Q1 2021 Iamgold Corp Earnings Call
[music].
Thank you for standing by this is the conference operator, welcome to the I am Gold's 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.
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At this time of I would like to turn the conference over to India, Gilby, Nathan Vice President Investor Relations and corporate communications for I Am Gold. Please go ahead.
Okay very material and welcome everyone to the Iron Gold first quarter 2021, operating and financial results Conference call.
Joining me today on the call are Gordon the other president and Chief Executive Officer.
Daniela Dimitrov Executive Vice President and Chief Financial Officer.
[noise] Mcdougall executive Vice President of <unk>.
Bruno Lemelin senior Vice President of operations and projects and Tim Bradburn, Senior Vice President General Counsel and corporate Secretary.
All of the marks 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 net what 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 of Gordon stomach.
Well, thank you Andy and good morning, everyone and thanks for joining us I hope everyone is he's happy and healthy and we just fun times I'd like to start by saying how pleased I am to introduce the Daniela dummy trial of as our new CFO of Daniela joined US at the end of March upon the retirement of a carry.
Vantage 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 for 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 of 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 the 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 of 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 sort of angle of the Doe project to bring much needed potable water to the communities around essakane in northeastern Burkina.
No.
The board has amended its renewal of diversity policies targeting the average tenure of the board to be 10 years or less than 30% or better of female representation as well. The policy has been adjusted to limit the board share in 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 is the 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 of safe restart of the underground operations for 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 and a four year Giants of Africa program aimed at encouraging the development of youth sports and Burkina Faso, Senegal and Mali.
We also joined a few of our Likeminded peer companies in sponsoring the 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 for $100000 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 triangle, the 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 160 in global mining companies reviewed and among 8000 global companies spanning various industries.
I'm gold was recognized for the 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 of our T. S. M Excellent Award.
The environmental category for innovate of recycling of plastic at Essakane.
Can recognized in 2010 that there was the 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 of plastic while supporting local businesses and creating jobs with over 65 tonnes recycled to date.
On behalf of the whole company I offer of congratulations for 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 of 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 of 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.
The site during their shifts cycle to enable mining capacity of the increased full site complement while respecting the COVID-19 protocols and accommodating the work force Rosebel added 150 beds to the camp for the first quarter with an additional 210 beds expected to be completed in the second quarter.
And the Coty and the Zip.
In addition to existing protocols of 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 for 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 have of gold contributed $250000 to UNICEF to support the International Act a kovacs emergency vaccination response effort in 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.
In addition capital expenditures, including both sustaining and expansion of expenditures at our operating sites as well as capital spent at our construction of development projects was just over $102 million in the quarter.
We've included a few Burger bar bar charts to.
To provide a comparison of results over time.
Attributable gold production was low compared to recent quarters due to the heavy rat range and COVID-19 restrictions impacting rosebel as well as westwood's reliance on open pit feed following the cessation of.
Suspension of underground activities.
Total cash costs of increased in the quarter due to the lower production base.
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 on 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 the 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 per cent of bonding capacity by the end of the quarter with Cerro marker of noncritical path of the 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.
The.
At the Kotte construction project, we have commenced the 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 the COVID-19 to coat day, a couple of weeks ago on 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 the Gaza lab, where we are targeting a maiden resource later this year.
Finally, we have ongoing resource delineation work at Nelligan, the ruined project of the failed property in Quebec of Diack in Mali, and and the Korea 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 angle of that such a transformation on stage of the company.
With my diverse background and experiences I am confident I will add value.
I look forward to working alongside the entire team to successfully drive the company to its next major milestone of 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 the average oil 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 non core 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 prepay arrangement for 50000 ounces at 15th at $17 53 per ounce and the 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 rolls one third of our obligation to physically deliver 150000 ounces under the 2019 prepay from 2022 to 2020 for ACA Cortez and 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 in the Canadian dollar and year round.
Capex as I expect that the trend up for the balance of 2021, reflecting increased activity on our operating sites.
The instruction and both of the 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 of $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 the a T refunds.
Partially offset by the timing of payments of approximately $13 million.
Net cash used in investing activities of 63 million reflects the $102 million capex spend partially offset by the cash received from the royalty sale.
These notes without an additional 10 on a $5 million was received from the sale in April of the 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 continuous improvement at our operations and the disciplined management of our growth pipeline supports the transformation of I M going 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 all of our safety performance metrics tracking better than target levels are.
The Dart and preferred rates were <unk> 46 on point 67, respectively for 200000 work hours works.
We continue to implement for the whole initiative, including I am sees the revamp of health and safety management program to promote a safe work environment.
I will now review operating performance at each site and third.
At the second attributable gold production was 102000 ounces for the quarter.
Production reflected the above 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 the 10% improvement in hard rock processing over the course of the year from annualized.
Annualized 10, 8 million tons to 11 point set of million tonnes.
This improvement kept the seat is important as this metro site moves to greater volumes of transition of hardware versus software or in the coming years.
All in sustaining costs for the quarter was $1061 per ounce sold reflecting lower sustaining capital.
Looking forward to the balance of the year of 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 push backs.
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.
At the sound like a bit we still experienced lower grades due to mining at the edges of the top of the deposit in some areas.
The coming at the bypass road part of it.
The infrastructure program was completed in the quarter.
All in sustaining costs of pools of.
14 number the $50, reflecting lower sales on the slower production.
With the ramp up of recommendation, which Gordon mentioned earlier, we expect to reach normal capacity in the second half of the year.
The generate increased recoveries, we have started the engineering and procurement process for the absorption of this option and recovery or ADR sort of comes from this improvement project.
Outside of America completion of the 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 of the collective labor agreement and these efforts continue.
The second quarter.
Westwood produced 70000 ounces in the first quarter 2021, with the mill processing.
Open pit score one of the underground remains on care and maintenance the.
Business continuing to the assessment is ongoing including geotechnical engineer anymore.
All in sustaining costs for the quarter or 1100 and $87 per ounce sold low.
Quarter over quarter due to lower sustaining capital level.
In April we announced the recall of underground employees for their work and training.
Decision to restart the underground operations is on the recon.
On the consolidation in the second quarter after which we would anticipate the restart at Westwood in the second half of 2021.
The restart with target nor is the Mississippi extraction zone, starting with the <unk> zone.
I've been saying the final study to assess the potential of the assets into the westwood's hub and spoke concept.
Work on sale includes further engineering and permitting.
Yeah.
I will now provide an update on our construction project co take hold.
This slide highlights the key metrics that we believe makes the Dakota gold project of tier one asset.
The of 18 year mine life under the extent of the case almost 500 pounds of.
500000 ounces per year of production in the first five years.
The second part of the total cash cost with all of them sustaining cost of $770 per ounce sold and Coty is located in mining friendly, Ontario with access to experience the labor in close proximity to infrastructure.
The first quarter was a busy one of coty.
Start with the few key metrics.
As of March 31st detail Engineering for Coty has advanced to approximately <unk> 83 per some complete.
We are at 18 for some project completion.
Procurement and expediting of major equipment contracts are progressing with the contract.
For the mining fleet being awarded in the first quarter.
Securities securing pricing of major items as part of early works of help mitigate pricing pressure.
However, we remain cautious given the recent copper and steel price movement.
The project includes $67 million in the quarter.
$143 million since July one 2020.
In the first quarter.
The team started the major earthworks head of the milestone schedule for.
Focused on the widening and overburden stripping we.
We come out of water management infrastructure for the tailings management facility and we set up temporary camps with the construction of permanent kind of underway.
From the health and safety perspective to date, we have not experienced any impact to schedule.
The COVID-19.
For the balance of the year, we will focus on earthworks construction hole road construction initial open pit the 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 count in the third quarter.
So if it works also underway at the plant site with concrete the activities expected to start in the second quarter as planned.
Yeah.
This slide summarizes the progress to date, we remain on track and we are working extensively to meet our time and cost targets.
We look forward to providing you with our quarterly updates as we progress of the project.
Now I'll turn the call over to Craig to discuss the development and exploration.
Thank you.
Thank you Bruno and good morning, everyone.
Before I begin. Please note that the results that you talked about today have been previously disclosed in accordance with the securities regulation.
On the off line qualified persons within the company reported.
In the quarter of our brownfield exploration work included at Essakane and airport drilling in the sampling program to help screen alerts and covered area, which we referred to as Tim for <unk>.
Potential targets located northwest of the <unk> operation and within the trucking Justin.
Results will be used the guy the planned follow up drilling program expected to commence in the second half of the year.
At Rosebel the team completed approximately 13300 meters of Diamond and RC drilling.
The focus on resource development and conversion that are known deposits.
As well as part of being selected high priority targets within our exploration concessions.
At Westwood surface drilling focused on upgrading of inferred resources of the Grand Duke satellite pit with the underground drilling focused on supporting the percentage of potential restart of underground mining operation.
Greenfield exploration in the quarter included the reporting of the assay results from the Gulf Wind zone at the Cote Gold project from an ongoing delineation drilling program, which will support on an initial resource estimate expected in the second half of the year.
The commencement of of further round of drilling.
The Lac Gamble zone at the Rouyn 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 of story of zone.
And we initiated infill drilling of the day after the deposit in Mali, which is located south of the Boto Gold development project.
Exploration spend in the quarter was $10 4 million.
The split roughly evenly between the brownfield and Greenfield programs.
On this slide you can see if you ask the results reported during the quarter of the Gosling zone, where drilling continues to intersect wide zones of mineralization with locally high grade.
Over the balance of the year of the Greenfield exploration budget for the Coke The district is $2 8 million.
Reflecting approximately 13% to 16000 meters of planned Diamond drilling which include 12 to 14000 meters of delineation drilling on the gods of the zone itself. As noted earlier, we are targeting amazing resorts regards on 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.
Geotechnical 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 from broker progressed 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 and.
And bridge work on the slide.
The Boto gold project anchors for the bamboo history, where exploration efforts have led to several additional discoveries building.
Building on the resource potential of this part of the Senegal, Mali shear zone.
Infill drilling has commenced of the day after the positive <unk> Maui with two diamond in one or the rig currently operating.
Of the program is designed to upgrade additional inferred ounces, while it created in Guinea of Diamond drill rig is on site and we will commence on the initial delineation drilling program to support the 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 the bit of a recap I will finish with our project pipeline.
I have said many times previously competition for an access to quality exploration projects and the acceptable entry costs remain challenging for the industry.
And especially in the face of the current environment of a bullish for gold prices.
But I am told we believe that of balance project pipeline strategically event is the fundamental asset for the future growth and viability of any mining company as.
As such the ion 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 the 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 of cash generation for my own golds operating mines on construction progress at Coty on 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 Neil.
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 tone 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 you are seeing on copper and steel and 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.
Ah 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 it.
We don't see of significant vulnerability for this year or for the rest of the project.
However, you know on steel prices have moved up concrete prices.
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 per cent of the total spend is already locked up and firm contracts.
Some of those are our unit price contracts, so the ore or cost plus contracts. So there is still some.
Exposure to inflation, but not not huge.
Yeah.
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.
On that.
The there there's nothing coming at us that.
Provides too much concern for us in terms of cost other than than some of them. Some minor aspects of of what we're looking at I guess the other thing I would add is you know 85% of the total costs of Cold day are Canadian dollar based we have done quite a bit of hedging and we do have.
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.
The 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 expectation is that it is kind of 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 us Ken, but maybe how rosebel is proceeding any potential hurdles.
Good luck Rosebel is very near or at the end of the process are we.
We have of presentation into the board. They are they are looking for ratification in the in the in the in.
In the coming couple of weeks here.
So we do hope that the Rosebel situation.
As a it will clear up here very very shortly on Essakane.
Is just entering into their process.
I think they've been it's two or three years since the 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 in and start the discussions to make sure.
That we get alignment on on what the issues to be talked about are.
But I'm I'm I'm, certainly, hoping that the 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.
My first question comes on that could you just give me an idea of when you're measuring the 18 per cent completion what basis are you using the dollars of 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.
Sorry on fabrication I missed 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 the.
<unk> 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 they get negotiated and signed off engineering is based on hours. So each of each of the components has a is it a.
The 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 the advancement is is is it.
It can be extrapolated to final costs.
The other.
I guess, what's a little different with co pay compared to some other projects is the fact that.
Because engineering and procurement was so far advanced compared to traditional project execution models.
We are right now seeing a lot of a lot.
Perhaps of additional value in that 18% metric because of that advancement and construction of what's already in the in the.
The engineering and procurement.
Versus the traditional project, which Mike.
Mike follow a little more closely with with the the spin timeline.
Thanks, Phil.
Just 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.
On pulling ore and putting it through the mill in Q2.
Hmm.
Well with respect to Westwood, what we said, we wanted to get underground and Theres some rehabilitation theres some training.
There's some new development protocols that we want to put in place.
Right now where we're.
We're working internally to reach a decision on when to start pulling ore.
And our 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 shouldnt be too too long before we get there.
Assuming assuming we we we reached that go ahead decision internally.
The Grand Duke there would be similar grades for next for Q2.
Bruno could you help with that.
Yes, the answer is going to be similar around the one gram per tonne.
Also what is the Antares Singh with <unk> is that we have increased the amount of reserve, we have sort of more than 50000 ounces.
The additional.
Then when we first started the project.
So the contract is going to be helping Westwood.
To complement its products from seed over the next two years.
Okay.
And then my last question and I'll leave it for other stuff is at Rosebel, So a little a little bit more detail on that line.
<unk> had some rain in Q1 I'm looking at your.
My one of my weather maps and tuck in and Q2 as your traditional rainy season. So are we can we expect similar types of.
To the softness in the in the throughput levels and then the grades and I noticed the NAU did well it seems like there was some stockpiles that you were pulling them from.
And so could you give us an idea of what the stockpile level is that we can get an idea of you know.
It keeps you will shake out.
Brito.
Yeah.
So and you thought youre right who has been.
His experience unusual amount of seasonal low range, usually it starts in Q2, but you have a smaller season in Q1.
This year, we had the twice the volume.
As in the same periods in 2020, so twice as much of which we usually get.
So whatsapp.
What happened is we were limited in terms of rock all the new capacity. So we were impacted also.
In terms of production.
Also the material was.
The other greater content in <unk>.
So we had to rely on the low grade.
Material from the from the the stockpiles as you mentioned.
And the DS.
These stockpiles are at the.
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 net.
As we are going to go through each to the.
The range raining season.
Season is going to subside.
So we will have additional rooms.
Two of the mining.
Mining to increase of the mining capacity right now with the COVID-19 the restriction.
We have to limit the number of people on site to favor of social distancing so with the additional of room.
And the seasonal range that will subside in H two.
We forecast that we target.
The increase in production and also sort of a better grade mainly in Q4, which side of that coming strong as we will be at the.
The other areas of the deposit 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.
Yes.
The Essakane I mean that was very high costs in Q1, maybe Bruno can you talk us through what you're expecting cost of <unk> as we go through the rest of the year.
Yeah.
Certainly.
I'm sorry Tanya.
Yeah, we had him some.
Costs increased due to the IR of consumption of region.
Due to the complexity of the material that we have in free in the phase III the.
The first reason is wonderful material line I.
I agree higher than what we forecasted although that the critical for you on some of that.
Complex ore.
Wires of more consumption of region. We also we were impacted by higher energy costs and also order of loyalties due to the higher realized gold price.
As you know.
For the.
For the the.
The remaining of the 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.
That's going to be since they are done.
That's going to be repeated in the coming quarters. So we expect well.
Our cost profile the twill.
The.
Reverted back to tour our target the planning.
Thus far with ICANN.
Okay. So just on Essakane on its own is it safe to assume then because of the.
All of these maintenance and so forth that we would see a bit of relief in the cost structure for essakane going into the rest of the yet.
Yeah.
Yes look.
Again, its going to depends on many parameters as you know opinion 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 the <unk>.
Of the grade material in phase III.
Also of some impact on the region. So we expect two of them in a very good strong production for.
For if I came on in 2021 and the.
Overall the.
Good.
Good performance in terms of of cost but.
Again that depends on the on the variance of those inputs of meters.
Okay.
Maybe just on overall as the company you know what.
I'm getting from from.
The presentation and maybe correct me if I'm wrong.
Of that Q2 overall it appears as though it's going to be similar to Q1 on from.
From the production standpoint, and then better second half of the year with a stronger Q4 because of some of Manhattan.
Is that a correct way of looking at it.
I think that's a pretty safe the way of looking at it Tanya.
We will see some rebound in Q2 from.
From a couple of the of things, but overall I think your assessment of its pretty its 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.
And labor is the big portion of the cost structure should we expect from the labor agreements that your costs should.
Should go higher in the next few years should we be factoring in and maybe you can share with us fluctuate on wage inflation that you're seeing looks like is it free banter.
Uh huh.
The numbers aren't bad there, they're more or less certainly in the U S dollars. They may even be a little bit high.
I really can't share of 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 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 the construction labor costs for for co pay so it's an area, we're keeping an eye on them.
You know the there seems to be a little bit of of of COVID-19 premium.
And some of the estimates we're seeing so we're working hard to bring those down but the remainder of the cost but as we can.
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 labor side for sure.
Okay, well, that's good to hear and then just lastly I.
I looked at on the slide of 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 of.
Our expectation is later this year will certainly be putting out of 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.
From the underground restart on some of the some of the the the new development of.
Design, we're putting in place we want to we want to see what that looks like we're also looking at some some.
The more higher use of remote.
Equipment.
But later this year our expectation is towards the end of the year, we'll be able to put out of a multi it.
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 that all of that someone else ask questions. Thank you Tanya.
Once again, if you have a question. Please press Star then one our next question 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.
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 this the civils are coming along as expected, we've we have encountered the less overburden and more rock.
In a few areas.
<unk>, which has sort of changed the mix of 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 the 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 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 the the.
The.
The project is more or less following the of the recipe that we laid out for ourselves.
And we're pretty.
Pretty excited about how it's how it's moving forward.
Good good so youre not finding situations, where the the mill footings of 30 feet of the extra loon shift or are you and the rock is.
It's actually the other way around the the.
Overburden occupancy of allo or.
The overburden with shallower than most places are than.
Than we had anticipated.
And then can you just touch on your Bruno will touch on this lease cost of $120 million versus $80 million give us some color on that.
So when we.
Really set the project R.
Our.
Our anticipation on what was available for lease 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 of other pieces of equipment.
And obviously.
From a payback point of view given how this project develops.
Much better if we can lease things and have those costs occur.
Commensurate with when.
On that when that work is happening rather than having all of the cost upfront. So.
We are looking at at leasing it gives us we have some sort of 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 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 the costs are.
Our.
I think there 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 dead on plan.
That's great good to hear.
The 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 Bert I'll answer that.
Yes, Hello zone.
So right now because we are at the very beginning of the sort of this project. We're mining of the very edge of the deposit on on top of the deposits in some areas.
And the loans, we're going to get more of the heart of the deposit you'll see the grade to improve nicely.
And getting toward the average grade that we are in order of block model.
So right now we see.
The the agreed to be lower than 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 rosebel to increase its production even for for the for the second half of the year of mainly also in Q4. So it's on average for the block models from some areas you will hit the <unk> eight gram per tonne. The other area that you will hit two gram per ton that's the.
Just the mine sequencing that we are right now to get access to the richest part of the.
Which is part of the zone of the of 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 where we're seeing positive reconciliation versus the the block model. So it really is great. It is a sequencing issue isn't that the.
The highest of elevation wise the areas of Cerro Mac of that we've we're accessing first as we mine top down are more towards the south east the lower grade areas, but as we mine down more to the northwest and and extend the the the benches to the northwest you are going to see.
Those higher grades coming at us.
Yeah.
So that's encouraging to hear that the you've got we know it's only a snapshot of the very beginning of at least the starting off positive the reconciliation.
The grid on maybe you could just touch on security at Essakane.
Yeah, So securities for two on no within that impacted our production for a for us at the mine.
We are good the regionals, who they are.
Some of them activities done by.
Some of the stakeholders from country to <unk> the market forces.
The are always a day.
I think the focus in the region, the 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 for us I guess I kind of.
Perfect. Okay. Thank you guys.
Our next question comes from Mike Parkin of National Bank. Please go ahead.
Hey, guys. Thanks for taking my question.
Just with the co pay can you give us an idea of 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 the the inflationary pressures, 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 for for the some of the other structures they havent been locked in yet.
Okay.
Then I guess same for like steel going into all of the heavy equipment like mills and so yeah. Those are under that fabrication of already.
Yeah.
The the stuff for the mills on the and the mining equipment the steel.
Most of that has been resolved most of the most of the manufacturers of that of that larger stuff they'll they'll they'll hedge there there are the supply costs at the time, we placed the order so that they're not exposed to the changes in the in the in the steel price. So a lot of that is is there were.
We're still outstanding as you know Theres still obviously theres rebar concrete.
There's a number of other buildings of merit there.
Yeah, there's there's timber for.
For scaffolding and framing and forming its other there there are some other there are some other bits 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.
The house for me has been the.
The answer thanks, very much guys. Thanks.
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 in Angola.
We look forward to having the kind of local kind of for our 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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