Q4 2022 IAMGOLD Corp Earnings Call
Thank you for standing by 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 questions.
And 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 Golf. Please go ahead Mr journey.
Thank you operator, and welcome everyone to our conference call today.
Joining me on the call Murray's.
Chairman of the board and interim President and Chief Executive Officer.
<unk> interim Chief Financial Officer, Bruno Lemelin, Senior Vice President operations and projects to Brad Burke 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 be advised that the same cautionary language applies where IMAX screens.
non-GAAP measures will also be referenced on the call me direct you to review the cautionary statements contained in the presentation and the reconciliation of these measures.
Most recent MD&A.
Under the heading non-GAAP financial measures.
With respect to the technical information to be discussed.
And information presentation under the heading qualified person.
Permission.
Slides referenced on this call can be viewed on our website.
I'll now turn the call over to our chairman and interim President and CEO .
Yes.
Thank you Glenn and good morning, everyone and thank you for joining us.
The last 12 months has been a transformer that's pretty funny.
The company took significant steps towards.
Becoming a leading high Mark will go through when he advancement.
Funding of coach Inc. As we prioritize our capital allocation on teachers exchange and value accretive I'm all for it.
First of all I wish a call date.
Yes.
Operationally the company exceeded its targets how do you think 713000 ounces funding coming.
Coming in above our revised guidance so in terms of safety.
<unk> thousand 700 <unk>.
Fine.
This strong performance was fueled by a record production.
Right.
And secondly is the backbone of our current production.
Just team there has done an incredible job demonstrating great initiatives and resiliency.
And coking coal projects.
In 2022.
It is now over 70% complete and recently celebrated a major milestone with the deployment of the first autonomous haul trucks, which began mining activity in Canada.
Okay.
The site celebrate 10 to $8 3 million I always thought that lost time injury, which is a testament to the skill and dedication of the coating.
T.
On behalf of the board and the executive team, we applaud the tireless efforts of the team.
Smith and his continued commitment to operating safely and responsibly.
Our commitment to safety is not just a priority for us, but it's value that is.
Everything we do.
Financially the company achieved.
The goal of funding the construction of Coty prior to the end of calendar.
Calendar year.
This strategic transaction, Covid, Clo's, rosebel and exploration projects.
West Africa, as well as the funding agreements with always trusted youre, assuming no more together combined for over $900 million of liquidity.
And what is that range without sacrificing any long term economics.
Yes.
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 at the forefront and we strive to achieve the highest standards in safety environmental social and governance practices.
I am goals commitment to zero harm.
Two calls the company's values and differential value creation for all always stakeholders.
To operate and excel.
Mining company.
Our efforts continued to be recognized as we were ranked.
52 respective peer by Moody's ESG solutions.
Continued your all the double a rating by MSCI reading assessment.
Actually placing I am goals, among the top 15% of precious metals companies.
We have done and we will continue to enhance.
Morning, undo 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. So he's always goal of achieving net positive baidu diversity at all of our operations.
And they're getting a greenhouse gas emissions by 2050.
Now turning to operations last year I am gold produced 713000 ounces of attributable gold from operations exceeding all of their guidance targets, which were raised in the second natural peak year.
This.
Our performance was driven by record production at its center.
Our strong fourth quarter from Rosebel and continued improvement at Westwood.
The strong production results and seal volumes translated to cash cost of 11.
All in all at 11 under the $9 sold and all in sustaining cost of $15 $81, So comparing well with our guidance estimates.
11, three to 11.
$80 per ounce for.
Hi, Scott.
Slightly below our all in sustaining cost guidance range of 16, three to 16 to 58.
Perfect.
We saw upper reading costs increase and just sick enough of the year from continued cost pressure from inflation and supply chain constraints.
Well no no.
Proportion of stripping expenditure.
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 lower operations and their respective production outlook in more detail in the following slides.
Cash Cogs this year I expect it to be between 11, 25 and you've ever done.
$5.
No.
The increasing cash Cogs comparative that's from continuing operations in 2022, and you to an expected return to a grade closer to reserve grades at Essakane as well as a continuation of the elevated pricing level.
Consumables as experienced during the second half of 2022.
Well the pricing for the main consumables, including cyanide lime and grinding media I expect it to remain in line with the levels of second half of 'twenty and 2018.
Some consumable pricing such as activated carbon explosives and fuel.
I expect it to remain under pressure in 2023, reflecting continued imbalances in global supply and demand.
All in sustaining costs is expected to be enduring hinge up 16 on June $25 17 to $100 per ounce sold.
And the increase in all in sustaining costs in 2023.
Again, I'll ask him to answer that from continuing operation in 2022.
Do you see the same reasons as cash costs per ounce sold.
As well as the impact of an increased ratio of stripping capital too.
All right.
Increased ratio of stripping capital two ounces produced.
Ken.
Particularly in the first half of the year, where we may see costs above what 2023 guidance or me to step down in the second half of the year.
In addition, our all in sustaining costs held view hasn't changed at all you can transition of corporate cost as a result of this figure.
All of the company's interest in the Rosebel goldmine.
Now turning to operations.
If I'm going to read probably the best year ever of production since starting operations 13 years ago.
The mine produced 480000 ounces of gold in 2022 or 472000 ounces two video wall basis benefiting from positive reconciliation and reconciliation excuse me at the head grade three since all the block model and improve.
Recovery didn't meal.
Yeah.
On a quarterly basis, the fourth quarter attributable gold production of 98000 ounces in line with the prior year prior yet.
All mining declined in the fourth quarter of operations prioritize stripping activities to secure access for the next phase of mining later this year, while also managing impacts from supply chain constraints relative to just security enforcement.
I'm sorry.
On that we know that the security situation in Burkina Faso continued to deteriorate in 2022.
With governmental instability and terrorists related incidents occurring in the country and the region.
The company continues to take proactive measures to ensure the safety and security of in country personnel any.
Thankfully adjusting its protocols and activity levels. Despite.
According to the security situation.
The company continues to make investments in security and infrastructure in the region and that's to my right.
Regularly engaging with relevant authorities and government partners.
No.
Cash costs and all in sustaining costs in the fourth quarter came in at.
$43 per ounce and.
14 of them doing $56 per ounce respectively.
Pricing actually in the second half of the year due to inflation as well as lower production and increased waste stripping relative to the 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.
I expect it to return closer to reserve grades.
Yeah.
And I was.
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 half of the year.
Mining activities prioritize stripping in order to provide to provide access to tune you all phases for mining in the second half and into 2024.
Cash costs and all in sustaining costs are expected to continue to remain a hot.
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 ghouls completed a study to assess alternative to a heap leach scenario at the end of <unk>.
The mine life.
And we did that by containing 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 Cold Lake.
Ultimately the company will not be pursuing the heap Leach project and we'll be providing to result 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 rates from underground.
Well the higher grades mined from the Green tree open pit.
Underground development into fourth quarter and achieved the highest develop niche rate of the year.
What.
1297 meter yourself lateral development completed tripled that of the same prior year period.
Resulting in full year lateral development of 4303 meters. This successful ramp up in development activity, our secret multiple all 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 ore 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.
Available surface deposit.
And we should note that our guidance includes shipped live in cold mill feed from satellite deposits, including from the five year old property in the second half of each year.
Cash costs and all in sustaining costs continued to remain high at the Westwood complex.
A very high sensitivity to underground output.
That's production volumes increase we expect to see Cogs go down.
Now turning to Coty go.
You guys have been very exciting thing to progress the project over into the 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 a fair reading at its current capacity with approximately 1500 workers at the site.
I always felt that tied to a couple of weeks ago with our pulp you Sumitomo and it is remarkable the transformation we have seen that kotte.
The other ones again, the project with approximately 73% complete achieving nearly 9% progress in the fourth quarter.
Just starting to winter and 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 it's still work in the H P G R and secondary crushing area.
And wrapped with domain structure and overhead crane can be installed in the first month of this year.
And as you saw in the previous slide installation of the Leach tanks is nearly complete.
And construction of the electrical substation that safety is progressing well and we.
And just to be connecting to their problems to the provincial Idaho grid on track with our schedule.
Yeah.
<unk> celebrated a major milestone last month with the initial deployment of the autonomous haulage and drilling systems with their first round of catch them fill their 793 haul trucks currently upper eating in autonomous mode supported by E. H S upper readers in the new lead.
Emissions controls.
This early deployment has allowed us to support our earthworks contract here, while better positioning our mining team for hand off midyear and four.
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.
On the December 31 2022.
<unk> 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 two 'twenty three expenditure.
I see us for the amended joint venture agreement as.
And Mark will cover in detail in a moment.
Therefore, translating to 88 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 out teams safely.
Oh, it's an end to the current budget that's coke.
At this time the critical path for the project continues to be true new processing plant and teams all focused with 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.
2020, 'twenty is going to be an exciting year for this project.
We are eager to showcase to the world that what will be Canada's largest gold mine by production.
Turning briefly to Goslin last year, we conducted the 70000 meter diamond drill campaign with US the results reported earlier, this month, which intersected mineralization to the south and below with the current results boundary of the deposit.
[noise] goslin with its major resorts of $3 4 million indicated ounces and one 7 million ounces inferred.
He used to be in the early stages of discovery.
Does it does it has only been drilled.
When a fraction of the meters compared to Coty and.
Two I did that.
It remains open along strike and depth.
When one looks at it could be life of mine plan, there's a step down in production in the years 2022 'twenty duty treat.
Which would be allergic all fit to bring goslin intuitive mindset.
There is a lot of work to do in order to realize.
And this year, we will be advancing technical studies to review alternative.
Oh potentially inclusion of coty into a huge Saudi for potentially inclusion of goslin into a future Coty mitral from my part.
Then looking beyond goslin.
Firmly believed that Coty gold is not just a project that started at the district and there is significant upside to be uncovered.
Yeah, it's been minimal historical exploration targeting dose.
O T 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 <unk> and good morning.
As you would have seen Raj is upon us being classified as a discontinued operation due to its size and are not included in our continuing operating results.
Revenue from continuing operations totaled 950 <unk>.
Yeah from sales of 555000 ounces or 506000 ounces on an attributable basis.
Average realized price of $1721 per ounce.
The process to be large spot.
Is it can you elaborate on the 50000 ounces into the PPA arrangement that has a 1500 dollar.
The orange color.
I'm going to receive 30 million in cash this year in relation to the call. It competing the trainee 19 Peabody arrangement.
Earnings before interest income taxes, depreciation and amortization from continuing operations was 202.
$2 3 million for the year.
Or $313 4 million.
Austin devices.
Yeah.
Oh, I'm, sorry, 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.
Bonnie.
One 9 billion.
With $761 2 million was used by continuing operations.
A major component, which was the ongoing construction prototype.
On the discontinued operations of $137 million.
Finally, net cash funding financing activities start falling for a while yet.
Primarily due to the drawdown of our credit facility.
In terms of our financial position, we ended the quarter with approximately 48 million cash and cash equivalents and 27 billion advisable under our credit facility.
After drawing down 455 million in 2022 I think.
Joining foot Edison credit market 18 point full boat shoes.
Under the credit facility.
That's good that's all for certain surety bonds issued its environmental indemnities.
It is worth noting that the cash balance excludes 40 foot well yet.
And assets held for sale that is 30.
<unk> 5 billion of cash.
At Rosebel.
Additionally, approximately 236 million or about cash and cash equivalents or khaki helped by Cogs and they said that.
Asbury started on golf computed a series of strategic transactions at the end of the.
Yeah.
Touching over 900 million.
Millions of dollars.
After tax bucket.
The results of which mean that Aimco is able to meet somebody that remaining funding requirements.
It doesn't.
75, political completion of construction of critical.
Based on the current schedule an estimate.
The Boston teams.
I'm going to announce some of interest in the Roche Buffalo point.
Mining for cash 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 January 31st.
This preliminary working capital adjustment of $3 5 million.
The company's due to receive of approximately 24 five.
By March 31, 223, consisting of the remaining cash balance held by rose about at that time.
A final working capital adjustments.
On December 20th the company adopt studies entered into definitive agreements with manager.
You saw the companies interested in this exploration development partnerships, Senegal, Mali, and Guinea, including butter retard the outcome.
For aggregate pre tax consideration of approximately $282 million.
Approximately 240 $250 million on an after tax spikes that method.
We continue to expect these transactions to close over.
And of course, with the second and third quarters.
Finally on the same with 19th.
The Handoffs the funding agreement with Sumitomo, which Jimmy jumbo contribute certain apocalypse, finding their box to the parts of the Gulf 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 folks right.
With the right to repurchase this 10% interest at one of seven future dates up to November 26.
We believe that's.
So much of this auction demonstrates to all our stakeholders strong validation of the project. The project from a project partner and you want to reinforce that as we've done with.
Its intention for bond goal to return to the safety that HIV ratio in the future.
Thank you Martin and congratulations to you and your team for the incredible job last year.
With that we'd like to pass due called 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 will hear tone acknowledging your request.
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Thank you.
Okay.
Thank you very much operator, they does that doesn't seem to be any questions.
I would like to thank everyone for joining us Oh Boy I think we are.
Okay questions coming in yes.
That's a great question.
The first question is from Mohammed.
CIBC. Please go ahead.
Hi, Thanks for taking my questions sorry about the mishap over there.
So my question is I mean, I'm here on behalf of Anita Soni from CIBC.
Question really related to the sequel, and the heap leaching expensive. So first of all I just wanted to understand whether or not the heap leach material growth has included in it or the reserves and resources.
Yes, that's my first question.
Okay.
Thanks for your question and if I understood well 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 misunderstood. The question, maybe you you would repeat trades.
Yeah no for sure.
Was your question it was related to the $9 eight.
8 million tons that you mentioned on the call and if not because going back to the technical report.
I recall that the heap Leach expansion there 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.
Economical material and when we expect to see that in resources or reserves.
So just provide what she clarity in terms of.
Oh that was configured.
In the heap Leach scenario Eaton depart.
All I'm going to say is that by midyear, 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 mm mm.
You bet and given the fact that you're not going ahead with the heap Leach expansion any more should we just expect the mine life to pan around at 2026, 2027 month, that's where the technical report.
At this point.
Yeah.
We think we danced possibility to extend to extend the mine life.
But as.
As you know we would need to collect what is really a D and an update on all of our resource model.
So where it keeps progressing and as I said, we will provide more clarity by midyear.
Okay sounds good.
Thank you.
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 receipt of.
The funds from Boto and from South America is roughly $1 billion as we stand today.
Okay.
Yes, if we if you take our cash position that we had at the end of the Euro 400, and save them then we add in.
Additional cash proceeds on the Cogs apprised about that it 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 two transactions that could 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.
Can you just.
Tell us a little bit more about maybe what's going on on the ground there.
You know there's been rumors about the French potentially leading to that is that true and you know.
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 lets you know I'll try to address to the bathroom to my knowledge.
And then 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 pulse.
The government actually issued a statement clarifying that day range and agreement with endeavor for that sale.
And by the way in the mining code article 16 does allow for these transactions.
And in our case, we still have a small amount 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 a bit more color as we know did this situation is complex and cannot.
It deteriorated in 2020 two.
And for US it's always reelected two hour the convoys of supply is going to demand.
It's it's a logistical.
College, 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 where are we.
We continue to make some investments in 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 I wish situation that the second and then just related sales, which are you know.
We have not received that type of request.
So I hope that's helpful.
Yes, that's very helpful. Thank you very much.
Thank you.
We have a follow up question from Mohammed.
Please go ahead.
Great. Thanks for taking my question just a follow up question on the current low grade material that 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.
No for sure no problem.
Nation.
Okay. Thank you so much.
This concludes the question and answer session I would now like to hand, the call back over to Mary sellers their.
Clothing remarks.
Thank you very much operator, and thanks to everyone for joining us this morning and for your continued engagement twist I am golf.
As always we are available it should we should you have any additional questions.
Please do not hesitate to reach out to grab them getting sold myself, if you would like to set up the beat it.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
Okay.
[music].
Okay.
Yeah.
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