Q4 2023 IAMGOLD Corp Earnings Call
Thank you for standing by this is the conference operator, welcome to the I am Gold's fourth quarter, 2023, 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 to join 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 Investor Relations and corporate communications for Ion Gold. Please go ahead Mr journey.
Thank you operator, and welcome everyone to the Iron Gold fourth quarter and year end 2023, operating and financial results Conference call.
Joining me today on the call are Renaud Adams, President and Chief Executive Officer, Martin to Houston, Chief Financial Officer, Bruno Lemelin, Chief Operating Officer, Tim Bradburn, Senior Vice President General Counsel, and corporate Secretary and Jersey or does it help chief Executive project director of coking coal.
Before we begin we are joined today for mining gold strong office, which is located on 313 territory on the traditional lands of many nations, including the Mississauga is of the credit Lana stomach the Chippewa isn't necessarily in the wind up People's.
Italian gold, we believe respecting and upholding in digital rights is founded upon our relationships the Foster trust transparency and mutual respect.
Please note that our remarks on this call will include forward looking statements and refer to non <unk> metrics. We encourage you to refer to the cautionary statements and disclosures on non ferrous measures included in the presentation and the reconciliations of these measures 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 of qualified person technical information.
The slides referenced on this call can be viewed on our website.
I'll now turn the call over to our President and CEO Renaud Adams.
Thank you Graham and good morning, everyone and thank you for joining us today.
Last year I am go made significant strides towards our goal of becoming a leading mid tier gold producer.
The breaking its asset to build a mining platform with a long life cornerstone asset in Canada.
As we will get into more detail shortly corrigo saw remarkable progress in 2023.
Where the project starting the year with construction, approximately 64% complete but ending the year at 98% complete.
This progress included major milestone across the project scope, including the mechanical piping electrical and instrumentation of the plan.
Completion of the first page of the tailing facility.
Electrification of the slide to the provincial hydro grid and initiation and successful ramp ups of autonomous mining fleet.
Making quality golf North America's first gold mine to be designed and bill for their use as a predominant as college, which is changing the face of mining today.
Corning is poised to start production shortly with more than 5 million tonnes of stockpile in place.
<unk> activities ongoing and a full hands off on all primary asset of the projects. So the ownership team This war.
Our primary focus and efforts continue to be on positioning the project for a steady ramp up of.
Production <unk>.
The year to achieve commercial production in the third quarter.
A steadier a steadier run rate quarterly goal will be the third largest gold mine in Canada, and it's critical for the repositioning of fire in golf.
Morning sunlight.
It provides a higher production base lower cost profile and the long life of cash flow generation and growth opportunities in Canada.
Further over the last 12 months the company has seen significant changes in leadership across the organization with a renewed focus on operational excellence and accountability, while continuing to build on I am gulf's strong and widely recognized sustainability practices.
Operationally I'm very proud of the team.
With attributable gold production from continuing operations of 465000 ounces, which was the top end of the guidance range of 410 to 470000 ounces.
Really want to congratulate the <unk> team, who achieved their targets while facing considerable challenges within the region.
The Westwood team, who continues to execute on the plan to ramp up on the gun operation, while employing industry, leading underground sysmex monitoring and management.
Last night, we also announced an update an update to our year end mineral reserves and resources with a map increase after deflation a secondary Westwood reserves extending the mine lives of these facets.
Mineral resources by a significant increase as well driven by updates to Coty in Gosman as we grow our gold pipeline and future for the company.
Longer term, our golf, where I am going to remain.
To be a leading intermediate gold producer with a portfolio of assets centered.
Around the corner asset in Canada.
That have a program of record and ability to generate strong consistent free cash flows and attractive returns for shareholders.
Built on our pipelines of project and strategic geographic aircraft fees and organically grow.
And and organically grow our assets.
Stablish ourself as a leader amongst peers and health and safety talent development.
In ESG, including biodiversity tailing management water stewardship, and community health and education and.
And of course to be recognized as a leader in applying leading proven technologies that drives performance and sustainability across our business.
Financially, we will prioritize returning to the 70% position in <unk> with our partner <unk> terminal as well as use of our cash flow to optimize our balance sheet and deliver at a company to have a more efficient and balanced capital structure.
With that we will now dive into the operating and financial reasons and highlights for the quarter.
Yes.
Starting with health and safety.
The company continues to perform extremely well with it days away restricted transfer duty rate of zero point 39, and total recordable injury rate of <unk> 69, Boes based on 200000 hours worked.
Wanted to take a moment to congratulate us again with <unk>.
Which achieved its best ever performance in health and safety with the days away restricted transfer duty rate of 0.06.
This is a testament to the professionalism and commitment to our culture of safety for our people in Burkina Faso.
Entering all of our employees and contractors go home safely would always be a primary focus.
Just like to say every Gulf island's produce has to be done safely.
And our goal continues to be zero harm zero harm for people and the places where we operate.
On production in the fourth quarter. The company produced 136000 ounces, bringing total annual production to 465000 ounces on an attributable basis, which was near the top end of our guidance of 410 to 478000 ounces as.
As we will get into a moment.
The production results were driven by it's a kind of being able to operate without disruptions and benefiting from positive greater accounts filiation and a continued ramp up in capitalizations are underground zones at Westwood.
Our cash cost and all in sustaining cost decline into fourth quarter to 1197, an ounce and $1735 an ounce respectively.
This brings our year to date cash cost of $1261, an ounce and an asset to $1783 an ounce in line with our revised guidance estimates things here.
On a year over year basis, we've seen a step up of costs due to come to new pressure pressures of satcom.
As well as sustained elevated price from the recent inflationary periods.
We are we are seeing some sign off price easing on certain consumable.
One on the hall, there are several costs that I have a long tail.
And slow to decline.
With that I will pass the call over to our CFO to walk us through our financial results position Martin.
Thank you Renaud.
And good morning, everyone.
Looking at our fourth quarter financials revenues from continuing operations totaled $297 6 million from sales of 147000 ounces on a 100% basis at an average realized price of $2005 per ounce.
Adjusted EBITDA from continuing operations was $110 million for the quarter and $315 1 million for the year.
Adjusted earnings per share from continuing operations was <unk> <unk> for the quarter and nine since for the year.
In terms of our financial position I am Gulf entered the year with cash and cash equivalents of $367 1 million and a fully undrawn credit facility.
Equating to the total liquidity of approximately $754 million.
Further described in MDI the company into the one year extension of its credit facility in November extending the maturity to January 31, 2026 from January 31 2025.
As part of the extension the created facility was also reduced or right sized to $425 million based on the company's requirement for senior revolving credit facility on its overall business.
The extension of the us with the credit facility to be available in non current during 2024 shoot we require additional liquidity during the ramp up of Cotai and for working capital purposes.
The company has received gross proceeds of 197.
6 million from the Bank group transactions and the remaining transactions related to the side of the early stage assets and gain and loss are expected to close this year for gross proceeds of approximately $84 4 million.
We note that was in cash and cash equivalents $81 7 million was held by Coca Cola and $70 9 million was helped by a CAD.
This article you JP requires its joint venture partners to fund in advance two months of future expenditures and cash calls are made at the beginning of each month, resulting in the months and cash balances approximating the following months expenditure.
Basic and normally pays a dividend in the second half of the year.
As you will outline in a moment the company's remaining funding requirement to complete construction commissioning of <unk> gold.
To bring the mind to Firstcall is estimated to be <unk> $42 million, which includes working capital adjustments.
The company believes that its available liquidity at December 31, 2023, combined with cash flows from operations. The expected proceeds from the site of three remaining bed bug assets and available liquidity provided by the credit facility is sufficient for the company to fund 63 interest.
Dakota unincorporated joint venture to complete the construction commissioning and ramp up of the Pacheco project.
It should be noted that the company's ability to draw on the credit facility is impacted by certain covenants, including the net debt to EBITDA and interest coverage ratios of the company that could be impacted by macroeconomic factors and the performance of the company's existing operations.
We also announced amendments to our golf pipa commitments in December we entered into a new forward set of announcements and the partial amendment to one of our existing golf PPA arrangements that effectively transferred to Golden every obligations out of this first quarter of this year into the first quarter of next year.
This was an important measure to improve the financial flexibility for the company for a reasonable cost.
Also able to benefit from favorable vote for gold prices, particularly for the first quarter of this year, while we are commissioning cotai ore production by the end of the quarter Andrew.
And with that I will pass back to and I think you're right I think.
Thanks Martin.
Turning now to <unk>.
The mine reported attributable gold production of 108000 ounces.
In the fourth quarter, which was our highest quarter of production for the year, bringing total attributable production in 2023 to 372000 ounces mined.
Mining activities totaled $12 9 million tons in the quarter, an increase from the third quarter as operations were less impacted by the security situation within the country with minimal disruptions and fuel supply on an annual basis mining operation moved 43 million tonnes, 13% lower than the pre.
Are you due to the impacts to the supply chain in the first and the third quarters.
<unk> morning.
And then Ark ton lines up $9 6 million tons were approximately 24% less than the year. Prior as a result of an increase in require waste stripping as mining activities move into phase five six and seven of the deck in the second half of the year in support of the 24 and two.
<unk> thousand and 25 mine plan.
Grades increased in the quarter to 132 grams, a tonne do deposits a rig counts filiation, but a deeper benches of K five.
This positive grade reconciliation that this economy is that a trend that has continued in the early weeks of this year. However, head grades are still expected to decline in line with the recent life of mine plan as volume from Phase phase six and seven increase and from increased proportion of stockpiles.
<unk>.
On a cost basis as a kind of reported fourth quarter cash cost of 1132 per pounds and then all in sustaining cost.
Two $1548 an ounce a significant improvement from the prior quarter yet year over year. The cost profile is increase with 2023 annual cash costs at 1181 per ounce and an ASIC off $1521 an ounce.
This increase in this the kind of cost profile over the last 12 months to 18 months is attributed to a combination of the lagging impact from deflation.
Your volumes are operating waste from increased strip ratios as the mine enters new faces the impact security situation, resulting in higher landed fuel prices.
Inspiration and Cam cost as well as higher labor cost due to appreciation in the local currency.
In addition last year, we saw the government of Burkina Faso, implement and updated royalty rates that we felt all the in country legal proceedings.
Proceedings under 2018 handling of carbon fine.
Looking ahead <unk> is expected to produce 330000 to 370000 ounces at a cash cost of 1300 to $1400, an ounce and <unk> thousand six 675.
<unk> $1800 per ounce.
These metrics are in line with the updated 43 101 and life of mine plan, we announced for a second in December.
During our current mine plan 2024 represents the last year of significant sustaining capital, which is expected to decline to decline, notably in the later years of the mine plan assuming no further extension of mine life there.
The updated technical report, we released in December demonstrated the success of teams.
At delineating additional ounces with the site security within the site security parameters.
Which contributed to an increase in our mineral reserves and resources inventory and more than offset the mine production deflation in 2023.
As of December 31, 2023.
<unk> has proven and probable reserves of $2 2 million ounces at an average grade of one one grams a tonne.
Which open pit reserves were estimated to be $1 8 million ounces grading 132 grams a tonne.
As a result, we were able to extend the mine life of this economy and the addition of the year providing visibility for the next five years of operations of the product.
At the project with considerable cash flow generation generating potential.
Particularly as.
Stripping requirements decline in the later years.
We continue to seek opportunities for further extension of the mine the life of mine as we continue to advance in 2024.
Turning to Westwood.
The fourth quarter represented the highest quarter of gold production since the mine restarted in 2021 with 28000 ounces produced.
Produced bringing the total annual production last year to 93000 ounces there.
The higher production and saltwater is the result of the ramp up of underground operations supplying increased volumes of higher grade ore for the mill feed and the introductions of higher grade material from this site you all composite.
Our mine from underground totaled 77000 tons in the fourth quarter contributing to an average head grade from underground ore.
92 grams, a tonne, which.
Which is the highest grades from underground in nearly six years.
Since Q1 2018.
As rehabilitation efforts has allowed access to previously closer close higher grade underground stopes.
The mill throughput in the first quarter for the <unk>.
Fourth quarter 2023 was 245000 tonnes at an average head grade of <unk> 339 grams.
The mill availability in the fourth quarter was rather low at 78%, which compared with 95% in the prior year period. This was due to unplanned maintenance on the Sag mill liners and apron feeder.
The cost profile for Westwood continues to see improvements with the increase in production.
Cash cost averaged $1434 in the fourth quarter, which was also a record since the <unk>.
Start of operation and notably includes an estimated $190 an ounce of cost related to the lava and ensure that for you. All that's why has expanded due to the sharp turn airlift mining the deposit.
On an all in sustaining cost basis Westwood operating they setup.
$2049 an ounce in Q4.
Which compare well with the realized gold price of $1989 an ounce.
Further.
When adjusted for positive working capital movement, Westwood actually returning positive mine site free cash flow in the fourth quarter.
An important step and has returned to profitability.
Looking ahead to this year Westwood Gulf production is expected to be in the range of 100, thousands of 120000 ounces and 24.
With an increasing proportion of our sourced from the underground mine at higher grades.
Production levels are expected to be higher in the first half of 'twenty four due to mine sequencing and the underground mine.
As as a supplementary mill feed from <unk> replace with lower grade material from <unk> in the second half of the year.
Cash costs at Westwood are expected in the in the range of 5250 to $1375 per hour install and the <unk> are expected in the range of 800 to $2000.
With the decrease driven by the expected increase in production and reduced underground rehabilitation.
<unk> capital expenditure. This year are expected to be essentially flat year over year at approximately $6 5 million stock.
As lower habitation is offset with increased underground development as well as an increase in capital for the renewal of the mall.
<unk> fleet and fixed equipment.
Looking at the long section of the mine here on the right.
We can see the increase in underground mining activity in the central and West corridor.
Region of the mine, which were essentially shut down prior to their rehabilitation program of the last two years.
We currently have eight zones, but a total of 10 zones that we're targeting in 2024 utilizing a revised mining metadata pillar last peer admits stope sequencing to deflect assess mix stresses to the outside of the operating areas.
Since the reopening of the mining 2021, we have now proven that we can mine and this higher grade zones.
Resulting in meaningful changes the Westwood complex inventory.
Westwood mineral reserves, including the Grand DUC, the Grand Duke open tax increase of 109% from 582000 ounces to one 2 million ounces net of depletion with grades increasing 26% to 7% for this 14 grams.
Top golf.
Excluding grander.
Underground mineral reserves were estimated at $1 1 million ounces at an average grade of 10 six grams a tonne.
In the second half of the year I am <unk> plans to file an updated ni 43, 101 Technical report telling the results are foregoing mine optimization efforts and strategic assessment.
Of the Westwood complex.
Turning to Coty golf.
The projects are remarkable progress last year.
No.
When you look at these pictures you may not see significant visual cash from last quarter aside from the snow copper.
At the end of the third quarter, all major infrastructure was in place and to focus was shifting to completion of piping electrical and instrumentation as well as demobilizing certain contractors and ramping our pre commissioning and commissioning activities.
With with first of all on the Horizon, we're now executing and ramping up commissioning activities.
Obviously working through their slow ship, starting on the dry side before bringing it together with the wet circuits.
Looking at the pictures starting at the top left.
Is the view of the processing facilities with four primary structures and yellow off note.
The first is the primary crusher and therefore grow.
Which you can also see in the photo beside a facility's photo in the top middle.
This West Commission in mid January where minds rock were delivered to the crusher be autonomous haul trucks.
The cross material was then conveyed and screened for size sort of screening building, which is a facility. The facility is photo into building into upper left of the picture.
Located between the wet processing building and adopt before being conveyed and deposited into coarse ore dome, which you can see in the top right up to page.
We are not working on commissioning of the secondary crushing building, which comes into HB Jr.
In the bottom left.
From there the crushed ore is conveyed back and forth from the screening building before being deposited and define our band which is the <unk> silo you can see the slide the secondary crushing building seen in the last fixture.
This step would account for a total of three of the four buildings and all conveyors, having been commission.
After this.
The final <unk> conveyed into the processing plant, where it passes into the ball mill.
And the bottom center photo and then through the remaining circuits of the plan, which is termed as the website.
As far as auto progress if note as I mentioned, we are nearing a major milestone with default hands off a false assets of the project to the ownership team.
Mining activities, which startup with the first autonomous truck over a year ago programs very well over a year with now over 5 million tonnes of stockpile available and in place.
Final deliverable.
Include the back end of the plan.
Where final mechanical completion of the detox and electro winning circuits and nearing completion.
Taken together, we are ready and very excited to turn to chapter arm cortex.
And bring it online for the benefit of our shareholders.
Martin you can walk us through the remaining project expenditure place and chaparral, but familiar.
Thank you.
Since commencement of construction and up to December 31, 2023 on a 100% basis.
<unk> project is incurred $2 seven at $6 billion of their plan to nine 6 billion of project expenditures.
The remaining expenditures to achieve first gold is estimated to be $179 million for the project as all of that 100%, which will bring the total cost to first gold in line with the $2 96 billion estimate.
There is an estimated $40 million of expenditures that will be incurred post the physical date for additional required infrastructure and earthwork projects.
Our remaining funding obligation for the project expenditure up to first gold.
On a 63% interest.
Incorporating changes of working capital leases and adjustment to the cash bonds held by the huge IP is $142 million.
Which as I noted earlier can be funded with the 367 million of cash on our balance sheet as well as operating cash flows and other sources of liquidity we discussed earlier.
Turning to the high level occupancy Cotai and everything I will be quoting year is 100% basis I will draw your attention to the top right. We outlined an expectation for capital expenditures. This year. In addition to the construction related expenditures, we just highlighted.
We estimate that $40 million of operating expenditures relating to mailing surface cost administration and indirect cost that will be incurred during commissioning ramp up and up to commercial production will be capitalized and reported as capital expenditure. These.
These costs represent inefficiencies experienced by the project is ramping up and not operating at designed capacity, while the operational team has been fully hired.
The estimated capital expenditures related to operations between <unk> 24, excluding capital waste stripping totaled $145 million.
These expenditures will be incurred through the year and include $60 million for the expansion of the Nic States.
Tightenings management facility $50 million for equipment purchases, including additional haulage trucks drove and other mobile equipment and <unk> 5 million related to other owners cost capital projects.
Then finally, we estimate $50 million to be incurred for capitalized waste stripping.
It is worth highlighting that project capital expenditure in 2024 are expected to be higher than the life of mine average as the main product graces with the completion of the construction of the full tailings dam footprint and increase the volume of material mined over to you and I. Thank you again Martin production Accordingly.
Golf on the 100% basis is expected to be between 220000 to 190000 ounces in 2024.
This estimate assumes the following initial gold productions in late Q1.
Operations ramp up in the second quarter 2024, and commercial production is achieved in the third quarter 2024.
The company defines commercial production has an average throughput of vimeo of 60% over a period of 30 days.
We are targeting core day to exit the year at a throughput rate of approximately 90% nicely.
During the ramp up of the Ophir project and until commercial production is cheap it is rather difficult to provide a good indication of operating cost estimates.
But at school at the golf achieved 90% throughput exiting the year, we estimate cash costs.
At the time to be in the range of approximately 700 to $800 an ounce.
And in <unk> of 11, 100 to $200 an ounce so.
With further decreases as volume as volumes increase and as we move to the lagging impact of the recent deflation on contracts for consumables.
This bring us to what is the future of <unk>.
We announced an updated mineral resource and reserve estimate for Coty and Gosman last night, that's a material increases in inventory at both of these deposits.
<unk> mineral reserve on the 100% basis increased by 436000 ounces to seven 6 million ounces with grades increasing 5% to one final one grams a tonne golf.
The increase in ounces was primarily driven by the increased grade of programmed mineral reserves to 1.09 grams a tonne.
<unk> based on the increase and stockpiled inventory and the ongoing great control drilling program.
On a resource basis, Corrigo measured and indicated mineral resources increased one 9 million ounces.
Our 18% to 12 1 million ounces.
I'd Gosling.
Drilling completed since the main and resources has been extremely effective within an updated mineral resource estimate on a 100% basis.
One 4 million.
Indicated gold ounces and 3 million inferred ounces.
This represents an estimated increase of one 1 million ounces and indicated and one 3 million ounces and infer representing 32% and 74% increase respectively.
This expansion of the Goslin resource was the result of a 35000 meter drill program completed over the last two years.
This year, we are planning an additional 35000 meter targetting the central zone between the pit shelf, where we see indication of concentration of mineralization and hydro terminal breakfast as well as some deeper holes to understand the continued tariff mineralization below the current pit shells.
The updated resource.
Gosling is very exciting for that project.
Gosling is a very large scale deposits sitting amazingly adjacent to coty.
That when combined together have business tomato total measured and indicated mineral resources of $16 5 million ounces with an additional $4 2 million ounces of inferred.
Putting the project an exclusive company of large scale Canadian assets.
The August 2020 to life of mine plan model was built on mineable reserves of 230 million tonnes of material for just over 7 million ounces.
However.
When investors constitute a combined global resource inventory of Dakota Gold project with its size and scope and for our mine that is effectively bill. This is very compelling potential offer for our shareholders.
As I've said before.
Protocol today as a project but.
But we believe strongly that this is the start of a mining camp.
And that it will provide a strong foundation for iam goal for many years to come.
With that I would like to pass the call back to the operator for the Q&A.
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 tone acknowledging your request.
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The first question comes from Wayne Lam with RBC. Please go ahead.
Yeah. Thanks, good morning, guys.
I'm just curious at a co pay.
Cost guidance implies about.
$100 million towards sustaining capex and capitalized stripping and there seems to be a bit more spend post for school budget versus the 22 mine plan just wondering how much of the $145 million Capex has been earmarked.
For sustaining versus non sustaining and then is there a potential for upward revision to our guidance.
A greater proportion of that falls under the sustaining portion.
Okay.
Good good morning.
So.
With the accounting guidelines changing way react to reports.
Our revenue and cost of sales from Coors goal.
And then you've got the impact of costs.
Being inefficient during the ramp up period up to commercial production.
That creates that additional $40 million that we have in there, but what it also does is it's difficult for us to have exact measurements of what is construction capital or long term capital and sustaining capital until we actually know these achievements. So we cannot really give.
Accurate.
That's a sustaining capital.
145 million that we've included in the capital guidance.
It's roughly in line with what we had in there taking a report and then similarly with the sustaining capital in those one cost we expect to decrease as well over the life of mine. So if you take out the construction capital the accounting we the capitalist in line with the technical report.
Yeah.
Okay, great. Thanks, and then maybe at Westwood can you talk about some of the rehabilitation.
<unk> Tec work done underground that give you.
Greater confidence in ramping up the output rates there and then just what proportion is budgeted from the main underground this year versus some of the satellite.
With regards to.
With regards to Westwood.
Ability of the mine.
There's a lot to do with the change of the mining the mining method sequencing there is no doubt.
It is not that it has eliminated so smack activities, but he has reduce it to the point of the energy is so low that it does not to start.
We still have obviously this is a systemic area like for mining.
But the change and how we addressed the mining the matter to sequencing as reduced the energy to a very very low level. So this is the main key aspect of course, depending on the area. We have adopted like very specific approach to ground support and monitoring and so forth. So.
This is like what I would call more of like a global recipe then just like one actions in particular, but after likewise nearly nearly two years now without any event and the monitoring of the activities and and we continue to see very low energy depleted as a result of <unk>.
We believe that the recipe is successful and <unk>.
So that's what I can say about that.
With regards to the to the mine plans per se.
Wed like to say that we'd like to achieve probably in the range of 902 to 1000 tonnes a day from the underground as part of the.
Of the of the plan for the year.
Okay, great that's good color and good to see.
The ramp up there.
Just last one for me.
Ken can you just comment on the security situation in the region and the ongoing management of getting fuel and supplies to pay.
I'd like to say that has been mentioned in our remark is we have seen.
Quite stable for us of course, we're not pretending you know that the securities. He asked changed a point in Burkina Faso.
It's a continuous monitoring but when it comes to the mind when it comes to our activities when it comes to to conveying our supplies to site.
We've put in place very very strong security protocols.
As we've mentioned before we do not.
As you know our ground transportations for labors and workforce.
Actually that's part of the higher cost of course, when we referred to transportation costs for labor.
So we fly people around we use shoppers around there. So I think like we say you know everything is about safety and about keeping our people. So.
It has proven to be working for us so far but has the country per se.
We're well aware of you and all of that Unfortunately, and also some situations continue sometimes.
And our military and our activities, but but in our case, we have been now pretty much the whole year you know.
Moving now.
That our protocols in place that works, well and we keep everyone safe.
Okay perfect. Thanks for taking my questions and best of luck in the months ahead.
Thank you.
The next question is from Anita Soni with CIBC World markets. Please go ahead.
Good morning, we note and Mike.
So a few questions just on Westwood I think he said that the reserves excluding the grant the open pit reserve for.
Underground stuff is about 10 gram per tonne material. So if I'm modeling like the addition, our life of mine and extending that would I be using 10 grams.
Or Peter is there is dilution that would actually be thinking of that.
Well I mean like if our.
The updated 43 101 will be based of course on the updated mineral reserve and resource, which rise as such in a $1 1 million ounce.
Underground material leveraging about 10, five grams attack now you need to get to the to their ramp up situations to leverage Charles we're not pretending that this year won't be necessarily at 10 six grams a ton because we still you know working in.
And positioning ourself and all of those zones, but as we advance in time, it's fair to say that the underground mine should be performing at the reserve level.
Yes, I don't have it ramping up until about.
Yeah, So like I mentioned like 911000 tonnes tonnes a day, we see the mine down the road capable product base to be more like 1000 tonnes a day we've.
We have achieved $7 99 grams a tonne. So we are systematically moving up you know affirmed a 'twenty one to 'twenty three.
Now I've raging on all of the eight grams, a ton and we continue to or two to improve you know from the six or so we were at the start of the year.
So I'm very comfortable to say that as we advance in 'twenty four should everything works well, we should start seeing those level up right towards the end of the year.
Perfect. Thanks, and then secondly on <unk> I just wanted to can you remind me what nameplate capacities and modeled the technical report you guys delivered in in mid December but the.
Press release says that we will be operating at nameplate I just want to make sure. That's still left in the technical report.
Yeah. So on an average basis is that kind of escape a ball to operate in the range of Thats already a price of 36000 tons a day.
Okay.
Okay.
And then just moving to <unk>.
To close I, just wanted to get an understanding of the cost. So I guess it was $50 million of costs that you said you would capitalize over and above what you would consider the normal run rate. So.
So anything about the 700 and I guess, you said seven to $800 per ounce and total cash costs.
Any like you've determined that that's the that's the normalized sort of cost structure. That's first year anything above that is what's going to get capitalized in the $50 million is that the case.
Good morning, Anita so that $40 million is is.
That.
Abnormal cost portion so yes, it is and we look at it on a per ton basis.
But the guidance range that we gave for cost cash cost is what we expect at the end of the year, that's not our average for the year.
So at the beginning of the even after we've taken out.
So as those capitalized in.
<unk> costs, it will still be a little bit higher than that.
Okay, what I can add.
Sorry go ahead, so what I can say I can add to the SME Italia is one thing that I'm very very pleased is as Martin mentioned earlier.
With the sustaining capital around the 400 and $145 million very much aligned with a 43 101.
We have kept all our capital ways capitalized weighs about 15 gallium yeah. That's compare may be with a 30 millions, but you know as you ramp up your costs are higher.
But as we exit exit the year.
<unk> now had a sustaining capital level closer to 43 101, we're very we're very pleased with that so it's up to US now like to put those extra caused online complete the constructions everything that is kind of extra capital, but there is behind us and exited the year strong with them you know capital capital align.
With the 43 101 or nearby and it's all about of course getting our operating unit costs in line as we ramp up it may have in their mind. So we'll be in very good shape as we enter 2005.
Okay.
Thanks for that and then a couple of other things in terms of the.
At one point and hopefully there were leases that were coming through is that now encapsulate. It in all of the Capex guidance sorry.
We're still thinking about I think at $120 million to $141 million of leasing flooding in Louisiana.
So for leases the amount that we.
Referring capital that is on an incurred basis in any excuse funding.
Our lease program of 125 million U S at Cotai concur.
Concluded.
Well, we'll conclude shortly so we don't have any estimates or assumptions in our 2024 planned for leases.
Okay. So that means youre not incurring leases totaling 2020 for either.
In the time, we are not showing that we are incurring additional leases in 2020.
Sure.
Alright, and then the working capital I think is there something we should be thinking about in terms of working capital or not encapsulated in the capitalization of some of the cost.
Just sort of be.
The typical software.
It takes a while for the circuit.
Become saturated.
And then you get that back at the end of life, but is there something that we would be thinking about there.
Okay.
So.
Turning his summit.
You can build upon.
Sorry in consumables and things like that.
Yeah.
So we have been purchasing consumables during 2023, and we face a lot of those orders and those are there so that we can operate.
So in our $2 965 estimate that included buying first photos and then a lot of these consumables and spare parts.
And when we look at the $142 million, which is our 63% that we need to fund.
That covers the project expenditures up to first Coke and then also the paydown of the accounts payable side that working capital component and then as I mentioned, we both purchased inventory in there and there's a small these component in there as well.
That's kind of that's the number that we need to fund from liquidity with our assumptions of building up inventory and paying down IP because gas payable balance will of course be a lot lower one screen operation compared to where we were.
Building the project.
Okay and then my final question as it pertains to the operate the 210 to.
290.
Production guidance can you give us some parameters around.
You are sort of the ranges.
We expect recovery rates to them.
Next to ask we expect the grade that we're gonna feed to be extra accident expected tonnage over the course of the year to be act like that and just how do you come up with them. So that we can keep track of it as it.
You're involved in.
We're not off site either way on to 'twenty or the 290.
I can I can assure our help you out a little bit here to put some clarifications around that so so first of all in terms of upgrade you know we have about over 5 million tonnes on the stockpile from which about a million a million tons is that the two gram. So that's why we call. So how do you know where.
<unk>, so we're separating their lower grace and within that what the direct feed there's a.
Segregation of million tons of.
The two of them. So we are saying this working well we're seeing the greater at constellation working work very well in the high grade zones. So one five grams, a tonne achieved a mill for 2000 for 2024 appears to be in the neighborhood is wise is achievable.
So.
Getting to their ramp up schedule. Our lives we're planning that could bring you to awards around the $6 5 million tons mail.
Recovery, we don't see any reason why would not be aligned with a 43 101 at above 90, 191% to 92%. So that's bringing like the top end right. So around the 605.
92, everything below that could be more of a factor of tonnes.
<unk> are ramping up I think by grade, we're feeling strong I think our recovery, but everything else below that <unk> would be a matter of time.
Okay. So you're very confident on the recovery. So we're not going to see you guys keep low grade until that recovery get that like that's one of the factors that sometimes in the first quarter people do a little bit last Sunday, because they don't want to waste it.
We don't intend to stay very much in the low grade once we achieved the first goal and we intend to ramp up.
We do not we do not foresee any issues with a recovery in chat if.
If were satisfy what we see at the very early stage.
We intend to ramp up tick rate.
As possible.
Okay Alright. Thank you that's very helpful.
Okay. Thank you.
The next question is from Lawson Winder with Bank of America Merrill Lynch. Please go ahead.
Great. Thanks, operator, good morning, everyone and thanks for the presentation.
Could I ask about your.
Overall inflation assumption for the two operating assets in 2024 versus 2023, so that's the cost inflation I should specify.
So between Westwood sort of an average between Westwood and Essakane.
Good morning loosen.
If we look at.
Inflation for those two mines.
Energy remains a big impact for both of them are assumptions is about $85.
The barrel that we used in our guidance cost ranges.
Well of course impacts other impacts like commodity linked.
Oil linked commodities such as steel.
But we are seeing those costs coming down.
In Burkina faster there is.
Our navy on oil as well as higher transportation cost, we expect those to remain so overall on a per ton basis for is can we actually see costs to be roughly flat with the ins and outs of the different things and inflation because there is certain items that we see at <unk>.
Down.
From that perspective.
Similarly at Westwood.
If we look at the contracts that we entered into opportunity for daily certain items may be see increases, but then but similar offsetting increases. So we don't expect to see a big increase in cost from what we saw at the back end of <unk>.
Three got going into 'twenty four from an inflation perspective, yeah.
I can if I may add something if you look at as a kind of in the last six months right.
It seemed that the beautiful.
How it is when Youre steady when you have no disruptions achieving as we said you know below this extend 100 doors at 50 50.
And we've seen as well do you know like pressure on cost or to 800, when we feel sometimes disruption so.
Should we have like a a year of steady good productions and no issues with their reconciliations and no disruptions.
Could we Ryder achieved towards like the lower end of the cost.
Top pan up their productions, but but we've seen that as a kind of operate sometimes in the tough environment. So so I think I think this is how you should look at it it's a bit of a balance weighted you know more I felt my experience over the last six months I should say.
I've been at the same width at Westwood I mean, we we have been consistently improving we've seen you know like a.
Q4 <unk>.
<unk> $2000 announced we're going to we're going to constantly to improve again.
<unk> improved the grade and so forth so.
This is how it's it's both mines have been like.
With the westward continuously improving.
Feel like we feel strong that we are overall, Canada can beat Q4 for the year.
And if I can is very depending on how stable that will be but should we be stable I think well have a great deal.
Okay. Thank you both for those comments, it's very helpful and then.
So overall.
Contemplation in control or for 2024 versus 23, what was actually realized in 2023.
In terms of year over year cost inflation.
I will give that to Martin.
Listen we saw.
We did see a big impact.
Especially in Burkina Faso.
And but that was impacted by higher landed cost as well because of the cost of getting a convoys decided safely now so I don't have a specific number for you right now to say what was the impact of inflation.
But the cost in the second half of 2024 have those inflation impacts impacted and you can see that compared to what we were doing in the first half of the year.
I think one is the most obvious one I guess you know like when you look at the impact of fuel cost at this iconic.
Most most mind, we'll say their labor cost as the higher cost with the economy is more like full works like the power and the use of fuel as a big impact.
Over the last two years, we've seen as high as probably like doubling.
Low price and dose.
So this was like this is from far the one that has impacted probably the most and can we see some reductions down the road, we're not necessarily counting on that in the short term, but just to give you a bit of an idea of.
What fuel.
How're you know has been the main contributor to that over the last three years.
Yeah, that's really helpful. And then just one final question on costs really pertaining to Burkina Faso.
When does the new sort of higher royalty regime take effect within the <unk>.
First of this year.
The new royalty regime is in effect and that's included in our Costco I need entered into.
The back end of last year in Q4, we got two for you.
Great and then one final question I guess on on Westwood.
At current gold prices about $2000 per ounce and with the significant improvements you've seen at that asset.
Do you anticipate.
Generating positive free cash flow in 2024.
And if not what.
What is kind of your benchmark that you think about it internally that you need to get to before that asset is.
Generation material positive free cash flow to the overall business thanks very much.
So there isn't any significant expansion capex at Westwood. So the all in sustaining cost range that we have in our guidance for Westwood is also an indication of our free cash flow. So if we if we meet our cost guidance in the gold prices higher it should be generating.
Cash flow and that's kind of how we manage that as well.
Also that is.
With those high cost ranges, we saw an opportunity to put in some golf pages in Q1.
So the 60000 ounces that can be hedged.
And it was zero cost collars and.
To put some those are between $19 15, 1975. So thats also how are we just making sure that with that higher cost per product waste wood to which we can be breakeven or cash flow positive.
Okay fantastic. Thank you so much for yeah responses and best of luck for 'twenty four.
Thank you. Thank you.
The next question is from carrier Macquarie with Canaccord Genuity. Please go ahead.
Hi, good morning, guys.
Martin could you just remind us what sort of minimum cash balance you'd like to keep through the ramp up here corporately.
So the minimum cash balance.
Is actually driven by one of the covenants in our credit agreements. So we have to maintain a $150 million of cash on the balance sheet.
Cash and cash equivalents.
Now because of.
The corporate structure.
There's always the cash balance at Essakane and there's actually also a cash balance that needs to be maintained that at cotai. So the $150 million covers that.
So that's the amount that we need to maintain.
And it works well with.
The cash out by those two entities.
Okay, Great and then just on the mining side, you've got 5 million tonnes stockpiled.
Is that stockpile is going to grow ahead of.
Ramp up or is it sort of constrained and then just more broadly like how does the mining ramp up look like through this year.
Carey can you speak up.
Can hear you very well sorry can you hear me now.
Can you hear me there.
That's better yes, yes.
Asking about the stockpile, if you've got 5 million tonnes on the stockpile is that going to continue to grow over the next couple of quarters as the mills ramping up or is that constraint at 5 million tonnes and secondly, just broadly like how does the mining ramp up look in 2024.
No definitely definitely we are we see that well they would be and in and out of course, you know as we ramp up the grade I was telling Anita earlier.
You will be using are of course some of them, but he is the mine plan.
Considers of course to continue to do that segregation continue to add.
Our high grade and Super high grade to the stockpile and managing the great too.
Roughly a range of about one five at the mill for the year definitely the mine.
The mine is ramping up quite well.
We now have a permission like towards like the <unk> trucks, we got the second shoveling now in the pit. So in term of mining capacity, where there are if we achieve an overall 50 million tonnes mined for the eight years that would've allowed us to to properly.
Produce Dr require and continue to segregate stockpile and feed the mill at a proper buffer.
Great. So that's roughly what I can say.
Sure.
Okay. That's it for me thanks.
Thanks.
The next question is from Tanya <unk> with connect with Scotiabank. Please go ahead.
Good morning, everyone. Thank you so much for taking my question.
I'm going to move just for the accounting of all of that.
Very much for all the detail on that co. Okay.
Maybe Martin over to you Jeff to walk us through how all of this is going to show up through the income statement and cash flow for the year. So maybe I'll start off with the first Q 'twenty to 290000.
<unk> thousand ounces on a 100% basis, what is going to be commercial in that amount.
So after that.
Every ounce that.
<unk>.
<unk>.
We will be produced will be reported as revenue.
So the condensate by commercial production doesn't.
Apologies from day, one everything will go through the revenue line.
That day, one everything goes through the revenue line.
Then you have to show the cost as well, so and that indeed, some stockpile accounting where the mining cost.
It comes off softball, so you will have cost of sales.
In the beginning part of the year of course that cost of sales number would be elevated somewhat but some of those cost lines up on the balance sheet.
And so up to commercial production.
That will.
We will have revenue and the cost to produce that revenue will be split between cost of sales and that $40 million that we mentioned at our capital guidance.
We shouldnt novel accounts dates.
We are showing some of the operating cost and capital.
In our guidance numbers.
Okay. So if we like to think of it from a high level at.
Operating costs, plus about 40 million, which is on 100% basis that would come in through your ear.
Cost of sales.
Then the remaining amount of that capital will be under our capital.
Yes.
Okay perfect.
So that through the year and any.
And the reserves.
You reported <unk>.
Putting on 100% basis.
When you look at.
Please see our 2023.
Attributable on the website.
Because the statements are not there yet.
We be looking at it on a 60% is that how you're going to report it on a 60%.
Attributable.
70% in 2022.
So.
Because of that option to repurchase or nine 7% interest.
We will be showing the assets and liabilities at 70%.
Until the point, where either we repurchase it or it expires if it expires things will go back to 60% but.
I think to keep things simple the balance sheet will be at 70%, but revenue and cost of sales will be at 60% and thats real cash flows is it 60% as well.
And so to get it up to 70% is just an accounting adjustment.
Alright, so it would only go to that time.
Z percent should that option might be exercised its like youre, saying.
Yeah on the balance sheet, but divided we think about it is we fund 60% and we so we have to pay for 60% of the cost.
Operating cost as well as capital and we get 60% of the gold.
Yeah, No I understand okay. I was just wondering about the 70 60 for them is there anything out there. Okay. No. That's fine and then just lastly, Martin to confirm Theres another 80.
4 million or thought about coming through to you this year.
Okay.
Some of the asset sales on top of the cash flow.
Yes, yes.
<unk> assay.
Proceeds from this the remaining cells have they been boot transaction.
Speak to get during the remainder of this year, there's two components of it the first one we expect to be in.
In Q1, and then the second one later this year.
We know how much we're getting in Q1 is just to make sure I'm looking at the cash flows and embraces out just one again that was right.
Yes, we expect that it's a little bit commercially sensitive, but it's about half of that transaction.
Okay.
Okay. That's helpful. Thank you very much.
The next question is from Don Demarco with National Bank Financial. Please go ahead.
Oh, hi, Thank you operator, Jonathan I think all my questions have been answered. Thank you.
Thanks Pat.
And we have a follow up question from Anita Soni with CIBC World markets. Please go ahead.
Just a question on that.
You touched on it with Kerry's question, but the minimum of 150 million liquidity covenant of the Rcs can you explain what that means like can you fully draw the entire Rcs and Jonathan.
Zero and then also and then.
150 million left on that Earth, Yes can you draw it down to zero and use that as cash.
Yes, we can so although cash and cash equivalents, let's say, we spend and we get down to $150 million.
And then from there on we can draw on that created just said the up to the full amount. So there's about 37 $38 million of layers of credit issued under it. So there is $387 million available so.
Of the $387 million, we can we can draw it fully dot 150 million doesn't impact it, but let's say we draw the full amount.
And then we have the cash on the balance sheet recon spend below 150, so we always have to maintain the cash balance of 150.
There is other items impacting that as well of course other covenants on the credit facility.
Based on what we're seeing now the facilities available.
Okay, and then just just to.
Catch right Tanya so got it.
About 80 million coming from the bandwidth cost that's probably evenly split between Q1 and Q2 in terms of the.
The receipt of that money.
Yes, approximately yes.
We really like to have two Clos are gaining in Q1. This is what we're laser focused on as we speak with our partner manage them on that.
That would be that would come first for sure and then Molly with follow somewhere in 2024. So this is really our target should we sleep. We're good I mean, it's not but that's that's our focus now to try to close that in Q1.
Okay. So you're still trying to close the deal in Q1, you said and then you said in 2000 and the other one sometime in 2024 I'm not.
Molly Molly was volatile.
Correct Mali with follow after so that's why we mentioned 24 or so.
Take a little longer but.
Private day right now the first one is to close scrutiny.
And not the one you are trying to close this $80 million.
Total.
No.
No no. The <unk> gave me itself represents about half of it about half of this year.
On a gross basis.
Okay, Alright, thank you very much.
Thanks.
Okay.
This concludes the question and answer session I would like to hand, the conference back over to Graeme Jennings for any closing closing remarks.
Thank you very much operator, and thanks for everyone for joining US. This morning do you have any further questions. Please reach out to another or myself. Thank you all be safe and have a great 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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