Q4 2021 IAMGOLD Corp Earnings Call
Thank you for standing by this is the conference operator, welcome to the Aimco 2021 fourth quarter and full year operating and financial results conference call and webcast.
As a reminder, all participants are in listen only mode and the conference is being recorded.
After the presentation there'll be an opportunity to ask question.
You joined the question queue you May Press Star then one on your telephone keypad.
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At this time I would like to turn the conference over to Graeme Jennings VP Investor Relations and corporate communications for Ion Gold. Please go ahead Mr journey.
Thank you operator, and welcome everyone to our conference call today.
Joining me on the call are Daniela Dimitrov, President and Chief Financial Officer, and interim CEO .
Craig Macdougall executive Vice presidents growth.
No Lemelin senior Vice President operations and projects, Tim Bradburn, Senior Vice President General Counsel and corporate Secretary.
Our remarks on this call will include forward looking statements. Please refer to the cautionary statements included in the presentation under the heading cautionary statements regarding forward looking information and be advised that the same cautionary language applies to our remarks during the call.
non-GAAP measures will also be referenced on the call and we direct you to review the cautionary statements included in the presentation and the reconciliation of these measures include in their most recent MD&A each under the heading non-GAAP financial measures.
With respect to the technical information to be discussed please refer to the information in the presentation under the heading qualified person and technical information.
The slides referenced on this call can be viewed on our website.
Now I will turn the call over to our president and interim CEO Daniela Demetrius.
Thank you Graham and good morning, everyone. Thank you for joining us.
The last 12 months has been a transformative period for the company as we reposition for the next chapter with New leadership, the advancement of Canada next tier one generational gold project co tango.
And the assessment of opportunities to uncover value at existing operations.
The theme of renewed leadership began at the beginning of 2021, when the board adopted new diversity and when you won't guideline.
With a view to ensuring an optimal mix and diversity of skills experience and expertise at the board level.
We had four new directors join Us in 2021, followed in 2022 by the retirement of quartz started as our CEO and director.
Charter as our chair Richard Hall, and Ron gauge all members of the board.
In addition, Ken Snyder one of our long standing director, who is not standing for reelection at our next AGM in May.
We would like to thank these individuals for their dedication and commitment to the company and wish them well.
In step with his departure, so we announced the appointment of Murphy's belong Shea as a director and the chair of our board.
As long as the appointment of two new directors, David Smith, and Ian Ashby.
We are pleased to welcome Dave.
David and Ian to Aimco.
The combined knowledge perspectives and experiences will be invaluable to the company.
So that's very important phase in our evolution.
Leadership changes also came outside of the board what the year on the appointment of Jersey or the Koski Executive project director for Cotai Gold.
Jersey assumed management of the project at the beginning of this year and he brings a wealth of experience in delivering large projects.
Adding significant horsepower to our project teams.
Ensuring the delivery of Cotai gold is Keystone for bridging the value gap between our valuation today and potential value growth for the company Tomorrow.
Our search for a permanent CEO continues with our CEO search committee comprised as Mohit belongs shape, David Smith, and Kevin Okay with the support of a global search firm retained by the company in January .
We will start our review with health safety and sustainability.
I am gold continues to strive to achieve high standards in environmental social and governance practices, which are reflected in our long held at a zero harm vision.
This is our commitment to reach the highest standards in human help minimize our impact on the environment and work cooperatively with our host communities.
Ensuring all of our employees go home safe continues to be a key focus for the company.
Last year.
Our dart frequency rate was <unk> 37, and the total recordable injury rate was 0.76 coming in below our global annual targets of 0.51 and 0.85, respectively.
At Coca Cola, we achieved another milestone.
With over $3 4 million hours without a lost time injury to date.
We continuously assess opportunities for investing and partnering with local host communities near our operations at both Essakane and Rosebel, we established in our seating community funds.
At Rosebel, we have committed to making the annual contribution of 0.25% of gold production to the paradigm of environmental and mining Foundation. In addition to the existing 0.25% of annual revenues contributed to the Rosebel community funds.
So that's again, we continued our participation in the mining fund for local development in Burkina Faso.
As well as advancing a public private partnership with the Canadian government, one drop foundation and cold water on the triangle Doe project to bring potable water to an additional 75000 people in the region.
We recognize that mining activities are energy intensive and generates significant greenhouse gas emissions.
In September we announced that we have set a global target of reaching net negative GHT admission.
No later than 2015, and we plan to provide a more detailed roadmap and interim targets later this year.
We have and will continue to enhance our reporting under reporting frameworks by continuing to report under <unk> and FASB, which we did in 2021 and committing to also report under T. C. F D by.
By the end of 2022.
Our effort and track record on ESG matters.
Our well established and continue to be recognized and we are very very proud of the work of our teams.
And there's a critical area that contributes to value creation.
Turning to our operating highlights last year, we produced 601000 ounces of gold, which was at the upper end of our updated guidance targets announced in July .
They can continue to be the engine of the company.
Reporting record annual annual attributable attributable production of 412000 ounces in.
And exceeding our guidance range of 390 to 400000 ounces, which was raised midyear.
Rosebel produced 154000 ounces in 2021 on an attributable basis also at the upper end of our updated guidance range of 140 to 160.
Earlier in January we announced in your life of mine plan with a path to return the operation to an annual production rate of over 300000 ounces by 2025.
On a 100% basis.
With a need for increased capital investment in stripping and processing times improvement over the next few years.
At Westwood, we restarted operations underground midyear.
And we have seen steady improvement, while ensuring a safe and secure restart.
In 2021 production was 35000 ounces coming in at the lower end of updated guidance of 35 to 45000 ounces.
The ramp up continues into 2022.
Cash costs came in at 11 32 announce an all in sustaining costs came in at $426 an ounce.
Which was in line with the updated guidance estimates.
Cash costs and all in sustaining costs were impacted by a $50 per ounce noncash net realizable value or MRV write down.
On ore stockpiles and finished goods.
This write down primarily relates to Essakane and Rosebel and is due to an increase in the estimated cost to process ore stockpiles.
After adjusting for cost increases stockpile grades and gold price assumptions.
Looking forward to 2022.
We are forecasting production to be in the range of 570 to 640000 ounces.
That's the 10 is expected to continue its strong performance with attributable gold production of 360 to 385000 ounces.
Head grades are expected to normalize closer to reserve grades this year, which will be offset slightly by higher recoveries as mining moves into areas with lower graphic or content.
Or was it all attributable gold production is expected to be in the range of 155 to 180000 ounces.
With improvements expected in recoveries from the ongoing refurbishment initiatives at the <unk>.
Mill complex, while stripping activities ramp up as outlined in our life of mine plan.
Which we will get into later.
Lastly, Westwood is expected to produce between 55 to 75000 ounces from the complex.
Assume the safe restart of the central and West underground zones in the first half of 2022.
Part of the continued ramp up of underground mining activities coupled.
Coupled with increasing grade from the satellite Garn, Duke open pit.
Cash costs for the year are forecasted to be between 1100, and 1100 and $50 per ounce and all in sustaining costs are expected to be between 16, 50 and $60 90 per ounce.
Our cash cost guidance incorporates assumptions related to inflation.
As we are forecasting the cost of our main consumables, consisting of explosives cyanide lime and grinding media to be between 5% to 7% higher on average compared to 2021 pricing.
This translates to an approximate 1% to 2% increase in cash cost and has been incorporated in our cost guidance.
The increase in all in sustaining cost is primarily due to an increase in sustaining capital expenditures.
Resulting from a higher proportion of stripping costs classified as sustaining capital rather than expansion capital in alignment with World Gold Council guidelines.
For example at <unk>.
Ken we are guiding towards total capital spend of 170 million of which $165 million is classified as sustaining.
Primarily consisting of capitalized stripping.
Previously there was a higher proportion of stripping.
Classified as expansion capital the.
The end result is a higher all in sustaining cost trigger.
Yes.
There are minimal impact on net cash flow from the operation.
Turning to our financial the following are some key highlights of our fourth quarter and year end financial results.
Core revenues in the fourth quarter totaled $294 6 million and $1 2 billion for the year with an average realized gold price of $17 90 per ounce.
Adjusted EBITDA came in at $90 million for the quarter and $356 million for the year, excluding the noncash impairment charges at Rosebel and the <unk> write down on stockpiles in finished goods at Essakane and Rosebel.
This translated to adjusted net earnings of 43 point.
$44 3 million or <unk> <unk> per share in the fourth quarter.
And adjusted EPS for the year at six cents per share.
On an operations basis operating cash flow before changes in working capital was 76 million for the quarter.
And $293 million for the year.
Which after accounting for capital expenditures ex development project translates into mine site free cash flow of $12 3 million in the fourth quarter and almost a 134 million in 2021.
In terms of our financial position, we ended the year with $545 million in cash and equivalents.
And $7 6 million and short term investments.
In addition, we had almost half a billion dollars available on our secured credit facility.
Which matures in January 2025.
Taken together with our cash balances resulted in total available liquidity.
$1 1 billion at the end of 2021.
We started the year with $941 million in cash and equivalents and this balance decreased by almost 400 million over the course of the year.
Cash generated from operations of $293 million was partially offset by an $8 million outflow from movements in noncash working capital items, including an increase in inventories of almost 37 million primarily related to higher stock stockpiles and finished goods inventories that Rosa.
Bell on Westwood.
This was offset by a decrease in receivables and an increase in accounts payable and accrued liabilities of almost $29 million.
Outflows from investing activities reflect net capital expenditures.
Of almost 625 million primarily related to Cotai gold construction.
And almost $7 million for other investing activities and capitalized borrowing costs, partially offset by the sale of a portfolio of royalty assets completed earlier in 2021.
Net cash used in financing activities.
The payment of lease obligations of almost 19 million dividend.
Dividends paid to minority interest repayment of equipment loans at our operations and the impact of FX fluctuations on cash.
We are scheduled to complete the remaining construction thats kotte during 2022 and 2023.
Resulting in significant additional capital expenditures.
Together with sustaining and expansion capex at our existing mines.
Our expected to exceed total current cash and cash generated from operations.
As a result, we expect to make the first drawdown on our credit facility in the first half of 2022, and we expect the drawdown most of this facility over the course of 2022 and 2023.
Assuming no significant changes in Cotai gold cost and assuming the continuation of prevailing commodity prices and exchange rates.
And operations performing in accordance with our 2022 guidance and 2023 plan. We believe we should have adequate liquidity with our existing credit facility and the coating equipment lease as we previously disclosed to implement near term operational plans and complete the development of Cotai gold.
The strength of the Canadian dollar impact Cotai project costs as they are primarily included were incurred in Canadian dollars.
And we have put currency and fuel exposure hedges in place as part of our risk management during the construction period.
Updated information relating to our hedges is contained in the presentation.
In addition, during 2021, we entered into gold sale prepayment arrangements in respect of 150000 gold ounces.
With an average forward contract price of $17 53 per ounce on 50000 gold ounces.
All a range of 1700 to 'twenty 100 per ounce on a 100000 ounces.
Which is being funded in the over the course of 2022 at $700 an ounce.
This will result in a total prepayments of $236 million to be received over the course of 'twenty two.
And the requirement on our part to physically deliver 150000 gold ounces over the course of 2024.
This prepay arrangement has the effect of rolling the 150000 ounce gold sales prepay arrangement that we entered into in 2019.
From 2022 to 2024.
After completion of the construction of Cotai gold.
To illustrate how this is working for us on a monthly basis.
In January we received $2 $5 million in cash and.
<unk> delivered the first 12500 ounces of gold into the 2019 prepay.
Separately, we received $19 $7 million in cash under the 2020 to prepay.
And we're expecting them.
Similar occurrences over the course of the rest of 2022.
We will now walk through our operations in more detail.
The COVID-19 .
Pandemic continued to involve in the fourth quarter.
And in 2022 and remained a significant focus for us.
But as I can.
The management of COVID-19 remains stable, although we did see increased cases into 2022.
Vaccination rates of our workforce, a 64% continued to be well above the country average which is under 4%.
The COVID-19 situation in Suriname, and at Rosebel started to stabilize and improve in the fourth quarter. However, the new Omicron Varian remains a concern in December and January 2022.
To give you an idea of of impact cases uncertain am in January where the highest recorded since the start of the pandemic.
Cases in country and at Rosebel are now declining and the government is moving towards normalization.
Vaccination rates at our site has increased with approximately 41% of our workforce fully vaccinated.
Which is really right in line with the country average of about 40%.
At Westwood the.
The COVID-19 situation in the fourth quarter was stable, though we saw absenteeism in January .
Associated with our new variance.
About 77% of our workforce has reported that it is fully vaccinated.
Step up from previous reporting.
Likely due to federal and provincial mandates, having a positive effect.
On this statistic.
Through most of last year at <unk>, we saw minimal impart due to COVID-19 at site and we talked about previously the protocols that we implemented including the regular testing of <unk>.
Wastewater.
Starting on December with a rapid rise in cases in Ontario, and other provinces.
<unk> began to have an impact on project activities Covid outbreaks during the holidays and in January forced a slower re mobilization of the workforce.
Site staffing was approximately 60% of plan through a part of January with a large number of infections in various pockets of the workforce, including in the steel installation team.
Earthworks team.
Size staffing has continued to ramp up since then and by mid February .
We returned to full plan rates of about 750 to 850 personnel.
We implemented a number of site restrictions and at this time, we expect such restrictions to be lifted by March one.
We introduced a mandatory vaccination policy in January and by February one 100% of the site personnel had at least one dose of vaccine.
And two doses are required under the policy by April one.
Yeah.
Moving on to Essakane.
Ken had a strong finish to the year producing 98000 ounces in the fourth quarter.
Translating to record attributable production of 412000 ounces for the year.
A notable achievement considering the challenges present in 2021.
During the year Essakane mine 60000, 60 million tonnes of material an increase year over year as a result of operational efficiencies and.
And reduction of cycle times achieved from the modification to the hauling fleet.
The strip ratio of two eight in 2021 was higher by 12% than the prior period than the prior year. As a result of continued focus on stripping campaigns in the upper benches.
Mill throughput of almost 13 million tonnes was modestly higher than 2020, yet with higher grades of 131 grams per tonne.
The improvement in capacity from the mill optimization project is really important as essakane moves to greater volumes of transition and hard rock versus softer ore in the coming years.
Cash cost and all in sustaining cost of $8 95, and 10 74 were lower by 4% and 2% respectively compared with 2020.
Primarily due to higher production and sales.
Partially offset by higher operating costs, including the <unk> write down noted previously.
All in sustaining costs sold also included higher sustaining capital expenditures of $51 million versus $37 million in 2020.
Last year, we reported on certain security incidents in Burkina followed by the military coup in January .
All of our personnel continues to be safe.
And associated supply chains have not been significantly impacted by the security situation or change in government.
The workforce has been increased to close to normal levels. Following a temporary reduction towards the end of 2021.
We continue to monitor the situation as we assess returning to full work with workforce capacity towards the end of the first quarter.
Additional investments in infrastructure in the region and at the mine site are being made to further strengthen security measures.
While we continue to engage with relevant authorities and other partners in Burkina in relation to security in the region, including supplies and transportation routes.
These measures and investments are captured in our cost guidance presented earlier.
Production in 2022 is expected to be between 360 to 385000 ounces.
Relatively steady over the year.
We have moved into the execution phase of our I am all in operational improvement program focused on executing on opportunities to increase melon mine productivity.
Our workforce is very engaged in this program with several initiatives underway, including in the area of equipment maintenance to improve availability rates mill recoveries and inventory management.
This is a program we will be rolling out to Rosebel next.
Turning to Rosebel 2021 presented numerous challenges, which have been described in our continuous disclosure documents.
The operation reported attributable production of 154000 ounces, which is 27% decline from 2020.
Fourth quarter production of 42000 ounces demonstrated quarterly improvements as ground conditions dried up and productivity initiatives were launched in the latter part of the year.
Mill throughput of $2 4 million tonnes was down 8% compared with the prior quarter due to the maintenance related work and improvements in the ADR circuit, which.
Which we're nearly completed at the end of the year.
Recoveries of 86% improved quarter over quarter.
As a result of higher grades of 0.78 grams per tonne in the fourth quarter.
And we expect to see a continued lift in recoveries into 2022 as a result of these improvements.
I can share with you that in the first two months of the year, we have averaged 90% recovery.
Cash cost of $15 33, and all in sustaining cost of $18 59 per ounce sold were 48% and 52%.
Higher respectively than in 2020.
Due to a lower annual production and sales as well as the noncash and RV write down.
Whichever way that almost a $120 per ounce sold at Rosebel.
This year Rosebel is expected to produce 155 to 180000 of attributable gold ounces weighted for the second half of the year following the rainy season.
No refurbishment improved sequencing increased stripping under their new life of mine plan are expected to improve operating performance compared to 2021.
In response to the challenges at Rosebel, we conduct that an assessment, culminating in an updated mineral resource and reserve estimates and corresponding updated life of mine plan prepared in partnership with external third party engineering firms Fr K consulting and double USP, Canada, which we.
Released on January 12.
The updated Rosebel mine plan outlines a path to ramp back up to an estimated 300000 ounces per year.
By 2025.
On a 100% basis.
The mine plan was based on revised geological models, incorporating drilling results over the last two years accounting.
Accounting for cost increases the operation has experienced.
And incorporating current capital allocation of the company.
Two of the key priorities for Rosebel.
Related to stripping and mill capacity to treat hard rock.
Considerable stripping is required to access deeper higher grade ore in existing pits at rosebel, resulting in the necessity for a material capital outlay in the next five years.
Our capacity for the mill to deal what the rosebel or ore hardness.
Could be alleviated by the replacement and expansion of two crushers at a cost estimated in 2021 of approximately $30 million.
Which capital has been built into the updated mine plan.
We are looking to start allocating capital towards system improvements.
Starting in the fourth quarter of 2022, and this has been incorporated in our guidance.
The investment into stripping.
It's proceeding forming the basis for the increase in production guidance.
With $140 million in capital allocated to this operation in 2022.
$105 million of sustaining.
With a majority of that be.
Being allocated to capital stripping.
Turning to Westwood gold production of 35000 ounces was 56% lower than in 2020.
Due to the underground operations being under care and maintenance for the first half of 2021.
Q4 production was 13000 ounces or 86% higher than in the prior quarter.
Benefiting from higher underground grades coupled with an increase in the grade of material sourced from Grand Duke.
Although underground mine productivity is improving the pace of the ramp up remains cautious as we continue to prioritize the implementation of enhanced ground support and additional safety measures.
Coupled with ongoing training to increase productivity rates.
Gold production at the Westwood complex is expected to be in the range of 55 to 75000 ounces in 2022, and this assumes the safe restart of the central and West underground zones.
In the first half of 2022.
Production levels are expected to progressively increase quarter over quarter benefiting from higher grade underground ore.
Turning to coated.
2021 was the first full year of construction of what will be I am Gold's Keystone asset.
Project completion was 43% at the end of December 2021, and detailed engineering is now nearing 100% completion.
<unk> settled on concrete deliverables principally complete.
In the fourth quarter, we expand at $147 million in line with previous guidance bring.
Bringing the total spend in 2021 to 359 million and total incurred cost to $412 million.
With a balance between spend and incurred costs relating to timing of payments and working capital items.
Key activities over the fourth quarter and into January are well described on slide 19 and in our <unk>.
DNA.
We have seen productivity for earthworks lagging targets and mitigation plans are in place and continue.
Equipment delivery is ongoing and inventory on site continues to increase.
Major components of the ball now such as motor Chillers and shells have started shipping.
We continue to closely monitor global logistic risk.
And at this time, we are not expecting material impact.
Although challenges in our global supply chain continue to persist.
As discussed earlier, the Covid outbreaks. It at the end of December and into January forced a slower re mobilization of the workforce and absenteeism on the first part of January was high.
This impacted the clotting process of the processing plant building, which lagged in January and February although it is more than 50% complete as you can see from the pictures.
We have put in place mitigation measures to ensure that the clotting is no longer on the critical path and we are now optimizing for the mechanical erection access state.
The focus is on driving the start of the concrete works inside the building for mechanical erection can commence in the second quarter.
We will complete the building clotting when appropriate resources are available and the logistics do not interfere with our critical path work inside the building.
We have highlighted the key remaining targeted milestones on slide 21, which included the initiation of processing plant equipment installations that I have just discussed.
The Cotai project continues to be on track for commercial production in the second half of 2023.
This estimate assumes no further disruptions caused by COVID-19, and related impact on the timing of activities availability of workforce productivity and supply chain and logistics and.
And consequently, we do caution dot further disruption could impact the timing of actual commercial production.
Our previously disclosed estimate of remaining cost to completion net of leases from January one 2022 onwards was approximately $710 million to $760 million.
And as of January 31, our estimated cost to completion continues to be in this range.
However.
Inflationary and other cost pressures have been identified impacting Earth works execution.
Extra color and instrumentation components.
Operation spare parts and consumables trade cost indirect cost and <unk> services.
This has put pressure on the budget with project cost curve trending upwards above the high end of the range of the previous estimate.
Our contingency has decreased from $85 million last July to $25 million going into March forming a trend that we are flagging today.
Trend reports continue to be updated and refined weekly.
With the appointment of the New Executive project director.
And as a result of the circumstances, we discussed the project team is in the process of evaluating these impact.
By completing a risk analysis of the cost and schedule.
In step with this assessment. The team is also evaluating potential offset offsetting litigation and or optimization opportunities in various areas, including earthworks processing. The life of mine plan and operations during initial ramp up.
This evaluation May result, in a potential cost and schedule re baseline, which may include an increase in cost to completion.
This assessment has commenced and we intend to provide an update before the end of the second quarter.
I know we got the first question on this matter would be what range are we expecting.
And the answer is it is too early to quantify at this time.
The evaluation involves over 50 personnel from our own team and the PCM and it is complex.
In terms of schedule at this time, we are not seeing anything material around the corner that could result in initial production not being achieved in the second half of 2023.
Our Board management Executive project director and all of the Coty teams are focused on ensuring <unk>.
Is the broad across the finish line on schedule and as close to the cost guidance as possible.
Taken together I am gold is at a critical junction juncture at Cotai.
As this is a project that is by all definition of transformative asset for the company.
He is a generational asset with average production of nearly <unk>.
500000 ounces on a 100% basis in the first five years.
At all in sustaining cost of below $800 in the first five years.
And an initial mine life of 18 years based on current reserves of $7 2 million ounces.
With another $6 4 million in measured and indicated.
In addition, we believe we are still in the early innings of uncovering the full potential of co pay.
We announced in October an initial resource at Gosselin deposit, which is located immediately adjacent to the Colgate Pik.
And we reported an initial resource of $3 4 million ounces of indicated and $1 7 million ounces of inferred.
<unk> remains open in a number of directions and has only been drilled to half the depth of copay.
We do have a lot more work to do to bring goslin into a conceptual mine plan and are excited about the potential.
To extend our higher grade period quota beyond the first five years.
Australia year end, we released additional drill results, which compare well with predicted grades from the resource block model and in some cases have extended the mineralization outside of the resource boundaries of the mineralization model.
Our planned drilling program in 2022 will target areas with potential for resource expansion.
Quota and golf alone are located in a large land package of over 540 square kilometers.
This is a massive gold bearing system and we're confident in the potential for additional discoveries in that region.
There is no doubt that high quality Canadian assets once clarity predictability and stability has demonstrated.
Trade at a premium in this market and we believe <unk> is the next such Canadian asset.
Thank you to everyone for joining us today I will now pass the call back over to the operator for Q&A.
Thank you.
We'll now begin the question and answer session.
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Yeah.
Our first question is from Carey <unk> with Canaccord Genuity. Please go ahead.
Hey, good morning, just wondering if you could.
Color on what Youre looking at in terms of potentially adding more liquidity to the balance sheet I'm, just noting that you have.
Seem to be against the asset sales are those still something you're considering.
Thanks for the question.
As we noted capital allocation for the company continues to be a key priority of ensuring that we allocate capital to generate the highest return on.
On invested capital.
As we as we noted in our MD&A and press release, assuming no significant change in <unk> cost and a continuation of of <unk>.
Prevailing commodity prices.
And our operations performing.
We are.
We believe we should have adequate liquidity. We've also noted that we continuously assess our liquidity.
Our operational performance a.
The continuation of the development of the Cotai project and capital markets and that we may take measures to increase our liquidity.
At this time, we don't know the outcome of this evaluation.
And we will provide more information by the end of the second quarter.
Okay, great. Thank you.
The next question is from Fahad Tariq with credit Suisse. Please go ahead.
Hi, Good morning, Thanks for taking my question just a follow up on the liquidity can you touch on that.
Gold price assumption that's baked into.
The quick liquidity comment you made.
Our our budgets.
The price deck for 2022 and 2700.
Okay and could you share what it is for next year or is it the same 1700 1700.
Okay.
Okay and then my second question just on the corporate costs I appreciate that you can't comment too much on it but.
But could you just tell us like high level given the detailed engineering is 92% complete procurement is 87% complete 79% of the contracts have been awarded whereas the surprise factor coming from in terms of.
At least the uncertainty around the overall costs remaining costs.
So a portion of the remaining costs that that we have left to spend.
In a sense fixed so to give you. An example, the autonomous vehicle fleet or the autonomous drills.
We entered into those commitments.
In in in 2021, and those costs are relatively fixed we havent expanded those costs as we will start to do that in 2022.
And <unk>.
So there is there is no risk around all components of the remaining cost left to be spent.
A big component of the remaining costs relates to actual construction.
And.
Impact.
Of a different productivity rates than what was assumed in the plan would have are.
But the impact on the remaining costs to be incurred.
As a number of the contracts such as the Earth works for example, or time and materials contracts Contra.
Contracts, rather than a fixed fixed price contracts.
Okay. That's helpful. That's it for me thank you.
The next question is from Jackie <unk> with BMO capital markets. Please go ahead.
Good morning, Jackie Hey, good morning Daniela.
They're really quick one if you don't mind, you you'd mentioned I think in the MD&A that the cladding of the building is no longer critical path I think you mentioned that earlier, what what is the critical path. Maybe can you just talk a little bit about.
Where do you see the bottleneck at this point.
Yeah. So the the the crowding of the processing building was on the critical path as a result of the necessity to actually do work inside the building.
Including <unk>.
Concrete work to actually get to what is really on a critical path which is the.
Mechanical erection of all of.
The necessary equipment and inside the building. So we were at about 32% a completion.
Completion on the cladding at year end.
And that progressed.
Progressed into January and February or but about where over 50% of the building clouded.
However, as.
As a result, particularly of our.
Contractor that is responsible.
Responsible for or.
Putting up the the steel clotting on the building really being negatively impacted by Covid.
In January and actually continuing into February .
We've pivoted.
And have.
Have made arrangements to be able to actually work inside the building and.
<unk> progress what is what is really on the critical path, which is which is that that the ability to progress with the.
What's ultimately the mechanical erection installation inside the building and so as.
As a result of our focusing on on that and and on those logistics.
<unk> is going to be completed.
At a time and with resources and more importantly to not impact the logistics of what was actually whats happening in the building.
We expect that we will complete the clotting into into the second quarter.
And.
At the moment, we're really focused on what's happening inside the building.
Great.
My second question I'm sure is a little bit of a compound question I think but.
Can you can you comment on the timing.
It really just risk analysis that coty is necessary to do to make sure that you have.
Appropriate budget, but the timing just seems a little bit funny to me given you're you're currently undergoing the CEO search and you've got a pretty big push for board renewal going on can you talk about how.
Risk analysis would coincide with the new CEO coming on board and if you would envision any kind of.
Further changes or if the new CEO might have some ability to influence.
Influences before it's completed.
The risk analysis started at the beginning of January and as is.
It's driven by a number of key factors one was just the overall impact on it.
What was happening on site and what the workforce and that impact.
And the second factor is it is really just the start.
When you say get a project director with New Jersey.
On onboard.
That.
That risk analysis of cost and schedule.
We talked about also includes opportunities for for mitigation and optimization and we're really looking at.
The next <unk>.
36 months in the in the life of the project through completion of construction and into the into the ramp up to look for.
Offsetting mitigation opportunities.
Two in the evaluation of doing this assessment.
Our our new directors.
Have been and are in the process of being oriented we spent some time last weekend and into this week doing got it and that will continue.
I don't expect the timing.
Of the completion of this assessment.
To really be delayed.
On that in a sense that the project is moving and and and it's got to move forward and we've got a.
To manage the schedule on the cost line on that front.
Makes sense, thanks, very much that's all my questions. Thanks Danielle.
Thanks Duffy.
Once again, if you have a question. Please press Star then one.
Our next question is from Josh Wolfson with RBC capital markets. Please go ahead.
Gotcha Alright.
Just a couple of questions on the on the financing outlook.
So first off in terms of the debt and the expectation to be able to draw down in the first half of this year is it safe to say that the that that assumption is based on and that requirement to drawdown is based on the company being fully funded to completion based on our most up to date capital estimate.
It.
So we we've we've been having discussions with what are the financial institutions in our lending syndicate for some time, we've been indicating.
I think from certainly the third or fourth quarter of last year that we expect our drawdown under the facility in the first half of 'twenty.
22, we have also indicated previously that.
We intend to maintain a minimum cash balance of at least $200 million and at times that minimum cash balance might be higher we do have.
Certain cash management.
Requirements.
Particularly in relation to our prepay. So for example, we deliver the physical allowances under that 2019 prepay at the beginning of the month and then we receive payment under the 2020 to prepay closer to the end of the month.
And then with respect to the hedges that we put in place for our risk management strategy.
Some of our hedges, we've got a growth at all rather than next at all and therefore that impacts our cash balance.
On that.
Our credit facilities are secured credit facility.
I'm going to say it is fairly covenant friendly we've got two financial covenants net debt to EBITDA of three and a half times.
And an interest coverage ratio, which is which is.
Because he's the one that we're not concerned about in the calculation of the net debt to EBITDA financial covenant of Prepays.
Do not count as debt, although I certainly treat them as does that since we've got to pay them back.
However for the purposes of that net debt to EBITDA calculation, they they do not count them. So.
<unk> Dot dot dot, obviously helps us manage the covenants going forward I'm not sure if I've answered your question.
Partially.
Yeah.
So I guess I'm trying to add more directly ask.
The event that the capital estimate changes.
And there is a funding shortfall are you still able to draw down on the credit line.
Yes, the credit facility is not isn't like project there drove annual construction driven.
And the the drawdown.
Or not.
We do not expect the drawdowns to be impacted by.
By our capital or liquidity shortage on on that front and we do have.
We do have headroom in our financial covenant to lets say assume additional debt.
If we.
We do need additional capital and we determine to obtain that additional capital in the form of debt.
Okay and then.
My last question when Youre looking at the available options.
The event that liquidity as required.
Beyond asset dispositions of which there is a number of opportunities that might be out there.
Is the company, considering or would consider more hedging or gold forwards in place or is that.
The upper end.
At this point.
We do have some restrictions on our credit facility with respect to the volume of ounces that we can sell forward under a prepay arrangement, we are not at that headroom, yet what the 150000 ounces that we have to.
To prepay or arrangements that we're juggling.
And we do have the capacity.
Under our various instruments to do additional hedging.
Of of of gold.
Perfect. Thank you very much.
This concludes the question and answer session I'll now hand, the call back over to Graeme Jennings for closing remarks.
Thank you very much operator, and thanks to everyone for joining us this morning and for your continued engagement with <unk> goals. We look forward to having you join US again for our first quarter results conference call and Goodbye.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
Okay.
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