Q2 2020 Iamgold Corp Earnings Call
[music].
Thank you for sending died this is the conference operator.
Welcome to the I am gold second quarter, Twentytwenty operating and financial results conference call and wet.
As a reminder, all participants and leasing only mode and the conference is being recorded.
After the presentation, there will be an opportunity to ask questions.
He joined the question Q simply press Star then one on your telephone keypad.
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At this time I would like to turn the conference over to indeed, Gopi not them Vice President Investor Relations and corporate communications for I am I haven't called please go ahead.
Okay, that's very much Claudia and welcome everyone to the uncle <unk> second quarter conference call for 2020.
Joining me today on the call accordance daughter, President and Chief Executive Officer.
Carol Banducci Executive Vice President and Chief Financial Officer.
Well, let me, let senior Vice President operations and projects.
Craig Macdougall senior Vice President exploration, and Jeffersonville, Senior Vice President business development and General Counsel.
Our remarks on this call will include forward looking statements. Please look refer to the cautionary language regarding forward looking statements in our disclosure documents and be advised that the same cautionary language applies to our remarks during the call with respect to the technical information to be discuss please refer to the technical information I qualify person's life.
Slides referenced on this call can be viewed on our website I will now turn the call over to our president and CEO Gordon.
Well, thank you Andy and good morning, everyone and thank you for joining us last night.
The issue solid operating results for the second quarter of 2020, demonstrating strong operating cash flows on increased margins and further improvement to our already strong balance sheet.
Subsequent to quarter, we announced our decision to go forward with the construction of Coty, a transformational growth project.
And like all of you we've been adapting to our new normal cobot 19, changing the way, we work and for some where we work.
We will provide an update our activities with respect to cope with 19 in a minute.
Finally, we are providing updated guidance for the year taking into account the suspension of operations at Rosebel and the resumption.
Capital sustaining expenditures.
Before I move onto the next slide I wanted to note here that last night, we also announced retirement of two key members of our executive leadership team.
After 13 years with a company Carol Banducci has advised us or intention to retire from I'm gold on March 31st 2021.
Aero steadfastly seen the company through a bull market, a bear market and several transitions her disciplined approach to financial management is the reason we have the balance sheet, we have today and her success and building and outstanding Finance and accounting team has positioned the company exceptionally well today for both challenges.
And opportunities I, certainly wish or all the best in retirement and look forward to our continued work together over the next several months.
In addition, Jeff Snow will be retiring from the company effective August 31st Twentytwenty, Jeff has had a story 39 your career at the intersection of law in mining and we will Miss his wise counsel and wish him all the best in his well deserved retirement.
These are both a big changes for the company and then certainly personally I was certainly enjoyed working with Carol since I came dime gold.
12 years ago, and Oh, we've gone through a lot of battles together and it says she's been a great teammate I started working with Jeff.
I think in the early nine it sitting around the head office in Toronto, and and is I count them, certainly amongst my friends and certainly valued colleague.
Oh.
The second quarter was really about learning to live in a time Colgate 19 at the end of the first quarter, we proactively implemented a multifaceted response, including screening physical distancing and personal protective equipment and sessional personnel policies.
In the second quarter, we were able to to reaching shifts at S. again, following the lifts the lifting of the local administrative core inching.
Westwood came back online in mid April falling a placement care and maintenance in accordance with provincial directors and as you know we experienced cobot 19 cases at the Roosevelt site as we saw outbreaks in the region and notably Brazil. Fortunately the cases that rosabel are now largely resolved.
We continue to work to enhance protocols and further expand the camp facilities to support social distancing.
As is the case at Roosevelt.
One of the more unique approaches that asset can where we've been using drones equipped with loudspeakers to raise awareness of the corona virus and our protocols to help ensure compliance and of course, we have also considered cobot 19 protocols in planning our construction activities for coating.
From a committee engagement perspective, I'd like to share a couple of stories.
In may the females employees, the female employees of ethic and made a symbolic in kind donation to the vulnerable community surrounding walk a due to the capital city of Burkina Faso, whereas a 2 million a French frankly, our wesco West African Franks, approximately Canadian $4700 theirs.
Contribution was the result of a front fund raiser they initiated at the mine. The determination was made through the associates you know Fam Amash F. M. And included 50 bags Rice 50 cans of oil sugar and so for 55 households in the walk into the region.
In Suriname entrepreneurs like community of Marshall Creek, located near the mine sites have been engaged to supply 1000, nonmedical mild caps or masks for Roosevelt. This follows on the 2019 community initiative led by the Committee Relations Department to help develop marketable skills and experience.
Since.
I am gold is committed to achieving high standards, and environmental social and governance practices with which reflect our long held zero harm break vision.
I'm gold donations to local communities in response to the global.
Oh, good 19 crisis include cleaning equipment and supplies Handwashing stands in hand, what hand, sanitizing gel for the communities metal medical protection equipment, including Max gloves et cetera.
Well as life support equipment, such as ventilators and hospital beds.
As we know this equipment is essential in the fight against Cobot 19, and is in very short supply in all countries and especially in developing nations.
I am gold at our employees across the globe are proud to highlight through these donations, our true and lasting partnerships with the governments as well as our deep commitment to these countries and their populations.
Following the suspension of operations at Rosabel, we reviewed our 2020 guidance as result of the the this view we've lowered our 20 Titan 20 guidance for rosabel to the range of 210 to 230000 ounces.
This change.
Shifts attributable guidance for the company down to the range of 645 to 700000 ounces for 2020.
With this change to attributable production, we have adjusted cost guidance as follows.
Cost of sales between 900.
And $1030 per ounce sold.
Total cash cost of 940 to $980 per ounce produced an all in sustaining cost between 11, 95 and 12 45.
Dollars per ounce sold.
I would note here that all in sustaining costs and the third quarter. This year are expected to be higher than the second quarter due to the resumption of sustaining capital programs with similar production levels.
In addition costs are expected to be higher in the third quarter as compared to the second quarter due to additional cobot 19 related expenditures.
Our outlook for capital expenditures has also been adjusted at assay can a reduction of non sustaining capital to 65 million from an original $80 million due to lower level.
Of capitalized stripping and timing of spends.
At Rosabel, <unk> decrease of $10 million and sustaining capital, which reflects the day delay caused by the suspension as well as a $15 million decrease in non sustaining capital due to the display of capitalized stripping work again due to the suspension.
At Westwood and adjustment in non sustaining capital to $18 million from $15 million on additional development work.
At wrote Cotai, our development capital expenditures for <unk> for Twentytwenty or $77 million increased from $45 million earlier and reflecting early works on construction.
At Bodo planned expenditures in 2020 remain the same $25 million.
In total these adjustments comprise a net decrease of $10 million and sustaining capital and a net increase of $5 million in non sustaining capital.
Total capital spending 2020 is planned at $340 million and that decrease of $5 billion.
While our 2021 guidance remains unchanged. We note that this continues to be under review given the current global uncertainty with respect to spread of Cobot 19, and the effect. It may have on the company's operations.
Following the major significant catalyst, which was our decision to proceed with coated construction.
In addition to the recent filing of an anti 43, one to one report for Westwood along with reaffirmed production guidance. Originally released in 2019, we see the following catalyst for the balance of 2020.
Roosevelt, we resumed long hauling saramacca or and work to complete the road, we expect to be at the target run rate for Saramacca later in the year.
The mill optimization project. It is again aimed at increasing throughput by about 10% is ongoing and we hope to get that online towards the end of the year or in early 2021.
We continue to de risk boto with investment in local infrastructure and an expiration. We're working on further resource delineation at various projects, including Nelligan, the rule and project and the recently acquired failed property and come back.
Also I coating and the New Korea discovery in Guinea.
When he was 21, we expect to see Westwood continue to expand production with supplemental feed from the Grand Duke open pit.
We also see rather Roosevelt production ramping up with Saramacca online for the full year and for an optimized after can mail to demonstrate increase throughput.
In addition, the coated work plan is focused on major earthworks, while we continue to de risk Bodo.
On that note I will now pass it onto over to Carroll to review our financial results.
Daryl I think you're on mute.
Thanks Mark.
I'm not going I'm going to go up dip a little bit hearing I just want to thank God for those kind words. He said earlier I think it very much of the personal decision to retire and I'm confident that underscore strong leadership and we haven't strong path to transport means company and a great company. We have great people, we have a great future. So with that again good morning, everybody in turn.
Into the second quarter. The company continues the trend of strong both margin in the second quarter with strong operating cash flow.
Acquire also presented opportunities to execute favorable input cost hedge it on both currency and steel exposures hotel.
With the development of co take I'm going to become a growing diversify Canadian company generating superior returns not prudently managing risk.
Good cheat this transformational strategy and in order to mitigate gold price exposure and revenue ramp over the construction period the company intense under an appropriate condition to hedge 15% to 20% of it total gold production between 2021, and mid 2023 or combination of options and our collars.
Following our construction decision announcement on co take credit agencies, S&P, and Moody's reaffirmed I'm gold staple outlook.
Continue to prudently manage our balance sheet with cash cash equivalent short term investment unrestricted cash at $866 million at the end of the corridor and our originally Undrawn credit facility a $500 million.
As Gordon mentioned cope with 19 did impact us in different ways in the corner working capital was higher due to our intentional increasing supplies inventory as well as the buildup of finished goods due to timing of shipments and the higher cost of inventory.
Expect depreciation expense in 2020 to be in the range at 225 million to $255 million down $5 million in the previous guidance, our cash tax guidance remains unchanged at $30 million to $45 million.
Revenues in the second quarter $284.6 million due to strong gold prices well cost of sales were lower compared to the same prior year period and the prior quarter.
The adjusted net earnings for the quarter was $20.1 million worth four cents per share net cash from operating activities before changes in working capital totaled $79 million.
Falling to strengthen gold prices are prudent management of the balance sheet, our liquidity, excluding restricted cash and including five or 500 million dollar credit facility totaled over $1.8 billion.
$400 million in senior notes are not due until 2025.
This this next slide highlights the strength of our financial position relative to our peer group a gold producers and as you can see we continue to be in a net cash position with parents eating liquidity.
Ill now pass the call over to Bruno to discuss operations.
Thank you Karen.
On slide 17.
We are committed to the health and safety award employees, and especially soldiering displaying a global coogan like the crisis.
The second quarter of Twentytwenty, we achieved that the Leadbetter, then target on the dark rate, which sends four days a week restricted or transfer de seasonal only 11.
We work every day to meet or exceed or safety goals, and Goodman thing and refreshing and number of incentives to ensure a safer work environment, including a comprehensive bigger base. These people.
[noise] [noise] this slide summarizes our results for the quarter with total consolidated attributable production of 155000 ounces.
Cost of sales of $1030 per home sold.
Total cash cost of 935 daughters announced produce.
And all in sustaining coasts.
Were you know $189 per ounce sold for the second quarter.
I will now review each operation and turn.
At this again attributable gold production put a second quarter.
Well, it's 83000 ounces, we mine higher grade zones in the quarter, but also completed lives capitalized waste grouping.
All in sustaining costs were 1100, and 23 daughters for the quarter.
By the lifting of the nickel and sets of current theme during the quarter expense improved productivity.
We were able to proceed with the crew change the prior shift what's best for the long on some employees work on played for almost two months.
For the balance of Twentytwenty, we are expecting some griffith, it or which typically negatively impacts economies.
We anticipate those will the new optimization project to be delivered late this year or early next.
In addition on the explanation from drilling at the C is complete and we are combining these results to us its two assets resource potential.
We continue to be vigilant with respect to coogan 19, with enhanced protocols in place to political workforce from the current I Barnes <unk>.
These pictures, we highlight some of this and the some measures implemented at site, including if we couldn't clean and disinfection convenient and washing stations set up of isolation zone and the drone equipped with speakers to communicate awareness of political.
Truesdell attributable gold production for the second quarter was 52000 ounces largely unaffected by the mid June suspension of operations.
All in sustaining costs were hit it under than $50 for the quarter.
The cold in main theme cases, we experience on sites are largely resolved with the limit the number of exit chases remaining which our current team of site.
[noise] operations resume on July 24, and we are processing stuck buys them high grade materials from South America.
Going forward, we expect slightly weaker third quarter production output for lose them, mainly due to their suspension of the operation on until July 24.
We have moved to one person on the per room that is the same for somebody in night, which from strain the number of employees. We can have on site.
This in terms of means that we will need to expenses he pays to ethane or pre suspension run rate, which we hope to achieve by the fourth quarter.
Q4 is heard are expected to be supported by higher grade ore coming from summit.
From a health and safety perspective, we included a couple of pictures for Imos Bill.
Hi, lighting or and hence physical dispensing protocols, the lunchrooms and maintenance shuts configuration.
Slide 21 highlights a number of pictures showing our progress at South America.
On the left is the new beneath the bridge, which is now complete on their right to the inputs such are in progress the second unlike on site.
[noise] Westwood resumed mining in mid April producing 20000 ounces into second quarter Twentytwenty, that's all in sustaining cost of 1100 $33 ground. So.
We just filed our national instrument 43, one on one technical record cold Westwood, which outlines a safe profitable and non life mine and we reaffirmed longer term production guidance originally disclosed in December 20, Mike.
Why the reserve ounces declined by 48 person over all resources, including reserves increased slightly.
It is difficult fund under underground mine. Our guidance includes resource ounces comes also during those time development and it is based on historic operational experience.
We have included a few pictures here about a general manager meeting with the afflicting physical distance in Florida.
Just a couple of weeks ago, we've made a momentous decision to proceed with the construction of the could be gold project.
We believe in could be because of the transformational value. It brings to our and go into all of our stakeholders. Just can you didn't project expense or production profile brings greater geographic diversity to the company and lowers our overall cost profile.
Go these went out of them isn't as we made the decision to construct we keep permits and approvals and and strong stakeholder relationships with our joint venture partner Sumitomo as well as indigenous commute communities Blaine goes in Michigan and of course, our northern communities.
Third Coty as significant district potential with the goslin and I'm trying them discoveries.
We know tier that could be highly levered to the gold price in fact that today's gold price of $2000 grounds. The project Smith Prism Buddy that's a 5% discount rate is $2.8 billion with the internal rate of return of 27.6 person.
On this slide.
Include pictures, we shared a couple of weeks ago or Chester construction cans, which then house 264 people and their view of the Teekay didn't compete that earlier this year.
We know turning the call her to Craig to discuss explanation.
Thanks, Bruno and good morning, everyone before I begin. Please note that the results. They talked about today have been previously disclosed in accordance with securities regulation and signed off by the qualified persons within the company reported.
The 2020 or planned exploration spend $52 million, excluding project development activity and study.
And we'll involved the completion of approximately 190000 to 210000 meters of diamond and reverse circulation drilling to support resorts development programs and exploration target devaluation.
Although we are maintaining our outlook on our exploration program, we continue to reassess the impacts of the cold at 19 crisis.
Going forward and we'll adjust accordingly.
As we've said before in three <unk> reserves have been on a steady decline since 2012.
And gold has been working hard to differentiate ourselves from the industry trend.
Beyond just replacing reserve ounces depleted from mine production. We have also achieved a significant increase in reserves over that time.
In 2016, we have not only replaced everyones mind.
But also added over 8 million ounces more than doubling or reserve base.
This is the result of of a sustained commitment to exploration through the cycle and the tireless efforts of our exploration in mind geology.
We believe this is a significant additive advantage for I'll handle in for future.
During the quarter, we announced further infill diamond drilling results from the RIN Gold project as we work to delineate maiden resource that a lot Gamble zone, which we feel may have potential to provide satellite feet or Westwood operation.
Highlights include 9.8 meters grading 27.8 grams per tonne goal, which included 4.4 meters grading 58.4 grams per tonne goal.
And another whole with 9.8 meters grading 10.4 grams per tonne goal, which included a three meter intervals grading 22.8 grams per tonne goal.
This along with you announced the acquisition of the oil project from 35 kilometers from with Wood continues to build on our hub and spoke models in the region centered on the Westwood operation.
Building put back you will remember, we announced amazing mineral resource estimate Inelegant gold project in the fourth quarter 2019.
With resources on 100% basis totaling 3.2 million ounces inferred category had agreed a 1.02 grams per tonne goal.
2020, we completed nearly 5000 meters of diamond drilling before activities were temporarily suspended due to the code at 19 crisis.
This program was designed infielder deposit to confidence in the resource model as well as test for extensions of mineralization beyond the existing resources.
Initial results reported during the quarter includes 27 meters grading 2.86 grams per tonne goal and 25 meters grading 1.87 grams per tonne goal.
Both from infield intersection.
As well, we reported a 10.5 meter intersections rating 10.5.
Grams per tonne goal, which included 1.5 meters grading 69.1 grams per tonne goal and just from a step of whole outside of the existing resources.
Although we no longer have the advantage of the winter access for which this property is well suited summer drilling program.
Has been designed and has commenced which will continue to advance the objective of this program.
That's a nearby Monster Lake project, located 15 kilometers north of an elegant project drilling activity also resumed during the quarter completing an additional 1400 meters the diamond drilling.
The program focused on testing the any shear zone in an effort to then mineralization intersected during 2019.
That's the results from this work will be reported once received validated and compile.
Although our drilling program to evaluate the resource potential let her new gasman discovery located 1.5 kilometers north east of the Coty Gold deposit was also suspended before completion is the result of the coated prices.
For logging sampling on the holes at work completed well event and we expect new results shortly.
Remainder of this program is being redesign utilizing a bright supported drilling program, which should commence in August.
In West Africa exploration activities continued during the quarter focused on resorts conversion and refinement of the reserve model at the Boto Gold project in Sunnyvale.
As well as tested for extensions to the day after deposit located to the south in Maui and.
And exploring selected high priority targets within 20 kilometer radius of that deposit.
Taking into consideration the current favorable gold price environment, you can certainly see the meaningful impact. It says on Boto project economics on a standalone basis.
Building on our exploration success along this portion of that then we'll go Meli shear zone with several discoveries located within 15 kilometers of the Boto gold project in adjacent country.
And he has initiated a strategic concept study.
Referred to is the vendor gold complex to advance resorts devaluation and delineation program.
Got to create a project, which will support the evaluation of various potential development scenarios and identify read regional synergies.
Driven by increasing gold prices competition for and access to quality exploration project is challenging for the industry.
Hi angle has developed and continue to invest in a healthy pipeline or early to advance Greenfield exploration project to support our future growth.
Well its support near mine brownfield exploration with a view to lengthen mine life.
Leverage our existing infrastructure.
With that I'll now pass the call back over to Gord to conclude.
Thanks, very much Craig.
So from a strategic perspective.
Q2, 2020, it was really a milestone corridor for for the company.
With the announcement of co tape moving forward.
We remain focused on lowering our consolidated cost profile to improve margins and cash flow.
Increasing our gold production, increasing our operational flexibility enhancing the geographic diversity of our overall portfolio and of course improving returns to shareholders.
The best achieved this we believe we need to achieve self funding it each of our existing operations to ensure exploration activities corporate functions in financing obligations in aggregate or not a burden on our balance sheet.
Sequenced development of our organic growth pipeline, starting with the construction of Coty and continued de risking a boto.
We will also be filing for another exciting future with the advancement of our rich district, brownfield and Greenfield operation exploration prospects, which include Gosling <unk>.
<unk> and Diack is here a buy out along with boto and the bamboo district in West Africa.
Now, let get Monster Lake in northeastern come back.
Oh, along the Saramacca bruck alone could trend answer Suriname, and our Westwood hub and spoke model in the Abitibi.
Importantly, this all needs to be accomplished while continuing to be leaders in E.S.G. performance through relentless pursuit of our zero harm vision.
We continue to guide our efforts in accordance with our vision to be the globe global leader in creating superior value for our stakeholders through accountable mining supported by our experience team of technical operational and financial professionals.
Thank you for joining us today, and I will now pass the call over to the operator.
Thank you.
We will now begin to question and answer session to join the question Q. You May proceed Star then one on your telephone keypad.
You will hear the tone and knowledge in your request.
If you're using a speakerphone. Please pick up your hand said before pressing any Keith.
If you wish to remove yourself from the question can you give me press Star then too.
Anyone who has a question maybe Chris that in one at this time.
Our first question is from 530 kept with credit Suisse. Please go ahead.
Hi, good morning, Thanks for taking my questions. Maybe first on Saramacca can you remind us what construction is left for this year and whether the lower growth Capex guidance for this year or what does that mean, there's some spillover of capex into 2021, maybe you can you just get some.
Context on what's left to do at Saramacca and what the Capex could look like for next year. Thanks.
Bruno can you I addressed that please yes certainly.
Hello Fab so the infrastructure that remains to be built isn't a watered thing.
That's something some offices and the rest is just finalizing the dipping over the road.
The playing a framework and that's it.
So we don't expect wise.
As much capital to be extended to 2021.
As we speak right now.
Okay, Great. That's helpful and just one other question on on Westwood.
I know you reaffirmed the longer term guidance, but the reserves declined how should we be thinking about the mine lifestyle at Westwood.
HM So we still expect a mine life beyond 2030, and as we guided on December 20, Mike <unk>.
We were doing a slow ramp up from 1000 ounces to 125, and then to try to get to a.
Run rate of.
130 to 145000 gold downs.
And we're pretty confident or the target is to to try to convert from back resources.
To a recently.
Ah by adding I was reading.
And at Westwood in the North Korea or in the zone to.
Over the next few years and it's a weekend upgrade to improve the resources to skew the New Jersey then.
Kinda like in the mine plan. So we can put.
To reserve and also we have adjusted or reserve.
According to a ground conditions by adding a June technical risk adjustments I think.
And Oh suite and changing the dilution in recovery factors associated too or are you a funny, but it's in mind fun is if you.
However, we're going to continue to work or.
Around these sectors to improve ore extraction straight each.
So we can.
But some of those ounces back into the reserve. So what do you look at it all to know what their resource base that we have the conversion factor that we've had in the past.
Well so looking also at the reconciliation history that we had some reserves to that deal.
Well the price, we we are quite confident about our guidance.
But I just described and to go beyond 2030.
That's helpful. Thank you.
Our next question is from Josh Wolfson with RBC capital markets. Please go ahead.
Thanks first question on the West way that I, just trying to understand what mining cost assumptions, we should be.
We should be incorporating longer term I didn't notice that the the technical report how to mining costs. After the mine plan of around $224 Canadian.
But the cut off for reserves was about $50 lower and 170 range.
Retail can you.
So you know that [noise].
[noise] [noise] so for the.
We made I'm just so please.
<unk>.
The difference between just give me one second.
Sure.
Okay and then if you back can you answer to provide the kind of great calculation, but maybe whats ideas I'll come back to it because the mining cost.
And because we have trends from public and westwood's anymore. So we had a couple of greed mining costs. So let's make sure that the difference between the two so a comeback to on that.
[noise] [noise] okay.
And on the capital side.
So the Capex is that 200 million cash is pretty exist for the current reserve base should we be assuming a similar <unk> no Amanda capital for reserves there will be added or is there a lot more development that's required for the current reserve base.
That that's been defined.
It sounds like a.
I suffer westway.
Okay sorry.
Yeah. So in fact, a we.
We're going to come to know to to keep developing.
Westwood's all that associates to it you have a much older hundreds cold and other its findings was true that needs to be assets either so when you want tomorrow, there would be additional ounces or for that.
Okay, and then last question related to Westwood.
The shaft at one point that had been discussed historically I don't believe that's incorporated for the current reserves is that still part of the planned longer term there or is that needed to the access reserves that you would project out to that 20 2030 plus timeline.
All right now and we believe that a or B D. The main access is sufficient.
As we speak and again, the what we need to do as we are.
As we speak is to further investigate the Delaware in the eastern side of the mine.
Then we'll be able to develop the mine plan and access for <unk> associates.
Okay and then the search I have got everybody does as we've looked at it because of the depth of the deposit the shaft is starting to become a long ways at the bottom end.
From the deposit so we've evaluated putting a wins and we've looked at at some declines and and we're sort of going through that analysis now.
You know I either one of those solutions still supports the declaration of resources, obviously as we get into reserves will need to we'll need to.
Crystallize the the current flash.
The final plan right.
Great and then one final question, sorry, I'm liking or they are tied to here at first saramacca.
I was one point there was a discussion about it at cutting out with an undergrad study, which which would have been I guess most beneficial early in the in the mine life to reduce some of that.
Stripping is that currently to plant or should we expect the study on that you know upcoming.
Yeah, right now, we're still figuring out a the best option whether to pursue with the open pit that becomes a price environments are since I'm. The underground we keep you still have some indication.
To do for the underground.
Put around this then a the flu there that you over this auction so that's not where as we speak it's still a conceptual and we're so that's the thing or option, but that's not them whether to come to me.
Thinking more there.
[music].
I would be opened the door or converting it to one of the underground.
Younger than potential, but as we speak right now it's too soon for too [laughter].
Oh, great those are on a question. Thank you.
Our next question. My question is from Jay keep she'd be Lucky with BMO capital markets. Please go ahead.
Hi, Thanks, very much a I guess I'll start off I noticed in the in the a released last night you didn't talk too much about the Sadiola sale. It was previously.
Forecast and I guess to be completed around the end of April. So I was wondering if you could give us an update on that I'm guessing there's some some delays due to coated.
Do you have any idea when that that may close.
So Jackie yeah, you're you're entirely correct, we haven't seen some delays due to coal that at most of everything has been inked up.
There is a little bit of a political machinations going on in Mally right now not with respect to to Sadiola, but more just with respect to the overall politics in mally.
And and and figuring out the path forward for the government.
Everything as is signed up and ready to go. We're just really just waiting for a new cabinet to be formed and the new mines Minister and and finance minister to be put in place.
Yeah, we anticipate that that may add a little bit of additional time as as a as the new ministers familiarize themselves with the file but from a bureaucratic a point of view and certainly from a business point of view between ourselves.
And and Anglogold, Ashanti and and the and Allied a everything is ready to go. So we're we're we're just waiting on Finalization right now.
Got it and maybe if I could just ask a different question on on Rosabella, you lowered the guidance and it a lot of that looks like it's due to rosabel I understand that there was a strike in and that you've got a productivity hits from their social dismissing can you quantify how.
How much I see a of the guidance revision this or 40000 ounces guidance revision how much of that is due to the strike and how much of that is due to the think going forward I'm proud to be hits and and I guess the question being like would you expect some productivity hit so similarly to affect started 20.
When you want as well.
I mean I'll let.
Bruno answer I I mean in it from my perspective about 80% to 90% of it is due to the suspension.
There are some some productivity hits in the near term, although we are seeing better grades.
For the remainder of the year. So we are our our we are able to compensate some of that but it's almost a direct one to one the the changing guidance with respect to Roosevelt being they the the suspension period.
Are you know that that's the amount of production we would have had out a roosevelt as we look to 2021 I, we're not anticipating any further productivity impacts we have a plan in place to to get back to our full complement of manpower through some additional camp construction.
And once were at full manpower, we'll see full productivity I don't know if you'd what I want to add anything else Bruno.
That's correct Gord about a 90 person that's not the ounces are coming from the suspension those be a variation than the this is just a the ramp up two or original run rate.
Okay. That's it for me thanks very much.
[noise] Jackie.
Our next question is from Mike Parkin with National Bank. Please go ahead.
Thanks, guys that most my questions are answered just one housekeeping ones are the cash taxes guidance or what gold prices that based though.
It's 1500.
Like okay.
And it's just too little bit on Westwood.
With the change here is there any.
Additional labor changes like I know you've heard your made some changes recently.
And we're seeing U.S. dollar operating costs come down just trying to get get a sense look like.
What we could expect going forward with a lower mining rates is back on the call for a further reduction and manpower.
Correct.
Yes.
So we don't expect the a further decreasing their workforce, we did not just meant a year ago.
Today and.
However for now we believe the is the of the workflows to compete.
The life of mine, but we have design with no, but and I used to become more.
Personnel needed.
The underground operation right now as we speak.
We believe that are the workforce is going to be quite stable, if not just increase a little bit.
Come back to the mine operating costs for mining plus we'll do it was only 200 and a 24 daughters can you can pick them.
And then we'll.
Milling comps and site genie costs be up yeah, or just because of the lower throughput yep. So 26, a daughter 094, admitting and a 42 daughters 95 cents for an station and Jim.
So it's all coming from dog.
Okay, well expand what we're saying like is actually with the additional rock that we're putting through from Grand Duke and we anticipate to put through from failed and so forth the administrative and.
And milling costs actually are lower.
For the complexes, we as we move forward on a per ton basis, its assigned to to Westwood.
No you guys doing owner operated or the open pits are those contract.
Contracts.
And in fact getting reported through Opex or is that.
Yes, yeah, it's getting its coming through Opex.
Okay.
All right that's it for me guys. Thanks.
Thanks, Mike.
Our next question is from carry my career with Canaccord Genuity. Please go ahead.
Hi, Good morning, everyone. Just had a question on 2021, Capex I'm not sure lease notes around 250 million for 2021, which isn't too far out from the 2020 guidance. Once you strip as you know cocaine photo. So I'm. Just wondering you know with Saramacca spending expectedly down and I know that absolutely stocks at lower stripping into.
2021, just how do we actually public capital that number relative to this year's number.
Bruno do you have a.
Thought on that.
Okay can you repeat the question is so what's your let me take or let's just stick to the questions around what's our capital expectations for 2021, given the shifts that we've made for 2020.
Yeah, I guess, that's all I'm 2021 versus 2020, but again, we would assume that saramacca should be down a bit and then it notes that capital stripping gigolo in 20 to one so I'm just trying to send a 2021, yes.
Yeah, that's some some of our sustaining capex for the remainder of Twentytwenty stick, increasing at Q3, Q4, and some will be petrol project.
In Q4.
Some of the company's loose with singles, who will take place in 22 into one right no.
Privy to see the full impact of the Oh barrel envelope don't but he that's going to be a.
That no material and we believe that we can keep.
Having some production level with a reasonable kept pulling blow fill.
And maybe I can add that I mean again. The 2021 is under review just given you know what transpired, but cobot this year and we did reduces our capitalized stripping. This year. So we'll have to look at the new mine plans. It through now has alluded to and so well well have to look at updating that perhaps in Q3 that it.
And your radio in just a it's something that where we're looking at.
And maybe just on the you know the middle <unk> de bottlenecking at ethic and I'm, just what the status of that as you know that's going to.
Also flow over into 2021.
So I mean.
The current schedule, we have right now carry is is to complete by the end of the year. There is a possibility that gets pushed a little bit into Q1, mostly on on delivery of some of the supplies are again related to co that arc are our capital assumptions that we put in place assumed that we run it out and.
It's it's up and running by the end of the year versus I mean, our original intention was to have it up and running in Q3.
But that was one of the the areas where we.
When we went into a reduced ur cobot impacted activities that we did reduce or the level of work on that project.
Got it that's it for me thanks.
Thanks here.
Our next question is from Tanya Jakusconek with Scotia Bank. Please go ahead.
Hi, Good morning, everyone can you hear me yes.
Great. Thank you I'm first of all just I want to say can Brad to lack Carolyn Jaffa on their retirement package well done.
Maybe I have three questions on I wanted to talk about.
People are quite easy maybe I'm far you apparel I'm just on the incremental called that 19 expenses.
That was not going to be included then other expenses going forward and excluded from your total cash cost them all in sustaining cost.
Yeah.
And again, we do a very detailed repeal of all the cobot cost Tanya so anything that we think it's going to continue will look we'll sit in cost of sales, but it's those cost that we think there are one time like for instance, premiums that we pay Tim please when they're going through the transition introducing all day.
The the protocol or if we brought in some additional housing in order to accommodate the the employees and do that the at the end spacing distances. So anything that we've done on a one time basis has gone through other expenses. So anything to do with you know obviously productivity level because of all the.
Because we have put in place that we're not excluding not so that's the way that you should be lucky now that it's the one time costs that were putting your other expenses and as you said they'll be they will not be included in a in cash costs are all in sustaining costs.
Okay, and so parallel what should we expect going for like on the call, let's say the rest of this yeah.
Right I mean, I think we're hoping that the worst of it is over and Ah and so you know we had obviously last meeting care and maintenance, it's ramped up really quite nicely and a and the same with with the assay can we have very specific administrative quarantine a that went in place in can.
Great and then again, where we're operating that's the Ken it's it's a I've been able to operate without any significant interruption and we've actually had obviously just we've just come out of this though a into suspended operation that really sit down. So we're hoping that the worst of it it is behind us and so we're not expecting the same level.
Uh huh going forward in into the into then the rest of the year, we are expecting some cost but not to the degree that we experienced in Q2, but I like like you know like you I don't think anybody really knows what might happen with Covidien mother, we see another you know sort of outbreak lately I think we've put.
All the measures in place and we've been I'm very very diligent and all the things that we've done and we worked with the various health officials in country. So like I said I mean, we're hoping that the worst it's over and and you won't see see the same thing that we experienced in Q2.
Okay, and then maybe I'm on capital allocation Gord Carol you just that Pat Pat gold prices, obviously, if any generating a lot more cash flow then you back at that yeah, clearly attraction of propane you know that yeah. They are part of it about what it what do you see.
Thinking about in terms of allocation on any incremental cash flow that you generate didn't have a higher oil prices.
Oh.
You know for right now I, I mean, I'll I'll, let Carol chime in but.
Our expectation is well continue to conservatively manage the balance sheet Oh, you know as we look strategically out with with with Ah Ah with a co pay construction, a we're very very comfortable with the level of or cash flow we have.
And our internal models are using much much lower gold prices to ensure that would that that we get through a while maintaining or the the required cash balances and and our leverage ratios yeah.
It below the targets that that we've set for ourselves.
If we generate additional I've, obviously that that helps us a worked through a week. We are considering obviously the development of Bodo whether at a later date. So that that is also being factored into our analysis, where we go.
And you know obviously if prices continue to go up and in cash continues to to be generated we'll look at you know, it's a little better redistribution certainly a at some point in the future I'd love to be able to get back to paying some some dividends back to shareholders.
And and help everybody sort of shared the in a in the higher gold price you know beyond that where we're happy with where we're acting and we'd like to get sort of a year of coated behind us and really understand that that everything is truly a salt.
Good for US Carol we got anything else Yeah. No just thing you know as as Gordon said like the would we expect this company to generate superior returns and coatings, so transformational whereas.
It was on it you know a significant spend there at least the guy and he provided is $875 million to $925 million and so our first priority is making sure that we thought sufficient capital to to get this project dealt and running and and once that occurs we're expecting to being you know significant.
Lead generating I mean significantly generating.
Cash flow. So I think in the end term I think you know that's kinda appreciate everybody on the call Im sure can appreciate I'm, just a significant volatility around gold price and so a you know continues to stay at these levels. There continues to rise definitely in Congress to take a look at Synta, what kind of Optionality that we have but a you know.
It's it's a it's three and a half years and Ah, we just need to make sure that we protect the balance sheet in the interim.
But our goal is absolutely to generate superior returns and returned a return that provide returns to our shareholders.
What's on minimum cash balance that you're going to keep on the balance sheet of the next couple of years.
200 million.
Okay.
<unk>.
My final question I'm, just that now for core drilling out you know just on the West <unk> I just thought we had moved out 550000 ounces of that reserve and to me. So I says what do you need to see if they move back into the heart.
[noise] Uh huh.
No. This is Greg.
So again like I explained that we were very conservative assumptions.
You want to offer a safe sustainable and profitable mine.
So we need to increase our knowledge on those specific zones in terms of extracts extraction strategy.
Ah. So just said this momentum we prefer a tool to risk adjust or those are doing stopes. So they're not that content for him, but then as we speak. However, we ours are you doing many activities.
To be able to put them back and [noise].
So we need more Julie.
Drilling a modeling the nickel a modeling on do zones.
And also to look at a Jack spectrum of other Stokes him to see the behavior of the ground because he does come through them, but we have to extract the others have to that.
Just on this but specific zone.
60 season, that's applied to all designs at Westwood, It's only on.
Gary It it's a it because this quickly just because you did on either.
What are the main central covering over it.
Good.
We are we able to work to do to to them [noise]. Some.
Some more attributes that and we want to be comfortable with it before we put those ounces backing.
Okay. Thank you.
Our last question is from I need to Sony we see I'd be see work markets. Please go ahead.
Thank you so first off congratulations Jeffrey and Carol on your end pending retirement.
And then second question kill could you just go up I think you mentioned.
You have a policy of hedging going forward can you just mentioned those parameters as I'm sure I mean in terms of that's only a couple things the Anita so in terms of the inputs we've already hedged all the not feeling what was your for cocaine overtake construction period, a and and so we touched that.
[laughter], but then up and I'm going to $50. So we're protected at $50 and a on the bottom side. It I think it's about 30, 38, 50 and ER and then what we've done is we're also looking to hedge the came dollar so weve hedged about 65 million of it in 2023 at one point.
<unk> six and we'll continue to watch the dollar it it's obviously a much stronger relative to the U.S. dollar. So our intent is that we've got some internal thresholds that were focused on and so we'll continue to watch it and then what we announced a this quarter is that you know just given the coating project and.
Lane to make sure that we can execute on this transformational project and really minimize the a the grabbing yet risk.
Well he said it you know under different circumstances, we may have a RV, we want we actually intend to hedge gold production, we haven't done anything yet I'm just watching the gold price something that a 26 right now so we would look at doing that and no more than <unk> and I should say in the range of 15% to 20%.
Over the next like I said three years, it's really focused on 21, 22 and half from 23 and ER and so when we look at doing it through a combination of options in collars and as we look at the college not leave what would want to do our strategy would be too.
Sure that we still provided a substantial amount of upside for shareholders and so we would look at what we're looking at the range is right now and then possibly financing options, which again other than money a crane that floor price on the gold price just because you know we just some of it it would make it prudent to do that to protect the balance sheet. So.
That's our thinking Anita.
Okay. Thank you I'm second question I'm, all for Gord I guess is.
So saramacca, it's been its been a while to see really dogs a in depth centered on it you know kind of supposed to started about this time last year and I'm just trying to get a rough idea.
You know what the overall parameters were for the Saramacca in terms of tonnage and grade and what we should have been setting our goal close far because it's been a wild type they talked about that.
Yeah [noise].
I think probably Bruno is more familiar with the with the current plan a we do expect to get up to pretty much a run rate by Q4 at run rate for Saramacca, yeah as in the neighborhood of about a thing its threep.
2.5 to 3 million tons annually.
Coming into the plant.
Yeah.
Can you filled out in a little bit more for me Bruno.
Exactly so HM we Oh, we expect to have close to a.
In between three quarter, two women M a ton of war.
Toward it.
Per quarter. This year was about two 2.5 million like like Gordon's eluding to.
Again to ramp up is is going.
It depends on the yeah solution lose them like I mentioned.
The constrained by the number of employees that we can have Uh huh.
That's a we have to add new facilities to increase the workforce on site. So some activities.
Are going to be delayed.
Again, we're going to prototypes.
The treatment of the stuff.
And the seven medical or [noise].
So we should see.
The for her ramp up what do you sound like a mining.
Into Q3 in Q4, and they're getting to the and the true or not.
That's true.
Yeah, that's insight around three quarters and then.
I'm sorry.
Per quarter. So once again, we're 2021 like a colder weather we were going to yeah from we're gonna goods associated to the older years later.
Okay, and then in terms of the the or sorry, the stockpile levels like what's that direct ore feed from Saramacca or was that was that or that you had stockpiled from South America.
Yeah, we stuck by the World Soccer, and then get transferred from old to tweak to the New school, which was he is.
Again, it's.
Every every month since January we've been.
Hi, being on the stockpile HM.
And and as we we have just started.
The Oh, Yeah, we started the operation, though we already are taking that parts of that stockpile.
Uh-huh to ER to pro to be process or the meal and then the the mine will resume as though.
Okay. So what's the level about stock all right now so Michael.
No peptide them on a job.
Right how much.
Yes, I mean income.
<unk> okay.
Okay, and then I'm just in terms of the degrade going forward. It at at Rosebel. It was low because you're purchasing stockpiles aren't that kind of <unk> is that once we get through <unk>. Okay. So we should resume sort of more closer to the reserve grades well that you've been doing previously you know when someone SAB sort of physical distance and she is.
Part resolved.
Exactly and so that's the plan stockpiled ER and said I'm not going then you're going to to start mining, thus far compared with two Picasso and one is.
The other pits, so good and rate should be improving.
And then the overall tonnage at the Rosabel is that it can process going forward.
Given that you've got you know they should have to three mines, which I'm not going what would roosevelt copper be delivering them.
The probably around the 30000, some pretty it's a it's a good number.
As we speak well it depends on them on the hardness cemetery older Korea running so Duncan.
Yeah, we're talking sort of 12 to 13 million tons annually, including Saramacca.
Okay sounds good thanks, and my last question just switching gears to co say, but just as we start to focus on I mean, you're you're going to this is full steam ahead on you're going to be you know sort of kind of break ground on this in Q4, I mean is it.
Can you just talk about or sort of the construction called out like you P.T. I'm like are you guys managing that to who's involved but going on I mean would see lets you know if you build that's the last years that.
Yeah that weve given given the size of the capital it's gonna be something I'd I. Appreciate you more details on how's it going or unfold.
So.
You're going to in our release and in a in July we sort of laid out the spend on the on an annual basis or at least the percentage spend of the total on annual basis.
We are using any PCM contractor, we're using a would oh you know formally the guys from a Mac, who who helped US prepare the feasibility study in a bit involved in the detailed engineering that we've been doing as part of the de risking exercise.
So right now the model easy PCM.
Given the fact that we've advanced a lot of the engineering to such a high level compared to most projects. We're currently evaluating the opportunity to maybe do some of the packages GPC ER and lock in a the fixed price so that that.
We can we can execute those projects with with even lower risk.
So there they are the main.
Driver of the project per Se, we do have a full orders team that that is looking after.
All of the main activities, we will transition.
As well to an operational readiness team that's being built we we are eager to to really start our owner mining.
Towards the end of 2021 as as a the initial couple of benches and they overburden will be strip by contractor, but once we get down to hard rock.
I'll start with our own mining fleet towards the end of next year.
And the rollout is is Ah Ah as you said sort of breaking ground. In Q4, we are doing a few activities through the summer here specifically so we're looking to do some some fish salvage of a couple of days.
A couple of the the lakes in the in the tailings dam area that would allow us to get into tailings dam construction.
Early next year.
And I I sort of leave it like that I mean, I couldn't we can certainly elaborate a little bit more one on one if you like a anita.
That's okay. Thank you.
This concludes time on located for questions I would now hand, the call back over to Indy coping nothing for closing remarks.
Thank you very much Claudia and thanks to everyone for joining us this morning and for your continued interest in I'm Gold. We look forward to how do you join US again for our third quarter 2020 conference call in early November Goodbye.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and had a pleasant day.
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