Kinross Gold Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
January 26, 2024

There are 14 speakers on the call.

Operator

Good morning, and welcome to Olin Corporation's 4th Quarter 2023 Earnings Conference Call. All participants will be in listen only mode. Please note this event is being recorded. I would now like to turn the conference over to Steve Keenan, Olin's Director of Investor Relations. Please go ahead.

Speaker 1

Thank you, Andrea. Good morning, everyone, and thank you for joining us today. Before we begin, let me remind you that this discussion, along with the associated slides and the question and answer session that follows, will include statements regarding estimates or expectations of future performance. Please note that these are forward looking statements that actual results could differ materially from those projected. Some of the factors that could cause actual results to differ from our projections are described without limitations in the without limitations in the Risk Factors section of our most recent Form 10 ks and in yesterday's Q4 earnings press release.

Speaker 1

A copy of today's transcript and slides will be available on our website in the Investors section under Past Events. Our earnings press release and other financial data and are available under press releases. With me this morning are Scott Sutton, Olin's CEO and Todd Slater, Olin's CFO. I'll now turn the call over to Scott Sutton to make some brief remarks, after which we'll be happy to take your questions.

Speaker 2

Thanks, Steve, and good morning to all. In the Q4, the Olin team delivered the 4 items that were promised, which were $210,000,000 of adjusted EBITDA overcoming a negative $100,000,000 EBITDA impact from our purposeful Value Accelerator Initiative. Stopping the decline of ECU values as a result of our value accelerator initiative, completing the remaining purchase of 10% of our standing equity in 2023 and setting the company up for a 2024 that is better than 2023. We start that setup by making the Q1 of the New Year better than the Q4 of the past year. We are also very pleased that outside of the minor purchase price for the Whiteflyer acquisition, Olin's net debt at the end of 2023 was essentially the same as the net debt at the beginning of 2023.

Speaker 2

Since this could well be my last Olin earnings call, I wanted to remind everyone that Olin has a very unique value creation equation of lifting people to a higher level of fulfillment, delivering value on a contemporary basis through a novel idea pipeline and practicing absolute leadership In Commerce, this unique value equation opens a long runway to a very positive future And our leadership team will take Olin there. The earnings and cash flow power of Olin is huge. So Andrea, that concludes my opening remarks. And now we can proceed to questions.

Operator

And our first question comes from Arun Viswanathan of RBC Capital Markets. Please go ahead.

Speaker 3

Great. Thanks for taking my question. Good morning. So I guess I just wanted to ask first on the guidance. So it looks like you're expecting some growth in 2024.

Speaker 3

How do you see that proceeding? Looks like your Q1 guidance is a little bit below where we were expecting. So I know that you're implementing the Value initiatives. So maybe you can just kind of walk us through some of the growth you expect, as you move through the quarters of 'twenty four?

Speaker 2

Yes. Good morning, Arun. Happy to do that. I mean, we're really forecasting some profit growth, right? And if you just walk through the three businesses and I'll just start with Winchester.

Speaker 2

I mean we are right in the middle of doubling our military business and that is on track both domestically and internationally. In the commercial side of that business, demand stays rather high. And on top of that, we have the Whiteflyer acquisition for a full year. And on top of that, There's going to be a shortage of propellant across the industry this year and Winchester is Well positioned to take advantage of that. So we feel really good about the profit growth in Winchester.

Speaker 2

Look, in epoxy, it's Much more a self help story. We're not necessarily anticipating demand growth, but clearly the restructuring work that we did is applicable for a whole year. Our focus on systems is working. We don't have to clean up inventory as much as we did in 2023 and we're going to work on the illegal flow of products coming from Asia as well. So then Arun, you really get to the biggest business CAPV, which I'll just remind you has super fundamentals as you look out in the future.

Speaker 2

But it's all about Turning around the value of the ECU and that's the initiative we're running now. We have a slide number 4 It gives some indications that we're having some success. I would say even on top of that, there's less volume entering global trade flows today. Some customers are restarting assets that have been down. So even in that business, we expect Q1 to be larger than Q4 and we expect Q2 to be better than Q1 as well.

Speaker 1

Thanks. And then if I

Speaker 3

could just ask, is there any update on the search for a new CEO? Thanks a lot.

Speaker 2

Yes, sure. Look, I really don't have an update on that. And I'm really sorry For that because look, our shareholders and our Olin women and men who have really built this value For those shareholders, they deserve a lot better than that from me. But I'm out of the process. That process is 100% run by our independent board members only.

Speaker 2

What I can say is to the best of my knowledge, I'm not aware of any offer being extended out there yet to any candidate.

Operator

The next question comes from Hassan Ahmed of Alembic Global. Please go ahead.

Speaker 4

Good morning, Scott. Question, just wanted to sort of go back to the value accelerator I mean you were very specific in talking about limiting your market participation till February 24. What gives you the confidence with regards to that sort of a timeline that you start sort of potentially seeing a positive inflection there on after, particularly keeping in mind the macro, housing the way it is and the like?

Speaker 2

Yes. Sure. Hi, Hassane. Look, we think that's about the right time to make sure that this gets substantially turned around. I mean, already and again, I'm kind of referring back to Slide number 4, right?

Speaker 2

We've Seeing the indicators of success, certainly in our business, we are having caustic price increases effective January 1 And even a bit before that, already EDC export pricing has lifted significantly. But for some of the public trade indices, that's still just projection. So it's their projection, not our projection now. But we do need to make sure that materializes. So look, I mean, this is a real game of momentum and third derivatives and second derivatives.

Speaker 2

And we're

Speaker 5

just going to make sure

Speaker 2

that We deliver a bit more oomph behind that momentum and that's why we're extending it a bit into the first quarter.

Speaker 4

Got it. And just wanted to get a bit more sort of quantitatively specific about the 2024 guidance that you gave. I mean, you're sort of alluding to north of $1,300,000,000 in EBITDA in 2024. And if I were to just use sort of Q4 as a starting point, you did $210,000,000 in EBITDA in Q4. So I annualized that and you're at $840,000,000 right?

Speaker 4

And to get to north of $1,300,000,000 You need an incremental call it $460,000,000 in EBITDA, right? So I'm just trying to And where that increment really comes from? I mean I know that in the slides that you guys presented, You referred to the sort of the value sort of enhancement being, call it, dollars 100,000,000 a quarter worth of a penalty. So is it primarily you guys sort of stopping to partake In that initiative post February and most of that EBITDA coming from there? Or are you sort of looking For some margin help from the market as well.

Speaker 4

Yes.

Speaker 2

I mean, sure. I mean, hopefully, you'll give us a little bit on Winchester And the fact that we will repeat epoxy being a 0. So then I get Your question for sure. I would also think a little bit about some of the math even We took our operating rate down to roughly 50% from Around 60% in the 4th quarter, and that was $100,000,000 penalty. So you might As those rates very slowly creep up to match customers coming back online, That's sort of an equation for where you might be $100,000,000 penalty for 1 quarter to change the rates from 50% 60%.

Speaker 2

If everyone is paying attention, they'll understand the math behind our operating leverage exactly. It doesn't take very much there to add $100,000,000 or a couple of 100 And or even a $1,000,000,000 as things get better maybe in 2025.

Speaker 4

Very helpful, Scott. Thank you so much.

Operator

The next question comes from Aleksey Yefremov of KeyBanc Capital Markets.

Speaker 2

Scott, you talked about January 1 caustic So the price increases, can you discuss them, were those mostly monthly customers or quarterly contracts or maybe spot and what is your outlook for caustic next few months? Yes. Hey, Alexia. Yes, I mean, look, I would say it's Some of all of that. In fact, even though we put January 1, some of that success happened early, earlier than that.

Speaker 2

And while it's across a number of customers, I mean, please understand that we still have a lot of work to do there. And caustic is a business that is still heavily tied to a trade index. And that trade index in the 4th quarter relative to the 3rd quarter showed a decline. So our pricing in the Q1 is going to change by the difference between those prior two quarters. So we still have to get by that hurdle.

Speaker 2

And that's why in the last quarterly earnings call, we said you're really going to see this start to materialize in a bigger way in our 2nd quarter results. Thanks, Scott. And on the chlorine side, I mean, there is a consultant's view of declines for the year. What is your outlook and level of confidence in in the outlook for the next few quarters as well? Yes.

Speaker 2

Well, I mean the chlorine and chlorine derivative sides are Still the weaker side of the ECU. But what I will say is that Olin's average chlorine price in the Q1 relative to the Q4 absolutely goes up. Some of that is because We've been able to renegotiate pricing in some contracts that expired at the end of the year. Some of that is because we ran this value accelerator initiative and the only way to pull out of the market actually to pull out of some of our higher price business because it was more spot in nature. But at least on our base business that continues without a contract change, that pricing doesn't go down Either.

Speaker 2

Nothing is getting worse in terms of chlorine pricing. Okay. Thanks a lot.

Speaker 6

Sure.

Operator

The next question comes from Steve Byrne of Bank of America. Please go ahead.

Speaker 7

Yes. Thank you. Scott, I was curious about this prolonged trough in PVC demand. Is that representing a bit of a challenge for you to negotiate maybe a partnering opportunity downstream Post the end of the Dow agreement in another year?

Speaker 2

Yes. Hey, Steve. I mean, look, I do think it's extended it Some, right? But of course, with the change in our relationship with Dow at Freeport in 2025, we get a lot of excess capability coming back in our hands and we'll have to decide what to do there and everyone already knows that that's quite accretive for us for sure no matter what we do. So that comes available.

Speaker 2

I would say in addition to that, we have a tremendous amount of VCM that's going through a pipeline to one customer and all of that ends in 2,030 as well. So we're getting close to being able to match up with a different PVC operator. So Instead of spending $6,000,000,000 on a completely integrated world scale facility, someone has the ability to spend 20% of that to get in business in a world scale PVC plant. So I think the timing is okay. We wish it was a bit faster.

Speaker 2

But you're right. I mean, the situation in the world right now has just slowed down some of those activities.

Speaker 7

And then just given this uncertainty about the new CEO, Scott, are you opposed to Staying there in that seat or staying longer depending on this transition?

Speaker 2

No, I'm not.

Speaker 8

Okay. Thank you.

Operator

The next question comes from Joshua Spector of UBS. Please go ahead.

Speaker 6

Hi, everyone. It's Chris Perrella on for Josh. Morning, Scott and Todd. Question on the follow-up, I saw that the share repurchases slowed in the 4th quarter. What's the outlook for share repurchases for 2024?

Speaker 9

Yes. Chris, this is Todd. Thanks for the question. We committed to repurchase approximately 10% of our standing shares in 2023 and that was consistent with what we achieved. We were relatively steady buyer through the year.

Speaker 9

We bought a little less in the Q4, but consistent with the guidance that we had provided. As you look at our levered free cash flow for 2024, you should expect us to primarily deploy that Cash towards share repurchases, our strong investment grade balance sheet and cash flow enable Olin to continue to deploy our cash toward repurchasing our shares.

Speaker 6

All right. And then a follow-up. As you take the break off the value accelerator initiative And you raised operating rates starting in March with as the current plan. I thought there'd be a larger step up In EBITDA earnings for the chlor alkali business, I'm just curious, Given the puts and takes there, it seems like it's not up much and that $100,000,000 penalty should be coming back a bit faster. Can you just kind of walk through how that penalty lifts?

Speaker 2

Yes. I mean, Chris, look, it's a really good Observation, I mean, I would just keep 2 things in mind. I mean, number Continuing to run that initiative for up to 2 thirds of the first quarter, but also on top of that, it goes back that caustic pricing phenomena that I talked about whereby the 1st quarter pricing that we print is determined by the difference between the Q4 and the Q3, and that's already known to be a drop. So we have to overcome that as well.

Speaker 1

All right. So it's just a lag in

Speaker 6

the contract pricing playing Okay. Exactly. Exactly.

Speaker 1

Thank you very much.

Speaker 2

All right.

Operator

The next question comes from Frank Mitsch of Fermium Research. Please go ahead.

Speaker 8

Hey, good morning. Interesting on the parlay chart reaching a high of 25% in the 4th quarter. Obviously, part of that is The initiative to ramp back your own operating rates, where does that stand now here in January and what are your expectations for that metric through the quarter?

Speaker 2

Yes, yes. Hey, Frank. Yes, I mean, you're right. I mean, it's I think it's very interesting that For 25% of our volumes were out there selling, we were buying those from 3rd parties. And it might just tell you about the strength of Olin that we can do that, we can go run our assets at 50% utilization, we can take care of all those items and still have positive levered free cash flow even in the 4th quarter.

Speaker 2

So I mean, thanks for the observation on that or the hint of the observation.

Speaker 7

I mean,

Speaker 2

I would say that, look, we're still doing a lot of that because we're still running that initiative. I do think through the year as we very slowly and incrementally may lift rates a little bit, you might see that percentage decline back some. We're unlikely to be at a 25% purchase of all of our volumes from other parties over a long period of time, it will probably settle at something lower than that.

Speaker 8

Okay, great. Great. And then as you assess the underlying market demand by region, you had indicated The last time that things were right, were rather slow and so forth. How is it standing here in January and what are your expectations? What is actually embedded In terms of underlying demand, as you think about 2024 being better than 23 overall?

Speaker 2

Yes. Well, I mean, look, in Winchester, there's a demand increase in military just to sort of put that one to bed. We haven't planned on any demand increase in epoxy, right? That's a self help type of work. Even in chlor alkali, very limited But I will just say that sentiment is a little bit better here at the start of the year.

Speaker 2

Customers are restarting. 2 of our larger customers that have large offtakes have been down for many weeks. And in fact, they're restarting. There's some light confidence, I'd say, in homebuilders, where at least maybe that doesn't go the wrong way. So there's just not a lot of strength in demand built in our outlook, Frank.

Speaker 8

Okay. Very helpful. Thanks so much, Scott. And if this is the last time we speak as you've been part of Olin, I'm looking forward to your next adventure. Thanks so much.

Speaker 2

Yes. Thanks, Frank.

Operator

The next question comes from Kevin McCarthy of Vertical Research Partners. Please go ahead.

Speaker 10

Yes. Thank you and good morning. Scott, I'd welcome your updated thoughts on the shape of the epoxy cycle. If I look at Slide 8, it appears as though your prices eroded in 4Q versus 3Q. How do you think that will trend in the Q1?

Speaker 10

And then I'm also interested to hear your thoughts on epoxies in Europe. We're reading about Disruptions in trade routes relative to the Red Sea and purchasing managers seem to want to kind of get ahead of those longer lead times and increased tensions and friction and so forth, how do you see the next quarter or 2 shaping up for epoxy?

Speaker 2

Yes, sure. Hey, Kevin, good question. Yes, look, I mean, we've announced price increase And we're getting some price increase. And in fact, if you really looked at what's happened over the last Few months has been more of a wash tub bottom. It really hasn't declined further.

Speaker 2

In fact, even the trade publications now are saying that this is a bottom. Believe me, we absolutely say that this is a bottom. And The disruptions for trade routes that is starting to have an impact particularly in Europe. So there's a lot of momentum for the start of lifting prices again through epoxy. It's going to be slow though.

Speaker 2

I think what you'll end up seeing us do is sort of Take that washtub and prop it up a little bit. I wouldn't expect something really, really fast there, but we're going to change the slope of that curve.

Speaker 10

Okay, that's helpful. And then curious on EDC, we've seen those prices percolate higher notwithstanding weakness in downstream PVC resin. How much headroom Is there, before you kind of run into that PVC ceiling, so to speak?

Speaker 2

Yes. Well, look, I Particularly the export PVC pricing is not good and you've seen EDC lift, but There's still a substantial gap left even when PVC is this low. And that's one of the focuses we've had and one of the initiatives we've had is to try to close that gap and we were never really Successful at closing that gap. So there's still room there to move it some more relative to PVC.

Speaker 10

Great. Well, that's helpful. And if it is the last call, Scott, congrats on all that you've been able to do with the company in less than 3 years and look forward to keeping in touch.

Speaker 2

Yes. No, thanks a lot. It's really not me though. It's this team and this employee group. So thanks.

Operator

The next question comes from David Begleiter of Deutsche Bank. Please go ahead.

Speaker 1

Thank you. Good morning.

Speaker 8

Scott, just on the Blue Water Alliance, keynote data saw on how it performed last year and what's the expected EBITDA contribution in 2024?

Speaker 2

Yes. Hey, good morning. Yes, I mean, look, I probably won't give a forecast of EBITDA contribution, but I mean clearly that does appear indirectly in our financials right, it's sort of the 1st year. There's a lot of purposes for Blue Water. We don't intend for it to be a wild direct contributor of profit.

Speaker 2

But the value to Ton 1 And the value in the overall product levels of Olin is there. I mean Part of our parlay work that we're doing now and we just had that discussion being 25% of our business is associated with Bluewater. So it will likely improve this year, but it's not going to be a major direct relative to the size of the rest of our business.

Speaker 1

Very good. And just again on

Speaker 8

epoxy, what's the Path back to mid cycle earnings given the amount of oversupply in the marketplace today?

Speaker 2

Well, I guess it depends on what you call mid cycle in that business, but I'll just say it's a multiyear path And maybe leave it at that.

Speaker 8

Thank you very much.

Speaker 2

Yes, sure.

Operator

The next question comes from Mike Leithead of Barclays. Please go ahead.

Speaker 3

Great. Thank you. Good morning. First question on Winchester. You've obviously talked a lot this call, Scott, about the earnings improvement likely this year.

Speaker 3

Could you first remind us just how big military is relative to your overall kind of sales mix in this business? And second, it is an election year. Does that normally change commercial order patterns or do you see that impacting at all commercial sales volumes?

Speaker 2

Yes. Hey, good morning. And the military side of that business now has become about as big in rough terms is the commercial side of that business. In fact, in the Q3 of 2023, it was actually bigger than the commercial business for the first time in history. So I think a good way to think of it is, it's sort of half and half from a sales It's not quite as profitable as the commercial business, but That's roughly the sizing of it.

Speaker 2

Yes.

Speaker 9

What was the second part of the question? The presidential election.

Speaker 2

Oh, yes. Yes. Thank you. Yes. Yes, I mean that kind of uncertainty along with other things that are out there in the marketplace I mentioned this challenge on propellant supply to the whole industry.

Speaker 2

Those two things coming together are likely to cause a run on ammunition.

Speaker 3

Got it. Okay. And then second question, I want to parse apart, one of the comments or bullets you have in the slide deck, Slide 4, I think you said customer requests for merchant chlorine has increased. Should we interpret that, that customers are coming to you asking for more products, but not at a price or an economics you're willing to sell at or can you maybe expand upon that a bit?

Speaker 2

Yes. I think the way to interpret that is that when we Pulled back from the market some just because we're running our initiative, we're not going to participate in a poor quality market. After we did that, that caused some customers, some not even The same customers that we may have pulled back from to come ask for more volume. Again, it's just an indication that we can have an impact by taking that kind of action. And it's an indication that we have the opportunity to turn back on some of these assets though at a very, very incremental amount only and do some additional business.

Speaker 3

Great. Thank you.

Speaker 2

Yes.

Operator

The next question comes from Mike Sison of Wells Fargo. Please go ahead.

Speaker 11

Hey guys, Scott, it's been great working with you over the last several years. I guess just to clarify, If you would need to get your operating rates in CAV between 16% 70% At some point, maybe the Q2 and beyond to get to your guidance of $1,300,000,000 or better. And I mean, Is demand there to do that, I guess, is a follow-up question or do you need demand to get better to do that?

Speaker 2

Yes. Well, I don't know that we need to get back to the levels that you spoke of. I mean, remember, Winchester and Epoxy are going to do better and we expect CAPV to do incrementally better as well. I think adding anything back to our rates, maybe below the numbers that you spoke of Gits is there. When you take that in combination with the fact that, look, we don't have another $100,000,000 penalty from not being able to run our VCM unit for a whole quarter, for example.

Speaker 2

So when you put those two things together, I don't think we need to get there. By 2025, I think we need to be in the 60s.

Speaker 11

Got it. And then what and just curious, what would prevent you from Moving or operating itself. I mean, I know the consultants have they have ECU margins kind of down sequentially. They might not necessarily be right. But what are you looking what would prompt you not to be able to raise your operating rates heading into 2Q.

Speaker 2

Yes. Well, if we weren't having success moving product values, then we would keep running this initiative. But we're having success changing the direction of our product pricing.

Speaker 8

Got it. Thank you.

Operator

The next question comes from Jeff Zekauskas of JPMorgan. Please go ahead.

Speaker 12

Thanks very much. Earlier in the call, you spoke of a large contract That can end in 2,030. Did that customer indicate that they didn't wish to renew?

Speaker 2

Well, hey, Jeff, how are you doing? I mean, what I would say is that's the natural expiration of that contract. And we're currently in a dispute with a very significant value lift opportunity. So we'll just have to see where that goes by 2,030.

Speaker 12

Okay. And then secondly, can you just compare general demand conditions In the caustic chain to the chlorine chain and in your curtailment of production, Are you making a larger difference to the chlorine side or to the caustic side and why?

Speaker 2

Yes. Well, I mean, right now, Jeff, the chlorine and chlorine derivative side is weaker for us. So we generally set our participation according to that weaker side. And so we're having an impact. But more than likely, the bigger part of the impact will be on the stronger side because you end up really shorting that demand profile more.

Speaker 12

Okay. I understand that. Thank you very much.

Speaker 2

Okay. Thank you.

Operator

The next question comes from Vincent Anderson of Stifel. Please go ahead.

Speaker 13

Thanks. Good morning. So maybe you have a different view, but it looks like China is Probably still planning a fair amount of capacity up and down the epoxy value chain over the next few years. So to me at least, it would appear that trade protections might be necessary even if we did see some amount of demand recovery. So I guess to turn that into a question, are you still considering trade in epoxy and how important is sort of your renewed focus on fleshing out your derivative portfolio is a balance to the operating leverage on the base resin assets?

Speaker 2

Yes, yes, sure. I mean, no, we're absolutely doing more than considering That, right? I mean, look, effectively, this is illegal product trade flows coming into both Europe and the U. S. And this has to be stopped.

Speaker 2

And for some of the reasons that you said, it's likely to continue. So we're absolutely going to pursue that. I think in terms of getting rates up, we've reduced our on the ground capacity quite a bit and we're using our systems portfolio to get some operating leverage back across our base resin. I think that was the second part of your question.

Speaker 13

Yes, it was. It was. And very helpful. Thank you. If I could ask one other one, Maybe too early on this, but we're reading about the Chinese ramping up capacity of sodium ion battery production.

Speaker 13

I'm curious if you've seen any meaningful change in their sodium markets, whether that's coming from the caustic side or maybe they're using soda ash, but just Anything you can shed a light on because it's still a bit of a black box on our end?

Speaker 2

Yes. And I probably can't help that much on that specific of an item, right? But what I can say is the ramp up of battery production And battery recycling is probably the largest growth item we have across our Chlor Alkali portfolio. There's a demand for more caustic in many of those applications. There's also an additional demand for hydrochloric acid in those as well.

Speaker 2

So it's probably the premier growth item over the next 10 years in this business.

Speaker 13

All right. Well, thanks. Thanks, Scott. I appreciate it.

Speaker 2

Sure.

Operator

The next question comes from Matthew Blair of TPH. Please go ahead.

Speaker 3

Hey, good morning, Scott. So Slide 8 shows caustic holding as a strong side of the ECU again this quarter. I think in the past you said you like it when that gap is pretty wide. Could you talk about what you're seeing in the market now? And is that gap widening out or is it narrowing?

Speaker 2

Look, give me a little clarification. I missed The gap between what two things?

Speaker 3

The gap between chlorine and caustic in ECU and which is the strong side and which is the weak side?

Speaker 2

Yes, sorry. Yes, I appreciate that. And I First of all, Olin does do better when there's a difference in the Supply demand profile on the chlorine side of the ECU versus the caustic side of the ECU. Just because we can act on 1 versus the The only challenge that we really have is when both are bad and they're equal. That's the hardest profile for Olin to act on.

Speaker 2

So we don't have a problem with 1 being weak and 1 being stronger. That's the way we're set up now. Caustic is stronger, chlorine is weak, but overlaying that is just general weakness and that's why our earnings are down.

Speaker 3

Got it. And then, I thought it was interesting. You mentioned That in general Winchester is a bright spot and talked about military being a big opportunity. I think the slides mentioned that military was actually down a little bit in the Q4, quarter over quarter, even given this period of global instability. What are you seeing in Q1?

Speaker 3

Is that starting to rebound?

Speaker 2

Yes. And I understand your comment. That was just a sequential issue and it's really only issue and it's really only order pattern related and delivery related. A lot of those deliveries into the Military application are very large and they're very discrete. So that's only an order pattern issue.

Speaker 2

Again, I would just compare year on year on year and there's substantial lifts year on year on year.

Speaker 3

That's really helpful. Thank you. Sure.

Operator

The next question comes from Vincent Andrews of Morgan Stanley. Please go ahead.

Speaker 3

Thank you. Good morning. On the cash taxes, my recollection is that those that increase was also supposed to be the case last year and I think you mentioned defer Into

Speaker 1

this year, so is this year that increase I think

Speaker 3

is $80,000,000 is that definitive for 2024 or is there some chance to further defer those?

Speaker 9

Thanks for the question, Vincent. And I wish I could sound very optimistic and say there is a chance to defer, I don't believe that will be the case. And we would expect that $80,000,000 will be paid out roughly during the middle of this year.

Speaker 3

Okay. And then also on that same Slide 9 and the primary uses For cash flow, the third one being the Alliance and JV opportunities. Is there sort of a rough amount you could suggest that go towards those this year or backs amount?

Speaker 9

They would be Vincent, thank you for the question on that. At this point, they would be very small. We do have a Hydrogen joint venture that we do have a little bit more that will be paid during this year. So that is a small number relative to any of those cash flow numbers.

Speaker 3

Okay. Thank you very much.

Operator

The next question comes from John Roberts of Mizuho. Please go ahead.

Speaker 3

Thank you and best wishes as well, Scott. I think acetone prices spiked during the quarter. Is that just the normal co product dynamics with the weak BPA market for epoxies or is there something else going on there?

Speaker 2

Yes. I mean principally that's it. You're right. I mean Phenol Acetone co production a little bit like chlorine, caustic and we've Sort of transferred some of our model that we run-in the ECU world into our phenol acetone production and marketing scheme. And so you've seen us take advantage of that and get some value out of acetone.

Speaker 3

And then at Lake City, do you think there are any political risks to being able to use the excess capacity for commercial production? The New York Times Had a pretty high profile article during the quarter.

Speaker 2

No, I don't think there's any risk there at all. I mean, what I will say is that, look, I mean, there's always this sort of backdoor play to try to go after the 2nd amendment of the constitution in the U. S. And That's what that is. And those kinds of things are not likely to be very successful.

Speaker 2

I just go back to the fact that Probably in this country, there's 26,000 gun laws on the books. Still, sports shooting is the largest Participants sport in the country just blow exercise, okay? And coming after ammunition, There's probably an unsuccessful road that some might follow there.

Speaker 3

Thank you.

Operator

The next question comes from Roger Spitz of Bank of America. Please go ahead.

Speaker 5

Thank you very much. I'm assuming you've idled some of your electrolyzers or perhaps full trains to get to the 50% operating rates. Will there be material restart costs as you move your operating rates up? I guess membranes can be finicky or you mainly idling just your asbestos

Speaker 2

Yes. Thanks for the question. No, there's no incremental cost. We can move those up and down rather quickly. And in fact, just a smaller point for you that's pretty interesting is the The diaphragm systems relative to the membrane systems are very easy to go up and down.

Speaker 2

That's an advantage of asbestos diaphragms for other kinds of diaphragms relative to membrane system, very easy to turn on and off.

Speaker 5

Got it. And secondly, historically, ammunition sales commercial ammunition sales have been higher when the Democrats Have the administration versus Republicans, do you have any view of how much EBITDA is in Winchester attributed to the fact that we currently have administration?

Speaker 2

Well, I would say not really. I would say it's more attributed to the fact that there's At least 15,000,000 new participants doing sport shooting in this country. And every month, I forget how many, maybe someone will tell me how many months in a row that the Knicks Background checks have been above 1,000,000 guns a month, but it's like 40 or 50, maybe even more. I just can't remember the number And that trend continues. And that's driven a lot more participation in the sport.

Operator

As there are no further questions, this concludes our question and answer session. I would like to turn the conference back over to Scott Sutton for closing comments.

Speaker 2

Well, I would just say thanks very much to everybody for attending today. Thank you.

Operator

Thank you for attending today's presentation. You may now disconnect.

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Earnings Conference Call
Kinross Gold Q4 2023
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