Thanks, Anita. Thanks everyone for joining this morning. I am going to give a couple slides, three, four slides here just to give an overview of the company high level for anyone in the audience that is not familiar. Then as Anita says, we will dive right into the Q&A. So slide one, again, this is our sort of introduction slide. We are a top performing senior gold producer. We produce about 2 million ounces of gold from six operations around the world. We have an extensive inventory of resources. We are sitting on about 20 million. So if you think about the 2 million ounces a year of production, 20 million of 2P proven and probable. Incremental to that is another 40 million on top of that of M&I.
We feel very fortunate to have that inventory and a lot of what we do is reach into that inventory and pull things forward into development. We have an extremely strong investment-grade balance sheet. We have a very healthy return on capital. We started the year with $1 billion in net cash. We will talk maybe a little bit later about return on capital, but notwithstanding our return on capital, which we just enhanced, we are on track for about $2 billion of net cash by the end of the year. So very, very strong balance sheet, very strong return on capital. We also believe we have a very compelling value proposition on our relative P/NAV, price to cash flow, EV/EBITDA. We are highly liquid. On our dividend, we have a free cash flow yield that is double digits, which again is quite attractive to many generalists.
We probably won't get into it today, but to the extent anyone wants to dig in a little further, we have a lot of disclosure and we are very proud of how we rank and what our achievements are in the areas of sustainability. Next slide, please. So here is the sort of 100,000 ft map of the world, if you will. The elevator pitch, if I have 30 seconds, we have six mines, three in the U.S., three out of the U.S. We acknowledge that our mines in the U.S., they are in great locations, great jurisdictions. We are in Nevada, we are in Alaska. In our portfolio, there are more mature mines. They tend to be a bit higher cost, lower production, and we have a lot of initiatives around that, which I will get into around grade enhancement.
The engine room of cash flow for our company is the three non-U.S., which is the mine in Mauritania, Tasiast, Paracatu and La Coipa. That represents about two-thirds of our production, and you are looking at an all-in sustaining cost of about $1,500. So that is a real cash engine part of the portfolio. On top of the operations, we have both brownfield development projects as well as some very exciting world-class greenfield development projects.
The greenfield namely Great Bear in Ontario, Canada and Lobo- Marte will come in after Great Bear which is, I will call it our Great Bear of Chile. Another very attractive high margin long life asset we will be bringing into production early 2030s. Let's flip over to the next slide. I won't dwell on all of this, but this kind of underpins the investment case. We have an excellent operating track record.
We've done a great job of holding the line on costs and maintaining margins. We generate substantial free cash flow. As I said, great balance sheet, buyback and dividend, compelling valuation. We're highly liquid, $300 million-$500 million of liquidity a day. I touched on the significant resource inventory, and we're steadily working through our pipeline. Last slide, just again, milestones. We set these milestones at the beginning of the year. As you can see, we've got a lot of check marks. We've achieved what we set out to do. Now we're looking into 2027, but I won't go through each of these in detail. It was really meant to provide an overview, and with that overview, let's jump into Q&A.
Paul, this week you guys made some changes to your production cost outlook and as well as raising your capital allocation—
Yep.
—framework. Could you give us an overview of these changes and what impacts they have to Kinross, both near and longer term?
Yeah, and that is obviously the topic. I would say, first and foremost, we take our guidance very seriously. We've got an excellent track record of hitting our numbers consistently over the last 10 years. But it is mining and we had some challenges really that surfaced in August. The bottom line is very important. I'm not trying to minimize it, but when I put it into context, I think context matters. What we're talking about is two of our smaller mines where we had different issues, and they're temporary and we will work through them, and I really don't think it changes our fundamental value proposition. Specifically, I'll start with Round Mountain. The Holy Grail at Round Mountain is all about the transition from the open pit into the Phase X underground.
That's part of our grade enhancement strategy, where as we look out, we'll be blending sub 1 g in the open pit with 3 g underground. That's where the flag on the hill and the focus is. Just in that regard, we're about 9.5 km of underground development. It's well-drilled, and scopes are getting set up, and we're training underground workforces, so we're in good shape. Where we have the challenges is really in the bridge, the bridge to Phase X and what we call Phase S, which is a layback in the south. As we've been going through Phase S, we've just encountered some challenges in recoveries and grade. We see the grade in the rock. It hasn't reported to the mill. I would characterize these as sort of operational, and we're going to tune those in. Recoveries are coming up.
We do believe that maybe part of this was all related to some dilution. What we have done is taken the decision to reduce the size of the fleet. We've gone from bigger shovels to smaller shovels. That allows us to do more selective mining, less dilution. That's preserving gold. The converse of that, of course, is it slows down our mining rate. Think about it as a deferral as opposed to a loss. That's Round Mountain Phase S transition on the way to X underground. La Coipa in Chile, it's a different animal, different situation. I will say for context, when we did our second quarter, we reaffirmed our guidance for the year at the beginning of August, and I've been kind of joking. I think it started snowing on our call and it didn't stop.
We had extreme adverse weather conditions, more snow than we've ever had in years. That, of course, impacted our ability to mine, that impacted our ability to keep the mill full, and Mother Nature is certainly a component of that. The other challenge we encountered in La Coipa is actually very interesting. Yes, today it's a disappointment from a recovery point of view, but I'm personally very excited, and I'm just going to elaborate. But before I do, like I said a moment ago, in Round Mountain, the Holy Grail, the flag on the hill is driving to the underground for the 3-g material to blend with stockpiles from the open pit. That's the mission. In the case of La Coipa, and Chile in general, the Chile strategy, as people may know, we're operating up in the high Andes, hence the snow.
We're up around 4,000 m. We operate in the Sahara Desert, and I always like to remind people that as dry as you think the Sahara Desert is, the Atacama is drier. Water is truly precious. Our constraint that we always think about in Chile is our water. We have permitted pumping water wells 70 L per second. We've pumped those wells for years. That's great because with pumping comes monitoring. Our overall strategy is about bridging these oxide pits that we're in today to Lobo- Marte. Lobo- Marte, as I say, one of our key world-class greenfield projects, we're going through the permitting process right now. We expect that'll be up and running after Great Bear, early 2030s. Just to put a bracket around it, we're talking 350,000 oz a year, about $1,000 AISC and an initial 15-year mine life.
The other part that we had some issues was we've always known in our oxide pits, as we get towards the bottom of the pits, we start encountering sulfides. We go through the oxide band into the sulfide band. We know the sulfur's down there, and the copper comes with the sulfur. What happened was we actually encountered much higher grade copper that we were anticipating, and by higher grade, and this is all in our disclosure, we're talking significant meters of 5%, 6%, 7% copper. Our system is not set up for that. The copper robs solutions that impact our gold recovery. As we've gotten into that, and we had already anticipated this, we have a PFS on a flotation that we've been working on.
Again, what we've got here is a situation, we punch through the oxide, we're into significant copper and gold, but we're going to take that material and we're going to place it on the side as we do more studies. I call that displaceable copper. If we're into 5% and 6% and 7% copper, I'm pretty sure if we put a flotation plant in there, we'll find a home for that con. What's also very interesting, and again, I don't want to lose the focus on the flag on the hill, the mission, critical, La Coipa to Lobo water. But what's interesting is if you look at our land package, we have a number of oxide pits all over. The plumbing below those oxide pits is a classic stratigraphy.
We go through the oxide gold into what I call an enargite, part of the stratigraphy, which is high copper, high arsenopyrite, high silver. As we punch through the arsenopyrite, the enargite layer, we expect there's good potential for a significant porphyry underneath all of that. But that's not for today, but that's the cue I would take away from the significant copper we're reaching in the bottom of the pits.
Okay. Thanks for that update. Capital allocation, you bumped the share buyback, well, the overall return of capital to shareholders from 40% - 50%. How do you plan to execute on that?
Yeah. Our history on my own personal belief on return of capital is you want to be playing from a position of strength. Let's make sure we have the money and the confidence and the cash flow before we make the commitment. What we have done is steadily increase. It's a little bit, I have to roll my eyes a bit. We set our guidance in mid-February. We set our capital allocation plan in mid-February, and by March, I am already getting questions on an increase in returning capital. What we typically say and what we said last year and other years is, "Look, it's March. Let us get through the year. Let's see how the gold price goes.
Let's see how the balance sheet looks, and we will revisit it later in the year." Last year, you may recall, on the third quarter, we upped the buyback, we upped the dividend. We will be reporting at the end of October, in about a month. Since we knew we were putting out some disappointment on trimming guidance, the net effect of that trimming of the guidance, if you will, is 2%-3% outside of our guidance range. Again, context, 2%-3% outside of our guidance. 2%-3% outside of our guidance is 40,000-60,000 oz. It's temporary. We just decided to, okay, we are going to get to this at the end of October here, in four weeks. Let's just bring it forward at the same time. We really just wanted timely transparency as we came into this conference.
Okay. I just wanted to touch on Great Bear. That's your next big project, due near the end of the decade. Could you just give us an update on where you are in terms of progress there, both on the AEX and the main permit, and then also talk a little bit about the permitting and the water, I guess, the requirements around water treatment and processing that's been in the news a little bit lately. I just wanted to get your take on that.
Yeah, sure. Again, just to level set context, we undertook what we call a parallel permit strategy. We've been advancing. Again, I apologize, we live in a world of acronyms. AEX, Advanced Exploration decline, is one set of permit processes that is really with the Ontario government. We're well on track. You can see on the slide, we did have a site visit last summer. We had about 20 folks up there. The surface works are incredible. The camp is built, all the surface infrastructure, the water treatment plant, power connection. We're well underway, and we are now about 300 m down underground on the decline, and we've gotten every permit that we need, and we're forging ahead. The second part of the parallel permit process is the main project.
Again, there's lots of permits, lots of stuff going on, but to boil it down, in essence, that's the permit that allows you to build a mill. That process is really around a federal review with Impact Assessment Agency of Canada. We call it IAAC. I think you touched on some of the comments we've heard around. There has been some media comments, and you and I talked about it.
Yes.
There was a newspaper article, which to me is a great example of why you got to be careful what you read in the Toronto Star.
If you read the Toronto Star.
If you read the Toronto Star. Questioning water treatment.
Yeah.
I just want to remind people again for context, how this process works. We go out, we work with multiple stakeholders, multiple agencies of government, and it's not a process where it's designed to say, "We like this, and this is good, and keep doing that." It's really about a negative. What don't we like or what are we concerned about? What happens is the IAAC takes all of those comments from all the various agencies and all of the stakeholders, and they feed it in, and then we deal with IAAC. That's how this process works. I think the article you were referring to was talking about the need for perpetual water treatment. What's not in the article, which is really insightful, is IAAC, who we deal with, the federal regulator, determined that that comment was based on a misunderstanding of geochemistry.
It was rejected. It was taken out, and we're not required to answer it because they thought it was a faulty suggestion. Again, that doesn't make it in the media. The media is the sensational, oh my gosh, water treatment. We're in great shape. Our two local First Nations, very supportive. We have signed, sorry about acronyms, we've signed an MoU on an IBA.
We've got a framework around our economics. We're full steam ahead. We're expecting early work permits to start construction of that mill spring of 2027. Assuming we get those from the regulator, that keeps us on track for 2029 gold pour.
Yep. That's going to be an exciting project when it comes onstream.
Very exciting.
Yeah. I just wanted to talk a little bit about the upside just in the last minute or so that you have. Just where do you see the biggest upside that the market is not really recognizing on Kinross right now?
Yeah, look, I think there's lots of upside at all of our assets, but in particular, I focus on the big ones. I think we'll see continuous improvement at the operations at Paracatu. I would say it's more mill-driven. It's fine-tuning in the mill, gravity process, carbon. We're still fine-tuning, and even a small percentage goes right to the bottom line. So think of Paracatu as continuous improvement, well run. I think Tasiast, those two mines together, by the way, just to remind, that's 1.1 million of production out of those two mines. Tasiast, it's all about continued optimization of fleet, shovel. We're looking at resizing options for the layback, and it's all about efficiencies within the pit. We touched on Round Mountain. To me, that's all about the underground.
I did say I think we're 9 km of underground development, and right now we've got our team shadowing Redpath. Remember, we're not expecting that production until 2028, but we're training all of our operators to be underground miners over the next two years. So those would be the big three. When you get into the exploration, still lots of places to go, both in Chile, Maricunga, Lobo. We're doing extensional drilling at Great Bear. It's not the main event, but we are seeing that trend continue. So lots of good stuff in the pipeline.
Okay. And we're just on time, so thank you very much. Thanks. It was great.
Okay. It seemed to go quickly.
Yeah, it did. Thank you.
Thank you