Good morning.
My name is Ian, and
I will be your conference operator today. At this time, I would like to welcome everyone to the Kinross Gold Operations Update. At this, all participants are in a listen only mode to prevent any background noise. After the speakers' remarks, there will be a question and answer Thank you. At this time, I would like to turn the call over to Mr.
Tom Elliott, Senior Vice President, Investor Relations. Mr. Elliott, you may begin your conference.
Thank you, and good morning. Before we begin, I'd like to bring to your attention the fact that we will be making forward looking statements during this presentation for a complete discussion of the risks, uncertainties and assumptions, which may lead to actual results and performance being different from estimates contained in our forward looking information, please refer to page 23 of this presentation, our news release dated October 20, 2020, the MD and A for the period ended June 30, 2020 and our most recently filed AIF, all of which are available on our website. With us today, we have Paul Rollinson, Chief Executive Officer Paul Tomory, Chief Technical Officer and 4 senior members of our technical team, John Sims and Richard Adolfo for geology, Scott Hicks for mine planning, and Yves Growe from metallurgy. With that, I'll turn the call over to Paul.
Thanks, Tom. Thank you everyone for joining us today. Before we get started, I just want to reiterate what our objective is here today. We're here to provide a technical update on our operations and projects that we feel underpin a positive story for Kinross. We're not here to talk about the Q3.
We've just gone into blackout and I'm not here to talk about rumors in the media. So let's kick it off. We have 4 of our most senior technical people here today and I'd encourage you to use the time wisely. We don't have this group assembled very often for this kind of an event. So, I think anyone who follows CHEMRAS knows that we take our guidance very seriously and we're very proud of our long term track record of achievement.
Entering 2020 this year, we had met guidance for 8 consecutive years. And despite the ongoing pandemic, we are and we have reiterated that we are on track to meet this year's original guidance, which would make 2020 the 9th consecutive year in a row that we've delivered on our targets. And we intend to maintain this record going forward. Our confidence stems from the fact that our company is in very good operational and financial condition. We've invested in our mines to make them as safe and productive as possible.
We've supported them with Brownfields exploration programs to not only optimize, but extend mine life. And as a result, we have a portfolio of operations with long lives and strong upside potential and particularly at higher commodity prices. This morning, we will provide additional detail on the multiyear guidance we spoke about in September. Paul Tomory and his team will provide a technical briefing that will review asset by asset our plan to increase production by 20% by 2023 or said another way, increase production by approximately 500,000 ounces over the next 3 years. There are 3 things driving this production increase in the near term and these same three things put us in an excellent position for the longer term.
First, we are realizing the benefits of our 3 year capital reinvestment program, which has upgraded our operations and created a platform for further growth. And by platform, what we mean is, we've invested, we have infrastructure as a result of those capital investments that will help enable additional opportunities and we'll cover that in a bit more detail. 2nd, the culture of CI is ingrained here and our continuous improvement programs have allowed us to reduce costs, improve productivity and also extend mine life. The one of the best examples of this is Paracatu, where you'll have noted over the last couple of years, our drive towards productivity improvement has helped turn this asset into a Tier 1 gold mine, where we've increased production without shortening mine life. And I guess the 3rd contributor, of course, is our exploration results, where we've had great success this year, you'll hear more about.
And we've increased mine life at a number of sites and in particular at our underground mines, Cupola and Toronto, where we anticipate extending production through to at least 2025 as we sit here today. In addition, this morning, we will also share some of our expectations for production beyond 2023. Part of our intention with today's session is to demonstrate that we have adequate plans and opportunities in our portfolio to carry production through the rest of the decade. We will offer an overview based on what we know today of our current reserves and resources and the potential new projects and additional organic opportunities that are expected to help us produce an average of approximately 2,500,000 ounces annually for the next 10 years. I will however caution that the further out we look, the less definitive we can be.
Said another way, we can see resources and grades, but in some cases, we haven't completed the necessary technical or permitting work that will be required. As you will see, we have attractive projects in all our regions. We will also touch on several more opportunities that we will continue to study that could further extend the production profile over the coming years.
We have
a strong track record of success with mine life extensions and our large estimated 30,000,000 ish ounce measured and indicated mineral resource gives us comfort that we can continue. I'm very pleased with where the company is today and I'm very appreciative of the hard work from our dedicated teams from around the world to help get us where we are today. I'm also very excited about where we're headed. And with that opening, I'll now turn the session over to Paul.
All right. Thanks very much, Paul. So we've got just to orient you what we're going to be doing here, we've got about 35, 40 slides that we're going to be going through, stepping through asset by asset. And we're going to reserve Q and A for the end, so save your questions up as we go along. And I'll be calling out slide numbers in a couple of spaces.
I may be flipping back and forth between slides. But a few context setting points here. I'm looking at Slide 8. Looking back and forth, 7 and 8, I want to reiterate 3 very important themes for the call today. Number 1 is the difference between guidance and outlook.
Paul talked about it, but the 3 year guidance we put out is essentially budget level guidance where it's the highest level of confidence. We have detailed models built up in our forecasting tools, Excel and Xeris that support that. And then the 10 year outlook is the collection of our projects in study at various stages from scoping to period feasibility to feasibility. Slide 8 illustrates that universe of opportunities that underpin our that universe of opportunities that underpin our confidence in putting out an outlook at 2.5 average over that time period. And there's going to be ups and downs at 2.5 average.
And what we're going to be doing over the next months years quarters is working to allocate capital in a priority fashion that works in the context of the overall portfolio that creates a production profile that is manageable with a capital profile that's manageable. And with a little bit of luck and do the hard work, we would look to smooth out and augment that profile. The second thing, and Paul touched on this, this is going to be a very important theme that runs through the entire presentation today, are those three drivers of growth that Paul outlined. Leveraging CapEx that's already in place, exploration strategy and CI, and I'll be touching on all three of those regularly through this presentation. I will be providing lots of illustrations.
So here on Slide 8, the way to look at this, very roughly speaking, I'm going to make some generalizations. It may not be 100% specific with certain sites, but I'm going to generalize just to orient you to the way we're looking at this. The base case production is generally speaking what's in the market already. It's generally well known. These are things that are supported either by detailed press releases or NI-forty three-one hundred and one technical reports.
I would call these generally well understood and expected by the market. The things in the middle category expected growth projects are things that we've touched on lightly. For example, in the case of Chulbacan, we've got some high level numbers out there that accompany the acquisition. We've just acquired the peak projects in Alaska against similar high level numbers. But in general, this middle area is not perhaps quite as well understood by market participants, but there are early inclinations of what they may look like.
And then over on the right are things that are very much in our hopper. These are, for the large part, ounces that are contained in our $1400 resource. There are some exploration opportunities that aren't in a resource, but these are in general less well understood or understood to varying degrees of detail by the market. And we want to spend a lot of time today on some of these additional pipeline opportunities that though they are currently in our $1400 resource underpinned by the 3 drivers of growth that Paul outlined, we believe that a good number of these could come into a $1200 economic framework and that's what will underpin our work over the coming quarters years is to make these work. So I'll draw your attention to the footnotes there, what is base case production.
I'll just read these off to you. These are processing operations in execution at least the PFS study or higher. And for the most part, these are already in reserves or anticipated to be in reserves by the end of this year. Expected growth projects imply products in operations ranging from scoping to FS and level of confidence in everything in the additional pipeline are really expanding the range from exploration targets to scoping to in some cases PFS level of study in that category. So the key takeaway here is that we have a very large array of pipeline opportunities in our resources and we're very excited to be advancing these.
And as we have over the last 4 or 5 years, we will continue to advance these in a disciplined fashion, adhering to our strong principles of operating and technical excellence. And in general, taking the same conservative Kinross approach to advancing these. A final point I'll make here is that we $1200 Our reserves are calculated $1200 and they will be calculated $1200 with our current year end. We have no immediate plans to change our reserve price. But obviously, in the context of the current gold price environment, if there are opportunities that are perhaps marginal at $1200,000,000 and are low capital, low risk, we would consider them in this environment.
However, we're not close to green lighting any major capital investment that requires a gold price higher than $1200 So I think that's an important point to reiterate in the context of what we're talking about today. Okay, Slide 9, overview of the agenda, just the roadmap of the assets we're going to be talking through and we'll get right into it here. So Slide 10, this is the guidance, the 3 year guidance. So what are the key drivers of increased production, cumulative production
in the 1st 3 years? We thought
it would be important to highlight where these are coming from. And the bar chart there on the right, close waterfalls the gap between what would be a 2,500,000 production profile over the next 3 years to what we have guided. And as you can see, in order, the biggest drivers are Charano, Fortox, Pareto, Kupol and then Bald. Charano and Kupol, those are largely the result of exploration success, but also as we'll keep talking about today, good continuous improvement to drive down costs as well as strong engineering and optimizing our mine plans. Fort Knox, the way to look at that is it's largely a pull forward, a re optimization of the Gilmore mine plan, but also a greatly improved operational strategy on how we're using the mill and the tailings.
And I think I'm going to spend some time talking about that because that's a pretty big change from what we've been talking about in the past and this is a strong positive change in the way we operate Fort Knox. At Paracatu, that's also a mine plan acceleration And in Bald, it's a resequencing of the north and south areas in that timeframe. So those are the key drivers for the guidance increase over the next 3 years. Okay, let's get into Russia. So the thing that jumps off the page here is that we're now confident to say that we will have continuous production in Russia uninterrupted and this wasn't always the case.
I mean at Kupol, we have had a strong track record of adding reserves through exploration. But as recently as a year ago, we were potentially contemplating gap in production between the end of Kupol and the start up of Chuvacan. That is now no longer the case. We now have continuous production into that overlap period in 2025. And we are very optimistic, and John and Richard will talk about this in a moment.
We're very optimistic about the continued prospects for exploration in Russia. So you can see the base case production profile there. And as we've been using throughout this deck, we then show the growth opportunities as well as the additional pipelines that could come in to support this production plan here. So let's get into Kupol. I'm on Slide 12 right now.
And the chart is illustrative. We've put on here at the end of mine life, and that's what I want to point out first is back in 2,008, the mine would have been long done by now based on the reserves known at the time. With the acquisition of Duignan, you can see with that first step up in the mine life, took it out to, call it, 2019. And stayed at 2019 for a number of years as we optimized the operation, as we really improved our ability to operate in Russia and stabilize operating performance really. And then starting in 2014, 2015 and then really into 2016, 2017, we ramped up our exploration focus and have shown a pretty consistent track record of adding new ounces into the reserve at year end.
Given the large magnitude of Kupol production back, say 4, 5 years ago, up above 500,000 ounces a year, it was difficult to replace that level of production. So we still had a net declining reserve life there when you factor in the high production. However, as Kupol has adjusted down to being a 500,000 ounce producer, including Friesen de Moinoid, it has become easier to replace that production. And certainly, this year, we anticipate at Kupol only having better than a replacement year. So in other words, fully offsetting and then some the depletion this year at Kupol.
So that chart shows how the mine life has been extended year over year, largely as a result of exploration success. I should note that the Voynoy, the mine is now moving into suspension. So we are putting the mine into a care and maintenance scenario in the near term, looking to suspend it. But DuVoisno will continue providing stockpile ounces into the Kruppel Mill for 3 years. So in this 3 year guidance time frame, there will be production from stockpiles at Des Moines through 'twenty one, 'twenty two, 'twenty three and we're looking at roughly 90,000, 50,000, 30,000 ounces in each of those 3 years from the stockpiles at Des Moines.
I should also touch on Kupol's very significant focus on innovation in CI. Sometimes at high grade operations at Koopal, you forget that CI is just as important as it is at the bigger lower grade open pits. But I want to touch on a couple of examples here that perhaps we haven't talked about as much. A couple of years ago, we invested in a dry stack tailings project at Cupola, which enabled an increase in the tailings capacity at Kupol, which at the time we didn't have the reserves to fully support that dry stack, but we were very confident that we would add them. And of course, it has played out that way.
That dry stack is really helping us now in terms of continued mine life investment. So we've invested in things like dry stack. We've upgraded the road. We, of course, have a permanent road between Desvoitner and Kupol. Our supply chain strategy into Kupol has also been a focus of very significant continuous improvement optimizing our logistics, our procurement, our management of working capital supplies and stocks at sites.
All these things contribute to a more effective cost structure that drives down the cutoff grade for bringing ounces into the economic profile. In terms of CI and the operations, very significant investments in upgrading the way we mine. We're focused more on narrower veins right now. I'll talk a little bit about that in a moment and just general cost control. And of course, the ruble being where it is has also helped.
Let's move to Slide 13. This is an illustration of the Kupol ore body, and it remains open along strike. And we have significant runway and room to grow the inferred pipeline as we advance things from exploration potential to inferred and then onward to indicated and reserve. And that has been the conveyor belt of pipeline development at Kupol for a number of years right now. As I mentioned, we have been transitioning the mine to narrower vein mining, and this has been critical to the enablement of further life of mine extensions.
As we get into mining veins that are narrower than had been historically the case at CUVA, find that there's still very high grades in those narrow veins. Richard will talk about that. And currently, we're getting about 5% of our ounce production from narrow veins, but that will ramp up to close to 30% in the next 3, 4 years. And potentially more than 30% of ounces come from narrow veins out beyond 2024. And lastly, CI efforts have been successfully, very successfully focused on dilution control so that we can maintain the feed grade as we get into those narrower veins.
And also areas like ventilation optimization, we've invested a lot of effort into optimizing our ventilation to allow access to some of these more distal parts of the ore body as we get into these newly opened up zones with exploration. We're getting deeper and further away from our portals. So on Slide 14, I'm going to hand over to Richard Adofo. Richard is VP of Global Brownfield Exploration and will be making comments today on our Russian and African sites. So Richard, over to you on the numerous opportunities here.
Thanks, Paul. At Cupo, what we've done over the years, within the last 3 to 4 years is that we've done a bit of a more systematic drilling underground and surface because of the reinterpretation of the ore body, we align our drilling in such a way that we'll be able to pick these ones. At the very low of Kupol, in 2016, we picked up a downturn of the Cupo ore body. And based on that downturn, we decided to explore from the known to unknown. And it has led us into that expansion to the north.
And specifically, within the last year, we've realized that there's a bit of a pleasure in the mineralization to the West, and that is the zone that we are calling Zone 42. And because of the narrowness of the ore body, we need to be very close to it to be able to drill and get it right. In the same way to the south, we have also due to reinterpretation, come to realize that the original coupon trend mineralization is also strained
a little bit. And so for the
next few years, we are going to drill this area between the south of Copo to the known graben. Previously, we thought that at the end of the graben, that was the end of the mineralization, but reinterpretation is telling us that we still have enough space to drill. Also at the depth portions of Cupo, we continue to take mineralization with depth, which is also quite significant for us. Again, on the eastern end of the Cooper Alliance is Morisca. Morisca, initially, we thought it was a simple state but reinterpretation has shown us other place of Morisca, which we also will continue to explore.
And from Morisca, we go to Providence, it is also another area that is going to be explored. So we have given ourselves or we've managed to get quite a significant amount of years ahead of us to continue to drill and we will continue to do that. So when we go to the next slide, we look at the regional perspective of Cupo. At the center of the circle is the Cupola lines that is shown red and what we've done is that over the last few years we've done an estimate engineering to show that in a material that is 130 kilometers radius from the cupola main, we will be able to track it down to cupola. So that is the focus.
And exploration because we have a runway from the mine, we can now go outside and search for the next couple and basically that is the plan. Unfortunately, we have also recently acquired the Kaimavan line, which is quite a big one on the eastern end of the circle. We've realized that it's also got quite significant amount of epitherma type veins, which we will be exploring. The initial review is that some of these veins are even more longer than the Kupo veins. And so in the coming years, we will find a lot more time to explore Vigipi's areas.
And then also the other small target areas that we have picked, all the alliances that we have, all the financial alliances that we own and we are continuing exploring in these areas for any potential Kupol or bigger than Kupol deposits within
the area.
Okay. Thanks very much, Richard. Just to touch on a point that Richard mentioned there, this Kyanmaivan property, we actually closed that acquisition this morning, and we're very excited to get going on exploration there. This Kupol synergy project, the circle that Richard talked about, what we're looking for is roughly 4 gram type material in that radius, 4 gram or better. And what we've learned is that with our experience at Devoinoy, the cost to truck in that radius, depending on the train, is between 1 grams and 2 grams.
So the cost of trucking to Koopal is 1 grams to 2 grams. That is also, by the way, the strategy we used in this Peak Gold acquisition in Alaska looking at economic radii around what is in effect a hungry mill. I'll talk about that when we get to Fort Knox. So that mill has capacity with our renewed focus on operating strategy in that mill. We've opened up a very large radius of potential opportunity at Fort Knox.
So we're treating Fort Knox and Cubo very similarly in that way in that we're the only real mill of any size in the area and it makes good economic sense to look at things further afield as long as the grade is there. So let's move on now to Slide 16 and Chil Bacan. The numbers on the page are the scoping study estimates, which are essentially unchanged from what we've been signaling now since the acquisition. But just to provide an update on what's been happening at Chilbacum. We've had a successful drill campaign this year notwithstanding COVID, it got a little bit delayed, but we were able to catch up on the program.
And we've drilled roughly speaking 50,000 meters thus far in the year. On the engineering side, we have advanced engineering on a number of fronts, logistics, power supply, power generation. We've been looking at the schedule. So we've delivered an internal project schedule that incorporates permitting studies, engineering, operations and early works as they would relate to the project. Another thing I would like to start introducing here is this word, Udyudinsk.
Chulbatan is what we refer to as the broader land package. We have the large principal license and I'm also happy to say we've recently acquired adjoining licenses as well. Rudinska is the pioneer pit. It's the first pit that we're going to be developing at Chilvacana where we expect to develop. And the numbers that we've got on the page here refers specifically to that Udinsk pit.
I'm going to hand it back here to Richard to talk about other potential targets and exciting opportunities we see in exploration in the broader land package. Slide 17.
So during the summer, we did do geosynthesis and geochemical more or less a reconnaissance exploration targeting program, where we run an IP over the Ujinska property on the long strike. And then also we did quite a lot of soil sampling. So on the figure is the soil sampling, the gold anomalies that is shown. What we've realized is that we've come up based on the multi element testing of the geochemistry and then also in some areas of the geophysicist, we've identified some anomalies or targets that are even have bigger or higher geologic signatures than Odisk. And that is these areas we will continue to follow that.
And then the good thing is that we have interpreted it along strike the Wodinsk, both to the north and to the south. We've interpreted anomalies that goes into the newly acquired surrounding properties. So we are encouraged with what we have seen and we'll continue to explore in the years to come.
Okay. Thanks very much, Richard. So that concludes our comments on Russia and we're going to be moving on to Africa right now. Again, Slide 18 orients you to the base case and the growth aspects of what we see coming down the pipeline. And I'll get right into the detail on Tasiast here on Slide 19.
I just want to take a step back here and reflect on what's happened to Tasiast over the last year. Of all Kinross sites, it has been the one most impacted by the COVID-nineteen pandemic. We haven't had a production interruption nor do we expect a significant impact to production this year. However, as we've talked about publicly before, we have fallen behind on stripping due primarily to quarantine and camp impact. So because we've been quarantining people, in effect, we've had a reduction in the number of people at site and have had to curtail stripping.
I'm happy to report that we've recently reduced quarantine requirements dramatically, camp spaces opened back up and the mining rate is now very close, not quite 100%, but well over 90% of where we expect it to be, so that we're getting back on track. The net result is we won't be able to make up that stripping shortfall. And in other words, there will be deferral of production as you see on the slide here on the bottom right there. There's about 100,000 ounces that will be deferred from 'twenty one to 'twenty two as well as capital, some capital that will have been unspent this year in both stripping and the 'twenty one, 'twenty four ks project that will be deferred into subsequent years. The project, notwithstanding the deferral of some CapEx, remains on time and on budget.
And you might ask, well, how can we say we've had some deferral CapEx and it's still on time? The CapEx has been deferred in areas that weren't on the critical path, most notably the power plant. The single largest scope of work on the project is a power plant and we took a 3 to 4 month delay on that. But I'm happy to report that we are now ramping up the EPC contractor on power plant construction as we speak. Otherwise, the project is doing well.
Mechanical and civil works are well advanced. We're now 15% in construction or 45% overall. And like I said, we remain on time and budget. Going to the next slide, most of you are familiar with the overall Tasiast land package, but I'll provide a couple of reminders right now. Over on the right, the upper chart, you can see right in the middle, the current mining area, the southern portion of that current mining area is the West Branch.
That is where all the current ore feed is coming from. And the northern part of the mining area is the historic Piment pits, which we intend to go back into down the road. There's still a reserve there. And then on the principal Tasiast permit, which is known as El Guicha, there are other targets, Fenech C67, C68, which we are currently assessing with further drilling and study. Richard will now talk about those 3, Fenech 68 as well as mineralization of depth in West Branch.
Okay, yes. So it is the same deposit and the same geologic understanding that we are going to imply on. What we've seen within this area is the flatness of the deposit, which is quite good for us, and so we will continue to explore these further.
So conceptually, what we're looking at for Tasiastu is picking up where we left off a year and a half ago, where we're going to reengage on a study to determine the potential for a dump leach operation at Tasiastud. As Richard mentioned, Tamaya has a sufficient quantity of high grade CIL ore that it would warrant trucking up to the big Tasiast Mill. But parallel to that, we are looking at the potential for almost a standalone operation for dumpage potential down there. Okay. That concludes comments for Tasiast.
Let's move on to Toronto on Slide 22. Like Kupol, this has been a very encouraging and important exploration success story. It's enabled a 3 year mine life extension. And in this 3 year extension, we'll be mining from a number of different deposits, principally underground, but also some open pit. And like Kupol and Fort Knox, this is a hungry mill.
We're doing 10,000 tons a day. So there is capacity to feed this mill and that is one of our operating strategies for Turano. As I've noted on at least a couple of quarterly calls, Turano is transitioning to a slightly lower production in the range of, let's say, $150,000,000 to $160,000,000 170,000,000 over this time period at a slightly higher unit cost, but it's still a reliable cash flow generator where we continue to be optimistic about the future there and Richard is going to touch on that in a second. As I mentioned at the outset in my opening comments, Currano is the biggest contributor to the 3 year increase in production guidance, principally because there are now 3 years of production in that weren't there before. Like other assets, Toronto is one where we have focused a lot on cost control and productivity improvement.
We are mining more headings than we were in the past and a big focus has been on optimizing the mine plan, the mine profile and how we dispatch equipment and miners. So we're happy to say that like at Kupol, hand in hand with the exploration success has been a successful focus on cost reduction and productivity. The biggest contributor at Toronto to the mine life extension is a deposit that we're using CALABRA. And Richard, could you please give some more detail on this one?
Thanks, Paul. So at CALABRA, between 2017 2020, we have been doing a little bit of surface drilling, trying to extend the original high grade that was picked around 2014 depth drilling. And over the years, we have continuously achieved results. And as you can see from the slide, what it was in 2017 and what it is now at the end of 2020. And so that is quite a big amount of material that is coming into the Chelanos life of mine extension.
And we will continue to extend and test the down plunge of the mineralization. And on the section on your right, I must say that the last intersection of the last drill hole there is currently not in our plan because it is classified as inferred. And it shows that that new addition continue to extend and we will continue to explore the depth extensions of the umbra. Umra is actually quite wide tonalight type deposit, so you have an average width of 30 meters and a grade is around 2.5 grams. So it's got the bulk of the material that can be mined at a profit.
Turning on to the next slide where we have entire Toronto deposits. So, from our cover all the way to what we are calling now is approximately 7 to 8 kilometer stride And all the round dotted outlines are the key areas that currently have been added on to our life of mine. Anything below that is the potential areas that we are drilling. At Akapa, in the early years, we had a hanging wall split at the upper portion, but it was not consistent. But as we explore a bit, we realize that the hanging wall is becoming as consistent as the main zone.
And so that has given us another advantage and we will continue to explore it. Then at Syro, Syroll has also been one of the areas that have been dormant a bit, but we have currently reopened it up and we'll continue to explore the debt extensions of the Estero. And as I said, we still believe that Obra will expand especially to the north. And then also we have seen a little bit more of the open pit at MAM now where originally there is a series of working space that we are currently exploring as potential open pit for the future. So yes, we are encouraged by what we've seen and what is going on at Turano.
Okay. Thanks again, Richard. Okay. That concludes our comments for Africa and we'll be moving on to the Americas portfolio right now. The Americas portfolio other than Kedlakarlu, large open pit mines and referring back to Paul's opening comments on leveraging CapEx, each of these big open pits has benefited, in this case, less from exploration, but much more so from a pretty intense focus on optimization, both in the cost and productivity structure, but also in ore body understanding.
We understand these ore bodies better. We have more robust resource models and we're able to tailor mine plans much more effectively to anticipated changes in ore characteristics. In addition, Phase W, Vantage Complex at Bald, the Gilmore project and the overall asset optimization at Paracatu have entailed capital investments that were predicated on what is in effect the first phase. So we justify those investments with robust IRRs, strong paybacks on the first phase of of a given pushback. What we are now looking at is, given that we have that infrastructure in place, given that we've made that capital investment, what further potential pushbacks satellites are enabled by both an optimized cost structure, but also a more effective set of capital equipment at site.
And then I'll talk about a number of these examples. Let's start with Paracatu. Just everybody knows this, but it is one of the world's largest gold mines. It is expected to average 600,000 ounces a year for the next 3 years. It is a Tier 1 asset by any definition.
And we have been very happy with its performance. On top of its own operating performance, we've benefited from a very strong tailwind from the FX impact. We continue to plan Brazil's mine plan at $1200,000,000 and also a pretty conservative real. We're using either 3 point 5 or 3.75, which is quite far off the current spot price. Paracatu, just to remind what we've been doing there for the last several years, we carried out what was in effect in the internal feasibility study, something we call the asset optimization project, which was very heavily focused on developing a better understanding of the ore body, its metallurgical, its geologic, its geochemical characteristics and tailoring the feeding of the mill, the blending of the ores to optimize recovery and production.
We've also implemented a world class grade control program so that we always have drilled inventory at the grade control level in front of us to increase reliability and our confidence in month to month, quarter to quarter and year to year mine plans. As a result of this higher confidence, we've invested in fleet of Paracatu recently and that has allowed us to mine more principally into the western portion pit where we have higher grades and somewhat comical, but Paracatu, a high grade is 0.44 compared to say 0.38. But on a very high throughput operation, I'd like Paracatu, that makes a big difference. So we've pulled forward production and we've pulled forward significant cash flow at this asset. And we've done so with the confidence that we're not impacting the long term.
And we're going to talk about this in a moment here. We do believe that there is strong potential to extend mine life at Paracatu, something that we haven't talked a lot about in recent years, but we've been advancing engineering studies. I should also touch on the impact of COVID at Paracatu. It is it has been one of the after Tasiast, probably the 2nd most impacted asset. We haven't had any particular impacts to production, but we've had at times numerous people off-site and we've been able to manage through it.
But like Itasiast, I'm happy to say that the worst is behind us. We're now coming out of the COVID impacted period. I'm handing over to Scott Hicks here. He's Vice President of Mine Planning and Technical Evaluations, to talk about some engineering we've been doing at the northwest part of the main deposit.
Thanks, Paul. I wanted to highlight in the graph on Slide 27 that as Paracatu, you can see the outstanding continuity of what Paul alluded to this relatively high grade work from this operation. As he mentioned, we are currently setting pushback optimization working on tailing the deposition plan to accommodate what we are illustrating as Northwest Phase 1 on this site plan. This chart has illustrative resource shelf gold prices at $1300 $1400 However, as we said through asset optimization, and as Paul mentioned during today's presentation, we've seen significant operational efficiency gains. And together with some acquired pit engineering, we'd love to see at least some portion of the $4,000,000 indicated resource ounces come into our $1200 reserve estimate in the not too distant future.
The strip ratio to access this ore remains very low. It ranges from less than half at the northern extent of what's labeled Phase 1b to less than 2 at the southwestern extent. As Paul mentioned, we've recently invested in additional mining fleet and hope that some acceleration of mining in this western portion of
the pit might allow us to continue to increase our production through
mine plan optimization and stockpile optimization as well. Thanks, Paul.
All right, Scott. Let's move on to Fort Knox here. Fort Knox, I have to admit it's had a challenging couple of years here. We've had pretty bad luck with rain and geotechnical issues and it's record rainfall. But happy to say the last couple of quarters of Fort Knox have been very strong.
We're optimistic about its near term operating performance. And we've also done what we call some technical resets at the site over the last, say, year. And let me talk a little bit about each of those. We've invested very heavily in dewatering. So we're very rapidly dewatering the current tailings storage facility and that's freeing up potentially significant amounts of tailings capacity.
And we're also permitted for tailings in the pit. So what we had previously thought was a limitation at Fort Knox tailings capacity, we are now viewing this asset as having a very substantial capacity for future mill production. Now, of course, with mill production, we would only feed that material into the mill that makes economic sense. And the preponderance of material coming out of the Gilmore deposit will be heap leach, but there are mill grades that we will be feeding. The other thing we've done in resetting the operating strategy is this is a mill that can do 14,000,000 tons a year and we've now put in place a mill operating strategy that allows us to run efficiently down to 4,000,000 tons a year.
With this spare capacity in both the mill and the tailings, it made the Peak deal extremely attractive given its high grade and a relatively low consumption of tailing space. So with this improved outlook on operating strategy at Fort Knox, with the capital invested in the Barnes Creek heap leach pad, We have pulled some fleet forward and Fort Knox as a result is the 2nd biggest contributor to the growth in 3 year production. And things are looking good for us right now for Knox, and we're happy with operating performance. Again, on the topic of engineering optimization, I'm going to hand it back to Scott here to talk about some satellite deposits we're considering at Fort Knox.
On Slide 29, the Gilds satellite project is currently envisioned to be a series of multiple small, both mill and heap leach grade pit that could contribute nicely to Ford Knox by adding incremental high margin ounces starting in late 2021, possibly through early 2024, pending permitting and some further study in engineering. This is a deposit that we booked at for some time in the Sourdough area
that we have been able to optimize
into a smaller project with excellent returns. As mentioned, the feasibility study and permitting are underway. So we're looking forward to selling more of those in early 2021. What I can say is, while the capital is modest, this project could scale larger at higher gold prices in the future, utilizing the road and some minor infrastructure that we're looking to build there. And as alluded to earlier, it continues to utilize Fort Knox's milling infrastructure with the intent to operationally bridge the project that Paul will describe next.
This slide provides some detail regarding the Gale Satellite's $1400 resources on the bottom right. And the text provides an illustrative subset of these ounces at a $12,000,000 planning price that we're currently advancing through our feasibility study.
Great. Thanks, Scott. Let's talk a little bit about Peak, our newest acquisition in the Americas. Like I talked about earlier, there's an economic radius around Fort Knox given the mill capacity that we have that makes a good chunk of the state of Alaska very attractive for potential bolt ons. Unlike a Kupol, where we would be building and maintaining our own roads, in Alaska, we benefit from a good installed base of existing infrastructure.
And so for example, at peak, which is about 400 kilometers away, the penalty on the grade is 1.3. So in other words, the cost of trucking to Fort Knox is 1.3 grams per ton, which means that the delivered grade is still very high compared to Fort Knox in situ grade nearly 10 times higher. So the plan contemplates crushing at the project and the trucking material to Fort Knox. And in our scoping level estimate, we're contemplating 1st production in 2024. And this is anticipated to give a very substantial lift to production for 4, 4.5 years at Fort Knox.
We're very excited to advance this and our first work is going to be working closely with the community in developing a mutually beneficial plan and then getting going on some drilling. At Fort Knox, it's not just the satellites and peak, but we're also focused on an area known as the Northwest Baldrige, which John Sims will talk about. John is Senior Vice President of Resource Geology and Brownfield Exploration as well as our company QP.
Thanks, Paul. So I think I'd like to just add a little color to the brownfield side. I think a reoccurring theme that you're going to see through the entire deck is the fact that we've really gone from a generative focus to a minic focus and we've implemented a resource characterization process. It's really helped us focus in on ore body characteristics. And then we just chase the mineralization out of the known footprint.
So you're going to see that reoccurring theme and now we've allowed ourselves some runway. So we can
go back to some of
that generative work and that's going to be the focus going forward in a lot of areas. So we're just working through that. I think we've got way ahead of the process and we're really it's going very well as you've seen through many of these slides. So for the Northwest Bulge, it's so Fort Knox is basically a grenade dome that sits in the crest of an anti form within the Fairbanks Schist. And so the Northwest Bulge is a perfect example of where we're chasing the mineralization, structurally controlled out of the pit.
And because we've done the work on the ore body characterization piece. So we're chasing this now to the northwest along these structures and the granite dome is coming closer to the surface in many areas.
So it's really helped a lot to the strip.
The only issue that we might have with some
of this is the boundary of
the shifts where the grade distribution become fairly erratic. And so the drilling has to be closer spaced along these edges to try to figure out where those boundaries are. So there's these erratic grades, but within the granite dome itself, the grade distributions are very well behaved. So you can see the potential expansion at 1400 that we see right now and this could extend
the mine life significantly if we
can chase it up further. All right. Thanks, John.
Okay, that concludes Fort Knox. Let's move over to Nevada with Round Mountain. Round Mountain is a fabulous asset. I mean, we've been thrilled with the performance here and it continues to give in terms of the opportunity. It's a very geologically, it's a very interesting ore body and it continues to yield some potential.
So we are studying 2 separate pushbacks at Round Mountain And more than any other site, these are enabled by the capital that we've put into the play. So we've with the Phase W project, there's about $200,000,000 of capital put into infrastructure, meaning truck shops, ancillary structures, fleet. We now have a very, very efficiently with electric rope shovels and large trucks. And the combination of the new infrastructure as well as the refreshed fleet is now allowing us to look at economic threshold for things like Phase S and Phase X. So let me go to Slide 33 here, where you see the plan view.
Phase S obviously is the south part of the pit there. Our current inventory there is just over a 1,000,000 ounces about a 1,000,000 ounces of indicated. And then Phase X, we have close to 1,400,000 ounces of indicated. Phase X is in effect the second pushback or the next major pushback in Phase W. And when we situated the infrastructure for the pushback, both the new leach pad as well as the truck shop and ancillary facilities, we made allowance for that Phase X pushback.
However, in terms of meeting an economic threshold, Phase S likely comes 1st in the plan. And we're currently working on a scoping study that contemplates capital in the $50,000,000 range. And we're planning to submit for environmental approval early part of next year for a potential start of mining if we get good economics and successful permits in the start of 2022. So this would augment and extend open pit operations until 2029 and midlife into the early 2030s. That's on the basis of Phase S alone.
And Phase S is something that's currently in the $1400 resource, but early indications are that we can make it work at $1200 Our work is not yet done, but we're going to be sharing results with you in the early part of next year. Phase X is deeper, a lot more stripping. It's currently a $1400 opportunity. This is not one where we'd love to make it work at $1200, we're not there yet. But what could change the game here is some of what we're seeing at depth.
And I'm going to ask John to talk about some of what we're seeing there in the depth zones of the Phase W pushback in terms of the grades we're encountering.
Sure. Thanks, Paul. Well, first of all, Round Mountain is an epithermal volcanogenic flow cell sedation system and it plunges deep to the northwest where we're seeing this on this cross section. And the grades there can be very high, but they're erratic. I mean, we hit some really high grades and then hit mid grades.
But what we're seeing though is we're seeing a lot of grade in the cover that we never expected. And so when we modeled the cover, we've been hitting grades in the drilling that we have there, which actually will provide some relief on the strip to go and be able to get to Phase X. So we're going to continue that drilling and see what we get there and model that up and see if it helps
with the strip to be
able to allow us to get to
that. And one of the things that gives us some confidence there is that in the Phase W pushback, we didn't model any of those upper zone ounces, but we are encountering them now as we mine down through Phase W. And that gives the geologists the perspective to potentially include those in a model in a Phase X. We've also put on here some conceptual underground diagrams. That is not off the table.
And one of the things we're looking at from an engineering point of view is what is Phase X? Is it a big pushback with a very significant amount of stripping? Or is it a more targeted underground? We don't yet know, but we are advancing studies on both open pit and underground potential for Phase X. Moving on to Bald Mountain.
Bald is a contributor for increased production in the 3 year timeframe, and that's really as a result of resequencing the mine plan. So we will preferentially mine more in the north and less so in the south, push out some of the south reserves to later on. And it's really a pretty simple resequencing. Bold Mound remains very prospective. And Slide 36, John will talk about some of what we're seeing in terms of the prospectivity.
Sure. As you can imagine, Bald Mountain is a huge land package. And so given the fact that we've closed in on ourselves to do the
Min X, we've mostly in
the north, we really focused on the Min X around the known pits and grew those resources and put much of that into reserves and there's still a lot of resources to be converted. So the North is intrusion related in the South is a more Carlin style mineralization. And so as you can see, we have the expected mine life extensions in the to the left in the left box and then the potential of resource extensions to the right. So you can see we have a number of targets. So given the fact that we went to Min X and we chased a lot of this stuff out of the pits, the known pits, we're probably going to move to a more generative program in the South and actually in the North as well.
So we'll be doing a lot of things at the same time, but we've given ourselves some runway to be able to
do those things because in
the last 3 years or so, we've really focused on the MINX piece.
Back to you, Paul.
Yes, thanks, John. I should also add that Bald Mountain, I'll reiterate, we're still planning at $1200,000,000 But Bald Mountain is an asset where a lot of potential mine life has opened up at consideration of higher gold prices. We're not moving there yet, but if we were to move down to path to 1400 down the road, Bald would be a very strong candidate for that. Okay. Heading to the finish line here with Chile.
Let's move on to La Coipa on Slide 37. The project, notwithstanding COVID impacts and some early delays, is moving very well. We've established the access road to the Phase 7 pit. The fleet refurbishment is advancing very well. It's about 40% complete.
This is the fleet we moved over from Maricunga. And early works have been completed on repairing some of the roof structures, the water supply, the camp and the office are being refurbished right now, a bridge crane and things like that are being replaced. So the project is advancing well, and we've been able to make up some of the lost time from the early phases of COVID. You've got the key numbers here. I'm not going to talk about those here, but rather let's go to Slide 38.
And as we've said in the feasibility study, the life of mine from the Phase 7 pit is relatively short at 22, 23, 24, 3 years of production. However, when we entered into the decision to build La Coipa or to restart it, we did so knowing that we had additional deposits on the property that we would advance engineering and permitting on to potentially bring them into the life of mine. So let me give some anecdotal commentary on these. The Peren deposit is a joint venture with Codelco. We're 65% owner, they're 35% owner.
It is already in reserves. You can see there on the table, the quantum of reserves there. The discussions with Codell are doing are going well, but this is a $1200 reserve and if all goes well, we'll be incorporating that into the mine plan. And then we have 2 more historic pits, Cuypa Norte and Cancun. Cuypa Norte is where we finished mining when we shut La Coipa down a number of years ago.
But again, with the investment in the infrastructure, with a strong focus on cost containment in Chile, we're working on a plan that could bring Coipa Norte into the mine plan. And Cancan, there are also some high grade remnants there that we're assessing. Catalina is an interesting underground. And John, can you give a little bit more detail on what we're looking at Catalina?
Sure. Catalina is actually a vein hosted deposit relatively deep and a lot of strip. So I think the plan there would be to either do a trade off study for underground or possibly from the Pompeo pit once we've mined down on that. We're just doing that work right now. But the grades are high and there's actually it's not closed off.
We have some indications of mineralization between Pompea and Catalina, so which we would also possibly cross in underground drift scenario. So there's a lot of that still to be played out to see what we might do at Catalina.
And that's analogous to what I just described at Phase W where if things go well on bringing Parem Coquitinorte Cancana to mine plan, we have a good amount of time to study. As John said, the trade off, you did an open pit and underground at Catalina with the potential to grow it from an exploration perspective. So these are the things we're working on at La Coipa. And as time goes by, we'll be sharing more details as we incrementally hope to bring these into the overall mine plan. Lobo Marte on Slide 39, nothing really new here from a market perspective.
We're advancing right now the feasibility study. Things are going well. It's going to take us just over a year to do this study. It's a large project. And I should add that its reserve grade is quite high.
It's an attractive ASIC project and our key focus of activities here in the feasibility study is to drive down CapEx and to see if we can optimize our capital expenditures having learned from a number of our other projects. So Lobo Marte advancing well and currently we're contemplating first production in 2027. And then very last year, in 2027. And then very last here in the deck, John will talk about an interesting little exploration project we have ongoing in the Kettle River Complex.
Sure. So, curlew is a structurally hosted low self sufficient system. It sits under a large basin and it sort of hugs up against that basin within an endocytic host rock. Multiple veins. We've been drilling it from surface and slinging some really long holes and trying to be surgical at depth and been really difficult.
But we've got we've had a lot of success doing that. We just can't get to spacing, right. So what we've done is we proposed to do a lot of rehabilitation and success. Example would be Kupol. We moved from drilling from surface trying to be surgical to underground drilling with a lot of success, same at Serrano.
This would be sort of a similar situation. I think drilling from underground is the And
I
think the underground will probably turn up a little bit more And I think the underground will probably turn up a lot of veins.
We just hit a new
vein we didn't even know existed a while ago. And there tends to be a lot of these that pop up. It's just putting them together and making the shapes and wrapping a really solid resource and reserve around this. So I think the underground drilling is going to be key for this project.
And between the inventories already identified and some scoping level desktop estimates from an engineering perspective, we felt comfortable investing $30,000,000 in the next couple of years in this advanced exploration project. So with that, that concludes our remarks. We stuck to just over an hour, so that should make Tom happy and we'll turn it back to Paul here for some concluding remarks.
Yes. Thanks Paul and team for those comments. Look, I just before we get to questions, just wrap up by saying we've consciously worked very hard over the last 8 years to invest in our portfolio. And what we think we've created is a really strong foundation that will sustain production going forward, be able to reduce costs, improve our cash flow. And obviously, we've got the balance sheet and the financial strength for flexibility to continue to be opportunistic with our portfolio.
We've demonstrated with our great operators globally. We've got a great balance sheet. We've got a peer leading cash flow. And we're very excited about our future. Today, as we said, was meant to give you some visibility into the longer term.
I hope that's been accomplished. And with that, operator, Ian, maybe we could open up the line to questions.
Your first question comes from the line of Greg Barnes of TD Securities. Paul Tomory, running through this presentation, it sounds to me like this really is a bridge towards a $1400 reserve calculation. Is that the way you're thinking about it as similar gold price remains strong?
Yes, Greg. It's we continue to do our planning at $1200 Our primary focus is moving what are currently 1400 resources into a $1200 reserve. And the 3 enablers are what we talked about, leveraging the CapEx we've invested, our lower cost structure and adding ounces. So the way to look at this is a good chunk of those additional opportunities on that first slide I show, things over on the right. We hope to be able to bring a good number of those into reserve at 1200.
For example, Phase S and go
out Phase W, I mean that's exactly
Yes, that's exactly what happened
at Phase W. So we have a strong track record of taking what was previously a higher priced resource and bringing it into a reserve. So our first order of business is in fact to make these work at $1200 So that's a very important point. We're not using this as a signal that we're going to be imminently moving to a 14 dollars reserve price. That is not what we're doing.
And I would get we're certainly not doing that year end this year. And I'm going to go on a limb and say we're likely not going to do it next year either. But we may here and there approve small capital that requires perhaps a $13,000,000 or $13,500,000 if there's a quick in year payback. It would be foolish in fact not to do those things, especially if there's a lower snow payback, but we certainly are not contemplating significant capital investment that requires anything more than $1200 I want to be really clear on that.
So you have been pushing Phase X, for example, on that basis?
Yes, Phase X requires more study, more drilling, more engineering. So one thing that could happen, we don't know, but if John and Richard and the exploration guys find more high grade there, that could drive the incentive price lower for Phase X, but we don't know that yet, which is why in Round Mountain, we're focused immediately on Phase S, which we see a clearer path to a $1200 reserve.
Just a second question. On the Kupol regional plan, you mentioned the $1 to $2 penalty on trucking, but I don't believe that there's road infrastructure there. You just did mention you'd have to build roads and maintain them. It sounds like a bit more than a 1 to 2 grand penalty for that kind of road that would be required for infrastructure.
Well, I mean, we've done it Desvoinoy. We built and maintained that road and the penalty there is in that same range. We've looked at other deposits in that region and we've done assessments. What I have to say on that one is, over the years at Russia, we have become very, very good at building and maintaining roads in these harsh conditions, and that is our assessment that the penalty is 1 to 2 grams in that 100, 120 kilometer radius. That is back way in steering end, Artis.
Rick. Your next question comes from the line of Terry McCurry of Canaccord Genuity. Paul, I think you mentioned at the beginning, Paul, tomorrow in terms of the 10 year plan, you've got the production profile, but keeping CapEx manageable. I'm just wondering, is there a certain capital envelope we should think about? Or how do you define manageable?
Yes. Look, maybe I'll lead off and segue to Paul, Kerry. I mean, we've said in different meetings and discussions around capital, if you look back in the rear view from a combination of both sustaining and growth, something in the $300 per ounce range is kind of the thumb suck whether you look historically and I wouldn't expect it would change a lot looking forward. So depending upon what our production profile is, to the extent we want to continue with that production profile, probably a good safe place to start for modeling would be $300 an ounce.
Right. And Carrie, this is something that we've kingdoms have risen and fallen here in Kinross and debating how to guide CapEx. But the 3 year guidance that we put out, the capital in that guidance supports that 3 year plan. We couldn't put capital in that guidance for unapproved projects, for example, like Phase S or Kupo Extensions or Trano over our underground development or whatever. Peak?
Yes. So we can't put CapEx out there for projects that either haven't really been daylighted from an economics perspective or from acquisition perspective or from an exploration perspective. So what will likely happen and this would be a good news story is as we approve incremental adds to the mine life, capital will come up. And the envelope that we're working with is exactly what Paul said is that we feel comfortable saying in general that our capital would be roughly $300 an ounce in a given year to maintain a production profile of $2,500,000 or higher. That's a very crude rule of thumb on how to look at the next 10 years.
And maybe second question, obviously a lot of potential laybacks. Any detail you can provide on strip ratios, like for example, Phase S or even what does the TAS CF strip ratio look like in the $1400 pit? So what
I would so we have to debate, do we talk about strip ratios and tons and all this detailed modeling? We would prefer to leave those to the individual calls where we provide more detail say on Phase S or Phase X. But in general, these pushbacks are relatively high strip pushbacks similar to Phase W. For example, Phase S, the reason I don't want to give a number right now is we have waste dumps on the pit rim at Phase S. And those are waste dumps that were created in the '80s '90s.
And in some cases, there's higher grade in those waste dumps than what we're pulling out of the pit. So we're still trying to assess whether to model grade in those waste dumps or not. So I'm not going to give you an answer on strip ratio, but rather ask for patience on waiting until we have a specific quarterly call or a dedicated call on some of these individual projects. But I make the commitment is that we will take the tried and stressed that Kinross approach to making these work at 1200 with robust returns and our typical conservative approach to project assessment.
Okay. Maybe just one more for me. You had the 12,000 Phase 1 expansion at Tasiast. I think the mill is running at closer to 17,000. You're on your way to 24,000.
I assume the guidance is still based on 24,000. Is there a
feeling that the 24,000 is going
to be something bigger than 24,000?
I'll hand it over to Yves Broe, our VP of Metallurgy Engineering. He's got some views on that. He'll explain how we get to 24, what the elements are and how we look at potential beyond there.
Thanks, Paul.
Yes, so basically the 24,000 is what we would say are clear and conservative approach that we've done on the other options that we've looked at. The hardness, look, we know the ore body, we know the hardness, we know the recovery. Right now, we're doing really well on recoveries. So, we anticipate that we could actually push a bit more of the lead circuit. So, if there's anything missing that we would push over 24,000, we would probably put a pre pressure in there, but that would be something really easy to add on.
So, right now, I'd say 24 is probably a fair bit and a bit of conservative on our side.
And the reason we actually deliberately modeled the 2 phase ramp up to 20 1 and 2024 is we want
to see where we got to actually with 'twenty
one given our experience with 'twenty one going higher. And so we want to see what the thing can do before over committing on CapEx. So like you've said, we're really happy with the performance of Mill, both from a recovery and a throughput point of view, and we're looking forward to start to unlock these bottlenecks in increments as we complete phases of the project.
Great. I'll pass it on. Thanks. Your next question comes from the line of Mike Harkin of National Bank.
Hi, guys. Thanks for taking my question. With Shalbadkin, you've got an initial capital estimate of $500,000,000 Should we kind of think of that being also a spend of $330,000,000 through 2021 to 2023. Given that's an earlier stage project, is that $500,000,000 still being optimized, that $330,000,000 could actually be a bit conservative and we might see that come in lower than that?
Well, we're about to launch on a form of PFS. We're going to award the EPCM contract in the coming weeks. That 330 is our current best gets you that, of course, we're going to look to optimize that, but I don't want to get ahead of myself and make commitments
either higher or lower there.
It's our current best estimate. And I would expect that it will come in roughly plus minus that estimate.
Okay. And
in that period, it's a big year, of course, it's 2023.
Right.
And just the balance is 20 20 4%.
Okay. And with respect to that region, can you just give a bit of commentary around the ease of operating at Hoboken relative to Kupol? I mean, obviously, the climate, just from the picture, you can tell it's dramatically different. But ease of infrastructure, workforce, etcetera, is it like it would seem like it's dramatically better around there than what you're experiencing and have experienced up in the Koople?
Sure. Maybe I'll lead off and again segue to Paul. Yes, look, I think bottom, bottom line is we're further south. We're in the tree line, so to speak, to use a Canadian analogy as opposed to above the tree line. So, there are the climate is not quite as harsh.
It is remote, but not as remote. And there's certainly more infrastructure in the region and there's more mining company activity in the region and there's more skills in the region. And but it is very much an area that is open to mining and welcoming, and we've had a lot of support since the announcement.
Another way to answer it is it's really a matter of perspective. If you'd only ever mined in Ontario or Nevada, yes, Avaras would be a pretty hard place to mine. But if you're used to Tricoci, it's a pretty easy place to mine. So it's a relative comparison. At Coop Bowl, as you guys know, we build and maintain a 400 kilometer winter road down from Quebec.
We have a seasonal shipping campaign. It's actually one of the most impressive things that Kinross does and it just happens in the back of the theater. At Chulacan, the roads aren't that far away, but what's more than that is it's right on the Amur River, on a branch of the Amur River and has good barge access. And in terms of prospect of other mines operating in the area, Polymetal has its Albazino mine. I'm going to say just across the river, but very proximal there.
So there are a lot of mines in the area. The towns and cities in the region are good service hubs for things like rebuilds, fabrication and mechanical electrical support. So compared to Chukotka, Habaras is a much easier place to operate a mine. But I don't want to say it's a slam dunk compared to places that are comparatively easier. But we feel very confident with our experience in Russia in servicing and operating very remote installations that this is something within our wheelhouse.
Okay. That's good. Certainly looks encouraging from a capital budget perspective. Switching over to Alaska, you're kind of implementing the hub and spoke model there. Are you seeing given that you've got significant mill capacity, are you seeing a lot of opportunity regionally to exploit smaller deposits that don't really work on a standalone basis and definitely are attractive as what you've done with the Peak project?
Well, again, I'd say, look, we try to keep tracks on what's going on around us wherever we're operating. That's point 1. I guess, is there a whole bunch of these? Yes, look, I think there's definitely potential. And I think the most important part of Peak is we've kind of printed a road map for others.
So this is a great opportunity where whether it's for environmental reasons or just share cost, there's a trade off study to be done as it relates to building your own infrastructure versus utilizing our fixed infrastructure. So, I think we've got a reasonable handle on what's out there and hopefully to the extent there's others, this is a nice roadmap to demonstrate what we can how we could partner.
The other thing is Alaska has a great network of rivers and that opens up a lot of potential for barging. This is all conceptual stuff, but it does open up a very wide radius of potential in Alaska.
That's good. All right. That's it for me. Thanks very much guys.
Thanks Mike. Your next question Your next question comes from the line of Anita Soni of CIBC World Markets. Your line is open.
Hi, good morning, everyone. Just a quick question on in terms of Tasiast. I'm just going back to the technical report and trying to understand, I guess, relook at some of the capital numbers. So do I understand that some of the capital, as you mentioned, is pushed is going to be pushed into 2021 that didn't happen this year? Or is that going to be pushed into 2022 as well?
Is that
Yes. So there's between $80,000,000 $100,000,000 of capital that will be deferred this year into subsequent years because a lot of that is stripping. We can't because next year is going to be a high strip year anyway, it's difficult to make that all up in 1 year. But yes, there's about $80,000,000 to $100,000,000 stripping and project CapEx that is being deferred from 2020 into 2021, 2022.
All right. And then secondly, I'm just trying to go back over what the grade assumptions are going forward. I noticed it's the 560,000 ounces of, I guess, on average. And I'm not quite getting there through the 24 ks ton per day. Could you remind me what the grades come up to, to help you get that average?
Right. So what we had in the technical report, the background of the technical report, which is now, as I said, bolstered because of the capital deferral. But we had early grades of say 2.3, 2.7, 2.7 in the near term, then dropping to 2. Just to remind what's happening at Tasiast, we have big pushbacks as we get into the heart of West Branch. And at the culmination of each of those pushbacks, we hit very high grades, in some cases 3 grams as we get there.
And that's really what drives the sawtooth and the production profile. But what was in the technical report is, like I said, this has now changed. We had 2.3 grams in 2021 and 2.7 grams, 2.7 grams in the 20 2, 20 23. And the key impact of this stripping deferral is a drop in grade in 2021. So we're still having the same tons going through, but we have a significant drop in grade happening and that grade gets pushed out.
It doesn't go anywhere, it just gets pushed out in the profile.
Okay. So just do we just assume that it basically gets pushed out like to push down the 2022 number from 2.7 and continues on with the chain reaction effect, I guess, is that
Anita Scott will he's in a bit more detail.
Hi, Anita. We're optimizing the mine plan and the intent at this point is to still catch up on those pushback 4 ounces within the 3 year guidance window. So we're reoptimized to try to capture all of that still. And that's one of the reasons why on that mine site by mine site chart, by no means we weren't silent on Tasiast. We had already disclosed that that was a significant just expect it to be more back end loaded as Paul is alluding to in that 3 year window.
Yes. And I just want to be clear, grade will be lower in 2021, but it will be the same or higher in 2022 and 2023 actually.
Okay.
Because we're just deferring the point at which we access the high grade portion of what we're calling the West Branch for pushback.
Okay. And then just finishing off on the West Africa there. Toronto, can we just assume like in terms of grade profile similar like similar for the next 3 years, I guess, or any sort of fluctuation there?
No, I'd say, Anita, it will be similar. We are including some open pit production that comes at a slightly lower grade. But as we said, there's capacity in the mill and so we would continue to process those. They would be economic certainly. It was a bit of a bump in the final year production as we close out some of the facilities and other underground infrastructure in those mines.
So we're looking at plusminus1.8 for the next number of years, but like Scott said, higher grade in the final year.
Okay. Thanks. The questions were asked, Alex.
Your next question comes from the line of Josh Wolfson of RBC Capital Markets. Your line is open.
Thanks. First off, as it relates to Chill Bob Ken, there were some kind of broad stroke numbers that were provided in terms of what the expected mineable resource was going to be in production outlook. Given some of the exploration results you've seen so far, but that haven't been reported publicly yet, are you lining up with your expectations originally or is there a potential upside you could see even for that mine plan so far?
So I'll hand over to John and Richard here in a second. But the drill program has really been focused on establishing the resource that we bought and confirming that it's there. And most of those drill meters have not yet been focused on expanding that Udinck pit. Where the exploration has been focused is identifying parallel structures, potential secondary ore bodies. And John or Richard, one of you may want to comment on what we've been focused on.
Sure. So the drilling program so far this year has been on drilling up the known pit as Paul said. And we are just now focusing on the high grade area that we hit earlier in the year. But because of COVID, we have been unable to complete our structural analysis is really key to be able to chase this stuff out of the pit. So the equipment's in country, the structural analysis is beginning and then the high grade drilling is underway.
And so once we have that structural analysis to put that together in 3 d surface structural analysis along with the drilling and we can see where these structures are and how to chase them out of the pit. That's when we'll step out and start drilling to expand the resource and actually hit some along strike. So the strike remains open. Depth actually remains open. It's just the grades were similar to what we've been hitting.
So we need to expand that pit and allow it to go
a little deeper. So there's still
a lot of work to be done and the COVID thing hit us a bit on the structural piece, which we expect to have done mid this year, but it didn't happen. So people are getting in the country and we're actually getting the work done. So hopefully Q1 of next year, we should know what that picture looks like.
And just to manage your expectations, the PFS we're going to put out on this asset will be the Udinsk pit. And I would guide you to think of what these numbers that you see here are going to be largely in line. It might be slightly higher, it might be slightly lower, but the PFS is focused on this current pit. Anything that comes beyond there, if it comes, hopefully it comes, we would look at those as bolt ons, tack ons. They wouldn't necessarily change our mind in terms of the scope of construction.
I think it's really important to lock down a scope that we believe provides a platform for future expansion and leverage. But what we don't want to do is chase a large and ever increasing order body because that's when you lose control of your discipline on your capital plan. So the market what you should expect is a PFS on this Utinsk pit roughly in line with what these numbers are here.
Got it. Thank you. And then on the larger sort of strategy side of things, I did hear the introduction remarks that there wouldn't be much comments on some of the rumors that have been surfacing. But is there any sort of commentary that can be provided on thoughts on M and A in terms of long term outlook for the company in the context of the new plan?
Sure. I mean, our consistent message on M and A has been we don't feel under pressure. In fact, we're thrilled with the performance of the company. We've been happy with our relative share price performance. We've had a great story to tell in terms of our operations, credibility, our outlook, our pipeline today.
On M and A, we've stressed and if I hinted anything for the market, it was we like synergistic asset deals. That's how we referred to Bald and Round. That's how we referred to Chillbackhand. And lo and behold, we just announced an acquisition in the Americas, which is a synergistic asset full time. So we've got lots in our pipeline, lots of room to grow and extend.
And we look at opportunities from time to time. But in the past 8 years, those are the three announcements that we've made and that's the discipline within the organization. So that's I mean, I don't see a lot of upside in debating the rumor of the week. And there's rumors every week. So, that's not helpful to anyone and it's certainly not helpful internally for our employees.
I mean, we've got the Americas is arguably 4 of 7 mines right now. It is the largest part of our production, and it's an important part of our asset base. So, we're focused on the portfolio and making it the best we can be, and we don't feel under any pressure as it relates to M and A.
Great. Thank you. Your next question comes from the line of Tanya Jakusconek of Socia Bank. Your line is open.
Good morning, everybody. I wanted to come back to just company wide as we look at your reserves, Paul, as we come to year end. I think what I took away from this is that you will see reserves addition at Cupo, Serrano. At Chebakan, what should we think? Are we just going to have now just a resource there?
Or will anything go into reserves? And maybe just the rest of the portfolio, do they look like we'll be replacing? My first question.
Yes. So you're correct on Kupol Triana. We anticipate a reserve out there. In the case of Chupelcan, there won't be a reserve out at year end this year. We are going to wait for the completion of that PFS.
And in terms of the other mines, I would just I would say we continue to work on these optimizations and the reserve adds barring small moves here and there, the reserve adds will be tied to the announcement of any potential expansion being approved. So in the case of Brown Mountain, if and when we approve Phase S, there would be associated reserve
growth number.
Okay. So hopefully, we try and replace, I guess, is what I read from that, for just this year and then additions when you approve things.
Yes, that's right. That's right.
Okay. And then maybe if I could just move on to maybe Paul R. On just looking at the host countries that you operate in, I think we saw Russia come out, not putting any additional taxation on gold and silver mining. And I think you have your Martenia agreement. Can you talk about just any of the place you work and potential governments looking at increased royalties or taxation due to COVID?
Yes, there's nothing imminent, Tanya. But clearly, there's an awareness on our part when the entire world is in a situation such as we're in And our business has continued to operate, notwithstanding the challenges of COVID and our commodity price has done what it's done, there tends to be a focus on who's doing well and where are revenues. And so we're aware of that. I call it maybe the tallest poppy syndrome. But there's been some noise in Nevada, which hasn't come to anything yet.
But there's nothing that we feel compelled to highlight at this point where we're overly concerned there's going to be some rewriting of the rules to try to get more from the gold industry.
Maybe getting more maybe advancing some of the taxation payments forward. Have you heard anything of that maybe in Ghana or Brazil?
No, there's been a noise every once in a while around have we got royalty right as the mineral policy correct, but nothing that's keeping us awake right now.
Okay. And then just maybe on just following up on the M and A. I know that I think we had talked about last year that you had mentioned a company in the size of 1,500,000 to 3,000,000 ounces. You believe to be the critical size needed to keep a technical team and sort of have the attention of the generalists. Do you still see that as being valid?
Yes. What I said just to be crystal clear is I like our size because with our size, we can accommodate some of the inherent features we've built. And one of the things you know that I think what we're most proud of here is our internal technical team. It's just a question of size. Smaller companies don't have the capacity to necessarily carry that kind of team internally and therefore have to be more reliant on external consultants.
We're of a critical mass where we don't have to do that. It probably builds a slight bias to conservatism because we do all of our own studies, we do all of our own project execution and then we hand off to our partners in operations. So when we look at stuff, we look at it owners, not agents. And that's a big advantage to the critical mass we have today. Obviously, as you get bigger, there's pros and cons.
There's bigger, more diversified portfolios. And the portfolio is always better than single asset concentration. But there is a point where as you get bigger, the question becomes, is there growth? Is there an ability to replace or maintain? And so what I was trying to say is the bubble we're in right now and we've been a 2.5 ish producer for many years, that's a good place for us.
We like that space. And working with the portfolio, I'm really impressed with what we've been able to do. And to put out now a nice 20% growth over the next 3 years with that portfolio is, again, testament to the strength of a strong internal technical team. So, I'm still of that opinion.
Okay. And maybe my last question, just to ask, in order to keep replacing your reserves and maintaining that $2,500,000 I understand it's production, but mainly focusing on the mine life. What do you think you need to spend annually on exploration to do this?
Yes. I'll turn it over to the guys. I mean, the combination there is really around what is the actual opportunity set within the portfolio. And everything here, everything here is competition for capital, even in exploration. And historically, we've been in the sort of the 70 ish kind of range, combination of brownfields and greenfields, mostly brownfields.
But I will say, and we haven't come through our budget process yet, we just finished our life of mine planning, which is what this event is really anchored to, our recent 2 weeks ago life of mine planning. We're now going into budget cycle. But we are seeing some great opportunities and we are looking to increase our budget. Haven't done that yet, but we're talking about increasing our budget given the opportunity set as we go into 'twenty and out years.
And Tanya, I think the salient point here is felt that we will be increasing our exploration budget, but we have good targets at our existing sites on the Minex and Generous site, but we've also acquired some good exploration potential. Peak has exploration potential. This Kayan and Meibom thing in Russia we talked about has exploration potential. The Chilbarkantha joint licenses, which we've recently acquired. So we have a lot more ground on which to drill and it will be accompanied by an increase in spending.
So we see the target and we're not spending for the SEGA spending, we see really good targets and really good prospectivity that supports an increased spending on exploration.
Okay. Thank you. Thanks,
Your next question comes from the line of Terry McCurry of Canaccord Genuity. Your line is open. Hi. Maybe just one more question for me. You mentioned you've got a lot of big open pits.
There's a lot of looks like a lot of future ways to move. Have you guys looked at economists' vehicles and is that an opportunity that can come in, in the next few years to further lower cost?
So we always look at things in our innovation area. One of the challenges of the big open pits is we haven't established fleet at mines that are older. I think the best place to look at autonomous fleets in big open pits is on greenfields, already at relatively young mines. Also, I should add in places where labor replacement doesn't become a government relations issue because that's a factor as well. So, Lobo Marte, would we look at autonomous fleet?
Potentially. I think that's one area where we might look at it. But for our big established U. S. And Brazil open pits, I would say we're likely not on the fleet.
Chobacan, could it happen? Yes, it could. We do make use of autonomous in some places dozers and drills. So it's not like what I'm talking about here, we wouldn't do wholesale switches to autonomous, but we do make use of autonomous technology on a spot basis, say, with individual pieces of equipment. Got it.
Thank you.
Your next question comes from the line of Fahad Tariq of Credit Suisse. Your line is open. Hi, good morning. Just one from me. On Slide 8, you talked a lot about additional pipeline opportunities and they're really all over the portfolio, so there's plenty of opportunities.
As you think about competition for capital, how much does the geography matter versus just the inherent mining potential of these opportunities?
Look, I think on the as it relates to geography, that bridge is being crossed already to the extent we're there and we've decided we're comfortable operating there. And again, you look at our geographies, Mauritania, we've been operating there successfully now for 10 years. We produced over 2,500,000 ounces. Russia, I make the point, we're as a public company, we're 27 years old, and we've been in Russia for we have, by definition, gotten comfortable with geographies. And when we look at the opportunity, I would say geography is not our prime consideration.
It's really about the return, paying for the buck, the risk reward scenario that we go through. When we think about our bigger portfolio and in aggregate, where our mines are around the world, we will have thoughts from time to time about a preferred geography over another. One of the things we've said many times, for example, is we don't have a mine in Canada and we have a head office in Canada.
Would we be
open to Canada? Absolutely. But if we're going to be open to Canada, we've got to find something that creates value for our shareholders. And as you know, M and A is very difficult and easier said than done. So that's how we come at it.
I hope that's helpful.
Yes, that's great. Thank you. There are no further questions over the phone lines at this time. I turn the call back over to the presenters.
Well, thank you, Anne, and thanks, everyone, today. Hope this was helpful and some great questions, and we look forward to catching up with you all along the way in the coming venues. Thank you. Thank you for calling in today.
This concludes today's conference call. You may now disconnect.