IAMGOLD Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
May 7, 2025

There are 10 speakers on the call.

Operator

Thank you for standing by. This is the conference operator. Welcome to the IAMGOLD First Quarter twenty twenty five Operating and Financial Results Conference Call and Webcast. As a reminder today, all participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions.

Operator

At this time, I would like to turn the conference over to Graham Jennings, VP, Investor Relations and Corporate Communications for IAMGOLD. Please go ahead, Mr. Jennings.

Speaker 1

Thank you, operator, and welcome, everyone, to our conference call today. Joining us on the call are Bruno Adams, President and Chief Executive Officer Martin Finusen, Chief Financial Officer Bruno Lemlin, Chief Operating Officer Annie Turquilla Lagace, Chief Legal and Strategy Officer and Dorina Quinn, Chief People Officer. We are calling today from IAMGOLD's Toronto office, which is located on Treaty 13 territory on the traditional lands of many nations, including the Mississaugas of the Credit, the Anishinaabeg, the Chippewa, Haudenosaunee

Speaker 2

and

Speaker 1

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. 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.

Speaker 1

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 3

Thank you, Graham, and good morning, everyone, and thank you for joining us. And I know it's a busy morning with earnings results, so we'll do our best to move things along. IAMGOLD began the year with a modest production of 161,000 ounces, but yet achieved several key milestones that further position the company for a much stronger remainder of the year. We remain very confident in our 2025 attributable production guidance target of seven and thirty five thousand to 820,000 ounces, with stronger quarterly production expected from each of our operations over the remainder of the year. At Cote, we have recently celebrated the best month of operations in March and April, achieving monthly throughput of 1,000,000 tons processed with the plant operating now at the 90% plus of nameplate.

Speaker 3

This progress positions us well to complete the ramp up to nameplate production of 36,000 tons per day by the end of the year. Meanwhile, we believe we have a significant amount of value yet to uncover. This year, we are conducting a significant drill program in the Kothi and Gosselin zones in support of a technical report in 2026, incorporating a mine plan that will bring these zones together into a unified super pit and online a larger scale operation, build up a significant portion of the over 20,000,000 ounces of resources in this zone, making Gode One of the largest gold mines in Canada. At Atacane, we will continue to the safe operation of the mine prioritizing the ability to maximize cash flow generations and dividend payment out of the country. As mining moves deeper into the pit in Q2, we expect to see improvements in grade reconciliation and stronger quality gold productions for the remainder of the year.

Speaker 3

And at Westwood, our focus is on expanding our underground mining areas and continuing our strong record of resource to reserve conversion. Westwood made significant strides last year to become a positive cash flow generating asset and we believe there is a significant potential to improve the value further through the drill bit and are increasing the feed of higher grade materials to the mill. Financially, we are quickly moving working through our gold prepayment arrangement which is which in and of itself is a form of debt retirement. Taking together with the prepays behind us by midyear, IAMGOLD will be an 800,000 ounce per year producer with full exposure to gold price and significant cash flow generation from three free cash flowing assets, but yet trading at a fraction of our mid tier peers on the price to cash flow basis. Further, with the COSI expansion scenario and the rapid growth of our Nelligans and Monster Lakes assets in Quebec, which combined have nearly 9,000,000 ounces of global resources, means IAMGOLD offer a robust organic growth portfolio within our own backyard.

Speaker 3

Now let's dive into the first quarter. Operating performance always starts with safety as ensuring all of our employees and contractor go home safely is priority number one. In the first quarter, our total recordable injury frequency rate was zero point six to seven. A slight uptick from the prior quarter. Management has instituted a new safety program in control with a focus on critical risk management and visible leadership to reduce high potential incidents.

Speaker 3

Additionally, yesterday the company released its 2024 sustainability report, which marked the eighteenth year of I'm Gold disclosing the sustainability topics and information that are most material to our stakeholder and our business. As an organization and member of the community, we are proud of our dedication to responsible mining practices, the core element of the IAMGOL culture. Looking at operation, IAMGOL started the year with attributable production of 161,000 ounces as Bulbas Gopi and Westwood production was lighter than the prior quarter, partially offset by modestly higher production in Isakane. The first quarter was expected to be the lightest quarter of production this year due to the ramp up in associated maintenance activity at Cote limiting throughput early in the year and the expectation of the transitions to higher grade in the second half at Isakami. At Westwood production decreased from the prior quarter, but is expected to resume its recent track record of strong performance has stope development continues to improve flexibility in the mine.

Speaker 3

Cash cost averaged $14.59 dollars per ounce and all in sustaining cost averaged $19.00 $8 per ounce in the first quarter. Costs are expected to decline quarter over quarter as production ramps up and we remain confident in our cost guidance for the year. While lighter, the first quarter production of 161,000 ounces represents a net increase of 7% year over year at an increased margin largely driven by the additions of GoDegal, which moved from first gold in March 2024 to 90% plus nameplate in March 2025. This resulted in an increase of our mine site free cash flow to $140,000,000 in Q1 compared to $46,000,000 in the same period of the prior year. With that, I will pass the call over to our CFO to walk us through our financial results and position.

Speaker 3

Martin?

Speaker 2

Thank you, Renaud, and good morning everyone. In terms of our financial position, at the end of the quarter, IAMGOLD had $316,600,000 in cash and cash equivalents and net debt of $882,300,000 The company has $210,000,000 drawn on the credit facility and approximately $428,500,000 remains available, resulting in liquidity at March 31 of approximately 745,800,000.0 We note that within our cash and cash equivalents, dollars 200,000,000 was held by Sican and Burkina Faso, Dollars Forty Six Point Nine Million was held by Dakota Gold unincorporated joint venture and $60,600,000 was held in the corporate treasury. Regarding our excess cash at this account, this cash is repaid through dividend payments, of which the company will receive its share based on its ownership, so 90% currently, net of dividend taxes. The size of the dividend is dependent on cash held and the projected cash generation at this account. Last year, we declared $180,000,000 dividend in the second quarter, with the company receiving its net share in September and October.

Speaker 2

We expect a similar process this year in which we will be declaring our dividend in the second quarter with disbursement in the second half of the year. On the debt side of the balance sheet, this year offers a significant inflection point for our gold, with the increase in gold prices are providing us with the ability to accelerate our plan to reduce the amount of cost of our debt the amount and cost of our debt. One element of this that we are making good progress on is our delivery into the gold prepay arrangements. During the first quarter of this year, the company delivered 37,500 ounces into the gold prepay arrangements, and we are 75% complete with the last 37,500 ounces deliverable during the second quarter. This is a considerable amount of debt that the company has repaid.

Speaker 2

The cash flow impact of delivering into the 37,500 ounces totaled approximately $107,000,000 during the quarter. Subsequent to the quarter end, a further 12,500 ounces was delivered in April, reducing the outstanding balance of ounces remaining to be delivered into the prepay arrangements to 25,000 ounces as of today. Once we have completed delivering into the gold prepay arrangements, as part of our plan to reduce our carrying cost of debt and debt levels, the company can start to repay its $400,000,000 term loan at the May in $20,000,000 installments at 104% of the face value and 101% of the face value if we paid after May 2026. The term loan has relatively higher interest in our other debt in our capital structure and responsibly paying down this facility would achieve our objective to reduce the mining cost of our debt. Looking at the cash flow waterfall for the first quarter at the bottom of Slide seven, we can see the impact of delivering into our gold prepayments has had on our operating cash flow as cash from operating activities, including the noncash revenue of 77,700,000.0 before financing charges that was received from the gold prepay was entered into, and I'm Gold would have received $107,000,000 if the 37,500 ounces were sold in the market during the quarter.

Speaker 2

By July, the prepublications will be completed and Iron Gold will be fully exposed to gold price at a time when we expect to see increases in production. Looking at the quarter and our financial results. Revenues totaled $477,100,000 from sales of 174,000 gold ounces at an average realized price of $2,731 per ounce, including the impact of the gold pre made arrangement. Excluding the impact of the gold prepays, our average realized price was $2,909 per ounce. The strong gold price translated to an adjusted EBITDA of 204,500,000.0 compared to $152,500,000 in the first quarter twenty twenty four.

Speaker 2

Adjusted earnings were $55,200,000 in the first quarter or $0.10 per share. Mine site free cash flow was $57,600,000 at Cote, sixty five point four million at Issacan and $16,600,000 at Westwood, totaling $139,600,000 for the quarter. As we look ahead for Angola, we are continuously analyzing what the appropriate capital structure is for an organization of this size with expected cash flow generation. Ultimately, we look forward to discussing the potential of returning value to our shareholders, whether through share buybacks or dividends. But first, we need to ensure that we achieve our targets and that the business is appropriately funded and we have reduced our debt to appropriate levels.

Speaker 2

And with that, I will pass the call to Bruno Leblanc.

Speaker 4

Thank you, Martin. Starting with Cotego, it was a critical first quarter at Cotego with the first winter at full production. As it is the case for any ramp up of a large mining project, there is a learning curve for the operations and maintenance team. They learn the stress points in every process and make adjustments to adapt to real conditions. During the first quarter, we experienced accelerated maintenance in our grinding area.

Speaker 4

However, we managed to operate without major interruption due to weather. We also hit new records for stability and utilization in March with continued improvement through April. This is very positive progress for an operation of this size. A year ago on March 31, Cote poured its first gold bar. Commercial production was then achieved effectively four months after starting production and now we have hit the 90% monthly milestone about eleven months after pouring first gold.

Speaker 4

This is a great achievement and we remain on target towards our goal to achieve full nameplate of 36,000 tons per day before the end of the year, again within the twenty month estimate as projected initially. Looking at the quarter, Cote produced 73,000 ounces on a 100% basis in the first quarter. Production was lower in the quarter due to lower tons processed the revised grade profile of the mine. We need to note that the mine moves away from segregated stockpiling to a more efficient and streamlined bulk mining model. Mining activity totaled 10,800,000 tons in the first quarter essentially flat from Q4 twenty twenty four.

Speaker 4

Ore mined decreased slightly to 3,100,000 tons with an associated increase in the strip ratio to 2.5:one. The average grade of mined ore was 0.78 gram per ton in the quarter, which reflects the updated mining schedule as mining activities expand the pit. As Tote transitions towards the bulk mining model and reduces re handling. Further, we saw an increase in the volume of blasted ore in the pit provide greater flexibility in supporting the planned mill feed this year. The mining process improvements and the starts of the transition towards bulk mining saw some immediate benefits as we saw a decrease in our mining units cost to 3.49 per ton, down from $4.19 per ton in the prior quarter.

Speaker 4

Costs are expected to continue to decrease over the course of the year as mining operations continue to ramp up closer to the target of 1,000,000 tons a week and re handling is reduced. On the processing side, mill throughput in the first quarter totaled 2,100,000 tons as a result of maintenance and repair activities on the HPGR in January and February, as we discussed on our last earnings calls. The changeover of the HPGR roles was completed in February 2025 and we continue to make improvements to increase the lifespan of the planned equipment. For the HPGR, this includes adding some water to reduce the generation of abrasive dust, revising the roller liner material and ensuring that a replacement set of rollers is always at site and ready to go. Once the repairs were completed in February, the plant was able to resume its momentum achieving a record monthly throughput of 1,000,000 tons in March or 90% of nameplate.

Speaker 4

This performance continued in April as over the last thirty days Cote averaged 34,500 tons per day or 96% of nameplate. With a record fourteen days in which the plant operated above nameplate capacity. Head grades in the first quarter averaged 1.17 grams per ton which were in line with our guidance of one point one, one point two grams per ton with feed material comprised of a combination of direct feed ore and stockpiles. Recoveries in the plant averaged 93% in the quarter, a modest step up as we saw the gravity circuit come online in the quarter. The reconciliation between the reserve models, grade control models and mill feed continues in line within expected tolerance.

Speaker 4

Milling cost was $20.18 per ton milled during the first three months. Unit costs were elevated in the first quarter due to the lower tons processed, higher parts and contractor costs from the increased maintenance activity and costs associated with the refeed circuit to support the mill feed during maintenance period. Unit costs are expected to decrease over the course of the year as throughput increases towards nameplate capacity and as operations and maintenance processes stabilize. For example, in March when Pote processed 1,000,000 tons, processing costs averaged around $15 a ton. Further improvement can be expected with the installation of the additional secondary crusher that should reduce the use of the refit circuit and related costs.

Speaker 4

Looking ahead, we remain confident in our Cote Gold production guidance of 360,000 to 400,000 ounces on a 100% basis, which is actually a doubling of production from last year to this year. The primary focus continues to be the ramp up of the processing plant towards the goal of achieving design capacity of 36,000 tonnes per day by the end of this year. The installation of the second cone crusher in Q4 will provide further capacity and redundancy in the dry side of the plant in support of the operation and potential future expansion. The installation will require a multi day shutdown which is accounted for in the current guidance estimate. Of course achieving nameplate is just a start of our plans for value creation at Cote.

Speaker 4

Since initial design, the project has seen considerable resource growth where the original mine plan called for a 36,000 ton per day plan targeting just over 7,000,000 ounces of reserves and yet now Cote and Ghost Lane zones combined for over 16,200,000 ounces of measured and indicated and 4,200,000 ounces of inferred resources or over 20,000,000 ounces together. Therefore, our plan this year is to conduct a thorough drill program of 45,000 meters focusing on the resource conversion at Ghoslaine in support of a technical report in 2026 that outlines a significantly upsized reserve base combining Cote and Ghoslaine into a super pit. In the first quarter, we completed about 12,000 meters of this program prior to spring breakup. Operationally, we will continue to look for opportunities to improve including options to increase processing plant capacity. Several components of the plant have been designed for 42,000 tons per day and we have seen many, many days above 40,000 tons per day over the last year.

Speaker 4

Longer term, a prudent strategy for mining an open pit subsequently in the gold environment where we are in is to maximize and monetize the number of tons of ore mined as they become available for processing. As currently designed, Cote has a mining capacity to average an annual ore mining rate of approximately 50,000 tonnes per day versus our current nameplate processing of 36,000 tonnes per day. As part of the 2026 technical report, we will look to find the right balance to increase the scope of processing rates with the mining rates targeting a larger reserve base of the Cote Gas Line Super Pit. We believe the results of this will outline a low capital intensive path forward reinforcing Cote Gold's position as one of the largest gold mines in operation. Turning to Quebec, the first quarter at Westwood saw a step down with production of 24,000 ounces which was about 10,000 ounces less than the quarterly average last year.

Speaker 4

Underground mining volumes were generally in line with 89,000 tons mined or nine eighty seven tons per day. However, underground head grade came in at 6.28 grams per ton compared to eight seventy eight grams per ton in the same period last year. Grain mined from the underground mine was lower than the prior year due to temporary equipment challenges impacting blasting efficiency that required stope resequencing and increased dilution in certain stopes. We have seen lasting efficiencies and improvement in April and we expect to see strong volumes from underground this year as the number of stopes drilled and loaded is nearly double what they were last year. Mill throughput in the first quarter was 282,000 tons at an average blended head grade of 2.89 gram per ton and 91% recoveries.

Speaker 4

Mill availability averaged 94% in the quarter, a good achievement and reflective of our team's ongoing maintenance effort. Cash costs and all in sustaining costs came in above our guidance ranges for the year due to the lower production volumes with cash costs averaging $15.27 dollars an ounce and all in sustaining averaging $2,124 an ounce. Costs are expected to fall within guidance range seen here as volume increase in the remaining nine months of the year. Looking ahead, we remain confident in Westwood's ability to meet our production guidance with production of 125,000 to 140,000 ounces. Open pit activities from Granzik are currently planned to be completed by the fourth quarter of twenty twenty five, Granzik stockpile material will contribute to the mill feed into 2027.

Speaker 4

However, should gold price remain where they are, there is a strong potential for further expansion expansion of the Granzik pit which will be evaluated this year. Finally, looking at Esa Can, we saw a modest step up in production from the fourth quarter last year with attributable production of 86,000 ounces. Mining activity totaled 10,900,000 tons mined in the quarter with 2,400,000 tons of ore mined translating to a strip ratio of 3.4:one, a decline from prior quarters as stripping activities required to open up phase six and seven move into the rearview mirror. Mill throughput in the first quarter was 3,100,000 tons, which is in line with a typical quarter at Isaka with no constraints on supply chain. Average head grades were 1.08 gram per ton in the quarter, which reflects mining in the upper benches of Phase seven.

Speaker 4

Grades tend to reconcile slightly below the reserve model during the earlier stages of mining a new phase and conversely to the positive as mining moves deeper into a phase as was experienced in the first half of twenty twenty four when mining activities were on the later stages of Phase five. On a cost basis, Essakane reported cash cost of $15.57 dollars per ounce and all in sustaining cost of $18.46 dollars an ounce to start the year. Costs are expected to improve as production improves through the year. As a whole, Essakane's costs have increased over the last few years due to higher landed fuel prices in country as well as higher supply chain and transportation costs impacted by the security situation. Further, as the gold price increases, there is an impact to cost due to royalties.

Speaker 4

For example, in the first quarter, royalties accounted for $2.00 $3 per ounce. Looking ahead, Essakane is on track to achieve its attributable production guidance target of 360,000 to 400,000 ounces at the cost seen here. The mill is expected to operate at throughput and head grades in line with the current life of mine. Though as mining moves deeper into phase six and seven, in the second half of the year grades are expected to reconcile positively over this period. While the cost of operations in the country has risen over the recent year, Esakan remains a world class mine positioned to generate strong free cash flows as waste stripping expenditures are expected to decrease year over year.

Speaker 4

Finally, it is worth highlighting the work ongoing at our second largest gold mining camp, the Nidegan and Monster Lake project in Shibugamu, Quebec. In the first quarter, we completed over 8,000 meters of drilling on our 13,000 meter program targeting the extension of the Nilegan deposit. Nilegan's mineral resources estimate was updated earlier this year which saw indicated ounces increase to 3,100,000 ounces with an average grade of 0.95 grams per ton and an additional 5,200,000 ounces of inferred at similar grade. Net again mineralization remained open at along strike and at depth with some of the most encouraging results at depth as you can see in the diagram here. In addition, the drilling program at the Monster Lake project is also ongoing targeting higher grade underground structure.

Speaker 4

With that, I will pass it back to Bruno. Bruno?

Speaker 3

Thank you, Bruno. So we look forward to the results of these programs as Nelligan has seen rapid growth from a relatively conservative drill program over the last two years. When you combine Nelligan with the high grade satellite Monster Lake deposit,

Speaker 5

there

Speaker 3

are nearing 9,000,000 ounces of resources in this mining camp already positioning Nelligan at a relatively early stage among the largest gold projects in Canada with significant potential for further growth. Taken together, there is no question that our Chibug Mo asset offers significant organic growth potential in the very mining friendly jurisdictions in Canada. So thank you all. It is really an exciting time for IAMGOLD and we're very, very positive about what the rest of 2025 holds for the company. Cote is entering the second quarter at 90% plus throughput rate with further improvements to come including the second gun crusher installation later this year.

Speaker 3

Westwood currently has record underground inventory ready to blast to drive our productions for the remainder of the year. Escana is moving into higher grade in the second half of the year and there is substantial growth to come through the drill bit at Cote and Milligan. So stay tuned and thank you for your support. With that, I would like to pass the call back to the operator for the Q and A. Operator?

Operator

Thank you. We will now begin the question and answer session. And today's first question comes from Anita Soni with CIBC World Markets. Please proceed.

Speaker 5

Good morning, Renaud and team. Just firstly, congratulations on getting Cote up to the 96% throughput rate in the last thirty days. Secondly, I had a question on the mining rates and the grades that you were delivering from the pit. I think it was 0.78 and which was a little bit lower than what you delivered as a processing head grade. Can you just give me an idea of where your stockpile levels stand, particularly the high grade and medium grade portions?

Speaker 5

Kind of give me some color on like how that one, firstly, how long is that 0.78, the lower grades while you try to open up the pit going to persist? And then like are you mining higher grades? Like are you sort of upgrading the direct ore feed and supplementing that to the mill while do that 0.78? Just trying to get an understanding how the grades and the throughput are going to evolve over the course of the year.

Speaker 3

So I'll ask Bruno for more detail. But just as a general comment, Anitra, so I just want to bring this conversation back to when we release our guidance for the year. And just remind everyone that for the first six months of the year, there was already a plan to be at a lower grade as we know the teams and the co pay are focused on repositioning the basis and so forth. So we were already kind of planning that we would be a little bit lower, but we will be using stockpile in a second. So I'll pass it to Bruno for more detail on it.

Speaker 3

But to me, there is no real surprises there. Maybe slightly a little lower on the mining side, but because we continue to mill or we were mining, milling at the lower rate than the mining, so you could still increase your grade to the mill to the 1.1 to the 1.2 at the Malaysia plant. But no real surprises and maybe reminded last year was a bit the same too. You could mind that the reserve grade, but increase your milling grade by nearly 50%. But now we're slowing down this.

Speaker 3

We go more direct feed. We avoid any unnecessary selective mining and so forth. So Bruno?

Speaker 4

Morning, Anita. That's exactly right. In the coming quarters, the grade mine is going to increase more towards the one gram per ton. We're also going to be mining more ore grade ore mined over time. So there will be some selectivity for sure, but we're trying to minimize that segregation so we can mine closer to reserve grade.

Speaker 4

So all in all, we're going to be within 1.1, one point two. We have close to 2,000,000 tons grading at over 8.8 gram per ton and we have 8,000,000 tons grading at 0.55 gram per ton. So whenever sometime we need to use a stockpile to feed the stockpile varies in average around 0.8 gram per ton. But for the next quarter, the mine the grade of the ore mine is going to be higher than 0.78 to answer your question.

Speaker 5

Okay. Thank you. And then just in terms of the grade at Essakane, I think you said the back half of the year would see positive grade reconciliation. I think I also had a declining grade profile for the year. So does that mean with positive grade reconciliation that should be more of a flat profile for the year?

Speaker 4

It's going to be quite flat to be honest for the remainder of the year. It's going to be a grade that is going to be above the one gram per ton. And because we're mining more ore than we are processing, we're going to be slightly selecting the higher grade material to the mill. But we also expect to see some good or to see the reconciliation to be as good as what we see right now.

Operator

And then

Speaker 3

just on the Yes. It's a bit of the so maybe, Anita, just to add to this, like if you look at 2024 was a bit of the opposite, right? So we as we move from Phase five to eventually exiting at entering new phases. So I wish and hope that we're going to see very good results as we transition to the high grade. Of course we need to use what we see in reserve to plan so far.

Speaker 3

But it's very likely that we see the same phenomena that we've seen in other places and as we transition to the better zones that you will see a significant kick on the head grades. So we're definitely expecting a stronger than Q1. But as Bruno said, we remain consciously prudent to not overstate what we could potentially see as great, but we should normally see the same phenomenon as we confirm that is in

Speaker 2

deeper zone.

Speaker 5

And then just on the unit cost at Essakane, the processing cost came in better than I had expected or I mean better than any of the quarters you posted last year. So is there anything driving that in particular? Is it currency? Or is that something that will persist over the rest of the year? Or is that just maybe just sort of a onetime new one?

Speaker 3

No, nothing specific to go ahead Martin.

Speaker 2

Good morning, Anita. One thing that is happening is I believe is the can is running at a bit higher throughput rate, is driving down the ton. So it's a bit absorbing some of the fixed costs.

Speaker 5

Okay. I'll leave it there and get back into the queue. Thanks.

Speaker 3

Yes. Thank you.

Operator

And the next question comes from Mohamed Siddiqui with National Bank. Please proceed.

Speaker 6

Hi, Renaud and team. Thanks for taking my question. And maybe just to follow-up on Anita's unit cost improvement at Essakane. I was just wondering if this was also maybe positively impacted or if you expect to see any positive impact from the lower fuel prices or diesel prices that we're seeing. Any comments on that?

Speaker 2

So the total cost that we spent at Issacan was actually in line with what we expected to spend and in line with prior years as well. Fuel cost in Burkina takes a bit longer to adjust to the market prices. So we've not seen the reduction in oil prices coming in there. So it is really because we have processed a bit it's more a unit throughput impact that is driving it.

Speaker 3

And maybe I could add to this. I mean, when you look at the previous quarter, I wouldn't necessarily say that the mining costs I think they were in line with previous. But we did notice reductions of the mailing processing costs in one quarter, as Martin noted, compared to last quarter. But in the last year, we were systematically more like in the '18 '50 and so far achieved seventeen fifty.

Speaker 3

Yes, some yet good results, but we'll see in the next quarter. Sometimes it's just a bit of the timing of certain expenses and so forth. But we're definitely confident that we could repeat at least minimum repeat what we achieved last.

Speaker 6

Great. Thank you. And then just my second question would be at Westwood, given the lower grade in the quarter because of the temporary equipment challenges. Could you maybe give us a little bit more color into what the grades may look into Q2? Is Q2 expected to be slightly still impacted by that?

Speaker 6

Or should we see a material improvement into Q2 at Westwood? Thank you.

Speaker 3

So I'll ask Bruno to add some comments to it. So definitely, we're going to see an increase as we advance in this year. So with the change of the mining sequencing, of course, we went to lower grade. The throughput is there, the total tons. So it's just a matter of transitioning back into.

Speaker 3

And there is no reason that you do not see the same as we were mining last year as we were approaching the end of the year Bruno?

Speaker 4

Yes. So Mohammed, grade for Westwood is going to be for the underground mine is going to be around hovering between eight and twelve. So depending on the sequencing that we are going to be in. So the goal for us is always to try to be as close to the reserve grade on around as possible like nine, ten gram per ton. So this is what we see for the next quarters and for the year.

Speaker 6

Great. Thank you. And if I could maybe slide in one last question, just on Burkina, on the security situation and maybe the commentary made recently by the Prime Minister. Bruno, did you have any additional comments and color on that?

Speaker 3

I think internally, we remain extremely confident. Like in the security situations, we wouldn't see worse in civil rights. So we continue to operate another quarter without any disruptions and the supply chains and so forth. To me and to us, there is really nothing new happening. There's a lot of talking and so forth, but it's the same information that's been revisited from the last year and so forth.

Speaker 3

There is a question a bit on the timing of certain of the aspect, but, no, we, I think our relationship and work with the government remain very strong. We never even remotely close to think that Esa Cana could be referred and those common if any. A lot of it is interpretation. So now we remain very confident to continue to operate strong operations, maintain the security allowing us to operate at 100% capacity and so forth. And so forth, we haven't seen anything but the strong support from the government in all matters.

Speaker 3

So no, we do not see it as an increased risk.

Speaker 6

Great. Thank you and congrats on a good quarter, Equity.

Speaker 3

Thank you.

Operator

And the next question comes from Tanya Jakusconek with Scotiabank. Please proceed.

Speaker 7

Yes. Good morning, everyone. Thank you for taking my questions and congrats on getting the mills back up again at Cote doing quite well. I have a few questions. The first one I wanted to start on was just on Essakane.

Speaker 7

When you put out your cost guidance, seemed to remember it was at much lower pricing than $3,000 And now that we have the increased royalty rates from the government at over $3,000 they get to 8%. Can you remind me if your cash cost guidance reflects that? Is this for Essakane?

Speaker 3

So I'll pass it to Martin. Thanks for that.

Speaker 2

Good morning, Tanya. So our cash cost guidance assumes the dividends and the increases, but our gold price assumption in our guidance was $2,500 an ounce. So if we look at our forecast, with that increase, we still expect to come within the guidance range. Okay. Got it.

Speaker 2

Yes.

Speaker 7

Okay. I just wanted to make sure because everyone's guidance is that that $504,600 and all of these things that are moving up and you just want to make sure that that still is reflected in that guidance. So thank you so much for that. And then just maybe continuing on just again, I think when we last spoke, were expecting a weak Q1 and then the strongest would be the Q4 with a stronger second half. Do we have an ability to so we obviously have improvement happening.

Speaker 7

Essakane seems to be flattish. We have improvements at Westwood and Cote I think quarter on quarter at Cote and Westwood, I don't know if it's evenly divided in next three quarters. But can we kind of try and break, are we at that 40 eightfifty two? Are we at 40 fivefifty five? Just to have an idea of how the year shakes out.

Speaker 3

A lot of component to this but I'll let Bruno start and maybe add.

Speaker 4

So at this I can, it's going to be clearly a stronger H2 than H1 thing because as you know as we dig deeper into Phase six and Phase seven, are going to see the higher grade in the second half of the year. For Westwood, we should see like the resume of the average production that we have enjoyed over the last quarters over $30,000 quarter. And coated that's going to be a continuous ramp up, gradual ramp up almost linear toward the end of the year.

Speaker 3

Clearly the second half Daniel, clearly the second half will be stronger, right, as you combine the three elements that Bruno is mentioning. Of course, we have some tie in to do with the crusher and so forth. But globally speaking, we see the three minutees pretty strong in the second half with some sort of a bit of a transition in Q2, right, to all of those aspects that we have. And it's really the second half that's going to highlight the year.

Speaker 7

Yes. So maybe Q2 just a bit better than Q1 and then you have the bump up in Q3 and Yes. Okay.

Speaker 3

Yes. The three mines should perform well in Q2 compared to Q1.

Speaker 7

Okay. And then maybe coming back to what Martin was just saying on when he talked about the balance sheet and he said ultimately looking to return to shareholders through share buyback dividends, etcetera. Maybe we can kind of review what do you need to see both from an operational standpoint and a balance sheet standpoint before you would be comfortable in thinking about shareholder returns?

Speaker 3

Well, I will let Martin describe how we think, definitely we don't see this company like and difficult things and also carry a certain level of debt, but I would definitely see on this year, we want to see a reduction of our net debt cost and volume. And eventually of course with the priority on the expensive 400,000,000 term loan that would be a priority. We don't necessarily see this company with the need to go absolutely free cash, know, that's pretty debt and now debt free in the very short term. But Martin maybe you could add to this, but for us it's really about bringing the level and cost to the what we call best in class and then after that rethinking our capital allocation. Martin?

Speaker 2

Yes. Thanks Renaud. And our focus will remain over the next twelve months to continue to perform in line with our production guidance. And depending on the gold price, it depends on how we would look at it. First priority is reducing the level of debt and our cost of debt.

Speaker 2

And then once we get to the back end of that, depending on what the gold price is, will impact middle of next year or end of next year to see if there are options available. But it's hard because as you know, the gold price has been very volatile. So our approach would just be to continue to focus on performing and executing on our debt and then evaluate options when we're ready.

Speaker 7

Do you have a net debt to EBITDA target that you want to get to before and that would capture a gold price that you want to get to before you would start thinking about capital return?

Speaker 2

Our net debt to EBITDA ratio at the moment is about 1.1. We would like for it to be at one or less than one, but you can't look at that when the gold price is above $3,000 So you need to look at what that would be if the gold price is lower as well. And that's why we say we continue to look at that, not just based on what the current gold price is, but also what it would potentially be when we are making those decisions.

Speaker 7

Okay. And I seem to think that you mentioned within twelve months out. So it wouldn't be something that we should think about for 2025. It would probably be in mid-twenty twenty six and thereafter. Would that be a fair statement?

Speaker 2

Yes, that would be a fair statement. The gold prepays was a big repayment, the big impact on cash. We continue doing that. And then there's a lot of we've $200,000,000 drawn on our credit facility and the 400,000,000 on the second lien. So those are still big plans we have.

Speaker 3

But I think as you mentioned, Tania, so as you hit like mid next year, should the gold price remain and our asset delivers, think we're going to be in a pretty good shape in the second half of next year.

Speaker 7

And can I ask an exploration question? I wanted to go back to Shibugamu Camp and that emerging district. Maybe just a little someone can explain to me like, so what are you what how do you see this camp evolving? And how do you see yourself in this camp? Do you think you can do this on your own?

Speaker 7

Would you bring a partner in for this? Maybe some color on how this camp and your involvement in it.

Speaker 3

No, thank you for that. So what I like about this is not like a kind of a one source of if you're looking at the map and sketches, there is a it's really a trend. It's really a camp. It's not just limited to one. So yes, we're thinking big when it comes to Nelligan Monstela.

Speaker 3

We have seen as well the hit ratios of our drilling in the last two years, which is also pretty exceptional and it comes in as you know and it opens. And there is other area within the can we haven't really touched. But how do I see it? I see it eventually a large gold resource base and again that combines a considerable type of average Canadian grade with underground higher grade, like two things that we're good at doing. And the combinations of both approach from day one will give you a lot of flexibility.

Speaker 3

Over the next two years, what I keep reminding everyone internally because everyone excited about Milligan is drill, drill like our objective in the next two years, twenty five, twenty six benefiting some flow through we've taken this earlier this year is to build a resource base. A large open pit of all resource base combined with a pretty decent underground high grade. So this is the objective of the next two years. I don't like to look at too much of the minability of it and that's in the short term. I prefer to think that we don't know yet how big that could be, but I don't see how this can could not be a 15,000,000 plus ounces over time.

Speaker 3

And this is what we're focusing on. So by the time we put the next day at Cote out there, it is our objective to have position already now again to a certain point as we can look at it as the next. When it comes to bringing partners, I think the situation has changed significantly. This company over the last few years, I don't see any need in a too early timeframe. I think we have more than the capacity, talent and resources to bring this resource base to the next level.

Speaker 3

But we would always consider the derisking aspect when it comes to the next phase and so forth. It's early stage. At this stage, we don't have plans to bring, we have an excellent experience of partnering with someone and building world class.

Speaker 2

So we don't

Speaker 3

necessarily say that it happen, but we just don't need absolutely don't see the need for a partner at this stage and prefer to bring this large resource base as a 100% loan.

Speaker 7

Yes, was looking at it more from a talent perspective, right, because there's only so much. Yes. Well, luck with the drilling and thank you for the slide. Look forward to hearing more about it as you drill away over the next few years.

Speaker 3

Awesome. Thank you.

Operator

Our next question comes from Carey MacRury with Canaccord Genuity. Just

Speaker 8

a question on Ethicon. Your reserves are at $1,500 I'm just wondering if you can just remind us what the mine life you're assuming there is? And if your reserves were at $2,000 or $2,500 what's the mine life extension potential there?

Speaker 3

I'll pass it to Graham.

Speaker 4

So good morning, Terry. Of course, with the gold price increasing by close to $1,000 over the last six months, we'll have to revisit our gold price assumption when revising our mineral resources and mineral reserves. So this is a good question. We are going to challenge our current assumption and it will certainly have an impact on Esa Can mine. Right now, we have enough material up until 2029.

Speaker 4

This year we decided to have a more intense drilling campaign to see what would be the full potential of Exa Can inside the fence. As you know with the security situation, we are not explaining too much outside the premise of the mine. And so far what we are seeing is we are seeing the deposits continue to expand north and south in that depth. So we are looking at different phases and that will have to

Speaker 9

be

Speaker 4

evaluated with any new gold price assumptions. So I think we'll be able to come up with new information once we have a new mining plan that will dictate how much how many years we could gain according to those new gold price assumptions and according to those new block model coming from exploration.

Speaker 3

I'd like to add to this that while definitely we see the industry and I think it's just a matter of time, you will see some increase in the gold price used for reserve. We have quite a bit of a gap here. But I also want to stress that our strategy is largely to improve and increase through the drill bit. So don't want this company to be depending on the gold price to perform or to increase and so forth. So the gold price helps in a lot of ways in the debt repayment and so forth and free cash flowing.

Speaker 3

But it's important to us to measure performance and financial by how good we are to execute. And I think we've come in on a month in the last two years in that way. So expect us to use the gold price to increase our drilling efforts. So this is where I want to see most of the answers coming from the drill bit.

Speaker 8

Okay, great. That's it for me and congrats on the progress at Cote.

Speaker 3

Thank you.

Operator

The next question is from Lawson Winder Please proceed.

Speaker 9

Yes. Thank you, operator, and good morning, Renaud and team. Thanks for the update. Can I ask about Westwood and the potential to expand the life of the open pit and add additional resources from Grand Duke? What is it that's being considered there?

Speaker 9

Is there a conversion of some of that inferred resource to the plan? And would you be able to give us an idea of what we're talking about in terms of ounces? Like there's about a 1,800,000 ounce inferred resource there. Is it large piece of that the open pitable material?

Speaker 4

Good morning, Lawson. So the Ganzuk, it's what we call strictly a swing producer. It's very low grade and what it does is it helps stabilizing the mill. It's a constant feed as opposed to the feed coming from underground that's still a bit more coming in a erratic manner. So we extract from the underground mine close to 400,000 tons a year, but we have mill capacity that exceeds that.

Speaker 4

So we want to capture that excess capacity to monetize any kind of source that would be in and around Duignan Westwood Complex. So, Grande Zuc so far, ticks all the checkbox. However, now I think we are at a certain limit under which we need to evaluate it for further expansion would be making sense because it will require capital and moving some infrastructure. So, there is always like a limit which you can expand and that's what we're going to be evaluating. Otherwise, Gantech has been very good for us, giving us like 30,000, 40 thousand gold ounce a year, 20 something.

Speaker 4

And it's a stabilizer. We see it as a stabilizer as the underground operation progresses.

Speaker 3

About the same thing too is on my previous comment, I think there is an unbelievable opportunity at Westwood here to increase the valuation through crystallizing more reserves. We have a resource base over 3,000,000 ounces and just really easy last year a technical report limited to 1,000,000 ounces. Our confidence of course and how we see what's good over the next year is more than 1,000,000. So there is a good room and opportunity as well through the drill bit to convert some and put maybe work a bit on modernizations in my plan, but we've been in place interesting opportunity there to increase reserve and valuation.

Speaker 9

No, I agree. It is very interesting. Can I also ask about the underground mine? So you're targeting about 1,000 tonnes per day in terms of

Operator

a mining rate. What okay, I guess to put this question in two ways. One is, what are

Speaker 9

the underground process improvements that you're actually working on? And then thinking of those, what is the potential to expand beyond that 1,000 tons per day? And like what's kind of what's the theoretical limit given the ground conditions and other considerations around the geology and geotech?

Speaker 4

Yes. So to answer the question, actually we are aiming at 1,000 tons per day. We are seeing good days at 1,100. Ultimately, what we would like to achieve is 1,200 tons per day and we believe that the limit would be closer to 1,300 tons per day without changing too much the infrastructure. Most of the improvement would come with an improvement in underground transportation of the ore.

Speaker 4

That's what we did. We made some capital investment on our trucks and ScoopTrams and Crawley and ORPAZ system and as well in terms of mine design and blasting techniques using upper zones instead of the regular sublevel lung in terms of drilling. So, all in all, we are doing a lot of great improvement month after month and we see I would say 30% improvement potential, but that's yet to be captured.

Speaker 9

Okay. Very helpful. And look, I appreciate you guys making time here. I'm just realizing we're about two minutes past the hour. If I can, I'd like to ask one more question just thinking around capital allocation and the balance sheet and how it's set to improve quite materially here.

Speaker 9

In the context of the recent Canadian asset sales from like Newmont and Barrick now having this ongoing process to sell Hemlo, how does M and A compete with the internal options, including expansions at Cote and the projects at Chupagumo?

Speaker 3

I mean, it's more than one piece. Mean, if you're really looking at our portfolio, right, where next year we're going to put in a new technical report out there, COVID had significant increase in reserve resources. I would just talk about the net again and so forth. So when you're looking at our organic potential, organic growth for the next years to come, we truly do not see at this stage of our company the need to in the short term absolutely not. We're going to focus on our assets.

Speaker 3

Down the road, I mean we'll see, right? Down the road we'll see, but at this stage for us it's more than complete. Would create more value to focus on organic growth than buying it. Sorry for the background We're competing with the window cleaner, so perfect timing. Sorry about that.

Speaker 3

Saw the back. No,

Speaker 9

that's great. You're coming through loud and clear. Thank you so much.

Speaker 3

Thank you. Thanks.

Operator

And this does conclude today's question and answer session. At this time, I would like to hand the call back over to Graham Jennings for any closing remarks.

Speaker 1

Thank you very much, operator. And thank you everyone for joining us this morning. As always, if you have any additional questions, please reach out to Renaud or myself. Thanks. Thank you all.

Speaker 1

Be safe and have a great day.

Operator

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

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Earnings Conference Call
IAMGOLD Q1 2025
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