Iamgold Corporation Ordinary Shares

Thank you for standing by. This is the conference operator. Welcome to the IAMGOLD second quarter 2021 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. 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 and zero. At this time, I'd like to turn the conference over to Indi Gopinathan, Vice President, Investor Relations and Corporate Communications for IAM Gold. Please go ahead, Ms. Gopinathan.

Thank you, Gaylene, and welcome everyone to the IAM Gold Second Quarter 2021 Operating and Financial Results Conference Call. Joining me today on the call are Gordon Stothert, President and Chief Executive Officer of and Daniela Dimitrov, Executive Vice President and Chief Financial Officer. Our remarks on this call will include forward-looking statements. Please refer to the cautionary language regarding forward-looking information in our disclosure documents and be advised that the same cautionary language applies to our remarks during the call. During the call, non-GAAP measures will be referenced and we direct you to review the reconciliations in our disclosures relating to these measures. With respect to the technical information to be discussed, please refer to the Technical Information and Qualified Persons slide. The slides referenced on this call can be viewed on our website. I will now turn the call over to our President and CEO, Gordon Stothert.

Well, thank you, Indy. Good morning, everyone, and thank you for joining us. The second quarter of 2021 was extremely challenging for IAMGOLD, and we will walk you through both the challenges and mitigations in our discussion today. Attributable production guidance was reduced to between 565,000 and 605,000 gold ounces due to lower actual production in the first half of the year from Westwood and Roosevelt and their lower anticipated output for the second half of the year. This is partially offset by higher production at ESSECAN. We increased cash operating cost guidance mainly to reflect the lower production, cost pressures, and stronger Canadian dollar and euro versus the U.S. dollar. All-in sustaining cost guidance also reflects increased sustaining capital spending in the second half of the year. Total capital expenditures for 2021 are expected to increase by about $35 million, primarily due to expected capital expenditure increases at Cote Gold. Site capital expenditures are expected to be lower, primarily due to an unexpected reduction in planned work at Essican and Roosevelt. Cote Gold's estimated 2021 capital expenditures are expected to increase by $75 million to $430 million. So I'll now touch on a few items in this slide. At a corporate and strategic level, IAM Gold generated $1.9 million in mine site free cash flow during a period with an adjusted loss of $3.6 million or one cent per share. We have approximately $830 million in cash, cash equivalents, and short-term investment, and approximately $1.3 billion in total liquidity. And during the quarter, we effectively rolled forward our 2019 gold prepayment arrangement from 2022 to 2024. From a growth perspective, as indicated in our July update news release and Cote quarterly update, we have adjusted capital at the Cote Gold Project, with total project costs recast to $1.125 billion to $1.175 billion, based on a number of factors, which I will discuss in more detail shortly. We continue to progress per schedule, with the project achieving 27% completion overall at quarter end. We've also achieved over 2 million hours without a lost time accident at COTEA. and consolidated company safety metrics are tracking better than targets in the first half of the year. We continue to develop our districts with work done in the quarter to de-risk Bodo and delineate Gosselin. I Am Gold is committed to achieving high standards in environmental, social, and governance practices, which reflect our long-held zero-harm vision. At the end of June, the company, the Métis Nation of Ontario, and Sumitomo Metal Mining Company Limited celebrated the signing of an IBA related to the Cote Gold project. This completes the IBAs that we were expecting to sign for Cote. At the Boto Gold project and the exploration program in Senegal, the company is committed to investing 3.4 million in local community development activities over the 2020 to 2023 period. The program, developed with local stakeholders, will focus first on responding to the development of priority infrastructure to meet the basic needs of the communities and initiatives aimed at the long-term empowerment of the community by initially focusing on the implementation of local employment and local procurement strategies. We are proud to share that at the end of the quarter, Corporate Nights released its Best 50 list, which identifies the top 50 Canadian corporate citizens across all sectors, evaluated based on up to 24 environmental, social, governance, and economic key performance indicators. IAMGOLD placed 44th across all corporate sectors and eighth out of 122 companies in the mining sector. And in April, we were upgraded to a AA rating on the MSCI ESG assessment, placing IAMGOLD in the top 15% of precious metal companies. For each of our sites, we have continued our proactive management of COVID-19, However, we did have an increase in COVID-19 cases in Suriname and corresponding increase in cases at Roosevelt, with mandatory antigen testing now in place, among other mitigating controls. The second quarter also saw an increased number of COVID-19 cases in the Timmins area. Although some cases were experienced by a small number of workers at Cote during this wave, heightened testing and additional constraints on site circulation were implemented, which which strongly limited the number of cases experienced. Subsequent to the end of the second quarter, several contract workers at Bodo tested positive for COVID-19 and remain under observation before being released into isolation. Testing and contact tracing has been undertaken and the situation is being monitored. At this time, the company does not expect material impact on project activities. The previously implemented protocols across our operations and offices globally remain in place, and there have been no other material impacts on our operations, construction and development projects, or exploration sites during the second quarter. Our DART, or Days Away Restricted and Transferred Duty, frequency rate was 0.35, and the TRI, or Total Recordable Injuries Frequency Rate, with 0.70 respectively per 200,000 man-hours worked. And the Kote Gold Project had achieved over 2 million hours without lost time. We continue to implement several initiatives, including I Am Safe, the revamped health and safety management program to promote a safe work environment. I will now review the operating performance at each site in turn. So Essex N continued to perform strongly in the quarter with attributable gold production of 106,000 ounces for the quarter at an all-in sustaining cost of $1,060 per ounce sold, consistent with the prior quarters. Production reflected above planned grades, partially offset by lower gold recovery. We have completed the mill optimization project with an anticipated 10% improvement in hard rock processing over the course of the year, from an annualized 10.8 million tons to 11.7 million tons. As noted last quarter, this improvement in capacity is important as ESSACAN moves to greater proportional volumes of transition and hard rock versus softer rock in the coming years. We have also renewed a three-year collective bargaining agreement with our unionized ESSACAN workforce in July, which will be, in effect, for three years until the end of June 2024. Looking forward to the balance of the year, we have revised production guidance at Essacan upward to 390,000 to 400,000 ounces to reflect the production from higher grades achieved in the first half of the year and which are expected to normalize in the second half. The mill feed is expected to be supplemented by ore stockpiles in the third quarter to offset the impacts of seasonal rain. and we will have higher capital spend in the second half of the year for strategic pushback work as previously planned a number of events negatively impacted roosevelt this quarter beyond the unusually heavy rain output fell as of a significant increase in cobit 19 cases in the region and because of challenging industrial relations up to the point of the resolution of the collective bargaining agreement in may which resulted in multiple lockdowns, illnesses, and impacts on workforce availability that affected operations. At the Saramaca pit, management of the high clay content ore exacerbated by the heavy rains negatively impacted the ore handling and mill throughput. As a result, attributable gold production for the first quarter was 25,000 ounces, with all-in sustaining costs of $2,237 per ounce sold, reflecting lower sales volumes higher cost of sales, and higher sustaining capital. Due to the collective impact of these challenging factors, among others, and continued uncertainty related to the COVID-19 situation, we have reduced Roosevelt's 2021 guidance to 140,000 to 160,000 ounces. At Saramaca, construction of required infrastructure is continuing with the infrastructure pad and sedimentation dams scheduled for completion in the fourth quarter of 2021. and the west dump rock drain, dewatering wells, and bypass road phase two scheduled for completion toward the end of the year and into 2022. We expect certain cost pressures to persist in the second half of the year, and we are continuing to assess what, if any, ongoing impacts our challenges may have on ore sequencing in 2022 production. In addition, we have been working on a new geological model to form the basis of an updated mineral inventory estimate to be released before the end of 2021. Based on currently available information and given the negative impact of certain factors, we expect a total mineral resource estimate will decrease. To address the issues we have encountered in the second quarter, we are implementing a number of initiatives. To manage the increase in COVID-19 cases at Roosevelt, we have implemented mandatory antigen testing safely now accommodate the necessary workforce, having commissioned the 360 additional beds that we've previously spoken to. To improve production rates, the operation is undertaking, among other activities, pit dewatering, geotechnical assessments, optimization of the mine design and sequence, and in-pit road haulage improvements. These activities are expected to reestablish and increase pushback access in the second half of 2021, provide additional productive faces at Roosevelt, and increase the overall mine grade over the remainder of the year, albeit still below reserve grade. Conditions in the pits are being improved and the operation has met its updated plan for July. To improve equipment availability, we have ongoing improvements to the maintenance program, while additional mobile equipment is scheduled to arrive by the end of the year. This is expected to improve equipment availability, loading, and reduce reliance on higher-cost hauling contractors. To address processing plant challenges, Roosevelt has initiated an asset integrity program with multiple improvement initiatives to be run over the next 18 months and to bottleneck congested mill areas. And the ongoing adsorption-desorption project is intended to improve the efficiency of the carbon management circuits. Westwood produced 8,000 ounces in the second quarter of 2021, with the mill processing Grand Duke open pit ore while mining in East Zone Underground restarted in June, albeit at a more tempered pace in order to implement recommended and enhanced safety measures. Slower productivity in underground mining activities reflect the implementation of additional safety measures recommended by a group of external experts in conjunction with our own internal experts. mining and geotechnical experts. In addition, and also with a focus on safety, we will be implementing additional egresses in the planned zones of extraction. Open pit mining at Grand Duke, sequenced through a small pushback with access to higher grade zones, was delayed by a slowdown of ore haulage due to ore stockpiling limitations at the mill. All-in sustaining costs for the quarter were $2,412 per ounce sold primarily due to higher costs of sales and higher sustaining capital expenditures when compared to the prior quarter. Costs of sales were higher than prior periods, primarily due to lower sales volume and higher mining costs due to the start of underground mining. We have reduced Westwood 2021 production guidance to 35,000 to 45,000 ounces, primarily to reflect the additional safety measures noted, as well as a slower than planned ramp up of personnel. Development, rehabilitation, and extraction activities are expected to ramp up in the second half of 2021, and we are assessing the impact of all of these factors on 2022 planning. Work on a medium-term three-year operating plan is expected to be completed before year-end as we continue to evaluate this asset to identify the optimal path forward for the company and for our site workforce. I'll now provide you an update on our construction project at Cote Gold At Cote, as previously disclosed, we identified certain estimated project cost increases from a project review resulting in our 70% share of updated project costs from July 1st, 2020 net leasing to be now estimated at $1.125 billion to $1.175 million. Given expenditures to date, our remaining 70% share of project costs from July 1st, first 2021 forward based on these assumptions is estimated at $930 to $980 million. As we disclosed and based on available information and work completed to date, which is ongoing, the change in the project cost estimate was primarily driven by increased structural, mechanical, piping, electrical and concrete estimates for the processing plant facility and increases in earthworks and concrete estimates representing collectively almost 50% of the increase. Additional increases were estimated in mine facilities costs, including the, with the inclusion of a portion of the camp costs previously that had been earmarked in operating costs as a lease. Resulting increases in indirect costs, EPCM and owner costs, direct costs related to COVID-19 and changes in the currency exchange rate, partially offset by the transfer of certain costs to the operating period. The revised project costs range includes new contingency amounts for the remaining expenditures estimates. These revisions result from increases in estimates, including quantities and manpower, changes in scope, the negative impact of COVID-19 on labor productivity, and due to inflation. As of June 30th, detailed engineering for Cote has advanced to approximately 82% complete, Cote has advanced to 27% overall project completion. The project expanded $89.7 million in the quarter and has expanded $193 million since July 1st, 2020. Activities in the quarter included progression of procurement and expediting of major equipment contracts with a logistics contract awarded. Progression of earthworks with roadwork, water pumping, fish relocation, and the completion of the tailings management cofferdam and drill and blast activities in the open pit. Plant site blasting has been completed, and the final level adjustments are ongoing. The concrete batch plant was commissioned and is in production. With concrete pouring and form work started, we focused on the ball mill and vertical mill foundation work. The permanent camp has also progressed with about 60% of the planned permanent capacity commissioned at the end of July, accommodating over 700 workers at site. For the balance of the year, the work plan will continue to focus on earthworks, haul road construction and water management infrastructure around the pit site. Pre-stripping work in the pit is expected to continue during the third quarter. Permanent camp is expected to be fully commissioned as well in the third quarter. civil works currently underway at the plant site are expected to continue with the placement of precast and cast in place concrete as well as the prep as well as preparation for the plant building shell erection updated 2021 project costs are 430 million dollars with about 301 million dollars remaining in the second half of the year and we expect to have an initial mineral resource on the gosselin zone in the fourth quarter This slide summarizes our progress to date. We remain on track and are working steadily to meet our targets. This slide shows a few pictures highlighting the construction progress at Cote. I'll now switch over to a discussion on our development and exploration project. From a development perspective, we continue to de-risk the Bodo project infrastructure, including the year-round access road and airstrip, engineering for critical plant equipment, and the implementation of local sustainability programs. We are assessing these activities and the associated capital spending and timing. Our brownfield exploration focus is on drilling to evaluate and assess resource potential of targets near Essex and at Roosevelt, with surface drilling at Westwood focused on evaluating the resource potential between the Grand Duke and the old Doyome pit, and underground drilling focused on supporting the restart of underground mining operations. And with that, I will pass the call over to Daniela.