Q2 2022 IAMGOLD Corp Earnings Call
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Sure.
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Thank you for standing by this is the conference operator, welcome to the I am Gold's second quarter, 2022, operating and financial results conference call and webcast.
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At this time I'd like to turn the conference over to Graeme Jennings VP Investor Relations and corporate communications for I Am Gold. Please go ahead Mr. Jennings.
Thank you operator, and welcome everyone today I'll handle the second quarter 2022, operating and financial results Conference call. Joining me today on the call are I'm pretty.
Chairman the board and interim President and CEO , Daniela Dimitrov, Chief Financial Officer, and Executive Vice President strategy, and corporate development, Craig Macdougall Executive Vice President of growth and Bruno Lemelin, Senior Vice President operations and projects.
Our remarks on this call will include forward looking statements. Please refer to the cautionary statements included in the presentation under the heading cautionary statement regarding forward looking information and be advised that the same cautionary language applies to our remarks during the call.
GAAP measures will also be referenced on the call. Let me direct you to review the cautionary statements included in the presentation and the reconciliation of these measures included in our 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 that technical information.
The slides referenced on this call can be viewed on our website.
I will now turn the call over to our chair and interim President and CEO .
Hey.
Thank you Graham.
Good morning, everyone and thank you for joining us this morning.
Last night, we reported our second quarter operating and financial results as well as announcing the results of the conical project update.
We have a lot of information to cover on this call. So we will try to expedite matters in order to allow for enough time for questions and answers.
Yeah.
As you will see I am goals and another strong quarter benefiting from recent productivity initiatives.
Operations.
We are on track to achieve the upper end.
<unk> guidance for the year.
There are many positive developments expected into thank you Matt.
But our operations are in challenging jurisdiction and we see cost pressure throughout the organization.
It is therefore essential to mitigate these impacts through a strong focus on operational excellence programs.
Uncovering improvement opportunities and productivity.
Optimization cost control and <unk>.
Capital allocation.
<unk> represents a significant milestone for the company.
This was the culmination of months.
In depth analysis.
The company's management and project teams.
Vcs contractor and technical expertise.
<unk> gold is transformation for <unk>.
Offering new logos cash flow generation once in production.
We truly believe that what we are building at Coty gold is not just a project, but the start of the district with significant opportunities for growth.
I'd like to think of it as just start of a new mining camp.
The project today is over 57% complete.
Dave just schedule and project costs give us much improved visibility towards completion.
Given the strategic importance of the co pay to achieve our goals.
Coming in leading high margin gold producer.
We are actively pursuing various alternatives to increase liquidity to deliver a coating on its updated schedule.
I am confident we will address dineen J Neal stern challenges in order to advance Coty and better position I am volt as a more resilient company for the current environment.
Now turning to the quarter.
On health and safety.
Ensuring all of our employees go home safe continues to be a key focus.
With gold ounce produce us to be done safely.
And we applaud our teams for their continued continuing.
Commitment to zero harm.
Also Dakota construction team for achieving an impressive $5 7 million hours with no lost time injuries today.
<unk> delivered another strong quarter with attributable gold production of 170000 ounces.
It's a strong performance from <unk> and improvements at Rosebel.
And that's bringing our year to date production to 340 44000 ounces.
Positioning us on track to achieve the top end of our guidance.
Guidance range of 572 640000 ounces.
The strong production results and seeing sales volume translates into cash cost of $1119 or so.
And all in sustaining costs.
$1604 per ounce sold.
On a unit cost basis, we are seeing impacts from inflation on mining and processing costs.
These have been partially mitigated through higher grades and other operational improvements at the mine.
Sorry.
Cost guidance for 2022 is unchanged at this time.
With cash costs expected to be between 11 of Android and 11th untreated 50, or so and the all in sustaining costs expected to be between 16 safety and.
16 $90 per ounce.
Portland.
These estimates issued in January included an inflation assumption of 5% to 7% on key consumables.
Additional cost pressures are continuing from systemic inflation.
<unk> global supply chain and other global events.
Further increasing the average cost of some key consumables such as oil ammonium nitrate grinding media line and probably a night.
We don't continue.
Continue the external cost pressures may result, in an increase to cost and capital expenditures.
We continue to see benefits from our oil hedges. This year, we have an 80% hedge ratio on double UTI contract and a 71% ratio on Brent and between 38 and $65 per barrel.
For reference a $10 per barrel increase in deal price equates to approximately $6 per ounce.
The increase in our cash cost.
Without hedging contracts did say $10 per barrel for use in the oil price will translate into a $15 increase in cash cost.
No it's a cat.
Turning to it that can kind of get used to delek or reporting gold production of 107000 ounces.
Benefiting from higher head grades and strong recovery.
Mining activity totaling $11 4 million tons in the second quarter was lower than the prior quarter, primarily due to lower waste stripping activity because of constraints in consumables from supply chain challenges in country and abroad.
We will work to rebalance this shrimping shortfall, but as of today no reduction in stripping activities is not expected to materially impact production in 2022 and 2023.
Mill throughput was $2 7 million tons at an average head grade of 152 grams per ton of golf and plant availability of 86% with recovery of 90%.
Mill feed ready availability, if you will know we're entering the second quarter due to higher volumes of hard rock in the mill feed as well as annual planned maintenance and supply chain challenges.
The security situation in pet it cannot dystonia oriented during the second quarter and impacted the implant supply chain, resulting in delays in the delivery of consumables. The company continues to take proactive measures to ensure the safety and security of Hill country personal.
<unk> and managed to limit the impact on production in the second quarter.
We continue to adjust our protocols and the activity level at this site. According to the security situation.
The company is furthering some additional investment in security infrastructure in the region and at the mine site.
And that is with the support of the government.
Looking ahead attributable gold production in 2022 is expected to approximate the top end of the range of 360 to 385000 nonsense.
Reflecting the higher than expected grade in the first half of the year and the potential for further Richards positive reconciliation between mine grades and the reserve block model.
Turning to Rosebel now.
We were very proud of the second quarter, which historically sees lower than production due to the impacts of the rainy season.
The part D operations reported second quarter attributable production of 49000 ounces benefiting from improved recovery and it had great bringing.
Bringing the year to date total to 95000 ounces.
Mining activities on regime to prevent they make levels mining 15 5 million tons in the quarter with the rest of the stripping program.
Required in the updated mine plan.
We released earlier this year, which by the way outlined the path for Rosebel to return to being a plus 300000 ounce per year.
Year producer.
Mill throughput that cheap to one 2 million tons at an average head grade of eight eight grams per tonne.
And Trump was it was lowered to two mills in maintenance work required on the Sag mill feed chute huge and refurbishment of the apron feeders Miller.
Mill, a recovery of 92%.
Continues to benefit from the ADR Sucrate improvements put in place at the end of 2021.
Looking ahead.
Attributable gold production guidance for 'twenty 2022 at Rosebel.
Means unchanged at 155 to 180000 ounces.
The first half of the year additional cost pressures emerged through rising oil prices.
And they continue to be partially mitigated by the existing hedge program.
Company also expects higher powered costs compared to 2020 watt, which we know athletes to the price of Google and Oracle.
We noticed that the collective labor agreement at Rosebel expires in August 'twenty, 'twenty, two and negotiation for new agreement I've come in and that's been cordial and professional.
The strategic review process of Rosebel is active and ongoing and we will provide updates when appropriate.
Not with Westwood Gold production was 14000 ounces in the quarter as the underground development continues in order to support the full ramp up of demand.
Importantly, ensure mining activities recommends in the higher grade west and central zones.
And domain around broke through the 180 level in the lower part of Dubai, which will allow for additional flexibility and they've locked in at the high grade zone, including selling to Germany.
Gold production guidance and the Westwood complex in 2022 remains unchanged and the range of 55 to 75000 nonsense.
And then that you that the safe and stable the restart of the central and West.
Underground zones can continues throughout the year.
Now turning to coated go.
Activity at the site at Southern region dramatically. This summer following discharge action by Crane operators and construction labor in May which reduced head count at site by approximately 250 people over it that much.
We currently have approximately 200 workers on site.
Work inside the plants is progressing with the ball Mill Foundation being set and preparation ongoing for mechanical electrical and piping installation.
Last night, we announced our updated estimate of costs to complete project economy and life of mine plan for Coty.
The results will be included in a new Ni 43, 101 technical report to be filed on SEDAR before.
September 17.
This project will be completed cozy GUL schedule and cost execution strategies strategy and risk creeps, you all super trend initiated by the company earlier this year.
Looking at the life of mine plan I like there are a few key changes from the previous technical report.
We are in the higher production extended over the first six years versus five years previously.
And also we have lower waste, though is translating into improved strip ratio.
Both of which helped to mitigate any increase in the unit cash cost on the cost and operating assumption.
The net result.
A project that continues to be transformational for ion goals.
What are your goals is a project with an 18 plus year mine life, producing nearly 500000 ounces per year in the first six years of operation and offering significant growth potential with the addition of goslin and and historically.
Do we explore up land package.
We will know quickly stepped through key component of the operation and the highlight changes all that.
Assumption in the new mine plan.
Yeah.
First online design and pit sequencing.
We saw some opportunities to add value to the project and minute maximize early cash flows.
Through this work the pit phasing was modified to talk at a high grade zone early in the life of mine plan moving to five phases with an extended phase one pit design.
Additional opportunities for value creation included the adjustment of the rent gradient, which allows for shorter haulage distances and the extension of mining activities in phase one.
Further we have lowered our ramp up in utilization assumption for their mining equipment.
To increase the other ones fall burning of operation and maintenance of the autonomous haulage system.
This increase windows for upper reading alongside our contractors to achieve.
Better knowledge transfer.
Also there is the first year of operation.
We all executive on the 48000 meter grade control drill program.
On this page 10 by 10 drill spacing, which covers 70% of the tons to be mined in the first 12 months of operation.
Did you have any plan includes updated assumptions and inputs.
Ramp up of the processing plant up to nameplate capacity.
Based on updated modeling and analysis of OEM D. The full plant equipment, we revised the mill upper reading time, Oh utilization rate to 92, 6% from 94% previously.
Further we have extended the ramp up for you to stay they state to 20 months from 10 months previously.
We like to account for an increased frequency of inspection shutdowns and also improve learnings.
D H B G off tertiary crushing unit is a major focus for our plant and operational readiness T.
We have revised dollar H P G. Our operating assumption.
For additional don't tell them in the early years and overall maintenance activities.
Paresh and he is well underway with all routine visiting weird H P. G. All its operations globally.
To exchange best practices for grandfather and operations.
He's spare parts are being procured with an extra set of rural already purchase well.
We are very fortunate that coty goals is located only a couple of hours from the wheel facility in Sudbury.
They're essential maintenance and road resurfacing will be supported our teams will be working alongside Weir engineers during commissioning.
And operation.
No no for reading cost over the life of mine totaled.
Total cash costs are expected to average $693 per ounce of gold sold and all in sustaining costs are expected to reach $854 for salt.
Mining unit costs are estimated at $2 62 per ton of material mined ore.
What is accounting for capitalized waste stripping $6 20 per ton of process tool.
Mining cost increased by.
15% from the 2021 technical report due to increased head count extended ramp up and updated cost models.
Processing costs increased 8% to $7.
97 per ton, mainly due to higher maintenance costs and shut down our assumptions during ramp up including with the H P. G. R US I mentioned before.
And we also have an increase in T M that operation and monitoring activity.
The plant is connected to hydro one we all classified as a class eight customer.
And our costs only accounts for 14% of processing costs.
The highest components reach it.
Spares and maintenance, which combined together account for nearly 50% of the processing cost.
That's the estimates that in the updated technical report.
My first 2020 due the remaining cost attributable to I am going to complete holiday and that she's initial production is estimated at just over $1 3 billion.
Despite a weak includes 185 million in contingency and $80 million for escalation.
As announced in our second quarter results, we estimate that the remaining spend to complete co date as of July one 2020 do is one two to one 3 billion after incurring approximately $100 million in May and June .
The project is over 57% complete and the updated schedule and project costs provide us with improved visibility towards completion.
In the last number of months Dakota Gold project I've seen several changes in leadership and oversight both at the project level and corporate level.
Since the appointment of a new executive project director Gee, I've been trying to target deficiencies, while leveraging knowledge experience and team integration between the older steam you'd be see them constructor and the various other projects contractors.
Do you think also represented the conclusion of the Super trend process initiated earlier this year.
It is important to note that Dakota Gold project is being developed with her background with COVID-19 inflation and other global events and their impact including on the global supply chain labor availability productivity and the right cost of materials commodities and.
Consumables.
As discussed in all with me I'm not Smith.
The estimated remaining spend to completion.
Oh, just from additional cost and schedule impact into general project cost category that you could see an hour's flight.
And includes the estimated impacts related to delays due to COVID-19, recent labor action in Ontario, and the inflation.
Outside of the Super trend process Ah study by independent Capital Project Management and service company estimates of direct and indirect COVID-19 related impacts to the project just for I am cool to be in the range of approximately 200 to 400 million.
Yeah.
Looking at the schedule.
Jose goals is expected to commence production in early 'twenty 'twenty four.
This year is critical for project advancement.
Project activities are ramping up through the summer and into the fall winter coordination of earthworks and concrete.
One structural mechanical piping work and our installation and they are being very very important.
The increase in the oversight team managing contractors and contracting packages will facilitate the expected increase in the number of contractors.
As the head count increased to over.
1500 pretty the people he's expected during this construction season.
The company cautions that potential further disruptions.
<unk> without limitations caused by COVID-19, Ukraine wall with them, but.
Actual labor disruption and the tight labor market continued to impact the timing of activity availability of workforce productivity and supply chain and logistics.
And consequently cause further impact the timing of actual commercial production.
And project cost.
Taken together the Coty gold project being developed in a challenging environment offers robust economy.
I didn't go well.
On a go forward basis from me for 2022 the after tax NPV at a discount rate of 5% of the Cote Gold project was estimated at 1.1 billion dollar we didn't even fly off.
After soy employed after tax IRR.
Teen and a half percent under your base case gold price assumption.
Our spot metal prices of 17 $75 per ounce gold.
Over the life of mine do go to go project as it needs to meet agent after tax NPV of 1.56 billion dollar and implied after tax IRR of 16, and a half per cent.
Following the project review and risk analysis.
<unk> regained and independent technical consultant to assist with the boards review of the results.
This independent review supported the updated estimates as presented confirming key project areas to focus on aligning with those with ongoing those soybean offline to date, well offering insights into fruit or optimization opportunities.
Yeah.
Now, let's talk a little bit about golf.
So we believe that could be going to it's not just a project with the staff of the new mining district.
Could it go life of mine plan as defined in the technical report is based on mineral reserve of $7 2 million ounces.
The Coty deposit.
The guards fled deposit is located immediately adjacent to Coty and contains $3 4 million ounces of measured and indicated resource with an additional one 7 million ounces of inferred.
Gosh, when I was the only been drilled two ive digged up itself coating.
And is open along strike and down.
Yes.
Taken together.
Oh, Dan Gosling as a total of $13 5 million ounces in measured and indicated and we believe there is significant upside to be uncovered.
There has been minimal historical exploration targeting these co day Goslin style, it's true intrusion hosted deposit within hours 596 square kilometer land package.
With that I will turn over to call to Daniela for the financial review.
Thank you Marie.
The following are some key highlights of our second quarter and year to date financial results.
Revenues in the second quarter totaled $334 million and $691 million year to date.
The average realized gold price for the quarter was 1700 and $99 per ounce.
I think the physical delivery of 37500 ounces at $500 per ounce under.
Under our 2019 prepay arrangement.
And when we come out with a monthly contract.
The average gold price in the second half of 2022, well continue to be impacted by the completion of physical deliveries of 75000 ounces at $500 per ounce as we close out the remainder of the 2019 prepay arrangement.
Adjusted EBITDA came in at $110 million for the quarter and $247 million year to date.
Income taxes for the second quarter that included withholding taxes on the repatriation of Fox from S. A cat impact that net earnings.
Resulting in net loss per share.
Two cents.
Adjusting for noncash items I talked that net loss per share for us.
One cents in the second quarter.
Year to date net earnings and adjusted net earnings per share were three fence and four cents respectively.
We have updated our income taxes paid guidance for 2022 to between 69 and $79 million from $55 million to $65 million set.
As set out in our previous guidance released in January to primarily account for withholding taxes on the additional repatriation of funds from S. A cat that we expect in the second half of 2022.
Operating cash flow before changes in working capital with 94 million for the quarter.
$228 million year to date.
And mine site free cash flow was $42 8 million in the quarter and $130 million year to date.
In terms of our financial position.
We ended the quarter with $453 million in cash cash equivalents and short term investments.
Approximately $349 million available under our credit facility.
We're drawing down $150 million a quarter.
Our current available drawdown under the credit facility is approximately $250 million as.
As we drew down 80 million subsequent to quarter end, primarily to manage the timing of the receipt of a dividend from S. A cat.
And we issued a $19 million letter of credit.
Under the credit facility in support of our surety bond.
Based on our recently updated cost estimate and schedule up construction after Cotai gold project.
Information currently available and prevailing market prices, we know what's that I am both will require additional liquidity to complete the construction of the project.
We are working to implement a fully funded financing plans by the end of the year.
And prior to the necessity to make any potential adjustments to the timing of the advancement of Kotte based on the updated schedule.
We are actively pursuing various alternatives to increase liquidity and capital resources, including disposition of one or more of the company's assets and our interest area and or joint venture partnerships.
Additional secured debt, which could be provided by banks private capital providers and or institutional investors additional unsecured debt, including unsecured and our convertible notes.
Sales of common shares and the extension of that 2022 prepaid arrangements.
In January 2022.
We announced that we were commencing a strategic review process to evaluate options for the Rosebel Saramaccan mining complex, including a potential sale of this complex.
We advanced the process and the second quarter of 2022.
In addition.
We just announced that we are evaluating strategic alternatives for certain development and exploration assets in West Africa, Excluding cat and in South America that may include the disposition of all or an interest in one or more of such assets.
These processes are well advanced and we will provide an update when warranted.
Back to you Murray.
Yeah.
I guess at this point, we will open it up for questions.
Thank you we will now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad, you'll hear a tone acknowledging your request.
If youre using a speakerphone please pick up your handset before pressing any keys.
Our first question is from Heath, Terry with Credit Suisse. Please go ahead.
Hi, Good morning, Thanks for taking my question, maybe first for Daniela can you from what you can tell in your forecast what what is the funding gap right now between.
You know at the end of this year, the cash flow generated and what is needed for for Cotai.
So we disclosed that the remaining spend for Cotai gold is 1.2 to $1 3 billion from July one 2022 to production.
We disclose our cash balance at year end at three at quarter end and are following the draw downs at the end of July that we have about $250 million available under our credit facility.
We've also disclosed that not all cash is readily available on some of the cash is held within our operating subsidiaries and operations need working capital.
We've also disclosed that our coating joint venture.
Under our joint venture agreement, we need to stay ahead, two months of construction cost and cash.
And until the.
At the end of July that period was three months.
And we also have hedges that do.
Required Roe settlement, rather than that settlement, which impacts the total cash that we need to have on hand at any one time.
We've also talked about in the past that taking all of these factors into consideration we view that at any point in time, our minimum cash balance that we would need to maintain would be somewhere around $200 million.
So that end of both price and of course, our operating performance I'll go into.
The range of.
Additional liquidity that the company needs to go into production.
Okay, and then just as a follow up I know Theres a number of alternatives available is there a preference that you can highlight them.
Whether it's an asset sale of additional debt.
No diluting the 70% ownership of any color there would be really helpful.
So we are looking at various options as we've disclosed and we do expect that the financing package will have several components.
Considering our cost of capital and maximizing shareholder value and providing the necessary additional liquidity to get kotte to production.
Okay, and then Okay and then maybe just the last.
Just the last question in the press release, you mentioned like one potential option if the financing is secured by.
In time that potentially the cotai timeline could be extended and this would quote significantly increased project costs can you just.
Maybe give some clarity on what that means.
We are working to implement a fully funded solution by yearend.
And that is our our focus are we are we talked about the fact that the processes are well advanced.
And we are cautiously optimistic that we will get to that will be funded solution by yearend.
Okay. Okay. Thank you.
Yeah.
The next question is from Josh Wilson with RBC capital markets. Please go ahead.
Thanks, very much a couple of quick questions for coach Inc. For the updated study what was the oil price assumption included either short term or short term and long term.
I believe that the Oh for the second half last night I'm, sorry of 2022, it was $93.
For 2023 was 82 and from 'twenty to 'twenty four onwards is about $70.
Okay.
Okay.
And looking at the updated plans, which are which incorporate I guess a bit of breathing room with the scheduling and the ramp up period.
Where would you see the risks now with development either in terms of the bottleneck or critical path items.
Thanks, Josh.
For the question.
But considering that a detailed engineering is done at 99, 6%.
That most of our contracts have been led procurement is all of the equipment is on site that did lead down area I do not expect any major issues to blend needs to deliver on what we say we can do.
And in fact, the team is targeting Ah.
Mechanical completion.
Soon as possible.
So I don't see a lot of risk and if you consider what we've disclosed that.
The 1.3, a $1.2 billion to $1.3 billion cost remaining.
We have more than $235 million in contingency and that escalation in there.
I guess, they just would project, it's quite unusual to us up to 12% contingency built in cost estimate.
So my job gel sheets to deliver on this project.
On schedule and on budget.
Okay, and then maybe final question for Coty.
Has there been any feedback or discussion with your joint venture partner are either about your views on the updated.
It all makes or about you know coming in as a party that could assist with funding here.
Okay Doug.
John Sumitomo is very supportive of us.
Noted in our MD&A, we made an amendment to the coating joint venture.
And we are in regular contact and we work closely with with Sumitomo.
Do you have people integrated with the team at site.
So I would say that we are actively pursuing various alternatives to increase liquidity and capital resources, but are disappointed we will not discuss specific all doing it is.
Understood great. Thank you very much.
The next question is from Jackie <unk> with BMO capital markets. Please go ahead.
Oh, Thanks, very much maybe maybe just start I'll just follow up on that last question that Josh asked on Sumitomo.
The company's Sumitomo put out a press release, I guess overnight, which which it says really briefly that it's continuing to review the estimates for the <unk> project It will.
It doesn't I mean, the the way that it's written it doesn't sound like Sumitomo is entirely committed even to funding its existing portion of the project. So.
Is there a formal commitment in place that Sumitomo is going to fund it.
Commitment or is that still something that you guys are in negotiations with sumitomo on.
Oh. Thank you. Thanks for the question and I think what we'd see a disappointing is dust.
What we've seen last year when the Ah in July 2021 Wednesday with an increase in capital costs that was announced.
As far as normal process for Sumitomo.
The.
The company close to probably the end of October early November to go through their approval process internally.
So in this case, we have been told that it too.
The normal process would take its course and I don't see anything unusual about this.
Just normal course of business for Sumitomo internally.
That's really helpful. Thank you yeah, that's good color and and maybe I'm sorry. Another question on Coty I know the.
Full.
Study is coming out in September so I'm sure, we'll get more detailed than but just for modeling purposes can you give us some color in terms of the cadence for spending on the projects like the capital spending and specifically I guess I'm asking for maybe for this year and next year can you just can you just talk.
About like how much you're anticipating youll spend.
Yeah.
Yeah, we expect a.
Hi, Jackie.
Expect our spend to be.
Somewhere between $60 million to $70 million per month.
Okay.
Thanks, Daniela, it's really helpful and maybe if I could just ask one other question just with respect to the commentary about the the process and the review for Rosebel and potential sale.
How how would that impact if at all your debt covenants do you have commitment to to maintain a certain through cash flow level or is it is.
Is it.
Easy for you to sell an asset like rosebel without without tripping with debt covenants.
So we are certain of the asset sales. So we are looking at including the sale of Rosebel are part of the security package under our credit facility.
We have been working closely with our lead lenders, who are aware of the process and and the ultimate necessity to release.
The security.
On a successful completion of our sale and more comfortable that as part of working with our lenders we have a good handle on it.
Okay.
Okay Super helpful. Thanks, Daniela Thanks Bruce.
The next question is from Mike Parkin with National Bank. Please go ahead.
Hey, guys. So with respect to Coty can you just give us an update on.
The dike that you're putting in.
Or how is that progressing.
And have you gotten to the point, where you're starting to dewater.
Side that you need to dewater or if not when does that start.
Uh huh.
Thanks, Mike for the question.
Dewatering is ongoing and we have dealt with it.
Pretty intense crush yet, but we all true.
And no issues with the watering whatsoever at this point in fact, I think we have really good visibility to the first benches of the pit.
Okay, so you're not getting kind of surprised by excessive water penetration.
No not at all.
And then just in terms of cash flow your exploration spend silver.
Still remains fairly high is that anything that you're considering pruning back in the near term just to help preserve the balance sheet.
Hi, Mike.
But so we're through them.
We're through I guess more than 50% of our exploration spend a harder that span is a focus on an odd goslin and we've got our spend on on carried out we put out some some pretty great drilling results recently on that.
We are going to continue what with the completion of that program. Specifically, we think that Ah is it's important to get that across the line to give us better visibility in terms of your value.
Particularly on that asset that is part of that West Africa, a sale process.
Okay.
And what about 2023 is there any is it too early really kind of worked on budgets yet.
It is too early to comment on beyond 2023.
Okay. Thanks, guys. That's it for me.
The next question is from Anita Soni with CIBC capital markets. Please go ahead.
Hi, Thanks for taking my questions. So firstly.
Can we talk about the life of mine plan a couple of things that you mentioned were stepping.
Stepping up the pit walls and also the ramps from a 10% or 8% to 10% can I ask did you have an independent third party review those technical assumptions from a geotechnical standpoint.
[laughter] Anita.
In fact, there's been extensive G would take where it does.
And originally the assumption was that we needed to be more prudent with the pit design and the ramp because of the autonomous haul trucks.
But those constraints now have been removed in defense that actually and that's really good news last weekend. The first fully autonomous truck was operating on our calibration pad and we feel really confident we can achieve those.
Regions and design polymer meters.
Alright, considering all weather factors that you have there.
Yep.
Okay.
Second question the assumption to go to 5% over nameplate capacity when doing this this life of mine plan what was the Genesis of that I mean, why why why go higher and I noticed you guys commented. This was a one on the Mcnulty curve and I you know given that you've got H P. G R and autonomous haulage.
I'm not sure that I would classify it as a one of them just don't see curve.
Okay.
Okay. I think the comment was more related to the capacity over all of the equipment. What we have is a.
Atlanta with oversight comps and a cycle, which peaked bombs and overall capacity.
And as.
As we've seen in the industry, it's not uncommon.
Once you get.
Mills going its not uncommon to get an extra 15% tonnage throughput.
So we feel very very confident we can reach that throughput, it's going to take some time, but considering decides and really the oversized equipment in that plant.
I don't see any issues with quoting that one and Fox.
Okay.
So then let's just move on to the capital cost estimate I just wanted to circle back the.
The updated our estimate is the same number that you guys put out three months ago, right and you've spent $172 million in the quarter. So my my.
Mass I think that's about 15 or 16% escalation in three months, how do we how can we talk about how how that went up and why it went up by so much in three months.
Just in context of now you've got the $285 million contingency.
And trying to figure out whether that's enough when you're cautious escalate in three months by 122 million Bucks.
Okay.
First of all I would like to mention just strike.
That's that's caused some delays and that was first of all there was a number of stripes. The first one did clean up our readers followed by labor.
And.
As you know.
Can we talk about Essakane just in general like concerning about the security issues. So can you just talk a little bit big cash flow generator for you like what exactly is going on there and how is July looks like are we getting material to cite here.
Did we have a decent July and what are we doing there to make sure. We keep this my knowing.
Yeah.
Let's talk a little bit about in a second because it's a very interesting one some challenges around security bug.
Working very closely with the government on some security measures and we also were at Cagny on and things like extending the a T.
T S trip I decide to have more flexibility.
We have found ways to organize calling voice well.
We are a very large number you can just imagine hundreds of 100 large cogs going decide all at once we are taking measures also to increase.
Our capacity of storage.
Storage capacity at the site as well so that we're not dependent as much one dose convoys.
And so and there's a number of measures that are being put in place.
If a guy is an interesting one because.
We have a very we have a positive.
Positive grade reconciliation.
And what I can provide it.
Yes.
Very steady production, where we also are 53% average gravity recovery.
And what we've seen is adapt in increase in AR.
Great.
And also an increase in core school to some extent, which has led the team to decide to go back Bill can you build a new block model, which will be implemented I expect them in September or early in the fall.
So it's again despite the challenges so we've had the higher grade than expected. We're looking at is we can implement new block model and redo our.
The mine plan and forecast so more to come on it's not done, but so far it's been a very solid producer and.
It's been a very very steady producer awful.
Okay, that's a bit of color on it's again challenges, but we've been our team has done it now some job managing around the security issues.
So <unk>, what like onsite, what sort of inventory levels do we have on fuel cyanide other consumables should we have to.
Closed down.
Because of.
Certainty around the mine site, what do we have on site that we can keep going.
We keep we keep a close to a month of the supplies on site.
Okay.
Okay. That's helpful and so far in July things have gone okay.
Oh, yes.
Absolutely July was in fact, a great month that they suck out.
Okay, perfect and that he has made our Daniela just on the financing package and I'll leave it to somebody else because it's gone over time.
I just wanted to understand that we're going to get some sort of financing package by yearend.
Appeared that it's just not going to be one thing I E. Not just that it could be components.
Components of it is it something that we're going to see just come through like.
By bit from now until year end or are you looking to put one big package together like I'm just trying to understand how you are going to attack. This finance package. If it I understand it's the sale of an asset that happens when it happens, but everything else is it you want to get something in place and then potentially we.
He is CEO coming in I'm, just trying to understand how this is all going to work.
We are working to implement a fully funded package.
With our various components.
Okay. So in one package fully funded and that then Muddies would help us with the a D. A C E O.
Trying to finalize the CEO for the company.
Yeah. So the CEO search is ongoing and the board wants to ensure that we are doing it we're doing it to weight that we have the right person. So stay tuned on this one.
Okay. Appreciate it thank you for taking my questions.
The next question is from Kerry Mccurry with Canaccord Genuity. Please go ahead.
Hi, Good morning, maybe just back on the Coty, Capex and $1 2 billion to $1 3 billion to complete how much of that is now fixed price versus how much of it is really still exposed to either price or volume changes.
That's a good question.
You know I may have to go back to you.
To provide more details, but you know one way to look at it is all of the large contracts that have been.
Got it.
And right now it's.
The work you know what's remaining is all time and material.
Okay I'm not sure.
Maybe I'll follow up maybe on just the sales processes I know you said that they're well advanced so I'm just wondering if you get a bit of color on how long. It's been is there any sort of expected timeline to it.
Complete that process.
So we are.
We are very active on a on both of those processes and we'll update the market.
Why do we have enough of it.
Okay fair enough. Thank you.
The next question is from Lawson Winder with Bank of America Securities. Please go ahead.
Hi, good morning.
A couple questions.
Maybe just quickly on <unk>.
One would be what percent of the Capex is in Canadian dollars. So we can just think about the sensitivity there.
Hum, 90% to 95% of the Capex is in Canadian dollars.
We've used 125 is the FX rate.
For the remaining spend.
The previous estimate was done at one three.
The average at which we've incurred the expenses is somewhere around $1 two seven.
And we have a number of FX hedges at 130 slightly above.
All of which are listed in a table in the MD&A.
Gotcha.
Thank you.
And then with regards to Sumitomo does the JV agreement.
I was just kind of curious what kind of rates.
How do they have the rates of decline additional funding.
Oh they have a.
They have the ability not to contribute to cash calls in which case.
They would be dilutive there are two different dilution mechanisms depending on how much other costs have been.
Spent.
Are we going to share with you that where cash calling on the updated schedule and cost and the.
Our cash contribution for.
That was due August one voice with me.
Okay. That's very helpful and then.
Just coming back to your existing operation.
Definitely touch.
As a kid, but maybe just on rosebel as well. So so number one question would be on the labor contract expiring in August .
Do you have any insight into when that could be resolved.
Uh huh.
Starting from the point of view both risk too.
Two possible disruption.
Impacting your cash flow, but also immuno potential buyer or partner for that asset and they want to see that result, so that'd be my first question.
Okay, I'll try to address that but obviously it does it's gonna be based on past years' experience.
Negotiations.
What we have seen in the past with a you know some are one to two month delay in finding final agreements.
And in terms of disruptions.
Yeah.
We have seen in the past really just one week.
Yeah.
Yeah.
Yeah.
Yeah.
Yes.
Yeah.
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