Iamgold Corporation Ordinary Shares

Thank you for standing by. This is the conference operator. Welcome to the I Am Gold fourth quarter 2023 operating and financial results conference call and webcast. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. 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 zero. At this time, I'd like to turn the conference over to Graham Jennings, Vice President, Investor Relations and Corporate Communications for IAM Gold. Please go ahead, Mr. Jennings.

Thank you, operator, and welcome everyone to the IAM Gold fourth quarter and year-end 2023 Operating and Financial Results conference call. Joining me today on the call are Renaud Adams, President and Chief Executive Officer, Martin Theunissen, Chief Financial Officer, Bruno Lemelin, Chief Operating Officer, Tim Bradburn, Senior Vice President, General Counsel and Corporate Secretary, and Jerzy Orszakowski, Executive Project Director, Cote Gold. Before we begin, we are joined today from IAM Gold's Toronto office, which is located on Treaty 13 territory, on the traditional lands of many nations, including the Mississaugas of the Credit, the Anishinabek, the Chippewa, Haudenosaunee, and the Wendat peoples. At Eye on Gold, we believe respecting and upholding Indigenous rights is founded upon relationships that foster trust, transparency, and mutual respect. 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. 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. The slides referenced on this call can be viewed on our website. I'll now turn the call over to our President and CEO, Renaud Adams.

Thank you, Graham, and good morning, everyone, and thank you for joining us today. Last year, IMGOLD made significant strides towards our goal of becoming a leading mid-tier gold producer. leveraging its asset to build a mining platform with a long-life cornerstone asset in Canada. As we will get into more detail shortly, Cote d'Ivoire saw remarkable progress in 2023, with the project starting the year with construction approximately 64% complete, but ending the year at 98% complete. This progress included major milestones across the project scope, including the mechanical, piping, electrical, and instrumentation of the plant, completion of the first stage of the tailing facility, electrification of the site to the provincial hydro grid, and initiation of a successful ramp-up of our autonomous mining fleet, making Cote d'Ivoire North America's first gold mine to be designed and built for the usage of autonomous haulage, which is changing the face of mining today. Cody is poised to start production shortly, with more than 5 million tons of stockpiling plates, commissioning activities ongoing, and a full hands-off of all primary facets of the project to the ownership team this quarter. Our primary focus and efforts continue to be on positioning the project for steady ramp-up of goal production through this year to achieve commercial production in the third quarter. At a steady run rate, Cody Gold will be the third largest gold mine in Canada, and it's critical for the repositioning of Fein Gold as the ones online. Cody provides a higher production base, lower cost profile, and a long life of cash flow generation and growth opportunities in Canada. Further, over the last 12 months, the company has seen significant changes in leadership across the organization. with a renewed focus on operational excellence and accountability while continuing to build on IMGO's strong and widely recognized sustainability practices. Operationally, I'm very proud of the team, with attributable those productions from continuing operations of 465,000 ounces, which was the top end of the guidance range of 410 to 470,000 ounces. I really want to congratulate the ESSA Canada team who achieved their targets while facing considerable challenges within the region, and the Westwood team who continues to execute on the plan to ramp up underground operation while employing industry-leading underground seismic monitoring and management. Last night, we also announced an update to our ERM, Mineral Reserves and Resources, with a net increase after depletion of the Sacana Westwood reserves, extending the mine life of these assets. Mineral resources saw significant increases while driven by updates to Cote and Gosselin as we grow our gold pipeline and future for the company. Longer term, our goals for IOM Gold remain. To be a leading intermediate gold producer with a portfolio of assets centered around a corner asset in Canada that have a proven record and ability to generate strong, consistent free cash flows and attractive returns for shareholders. Build on our pipelines of project and strategic geographies and organically grow our assets. Establish ourselves as a leader amongst peers in health and safety, talent development, and ESG, including biodiversity, tailing management, water stewardship, and community health and education. And of course, to be recognized as a leader in applying leading proven technologies that drives performance and sustainability across our business. Financially, we will prioritize returning to the 70% position in COETE with our partner Sumitomo. as well as use our cash flow to optimize our balance sheet and deliver the company to have a more efficient and balanced capital structure. With that, we will now dive into the operating and financial reasons and highlights for the quarter. Starting with health and safety, the company continues to perform extremely well with a days away restricted transfer duty rate of 0.39 and total recordable injury rate of 0.69, both based on 200,000 hours work. I want to take a moment to congratulate SACAM, which achieved its best ever performance in health and safety with a days away restricted transfer duty rate of 0.06. This is a testament to the professionalism and commitment to a culture of safety for our people in Burkina Faso. Ensuring all of our employees and contractors go home safely would always be a primary focus for IMGO. As we like to say, every gold ounce produced has to be done safely. And our goal continues to be zero harm. Zero harm for the people and the places where we operate. On production, in the fourth quarter, the company produced 136,000 ounces. bringing total annual productions to 465,000 ounces on an attributable basis, which was near the top end of our guidance of 410,000 to 470,000 ounces. As we will get into in a moment, the production results were driven by Isakani being able to operate without disruptions and benefiting from positive grade reconciliation. And the continued ramp up in rehabilitations of underground zones at Westwood. our cash costs and all in sustaining costs declined in the fourth quarter to $1,197 an ounce and $1,735 an ounce, respectively. This brings our year-to-date cash costs to $1,261 an ounce and an asset to $1,783 an ounce, in line with our revised guidance estimates here. On a year-over-year basis, we've seen a step-up of costs due to continued pressures at the SACAC, as well as sustained elevated price from the recent inflationary period. We are seeing some sign of price easing on certain consumables, but on the whole, there are several costs that have a long tail and slow to decline. With that, I will pass the call over to our CFO, to walk us through our financial results and position. Martin?

Thank you, Renaud, and good morning, everyone. Looking at our fourth quarter financials, revenues from continuing operations totaled $297.6 million from sales of 147,000 ounces on a 100% basis at an average realized price of $2,005 per ounce. Adjusted EBITDA from continuing operations was $110 million for the quarter and $315.1 million for the year. Adjusted earnings per share from continuing operations was $0.06 for the quarter and $0.09 for the year. In terms of a financial position, IAMGOLD entered the year with cash and cash equivalents of $367.1 million and a fully undrawn credit facility. equating to the total liquidity of approximately $754 million. As further described in MDA, the company entered into the one-year extension of its credit facility in November, extending the maturity to January 31, 2026 from January 31, 2025. As part of the extension, the credit facility was also reduced or right-sized to $425 million, based on the company's requirement for a senior revolving credit facility on its overall business. The extension allows for the credit facility to be available and non-current during 2024, should we require additional liquidity during the ramp-up of COTE and for working capital purposes. The company has received gross proceeds of $197.6 million from the Bamboo transactions and the remaining transactions related to the sale of the early stage assets in Guinea and Mali are expected to close this year for gross proceeds of approximately $84.4 million. We note that within cash and cash equivalents, $81.7 million was held by Cota Gold and $70.9 million was held by Essacan. The Cota Gold UJV requires its joint venture partners to fund, in advance, two months of future expenditures and cash calls are made at the beginning of each month. resulting in the month in cash balance approximating the following month's expenditure. SKN normally pays a dividend in the second half of the year. As we will outline in a moment, the company's remaining funding requirement to complete construction commissioning of Cota Gold to bring the mine to First Gold is estimated to be $142 million, which includes working capital adjustments. The company believes that its available liquidity at December 31, 2023, combined with cash flows from operations, the expected proceeds from the sale of the remaining bamboo assets, and available liquidity provided by the credit facility, is sufficient for the company to fund its 60.3% interest of the Cote Unincorporated Joint Venture to complete the construction, commissioning, and ramp-up of the Cote Gold project. It should be noted that the company's ability to draw on the credit facility is impacted by certain covenants, including the net debt to EBITDA and interest coverage ratios of the company that could be impacted by macroeconomic factors and the performance of the company's existing operations. We also announced amendments to our gold prepay commitments in December. We entered into a new forward sale announcement and a partial amendment to one of our existing gold prepay arrangements. that effectively transfers the gold delivery obligations out of the first quarter of this year into the first quarter of next year. This was an important measure to improve the financial flexibility for the company for a reasonable cost while we were also able to benefit from favorable forward gold prices, particularly for the first quarter of this year while we are commissioning Cote, out of production by the end of the quarter. And with that, I will pass back to Renaud. Thank you, Renaud.

Thanks, Martin. Turning now to Esakani. The mine reported attributable gold production of 108,000 ounces in the fourth quarter, which was the highest quarter of production for the year, bringing total attributable productions in 2023 to 372,000 ounces. Mining activities totaled 12.9 million tons in a quarter, an increase from the third quarter as operations were less impacted by the security situation within the country, with minimal disruptions in fuel supply. On an annual basis, mining operation moved 43 million tons, 13% lower than the prior year, due to the impacts to the supply chain in the first and the third quarters. And in our town mines of 9.6 million tons were approximately 24% less than the year prior as a result of an increase in required waste stripping as mining activities move into phase five, six, and seven of the bid in the second half of the year in support of the 24 and 2025 mine plan. Head grades increase in the quarter to 1.32 grams a ton due to positive reconciliations for the deeper benches of phase five. This positive grade reconciliation at Isakane is a trend that has continued in the early weeks of this year. However, head grades are still expected to decline in line with the recent life of mine plan as volume from phases six and seven increase and from increased proportion of stock falls over. On a cost basis, Isakane reported fourth quarter cash costs of 1,132 per pounds and an all-in sustaining cost to $1,548 an ounce, a significant improvement from the prior quarter, yet year over year the cost profile has increased with 2023 annual cash costs of $1,181 per ounce and an ASIC of $1,521 an ounce. This increase in the secondary cost profile over the last 12 to 18 months is attributed to a combination of the lagging impact of deflation, higher volumes of operating waste from increased strip ratios as the mine enters new phases, the impact of security situation resulting in higher landed fuel prices, transportation and camp costs, as well as higher labor costs due to appreciation in the local currency. In addition, Last year, we saw the government of Burkina Faso implement an updated royalty rate that would settle the in-country legal proceedings on the 2018 handling of carbon fine. Looking ahead, the Sakana is expected to produce 330,000 to 370,000 ounces at a cash cost of $1,300 to $1,400 an ounce. and an ASIC of $1,675 and $1,800 per ounce. These metrics are in line with the updated 43-101 and life of mine plan we announced for a second in December. Under the current mine plan, 2024 represents the last year of significant sustaining capital which is expected to decline notably in the later years of the mine plan, assuming no further extension of mine life. The updated technical report we released in December demonstrated the successes of teams delineating additional ounces within the site security parameters. which contributed to an increase in our mineral reserve and resources inventory and more than offset mine production depletions in 2023. As of December 31st, 2023, Esakane has proven and probable reserve of 2.2 million ounces at an average grade of 1.1 grams a ton, of which Hope and Pitt Reserve were estimated to be 1.8 million ounces, rating 132 grams a ton. As a result, we were able to extend the mine life of Essakane an additional year, providing visibility for the next five years of operations at the project with considerable cash flow generating potential, particularly as stripping requirements declined in a later year. We continue to seek opportunities for further extension of the life of mine as we continue to advance in 2024. Turning to Westwood, the fork water represented the highest quarter of gold production since the mine restarted in 2021, with 28,000 ounces of gold produced, bringing the total annual production last year to 93,000 ounces. The higher production in fork water is the result of the ramp up of underground operations, supplying increased volumes of higher grade ore for the mill feed. and the introductions of higher grade material from the Fayol deposit. Our mine from underground total 77,000 tons in the fourth quarter, contributing to an average head grade from underground ore of 7.92 grams a ton, which is the highest grade from underground in nearly six years since the Q1 2018. As rehabilitation efforts have allowed, access to previously closed higher grade underground stoves. The mill throughput in the first quarter for the fourth quarter of 2023 was 245,000 tons at an average head grade of 3.9 grams a ton. The mill availability in the fourth quarter was rather low at 78%, which compared with 95% in the prior year period. This was due to unplanned maintenance on the sag mill liners and apron feeders. The cost profile for Westwood continues to see improvement with the increase in production. Cash costs averaged $1,434 an ounce in the fourth quarter, which was also a record since the restart of operation, and notably includes an estimated $190 an ounce of cost related to the development incurred at Fayol that was expanded due to the short-term of mining at the deposit. On an all-in sustaining cost basis, Westwood averaged an ASIC of $2,049 an ounce in Q4, which compared well with the realized gold price of $1,989 an ounce. Further, when adjusted for positive working capital movement, Westwood actually returned positive mine site free cash flow in the fourth quarter, an important step in his return to profitability. Looking ahead to this year, Westwood gold production is expected to be in the range of 100,000 to 120,000 ounces in 24 with an increasing proportion of ore sourced from the underground mine at higher grades. Production levels are expected to be higher in the first half of 24 due to mine sequencing in the underground mine as the supplementary mill feed from Fayol is replaced with lower grain material from Grand Duke in the second half of the year. Cash costs at Westwood are expected in the range of $1,250 to $1,375 per ounce sold, and the ASIC per ounce sold are expected in the range of $1,800 to $2,000, with the decrease driven by the expected increase in production and reduced underground rehabilitations. Sustaining capital expenditure this year are expected to be essentially flat year over year at approximately $65 million, as lower rehabilitation is offset with increased underground development, as well as an increase in capital for the renewal of the mobile fleet and fixed equipment. Looking at the long section of the mine here on the right, We can see the increase in underground mining activity in the central and west corridors, region of the mine which were essentially shut down prior to the rehabilitation program of the last two years. We currently have eight zones, but a total of 10 zones that we are targeting in 2024, utilizing a revised mining method of pillar-less pyramid-stop sequencing to deflect the seismic stresses to the outside of the operating areas. Since the reopening of the mine in 2021, we have now proven that we can mine in these higher grade zones, resulting in meaningful changes to Westwood Complex Inventory. Westwood Mineral Reserve, including the Grand Duke Open Pet, increased 109% from 582,000 ounces to 1.2 million ounces, net of depletion. with grades increasing 26% to 7.14 grams a tonne gold. Excluding Grandeur, underground mineral reserves were estimated at 1.1 million ounces at an average grade of 10.6 grams a tonne gold. In the second half of the year, IAMGO plans to file an updated I-43101 technical report telling the results of ongoing mine optimization efforts and strategic assessment of the Westwood complex. Turning to Cotigo, the project saw remarkable progress last year. Though, when you look at these pictures, you may not see significant visual change from last quarter, aside from the snow copper. As at the end of the third quarter, all major infrastructure was in place and the focus was shifting to completion of piping, electrical and instrumentation, as well as demobilizing certain contractors and ramping up pre-commissioning and commissioning activity. With first goal on the horizon, we're now executing and ramping up commissioning activities, methodically working through the flow shift starting on the dry side before bringing it together with the wet circuits. Looking at the pictures, starting at the top left is a view of the processing facilities with four primary structures in yellow of note. The first is the primary crusher in the foreground, which you can also see in the photo beside the facilities photo in the top middle. This was commissioned in mid-January where mined rock were delivered to the crusher via autonomous haul trucks. The crushed material was then conveyed and screened for size through the screening building, which is the facility's photo in the building in the upper left of the picture and located between the wet processing building and the dome, before being conveyed and deposited in a coarse ore dome, which you can see in the top right of the page. We are now working on commissioning of the secondary crushing building, which comes in the HPGR, seen in the bottom left. From there, the crushed ore is conveyed back and forth from the screening building before being deposited in the fine ore bin, which is the wide silo you can see beside the secondary crushing building seen in the upper left picture. This step would account for a total of three of the four buildings and all conveyors having been commissioned. After this, the fine ore is conveyed into the processing plant where it passes into the ball mill and the bottom center photo and then through the remaining circuits of the plant, which is termed as the wet zone. As far as other progress of note, As I mentioned, we are nearing a major milestone with the full hands-off of all facets of the project to the ownership team. Mining activities, which started with the first autonomous truck over a year ago, progressed very well over the year, with now over 5 million tons of stockpile available and in place. Final deliverables include the back end of the plant, where final mechanical completion of the detox and electrowinning circuit is nearing completion. Taken together, we are ready and very excited to turn the chapter on COTE and bring it online for the benefit of our shareholders. Martin, you can walk us through the remaining project expenditure, please, in capital of the year.

Thank you, Renaud. Since commencement of construction and up to December 31, 2023, on a 100% basis, the COTE project has incurred $2.786 billion of the planned $2.96 billion of project expenditures. The remaining expenditures to achieve First Gold is estimated to be $179 million for the project as a whole at 100%, which will bring the total cost to First Gold in line with the $2.96 billion. There is an estimated $40 million of expenditures that will be incurred post the first gold date for additional required infrastructure and earthwork projects. A remaining funding obligation for the project expenditure up to first gold, based on our 60.3% interest, and incorporating changes of working capital, leases, and adjustment to the cash balance held by the UJB is $142 million. which, as I noted earlier, can be funded with the $367 million of cash on our balance sheet, as well as operating cash flows and other sources of liquidity we discussed earlier. Turning to the high-level outlook for Cote, and everything I will be quoting here is on a 100% basis, I will draw your attention to the top right, where we outline an expectation for capital expenditure this year in addition to the construction related expenditures we just highlighted. We estimate that $40 million of operating expenditures relating to milling, surface costs, administration and indirect costs that will be incurred during commissioning, ramp up and up to commercial production will be capitalized and reported as capital expenditure. These costs represent the inefficiencies experienced while a project is ramping up and not operating at design capacity. while the operational team has been fully hired. The estimated capital expenditures related to operations for 2024, excluding capital waste stripping, total 145 million. These expenditures will be incurred through the year and include 60 million for the expansion of the next stage of the tailings management facility, 50 million for equipment purchases, including additional haulage trucks, drills, and other mobile equipment, and $35 million related to other owner's cost capital projects. Then finally, we estimate $50 million to be incurred for capitalized waste stripping. It is worth highlighting that Kota Capital's expenditure in 2024 are expected to be higher than the life of mine average as the mine progresses with the completion of the construction of the full tailings dam footprint and increases volume of material mined. Over to you, Renaud.

Thank you again, Martin. Production at Cote d'Ivoire on a 100% basis is expected to be between 220,000 and 290,000 ounces in 2024. This estimate assumes that following initial gold productions in late Q1, the operations ramp up in the second quarter 2024 and commercial productions is achieved in the third quarter 2024. The company defines commercial production as an average throughput of the mill of 60% over a period of 30 days. We are targeting Cote to exit the year at a throughput rate of approximately 90% of the nine-pleat. During the ramp-up of the project and until commercial production is achieved, it is rather difficult to provide a good indication of operating cost estimates. But as Cote Gold achieves 90% throughput exiting the year, we estimate cash costs at the time to be in the range of approximately $700 to $800 an ounce and an ASIC of $1,100 to $1,200 an ounce sold, with further decreases as volumes increase and as we move through the lagging impact of the recent inflations on contracts for consumables. This brings us to what is the future of COTE. We announced an updated mineral resource and reserve estimate for Cote and Gosselin last night that some material increases in inventory at both of these deposits. At Cote, mineral reserve on a 100% basis increased by 436,000 ounces to 7.6 million ounces, with grades increasing 5% to 1.01 grand a ton gold. The increase in ounces was primarily driven by the increased grade of proven mineral reserve to 1.09 grams a ton, gold, based on the increase in stockpiled inventory and the ongoing grade control drilling program. On a resource basis, code gold, measure and indicate a mineral resources increase 1.9 million ounces, or 18% to 12.1 million ounces of gold. At Gosselin, the drilling completed since the maiden resources has been extremely effective with an updated mineral resource estimate on a 100% basis of 4.4 million indicated gold ounces and 3 million inferred ounces. This represents an estimated increase of 1.1 million ounces in indicated and 1.3 million ounces in inferred. representing a 32% and 74% increase respectively. This expansion of the Gosselin resource was the result of a 35,000 meter drill program completed over the last two years. This year, we are planning an additional 35,000 meter targeting the central zone between the pit shells where we see indication of continuation of mineralization and hydrothermal breaches. as well as some deeper holes to understand the continuity of mineralizations below the current pit shells. The updated resource at Gosselin is very exciting for the project. Gosselin is a very large-scale deposit sitting immediately adjacent to Cote. That, when combined together, has an estimated total measured and indicated mineral resources of 16.5 million ounces, with an additional 4.2 million ounces of infert, putting the project an exclusive company of large-scale Canadian assets. The August 2022 Life of Mine Plan model was built on mineable reserve of 230 million tons of material for just over 7 million ounces. However, when investors considered a combined global resource inventory of the Codigo project, with its size and scope, And for a mine that is effectively built, this is a very compelling potential offer for our shareholders. As I've said before, Cote d'Ivoire today is a project, but we believe strongly that this is the start of a mining camp and that it will provide a strong foundation for IMBOL for many years to come. With that, I would like to pass the call back to the operator for the Q&A.

Thank you. We'll now begin the question and answer sessions. 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. To withdraw your question, please press star then two. The first question comes from Wayne Lam with RBC. Please go ahead.

Yeah, thanks. Morning, guys. Just curious, Kote, the cost guidance implies about $100 million towards sustaining CapEx and capitalized stripping, and there seems to be a bit more spend post-first gold budget versus the 2022 mine plan. Just wondering how much of the $145 million CapEx has been earmarked for sustaining versus non-sustaining, and then is there a potential for upward revision to ASIC guidance if a greater proportion than that falls under the sustaining portion?

Good morning. So with the accounting guidelines changing, where we have to report our revenue and cost of sales from first calls, and then you've got the impact of costs being inefficient during the period up to commercial production. that creates that additional 40 million that we have in there. But what it also does is it's difficult for us to have exact measurements of what is construction capital or long-term capital and sustaining capital until we actually know these achievements. So we cannot really give accurate estimates of sustaining capital. The 145 million that we've included in the capital guidance is roughly in line with what we had in the technical report and then similar with the sustaining capital. And those one cost we expect to decrease as well over the life of mine. So if you take out the construction capital, the accounting, the capital is in line with the technical report.

Okay, great. Thanks. And then maybe at Westwood, can you talk about some of the rehabilitation and geotech work done underground that give you greater confidence in ramping up the output rates there? And then just what proportion is budgeted from the main underground this year versus some of the satellite feed?

With regards to the stability of the mine, it has a lot to do with the change of the mining method sequencing. There's no doubt. It is not that it has eliminated seismic activities, but it has reduced it to the point of the energy is so low that it does not disturb. We still have obviously, this is a seismic area like for mining, but the change and how we address the mining, the meta, the sequencing has reduced the energy to a very, very low level. So this is the main key aspect. Of course, depending on the area, we have adopted like very specific approach to ground support and monitoring and so forth. So this is like what we call more like a global recipe than just like one actions in particular. But after like what, nearly two years now without any event and a monitoring of the activities and we continue to see very low energy at the As a result, we believe that the recipe is successful and will work. So that's what I can say about that. With regards to the mine plans per se, we'd like to say that we'd like to achieve probably in the range of 900 to 1,000 tons a day from the underground as part of the plan for the year.

Great. That's good color and good to see the ramp up there. Maybe just last one for me. At ESSACAN, can you just comment on the security situation in the region and the ongoing management of getting fuel and supplies to site?

I'd like to say that, as we mentioned in our remark, is we've seen – quite stable for us. Of course, we're not pretending, you know, that the security has changed the point in Burkina Faso. It's a continued monitoring. But when it comes to the mine, when it comes to our activities, when it comes to conveying our supplies to site, we've put in place very, very strong security protocols As we've mentioned before, we do not use, you know, ground transportations for laborers and workforce. We actually, that's part of the higher cost, of course, when we refer to transportation costs for labor. So we fly people around, we use choppers around there. So I think, like we say, you know, everything is about safety and about keeping our people. So it has proven to be working for us. so far, but as of the country per se, we're well aware, you know, that unfortunately, you know, some situations continue sometimes and military, you know, activities. But in our case, we've been now pretty much the whole year, you know, proving that our protocols in place works well and we keep everyone safe.

Okay, perfect. Thanks for taking my questions and best of luck in the months ahead.

Thank you.

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

Good morning, Renaud and Martin. So a few questions. Just on Westwood, I think you said that the reserves, excluding the grand, the open pit reserves are, so the underground stuff is about 10 gram per ton material. So if I'm modeling like the additions, life of mine, you know, and extending that, would I be using 10 grams? or feed, or is there a solution that I should be thinking of?

Well, I mean, like, if our, you know, the updated 43-101 will be based, of course, on the updated mineral reserve and resources, whereas as such, you know, 1.1 million ounce of underground material averaging about 10.5 grams a ton. you need to get to the ramp-up situations to leverage those. We're not pretending that this year will be necessarily at 10.6 grams a ton because we're still working and positioning ourselves in all those zones. But as we advance in time, it's fair to say that the underground mine should be performing at the reserve level.

Yeah, I don't have it ramping up until about...

Yeah, so, like, I mentioned, like, 900 to 11,000 tons a day. We see the mine down the road capable probably to be more like 1,000 to 1,200 tons a day. We've achieved 7.9, you know, grams a ton. So we're systematically moving up, you know, from the 21 to 23 tons. We're now averaging almost eight grams a ton, and we continue to improve, you know, from the six or so we were at the start of the year. So I'm very comfortable to say that as we advance in 24, should everything works well, we should start seeing those levels upgrade towards the end of the year.

Okay. Thanks. And then secondly, on SACAN, can you remind me what nameplate capacity is? I modeled the technical report you guys delivered in mid-December, but the press release says that we will be operating at nameplate. I just wanted to make sure that's still what's in the technical report.

Yeah, so on an average basis, SACAN is capable to operate in the range of the 35,000 to 36,000 tons a day.

Okay. And then just moving to Kote, I just want to get an understanding of the cost. So I guess there was $50 million of costs that you said you would capitalize over and above what you would consider the normal run rate. So anything above the $700, and I guess you said $700 to $800 per ounce on total cash costs. Okay. You've determined that that's the normalized sort of cost structure this first year. Anything above that is what's going to get capitalized in the $50 million. Is that the case?

Good morning, Anita. So that $40 million is that abnormal cost portion. So yes, it is. And we look at it on a per ton basis. Guidance range that we gave for cash costs is what we expect at the end of the year. That's not our average for the year. So at the beginning of the year, even after we've taken out those capitalized inefficient costs, it will still be a little bit higher than that. Okay.

Sorry, go ahead. So what I can add to this, Anita, is one thing that I'm very pleased is, as Martin mentioned earlier, with the sustaining capital around the $145 million, very much aligned with the 43-101. We have capital ways, capitalized ways, about $15 million. Yeah, that's compared maybe with the $30 million, but as you ramp up, your costs are higher. But as we exit the year, uh being now at the sustaining capital level closer to 43 101 we're very uh we're very pleased with that so it's up to us now like to put those extra calls behind complete the constructions everything that is kind of extra capital put this behind us and uh exit the year strong within you know capital capital aligned with the 43 101 or nearby And it's all about, of course, getting our operating unit costs, you know, in line as we ramp up the mail in the mine. So we'll be in very good shape as we enter 2025. Okay.

Thanks for that. And then a couple of other things in terms of the – at one point, I thought there were leases that were coming through. Is that now encapsulated in all of the CapEx guidance, or are we still thinking about, I think, the 120 to 140 million of leases starting in this year?

So for leases, the amount that we refer in capital, that is on an incurred basis and it excludes funding. Our lease program of $125 million U.S. at Cote concluded or will conclude shortly. So we don't have any estimates or assumptions in our 2024 plan for leases.

Okay. So that means you're not incurring leases though in 2024 either?

In the plan, we are not showing that we are incurring additional leases in 2020.

And then the working capital, is there something we should be thinking about in terms of working capital or is that encapsulated in the capitalization of some of these costs? Just sort of the typical stuff where it takes a while for the circuits to become saturated and then you get that back at the end of the life. But is there something that we would be thinking about there? So in our funding estimate… You can build up of, sorry, consumables and things like that.

So we have been purchasing consumables during 2023, and we've placed a lot of those orders, and those are there so that we can operate. So in our 2965 estimate, that included buying first folds and then a lot of these consumables and spare parts. And when we look at the 142 million, which is our 60.3% that we need to fund, that covers the project expenditures up to first cold. And then also the pay down of the accounts payable. So that working capital component. And then, as I mentioned, we bought purchase inventory in there and there's a small lease component in there as well. So that's kind of, that's the number that we need to fund from liquidity with our assumptions of building up inventory and paying down IP because our accounts payable balance will of course be a lot lower once we're in operation compared to when we were building the project. Okay.

And then my final question pertains to the 200 to 290 production guidance. Can you give us the parameters around which you are sort of like the ranges of, you know, we expect recovery rates to be X to X. We expect the grade that we're going to feed to be X to X. And we expect the tonnage over the course of the year to be X. Like that's the, like just how do you come up with those? so that we can keep track of it as the year evolves and we're not offside either way on the 220 or the 290.

I can sure help you out a little bit here to put some clarifications around it. So first of all, in terms of grade, we have about over 5 million tons on stockpile, from which about a million tons is at the 2 grams. So that's what we call. So as you know, we're segregating. So we're separating the lower grades. And within the direct feed, there's segregations and million tons of the 2 grams. So we are seeing this working well. We're seeing the grade reconciliation working very well in the high-grade zones. 1.5 grams a ton achieved a mill for 2000 for 2024 appears to be in the neighborhood as was is achievable so. Getting to the ramp up schedule as we're planning that's could bring you towards around the 6.5 million tons mail. Recovery, we don't see any reason why it would not be aligned with the 43-101 at about 91 to 92%. So that's bringing like the top end, right? So around the 6.5 million, 92. Everything below that could be more a factor of tons, you know, the timing of ramping up. I think the grade will feel strong. I think the recovery, but everything else below that, Anita, would be a matter of tons.

Okay, so you're very confident on the recovery, so we're not going to see you guys feed low-grade until the recovery gets up. That's one of the factors that sometimes in the first quarter people do a little bit less on grade because they don't want to waste it.

We don't intend to stay very much in the low-grade once we achieve the first goal, and we intend to ramp up. We do not foresee any issues with the recovery and recovery. If we satisfy what we see at the very early stage, we intend to ramp up the grade as soon as possible.

Okay. All right. Thank you. That's very helpful. That's it for my question. Thank you.

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

Great. Thanks, operator. Good morning, everyone. Thanks for the presentation. Could I ask about your... overall inflation assumption for the two operating assets in 2024 versus 2023. So that's a cost inflation, I should specify. So between Westwood, sort of an average between Westwood and Essican. Thanks.

Good morning, Lawson. If we look at inflation for those two mines, energy remains a big impact for both of them. Our assumption is about $85 per barrel that we used in our guidance cost ranges. Well, of course, impacts other impacts like commodity-linked or oil-linked commodities such as steel, but we are seeing those costs kind of coming down. In Burkina Faso, there is a a levy on oil, as well as higher transportation costs. We expect those to remain. So overall, on a per ton basis for Issa Khan, we actually see costs to be roughly flat with the ins and outs of the different things in inflation, because there is certain items that we see are coming down from that perspective. And similarly at Westwood, if we look at the contracts that we entered into for 2014, There are certain items where we see increases, but similar offsetting increases. So we don't expect to see a big increase in cost from what we saw at the back end of 2023 going into 2024 from an inflation perspective.

Yeah. And if I may add something, if you look at ESACAN in the last six months, we've seen the beautiful of how it is when you're steady, when you have no disruptions, achieving, as we said, you know, below the $1,600 towards the $1,550. And we've seen as well, you know, like pressure on cost-to-order, $1,800, you know, when we feel sometimes disruption. So should we have like a year of steady, good productions and then no issues with the reconciliations and no disruptions, you know, Could we rather achieve towards like the lower end of the cost, top hand of the productions? But, you know, we've seen that it's a kind of operates sometimes in tough environments. So I think this is how you should look at it. It's a bit of a balance weighted, you know, of our experience with the last six months, I should say. I bet the same with at Westwood. I mean, we've been consistently improving. We've seen, you know, like a Q4, achieving nearly the $2,000 announced. We're going to continue to improve. We're going to continue to improve the grade and so forth. So this is how it's both minds have been, like with the Westward continuously, you know, improving. We feel strong that we overall can beat Q4 for the year. And the second is very depending on how stable we'll be. But should we be stable? I think we'll have a great year.

Okay, thank you both for those comments. It's very helpful. So overall, cost inflation in control for 2024 versus 2023, what was actually realized in 2023 in terms of year-over-year cost inflation? I will give that to Martin. Listen, we saw...

We did see a big impact, especially in Burkina Faso, but that was impacted by higher landed costs as well because of the cost of getting our convoys to site safely now. So I don't have a specific number for you right now to say what was the impact of inflation, but the cost in the second half of 2024 have those inflation impacts

impacted and you can see that compared to what we were doing in the first half of the year i think i think one is the the the most obvious one i guess you know like when you look at the impact of fuel costs and at this economy uh most most mine will will say their labor cost is the higher cost the second is more like towards like the power and the use of fuel has a big impact And over the last two years, we've seen as high as probably like doubling, double price on those. So this was like, this is from far the one that has impacted probably the most. And can we see some reductions down the road? We're not necessarily counting on it in the short term, but just to give you a bit of an idea of what fuel power, you know, has been the main contributor to that over the last two years.

Yeah, that's really helpful. And then just one final question on costs really pertaining to Burkina Faso. When does the new sort of higher royalty regime take effect? Was that the first of this year?

The new royalty regime is in effect, and that's included in our costs. And it entered into... In the back end of last year in Q4, yeah. Q4, yeah.

Great. And then one... Final question, I guess, on Westwood. At the current gold price of about $2,000 per ounce and with the significant improvements you've seen at that asset, do you anticipate generating positive free cash flow in 2024? And if not, what is kind of your benchmark that you think about internally that you need to get to before that asset is generating material positive free cash flow to the overall business? Thanks very much.

There isn't any significant expansion capex at Westwood. So the oil and sustaining cost range that we have in our guidance for Westwood is also an indication of a free cash flow. So if we meet our cost guidance and the gold price is higher, it should be generating cash flow. And that's kind of how we manage that as well. What we always also did is With those high cost ranges, we saw an opportunity to put in some gold hedges in Q1. So there's 60,000 ounces that we hedged and it was zero cost collars. And the puts on those are between 1915, 1975. So that's also how we're just making sure that with that higher cost profile at Westwood that we can be break even or cash flow positive.

Okay, fantastic. Thank you so much for the responses and best of luck for 24. Thank you. Thank you.

The next question is from Kerry McCrory with Canaccord Genuity. Please go ahead.

Hi, good morning, guys. Martin, could you just remind us what sort of minimum cash balance you'd like to keep through the ramp up here, like corporately?

So the minimum cash balance is actually driven by one of the covenants in our credit agreements. So we have to maintain $150 million of cash on the balance sheet, cash and cash equivalents. Now, because of the corporate structure, there's always the cash balance that is a can, and there's actually also a cash balance that needs to be maintained at COTA. So the $150 million covers that. But so that's the amount that we need to maintain. And it works well with the cash out by those two entities.

Okay, great. And then just on the mining side, you've got 5 million tons stockpiled. Is that stockpile going to grow ahead of ramp up or is it sort of constrained? And just more broadly, how does the mining ramp up look like through this year?

Kerry, can you speak up? We can't. I hear you very well. Sorry, can you hear me now?

Can you hear me? Better. Better? Yep, that's better. Yeah, so I was asking you about the stockpile. You've got 5 million tons on the stockpile. Is that going to continue to grow over the next couple of quarters as the mill's ramping up? Or is that constrained at 5 million tons? And secondly, just broadly, how does the mining ramp up look in 2024? Sure.

No, definitely we see that. Well, there would be an in and out, of course, as we ramp up the grade. I was telling Anita earlier, you will be using, of course, some of them. But yes, the mine plan considers, of course, to continue to do that segregation, continue to add high grade and super high grade to the stockpile, and managing the grade to... roughly average about 1.5 of the mill for the year, definitely. The mine is ramping up quite well. We now have commission towards the 14 trucks. We got the second shovel now in the pit. So in terms of mining capacity, we're there. If we achieve an overall 50 million tons mine for the years, that would allow us to properly produce the ore required, and continue to segregate stockpile and feed the mill at a proper head grade. So that's roughly what I can say.

Great. That's it for me. Thanks.

Thanks.

The next question is from Tanya Jakuskinek with Scotiabank.

Please go ahead.

Good morning, everyone. Thank you so much for taking my questions. I'm going to move just to the accounting of all of this. I think, thank you very much for all the detail on the COTE. Maybe Martin over to you just to walk us through how all of this is going to show up through the income statement and cash flow for the year. So maybe I'll start off with the first of the 220 to 290 thousand ounces on a hundred percent basis. What is going to be commercial in that amount?

So after every ounce that will be produced will be reported as revenue. So the concept of commercial production doesn't. Apologies.

So from day one, everything will go through the revenue line.

Okay. Day one, everything goes through the revenue line. And then you have to show the cost as well. So, and that includes some stockholder accounting where the mining costs, comes off stockpile, so you will have cost of sales. In the beginning part of the year, of course, that cost of sales number would be elevated somewhat, but some of those costs lands up on the balance sheet. And so up to commercial production, we will have revenue and the cost to produce that revenue will be split between cost of sales and that $40 million that we mentioned in our capital guidance. So we shouldn't double-account it. We are showing some of the operating costs in capital in our guidance number. Okay.

So if we were to think of it from a high level, so operating costs plus that $40 million, which is on a 100% basis, that would come in through your cost of sales, and then the remaining amount of that capital will be under a capital fund.

Yes.

Okay, perfect. Okay, so that's through the year. And the reserves that you reported, which you're reporting on a 100% basis, when you look at and put your 2023 attributable on the website, because the statement's not there yet, will we be looking at it on a 60%? Is that how you're going to report it on a 60% basis, all the attributable data? versus 70% in 2022?

So because of that option to repurchase our 9.7% interest, we'll be showing the assets and liabilities at 70% until the point where either we repurchase it or it expires. If it expires, things will go back to 60%. But I think to keep things simple, the balance sheet will be at 70%, but revenue and cost of sales will be at 60%. And real cash flows is at 60% as well. So to get it up to 70% is just an accounting adjustment.

All right. So it would only go to that 60% should that option not be exercised is what you're saying.

Yeah, on the balance sheet. But the way that we think about it is we fund 60%. So we have to pay for 60% of the operating costs as well as capital, and we get 60% of the gold.

Yeah, no, I understand. Okay, I was just wondering about the 70-60 for the reserves and other. Okay, that's fine. And then just lastly, Martin, to confirm, there's another $84 million or that about coming through to you this year? Is that from some of the asset sales on top of the cash flow?

Yes, yes, there's the gross asset proceeds from the remaining sales of the bamboo transaction we expect to get during the remainder of this year. There's two components of it. The first one we expect to be in Q1 and then the second one later this year.

Do we know how much we're getting in Q1? It's just to make sure looking at the cash flows in and versus out, just want to get those right.

Yeah, we expect that. It's a little bit commercially sensitive, but it's about half of the transaction.

About half. Okay. Okay, that's helpful. Thank you very much.

The next question is from Don DeMarco with National Bank Financial.

Please go ahead.

Oh, hi. Thank you, Aubrey. Gentlemen, I think all my questions have been answered. Thank you.

Thanks, Don.

And we have a follow-up question from Anita Soni with CIBC World Markets. Please go ahead.

Just a question on that. You touched on it with Kerry's question, but the minimum $150 million liquidity as a covenant of the RCF, can you explain what that means? Can you fully draw the entire RCF and draw it to zero and then say you have $150 million left on that RCF? Can you draw it down to zero and use that as cash?

Yes, we can. So of our cash and cash equivalents, let's say we spend and we get down to $150 million. Then from there on, we can draw on the credit facility up to the full amount. So there's about $37, $38 million of letters of credit issued under it. So there's $387 million available. Right. Of the 387 million, we can draw it fully. That 150 million doesn't impact it. But let's say we draw the full amount and then we have the cash in the balance sheet. We can't spend below 150. So we always have to maintain the cash balance of 150. There is other items impacting that as well, of course, other governance on the credit facility. But based on what we're seeing now, the facility is available.

Okay. And then just to... catch what Tanya said. So about 80 million coming from the bamboo gas, that's probably evenly split between Q1 and Q2 in terms of the receipt of that money?

Yes, approximately, yeah.

We really like to close Gini and Q1. This is what we're laser focused on as we speak with our partner management on this. that would be, that would come first for sure. And then Molly would follow somewhere in 2024. So this is really our target. Should we sleep? We're good. I mean, it's not, but that's a, that's a focus now to try to close that.

Okay. So you're still trying to close the, the, the deal in Q1. You said, and then you said in 20, it's not in the other one sometime in 2024. I'm not, I'm not.

Molly would follow there. Correct. Molly would follow after. So, uh, That's why we mentioned 24, so it may take a little longer, but the priority right now, the first one, is to close Guinea first.

And the one you're trying to close is 80 million total? No?

No, no. The Guinea itself represents about half of it. About half of it, yeah.

On a gross basis.

Okay. All right. Thank you very much. Thanks.

This concludes the question and answer session. I'd like to hand the conference back over to Graham Jennings for any closing remarks.

Thank you very much, operator. Thanks for everyone for joining us this morning. If you have any further questions, please reach out to Renaud or myself. Thank you all. Be safe and have a great day.

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