Q4 2022 IAMGOLD Corp Earnings Call
Thank you for standing by this is the Congress operator, welcome to the ion <unk> 2022 fourth quarter and year end 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.
Joining the question queue you May Press Star then one on your telephone keypad should you need assistance during the conference call you May signal, an operator by pressing Star then zero.
At this time I'd like to turn the conference over to Graeme Jennings, Vice President of 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 marine Cherokee.
Chairman the board.
An interim President and Chief Executive Officer, Martin <unk> interim Chief Financial Officer, Bruno Lemelin, Senior Vice President operations and projects.
<unk> Senior Vice President General Counsel and corporate Secretary.
Our remarks on this call will include forward looking statements. Please refer to the cautionary statement included in the presentation under the heading cautionary statements regarding forward looking information and we 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 are included in our most recent MD&A each under the heading non-GAAP financial measures.
With respect.
And to be discussed please refer to the information in the presentation under the heading qualified person and technical information.
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 .
Got it.
Thank you Greg Good morning, everyone and thank you for joining us.
The last 12 months has been to transform it gets pretty funny.
The company took significant steps towards this goal of becoming a leading high mocking gold producer with you guys.
Smith.
Funding is coty as we prioritize.
And the legislation on key jurisdiction and value accretive ISS.
For the benefit of always take hold.
Yes.
Regionally the company exceeded its targets how did you say 713000 ounces funding.
Coming in above our revised guidance of 652700, <unk> and financing.
This strong performance was fueled by a record production at Essakane.
Secondly is the backbone of our current production and good teams, there and done an incredible job demonstrating great initiative and resiliency.
But putting all their projects so remarkable progress in 2022.
It is now over 70% complete and recently celebrated a major milestone with the deployment of the truth.
Autonomous haul trucks, which began mining activity in Canada.
This site celebrate 10 to $8 3 million I always without a loss time injury, which is a testament to the skill and dedication of Dakota T.
On behalf of the board and the executive team, we applaud the tireless after each of the Aimco team for these achievements and continued commitment to operating safely and responsibly.
Our commitment to safety is not just a priority for us, but it's value that is S E all of everything.
Everything we do.
Financially the company achieve its stated goal of funding the construction of Coty prior to the end of the.
Calendar year.
This strategic transaction for the sale of the Rosebel and exploration projects.
West Africa, as well as the funding agreement with our trusted partners Sumitomo together combined for over $900 million of liquidity.
And what does that rate without sacrificing any law to economy.
Concrete assets.
This was a major achievement for the company.
And I think positions us for success this year.
Turning to sustainability.
Island Gold continues to place responsible mining and default trends.
We strive to achieve the highest standards in safety and environmental social and governance practices.
I am goes commitment to zero harm is our new called the company's values and essential for value creation for all I always take holders and to operate and excel.
Mining company.
Our efforts continue to be recognized as we were ranked <unk> out of 52 respective peers by Moody's ESG solutions and continued through all of the W. E reading by MSCI reading assessment.
Actually placing I am goals, among the top 15% of precious metals company.
We had and we will continue to enhance our reporting under a widely recognized frameworks, including the global reporting initiative.
And the sustainability accounting standards Board.
And this year, we will be issuing our inaugural task force on climate related financial disclosure report, which will unwind medium term targets and a roadmap to always always goal of achieving net positive baidu diversity at all of our operations.
And they're getting a greenhouse gas emissions by 2015.
Now turning to operations last year I am gold produced 713000 ounces of attributable gold from all operations.
Exceeding all of their guidance targets, which were raised in the second natural to here.
This.
Our performance was driven by record production at its again its trunk fourth quarter from Rosebel and continued improvement at Westwood.
The strong production results and sales volumes translated good cash cost of $11.
11, <unk> hundred at $9 per ounce sold and all in sustaining cost of 1500 $81 per ounce, so comparing well with our guidance estimate of 11 LNG to 11.
$8 per ounce for.
For cash cost and slightly below our all in sustaining cost guidance range of 1600 to 16 50.
Yeah.
We saw upper reading costs increase in the second half of the year from continued cost pressures from inflation and supply chain constraints as well.
The proportion of stripping expenditure at Cannes relative to production in Q4.
Looking forward to 2023, we are forecasting production to be in the range of 410 to 470000 ounces from its again and Westwood.
We will walk through our operations in their respective production outlook in more detail in the following slides.
Cash cost this year I expect it to be between 11, and 25 and 1100 $75 per ounce.
So.
The increasing cash costs compared to that from continuing operations in 2022, and due to an expected return to a grade closer to reserve grades at Essakane as well, that's a continuation of the elevated pricing level for some consumables asics.
During the second half of 2022.
Pricing for the main consumables, including cyanide lime and grinding media I expect it to remain in line with the levels of the second half of 2022.
Some consumer loan pricing, such as activated carbon explosives and pure plug ups.
Got it to remain under pressure in 2023.
Selecting continued imbalances in global supply and demand.
All in sustaining costs is expected to be Indurain, just 16 on June 25 to 17 $200 per ounce sold.
The increase in all in sustaining costs in 2023 again ask him to answer that from continuing operation in 2022, and you do the same reasons as cash cost per ounce sold as well as the.
Impact of an increased ratio of stripping capital all to I'm sorry.
Increased ratio of shrinking capital two ounces produced at its heart.
Ken.
Similarly in the first half of the year, where we may see costs come in above towards 2023 guidance only to step down in the second half of the year.
In addition, our all in sustaining cost outlook has changed at higher per ounce country mission of corporate costs as a result of the sale of the company's interests in the Rosebel goldmine.
Now turning to operations.
It's again you reported your best year ever of production since starting operations 13 years ago.
The mine produced 480000 ounces of gold in 'twenty, 'twenty, two or 422000 ounces two videos all basis.
Benefiting from positive reconciliation and reconciliation excuse me on the head.
Green versus always block model and improved recovery of demand.
On a quarterly basis, the fourth quarter was attributable gold production of 98000 ounces.
In line with the prior your prior yet.
All mining declined in the fourth quarter as operations prioritize stripping activities to secure access for the next phases of Minding later this year, while also managing impacts from supply chain constraints related to security environment in the country.
<unk>.
On that we know what the security situation in Keno Hill continued to deteriorate in 2022.
With governmental instability and terrorists related incidents occurring in the country and region.
The company continues to take proactive measures to ensure the safety and security of in country personnel and Heath.
Adjusting its protocols and activity levels I dislike according to the security situation.
The company continues to make investments in security and infrastructure into the region and at the mine site well regularly engaging with relevant authorities and government partners, even like you know faisel.
Cash costs and all in sustaining costs in the fourth quarter came in at $1043 per ounce and.
14 of them doing $56 per ounce, respectively, increasing actually in the second half of the year due to inflation as well as lower production and increased waste stripping relative to their production in that quarter.
Looking ahead as I kind of attributable gold production is expected to be in the range of 340 to 380000 ounces.
Grades are expected to return closer to reserve grades.
And.
Also operations move into the next phases of the pit.
Unlike last year, where we saw relatively flat production quarter over quarter.
This year, we expect lower production in the first starts off the year.
Mining activities prioritize stripping in order to provide to provide access to two new all phases for mining in the second half and into 'twenty 'twenty four.
Cash costs and all in sustaining costs are expected to continue to remain a hot spot.
Particularly in the first half of the year, reflecting lower production levels.
<unk> had great reaching closer to reserve grade.
Additionally, in the quarter I am goes completed the study to assess alternatives to a heap leach scenario at the end of the mine life.
And we did that by campaigning low grade stockpile through the processing plant.
This study region positive results, suggesting that approximately 10 million tonnes of stockpile.
Can be processed through the CIL circuit and cause a mix like I.
Accordingly, the company will not be pursuing the heap Leach project and it will be providing good results.
In an updated technical report later this year.
No Westwood.
Gold production was 18000 ounces in the quarter as a result of higher volumes and ore grade from underground.
As well as higher grades mined from the Greentree open pit.
Underground developments into fourth quarter achieved the highest developing the debate of the year with.
1297 meter yourself lateral development completed triple that of the scene, probably hear a year prior yet right.
Resulting in full year lateral would have loved them into 4303 meters. This successful ramp up in development activity, our secret multiple ore faces a different levels in the mine.
Increased operational flexibility to exploit multiple stope sequences.
To support the 2023 production flat.
This year at Westwood is expected to produce between 70 to 90000 ounces with an increasing proportion of all sourced from the underground mine.
Production levels are expected to progressively increase over the course of the year.
Benefiting from the continued advancement of underground development, providing access to higher grade zones in the second half of the year.
No feed will continue to be simpler and just from the available surface deposit.
And we should note that our guidance includes supplemental mill feed from satellite deposits, including from the five year old property in the second half of the year.
Cash costs and all in sustaining costs continue to remain high at the Westwood complex.
It's a very high sensitivity to underground output.
Production volumes increase we expect to see costs go down.
Now turning to Coty go.
He has been very exciting seem to progress on the project over into fourth quarter ending two this year.
Project advancement rates all correctly at peak levels in line with the updated project plant.
In fact, he's operating at its current capacity with approximately 1500 workers at the site.
I always thought that stage a couple of weeks ago with our partner Sumitomo and it is remarkable to transformation, we are seeing that could take.
Yeah.
The other thing again, the project was approximately 73% complete achieving nearly 9% progress in the fourth quarter.
To stop the winter our construction teams were focused on critical project activities to allow for mechanical installation and mobilization inside the plant during the winter season as well.
Earthworks activities in preparation for this spring.
Structural steel work into your H P G R and secondary crushing area.
Difficult to progress with the main structure, an overhead crane can be installed in the first month of this year.
And as you saw on the previous slide installation of the Leach tanks is nearly complete.
Construction of the electrical substation that safety is progressing well and we anticipate connecting to the problem to the provincial Idaho grid on track with our schedule.
Yeah.
This site celebrated a major milestone last month with the initial deployment of the autonomous haulage and drilling systems with the first round of Caterpillar 793 haul trucks currently upper reading in autonomous mode supported by E checks upper readers in the knee.
Newly commissioned mind control group.
This early deployment has allowed us to support our Earth works contractor well better position positioning our mining team forehands off mid year and for the commencement of production next year.
It is really a site to see these trucks money with their blue light and operating with a level of precision that can only be achieved by this technology.
Now looking at just project spending.
In Q4, the company incurred $185 $6 million in project expenditures.
As of December 31st 2022, the estimated attributable cuts to complete.
Construction and I am Gold's funding requirement is 800 to 875 million.
It is expected that Sumitomo will fund approximately 340 million of the Twenty-twenty tree expenditure I see.
As per the amended joint venture agreement.
Jim will provide details of it in a moment.
Therefore, translating to a I am gold funding requirement. This year of 462 535 million during 2023.
In terms of timeline could they go continues to track well with the updated project schedule towards initial production in early 2024.
I am holding our partners Sumitomo, all aligned and focused on building Coty safely.
All the time and to the current budget and scope.
At this time the critical path for the project continues to be true in the processing plant and teams all focused wind installation.
Ongoing off the pipe racks, and grinding and refining structures.
The project is advancing the 2% to 4% per month.
And as we look ahead to this year, we can start to see the light at the end of the tunnel.
2023 is going to be an exciting year for this project.
We are eager to showcase to the world.
It will be 10 of the largest gold mine by production.
Turning briefly to Goslin last year, we conducted the 70000 meter diamond drill campaign with US. He results reported earlier this month, which intersected mineralization to this so dog and below the current resource boundary of the deposit.
Thus flynn with its maiden resource of $3 4 million indicated ounces and one 7 million ounces inferred.
He used to be in the early stages of discovery.
The deposit is only been drilled.
With a fraction of the meters compared to Coty and to.
The depth and.
It remains open along strike and depth.
When one looks as it could be life of mine plan, there's a step down in production in years 'twenty dirty to 'twenty duty free.
Which would be a logical fit to bring bosland intuitive mindset.
There is a lot of work to do we know what to do to realize and this year, we will be advancing technical studies to review alternative.
Well potentially inclusion of coty into the future.
For potentially inclusion of goslin into a future coated mitral from my part.
Then looking beyond goslin.
We firmly believe that cookie golf not just a project, but just started the district and there is significant upside to be uncovered.
Yeah, it's been minimal historical exploration targeting dose.
Coty Goslin stall entrust intrusion hosted deposit with it now we're at 596 square kilometer land package.
I will now turn it over to Martin to walk us through the financial review.
Thank you Barry and good morning.
As you would've seen rosebel has been classified as a discontinued operation due to its size and are not included in our continuing operating results.
Revenue from continuing operations, starting with 950.
Last year from sales of 555000 ounces.
506000 ounces on an attributable basis on.
Average realized price of $1721 per ounce.
The process to be large spot.
Bucket physically deliberate comping 50000 ounces into the PPA arrangement that has a 1500 dollar for oxycodone.
<unk> 3 million in cash this year in relation to the call it competing 2019.
Instrument.
Earnings before interest income taxes, depreciation and amortization.
From continuing operations was $292 3 million for the year.
Or $313 4 million on an adjusted basis.
But in fact free cash flow from continuing operations.
Let me discuss flow from mine site operating activities this mindset related capital expenditures.
$167 2 million for the year.
Looking at cash flow.
Cash flow from operating activities, including working capital was $407 million.
With $257 6 million coming from continuing operations.
151, 1 million from discontinued operations.
Net cash used in investing activities totaled 800 anybody who bought.
One 9 billion of which $761 2 million was used by continuing operations of.
The major component, which was the ongoing construction prototype.
The discontinued operations of $137 million.
Finally, net cash funding financing activities, starting with broadening film boyhood.
Primarily due to the drawdown of our credit facilities.
In terms of our financial position, we ended the quarter with approximately four 8 million cash and cash equivalents.
27 billion available under our credit facility.
After drawing down 455 million in 2022.
<unk> put it as a credit market $18 4 billion issued under the credit facility.
As collateral for certain surety bonds issued its environmental indemnities.
It is worth noting that the cash balance excludes 40 foot bogey.
Assets held for sale that is prudent.
$38 5 billion of cash at Rosebel.
Additionally, approximately 236 million or about cash and cash equivalents or car T like drugs right and it's a cat.
That's where you started.
Golf computed a series of strategic transactions at the end of the.
Dr overnight.
After tax funky.
The results of which mean that Aimco is able to meet somebody that remaining funding requirements I talked it doesn't.
Sami fastball political infusion of construction are critical.
Based on the current schedule an estimate.
I was in hospital type of IP.
On golf and all signs of interest and the rise in Buffalo.
Bonnie.
Consideration of 360 bogey.
This transaction closed.
On January 31st we stopped the company received net proceeds of three.
Save me, one with 5 million.
Consisting of sales proceeds of $360 million.
$15 million up the cash held by Rosebel on January 31st.
This preliminary working capital adjustment of $3 5 million.
The company's due to receive approximately $24 million.
By March 31, 223, consisting of the remaining cash balance off part of it was about five.
Then a final working capital adjustments.
On December 20th the company adopts that has entered into definitive agreements with manager to solve the companies interested in this exploration development partners in Senegal, Mali, and Guinea, including butter retard the opco for aggregate pre tax consideration of approximately 200.
$82 million.
Or approximately $240 million to $250 million on an after tax spikes that is the method.
We continue to expect these transactions to close over.
And of course, with the second and third quarters.
Finally on the same with my team.
Lastly, in Boston funding agreement with Sumitomo with Sumitomo will contribute certain apocalypse, finding their box through the project off project.
Which in aggregate are expected to target approximately 340 billion over the course of this year.
In exchange for an approximate 10% interest in prototype.
With the right to repurchase the 10% interest like one of seven future dates up to November 26.
We believe.
That's to me so much as auction demonstrates to all our stakeholders strong validation of that particular project.
From our project partner and we want to reinforce that is ours and so when we talk much attention.
<unk> goal to return to the 70 30, JV ride sharing in the future.
Thank you Martin and some Gratulation to you and your team for the incredible job last year.
With that we'd like to pass to call back to the operator for Q&A.
Yeah.
Thank you well now begin the question and answer session will join the question queue. You May Press Star then one on your telephone keypad, well hear tone acknowledging your request.
If youre using a speakerphone please pick up your handset before pressing any key.
To withdraw your question. Please press Star then two.
We'll pause for a moment as callers join the queue.
Once again, if you have a question. Please press Star then one.
Thank you.
Thank you very much operator does Dan doesn't seem to be any questions. So I would like to thank everyone for joining us.
So I think we are hot.
Okay questions coming in yes.
That's correct question. The first question is from Mohammed.
CIBC. Please go ahead.
Yeah.
Hi, Thanks for taking my question, sorry about the mute.
We have over there.
So my question.
I'm here on behalf of Davidson.
A question really related to that quickly and.
And the heap leaching expensive. So first of all I, just wanted to understand whether or not that mature.
Included in either the reserve and resources.
Yes, that's my first question.
Okay.
Thanks for your question and if I can just to dwell you wanted to know if that potential.
The 10 million tons, we mentioned that was supposed to be heap Leach. If it's included in the resource or reserve.
It is not.
And if I Miss one just doing good question, maybe you could repeat please.
Yes for sure.
Was the question.
Related to the nine.
8 million tons that you mentioned on the call.
He is not going back to the technical report.
I recall that this expansion that was about 43 million tonnes or about three seven grams per tonne would you be able to maybe give us a little bit more color on what we could expect from that.
Our economical material and when we'd expect to see that in resources or reserves.
And so different providers want sheet and clarity in terms of the material that was considered.
In the heap Leach scenario Eaton depart.
All I'm going to see is that by mid year, we should have a new technical report.
We will have studied all of the potential options for processing and different processing pathway. So.
We'll keep we'll we'll keep the market informed as what are the keys to complete it.
Okay sounds good. Thank you for that and then finally I guess given.
Given given the fact that you are going ahead with the heap Leach expansion any more should we just expect the mine life to pan around that 2026 2027 months.
That's where the technical report.
At this point.
Yeah.
We think we have possibility to extend to extend the mine life.
But.
You know, we will need to collect more drilling India and upbeat on all of our resource model.
Work is progressing and as I said, we will provide more clarity by midyear.
Okay sounds good.
Yes.
The next question is from Sean <unk> with Deutsche Bank. Please go ahead.
Hi, good morning, and nice job on liquidity this quarter.
Just if we take a look at your cash position today.
Is it fair to say that pro forma cash assuming the receipt of the funds from both to and from South America is roughly $1 billion.
Okay.
Yes, if we if you take our cost position that we had at the end.
If the Euro 400, saving then we add in.
Additional cash proceeds on the drug's apprised about that was included in our assets held for sale that gets us to the $450 million and then if you add in.
The net proceeds from the others. The other the two transactions that would get us to approximately $1 billion.
Okay, great. Thank you and then just surrounding Burkina Faso mm Theres been a few headlines out there there was a headline with endeavor yesterday.
Can you just tell.
Tell us a little bit more about maybe what's going on on the ground there.
There has been rumors about the French potentially readings that is that true and how do you control your own destiny. There I know you've operated in the country for a long time, there's always been some kind of turmoil.
Just curious to get your opinion on has anything changed there or is it sort of it's always been a difficult environment and a more coping with it.
Okay.
I'll take I'll take this.
Well first let's.
I'll try to address to the bathroom money not only HDR.
The headline news, we heard about early this week with cool sale.
So we are aware of media reports relating to the Burkina Faso government buying coal.
The government actually issued a statement clarifying that D arranged an agreement with endeavor for that sale.
By the way in the mining code article 16 does allow for these transaction.
And in our case, we settled a small amounts frequently directly to the West African Central Bank.
We have not received such a request from the Burkina Faso government.
And I would not comment further on that.
In terms of the security and if there's more color as we noted this situation is complex it cannot.
It deteriorated in 2022.
And for US, it's always relative to our convoys of supply is going to demand.
It's it's a logistical.
Child niche and the company continues to take proactive measures to ensure the safety of our people.
And we are constantly adjusting our protocols and activity levels and we are monitoring closely security environment.
And also we are.
We continue to make some investments in our supply chain infrastructure.
And also in storage capacity at the mine site.
And we.
We do have the support of the government.
So you know two components to this our situation that the second and then disclose sales which shot.
We have not received that type of request.
For Cat I hope that's helpful.
Yes, that's very helpful. Thank you very much.
Thank you.
We have a follow up question from Mohammed Citibank. Please go ahead.
Great. Thanks for taking my question just a follow up question on the current low grade material.
I was just looking through the reserve and resource table I was wondering if you could give me maybe just the tonnage and grade that you currently have there in delivering material that's available. Thank you.
For low grade material I do not have that if you don't mind, one that we could take that off slowly.
Yes for sure.
Our mission.
Okay. Thank you so much.
This concludes the question and answer session I would now like to hand, the call back over to Mary.
<unk> remarks.
Thank you very much operator, and thanks to everyone for joining us this morning and for your continued engagement with I am goals.
As always we are available should we should you have any additional questions.
Please do not hesitate to reach out to grabbing Jennings of myself, if you would like to set up the beat it.
Thank you all and other grid day.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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