Thank you for standing by. My name is Tina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Kinross Gold First Quarter 2026 Results Conference Call and Webcast. I would now like to turn the call over to David Shaver, Executive Vice-President.
Thank you, and good morning. In the room with us today on the call, we have Paul Rollinson, CEO. From the Kinross senior leadership team, Andrea Freeborough, Claude Schimper, William Dunford, and Geoff Gold. For a complete discussion of the risks and uncertainties which may lead to actual results differing from estimates contained in our forward-looking information, please refer to page three of this presentation, our news release dated April 29th, 2026, the MD&A for the period ended March 31st, 2026, and our most recently filed AIF, all of which are available on our website. I will now turn the call over to Paul.
Thanks, David, and thank you all for joining us. This morning, I will discuss our first quarter results, provide high-level updates from across our portfolio, comment on sustainability and confirm our outlook. I will hand the call over to the team to provide further details. Following our outstanding performance in 2025, we continue to deliver strong results in the first quarter. Our culture of technical excellence and financial discipline, combined with the recent gold prices, resulted in strong operating margins, which again outpaced the increase in the gold price. As a result, In Q1, we delivered our fourth consecutive quarter of record free cash flow of approximately $840 million. Our financial position and cash flow outlook remain excellent. We continue to return meaningful capital to our shareholders through buybacks and our quarterly dividend.
We are targeting to return approximately 40% of our free cash flow in 2026. In Q1, we continued our buyback program. Turning now to operational highlights. Q1 was a great start to the year with production of 493,000 oz. Both Tasiast and Paracatu had strong quarters and together accounted for more than half of our production, driving significant free cash flow. Paracatu delivered another excellent quarter on the back of record mill recoveries. Tasiast saw strong output in Q1, supported by higher grades and strong recoveries. With regards to our projects, we continue to make strong progress in Q1 across our pipeline of mine life extensions and growth projects. In the U.S., the team continues to advance the three projects we announced in January.
At Great Bear, both the advanced exploration program and the main project are progressing well with key permitting milestones achieved, which Geoff will comment on later. At Lobo-Marte in Chile, I'm pleased to report that we submitted the environmental impact assessment earlier this month, marking a significant milestone as we formally initiate the permitting process. We look forward to providing a Lobo-Marte update in the second half of the year. Turning now to sustainability. Our annual sustainability report will be published later this quarter. This comprehensive report, which is in its 18th edition, provides an update on all the progress we made in 2025 and what we aim to accomplish this year and beyond. Turning to our outlook. Following a strong first quarter, we are on track to achieve our production, cost, and capital guidance again this year.
More specifically on cost, given the recent geopolitical events, I would highlight that we continue to benefit from an attractive relative cost position, which is supported by our long-standing approach to mitigating cost pressures. This includes, among other things, our grade enhancement and hedging strategies. Andrea will comment on our hedge book strategy later. With respect to grade enhancement, we have Phase X, Curlew, Great Bear, and Lobo-Marte all bringing higher-grade ore into our future production profile. Looking forward, we will continue to maintain our financial discipline and prioritize cost management to consistently deliver strong margins and free cash flow. With that, I'll now turn the call over to Andrea.
Thanks, Paul. This morning, I'll review our financial highlights from the 1st quarter, provide an overview of our balance sheet and return capital, and comment on our outlook. As Paul noted, Q1 was a strong start to the year for us. We produced 493,000 gold equivalent oz as planned. Q1 cost of sales at $1,380 per ounce and all-in sustaining costs of $1,732 per ounce were also on plan. Margins were a record $3,476 per oz and outpaced the increase in the gold price. Our adjusted earnings were $0.71 per share, and our adjusted operating cash flow was a record $1.1 billion.
Our earnings and adjusted earnings were impacted by the timing of a $65 million withholding tax expense recorded in Q1 but pertaining to tax payable in future quarters. This accounting requirement caused our earnings per share to be lower by $0.05 and skewed our effective tax rate higher in Q1. We expect our effective tax rate to be lower from Q2 to Q4 and our full year effective tax rate to be within our guidance range of 28%-33%. Our taxes paid are also expected to be in line with guidance, with approximately 70% of our payments expected in the first half of the year. Attributable free cash flow was a record $838 million, despite making significant tax payments of approximately $450 million in Q1, largely related to 2025 earnings. Turning now to our balance sheet.
Our financial position continued to strengthen in Q1 as we added $440 million in cash after funding our planned CapEx and returning $300 million to shareholders. We ended the quarter with $2.2 billion in cash, $3.9 billion of total liquidity, and $1.4 billion in net cash. With respect to return of capital, we're targeting to return approximately 40% of our free cash flow back to shareholders through both dividends and share repurchases. Our shares continue to remain a strong return on invested capital, considering our attractive valuation and free cash flow yield. In Q1, we repurchased a total of $250 million in shares, representing approximately 7.7 million shares, or 0.6% of our shares outstanding. Subsequent to Q1, we repurchased an additional $50 million in shares.
I'm pleased to report that since we restarted our share repurchases one year ago, we've repurchased approximately $900 million in shares, representing over 3% of our outstanding share count. Including our quarterly dividends, we've returned approximately $350 million to date in 2026 and over $1 billion since the first quarter of 2025. Turning now to our guidance. Following Q1, we remain solidly on track to produce 2 million oz at a cost of sales of $1,360 per ounce and all-in sustaining costs of $1,730 per ounce. We're also on track with our capital guidance of $1.5 billion. As a reminder, our cost guidance was based on a $4,500 gold price and a $70 per barrel oil price.
In terms of production, the second quarter is expected to be in line with our first quarter. As a result, the 2nd half is expected to be slightly higher than the 1st half to meet our full year production guidance. In terms of operating costs, we expect costs to be relatively stable throughout the year. Given the current situation of elevated oil prices, we're providing additional information on our oil price sensitivity. To start, I will note that impacts of higher oil prices within the 1st quarter were minimal. Fuel currently represents approximately 11% of our total costs, and as I noted earlier, our 2026 cost guidance was based on $70 oil. Our stated sensitivity is for every $10 per barrel change in price, we expect an impact of $3 per ounce on our cost of sales.
This captures the direct impact of crude oil prices on refined products that are used in our operations, primarily fuel and including diesel. However, in the current volatile environment and contemplating other factors that impact the price of refined products such as refining, distribution, and taxes, the sensitivity for 2026 is estimated to be $10 per oz for every $10 per bbl change. This impact is not overly significant. To put it in perspective, if the oil price stays at $100 for the remainder of the year, we would expect an impact of approximately $20 per oz on our full year all-in sustaining cost, representing approximately 1%.
If we go one step further and consider potential secondary cost inflation from a prolonged elevated oil price on other consumables and freight, we estimate a further $10 potential impact for a total $30 per oz to our full year all-In sustaining cost guidance, representing less than 2%. Overall, putting cost sensitivities into context, our grade enhancement strategy, which started in 2022, has already put us in an attractive relative cost position. In the short term, we're not expecting a significant impact on our costs because of higher oil prices. This is, in part, a result of our long-standing hedge strategy. We have favorable oil hedge positions in place under this program. For 2026, we've hedged 63% of the oil component of our fuel consumption at our U.S. and Tasiast operations at an average price of $62 per bbl.
This accounts for approximately 75% of our company-wide fuel consumption. In the medium and long term, we have our grade enhancement strategy, bringing higher-grade ore into our future production profile and providing organic offsets to inflationary pressure. Lastly, in terms of supply of fuel and other consumables, we're not currently experiencing any disruptions at our operations, and we continue to receive regular delivery. I'll now turn the call over to Claude.
Thank you, Andrea. I'd like to start with our safety culture. This quarter, we have continued to focus on our Safeg round brand through practical leadership training, with a focus on prevention of high-potential incidents. Visible leadership activities are engaging the workforce and strengthening our Safety Excellence program, which is resulting in strong leading indicators. Starting with Paracatu, the mine had an outstanding quarter, with strong production driving significant free cash flow. Production of 161,000 oz increased over the prior quarter due to record mill recoveries, driven by continuous improvement programs across the processing plant. Key initiatives included enhancements to the CIL circuit, improved operational controls, and carbon management practices, as well as targeted improvements in the AARL reactor performance.
Cost of sales of $1,119 per oz increased over the prior quarter, and Paracatu remains on track to meet its guidance of 600,000 oz at a target cost of sales of $1,240 per oz. Tasiast had another strong quarter. Production of 130,000 oz increased over the prior quarter, and cost of sales of $990 per oz decreased over the prior quarter due to strong grades. Continuous improvement efforts at the Tasiast solar facility has led to 15.5 GW of power generation, accounting for 23% of the site power in the first quarter and offsetting 3.5 million L of hydrocarbons.
Tasiast remains on track to meet its guidance of 505,000 oz at a target cost of $1,050 per oz. At the Quebra, we produced 54,000 oz at a cost of sales of $1,526 per oz. Production decreased over the prior quarter due to a planned 16-day mill shutdown, which also includes several opportunistic continuous improvement initiatives aimed at increasing reliability and uptime in the plant. Grades and production are expected to increase in the second and third quarters as we mine Phase 7 ore. Quebra remains on track to meet its guidance of 210,000 oz at a target cost of sales of $1,320 per oz. Now, moving to our U.S. operations.
Production was higher quarter-over-quarter, benefiting from strong contributions from Fort Knox and Manh Choh in Alaska. Combined, the U.S. sites delivered production of 148,000 oz at a cost of sales of $1,982 per oz. At Fort Knox, first quarter production of 94,000 oz and cost of sales of $1,761 per ounce was higher than the prior quarter due to timing of the oz processed through the mill and the heap leach pads. At Bald Mountain, production of 28,000 oz was lower than the prior quarter due to the timing of oz recovered from the heap leach pads. Cost of sales of $1,934 per ounce was higher due to the fewer oz produced.
At Round Mountain, production of 26,000 oz was lower quarter-over-quarter due to the processing of lower grade, lower recovery stockpile feed as we continue to transition towards higher grade, higher recovery ore from Phase X in the second half of the year. Our cost of sales of $2,776 was higher due to the fewer oz produced. With that, I will now pass this call over to William.
Thanks, Claude. Recall our project pipeline is backed by significant resource inventory, with over 27 million oz of M&I, plus an additional 17 million oz of inferred, all calculated at $2,500 per ounce. This includes several projects across our portfolio that our in-house technical team is advancing, while also leveraging ongoing exploration to support future production potential. We continue to see several value-creating investment opportunities emerging across our portfolio to leverage the strong gold price and enhance our production profile in the 2030s and beyond. The three high-return projects in the U.S., which we announced earlier this year, are strong examples of the potential to progress oz from that extent of resource inventory into our production profile, enhancing our asset value. Projects and operations teams are making excellent progress across all three of these projects.
At Phase X at Round Mountain, we are pleased to announce that we have received all major operational permits ahead of schedule, including the federal permit to increase our underground mining rate above 3,000 tons per day. In terms of the project, underground development is well advanced, with 7.2 km completed to date. We've already exceeded the planned development rate of 12 m per day for 2026 and are slightly ahead of schedule, which significantly de-risks our path to first production in 2028. Engineering work for both surface and underground infrastructure is advancing well, and procurement of long lead items such as the mining equipment is underway. At Bald Mountain, mining of Redbird is advancing well, fully realizing the anticipated efficiency benefits of mining closer to key site infrastructure with improved equipment utilization.
Construction of processing infrastructure for Redbird extensions and detailed engineering of the SART plant is progressing well. Turning to our Curlew project in Washington, with a mild winter, we had a successful construction season, allowing us to make good progress on project infrastructure. Detailed engineering for the mill refurbishment is largely complete and procurement is well underway. We have selected a contractor for the mill refurbishment. Mobilization activity is commencing in Q2. We pulled forward some underground mining development into Q1 to de-risk our mine plan and first production. In parallel, we continue to progress exploration at Curlew. Strong results both at North South and at the Roadrunner zone, which provide potential to enhance and extend the mine plan.
As you can see on the slide, at North South, we intersected 12.5 m at 7 g/t, 4.5 m at 8.5 g/t. At Roadrunner, we intersected 2.4 m at 9 g/t. With the U.S. projects advancing well and expected to come online in 2028, our team is also focused on advancing studies on opportunities across our resource base that are value accretive to our production profile in the 2030s. Here you can see updates on a few of those opportunities. At Bald Mountain, technical studies are underway for the next layback, the Top open pit, which has potential to extend production in the 2030s. The Top pit would be sequenced after Redbird and is the next potential anchor pit, with a current indicated resource of approximately 1 million oz.
Similar to Redbird, the top open pit is a layback of an existing pit, and we will be exploring and studying additional satellite pit optionality to bring in alongside this anchor pit. At Fort Knox, we are progressing technical studies focused on advancing Phase 11, which is the next layback of the current open pit mine following the same well-understood ore body at Dahat. Phase 11 resource contains approximately 2 million oz and has potential to start producing in the early 2030s, meaningfully extending mine life at Fort Knox. We are studying optionality to mine the Gil satellite deposit alongside the current Phase X and future Phase 11 to augment our overall production profile in Alaska. Moving across to Chile at La Coipa, last year we submitted an environmental impact assessment for the Puren 4 extension, and we remain on track with our permitting timeline.
Puren is also a layback of a prior pit, which we expect to extend production into the early 2030s, at which point we plan to transition to Lobo-Marte. Lastly, at Lobo-Marte, we submitted our EIA earlier this month, commencing our regulatory review process. Lobo-Marte is expected to be a long-life, low-strip, low-cost heap leach operation with potential to produce 4.7 million oz over a 16-year mine life. The strong heap leach grade of 1.3 g per ton and significant production potential of 300,000 oz-400,000 oz per year makes this an anchor tenant in our grade enhancement strategy alongside Great Bear in the 2030s, providing significant free cash flow with a low expected AISC.
We are in the process of updating and reviewing a 2021 FS for Lobo while progressing our permitting, and we'll provide a more fulsome project update in the second half of the year. I will now hand it over to Geoff for an update on permitting at Great Bear.
Thanks, Will. In terms of our advanced exploration, I am pleased to announce that we have now received the remaining permits from the Ontario Ministry of the Environment, Conservation and Parks. This is a testament to the team at Kinross and the Ministry of the Environment, Conservation and Parks under the leadership of Minister McCarthy to continue to advance the permitting process forward. Turning to the main project, we continue to advance permitting with both federal and provincial authorities. Federally, and as planned, I submitted the third and final phase of the impact statement to the Impact Assessment Agency of Canada in Q1, and we will continue to work with them as they progress their review and obtain public and Indigenous input.
As a reminder, receiving the final impact assessment report is the critical first step to obtaining other federal and provincial permits we require to construct and operate the Great Bear mine. We would require this final report and certain provincial early works and construction permits in the spring of 2027 to allow us to take advantage of the summer construction season in order to maintain targeted first production in late 2029. Provincially, we continue to work with the Ontario authorities to advance the permitting process for the main project under the One Project, One Process, which is overseen by the Ministry of Energy and Mines. One Project, One Process is a multi-phase process.
We have submitted our final project description and are awaiting final approval from the Ministry of Energy and Mines so that we can proceed to the next phase, which is the integrated authorization and permitting plan.
Submission of individual Ontario permits will proceed in accordance with this plan once approved by the Ministry of Energy and Mines. On the Indigenous community front, we continue to progress the negotiation of benefits agreements. We are pleased to report that in relation to Lac Seul and Wabauskang First Nations, on whose traditional territory the main project resides, negotiations on the impact and benefits agreement continue to advance based on a recently signed and confidential memorandum of understanding that captures the key economic compensatory and procurement elements. With that, I will now turn it back to Will for a technical project update on Great Bear.
Thanks, Geoff. At Great Bear, work on the AEX program and the main project is progressing well. With final AEX permits in place, we expect to commence construction of the AEX decline this summer. The AEX decline will provide drilling access for exploration and extension of the underground resource, as well as delineation work. In terms of the main project, with the impact assessment now submitted, we have already started to make meaningful progress on procurement, with early packages awarded and requests for proposal issued across several work streams, including key mill equipment. Detailed engineering is also advancing well and is approximately 45% complete. On completion of detailed engineering in early 2027, we will provide an update on the initial capital.
This update will include both the impact from inflation since the 2024 PEA estimate and the impacts of any scope changes and enhancements we make as we move through detailed engineering. As an example, we've been progressing detailed engineering alongside permitting, and through that work, we have chosen to enhance the scope in select areas, including water management. These enhancements go beyond standard practices and reflect a proactive approach to environmental protection given the long expected mine life of the asset. Through detailed engineering, we are working to ensure we are building a robust, reliable, world-class operation given the multi-decade potential high-margin production we see at this asset. Turning now to exploration, we continue to see positive results that are validating that view of potential for multi-decade high-grade operation at Great Bear.
2026 exploration is focused on our 18-km LP structural corridor, as you can see on the slide. Drilling identified a new zone of mineralization 2.4 km on strike from the south-southeast edge of the LP resource called the Strider zone, where drilling intercepted encouraging widths around 2 m at double-digit grades. Drilling is continuing in this area following the structure on strike and down dip to define the extent of mineralization. With that, I will now turn it back to Paul for closing remarks.
Thanks, William Dunford. After a strong start to the year, we are well positioned to meet our targets in 2026, and we have a strong set of upcoming milestones this year, which include ongoing return of capital to our dividend and share repurchases, continued strengthening of our balance sheet supported by strong operational performance and cash flow generation, advancing our projects pipeline, including the U.S. projects we discussed in January, as well as Great Bear and Lobo-Marte, and continued exploration and studies of our resource inventory to bring in new projects to extend mine lives. Looking forward, we are excited about our future. We have a strong production profile. We have an attractive relative cost position. We are generating significant free cash flow. We have an excellent balance sheet. We have an attractive return of capital. We have an exciting pipeline of both exploration and development opportunities.
We are growing our net asset value and our per share metrics, and we are very proud of our commitment to responsible mining that continues to make us a leader in sustainability. In closing, we believe that our shares offer attractive relative value across a number of metrics. With that, operator, I'd like to open up the lines for questions.
Your first question comes from the line of Josh Wolfson with RBC Capital Markets. Please go ahead.
Hi, thank you very much. First question is on Great Bear. With the AEX permit now in place, you know, what is the pathway to be able to start some of that deeper exploration? You know, basically, what time frame would you be at the levels that you'd need to be at to start some of that deeper exploration?
I mean, the time frame now, the key path, there's some more work we just need to do over the summer once we thaw on water management to get ready for underground decline. We expect August or September to actually be blasting and getting underground. Following that, obviously, it's, you know, we're gonna focus in a few different areas at the beginning. We'll do infill and extensional drilling in the main part of the LP ore body. There's also Hinge and Limb, which wasn't in our PEA, which we'll hopefully explore over the next couple years. I think it's progressive really. It's, you know, we won't be deep at the very bottom of the ore body for a number of years. We'll kind of follow ahead of the mining.
Great. Thank you. Then back to sort of the conversation on inflation. You know, the company has some very good protections in place with the hedges. I guess sort of two parts to this question. One is, when you're looking at the non-energy related items, you know, reagents, labor, and so forth, I'm curious to know, you know, where is inflation tracking into next year? Then also, you know, when you're thinking about these capital updates for Lobo-Marte as well as Great Bear, you know, what's the sort of thought process there in terms of CapEx inflation trends? Thank you.
Hi, Josh, it's Andrea . On inflation more broadly, I'd say, you know, we included a 5% inflation factor in our cost guidance back in February. We're still on track for that. It's early in the year, and we'll see where things go with oil price and fuel costs and energy-related costs we've given the sensitivities. As we sit here today, we're still feeling good about the 5% overall inflation factor.
Maybe just to jump in there as well, as it relates to capital for both Lobo-Marte and Great Bear, look, I think, yeah, it's there. I don't think inflation's going away. Our PEA, which we put out in 2024, at some point in the future here, we're expecting to update, but there will definitely be an inflation component as between where we started with the numbers in 2024 and where we're likely to end up. I think you'll see that on both projects. Really just a macro effect, really, you know, something we're gonna be price receivers on. We'll continue to look to sharpen our pencils where we can, but we're working in that overall macro inflation environment.
Great. Thank you.
Your next question comes from the line of Fahad Tariq with Jefferies. Please go ahead.
Hi. Thanks for taking my question. Maybe first on Tasiast grades. They were really high, I think the highest since the third quarter of 2024. Just the outlook for grades through the rest of this year, that would be really helpful.
Yeah, Fahad, thanks for the question. Yeah. You know, Tasiast, we're working through different areas. We're finishing off on West Branch ore, that's why the grades were higher. We still had some of that stockpile inventory, we pushed that through in the first quarter. We expect it to taper off for the rest of the year, slightly lower. We are constantly looking at opportunities to obviously enhance what we're putting out from Tasiast.
Maybe just staying in Mauritania, can you just remind us diesel prices are regulated, I believe, by the government, so that probably factors into the sensitivity you provided, if you could confirm that. Also anything you've heard in terms of security of supply specifically in Mauritania. Thanks.
I'll hit a bit. First of all, the diesel prices are regulated by the government for the country, but not necessarily for us. We have long-term contracts with the suppliers that come into our system. Both for HFO and other fuel. The second part of it from a supply point of view, it's very similar to Brazil and these other countries. We don't get our product from the Middle East. It comes from the other side of the track. We don't have an issue with supply. The impact will be on the unhedged fuel that from a cost point of view. We don't have an issue with supply.
Okay. That's super clear. Thank you.
Your next question comes from the line of Ralph Profiti with Stifel Financial. Please go ahead.
Thanks very much. The Lobo-Marte EIA submission would have had to, as a baseline include, you know, some type of a water usage strategy. Just wondering what that baseline is and what can you tell us about the strategy around that?
Sure. Maybe I'll start, and Will can jump in. I mean, it's a good question, Ralph. I mean, our whole Chile strategy is really around what is our water strategy. As you may recall, you know, whilst we have many thousands of Ls of water rights, what really matters is permitted pumping capability. We have permitted pumping wells that have been running for many years. That's a good thing because with pumping comes monitoring. As we've been pumping, we have monitoring wells, and we've got a very strong sort of history of monitoring that there's absolutely no detrimental impact to our draw. Our strategy, really, we call it our base case because there are upsides, but the base case is that we, the water wells that we're currently using, supply La Coipa.
They're actually physically closer to Lobo-Marte. We've spoken with the regulators. There's no guarantee with regulators, the concept is. You know, we take that existing permitted pumping water, and we just move it in a different direction closer to Lobo. That would be our base case. Using the water we already have, we've got many years of history and monitoring. The upsides from there really relate to if we could get more water, we've got a few initiatives underway, we could actually do more. As it relates to Lobo, the linear factor is that permitted pumping capability. Sorry, Will, did you wanna add?
No, I mean, I think that's exactly right. That's what we submitted in the EIA. Lobo is the exact same, you know, water consumption, that we have at La Coipa, so it's been designed that way for the EIA so that, as you said, we just continue to use the same water with well-proven history. All of that water modeling and data has already gone into the EIA submission, providing that strong base case. We're working on all that other, you know, you mentioned the water rights. We're working on all of those water rights to identify other water, potential water sources for La Coipa in the longer term. There are other optionality actually.
Great. Yeah, that's very helpful. Just as a sort of a minor follow-up. I'm looking at the Round Mountain recoveries for the quarter, and just wondering, is that sort of the normal, you know, grade and recovery relationship there? Was that expected? You know, is there any change in the metallurgical assumptions around sort of that Phase X underground transition, when I think about those recoveries?
There are multiple parts to that. You know, first of all, when we feed from those stockpiles, relative to where we are in the pit at the time, and this was the first quarter was really a lot of stockpile material, that grade is significantly lower, and then the grade recovery curve, as you know, changes. We anticipated that sort of recovery. We're doing a whole bunch of things to continue to optimize that. Phase X is a different grade and a completely different piece, very similar to what we had in Phase W or higher up in Phase W. We do see that recovery changing as we put different types of material through for the year. Yeah, it remains our focus point.
Okay, great. Yeah, I appreciate that clarity. Thank you.
Your next question comes from the line of Carey MacRury with Canaccord Genuity. Please go ahead.
Hi, good morning, and congrats on a strong start. Just following up on the second half guidance being slightly higher than the first half. Just wondering what assets in particular we should be thinking about as stronger in the second half.
Sure. I'll start and someone else may wanna jump in. I think, you know, the U.S. in particular, we've pointed to as expecting to be higher in the second half. Some of that is Round Mountain as we expect, you know, higher production there as we get into the heart of Phase X.
We continue to be on plan at this point.
Okay. Just follow up on the oil hedges. I think, Andrea, you mentioned you're 75% hedged for 2026. Was that the number in terms of exposure?
We're 63% hedged for the exposures in the U.S. and at Tasiast.
Mm-hmm.
That on the total portfolio is somewhere around 50%. We don't hedge in Brazil because there is price controls in Brazil. The prices don't move necessarily directly with spot in Brazil. For example, so far since early March, we've seen prices increase everywhere else, except they've been pretty flat in Brazil.
Okay, for 2027, we can kind of.
I think the 75% comment was the U.S. and Tasiast make up 75% of our fuel usage.
Okay, got it. For 2027, I guess we can just prorate based on the numbers on slide 11 there.
Sorry, 42%. We're 42% hedged for those, for U.S. and Tasiast for 2027. That's about 30% company-wide.
Which we'll look at opportunities to chip away at.
Yes.
Okay. That's great. Thank you.
Going forward.
Thank you.
Your next question comes from the line of Anita Soni with CIBC World Markets. Please go ahead.
Hi, guys. Good morning. Congrats on a strong start. I just wanted to ask, a lot of the questions I wanted to ask would have been asked already about Tasiast grades and Phase X grades. Just could you give us a little bit more guidance, or is it the same as it was at the beginning of the year on the cadence of sustaining capital and growth capital spend over the next few quarters?
Sure. I mean, we were, you know, slower to start, which is typical for us. Q1 is always, you know, a bit of a lower CapEx quarter. We're still on track for the full year with, in particular, the growth capital spending kind of ramping up on the U.S. projects as we go through the year.
Okay, thanks. That's it for my questions.
Okay. Your next question comes from the line of Tanya Jakusconek with Scotiabank. Please go ahead.
Oh, great. Good morning, everybody. Thank you for taking my question. Andrea, can I just come back, and you mentioned that, you're seeing no issues in terms of getting supplies to mine sites, etc. With your suppliers that you talk to, that they are monitoring just, you know, things are moving now, but is there anything tight that they're watching?
Tanya, it's Claude. I'll take that. From a supply point of view, globally, you know, as our teams work and these things change 'cause it's quite dynamic. We do follow up with the suppliers on a consistent basis. Obviously for us it's about what's the high priority items, explosives, cyanide, these kinds of things. We haven't seen any tension from any of them yet. You'll recall that two years ago with the issue in Ukraine, we shifted a lot of where our supply comes from, along working with our suppliers, on explosives, cyanide, all those types of things, lime. We feel like we're in pretty good shape relative to the current situation as well.
Okay. They're not seeing anything. That would imply, Andrea, I shouldn't see any increase in, you know, working capital inventory at site, at mine sites here if you're not accumulating anything there.
We are targeting more fuel in country for Tasiast. There was already a little bit of a buildup of supplies inventory, you know, starting in March, but nothing overly significant.
not going back sort of the COVID period.
No.
No. Okay. My second question is still on the costing side. You know, we talked about fuel a lot. Thank you for that information. That's very helpful. I wanted to come back and focus on labor as well. I mean, you mentioned, you know, I, number one, I wanna understand whether you are seeing any tightness in the labor market and any contracts that you are seeing that are renewed for this year that you have to renew and align with your 5% inflation estimate.
No, Tanya, as we mentioned in the previous quarter, we've now signed the major sites that have collective labor agreements. Tasiast, Brazil, and Chile, we have signed all of those agreements with the teams for the longer term. Chile's a two-year, Tasiast is a five-year, and Brazil is a three-year. We're in pretty good shape this year when it comes to that. From a labor supply point of view, there's always tension in the system, but we're seeing a lot less turnover in Nevada than we're used to. We're in reasonable shape. From a supply point of view, it's fine. From an agreement point of view, it's relative to the, other than the inflation, as Andrea mentioned, we don't see any pressures at this point.
Okay. Because on your costing side, I think you mentioned that, you know, you have a strategy for, you know, your hedging, so your fuel, your currencies, and then your grade optimization as we get better grades. I'm just wondering if your productivity and your turnover is where you want it to be as well.
Yeah. Like I said, certainly with the Big 3 labor groups, we continue to focus on being the employer of choice. Certainly those areas we believe have been quite successful, but it doesn't take us off the focal point. Just from a point of view of cost, as I said, there's no pressure.
Okay. Thank you.
Our final question is from the line of Lawson Winder with Bank of America Securities. Please go ahead.
Thank you, operator. Good morning, Paul and team. Thank you for today's update. You submitted the Lobo-Marte Environmental Impact Assessment in April. That formally starts the permitting process. You are expecting to provide an additional update in the second half. What are you anticipating in terms of timelines at this point? You know, what I'm ultimately getting at is, you know, when do we expect a full funding decision? You know, when should we be thinking about penciling in first production, just conceptually, even if we're not gonna put it in our models yet? Thanks.
Yeah. Maybe I'll start. Then turn it over to others. With, you know, with the EIA, you're sort of looking at a couple of years to kind of complete that process.
Yeah. Then again, Cadence, following that couple of standard, I would say pre-standard, two years of work to finalize the impact statement, then you're into the sort of the approvals, the early works, and the construction, which would at a minimum be another two years. I think when you take all of that, and we've always anticipated Lobo to come in behind Great Bear in the early 2030s. That's kind of what we've got in our timeline. We always look at opportunities for schedule compression, but I think we're comfortable saying early 2030s in behind Great Bear.
Okay. Thank you for that. If I could ask on the solar power at Tasiast. I mean, it appears there's been a clear cost benefit to that. Are you able to quantify the cost benefit from the solar? For example, I mean, if there were no solar in Q1 versus you know, a full exposure to heavy fuel or diesel. I mean, do you have a sense of what that benefit would be? Like, taking that to the next conclusion, to what extent could you expand solar capacity at Tasiast, you know, particularly considering the stability of the overall electrical supply?
Yeah. I mean, the calculation is pretty simple. It's about 14 million L of fuel that is additionally transport and then used at the fuel cost. For us, right now it's representing 22%-24% of our electricity supply to the whole site. It is significant. To your point on expansion, the challenge is, you know, the system, 25% is a quarter of the day, so it works through daylight hours. The real issue is battery capacity. Adding additional solar panels will not influence it in any way because we reached the peak supply of power for the site. You're just gonna create power that won't be able to use.
Storage is the bottleneck.
Storage is the bottleneck for those very large, capacity plants.
I think, Claude, to add, I mean, you know, the solar plant was really kind of the first beachhead. We got the direct savings on fuel, but now we're established with the beachhead. We've got buses, light vehicles, more and more use of battery-powered light vehicles at site, and I could see that trend continuing.
As we look at the larger mining fleet as well, we're starting to look at how do we capitalize on using that solar heat. The other part now is looking at the opportunity for wind, and we're currently doing a wind study as well in the area. Looking at a lot of different alternatives to heavy fuel.
Okay. That's very helpful. Thank you both. If I could just ask just one quick clarification question on Fort Knox. The conveyor belt repairs during the quarter, I guess they were unexpected, and that's why they were backed out of earnings for adjusted earnings. Just any additional costs or shutdowns expected with that for the balance of the year?
No. The incident didn't have any impact on our actual production and process. It's given us the opportunity to refurbish a 50-year-old installation, and we're right on track. Ironically, right at this point, we're busy doing commissioning and testing of the new system, and we've replaced nearly a kilometer of belt. We're on track, and we expect the operation to just continue as normal.
Fantastic. Thank you very much.
With no further questions in queue, I will now hand the call back over to Chris Lichtenheldt for closing remarks.
Great. Thank you, operator. Thanks everyone for joining us this morning. We look forward to catching up with you in person in the coming weeks. Thanks, thanks for joining us.
Thank you again for joining us today. This does conclude today's conference call. You may now disconnect.