Q2 2021 Iamgold Corp Earnings Call

Equipment and priority infrastructure to meet the basic needs of the communities and initiatives aimed at the long term empowerment of the communities by initially focusing on the implementation local employment and local procurement strategies.

We are proud to share that at the end of the quarter Corporate Knights released its best 50 list, which identifies the top 50 Canadian corporate citizens across all sectors evaluated based on up to 24, environmental social governance, and economic key performance indicators and gold placed 40 force 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 MSCI ESG assessment.

And I am gold 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 COVID-19 cases, and Suriname and a corresponding increase in cases at Rosebel with mandatory antigen testing now in place among other mitigating controls.

And second quarter also saw an increased number of COVID-19 cases, and the Timmins area.

Although some cases were experienced by a small number of workers at Cotai. During this wave heightened testing and additional constraints on site circulation were implemented which drive which strongly limited the number of cases experienced.

Subsequent to the end of the second quarter several contract contract workers at Boto tested positive for COVID-19, and remain under observation before being released and isolation.

Testing and contact tracing and its been undertaken and the situations being monitored at this time the company does not expect a 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 or exploration sites during the second quarter.

Our dart.

Days away restricted and transfer duty frequency rate.

Was 0.35, and the tier I or total recordable injury frequency rate was 0.70, respectively per 200000 man hours worked.

And the Po take hold projects had achieved over 2 million hours without lost time.

We continue to implement several initiatives, including I am safe.

Our revamped health and safety management program.

And to promote a safe work environment.

I will now cover review the operating performance at each site and turn.

So essakane and continue to perform strongly and the quarter with attributable gold production of 106000 ounces for the quarter at an all in sustaining costs.

$1060 per ounce sold.

System with the prior quarter's.

Production reflected above planned grades partially offset by lower gold recovery.

We have completed the mill optimization project with an anticipated 10%.

Improvement and hard rock processing over the course of the year from an annualized $10.8 million tons to $11.7 million tonnes.

As noted last quarter this improvement and capacity is important as essakane moves to greater proportional volume transition and hard rock versus softer rock and the coming years.

We have also renewed a 3 year collective bargaining agreement with our unionized Essakane work force in July.

Which will be and effect.

For 3 years until the end of June 2024.

Looking forward to the balance of the year.

We have revised production guidance at Essakane upward to 390000 to 400000 ounces.

Flex the production from higher grades achieved and the first half of the year and.

And which are expected to normalize and the second half day.

Mill feed is expected to be supplemented by ore stockpiles 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 from strategic pushback work as previously planned.

A number of events negatively impacted rosebel this quarter beyond the unusually heavy rain output fell because of a significant increase and COVID-19 cases, and the region and because of challenging industrial relations up to the point to the resolution of the collective bargaining agreement in May which resulted in multiple.

Lockdowns illnesses and impacts on workforce availability that affected operations.

At the serum ACA pet management of the high clay content ore exacerbated by the heavy range negatively impacted or handling and mill throughput.

As a result of true.

Gold production for the first quarter was 25000 ounces with all in sustaining costs from $2237 per ounce sold reflecting lower sales volumes higher cost of sales and higher sustaining capital.

Due to the collective impact of these challenging factors among others and continued uncertainty related to the COVID-19 situation, we have reduced rosebel 2020, 1 guidance to 140000 to 160000 ounces.

And Sir America 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 phase 2 scheduled for completion towards the end of the year and he and into 2020.2.

And it.

We expect certain cost pressures to persist and the second half of the year and we are continuing to assess what if any ongoing impacts our challenges may have on or sequencing and 2022 production.

In addition, we have been working on a new geological model.

And to form the basis of an updated mineral inventory estimate to be released before the end of 2020.1.

Based on currently available information and given the negative impact of certain factors. We expect the total mineral resource estimate will decrease.

To address the issues, we have encountered and the second quarter, we are implementing a number of initiatives.

And that is the increase from COVID-19 cases at Rosebel, we have implemented mandatory and as gene testing.

And safely now accommodate the necessary work force, having commission day 360 additional beds that we'd previously spoken to.

To improve production rates the operations is undertaking among other activities 50, watering geotechnical assessments optimization of the mine design.

And sequence and in pit road haulage improvements.

Activity are expected to reestablish and increased pushback access and the second half of 2021 provide additional productive faces at Rosebel and increase the overall mine grade over the remainder of the year, albeit still below reserve grade.

Conditions and the pits are being improved and the operation has met its updated plan for July.

To improve equipment availability and we have ongoing improvements to the maintenance program.

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.

And to assess to address processing plant challenges Rosebel has initiated and asset integrity program with multiple multiple improvement initiatives to be run over the next 18 months and to bottleneck congested mill areas.

And the ongoing adsorption desorption project is intended to improve the efficiency of the carbon management circuit.

Westwood produced 8000 ounces from the second quarter of 2021 with the mill processing Grand Duke open pit ore, while mining and eastern and underground restarted and June, albeit at a more tempered pace in order to implement recommended and enhanced safety measures slower.

It's lower productivity and underground mining activities reflect the implementation of additional safety measures recommended by a group of external experts in conjunction with our own internal.

And my and.

Geotechnical experts in.

In addition, and also with a focus on safety, we will be implementing.

Additional egress and the plans owns a extractor.

And pit mining at Grand Duke sequence through a small pushback with access to higher grade zones was delayed by a sharp slowdown of ore haulage due to ore stockpiling limitations with the mill.

All in sustaining costs for the quarter were $2412 per ounce sold primarily due to higher cost of sales and higher sustaining capital expenditures when compared to the prior quarter.

Cost of 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 35000 to 45000 ounces primarily to reflect the additional safety measures noted as well as a slower than planned ramp up of personnel.

Development rehabilitation and extraction activities are expected to ramp up and the second half of 2020, 1 and we are assessing the impact of all of these factors on 2020.2 planning.

Work on our medium term 3 year operating plan is expected to be completed before year end as we continue to evaluate this asset to identify the optimal path forward for the company and for our site work force.

I'll now provide you an update on our construction projected who take gold.

And <unk> and as previously disclosed we identified certain estimated project cost increases from our project review, resulting in our 70% share of updated project costs from July 1.2020 net of leasing.

We now estimated at 1 net.

112, 5 billion to 1.1 and $75 million.

Given expenditures to date are remaining 70% share of project costs.

From July for 2020.1 forward based on these assumptions is estimated at $930 million to $980 million.

As we disclosed and based on available information and work completed to date, which is ongoing the change and the project cost estimate was primarily driven by increased structural mechanical piping electrical and concrete estimates for the processing plant facility and increases and earthworks and concrete estimates representing collectively almost 50.

Percentage of the increase.

Additional increases were estimated and mine facilities clock costs.

Including the.

Hum.

Yeah.

With the inclusion of a portion of the camp costs previously and.

That had been earmarked in operating costs as a lease.

Resulting increases and indirect costs E P C M and owner Clos and.

Direct costs related to Covid, 19, and changes and the currency exchange rates, partially offset by the transfer of certain costs to the operating period.

The revised project cost range includes new contingency amounts for the remaining expenditures asking it.

These revisions result from increases and estimates, including quantities and manpower changes in scope and.

Negative impact of Covid, 19 on labor labor productivity and and due to inflation.

As of June 30th detailed engineering for Cotai has advanced to approximately 82% complete.

Hotez advanced to 27% overall project completion.

<unk> expanded $89.7 million and the quarter and has expanded $193 million since July 1.2020.

Activities and the quarter included progression and procurement and expediting of major equipment contracts with logistics contract awarded.

Progression of Earth works with road with Roadwork water pumping Fisher relocation and the completion of the tailings management Coffer dam and drill and blast activities and the open pit.

And that site last thing has been completed and the final level adjustments are ongoing.

The concrete batch plant was commissioned and and is in production with.

And with concrete pouring and form work started with focused on the ball mill and vertical.

Foundation work.

The permanent camp has also progressed with about 60% of the planned permanent capacity commissioned at the end of July accommodating over 700 workers at site.

For the balance of the year the work plan and we'll continue to focus on earthworks haul road construction and water management infrastructure around the pit site.

Pre stripping work and the pit is expected to continue during the third quarter from.

Net camp is expected to be fully commissioned as well and the third quarter simple.

Civil works currently underway at the plant site are expected to continue with the placement of precast and cast and place concrete as well.

Well as the prep as well as preparation for the plant building shell erection.

Updated 2021 and project costs are $430 million with about $301 million remaining and the second half of the year and.

And we expect to have and initial mineral resource on the Gosselin zone and the fourth quarter.

This slide summarizes our progress to date, we remain on track and are working steadily to meet our targets.

This slide shows a few pictures.

I highlighting the construction progress.

At Coty.

I'll now switch over to a discussion on our development and exploration projects.

Well and development prospective perspective, we continue to Derisk, the boto project infrastructure, including a year round access road and airstrip engineering for critical path plant equipment and the implementation of local sustainability programs.

We are assessing these activities and.

And the associated capital spending and timing.

Our brownfield exploration focus is on drilling to evaluate and assess resource potential targets near our essakane and rosebel with surface drilling at Westwood focused on evaluating the resource potential between the Grand Duke and the old way on pet.

And underground drilling focused on supporting the restart of underground milling operations mining operations excuse me.

And with that I will pass the call over to Daniela.

Thank you Gordon.

And good morning, everyone.

The following are some key highlights of our second quarter financial results.

We reported adjusted EBITDA of 85 million from sales of 135000 ounces at.

And at an average realized gold price of $1800 per ounce per.

For the first 6 months of the year adjusted EBITDA was $185 million per month.

Sales up 288000 ounces at an average realized gold price of $17.88 per ounce.

And net loss was $4.5 million or 1 cents per share and adjusted net loss was $3.6 million or 1.7 per share.

We generated $1.9 million and mine site free cash flow in the second quarter, reflecting the operating challenges and a quarter that and cord discussed.

For the first 6 months of the year mine site free cash flow was $91.4 million.

In terms of our financial position, we ended the quarter with cash cash equivalents and short term investments of.

$830 million.

We continue to maintain a largely undrawn credit facility of $500 million maturing in January of 2020.5.

All day and total available liquidity of approximately $1.3 billion at June 30.

We entered into further Goldman sales prepayment arrangements and this quarter.

And then at a weighted average cost of $4.4 5 per cent per annum and respect of 150000 gold ounces.

With an average forward contract price of 17, and 53 per ounce and 50000 gold ounces and a caller range up 17 hungry out to 'twenty $100 per ounce and Ah ha.

And with 1000 gold ounces.

These transactions have the effect of rolling all of that 2019 pre payment arrangement on a 150000 ounces.

And 2020, 2.2020 for Oscar that completion of the construction of the cortical project.

The new arrangement will result in total cash prepayments to the company over the course of 2022 up $236 million and 150000 gold ounces.

In respect of the 150000 ounces that we pre sold in 2019 under that particular prepayment and arrangement.

We will receive $30 million and cash payments over the course of 2020.2.

Assuming the gold price remains above $500 per average.

And our quarter. We also continued to further manage our Canadian dollar risk exposure.

And entered into our target accrual redemption forward or a tough <unk>.

Sure.

On $120 million Canadian.

Assuming the USD.

Canadian exchange rate is below the strike price of $1.30.

And that's to risk manage the dollar 30 FX.

And which our assumptions are based and this is described in further detail and our N DNA.

Looking forward total per ounce cost guidance for 2020..1 has been increased mainly to reflect the lower toward electric and good about production guidance.

And cost pressures experienced in the first half of the year.

Certain of which are expected to continue in the second half of 2021, along with a stronger Canadian dollar and euro.

All in sustaining cost per ounce sold guidance is expected to be impacted by the factors that we've discussed and.

And also it reflects increased planned spending on sustaining capital and investments in the second half of 2021 at our operations.

Taking a closer look at our cash flows and the second quarter cash.

Cash generated from earnings of $76 million was partially offset by income tax paid up almost $21 million.

Newsman and noncash working capital items, and non current ore stockpiles, and whereas all of that and an outflow of $17.6 million, reflecting the use of cash and receivables and other current assets of $6 million.

Primarily due to new claims for VA T.

Outflows related to inventories and non current ore stockpiles up 23 million.

Primarily due to higher cost of production at Rosebel.

And an increase in accounts payable and accrued liabilities of almost $12 million, primarily due to the timing of payment of suppliers.

Net cash used in investing activities reflect net capital expenditures of almost $152 million and capitalized borrowing cost of $9 million, partially offset by cash received from the second and final closing of our royalty portfolio sales of $10 million.

Net cash used in financing activities reflects interest paid on our outstanding senior notes.

Leases loans and dividends paid to minority interest.

As noted earlier, our patch position was $830 million at the end of the quarter and net cash was $292.3 million with total available liquidity to the company of $1.3 billion at June 30.

Assuming the continuation of prevailing commodity prices and exchange rates and operations performing in accordance with the updated guidance Mike brands. We believe we have adequate liquidity to implement and near term operational plans and completed the development of the Cotai Gold project.

The company 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 God to conclude.

And Daniela.

Looking ahead and.

And at Essakane. The mill optimization project has already demonstrated improved 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.

At Rosebel, we are implementing a number of initiatives to address the headwinds encountered and the second quarter and we are progressing on the remaining saramaccan infrastructure at.

Westwood, we have restarted mining and the East Zone at Dakota Construction project, we were at 27% overall project completion and <unk>.

Photo we continued to de risk and and exploration we are targeting a maiden resource for Gospel and later this year.

Thank you and everyone for joining us today I will now pass the call back over to the operator for Q&A.

Thank you well now begin the question and answer session.

And joining me question queue, you May Press Star then 1 on your telephone keypad.

Here at home acknowledging your request.

Youre using a speakerphone, please pick up your handset before pressing and Keith.

Withdraw your question. Please press Star then 1.

Sorry guidance Tim.

Our first question is from Josh Wilson with RBC capital markets. Please go ahead.

Hey, good morning.

Just sort of focusing on the on the <unk> capital number.

And I'm curious to understand what what specifically changed.

Leslie I know theres and impacts from from installation and from Covid.

But obviously historical guidance had been.

Fixed price contracts and place a lot of hedging and so I'm just wondering what beyond those items.

As noted in the and the overall change and capital.

Okay.

Thanks, Josh.

Well.

And as we stated in our and our disclosure we undertook a project review during the quarter.

And in parallel obviously, what's advancing detailed engineering and procurement work and through this process. We have identified additional cost some of which were.

Most significant and unexpected the biggest impacts are related to.

Structural mechanical piping electrical and instrumentation.

We call that F N P I.

And earthworks and concrete costs, which together account for roughly <unk> 50 per cent of the increase so they were estimate changes.

They did that and.

Included in.

Increases in both quantities of material and manpower.

And additionally to those impacts which were where as I said quite significant and as you. You commented we did see some impacts due to inflation and some minor changes in scope and and growth projects. We.

We do see impacts of COVID-19 on productivity, Oh on productivity assessments as well as some direct COVID-19 and.

Costs and impacts of currency exchange.

And Additionally, we we've done a probabilistic reassessment of the remaining work and applied a prudent contingencies to those numbers. So there are a number of sources of change.

The bigger changes where with the S M P I and the and the concrete.

With some and some changes on an on earthworks and others.

Okay, and then what's the I guess either percentage or dollar amount of the new capital number for this contingency now.

We're not we're not going to release that contingency number at this point in time, but.

But we feel it's it's it's prudent and as really.

Really looked at us.

Applying a number that that allows us to complete the remaining project within the revised estimate.

Okay.

And then.

For the actual.

Construction activities what are the critical path items today to keep this second half of 2023.

Scheduling.

Critical path I guess is really for us.

Around completion of the process of building them.

So we're working on foundations a foundation match for the for the larger.

Process and equipment, the ball mill and the Verde Mills.

And that's ongoing and we're also building the foundation materials, both cash and place and precast.

For the structure of the building itself.

And.

Our our current timeline.

Timeline for the process building.

And closure is in Q1 of next year.

We're working very aggressively to see if we can improve upon that.

And other timeline.

Other critical path timeline.

We are working through the pre stripping.

On the pit, we expect to start owner mining and Q3 next year.

Not fully on the critical path because there's some certainly some ability to accelerate and if we need to later on.

However, it's 1 of our key activities right now.

And we're getting into a tailings dam foundation work and again tailings and specifically is not on the critical path.

But it's obviously and activity 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 cost targets.

For the I guess $800 per ads could you remind us what the I guess, what the forecast unit cost items or if you if you happen to have those members.

And actually right now Josh we are really working and re looking at what our operating cost model and looking like.

And all right.

We aren't ready to release that right now there's obviously been from some short term inflation issues that we are reviewing.

That being said you know, we are going back and zero, basing and and really really looking at.

And what the operating cost impacts are you know.

And when we made the announcement in July of last year and through the technical session.

We did go into a fair bit of detail as to where we saw the operating profit 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.

We're looking to enhance that model and update that model and we will release it when were.

When we have that information available.

Okay and.

Apologize for taking up so much airtime here last 1 just on on Westwood.

Is there any sort of additional insight as to when you don't when the company could receive approval for mining and the and some of the other areas and I guess, the western and Central area and then what.

If there is visibility on when you have a new mine plan it comes out or any protections there.

Yeah.

So.

A couple of questions there.

With respect to the West zone and the Central Zone. Currently we are expecting to be able to restart those early next year.

Although there they will be staged.

We're doing some additional design work and and rehabilitation and.

And and working through our work and the east zone and to understand.

And the implications of all of that as well as looking at the design 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 and our mine plan.

We plan to have out before the end of the year.

Great. Thanks, so much.

Thanks, Josh.

And next question is from Mike Parkin with National Bank. Please go ahead.

Great. Thanks, guys for taking my questions.

Following up on some of them and stuff, but Josh you mentioned and I know you're reviewing the opex.

June.

Sorry, the June 2020 on Coty had a sick at 771.

In terms of what you transferred over to costs do you have a sense of like what that will do on a per ounce basis with this update in terms of cash.

Capex with some flowing over to Opex.

Yeah.

Thanks, Mike.

And actually as we look at the numbers there were some transfers.

To to the operating period of some of the capital mostly mostly some additional mine tons that.

And that had been pushed into the operating period.

And some some equipment to go with it.

On the flip side. There were also some changes coming from the operating cost side back into the capital period, I think we mentioned and the disclosure there.

That the and <unk>.

Part of the camp costs had been assumed to be a third party lease.

Would've been borne by the operating period and now that is being taken and the capital period.

And want a minor basis Theres also a similar sort of assumption or change with respect to the assay lab smaller dollar number overall the balance between those those 2 changes is as close to negligible.

With respect to the transfers into the operating period, we're not we're not anticipating a big impact on on the all in sustaining costs.

From that transfer we are reviewing along with our operating cost, we're obviously reviewing our sustaining capital.

At the same time and and and when we're when we're ready to come out with operating costs will be able to speak the sustaining capital at the same time.

And that includes capitalized stripping, obviously any impacts we see and operating costs will bear directly on on the cost and.

Capitalized stripping.

And as well reviewing the construction sequence for the tailings dam and try and and working to understand what opportunities or changes might come out of that so it's sort of a complete package and and we're working through that right now Mike.

Alright are you seeing any like.

And I recognize it's pretty early days, but are you seeing.

Any signs that you or your estimated costs and neither tailings dam development or early strip work on the pit are showing signs that your life of mine estimates or are too low.

Or is that too early to say.

It is and it's pretty early to say.

And there are both gives and takes were seeing you know what.

And we're really.

Focused on assessing what.

And what the impact of the inflationary pressures are on some of the input costs.

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.

And I you know I I.

And I don't want to speculate as to what the net impact will be.

But but it is something that is being assessed for sure.

Okay and then.

And then.

And with the comment around.

The project review and identifying additional cost.

Was any of that you realize you need more cement.

Or concrete work or steelwork.

Yes.

Yes.

<unk>, yes.

And as we reassess the the volumes and we and we but we did the re estimate we saw there were some significant changes from the original estimate.

So there were there was there was a little bit of scope change there.

But but a lot of it is is just going back to the original estimate and and Oh, how that estimate was done versus as.

As we got into the details with more advanced engineering and going through it.

And I E.

It's not a it's not scope change as much as it is reactivate needed to be redone and and and identified that there was certainly additional materials and labor required to install it.

Okay.

And then just last question from me.

And your partners Sumitomo and you're going to reviewing these changes.

What's the path there like is.

Is there anything where they can come back and and challenge. The scope changes are there and kind of tired and they have to kind of come.

Come to the table with their share of the capital.

Right.

Our JV agreement with Sumitomo is is I think I would describe it as relatively standard with respect to this like us and.

And they are very keen on on the reconciliation exercise, we're going through and understanding it.

You know we have majority vote.

As a senior partner on the budget going forward for construction.

And and you.

We do expect them to 2 to challenge the assumptions just as we expect our own owners team on an ongoing basis to challenge the assumptions and look for it and.

For.

For opportunities for savings.

That being said there you know as you would well imagine with the project.

Moving forward.

Yeah.

And the senior partner the majority partner and.

And basically has the ability to push forward the project.

Okay.

Thanks, guys Thats it from me.

And next question is from Anita Soni with CIBC World markets. Please go ahead.

Good morning, everyone and thanks for taking my call. So good.

And the soft in terms of your near term capital plans and are there any changes to the the outlook from spending at boto at this stage would you consider deferring non or plan to go ahead with that kind of spend and then could you remind us how much that is in 2020 soon.

Sorry.

I believe the guidance and now 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.

Does some overlap from the prior year.

That being said we.

We are obviously.

You know given the revised guidance and given the cost increase it and that's okay.

We are looking at all of our expenditures around the company and and and Boto among them we've always.

We've always it reiterated that you know the the spend at boto.

Is it on behalf of de risking that project and and and providing the opportunity to execute it at the appropriate time, when we want it.

So understanding that and understanding the scheduling our focus is on on coated on executing and completing that project and so.

So we will be looking at boto amongst other amongst other capital.

Requirements, and we want to make sure.

That oh.

We're solidly.

Founded in order to complete a co day ASP.

As per plan.

Great attachment with me and stuff on it.

Is that correct.

The second question I guess, just with regards to operating cost Josh Josh off with a little bit but is there any and I mean are you.

I think I ask this every time and it comes out but how confident are you in that mining cost per tonne number and the efficacy of these H P. G ours when they come on China, that's a relatively low mining costs number relative to you know from some of the other bigger operations in Canada and.

And what they've been able to achieve and I just wanted to get your latest thinking on on where that could go and.

And then secondly, how that would impact and your assumptions on reserves can you remind me are we doing that the base case scenario and extended case scenario and your current life of mine plan and I think the extended case high point 93 gram per tonne material versus point and I hate is the average.

Yeah.

And in case.

It has some additional low grade at the very and so.

It may have that we are using that standard case and our model the impact is really just.

Take an extra year and a half of a low grade ore handling at the end of.

Of the mine life with respect to the cost estimate as I said.

We're reviewing it and.

And haven't been doing so on an ongoing basis.

From a productivity standpoint, we think we're comfortable and the numbers, we're using our conservative both on the mining and the milling costs.

With respect to the inputs are that.

Consumables and so forth.

We do recognize that there has been.

And some relatively sharp and inflation and some of them and put them.

The consumables numbers and and and we need to assess what the impact on cost will.

We will be for that.

With respect to hps yard and milling.

Again, we are comfortable there there are several H b G R installations around the world.

And 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 versus sag from a cost per ton basis, especially from a brittle orders like we have at copay is significantly superior from that from an operating cost standpoint.

Both in terms of energy consumption, but also and consumables like steel consumption.

And and that was all part of our our rationale for moving to H P. Jar for this project.

And versus a.

Versus Sag mill, and the D or sort of told us where to go with it.

Okay, and then and just in terms of the.

The tailings facility could you remind me what kind it is and I'm, assuming with central line and.

Or was it modified central line and your and your and.

And our current thinking.

Yeah, It's modified Center Center line I mean.

I.

Believes the first couple of lifts our downstream.

And once once the plant is up and established a it moves to the center line at the top but.

The first couple of list or a typical downstream construction, okay, Alaska, probably a little bit ignored what gets released but could you just remind us.

Or kind of give us some indication of the announce.

And what how you see rosebel unfolding into 2022 and given the issues that you've had in the first half of the here and what the camp and the labor and.

And productivity rate, so how should we think about them.

Carryover impact into 2022, 4 a share mark on right now.

So and you know where where we're currently assessing what 2022 is going to look like.

And I don't want 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 remediation plans.

Plans that we're putting in place and activities that we're putting in place right now at Rosebel.

And 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 what 2023 and the remainder of the life of mine for Rosebel looks like and and and understanding what that deposit can give us we have a new block model as well that we are are focused on and and and incorporating it and you know.

And we do want to make sure that we have appropriate conservative estimates and.

As we move forward with with Rosebel. 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 what rosebel looks like.

And thank you for answering all my questions.

Thanks Anita.

Yeah.

And next question is from Tanya and she could connect with Scotiabank. Please go ahead.

Good morning, everyone and thank you for taking my call.

Maybe just starting out and just some of it and smaller items just on the hotel.

And looking at and all options to enhance value up to my value that is selling the asset 1 of them 1 of the options.

Yeah.

And we are we really do like boto and what it provides for us as well as the regional opportunities there.

That being said you know, it's part of our role.

And as stewards of this company to assess all of our assets at any given point in time.

And.

The current situation.

Really demands that we have a good hard look at each and every asset and the portfolio and understand.

What the appropriate path forward is for us too.

To achieve a sort of the longer term strategy.

Yeah.

I.

And I'm going to leave it at that but.

We are looking at at and at what is possible with Bodo just like we're looking at what's possible.

With Westwood and and and other assets.

Okay.

And maybe then just moving on and I know it.

And quite a number of questions on Cotai and well wait for.

And you get through your Casa and revealing your cost but maybe.

What you can share with us and right now and inflation wise can you review with US what you are seeing inflationary pressures and your cough and jurisdictions, you're operating so Canada Africa and South America.

Labor consumables et cetera.

I don't have all of the percentage is for you.

But we are seeing.

Increased fuel prices certainly some of that is offset by our hedging program.

That that we've run for several years and in and managing our fuel cost.

Primarily at the open pit operations, but also.

Managing the input fuel costs for the Cotai construction per project.

So we are seeing some pressures there.

And we are seeing some general supply chain pressures on an on cost.

Thank you and a few areas both on.

You know and expediting and transport and obviously the shipping industry out there and the world is there's a little bit topsy turvy. So we have we have seen increases and that.

Consumables like steel and it's everybody's well aware the price of steel is up right now we.

We do have a fixed term contracts on grinding media and.

And liners and that sort of thing.

But they're not longer term so as we look at it.

And would expect to see some pressures there.

Major inputs are.

Like explosives as well have been affected by the increase and and.

And fuel prices, but also by the you know.

By the transportation cost increases.

And the positive side, we were able to resolve and our collective bargaining agreement at Rosebel and.

And.

And so those.

Those numbers are baked into our current estimates as we move forward.

And likewise with respect to Essakane.

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 at Essakane during the year for a 3 year term. So so those things are going to serve us well.

From that side.

And productivity contractor costs, they're they're they're they're our inflation and inflationary pressures out there right now.

And unlike everything and I imagine like a lot of our competitors.

Evaluating whether they're permanent inflationary impacts are temporal inflationary impact kind of like we saw with wood with lumber here in Canada.

Is is you know it's it's it's it's a challenging.

Analysis to say are these numbers up and are they going to stick.

Or is it is it something and that's a bit of turmoil and will go away.

And the near term.

And maybe just the labor costs, and Canada than not and God.

What are you seeing there yeah, yeah, no and labor costs, and Canada, I mean, we were looking at and labor cost.

Inflationary statistics out of the government here as part of the work that we're doing right now and.

Analyzing cold day.

And there has been.

Inflation of labor costs above and beyond what is the general inflation.

And in Canada I believe.

Yeah. The number I saw was some I believe and the order.

5 and a half 6% something like that over the past year and in and labor costs and industrial labor costs.

Aye.

And I don't have the exact figure and at the tip of the tip of my tongue, but.

I'm certainly happy to report that back to you.

And the Westwood.

Westwood is under and existing CBA. So we're we're sort of managed their although there is a degree of indexing to CPI.

And at a co pay and you know we don't have any kind of a specific.

Labour agreement for the operation, we do have we do have some agreements in place with respect to the.

And the construction programs.

So it you know it.

It's 1 that's out there and as we move to the operating period, we're going to need to understand it I think.

You know 1 of the things that we did Ah kotte specifically.

Specifically understanding the Canadian labor market was the move to automated haulage and automated drilling.

And really to help us.

Mitigate somewhat our exposure to Canadian labor rates.

Okay, and then maybe if I could just ask on the Rosebel, because there's a lot of things happening there.

And from pet to the MAU and <unk>.

Change in management at the mine sites, you're still dealing with their vehicle and miners.

I'm a bit concerned about everything going there. So maybe if you can just from your from the pit to the MAU to all the management changing and illegal miner and just what has happened.

Wow.

And in some ways a bit of a perfect storm, if you will tonya and at.

At Rosebel.

And you know as we reported Oh I'll.

Start with the weather because it was the 1 of the bigger smacks and they had.

So to the middle of the year.

Rosebel is experiencing a.

It's beyond the 1 and 20 year event, probably closer to <unk>.

And 1 and 100 year event and <unk>.

Hum.

And the month of May.

Nearly 3 quarters of a of a meter of rainfall.

It was experienced at Rosebel itself, so that had a number of other impacts.

And and.

To delineate.

In the and the Rosebel kits.

And it obviously impacted our ability to dewater the pets.

And in force mining at Rosebel more into the into the expansion phases, which are which are lower grade and.

And restricts our access into the bottom of the pet and overall.

Overall rain impacts are obviously affected our R.

Our just our ability to mind generally.

In the push backs it at Rosebel as well.

Because of the push backs tend to be and softer rock and and and access is difficult at Merrimack and it had some very strong effects that the rainfall during the quarter.

And then mostly in pit.

You know the main haul road between Saramaccan Rosebel is built out of rock and and as well drained and and generally performed very very well despite the high rainfall, but the access areas within the pit itself, we're very challenged for the quarter.

Cerro market is all saprolite, there is no hard rock there too.

And to help with road Betty.

The team has been working on a number of technical solutions to improve the in pit access, but it was impacted.

And as a result.

Part of what was done at a zero market during the quarter was a move to a small satellite lower grade pit, which which was easier to access while they while they worked on reestablishing and access into the pit.

And Oh, we are back hauling a lot of rock from from Rosebel into share market and as we move forward, we really do see.

And we'll get that floating and place them.

And other important impact.

And given the nature of the process at Cerro America Theres. There are typically sort of 2 or 3 re handles of the or before it hits the mill.

And that that was the original plan and the additional rain.

Coupled with the high play and nature of the ore that we're mining right now Matt that this that ore was becoming saturated and and extremely sticky.

And had follow on effects at the mill.

So so so that was the <unk>.

And no effect.

And are working on the carbon management.

Our system at the mill.

The 1 and we have in place that's been there for a while and and need some work.

So we do have a program in place too to really bolster the capacity of the mill to manage and sticky rock.

As well as hard rock, and and and and and to treat the carbon effectively.

So we're expecting that.

That capital project to be completed by the end of year, it's not a big capital project.

But we are very much looking forward to the expected recovery impacts, we'll see out of it.

Yeah, I guess the other.

Key impact obviously for the quarter was Covid and.

Covid impacted us and a lot of different ways, but COVID-19.

Directly.

You know there was a big wave and Suriname towards the second half of the third and second quarter excuse me.

And that led to a number of countrywide shut downs and it led to some unrest and some civil unrest in and around the country. Some blockades.

Which did challenge us.

So and at a macro level, we had those COVID-19 impacts locally within the mine.

We also had COVID-19 impacts.

And just.

Just like everyone read some news around how COVID-19 impacts areas, you'll get clusters.

Within our mine site, 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 down 10%.

You can be down 10% 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 are both from the mine and mill were impacted.

And that's driven.

Our backlog and and maintenance required and both of those areas.

And that's been incorporated into the into the plan going forward.

As you pointed out we have a center and some reinforcements we've made a few management changes I am.

And are are significantly reinforcing the maintenance teams. So that we can we can pick up on that backlog.

And the mail.

And with with the with.

With the mining group.

And then last 1 and we are working through it we did.

And I have a protracted collective bargaining.

And negotiation with the Union at Rosebel and it was finally resolved.

And may but prior to that.

We did see some impacts on productivity and.

As we look at the remainder of the year.

And throughout the organization, we are implementing a.

Cost savings and productivity improvement.

Exercise called I am all and.

What was it started at.

And Ken.

Already starting to see some some.

Some nice opportunities there going forward and very shortly we'll be implementing that at rosebel as well.

So the confluence of all of these factors.

And I really put us behind the 8 ball not only impacted the production.

Asleep very severely from Q2, but it also impacted our sequencing and and and our ability to react going forward.

And hence the reduction in AR and AR and the forecast for the remainder of the year.

Yeah.

I'm happy with the team we have in place.

And and and we are working very aggressively to get rosebel back on its feet as quickly as possible.

And maybe just on the illegal miners and what we're doing now to just keep them away from the pet yeah.

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.

We overall versus prior years are seeing a steady decrease.

And and then.

And the number of illegal miners that we have at site.

That being said there.

You know they are challenging.

We're implementing some additional security measures to allow us to manage that situation better.

We're also obviously working very hard with the communities and.

On our community development programs, and and and other opportunities to provide alternatives for people.

Who are being impacted by devaluation and inflation and country and.

And are obviously looking to find a way to generate some some income from themselves.

So it's not only.

You know the immediate reactionary.

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.

And 2 to reduce it to 2 to a manageable level and the long term.

And.

And they they may be illegal, but theyre not necessarily bad miners, they they know where high grade material is and and and there.

You know, they're there, they're pretty creative and and there are.

And their tactics so.

We need to find a way to remove the incentive.

Okay, well good luck at Rosebel.

Thank you very much done here.

This concludes the time allocated for questions on today's call I'll now hand, the call back over to India called connect and for closing remark.

Thank you very much Caitlin and thanks to everyone for joining us this morning and for your continued engagement with Aimco. We look forward to having you join 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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And.

Good day.

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