IAMGOLD Corporation (IAG) Q3 2012 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to IAMGOLD Corporation's third quarter financial results conference call. [Operator Instructions] I would like to remind everyone that this conference call is being recorded on Wednesday, November 14, at 8:30 a.m., Eastern Daylight Time. I would now like to turn the call over to Mr. Bob Tait, vice president, investor relations. Please go ahead, sir.

Thank you, operator. Welcome to IAMGOLD's third quarter conference call. On Tuesday, November 13, we announced our financial results for the third quarter of 2012 which, along with the accompanying financial statements, notes, and MD&A, can be found on our website at www.iamgold.com. Joining me on the conference call today are Steve Letwin, president and CEO of IAMGOLD; Carol Banducci, executive vice president and CFO; Gord Stothart, executive vice president and chief operating officer; Craig MacDougall, senior vice president, exploration; and Jeff Snow, senior vice president and legal counsel. Our remarks today will include forward-looking statements. I'll refer you to the cautionary language regarding forward-looking information and our disclosure documents, and advise you that the same language applies to our remarks during the call. We have prepared slides which can be viewed via our website and this call, as the operator said, is being recorded for playback purposes. I'll now turn the call over to our president and CEO, Steve Letwin.

Good morning. The one thing our results tell us this morning is that moving a higher percentage of our gold portfolio to the owner-operator model was the right thing to do. As all of you have seen, the mines we own and operate account for about 85% of our production now. They’re performing well, and have reached three-quarters of the 2012 production target. Year to date cash costs were in line with our expectations at $627 an ounce, and we’re 46% lower than our joint venture operations. Performance at the mines where we are not the owner-operator, for example Sadiola and Yatela, have been disappointing. As a result, consolidated production for the year is likely to be at the lower end of our guidance. Cash costs are expected to be within plus or minus 3% of the high end. So I’m not happy about that. Not a lot right now we can do about it. We don’t operate these mines, as you know, and we continue to have discussions with our partner to see if we can improve the performance. And as most of you know, in a joint venture operation you operate with the information you’re given, and do the best you can to manage it from there. Going forward, even at the mines we do own and operate, we will be moving into harder ore, and there will be challenges, but they will be within our control. And we have to manage the transition expeditiously and cost-effectively, and I feel very confident that we have the team in place, with the leadership of Gord Stothart, to do so. At a consolidated level, adjusted earnings per share were $0.16, with the year over year decline due mainly to lower gold sales. We’re going to take a look at this going into the last quarter and make sure our gold pours are in line with our calendar. These gold sales were down due to lower production in gold produced late in the quarter that wasn’t sold until October. And the delayed shipments alone cost us about $0.04 a share. On slide five, turning to some of the highlights, the highlight for us has been our acquisition of Cote Gold, and I think it’s a highlight for sure for our investors. It’s been a challenge to get people to brush aside some of the preconceived notions about Cote, and form opinions based on what we believe are very hard-earned facts. Our positive resource update and tour of the site helped to recast the project in a more positive light. I think we’ve opened a lot of eyes. We’ve got some more work to do. The prefeasibility study is underway, and we look forward to keeping you up to date on this promising project. On Quimsacocha, we’re in the process of disposing of our interest in this project to INV Metals in the exchange for 221 million common shares of INV. But we will retain a 47% equity stake. With 1.7 million ounces of probable gold reserves, we look forward to participating in any upside potential once INV is able to advance this project. Negotiations with the government of Suriname and Burkina Faso with respect to our expansion plans have been a little slow. However, we have been making some good progress of late. The agreement on terms related to to the expansion of Suriname provides for an attractive power price to support incremental production. With a signed agreement, we can advance the concept study so as to better understand the expansion potential of the satellite resources. We’re targeting no later than year end for the signing of that agreement, and right now all I can tell you is that we’re working extremely hard to make sure that happens. In Burkina Faso, we received permits related to the Essakane expansion. Negotiations with the government on the fiscal terms had a favorable outcome, including a reduction of import duties on expansion related materials from 7.5% to 2.5%. In Mali, I just got a note that in fact we have signed the power purchase agreement, so we have completed negotiations with a few administrative details. I believe they have signed. We have yet to sign. That will be signed by Anglo on behalf of [Simos]. So our permits should enable us to connect to the national power grid and reduce power costs by 50%. That’s a critical item, as you know, for us, moving the Sadiola expansion project ahead. Having said that, the decision by the AngloGold board has not been forthcoming. So we have anticipated further delays in the sulfide project, and I have referenced that in our press release. And I’ll talk a little bit more to that going forward. With the expansion projects at Essakane and Sadiola slowing, getting off the ground, our timing assumptions have changed somewhat. And as a result, we are reducing our capex guidance for 2012 from the range of $840 million to a range of $750 million to $780 million. As you know, when we first came out in 2012 we were looking more at $880 million in total. So it’s down about $100 million from what we had initially thought. We are also reducing our capital expenditure forecast for 2013. We’re in the process of working through the math on this. It will be mainly due to the delayed approval of the Sadiola sulfide project. We still need to get Anglo on side, and we’re working away on that. But we are going to see, obviously, a delay to that particular project. And we are going to be looking at deferring the capital spending at Niobec. Rather than accelerate capital expenditure related to the expansion as we initially contemplated, the timing of capital is going to be more aligned with the advancement of permitting and the completion of the feasibility study. We simply don’t want to get ahead of our [skis] on this project. Given the very serious discipline and concern we have about capital, we want to make sure we’re hitting the milestones that are very necessary for proper execution of a project this size. So some good, creative work is being done in this project, and we’re very excited about the Niobec expansion. That hasn’t changed. But we’re going to be a little bit more timely about the deployment of capital until we have more information around the feasibility. So on that note, I’ll have Carol take you through our financial results. Carol?

Thanks, Steve. Turning to slide six, revenues in the third quarter were $387 million, compared to $432 million in the same quarter in 2011. The year over year decline was mainly due to lower gold sales. As Steve mentioned, the lower volume of gold sales was the result of lower production and gold produced late in the quarter that was not sold until October. Turning to slide seven, adjusted net earnings were $60 million, or $0.16 a share, in the third quarter of 2012, compared to $112 million, or $0.30 a share, in the third quarter of 2011. These results exclude such items as gains or losses on commodity and foreign exchange contracts and gains on the sale of marketable securities. The year over year decline reflects lower gold sales and higher exploration spending, partially offset by lower mining costs and taxes. On operating cash flow, excluding changes in working capital, operating cash flow was $114 million in the third quarter or $0.30 a share compared to $174 million or $0.46 a share, in the same quarter of 2011. And the year over year decline was attributed to the lower gold sales. Turning to slide nine, attributable gold production in the third quarter was 205,000 ounces, compared to 222,000 ounces from continuing operations in the same period last year. Two-thirds of the production decline was due to lower recoveries and the processing of lower-grade ore at Essakane as well as lower throughput and grades at Sadiola. The rest was due to the unavailability of the plant at Mouska as we refurbished the Westwood Mill. In terms of total cash costs, where we include royalties, they were $710 an ounce in the third quarter compared to $674 an ounce for continued operations in the third quarter of 2011. Comparing year over year cash cost per ounce for IAMGOLD owned and operated mines, cash costs were $644 an ounce in the third quarter of 2012, up from $602 an ounce in the third quarter of 2011. An increase in the proportion of hard rock process at Rosebel drove up power costs, and labor costs were up due to an increase in tonnage mines and wage increases in line with inflation. And at Essakane, the increasing cash costs reflect the lower production due to lower grades, along with a higher strip ratio. On gold margin, with cash costs higher and gold prices virtually flat, the gold margin was $960 an ounce compared to $1001 an ounce in the third quarter of 2011. Turning to Niobium, on slide 12, revenue from Niobec was $1.2 million in the third quarter, up 13% from the third quarter of 2011, a 20% increase in sales volume, combined with a higher Niobium price, was behind the growth in revenue. It should be noted, however, that the timing of shipments was delayed in Q3 2011 due to production late in the quarter. Operating margin was at $16 a kilogram, which was up from $14 a kilogram last year, due to higher Niobium prices, again partially offset by higher labor costs and lower grades. We had very strong liquidity. With the recent success of our $650 million debt issuance, we increased our financial capacity substantially. Together with our unutilized credit facilities, cash and cash equivalents, and gold bullion, we had $1.9 billion in liquidity. Now, with that, I’ll turn it over to Gord for a closer look at our operations and an update on our development projects.

Thanks, Carol. Good morning everyone. At Rosebel, slide 14, attributable gold production was 95,000 ounces, compared to 94,000 ounces in both the previous and prior year period. Our focus at Rosebel has been on increasing the capacity to treat hard ore. With the expansion of the gravity circuit near completion, the recovery rate has continued to improve, climbing from 94% in the first quarter to 96% in the second, and in the third quarter, we actually reached 97%. Higher recoveries were partially offset by lower throughput, which was down year over year, although up from the second quarter. Throughput is improved during 2012, with the installation of the precrusher and the larger pebble crusher, and will further benefit from the completed installation of the third ball mill early in 2013. At that time, we expect to have completed the feasibility study, which will give us more design detail around the optimization project. Cash costs of $689 an ounce in the quarter were higher than in the same quarter of 2011. This was mainly due to higher power, fuel, and labor costs associated with an increase in tonnage mined and a higher proportion of hard rock. At Essakane, we produced 77,000 [attributable] ounces in the third quarter, down from 86,000 ounces in the same period in 2011. While the tonnage of ore milled was 33% higher than in the previous year, lower recoveries and the processing of lower grade ore were behind the lower production. Cash costs continue to be impacted by lower grades and a higher strip ratio. The plant expansion to double hard rock processing, which started in July, continues, with completion expected by the end of 2013, and commissioning at the beginning of 2014. As Steve mentioned, negotiations with the government on the fiscal terms took longer than anticipated, so a portion of our capital spending intended for 2012 will be pushed forward into 2013. Essakane remains a solid and well-run operation. We continue to focus on improving productivity, and we signed a labor contract last quarter providing for a 5% increase over each of the next three years. Looking at slide 16, at Sadiola, our joint venture operation at Sadiola has been an underperformer. Lower throughput and lower grades caused production to slip, with little chance of catch up by the end of the year. At 26,000 attributable ounces for the third quarter, production was down 4,000 ounces from the third quarter of 2011. Compared to the second quarter, gold production increased slightly, as lower throughput was partially offset by a significant improvement in recoveries. Recoveries climbed from 84% in the second quarter to 94% in the third, reflecting a move from sulfide ores to oxide ores and enhancements to the gravity circuit. While we can’t advance the sulfides expansion project without formal approval from Anglo’s board, we’re ready to begin prestripping the main pit to access the underlying sulfides beginning in 2013. We’ve revisited our timing assumptions for Sadiola, and will push some of the planned expenditures for 2012 into 2013. At Niobec, throughput was up 7% from both the same quarter in 2011 and the previous quarter. With lower grades, however, production in the third quarter remained unchanged from both periods. We continue to target the completion of the expansion feasibility study by the third quarter of 2013, and to complete permitting in 2014. At Westwood, we’re in the home stretch as we prepare to transition from a development project to an operating mine in the first quarter of 2013. From a project management perspective, the development team has done an outstanding job keeping the project on track. Since development began in early 2008, there’s been no slippage in the timeline. At quarter end, shaft sinking had less than 140 meters to go to reach our year-end target of 1954 meters. The [paced] backfill plant, and the plant refurbishment will be completed before year end. The new wastewater treatment plant is operational, and the sewage and potable water network is complete. Lastly, the union membership ratified a six-year contract with an effective date retroactive from December 1, 2011. Production will begin in the first quarter of next year, although the initial ramp up will be slower than expected. Craig will now provide an update on exploration.

Thanks, Gord. Throughout the year, near mine exploration and development work continued, and we’ve also been active on some 15 greenfields projects. Exploration expenditures in the third quarter were $44 million, up 61% from the third quarter of 2011. Near Essakane, we continue with our aggressive program to delineate potential resources at the nearby Falagountou south deposit and on other priority satellite targets including the Gossey - Korizena trend. The initial results from drilling on the northern extension of the main pit confirm extensions of the targeted mineralization, and are being assessed for their potential to add to the existing resources. While infill drilling within the satellite Falagountou deposit has been restricted by extensive artisanal workings, we completed the drilling to test for extensions southeast of the deposit. As the results are received, they are being evaluated for the potential impact on the resources of that deposit. Near Rosebel, we completed 34,000 meters of drilling, mainly at the Mayo, Koolhoven, and Pay Caro deposits. We are incorporating those results into our updated resource models as they are received, and we’ll reflect these in our year end mineral reserves and resources update. We recently announced encouraging results from our diamond drill program at our 100% owned Boto project in Senegal. Assay results from 44 holes drilled during the first six months of this year demonstrate good grades and confirm the continuity of several of the zones. Drilling will resume as soon as access improves following the wet season. Drilling activity also continues at the Kalana project in Mali, and significant progress has been made to reduce the assay backlog. Results are being incorporated into our geological models, in advance of the year end resource estimate update. At Westwood, infill delineation resource expansion drilling continues to increase our confidence in the reserves and resources and demonstrate extensions to the mineralization for further exploration. And finally, at the Cote gold project, delineation drilling is progressing well, together with geotechnical studies and metallurgical test work, which will support the commencement of the prefeasibility study beginning this quarter. All validated drill results on hand as of October 1 will be included in our year end reserve and resource update. As with our update of October 4, we continue to target the conversion of a significant portion of the inferred resource to the indicated category. I’ll now turn you back to Steve to wrap up.

Thanks, Craig. So on this last slide, we show our updated production forecast. So we’re in front of you a lot earlier than normal. And I think, again, this is a result of us being a lot more efficient and more real-time in getting a better handle on our operations. As a result of the revised capital expenditure forecast for the gold business, we do continue to see poor performance at Sadiola. We also see a slower ramp up in production at Westwood. We’re going to commence our production at Westwood in the first quarter of 2013, but we have revised our 2013 production forecast, and I’m sure Gord talked to that. So for 2013, gold production is expected to range between 875,000 and 950,000 ounces. In terms of our outlook for gold prices next year, we remain bullish and are assuming a $1,700 gold price. As I said at the outset, our owned and operated mines are outperforming our joint venture operations, so we’re going to keep moving in that direction, leveraging our in-house development and operating expertise as much as we can and managing our capital spending prudently. We have the capital available to fund a robust portfolio of projects, from expansion projects in all of our operating regions, to Westwood, to Cote gold. Within five years, we expect to reach 1.4-1.6 million ounces and nearly double our current level of production. Now let’s open it up for questions.

[Operator instructions.] Our final question comes from Paolo Lostritto. Please go ahead.

Just maybe a little bit more clarity in terms of how things are going over at Westwood, recognizing that it’s taking a little bit longer for the ramp up. Can you give us a bit more color as to why?

We’re going to get into production, as we said, in the first quarter of 2013, which was where we said we wanted to be. The issue with the ramp up really is around the amount of development we’ve been able to complete this year and right at the end of last year. We were hampered somewhat by the incident we had late in 2011 with the Doyon shaft, which impacted our ability to hoist waste this year, and also impacted our ventilation circuit. Productivity on the development side has been acceptable, we just haven’t had the same number of crews working that we had hoped to have working. We’re looking to address that shortly. We’ve just broken the ramp through from surface all the way down to the 84 level, which will allow us to do some haulage up the ramp, and also help us with our ventilation circuits. So we’re going to strive to ramp up a little more quickly, but we wanted to put a reasonable estimate out there for next year.

Our next question comes from Don MacLean. Please go ahead.

Just to follow up on that Gord, can you just talk a bit about the delta that we’re going to see in 2013-2014, how the ramp up will profile?

Right now we’re still working through our plans for next year. We have some preliminary estimates. We were actually just at site here the last couple days, and going through the plans with the site. But I’m just going to sort of hold off on the site by site guidance until later in the year when we get our budgets approved.

Can you maybe then just refresh us on what the expectations were?

Yeah. The guidance we had for next year was 120-140 at Westwood, and a further 60 from Mouska, or 50-70 from Mouska. The Mouska is still holding pretty well, but certainly the Westwood is off a significant amount.

Gord, maybe you could clarify Don’s question, because he’s asking beyond 2013. You’re just talking to 2013 right now.

Oh yeah, 2013. Beyond 2013, when we get into 2014 and going forward, we’re still at the same rates. And we’re still targeting sort of the same annual production rate once we’re at full production. Ramp up sort of through to the end of 2015, and then we’re into full production rates.

Okay, so there’s nothing that has changed in terms of the longer term outlook for either production or cost?

Yeah, it’s a 2013 effect, a wrap up at that point in time. We continue to confirm the reserves and resources. We’ll certainly have some additional ounces that will move into the reserve category here at year end. It’s a short term thing, and we certainly have the commitment of the site to really focus on the development here next year and pull ourselves forward.

And then can you just talk a bit about the timing of getting into the much harder rock at Essakane, and that blend of soft oxide, hard, what the profile we’re looking at for that is now?

We’re actually treating a bit of hard rock right now, not a lot of it. The real onset of hard rock we’re going to start to see toward the second half of next year. Within the schedule for the development project there’s pebble crushing and precrushing, and the power plant to go with them, that are actually staged a little bit ahead of the full expansion. So that will allow us at the end of the year next year before the full plant is even in place to start to ramp up the hard rock proportion. When we get into 2014 and going forward from there, the hard rock goes up very, very drastically, to over 80% I believe, in 2014 and forward.

And the experience with the hardness of the rock has not changed? There’s no change in profile for that?

Yeah, we certainly are continuing to look at it. We’re not moving off our conservative stance right now. My personal expectation is like all of our sites, once they get into it and start to work with it, I think we’re probably designed a little on the conservative side. But until we see sufficient amounts of hard rock going through, and we’re comfortable with what we’re seeing… And also, understand the variability within the hard rock itself. Not all of it’s going to be exactly the same. I think right now the numbers we’re putting forward are appropriately prudent. As we get into numbers, and obviously for the budget next year, after we’ve had some experience with hard rock, I think we’ll be able to refine those numbers a little bit better.

[Operator instructions.] Our next question comes from David Haughton. Please go ahead.

One of the things that I was looking at was a discussion on the timeline, and the permitting sequence for Niobec. You mentioned that that was one of the reasons that you wanted to resequence some of your capex. Can you just talk us through what you’re seeing there for that timeline?

Our confidence in Niobec remains extremely high, and we continue to talk to people about participating in the expansion. This decision was really driven by me. We are going to continue to derisk the project, but I simply don’t want to get out in front of our [skis] with respect to the spending of capital until a) we get closer to the feasibility study completion, where we’ll have a better idea of how the project works. And we’re seeing some good, creative thinking around reducing overall capital at Niobec, and we’re also seeing challenges. So at the same time, it’s one of those things where more information is better. So we’re going to continue to permit the project. We’re going to continue to put all of our efforts into making sure that we can move forward. But we are going to slow it up relative to our initial forecast, just to make sure that we have as much relevant information as we can before we move it forward. It’s really as simple as that.

That’s pretty prudent given the circumstances. When would you expect the feasibility to come out, and when would you think we would see that?

Right now we’re targeting third quarter next year. So that’s when we hope to have it complete. And then the permitting, of course, fairly soon after that. But great work is being done by [Gil Frelat] and his team at Niobec. We’re making very, very good progress with all the regulatory bodies and governments. We’re seeing a pretty solid niobium price that’s holding pretty firm. We’re continuing to see some very solid interest from steel companies around the world. But you know what the world environment is like right now. It’s pretty tentative. And my experience has been move ahead cautiously, be prudent. We have $1.3 billion in cash. We have a very, very strong balance sheet. But for our size of company, I just want to make sure that we take it one step at a time and don’t get too far out in front of this ourselves with respect to capital deployment at Niobec. We made a commitment to our gold shareholders, because we are a gold company, that we’re going to be very prudent, make sure we use niobium cash flow to fund the expansion and keep it basically self-funded. And we’re going to keep that commitment. So that’s where we’re at right now.

And that feasibility study is just looking at the ferroniobium portion of the business. It’s not going to include the REE?

That’s correct.

Just switching back to Sadiola, it sounds that AngloGold’s pretty lukewarm on it, listening to their conference call just late last week. It’s not really at the top of their priority list. Obviously you’ve got a different kind of perspective on that. How are your discussions going with the company to move them to your way of thinking?

Well, I wouldn’t say they’re lukewarm about the project economics, but they just lost $250 million in cash flow and cut their dividend by 50%. So I think, being respectful, they have other things to be concerned about than Sadiola. So it’s a well-run company. I have a lot of respect for the leadership there. When you run into situations like Anglo has - and I feel for them, with the strikes in South Africa - you turn your attention to other things. So it’s not abnormal to see them reposition themselves. That hasn’t changed our intention to try and move Sadiola forward. It’s a wonderfully attractive economic project. It’s got a 19-20% after-tax IRR for us. We are the ones who designed the expansion as you know. It really was the beginning of IAMGOLD, that mine, as part of our history. So we would like to see it move ahead. We anticipate that we’ll sign the PPA here very shortly, now that the Mali is on side, and we’ll have to sit down with the Anglo team and figure out a way forward. Because that mine, as I said, has very attractive features to it in terms of the expansion. But I don’t know, Gord, if you want to add anything to that?

No, I think that sort of covers it. We’re continuing to talk with the leadership group there, and find the path forward. We’re eager to get this project in play. It adds a lot of value to our bottom line.

Our next question is from Alex Kodatsky. Please go ahead.

Just had a couple of questions. Maybe coming back to Sadiola first, I guess you’re sort of sensing that there will be a bit of a delay there. With capex coming back, is there any sort of initial perspective on what that delay will be in terms of timing? Or have you thought that far through? It’s obviously impacting 2013 guidance. I’m just curious what your initial thoughts are.

When I joined the company in November 2010, we were one month away from having the project approved by the combined board. So it’s two years later and we still haven’t had that approval. And a lot of that, unfortunately, is tied to the fact that Mali has been their own worst enemy with respect to making that happen, with the coup and the uncertainty. We’ve been there 17 years. We’ve never had a day of production lost to political instability. We’re very comfortable with our position in Mali. We had upwards of $300 million allocated for this expansion, and we’re simply not going to move ahead and deploy capital without certainty. And as most of you know, my philosophy is we were committed to deliver high rate of return projects. This is one of them. But until we have all the “I”s dotted and “T”s crossed, we’re simply not going to do that. So for 2013, we had allocated upwards of $130 million for Sadiola. Until we have certainty, we’re not going to be spending that money. And that obviously affects our capital profile and it also affects our production, which we’ve indicated. So we’re doing the best we can with what we have there, and again, we’re not driving the truck. And so it’s difficult for us to maybe move it as quickly as we would like it, but we also understand the situation that Anglo’s in. So we’ve got to work with that.

And I know you don’t want to get into a discussion on an asset by asset breakdown on 2013, but just trying to get an idea on how to think about the asset base there. With respect to the move in guidance, would you characterize it as almost solely due to Sadiola and Westwood, changes there? And just trying to get a sense for how we should think about Essakane and Rosebel.

Well, Essakane and Rosebel has held well. We always knew Essakane was going to have a big of a challenge in 2013 as we move to harder rock. Rosebel has been holding its own and will continue to do that. But when we look at where we thought we were going to be, I would say 70% of it is due to Sadiola and 30% of it’s due to Westwood. And so as we move forward, hopefully we’re able to recover the Sadiola portion sooner than we thought, and be able to do better than we anticipated. But it’s information we have in hand now about Sadiola, and it’s our responsibility to let you know that that’s not as robust as we had been initially indicated. So it’s something that we have to pass on, and I don’t like it any more than anybody else, and hopefully we can mitigate that, but right now that’s where we sit.

[Operator instructions.] Our next question comes from Anita Soni. Please go ahead.

Just to follow up on the split in terms of the production guidance revision, 70% and 30%, I guess the guidance revision comes down to about 125,000-150,000 ounces if you’re moving from 1.1 and 1 down to 875…

Just to correct you, Anita, we’re at about a million ounces is what we’ve been showing. So, rounded, we’re down about 100,000 ounces, basically from where we thought we were going to be.

Okay. So then the 70%, so that’s 70,000 ounces coming from Sadiola. What were you expecting from Sadiola in 2013?

Well, we’ve been running at around 150,000 ounces at Sadiola Yatela. And 130,000 to 150,000 ounces. And again, back when we put together our look for 2013, we were looking at trying to get equipment in place to do stripping earlier, as Gord said, and start moving production up, not seeing it fall down.

So then we’re looking more along the lines of a 60,000-70,000 ounce year at Sadiola for next year?

We basically reflected that in our outlook, and I think, again, without getting into huge amounts of detail, when you do the math, I would say generally speaking, that’s where the math is falling. And again, I think it’s something we have to work on and try and pull up, but we just weren’t seeing the kind of progress that we were hoping to see, and certainly in the performance of the mine, as you can see in the quarter. It’s just prudent to cut back on where we thought that mine would be performing. So that’s all we’ve done.

The mine doesn’t seem to be performing dramatically less this quarter than it has in the last two.

Yeah, well, if you’re sitting in our shoes, Anita, and you’re hearing back from your partner that it’s going to improve, and so on, that’s what you kind of react to, right?

So the next part, the Westwood startup, the revision downward there, obviously it’s going to start up in the first quarter, you’re maintaining that. But how do we think about the next three quarters after that? Should that be sort of a slow ramp up, like gradual? Or more back end loaded?

The first quarter will be a little bit slower. And you’ve got to remember, we’re running two ores through there. We’re running both Mouska and Westwood through there. We’re going to start both of them at the same time, and we probably, because we already have a large stockpile of Mouska ore sitting in front, just from a pure operational standpoint, the production will probably be a little bit more front-end loaded to Mouska and back end loaded to Westwood. The combined output, I think, is going to be relatively balanced over the three quarters.

And then my last question was with respect to the throughput level at Essakane in 2013. I’m not quite sure if I missed it, but did you indicate how much rock you would be processing next year?

No, we haven’t specified that yet.

Your next question comes from Patrick Chidley. Please go ahead.

I have a question just on Sadiola again. Would you go ahead with the expansion at Sadiola if AngloGold gave the go ahead today, say? Or are you equally worried about investing that much money in Mali? Is that really what’s driving it?

No, it has nothing to do with Mali. If Anglo was prepared to go ahead today, we’d move it ahead today. We would have moved it ahead yesterday. We’ve been wanting to move it ahead literally every day since I’ve joined. I understand the rationale, and we have a lot of respect for the Malians, but it hasn’t exactly been easy for companies to make decisions about projects of this size with what’s been going on. But for us, again, we’ve been there a long time, and we’re very comfortable with the country.

Clearly you’re happy with spending 40% there, but if you had 80%, if you had AngloGold’s stake, would you also be as willing to go ahead with it?

Yes.

And that was our last question. I’d now like to turn it back to Mr. Bob Tait for closing remarks.

Thank you very much for participating in the call. Obviously if you have further questions, send emails. I’ll be out of the office the rest of the week at a conference, but Laura’s in, and either of us will respond to emails if you have any follow up questions. Thank you for participating in the call today.