IAMGOLD Q3 2023 Earnings Call Transcript

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November 10, 2023

There are 7 speakers on the call.

Operator

Welcome to the IAMGOLD Third Quarter 2023 Operating and Financial Results Conference Call and Webcast. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask At this time, I'd like to turn the conference over to Graeme Jennings, VP, Investor Relations and Corporate Communications for IAMGOLD. Please go ahead, Mr. Jennings.

Speaker 1

Thank you, operator, and welcome everyone to our call this morning. Joining me today on the call are Bruno Adams, President and Chief Executive Officer Martin Vanusen, Chief Financial Officer Bruno Lemelin, Chief Operating Officer Tim Bradburn, Senior Vice President, General Counsel and Corporate Secretary and Jerzy Orzechowski, Executive Project Director, Cote Gold. Before we begin, we are joined today from IAMGOLD's Toronto office, Located on Treaty 13 territory on the traditional lands of many nations, including the Mississaugas of the Credit, Anishinaabe, Chippewa, Hooten O'Shaughnessy and Wyndham Peoples. At Hyangold, we believe respecting and upholding indigenous rights is founded upon relationships that foster trust, transparency and mutual respect. Please note that our remarks on this call will include forward looking statements and refer to non IFRS measures.

Speaker 1

We encourage you to refer to the cautionary statements and disclosures on non IFRS measures included in the presentation and the reconciliations of these measures in our most recent MD and A, each under the heading Non GAAP Financial Measures. With respect to the technical information to be discussed, please refer to the information in the presentation under the heading qualified person and technical information. The slides referenced on this call can be viewed on our website. I'll now turn the call over to our present CEO, Bruno Adams.

Speaker 2

Thank you, Graham, and good morning, everyone, and thank you for joining us today. This is really an exciting time for IMCO. Over the summer, we saw the Cotego project make significant strides to where it is now. With our owners team taking over the project, the mobilization of construction teams and pre commissioning activities ramping up towards productions early next year. As we approach the production start at Cote, our intention is laser focused on managing the ramp up of the operation.

Speaker 2

With the goal in mind to make Gote one of the most successful large scale mining start up to date in our industry. The importance of Go Take All to Payongol is clear. This is a project that is critical for the repositioning of this company. As once online, IMO will have a higher production base, lower cost profile with a strong foundation and long life of cash flow generation and growth opportunities in Canada. Turning to the quarter itself, I'm proud of the work that was achieved this year.

Speaker 2

To date, attributable production from continuing operations of 329,000 ounces Putting the company well on track to meet its annual production guidance of 410,000 to 470,000 ounces. We continue to see the resiliencies and professionalism of our ASAC and AT and T with the mine on track for guidance this year despite the complexities within the region. And at Westwood, where our team's efforts to rebuild the mine underground has begun to show key improvement. We will walk through the quarterly operating results in more detail in a moment. But I want to be clear that our short Term goals for IAMGolds are the following: bring Holiday online with a focus on achieving steady and sustainable ramp up operations.

Speaker 2

2nd, my major operations at Icane and Westwood with a focus on improving While ensuring the safety of people and the community in which we operate. In the longer term, our goal remains that we want to become a low cost, high margin intermediate gold producer with a on operating base in Canada. Financially, we will prioritize returning our 70% position in Cotay with our partner Sumitomo as well as use our cash flows to optimize our balance sheet and deliver the company to have a more efficient and balanced capital structure. With that, we will now dive into the operating and financial results and highlights for the quarter. Starting with health and safety.

Speaker 2

The company has seen an improving trend year over year With the days away, restricted transport duty rate of 0.36 and a total recordable injury rate of 0.66, This is all based on 200,000 hours of work. Ensuring all of our employees and contractors go home safely would always be The primary focus for iron ore. As we like to say, every gold ounce produced has to be done safely, And our goal continues to be 0 harm for the people, but also the places where we operate. On production, in the Q3, the company produced 109,000 ounces of gold on an attributable basis, slightly higher than the previous quarter, bringing our year to date productions to 329,000 ounces of tons. As we will get into a moment, the production results were driven by its iconic performing effectively to plan Despite continued pressures on the supply chain and an increase in tons from recently really heavily dated underground zone at West Coast.

Speaker 2

Despite these achievements, the 3rd quarter saw a further increase in cost, with our aim goal reporting 3rd quarter cash cost of at $1400 an ounce sold and an all in sustaining cost of $19.75 a net. And guidance, this brings our year to date cash costs to $12.88 an ounce and an all in sustaining cost to $1803 an ounce, sitting above our prior guidance targets you see here on the bottom. As a result, we have revised our cost guidance higher with cash costs now forecasted to be between $450 $13.35 an ounce and all in sustaining costs to be between $17.50 $18.25 This increase in cost trend and forecast is due to continued cost pressures at Essakane resulting from the security situation, of which we will go more into tomorrow. Furthermore, we have seen sustained elevated price from the recent inflationary period. And on that, we are seeing now some signs that prices are beginning to see However, the rate of easement never matches the pace of increase.

Speaker 2

Looking at our other guidance revisions, we have reduced our sustaining capital forecast for Esakane and Westwood. For Saccane, if you will recall, in the Q1, we were unable to complete the planned stripping program to the supply chain issues, which was rectified in the Q2, but the stripping program was in line with plan. This last quarter, we were able to start to recoup the shortfall in Q1. However, it does not appear we will be able So in time for calendar year end, the spending will continue in 2024 in support of our 2024, 2025 production plan. Likewise, at Westwood, we have reduced our sustaining capital as a result of creates visibility into end of year underground development and rehabilitation rates.

Speaker 2

With that, I will pass the call over to our CFO to walk us through our financial results and position. Martin?

Speaker 3

Thank you, Renaud, and good morning, everyone. Looking at our Q3 financials, revenues from continuing operations totaled $224,500,000 from sales of 116,000 ounces at an average realized price of $19.37 per ounce. Adjusted EBITDA from continuing operations was $57,800,000 for the quarter, translating to an adjusted loss per share of $0.01 In terms of our financial position, Pine Gold ended the quarter with cash equivalents of $548,900,000 and a fully undrawn credit facility equating to total liquidity of approximately 1,000,000,000 As noted in our MD and A, the company entered into a 1 year extension of its credit facility yesterday, extending their maturity to January 31, 20 26 from January 31, 2025. As part of the extension, the credit facility was reduced or rightsized to $425,000,000 based on the company's requirement for a senior revolving facility on its overall business. The extensions allow for the credit facility to be available as well as non current during 2024 should we require additional liquidity when Cote is being commissioned and ramping up.

Speaker 3

We note that within cash and cash equivalents, $70,680,000 was held by Cote Gold and $54,600,000 was held by Essakane. The company declared a dividend from Essakane of $120,000,000 in the 2nd quarter, which was received in the 3rd quarter, net of minority interest and withholding taxes. The company has to fund an estimated $325,000,000 of the Cote project expenditures during the remainder of 2023 and into 2024 as the project is completed and commissioned and plans to use the available cash and cash equivalents, Andron's amount on the revolving credit facility and the remaining proceeds from the sale of the Pembroke assets. As we look forward to 2024, the gold prepayment is coming into focus. As per the arrangement, The company has to physically deliver 150,000 ounces over the course of 2024 We have a collar range of $1700 to $2,100 per ounce on 100,000 of the gold ounces that will be delivered and where the company will participate in the gold price within the color range.

Speaker 3

The company does not participate in gold price upside with the remaining 50,000 ounces of gold ounces that we need to deliver. While the gold pre maintenance arrangement reduces operating cash flow in 2024, the company could potentially roll forward a portion or all of the arrangement should the need arise. And with that, I will pass the call back to Rune. Thank you, Rune.

Speaker 2

Thank you, Martin. Turning to Essakane. The mine reported 3rd quarter attributable gold productions of 84,000 ounces ago, bringing the year to date total to 264,000. This was down slightly from the 88,000 ounces produced in the 2nd quarter on modestly lower throughput in rate. Mining activity totaled 10,600,000 tons in the quarter, down from the prior quarter The mining fleet did not operate at full capacity during August due to the disruptions in fuel supply resulting from the regional geopolitical issues, including the crew in Niger, as well as the continued challenges on the ongoing security situation within the country.

Speaker 2

The situation improved towards the end of the quarter, refining fleet operating at capacity during September October. Head grades remain effectively flat in the quarter at 1.1 grams a tonne, which is below the reserve model grade as mining activities were through the upper benches of Page 5 of the pit and mine were blended with lower grade stock price. We are seeing potential indications of Great improvement in the pit through September October as activity began to advance into lower ventures of the Phase 5. On a cost basis, Esacano reported cash cost of $13.70 an ounce, approximately $100 NAMS increased from the prior quarter due to higher volumes of operating waste resulting from increased strip ratio as the mine enters new phases, The impact of the security situation resulting in higher landed fuel prices, transportation and can cost as well as higher labor costs due to depreciation in local currency. In addition to the fuel pricing pressures, Power generation costs increased as heavy fuel use normally was periodically substitute with more expenses like fuel to maintain operations when supply was limited.

Speaker 2

As marketing activities improved into the 4th quarter, it is worth noting that at quarter end, there IAMGOL at Sedanec is expanding its fuel storage facilities by approximately 50% to mitigate the impact potential limited fuel supplies in the future. Despite the disruptions in August, the Saatana was able to increase Sustaining capital expenditures quarter over quarter spending $36,600,000 in the 3rd quarter in support of the 2024 of 2025 production plan. While we revised our sustaining capital expenditure downwards to 125,000,000 Following the challenging Q1 and disruptions in August, we are encouraged to see that capital spending program was able to be deployed over the last 2 quarters. As a result, our all in sustaining costs for the quarter were relatively high at the $7.98 an ounce, reflecting the higher production costs and expanded capital program. The company continues to plan to file an updated technical report Turning to Westwood.

Speaker 2

Gold production was 25,000 ounces in the quarter, bringing the total production year to date to 65,000 ounces. This was an interesting quarter at Westport as we saw mining rates from underground take a step up, which resulted in a step down in cash costs. After the last 18 months of essentially rebuilding the underground mine, There are signs that Westwood can take the next step in production and cost reduction as we exit the year. Mining activity in the 3rd quarter totaled 310,000 tons of ore, while underground contributing with 79,000 tons, which was the highest level we have seen since the reopening of the mine in 2021. This increase in underground tons is attributed to the continued progress in rehabilitation and the development of underground activities, which has resulted in an increase in production still available.

Speaker 2

The mill throughput in the 3rd quarter was 283,000 tons, an increase from the prior quarter when the operation was impacted from the early summer forest fires. The head grades increased to 2.94 grams a tonne, benefiting from the increased production proportion of a higher grade ore feed from underground. In addition to the introduction of a higher grade material from the Fayol open pit deposit. Accordingly, cash costs fell down in the quarter to $156 an ounce sold, which notably includes an estimated $127 an ounce of cost related to the development incurred at the Fayon that was expensed due to the short line of the deposit. Our all in sustaining costs of $2,138 an ounce remain above the spot gold price as a Sustaining capital program continues to include development and rehabilitation work in support of the 2024, 2025 plan.

Speaker 2

But as we noted in our MD and A, in September Westwood reported a major achievement breaking even on an all in sustaining cost basis. Looking ahead, Westwood is well on track to achieve the upper end

Operator

of our

Speaker 2

70,000 to 90,000 ounces of guidance this year. Production level and unit costs are expected to continue to improve in We are really excited to see the progress at Westwood. I will note that we have deferred the release of our updated life of mine plans for Westwood into 20 As the plan needs to be optimized based on the performance of the operation now that we are able to start mining in previously closed area of the mine. Turning to Corigall, I will pass the mic to our Executive Project Director in a moment to provide some highlights on the current status of the project. First, I would like to draw your attention to the bottom of the slide.

Speaker 2

Since the commencement of the construction of Vodizone And up to the end of September, dollars 2,540,000,000 of the planned $2,965,000,000 of project The expenditure has been incurred with 425,000,000 left to be incurred on a 100% basis. The project remains in line with the budget. It is important to know that this total is for project completion, which includes demobilization post initial production. Accordingly, we have noted that a portion of the project expenditures are expected to be incurred during commissioning and ramp up mix. After accounting for the Sumitomo amended agreement To 60.3 percent, the working capital and leases, IAMGOLD has a remaining funding requirement to complete Golay of 325.

Speaker 2

And as a reminder, Amgel ended the quarter with cash and cash equivalents of approximately 5 $49,000,000 and total liquidity of near $1,000,000,000 So the company is sure well positioned to fund the remainder of the construction, commissioning and ramp up of gold in. With that, I will hand it over to Jerzy.

Speaker 4

Thank you, Renaud. The Q3 once again saw considerable progress at Kotel with great Advancements in construction, but what was the most noticeable is the change in tone in the comeback of activity behind the shift from major construction, utilization, decommissioning and commissioning. At the end of quarter, the project was estimated to be 90 6% complete and the construction at approximately 92%. I believe we hit peak capacity in the quarter And since then, we have seen our numbers decline as certain contractors are being demobilized. Despite the crowds, our construction teams, Contractors and subcontractors continue to do a great job as evidenced by the 13,200,000 hours work with Looking at the site and moving from left to right top to bottom, we have a bird's eye view with the Open pit mining operation in the top right picture and the stockpile builds are just below the quarter pipe on this slide.

Speaker 4

During the Q3, the primary earthworm conductor was demobilized, successfully handling of it Deletering, pioneer drilling and overburden stockpile activities to aim to hold operations in mining teams. We are now 14 cut 793 autonomous coal fired commissions and the autonomous drilling begun in the quarter with the 4 pit vipers now in operation. Owner mining has progressed well with nearly 1,600,000 tons mined in the 3rd The stockpile surpassed 4,000,000 tons at the end of October Well on track target to build up of 5,000,000 tons by the end of the year. In the top center is the southwest view of the tailing management As you can see, the 2nd phase of the TMF is well on track with the bulk of material in place and at the target elevation With some betting and liner work going. At the end of October, we now have 1,000,000 cubic meters of water accumulated in the TLF.

Speaker 4

Approaching our target was €1,100,000 to €1,500,000 required for the commission. Next, In the top right is a view of the north side of the plant with a high voltage substation in the center. Primary power substation is operational and the organization is moving to the ground distribution network to the pit for shuttle electrification. Bottom left is the conveyors and the crushing section. These are complete with the first equipment testing started in October.

Speaker 4

Auto mill is grinding. Installation of the ball mill liners is complete. Motors and salt blades are set. The bell has been turned on. But during testing, it will determine that the alignment on the ring gear of the ball mill was out of torrents, And finally, bottom right is the Thigenere and Leach Tank

Speaker 2

Farm.

Speaker 4

Completion of the Lynch tanks is making progress following some delays. The testing commenced last month and we are working through the progressive hydro testing of this Turning to the final pipeline, Cosan Gold continues to track well to the updated project schedule towards initial production in the Q1 of 2024. Our focus this quarter is completion of the processing plant And the ramp up of the pre commissioning and commissioning activities. We are working in close alignment with our partners Sumitomo and our contractors to

Speaker 2

Thank you, Jersey. And I would like to add that our focus is last on pushing to get the first gold mark out of Coty as early as possible, Brenna, ensuring that all the elements in preparation are in place for a smooth ramp up of the project in Our goal is straightforward. We want the ramp up of Koli to be among the most successful projects in Kazakhstan. We hosted an Analyst and Investor tour at the end of last month, and I believe it showed that we have hired people With the right experience and technical expertise for the commissioning, ramp up and operation of Cote. This is a thing that has done it before and I think we are well positioned to take the next step of the project.

Speaker 2

Of course, When we are talking about the future, we need to continue to highlight Gosselin. At the end of last month, we announced the results of an additional 21 diamond Drill holes have Gosselin that targeted the expansion potential of the deposit of debt, specifically below the East and West Brecches body by the gap between these areas. The results confirm the extension of gold mineralization in numerous drill holes up to The value accretive potential of Glassland is clear. The deposit is right next to the coated debt with a main resources Estimate of 3,400,000 ounces of indicated and another 1,700,000 ounces of inferred and a high potential to grow this resource further. Next year, as Kodea ramps up production, We will continue to push the testing of government, including the advance of dermatological testing, mining and infrastructure studies in order to begin reviewing alternatives for potential inclusion of the Gosling deposit into a future Corigal life of mine plan.

Speaker 2

Corigal today is a project, but we believe strongly This is the start of the mining camp and will provide a strong foundation for iron zones for many years to come. With that, I would like to pass the call back to the operator for the Q and A portion of the conference. Operator?

Operator

Thank you. We'll now begin the question and answer session. Our first question comes from Anita Soni with CIBC World Markets. Please go ahead.

Speaker 5

Good morning, Renaud and team, and thanks for taking my questions. So firstly, as I came, you're talking about Processing the stockpiles that you've built up there, I think was 9,900,000 tons over the life of the mine and you're going to release a study on that. Could you remind me what kind of grades that you would see there? I know in the Original heap leach was probably 4 times as much tonnage, but at lower grade. So I was wondering if you were going to be high grading that 9.9 tons of stockpile?

Speaker 2

I'll ask Bruno to comment on that one, Amit.

Speaker 6

Yes. The stockpile for the Ape Leach was To be pegged, between 0.4 and 0.6 gram per tonne. We're actually studying the capacity to process that material to the CIL. That's the reason why we want to rejuvenate the technical report taking this into account.

Speaker 5

Okay. Wasn't that material though, it was like 43,000,000 tons I thought at 0.4 grams per ton material. And you're only taking 10,000,000 tons of it. So I was wondering if you were going to selectively upgrade it.

Speaker 2

I can come back to you after this call. Yes, I'm not sure, but the intention, of course, as would be highlighted is to process all this ore, but in a Conventional weight rather than building capacity, heathlete.

Speaker 3

And it is the higher grade parts of the stockpile That is separated. That will

Speaker 6

be processed. Okay. Or could

Speaker 5

it be that the 43,000,000 tons is now just 10,000,000 tons

Speaker 6

that you've You use some

Speaker 5

of it over time. Anyway, we can take that offline. So in terms of Westwood, I was just wondering about the underground mining costs. Could you tell me what they were on a unit Cost basis this quarter, I did notice a significant improvement in unit costs and I wanted to get that into tomorrow.

Speaker 2

Marvin?

Speaker 3

The mining cost was about $28 per ton For the total tons before stripping and it's about $90 per ton after you take that to the development tons.

Speaker 5

So $90 is that just the underground portion?

Speaker 4

Yes.

Speaker 6

Okay. And then the deferral of CapEx Sorry,

Speaker 3

I need to apologies. That is the total mining cost including for the other areas. I don't have that separated right in front of me, but we can get back to you on that as well.

Speaker 5

Okay. Thank you. The deferrals of CapEx at Westwood and Ethicane, would those move into 2024 or I think you said at Westwood, there might be savings, but Essakane, I'm not sure what's going to happen there considering the shorten mine life. Is there a thought that you probably won't do that stripping or is that ultimately going to be done in 2024 2025?

Speaker 2

Yes, I think that's what we're going to be addressing. If you really look at the last 3 years, Anita, I mean, the mine has been systematically more on a ratio towards like between the 23. And as we mentioned in the note, we have there is effort now To increase that in catch up and so on. So yes, you should expect 24% and 25% to come up more and the higher strip ratio to catch up, So we could unlock and further years the full reserves The mine.

Speaker 6

Okay. So what was the

Speaker 5

strip ratio like overall life of mine supposed to have been and it was lower, I guess you said 2 to 3. So Should have been more like a 4 or 5, is that what it is or?

Speaker 2

Yes, correct. So we intend to be more in the 4 or 5 and over the next 2 years.

Speaker 6

Okay. So now moving to

Speaker 1

yes? I'll just note that before the end of the year, we'll be having coming out with

Speaker 5

Okay. All right. Now moving to Cote and my apologies to my colleagues, but there are a few I want to get down. So maybe this is a question for Jersey that The CapEx guide for the remainder of completion, I noticed, went from $825,000,000 to $875,000,000 up to 8.75 plus or minus 5%, which would imply a high end of the range at now 9.19%. So I'm wondering why that increase if it is indeed an increase and what are the components of that?

Speaker 5

And the second part of that question, and this will be the last one, How should we think about, first off, what remains in 2024 to be spent, like the breakout between Q4 and then 2024 for initial capital of that $875,000,000 And secondly, what kind of sustaining capital are we looking at Cote in 2024?

Speaker 2

I think we'll pass it to Martin for that.

Speaker 3

Hi, Anita. So when we guided at Beginning of the year, we had a range and the $875,000,000 was the high end of the range. And that amount, based on what we've spend up to the end of 2022 would have gotten us to the US2965 billion dollars at 100% that we had in the technical report. Now that we are in November and close to the end of the year, we are indicating that We are still trending in line with the budget of $2,965,000,000 and that $875,000,000 gets us there. So We've now just updated because we're closer to the end of the project.

Speaker 3

We still have to incur 4 $25,000,000 at 100 percent to get to the 2,965. If you look at the amount that we incurred in Q3, It was $317,000,000 So we will continue to incur at that rate. But as we get closer to 100% construction That tapers off and that's why we are seeing costs being incurred in Q4 at around the same level as 3 might be slightly lower and then the remainder type is off into Q1 of next year.

Speaker 5

Okay. Sustaining capital question, did you can we get an idea of what that's going to look like in 2024 now?

Speaker 3

So we are working through our budgets on sustaining capital for next year. So we are still guiding towards the technical reports With adjustments for inflation, we will provide a detailed update on the production cost and sustaining capital early next year when

Operator

Seeing none, I'll hand the call back over to Graeme Jennings for closing remarks.

Speaker 1

Thank you very much, operator, and thank you to everyone for joining us this morning. As always, if you have any additional questions, please reach out to Renaud or myself via phone or e mail. Thank you all. Be safe and have a great day.

Operator

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

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Key Takeaways

  • Coté Gold project is approximately 96% complete and remains on budget for initial production in Q1 2024, positioning IAMGOLD for a higher production base, lower costs and long-life cash flow.
  • IAMGOLD produced 109,000 ounces in Q3 (329,000 YTD), keeping the company on track for its annual guidance of 410,000–470,000 ounces despite regional security and supply-chain challenges.
  • Costs rose to US$1,402/oz cash cost and US$1,975/oz AISC in Q3, leading to revised full-year guidance of US$1,300–1,335/oz cash cost and US$1,750–1,825/oz AISC due to inflationary pressures and elevated fuel prices at Essakane.
  • The company ended Q3 with US$549 million in cash and ~US$1 billion in total liquidity, with a remaining US$325 million funding requirement for Coté to be met from existing cash, the undrawn credit facility and asset sale proceeds.
  • At Essakane, Q3 output was 84,000 ounces amid higher strip ratios and fuel disruptions, while Westwood ramped up underground mining, delivering 25,000 ounces and improved unit costs toward its 70,000–90,000 ounce guidance.
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Earnings Conference Call
IAMGOLD Q3 2023
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