Q2 2021 Iamgold Corp Earnings Call
[music].
Thank you for standing by this is the conference operator, welcome today I am Gold's second quarter, 2021 operating and financial results conference call and webcast.
A reminder, all participants are in listen only mode and the conference is being recorded.
After the presentation, there will be an opportunity to ask questions.
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At this time I'd like to turn the conference over to <unk> and <unk>.
President of Investor Relations and corporate communications for Ion Gold. Please go ahead and sculpt and Nathan.
Bell and their lower anticipated output for the second half of the year.
This is partially offset by higher production and African.
We increased cash operating costs guidance, mainly to reflect the lower production cost pressures and stronger Canadian dollar and Euro vs. U S dollar.
All in and sustaining cost guidance also reflects increased sustaining capital expanding and the second half of the year.
Total capital expenditures for 2021 are expected to increase by about $35 million, primarily due to expected capital expenditure increases and kotte gold.
Capital expenditures are expected to be lower primarily due to an unexpected reduction and plan to work at S again and Roosevelt.
Okay. Gold's estimated 2021 capital expenditures are expected to increase by $75 million to $430 million.
So.
And I'll touch on a few items and this slide.
And a corporate and strategic level I am gold generated 1.9 million and Mindsight free cash flow during a period with and adjusted loss of $3.6 million or 1 cent per share.
And we have approximately $830 million in cash cash equivalents and short term investments and approximately $1.3 billion and total liquidity.
And during the quarter, we effectively rolled forward or 2019 and gold prepayment arrangement from 2022.2024.
From a growth perspective, and vindicated and our July update news release, and Kotte quarterly update we have adjusted capital at the coat take the old project with total project cost recast to 1.125 billion to $1.175 billion based on a number of factors, which while I will discuss.
And more detail shortly.
We continue to progress per schedule with the project achieving 27 per cent completion overall a quarter and.
And we've all we've also achieved over 2 million hours without a last time and accident coating and.
Holiday to accompany safety and metrics attract and better than targets and the first half of the year.
Continue to develop our districts with work done and a quarter to Derisk boto and delineate and your last 1.
I am goal is committed to achieving high standards, and environmental social and governance practices, which reflect our long held zero harm vision at.
At the end of June the company and May 2 nation, and Ontario, and Sumitomo metal mining company limited celebrated the signing of and I V. A related to the Kotte Gold project. This completes the I I V. A S and we were expecting to sign for for code too.
At the bottle Gold project and the exploration program and Senegal. The company is committed to invest and 3.4 million and local community development activities over the 2020th and 20 twenty-three period.
[noise] program developed with local steric stakeholders will focus first on responding to the development of priority infrastructure to meet the basic needs of the communities and initiatives aimed at the longterm empowerment of the community and.
Initially focusing on the implementation local employment and local procurement strategies.
We are proud to share that at the end of the quarter corporate nights released its best 50 list, which identifies the top 50 Canadian Corp, corporate citizens across all sectors evaluated based on up to 24, environmental social governance and economic key performance indicators.
And gold place forty-fourth across all corporate sectors, and 8 out of 122 companies and the mining sector.
And in April we were upgraded to a double a rating on the M. S. C. I E. S. G assessment, placing iamgold and the top 15% of precious metals companies.
For each of our sites.
We have continued our proactive management of COVID-19. However, we did have an increase and told it and 19 cases, and sore and EM and a corresponding increase and cases at rosebel with mandatory antigen testing now and place among other mitigating controls and <unk>.
Second quarter also saw and increase number of COVID-19 cases, and the Timmins area.
Although some cases were experienced by a small number of workers and kotte. During this wave heightened testing and additional constraints on site circulation were implemented which which.
Which strongly limited the number of cases experienced.
Subsequent to the end of the second quarter several contract contract workers and Bodo tested positive for COVID-19, and remain under observation before being released and isolation.
Testing and contact tracing has been undertaken and the situations being monitored at this time the company does not expect and material impact impact on project activities.
The previously implemented protocols across our operations and offices globally remain in place and there have been no other material impacts our operations construction and development projects, where exploration sites during the second quarter.
Our dart or days.
Days away restricted and transfer duty frequency right.
0.35, and the T R I or total recordable and his injuries frequency rate was 0.70, respectively per 200000 and that hours worked.
And the code take hold project had achieved over 2 million hours without lifetime.
We continue to implement several initiatives, including I am safe, the revamped health and safety management program too from from.
8 safe work environment.
I will now cover review the operating performance at each site and turn.
So S again and continue to perform strongly and a quarter with attributable gold production of 106000 ounces for the quarter and and all in sustaining toss of $1060 per ounce sold.
Consistent with the prior quarter's.
Production reflected above plan grades, partially offset by lower gold recovery.
We've completed the mill optimization project with and anticipated 10 per cent improvement.
Improvement and hard rock processing over the course of the year, and then annualized 10.8 million tons to 11.7 million times.
As noted last quarter, this improvement and capacity as important as as they can lose to greater proportional volumes of transition and hard rock versus softer rock and the coming years.
We have also renewed a 3 year collective bargaining agreement with are unionized essakane workforce in July.
Which will be in effect.
For 3 years until the end of June 20th 24.
Looking forward to the balance of the year.
We have resolved revised production guidance and S again upward to 390000 to 400000 ounces.
Like the production from higher grades achieved and the first half of the year and which are expected to normalize and the second half.
And they'll feed is expected to be supplemented by or stockpiles and and the third quarter to offset the impacts of seasonal range.
And we will have higher capital spend and the second half of the year for strategic pushback work as previously planned.
A number of events negatively impacted rosebel this quarter beyond the unusually heavy rain outfoot <unk> fell cause of a significant increase and COVID-19 cases, and the region and because I'm challenging industrialization up to the point to the resolution of the collective bargaining agreement and May which resulted in multiple.
Lockdowns illnesses and impacts on workforce availability that affected operations.
At the Sarah Mac, a pet management of the high clay content or exacerbated by the heavy rains negatively impacted or handling and Nell throughput.
As a result attributable production for the first quarter was 25000 ounces with all and sustaining costs and $2237 per ounce sold reflecting lower sales volumes higher cost of sales and higher sustained and capital.
Due to the collective impact of these challenges factors among others and continued on certainly related to the COVID-19 situations, we have reduced Rosa bells, 20th 21 guidance to 140000 and 260000 ounces.
And Sarah Macca construction of required infrastructure is continuing with the infrastructure pad and sedimentation dams scheduled for completion and the fourth quarter of 2021, and the west dumped rock drain dewatering walls and bypass road case to scheduled for completion towards the end of the year and and and into 2020.
You too.
We expect certain cost pressures to persist and the second half of the year and we are continuing to assess what if any ongoing impact our challenges may have on or sequencing and 20 twenty-two production.
In addition, we have been working on a new geological model to form the basis of and updated and mineral inventory estimate to be released before the end of 2021 face.
Based on currently available information and given the negative impact of certain factors, we expect a total mineral resource estimate will decrease.
The address the issues, we have encountered and the second quarter, we are implementing a number of initiatives.
To manage the increase and COVID-19 cases that rose about we have implemented mandatory and itchy and testing and can safely now accommodate the necessary workforce having commission. The 360 additional beds that we previously spoken to.
To improve production rates the operation is undertaking among other activities 50, watered geotechnical assessments optimization of the main design and it's.
Sequence and and pit road haulage improvements.
Activities are expected to reestablish and increase pushback access and the second half of 2021 provide additional productive faces rosebel and increase the overall mine grade over the remainder of the year, albeit still below reserve grades.
Conditions and the pets are being improved and the operation has met its updated plan for July.
To improve equipment availability, we have ongoing improvements to the maintenance program, while additional mobile equipment and scheduled to arrive by the end of the year.
This is expected to improve equipment availability loading and reduce reliance on higher cost hauling contractors.
To assess to address processing plant challenges Rosebel has been initiated and assets integrity program with multiple multiple improve and initiatives to be run over the next 18 months and.
And 2 bottleneck congested mill areas and.
And the ongoing adsorption Desorb from project is intended to improve the efficiency of the TARP and management circuit.
[noise] Westwood produce 8000 ounces and the second quarter of 2021 with the mail processing Grand Duke open pit or while mining and East zone underground restarted and June, albeit at a more tempered pace and in order to implement recommended and and have safety measures slower.
[noise] slower productivity and underground mining activities reflect the implementation of additional safety measures recommended by a group of external experts in conjunction with our own eternal my and geotechnical expert.
In addition, and also with a focus on safety, we will be implementing additional egress is and the plans zones of extractor.
Open pit mining and Grand Duke's sequence through a small pushback with access to higher grade zones was delayed by a shot slowdown of or haulage due to or stockpiling limitations of the milk.
All in sustaining cost for the quarter were $2412 per ounce sold primarily due to a higher cost of sales and higher sustaining capital expenditures when compared to the prior quarter.
And that's a sales were higher than prior periods, primarily due to lower sales volume and higher mining costs due to the start of underground mining.
We have reduced Westwood 2021, and production guidance to $35040.5000.
Primarily to reflect the additional safety measures noted as well as a slower than planned ramp up of personnel.
Element rehabilitation and extraction activities are expected to ramp up from the second half of 2021 and.
And we are assessing the impact of all of these factors on 20th 22 planning.
Work on a medium term 3 year operating plan is expected to be completed before year and as we continue to evaluate this asset to identify the optimal path forward from the company and for our site workforce.
And now provide you and update on a construction projected who take gold.
And kotte and as previously disclosed we identified certain estimate and project cost increase and it's from a project review, resulting in our 70 per cent share of updated project costs from July 1st 2020, net and Blue.
Lucy.
And now estimated at 1 minute.
1.125 billion to 1.17 and $5 million give.
And given expenditures to date are remaining 70 per cent share project costs.
From July 1st 2021 forward based on these assumptions is estimated at $930 million to $980 million and.
As we disclosed and based on and available information and work completed the day, which is ongoing the change and the project cost estimate was primarily driven by increased structural mechanical typing electrical and concrete estimates for the processing plant facility and increases and earthworks and concrete estimates representing collectively almost 50.
Per cent of the increase.
Additional increases were estimated and mine facilities clock costs and.
Looting.
With the inclusion of a portion of the camp costs previously.
That had been earmarked and operating cost is elise.
Resulting increases and indirect costs E P C M and owner cloths and.
Direct costs related to Covid, 19, and changes and the currency exchange rate, partially offset by the transfer of certain costs to the operating period.
The revised project costs range includes new contingency amounts for the remaining expenditures estimate.
These revisions result from increases and estimates, including quantities and manpower changes and scope the negative impact of COVID-19 on labor labor productivity and and due to inflation.
As of June 30th detailed engineering for Conte is advance to approximately 82% complete.
Hotez advanced to 27 per cent overall project completion.
Jack expanded $89.7 million and a quarter and has expanded $193 million since July 1st 2022.
Activities and the quarter included progression of procurement and expediting a major equipment contracts with logistics contract awarded.
[noise] progression of Earth's works with rope with roadwork water pumping Fisher relocation and the completion of the tailings management, cofferdam and grill and blast activities and the open pit.
Site blasting has been completed and and final level adjustments or ongoing.
The concrete batch plant with the commission and and he's and production and work.
With concrete pouring and form where it started with focused on the ball mill and vertical and male foundation work.
The permanent camp and is also progressed with about 60% of the plan permanent capacity commissioned at the end of July accommodating over 700 workers that site.
With a balance of the year. The work plan and will continue to focus on earthworks haul road construction and water management infrastructure around the pet site.
Prestripping work and the pit is expected to continue during the third quarter.
Permanent camp is expected to be fully commission as well and the third quarter.
Simple works currently underway at the plant sites are expected to continue with the placement of pre cast and cast and place concrete as well as the <unk> as well as preparation for the plant building shell erection.
Updated 2021, and the project costs are $430 million with about $301 million remaining and the second half of the year.
And we expect to have an initial mineral resource on the Gosselins zone and the fourth ward.
Yes, I slide summarizes our progress to date, we remain on track and I worked and steadily to meet our targets.
This slide shows a few pictures I highlighting the construction progress at Kotte.
I'll know switch over to a discussion on our development and exploration projects.
And development Prospected perspective, we can choose and Derisked, the bodle project infrastructure, including the year round access road and airstrip engineering for critical path climbed equipment and the implementation of local sustainability programs.
We are assessing he's activities and.
And the associated capital spending and timing.
Our brownfield exploration focus is on drilling to evaluate and assess resource potential targets and your Essex and rosebel with surface drilling and Westwood focused on evaluating the resource potential between the Grand Duke and the old oil and pet.
And underground drilling focused on supporting the restart and underground and knowing operations mining operations excuse me.
And with that I will pass the call over to Danielle.
Thank you Gordon and.
And good morning, everyone.
The following are some key highlights of our second quarter financial results.
We reported adjusted EBITDA of 85, Marianne from sales of 135000 and Erica and.
And an average realized gold price of $1800 per ounce.
For the first 6 months of the year I adjusted EBITDA with $185 million from sales that $288 and hour and said and an average realized called price. That's 17.88 per ounce.
Net loss was $4.5 million or 1 cent per share and adjust that net loss was $3.6 million or 1 friend per share.
We generate at $149 million and Mindsight free cash flow and a second quarter, reflecting the operating chatter and check on a corner I got and Gore and discussed.
And the first 6 months of the year Mindsight free cash flow with $91.4 million.
In terms of our financial position and we ended the quarter with cash cash equivalents and short term and Bachelor and stuff I have $839.
And we continue to maintain a largely undrawn credit facility, a $500 million maturing and January of 2025, resulting in total available liquidity of approximately 1.3 billion at you and 30.
We entered in and get further Golden sales prepayment arrangements this quarter.
And then and a weighted average cost at 4.45 per cent per annum and respect of 150000 and call down and says well.
With an average forward contract price of 17.53 per hour and Orange 50000 go downstairs, and a color range up 1700 to $220.100 per hour.
And 100000, and cool down and says.
These transactions has the effect of rolling all of that 2019 pre payment arrangement on 150000 ounces from 2022.2024.
Ask other completion of the construction of the Cold Tangled project.
The new arrangement will resolve and total cash prepayments Tibet company over the course of 2022 up $236 million on 150000 chemical down and test.
In respect of 150000 and hour and says that we presold and 2019 under that particular pre payment arrangement.
We will receive $30 million in cash payments over the course of 2022.
Assuming the gold price remains about $1500 per ounce.
And a quarter. We also continue to have her there and manage our Canadian dollar risk of exposure and entered into our target Ah cruel redemption for war and or a tough tough structure.
And $120 million Canadian assuming though U S D. A Canadian exchange rate is below that strike price and my daughter's 30.
And that's to risk manage that dollar 30 effects on which our assumptions are based this is described in further detail and R. N D N a.
Looking forward total per ounce cost guidance for 2021 has been increased mainly to reflect the lower toilet tribute about production guidance and cost pressures experienced and the first half of the year.
Certain have which are expected to continue and the second half and.
Of 2021, along with a stronger Canadian dollar and your.
All are and sustaining cost per hour and sold guidance as to expect it to be impacted by the factors that we discussed and also and reflects increased planned spending on 15 and cap at all or investments and the second half of 2021 at our operations.
Taking a closer look at our cash flow from the second quarter cash generated from earnings of $76.2 million was partially offset by income tax paid up almost $21 million.
Newsman and non-cash working capital items, and non current or stockpiles, whereas all that and and outflow of $17.6 million, reflecting the use of cash and receivable and other current assets at 6 and I am.
Primarily due to new claims for a V a T.
Outflows related to inventories and non current or stockpiles of 23 million.
Primary laid due to higher cost of production and I've always about.
And an increase and accounts payable and and create liabilities I've almost $12 million, primarily due to the timing of payment of suppliers.
Net cash is and and investing activities reflect that capital expenditures that are almost 158 your million dollars and capitalize borrowing cost of $9 million, partially offset by cash received from the second and final closing of our royalties portfolio sale of $10 million.
Net cash used and financing activities reflect interest paid on our outstanding senior notes.
Leases learns and dividends paid to minority interest.
Cause you know that earlier are pash position was $830 million at the end of the quarter and net cash was $292.3 million. What's total available liquidity to that company of 1.3 billion at June 30.
Assuming the continuation of prevailing commodity prices and exchange rates and operations performing in accordance with updated guidance mind brands. We believe we have adequate liquidity to implement near term operational plans and completed the development of the cold take all the project.
The company and May take additional measures to ensure.
Adequate liquidity and flexibility and support of our strategy taking into consideration market conditions ongoing operational and financial performance and project development progress.
I will now pass the call back over to guard technical and.
And that and yellow [noise].
Looking ahead.
And African day, no optimization project has already and demonstrated improve improvement and hard rock or processing capacity.
Which is expected to continue over the balance of the year and into the future and to stabilize and to provide additional crushing capacity for hard rock throughput.
Ah Rosebel, we are implementing a number of initiatives to address the headwinds encountered and a second order and we are progressing on the remaining saramaccan infrastructure and.
Westwood, we and restarted and mining and the East Zone at Dakota Construction project. We're at 27 per cent overall project completion and photo we continue to day risk and and exploration when you're targeting her maiden resource for gas line later this year.
Thank you to everyone for joining us today I will now pass the call back over to the operator Q&A.
Thank you well now begin the question and answer session.
To join the question queue, you May pass started and 1 on your telephone keypad.
Here at home and acknowledging your request.
If you're using a speaker phone please pick up your handset before pressing and and Keith Chili.
And which are you a question please press diet than the 1.
Sorry, sorry, and then too.
My first question is from Josh Wilson with a B C capital markets and please go ahead.
And good morning, just sort of focusing on the on the Kotte capital number and.
You know and I'm curious to understand you know what what specifically changed obviously I know, there's there's impacts from from inflation and from Covid, but obviously historical guidance had been a fixed price contracts and place a lot of hedge a so I'm just wondering what beyond those items.
Resulted in it and the overall change and capital.
Thanks, Josh.
Well and.
And as as we stated and our and our disclosure Ah We undertook a project review during the quarter.
You know and parallel obviously, what's advancing and detailed engineering and procurement work and through this process, we identify and additional costs and some of which were most significant and unexpected the biggest impacts are related to structural mechanical piping, electrical and and instrumentation and we.
And we.
We call that S. M P I and earthworks and concrete costs, which together accounts for roughly 50 per cent of the increase so they were estimate changes that and that <unk>.
Included increases and both quantities of material and manpower.
And additionally to those impacts, which where where as I said quite significant and as you commented we did see some impacts due to inflation, some minor changes and scope and and and growth projects.
We do see impacts of COVID-19 on productivity.
On productivity assessments as well as some direct COVID-19 and and costs and impacts of of of currency exchange and and Additionally, we we've done a probabilistic reassessment of the remaining work and applied a prudent contingents to those numbers. So there are a number of sources.
<unk> of change.
The the bigger changes were with the S. M P I and the and the concrete with some some changes on on on Earth works and others.
Okay, and what's the I can see their percentage or dollar amount of new capital number for this contingents you know.
We're not we're not gonna release that contingency number at this point in time and.
But we feel it's it's it's prudent and as really really looked at us applying and number that that allows us to complete the remaining project within the revised estimate.
Okay.
And then.
And for the actual construction activities what are the critical path items today to keep this second half 2023 scheduling.
I guess is really for us around completion of the process building. So we're working on foundations foundation match for the for the larger process and equipment, the ball mail and the Verde nose.
And that's ongoing we're also building the foundation materials, both cast and place and pre cast for the structure of the building itself.
Our our current timeline for for the post office building.
Enclosure is and Q1 of of next year, we're working very aggressively to see if we can improve upon that.
And other time line.
You know other critical path time line, we are working through the Prestripping on the pit, we expect to start on a mining and Q3 next year and.
And it's not fully on the critical path because there's there's certainly some ability to accelerated if we need to later on and.
However, it's it's it's 1 of our key activities right now and we're getting into tailings Dam Foundation working again tailings specifically is not on the critical path.
But it's it's obviously an activity that that we need to get out of the way most of the critical path goes through the process building.
Okay, and then for the operating costs targets for the I guess 800 dollar per and could you remind us what the what the forecast unit cost items or if you if you happen to have those numbers.
Actually right now Josh we we all were you working and re looking at what are operating cost model is looking like and all I <unk>, we we aren't ready to to release that right now there's obviously been some some short term inflation issues that were were.
We are reviewing that being said I you know, we are going back and zero, basing and and really really looking at.
What the operating cost impacts are.
You know when we made the announcement in July of last year and and through the technical session. We we did go into a fair bit of detail as to where we saw the operating costs sitting and and updated them from what had been used for the feasibility study again I don't have those numbers for you today, but we are we are.
Looking to to enhance that model and update that model and we will release. It when we were when we have that information available.
Okay, and I apologize for taking up so much airtime and your last 1 just salt on on Westwood. You know is there any sort of additional insight as to when you know when the company could receive approval for lighting and the and some of the other areas.
Hester Central area and then what.
If there's visibility on weight and you know a new line play it comes out or any protection Sir.
[noise] Yeah, we're so.
A couple of questions here, you know with respect to the West zone and the Central Zone. Currently we we are expected to be able to restart those early next year, although there, though and they will be staged.
We're doing some additional design work and and rehabilitation and and.
And and working through our work and that you saw and to understand you know the implications of all of that as well as looking at the design you know with a real focus on safety as we move into those new areas. The team is working very hard on a on a on a medium term mine plan that we plan to have.
That was before the end of the year.
Great. Thanks, so much.
Thanks, Josh.
And the next question is from Mike Parkin with National Bank. Please go ahead.
Great. Thanks, guys for taking my questions.
[noise] following up on some of them and stuff, but Josh and you mentioned and I know you're reviewing the Opex the June.
I'm sorry, the Yeah June 2020 on Coty had a sick at 7 and 71.
In terms of what you transferred over to cost you out of a sense of like what that will do on a per ounce basis.
This update and in terms of Capex with some flowing over to Opex.
Mm.
Thanks, Mike actually is yes, we look at the numbers there there were some transfers to to the operating period of of some of the capital mostly mostly some additional 9 times that that had been pushed into the operating period and some some equipment to go with it on the flip side.
Side. There were also some changes coming from the operating costs I back into the capital period, and I think we you know we mentioned and the disclosure that the.
Part of the camp costs had been assumed to be a third party lease which would have been born by the operating period and now that is being taken and the capital period and want a minor basis. There's also a similar sort of Ah assumption or change with respect to the assay lab smaller dollar number overall.
Now the balance between those those 2 changes is is as close to negligible. So.
With respect to the transfer is into the operating period, we're not we're not anticipating a big impact on on the all and sustaining toss from that transfer we are reviewing along with our operating costs were obviously reviewing or sustaining capital at the same time and and and when were you know when we're ready to come out with.
Operating costs will be able to speak and sustaining capital at the same time.
And that includes capitalized stripping, obviously and the impacts we see and operating costs will will bear directly on on the cost of of capitalized stripping.
And as well reviewing the construction.
Construction sequence for the tailings dam, and try and and working to understand what opportunities or or or changes might come out of that so it's sort of a complete package and and we're working through that right now.
Alright are you seeing any like I recognize it's pretty early days, but are you seeing.
Any signs that your your estimated cost on either tailings dam development or early strip work on the pit are showing signs that your life and mine estimates are too low.
Or is that too early to say [laughter]. It. It's it's pretty early to say you know I Ah. There are both gives and takes where she and you know we're we're really.
Focused on assessing what the impact of the inflationary pressures are on some of the input costs and at the same time as we're looking at our productivity assumptions for operating.
And other measures of that that nature. There are some there are actually some opportunities and some.
Some improvements where we expect to see out of that so there's a few moving parts I I you know I I I don't want to speculate as to what the the net impact will be but but it is something that is being assessed for sure.
Okay and.
And then.
With the the comment and around you and the project review and identifying additional costs.
Was any of that you realize you need more cement and.
And Ah or concrete work or steelwork.
[noise].
Yes, [laughter] effectively yes and.
And as we reassess the the the volumes and we and we we did to react and that we saw there was some significant changes from the original estimate on those volumes and as being applied to to to the to the cost estimate.
So, yes, we have seen and some increasing concrete and steel.
Versus what was used and the original estimate and that in fact is driving a lot of the of the overall increase significantly significantly increase.
And what drove that in terms of concrete volume says that as you got.
You know down and 2 bedrock for foundation work you just realized you had to go a bit deeper or is it a structural.
You know and structural stability.
Change that additional foundational materials required.
There's some of that not not not a significant amount of that there is also some scope change if you will within the building we wanted to put additional reinforcement in and around the the primary sorry that the the crusher I'll and the.
And and some of the structures around some of the larger pieces of equipment. So there was there was there was a little bit of skull change there.
But but a lot of it is is just going back to the original estimate and and how that estimate was done versus as we got into the details with more advanced engineering and going through it and.
And it's not it's not scope change as much as it is the the the estimate and needed to be redone, and and and and identified that there was certainly additional materials and and and labor required to install it.
Okay.
And then just the last question for me your partner Sumatomo reviewing.
And reviewing these changes what's.
And what's the path they're like is.
Is there anything where they can come back and and challenge. The scope changes are there and kinda tired and you have to kind of come.
Come to the table with their share of the capital.
Like I E. R. J V agreement with with Sumatomo is is I think I would describe it is relatively standard with respect to this like us and they are very keen on on the reconciliation exercise, we're going through and understanding it.
You know we have majority vote as the senior partner on the budget going forward for construction.
And and you know, we we do expect them to to to challenge the assumptions just as we expect our own owners keen on an ongoing basis to challenge the assumptions and look for for.
4 opportunities for savings Ah that being said there you know and as you can well imagine with with a project and moving forward you know.
The the the the senior partner the majority partner and.
And basically has the the the ability to to push forward the project.
Okay and.
And thanks, guys. That's it for me.
And next question is from and need to Sony, Let's see I B C World markets and let's go ahead.
Good morning, everyone and thanks for taking my call. So go ahead and can I, just ask and times near near term capital plan are there any changes to the the outlets and spending at the hotel at this stage would you consider define not or are planning to go ahead with that kind of standard and could you remind us how much that is and 2022.
So I I I I believe the guidance and and I will confirm it with you afterwards and eat them, but I believe the guidance for 2021 for Boto is $55 million of new spend there there was some overlap from the prior year.
And that being said we are obviously you know given the revised guidance and and given the cost increase it and and Kotte. We are looking at all of our expenditures around the the company and and and bodle among them. We've always we've always it.
Reiterated that you know and the the standard Boto is is on behalf of Derisking that project and and and providing the opportunity to execute it at the appropriate time, when we want it.
So understanding that and understanding scheduling our focus is on on coating on executing and completing that project and.
So we will be looking at boto amongst other amongst other capital requirements and we want to make sure that.
And we're we're solidly mm mm founded in order to to complete a co day.
And as per plan.
And I just had to put me and it's not going to need that cause like and the second question I guess and just regards to operating costs, Josh Josh <unk>, a little bit but is there any and you know I I think I asked us every time <unk> and it comes up and how confidence argument and mining.
<unk> and number and and efficacy and if these H P. G. R S and they come on <unk>, that's and relatively low and.
Mining cost number relative to you know to and some of the other and bigger operations and Canada, and what they've been able to and she said I just wanted to get your latest thinking on on where that could go on and then secondly, how that would impact and your assumptions on reserves can you remind me of redoing the the base case and.
Alright, and in case scenario and your current life of mine plan and I think I'll extended case has <unk> 93 grand per time material versus point and I ate at the average.
Yeah.
Extend and cases.
And it it has some additional low grade at the very and so you know it.
It may have that we are using extended case and our model. The impact is really just I'll take an extra year and a half of of of low grade or handling at the and of the mine life.
With respect to the cost estimate and as I said, we're reviewing it and and have been doing so on and ongoing basis from a productivity standpoint, we think we're we're comfortable and the numbers were using our conservative Boulevard and the mining and the million cloth with respect you.
And the input.
The consumables and so forth.
We do recognize that there has been some relatively sharp and inflation and somebody you unplug it.
The consumables numbers and and and we need to assess what the impact on cost will be for that.
With respect H P R and milling and.
Again, we are comfortable there there are several H b G. R installations around the world. So there's a fairly good database of understanding what the what the impacts of that are and and quite typically H P. G. R vs. Sag from a cost per tonne basis, especially for a brittle.
<unk> like we have a co pay is is is significantly superior from from and operating cost standpoint, both in terms of energy consumption, but also consumables like steel consumption and and that was part of our our our rationale for moving to H P. Jar for this project.
[noise] yeah versus.
Versus sagged and I'm like the the the or sort of told us where to go with it.
Okay, and then just in terms of the the tailings facility could you remind me what kind it is and I'm a female with central line, what was it modified central line and your and your and I can.
Yeah.
Yeah, it's modified Senator satellite and I mean.
I.
Believes the first couple of lifts are are downstream.
And once once the pond is up and established it moves to center line at the top but the first couple of lists or a typical downstream and stuff, okay and last probably a little bit ignored what gets released but could you just remind us uhm or are kind of give us some indication of the announce.
And what time did you see I rosebel unfolding and to 2022, and giving me issues that you've had and the first half of the here and went to camp and the labor and and productivity right. So how should we think about.
Carryover impacts into 2022 for Saramaccan right now.
So and you know where where we are currently assessing what 2022 is gonna look like I you know I.
And I don't want us to speculate on what those final numbers will be and you know at the end of it some of it will be determined by the success of our of our mediation and the mediation and plans that we're putting in place and activities that we're we're putting in place right now at Roosevelt.
So as we build those back and and as we get a little further on we will be having a very good look at and.
<unk> 2023, and the remainder of the life of mine for for Roosevelt looks like and and and understanding you know what that deposit and give us we have a new block modeled as well that we are are are focused on and and and incorporating it you know we do want to make sure that we have.
Appropriate conservative estimates as we move forward with with Roosevelt. So that's a bit of a stay tuned and and you know as we move forward here, we will be providing additional color on on what rosebel looks like.
Okay. Thank you for answering all my question.
And the data.
And the next question is from Tanya and she could connect with Scotiabank. Please go ahead.
Good morning, everyone and thank you for taking my.
Maybe just.
And.
And smaller items and Stefan.
Hotel and you're looking at yeah, all options and.
And sign you up to my value there is Sally yeah, 1 of the 1 of the options.
Look crying and we we we really do hike a photo and what it provides for us as well as as the the regional opportunities there that being said you know it's part of our role as stewards of this company to to assess all of our assets at any given point and.
And and you know the the the current situation really demands that we have a good hard look at and each and every asset and the portfolio and understand what the appropriate path forward is for us.
To achieve sort of the longer term strategy.
You know I I I I I gonna leave it at that but we are looking at at at and what's possible with boat or just like we're looking at and what's possible with Westwood and and and other assets.
Okay and.
Maybe then just moving on and I hope.
Quite a number of questions on co pay and we'll wait for you know as you get training, a cough and whenever you and your cough, but maybe well.
And you can share with us and right now and inflation wife came in here with US what you are seeing inflationary pressure and your cough and jurisdiction here operating from Canada Africa, and and South America like Labour consumables et cetera.
I I don't have all of the percentage is for you and yeah, but we are seeing increased fuel prices certainly some of that is offset by our hedging program.
That that that we've run for several years and and and managing our our our fuel costs and.
Primarily at the open pit operations, but also managing the input fuel costs for the Kotte construction project and.
So we are seeing some pressures there we are seeing some general supply chain pressures on on on cough, I think you and a few areas both on and you know on the expediting and transport obviously, the shipping industry out there and the <unk>.
World is is a little bit topsy turvy. So we have we have seen increases and that consumables like steel and it's everybody's well aware.
Price of steel is up right now we we we do have you know fixed term contracts on grinding media and liners and that sort of thing, but they're not longer term. So as we look at it we we would expect to see some pressures there major input.
Like explosives as well have been affected by the increase and and and fuel prices, but also by the by the transportation cost increases.
On the positive side, we were able to resolve and our our collective bargaining agreement and Rosebel and and so those you know those numbers are are Ah baked into our current estimates as we move forward Likewise with respect to African and.
Albeit it was a much shorter.
Period of time required to resolve it we were also able to to to sign off on the collective bargaining agreement and African during the year for for 3.3 year terms. So so those things are are gonna service well from that side and productivity contractor costs. There there there there are inflamed.
<unk> and inflationary pressures out there right now and I have like everything and I'm, having like a lot of our competitors evaluating whether they're permanent inflationary impacts or a temporal inflationary impact.
Like we saw with with with lumber here in Canada is is you know it's it's it's it's a challenging analysis just to say are these numbers up and are they gonna stick.
Or is it is it something and that's a bit of turmoil and will go away and the New York.
True.
And maybe just the labor costs, and Canada than that and God.
What are you, saying that yeah, yeah, no and labor costs, and Canada, I mean, we were looking at labor cost.
Inflationary statistics out of the government here as part of the work that we're doing right now and and and analyzing kotte and there has been inflation of labor costs above and beyond what is the general inflation in Canada.
And I believe.
Yeah, and the number I saw with some I believe and the order of and.
5 and a half 6 per cent something like that over the past year, and and and a labor costs industrial labor costs.
I I I I I.
I don't have the exact figure and at the tip and like the tip of my tongue, but I certainly happy to report that back to you.
Westwood.
Westwood is is under and existing C. B a so we're we're sort of manage their although there is a degree of of index and just C. P. I at at Kotte. You know, we don't have any kind of a specific labor agreement for the operation. We do have we do have some agreements and place with respect to the to the construction.
And programs.
And.
So it it you know it's it's 1 that's out there and as we moved to the operating period and we're gonna need to understand it I think.
You know 1 other things that we did Ah kotte specifically.
Specifically understanding the Canadian labor market was the move to automated haulage and automated drilling.
Mm mm really to help us and mitigate somewhat our exposure to Canadian labor rates.
Okay, and then maybe if I could just ask on on the other is about a lot of things happening.
And Ah from the pet to the mall you.
And you have changed and management at the mine site, you're still feeling with their vehicle minor and just a bit concerned about everything going there. So maybe if you can just frankly and from the pet to them now and all the management changing and their take on line that just what has happened.
[noise] Wow and some ways a bit of a perfect storm, if you will Tanya and at at Rosebel and you know as we reported I'll start with the weather cause it. It it was the 1 of the bigger smacks and they had.
So to the middle of the year.
Rosebel is experiencing a it's it's beyond the 1 and 20 year of and probably closer to 1 and 100 year event and answer and and the month of May and.
Nearly 3 quarters of a of a meter of rainfall was experienced at Roosevelt sucks. So that had a number of of of the impacts and.
And and.
You know to to delineate and in the lows about pets.
It it obviously and pass it our ability to to do water, the pets and and forced mining rosebel more into the into the expansion faces, which are which are lower grade and and restricts our access into the bottom of the pet overall rain and packs, obviously affected a R. R. R.
And just our ability to mind generally and the pushbacks it at Rosebel as well because the pushbacks tend to be and soft rock and and and access is difficult.
Meramec It had some very strong affects the the rainfall during the order again, mostly and Pitt you know and the main Hall road between Saramaccan Rosebel is built out of rock and and and as well drained and and generally performed very very well despite the high rainfall, but the access areas within the P.
And get itself, we're very challenge for the quarter Saramaccan is all saprolite. There is no hard rock there to help with road dirty.
And the team has been working on a number of technical solutions to include the Internet access, but it it was impacted and as a result part of what was done it and that's a market during the quarter was a move to a small satellite lower grade pet, which which was easier to access while while they worked on re establish.
And the access into the pet Ah Ah Ah Ah we are back hauling a lot of rock from from Rosebel into Saramaccan and as we move forward, we really do see we'll get that flooding and place.
And other important impact.
Given the nature of the process. It Sir America. There's there are typically sort of 2 or 3 re handles of the or before it hits the mail and that that was the original plan and the additional range coupled with the high play and nature of the world where mining right now.
Oh man that this that or was becoming saturated and and extremely sticky.
And had follow on effects at the mail. So so so that was the you know the primary no effect, we are working on carbon management system at the mail. We you know the 1 and we have and places been there for awhile and and needs some work and.
So we do have a program and place too.
To really bolster the capacity of the male to manage and sticky rock.
As well as hard rock, and and and and and to treat the carbon effectively and.
So we're expecting that that.
That capital project to be completed by the end of it it's not a big capital project, but we we are very much looking forward to the expected recovery impacts will see out of it.
Yeah, I guess the other.
Key and Pat obviously till the quarter was coded and Covid impacted us and a lot of definitely COVID-19 directly.
You know there was a big wave and Sir and am towards the second half of the third of the second quarter excuse me.
And that led to a number of countrywide shutdowns and it led to some unrest and some civil unrest and around the country some blockades and.
Which did challenge us so at at a macro level, we had those COVID-19 and tax locally within the mine. We also had COVID-19 and patch and yeah, just like everyone reads. The news around how COVID-19 impacts areas you get clusters within.
And Ah Mindsight, just as you get clusters within the general population and for Rosebel. Some of those clusters occurred and the maintenance department. So it's not like if you're down 10% every department is downtown per cent.
You can be downtown per cent and they have some departments much much more drastically affected by COVID-19 not only from direct infection, but also contract contact tracing and contact isolation and for Rosebel the maintenance departments, both and the main and mail were impacted and that's driven.
A backlog and and maintenance required and both of those areas and.
And that has been incorporated into the into the plan going forward and we as you pointed out we have sent to you and some reinforcements. We've made a few management changes and are are significantly reinforcing the maintenance team. So that we can we can pick up on that backlog both are in the mail.
And with with the with the mining group and and the last 1 and you know we are working through it we did but I have a <unk> ah protracted collective bargaining.
Negotiation with the Union at Rosebel and I was finally resolved.
And may but prior to that yeah. We we we did see some impact on productivity and we look at the remainder of the year and.
And throughout the organization.
We are implementing a a cost savings and productivity improvement exercise called I am all in.
What was it started at.
And can we're already starting to see some some some nice opportunities there going forward and and and very shortly will be implementing that it rosebel as well. So you know the confluence of of of of all of these factors.
And I really put us behind the 8 ball not only impacted the production Ah obviously very severely from Q too, but it also impacted our sequencing and and and our ability to react going forward enhance the reduction and and the and the and the forecast for the remainder of the year.
I'm happy with the team we have and place.
And and and we are working very aggressively Chi Chi to get Rosebel back on its feet as quickly as possible.
And maybe get some illegal line or is that and what we're doing that and just keep them away from the path.
With respect to the illegal miners, we've been working very closely with the government. You know we have signed some agreements with the government with respect to the security and.
We overall versus prior years are seeing a steady decrease and and and and the number of illegal miners that we have at site.
That being said there and.
You know they are challenging we are implementing some additional security measures to allow us to manage that situation better.
We're also obviously working very hard with the communities on our community development programs and and and other opportunities to provide alternatives for people who are are being impacted by you know devaluation and inflation and country and are are obviously looking to find a way.
<unk> to generate some some income from themselves so.
It's not only.
You know the the immediate reactionary and.
Work, we're doing to manage that issue, but it's also going back to the root cause behind that issue and and and working closely with the government and and with our communities to find ways mm mm to to reduce it to to to a manageable level and the long term.
You know.
And they they may be illegal, but they're not necessarily bad miners. They they nowhere high grade material is and and and.
And there you know, they're they're they're pretty creative and and their.
And their tactics, so we need to find a way to remove the incentive.
Okay, well good luck out members about.
Thank you very much down here.
This concludes the time allocated for questions on today's call and and the call back over to Indy Cup and neck and for clothing remark.
Thank you very much cable and thanks to everyone for joining us this morning and for your continued engagement with I'm Cold, we'll look forward to having to try and US again for our third quarter conference call in November.
Goodbye.
This concludes today's conference call. Thank you for participating and have a pleasant day.
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