Iamgold Corporation Ordinary Shares

Thank you for standing by. This is the conference operator. Welcome to the IAMGOLD second quarter 2022 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 graham jennings vp investor relations and corporate communications for imgold please go ahead mr jennings thank you operator and welcome everyone to the imgold second quarter 2022 operating and financial results conference call

Joining me today on the call are Maryse Boulanger, Chair of the Board and Interim President and CEO, Daniela Dimitrov, Chief Financial Officer and Executive Vice President, Strategy and Corporate Development, Craig McDougall, Executive Vice President, Growth, and Bruno Leblun, Senior Vice President, Operations and Projects. Our remarks on this call will include forward-looking statements. Please refer to the cautionary statement included in the presentation under the heading Cautionary Statement Regarding Forward-Looking Information. and be advised that the same cautionary language applies to our remarks during the call. Non-GAAP measures will also be referenced on the call, and we direct you to review the cautionary statements included in the presentation and the reconciliations of these measures included 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 Qualified Person and Technical Information. I will now turn the call over to our Chair and Interim President and CEO, Maryse Belanger.

Thank you, Graeme. Good morning, everyone, and thank you for joining us this morning. Last night, we reported our second quarter operating and financial results, as well as announcing the results of the Cote d'Ivoire project update. We had a lot of information to cover on this call. so we will try to expedite matters in order to allow for enough time for questions and answers at the end. As you will see, I am gold at another strong quarter, benefiting from recent productivity initiatives at our operations. We are on track to achieve the upper end of our production guidance for the year, and there are many positive developments expected in the second half. But our operations are in challenging jurisdictions, and we see cost pressure throughout the organization. It is therefore essential to mitigate these impacts through a strong focus on the operational excellence program to uncover improvement opportunities in productivities, process optimization, cost controls, and capital allocation. The COTI update represents a significant milestone for the company. This was the culmination of months of in-depth analysis by the company's management and project teams, EPCM contractors, and technical experts. COTI Gold is transformational for IAM Gold, offering robust cash flow generation once in production. We truly believe that what we are building at Cote Gold is not just a project, but the start of a district with significant opportunities for growth. I like to think of it as the start of a new mining camp. The project today is over 57% complete, and the updated schedule and project costs give us much improved visibility towards completion. Given the strategic importance of Cote to achieve our goal of becoming a leading high-margin gold producer, we are actively pursuing various alternatives to increase liquidity to deliver Cote on its updated schedule. I am confident we will address the near-term challenges in order to advance Cote. and better positioned IAM Gold as a more resilient, agile company for the current environment. Now turning to the quarter. On health and safety, ensuring all of our employees go home safe continues to be a key focus as every gold ounce produced has to be done safely. And we applaud our teams for their continued sorry, commitment to zero harm, and also the co-deconstruction team for achieving an impressive 5.7 million hours with no lost time injuries to date. IONGO delivered another strong quarter with attributable gold production of 170,000 ounces on continued strong performance from ESACAN and improvements at Roosevelt. And that's bringing our year-to-date production to 344,000 ounces, positioning us on track to achieve the top end of our guidance range of 570 to 640,000 ounces. The strong production results and sales volume translated to cash cost of $1,119 per ounce sold and all in sustaining costs at $1,604 per ounce sold. On a unit cost basis, we are seeing impacts from inflation on mining and processing costs. Though these have been partially mitigated through higher grades and other operational improvement at the mines. Cost guidance for 2022 is unchanged at this time. with cash costs expected to be between $1,100 and $1,150 per ounce sold, and all-in sustaining costs expected to be between $1,650 and $1,690 per ounce sold. These estimates issued in January included an inflation assumption of 5% to 7% on key consumables. Additional cost pressures are continuing from systemic inflation, constrained global supply chains, and other global events, further increasing the average cost of some key consumables, such as oil, ammonium nitrate, grinding media, lime, and cyanide. We know that continued external cost pressures may result in an increase to cost and capital expenditures. We continue to see benefits from our oil hedges. This year, we have an 80% hedge ratio on WTI contracts and a 71% ratio on Brent at between $38 and $65 per barrel. For reference, a $10 per barrel increase in the oil price equates to approximately a $6 per ounce increase in our cash cost. Without our hedging contract, the same $10 per barrel increase in the oil price would translate into a $15 per ounce increase in cash cost. Now, ESACAN. Turning to ESACAN, it continued to deliver, reporting gold production of 107,000 ounces. benefiting from higher head grades and strong recoveries. Mining activity totaling 11.4 million tons in the second quarter was lower than the prior quarter, primarily due to lower waste tripping activity because of constraints in consumables from supply chain challenges in country and abroad. We will work to rebalance this tripping shortfall But as of today, the reduction in stripping activities is not expected to materially impact production in 2022 and 2023. Mill throughput was 2.7 million tons at an average head grade of 1.52 grams per ton of gold and plant availability of 86% with recovery of 90%. Mill feed rate and availability were lower during the second quarter due to higher volumes of hard rock in the mill feed, as well as annual plant maintenance and supply chain challenges. The security situation in Burkina deteriorated during the second quarter and impacted the inland supply chain, resulting in delays in the delivery of consumables. The company continues to take proactive measures to ensure the safety and security of in-country personnel and managed to limit the impact on production in the second quarter. We continue to adjust our protocols and the activity levels at the site according to the security situation. The company is furthering some additional investment in security infrastructure in the region and at the mine site. And that is with the support of the government. Looking ahead, attributable gold production at ESSACAN in 2022 is expected to approximate the top end of the range of 360 to 385,000 ounces, reflecting the higher than expected grade in the first half of the year and the potential for further positive reconciliation between mine grade and the reserve block model. Turning to Roosevelt now, we were very proud of the second quarter, which historically sees lower production due to the impacts of the rainy season. The operation reported second quarter attributable production of 49,000 ounces, benefiting from improved recovery and ahead grades, bringing the year-to-date total to 95,000 ounces. Mining activities are returning to pre-pandemic levels, mining 15.5 million tons in the quarter with a ramped-up stripping program as required in the updated mine plan we released earlier this year, which, by the way, outlined the path for Roosevelt to return to being a plus 300,000 ounce per year producer. Mill trumpet achieved 2.2 million tons at an average head grade of 0.88 grams per ton, and trumpet was lowered due to mill maintenance work required on the sag mill feed chute and refurbishment of the apron feeders. Mill recovery of 92% continues to benefit from the ADR circuit improvement put in place at the end of 2021. Looking ahead, attributable gold production guidance for 2022 at Roosevelt remains unchanged at 155,000 to 180,000 ounces. In the first half of the year, additional cost pressures emerged through rising oil prices, and they continue to be partially mitigated by the existing hedge program. The company also expects higher power costs compared to 2021, which we know have linked to the price of gold and oil. We know that the collective labor agreement at Roosevelt expires in August 2022, and negotiation for new agreement has commenced and has been cordial and professional. The strategic review process of Roosevelt is active and ongoing, and we will provide updates when appropriate. Now with Westwood. Gold production was 14,000 ounces in the quarter, and the underground development continues in order to support the full ramp-up of the mine. Importantly, in June, mining activities were recommended in the higher-grade west and central zones, and the main ramp broke through the 180 level in the lower part of the mine, which will allow for additional flexibility and development of high-grade zones, including Zone 230. Gold production guidance at the Westwood complex in 2022 remains unchanged in the range of 55 to 75,000 ounces. And it assumes that the safe and stable restock of the central and west underground zones can continue throughout the year. Now turning to Cote Gold. Activity at site has accelerated dramatically this summer following destruct action by crane operators and construction laborers in May, which reduced headcount at site by approximately 250 people over that month. We currently have approximately 1,200 workers on site. Work inside the plant is progressing with the ball mill foundation being set and preparation ongoing for mechanical, electrical, and piping installation. Last night, we announced our updated estimate of cost to complete, project economics, and life of mine plans for COTEX. The results will be included in a new NI43-101 technical report to be filed on CDAR before or on September 17th. This project update concludes the COSI goals, schedule, and cost execution strategy and risk review, or Supertrend, initiated by the company earlier this year. Looking at the Life of Mine Plan highlights, there are a few key changes from the previous technical report. We have higher production extended over the first six years versus five years previously. And also, we have lower waste tons translating into an improved strip ratio. both of which help to mitigate an increase in unit and cash costs on updated costs and operating assumptions. The next result is a project that continues to be transformational for iron gold. Cody Gold is a project with an 18 plus year mine life, producing nearly 500,000 ounces per year in the first six years of operation. and offering significant growth potential with the addition of Goss land and an historically underexplored land package. We will now quickly step through key component of the operation and highlight changes of assumption in the new mine plan. First, on mine design and pit sequencing, we saw some opportunities to add value to the project and maximize early cash flows. Through this work, the pit phasing was modified to target high-grade zone early in the life of mine plants, moving to five phases with an extended phase one pit design. Additional opportunities for value creation included the adjustment of the ramp gradient, which allowed for shortened haulage distances and the extension of mining activities in phase one. Further, we have lowered our ramp-up and utilization assumptions for the mining equipment to increase the allowance for learning of operation and maintenance of the autonomous haulage system with increased windows for operating alongside our contractors to achieve better knowledge transfer. Also, to direct the first year of operation, we are executing on a 48,000 meter grid control drill program on a 10 by 10 drill spacing which covers 78% of the tons to be mined in the first 12 months of operation. The new mine plan includes updated assumptions and input for the ramp-up of the processing plant up to nameplate capacity. Based on updated modeling and analysis of OEM data for plant equipment, We revised the mill operating time, or utilization rate, to 92.6% from 94% previously. Further, we have extended the ramp-up period to steady-state to 20 months from 10 months previously to account for an increased frequency of inspection, shutdowns, and also improved learning. The HPGR tertiary crushing unit is a major focus for our plant and operational readiness team. We have revised our HPGR operating assumptions for additional downtime in the early years and overall maintenance activities. Preparation is well underway with our team visiting where HPGR's operations globally to exchange best practices for ransom and operations. These spare parts are being procured with an extra set of rolls already purchased. We are very fortunate that Cote d'Ivoire is located only a couple hours from the wheel facility in Sudbury, where essential maintenance and roll resurfacing will be supported. Our teams will be working alongside WIR engineers during commissioning, ramp-up, and operations. Now on operating costs. Over the life of mine, total cash costs are expected to average $693 per ounce of gold sold, and all in sustaining costs are expected to average $854 per ounce sold. Mining unit costs are estimated at $2.62 per ton of material mined, or if accounting for capitalized waste tripping, $6.20 per ton of process stored. Mining costs increased by 15% from the 2021 technical report due to increased headcount, extended ramp-up, and updated cost models. Processing costs increased 8% to $7.97 per ton, related to higher maintenance costs and shutdown assumptions during ramp up, including with the HPGR, as I mentioned before. And we also have an increase in TMF operation and monitoring activities. As the plant is connected to Hydro One, We are classified as a Class A customer, and our cost only accounts for 14% of processing costs. The highest component are reagents, spares, and maintenance, which combined together accounts for nearly 50% of the processing cost. As estimated in the updated technical report, As of May 1st, 2022, the remaining costs attributable to IAM Gold to complete Cote and achieve initial production is estimated at just over $1.3 billion. This, by the way, includes $185 million in contingency and $80 million for escalation. As announced in our second quarter results, we estimate that the remaining spend to complete COTE as of July 1, 2022 is $1.2 to $1.3 billion after incurring approximately $100 million in May and June. The project today is over 57% complete, and the updated schedule and project costs provide us with improved visibility towards completion. In the last number of months, the Cody Gold project has seen several changes in leadership and oversight, both at the project level and corporate level. Since the appointment of a new executive project director, teams have been strengthened to target deficiencies while leveraging knowledge, experience, and team integration between the owner's team EBCM contractor, and the various other project contractors. The update also represents the conclusion of the Supertrend process initiated earlier this year. It is important to note that the Cody Gold project is being developed with the background of COVID-19, inflation, and other global events and their impact, including on the global supply chain, labor availability, productivity and rates, cost of materials, commodities, and consumables. As discussed in our May announcement, the estimated remaining spend to completion resulted from additional cost and schedule impact in the general project cost category that you can see on our slide, and includes estimated impacts related to delays due to COVID-19, recent labor action in Ontario, and inflation. Outside of this super trend process, a study by an independent capital project management service company estimated direct and indirect COVID-related impacts to the project just for IAM Gold to be in the range of approximately $200 to $400 million. Looking at the schedule, Cody Gold is expected to commence production in early 2024. This year is critical for project advancement as project activities are ramping up through the summer and into the fall with the coordination of earthworks, concrete, plant structural, mechanical, piping work, and power installation. and they are being very, very important. The increase in the oversight team managing contractors and contracting packages will facilitate the expected increase in the number of contractors as the headcount increase to over 1,500 people is expected during this construction season. The company cautions that potential further disruptions, including without limitation caused by COVID-19, Ukraine war, weather, potential labor disruption in the tight labor market could continue to impact the timing of activities, availability of workforce, productivity, and supply chain and logistics. And consequently, could further impact the timing of actual commercial production and project cost. Taken together, the COTI Gold project, while being developed in a challenging environment, offers robust economics for item gold. On a go-forward basis, from May 1st, 2022, The after-tax NPV at the discount rate of 5% of the Cote d'Ivoire project was estimated at $1.1 billion, with an implied after-tax IRR of 13.5% under the base case gold price assumption. At spot metal prices of $17.75 per ounce gold, Over the life of mine, the GoDeGo project has an estimated after-tax NPV of $1.56 billion and implied after-tax IRR of 16.5%. Following the project review and risk analysis, the board retained an independent technical consultant to assist with the board's review of the results. This independent review supported the updated estimates as presented, confirming key project areas to focus on, aligning with those we outlined today, while offering insights into further optimization opportunities. Now, let's talk a little bit about GUS. So we believe that Cote Gold is not just a project, but the start of a new mining district. The Cote Gold life of mine plan, as defined in the technical report, is based on mineral reserve of 7.2 million ounces at the Cote deposit. The Gosselin deposit is located immediately adjacent to Cote, and contains 3.4 million ounces of measured and indicated results with an additional 1.7 million ounces of inferred. Gosselin has only been drilled to half the depth of Cote and is open along strike and at depth. Taken together, Cote and Gosselin have a total of 13.5 million ounces in measured and indicated, and we believe there is significant upside to be uncovered as there has been minimal historical exploration targeting these Cote-Gosselin-style intrusion-hosted deposits within our 596-square-kilometer land package. With that, I will turn over the call to Daniela for the financial review. Thank you, Maurice.

The following are some key highlights of our second quarter and year-to-date financial results. Revenues in the second quarter totaled $334 million and $691 million year-to-date. The average realized bull price for the quarter was $1,799 per ounce, reflecting the physical delivery of 37,500 ounces at $1,500 per ounce under our 2019 prepay arrangement as we close monthly contracts. The average gold price in the second half of 2022 will continue to be impacted by the completion of physical deliveries of 75,000 ounces at $1,500 per ounce as we close out the remainder of the 2019 prepay arrangement. Adjusted EBITDA came in at $110 million for the quarter and $247 million year-to-date. Higher income taxes for the second quarter that included withholding taxes on the repatriation of funds from ESACAN impacted net earnings, resulting in net loss per share of $0.02. Adjusting for non-cash items, adjusted net loss per share was one cent in the second quarter. Year-to-date net earnings and adjusted net earnings per share were three cents and four cents respectively. We have updated our income taxes paid guidance for 2022 to between 69 and $79 million from 55 to $65 million set out in our previous guidance released in January to primarily account for withholding taxes on the additional repatriation of funds from ESSECAN that we expect in the second half of 2022. Operating cash flow before changes in working capital was $94 million for the quarter and $228 million year-to-date. And mine site pre-cash flow was $42.8 million in the quarter and $130 million year-to-date. In terms of our financial position, we ended the quarter with $453 million in cash, cash equivalents, and short-term investments. And we had approximately $349 million available under our credit facility after drawing down $150 million in the quarter. Our current available drawdown under the credit facility is approximately $250 million, as we drew down $80 million subsequent to quarter end, primarily to manage the timing of the receipt of a dividend from ESSECAN, and we issued a $19 million letter of credit under the credit facility in support of a surety bond. Based on the recently updated cost estimate and schedule of construction of the Cote Gold project, information currently available and prevailing market prices, we note that IAM Gold will require additional liquidity to complete the construction of the project. We are working to implement a fully funded financing plan by the end of the year and prior to the necessity to make any potential adjustments to the timing of the advancement of COTE based on the updated schedule. We are actively pursuing various alternatives to increase liquidity in capital resources, including disposition of one or more of the company's assets and or interest therein and or joint venture partnerships, additional secured debt, which could be provided by banks, private capital providers and or institutional investors, addition of unsecured debt, including unsecured and or convertible notes, sales of common shares, and the extension of the 2022 prepay arrangements. In January 2022, we announced that we were commencing a strategic review process to evaluate options for the Roosevelt Saramaca Mining Complex, including a potential sale of this complex. We advanced this process in the second quarter of 2022. In addition, we just announced that we are evaluating strategic alternatives for certain development and exploration assets in West Africa, excluding ESSECAN, and in South America. That may include the disposition of all foreign interest in one or more of such assets. These processes are well advanced, and we will provide an update when warranted. Back to you, Maurice.

Graham, I guess at this point we will open it up for questions.

Thank you. We'll 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 a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. Our first question is from Fahid Tariq with Credit Suisse. Please go ahead.

Hi, good morning. Thanks for taking my question. Maybe first for Daniela, can you, from what you can tell in your forecast, what is the funding gap right now between the end of this year, the cash flow generated, and what is needed for Cote?

So we've disclosed that the remaining spend for Cote Gold is 1.2 to 1.3 billion from July 1, 2022 to production. We disclosed our cash balance at quarter end and following the drawdowns at the end of July that we have about $250 million available under our credit facility. We've also disclosed that not all cash is readily available. Some of the cash is held within our operating subsidiaries and operations need working capital. We've also disclosed that our Cote joint venture, under our joint venture agreement, we need to stay ahead two months of construction costs in cash. And until the end of July, that period was three months. And we also have hedges that do require growth settlements rather than net settlement, which impacts the total cash that we need to have on hand at any one time. We've also talked about in the past that taking all of these factors into consideration, we view that at any point in time, our minimum cash balance that we would need to maintain would be somewhere around $200 million. So that and the gold price and, of course, our operating performance all go into the range of additional liquidity that the company needs to go into production.

Okay, and then just as a follow-up, I know there's a number of alternatives available. Is there a preference that you can highlight, you know, whether it's an asset sale, additional debt, you know, diluting the 70% ownership, any color there would be really helpful.

We are looking at various options as we've disclosed, and we do expect that the financing package will have several components. considering the cost of capital, maximizing shareholder value, and providing the necessary additional liquidity to get Cote to production.

Okay, and then maybe just the last question. In the press release, it mentioned like one potential option if the financing isn't secured in time that potentially the Cote timeline could be extended. and this would, quote, significantly increase project costs. Can you just maybe give some clarity on what that means?

We are working to implement a fully funded solution by year end, and that is our focus. We talked about the fact that the processes are well advanced, and we are cautiously optimistic that we will get to that fully funded solution by year end.

Okay. Okay. Thank you.

The next question is from Josh Wolfson with RBC Capital Markets. Please go ahead.

Thanks very much. A couple quick questions for Kote. For the updated study, what was the oil price assumption included either short-term and long-term?

I believe that the second half of 2022, it was $93. For 2023, it was $82. And from 2024 onwards, it's about $70.

Okay. And looking at the updated plans, which incorporate, I guess, a bit of breathing room with the scheduling and the ramp-up period, you know, where would you see the risk now with developments, either in terms of the bottleneck or critical path items?

Thanks, Josh. Thanks for the question. Considering that detailed engineering is done at 99.6%, that most of our contracts have been led, procurement is, all of the equipment is at site at the lay down area, I do not expect any major issues. The plan is to deliver on what we say we're gonna do. And in fact, the team is targeting mechanical completion as soon as possible. So I don't see a lot of risk. And if you consider what we've disclosed, that at the $1.2 to $1.3 billion cost remaining, that we have more than $235 million in contingency and escalation in there. At this stage of a project, it's quite unusual to have up to 12% contingency built-in cost estimate. So my job, Josh, is to deliver on this project, on schedule, and on budget.

Okay. And then maybe final question for Kote. Has there been any feedback or discussion with your joint venture partner you know, either about, you know, views on the updated economics or about, you know, coming in as a party that could assist with funding here?

I'll take that. Just Sumitomo is very supportive. As noted in our MD&E, we made an amendment to the COTE joint venture. And we are in regular contact. We work closely with Sumitomo. They have people integrated with the team at site. So I would say that we are actively pursuing various alternatives to increase liquidity and capital resources. But at this point, we will not discuss specific alternatives.

Understood. Great. Thank you very much.

The next question is from Jackie Prisbelowski with BMO Capital Markets. Please go ahead.

Thanks very much. Maybe to start, I'll just follow up on that last question that Josh asked on Sumitomo. The company Sumitomo put out a press release, I guess, overnight, which it says really briefly that it's continuing to review the estimates for the Cote project. It doesn't, I mean, the way that it It's written, it doesn't sound like Sumitomo is entirely committed even to funding its existing portion of the project. So is there a formal commitment in place that Sumitomo is going to fund its commitment? Or is that still something that you guys are in negotiations with Sumitomo on?

Thank you. Thanks for the question. And I think what I would say at this point is that what we've seen last year in July 2021, when there was an increase in capital cost that was announced, as part of normal process for Simwitomo, it took the company close to probably the end of October, early November, to go through their approval process internally. So in this case, we have been told that the normal process would take its course, and I don't see anything unusual about this. Just normal course of business for Sumitomo internally.

That's really helpful, thank you. Yeah, it's good color. And maybe, sorry, another question on Kote. I know the... The full study is coming out in September, so I'm sure we'll get more detail then. But just for modeling purposes, can you give us some color in terms of the cadence for spending on the project, like the capital spending? And specifically, I guess I'm asking for maybe for this year and next year, can you just talk about how much you're anticipating you'll spend, Kote?

Yeah, we expect... We expect our spend to be somewhere between $60 to $70 million per month.

Okay. Thanks, Danielle. That's really helpful. And maybe if I could just ask one other question. Just with respect to the commentary about the process on the review for Roosevelt and potential sales, How would that impact, if at all, your debt covenants? Do you have commitment to maintain a certain cash flow level, or is it easy for you to sell an asset like Roosevelt without tripping those debt covenants?

So we are, certain of the asset sales we are looking at, including the sale of Roosevelt, are part of the security package under our credit facility. We have been working closely with our lead lenders who are aware of the process and the ultimate necessity to release the security on a successful completion of a sale. And we're comfortable that as part of working with our lenders, we have a good handle on it.

Okay. Okay, super helpful. Thanks, Daniella.

Thanks, Maurice. The next question is from Mike Parkin with National Bank. Please go ahead.

Hi, guys. With respect to Cote, can you just give us an update on the dike that you're putting in? You know, how is that progressing? And have you got to the point where you're starting to dewater? the side that you need to dewater, or if not, when does that start?

Thanks, Mike, for the question. The dewatering is ongoing, and we have dealt with a pretty intense freshet, but we are And no issues with the watering whatsoever at this point. In fact, I think we have really good visibility to the first benches of the pits.

Okay, so you're not getting kind of surprised by excessive water penetration?

No, not at all.

Excellent. And then just in terms of cash flow, your expiration spend, still remains fairly high. Is that anything that you're considering trimming back in the near term just to help preserve the balance sheet?

Hi, Mike. So, we're through, I guess, more than 50% of our exploration spend. Part of that spend was focused on goth lens. and we've got a spend on Carita. We put out some pretty great drilling results recently on that. We are going to continue with the completion of that program specifically. We think that it's important to get that across the line to give us better visibility in terms of view of value. particularly on that asset. That is part of the West Africa sale process.

Okay. And what about in 2023? Is there any, is it too early? You haven't really kind of worked on budgets yet?

It is too early to comment, yeah, on 2023.

Okay. Thanks, guys. That's it for me.

The next question is from Anita Soni with CIBC Capital Markets. Please go ahead. Hi.

Thanks for taking my questions. So firstly, can we talk about the life of mine plan? A couple of things that you mentioned were steeping up the pit walls and also the ramps from 8% to 10%. Can I ask, did you have an independent third party review those technical assumptions from a geotechnical standpoint?

Anita, in fact, there's been extensive geotech work done. And originally, the assumption was that we needed to be more prudent with the pit design and the ramp because of the autonomous haul trucks. But those constraints now have been removed in the sense that actually that's really good news. Last weekend, the first fully autonomous truck was operating on our calibration pad, and we feel really confident we can achieve those ramp gradients and design parameters.

All right. Considering all weather factors that you have there? Yep. Okay. Second question. The assumption to go to 5% over nameplate capacity when doing this life of mine plan, What was the genesis of that? I mean, why go higher? And I noticed you guys commented this was a one on the McNulty curve. And I, you know, given that you've got HPGR and autonomous haulage, I'm not sure that I would classify it as a one on the McNulty curve.

Okay. I think your comment, you know, was more related to the capacity overall of the equipment. What we have is a... a plant with oversized pumps and cyclo-feed pumps and overall capacity. And as we've seen in the industry, it's not uncommon. Once you get mills going, it's not uncommon to get an extra 10%, 15% tonnage throughput. So we feel very, very confident we can reach that throughput. It's going to take some time. But considering the size and really the oversize equipment in that plant, I don't see any issues with quoting that 105.

Okay. So then let's just move on to the capital cost estimate. I just wanted to circle back. The updated estimate is the same number that you guys put out three months ago, right? And you've spent $172 million in the quarter. So by my math, I think that's about 15% or 16% escalation in three months. Can we talk about how that went up and why it went up by so much in three months? Just in context of now you've got $285 million contingency, and trying to figure out whether that's enough when your cost just escalated in three months by 172 million bucks.

Okay. First of all, I would like to mention the strike. That caused some delays, and that was first, well, there was a number of strikes. The first one, the crane operators followed by laborers, and as you know, costs are largely driven in the indirect categories by schedule. So what we've seen is actually a delay because of the strikes of five to six weeks. And that does impact not only our schedule, but also the timing of first revenues that we can realize. And Daniela, if you want, you can add to this. Sure. Sure.

So the estimate that we issued on May 1 was on a preliminary basis, and we did caution that we had not fully completed our work. In the first week of May, as Maurice noted, there were a number of strikes. We had hoped and expected that those strikes would be avoided. They did result in approximately a six-week-plus extension to the schedule as we had to demobilize quite a number of workers and then remobilize following the completion of the strikes. It always takes longer to get back to where you were than it takes to demobilize. That really were the primary factors that drove that increase. That resulted in a slightly extended schedule with a slight increase to indirect primarily and more of those operating costs now being part of project costs because our production, initial production and commercial production were extended from the schedule that we were assuming back on May 1.

Okay, I'm just looking. Okay, all right, thanks. And then I just wanted to circle back to a question that Fahad asked. and it was about the minimum cash balances that you referenced. You said keeping everything in mind, you would need $200 million as a minimum cash balance. Did that include the two-month lead for the construction capital? So is it $200 flat, or should we be thinking more along the lines of $320 to $340 when you include $60 to $70 million per month of spend in a two-month lead on it?

It's plus or minus $200, including the staying ahead by two months.

Okay. All right. Thank you very much.

The next question is from Tanya Jakuskinek with Scotiabank. Please go ahead.

Great. Thanks for taking my questions. I just wanted to follow back. Thank you for the oil assumptions on Cote. Do you have the sensitivity for a $10 move barrel, what it would do to the cost, so that we can just have an idea on that front?

We'll follow up and provide that. We do have some oil hedges that we have done for our own account rather than at the project level. And so we'll provide that information as well.

Okay. And, you know, just following back to this funding gap, You know, just looking out, and I appreciate, you know, there's a lot of moving parts, but, you know, for us trying to figure out, you know, what this funding gap is, and we know we need to have that minimum $200 million in cash on the balance sheet. As we look into next year, is it safe to assume, or we're assuming similar production and costs overall for the company as we have in 2022? And on that basis, and the spend that we're seeing at... cote of that $70 million a month or thereabout. Is it safe to assume with that minimum $200 million in cash on your balance sheet plus, let's say, spot gold prices, that $600 million, $700 million of a funding gap, are we within a reasonable range?

I would think about the Depending on, you know, whether ultimately Roosevelt is in our portfolio or not, and I would take that into consideration as well. And I would think about that range being, you know, the lower end of the range being, you know, your high end of the range.

Okay. So about $600 million. I appreciate it. I mean, obviously I have to include Roosevelt in there because it's not sold yet, but just trying to understand. So assuming Roosevelt is in, assuming the assumptions I gave you with that minimum cash 600 million gap would be something thereabout at spot pricing.

Yeah, Roosevelt, I think we noted when we released the updated technical report back in January, Again, depending on what gold price you're using, as we ramp up to that 300,000-ounce production range in 2024, we were still expecting and are seeing Roosevelt be a user of capital both in 2022 and in 2023. Yeah, okay.

And can I circle back to, obviously, you know, maybe Roosevelt is going to be sold, maybe it's not. We've got two mines otherwise that are going to need to generate cash flow for us to get us through this period. Can we talk about ESSECAN just in general? It's a bit concerning about this security issue. So can you just talk a little bit, big cash flow generator for you? What exactly is going on there and how has July looked? Are we getting material to site here? Did we have a decent July and what are we doing there to make sure we keep this mine going?

Yes. Okay. Let's talk a little bit about SACAN because it's a very interesting one. Some challenges around security, but working very closely with the government on some security measures. And we're also working on things like extending the airstrip at this site to have more flexibility. We have found ways to organize convoys where we have a very large number, you can just imagine hundreds of 100 large trucks going to site all at once. We are taking measures also to increase our capacity of storage, storage capacity at site as well. so that we are not dependent as much on those convoys. And there's a number of measures that are being put in place. ESSA-CAN is an interesting one because we have a positive grade reconciliation. And what ESSA-CAN provides is very steady production where we also have 53% average gravity recovery. And what we've seen is an increase in grade and also an increase in course goal to some extent, which has led the team to decide to go back build a new block model, which will be implemented, I expect, in September or early in the fall. So as I can, despite the challenges, we've had a higher grade than expected. We're looking at it. We're going to implement new block model and redo our mine plan and forecast. So more to come on ESACAN, but so far it's been a very solid producer and it's been a very, very steady producer also. So that's a bit of color on ESACAN. Challenges, but we've been, our team has done an awesome job managing around the security issues.

So, Maryse, like on-site, what sort of inventory levels do we have on fuel, cyanide, other consumables? Should we have to close down because of uncertainty around the mine site? What do we have on-site that we can keep going?

We keep close to a month of supplies on-site.

Okay, that's helpful. And so far in July, things have gone okay?

Yes, absolutely. July was, in fact, a great month at Esakian.

Okay, perfect. And Marivme or Daniela, just on the financing package, and I'll leave it to somebody else because it's gone over time. I just wanted to understand that we're going to get some sort of financing package by year end. It appears that it's just not going to be one thing, i.e., not just debt. It could be components of it. Is it something that we're going to see just come through bit by bit from now until year end, or are you looking to put one big package together? I'm just trying to understand how you're going to attack this finance package. I understand if it's a sale of an asset, that happens when it happens, but everything else, is it you want to get something in place and then Potentially, we see a CEO coming in. I'm just trying to understand how this is all going to work.

We are working to implement a fully funded package with the various components.

Okay, so one package, fully funded, and that then, Maryse, would help us with a CEO, trying to finalize a CEO for the company? Yes.

Yeah, so the CEO search is ongoing, and the board wants to ensure that we're doing it right, that we are the right person. So stay tuned on this one.

Okay. Appreciate it. Thank you for taking my questions.

The next question is from Carrie McRury with Canaccord Genuity. Please go ahead.

Hi, good morning. Maybe just back on the Cote CapEx, did $1.2 billion to $1.3 billion have to complete? How much of that is now fixed price versus how much of it is really still exposed to either price or volume changes?

That's a good question. I may have to go back to you to provide more details, but You know, one way to look at it is all of the large contracts have been let, and right now it's the work, you know, what's remaining is all common material.

Okay. I'm not sure that's it.

I think I'll follow up. Maybe on just the sales processes, I know you said that they're well advanced. I'm just wondering if you can give a bit of color on how long it's been. Is there any sort of expected timeline to complete that process?

So we are very active on both of those processes, and we'll update the market when we have an update.

Okay, fair enough. Thank you.

The next question is from Lawson Winder with Bank of America Securities. Please go ahead.

Hi, good morning. A couple questions, maybe just quickly on Cote. One would be, what percent of the CapEx is in Canadian dollars? So we can just think about the sensitivity there.

90% to 95% of the CapEx is in Canadian dollars. We've used 125 as the FX rate for the remaining spend. The previous estimate was done at 1.3. The average at which we've incurred the expenses is somewhere around 1.27. And we have a number of FX hedges at 130 and slightly above, all of which are listed in a table on the MD&A.

Gotcha. Thank you. And then with regards to Sumitomo, under the JV agreement, I'm just kind of curious what kind of rights Sumitomo has. Do they have the right to decline additional funding?

They have the ability not to contribute to cash vault, in which case, they would be diluted. There are two different dilution mechanisms depending on how much of the costs have been spent. We can share with you that we're cash calling on the updated schedule and costs and the cash contribution for due August 1 was made.

Okay. That's very helpful. And then just coming back to your existing operations, We definitely touched a lot on Essecan, but maybe just on Roosevelt as well. So number one question would be on the labor contract expiring in August. Do you have any insight into when that could be resolved? And, I mean, I'm coming from the point of view of, you know, both risk to possible disruption. impacting your cash flow, but also a potential buyer or partner for that asset may want to see that resolved. That would be my first question.

Okay, I'll try to address that, but obviously it's going to be based on past years' experience and past negotiations. What we have seen in the past was some one to two month delay in signing final agreements And in terms of disruptions, we have seen in the past really just one week of, what do you call that, work to rule, for example. But what I would say one week is a good estimate at this point of possible delays in production.

Oh, okay. That's helpful. And then maybe just asking about your guidance. So to be honest with you, given how strong the first half was, I would have expected you to increase the guidance. I mean, the implied for H2 is 55 to 85,000 ounces, which would be a substantial decline from one. Are you factoring in disruptions from the labor negotiations or is this strictly you know, great tonnage or operationally related. Thanks.

Yeah, and thanks for the question because I said in my remarks that we've had a great quarter, a good half of the year, and I expect even some improvement in the second half of the year. I understand there's a bit of a disconnect. We decided to simply reiterate guidance, not increase it, To be a bit conservative, and then we'd say that I would, you know, with the team here, we really want to focus on meeting and beating expectations, okay? So decided to read during guidance. That allows us to take into account some of the risks around production, but definitely being conservative from my perspective. So, no, we don't expect, you know, a bad second half of the year. It's not the case, no.

Okay, great. That's helpful. Maybe just one follow-up for Kina Fazzo, if I might. Are you currently relying strictly on sort of government and military support from a security point of view, or have you hired a private security team? And if not, is that something that you're seriously considering?

We are working with the government and their military people, and we do not use private military support in country, no.

Okay, thank you.

This concludes the time allocated for today's questions. I will now hand the call back to Maurice Belanger for closing remarks.

Thank you very much, operator, and thanks to everyone for joining us this morning and for your continued engagement with IAMGOLD. There's no doubt that we have hard work ahead of us, but myself, the board, and the management team are entirely focused on advancing COTI to production, addressing our capital needs, and continuing on the solid operational performance as our operating mind. I look forward to directly engaging with you, our investor and analyst community. So please reach out to myself or Graham, Jenning, or Anne if you would like to set up a meeting. Thank you all. Goodbye. Have a great day.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.