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