Q3 2024 IAMGOLD Corp Earnings Call
[inaudible]
I love you.
Thank you very much.
Speaker Change: Thank you for standing by. This is the conference operator. Welcome to the IAMGOLD Third Quarter 2024 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 will be an opportunity to ask questions.
Speaker Change: To join the question queue, you may press star then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then 0.
Speaker Change: At this time, I would like to turn the conference over to Graeme Jennings, VP Investor Relations and Corporate Communications for IAMGOLD. Please go ahead, Mr. Jennings.
Graeme Jennings: Thank you, operator, and welcome everyone to our conference call today.
Graeme Jennings: Joining us on the call are Renaud Adams, President and Chief Executive Officer, Marthin Theunissen, Chief Financial Officer, Bruno Lemelin, Chief Operating Officer, Tim Bradburn, Senior Vice President, General Counsel and Secretary, and Dorena Quinn, Senior Vice President, People.
Graeme Jennings: We are joining today from IAMGOLD's Toronto office, which is located on Treaty 13 territory on the traditional lands of many nations including the Mississaugas of the Credit, Anishinaabeg, Chippewa, Haudenosaunee, and the Wendat peoples.
Graeme Jennings: At IAMGOLD, we believe respecting and upholding Indigenous rights is founded upon relationships that foster trust, transparency, and mutual respect.
Graeme Jennings: Please note that our remarks on this call will include forward-looking statements and refer to non-IFRS measures. We encourage you to refer to the cautionary statements and disclosures on non-IFRS 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.
Graeme Jennings: With respect to the technical information to be discussed, please refer to the information in the presentation in the heading Qualified Person and Technical Information.
Graeme Jennings: The slides referenced on this call can be viewed on our website.
Graeme Jennings: I'll now turn the call over to our President and CEO, Renaud Adams. Thank you, Graeme, and good morning, everyone, and thank you for joining us.
The third quarter was another exciting quarter for IMGO.
Graeme Jennings: as our operations perform well, demonstrating safe, stable production and strong cash flow growth.
Graeme Jennings: Gold production here today for the company totals 490,000 gold ounces.
Graeme Jennings: Driven by the strong year-to-date performance at Esakani and the turnaround of Westwood, both assets which are poised to achieve the near-to-upper end of the production guidance estimate.
Cody Gould, meanwhile, is taking significant strides.
Graeme Jennings: As the mine continues its ramp-up and achieves multiple milestones in the quarter, including reaching commercial productions on August 2nd,
Graeme Jennings: demonstrating the capability to operate at or above nameplate throughput level, completing key maintenance to improve the availability of the plant, and achieving its first quarter of a positive free cash flow production.
Graeme Jennings: Coty remains on track towards our goals of the mine achieving 90% nameplate throughput exiting the year.
Graeme Jennings: With 2025 just around the corner, a surprising seven weeks away,
Speaker Change: IAMGOLD is rapidly moving closer to our goal of becoming a leading modern Canadian gold producer with a strong balance sheet, an asset that is poised to generate significant value for our stakeholders, partners and investors.
further enhanced by the backdrop of today's gold price action.
Speaker Change: By the middle of the next year, we anticipate we will have our gold prepayment facility behind us. Cody will be nearing nameplate production, and Esakan and Westwood will be capable of generating near-records cash flows.
Speaker Change: This will conceptually position IMGO uniquely amongst the mid-tier space, with significant cash flow generation and some very valuable near-term growth to uncover at go2go.
Looking at a highlight from the quarter.
Speaker Change: Starting with health and safety, which is a fundamental pillar of IMGIL's visions of zero harm and our commitment to people and the places in which we operate. In the third quarter, our total reportable injury frequency rate was 0.46.
Speaker Change: An improvement from the prior quarter, led once again by a Sakani team who achieved triple zero for safety incident in September, a testament to the professionalism and commitment to a safety culture by our people in Birkenau-Fessel.
Speaker Change: In the Third Quarter, IM Gold produced 173,000 attributable gold ounces.
from our tree of itself berries.
Speaker Change: well above the 109,000 ounces achieved in the same period last year.
Speaker Change: This year-over-year production growth was driven by continued stable operation and a secondary...
The successful turnaround at Westwood and the ramp-up of Coté.
Speaker Change: On a cost basis, IAMGO reported third-quarter cash costs and all-in sustaining costs of $1,165 per ounce and $1,756 per ounce, respectively.
While costs were lower than the prior year period,
Speaker Change: The cost increase quarter over quarter was in line with expectation and our guidance as we will discuss in a moment.
Speaker Change: Sustaining capital expenditure increase in the third quarter to $84.7 million.
Speaker Change: up from $50.4 million the year prior, as CODI achieved commercial production in August, which allowed for the relocation of capital expenditure related to operation to sustaining for the mine.
Thank you very much.
Looking at our targets for the year.
Speaker Change: IAMGO reiterated its guidance estimates in the third quarter. As you will recall, last quarter, the company increased its production guidance and lowered the cost guidance target, following a very strong first-half performance from our Asakana and Westwood mines.
Speaker Change: Kusakane and Westport are well positioned to achieve the upper end of their production guidance ranges this year, with combined production year-to-date of 428,000 ounces versus guidance of 495,000 to 540,000 ounces.
Speaker Change: The 2020 forecast guidance for Esakan and Westwood combined is unchanged and is expected to be on the low end of the range of $1,175 to $1,275.
for Cash Costs Per Ounce.
So, and $1,700 to $1,825 for ASIC per ounce sold.
Speaker Change: Crops are expected to be higher in the fork water at the Sakanae.
Speaker Change: As this account is expected to report a lower head grade from an increased production of stockpile material in the mill, and Westwood conduct a scheduled maintenance plan shut down in the quarter. Both in lines with our expectations.
Speaker Change: On a macro level, inflationary pressures have continued to ease, though key input, including labor, remains elevated.
Speaker Change: As well, pricing for certain consumables, including cyanide and grinding media, are in line with the level of experience in 2023.
Speaker Change: With that, I will pass the call over to our CFO to walk us through our financial results and position.
Thank you, Renaud, and good morning, everyone.
Renaud Adams: In terms of our financial position, IAMGOLT ended the quarter with cash and cash equivalents of $553.4 million, and our credit facility remains undrawn, equating to total liquidity of approximately $959.3 million.
Renaud Adams: We note that within Cash-in-Cash equivalents, as of September 30 of this year, 83.4 million was out by Cota Gold and 135.3 million was out by Isacan.
Renaud Adams: Notably, as the plan declared a dividend during the second quarter of 180 million, for which the minority interest portion and withholding taxes were paid during the second quarter.
Renaud Adams: And $136.3 million was received by the company in the third quarter, and the balance of $15.6 million was received in October, for a total dividend received by Armgold of $151.9 million.
Renaud Adams: On September 30, 2024, the company provided Sumitomo with the required 60 days formal notice to exercise the right to repurchase the 9.7 interest in Kote Gold, and the transaction is expected to close on November 30, 2024.
which will return Arngold's to its full 70 interest.
in Kuytergold.
Renaud Adams: The repurchase price is approximately $377 million and includes $23.7 million for the repurchase option fee accrued during 2023.
Renaud Adams: The payment will be funded using the proceeds from the $300 million board deal completed during Q2 2024 and with available liquidity.
Renaud Adams: Additionally, as of today, the company has completed a third of its gold prepaid obligations, having delivered 37,500 ounces in the third quarter and 12,500 ounces in October.
Renaud Adams: The company received $13.3 million in cash as part of the delivery of the obligation.
Renaud Adams: The company has a remaining 100,000 ounces to deliver on its gold prepayment arrangements from November 2024 to June 30, 2025.
Renaud Adams: The prepay arrangements were funded at the time of entering into the arrangements, though the company will receive certain cash payments at the time of delivering into the gold prepay arrangements based on the market price of gold at the time of delivery as follows. In Q4,
capped at $2,100 per ounce.
with the remaining 15,000 ounces pre-funded.
Renaud Adams: Then in Q2 of next year, for 31,250 ounces that will be delivered through the period of April to June, the company will receive the difference between the spot price and $2,100 per ounce, capped at $2,925 per ounce.
Renaud Adams: Please refer to the Liquidity Outlook section of the MD&I for further details.
Renaud Adams: Looking at our third quarter results, we saw the impact of strong production at near record realized gold prices, resulting in the company realizing higher margins, generating higher operating cash flows and adjusted EBITDA at an important time for the company.
Renaud Adams: The higher gold price is helping set up the company to potentially expedite its plan to reduce debt levels and debt carrying costs.
Renaud Adams: Revenues from operations totaled $438.9 million from sales of 184,000 ounces on a 100% basis at a record average realized price of $2,391 per ounce.
Renaud Adams: The realized price includes the impact of gold prepay arrangements in place during the quarter that reduced the realized price by $107 per ounce from $2,498 per ounce.
Renaud Adams: Net earnings was $598.1 million during the quarter and includes a reversal of a previous impairment on waste wood of $462.3 million.
Renaud Adams: The Impairment Reversal Mainway Results from the Update to the Long-Term Gold Price Assumptions.
Renaud Adams: The strong third quarter operating results and gold price resulted in an adjusted EBITDA of $221.7 million, which was a record quarter for the company. This brings the year-to-date EBITDA to $565.2 million, with Cote still in the early stages of its ramp-up.
Renaud Adams: Adjusted earnings per share was $0.18 for the quarter compared to $0.16 in the previous quarter and a $0.01 loss in the third quarter of 2023.
Renaud Adams: Operating cash flow before working capital changes was $161 million in the third quarter.
Renaud Adams: Operating cash flow does not include the pre-funded cash flow received as part of the Gold Pre-Pay Arrangement and is $64.4 million lower than what it would have been without the impact of the Deferred Revenue Recognised as part of the levering into the Gold Pre-Pay.
Renaud Adams: Looking at mine site free cash flow, which is calculated as cash flow from mine site operating activities, there's capital expenditures from operating mine sites.
Renaud Adams: SACAN reported third quarter mine site free cash flow of $76.6 million and a waste route of $20.5 million.
8 million.
Speaker Change: It is worth highlighting again, as Renaud mentioned in his introductory comments,
Speaker Change: This was the first quarter for Cote to contribute positively to mine site pre-cash flow, with $23.3 million in the quarter, which represents Armgold's 60.3% portion of the cash flow.
Speaker Change: And with that I will pass the call back to Renaud. Thank you, Renaud.
Renaud Adams: Thank you, Martin. We will start with Kote, which you can see here on the left image on the slide, with a view of active mining activity early in the summer.
Speaker Change: Last month, we announced the CODIS Preliminary Q3 Operating Results ahead of what was a well-attended mind tour by analysts and institutions.
Speaker Change: I want to take this moment to once again thank all the attendees for the great turnout and thank our CODI team for hosting what was a very engaging tour.
Speaker Change: Looking at the quarter, a highlight for Cote was the first quarter of positive free cash flow, as Martin just highlighted, from productions of 68,000 ounces on a 100% basis.
Speaker Change: However, I believe the real advancements were on the progress of the ramp-up and improved understanding of the operation.
Thank you.
Speaker Change: I am very proud about the progress we achieved in the third quarter.
Speaker Change: As we saw a definitive sign that the improvement that were deployed throughout the quarter and during the shutdown in September are having a miserable and meaningful positive impact on operation.
Speaker Change: Mining activity totaled 10.4 million tons in the third quarter of 2024, in line with the prior quarter, and ore-ton mines increased to 3.2 million tons during the period, with an associated decrease in the strip ratio to 2.321 waste to ore.
The average grade
Speaker Change: of mine ore was 1.02 grams a ton in line with the mine plan. The reconciliations between the grade control and reserve model is also in line with expected tolerance.
Speaker Change: Within the pit, the mine currently has two CAT 6060 electric shovels and 18 CAT 793 autonomous haul trucks in operation.
Speaker Change: with an additional three haul trucks to be commissioned before the end of the year.
Utilization rates of the primary mining equipment has been improving.
Speaker Change: Drilling and blasting activity has seen month-over-month improvement from enhanced drill fleet performance with better blast pattern preparations resulting in a higher level of thin-piece blasted ore inventory available for loading and hauling.
Speaker Change: The current mine plan is using multiple stockpile, segregated by grade, with the 43-101 estimating a total of 78 million tons of rehandled ore mill feed over the life of mine.
Speaker Change: This strategy is proving today to require higher than expected amount of re-handling, which are seeing indications of flowing through to mining costs.
Year-to-date, mining costs have averaged $3.77 per ton.
Speaker Change: This is higher than expectation due to the re-handling, as well as higher contractor costs to support the ramp up the mine.
Speaker Change: We expect to see unit mining cost decline as we bring in the full fleet and reduce the need for external support.
Speaker Change: Further, we are looking at refining some aspects of the mining strategy to optimize ore handling and move towards more of a bulk mining scenario when economically possible and as the mill continues to increase its overall throughput.
Speaker Change: The ramp-up of the plan was the primary technical focus of our efforts in the quarter, with a headline milestone of achieving commercial production midway through the quarter, as well as multiple days of achieving above nameplate production.
Mill throughput in the third quarter totaled 1.6 million tons.
Speaker Change: A notable improvement quarter-over-quarter, though, throughput was impacted by the mid-September planned shutdown and an unplanned shutdown at the end of the month from an electrical failure in a motor control center.
Speaker Change: Head grade of 1.41 grams a ton were in line with the mine plan, which required feed material from a combination of higher grade direct feed ore and a higher grade stockpile.
Speaker Change: Recoveries in the plan average a wonderful 93% in the quarter.
Speaker Change: including primary, secondary crushing, HPGR, conveyors, ball mill, leaching, etc. All have now proven their capability to operate at or above design low when provided with stable conditions.
Speaker Change: During the ramp-up, the primary areas of focus for the plan were 1. the crushing circuit before the course or dome and 2. everything else after the course or dome or the downstream circuit.
Speaker Change: which is the HBGR-2 to the west side of the park.
Speaker Change: With a coarse-optome film, the downstream processing circuits demonstrate very strong performance and availability and capacity.
Speaker Change: So we have focused on a crushing circuit to improve the availability and capacity.
Speaker Change: In September, the companies completed an eight-day meal shutdown at Cote.
Speaker Change: to deploy key optimization and improve the operating availability of the plant in support of the goal to ramp up throughput to 90% of nameplate by the end of the year and achieve nameplate in 2025.
Speaker Change: The priority of the work performed during the shutdown was to stabilize the crushing circuit and attend to the primary causes
Speaker Change: for low availability in the second quarter, which include in replacing 90% of the shoes with higher abrasive resistant material to reduce the level of wear, and using new type of and sizes of screen in the course or screening area.
Speaker Change: These improvements have made a difference, and the plant has seen further increases in availability and performance of the secondary crusher and screening over the last few weeks, achieving multi-day performance above 40,000 tons per day in the crushing plant.
Speaker Change: We are now well positioned to ramp up the overall processing facility to our 90% of nameplate objective as we exit the year.
Speaker Change: In October, we averaged just under 80% of the nameplate as daily throughput.
Speaker Change: Achieving the additional 10% at COTE is primarily about stability. The objective is to eliminate daily variances in processing, as we already know that we can meet nameplate capacity of 36,000 tons per day and potentially more.
Every downtime brought new information.
and an opportunity to further improve.
It is really now about achieving stability.
More consistency.
This is how we will earn the additional 10%.
Speaker Change: Furthermore, we will be installing a second coulomb crochet in the second half of next year at the low capital requirement.
Speaker Change: to provide additional capacity and redundancy in support of the operation and throughput maximization.
Speaker Change: Lastly, and as we noted previously, Cote d'Ivoire added a mobile crusher unit and conveying system that act as a dumper feed system.
Speaker Change: This addition provides flexibility, redundancy, and time of shutdown by delivering up to 1,000 tons per hour to the dome and can operate in parallel with the crushing circuit for extra daily capacity when spartically required.
Speaker Change: Based on a year-to-date ramp-up progress, we maintained our guidance set last quarter for animal production to be at the lower end of the previous guidance range or closer to 220,000 ounces on a 100% basis.
Speaker Change: At the exit rate of 90% throughput, we estimate that cash costs will, at that time, average approximately $700 to $800 per ounce and all in sustaining costs to be approximately $1,100 to $1,200 per ounce.
Speaker Change: We know, though, that costs may exceed these ranges depending on the timing and the one-time cost of finishes and improvement implemented to achieve the rip-off target.
Speaker Change: Looking into 2025, we will advance CODI towards the nameplate throughput rate of 36,000 times per day.
while looking for easy win.
Speaker Change: to increase the processing plant capacity. As we have noted in the past, several components of the plant have been designed for 42,000 tons per day, and we have seen multiple days above 40,000 tons per day early on in the lifecycle of the project.
Speaker Change: The addition of the second corn crusher next year is aligned with our strategy of unlocking maximum value by monetizing, at low capital requirements, a maximum number of tons of ore mined as they become available for processing.
Alongside this, as mentioned,
Speaker Change: We are evaluating the potential to adjust certain aspects of our mining plan at Cody to potentially shift, over time, to a more bold mining approach as the mill throughput capacity is unlocked.
Speaker Change: which offers numerous efficiencies advantages including reduced re-handling, improved pit sequencing, and less reliance on segregations for the mine plant and more on maximizing mill throughput and monetizations of gold mines.
Speaker Change: Over the current life of mine, the mining rate of ore was estimated to average approximately 50,000 tons per day, and this compared to our processing rate of 36,000 tons per day.
Thank you.
Speaker Change: The Cody deposit has estimated mineral reserves of 7.6 million ounces that form the basis of the current economics of the project.
Speaker Change: On a measured and indicated resources basis, the CODI zone is currently estimated at a total of 12.1 million ounces.
Speaker Change: I've seen here in the dark blue pitch shell at the bottom left.
Speaker Change: This does not include mineralization outside of the pit shell, highlighted in red in what we will unofficially call the Cote Norte zone.
Speaker Change: Further to the adjacent Gaussman zone has an additional 4.4 million ounces of measured and indicated resources and nearly 3 million ounces of interest.
Speaker Change: bringing the project to a total of 16.5 million ounces of measured and dedicated and an additional 4 million ounces of inferred.
Speaker Change: The size of Cote and Gosling together put the project in a very exclusive category amongst large-scale producing Canadian assets.
Speaker Change: We need to consider what COTI will be when it grows up.
Speaker Change: And that is to say, we need to consider Cote not as a 7.6 million ounces project, but as a significantly bigger deposit, and how to bring this value to the market.
Speaker Change: Our exploration program on Gosselin and ADDEP under the Kootenai and Gosselin Zone progressed well this year.
demonstrating extensions of mineralizations outside of the resource pitch-out.
Turning to Westwood.
are otter Canadian assets.
Speaker Change: It was another strong quarter for the mine as underground activities are now able to focus on operations and less on legacy rehabilitation.
Speaker Change: It may surprise some to say, but Westwood so far this year has generated $53.1 million in mine-free cash flow, and the third quarter, out of cost profile, the low is a cut.
Speaker Change: Looking at operation, Westwood produced 32,000 ounces in the quarter for a total of 99,000 ounces year-to-date.
Speaker Change: or mine from underground continue to play a more pivotal role in a higher grade, with 84,000 tons in the third quarter at an average head grade of 9.09 grams a ton.
Speaker Change: The milk throughput was relatively flat, quarter over quarter, at 289,000 tons processed at an average blended head grade of 3.67 grams a ton and 93% recovery.
Speaker Change: The plan availability in the quarter of 90% was higher than the same prior year period of 86%.
Speaker Change: with plans to further improve availability through an ongoing maintenance program in addition to an annual bill shutdown plan in November.
Speaker Change: The margin for Westwood continues to improve, with a strong gold price and stabilizing costs. Cash costs average $1,150 an ounce, and all in sustaining costs average $1,617 an ounce in the third quarter.
Speaker Change: Looking ahead, Westwood production is expected to be at the top of the guided range of 115 to 130,000 ounces.
Speaker Change: While costs are expected to be at the lower end of the range of $1,200 to $1,300 for cash costs per ounce sold and $1,775 to $1,900 for ASIC per ounce sold.
Speaker Change: Four-quarter unit costs are expected to be higher than the third quarter due to the schedule shutdown, mill shutdown in November. This is to better position the operations for next year.
Speaker Change: Later this month, we will be issuing an updated technical report and mine plan based on reserve only for Westwood.
Speaker Change: which should demonstrate the value that has been created by the Westwood teams over the last three years of rehabilitation, redesign, and operation.
Finally, looking at a second.
Speaker Change: being able to perform effectively to plan in the quarter. The Sakana reported attributable gold productions of 100,000 ounces in the third quarter, bringing the year-to-date total to 329,000 ounces.
Speaker Change: mining activity totaled 12.2 million tons in a quarter with only 1.9 million tons of ore mined. As mining prioritized
Speaker Change: waist-stripping sequences in support of the 2025 production plan including the opening of the upper benches of Phase 7.
Speaker Change: Head grades were 1.26 frames a ton in line with estimates.
Speaker Change: Average head grades decrease in the third quarter from level in the first half of the year and are expected to continue to trend towards reserve grade in the fourth quarter as the volume from phases six and seven increase and from increased proportion of stockpile are included in the mill fee.
Speaker Change: On a cost basis, it's a kind of reported third quarter cash costs of $1,223 per ounce and all in sustaining costs of $1,730 per ounce.
Speaker Change: And increase quarter over quarter on lower ounce or so. With both cash costs in ASIC.
Speaker Change: on our track to be at the low end of our cost-guided range.
Speaker Change: Looking ahead, Isaacana Tribunal production is expected to be at the top end of the guidance range of 380,000 to 410,000 ounces.
Speaker Change: The mill is expected to continue operating at nameplate capacity, and the positive reconstellation of phase 5 is expected to continue.
However...
Speaker Change: The average feed grades are expected to decrease during the fourth quarter, as mining activities continue to transition into the next phases of the pit, resulting in a lower level of ore mine, requiring ore feed to be supplemented with low-grade stockpile material.
Speaker Change: The focus in the Fork Water will be to further enhance the face positioning in the pit for a strong start next year.
Speaker Change: As we begin to look into next year, the Seqanatu continues to be a significant cash flow contributor for IMDb. With a current mine life through 2028,
Speaker Change: This operation has the capability to generate over a billion dollars of cash flow at current gold price and is a significant part of our Larkin plan to deliver the company.
Speaker Change: Looking beyond the mind plan, we are continuing to examine opportunity to extend the mind life at a second.
Speaker Change: targeting options within the FEDS to ensure the safety of our teams.
Speaker Change: So thank you all, and I look forward to an exciting year ahead. With that, I would like to pass the call back to the operator for the Q&A portion.
Rader
Thank you. Thank you. Thank you.
We will now begin the question and answer session.
Speaker Change: To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two.
We will pause momentarily to assemble our roster.
Speaker Change: Our first question comes from Lawson Winder of Bank of America. Please go ahead.
Lawson Winder: Yeah, thank you operator and good morning everyone. Thank you Renaud and team for today's presentation.
Lawson Winder: Could I actually just start off with a pretty basic cash flow question?
on working capital.
Speaker Change: Martin, I mean, there's been a moderate headwind of free cash flow in 2024 year-to-date, something like $90 million.
from Working Capital Build.
Speaker Change: First of all, at what point do you expect that to stabilize? And then assuming flat gold prices from here, what does the working capital build look like for Q4? And then what about 2025?
Good morning, Lawson.
Speaker Change: A big part of the working capital this year was at Cote. We had considerable accounts payable balances due to the construction, still outstanding. And we've been paying those down over the course of the year as we are closing out those contracts and paying back holdbacks.
Speaker Change: That will continue in Q4, but then we will be at the back end of that.
We...
Speaker Change: Part of the working capital is also some of the taxes that's building up and reaccruing taxes that is increasing because of higher gold prices. But other than that, we expect our accounts to be able to decrease.
specifically at Cote and then stabilised after that.
Thank you. Thank you.
from next year onwards.
Speaker Change: Okay. And then just thinking about your net debt. So, I mean, well, look, it's spot gold. Like, I think I am gold could be in a net cash position by year end of 2025. Or how are you thinking about
First question, yeah.
Speaker Change: Yeah, so the first part of our, so we'll be looking at our data as it comes due when we look at that and using excess cash and equity to deal with that.
Speaker Change: But we've restarted paying debt this quarter already by delivering into the gold prepay and and we'll continue doing that over the course of
Speaker Change: This year and the first half of next year, by some spot gold prices, that has a significant impact on cash. So getting that off our balance sheet is important for us.
Speaker Change: at $20 million increments with excess liquidity when we can. So that would be our next
Speaker Change: target I'm using excess liquidity and then after that the biggest portion of our data that remains is our high yield notes
Speaker Change: and that is a 5.75% coupon. We won't be in a rush to pay that down off of our balance sheet.
Speaker Change: And then lastly, the leases that we have, about $133 million, $130 million at the moment and we expect to increase that slightly still. We'll pay that down just based on the scheduled payments.
Speaker Change: So that's kind of our way that we look, and based on the date agreements we are meeting to make amendments, that's what we can do.
Speaker Change: Great. Yeah, that's very good. I appreciate that detail tremendously. Okay, so looking beyond that repayment, which I mean, it'll be mostly wrapped up by some point in the second half of next year.
What would be the capital priority?
Speaker Change: considerations at that point? And I mean, at what point do you start thinking about a dividend or share buybacks?
Speaker Change: Before we go to the to the share buyback and you know It is the most important thing once we put we put the prepaid behind us is to really turn the company into a net You know positive cash. So that's the priority number one. So this would allow
Speaker Change: A 25 for us is a rider that comes in the ramp up of Cote and quite frankly Westwood and Esakanis should be like a pretty
Speaker Change: City Stadium type of year, maximizing cash flow. As we enter 26, as I mentioned, it could be some opportunity of extending the life of mine at Esa Canes or where you would remain always positive cash flow, but maybe you could take...
Speaker Change: a little bit less in 6-7 and extend the life of mine. So, I think once we turn the company...
Speaker Change: On the positive cash flow side, we'll be capable to first look at unlocking additional organic growth for the assets, as everyone will be capable to take care of themselves, and that's what we'll be.
Speaker Change: I've mentioned, you know, opportunities at Cote as well, at the low capital requirement, the cross-share, we'll eventually look back after that.
On the website, is there any some opportunities? But NAPNAP.
Speaker Change: Companies should not be entering any additional important capital allocation more than benefiting, you know, from the free cash flow at each asset to further unlock some...
Speaker Change: some potential and continue to improve on the balance sheet. Even though Coltay has this voice with some opportunity to increase, we do not see this as a potential important capital allocation, but rather benefit just from the free cash flow.
Hope this will get you satisfied.
Speaker Change: Yeah, no, that's very clear. And then just one final thought, like at some point it might
really benefit IAMGOLD shareholders to consider increasing IAMGOLD's
Speaker Change: Ownership of Cocteau Gold. Are there certain milestones or timelines or pre-established economic considerations that would allow IAMGOLD to even marginally increase that position from 70% at some point in the future?
Speaker Change: I would say at this stage the main limiting factor is this whole thing was designed at a 7-8-30, right?
Say au revoir.
Speaker Change: So we do have a partner, and we're very, very happy, and the partnership we have. Should it be any opportunity down the road with our partner Simitomo, for sure we would be considering to increase. But at this stage, it was designed at a 70-30, which we should be back soon.
Speaker Change: But Cote is from far our best opportunity, right? So any opportunity we would see that makes a lot of sense and generate return, we'll be looking at improving our positions or the NAB or any unlocking in the organic bills. That would be always our criteria.
Thank you.
Okay, fantastic. Thanks very much, guys.
Thanks.
Speaker Change: The next question comes from Anita Soni of CIBC World Market. Please, go ahead. Good morning, Renaud and team. A couple of questions. So, just firstly on Westwood, you said there was a mill shutdown in November. Could you tell us how long that mill shutdown would be for? How many days?
Speaker Change: Yeah, we're targeting five. If we see a further opportunity, we'll do it. I would say five to seven, but hopefully we do it in five.
Speaker Change: Okay, and then next on Essa Cane, just for you to understand what
Speaker Change: Q4 and 2025 look like there. Q4 you indicated that you're going to be pulling more stockpiles as you are focusing on stripping waste. Could you just give us an indication of what the strip ratios would be, both the operating and the capitalized strip ratio?
Renaud is...
Renaud Adams: Yeah, so next year we'll be back with more standards. I could already tell you that. It's a year where we should see reductions of total capital as well as aligned with the 43.01.
Renaud Adams: And the Q4, we should normally increase. It's going to be like a much lower R-grade mine, so we could go probably as far as probably 4 or 5 to 1.
Renaud Adams: depending on how it goes and the opportunity to face positioning, but in 2025 we would be back to a more regular in-line probably with what we've done this year or even lower.
So a round two, is that correct?
Renaud Adams: Between 2 and 3, always seizing the opportunity, like this year what we've done, considering, you know, the very positive year, the free cash flow, so we took advantage, you know, to push.
Renaud Adams: improve the positioning of the bed, do more weights, but you can start.
Renaud Adams: towards maybe a 2-5 plan, and you could go a little bit higher. So follow the 43-101, which I think remains very relevant for 2025.
Speaker Change: Okay, and then the last question on Ethel Kane would be...
Speaker Change: The grade reconciliation, I know you tried to do work on it in the past, but it's clearly beating and continuing to beat. I think the plan for Q2 was lower grade, the plan for Q3 was lower grade.
Speaker Change: It's still hanging in there well above the reserve grade. So how should we think about that on a go-forward basis? I know you'll probably tell me to use the reserve grade, but I mean, is that realistic at this point?
Speaker Change: Well, as I mentioned in my opening comment, I mean that one of the big contributors is the Phase 5 and we've seen like some extension that's going to prolong in 25.
Speaker Change: On that point of the Phase 5 alone, it would bring, normally, opportunity beyond the 43-101. So, we'll look at this for next year. Now, we're not at the beginning of the Phase 5, but we should benefit at least another quarter, if not more, from the Phase 5.
Speaker Change: So, yes, we should normally, should the Phase V continue, as I mentioned, we should normally be able to improve beyond the 43-101 in terms of grade for next year.
Speaker Change: Thank you. I'll pause there and let someone else ask questions. Thank you.
Thank you so much.
Speaker Change: Once again, if you have a question, please press star then 1. Our next question comes from Tanya Jakuskonek from Scotia Bank. Please go ahead.
Tanya Jakuskonek: Good morning, everyone. Thank you for taking my question. Renaud, maybe just to circle back on Lawson's question on capital allocation, did I understand correctly that the priority
Tanya Jakuskonek: are obviously paying down, you know, the prepaid and the notes and some of the leases, et cetera, et cetera, dealing with the debt side.
Tanya Jakuskonek: And then you have some capital that you can put into cotay on the plant side. And is it safe to assume, and you want to extend the mine life as it can? So that's 2025, and so as we go into 2026...
Speaker Change: Do you think at that point you will have any additional free cash flow to look for returns to shareholders? I'm just trying to see whether return to shareholders via dividend and or share buyback is a 2026
Speaker Change: part of your review. It's not 2025 is what I'm understanding.
Thank you. Thank you. Thank you.
[inaudible]
Speaker Change: Thanks for your questions because our shareholders obviously, you know, means a lot and we'll always be taking into account. So my capital allocation answer was really focusing more on what we see as real kind of mine site capital needs which we still see within. But as you mentioned and as we have mentioned in previous quarter,
Speaker Change: and address properly leveled of debt reductions will continue to generate excess free cash flow and we have mentioned in the past.
Speaker Change: That we will be looking down the road to how could we find a better way to reward our shareholders? This is not for a 25
Speaker Change: We will see how the gold market goes, but I'm expecting this company to be in excess of cash low as we advance 2625 and beyond, and which will represent some opportunity. We don't have any decision made. This is all part of...
strategic approach as we advance in time.
Speaker Change: But I'm looking at 24, looking how we are advancing. I'm very excited about what this company could be next year towards the Q3. There are some big priority that would make a difference for the shareholders. As you know, the second lean is very expensive and we must find a way to reduce cost of that.
Speaker Change: But after that down the road, once you adjust your balance sheet, I think it would be a fortune for the shareholder. So, thank you for this question.
Speaker Change: Okay, looking at twenty-six and beyond for that opportunity. Yeah, that cannot really be before that because we do have, so I think as we advance twenty-six and beyond, looking at the needs, the excess cash flow, we'll be looking at what could be done.
Speaker Change: Perfect. And then, Renaud, my second question is just on Westwood. I know the 43-101 technical study is coming, and I think you need to ask this on one of the other calls. But can you just remind me?
Speaker Change: What you have kind of said is the long-term production target and cost target for this asset.
Was that 150,000 ounces or one? Yeah.
Thank you.
Thank you for doing that, that was great.
Speaker Change: Thanks for your questions, because we will be filing the 43-101, but in all fairness...
Speaker Change: The 43-101, you know, by the nature of the mines, a deep mine, there's quite a bit of ounces, you know, not quite in the reserve category. So you've seen the reserve at the end of December is about a million ounces and the 43-101 is based on reserve only.
Speaker Change: but there is quite a significant amount of other answers that of course part of the life of mine and so forth so
Speaker Change: An average of 130-140, so I like to see, I see this mine down the road, that is a steady 125-150 type of range. And this is just...
Speaker Change: With the current life of mine, but you know once the grand jack is done There will be further opportunity, you know and and extra capacity at the mail down the road That could be so I would say as a base case is probably 125 140
Speaker Change: And in terms of cost, I would wait for the 43-101 to highlight a little bit more of that. So I don't want to be ahead of my ski here.
Speaker Change: A few weeks will be a better answer to these questions. But you will see a drop from the current range just because of the level of rehabilitation that is down.
Speaker Change: So that would lower some costs. So if we do $1,600 today, you should expect down the road the mine to be capable to do better than that.
Speaker Change: Okay, look forward to getting it. And then maybe my final question, I just wanted to circle back, Renaud, on something you said earlier, which...
was on invitation.
Speaker Change: I'm very focused on this. I think that 35% of your cost structure is labor, correct me if I'm wrong. Can I just understand, number one, what is your labor inflation currently and how are you thinking about that into 2025?
Speaker Change: That's my first question. So, is $35,000, Martin, the right number as a percentage of cost for labor and then inflation?
Speaker Change: I'll pass it to Marthin for more further detail on that.
Good morning, Tanya.
So, 35% is still the...
Speaker Change: amount for labor and contractors in our cost structure. That will change slightly as COTA becomes a bigger part of our organization now going forward, because COTA has less labor than ISSA can, for example. When we look at our budget, which we're still working on, and we look at what industry is doing, as well as CPI, we're seeing like three to three and a half percent
Speaker Change: increases for labor on average. And I think that's in line with what other people are seeing as well.
Speaker Change: And as we go forward, would that 35% move to 40% in labor, or would it be higher, like with the contractor?
Speaker Change: I'm just trying to understand what that 35 would move to.
[inaudible]
Speaker Change: I think that 35 would maybe decrease, because of the labor component, the higher labor component is scanned in that.
Speaker Change: at COTA, but we're just working through those numbers as well, so... It should not increase. It should not change. It shouldn't increase. It should be a slight decrease. Yes.
Speaker Change: saying that percent, that 35% includes your employees and labor and your contractor.
in that 35.
Speaker Change: Okay, can you give me the slip of what that is now, so what is your spell?
and what is Contractor in that third slide.
Speaker Change: So based on our plan for this year, I've not checked the actuals recently, but it was about 25-10, 25% of the 35 and then 10. So labor, 25, contractors 10.
of that city.
Speaker Change: Okay, thank you for that. And then that 10% should increase as the protest goes on next year, is how I understood it.
Yes.
Thank you. Yes.
Speaker Change: And still within the 35, it's just the shift of contractors increasing versus your employees. And then, Renaud, you mentioned... It's more that...
Speaker Change: Sorry Tanya, it's more that the percentage of labor of our cost structure, the 35% we expect to maybe slightly decrease, as CopeCity becomes a bigger part of our overall cost structure. The split between labor and contractors may not change, but it depends on how we operate the business.
Speaker Change: Okay, and and and so what when you look at overall and I think Renaud you mentioned that consumables is in line with
So, you're not sick.
Speaker Change: appreciation in that portion of the cost structure, obviously the higher gold price and royalties that you see. So as you think about 2025 and you have you know this labor inflation that's at you know three, three and a half percent
Speaker Change: and I'm going to say flattish on some of the other stuff, plus you have a higher goal price for the royalties. Would we be thinking like 5% would be a reasonable assumption for year over year change?
25-24
Speaker Change: There's lots of other price inputs as well, like we need to look at oil and that's been changing.
So energy costs.
Speaker Change: So we will be providing our guidance early next year and we're still working through our budgets and plans as well. So it's hard to confirm that number at this point. Yeah, and the thing is that you may have some, like Cote for instance, right? Like Cote is a good example. It's the first year, it's a ramp up. So you're looking at
Speaker Change: We'll do anything possible to offset, you know, any possible increase.
Speaker Change: But as Martin Highlighted, you know, so we'll be more specific at the start of the year But I definitely do not because Cote has so much of improvement and opportunities I think we still can target to upset most of that most of the increase
Other than the labor.
Speaker Change: Yeah, got it. Okay, really appreciate that. Thank you for taking my questions.
Thank you.
Speaker Change: Our next question comes from Simon Wildsmith of Canaccord Genuity. Please go ahead.
Simon Wildsmith: Hey guys, good morning. Thanks for taking my question and congratulations on the quarter. Maybe for Martin, with strong gold prices and what seems to be an improving balance sheet, is there an opportunity to refinance the relatively high-cost term loan early?
Good morning, Simon.
Speaker Change: So to do anything before then, if you look at the cost of new debt and all of those costs, we don't believe that that is the best way to increase value and reduce our debt-carrying costs. But by middle of next year, that's when there would be an opportunity to do that.
Thank you.
Speaker Change: And we are still delivering into the gold pre by now as well, so that is using a lot of the extra free cash for a high gold price.
Okay.
Speaker Change: Okay, sounds good. That was my only question. Thanks, guys, and congratulations again.
Thanks. Thank you.
[inaudible]
Speaker Change: This concludes our time allocated for questions on today's call. I will now hand the call back over to Graeme Jennings for closing remarks.
Graeme Jennings: Thank you very much, Alfredo, and thank you everyone for joining us this morning. As always, if you should have any questions, please reach out to Renaud or myself. Thank you all, be safe, and we will see you next quarter in 2025.