Q1 2021 Iamgold Corp Earnings Call
[music].
Thank you for standing by this is the conference operator, welcome to the I am Gold first quarter 2021, operating and financial results Conference call and webcast. As a reminder, all participants are in listen only mode and the conference is being recorded.
After the presentation there'll be an opportunity to ask questions to join the question queue. You May Press Star then one on your telephone keypad.
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At this time I would like to turn the conference over to indeed, there'll be Nathan Vice President Investor Relations and corporate communications for I Am Gold. Please go ahead.
Thank you very much Ariel and welcome everyone to the Iron Gold first quarter 2021, operating and financial results Conference call.
Joining me today on the call are Gordon's, daughter, President and Chief Executive Officer.
Daniela day neutral executive Vice President and Chief Financial Officer.
[noise] Mcdougall executive Vice President.
Bruno Lemelin senior Vice President operations, and projects and Tim Bradburn, Senior Vice President General Counsel and corporate Secretary.
All of them are 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 that the same cautionary language applies to our remarks during the call.
During the call non-GAAP measures will be referenced and we will direct you to review the reconciliation 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's life.
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 stomach.
Well. Thank you Andy good morning, everyone and thanks for joining us I hope everyone is.
He was happy and healthy in these one time I'd like to start by saying how pleased I am to introduce Daniela dummy trial as our new CFO a.
Daniela joined US at the end of March upon the retirement of Carol Banducci, Carol Banducci, who had been with I am gold for almost 15 years.
I'm sure that Daniela is well known to many of you having been involved in our sector is a seasoned executive in the investment corporate and banking components of the mining industry at various times throughout her career.
I'm very happy that she has agreed to join us bringing her wide skill set to further enhance our strong executive and finance teams as we move forward through this exciting growth phase we're in.
Now, let's get into the our overview.
Our first quarter of 2021, so at the corporate and strategic level I am gold generated $89 $5 million in mine site free cash flow during a period with adjusted earnings of $6 million or one seven per share.
On our balance sheet at quarter end, we have $968 million in cash and approximately $1 $5 billion in total liquidity, which fully funds our construction plans.
For each of our sites. We have continued our proactive management of COVID-19, with rapid response and strict protocols some of which I will expand on in a moment.
We continue our comprehensive community engagement programs, including funding the infrastructure improvement projects through the Rosebel community funding, Suriname and starting the planning for phase two of the Burkina Faso Secret angle. The Doe project to bring much needed potable water to the communities around essakane in northeastern breccia.
No.
The board has amended its renewal on diversity policies targeting the average tenure of the board to be 10 years, or less and 30% or better female representation as well. The policy has been adjusted to limit the board share and each committee chair to a maximum tenure of 10 years and their respective roles.
From an operations and growth perspective, we continue to execute on our growth plan with cotai construction, well underway and advancing rapidly and the project achieving 18% overall completion at quarter end.
Overall completion as a composite metric taking into account progress on all aspects of the project, including engineering procurement fabrication construction and commissioning.
At Essakane, we delivered strong operating performance and we have completed the CIL upgrade project at Rosebel, our first quarter of the year was impacted by heavy rain and camp capacity restrictions. However, we are expecting a much stronger second half with the completion of the camp expansion in Q2, and as we move past the rainy season.
At Westwood, we continue to take a cautious approach targeting a safe restart of the underground operations from the second half of the year. Following a decision point this quarter.
In addition, we continue to advance our development pipeline by Derisking. The Boto Gold project, continuing delineation drilling of the gospel on target near Coty, and advancing exploration work targets, including at Nelligan and in the bamboo district.
Bruno and Craig will provide some additional color on all of this activity in a few minutes.
Yes.
I am gold is committed to achieving high standards in environmental social and governance practices, which reflect our long held zero harm vision in.
In the first quarter, we committed to investing at $950000 in a four year Giants of Africa program aimed at encouraging the development of youth sports in Burkina Faso, Senegal and Mali.
We also joined a few of our Likeminded peer companies in sponsor sponsorship of the Artemis project, which aims to promote.
Female business owners and entrepreneurs in the mining sector, including innovative and award winning social and National natural scientists.
As mentioned earlier, we applied $400000 in funding from the Rosebel community fund towards solar Leds Streetlights for public security electrification and potable water supply in the communities around Rosebel on Cerro marker and we continue our public private partnership with Qantas government. The one drop found.
Asian, and cold water on the triangular Doe project by completing phase, one which provides potable water to 60000 people in their S again, and advancing phase two which aims to bring potable water to an additional 75000 people.
We are humbled to receive recognition for our efforts and we were recognized in the prestigious corporate Knights 2021 global 100 sustainability scorecard, where we have been ranked <unk> out of 116.
We've been ranked 10th out of 116 global mining companies reviewed and among 8000 global companies spanning various industries I'm gold was recognized for a third consecutive year as part of Bloomberg's 2021 gender equality index, among 380 global companies across various industries that foster a more inclusive.
And equitable workplace.
And we received the mining association of Canada of Canada's prestigious towards sustainable mining or T. S. M Excellent Award.
The environmental category for innovative recycling of plastic at Essakane.
<unk> recognized in 2010 that there was a need to enhance its public plastic waste management, particularly as there were no recycling facilities in the region, which meant public waste had to be public.
Public and plastic waste had to be buried working with local entrepreneurs essakane has been able.
Being able to recycle rather than brewery plastic, while supporting local businesses and creating jobs with over 65 tonnes recycled to date.
On behalf of the whole company I offer congratulations to the Essakane team on their well deserved recognition.
COVID-19 health and safety protocols are embedded in our operations and projects. These protocols are continuously adapted and enhanced and in the quarter Essakane implemented additional member measures, including thermal screening of all personnel and visitors entering the mine site and the Ouagadougou office the 20 bed.
Field Hospital and medical confinement House established in Ouagadougou and 2020 remains available to accommodate any future COVID-19 cases.
At Westwood in addition to existing protocols random antigen testing was implemented on site to further protect the work force against COVID-19, and at Rosebel. Following the increase of COVID-19 cases in country. There was a temporary suspension of daily commuting by employees during the quarter with off site employees required domain.
Net site during their shift cycle to enable mining capacity increased full site complement while respecting COVID-19 protocols and accommodating the work force Rosebel added 150 beds to the camp in the first quarter with an additional 210 beds expected to be completed in the second quarter.
And at <unk>.
In addition to existing protocols are combination of PCR and antigen testing for all personnel on visitors entering the site has been established further mandatory antigen testing at the Sudbury and Timmins bus terminals has been implemented to detect COVID-19 cases before there is an opportunity for contact as personnel.
Board the bus.
COVID-19 related community activities include financing the news Suriname Bureau of public health cooling system of the Central Laboratory Laboratory, which provides critical testing capacity for HIV malaria influenza tuberculosis said more recently COVID-19 funding was provided through the Rosebel community Fund.
And the Suriname, environmental and mining Foundation also known as <unk> and both of these entities are funded wholly or partly by Rosebel.
As well I am gold contributed $250000 to UNICEF to support the International Act, a kovacs emergency vaccination response effort and West Africa.
Now looking at our operating results in the first quarter on a global basis attributable production was 156000 ounces total cash costs were $1052 per ounce produced and all in sustaining costs were $1238 per ounce sold.
In addition capital expenditures, including both sustaining and expansion expenditures at our operating sites as well as capital spent at our construction and development projects was just over $102 million in the quarter.
We've included a few Burger bar charts.
To provide a comparison of results over time.
Attributable gold production was low compared to recent quarters due to the heavy rains and COVID-19 restrictions impacting rosebel as well as westwood's reliance on open pit feed following the cessation.
Suspension of underground activities.
Total cash costs have increased in the quarter due to the lower production base on.
All in sustaining costs were a bit lower in the quarter, primarily reflecting lower sustaining capital spend and operating capital expenditures were also relatively lower in the quarter due to lower capitalized stripping at essakane and impact of rainy season, and COVID-19 restrictions at Rosebel.
In the quarter, we made good progress on a number of areas while experienced some setbacks and others at Essakane. The mill optimization project was completed with expected improvement in hard rock or processing capacity over the balance of the year. The site is working on optimization following the upgrade.
At Rosebel, we achieved approximately 85% of bonding capacity by the end of the quarter with Sarah Mac on Noncritical path infrastructure work ongoing.
At Westwood, we announced a couple of weeks ago that we have started recalling our underground employees for rehabilitation work underground and training in April and we expect to make a decision this quarter on our second half restart of the mine.
Yeah.
At Dakota construction project, we have commenced major earthworks ahead of our target schedule and continue to expand the construction camp.
Bruno on I had an opportunity for a quick COVID-19 safe visit to COVID-19 to coat day, a couple of weeks ago and I'm very excited about the progress that I saw.
We have continued to progress the access road construction and project infrastructure Derisking work at the Boto project and an exploration resource delineation work continues at Gaza Lab, where we are targeting a maiden resource later this year.
Finally, we have ongoing resource delineation work at Nelligan, the ROI on projected a failed property in Quebec, Diack in Mali, and and accreted discovery in Guinea.
I will now pass it over to Daniela to review our financial results.
Thank you Gordon and good morning, everyone.
I'm very pleased to be joining I M going on that's such a transformation on stage at the company.
With my diverse background and experience says I am confident I will add value.
I look forward to working alongside the entire team to successfully drive the company pets next major milestone 1 million plus ounce producer at all in sustaining cost of less than $1000 per ounce by 2024.
The following are key highlights of our first quarter financial results, we generated revenues of $297 $4 million down from the previous quarter due to lower sales and lower realized average price of $17 81 per ounce.
Earnings were $19 5 million or four cents per share and adjusted earnings were $6 2 million or <unk> 10 per share.
We generated $89 $5 million in mine site free cash flow, reflecting lower operating capex this quarter.
In terms of our financial position, we ended the quarter with cash and equivalents of 967 million benefiting from net vap inflows of $36 million at Essakane and the net proceeds of $36 million from our noncore royalty portfolio sale.
We maintained our largely undrawn credit facility of $500 million, resulting in total available liquidity of approximately $1 5 billion at quarter end.
In the quarter, we extended the term of $490 million available under the credit facility to January 31 2025.
Subsequent to quarter end, we entered into a new gold sales prepaid arrangement for 50000 ounces at 15 at $17 53 per ounce and a cost of $4 four 4% per annum.
We will receive a prepayment of $83 million in equal monthly payments in 2022 with the obligation to physically deliver such 50000 ounces in equal monthly installments in 2024.
This transaction effectively rules, one third of our obligation to physically deliver 150000 ounces under that 2019 prepay from 2022 to 2024 after <unk> in production.
Looking forward sales are expected to improve on stronger expected production in the second half of the year at Rosebel and Westwood unit costs are expected to trend down on the second half of the year driven by higher production and sales potentially offset by some cost pressures.
On energy and supplies along with continued strength on the Canadian dollar and year round.
Capex is expected to trend up for the balance of 2021, reflecting increased activity on our operating sites.
I'll take on instruction and Boto Derisking.
Taking a closer look at our cash flow within the quarter.
Cash inflows from operating activities reflect earnings after adjustments and before changes in noncash working capital on to $87 $3 million.
Partially offset by $7 $5 million on income tax paid.
The inflow from working capital of $19 2 million benefited from cash received from the Essakane VA T refunds.
Partially offset by the timing of payments of approximately $13 million.
Net cash used in investing activities of 63 million reflects a $102 million capex spend partially offset by the cash received from the royalty sale.
Please note that on additional 10 on a half million dollars was received from the sale in April with a final payment.
Net cash used in financing activities of $14 $2 million reflects payments for financing cost leases and loans as well as dividends to minority interest.
Our cash position was $970 million at quarter end with net cash at 436 million and total available liquidity of almost $1 5 billion.
Our senior notes mature in 2028.
Our financial position combined with mine site free cash flow.
<unk> improvement at our operations and the disciplined management of our growth pipeline supports the transformation of <unk> into a lower cost higher margin million ounce producer in a few years' time.
I will now pass the call to Bruno to discuss the operation.
Thank you Daniela well it might be to reported that we started the first quarter of the year with our safety performance metrics tracking better than target levels.
Dark and preferred rates were <unk> 46 on point 67, respectively for 200000 work hours works.
We continue to implement so that whole intensive including I am please to revamp health and safety management program to promote a safe work environment.
I will now review operating performance at each site and third.
At this I can attributable gold production was 102000 ounces for the quarter.
Production reflected both planned grades due to complex or partially offset by lower gold recoveries on the same material.
We have completed the mill optimization project with the net speed on 10% improvement in hard rock processing over the course of the year from an annualized 10 8 million tons and at that point 7 million tons.
Improvement in capacity is important as this metro site moves to greater volumes of transition and hard rock versus softer ore in the coming years.
All in sustaining costs for the quarter was 1061.
On sold reflecting lower sustaining capital.
Looking forward to the balance of the year production remains on track relative to guidance and we expect higher capital in the second half of the year due to the infusion of strategic pushback.
At Rosebel attributable gold production for the first quarter was 47000 ounces impacted by lower grade stockpile feed.
Lower throughput caused by unusually if it rains on.
It does sound like a bit we still experience lower grades due to mining at the edges of the top of the deposits in some areas.
Coming to bypass road parts a day.
Infrastructure program was completed in the quarter.
All in sustaining costs at Rosebel.
<unk> hundred $50, reflecting lower sales on the slower production.
With the ramp up on a recommendation, which Gordon mentioned earlier, we expect to reach normal capacity in the second half of the year.
To generate increased recoveries, we have started the engineering and procurement process for the assumption on this option in recovery or ADR sort of comes from this improvement project.
That's all on my Cup completion of their non critical infrastructure work, that's been rescheduled and the project is now planned for completion in the fourth quarter due to the lodging restrictions.
Finally, we have been progressing negotiation on the collective labor agreement and these efforts continue.
The second quarter.
Westwood produced 70000 ounces in the first quarter 2021, with the mill processing.
And fifth floor, while the underground remains on care and maintenance.
Continuing with the assessment is ongoing including geotechnical engineer anymore.
All in sustaining costs for the quarter.
<unk> and $87 per ounce sold.
Quarter over quarter due to lower sustaining capital level.
In April we announced the <unk>.
Call of underground employees for their work and training.
Decision to restart the underground operations is on the recon on their consolidation in the second quarter after which we would anticipate the restart at Westwood in the second half of 2021.
The restart with target northeast, Mississippi extraction zone, starting with the <unk> zone.
We are advancing the <unk> study to assess the potential of the assets into Westwood's hub and spoke concept work on sale includes further engineering and permitting.
I will now provide an update on our construction project Coty Gould.
This slide highlights the key metrics that we believe from me to Dakota Gold project, a tier one asset.
Good day.
18 year mine life under the extended case.
It was 500 pounds on a 500000 ounces per year of production in the first five years.
Second quarter total cash costs with all in sustaining cost of $770 per ounce sold and Coty is located in mining friendly on target with access to experience labor and close proximity to key infrastructure.
The first quarter was a busy one with Coty I will start with a few key metrics.
As of March 31st detailed engineering for Coty has advanced to approximately $83 on complete.
At 18, Bruce on project completion.
Procurement and expediting of major equipment contracts are progressing with the contract.
For the mining fleet being awarded in the first quarter.
Securing pricing of major line items as part of early works and has helped mitigate pricing pressure. However, we remain cautious given the recent copper and steel price movement.
The project incurred $67 million in the quarter and $143 million since July one 2020.
In the first quarter.
The team started major Earth works ahead of the milestone schedule and focused on widening and overburden stripping.
We come on water management infrastructure for the tailings management facility and we set up temporary camps with the construction of permanent camp underway.
From a health and safety perspective to date, we have not experienced any impact to schedule.
Due to COVID-19.
For the balance of the year, we will focus on Earth works construction hole road construction initial open pit pre stripping and water management infrastructure around it.
We aim to commission a portion of the permanent camp in the second quarter and fully commissioned the final cap in the third quarter.
So if it works also underway at the plant site with concrete activities expected to start in the second quarter as planned.
Yeah.
This slide summarizes our progress to date, we remain on track and we are working steadily to meet our time and cost targets.
We look forward to providing you with our quarterly updates as we progress the project.
Now I'll turn the call over to Craig to discuss development and exploration.
Thank you.
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 <unk>.
On the off line qualified persons within the company reported.
In the quarter, our brownfield exploration work included at Essakane and airport drilling and sampling program to help screen alerts and covered area, which we referred to as Jim.
Potential targets located northwest of the <unk> operation and within trucking distance.
Results will be used to guide the planned follow up drilling program expected to commence in the second half of the year.
At Rosebel. The team has completed approximately 13300 meters of diamond and RC drilling.
With a focus on resource development and conversion that are known deposits.
As well as targeting selected high priority targets within our exploration concessions.
At Westwood surface drilling focused on upgrading of inferred resources at the Grand Duke satellite fit with underground drilling focused on supporting the percentage of potential.
Potential restart of underground mining operation.
Greenfield exploration in the quarter included the reporting of the assay results from the <unk> zone at the Cote Gold project from an ongoing delineation drilling program, which will support on an initial resource estimate.
In the second half of the year.
The commencement of a further round of drilling at the Lac Gamble zone at <unk> Gold project in Quebec to also support the future maiden resource estimate.
As well as the reporting of assay results from the drilling program completed at the story of zone.
And we initiated infill drilling at the day after deposits in Mali, which is located so on the Boto Gold development project.
Exploration spend in the quarter was $10 4 million.
Split roughly evenly between brownfield and Greenfield programs.
On this slide you can see a few assay results reported during the quarter at the <unk> zone, we're drilling.
To intersect wide zones of mineralization with locally high grade.
Over the balance of the year, the Greenfield exploration budget for the Cortez District is $2 8 million.
Reflecting approximately 13% to 16000 meters from planned Diamond drilling which include 12 to 14000 meters of delineation drilling on the Godfather zone itself.
As noted earlier, we are targeting amazing resource regards in the second half of the year.
At the Boto Gold development project in Senegal, we continue to make progress de risking the project.
We have advanced the construction of year round access road and permanent camp construction with the award of a cap on track during the second quarter.
Due to technical and hydro geological assessments are underway to refine the mine facilities and pit design.
And plant detailed engineering is advanced to 75%.
COVID-19 restrictions have eased somewhat since the first quarter, allowing work on site.
Progress with appropriate protocols in place.
Our development capital guidance for the year reflects the early works package, which includes completion of the year round access road and in Aerospace engineering for critical plant equipment and the implementation of local sustainability program.
We've included a few pictures here of the access road cash.
And rich work on slide.
The Boto gold project anchors, the bamboo history, where our exploration efforts have led to several additional discoveries.
Building on the resource potential of this part of the Senegal, Mali shear zone.
Infill drilling has commenced at the day after deposits in Maui with two diamond and one RC rig currently operating.
The program is designed to upgrade additional inferred ounces.
It created in Guinea Diamond drill rig is on site and we will commence on initial delineation drilling program to support a future maiden resource estimate.
Please up we've updated this slide to show not only industry reserve trends over the past few years, but also measured and indicated resource trend.
The story on surprisingly is.
The thing on our industry has been on a steady decline.
Since 2012, which represents a significant challenge to maintain future production levels.
Finally, as a bit of a recap I will finish with our project pipeline.
I've said many times previously competition for an access to quality exploration projects and acceptable entry costs remain challenging for the industry.
And especially in the face of the current environment of bullish gold prices.
I am told we believe that our balance project pipeline strategically advance is a fundamental asset for the future growth and viability of any mining company.
As such volume Gold has developed and continues to invest in a healthy pipeline of early to advanced.
Greenfield exploration projects to support future growth as well as support near mine Brownfield exploration program with a view to extend the mine lives and leverage our existing infrastructure.
I'll now pass the call over to Gordon to conclude.
Well, thank you Craig.
So on the first quarter 2021, the Aimco team made good progress towards our operating and development goals with the normalization of operations and continuous improvement, we expect to see better production levels in costs over the balance of the year.
And to continue to steadily advance our development projects and pipeline.
We look forward to continuing our quarterly conversations with you on performance and cash generation from my on golds operating mines on construction progress at Coty, and Derisking progress at Boto as we realize our transformational growth strategy.
And our our exploration and development pipeline news as we set the business up for the long run.
On an editorial note I'd encourage everyone to get your vaccines as soon as you can if you haven't already done so it's important for the safety of US all as we get the world's restarted.
So thank you to everyone for joining our call today I will now pass the call back over to the operator, and we'll be happy to answer a few questions.
Thank you.
We'll now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad, you'll hear Tony acknowledging your request. If you are using a speakerphone. Please pick up your handset before pressing any keys.
To withdraw your question. Please press Star then two.
Our first question comes from Fahad Tariq of Credit Suisse. Please go ahead.
Hi, Good morning, Thanks for taking my two questions, maybe first on coated gold and the spend for the rest of the year. You mentioned I think he used the word cautious on some of the cost pressures youre seeing on copper and steel maybe even timber can you talk a little bit about the potential risks to you know the capex spend this.
Like how much higher could it be how much has already been locked in and contracts already any color there would be helpful. Thanks.
Thanks.
Thanks, very much so look where we're having a good hard look at them at all of our cost right. Now we don't see we don't see a significant vulnerability for this year or for the rest of the project.
However, steel prices have moved up concrete prices as.
As well concrete supply prices and there's you know there's some general inflation pressures on on on labor costs.
For construction so.
We are over currently over 50% of the total spend is already locked up and firm contracts.
Some of those are our unit price contracts or soda or cost plus contracts. So there is still some.
Exposure to inflation, but not not huge.
I think as we move towards the end of this year, we're gonna have a very very clear picture of where the total cost spend is going to go and we're comfortable.
That debt there, there's nothing coming at us debt.
Provides too much concern for us in terms of cost other than than some some minor aspects of what we're looking at I guess the other thing I would add is you know 85% of the total cost to coat day, our Canadian dollar based we have done.
Quite a bit of hedging and we do have a lot of Canadian dollars.
In the bank to support that I think we're covered over 70% of our Canadian dollar exposure.
For for 2021.
However, you know.
The Canadian dollar does continue to strengthen we look at it on a regular basis and we continue to monitor where it's at.
And our.
<unk> is that it is going to move a little bit more back in our favor as we head towards the end of the year.
And the economy start to shake out.
Okay, Great and Okay. That's helpful. And then maybe just switching gears on the labor agreement negotiations at both Rosebel and Essakane any updates on how maybe its too early for Essakane, but maybe how rosebel is proceeding any potential hurdles.
Look rosebel is very near at the end of the process. We have a presentation into the board. They are they are looking for ratification and then in the in the.
In the coming couple of weeks here. So we do hope that the Rosebel situation.
Is is.
It will clear up here very very shortly essakane is just entering into their process. It's I think they've been it's two or three years since they they last negotiated.
So that wasn't a that went still ahead of us.
We start with all of these projects, we start that work very early and start the discussions to make sure.
That we get alignment on on what the issues to be talked about our but I'm I'm I'm, certainly, hoping that rosebel shakes out sooner rather than later.
Okay. Thank you.
Our next question comes from Anita Soni of CIBC World markets. Please go ahead.
Good morning, everyone.
The first question comes on that could you just give me an idea of when you're measuring the 18% completion.
Basis are you using that dollars or units of production.
So the 18% of total project completion is it's a composite measure so it incorporates a weighted average score between engineering.
Procurement construction come.
Commissioning.
Alright, and fabrication I Miss fabrication.
So each of those components is weighted construction is by far the biggest component, but it's not the only component.
And.
Each of the metrics is measured on under our <unk>.
Different kpis. So construction is based on construction spend.
Procurement is based on advancement towards the schedule.
A.
Procurement is is a weighted average.
Based on the value of contracts, but.
Sort of tied to the number of contracts.
They get to get negotiated and signed off engineering is based on hours. So each on each of the components has a.
A different weighting to it.
When we get into construction like I said, it will tie quite closely to spend that.
That being said I don't want to give anybody the impression that where are we at with the spend.
Versus advancement is is is it can be extrapolated to final costs.
The.
I guess, what's a little different with kotte compared to some other projects is the fact that.
Because engineering and procurement.
So far advanced compared to traditional project execution models we.
We are right now seeing a lot of a lot.
Perhaps of additional value in that 18% metric.
Cuz of that advancement and construction I'm, sorry and in an.
In engineering and procurement.
Versus a traditional project, which.
Mike follow a little more closely with with the spend time line.
Switching to some of the operations. So on Westwood I noticed you guys said you were focused on remediation and training. So does that mean that maybe there's not as much focus.
On pulling ore and putting it through the mill in Q2.
Well with respect to Westwood, what we said we wanted to get underground and Theres. Some rehabilitation theres. Some training there is some new development protocols that we want to put in place.
Right now we're we're we're working internally to reach a decision on when to start pulling or and art our guidance estimate.
Contemplates that that that ore production from underground will start relatively early in the second half so we're not pulling ore right yet but it.
It shouldn't be too long before we get there.
Assuming assuming we we we reached that go ahead decision internally.
So grand Duke it would be similar grades for next for Q2.
Bruno could you help with that.
Yes.
Going to be similar around one gram per ton on.
Also what we're seeing with <unk> is that we have increased the amount of reserve we have more than 50000 ounces.
Additional.
Then when we first started the project.
So <unk> is going to be helping Westwood too.
To complement its products from seed over the next two years.
Okay.
And then my last question and I'll leave it for others.
Is that rosebel, so a little a little bit more detail on that line. So you had some rain in Q1 I'm looking at your Oh, My one of my weather maps and Duncan and.
Q2 is your traditional rainy season. So are we could we expect similar types of.
Judy on softness in the in the throughput levels and then the grades and I noticed the mill did well it seems like there was some stockpiles that you were pulling from.
And so could you give us an idea of what the stockpile level is that we can get an idea.
It keeps you will shake out.
Brito.
Yeah.
So Anita Youre right, who has been on.
His experience unusual amount of seasonal range, usually it starts in Q2, but you have a smaller season in Q1.
This year, we had twice the volume.
As in the same period in 2020, so twice as much as which we usually get.
So what.
What happened is we were limited in terms of rock volume capacity. So we were impacted also.
In terms of production.
Also day material was.
The greater content in <unk>.
So we have to rely on.
Material from the from the stockpiles as you mentioned.
And these.
These stockpiles are at.
Elevate on the numbers too.
For the moment I don't have the precise number but it's it's a it's sort of term debt.
As we are going to go through each to the.
The rainy season.
Season is going to subside.
So we will have additional rooms.
Two of the.
Mining to increase on mining capacity right now with the COVID-19 restrictions, we have to limit the number of people on site to favor social distancing. So would you additional room.
And the seasonal range debt will subside in H two.
We forecast that we target.
An increase in production and also to have a better grade meeting in Q4, which sound like are coming strong as we will be.
At the.
At the other areas of the deposits, where we expect to revert back toward.
The average reserve grade.
Okay. Thank you.
Our next question comes from Tanya <unk> of Scotiabank. Please go ahead.
Hi, Yes. Good morning, everyone. Thank you for taking my question I'm just following up on any of those questions just on on the performance of some of these mines.
Hum.
Essakane I mean that was very high costs in Q1, Andy Brown on can you talk us through what you are expecting cost line as we go through the rest of the year.
Yeah.
Certainly.
So im sorry Tanya.
Yes, we had some.
Costs increased due to the higher consumption of region.
Due to the complexity of the material debt, we have industry in the phase III.
The phase III zone, it's wonderful material line I.
I agree higher than what we forecasted although debt recovery on some debt.
Complex ore.
<unk> more consumption of region. We also we were impacted by higher energy costs and also wider loyalties due to the higher.
Our realized gold price.
As you know.
So for the <unk>.
For the.
The remaining of the.
For the year we.
We expect to remain within the guidance.
And.
Also we had some maintenance activity to done in Q1 and those are.
That's going to be since they are done does not going to be repeated in the coming quarters, we expect to have.
Our cost profile.
Uh huh.
Reverted back to our target.
Hum.
Thus far with ICANN.
Okay. So just on Essakane on its own is it safe to assume then because of the.
Some of these maintenance and so forth debt, we would see a bit of relief in the cost structure for essakane going into the rest of it yet.
Okay.
Yes.
Again, its going to depends on many parameters as you know what's going on like a.
Hum how is going to be.
The fuel price is going to be.
So if we go on to continue to hit our <unk>.
Good grade material in phase III.
Also having some impact on the region. So we expect to have them.
Our strong production.
Four if I came on in 2021 and overall.
Good.
A good performance in terms of cost.
Again that depends on the on the variance of those inputs meters.
Okay.
Maybe just on overall as a company.
You know what I'm getting from from.
Presentation on and maybe correct me if I'm wrong is that Q2 overall it appears as though it's going to be similar to Q1 on.
From a production standpoint, and then better second half of the year with a stronger Q4 because of Sacramento.
Is that a correct way of looking at it.
I think that's a pretty safe way of looking at it Tanya.
We will see some rebound in Q2 from.
From a couple of things, but overall I think your assessment is pretty it's pretty fair.
Okay, and then maybe Gordon now that I have you on just a couple of things on wanted to touch base on partly was the comments you made on inflationary pressures you talked about the copper steel concrete, but you also mentioned labor.
And labor is a big portion of the cost structure should we expect balance on these labor agreements that Dr. Kos.
Should go higher in the next few years should we be factoring in and maybe you can share with that fluctuate on wage inflation that you're seeing looks like is it three five banter.
I I'd be on your numbers aren't bad there, they're more or less certainly in U S dollars. They may even be a little bit high.
I really can't share the exact numbers with you right now because we don't have everything signed up but I will say that when we've got our cost estimates.
And our cost guidance, it's based on an assumption of an increase and we're within those assumptions currently so the cost guidance you see for this year is already incorporating the.
The higher labor costs.
When I said that earlier I was specifically relating to construction labor costs for a coat day. So it's an area, we're keeping an eye on them.
There seems to be a little bit of of of COVID-19 premium.
In in some of the estimates we're seeing so we're working hard to bring those down but the remainder of the cost but as.
As we move forward, you're going to see better production at Westwood and Rosebel.
In future years, which will more than over dominate.
Any sort of cost inflation that we're seeing on the labor side for sure.
Oh, that's good to hear and then just lastly.
I looked at on the slide is the catalyst.
I didn't see Westlake New mine plan I thought we were supposed to get one this year, where do we stand on that.
Yeah.
We are assuming we get a positive decision to move ahead on our expectation is later this year, we'll will certainly be putting out a mine plan for the for the for the for the next couple of years, we wanted to get a little bit of of empirical information.
From the underground restart are on some of the.
Some of the the the new development.
Design, we're putting in place we want to we want to see what that looks like we're also.
Looking at some.
Some a little bit more higher use of remote equipment.
Equipment.
But later this year you're on.
Our expectation is towards the end of the year, we'll be able to put out a multiyear.
At least the short term plan for the coming three to five years, and then and then revisit the overall lawn.
After that.
Okay perfect I'll leave it there to have someone else ask questions. Thank you. Thanks Tanya.
Once again, if you have a question. Please press Star then one our next.
<unk> comes from Don Maclean of paradigm capital. Please go ahead.
Well good morning, everyone.
And thanks for taking my questions.
Just wanted to start with Cotai usually.
The civil side of things is.
The part that's hardest to gauge how is that coming along Gordon Bruno.
It is.
Sure.
Works on your construction civil coming along as expected so far.
Yeah generally the civils are coming along as expected, we've we have encountered less overburden and more rock.
In a few areas.
Which is sort of change the mix a little bit but in terms of of actual progress things are looking a.
Really good I mean, it's a as I said.
Bruno and I were up at site a couple of weeks ago on had a good look around that's it's quite amazing I mean with with COVID-19 I hadn't been there in and about seven months, So which is a little weird for me, but it is what it is yeah overall, we're not getting really any surprises that the the.
The project is more or less following the the recipe that we laid out for ourselves in and.
We're pretty excited about how it's how it's moving forward.
Good good so youre not finding situations, where the the mill footings have 30 feet of extra loon shift or are you going to rock, it's actually the other way around.
The overburden shallower.
The overburden with shallower than most places are than we had anticipated.
And then can you just touch on your Bruno touch on this lease cost of $120 million versus $80 million give us some color on that.
So.
When we originally set the project R.
Our.
Our anticipation on what was available for lease.
It was just around the.
Just around the mining fleet.
As we've gotten into the project and as we went out to look for leasing support.
We saw that there is opportunity to do some additional leasing.
Specifically with respect to cap and and some other pieces.
He says of equipment.
And obviously.
From a payback point of view.
Do you have on how this project develops.
It's much better if we can lease things and have those costs occur.
Commensurate with when you know what went on that when that work is happening rather than having all the costs upfront. So.
We are looking at at leasing it gives us we have some pretty aggressive opportunities to do some additional leasing. So we continue to look at it and that's what's what's buried in the into the current estimate.
And how does the say the mining fleet cost for the lease compare to what you had expected.
The total cost of the mining fleet, we havent ordered at all yet, but we certainly put the biggest order in here last month and of course or.
I think there are about one or 2% below what are our capital estimate was on the mining fleet. So it's it's come in pretty much debt on plan.
That's great good to hear.
Saramaccan the grade wasn't.
Particularly stellar at all.
And it was said because of the mine sequencing can we get a little bit more color on how the grades can improve over the over the year on.
Sure I'll, let I'll, let Bert I'll, let Bruce answer that yes.
Yes, Hello zone.
So right now because we are at the very beginning of this on this project we're mining at the very edge of the deposits on on top of the deposits in some areas.
On the loans, we're going to get more at the heart of the deposits, you'll see the grade to improve nicely.
And getting toward the average grade that we have in our block model.
So right now we see them.
The agreed to be lower.
On the average grade.
For the the whole project.
But the nature to that grade is going to improve nicely.
Above the one gram per tonne easy.
And then will help.
To increase its production even for Ford.
Second half of the year and mainly also.
In Q4, so it's on average for the block model. Some some areas you will hit the <unk> eight gram per tonne. Other area you will hit two gram per tonne.
On the just the mine sequencing that we are right now to get access to the richest part of it.
Which is part of the zone of the Santa Monica.
As we speak.
Yeah, I think the other thing I'd add Dan is.
With respect to share a marker we are still.
We're seeing positive reconciliation versus the block model. So it really is great. It is a sequencing issue isn't that the.
The highest elevation wise areas.
Cerro marker that we've we're accessing first as we mine top down are.
More towards the south east in lower grade areas, but as we mined down more to the northwest and extend of the debentures to the northwest you are going to see.
Those higher grades coming at us.
So that's encouraging to hear that the you've got we know it's only a snapshot at the very beginning debt at least starting off positive reconciliation.
Then grid on.
Maybe you could just touch on security at Essakane.
Yeah.
<unk> for two on no within that impacted our predictions for force.
We are good the regionals with Dr. <unk>.
Some activities done by.
Some stakeholders from country to <unk> marketing forces.
They are always a day.
I think our focus from the region, increasing security details on protocols.
And also for US that's what we do we continue to monitor the situation as we speak but so far it's.
It's very stable force antipsychotic.
Perfect. Okay. Thank you guys.
Our next question comes from Mike Parkin of National Bank. Please go ahead.
Hi, guys. Thanks for taking my question.
Just with <unk> can you give us an idea for the steel work in terms of the mill framing and crowding has that been ordered and is it is there any of it at risk of price suggesting.
For ease of inflationary pressures or you're hearing and reading about on steel prices or are those prices largely locked in at this point.
Most of the steel contract.
For the building has been locked in but there are.
For the main mill building from for some of the other structures they havent been locked in yet.
Okay, and then I guess same for like steel going into all the heavy equipment like mills and so yes, those are under our debt fabrication already yeah.
The stuff for the mills on the and the mining equipment the steel.
Most of that it's been resolved most of the most of the manufacturers is that of that larger stuff.
They'll they'll they'll hedge there there are there supply costs at the time, we placed the order so that they're not exposed to changes in the in the steel price. So a lot of that is is there.
There were still outstanding as you know, there's still obviously theres rebar concrete.
There's a number of other buildings that merit there.
Yeah, there's there's timber for.
For scaffolding and framing and forming.
There are some other there are some other bets yet that we're waiting to come in we're working through them now we would expect to have almost everything locked up here certainly.
By the time, we get into Q4 this year.
Okay Super Alright, everything else from he's been answered thanks, so much cash.
Thanks, Mike.
This concludes time allocated for questions on today's call I'll now hand, the call back over to Andy Gobi Nathan for any closing remarks.
Thank you very much Ariel and thanks to everyone for joining us. This morning on for your continued interest on Angola.
We look forward to having you join US again for a second quarter 2021 conference call in August Goodbye.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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Yes.
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