Actuals vs. estimates

Verdict

• Adjusted EPS of $2.20 beat the $1.96 estimate by 12.2%, a third-quarter record, on a $4,317 per ounce realized gold price and roughly 1.3 million ounces of gold.
• Full-year gold AISC guidance improved to approximately $1,520 per ounce, about 10% better than the original guide, with production and capital guidance held.
• 2027 framing arrived early: production up a low to mid-single-digit percentage, development capital about $500 million higher, and unit costs trending higher as Penasquito silver falls roughly 30%.
• The one thing that matters: the cost beat is borrowed from co-products. Q3 AISC of $1,454 per ounce leaned on 11 million ounces of silver, and the guide already has Q4 near $1,900 per ounce with 2027 unit costs rising as that credit fades.

Guidance & KPIs

Management commentary

• Red Chris block cave development capital estimated at $4.2 to $4.8 billion on a 100% basis, construction ramping in 2027 and commercial production targeted for 2033, with a full funds decision expected early next year.
• About 50% of the roughly $500 million 2027 development capital increase is tied to Red Chris; the rest includes the Lihir nearshore barrier.
• Lihir faces El Nino water risk through November and December; management said "we have not been impacted yet" and plans to keep mining to stockpile if plant water runs short.
• Tanami second expansion now expected to reach commercial production by the end of Q2 2027, earlier than previously anticipated.
• Labor escalation expected to exceed the roughly 3% assumed for 2026; the indirect oil sensitivity excludes labor.

Quality of earnings

• Unit costs improved on by-product credits, not gold-mine costs. Management attributes the sequential AISC improvement to $1,454 per ounce primarily to higher gold and co-product volumes, 11 million ounces of silver and stronger copper prices; Q4 silver at Penasquito drops to about half of Q3 levels.
• Cash conversion is real but was flattered less than Q2. Operating cash flow of $2.8 billion after working capital, less $525 million sustaining and $354 million development capital, yields the $1.9 billion free cash flow, with part of the Q2 working-capital benefit unwinding in Q3.

Gotchas & watch items

• Q4 AISC guided to approximately $1,900 per ounce, the highest of the year, versus $1,454 in Q3.
• Penasquito silver output expected roughly 30% lower in 2027 than 2026, removing a key co-product credit.
• Oil sensitivity widened: about $60 million direct fuel plus about $50 million indirect consumables impact per $10 per barrel move.
• The $3.2 billion net cash balance excludes the $1.95 billion Nevada Gold Mines payment expected in Q4.

Last quarter's watch items: what happened

• No watch items on file from a prior quarter - this is the first tracked quarter for this company.

Next quarter: the 2-3 things that matter

• Q4 gold production reaching the guided strongest quarter Baseline: Q3 gold production approximately 1.3 million ounces; Q4 guided to 1.4 million ounces Confirms: Q4 gold production at or above 1.4 million ounces with Lihir higher grade delivered Breaks: Q4 production below 1.4 million ounces, especially if Lihir is cut by El Nino water constraints Check in: Q4 2026. Source: CFO prepared remarks on Q4 guidance
• Full-year AISC landing at the improved guide Baseline: FY2026 gold AISC guided to approximately $1,520 per ounce; Q4 approximately $1,900 per ounce Confirms: FY2026 AISC at or below approximately $1,520 per ounce Breaks: FY2026 AISC above $1,520 per ounce or Q4 materially above $1,900 per ounce Check in: Q4 2026. Source: CFO prepared remarks on cost guidance
• Red Chris full funds decision and capital estimate Baseline: Development capital $4.2 to $4.8 billion on a 100% basis, FID expected early 2027 Confirms: FID approved early 2027 with capital inside $4.2 to $4.8 billion Breaks: FID delayed or capital estimate above $4.8 billion Check in: Q4 2026. Source: CEO prepared remarks on Red Chris