Ladies and gentlemen, thank you for standing by and welcome to the Kinross Gold Corporation Fourth Quarter and Full Year 2020 Results Conference Call and Webcast. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]. I would now like to hand the conference over to your speaker for today, Tom Elliott, Senior Vice President, Investor Relations. Please go ahead, Mr. Elliott.

Thank you. Good morning. With us today, we have Paul Rollinson, President and CEO; and Kinross' senior leadership team, Andrea Freeborough, Paul Tomory, and Geoff Gold. 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 2 of this presentation, our news releases dated February 10, 2021. The MD&A for the period ended December 31, 2020, and our most recently filed AIF, all of which are available on our website. I'll now turn the call over to Paul.

Thanks, Tom. Thank you all for joining us today. 2020 was a unique and challenging year for everyone. I would like to acknowledge and thank all of our people who worked hard to keep our company on track and deliver on our promises in these unprecedented times. Despite the obstacles presented by the pandemic, we delivered an exceptionally strong year and were able to meet our original 2020 guidance for production costs and CapEx. We have now met or exceeded our guidance for nine consecutive years. A record that speaks to our culture of operating and technical excellence, and a record we are very proud of. Before turning the call over to Andrea for a financial review and to Paul for an overview of our operating performance, I will comment briefly on our key accomplishments, outlined some upcoming milestones and touch on our ESG performance. From a financial perspective, 2020 was an outstanding year. Because of discipline, cost management and capital spending, we were able to capitalize on the strong gold price and delivered record free cash flow of more than $1 billion along with very healthy margins. We expect strong margins and free cash flow to continue into the coming year and beyond. In 2020, our three largest mines Paracatu, Kupol-Dvoinoye, and Tasiast represented more than 60% of our production, and for the second year in a row were the lowest cost minds in the portfolio. As a result of our strong operating and financial performance, our balance sheet continued to strengthen and we finished the year with just over $1.2 billion of cash. Last night, we reaffirmed our guidance of production rising approximately 20% over the next three years. Specifically, we expect our production to grow by roughly 500,000 ounces, from 2.4 million ounces this year to 2.9 million ounces in 2023. Furthermore, we maintain an excellent long term outlook, with average annual production of 2.5 million ounces through the end of the decade with additional upside opportunities beyond that. Andrea will provide more detail on our ‘21 guidance shortly. I'm also pleased that we were able to return capital to our shareholders with a sustainable quarterly dividend of $0.03 per share. We are also proud to report a 23% increase in total reserves compared with 2019. These additions were based on a $1200 per ounce reserve price. Reserve pricing is understandably gaining a lot of tension given the current gold prices. We have concluded that maintaining a $1200 reserve price helps to ensure our business maintains strong margins and is well positioned to generate value throughout the commodity price cycle. Paul will comment on reserves and resources in more detail later on this call. In terms of other notable accomplishments during the year we closed our Kupol acquisition in Russia and acquired additional licenses to enhance our already attractive land package. We acquired the Kayenmyvaam property which is 130 kilometers from Kupol and offers excellent near term exploration potential. We acquired a 70% interest in the peak project in Alaska. We reached an agreement in principle with the government of Mauritania, which we are close to finalizing. With an upgrade for Moody's, we achieved investment grade ratings from all three agencies. We completed our Gilmore project on time and under budget. And we remained on track at all of our other development projects. Looking forward to 2021 we expect to continue our consistent performance and have a number of significant milestones to watch for this year. During the first half of the year, we expect to complete a feasibility study for Round Mountain phases, a scoping study for peak and a feasibility study for the Fort Knox Gil satellites. During the second half of the year, we expect to complete a pre-feasibility study at Udinsk to complete a feasibility study for Lobo-Marty, and Tasiast throughput to reach 21,000 tons per day by the end of the year. Our operations are performing strongly. Our portfolio was well positioned to carry us through this decade, and our balance sheet is in excellent shape. In summary, Kinross had a great 2020 and is guiding for three years of growth and production cash flow. We also have a pipeline of capital efficient growth projects and an exciting number of additional development opportunities to drive our current production through the next decade. Finally, before handing off to Andrea, I'd like to make a comment on our key achievements related to ESG. We continue to make meaningful contributions in the regions in which we operate, including providing support to our local communities during the pandemic. We score on the top quartile of the peer group with all of the major third party ESG rating agencies. We remain among the lowest greenhouse gas emitters in our sector on both a per ounce on a per ton basis. We continue to receive recognition for our environmental achievements, including in Russia, the World Wildlife Fund for environmental transparency, ranking first in three of the past four years, including the top ranking in 2020. And for the second year in a row, we were the highest rated mining company in the global males annual corporate governance safety survey. I also want to comment on safety, which is our first priority at the company. Our injury rates are among the lowest in the industry. However, sadly, this was overshadowed in 2020 by a mine site fatality. Following this tragedy, the company held a global safety stand down to reinforce our standards, and to make sure we are doing everything possible to ensure the well-being of our employees. This tragedy was a reminder that despite our tireless efforts in this area, our work is never done. I'll now turn the call over to Andrea for a more detailed review of our financial results.

Thanks, Paul. I'll begin with financial highlights from the quarter and the full year. I'll also give an overview of our balance sheet and then provide some commentary on our outlook. As expected production increased throughout the year and fourth quarter was the strongest, production of approximately 624,000 attributable gold equivalent ounces and sales of 633,000 ounces. For the full year we produced 2.37 million attributable gold equivalent ounces and sold 2.36 million ounces. And as Paul mentioned, we met our guidance for the ninth straight year. Despite many pandemic related challenges throughout the year, we were able to deliver strong cost performance, both full year production cost per ounce of $723 and all in sustaining costs around of $987 or within a few percent of our 2019 costs, while our realized gold price increased by more than 27%. As a result of this cost discipline, our attributable operating margin increased by 53%, and our adjusted operating cash flow increased by 59%. Furthermore, in 2020, we were able to convert a significant portion of our operating cash flow into free cash flow, which increased more than six fold compared to 2019. Full year free cash flow was over $1 billion, with approximately 37% of this being generated in the fourth quarter. Finally, our Q4 adjusted net earnings of approximately $335 million and adjusted operating cash flow approximately $528 million were also both up significantly compared with the fourth quarter of last year due to the reasons I mentioned. It is worth noting that these adjusted figures exclude approximately $23 million of COVID related costs and donations during Q4, which was up from about $17 million in Q3. As we've previously stated, these costs are primarily driven by quarantine measures taken at site. So as long as quarantining is necessary costs will persist. Capital expenditures were $298 million during the fourth quarter and $916 million for the year, which was in line with our guidance. In 2020, we reported non-cash impairment reversals, net of taxes, totaling approximately $630 million related to property, plant and equipment at Tassie in Toronto and mobile marketing. The impairment reversals are largely as a result of higher gold price assumptions, as well as the mine life extension at Toronto [ph]. Following another quarter of strong results, we ended the year with just over $1.2 billion of cash and cash equivalents compared with approximately $575 million at the end of 2019. The increase in our cash balance was due to our robust cash flow and the $200 million draw down on our project finance. These increases were partly offset by the first payment, our acquisition of Peak and a net repayment of $100 million on our revolving credit facility, as well as interest and dividend payments. Subsequent to year end in January, we made our final throwback [ph] payment of $142 million in cash and also made a tax payment in Brazil of $86 million. Other significant cash outflows expected in Q1 include our regular interest and dividend payments. As at the end of December, our total debt was approximately $1.9 billion with our net maturities at September of this year was $500 million in senior notes coming due which we expect to repay. Our year-end net debt was approximately $700 million, and our trailing 12 month net debt to EBITDA ratio improved once again to approximately 0.35 times. Our current gold prices expect to be approaching zero net debt by the end of 2021. In summary, we're comfortable with our balance sheet, and we're well positioned to fund our growth over the next few years while continuing to reduce our net debt and pay dividends to our shareholders. Turning to our outlook for 2021, I want to note that all figures I reference are within our typical confidence range of plus or minus 5%. First, with respect to production, we expect 2.4 million gold equivalent ounces in 2021 in line with 2020. Expected production growth in the Americas is offset by modest production declines anticipated in Russia, with the end of mine and in West Africa, as pass this undergoes a catch up year following delays in mining activity due to COVID during 2020. Cost of sales are expected to increase from $723 per ounce in 2022, approximately $790 per ounce in 2021 before declining again in 2022. This increases the results of a few factors including higher operating rates and lower production with delayed access to higher grade ore, which pushed 100,000 ounces into 2022. Higher operating waste at our North American operation and fewer low cost ounces coming from our Dvoinoye mine in Russia after completion of mining in late 2020. However, to reiterate, cost of sales is expected to decrease in 2022 and return to levels that are largely in line with 2020. I suppose as production at both ramp up [ph]. All in sustaining costs during 2021 are expected to increase to approximately $1,025 per ounce from $987 per ounce in 2020 for the same reasons. It is worth noting that production and costs are both expected to increase throughout the year with higher costs largely driven by anticipated increase in operating [Technical Difficulty]. Our cost guidance came to $1,500 [ph] per ounce gold price, and includes other assumptions with respect to currencies and oil prices, which can be found on Page 11 of our company's slide deck or Page 8 of our Q4 results press release. With respect to CapEx, we expect approximately $900 million of expenditure in 2021, which is in line with 2020. Our exploration budget is increasing to $120 million due to enhanced programs that will follow up on areas of success in 2020. With respect to CapEx beyond 2021, I'd like to clarify that when we provided our three year CapEx outlook in September of last year, we indicated the outlook was predicated on our baseline production, and excluded additional opportunities in our pipeline with the exception of our Udinsk projects. As other projects advanced and are ultimately approved, we expect that our CapEx guidance could increase in 2022 and 2023. For context, examples of projects which could be approved and move into our CapEx guidance include Round Mountain phase S, and Fort Knox peak. However, as additional capital projects are approved, we would expect to be providing further detail on the anticipated production and returns associated with this expenditure. Therefore, as we continue to advance our pipeline of projects CapEx guidance for later years could ultimately increase to be more in line with 2021 levels. With that, I'll now turn the call over Paul Tomory.

Thanks very much, Andrew. I'll share highlights from our reserve and resource update, and provide an update on exploration activities before giving a review of operations and development projects. First, however, like Paul said, I want to acknowledge our employees who went over and above the call of duty in delivering exceptional results in what was a very difficult environment. Much of the uncertainty that we face at the beginning of the pandemic has lifted however, we remain cautiously prepared as a second and in some cases, third waves continue to evolve. Fortunately, we did not experience any major disruptions to our operations, and were able to meet guidance in 2020. Moving to a reserve and resource update, we are pleased to have added 8.7 million ounces of proven and probable reserves, while depleting just over 3 million ounces in 2020 for net reserves increase of 23% compared with year end ‘19. This brings our total proven and probable reserves to approximately 30 million ounces. As Paul noted, this growth was achieved while maintaining our $1200 per ounce reserve price. Lobo-Marte was the largest contributor, we have a conversion of 6.4 million ounces from reserve to resources, as announced with the midyear PFS results. Furthermore, successful exploration and engineering optimization programs at Kupol, Toronto, extended mine life by one year and three years respectively, each to at least 2025. Additionally, and notably Paracatu largely offset depletion, adding one year of mine life production at this tier one asset. In terms of resources, we have elected to increase our gold price assumption for all resource categories to $1600 per ounce. We believe this assumption allows us to better illustrate the significant potential at our assets in the context of the current gold price environment. I'd like to note however, that updating the resource amount to $1600 is only the first of several steps. Next will include more drilling, as well as looking at different ways to apply engineering principles to our mine plans and this will occur over the coming years. As a result of this assumption change and excellent exploration results are inferred category increased from 5.9 million to 9 million ounces, measured and indicated resources declined from 35.5 in 2019 to 32.4 in 2020 primarily due to the reserve conversions of logo and Paracatu that I mentioned, partly offset by exploration positions at the end the acquisition to peak project in Alaska. In summary, our reserves grew by almost 6 million ounces in net of depletion, while our mineral inventory and measured indicating inferred was stable despite the significant reserve conversions. Results that further support the long term prospects of our portfolio. Shifting to expiration we're excited that 2021 will be our biggest year since 2015 as we follow up on numerous promising opportunities. We have lots of new targets as a result of the acquisition of advanced exploration projects such as Kayenmyvaam, the Chulbatkan wrap around licenses and Peak. We intend to spend 60% of our overall budget in Russia, in Chirano and Curlew and then continue to prioritize other opportunities within the footprints of existing mines. Starting with Russia, we had 409,000 gold equivalent ounces to mineral reserves at Kupol-Dvoinoye, our largest addition since 2014, largely replacing depletion for the second consecutive year. We accomplished this despite COVID restrictions which limited activities in 2020, including surface work at Kupol, step out drilling at Udinsk. Looking forward, we continue to be very encouraged by the exploration prospects of Kupol. We have six underground and two surface drill rigs and operations with the goal of adding inferred resources and upgrading additional resources to reserve. Results from late 2020 drilling have delineated substantial mineralization previously unrecognized at the southern and northern strike extensions of the Kupol ore body. We expect to continue exploring these zones in 2021. We also remain focused on grassroots exploration within the Kupol Synergy Zone of influence, which covers a radius of about 130 kilometers around the Kupol plant, targeting areas that could be economic to mine life given the proximity to the Kupol mill. We expect to spend $25 million in 2021 to four targets within this zone, including the newly acquired and promising Kavralyanskaya licenses. Staying in Russia, our progress continues at Udinsk, expected to be the first mine within our Chulbatkan license. A total of 60,000 meters of infield drilling was completed in 2020 and approximately 260,000 ounces were added to M&I resources. This drilling confirmed our original thesis at the time of acquisition. A comprehensive drill program is planned for 2021 with a goal of declaring a reserve at year end, in-line with expectations. On the larger Chulbatkan license, surface geochem [ph] exploration activities were carried out during 2020. These programs resulted in encouraging results and confirmed known targets and the discovery of new target areas near the Udinsk. As such, the 2021 drilling program will prioritize these targets, followed by drilling for striking depth extensions. Turning to Ghana. Exploration spend at Chirano 2021 has been increased to $12 million in order to drill depth extension Obra, Akwaaba, Suraw, Tano and near the Mamnao open pit, all promising prospects. The budget also includes the construction of an exploration decline to drill the northerly plunge extensions at Obra from underground. We are targeting a significant portion of estimated mineral resources for potential conversion to reserves in 2021 and 2022 from Obra, Akwaaba, Suraw, Tano and Mamnao. Moving to Americas. Exploration of Bald Mountain this year will focus on following up on targets identified during 2020 that could add resources in the future. At Round Mountain, a large portion of our $6 million budget is earmarked for the Phase X deposit. Drilling is expected to test a long strike in Dvoinoye with the goal of delineating potential underground mining resources in the future. At Fort Knox, the $5.5 million budget will be spent on targeted conversion of resources to Gil-Sourdough to continue exploring the western extension of Gilmore and to explore the newly acquired Peak property. At Curlew, we continue to advance our efforts by rehabilitating the old K2 underground to test the continuation the Galaxie and Marlin targets were 2020 drilling intercepted six gram per ton veins. In addition, the K2 deep vein structure was extended a long strike by approximately 300 meters and a 50-meter-deep extension. This year, we have increased our greenfields budget as well, where our philosophy is to explore for hybrid deposits in North America, Europe and Russia. Turning now to our portfolio of operations and projects -- all of which continue to perform very well in the face of COVID-19. As Paul indicated previously, our three biggest mines [indiscernible] and Kupol continued their strong performance, accounted for more than 60% of production during the year, and were the lowest cost mines in the portfolio. Paracatu was once again our largest producer, with 542,000 ounces, but down slightly from 2019 due to lower recoveries and throughput as planned. Turning to Russia; Kupol and Dvoinoye delivered another exceptional year with costs below $600 although production was down slightly from 2019, mainly as a result of anticipated lower grades. We completed mining activities at Dvoinoye on November 2020. However, exploration activities are ongoing and we expect to continue processing stockpile Dvoinoye ore through the end of 2023. At Udinsk, project studies are advancing on-plan including the development of the resource plan and fleet [ph] selection. An EPCM contract has also been awarded. We expect to complete the PFS in Q4 this year with a goal of declaring a reserve at year end, in-line with our view at the time of the acquisition while our first production is still targeted for 2025. Moving to Tasiast. The operation delivered record-free cash flow and also beat the prior year's record for production and cost of sales per ounce. Production increasing in 2020 due to the continued successful debottlenecking of the process plant and planned the increases in throughput, leading to record Q4 gold production. Cost to sales per ounce were the lowest in the portfolio for both the quarter and the year at approximately $565 and $585 respectively. Despite challenges in 2020 related to the pandemic and a strike in Tasiast. The Tasiast 24k operation project remains on budget and on schedule to increase throughput to 21,000 tons per day by the end of this year and to 24,000 tons per day by mid-2023. The project is now approximately 60% complete with mechanical work on the process plant and construction of the power plant both proceeding exceptionally well. Now turning to our U.S. operations. At Fort Knox, full-year production increased compared with 2019 as a result of higher mill [ph] grade and throughput. Cost of sales were in-line with the previous year. The Fort Knox Gilmore project was completed on time and under budget with first gold poured in January of this year. We also made good progress with the Peak project since the acquisition in September. A close working relationship has been established for the local [ph]. We have commenced drilling and are also advancing initial permitting work and environmental studies, with completion of the scoping study expected in the second quarter of 2021. Engineering contracts have been awarded for infrastructure processing at Peak, as well as for mill modifications at Fort Knox to process Peak ore. At Round Mountain, full-year production was lower compared to 2019 mainly due to lower mill grades, while full-year cost of sales per ounce decreased slightly due to the lower operating waste mined. At Bald Mountain, full-year production increased slightly with higher grades, while cost of sales also increased year-over-year because of higher operating waste mined. Turning now to a project in Chile. We made significant progress of both Lobo and La Coipa. Concerning global marketing, the feasibility study continues to advance on schedule and is expected to be completed in the fourth quarter this year, with first potential for production in 2027 following permitting. At La Coipa, we are fully permitted to restart as progressing [indiscernible]. Pre-stripping commenced as planned in January and we remain on track for first production in the middle of 2022. We continue to advance opportunities to incorporate adjacent deposits with existing resources to potentially extend mining at La Coipa, particularly the deposits of Puren, Coipa Norte and Can Can. Finally at Chirano, I'm proud of the hard work that the team did to expand mine life for three years -- a culmination of refined focus on drilling, great exploration, cost-cutting, productivity, engineering, tailings facility expansion. To wrap up on operations projects, our priorities continue to be the health and safety of our employees, particularly in the context of this ongoing pandemic. Our social license to operate and the well-being of our communities and stakeholders, strong consistent operating results and delivering our projects on-time and on-budget. And with that, I'll turn the call back over to Paul.

Thanks, Paul. I want to reiterate our gratitude to our employees, suppliers, communities and host governments who have all continued to work together to help us stay safe and productive. As a result of everyone's hard work, all of our sites are operating well and our projects continue to advance on-time and on-budget. Our business remains very well positioned; our commodity prices and currencies are favorable; we have an attractive global portfolio of operations, coupled with a robust pipeline of projects and exploration opportunities. We have a proven track record for operational excellence and project execution across all of our geographies. We continue to generate substantial free cash flow and further strengthen our balance sheet and we are a leader in the mining sector for ESG performance. With these attributes, we are in a great position to continue driving meaningful value creation and share price appreciation. With that, Operator, Carol, I would now like to open up the call for questions.

Thank you. [Operator Instructions] Our first question this morning comes from Greg Barnes from TD securities. Please go ahead.

Yes, thank you, Paul and team. Just clarifying the CapEx guidance. Obviously, you have the guidance out there for 2021 of $900 million. But it appears if you sustain that CapEx for $900 million, that would give you a $3 million ounce peer production profile through the decade. Is that how we should think about that?

Yes, Greg, I'll take that one first and Andrea might jump in. So, this relates to the 10-year outlook that we put out a few months ago and the three-year guidance were $2.4 million and going up to $2.9 million in a couple years. The CapEx associated with getting to that figure is $900 million, $800 million, $700 million over the next three years. However, there will be projects that to get approved, that will supplement the production profile…

We expect we'll get approved.

And we expect we'll get approved. And there's a number of projects -- some will be approved some won't, which will contribute to the 10-year outlook. And so, as those projects are approved, we expect that the $800 million and $700 million will likely drift upward, as we are able to strengthen the production profile beyond 2023, if that makes sense. So, in other words, the $900 million, $800 million, $700 million over the next three years, get us up to the $2.9 million in 2023. After that we're guiding to an average of $2.5 million, but that's the number that could get better if we have attractive projects to approve, and we certainly believe we do.

So, the $2.5 million, you generally need about $750 million a year to support that? You do [indiscernible].

That's roughly correct. We had endless debates on this topic as we prepared for this call. But basically, over a long run -- and not measurements in individual years, but over say, two, three-year horizons -- a number of $3 million to $3.5 million of CapEx rounds is not a bad number to use. And so, you're right that it's the sustained $2.5 million. Roughly speaking, that number is not -- $750 million is about the right number. The reason that it could retire is that we do have enough resource in the portfolio to potentially drive years that may be higher than $2.5 million. The CapEx number will fluctuate accordingly, of course it being a leading indicator for production that shows up two, or three, or four years later depending on the project.

But by definition, we're now looking four, five years. And our level of accuracy as we look further out, we have given a very solid, committed three-year guidance and we've given visibility on what we'll backfill in over the next few years to continue. But, there's a bit of a limit to how accurate we can be, how far our we go.

Sure.

I think part of the message as well is as we add these projects that we may approve, we don't see the CapEx going significantly higher than where it is as we're guiding for 2021 and at least on 2020 [ph].

Yes, that's a good point. We would characterize it all as quite manageable and not spiky or lumpy as we look forward.

I'll use a hypothetical example here. So, let's say later this year, we approve a project or two -- strictly hypothetically. That might then cause us to update our three-year guidance, which would then roll into 2024, in which case, we would update near-term capital guidance. And if the guidance goes up from the $900 million, $800 million, $700 million, it would be accompanied by an increase in production into that next year of the three-year guidance. So, it would be a logical addition to both CapEx and production that are tied to each other.

I think Andrews point, too, is that the $900 million is a manageable number and that obviously drives a higher production profile over time without being spiky. Yes. Good. Thank you. That's helpful.

Our next question comes from Fahad Tariq from Credit Suisse. Please go ahead.

Hi, good morning. Thanks for taking my question. Now that you're using $1,600 an ounce for resources but still using $1,200 for reserves, can you remind us as you think about some of these projects internally and budgeting and thinking about what's economical and not? What price is being used for making that assessment? Thanks.

Well, we're still making all of our economic assessments, mine plans around a $1,200. Paul can chime in here -- we've been at $1,200 for reserve and $1,400 for resource for many years. Maybe even a decade. And of course, $1,400 resource for the longest time was above spot. In the context of where we are today, we get a lot of questions about what does our portfolio look like? And by moving to $1,600, which is obviously a couple hundred dollars lowers than spot, we're attempting to give some visibility into the portfolio. But as Paul said, it's a first step. It's not a fully-engineered resource calculation. It's more of a spreadsheet calculation. To get a better understanding of the true resource potential, we'd have to do more infill drilling and that'll take time, but I think directionally, it's just meant to give people a better look. And it's really for our business planning purposes to understand our ore bodies.

One other point of context here that may be helpful is, we also do look at longer term big capital items differently than we might on quick payback shorter term opportunities where in the short term, something with a quick payback, we might consider -- though they are reserves of $1,200, perhaps marginal at $1,200 -- in a context to say $1,300, $1,400, $1,500 on a short payback item. We might look at that a little bit differently compared to a longer dated project such as Lobo-Marte.

Got it. Okay. Yes, that's it for me. Thanks.

Thank you.

Our next question comes from Tyler Langton from J.P. Morgan. Please go ahead.

Good morning. Thank you. Just at a more general cost question, obviously, sort of oil, diesel prices are going up. Are you seeing any other signs of cost inflation around labor or any other materials that could maybe sort of pressure the cost guidance for the year?

Yes, you've hit on the oil point, that's an obvious one. In general, the cost that we're most exposed to, first of all I'll start with currency. The currencies where we operate remain favorable, say, the Real in Brazil, the Peso in Chile, or the Ruble in Russia, those are helpful. But in terms of key input commodities, we're not seeing a lot of upward drift in pricing. What we do see though sometimes is longer lead times on capital equipment, primarily pandemic-related, but we're not seeing a lot of pricing pressure. We do have inflation in Brazil as you'd expect with a lower currency that is accompanied by an amount of inflation. But unlike the last cycle, say, going back 10 years where inflation ate away the benefits of currency, weakness, we're not seeing that right now. So, in other words, the net equation on currency weakness versus local labor costs inflation, is still in that positive. So, to answer your question, yes, you got the oil number, but in general, key inputs, key capital equipment are relatively tame with creeping inflation in some of the places where we operate.

I would just add as well, that we are hedged on currencies and on oil. So, we're about 50% hedged for Russia, Brazil, and on WTI for 2021 and then lower amounts for the year after that.

Good, that's helpful. Just have a quick follow up question on free cash flow. Obviously, 2020 was a strong year and we look after the 2021, CapEx should be kind of flat year-over-year. Maybe it looks like cash taxes could be up a little bit. Are they just moving items to think about when trying to make a free cash flow bridge in 2021 versus 2020?

Sure, we do expect to have strong cash flow in 2021 especially at current gold prices. But everything being equal as you suggested, there were some items in 2020 we may not see in 2021. And we've already noted that cash costs will be higher in 2021, so that will be an impact exploration. We expect to spend more on exploration in 2021 than we did in 2020. And we did have a fairly significant U.S. tax refund in 2020 that we don't anticipate this year. I would just highlight as well that going forward beyond this year in 2022 and 2023, we do expect our free cash flow to grow significantly as production rises and cash costs come back down.

Great, thanks so much.

Our next question comes from Josh Wolfson from RBC capital markets. Please go ahead.

Thank you. I was just wondering if you could provide any update on the current status of citing the more 10-year [ph] agreement that was that was announced last year?

Sure. Yes. We announced that heads of agreement last year. It's moving along well, but we have had some macro headwinds along the way. We got a new mines minister who has just been great and super engaged, and driving towards the finish line, we've had to work through COVID. And I think in general, sovereign authorities don't move at the same speed as we would in private world. But I would say it's going well. We're really just hammering out definitive documentation with lawyers. We're meeting regularly now and we expect we'll get it wrapped up fairly quickly. And no departures at all from our key terms that we outlined in the heads of agreement.

Okay. And then maybe sort of following up the last question in terms of the industry changes you're seeing. In the U.S. I guess has been outlined as a jurisdiction, maybe where there could be -- or maybe in Nevada mining tax increase or corporate tax change more broadly. Is there any commentary you have on that? Or broadly, some of the fiscal term items you're seeing out there?

Not yet, really. I think it's still early days. We obviously follow what goes on. But look, we work through all kinds of administrations all around the world. U.S. is no different. Federally, it's important, states-important. There was noise, comments made during the campaign. But nothing yet, that would cause us to be concerned where I'd say characterize as we're in a bit of a wait-and-see as it relates to the U.S.

Yes. Biden in his campaign had proposal to increase the corporate tax rate in the U.S. and to introduce a minimum tax. But it's too soon to say what impact that might have and whether those details may change now that the administration is in play.

Great. Thank you very much.

Our next question comes from Mike Parkin from National Bank. Please go ahead.

Hi, guys, thanks for taking my questions and congrats on the good quarter. Just maybe going back to Greg Barnes' questions. So, capital intensity kind of indicates $300 an ounce. So, just as a sense in terms of if some of these other projects kind of get green lighted, would you expect that kind of $300? It seems like the $300 per ounce might come down a little bit. So, you get more production, but capital intensity per ounce probably doesn't change, if anything, it may be improves a little bit? Is that a right way to read that?

We've kind of put that $300 an ounce directional advice out there, I've sort of said candidly in a one-on-one, it gets you to the right street, but maybe not to the right house address. It's meant to kind of ballpark you. But even in a rearview mirror, it'll fluctuate up and down year-to-year depending upon where we are in our mind plans and our stripping campaigns. But that number as a starting point, I think gets you reasonably into the zone of where to start, and we'd refine as we get closer.

And it also depends on the production mix that comes out of that. So, at Kupol, for example, adding 200,000, 300,000, 400,000 ounces in production profile is not going say free, but essentially free on a CapEx basis. Just a few development meters here and there whereas additional ounces at Round Mountain, say for Phase X come with a reasonably hefty stripping ticket. So, it also depends on the mix of production and CapEx.

And then when we spend the CapEx, the production comes in later years, though.

There's a lag. Yeah.

True

Okay. And then just on the exploration side of things, are we still on pace to start doing step out at Chulbatkan outside of the main resource pit?

Yes, so that's the focus for this 2021 program. Just a clarification on nomenclature, Udinsk is the principle of resource fit. It is the fixed resource scope that we're taking to a PFS right now. And the plan for 2021 is absolutely to focus on targets that were identified through a combination of geophysics and geochemistry, and there are quite a number of attractive targets we've identified on the property. Some of them are very close to the Udinsk pit along the same fault and some of them are a little bit further afield. But to answer the question, absolutely, yes, that is the focus this year now that we've got the principle resource moving forward into PFS.

Okay. And it seems like you guys didn't have much of a trouble getting drilling done in Russia, where some of your peers have indicated coming in under budget to plan meters. Is that accurate and therefore, we could expect some pretty good meterage rates coming out of Russia for 2021?

The answer is mostly yes. We were hampered at Kupol. So Kupol, we got explorations done that was principally underground where we're doing it with the mine ops team, whereas a lot of the surface drilling we did have to curtail at Kupol simply because camp space is being consumed by people in quarantine. So, we did see our meters on surface really in Kupol fall under budget. However, at Chulbatkan, we did deliver the program. It was a late finish, but we got it delivered in the end of the year. We see that debottlenecking going into this current year. So, we view our ability to meet our meters in the budget as better than it was last year. One other comment I'd make is that it's not just drilling that's impacted by COVID, but it's also turnarounds at our labs. So, for example, at Chulbatkan, though we got our meters drilled, we still have a backlog of assays coming from the labs that we expect to clear over the next little while.

Okay. And then we've noted quite a bit of kind of back-half guidance weighted from peers. Any comments on that in terms of production profile, or CapEx spend? Or should we expect any kind of heavier CapEx spend on the first half or second half? Or is everything fairly consistent quarter-over-quarter?

We did know that our production and costs are both expected to increase throughout the year. So higher in the second half than the first half. And on the cost side, that's related to increase operating lease stripping in the second half. On the production side, I think it's mostly Tasiast increasing in the second half. On CapEx, it's fairly consistent throughout the year, but we do historically tend to spend more in the second half. But as we start the year, it does look like fairly even throughout the year.

Okay. And last question. With complex global market in La Coipa, if you greenlight some of the satellites around La Coipa, will that defer the start of Lobo? Or would you still look to kind of do Lobo and then maybe satellites.

So the satellites are required to bridge. Depending on how many of those satellites we get in there, there could be a deferral at Lobo-Marte, however, the satellites are needed for full bridge. Our strategic objective is to have uninterrupted production in Chile, La Coipa and then into Lobo. If all of the satellites in La Coipa come into the mine plan, there could be a potential push out of Lobo-Marte, which would not be a bad thing from a capital prioritization point of view. The other thing to keep in mind is that our intent all along has been to synergistically use it to operations together. So that certain aspects, for example of infrastructure of people, or fleet, or other examples are shared -- water being an example.

Okay. Would it be anything where you may be spread Lobo CapEx over a greater period of time or just simply defer the start?

That's a good question. We haven't got to that level of analysis. In general, you don't want to go slow on a big project. That's not efficient. But there may be some early works that come into the plan. For example at Udinsk, we are contemplating early works. So, where it makes sense, we might look at that at Lobo. But I'd say it's a little bit too early to say that, particularly because we're into a very intense period of permitting activities in the couple years. And Tucson [ph] scope is important.

All right. Well, thanks very much.

Thanks, Mike.

Our next question comes from Anita Soni from CIBC. Please go ahead.

Hi. Good morning, everyone. So, my first question is again with the capital, but could you give us an idea of given the non-sustaining capital spend that you have, just a general idea about, which ones would increase and ramp up in 2022 and which ones will start to come down? I know you've given us an overall $800 million number, but I'm just trying to understand which ones may increase at without which assets [ph].

I mean, if you look in the rear-view mirror, we've always said to keep eight mines well maintained around the world, we've been plus or minus the 400ish sustaining capital number. And I think, again generally, as we look forward, that's a good base. Anything over that was generally characterized as discretion, or gross capital. Again, the further we look out, the more things are moving around and with less certainty, but I do think that's a rule of thumb is a good guideline. Paul?

Way in that 987 guidance, clearly, what's happening is a big projects come off [indiscernible] is a good chunk in each of the next couple of years, we'll call it, was a big part of this current year. And as we get through those two particular projects, we move into a raft of the smaller sustaining-type projects. But referring back to the discussion, as we look to greenlight other potential mine life extensions, those will come in bigger chunks to potentially drive that capital up.

I get the whole $900 million is just to go forward. I know you need to spend to grow and to sustain that growth. But I was just wondering, does this [indiscernible] is that similar number next year, or it tapers off next year? The West Branch stripping, when does that end? Like, where should -- how should we be modeling that? And then maybe factoring it in anything?

Yes, at La Coipa this year is the big capital spend year and then it tapers off next year, and then we're into production in the middle of 2022. So La Coipa [ph] will largely taper off. At Tasiast, unfortunately, the stripping is always a big number. It will vary with the mine plan. But we are going to have on and off big strip years at Tasiast.

Okay, and then, in terms of the cost guidance, you mentioned production guidances ramping over the course of the year with particularly second half of the Tasiast, the 24k done, but in terms of costs, I'm not sure I can't recall whether or not I saw that, but was there a similar --well, cost should go down over the course of the year? Or did I recall seeing something about stripping going up, as well, and so the cost would actually ramp back into over the year as well?

Well, yes, we did note that production goes up throughout the year; costs also go up throughout the year. And it's just a function of the set of higher operating weights in the second half of the year impacting us throughout the year, but more in the second half of the year.

And then, just to follow that conversation on CapEx, is there the typical -- I mean, I generally noticed a little less spending in Q1, bulk of spending in Q2, Q3, and then people rushing to spend their budgets in Q4.

Yes, we do typically have higher spend in the second half of the year than the first half. So it's fairly even, but that does typically end up happening.

Okay. And then, I just wanted to drill down a little bit more specifically on a couple of assets. So firstly, in Paracatu, I was going through your reserve replacement there. And I noticed, and correct me if I'm wrong, but it's at a lower grade than your reserves. Is that correct? I thought you mentioned that you were getting higher grades at Paracatu or was that just moving higher grades forward, but the reserve additions were actually slightly lower?

So at Paracatu, we've done a few things. Number one is, we've accelerated the stripping rate and also accelerated some of the remaining tailings, that actually drives the grade a little bit lower in the near term, but net actually increases production when you look at the throughput. The reserve additions at Paracatu were slightly lower. And that was as a result of optimizing some tight real estate. So as you get into the outer phase of the Paracatu mine life, you start to run into limitations on the town boundary, on the highway, on the site access road. And it was really about optimizing the real estate and the sequence of the mine plan. So the grade will vary with that sequence. But typically, the grades get higher as you go further deep in the west part of the pit but some of this, I suppose, Ryan [ph], the material we pulled into the reserve will be lower grade than that which is in the deeper part of the west part of the pit. It's probably a lot of detail on there. We can take this offline, there was a lot of great complexity at Paracatu.

And then in terms of the assets where you're doing a stripping, is that purely the costs are being impacted by operating stripped purely? Or is there some little bit lower grade happening as well, as maybe you're using stockpiles or something that the fleet focused on stripping.

So what's happened, and this is a coincidence and it's planned at each individual site. But it's coincident, that it's all happening together. Our three big US sites at Tasiast just happened to be shifting from a period where majority of the stripping is categorized as either sustaining or initial capital to a period of a higher proportion being categorized as operating waste. And that drives up our cash, that's the biggest contributor to driving up or cash costs, simply a higher proportion of waste being categorized as OpEx, rather than either sustaining or growth CapEx.

Okay, so similar amounts of stuff being moved just in accounting.

That's right. Yes, that's a very good point. I want to reiterate that our company-wide mining rate, the total number of tons we move is largely unchanged. I mean, it'll fluctuate 5% or 8% in a year-to-year basis. But it's not like we're moving an awful lot more tons in 2021 versus 2020. Another small example without getting into excruciating detail, but our total re-handle tons are way lower in 2021 than they were in 2020 or historically, and that also drives a higher proportion of operating waste. So, it's particulars of individual mind plants all coming together, coincidentally, to drive a higher proportion.

Okay, and then my last question pertains to reserves at Tasiast and Tasiast [ph]. I mean, now you've got your license there. When can we expect you to start focusing on that? It was a lot of excitement about that two or three years ago, and then stopped in its tracks and I'm wondering where that stands and when we can expect to see some results from that?

I'll get Jeff to just maybe opine on that.

Maybe just to clarify, we don't have our license at sue [ph] yet. And in fact, that license is contemplated to be issued as part of the ongoing negotiation of our definitive agreements.

All right. Thank you.

Our next question comes from Tanya Jakusconek from Scotiabank. Please go ahead.

Good morning, everybody. I've got three questions. Maybe I'll start with the Tasiast. Paul, can we just get what some of the critical milestones are in the next two years to get us to that 23,000 tons a day? Just what do we -- this year, and next, would be the most important. And also, do we have everything we need at site? You mentioned a little bit about long lead time to get things because of COVID. I just wanted to review what you have at site and what needs to still get to site.

Yes, so from a COVID perspective, it has been very challenging managing this project with availability of people, getting goods to site logistics, and just the infrastructure required to mobilize a project. Fortunately, we remain on time and on budget, but it hasn't been easy. In terms of the two phases of project, everything for the 21k project is in place. And we haven't yet placed the orders for the 24k project. But that's something that comes next year and the year after. In terms of key milestones, there's a lot of them, but the two big ones are the thickeners to get us to 21,000 tons a day. And that's a plan for the very late part of this year. And then, I suppose the high level way to look at it for the 24k, the power plant, there's a lot of little sub elements with the two key elements on the 21 or the thickeners and the power plan for 24. The power plant, I think we talked about this earlier, we did take a three, four month delay on it. But it wasn't critical path for 21k. It is important for 24 K. But, we do have lots of little incremental milestones. So for example, just last month, we commissioned new tailings booster pumps. And we're also already seeing enhanced throughput as a result of that. So there's going to be a number of these little micro milestones through the year that will incrementally increase throughput, but the big one will be the thickeners at the end of the year.

Okay, so everything you need for 21 is in place at site?

Yes. Or on the way.

I think it's 80% there and 20% in transit thing.

And maybe all -- just looking at the optionality of the portfolio, and you've given us your resources at higher prices. Do you see anything at your main sites, mainly the pits, where you could make money today, very little capital and very little time in terms of bringing ounces into production that may not have been in my plan?

I'll start and then hand to Paul. We're studying those options right now, there's been no decisions, but the overarching philosophy here is, if there's a low capital, quick payback on something that might be trading dollars at $1200, but we could get in and out with a really good return, we'd like to understand what those opportunities are.

Yes. And I alluded to that earlier, obviously, things that are smaller capital, quicker payback are going to be more attractive in that environment. One particular example, are these GIL [ph] satellites at Fort Knox, where if we were to sustain $1200 price environment, though they make a buck at that level, they're not particularly attractive, but certainly a $1500 or, especially at spot, they're really attractive. And when these are low strip proximal, pretty easy to get, absolutely, we're looking at them. And the gill satellites at Fort Knox are a really good example that -- we'll talk a little bit more about those two probably in the first or second quarters. We're just finalizing the studies on that, we've done the resource models, and actually we're just right now live with looking at contract mining for those small pits. So yes, we are being opportunistic, where it makes sense, where's low capital, and it's a pretty quick turnaround.

Anything at Bald Mountain?

At Bald, we're going through a mine plan. I think at Bald, it's a little bit of a different story. Bald is one where you'd have to look at the entire asset at a higher gold price, because there's so many little pits, and there -- you've been to Bald and is a lot of driving there to get around. Bald is the site that would benefit most from a higher reserve price. Let's put it that way. And I think at Bald, it would be a more comprehensive look at the asset rather than small ones. Like Bald but a little bit different as [indiscernible] is one where mine life extension, I don't want to say it's easy at current prices, but because it's an underground and because of the nature of the capital investment required for underground, it's easier to come up with near term extensions at Toronto [ph], and though the extension we just made here to 2025 is reserve at 1200, certainly, having gold higher than 1400 or 1500 made those decisions much easier.

Okay, I look forward to more information on that. And maybe my final question for Andrea, can you talk a little bit about your tax pools available at Tasiast? I'm just trying to get an idea of when you're going to start to pay full corporate income tax based on your current plans and gold price at that asset?

Yes, first I'd say we do pay a number of -- we do pay to the government in ways other than corporate income tax. And we've paid a significant amount over the time that we've been there. But in terms of corporate income tax and our losses, we at current gold prices, we would expect to start paying tax on corporate income tax in about 2023. And then, obviously at lower gold prices, that pushes out further.

And anything that will affect this by the revised agreement with the government of Mauritania or the new tax code in that same country?

No. That's assuming everything conforms with the heads of agreement that we announced earlier.

Okay. All right. That's all my questions. Thank you.

Our next question comes from Carey MacRury from Canaccord Genuity. Please go ahead.

Good morning, everyone. Just a question on Tasiast, I know it was going to $1600 resource number, the ounces didn't change too much for resources. I know there used to be a lot of ounces outside the pit shell there. Is there still an opportunity to bring a significant amount of gold ounces in mine plan at some point?

Yes, there is. A couple reasons why that resource didn't grow at $1600. One is drill density, their mineralization does extended depth, there's no doubt about that. We just don't have the drill density down there to necessarily pull a substantially larger resource pit. But more than that, as you get down into the depths of Tasiast, you're looking at huge strip ratios, so a lot of capital and when we did the resource calculation here at Tasiast, and this is an important point, we did it assuming open pits. In other words, you ran your pit shell at $1600, to see whether you pull a bigger resource based on drill densities, and it didn't, it didn't pull much bigger pit. But we didn't evaluate the resource potential in this calculation with an underground. And this is why the move to $1600 is literally just the first step. I mean, as you can imagine, we've been at 1400 for pretty close to 10 years, and a lot of our drill programs are tailored to that. So there's not a lot of drill density beyond $1400 or $1500 pit shells. So as we look at different potential expansions, mines will have to tailor drill programs to go to tighter spacing into $1600 old pit shells, but more importantly, look at underground potential. And so assets where we have begun engineering work on underground potential at Tasiast, Round Mountain and Phase X, could Phase X, which is the next phase of W, could that be an underground? And are there underground opportunities at Bald? So we didn't do that in our year and resource calculation, but it's something that we are going to start to look at this year. With that $1600 resource price, is there a different mining method that would yield a bigger resource at particularly those three assets, has this round evolved? And I suspect the answer is yes, but we need to do the work.

Great, just on Maricunga, there was a big uptick in resources there. Is there any potential that comes back into production over the next three or five years, or is that something --

Yes, that was a pleasant, though not wholly unexpected, surprise. Maricunga is actually -- one of the reasons it actually grew that big is pits are drilled to the current $1600 pistol. That's one example of an asset where drill density was greater outside the $1400 pitch shell. Our priorities in Chile remain La Coipa, Lobo-Marte, but Maricunga is a very interesting asset to inventory or warehouse on a longer term timeframe. It's not in our immediate plans. We're continuing currently with our care and maintenance there. But we are looking at it as a much longer dated potential option. But La Coipa and Lobo are the priorities that fall ahead of it.

Our next question comes from James Morrison [ph]. Please go ahead.

Hi, thanks for taking my question. I know the near term goal was to pay down the debt by $500 million later this year in September. But if your cash, your net debt zero around that time, is any thought being given to possibly a share buyback program later in the year? The share price is being so low, especially in comparison to the peers.

Thank you, James. Yes, look, I think you're right on. It's a good point. Our capital allocation strategy revolves around the needs of the business, the strength of a balance sheet, and obviously, the tone and the commodity. And, all three of those are feeling pretty good. As Andrea indicated, we anticipate very strong cash flows this year, the notes are significant non-recurring use of proceeds. But as we continue to get stronger, and if the market continues as it is, we'll definitely be giving more thought to how we enhance the return of capital. I think there's not an official poll, but I guess when we were talking of shareholders over the past couple years, I think, at the margin, the dividend seemed to be the right place to start in terms of benchmarking against our peers. And just the simplicity, I think that investors were looking for. I personally like the concept of a buyback. I like the quantitative aspect. It's a little harder to explain sometimes to people, having them understand. But it's something we have talked about, it's something we're thinking about and it might well be the right thing to add to the dividend if these conditions persist, so it's a good question. It's something we're thinking about. And, we'll continue to study that more as we go through the year.

Well, thank you very much. That was my -- everyone else asked my other questions. Thank you.

This concludes the Q&A portion of our call and I would like to turn it back to Paul Rollinson for final comments.

Thank you, Carol. Thank you, everyone for joining us today. We look forward to catching up hopefully in person at some point later this year, but thanks for your time. And thank you, operator.

Ladies and gentlemen, this concludes today's conference call. Thank you once again for participating. You may now disconnect.