IAMGOLD Q2 2024 Earnings Call Transcript

Quartr
Provided by Quartr
August 9, 2024

There are 9 speakers on the call.

Operator

Thank you for standing by. This is the conference operator. Welcome to the IAMGOLD Second Quarter 2024 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.

Operator

Please go ahead, Mr. Jennings.

Speaker 1

Thank you, operator, and welcome everyone to the Q2 2024 operating and financial results conference call. Joining me today on the call are Renaud Adams, President and Chief Executive Officer Martin Thonusen, Chief Financial Officer Bruno Lemelin, Chief Operating Officer and Tim Bradburn, Senior Vice President, General Counsel and Corporate Secretary. We are joining today from Iangold's Toronto office, which is located on treaty 13 territory on and the Wendat Peoples. At IAMGOLD, 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 on disclosures on non IFRS measures, including 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 will now turn the call over to our President and CEO, Renaud Adams.

Speaker 2

Thank you, Graham, and good morning, everyone, and thank you for joining us. It was another exciting quarter for IAMGOL, with the 1st full quarters of operations at Cote and another strong operating performance from Misakane Westwood, putting us in a position to increase our overall guidance for the year. At a high level, I believe this quarter begins to paint a picture of what ultimately IAMGOLD will look like. Colby Gold is now ramping up, providing for higher production base, lower cost profile and shifting the density of our value to Canada. At City Run rate, Kote Gold will be among the largest gold mines in Canada and a model for mining for modern mining done right and for many decades to come.

Speaker 2

This is then coupled with strong and predictable productions in cash flow from Mesakane and Lesotho. In addition, as a company, we are seeing our financial position growing stronger quarter over quarter with the potential for significant step change and improvement next year when Cote is running at full steam and our prepaid commitment are behind us. This will position us with a clear roadmap for success with strong free cash flow generations will be essential to ultimately deliver the balance sheet and drive value accretions for our shareholders. And next quarter, we continue to improve the business and get closer to our objective. With that, we will now dive into the operating and financial results and highlights for the quarter.

Speaker 2

Starting with health and safety, IAMGOLD has continued to demonstrate a non wavering commitment to safety excellence. At IAMGOLD, it is our priority to ensure everyone goes home safely. In the Q2, our total recordable injury frequency rate was 0.6, an improvement from the prior quarter. I want to commend and congratulate the ESA Pen team, which recently surpassed the record health and safety milestone of 5,000,000 hours work without recordable safety incident. Reaching 000 over such a period is a monumental achievement in our industry and a testament to the professionalism and commitment to a culture of safety of our people in Burkina Faso.

Speaker 2

Looking at operation, on an attributable basis, IAMGOLD produced 166,000 ounces of gold in the 2nd quarter, bringing the year to date productions to 317,000 ounces of gold. As we will get into a moment, the 2nd quarter production results were driven by EsaCannib being unable to operate without disruption and benefiting from continued positive grade reconciliations. The continued ramp up of Westwood as the mine benefits from the rehabilitation of the underground and opening of new mining phases, and of course the Q1 of production at Cote. The strong productions and sales volume translated to cash costs and all in sustaining costs of $10.71 an ounce and $16.17 an ounce respectively. Further, capital expenditure continued to step down quarter over quarter totaling $119,700,000 in the second quarter as Kone transitions into operations and setting the stage for IAMGOL to see growing free cash flow moving forward.

Speaker 2

Looking at our guidance, the strong first half positioned the company to beat on operating guidance for the year. Accordingly, we have increased our production guidance and lowered our cost estimate for the year. On production, IAMGOLD has increased 20 24 attributable gold production guidance per second in Westwood to 495,000 to 440,000 ounces of gold, up from 430,000 to 490,000 ounces previously, as both of these mine has a strong first half of the year. At Cote, we are maintaining our guidance of 130,000 to 175,000 ounces on a 60% basis, but we now expect productions to come in the lower end of this range as improvements are made to mill availability. But we will get more into this in a moment as we walk through each asset.

Speaker 2

On operating costs, the 2024 cost guidance for Sakane Westwood combined is now expected to be in the range of $11.75 to $12.75 for cash cost per ounce sold and $1700 to 18.25 for ASEK per ounce. This compared to the previous guidance estimate of cash cost per ounce of $3.80 to $1400 and ASEK per ounce of $17.80 to $19.40 While we have brought our cost expectation lower this year, the updated guidance ranges are above our year to date performance as the increased guidance reflects the outperformance we saw in the first half and grades are expecting to come down at a second as we enter new mining phases. While inflationary pressures are easing, pricing for certain consumables including cyanide and grinding media remains in line with the level experienced in 2023. With that, I will pass the call over to our CFO to walk us through our financials results and position. Martin?

Speaker 3

Thank you, Renaud, and good morning, everyone. In terms of our financial position, Heimgold ended the quarter with cash and cash equivalents of $511,400,000 and our credit facility remains undrawn, equating to total liquidity of approximately $915,700,000 We note that within cash and cash equivalents, $55,900,000 was helped by Tote Gold and $188,200,000 was helped by EsaCann. EsaCann declared a dividend during the Q2 of $180,000,000 for which the minority interest portion and withholding taxes were paid during the Q2 2024. The net portion due to the corporation of $151,900,000 is expected to be paid by the end of this year. However, this is dependent on Essakane's estimated future cash flows from operations to leave a sufficient working cash balance in country.

Speaker 3

Any unpaid amounts will be paid during 2025. We continue to see a risk on the ability to recoup all of the VAT receivables. Though the company was able to sell a small amount to a local bank at Burkina Faso during the Q2. The company still has considerable obligations and factors which will influence our liquidity during the next 12 months. During May, the company completed a board deal equity financing for aggregate gross proceeds of approximately $300,200,000 or $287,500,000 net of fees.

Speaker 3

The company intends to use the proceeds from the financing to partially finance the repurchase of the $9,700,000 interest in Kotakold from Sumitomo on November 30, 2024, with the difference funded from available liquidity. Additionally, the company has to deliver 150 ounces under its gold prepay arrangements from July 2024 to June 30, 2025. The prepay arrangements were funded at the time of entering into the arrangements. The company will receive some cash payments at the time of delivering into the gold prepay arrangements based on the amount that the market price of gold at the time of delivery as follows. For 50,000 ounces that will be delivered from July to December of this year, the company will receive the difference between the spot price and $1700 per ounce capped at $2,100 per ounce.

Speaker 3

For 31,250 ounces that will be delivered during the Q2 in 2025, the company will receive the difference between the spot price and $2,100 per ounce capped at $29 or $2,925 per ounce. Lastly, the company expects to receive $84,400,000 on gross proceeds in 2024 in respect of closing of the remaining transactions arising from the remaining Bambrook asset sales. Please refer to the liquidity outreach section of the MD and A for further details. Looking at our Q2 financial results, higher production resulted in lower unit costs as our operating costs remain in line with costs incurred during Q4 2023 and Q1 2024. With costs remaining in line with prior periods, the unrealized gold price resulted in higher margins and higher free cash flow.

Speaker 3

Revenues from continuing operations totaled $385,300,000 from sales of 160 7,000 ounces on a 100 percent basis at a record average realized price of $2,294 per ounce. The realized price includes impact of the gold prepay arrangements delivered into during the quarter that reduced the realized price by $60 per ounce. The strong second quarter operating results coupled with the high gold price resulted in an adjusted EBITDA amount of $191,100,000 compared to $152,500,000 in the previous quarter of the year, which is $127,000,000 higher than the $63,800,000 adjusted EBITDA number in the Q2 of 2023. Adjusted earnings per share was $0.16 for the quarter compared to $0.11 in the previous quarter and a $0.01 loss in the Q2 of 2023. Looking at mine site free cash flow, which is calculated as cash flow from mine site operating activities, less capital expenditures from operating mine sites, Westwood and Essakane produced a recent high of $140,000,000 Including Westwood, which returned its 2nd quarter of positive mine site free cash flow since the restart after the June after in June 2020, bringing its year to date title for the mine to $32,300,000 At Essakane, we note mine site free cash flow in the 2nd quarter was $118,200,000 that is $81,800,000 higher than the $36,400,000 during the Q2 of 2023.

Speaker 3

And with that, I will pass the call back to Renaud. Thank you, Renaud.

Speaker 2

Thank you, Martin. We will walk through our operating performance at Essakane and Westwood before we dive into Cote. At Essakane, the mine reported attributable gold production of 111,000 ounces in the 2nd quarter, up 26% from prior year period and bringing the year to date total to 229,000 ounces. This was another very strong quarter of operation for Essakane, made possible by our mining operation being able to perform to plan in the quarter compound with continued higher than expected grades. Mining activities totaled 11,000,000 tons in the quarter with only 2,200,000 tons of ore mined as mining worked through a higher strip sequencing of the mine coupled with limited mining in a part of Phase 6 due to localizing stability, which requires enforcement and has been addressed since then.

Speaker 2

At grade remained high at 1.46 grams a ton due to the continued positive reconciliations of grade from the reserve model as we continue to mine deeper into the Phase 5. This positive grade reconciliation in the deeper portions of Pesachana was seen previously in Phase 5 and is continuing in Phase 5 is in Phase 4 and continuing in Phase 5. However, we are seeing head grades decline in line with the life of mine plan as volumes from Phases 6 and 7 increased and from increased portion of stockpile are included in the mill fee. On a cost basis, Esacana reported 2nd quarter cash costs of $10.81 per ounce and all in sustaining costs of $14.81 a slight increase from the prior quarter, way below our previous guidance due to strong productions in gold sales. With a strong first half of operations in 2024, Sakhane production guidance has been revised upwards with attributable production expected to be in the range of 380,000 to 410,000 ounces.

Speaker 2

This compared to the prior guidance of 330,000 to 370,000 ounces of gold. The mill is expected to continue operating at nameplate capacity, though at average head grade slightly lower than in the first half of the year as per the mine plan. The cost guidance for Esakanes has also been revised onward and is expected to be in the range of $11.75 to $12.75 per cash cost per ounce sold and $15.75 to $16.75 for A6 per ounce sold. Approximately 100 $125 per ounce improvement on both metrics due to the outperformance in the first half of the year. Capital expenditure guidance has been increased to approximately $175,000,000 primarily due to an increase in the strip ratio, not total tons mined, resulting in more mining costs being included in capitalized waste and equipment replacement.

Speaker 2

Esa Cana continued to be a significant cash flow contributor for IAMGOL. With the current mine life through 2028, this operation has the capability to generate over $1,000,000,000 of cash flow at current gold price. We are continuing to examine the opportunities to extend the mine life of Esa Cana targeting options within defense to ensure the safety of our teams. Turning to Westwood. I want to congratulate the team on another improvement in the quarter.

Speaker 2

As the mine continues to test new highs and quarterly volumes from underground grades and production since the mine restarted in 2020 1. This improvement has meant that Westwood has generated, as Martin noted, positive mine free cash flow of nearly $22,000,000 in the 2nd quarter, bringing the year to date total to just over $32,000,000 On operation, Westwood produced 35,000 ounces in the quarter, a significant 84% over prior year period and bringing the year to date total to 67,000 ounces year to date. Our mine from underground continued to step up and at a higher grade with 89,000 tons in the 2nd quarter contributing to an average head grade from underground ore of 9.2 grams a ton. Mill throughput also increased in the quarter to 302,000 tons processed at an average blended head grade of 3.92 grams a ton 92% recoveries. The increase in throughput was driven by improved availability of 89% due to the ongoing maintenance program.

Speaker 2

The cost profile for Westwood continues to decline as operations improve. Cash costs averaged 11.31 dollars an ounce and all in sustaining cash averaged a promising $16.63 an ounce in the 2nd quarter, continuing the trend of quarter over quarter cost improvement. Looking ahead, we have raised our guidance for this year with Westwood now expected to produce between 115,000 to 130,000 ounces of gold at lower cash costs of $1200 to $1300 per ounce and AISC of $17.75 to $1900 per ounce. In the Q4, we will be issuing an updated technical report and mine plan for Westwood, which will provide an updated mineral resource and reserve estimate and life of mine based on the last 2.5 years of mine optimizations efforts at Wassaouais. Turning to Cotego.

Speaker 2

We couldn't be more impressed with the work of our teams on the ground as they brought CoteGulf commercial productions only 4 months after the initial gold pour on March 31, 24, which was achieved within 90 days of our first pre commissioning activity. The ramp up of Cody has seen the project hit significant milestones in its first few steps as a mine. We took the path of testing first the capacity of the main equipment that drive the ultimate nameplate objective and then build availability as we ramp up. From early on, the primary components of the processing circuits, primary and secondary crushing, HPGR, conveyors, ball mill, leaching, etcetera, all have proven their capability to operate under design load when provided with stable conditions. During the same period, we also took the time to follow the team to stop and correct several deficiencies that it is usually the case at early days of ramping up the large scale facility.

Speaker 2

The first bit took about the whole first half of the second quarter. For 45 days go fast. In the second half of the quarter, efforts were made on slowly but surely cranking up the engine and testing the stability and the overall availability of the processing facility while identifying all potential limiting factor to objective of exiting the year at 90% nameplate. In early July, the team pushed the commercial production button and reached our Vexiv 30 days later with nameplate production of 36,000 tons achieved on August 1 as the last day. On the dry side, we can report that we are very pleased with the performance of our HPGR and believe that it will bring great value down the road.

Speaker 2

During the ramp up phase, we have identified some improvement required on the dry side in order to achieve design availability and performance. The first one has to do with mitigating the effect of abrasive on wear parts. The R at Coty is highly abrasive, which was always known, but with actual effect to be experienced. Availability of the crushing and screening circuit in the 2nd quarters was somewhat impacted by accelerating wear on the liners, feeders and shoots due to this abrasiveness. The new lining material has been identified and tested with good results in some critical area.

Speaker 2

2nd, the continued core screening performance was also limited during ramp up and new panel designs are being proposed. Finally, dust management was challenging in the early days and in particular in the screening building. And while significant improvement has been made, more corrective action needs to be made. We have tested addition of suppressions, both water and surfactant system in critical area with great results. So all in all, everything is solvable.

Speaker 2

We have identified corrective actions and we have initiated implementation of that. The company is planning a multi day shutdown in September, at which time we will deploy key optimization to address all meeting issues and improve the

Speaker 3

long term availability of the plant. We are very confident

Speaker 2

in the ability of Further, the power requirement of the plant has been lower than anticipated, providing important available capacity for down the road. In the Q2, mining activities achieved a new high of 10,500,000 tons of total material mined. Further, grade mine are continuing to come largely in line with our grade control block model in the current life of mine. Mining costs in the quarter, despite not yet running at full run rate, were comparable to Canadian open pit peers at just under the $4 a ton, an increase from the prior quarter due to temporarily optimization activities and production drilling as well as some powers curtailments experienced in June due to unseasonal heat wave. On processing, milk throughput in the second quarter was 834,000 tons at an average 1.4 grams a ton for a total of 34,000 ounces produced and 100% Revenue circuit was successfully commissioned toward the end of the quarter and recovery has responded well to the ramp up of the operations averaging 90%.

Speaker 2

In July, Cody Gold processed over 620,000 tons of ore with productions of nearly 26,000 ounces of gold. We have maintained our guidance at Cody for this year, though we have guided to the lower end of the range of 220,000 to 290,000 ounces on a 100% basis. As improvement to mill, availability are made during the ramp up of operations during reducing expected ton prior to completing those solutions. We believe that exiting the year at Neely nameplate will set Cote and IAM GO for huge success starting early 2025. I will now hand the call back to Martin for a brief update on projects pending this year.

Speaker 3

Thank you, Renaud. I want to note that as we discuss project expenditures, all costs are being quoted on a 100% basis. Project and capital expenditures were $92,600,000 in the 2nd quarter and $288,900,000 year to date. The expenditures include project expenditures of $30,700,000 to support the completion of commissioning and certain scopes of non critical path earthwork and infrastructure. Prior to the first call on March 31, project expenditures were 151,700,000 totaling $182,400,000 for the year.

Speaker 3

Dollars 24,500,000 of operating expenditures related to milling and surface cost have been capitalized in the Q2 $51,500,000 year to date in support of the commissioning and ramp up efforts in advance of achieving commercial production. Capital expenditures related to operations for the Q2 were $37,400,000 $55,000,000 year to date. Capitalized waste stripping and capitalized operating costs are expected to be higher when compared to guidance, which is offset by lower capital related to operations due to some of the equipment being purchased through our increased leasing facility. The total of all of our capital expenditures of $454,000,000 as well as the timing of the expenditures are in line with our forecast and guidance for the year. Back to you, Renaud.

Speaker 2

Thank you, Martin. So that is that. Our goal this year is very clear. We need to ramp up the planned availability and utilization to exit the year at a throughput rate of approximately 90% of NIM plate and start 2025 on a very strong footing. This brings us to the slide we always like to finish on, and this is what the future is for Cote.

Speaker 2

We are continuing to advance in our understanding of the impact of Gosselin and potential of the project. At year end 2023, we updated the Gosselin mineral reserve and resources estimate with an additional 35,000 meters of drilling, which was drilled over the 2 years prior. This year itself, we are conducting a 35,000 meters drill program targeting the central zone between the pit shells where we see indication of continuation of mineralization and epidermal breaches as well as some deeper holes to understand the continuity of the mineralization below the current pit shelf. When we look at the resource and reserve statement, Dakota deposit has estimated mineral reserve on a 100% basis of 7,600,000 ounces. This reserve formed the basis of the current economics of the project.

Speaker 2

On a measured and educated resource basis, the coated pit is currently estimated at a total of 12,100,000 ounces. The adjacent Gosling pit has an additional 4,400,000 ounces of measuring and indicated resources and nearly 3,000,000 ounces of inferred, bringing the project to a total of 16,500,000 ounces of measuring and dedicated and an additional 4,000,000 ounces of invert. The size of Cody and Gosman together put the project in the mine in a very exclusive company amounts large scales producing Canadian assets. We expect to have the results of this program later this year, which will greatly inform our understanding of how to incorporate Gosselin and remaining majority decayed into a potential future mine plan. So thank you all and I look forward to a very exciting year ahead.

Speaker 2

With that, I would like to pass the call back to the operator for the Q and A. Operator?

Operator

Thank you. We'll now begin the question and answer session. The first question comes from Leila Salvi with CIBC World Markets. Please go ahead.

Speaker 4

Good morning, Renaud, everyone. My first question is with respect to Cote. What factors are what are the main factors that drove the indication that you're going to be near the bottom end of the production guidance range at Cote? Is it throughput grade recovery rate? And then the second one probably related to that is how long will that shutdown last in September?

Speaker 2

Thanks for your questions. And as you're also the one that asked me early in the year, how we set the original guidance. I would say that it's mostly a matter of the total tons of mill. So if you recall, we said the guidance early in the year, the 220 to 290 specifying that we were confident in the high grade, which is happening. But also basically saying that at a perfect commissioning without any need for further downtime and so far with the 6,500,000 ton process or so, we'll set the 2.90.

Speaker 2

As I explained in my comments, we really did take the time in Q2 to properly stop and correct things as we forward. This has been our philosophy since day 1 and I'm very pleased that it's been maybe a little pain in the short term on the total ounces, but we're definitely going to shift the profile starting in 2025. So we did that in Q2. And as I mentioned, so to your point is, originally speaking, we were probably thinking of the 5 days in September, but we're prepared to go further. So if it takes additional downtime, another 5, 7 days for a total of 10, 15, whatever it takes to correct all those issues, If it takes less, we may perform better than the lower end, but we just want to make sure that we're prepared to take the time in So let's call for 10 to 15 max and we'll see how it goes for the remaining of so largely the

Speaker 4

ton for the Q2. Thank you for that. I know and I also know that relatively short period of time since you've declared commercial production on August 7. But can you give us an indication how the processing costs are going at this stage?

Speaker 2

Mark?

Speaker 3

Good morning, Anita. The processing cost on a total basis is actually well within our expectation and our plans. There is of course some additional costs being incurred as they are fixing or replacing certain things. But when we look at where we are, we expect the dollar per ton cost when we get to the end of the year to be in the ranges that we guided and disclosed previously. So in line with the 40 three-one hundred and one with slight increases because of inflation, but also just we won't be at 100% yet, but our expectation on the cost of the mill have not reduced at this or have not changed at this point.

Speaker 2

I think Martin, it's fair to say that the range of the 10 to 15 is just a matter of the tons mill price. So we were still low globally low with 839,000 tons of mill in the Q2, but with only 1 month of 620,000 tons of what we're expecting to get closer to the 10 objective, 10 to 11 objective as we exit the year. But it's really a matter of time now.

Speaker 4

And that power of the as you mentioned that you're using less power or is that factoring into that lower, I guess, benefit on cost?

Speaker 2

Yes. But also power, even though it's a massive, it's a big operations, power cost per kilowater would be extremely low at coating as we manage peaks and we're expecting one of the lowest costs in our kilowater pretty much in the industry. So yes, this is, but the real benefit beyond potentially saving is the opportunity of using this extra power down the road. As we well documented, there is some certainty like the 72 megawatts, so you use it how you want, right? And this is what we're the most excited about is we feel that the main equipment on the website may drive more tons down the road, not the nameplate.

Speaker 2

It has to be proven on a steady basis, but what we've seen so far is we're definitely using less power for the same throughput.

Speaker 4

And then just an idea of in terms of the build out in the summertime, I noticed the mining rates on ore were similar to last quarter. So I'm just assuming you guys are a little bit more focused on building the tailings dam over the summer months. Is that correct? And when how many tons do you have to deliver to the tailings dam in Q3?

Speaker 2

I don't have the details of the tons, but if you recall and as described as well in the 40 three-1 101, so we are basically executing the whole Phase 2, right? And this will, combined with the fact of the throughput, the ramp up will position towards the 18 months of capacity. And then as we move forward, this summer we'll add. But yes, we're completing the Phase 2 that we've initiated last year. We're completing it this year.

Speaker 2

And then by fall, we should have minimum of 18 months ahead of us and then we'll continue on a yearly basis to raise. And our objective is to be comfortably sitting at least on the 24 months beyond ahead of us.

Speaker 4

And my last question, just in terms of stockpile levels, can you tell us how many tons of ore you have stockpiled ahead of the mill right now and what the average grade is there?

Speaker 2

Brenor, you got this? Yes.

Speaker 5

Good morning, Anita. So far we have 8,000,000 tons grading at 0.75. We have different category of stockpiles with direct feed, high grade ore and low grade ore.

Speaker 2

So, so

Speaker 6

far we are pretty satisfied with

Speaker 5

the level of stockpile and also with the reconciliation on the high grade category.

Speaker 4

And then you mentioned I think in that you're directing more higher grade from the pit to the mill. What would that high grade be on average?

Speaker 5

We define high grade weather is above the 0.7, 0.8 gram per tonne category. So right now we have a good fair amount of stockpile at 1.6 gram per tonne in front of us. And we have also some run of our mine at 114.

Speaker 2

So we'll try to keep the mill towards the 1.5 till the end of the year. We did very well in July as well. So there is no issues or reason to believe we won't deliver the grade. So it's really about cranking up the tonnage throughput. But the mine has been doing very well so far.

Operator

Okay. Thank you. That's all my

Speaker 4

questions and congratulations on hitting commercial production.

Speaker 2

Thank you so much.

Operator

The next question is from Wayne Lam with RBC. Please go ahead.

Speaker 7

Yes, thanks guys. Good morning everyone. Just wondering maybe at Cote, if you might be able to speak to the performance of the autonomous operations date on the haulage and drilling and just where the challenges have been and how you've mitigated those risks?

Speaker 2

I wouldn't call too many risks to be mitigated. I think more every quarter that goes by, we get more comfortable with autonomous haulage and it's been operating very well and Bruno just mentioned the stockpile and everything that's been processed. So basically every single ton that's been put on the stockpile has been with autonomous trucks. And it's been performing extremely well at a very high availability and so forth. So I honestly do not see any issues with them.

Speaker 2

And hopefully over time, we could be even better and with our drilling automation as well. So working hard on both, but autonomous is absolutely working beautifully. And not to underestimate as well the health and safety aspect of not having operators behind the steering. It's not about cutting job, it's really about improving, modernizing operations and make it safer. But so far so good.

Speaker 2

Excellent. I'll give a very high score to the implementation of autonomous knowledge. I will redo it anytime.

Speaker 7

Great. It sounds like things are going pretty well. Maybe moving to Westwood, just on the grades there, which seem pretty positive relative to the reserve. Do you see those grades continuing through the year? And then with the upcoming technical report, do you see upside to the targeted run rate from the underground beyond the 900 tonnes per day?

Speaker 7

And given the strong performance of the mine now with the underground now rehabilitated, do you envision that asset as one to keep in the portfolio longer term or could it potentially be classified more as non core?

Speaker 2

I'll go in other. My KPI is in every quarter, I've seen the asset ramping up with more tons from underground, the overall grade improving from underground. We're sitting on a reserve of roughly 10.4 grams a tonne reserve. And that's the ultimate objective. You need to position yourself at some point where you start mining at the reserve grade at Westwood, and this is where you're going to feel that you have reached a certain stability and sustainability.

Speaker 2

So pretty close to. We could be basically 1 quarter away of reaching. Once you get that, you want, like I said, to continue to operate along this line. We're extremely, extremely pleased to how Westwood has performed and continue to perform and the cash flow. So comfortable to say that at this stage, we're very pleased with both Sasakane and Westwood.

Speaker 2

And we definitely can see these 2 mines continue being a big collaborator, if you will, to our and contributor to our story. Having said that, I don't think so we've seen the end of the optimization of Westwood. So we're going to put the 42,101. We want to see what we could do, where we could get. And as I said, strong production profiles and improving and free cash flow.

Speaker 2

So we're very, very pleased. On the total tons we see at Brno getting wet a bit here. So what do you see down the road?

Speaker 5

Thank you, Renaud. Actually, the performance from underground is getting better and better due to the powder air work we have done over the last 2 years and a half. It's proved to be very beneficial for us in our ability to reach our targets at 900 tonnes per day. Of course, we have vision to increase this closer to the 1100. Those are the kind of targets we're looking at.

Speaker 5

Again, with the new 40three-1 101, we'll be able to express with more clarity what those targets are going to be and also the extent of the life of mine with the new block model. So at that time, we'll be able to give more insight related to that mining plan.

Speaker 7

Okay, great. Thanks. And then maybe just last one, just on the bamboo cassettes. Can you provide a bit more clarity on the final payment and whether there is any credit risk associated with that? Just seems like it's been a bit delayed and wondering what the risk is to that final payment coming in?

Speaker 2

Yes. It's a fair comment that it's been a bit long. And I can assure you it's been a bit long for us as well. But I think we're making great progress, honestly. So we're still comfortable of the closing of Guinea in the second half.

Speaker 2

And following that, we'll address the closing in Mali. So can we close both? No, we're still seeing that. We're still saying that they're both we're working towards closing both remaining, talking about roughly $80,000,000 of gross proceeds and for both. So it's meaningful, it's important.

Speaker 2

It's important for our people as well because as you mentioned, we've got to move on here and allow everyone to move on. So we're very active and remain confident we're going to close out this year.

Speaker 7

Okay, great. Thanks for taking my questions.

Speaker 2

Thanks.

Operator

The next question is from Mike Parkin with National Bank Financial. Please go ahead.

Speaker 6

Hi, guys. Congrats on the solid quarter. Most of my questions have been answered. Just a couple of follow ups. You gave us good color on expected shutdowns at Cote.

Speaker 6

Can you give us any guidance around shutdowns planned at Westwood or Essakane?

Speaker 2

Definitely nothing extraordinary beyond the regular. So you're looking at the average availability of Enesakane and Westwood. We achieved 89%. So I think it's fair to think that we're going to try to maintain around that level to the end of the year. And this is basically done through planned shutdown, a little bit of unplanned, but we don't have anything struggling.

Speaker 2

And I think the same comment goes for Sacane as well. There's always, of course, things to be addressed, but we're not planning beyond the regular availability. So, both mine should be in the availability or better of what you've seen in Q2.

Speaker 6

Okay. And then the target at Cote to be at 90% of nameplate by year end, is that like obviously you put out a daily number just recently and that it's well known, it's at nameplate, but what's the 90% based on is that like a trailing 4 week average?

Speaker 2

I'll be very, very happy by accumulating 4 weeks. Let's say if what we've done in commercial using 60% of 9 plane, if we repeat that in December and we feel very strong, this is what we call exiting the year. So thanks for asking. But internally, this is how we would feel. It's not about a few days.

Speaker 2

We know we've done it one day. We know it's capable to be done. But as you ramp up, you want to make sure that you're solidly on the saddle and comfortably sitting on the saddle by the end of December. So let's call 30 days averaging 90% will be our key objective in

Speaker 5

December. Great.

Speaker 6

That's it for me guys.

Speaker 2

Thanks.

Speaker 3

The

Operator

next question is from Carey MacRury with Canaccord Genuity. Please go ahead.

Speaker 5

Hi, good morning. Just a follow-up on the mill throughput. Obviously, you hit commercial production. Should we be assuming that the mill is kind of going to run at around 60% through August up until the shutdown or is the mill performing a bit better than that now?

Speaker 2

Yes. No, definitely from the moment you hit the 60%. I would exclude September because like I said, September is the big month where we're going to be making a lot. But yes, so 60% has been reached and becomes the baseline now. So from that point on, we need to continue to improve August.

Speaker 2

September will be for the time of fixing, but definitely some kind of a steady ramp up with a little bit of a dip in September allowing for the shutdown, but 60% is and will remain the new baseline. Okay. And then just maybe a

Speaker 5

question for Martin on the Sumitomo buyback. I see the option there is, I think, dollars 380,000,000 given the ramp up, is that more or less where it's going to

Speaker 6

be or is that do

Speaker 5

you expect that to move around plus or minus?

Speaker 3

Good morning, Kerry. We don't expect that number to change significantly, but it is dependent on the August cost and the August sales because that still gets the July August cost and sales because that still gets incorporated into that and the gold price has an impact. But we don't expect it to change materially from the $380,000,000 expected previously as well.

Speaker 5

Okay, great. That's it for me. Thanks.

Operator

The next question is from Stephen Green with TD Securities. Please go ahead.

Speaker 1

Yes, good morning everyone. Just a quick accounting question for you. Up until now you've been capitalizing your interest on Cote. Can we expect that will all start being expensed after the August 2 date?

Speaker 3

Yes, we will stop depreciating the asset and we will stop capitalizing our borrowing costs after achieving commercial production, which we it would be out there beginning August or beginning September, but probably beginning August.

Speaker 1

Okay, great. That's all I had.

Operator

The next question is from Tanya Jakusconek with Scotiabank. Please go ahead. Great.

Speaker 8

Good morning. Thank you very much for taking my questions and congrats on getting Cote commercial. I just wanted to come back. I know a lot of questions have been asked. I needed it quite a bit on starting off on Cote.

Speaker 8

Can I just go back to starting on the just on the pit you said the grade meets the block model? Just remind me right now on the availability of your trucks, what are they operating as availability wise?

Speaker 2

We're definitely in the specs, so 85% just confirm 85% or so. So this is how you want to see a new fleet behave. Okay.

Speaker 8

And then can I ask just looking at so going back to the processing facility sorry, before the processing facility, just the stockpile, you gave us the 8,000,000 tons for the 0.75? Can you just give me what the stockpile tonnage is for the 1.6 grams per ton? Because I know that's what you're going to be feeding in the short term through the processing facility. So what do we have in 1.6 grams per tonne?

Speaker 5

Hello, Daniel. We're talking about 1000000 tons right now. And we have packets in front of us, directly at the in the pit.

Speaker 2

Yes. We used a bit of stockpile, of course, during the ramp up and the mine was getting new facing prepared and so forth. So we've entered now much like good grade and long and continuous benching. So expecting pretty good grade till the end of the year.

Speaker 8

End of the year. Yes, Sachin, you mentioned the 1.4. Percent. Okay, perfect. And then as we look at

Speaker 2

the 1.4 percent. Yes, we did 1.4 percent. Sorry, Tanya, just to clarify. So we did 1.4 percent in Q2, but now that we're primed, if you will, so we'll like to maintain more towards a 1.5 in the end of the year.

Speaker 8

Okay. So you are going to take a bit more of that higher grade stockpile through as well?

Speaker 2

No. We just well, maybe, maybe, but also because the mine will be producing more until the end of the year of that, I agree.

Speaker 8

Okay. That's helpful. And then as we get into the processing facility and we're down for that 10 to 15 days, just wanted to make sure like you're tacking the liners, the screens. Do we have all of this inventory on-site right now or are we still having to purchase or have this come to site?

Speaker 2

A lot of that already, Tanya. Some will come later on in August. Some the latest will be kind of very early September. So we feel that we're going to be fully equipped to address all those issues. So we're not expecting any issues on the material.

Speaker 8

Okay. And then just on the dust that you talked about, was that just a lot of dust that you're having to fight against the permit? Or what was it about the dust in general that you needed to I understand you need to control DUS, but I'm just wondering if it was a permit or if it was just a normal operating stuff issue?

Speaker 2

I would say more operating things. I mean like the objective is very clear. You visited a lot of assets and know what it is. And in the screening building and the crushing building, using a mask should be a second layer of protection and not the main layer. So that's the bar.

Speaker 2

It's like our commitment to health and safety. Rules are very strict as well, of course, in Ontario as it should be. So we're going to bring this to basically the 0 DOS, fugitive and DOS and so forth. So we were not there at the beginning, of course, a lot of adjustment, but as we advanced in August, we have some sectors now that really looks like a 0ed off. So this is basically what has to do.

Speaker 2

So most likely, we're just going to extend to every single critical area, the suppression system. We're working with the and some optimization. So the combinations of both, we're very, very confident that we'll solve the problem once we're good in

Speaker 8

August in September. Okay. And just on the processing costs that was quoted, the $10 to $15 a ton, I just want to make sure that's USC?

Speaker 2

Yes.

Speaker 8

Okay. And then thank you for that all my questions on and congrats on getting this up. It like it's coming along nicely. Can I just move to my final question, which is just on the guidance for the remaining portion of the year for the company as a whole? We do have the lower grades coming in at Essakane.

Speaker 8

Is that coming in like slowly, I. E. Q3 is lower than Q2 and then a lower Q4? Or are we already in the low grade and it's sort of even in the 2 quarters?

Speaker 2

Yes. The first part, like July was somewhat like a transitions and remained good. And I think from there, like as we enter August, like slowly, we see this ramping down. But it has it wasn't like a dry cut at the end of Q2. So we had a good July and we continue and now we're transitioning slowly.

Speaker 2

And on that, I know when you're looking at the guidance, as I mentioned, it looks like we're performing better the year to date. And how we look at it as a county as well as we set the guidance, there is some sort of risk adjusted effect as well there. So we all understand the situations and it would take only a month of interruptions of supply or LFO being used for power. So there's a bit of a risk adjustment. And just like happened in the first half, if the second half is very stable, you have no disruptions and the mine operates according to his plan, there is no reason to believe that we will not perform extremely well under those new updated guidance.

Speaker 8

Okay. So looks like Q3 a bit lower and then Q4 will be the lowest. And then for Westwood with the revised numbers, are we still looking at quarter over quarter improvement Q3 over and then better improvement in Q4 on the grade side?

Speaker 2

Yes. But as I mentioned, we're almost now already at reserve grade, right? So there would be a point where you don't want to over mind this. So you're going to be following. So we're almost there.

Speaker 2

So if everything goes as well, while Fayol is over, so there's about 10,000 ounces of the first half of the year that came from Fayol. So this one is so we had a very good a very good grade in the Brunswick as well in kind of the second half of H1. So that's also. So all those elements will maybe not be there in a second. So when you're looking at, I think, the underground will continue to improve, but you may lose a bit of grade towards the Grand Zuk and you won't benefit the ounces from Fayol.

Speaker 2

So could we repeat H1 and H2? A little more challenging, but if the mine continues to ramp up well on the ground, we could be well positioned as well under this new guidance. Okay.

Speaker 8

So it kind of looks like you're almost there on grade, so mainly evenly distributed for the second half?

Speaker 2

Yes.

Speaker 8

Okay. Thank you so much for taking all my questions. I really appreciate it and congrats again.

Speaker 2

Thank you so much.

Operator

This concludes the time allocated for questions on today's call. I'd now like to hand the call back over to Graeme Jennings for closing remarks.

Speaker 1

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

Operator

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

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Key Takeaways

  • Côté Gold ramp-up: Achieved commercial production on August 7 just four months after first pour, processed 834 kt at 1.4 g/t to produce 34 koz in Q2, and will undertake a mid-September shutdown to optimize plant availability toward a 90% nameplate throughput target by year-end.
  • Upgraded 2024 guidance: Attributable gold production guidance raised to 440–495 koz (from 430–490 koz) with combined cash costs lowered to US$11.75–12.75/oz and AISC to US$17.00–18.25/oz for Essakane and Westwood, while Côté remains at 130–175 koz on a 60% basis but expected at the lower end due to mill availability improvements.
  • Q2 operational outperformance: Essakane delivered 111 koz (+26% YoY) at 1.46 g/t grade, cash costs of US$10.81/oz and AISC of US$14.81/oz, and Westwood produced 35 koz (+84% YoY) at 9.2 g/t underground grade, marking a second consecutive quarter of positive mine-site free cash flow.
  • Financial strength: Ended Q2 with US$511 m cash and an undrawn US$400 m credit facility, raised ~US$300 m net via equity financing, expects US$152 m Essakane dividend by year-end and ~US$84 m from remaining Bambouk asset sales, positioning for step-change free cash flow in 2025.
  • Mine life and project advancement: Launched a 35 ktm Gosselin drill program targeting >4.4 Moz of additional Indicated resources at Côté, power capacity headroom supports future expansion, and Q3 capex remains aligned with 2024 guidance to drive long-term value.
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Earnings Conference Call
IAMGOLD Q2 2024
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