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.