Iamgold Corporation Ordinary Shares

Thank you for standing by. This is the conference operator. Welcome to the IAMGOLD Second Quarter 2025 Operating and Financial Results Conference Call and Webcast. As a reminder, all participants are in the 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, then zero. At this time, I would like to turn the conference over to Graham Jennings, VP, Investor Relations for IAM Gold. Please go ahead, Mr. Jennings.

Thank you, operator, and welcome everyone to our conference call today. Joining us on the call are Renaud Adams, President and Chief Executive Officer, Martin Van Heusen, Chief Financial Officer, Bruno Lemelin, Chief Operating Officer, Annie Turkiye-Lagase, Chief Legal and Strategy Officer, and Doreena Quinn, Chief People Officer. We're calling today from IAMGOLD's Toronto office, which is located on Treaty 13 territory, on the traditional lands of many nations, including the Mississaugas of the Credit, the Anishinaabe, the Chippewa, Haudenosaunee, and the Wendat peoples. At IAMGOLD, 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, including 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 Haddams.

Thank you, Graham, and good morning, everyone, and thank you for joining us to walk you through our quarterly results, highlighting our operations, financial performance, and strategic priorities. Overall, at the halfway point of 2025, IAMGOLD has made major advancements as a leading mid-term Canadian gold producer. This starts with the highlight of the quarter, which was the successful ramp-up of Cote Gold to the end plate capacity ahead of plan. The second quarter was also significant, as it was the full quarter where the mine achieved overall operating milestones, including throughput and grade, in line with consensus estimates, and with Gold recovery and reconciliation military reserve in line with plans as well. As we continue to stabilize Cote, we are confident that the ability to operate the mine with consistency and predictability and stability quarter over quarter will be rewarded by the market. Further, with another quarter behind us, we get closer to unlocking the expansion potential of Cote, where we outline to the market a larger Cote in scale and scope, targeting ounces from both the Cote and Gosselin zone at the conclusion of our 2025 drilling program of 20 million ounces plus of measured and indicated resources. As we will discuss today, work on this plan is in motion, and we will be announcing an updated Cote Life of Mine in the second half next year. Operationally, IM Gold is on track to achieve its production guidance target of 735,000 to 820,000 ounces of gold this year, though at a revised consolidated all-in sustaining cost range of between $1,830 and $1,930 per ounce, as we will discuss more on the revision in a moment. Financially, we have now concluded our gold prepayment arrangement with 75,000 ounces delivered this year in an environment where the gold price averaged $3,100 an ounce. These deliveries translate to approximately $200 million of value that went towards what can be considered a form of debt servicing this year. With this behind us, IAMGOLD is now the 800,000 oz plus gold producer with full exposure to gold price and significant cash flow generation. Beyond Cote, IAMGOLD offers a robust organic growth portfolio with our own backyard in Canada, with the rapid growth of the Nelligan and Monster Lake assets in Quebec, which combined have nearly 9 million ounces of gold resources. Turning to the quarter, and we are now on slide five. Above all, the safety of our people remains our top priority, and I'm proud to report that our total recordable injury frequency rate continues to trend below prior year level, reflecting our commitment to a culture of safety and continuous improvement. In addition, in May we released our 2024 Sustainability Report, which marked the 18th year in a row we have documented and disclosed our achievement and dedication to responsible mining practices. Looking at operation, on an attributable basis, IAM Gold produced 173,000 ounces of gold in the second quarter, bringing the year-to-date production to 334,000 ounces of gold. The quarterly performance was led by strong results at Cote, which produced 96,000 ounces on a 100% basis, followed by improved quarter-over-quarter production at Westwood with 29,000 ounces and at Sakane at 77,000 ounces of attributable production as the mine continues work through the lower grades early in phase seven. On a cost basis, IMGO reported the Q2 cash costs of $1,556 per ounce and an all-in sustaining cost of $2,041. Costs were higher in the first half of the year due to a combination of higher royalties, foreign currency movement, and a higher unit cost as we continue to work on stabilizing Cote at maximum throughput and grade mill, as we will discuss next. Looking at our guidance, Total attributable production in the first half of the year was 334,000 ounces. The company expects attributable production in the second half of the year to be much stronger, ensuring that we are on track to achieve the full year production guidance of 735 to 820,000 ounces of gold. The stronger second half is due to continued improvement at the Cote mine during its full first year of operation, copper coupled with an increase in expected grades at both Isakani and Westwood based on the respective mining sequences. Our Q3 performance to date at our assets reinforced our confidence in our production guidance for the year. On Isakani, the tributal guidance was estimated at the beginning of the year, assuming IM Gold 90% ownership interest in the project. With the change in ownership to now 85% at the end of the second quarter, the company expects its account as a tributary production to fall towards the lower end of the original guidance range. Looking at costs, we have revised our cost guidance upwards. With cash costs now expected to be in the range of $1,375 to $1,475 in-house sold, or approximately $150 per ounce higher, and an all-in sustaining cost of 1,830 to 1,930 per ounce. The increase in cash costs is a combination of external and operational factor, including higher royalty being paid as gold prices rise at Cote and Isakane. At Isakane, the government increased the royalty structure when gold prices are about $3,000 an ounce further The recent strength in the euro has necessitated a revision of its impact to our costs in the country. At COTE, we are seeing temporary higher costs of the mine and nil associated with the ramp-up in stabilization activities. Processing costs of the mine are expected to fall following the installation of the additional secondary crusher in the fourth quarter. And the mining costs expected to improve as the team continues to transition to bulk mining and at all for more direct feed mine to mill with less rehandling. In the short term, while rehandling is adding costs, it also allows, until the mine is set for it, to boost the mine grade of 0.95 grams per ton in Q2 to a 1.1 grams a ton mill, adding approximately 25 to 30 cents per ton mine, or roughly $1 per ton mill, but also unlocking additional value of nearly $15 per ton mill by uplifting the grade mill. Same idea with the extra milling costs. We have accelerated nameplate in part because we found a way to temporary maximize throughput by incorporating additional refeed system using contractor for aggregate plant. Moving ahead, Name plays by five to six months allow for maximizing tons mill over just waiting for the second crusher to support. This idea of following for extra milling costs bring also the opportunity to monetize additional tons already mined till the end of the year by building fine and core stockpiles that could be used during planned longer shutdown, in particular around the installation of the second cold crusher. As we move forward, we will eliminate that practice and replace by in-house crushing and repeat system once the second crusher is commissioned, allowing for extra capacity. On the capital side at Cote, we have increased our sustaining capital estimate by $20 million this year for project that will further improve the availability of the plan and working condition. This includes a more robust dust management system as well as a final repeat system to support the mill during scheduled downtime of the crushing plant. These adjustments at Cote are a byproduct of where we are in the life cycle of the project. This is the first full year of operation, and in Q2, we achieved the first full month of nameplate production. Standing back, the ramp-up of Cote has gone extremely well, and the project is delivering and displaying its potential. With that, I will pass a call over to our CFO to walk us through our financial results and position.

Martin? Thank you, Renaud, and good morning, everyone. In terms of our financial position, at the end of the second quarter, I'm gold at $223.8 million in cash and cash equivalents and Nate dead of $1 billion. The company has $250 million drawn on the credit facility and approximately $391.7 million remains available, resulting in liquidity at the end of June of approximately $660.5 million. We note that within our cash-in-cash equivalents, $91.4 million was held in the corporate treasury, $56.4 million representing Armgold's 70% share was held by Dakota Gold's UJB, and $85.1 million was held by Issacan and Burkina Faso. UNDOL's interest in ISACAN was adjusted from 90% to 85% effective June 20, 2025, as per the updated Burkina Faso Mining Code adopted in August 2024. Following the change in ownership, ISACAN declared a significant dividend of approximately $855 million, representing all of the undistributed profits of ISACAN up to and including the 2024 profits. The company's 85% portion of the dividend, net of withholding taxes, is approximately $680 million. SACAN will make dividend payments during the third quarter based on the cash flows generated during the period, and the remaining balance of the dividend will be converted into a shareholder account between SACAN and Armgold. The shareholder account structure looks like an intercompany loan and allows for the company's portion of the dividend to be repaid at any time of the year using excess cash generated by SECAM. Therefore, improving the efficiency of cash repatriation and aligning the interests of both OnGold and the government of Kukina Faso, being more regular cash flow movements from SECAM. The government of Kukina Faso received each portion of the dividend, total 128.3 million, in June of 2025. Looking at our debt obligations, I'm Gold is in a good position to execute on a strategy to responsibly deliver the balance sheet. Over the last four to five years, in order to fund the construction and completion of Cote, I'm Gold put in place numerous financial vehicles with the goal to avoid permanent encumbrances or transactions that would permanently decrease I'm Gold's ownership interest in Cote. These included the Gold prepaid arrangement and the second term loan. In the second quarter, we concluded delivering into the gold prepay arrangements. Year to date, the company delivered 75,000 ounces into the arrangements, resulting in deferred revenue of 154 million being recognized. Deferred revenue represents the cash on gold received when entering into these arrangements, adjusted for the impact of any gold edging structures included in the arrangements. If those ounces were delivered at today's gold prices, cash would have been higher by approximately $200 to $225 million, illustrating the potential increase in our future cash flows as we will now sell all production at market prices. We are now prioritizing repaying the highest cost debt, which is our second interim loan. And it has a floating rate of more than 12%. Repaying the term loan will also reduce our average debt carrying costs. We're proud to announce that subsequent to quarter end, the company made the first step on its delivering strategy and repaid 10% or 40 million of the term loan, reducing the principal balance to 360 million. Looking further ahead for our goal, we are continuously analyzing what the proper capital structure is for an organization of this size with our expected cash flow generation. Ultimately, We look forward to discussing the potential of returning value to our shareholders, whether through share buybacks or dividends, once we have addressed our capital structure. Looking at our P2 financial results, revenues from continuing operations totaled $580.9 million from sales of 182,000 ounces on a 100% basis, and a record average realized price of $3,182 per ounce, which includes the impact of the gold prepaid arrangement in comparison to the spot price of $3,302 per ounce. Cost of sale, excluding depreciation, was $287.1 million, and adjusted EBITDA was a record $276.4 million, compared to $191 million in the second quarter of 2024. At the bottom line, adjusted earnings per share in the second quarter was 13 cents. Looking at the cash flow waterfall at the bottom of slide 8, which is displaying the cash flow movements for the first half of the year, we can see the year-to-date combined impact of the gold prepaid deliveries. And the dividend payment to the government in a FASA following is against large dividend declaration. On a mine site free cash flow basis, iron gold generated $114.5 million in the second quarter. including 93.9 million from Cote and 36.6 million at Westwood. SACAN reported 10 million in mine type 3 cash flow in the second quarter, which is important to highlight as impacted by approximately 47.5 million for the timing of cash tax payments related to the final assessment on 2024 earnings, as well as an increase in working capital and the VAT receivables. I would also like to note that subsequent to quarter end, ISACAN received a 27 million VAT refund, reducing the receivable. And with that, I will pass the call to Bruno, our Chief Operating Officer.

Bruno? Thank you, Martin. Starting with Cote Go, as Renaud noted in the opening remarks, this was an important quarter for Cote as the mine transitions from ramp-up to optimization and stability. We are very proud of our progress at the mine. 16 months ago, on March 31st, Cote poured its first gold bar, followed by commercial production four months later, and ultimately achieving main plate throughput of 36,000 tons per day on June 23rd, well before the 20-month estimate at project initiation. Looking at the quarter, Cote produced 96,000 ounces on a 100% basis, Mining activity total 11.8 million tons in quarter with 3.2 million ore tons mine equating to a strip ratio of 2.7. The average grade mine increased from the prior quarter to 0.95 gram per ton in line with the updated mining plan as in-pit activities continue to broaden the mining area within the pit to support the transition to bulk mining. On a cost basis, we saw unit mining costs of $3.88 a ton due to the higher than expected diesel consumption associated with additional re-handling, as well as contractor costs, consumable parts related to an increase in drilling, loading, and blasting activities. Mining costs are expected to reduce in the second half of the year closer to the $3.50 a ton level. This will be achieved by targeting an objective of 1 million tons a week and the reduction of re-handling through an increased proportion of direct feed material coupled with improved blasting and pit management. Turning to processing, mill throughput totaled 2.9 million tons with successive increases in throughput each month during the quarter. Head grades of 1.1 per ton were in line with plan, with feed material comprised of a combination of direct feed ore and stockpiles. Mill recoveries averaged 93% in the quarter. Beyond plan, as well, we believe we are seeing the benefits of the micro fracturing created by the HPGR. Reconciliation between the reserve models, gradient control models, mill feed, and production continues to be in line with expected tolerances, with Q2 EXTIP production seeing 7% positive reconciliation to both reserve tons and grain. Bidding unit costs saw quarter-over-quarter improvement to $6.94 per ton mill, though they remain elevated from our target of about $12 per ton. Unit costs are impacted by the supplementary crushing and coarse ore refit activities, which have performed well to provide an additional capacity during maintenance windows, but come at an increased cost. The supplementary crushing is temporary, and we expect unit costs to decline following the installation of the additional cone crusher in the fourth quarter. Looking ahead, we remain confident in our Cote Gold production guidance of 360 to 400,000 gold ounces on a 100% basis, which is essentially a doubling of production from last year. The primary focus continues to be the stabilization of the processing plant to operate at or above the design capacity of 36,000 tons per day. On cost, as Renaud highlighted, cost guidance has been revised Cash costs are now expected to be in the range of $1,100 to $1,200 per ounce sold, and all insistent costs is now expected to be $1,600 to $1,700 per ounce sold. The cash cost increase is primarily associated with higher royalties due to the higher gold price equating to an increase of about $50 to $60 per ounce, coupled with The higher the planned cost to operate the temporary course or retreat crushing circuit, and higher maintenance costs have contributed close to $150 per ounce over the course of the year. The audience sustained cost revision includes the additional $20 million or $40 per ounce for the additional non-recurring capital to improve overall plant availability and operating conditions. including dust mitigation systems inside the facilities. We are looking forward to seeing the impact of the installation of the second cone crusher in Q4, which will provide further capacity and flexibility in the dry side of the plant in support of the operation and potential future expansions. Which leads us to what is the most exciting slide, the advancement of the Cote-et-Gasline super pit scenario. Our drills are busy at work with over 32,000 meters completed on the 45,000 meter program. This program is prioritizing the resource conversion at Gosling to provide the foundation for an updated technical report that is expected to outline a significantly upsized reserve base combining Côté and Gosling into a super pit. This report is expected to be released in the second half of next year. As currently designed, Côté has the mining capacity to average an annual ore mining rate of 50,000 tons per day, versus our current main plate processing rate of 36,000 tons per day. As part of the 2026 technical report, we will look to find the right balance between an increased processing rate with mining rates targeting the combined Côté-Gosselin super pit. It is interesting to note that the Côté deposit itself has over 400 million tons of measured and indicated material. If mined at the rate of 20 million tons of ore per year or 50,000 tons per day, the Côté deposit itself would have a mine life of potentially 20 years prior to bringing gosling into plant. This would allow for considerable flexibility for pay permitting, and kept out of phase. Altogether, there is a significant amount of value to continue to uncover at Cote. Turning to Quebec, the second quarter at Westwood saw improvement from the prior quarter, with production of 29,000 ounces as the mine operates through some lower-grade stoves and conducts, additionally underground activities to set up the mine for a stronger second half. Underground mining totaled 98,000 tons, averaging nearly 1,100 tons per day, as volumes from the underground continue to increase compared to the prior year and previous quarters. Production drilling has continued to improve quarter over quarter, achieving 193 meters per day, a record since the mine restarted in 2021, building confidence that our underground mining methodologies and systems are proving to be effective. The Gazic Satellite Open Pit reported 315,000 tons mined, higher than the previous quarters in line with the mining schedule. Mill throughput in the second quarter totaled 323,000 tons at an average head rate of 3.07 grams per ton. The strong throughput was due to plant edibility in the quarter of 96%, which was higher than the same prior year period of 89%. The mill achieved recoveries of 92% in the second quarter 2025, in line with the same prior year period. Cash costs and audience sustained costs came in above our updated guidance ranges for the year as production is expected to be second half weighted, with cash costs averaging $1,562 an average of $2,140 an ounce in the quarter. Looking ahead, we remain confident in Westwood's ability to meet our production guidance with production of 125,000 to 140,000 gold ounces. Underground mining rates are expected to be maintained at around 1,000 tons per day from multiple active mining zones. while grade is expected to increase in the second half of 2025 as the mining sequence transitions to higher grade zones during the period. As previously discussed, cost guidance has been revised and cash costs are now expected to be in the range of $1,275 to $1,375 per ounce sold. and un-sustained costs to be between $1,800 to $1,900 per ounce sold. Unit costs were higher in the first half of the year due to higher mining and maintenance costs combined with lower production from lower average grade relative to plant in the first half of the year. Unit costs are expected to decline in the second half of the year on higher production expectation. Turning to ESSACAN, It was a challenging quarter as we worked through the lower grade of the upper benches of Phase VII while being impacted by higher costs from increased royalties, a stronger euro, increased maintenance and consumables costs, and a higher proportion of stripping activities being expensed. Production on a 90% basis to two total 77,000 ounces. Mining activity totaled 10.7 million tons, with ore tons mined of 2.2 million tons, equating to a strip ratio of 4 to 1. Mill throughput was 3.1 million tons at an average head rate of 0.93 grams per ton, a great decrease as the mining activities progressed through the upper benches of Phase VII. Grades tend to reconcile slightly below the reserve model during the earlier stages of mining a new phase and conversely to the positive as mining moves deeper into the phase. As we saw in the first half of 2024, when we were mining the later stages of phase five, the transition to the higher grade benches in phase seven occurred later than forecast with increases in grade materializing subsequent quarter hands. On a cost basis, SACAN reported cash costs of $1,855 per ounce, and audiences paying costs of $2,224 per ounce in the quarter. Costs were higher in the quarter due to a lower proportion of capitalized waste in the period, higher maintenance activities, and an increase in consumable costs, including diesel and grinding media. Labour, contractor and facility costs also increased due to the appreciation of the local currency, which is pegged to the euro. Royalties accounted for $257 per ounce in the quarter, representing an increase of nearly $100 per ounce from the prior year period, primarily due to higher realized prices and a revision in royalty rates. Looking ahead, we estimate that ESSECAN will be on the lower end of the attributable production guidance target, ranging from 360 to 400,000 gold out. This guidance accounts for the revision of the company's interest in the projects to 85% from 90% previously. Our ESSECAN cost guidance has been revised and cash costs are now expected to be in the range of $1,600 to $1,700 per ounce sold and all interesting costs is now expected to be between $1,850 to $1,950 per ounce sold. Costs at ESSECAN are higher than planned primarily due to the increased royalty rate previously mentioned and the impact higher gold prices have on royalties resulting in an increase of approximately $77 per ounce and the continued impact of a stronger euro on operating costs. While the costs of operation in country have risen over the recent years, SACAN continues to be a world-class mine and is positioned to generate significant free cash flows moving forward. Finally, it is worth highlighting that work is ongoing at the second largest gold mining camp, the Nettingen and Monster Lake project in Chibougamau, Quebec. Year to date, we have completed over 12,000 meters of drilling at Nettingen with an upsized drill program of 15,000 meters and 11,000 meters of drilling at Monster Lake. The Nettingen program prioritized the extension of the deposit at depth. Nilligan's mineral resources estimate was updated earlier this year, which indicated ounces increased to 3.1 million ounces with an average grade of 0.95 gram per ton and an additional 5.2 million ounces in infers at similar grades. We plan to have assay results from this program later in the year as we work to grow Nilligan, targeting over 10 million ounces, making it among the largest undelivered gold project in Canada. With that, I will pass it back to Bruno.

Thank you, Bruno. So thank you all. There is no question we have to be exceptionally diligent at our operations to ensure cost management, containment management, particularly during a rising gold price environment to ensure the margin expansion is protected. Looking beyond this, It is a very exciting time for A&Go. We are now completely exposed to the gold price with the conclusion of our prepays. We are expecting a strong second half of the year, and our go-to-go project is performing very well with significant value growth opportunity ahead. So thank you for your support. With that, I would like to pass the call back to the operator for the Q&A. Operator?

Thank you. We will now begin the question and answer session. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. Our first question comes from Anita Soni with CIBC World Markets. Please go ahead.

Hi, good morning, Renaud and team. A couple of questions. Just firstly on the cost increase at Cote, could you just give us an idea of what the – I think you mentioned that the amount of material moved would be around 11 to 12 million tons per quarter for the back half of this year. Could you just give a breakdown of what the strip ratio would be for those two quarters? I'm sorry if you've already said it. I'm just on two competing calls right now.

On the strip ratio, we should be slightly below, I guess, the H1. But the most important thing is when you look at the rehandling, so it's not just rehandling that has to do with moving the great mine to the mill. So we talk about a lot about the aggregate plan and the support from contractors. So that also encouraged some rehandling around this, but all in all, yes, we had about over 2 million tons of total move above the total mine. So this is all those movements. So what I like about this, at least in the short term, is it does, as I said, it does bring some uplifting grade at the mill and so forth. So obviously the benefits offset largely. Why not in the long run? We talked largely about it. In the long run, we see more direct fees, we see bulk mining, we see the ability, you know, to reduce on rehandling while continue to separate at the source and the pit, you know, the lower grade from there. So, Bruno, you have maybe more detail on this.

Good morning, Anita. So, we're going to have a stripping ratio closer to 2.5 in the second half, which is quite like similar to what we had in H1. As Renaud mentioned, the reending is due to be reduced as we transition toward a direct ore feed strategy that will be coupled with the installation of the secondary cone crusher or the second cone crusher. So we expect a sharp decline in re-handling for that activity after the installation of the cone crusher.

What I can add maybe to this is we have roughly 2 million tons of ore stockpile, you know, what we call the NGO, which as Bruno mentioned, by processing it, you know, we had the positive reconciliation on it. So that brings what I would call the project today pretty bang on. So we're very, very pleased with that. And, but eventually it's a strategy to continue to deplete. So you'll reach the point where you wouldn't have, you know, all those stockpiles to play with. So the mine will continue to ramp up, reach a point where The excess or tons in a lower grade will be stockpiled for the long run and the direct fees. So this is really the strategy. So we're not there yet, but we're advancing well and we're facing the fifth and so forth. So it's a matter of time, but for the time being, the rehandling while adding costs actually adds quite a bit of revenue as well.

Okay. And then a second question on the processing. So I noticed you had a pretty good drop in the processing unit costs. How does that evolve with the two shutdowns? You've got a maintenance shutdown in Q3 and then also the tie-in that we knew about in Q4. So do you expect the processing costs to go up temporarily and then in 2026 could be at the cost that you delivered in Q2 or lower?

Not necessarily for the exact same reason you just mentioned. So that's the reason why we decided to maintain external support. We got some tie-in to do. We don't can speak about that. There was quite a bit of work around the crushers as well and safety first and all that. So we decided to maintain. So now we, that's the reason why we adjusted the 150 because you could argue that the re-handling, extra re-handling in the short term, all those extra mailing costs, yeah, some also rent and maintenance power as well, you know, to help. So all that in the short term, which kind of a $4 or $5, you know, on a combined basis. So basically explain the 150. So we've got to maintain this in place, making sure we maximize the throughput once the second colony is installed. And that whole dynamic would change as we move forward. Renaud, any additional comments?

So we have our annual shutdown in August, the 5-day shutdown. So we're going to be, again, we just want to remain prudent. It's the first year of operation. They will be training. We're going to be doing it the safe way. And after that, in Q4, with the installation of the concussion, we're trying to strategize as to not to interrupt the mill too much. But there will be some interruption to make all the tie-ins and everything. All in all, we are very confident that we're going to be producing as expected within the production guidance, but we need some support to complete those two activities. The activity of installing the second cone crusher is an activity that will bring us to a position where we will see after that a decline in the milling cost, and also in the mining cost because you will have a reduction in the year-ending.

Maybe the last comment on this is I know we talked about costs and I know it's, you know, it's all about this industry to remain very disciplined and so forth. So again, we see those additional costs kind of temporary, you know, and not really. But what I like about our cost structure, even though we're just in the first year, if you look at our targeted, you know, cost for the mine, cost for the year, $3.50, target is eventually towards the $3.00. So we're not that, that far. You still have about a 30 cents, you know, build in and rehandling, which will reduce all your mining processes would continue to improve. So you're not that far. You're like barely 10%, you know, of improvement down the road to get to your objective. And we're going to get there. And we're now mining at the 12 million tons run rate. So that's the 48 and continue to improve. So we're very confident on the mining side. Reconciliation works well and so forth. On the milling side, if you could break down basically line by line, there is one line that really outstands the other, and it's the contractor, use of external services to continue to support. That is the one line. On its own, consider about $4 to $5. So as we move forward, this is the line we target. It's not like all the cost structure is under control. Actually, it works extremely well. All the variables, consumption versus cost. So if you would say an ultimate target of 1050, the difference in between is basically we achieved something like 1480 in June as a milling cost. So we're very, very confident. We take the hit in the short term. We're going to continue to bring some additional value. But down the road, we're extremely confident in positioning the cost structure where we want.

And one final question, and apologies to my fellow analysts. My last question is with respect to the Gosselin integrated study. I think I was expecting it nearer to the end of this year or early next year, and I think you mentioned by the end of 2026. Is that a That change, I think you mentioned in the opening comments that COTE itself would sustain about 20 years of mine life. Is that just to give you more time to drill or was I wrong about that?

No, let's separate reserve from resources, right? So the plan is that we're going to extend our drilling to the end of the year, maybe even June. January. So for the reserve resource estimate, don't expect anything more than a kind of a depletion exercise at the end. We're going to complete, maximize our drilling up to probably January, then update our new resource base within that. From that new resource base, which we're targeting late Q1, maybe early Q2 for disclosure, this is a resource base where we're targeting to have, after the completion of the drilling, a 20 million ounces plus of measure indicated, which will form the base of the mine plan in the new reserve. And all this, the final, will be released in the latter part of 2026. But the resource will be earlier in the year.

Okay. Thanks for clearing that up. That's it for my questions.

Thank you.

Our next question comes from Matthew Murphy with VMO. Please go ahead.

Hi. Just a few more questions on Cote. How's the HPGR holding up at this point? Are there any risks? You know, when you do this maintenance, it's a chance to take a look at how wear rates have been and so on, or do you already have a good grasp of how it's faring?

So I'm sure Bruno, I see a little smile because Bruno and I would definitely see this like on a very, very glass half full and not half empty. It is true, you know, that as we mentioned earlier in the other day, the abrasive sniff and so forth may look like, you know, we're going to achieve maybe less hour on the tires, but the performance of the machine is extraordinary. And to a point that when we feed the wet, we're capable to to process and crush more with HPGR, and we can actually extract. We're still using external for longer, but the machine is operating very well.

Yes. Mathieu, this is Bruno. What we see is we see a very good performance from the tires, although they are wearing fast due to the abrasiveness of the air. But we see performance exceeding very often like beyond 40 000 tons per day so it's not a matter of daily performance i think the the team is managing those roles better they understand now the behaviors of of the equipment right now what we're doing is we're going to be uh ultimately replacing those tires with a new generation which will have longer studs we hope that is going to increase the longevity so it's more like a longevity issue than performance issue and we will be after that another generation of tires with a larger diameter of the studs so all in all we we believe that the HPGR actually is a piece of equipment that is bringing a lot of value for Cote. The team has been trained and educated as how to operate the HPGR. It works well. Right now, it's just like we need to change those tires more often than is firstly expected, but the goal is to get there eventually.

Having said that, two things that it's important. With the addition of the second cone crusher, we should be in a position to restabilize even further, crushing a little finer, feeding the HPGR more in its sweet zone, sweet spot zone. So we might see a reverse back to better life, But how are we going to bypass all this? We're not so concerned as long as it doesn't bring, you know, additional downtime. So as we mentioned, you know, this additional improvement on the repeat system will be allowing us, as we crush, to extract and repeat. And this is all going to be doing in-house. So we're going to adjust to that, but the performance of the machine is extraordinary.

Okay, that's great. And then I'm just trying to understand some of these temporary costs. Sounds like a pretty abrupt drop off in extra costs once you get this secondary additional pressure up and running. Are there any sort of temporary costs that you see persisting into 2026?

I like to say that it is absolutely possible that all in all, if you would compare like a sag milling operation, let's say with an HPGR, you might have to face a little higher maintenance costs of replacement of your web part. But as we mentioned, this would probably be offset anyway by additional benefits brought to you. That is the only thing. On the website, there is absolutely nothing that I see remaining. Once you're positioned to extract and refeed internally from your course and your fund, you'll take care of that. We have a lot of additional extraordinary costs, you know, of repair, you know, extraordinary repair, which we've seen super, you know, like much, much, much better now in civilizations and so forth. So a lot will disappear, but it could be possible that $10 a ton, as normally happens, pretend mail an asset like that should be doing. Could be a little shy, but other than that, I'm pretty confident.

Okay, thank you.

The next question comes from Steven Green with TD Securities. Please go ahead.

Good morning, everybody. Just a quick one on the new agreement at ESSA-CAN, the new framework deal with the government. Obviously, good to have the better certainty on the cash flows. Is this something that you were seeking or is this something the government was looking to do in terms of the new agreement?

I'll pass it to Martin.

Good morning, Steve. If so, the government wants to have a maximum dividend and on goal wants to make sure that we have an efficient structure to be able to move excess cash out of the country. And basically by declaring the full distributable profit from the past allowed us to pay that maximum dividend to the government. So we achieved their objective. And now what OnGold has is instead of waiting and only being able to pay dividends during the third quarter every year, we have this intercompany loan structure where as ISACAN generates free cash flow in the next period, we can repay that loan using that free cash flow. And ISACAN paid a lot of taxes and other working capital amounts in Q2, but now going forward, we expect ISACAN to continue to produce good cash flows, and that is then available for us. So we achieve both benefits and we work well with the government on this.

Okay, thanks. And is there a stability agreement associated with this?

So the government is a 15% shareholder. So these things are done in board meetings as shareholders. So it's not that there's a specific agreement, but there is, of course, agreements with SACAD. for these type of instruments, and the government had to agree to these things as a shareholder.

Okay, great. And I guess just larger picture, with this in place, with this new agreement in place, is there potential for ESSA-CAN to be something that you would look to divest at some point, just given your focus on Canada and Cote now?

I would say at this stage, all eyes is on the focus of cash flow and debt repayments. So this is a very good cash flow. Strategically, as we move forward, we continue to believe that if a county is capable, you know, to bring, you know, good ounces cash flow and an opportunity, you know, to further reward our shareholders down the road. And this is what we see. I mean, we reached a point with 800,000 ounces attributed all we have expectations to pay down quite a bit of our debt this year and next year. So we could be in a position where we're mid next year. And if you would have this excess cash available, you would also be in a possibility to increase the reward to show. So it's very strategic as we move forward, but we're extremely pleased now. And with this vehicle in place, we'll be capable to have more predictable and so forth. Down the road, we continue to monitor the situation. Okay, that's helpful.

Thanks a lot.

Our next question comes from Tanya Jakuskonek with Scotiabank. Please go ahead.

Good morning, everybody. Thank you for taking my three questions. A lot of them have been answered, but just some follow-ups on some of the ones that were asked. So just finishing off on ESSECAN, if I could, Renaud, how do you see the mine life there? We've got this higher gold price. So I'm just thinking about as we get to year-end, your reserve pricing and resource pricing and how does ESSECAN look in terms of extending beyond that, the technical study that you filed?

So let's start first by looking a bit of the regulation attached to this. So it is a bit of understanding, you know, that Renewal of permit down the road could be for a period of five years. So let's see now we're focusing on looking beyond 28 up to 30, 2033. So it looks extremely well. So like if we want it to stay and develop and increase the life of mine and invest to extend, we're pretty confident we could easily bridge the first five years extension. Beyond that, This is not our focus at this stage. But yeah, if you increase the growth price a bit, if you look at a Sakane as you would accept that it's more $2,000, $2,100 an ounce, extended life of mine and so forth, there is a lot of additional value and we're more than confident we could expand for an additional five billion.

Okay. So I should be thinking probably 2033 as sort of what you're targeting for.

Yeah, so now we have a 43-101. So it would imply, of course, successful conversations with the government. We would not obviously be inclined, you know, to inject, you know. Inject capital is a big word because the mine is free cash flowing and would probably pay for its own investment. But the point is before you engage in such a thing, you know, you would like to have certainty, you know, on permit extension and so forth now in 26th. and then the expansion and so forth and refiling up. So that's one scenario over the current scenario of 28. But yes, definitely at this rising gold price, without using at all, maintaining a significant margin around the 2,000, 2,100 kind of reserve, you would expand quite easily.

Okay. And then if I can just come back to Kote. So as I'm thinking about getting these costs stabilized, you know, you mentioned that you're, you know, 30 cents or thereaboutish, you know, 50 cents on the mining cost per ton to get to $3. I mean, as you get rid of this rehandling, which when do you think that will be? Like, is that like this year or like is that into next year we're going to finish the rehandling? I'm trying to understand when I can get this money down.

Again, there would always be a little bit of rehandling. From the moment, you might more than the mailing, but not to the extent of what we see. Again, a big portion of the rehandling as well takes place at the aggregate plan or around. You know, you move the ore quite a few times. So that's one thing. So it's more at 26. I think we feel strong that we probably can exit on an average of about 350. And as we continue, I see about Half of it is about rehandling and half of it is about just continuing improvement, volume, bigger denominator type of to bring us to the $3 eventually. So it's more $2,600. Okay.

And then on the processing side, once we eliminate these contractors and these other, you know, get this more stabilized and get the secondary crusher in, are we looking at this $12 a ton also like in the second half of next year? I'm just trying to understand when the mine... I would like it earlier than that.

I would like it earlier than that, but we'll be commissioning. It should be straightforward commissioning of the second cone. At that point, we would have already improved the in-house or refeed system on the fine side, maybe a little bit of improvement on the feeding system on the coarse side. But yes, technically you'll be in a position already in Q1 next year to see a reduction of those costs, but it could go to the mid-year, you know, where you would stabilize there. In the long run, we would continue to improve beyond the 12, but I think it's a fair call by mid-next year we should stabilize there.

Okay. So hopefully mid-next year mining and processing where you are or close to where you want to be and we'll move forward from that. Would that be a fair comment?

Yep.

Okay. That's helpful. Thank you. And then finally, my final question. Thank you for your question. My final question is on the, you know, when we talked about improvement in the second half, I'm just trying to understand, you have the same number of tons, you know, mined, you know, for Estacan in Q3, Q4, and similar grades, but you have that maintenance downtime in August, and then you have the secondary crusher going in. Should I be thinking that the quarters would be evenly distributed? I just don't know how long you think the secondary crusher is going to take to install. So should I be thinking Q3, you know, a little bit better than Q4? I'm just trying to understand how Cote looks for the next few quarters.

Yeah, a little bit the same, I guess. Like Bruno mentioned, like this quarter, we had a plan shut down and all, then Q4 is a tie-in. will be capable to reduce those by using some. So I would say Cote Gold is probably more a kind of lookalike Q3, Q4, strong boat. And as I kind of know, you're probably expecting Q4 a little higher.

Yeah. The maintenance, as I can remember, we have a 24-hour maintenance on line A and a 16-hour maintenance on line B. So the impact is going to be somehow large.

Okay. Okay, no, no, that's fair enough. So really, it's Esakane that has a stronger Q4, and there's Westwood as well with the grade. I'm just trying to see if that quarter, over-quarter improvement Q3, Q4 still stands.

No, you're absolutely right. You can take the view that Esakane and Westwood will have a stronger Q4 than Q3, and Cote should be about more or less the same.

And Westwood as well, more or less the same?

No, Westwood, and just like at Sakana, should have a stronger Q4 as you continue to improve on the grid.

Okay, so quarter-on-quarter improvement still. Okay, well, that's very helpful. Good luck with getting all of the secondary crusher in as well for Cote. That would be great to see.

Working on it. Thank you. Thank you.

The next question comes from Mohamed Sidibe with National Bank Financial. Please go ahead.

Good morning, Renaud and Tim, and thanks for taking my question. So maybe just on the second half expected at Ethicane, just wanted to know if you could provide us with a little bit more color on some of the grades you're expecting out of Phase 7, or should we also anticipate a little bit more increase of throughput in the second half versus the first year? Thank you.

Bruno? Yes. Good morning, Moana. You know, I used to be the GM at SACAM and it's not necessarily the first time that we see lower grade material at the upper benches of a new phase, so it's not new. So what we expect in the second half is that as we dig deeper, we're going to enjoy higher grade material and post subsequent to this water. This is what we see and we expect grades to pick up and to increase and also the reconciliation to be positive after a month in. So our plans are somewhat conservative, but we are anticipating still a stronger H2O.

Thanks, Bruno. And then the second question would just be on the taxes paid and the increased guidance there. Could you give us maybe some call on the cadence that we can expect for Q3, Q4? I know it's impacted by the dividend declaration as it came, but should we expect Q3 to be higher versus Q4 or how should we look at that? Thank you.

Good morning, Mohamed. So in Q3 or in July, we actually paid the withholding taxes on the dividend. That was just over $40 million. And then the rest of the tax payment should be equal over the rest of the quarter.

Great. Thanks for my question. The rest I'll be an answer. Thank you.

This concludes the time allocated for questions on today's call. I will now hand the call back over to Graham Jennings for closing remarks.

Thank you very much, operator, and thanks to everyone for joining us in this morning. As always, should you have any additional 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.