Q4 2020 Iamgold Corp Earnings Call
Thank you for standing by this is the conference operator, welcome to the I am gold fourth quarter, and 2020 full year operating and financial results Conference call and webcast. As a reminder, all participants are in listen only mode and the conference is being recorded.
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At this time I would like to turn the conference over to indeed go up and <unk>, Vice President Investor Relations and corporate communications for I Am God. Please go ahead.
Thank you very much Saatchi and welcome everyone to the iron called fourth quarter, and full year 2000, and 'twenty conference call.
Joining me today on the call are Gordon <unk>, President and Chief Executive Officer, Carol Banducci, Executive Vice President and Chief Financial Officer.
Craig Macdougall and executive Vice President growth.
Bruno Lemelin, senior Vice President operations, and projects and Tim Bradburn, and senior Vice President General Counsel and corporate Secretary.
Our remarks on this call will include forward looking statements. Please refer to the cautionary language regarding forward looking information in our disclosure documents and be advised the same cautionary language applies to our remarks during the call.
During the call non-GAAP measures will be referenced and we direct you to review the reconciliations in our disclosures relating to these measures with respect to the technical information to be discussed please refer to the technical information and qualified persons slot.
Slides referenced on this call can be viewed on our website.
I will now turn the call over to our President and CEO Gordon and stop it.
Well, thank you and be a good morning, everyone and thank you for joining us.
And reporting on our Q4 and in 'twenty and 'twenty results 2020, certainly.
I think a challenging world for the challenging year for the whole world but.
We're really eagerly looking forward to 'twenty and 'twenty one.
So I'll start with the key highlights for the fourth quarter and the year and at the corporate level.
And I'm gonna demonstrated its strong leverage to the gold price with a 280% increase year over year and mine site free cash flows.
Generating more than $223 million.
We ended the year with almost $1 billion and cash and short term investments on our balance sheet and nearly $1.5 billion and total liquidity.
We continue to proactively manage the impacts of the global COVID-19 pandemic on our operations development projects and exploration activities with a rapid response and stripped the strict safety protocols.
Reflecting our long held zero harm vision, we were recognized for our pure leading environmental social and governance practices by a number of independent organizations.
Focusing on governance, we embraced evolving best practices through board renewal.
Switching to the operational highlights.
That's the cat and continues to deliver with a strong finish to the year and its best quarterly performance in 2020, and Q4 Rosebel demonstrated a strong increase in mining rates and the fourth quarter at Westwood. Despite its challenges with free cash flow positive and continued the process open pit ore from the adjacent Grand Duke satellite debt.
Westwood has a significant resource base and we are taking a cautious approach as we assess its business continuity plan, while the underground mine is and care and maintenance mode. Following the seismic event last quarter.
At Kotte construction commenced in the fall of 'twenty and 'twenty and continues to progress well with major earthworks having commenced in January ahead of schedule.
Looking forward, we continue to develop our districts with delineation drilling of Gaza lab near Kotte and support of an initial resource estimate later in the year.
With project Derisking at Boto and with further drilling at Nelligan ahead of an updated resource.
Yeah.
We're coming upon almost a year of living with COVID-19 in our midst I'm proud of the rapid and adaptable response across the company to this challenging situation.
Noteworthy efforts included Essakane, the reconfiguration of the camp to accommodate new protocols.
Stablish meant a 20 bed field hospital at site as well as setting excuse me as well as setting up a medical confinement house and Ouagadougou for managing quarantines.
With these protocols and systems in place Essakane has been operating at normal capacity since Q3 of 'twenty and 'twenty.
At Westwood No cases have arisen at site with health and safety protocols and implemented immediately upon restart last April following the government mandated shutdown.
After the seismic event and the fourth quarter mill operations continue to operate under a well established protocols.
Process and Grand Duke or while the mine remains suspended under care and maintenance and in fact, we have seen the mill achieved a record rate of throughput during this period.
At Rosebel and the camp expansion is well advanced following the receipt of all the modules required and we expect to accommodate our full workforce through the staged addition of 300 new beds by the second quarter of 2021.
<unk> was operating at 75 per cent of bonding capacity at year end and is currently operating at 85 per cent.
And at Kotte.
We've taken what we've learned from our operating sites and establish robust testing and operating protocols to protect both the local communities and the work force and to date, we have had no COVID-19 cases of Cold day.
Community support and engagement are fundamental aspects of our zero harm commitment in the fourth quarter 'twenty and 'twenty COVID-19 related activities included at Rosebel and the creation of a local community field squad to assist the local governments and promoting COVID-19 awareness and preventative measures.
And at Essakane, and drones were deployed to help spread the message of awareness and social distancing.
Through 'twenty and 'twenty I am gold contributed $1.5 million to local communities, and which we operate globally, including for cleaning equipment and supplies protective medical equipment and life support equipment.
As you know I am goal is committed to achieving high standards and environmental social and governance practices, which reflect our long held zero harm vision highly.
Highlights of activities include hosting our annual health safety and environment days event over four days.
At Essakane co chaired by the Minister of energy and the Ministry of environment, Green economy, and climate change and Burkina Faso.
Completion of phase one of the tree and do a public private partnership to bring potable water to 60000 people and Burkina Faso.
We are also lobbying our partners and other stakeholders for the second phase of the Triangle project now that phase one has been completed with the goal of extending water infrastructure to two other communities nearby are Essakane mine. Our ultimate goal is to bring potable water to 200000 people and the area.
Also at Essakane, we completed a one year long pilot internship program, consisting of 10 and local mining engineering students.
Our ESG efforts have been recognized by independent parties, including Moody's affiliate VGL Juris assessment of our environment, social and government practices, which ranked us fourth out of 45 sector peers, including senior producers I am Gold's assessment reflected notable strengths and community involvement and environmental strategy.
E health and safety and governance.
M. A C is ESG ratings, where we maintained at a rating placed I'm gold and the top third of precious metal companies.
Bloomberg's 'twenty 'twenty, one gender equality index, where it got I am gold was recognized for a third consecutive year among 380 global companies across various industries that foster a more inclusive and equitable workplace and the prestigious corporate Knights 'twenty 'twenty, one global 100 and sustainability scorecard.
Where we have been ranked 10th out of 116 global mining companies reviewed and among 8000 global companies spanning various industries reviewed.
Looking forward to operations in 'twenty and 'twenty. One we are planning for global production of 630 to 700000 ounces for the year.
Cost of sales between $980 to $1030 per ounce sold.
Total cash cost between 930, and eight nine and $80 per ounce produced and all in sustaining cost between 12, 30, and 12 $80 per ounce sold.
The first quarter of 'twenty and 'twenty, one is expected to be at a slightly lower level of production and the second quarter of 'twenty and 'twenty due to the Westwood underground operations are being placed on care and maintenance with restart targeted for age two and also due to lower production and anticipated at Rosebel as the mining sequencing continues to advance to normal rates.
Commensurate with camp expansion as described earlier.
Cost are expected to be lower and the second half of 2021 benefiting from a higher anticipated production relative to the first half of 'twenty and 'twenty one.
Guidance for the year reflects ongoing efforts to improve productivity and optimize performance across our operating sites, while self guard cells safeguarding operations against and he resurgent COVID-19 risks.
Our 'twenty 'twenty, one and outlook for capital expenditures includes at Essakane, and sustaining capital of $60 million and non sustaining capital expenditures of $90 million at Rosebel and sustaining capital of $50 million and non sustaining capital expenditures of $75 million at Westwood sustaining capital of 10.
And non sustaining capital of $10 million at Kotte development capital expenditures of $355 million and at Boto Derisking capital expenditures of $60 million for the year total sustaining capital and expanded expenditures will be $120 million well nonsense.
Staying and capital totaled $590 million plus or minus 5%.
In 'twenty and 'twenty, one we look forward to updating you on rosebel resuming its operating cadence following the camp expansions as well as completion of the Saramaccan infrastructure construction.
Essakane completed and the mill optimization project and the first quarter of 'twenty 'twenty, one with expected improvement and hard rock or processing capacity.
The advancement of our goals growth projects, including major earthworks at Coty and the expansion of the construction camp and access road and project infrastructure Derisking work at Boto.
And exploration and Gaza Lab, we are planning resource delineation work and targeting and targeting a maiden resource later this year.
We are also planning resource delineation work at various projects, including Nelligan and the rule and project and the recently acquired failed property and Quebec, Diack and Valley and.
And the new Corita discovery in Guinea.
And on that note I will now pass the call over to Carol to review our financial results.
Thank you Gordon and good morning, everyone as Greg mentioned, we demonstrated our leverage to the gold price and the year generating $223 million and mine site free cash flow and increase and 280% over the prior year.
Mine site free cash flow was $78 million and the fourth quarter.
We continue to prudently manage our balance sheet, recognizing that we have the substantial capital allocation to our transformational growth projects. Okay cool.
And that year, and we had $948 million and cash cash equivalents and short term investments.
Excluding restricted cash and $39 million.
Combined with her and largely Undrawn credit facility of 500 million, our liquidity at year end and nearly $1.5 million.
This monthly further extended the maturity of $490 million available under the credit facility by one year to January 'twenty and 'twenty five.
And at this level of liquidity, we believe and are well positioned to execute on our growth plans.
And the fourth quarter and subsequent to year, and we are able to execute favorable hedges and called.
And currency and these activities included the addition of gold hedge collars for 2021, and the range and 1600 to $2800 per ounce and gently.
The 8040 ounces and.
Gold hedge collars on 24000 ounces at 1700 to $2700 per ounce.
The first half of 'twenty and 'twenty, three and I'll just pause there because we have received some questions overnight around the collars and just to be clear they are call or yourself gold prices are and the last case below 1700, and we are we see a floor price and 1700 and at the gold price is about 27.
Hungry and were capped at 2700 and any spot price and pool between that range, we will receive.
In addition, we received the number and zero cost collar options on contracts at prices below $55 per barrel for the period 'twenty 'twenty, one 'twenty and 'twenty four.
Alright, and gold share the coating gold project cost for it and collars and being used to mitigate our currency risks for 'twenty for 'twenty 'twenty, one approximately 44% and the Canadian dollar exposure is hedged and the range of 1.28 to 1.47. This together with nearly 145.
A Canadian dollars that we have on hand increased and the 'twenty 'twenty, one Canadian dollar hedged position to 73 per cent.
For 'twenty and 'twenty to approximately 28% and the Canadian currency exposure and Coty was hedged in the range of $1 three zero to 1.48.
And for 'twenty and 'twenty, three approximately six 5% and the Canadian currency exposure was hedged and the range of 130 to 1.46.
Okay.
Forward to 'twenty and 'twenty, one and we expect depreciation to range from $295 million to $305 million with cash taxes, ranging from $78 million to $88 million for the year.
Note that in 'twenty and 'twenty, we have reported COVID-19 expenses and other expenses given the assessment that and incremental cost that do not typically foreign pardon me of the cost of oil production and are therefore, not reflected in our unit cost.
Turning to the fourth quarter financial results revenues were $348 million up 18% per annum from the prior period and 4% over the third quarter adjusted net earnings for the quarter were $19 million or four cents per share impacted by the removal of deferred tax recovery arrives.
And so we from the movement.
And foreign exchange rates and that was mostly asking where we saw the euro at the beginning of the year go from 1.12 to one point to two relative to the U S. Dollar. We also incurred higher G&A expenses related to executive retirement and higher depreciation expense.
Net cash and operating activities before changes in working capital totaled $108 million.
And the gross profit margin just over 24% representing a significant improvement over the prior year period and 14%.
For the year ended 2020.
Revenues were $1, two 4 billion on higher realized gold prices, partially offset by lower sales volumes year over year.
Cost of sales remained essentially flat, reflecting lower depreciation expense, partially offset by higher royalties due to higher gold prices.
Adjusted net earnings for the year were $88 million or <unk> 19 per share net cash from operating activities before changes in working capital totaled $368 million and he.
Gross profit margin, averaging 20 per cent for the year.
Mines like great cash flow free cash flow from our operating mine site with development capital and non mine site activities adjusted out.
As we noted earlier of mine site free cash flows have been robust, reflecting a 21 per cent increase and the fourth quarter of 2020, and the same period and 2019, a 280 per cent increase year over year.
Following the strength and gold prices and our prudent management of the balance sheet and liquidity, excluding restricted cash and including our largely undrawn $500 million credit facility is nearly $1.5 billion.
During the year, we successfully refinanced and bonds.
At a 5.75.
5% coupon rate per $450 million due in October 2028, both S&P and Moody's credit rating agencies reaffirmed angle stable outlook following the refinancing and as I noted earlier. This month, we extended the maturity of $490 million under the credit facility.
And January 2025.
Given our liquidity and institutionalized prudent and balance sheet management and risk management measures combined with the anticipated free cash flows from our existing operations. We believe we are well positioned financially for the construction of our transformational coating project.
And the last night here and as you can see our disciplined approach positions us as a leader amongst our peers with a net cash position and leading and liquidity.
And with that I will now pass the call to Bruno to discuss operations.
Thank you Carol.
I am gold is committed to the health and safety of our employees and.
And 2020, I am pleased to see particularly given the context of the COVID-19 pandemic.
That we outperform or health and safety targets.
For 2020, our dart and preferred rates or point 46, and point 67, respectively.
For 200000 hours worked on.
Unfortunately, the fourth quarter performance was affected by the Westwood Smith and incident.
That been said, we were still able to.
And to meaningfully outperform or annual dark and T. R. R.
<unk> and achieved noteworthy year over year improvements of 10% and 23 person respectively.
We continue to implement several initiatives.
And I am safe there is that health and safety management program to promote a safe work environment.
We just released our update other reserve and resource estimate for 2020, which reflects $13 9 million ounces attributable proven and probable reserves for a 17% decline year over year.
$23 9 million ounces and attributable measured and indicated resources for a 12 person declined year over year and.
And $11 3 million ounces and attributable inferred resources for a six person declined year over year.
The updated figures reflect the sales of the non core subdued online at the end of 2020.
Excluding the sale of <unk> total attributable proven and probable reserves decreased by 1.2 million ounces are a seven person.
The updated figures also include operating mine depletion and reclassification of reserves at Westwood previously reported in August of last year.
Mining is a depleting activity and this is the first time and several years debt, we have seen a decline in our reserves and resources. However, as Greg will discuss we are working hard and.
And exploration to develop further resource potential.
For the quarter, we are reporting total consolidated attributable production of 169000 ounces and team.
Double gold sales of 172000 ounces cost.
Cost of sales of $1045 per ounce sold.
Total cash cost of $998 per ounce produced and.
And all in sustaining cost of $294 per ounce sold.
We achieved the midpoint of 2020 production guidance reporting total consolidated attributable production of 653000 ounces cost.
And of sales of $1057 per ounce sold total cash cost of $984 per ounce produced and.
And all in sustaining cost of 12 $832 per ounce sold.
I will now review each operation and term.
This icon attributable gold production was 103000 ounces for the quarter and 364000 ounces for the year.
Production was up quarter over quarter due to the mining of green zones.
And that's really offset by lower recoveries adjusted.
Yes, it's a core.
Total cash cost for the year were $936 per ounce produced up year over year due to increased royalties on all your gold prices and higher operating cost due to stockpiles and the drawdowns and increased cyanide consumption.
All in sustaining cost for the year or $1098 per ounce sold up year over year due to higher cost of sales possibly.
And the offset by lower sustaining capital.
And note that the election process and duck and necessity was concluded smoothly with the prior earnings accretion really addictive.
And as Gordon noted earlier this icon, we have reconfigured the camp to accommodate new COVID-19 protocols and.
And that's been operating at normal capacity since the third quarter.
In addition.
We have a steady production outlook for 'twenty and 'twenty, one with additional pushback a work plan.
And the optimization project is targeted for completion and the first quarter with tenants and.
<unk> stated 10 person improvement and artwork processing.
And as you can see from the table 2020 reserves and resources were updated to include Honeywell and mine depletion.
I pose bell attributable gold production for the fourth quarter was 52000 ounces, demonstrating a steady increase and mining activity.
Well it was bell recovered from the midyear suspension, reaching 75% of operating capacity at year end and is operating at 85 per cent currently.
For the full year Rosebel produced 210000 ounces of gold, reflecting the suspension and the gradual resumption of the mining activity.
We have established Offsite field hospitals facility to accommodate and cases.
Total cash cost for the year of $1017 per ounce produce or are your year over year lower production volumes from the temporary suspension midyear and other.
Royalties on higher gold prices are among the main drivers of the increase.
All in sustaining costs were 12 under $24 per ounce sold and for the year all your year over year and due to higher cost of sales offset by lower sustaining capital and.
In terms of ESG, the rosebel couldn't be fun is operational with two worthy projects funded one for solar energy and <unk>.
The other four potable water and the village of Beacon and Micah.
Our COVID-19 protocols are in place and we expect to reach our normal workforce capacity and the first quarter of 2021 and.
And 'twenty 'twenty, one our outlook reflects pit sequencing and the shift of waste stripping from 'twenty to 'twenty one.
We expect to complete the non critical infrastructure for Santa Monica and the first half of 'twenty 'twenty, one and continue to and continue the collective labor agreement negotiation process.
Year end 2020 reserves and resources noted and the table below were updated to include other mine depletion.
On this slide you can see Nashville, and their view of their trucks up.
Onset.
Onsite Jensen and the tire shop to 'twenty three kilometer haul road and bridge, which was completed achieving a noteworthy milestone of zero lost time incident over more than 700000 work hours.
Yeah.
Westwood produced 14000 ounces and the fourth quarter 2020, with the mill processing stockpiles and gods of open pit ore, while the underground remains suspended for.
For the full year Westwood produced 79000 gold ounces.
Both figures were lower than the prior year periods due to debt suspension I would note that the conflict transitioning to 24 hours seven days a week mining the Westwood mill achieved the highest annual mill throughput and performance seen since 2005.
Total cash cost for the year were 11 $117 per ounce produced.
Your year over year on lower production.
All in sustaining cost for the year were 1200 $86 per ounce sold higher year over year due to higher cost of sales, partially offset by lower sustaining capital due to the COVID-19 restrictions and.
Underground mine suspension.
From a COVID-19 perspective, Westwood was infected and late Q1 with a government mandated shutdown from which we were able to establish strong protocols to manage the health and safety of our work force. These protocols continued to work well.
Yeah.
Our outlook for Westwood and <unk> 'twenty 'twenty, one is tempered by depending business resiliency plan, our national instrument 43, 101 and report published in August 2020 is paused as a result, we.
Anticipate a restart at Westwood and the thing and half of 'twenty 'twenty, one targeting safe extraction from multiple zones.
In addition, we are advancing the <unk> study to assess the potential of assets and the westwood's hub and spoke concept.
Reserve and resources increase slightly net of annual depletion with the addition, and with the addition of incremental ounces from the gallons of open pit deposit.
As we incorporated more drilling data completed in 2020.
Underground reserves and resources or adjusted for mine depletion with no further refinements.
The hub and spoke model for Westwood is based on the excess capacity, we have a day meal.
Which acts as a hub with regional targets us acting as spokes.
This model, which C. Johnson Corp feed eventually followed by fail or sheet pending permitting with target prediction portfolio commencing at the end of 'twenty 'twenty, two and running for two years.
I will now provide and update on our construction project quote Eagle.
We believe the Coty Gold project meets the criteria of a tier one handset boasting a long life potentially exceeding 18 years of mine life 493000 ounces of gold production annually and the first five years on the one other person attributable basis.
And second quartile total cash cost of $600 per ounce.
Second quartile all in sustaining cost of $771 per ounce and.
And Coty is located and the mining friendly jurisdiction, which further potential upside for exploration.
Expect Dakota Gold project to add tremendous value to our and go with a net present value of $2.5 billion and internal rate of return of $25 nine person on the 100 per some basis at a gold price of 19 <unk> hundred dollars per ounce.
We are proud to have strong stakeholder relationship with joint venture partners Sumitomo indigenous communities flying pose and Metagnomy and our host northern communities.
As of December 31, 2020 detailed engineering for Coty has advanced.
And at least 73% complete and the fourth quarter and construction progressed on plan along with road access development and the realization of Fisher salvage and activities.
Major earthworks comments earlier this year ahead of schedule.
Last year, we spent approximately $51 million on Coty construction and.
In addition, approximately 45% of the total expenditures range reference from July one 2020 is coming from.
We have continued to advance our permitting for construction and speaking in due course for additional approvals under the lakes and rivers improvement approximately 10 miners permits and approvals.
You can see here pictures of the construction and Canada Coty, the processing plant location hurt works activity. The Hertz works lay down area.
Uptick corridor and installation and construction equipment.
I like to highlight and dislike because it demonstrates coty sensitivity to the gold price with both after tax net present value and internal rates of return shifting dramatically up and the current gold price environment.
While we are pleased to see this potential our internal modeling for Coty is based on conservative prices and assumptions. So that this project is defensively positioned for gold price volatility.
And we'll now turn the call over to Craig to discuss development and exploration.
Thank you Bruno and good morning, everyone.
Before I begin. Please note that the results I talked about today have been previously disclosed in accordance with securities regulations.
And signed off by the qualified persons within the company reporting them.
In 2020, our exploration spend was $36 $3 million compared to $47 million and 2019 exclusive project studies and.
A reduction largely reflective of the impacts of COVID-19 restrictions on our exploration programs in various regions and <unk>.
'twenty, one planned exploration spending totaled $56 million.
Split approximately 60 40 between Greenfield and brownfield targets.
I will now review a few highlights from the exploration work completed in 2020.
And our Nelligan project in Canada, We reported assay results from our 'twenty and 'twenty infill and expansion Diamond drilling program throughout the year starting in the second quarter.
<unk> included $25 one meters grading, one nine grams per ton gold and.
And 27 meters grading 2.9 grams per tonne gold.
Additional assay results were reported in the third quarter with highlights of 39, one meters grading two one grams per ton gold and $34 five meters grading one nine grams per ton gold.
And finally, the remaining results from this program and reported in the fourth quarter of 2020 and and.
Included $17 three meters grading seven six grams per tonne gold and 21 eight meters grading two grams per tonne gold.
And other adjacent or sorry at our guzzler and discovery adjacent to the Cotai gold deposits at Ontario, We reported assay results and January 'twenty 'twenty, one from 'twenty four diamond drill holes totaling just over 10000 meters completed as part of our 2019, 'twenty and 'twenty delineation drilling program, which continued to enter.
Wide zones of alteration and associated mineralization.
Similar to that and observed at the Coty deposit itself.
Highlights included 86 meters grading five six grams per ton gold, which included a 35 meter interval grading 14, seven grams per tonne gold.
And as well, we had 164 meters grading one five grams per tonne gold.
$417 three meters grading 1.0 grams per ton gold, which included 197 three meters grading one six grams per tonne gold.
Another intersection of 202 meters grading 1.2 grams per ton gold and 353 meters grading 1.0 grams per ton gold.
Which included a 46 meter interval grading three four grams per tonne gold very impressive intersections from that program.
At Boto, we completed 23000 meters of infill reverse circulation drilling aimed at resource conversion.
Monster Lake project in Canada, we successfully consolidated our ownership to 100 per cent and reported assay results from the 2020 and drilling program targeting the anti shear zone area along strike from the defined mineral resources at the three to five Megan's zone drill highlights from that program included three.
Eight meters grading 16.9 grams per tonne gold.
Two eight meters grading five six grams per tonne gold and $12 three meters grading 2.1 grams per ton gold.
Because we have shown before industry reserves have been on a steady decline since 2012, representing a significant challenge to the future of our industry.
I am gold has worked hard to differentiate ourselves from this industry trend and although this year, we did see a decline primarily due to the sale of the non core assets that you all are the usual mine depletion.
From our annual mine production and a reclassification of reserves at Westwood announced earlier in the year, we continue to commit to discovery oriented exploration programs to support future growth.
And in 'twenty and 'twenty, one we have several brownfield exploration targets and that's it.
Can drilling is focused on resource potential at targets within trucking distance.
The mine and include our German target Corp, Zena and to Siri.
At Rosebel, we are focused on resource development at our existing deposits and the exploration of high potential targets within our extensive concessions.
At Westwood, we are planning continued resource definition drilling and development supported by Geo technical drilling.
Along with plans to advance our regional Greenfield targets, including the further delineation of the Lac Gamble zone at through and Gold project.
This work will support the future maiden resource estimate for this target and.
In addition, we are planning the evaluation of the resource potential at the historic Mito deposits and the Cinderella zone.
Also at through and Gold project.
And if the guzzler and discovery located one five kilometers northeast of the Coty deposit.
And delineation drilling is in progress to support and initial resource estimate later this year.
At the Boto Gold project in Senegal, 60 million and capital expenditures as planned in 'twenty and 'twenty one for the continued derisking of the project, including the construction of and all your access road engineering for critical plant equipment and advancement of sustainability programs to both promote social.
And collaboration with local communities and ensure adequate environmental protections.
And it's important to note that the capital cost estimate and the optimization study.
Reflects pricing is at the second quarter of 2019 and is deemed to have and overall accuracy of plus or minus 15%.
The study estimate excludes escalation and inflation and the impact of a project and schedule changes.
The derisking activities and Bodo will help position the project for an eventual construction decision.
Subject to market conditions, and the construction progress at Coty among other factors.
Photo anchors or bamboo district, where exploration efforts have led to several additional discoveries building on the resource potential of the area in 'twenty and 'twenty, one and infill drilling is planned at the day active deposits and Molly and order to upgrade additional inferred resources, while at Korea and Guinea initial.
Delineation drilling is planned to support the future maiden resource estimate.
And North America exploration at the Nelligan deposits in Quebec is.
And is intended to focus on resource expansion after the drilling results from the 'twenty and 'twenty program and confirm the extension of mineralization beyond the current resource boundaries.
This program will help support the completion of an updated resource estimate and the second half of 'twenty or 'twenty, one well drilling up the nearby Monster Lake project will work to evaluate the resource potential of the anti shear zone target area.
Finally, I will finish with our project pipeline.
Competition for and access to quality exploration projects at acceptable entry cost remains challenging for the industry and especially so in the face of the current environment of bullish gold prices.
And I am goal, we believe that a robust and balanced project pipeline and strategically assembled and advanced is a fundamental asset for the future viability of any mining company.
And as such I and gold has developed and continues to invest and a healthy pipeline of early to advanced Greenfield exploration projects to support future growth as well as support near mine brownfield programs with a view to extend mine lives and leverage our existing infrastructure.
With that I will now pass the call over to <unk> to conclude.
Well. Thank you very much Craig so I am going to at the beginning and exciting transformation as we focus on the future through the execution of our growth pipeline.
In 'twenty and 'twenty, we announced the decision to proceed with the construction of the Cote Gold project located in Ontario, which along with the Derisking of the Boto project in Senegal positioning xylem gold and a few years' time is it 1 million ounce producer with all in sustaining cost well below $1000 per outs, greater geographic balance and long life.
And we look forward to continuing our quarterly conversations with you on I am golds operating mines construction progress at Coty, Derisking progress at Boto and exploration news.
Thank you to everyone for joining our call today I will now pass the call back over to the operator.
Thank you we will now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad, you'll share account acknowledging your request.
Youre using a speakerphone please pick up your handset before pressing any keys to withdraw your question. Please press Star then two.
Okay.
Yeah.
The first question is from Fahad Tariq from Credit Suisse. Please go ahead.
Hi, Good morning, Thanks for taking my question on Westwood can you give some more color on what the business continuity plan assessment and kills it sounds like there the decision to access underground and the second half of the year has already been made and I'm guessing that's already baked into the guidance, but maybe talk about like what what exactly is being evaluated.
Weighted and that plan and how could that change.
The way its mine them and you know the way its mined this year or what that means for the guidance. This year. Thanks.
Bruno would you like to discuss that.
So and fact and as you mentioned.
We are we keeping and investigating the incident from October 30th.
And what we want to make sure is that and.
We don't have the same condition and the other zones, where we're going to be mining and so we're finalizing some geotechnical drilling and logging and are analyzing.
Just to ensure that Westwood and it remains a safe profitable and sustainable over time and once we restart. So this is what we're doing so we can we cannot have some.
Line of sight as to when we expect to restart the operation. However, we need to again so net.
As the investigation for Spurs.
And does the guidance for this year already incorporate accessing the underground or parts of the underground and the second half or is that upside to that yes.
Yes, yeah rough roughly around 50 per cent of the ounces.
And the guidance are deemed to come from underground and that being said.
Grand Duke is already somewhat over producing so but the guidance is based on and assumption of a of a second half restart.
I had a limited pace initially and then building through the remainder of the year.
Okay, Great that's very clear that's it for me thanks.
The next question is from Joshua Wilson from RBC capital markets. Please go ahead.
With regards to this royalty transaction.
And what payments would you expect to receive upfront and is there any sort of anchor asset that's driving the overall value.
Craig did you want to cover that.
Okay.
Sure I can do that the portfolio is essentially a group of historical royalty assets that date back to some of them date back quite far and the company's history.
I wouldn't say, there's any specific anchor assets and there there are variable attributable values, depending on on what the asset is but there's not.
And overall singular anchor asset that's driving the value. It's just a collection of well positioned royalties, we've had over time that and in the current environment and have value and so we've assembled those and and had groups looking at them and and essentially the transaction that's documented.
And our release is the value that was put on it but by the the potential purchaser or the one that we will be purchasing it.
And it will be essentially all cash upfront as has been documented and in the disclosure.
Okay got it and.
For for Coty.
And I understand the capital ranges have been reiterated.
And the overall expenditures so far is there any sort of additional insight you can provide our and directionally, what's what's coming in ahead of expectation what's come in below just kind of giving us some insight on some of the some of the different inflation, Eric perhaps even maybe deflation trends youre seeing on an <unk> on the line items.
And as we're as we're working through on our commitments and signing up our our firm contracts.
You know, we're not seeing anything that is wildly outside of of of what our initial budgets were oh, we have allocated some contingency to cover off some things and there are a few areas, where we've gained some contingency back but given level of engineering that we had.
By the time, we we we actually came up with the construction announcement and understanding that a lot of the stuff was pre negotiated.
We we really haven't seen a lot of surprises one way or the other you know obviously, the the things still to be determined or our volume variances on and on Earth moving the fact, we've already started our R. R.
And our major earthworks on the tailings and and the plant site already as you saw from the from the photos that debt the brutal head up IR.
And we'll be starting on the other pit I mean, pip volumes were not so not and not very well.
Worried about saying a lot of volume variances there.
But the other zones.
By and the tailings will be up and out of the ground.
I have a lot of those foundation items out of the way by the end of the summer this year. So.
And as we're working through things Josh.
It's it's more or less going and as as planned there are minor variances, but nothing is really sort of has has caused us to too much concern.
On a materiality basis, either up or down and again, it's it's because just because of how far advanced the project was when we when we launched it and that's sort of the same concept, we're going through for boto as we as we look at that.
Got it Okay, and then maybe last question on AR and Gosling and looking at the opportunity there for the resource and the second half of the year.
And which assuming that that turns out to be.
And as expected and and in a and a larger contribution to resources and perhaps reserves would that result, and any potential scope changes for the project I know theres, obviously, some constraints on on tailings, but is there anything maybe between today and and actual force production, where you you would look at leveraging what that opportunity could be and the mine.
Wayne.
That's great. It's a great question, Josh and Ed.
And is it certain certainly something we've had a look at that.
That being said, we really are focused on executing the project that we've laid out.
I I you know I am I don't have any problem and saying the design of the plant already has baked in and a potential future expansion.
Of around 20% so that that's actually built into the design.
And the layouts are.
We're not planning on building that that that future expansion at this point in time, but that is one of the considerations will be looking at the other place that the docile and probably have some applicability. If you look at the production profile and.
And the grade profile for Cotai over the life of the mine.
Have a good run of six or seven years at relatively high grades and then we get into a lower grade.
Valley, if you will and the production.
<unk> portfolio.
Given you know obviously, we're still evaluating what gosline and looks like but it's but assuming it has similar grade distribution and and especially if there's any.
Nice nicer grade areas closer to surface, there would be and the opportunity for us to really look at it maybe filling over that valley with higher grade material from Goslar, if the opportunity presents itself.
So those are the two main impacts we see from from Godzilla.
And where and the process of evaluating but we're really focused on on executing that project as is.
Great. Thank you very much.
As a reminder, it is star one to ask a question.
The next question is from Anita Soni from CIBC World markets. Please go ahead.
Good morning, everyone. First question I think AR is with respect to Saramaccan. So there was some commentary in the.
And the release last night about the grades at Rosebel, sorry out of Santa Monica and can you just talk give a little bit of color about what's going on there Q4. It was a little lighter than I had expected, but you know overall, how can we expect grades to evolve into 'twenty and 'twenty one they're both at <unk> and at Rosebel proper.
Bruno.
Yes.
I don't want and so for 2020 as we were in.
In fact, developing the so have Micah project, we got access to the first ore packets, which were lower grade material.
The first blocks.
<unk> and.
Showings with them.
Great that is lower than the average so we expect for 2021 12.
12 degree to go closer to the average of the deposits.
And.
And after debt again, increasing over time, so that's going to help.
In terms of gold production overall.
And same thing for for gross Rosebel for our other pits and we know.
And where we have some stripping to do theres. Some stripping that were supposed to be done in 2020 debt, we're going to do some catch up and 'twenty 'twenty one.
Due to the reduced capacity, we have with the mine improve but after that two we also expect 12.
After a couple of years to have the degree to inquiries as well for Rosebel.
Okay. So was that in line with your expectations around the first few pockets or was that you know is that with the block model was predicting where it was at.
And so far it's reconcile of and.
Very good and we are satisfied.
To some extent to what we are seeing right now again it's.
It's.
It depends on the pit sequencing and and also the where they would be and the position of your shuttle and again right.
Right now we don't have any surprise horses for us Michael.
Yeah.
Sorry, I was just going to say the topography of serum ACA was such that we started sort of in the southeast on the highest part of the deposit and and the grade does improve a little bit as you move towards the north west or west northwest So.
And as Ware.
You know, obviously mining down and the sequence and and gaining access further and further west.
You will see those grades come up but the reconciliation for startup Mac has actually done very very well.
Okay, and then just still on their Mac about more about the.
More about the AR reserves and resources, there I noticed in the and MNI category. There's some higher grade material is that the underground and that's why it's not and reserves right now.
We haven't included any of the underground and resources that are higher grade.
<unk> is there's a zone.
To the to the.
Closer to the north west that will get down into and and they are in the mining, but we haven't we haven't included any underground yet and and resources.
So that pocket than it was like a three 3.8 gram per tonne material is there a reason why autonomy and the resource and the reserves right now.
I and how it can make a comeback with you and.
Anita I really I need to look at that but I didn't know, if craig or Bruno I have and insight there.
And once and it was late last night, so I'm, maybe I'm confusing I don't know exactly.
We can take a loss and we can take it offline.
Thank you.
And remember resources has done a 1500 the reserve shelves are done at 200, and so it's just looking at the stripping ratio and the assumptions at the time, but we can look into it and either for about all the color on that.
And it makes sense.
Yeah, It does makes them and because there and.
And might be getting down into those and are those underground and zones.
Even with a pit at that higher price.
Got it okay.
And then just in terms of the actual reserve resource update and as you guys had mentioned you you I mean, you usually have a pretty strong track record of reserve replacement I think it's almost a decade running so I'm understanding that COVID-19 hit and you know everybody. This this year can you just talk about.
Why reserve replacement was almost nil like well it was it was it just a matter of timing or was it just you know.
Was there something that kind of held back getting.
Some of your resources reserves converted or drilling done or is it just a matter of not enough drilling done this year.
All right.
Originally we had planned for free for a more fulsome AR reserve and resource updates at AR at the sites.
We did sacrifice our drill programs.
In 2020, as as we adjusted for Covid and and camp capacity. So yeah, it's mostly a matter of of of us understanding.
And where those reserves and resources are.
That being said, we have restarted those programs and and we we do expect that we'll be able to give a better picture of this year.
We're also looking at.
What our mining sequences and everything are doing.
And I think also important to point out that we've we've retained a 200 dollar gold price for reserve definition.
Mostly too to really protect cash flows through the construction period for for Cotai and eventually boto.
But on the shorter life assets at some point in time, we will need to think about what gold price. We apply because there is there is certainly much more gold Ah at Essakane and Rosebel debt that is potentially accessible under under a higher price.
Okay and last question for me is with respect to the special Unity Levy is that what they're calling it yeah, there and ask.
So that debt.
Your best understanding and that that's just for this year and that will expire into 'twenty and 'twenty two.
And that's the way it's been written it it's for this year and we're still in discussions with them as to as to how that applies.
Okay, and that's as a result of Covid or was there some other precipitated.
You know I think the new government coming in the Treasury was and a bit of a mass so they've they've done a lot of work on and on refinancing the country and and and trying to get things straightened out you know several years of lower.
Gold prices and oil prices hadn't help them.
And and Uh Huh.
Uh huh.
They're just trying to put the house and order.
And the reason, it's relatively temporary and something that a lot of a lot of developing countries.
Don't have is they recently had a significant oil find.
And sort of them and the expectation is that.
And as that gets developed over time, it will significantly change the finances of the country. So it it's it's a short and medium term issue more than a day.
And our systemic long term issue for them.
Okay. Thank you very much.
The next question is from Kenya, Jackie Sonic from Scotiabank. Please go ahead and good morning.
Everybody I'm, just wanted to circle back to Westwood and <unk>.
We share some of the information on what's happening there, but the geotechnical drilling and logging and China assess.
The other parts of the mine and and the impact just a question for them when are we going to get some more clarity for the longer term out and not afraid that's mine.
And you know, we're obviously waiting to see and we've had to change and and sorry to the mine plan I guess and we are now looking at tomorrow satellite deposits being supplemented to the production profile. So when and when are we going to get an update on the long term.
Bruno.
Yes, Thank you Gordon and.
We have issued and 43, one and one in August last year and it was composed of net on the de risking some mineral areas, but also was including a new mining methods.
We for me and he believed that these new mining methods is going to be key for the future success of of Westwood.
Where we have the systemic event.
It wasn't the area, where it was developed by Covid.
And 16 so.
And right now that debt area was all almost already mined out and.
So for the future development and.
And for the future X collection.
Or a collection that Westwood and we're going to rely on doors and your mining methods and the.
And that will is.
So and the plans.
Again this just what we.
We are.
And our planning to mine and 'twenty to 'twenty, one just want to validate that the condition that were present and during the seismic event of October 30th.
Our net replicate them and the other zone, where we had prior to development.
So once we have this sounds and were start we're going to have a.
And Oh, he's germination and update of our.
Life of mine, including those new mining methods, and we will be able to talk to publish and so.
So I, probably and the and the next quarters, we'll be able to have a better.
Uh Huh signal with regard to the longevity of Westwood.
And with the under own under and Uh Huh.
Amongst non commscope.
And clearly going to help us out and defusing.
And the concentrate to away from the mining zone. So we.
We are.
Ask.
And many experts.
Yeah.
We have many from all around the world.
Working on the Westwood.
And our plan and we are confident that with this new mining methods and that's going to help us out and having again.
More predictable and safe and sustainable.
And mine so we just need to make sure that we do our chicken and balance with that you would take data.
Before restarting and after that completing the new zones.
With those new mining methods, it's not all of those homes at Westwood and develop.
We still have many other zones to develop but needs to be developed with them.
And with the new mining methods and the new mine sequence and stope sequencing as well.
So there was no practices.
And it will be put in place.
This concludes the time allocated for questions on today's call I will now hand, the call back over to Andy Gault and Nathan for closing remarks.
Thank you very much saatchi and thanks to everyone for joining us this morning and for your continued interest and I and cold. We look forward to having you join US again for our first quarter, 'twenty and 'twenty, one and conference call and.
Goodbye.
Yeah.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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