Kinross Gold Corporation (K) Earnings Call Transcript & Summary

Good morning. My name is Lisa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Kinross Gold acquisition of Great Bear Resources Conference Call. [Operator Instructions] Thank you. I would now like to turn the call over to Mr. Chris Lichtenheldt, Vice President, Investor Relations of Kinross Gold. Chris, you may begin.

Thank you, and good morning. With us today, we have Paul Rollinson, President and CEO of Kinross; and Chris Taylor, President and CEO of Great Bear Resources. From Kinross, we also have our senior leadership team, Andrea Freeborough, Paul Tomory and Geoff Gold. From our geology team, we have [ Greg Lang ], Senior Director of Greenfields Exploration for North America and Europe, who's been our principal geologist on this file since 2018; and [ Niko Seifer ], Senior Director of Resources and Mine Geology, who has extensive global experience in underground geology, including at Hemlo. And finally, with us from Great Bear Resources, we also have Calum Morrison, CFO and VP, Corporate Development. Before we begin, I'd like to also state that there will -- that we will be making forward-looking statements during this presentation. For a complete discussion of the risks and assumptions which may affect actual results differing from estimates contained in our forward-looking information, please refer to Page 2 of this presentation. Our news release dated December 8, 2021, and our most recently filed AIF, all of which are available on our website. I will now turn the call over to Paul.

Thanks, Chris, and thank you all for joining us today. And a very special welcome to Chris Taylor. We are excited to discuss with you today our agreement to acquire Great Bear Resources, which owns 100% of the Dixie project. A high-quality development project in the renowned Red Lake Mining District in Canada. Over the past several years, we have reviewed hundreds of opportunities, including every opportunity in Canada, and we believe that this is an excellent transaction for our shareholders. This morning, I'm going to highlight the key terms of the agreement, walk through the strategic marks of the deal and briefly describe the asset and how we see development moving forward. Paul Tomory will provide a technical overview of the project. The transaction involves upfront consideration of approximately $1.4 billion, comprised of 60% cash and 40% shares. With shareholders of Great Bear having the option to increase the cash component to 75%, subject to proration. In addition, the transaction includes a contingent payment payable and Kinross shares having an approximate value of $46 million triggered by reaching commercial production at the Dixie project and the declaration of at least 8.5 million ounces of M&I resources by the time commercial production has reached. The Board of Directors for both Great Bear and Kinross have unanimously approved the transaction. Dixie is a top-tier discovery with a clear path to becoming an operating mine with substantial exploration potential beyond that. We have been looking at this asset since 2018 and with recent confirmation of our views on Dixie's potential, we believe now is the time to bring the asset into our portfolio. Based on our extensive due diligence on the drilling completed to date, we are confident that our purchase of Dixie is well justified by our vision for a high-quality open pit on its own. In addition to this, we believe significant value remains to be unlocked through future exploration drilling, particularly in the underground extensions below the open pit. The exploration results to date from over 700 holes and 340 kilometers of drilling suggest a prolific gold system that remains unconstrained and open to extension with over 80% of the properties still unexplored. In our view, the LP Fault zone mineralization shows many similarities with Hemlo, which has produced tens of millions of ounces over a multi-decade period. At this stage, we also see potential for other mines on the property, similar to LP as well as Red Lake-style deposits in the Hinge and Limb. In terms of location, Ontario is a highly attractive and stable mining jurisdiction and the Red Lake mining camp is an established district with access to skilled labor and a significant regional infrastructure. Furthermore, with our head office in Canada, we have significant tax pools that we expect to apply to the future operation, which enhance project returns. This project plays to our strengths as we can leverage our project development, open pit and underground expertise as well as our proven track record of operating top-tier assets. Dixie will be an excellent fit, and we are excited about its potential to become a cornerstone asset that is expected to support our longer-term production. I'll now turn the call over to Chris Taylor to provide his comments on the transaction.

Thanks, Paul. The acquisition of Great Bear by Kinross is an excellent opportunity for all stakeholders. There will be -- these guys will be an exceptional steward for the Dixie project, continuing the long-term partnership with the Wabauskang and Lac Seul First Nations that we've developed and the other local communities. Not only will Great Bear shareholders benefit from a compelling premium, but we also have the opportunity to continue to participate in the future potential of Dixie in the hands of Kinross while also gaining exposure to Kinross' diverse portfolio by way of the Kinross shares that we will receive. Now Kinross is unique among its peers in offering increasing production and cash flow growth in the coming years, and I'm personally happy to become a shareholder at this time and see the company add the Dixie project as a potential long-term high-quality operation. The Kinross team, very impressive. They have the technical open pit and underground expertise and development capability and financial strength to advance Dixie as a top growth priority, and I'm excited at the potential for it to become a Canadian centerpiece Tier 1 asset for the company. As you're going to hear from the Kinross team today, further exploration at Dixie will be a significant focus for Kinross, and will fit nicely into Kinross' development portfolio. I am confident that as Kinross unlocks potential and maximizes the project's value, Great Bear shareholders will be exposed to the project's future success through contingent consideration and the Kinross shares. And as Paul noted in his remarks, the Great Bear Board of Directors unanimously supports the transaction, and we have voting support arrangements from all the directors and officers and certain significant shareholders.

Thanks, Chris. In terms of advancing the asset, we plan on pursuing 3 objectives in parallel. First, we expect to undertake an extensive exploration program at the LP Fault zone, including 200,000 meters of planned drilling in 2022. We also expect to start drilling to support permitting and development of an initial high-quality, high-grade open pit mine. Second, we will continue exploring beyond the upper portion of the central area of the LP Fault zone by stepping out along strike -- along the strike extents and also following mineralization as it continues at depth. And third, we will opportunistically explore the high-grade Red Lake-style deposits as well as other high-potential new discoveries such as Midwest. As large stretches of the property have not yet been fully explored, we believe there is significant untapped potential. In summary, we envision a large, long-life, multi-deposit mine complex with a quality initial high-grade open pit that has the potential to be a centerpiece asset for years to come. While the majority of the consideration for this transaction is cash, our payment does include shares. It's worth noting that our preference would have been to pay entirely with cash. However, Great Bear management sees compelling value in Kinross shares and wanted to include equity as part of the consideration. I would point out that we have the financial capacity to enhance our capital return program, which were to help offset the shares being issued. With respect to the cash portion, our balance sheet is strong, and we are in a good position moving forward. In the 60% cash consideration scenario, we would be paying approximately $850 million in cash and the remaining $570 million using shares. If we assume the maximum cash payment scenario of 75%, the cash portion would become approximately $1 billion. At closing, our intention is to finance the cash portion with our existing liquidity, which as of September 30 included $586 million and a $1.5 billion revolving credit facility. As a reminder, at the end of Q3 2021, our total debt was $1.45 billion and our net debt-to-EBITDA ratio was under 0.5x. We expect to generate significant free cash flow in the coming years, and we are in an excellent position to repay our debt while continuing to pay our dividend and repurchase shares. In today's gold price environment, we expect our initial pro forma net debt-to-EBITDA would remain below 2x and would decline to around 1x by the end of 2022 as our production ramps up through the second half of the year. In line with our widely recognized sustainability practices, we will follow a Do No Harm strategy throughout the life cycle of this asset and to minimize the effects on the environment while making positive contributions to the community. This project is located in a low greenhouse gas energy grid, and we expect a potential operation at Dixie could lower Kinross' overall emissions intensity. I have had the opportunity to meet the chiefs of the Wabauskang and Lac Seul First Nations who have traditional territorial claims in the area. We look forward to continuing to build on the established strong relationships, and we will work together to ensure that we honor indigenous rights so that the project delivers sustainable benefits to their communities. In addition, we will look to leverage the strong mining culture in the Red Lake region to continue delivering benefits to the broader community. I'll now turn the call over to Paul to provide more detail on the asset.

Thanks, Paul. As mentioned, the Dixie project is located in the renowned Canadian Red Lake District with excellent access to local infrastructure, approximately 25 kilometers southeast of the Town of Red Lake and consists of more than 91 square kilometers of contiguous claims that extend linearly over 22 kilometers, leaving significant room for additional discovery. The paved highway and provincial power line run parallel to the project, and the property hosted network are very well-maintained logging routes that facilitate access. Dixie is a relatively recent discovery, and we've been actively involved in diligence on the property since 2018. We believe that Great Bear has an exceptional team of exploration geologists that have made a camp-scale discovery at Dixie. The Great Bear team has conducted their geologic work to a very high standard, for example. The work was based on 100% oriented core, enabling accurate modeling of estimation domains precisely the intersection. 100% use of multi-element coverage, enhancing confidence in metallurgical assumptions and helping us refine our own geologic model, very robust logging, sampling QA/QC and data storage procedures, giving us a high degree of confidence in the integrity of data. And lastly, initial metallurgical results for recovery, which have been -- I can see the potential for a robust high-quality, high-grade open pit mine at LP. We expect this initial pit will be based on approximately 2 kilometers strike down to a depth of approximately 400 meters identified along the LP Fault corridor that has been confirmed with initial drilling over 10.8 kilometers. LP remains open across the entire property and drill results indicate it remains open at depth below 750 meters, which gives us a long runway to continually grow the resource over time. With this, we see camp scale potential at LP that will likely take time to define, but could potentially extend production for years and hopefully, decades beyond the initial open pit and as mining transitions to a substantial underground operation. And to be specific on that point, we will plan our initial mill to be sized for ultimate transition to underground. The following images provide some additional perspectives on the spatial characteristics of the LP zone. In the great thickness long section on the right, you can see that the gold mineralization is very continuous across strike and down dip and remains open. You'll note the average grade and true thickness we are working with. And keep in mind, this is only 1 of the 14 stacked lenses in this section. Looking at the cross section on the left, you can see that the stack nature of the mineralized zones, which range from 10 to 20 meters in thickness and aggregate to total mineralized widths of 200 to 400 meters over kilometers of strike length. The nature of these stacked lenses imply the high ounce per vertical meter. In addition, we see numerous similarities between LP and the Hemlo deposit, which has produced more than 20 million assets of gold and has been operating continuously for more than 30 years. Both deposits are hosted in meta felsic volcanics. They share the same metamorphic grade. They occur at flexors along major regional scale structures, show evidence of deep sea to fluid flow and manifest as a series of stacked lenses. Expanding on this comparison, the LP Fault zone has a 4.6 kilometer strike length thus far, starts very close to the surface and extends locally down to a vertical depth beyond 750 meters. This is what makes the Dixie property special. As this style of mineralization is not typical of a long history of Red Lake Gold camp, but rather more analogous to the Hemlo camp, near Marathon. Further, across all zones, Great Bear has reported that over 80% of the drill holes contained visible gold, which underlines a significant scope and robustness of the mineralized system. We also like the potential of the high-grade Limb and Hinge discoveries and view these as Red Lake Campbell-type opportunities. Finally, within close prosciutto these primary zones with a newly discovered high-grade Midwest and Aero targets that also represent potential for future growth. Regional potential of the 91 square kilometer property has yet to be tested for similarly prospective deposits. To reiterate, this discovery, while already substantial is still early, and we are extremely excited to get to work drilling out over the coming years. And with that, I'll turn the call back to Paul.

Thanks, Paul. In conclusion, the agreement to acquire Great Bear illustrates our commitment to long-term growth from high-quality assets and our ability to strategically execute on our M&A vision. We are excited about bringing this compelling gold discovery into our portfolio. We see considerable value in what's already being drilled at Dixie, we are even more excited about the long-term potential for this to become a top-tier producer with a long runway for resource growth, driving long-term value for our shareholders. We remain fully committed to our plan to produce an average of 2.5 million gold equivalent ounces per year over this decade and believe that Dixie will be a cornerstone project in an excellent jurisdiction supporting our production profile by further strengthening our robust long-term outlook. With that, operator, we'd now like to open up the line for questions.

[Operator Instructions] Your first question comes from the line of Tyler Langton with JPMorgan.

I guess to start, Paul, you mentioned sort of the exploration activities that you're going to look at in 2022. I don't know if it's still too early and maybe depending on the results of the exploration, but do you have a rough sense in terms of how long to get sort of resources or -- and then ultimately sort of a technical report and investment decision? Just trying to get a little bit more details on potential timing.

Yes, this is Paul Tomory. Our focus over the next year is going to be a pretty extensive drilling program. We're targeting a budget in the $50 million to $60 million range. And we will focus on both infill drilling in the LP zone as well as continuing some of the exploration work across the broader property. Our goal is to have a resource in place on an open pit, which would form the basis of our first study. And so strategically, the way we're looking at this is we see 4 big buckets of opportunity. One is the LP open pit. The second would be an ultimate transition to an LP underground. Then looking at the Hinge and Limb, the more Red Lake-style mineralization as an underground and then further afield. So 4 key buckets of opportunity. And so the first resource that we put out would be on that LP open pit and potentially some of the underground as well. It would not represent the full extent of what we see on the property. So I'm not going to put a date on that yet, but it will -- we've got about a year of drilling ahead of us, and perhaps year-end 2022 would be a good number for our first resource. But I reiterate that would just be the open pit and potentially some of the undergrounds at LP. You asked about PEA, we want to do the drilling first so that we can get tighter drill spacing to get to an indicated level of confidence. At that point, we would initiate studies on a PEA on the LP open pit. And that will be followed up in subsequent quarters and years with additional studies on potential further extensions of mining. We do have initial estimates on what an LP open pit might look like. But of course, we've got to do a fair bit of work on infill drilling here. I've covered a lot of ground there, but I think I've answered your question in there.

Yes. No, that's very helpful. And then I guess just as a follow-up, and again, I know it's early, but you mentioned sort of the CapEx for the mill would kind of be sized and take into account the underground. I mean, do you have a rough sense for the CapEx sort of, of this project, either I don't know, initial CapEx for the open pit or sort of just longer term, just sort of rough numbers in terms of how you're thinking about it?

The most attractive thing from a project development point of view, this asset is the location. It is right there beside the highway beside the power line. And so there will be significant capital development synergies and leveraging just off an established district. In Canada these days, you can't really build much for under $1 billion, but because of the proximity to infrastructure, we see some upside to get below that $1 billion number. But what we've done to date is obviously very high-level estimates, but some number under $1 billion is a pretty good start. Yes, you asked about the mill. This is a high-grade open pit, so we're not talking about a mill in the 20,000, 30,000, 40,000 tonnes a day range that's too big. We would want a mill that could later accommodate bulk tonnage perhaps panel cave-type underground operation. So we're very, very conceptually targeting a mill in the 10,000 to 15,000 tonne a day range.

Your next question comes from the line of Josh Wolfson with RBC Capital Markets.

Paul, you mentioned there is a clear path for the asset to become an operation. When you consider the extensive time line was just discussed for an initial resource, economics, permitting, construction, what sort of time frame should we think as being realistic for initial production?

Yes. I don't know if you -- Paul Rollinson or Paul Tomory, but Paul, do you want to?

Yes. So Josh, we're going to have multitrack development plan here because of the -- I think this is a really important point. there are multiple deposits on the property, but the first project, if you want to call a starter project, but even if it's not really a starter. It's a pretty substantial mine would be the LP open pit. So we would seek to infill drill that and then get going on a scoping level study moving to PFS FS. And concurrently to all -- with all that, we would begin very early with engagement with local stakeholders. That's going to be an important part of our development plan and then getting into permitting. In Ontario, you can run concurrent permit and study processes. But we're really looking at getting going a scoping study 1 year from now and then probably 2.5 years of PFS FS, 2 to 2.5 years of construction. So a good first production guess at this point would be at 2029, end of the decade.

Okay. And I think given the early stage of the project and having seen some acquisitions in the sector, which have -- in particular, Red Lake, I know this asset is different. But not having materialized as helped. And obviously, given the performance of the stock recently and the premium that's paid, what gives you this level of comfort to make this size transaction at this time with the uncertainty in the time -- long time lines ahead towards production?

Look, I'll start with that. I mean, again, yes, we don't have any kind of resource at this point given the earlier stage. But as I said, we've got 700 drill holes and 340 kilometers of drilling. And you would have seen in that long section that we put into the presentation, there's a lot of drilling, there's great continuity, great grades, we can't give you a resource, but the tools are certainly there from a strike, width, depth, grade perspective to get a sense of what would come out of a potential open pit there. And we believe that, that open pit alone more than justifies this transaction with all the upside to follow.

Josh, what gives us a lot of confidence, given the early nature of the asset here is mineralization is highly consistent. The grades and the widths that are seen in the drill data are very consistent. And there's also an almost remarkable lack of faulting and dyking in the deposit, which gives us a lot of confidence in the potential continuity of mineralization. Another important factor here is that I suppose for decades, people have been looking for Red Lake and Campbell-style mineralization in that camp. And what Great Bear has discovered here, in addition to the Red Lake Campbell-style mineralization and Hinge and Limb deposits, they have found a completely different style of mineralizing system for that area, which is more analogous to, as I said in my prepared remarks, to Hemlo. And we view that as of lower geologic continuity risk than, say, would be a typical Red Lake Campbell deposit, where continuity might be called into question given the past experiences with other developers in that camp.

Your next question comes from the line of Greg Barnes with TD Securities.

First off, I guess, for Andrea, can you give us an idea of what your tax loss carryforwards actually are in Canada?

Yes. So we've got about $1 billion of tax losses. That's -- we disclosed that tax losses in Canada. -- there's an expiry date associated with those. But through tax planning, we expect we'd be able to refresh those. So we should be able to use all those tax loss when in operation and generating revenue.

Okay. Just as a signpost, you've mentioned the 8.5 million ounces is a minimum that you want an M&I before you would pay the contingent payment. Is that just in the LP zone or the central LP zone, does that incorporate other zones into that M&I resource across the entire property?

It would encompass everything, Greg. And the 8.5 million, the sort of the mystery behind how do we land on 8.5 million was -- If you look at the current sell-side consensus average for resources, that is the number, 8.5 million. And we just felt it was a good sort of flag on the hill to just remind people, particularly those that aren't familiar with the story, what some of those sell-side consensus research targets are. So it was a reasonable place to put a pin in for a contingency.

Paul, I don't see those reports, I haven't seen them. Is that 8.5 million based purely on the LP zone? Or is it a bigger number that people are assuming in their calculations?

I'll speak to that a little bit. It's Chris from Great Bear. The LP zone by itself, I think these guys were making the Hemlo analogy. And I know Hemlo is not intimately familiar to many in the analyst community at this point because it's been in production for so long. But that deposit has produced about 23 million ounces of gold so far, over about 2.6 kilometers of strike length. It averages about 8 meters wide of just about 8 grams. It has a smaller mineralized footprint than what we have at the LP Fault by itself. So the LP Fault so far, we're looking at about 4.2, 4.5 kilometers of continuous mineralization that we're doing a grid program on now. So I'd view that over the long term, the potential just within the LP target by itself would be greater than that number, and that's what the analyst community is also projecting.

And I think just to be clear, I think, Chris, I would say the 8.5 million does come from the LP and doesn't even get into the broader potential of the property.

Yes, the other zones would be on top of the Red Lake-style mineralization.

Your next question comes from the line of Mike Parkin with National Bank.

Just wondering if you thought about any of the regional milling capacity as an alternative to building your own stand-alone and I guess, kind of having something closer to where this is -- probably makes more sense, but it's not worth asking.

The local capacities are, in the case of the established camps, are pretty well -- they're used. I know what you're talking about more further away mill. But given the scale of the mill that we're talking about here, 10,000 to 15,000 tonnes a day, given the need to have this pretty close to where the mine would be, we are looking to build our own mill and fit for purpose. We want to customize this mill to our own technical standards. Also, we view this development as an opportunity to showcase some good ideas on innovation and ESG from -- building it from the ground up. So we are looking at this as our own set of infrastructure...

We like the idea of having this and building it to our standards. And I think we've got enough lead time here to make this a Tier 1 example of what you can do in terms of new technology, environmental and we'd rather just take it and develop it on our own with our own standards and the latest technology.

But fundamentally, given the open pit, the scale here is different than anything is in the area.

[Operator Instructions] Your next question comes from the line of Mike Jalonen with Bank of America.

I guess close enough. And just following up on Greg's question because I guess I must have followed off the research distribution list of the analysts who cover great there. I don't know why. Such a nice guy, but what grade would they have used for that 8.5 million ounces since you guys are using that maybe is the great, is that great too?

I'll take that question. I mean, there's really -- it is an interesting system. It's an interesting series of deposits. It's probably the best way to understand it. Ultimately, underground, you'd probably looking of 8 grams, it'd be over 8 grams from what we're seeing. And I think we're all looking at that, like you're not stretching the low cutoffs. We'll talk about all that in the future, but it's genuinely high grade in the 8-gram plus level. In the pit, the important point is that grade goes right to the bedrock surface. So literally, the only reason that this wasn't found many, many years ago is there's a thin layer, sometimes 2 meters, sometimes 20 meters of gravel that cover the bedrock everywhere. But the high-grade gold goes right to the bedrock surface over literally kilometers of strike length. And around that, you get this wide halo of lower grade mineralization. So that's what we were talking about at the beginning here, is that sometimes we see up to 200, 400 meters of like disseminated low-grade mineralization. But in the middle of that, you get to anywhere from a few meters to 20-plus meters of high grade and it's really that composite material. So what's the grade? Well, in the pit, it would legitimately be a high-grade open pit. And it depends how these guys end up modeling it, what the mill capacity is and everything else. But when they say high-grade open pit, that's not a stretch. It really will be. And then you're looking at going in and accessing that high-grade 8-gram plus sort of material underground. So genuinely a high-grade discovery, genuinely big scale, and they will be up to these guys to optimize what sort of throughput grade they want to see in the mill. Paul will probably have a lot of fun talking about that over the next short term year, but what would you guys say looking at the initial data?

Well, you obviously are quite correct on the grade in the underground in a high-grade zone. In our pits, we would obviously look to pull some of the lower grade halo as well. So the throughput grade would be lower than that but still quite high compared to any open pit you may want to look at. Not unreasonable to think of grades in the 3 to 4 range, I think, in an open pit scenario. That's where the open pit, [indiscernible] will be higher.

Yes, actually, I visited Hemlo multiple times and the open pit itself is at volumes is what point 2 grams, 2.5 grams, maybe even 3 grams. So does that sound accurate in that range, like you just said?

Well, the Hemlo, I think they ran about 1.5 grams open pit component, but it was only a very small portion of the total mineralization out of 23 million ounces produced. There was only about 1.5 million in the open pit. This project is different because the mineralized system is wider. So it looks like Hemlo mineralization, it's very predictable. It's sheet like. It's not like tubes or pencils going down to depth. It's like broad sheet. Sometimes there are hundreds of meters sometimes more than a kilometer in strike length, and they're really highly continuous. So that's like Hemlo that the scale of it is quite different. If you look at it in a cross section, you're not looking at something that's typically 7 or 8 meters wide. You're looking at a total mineralized system that's up to hundreds of meters wide. It's so similar geologically, but dimensionally, much bigger.

Okay. Chris, just one last question for you. In your presentation deck the last one, said a 43-101 report was coming out in early '22. It sounds like -- is that still coming out? Or are we waiting now year-end '22 for residential resource?

I think these guys are probably going to want to handle that at this point in time. We're all very optimistic about how that comes about. And effectively, like the project what the analyst community, what Great Bear and what Kinross believe, like we believe this is going to be a Tier 1 type deposit and/or series of deposits. It's basically a mine complex. We're trying to emphasize that on the call, but there's multiple zones beside each other that we -- these are going to turn into multiple deposits. So I mean it's up to these guys when they want to release that. They're putting a big exploration program into it this year, lots of meters drilled. And it won't be long, like they have the ability to unlock this thing rapidly. And that's what gets me excited. Like I'm actually -- I've been very happy to be a Great Bear shareholder like all of our shareholders and very optimistic about that. But with Kinross taking on this project, we're very happy to be Kinross shareholders because what they're going to be able to unlock here with their technical team. It will be efficient, it will be quick, and you'll see some really exciting stuff coming out in the near term.

Mike, I'm just going to add a couple of comments on our path to a resource here. You know Kinross' DNA, we do our work, and we want to get it right. And so the focus, as I said, is a pretty big infill program over the next year, and that will be the initial resource. And that's -- I stress, it will be the initial resource focused on an LP open pit, but there's going to be more to come beyond that. But like I said, you know our DNA, we do our work. We're rigorous in our technical approach. We do all that in-house, and we're gearing up for a pretty big drill program over the next 12 months.

Your next question comes from the line of John Tumazos.

It's John Tumazos Very Independent Research. Congratulations to the Kinross team. Now if I think I've heard everything right, you said the LP Faults at least a 2-kilometer open pit in the -- to 700 meters. And I thought I heard 3 or 4-gram open pit milling target. So you've got a pretty good thumbnail sketch. What's keeping you from declaring an inferred resource if you put widths on that, you've got a mineral envelope. And it sounds like the maiden resource could be over 5 million ounces. Am I hearing all the dimensions right?

The pit is not quite that deep, like I said in our prepared remarks, we're looking at a pit 350 to 400 deep. Why are we not declaring an inferred resource? Partly, we want to do our own work over the next year. The drill density is good, but we want to make it more consistent across the LP Fault zone. Great Bear has done an exceptional job on exploration drilling, focusing on the property and target identification. There's a generational step taking place right now with this asset as it moves to a better understanding of the potential resource and a potential minability. So that's what our focus is, is the infill program right now. We're not in a rush to put out a resource. We want to do the infill work. We want to understand the optimization between an open pit and underground, and that will also drive where we have our resources because the way we look at an open pit versus an underground resource will be different. And that will all be part of the work over the next year.

Once again, I'm putting myself in the shoes of your evaluation team and Board. My hunch is that you have a resource number conceptually in-house that maybe isn't good enough to publish it and you want to verify. In your own analysis, what top cut factors are you using? And are there any other geotechnical constraints that you would apply?

I'll pass it on to [ Niko Seifer ], our Resource Geology lead.

Sure. We've kind of looked at multiple top cut factors. What really matters here is there's a great deal of visible gold in the system. And we see it everywhere. So how you constrain that? How far you let that spread can really move the needle. So that's another reason for just taking our time, getting the infill in place, getting some tighter drill spacing to understand how far that spreads. That's the real goal here.

So you're taking your time to have a better quality resource with more infill drilling more data.

Yes, we don't want to comment on...

[indiscernible] the area of influence.

Exactly. We don't want to come out of the gate with something that's inferred and maybe half baked, when we should do the work properly in-house and deliver something that's quality.

John, we're not buying this for the initial resource. That's going to be 1 step along the journey here. We're buying this for the camp scale potential that we see in this property. Another point is Kinross does our own technical work. When we bought other assets, we actually -- in the case of the Russian asset, we bought a couple of years ago, we did our own drilling during the diligence period. Here, we didn't do that. And so we just want to build our models and bring everything in line with the Kinross standard. So we're not in a rush to put out a resource.

Your next question comes from the line of Tanya Jakusconek with Scotiabank.

Thank you for some of the details. And maybe if I can just circle back just missing one other portion is just on the costing side, maybe Paul Tomory, can you just give us a bit of an idea of if you can, on a strip ratio and just back of the envelope numbers is a $600 to $800 per ounce all-in sustaining cost, something reasonable for this open pit?

That's very reasonable.

Okay.

Strip ratio will be determined by our cutoff grade in the pit.

Okay. Okay. That's helpful. And maybe as we look at the project and we said at the end of the decade coming in. Maybe Paul Rollinson, can you kind of walk us through your priorities of your project pipeline, how this would fit in with Lobo-Marte, Chulbatkan, et cetera, so that we understand the capital spend over this period.

Sure. Look, I think the timing is actually quite ideal. We won't be taking our foot off the gas on any of those other projects. And we certainly have the technical bandwidth capacity. We have the financial capacity. This will be a highlight in our portfolio. It will be a priority, but it will not detract from the other development projects that we're working on.

Okay. So you don't -- sorry, go ahead.

And in the case of Lobo-Marte, our development time line is tied to how much further potential we get at La Coipa. So the more we get at La Coipa, the more we'll push out the Lobo Marte time line. And we just signed our first agreement with Codelco on the JV. So we've got a life of mine extension already happening at La Coipa. So Lobo will be tied to La Coipa.

Okay. And if you have to prioritize, you would have La Coipa, which is coming in, you would have this one. Russia and then sort of global market would be sort of the one you'd move around if you had to?

It's the furthest out, yes.

Yes. Okay. And maybe if I could ask about just on shareholder returns. You talked about maybe accelerating your share buyback. So can you talk a little bit about if we go to the maximum and that 96 or whatever million shares are issued on the Kinross side. How do you see buying those back? Like can you kind of give us an idea of what you're targeting? Or how do you see that play out?

Yes, just -- okay, sure. Just to refresh, I mean, we're doing $150 million a year in the dividend and about $150 million a year in the buy back, we've obviously modeled sensitivities as to our financial capability to increase that. And we're quite comfortable. I don't want to get into specifics today, but when you look at our go-forward cash flow this year, growing, next year, growing. We've got more than enough capacity to effectively turn this into a cash transaction.

At this time, there are no further questions. I would like to turn the call back over to Mr. Paul Rollinson for closing remarks.

Well, thank you, Lisa, and thank you, everyone, for joining us. I'm sure we'll be talking to many of you in subsequent one-on-ones. But thanks for joining us, and we'll be in touch. Thank you.

This concludes today's conference. You may now disconnect.