Q4 2020 Iamgold Corp Earnings Call
[music].
Thank you for standing by this is the conference operator, welcome to the Iam 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 Nathan Vice President Investor Relations and corporate communications for Ion Gold. Please go ahead.
Thank you very much Saatchi and welcome everyone to the Iron Gold fourth quarter and full year 2020 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 tailored Redbird 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 person flood.
The 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 Andy and good morning, everyone and thank you for joining us.
Reporting on our Q4 and in 'twenty and 'twenty results for 2020, certainly I think a challenging world for the challenging year for the whole world but.
We're really eagerly looking forward to 2021.
So I'll start with the key highlights for the fourth quarter and the year at the corporate level.
And I'm gold demonstrated the strong leverage for 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 strip 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 for.
Focusing on governance, we embraced evolving best practices through board renewal.
Switching to the operational highlights.
Second and continues to deliver with a strong finish to the year and its best quarterly performance in 2020 in Q for Rosebel demonstrated a strong increase in mining rates and the fourth quarter at Westwood. Despite its challenges was free cash flow positive and continue the process open pit ore from the adjacent Grand Duke satellite pit.
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 <unk> 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 Coty in 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.
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 establishment of 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.
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 achieve 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.
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 mining capacity at year end and is currently operating at 85 per cent.
At Coty, 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 at Cotai.
Community support and engagement are fundamental aspects of our zero harm commitment in the fourth quarter 2020, 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 at Essakane.
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 triangle, 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 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.
And S. C is ESG ratings, where we maintained at a rating placed I am gold and the top third of precious metal companies.
Bloomberg's 'twenty 'twenty, one gender equality index, where I am Gould 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 2021, 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 interest 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 $980 per ounce produced and all in sustaining cost between 12, 30, and 12 $80 per ounce sold.
The first quarter of 2021 is expected to be at a slightly lower level of production and the second quarter of 2020 due to the westward underground operations being placed on care and maintenance with restart targeted for each too and also due to lower production anticipated at Rosebel as the mining sequencing continues to advance to normal rates.
Commensurate with camp expansion as described earlier.
Costs 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 million and non sustaining capital of $10 million at Cotai development capital expenditures of $355 million and at Boto Derisking capital expenditures was $60 million for the year total sustaining capital expense expenditures will be 120.
Yeah.
While non sustaining capital totaled $590 million plus or minus 5%.
In 2021, we look forward to updating you on Rosebel resuming its operating cadence following the camp expansions as well as completion of the Cerro market infrastructure construction and.
For Ken completed and the mill optimization project and the first quarter of 2021 with expected improvement and hard rock or processing capacity.
The advancement of our 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.
And exploration and Gaza Lab, we're 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, Diana and Mali 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.
And as Gordon mentioned, we demonstrated our leverage to the gold price and a 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 and we have a 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 on go on.
And currency and these activities included the addition of gold hedge collars for 2021 in the range and 1600 to $2800 per ounce and 78040 ounces and gold hedge collars on 24000 ounces at 1700 to 2700.
And these 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 arent call or yourself gold prices are and the last key low 1700, and we are we see a floor price and 1700 at the gold prices and <unk>.
700, and we're capped at 2700 and any spot price and Gould between that range and even when we see.
In addition, we received the number and zero cost collar options on field contract.
And as below $55 per barrel for the period 2021 through 2024.
Right and gold share the coating gold project costs for it and call everything being used to mitigate our currency risk for 'twenty four 'twenty 'twenty, one approximately 44 per cent of the Canadian dollar exposure is hedged and the range of $1 two eight to one point for seven this together with nearly 145.
And of Canadian dollars that we have on hand, and increase in 'twenty and 'twenty, one Canadian dollar hedged position to 73 per cent.
For 2020 to approximately 28% and the Canadian currency exposure for Coty was hedged in the range and 130 to one point for ink.
And for 'twenty and 'twenty three approximately six 5% for the Canadian currency exposure was hedged and the range of 130 to one point for six.
Looking forward to 'twenty and 'twenty, one 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 costs that do not typically foreign part and the cost of production and 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 corner and $19 million for four cents per share impacted by the removal of deferred tax recoveries and rise.
And so we from the movement.
And foreign exchange rates and that was mostly assay, Ken where we saw the euro at the beginning of the year go from my 0.1 to 2122 relative to the U S dollar.
And 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 a gross profit margin and just over 24% representing a significant improvement over the prior year period and 14%.
For the year ended 2020.
Revenues were one two for $1 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 a.
Gross profit margin, averaging 20 per cent for the year.
Mine site free 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% increase and the fourth quarter of 2020, and the same period and 2019, a 280% increase year over year.
The only and the strength and gold prices and our prudent management of the balance sheet, our liquidity, excluding restricted cash and including our largely undrawn $500 million credit facility is nearly one $5 billion.
During the year, we successfully refinanced and bonds.
And five seven.
5% coupon rate for $450 million due in October 2028, both S&P and Moody's credit rating agencies reaffirmed angle stable outlook following the refinancing.
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 Coke and coal project.
And last night here and you can see our disciplined approach positions us as a leader amongst our peers with a net cash position and leading and liquidity.
With that and I will now pass the call to Bruno to discuss operations.
Thank you Carol I.
<unk> 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 are.
Outperform or health and safety targets.
For 2020 are dark and preferred rates or <unk>, 46, and <unk> 67, respectively.
For 200000 hours worked.
Unfortunately, the fourth quarter performance was affected by the Westwood seismic and incident.
Would that been said, we were still able to.
And to meaningfully outperform our annual dark and PR.
And it gets and achieved noteworthy year over year improvements of 10% and 23% respectively.
We continue to implement several initiatives.
And I am safe, the reason and health and safety management program to promote a safe work environment.
We just released our updated 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 attributable measured and indicated resources for a 12% decline year over year.
And $11 3 million ounces and attribute.
And for the resources for a 6% decline year over year.
The updated figures reflect the sales of the non core subdued on line at the end of 2020 <unk>.
Excluding the sale of Saviola 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 that we have seen a decline in our reserves and resources. However, as Craig will discuss we are working hard and.
And next provision to develop further resource potential.
For the quarter, we are reporting total consolidated attributable production of 169000 ounces and keep.
Double gold sales of 172000 ounces.
Sales of $1045 per ounce sold.
Total cash cost of $998 per ounce produced and all in sustaining cost of $294 per.
Per ounce sold.
We achieved the midpoint of 2020 production guidance reporting total consolidated attributable production of 653000 ounces.
Cost of sales of $1057 per loans sold.
Total cash cost of $984 per ounce produced and all in sustaining costs of 12 $832 per ounce sold.
We will now review each operation and term.
This is a.
<unk> gold production was 103000 ounces for the quarter and 364000 ounces for the year per.
Production was up quarter over quarter due to the mining of green zones.
That's really offset by lower recoveries adjusted.
Yes, it's a core.
Total cash costs for the year were $936 per ounce produced up year over year due to increased royalties on gold prices and higher operating cost due to stockpiles and the drawdowns and increased cyanide consumption.
All in sustaining costs for the year or $1098 per ounce sold up year over year due to higher cost of sales, partially offset by lower sustaining capital.
And note that the election process and Burkina Faso, and West concluded smoothly with the prior earnings accretion.
And as Gordon noted earlier at this I can we have reconfigured the camp to accommodate new COVID-19 protocols and have been operating at normal capacity since the third quarter.
In addition, we are.
Have a steady production outlook for 2021 with additional pushback a work plan.
Mill optimization project is targeted for completion and the first quarter with the and then separately.
Stated 10 person improvement and Archrock processing.
And as you can see from the table 2020 reserves and resources were updated to include Honeywell and mine depletion.
<unk> attributable gold production for the for fourth quarter was 52000 ounces, demonstrating a steady increase and mining activity.
<unk> recovered from the midyear suspension, reaching 75 person operating capacity at year end and is operating at 85% 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 of site field hospitals, such as day to accommodate and cases.
Total cash costs for the year of $1017 per ounce produced.
Year over year lower production volumes from the temporary suspension midyear and all.
Royalties on all your gold prices are among the main drivers of the increase.
All in sustaining costs were 12 under $24 per ounce sold for the year.
For year over year, and due to higher cost of sales offset by lower sustaining capital.
In terms of ESG, the Rosebel couldnt be fun is operational with two worthy projects funded one for solar energy and another for 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 2021, our outlook reflects pit sequencing and the shift of waste stripping from 2020.
We expect to complete the non critical interest.
And for Santa Monica and the first half of 2021 and continue to and continue the collective labor agreement negotiation process.
Year end 2020 reserves and resources noted and the table below.
Did you include annual mine depletion.
On this slide you can see Nashville, and their view of the truck shop.
Onset.
<unk> Jensen and the tire shop to 'twenty three kilometer for older Road and bridge, which was completed achieving a noteworthy milestone that a zero loss time incident over more than 700000 work hours.
Okay.
Westwood produced 14000 ounces and the fourth quarter 2020, with the mill processing stockpiles and Gdansk open pits for while the underground remains suspended.
For the full year Westwood produced 79000 gold ounces.
And with figures were lower and under prior year periods due to the suspension I would note that the contract transitioning to 24 hour seven.
And these are weak mining the Westwood achieved the highest annual mill throughput performance seen since 2005.
Total cash costs for the year were 11 $117 per ounce produced.
Your year over year on lower production.
All in sustaining costs for the year were 1200 $86 per ounce sold higher year over year due to higher cost of sales.
By lower sustaining capital due to the COVID-19 restrictions and.
Underground mine suspension.
From a COVID-19 perspective.
<unk> was impacted in late Q1 with a government mandated shutdown from which we were able to establish strong protocols to manage the health and safety of our workforce. These protocols continued to work well.
Yeah.
And our outlook for Westwood and <unk> 'twenty 'twenty, one is tempered by depending business efficiency plan and our national instrument 43, one and one report published in August 2020 is paused as a result.
Anticipate a restart at Westwood and the thing and half of 2021 targeting safe extraction for 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 <unk> open pit deposit.
As we incorporated more drilling data completed in 2020.
Underground reserves and resources 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 mill.
Which is a hub with regional targets us acting as spokes.
This model, which C. Johnson for feed eventually followed by fail or feet pending permitting with target prediction portfolio commencing at the end of 2022 and running for two years.
I will now provide and update on our construction project co tango.
We believe the Coty Gold project.
A tier one handset boosting alone life potentially exceeding 18 years of mine life for.
<unk> hundred and 93000 ounces of gold production and really in the first five years on the 100% attributable basis.
Second quarter total cash costs 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 for potential upside for exploration.
Expect Dakota Gold project to a tremendous value 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 relationships with joint venture partners Sumitomo indigenous communities flying Posen Metagnomy and.
Our host northern.
Yeah.
As of December 31, 2020 detailed engineering for Coty advanced.
And at least 73 person company and the fourth quarter kind of construction and progressed on plan along with Rolodex is development and monetization of Fisher salvage activities major.
Major earthworks comments earlier this year ahead of schedule.
Last year, we spent approximately $51 million on Coty construction and the addition of approximately 45 per cent of the total expenditures range reference from July for 2020 is coming from.
We have continued to advance our permitting for construction and <unk>.
<unk> and <unk> for additional approvals under the lakes and Rivers improvement Act.
Approximately 10 miners permits and approvals.
You can see here pictures of the construction and combat Coty, the processing plant location <unk> activity.
<unk> works lay down area.
The corridor and installation and construction equipment.
I'd like to highlight the slide because it demonstrates coty sensitivity to the low 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.
And for Coty is based on conservative prices and assumptions. So that this project is defensively positioned for gold price volatility.
I'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.
And 2020, our exploration spend was $36 $3 million.
Compared to $47 million and 2019 exclusive project studies a.
The reduction largely reflective of the impacts of COVID-19 restrictions on our exploration programs in various regions and <unk>.
121 planned exploration spending totaled $56 million.
Split approximately 60 40 between Greenfield and brownfield targets.
And 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 2020 infill and expansion Diamond drilling program throughout the year starting in the second quarter.
<unk> included $25 one meters grading one nine grams per tonne gold.
And 2007 meters grading two nine 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 tonne gold and.
And finally, the remaining results from this program we reported in the fourth quarter of 2020 and included $17 three meters grading seven six grams per tonne gold and 21 eight meters grading two grams per tonne gold.
And are adjacent or sorry at our guzzler and discovery adjacent to the <unk> gold deposit at Ontario, We reported assay results in January 2021 from 'twenty for Diamond drill holes totaling just over 10000 meters completed as part of our 2019 2020 delineation drilling program, which continued interest.
Sect wide zones of alteration and associated mineralization.
To that observed at the Coty deposit itself.
Delights included 86 meters grading five six grams per ton gold, which included a 35 meter interval grading 14.7 grams per tonne gold.
As well, we had 164 meters grading one five grams per tonne gold for.
$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 one two 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.
And our Monster Lake project in Canada, we successfully consolidated our ownership to 100% 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 zone.
Drill highlights from that program included three eight meters grading 16, nine grams per tonne gold.
And $2 eight meters grading five six grams per tonne gold and $12 three meters grading two one grams per ton gold.
As we have shown before interest through 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.
The usual mine depletion for.
And 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 2021, we have several brownfield exploration targets at Essakane drilling is focused on resource potential targets within trucking distance of the mine and include our gem target core zena and to theory.
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 geotechnical drilling for.
Along with plans to advance our regional Greenfield targets, including the further delineation of the Lac Gamble zone, it through and gold project.
Work will support for future maiden resource estimate for this target and.
In addition, we are planning the evaluation of the resource potential at the historic Mito and deposit and the Cinderella zone.
Also at Blue and gold project.
At the Guzzler and discovery located one five kilometers northeast of the Cote 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 2021 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.
For collaboration with local communities and ensure adequate environmental protections.
And it's important to note that the capital cost estimate and the optimization study for <unk>.
Reflects pricing is at the second quarter of 2019 and us.
It's deemed to have and overall accuracy of plus or minus 15%.
The study estimate excludes escalation and inflation and the impact of 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 exploration efforts have led to several additional discoveries and building on the resource potential of the area and 2021 infill drilling is planned at the day active deposit and Molly.
In 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 deposit in Quebec.
It 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 and '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 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 gold is beginning and exciting transformation as we focus on the future through the execution of our growth pipeline in 2020, 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.
<unk> XI and gold and a few years' time, and 1 million ounce producer with all in sustaining costs well below $1000 per ounce.
<unk> geographic balance and long life mines, we look forward to continuing our quarterly conversations with you on I am golds operating mines construction progress at Kotte 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 will hear a tone acknowledging your request is current.
Using a speakerphone please pick up your handset for Christine any keys to withdraw your question. Please press Star then two.
Okay.
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 killed it sounds like there the decision to access underground and 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 and that plan and how could that change.
The way, it's mine them the way its mined this year or what that means for the guidance. This year. Thanks.
Bruno would you like to discuss that.
Yes, so in fact.
And as you mentioned.
We are keeping are investigating the incident from October 30th.
And what we want to make sure is that.
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 analyzing.
Just to ensure that Westwood remains a safe profitable and sustainable over time and once we restart. So this is what we're doing so we can we can have some.
Your line of sight as to when we expect to restart the operation However, we need to.
Again finalize the investigation for it for us.
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.
But the guidance is based on and assumption.
Second half restart.
At 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.
Yeah.
The next question is from Joshua <unk> from RBC capital markets. Please go ahead.
And with regards to this royalty transaction.
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.
Sensually 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 what the asset is but there is not.
And overall singular anchor asset thats driving the value. It's just a collection of well position royalties we've had over time that in the current environment have.
And have value. So we've assembled those and had groups looking at them and essentially.
The transaction that's documented.
And our release is the value that was put on it but by the the potential purchaser of the one that we will be purchasing it.
And it will be essentially all cash upfront.
As has been documented and the disclosure.
Okay got it and.
For for Cold day.
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 on <unk>.
Actually 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 and maybe deflation trends youre seeing on and on the line items.
And as we're as we're working through on our commitments and signing up our firm contracts.
And you know, we're not seeing anything that.
That is wildly outside of of of what our initial budgets were.
You know 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 the level of engineering that we had by the time, we we we actually came out with the construction announcement and understanding that a lot of the stuff was pre negotiated.
And we really haven't seen a lot of surprises one way or the other.
You know obviously the.
And the things still to be determined our volume variances on and on Earth moving.
The fact, we've already started R. R.
Our major Earth works on the tailings.
And and the plant site already as you saw from the from the photos that brutal add up and will be starting on the on the pit I mean, Pip volumes were not so not I'm not very.
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.
And as planned.
There are minor variances, but nothing is really sort of has has caused us to too much concern.
Auto materiality.
Basis, either up or down and again, 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 Goslin and looking at the opportunity there for for the resource and the second half of the year.
Assuming that that turns out to be.
Expected, it and a and a larger contribution to resources and perhaps reserves.
That results and any potential scope changes for the project I know theres, obviously, some constraints on tailings, but is there anything maybe between today and actual force production, where you you would look at leveraging what that opportunity could be and the mine plan.
That's great. It's a great question, Josh and and at certain certainly something we've had a look at.
That being said, we really are focused on executing a 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.
And 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 I probably have some applicability. If you look at the production profile.
And the grade profile for Cotai over the life of the mine.
We 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.
Obviously, we're still evaluating what gosline and looks like but it's but assuming it has similar grade distribution and and especially if theres any.
Nice thanks for great areas closer to surface, there would be and the opportunity for us to really look at it maybe for.
Selling over that valley with higher grade material from Das line, if the opportunity presents itself.
So those are the two main impacts we see for from glassware.
And where and the process of evaluating but we're really focused on on executing that project as is.
Great. Thank you very much.
Yeah.
As a reminder.
Under 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 for.
First question I think is with respect to Saramaccan. So there was some commentary in the.
In the release last night about the grades at Rosebel, sorry out of Cerro marker and can you just talk give a little bit of color about what's going on there to keep for at least a little lighter than I had expected but.
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.
So for 2020 as we were.
And in fact did.
And so how much project, we got access to the first ore packets, which were lower grade material.
The first blocks and organization.
And showings with them.
Great that is lower than the average so we expect for 2021.
For the degree to go closer to the average or for the deposit.
And.
And after that and again, the increasing overtime, so that's going to help.
In terms of gold production overall.
And for that same thing for for grocers, though for our other pits.
We have some stripping to do theres. Some stripping that were supposed to be done in 'twenty and 'twenty, that's where you're going to do some catch up and 'twenty 'twenty one.
Due to the reduced capacity, we have with the line improve.
But after that and we also expect to have.
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 is that with the block model was predicting where it was that.
And so far it's reconciled.
Very good and we are satisfied.
To some extent to what we are seeing right now again it's.
It's.
And it depends on the pit sequencing and and also the whereas the D and the position of your shuttle and again.
Now, we don't have any surprise horses for South Africa.
Yes.
Alright, I was just going to say the topography of Sarah marker was such that we started sort of and the south east and the highest part of the deposit.
And the grade does improve a little bit as you move towards the northwest or west northwest So.
And as we're as we're obviously mining down and the sequence and and gaining access further and further west.
And you will see those grades come up but the reconciliation for startup Mac has actually done very very well.
And then just still on fair market, but more about the.
For both the AR reserves and resources are there I noticed and me 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.
It is there's a zone.
To the closer to the northwest that will get down into it and the AR and 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.
And how can make a comeback with yet.
Anita and I really I need to look at that I don't know if Craig or Bruno.
And inside there.
And once and it was late last night, so maybe I'm confusing no problem no I don't think we can take it laugh and we can take it offline.
Thank you.
And remember resources and <unk> 500, the reserve sheltered 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 for color on that.
And it makes sense.
Yeah, It does makes them and because they are.
It might be getting down into those and those underground and zones.
Even with a pit at at a higher price.
Got it okay.
And then just in terms of the actual reserve resource update and <unk>.
You guys had mentioned you use I mean, you usually have a pretty strong track record of reserve replacement and 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.
Was it was it just a matter of timing or was it just.
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 down this year.
Originally we had planned for for for 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 for Covid, and and cap 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 gold price for reserve definition.
And mostly to really protect cash flows for the construction period for for Cotai and eventually boto.
But on the shorter life assets at some point in time.
And we'll need to think about what gold price, we apply because there is certainly much more gold.
At Essakane and Rosebel.
And that 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 Suriname for that.
Your best understanding and that that's just for this year and it will expire and plenty of my Kid.
That's the way it's been written 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 precipitate or for that.
No sorry.
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 refinancing our country and and and trying to get things straightened out.
Several years of lower.
Gold prices and oil prices hadn't help them.
And and Uh Huh.
I think they're just trying to.
Put the house and order.
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 them and serve them and the expectation is that <unk>.
And as that gets developed over time.
It will significantly change the finances for the country. So it's it's a short and medium term issue more than a and a systemic long term issue for them.
Okay. Thank you very much.
Yes.
The next question is from Kenya, Jackie Sonic from Scotiabank. Please go ahead and.
Good morning, everybody.
Just wanted to circle back to Westwood and appreciate some of the information on what's happening there, but the geotechnical drilling and logging and China Seth 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 outlook for this mine.
And we're obviously waiting to see and we've had to change and and sorry for 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.
No.
We have issued a 43, one and one in August last year and.
And it was composed of not only the risking some mineral areas, but also was including new mining methods.
So we for me and he believes that these new mining methods is going to be key for the future success of <unk>.
Of Westwood.
Where we had the seismic event.
It was an area where it was developed by Covid.
And 16.
And.
And right now that that area was all <unk>.
Most already mined out.
So for the future development and for.
For the future.
Extraction.
Our next section that Westwood and we're going to rely on those new mining methods.
And and that will.
So and the plans.
Again this just what we.
We are.
Planning to mine and 'twenty, two 'twenty, one and just want to validate that the condition that were present and during the seismic event of October through yet.
Our net.
Applicator and the other zone, where we had.
Prior to development.
Once we have this sounds and were start we're going to have.
And Oh history of a nation and update of our life.
Life of mine, including those new mining methods, and we will be able to talk to completion.
So I, probably and the and the next quarters, we'll be able to have a better.
Signal with regard to the longevity of Westwood.
With the under own underwritten loans.
Amongst non coastal.
It's clearly going to help us out and defusing.
The concentrator to away from the mining zone. So we.
We.
And <unk>.
Many experts.
Uh huh.
We have many from all around the world.
Working on the Westwood.
And our plan and.
And we are confident that with this new mining method, that's going to help us out and I think.
And again.
More predictable and safe and sustainable.
All mine so we just need to make sure that we do our chicken and balance with that you would pick data before restarting and after that completing the new zones.
With those new mining methods and it's not all of those loans at Westwood.
And 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 Gupta 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 have and will join US again for our first quarter 'twenty and 'twenty, one and conference call on day.
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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