IAMGOLD Corporation (IAG) Q4 2012 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to IAMGOLD Corporation's 2012 Fourth Quarter and Year-End Financial Results Conference Call. [Operator Instructions] I would like to remind everyone that this conference call is being recorded on Thursday, February 21, 2013, at 8:30 a.m. Eastern Standard Time. I would now like to turn the call over to Mr. Bob Tait, Vice President, Investor Relations. Please go ahead, sir.

Thank you, Merrell. Welcome to IAMGOLD's conference call for the fourth quarter and full year 2012. Yesterday, we announced our 2012 reserve and resource update and our financial results for 2012, which, along with the company financial statements, notes and MD&A can be found on our website at iamgold.com. Joining me on the conference call today are Steve Letwin, President and CEO of IAMGOLD; Gord Stothart, Executive Vice President and Chief Operating Officer; Carol Banducci, Executive Vice President and Chief Financial Officer; Craig MacDougall, Senior Vice President of Exploration; and Jeff Snow, Senior Vice President and General Counsel. Our remarks today will include forward-looking statements. I'll refer you to the cautionary language in the documents -- the disclosure documents that we put out and advise you that the same cautionary language applies to our remarks during the call. We have prepared the slides, which can be viewed via our website. This call is being recorded for playback purposes and I'll now turn the call over to our President and Chief Executive Officer, Steve Letwin.

Thank you, Bob, and good morning, everybody. Thank you for calling in today. Despite all the headwinds facing the industry and there are many of them, we want to talk about our optimism about the industry and the company. The business of mining gold continues to be challenged as we know. We have the assets, the people and the funds to grow the company and more specifically, grow our return on capital employed. The focus of return on capital has been talked about by many people. At our company, it's been a focus for a long time and it continues to be our premier measure to evaluate any project. On Slide 4, we summarize 2012, which ended with strong production in the final quarter. Costs were higher than we targeted for the year as we transition into hard rock and saw further inflationary pressures. We had some successes in 2012 such as converting most of the inferred resources at Côté Gold to measured and indicated, and also in improving our liquidity with a long-term debt offering for $650 million at 6 3/4%. On Slide 5, we look at 2013 in terms of production, which is expected to increase from 2012 as we start up Westwood next month. As I've said at the outset, rising costs continue to be a challenge. The biggest change at our 2 largest mines is the transition from sort rock to hard rock. This is a development that we've been talking to investors about for some time and we did signal at the beginning of last year that the hard rock was proving to be harder than originally assumed. Magnitude of the cost increases did, however, surprise everyone, and Gord will speak to some specific initiatives at our operations to address rising costs. There are some events, however, that we expect to have less cost impact after 2013. For example, Westwood is just starting up next month. As is typical for the startup of an underground mine, we do not expect to reach full production for a few years. We're projecting 2015 to reach that point. So production is expected to increase and unit cost to decrease year-over-year in both 2014 and 2015. Also in 2013, we'll be winding down the Mouska mine, as Westwood ramps up, and the Yatela mine in Mali, which is reaching the end of its productive life. The higher cost for these 2 mines in 2013 are not expected to continue through 2014. A further issue affecting cost at Rosebel and Essakane are lowered grades in 2013, which we expect will improve in subsequent years. On Slide 6, in the face of these challenges and as I said in the news release, we need to do better. As you can see, we have an action plan to do just that. We have implemented a new business performance measurement system, which will allow us in realtime to constantly measure our performance, which gets measured better -- what gets measured better can be managed better. We have cost savings initiatives across all our operations, which Gord will speak to in a moment. We will implement these initiatives aggressively and continue to seek out other areas of cost improvement. We also believe in reporting an all-in sustaining cost metric and we are working with our peers on the Gold Council task force to standardize a definition for this across the industry and plan to begin reporting that once defined. On the topic of reserves, excluding the sale of Quimsacocha in Ecuador, we largely replaced the reserves we depleted in 2012. We have not yet reported the results of the Rosebel 2012 exploration program as we are soon to finalize a new feasibility study that, depending on the conclusions of the study and the ongoing economics for Rosebel, could impact the current reserve estimates. We will adjust our reserves there once the study is complete. Carol Banducci will now take you through our financial results.

Thanks, Steve. Turning to Slide 7. Revenues in 2012 are $1.67 billion, virtually unchanged from 2011. The lower gold sales volume was offset by higher average realized gold prices and higher niobium sales volume. Adjusted net earnings were $317 million or $0.84 a share in 2012 compared to $406 million or $1.08 a share in 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 higher mining costs and higher exploration spending, including the work at our newest property, Côté Gold. Operating cash flow. Excluding changes in working capital, operating cash flow was $504 million in 2012 or $1.34 a share compared to $657 million or $1.75 a share in 2011. The year-over-year decline was attributed to higher costs, higher exploration spend and higher taxes paid. As you may recall, 2011 was a record year for IAMGOLD and we made our final tax payment for 2011 taxable income in 2012. Turning to Slide 10. Attributable gold production was 214,000 ounces in the fourth quarter as compared to 253,000 ounces from continuing operations in the same period of 2011. For the full year, attributable gold production was 830,000 ounces compared to 896,000 ounces in 2011. The production decline was due to lower recoveries and the processing of lower grade ore at Essakane as well as lower throughput in grades at Sadiola. The rest was due to the unavailability of the plants at Mouska throughout the year due to the refurbishment for Westwood. Total cash cost for 2012, which include royalties were $715 an ounce compared to $636 an ounce for continuing operations in 2011. An increase in the proportionate [indiscernible] process of Rosebel drove up power costs and labor costs were up due to the increase in tonnage mined and wage increases in line with inflation. At Essakane, the increase in cash costs reflect lower production due to lower grades. Turning to Slide 11. Higher gold prices more than offset increased cash cost resulting in the gold margin of $952 an ounce in 2012 compared to $919 an ounce in 2011. Turning to niobium. Niobec continued to run very well and niobium prices were maintained in the year. Revenue improved to $191 million versus $178 million in 2012. Operating margin at $15 a kilogram was even with the previous year. With the recent success of our $650 million debt issue, we increased our financial leverage substantially. Together with our unused credit facilities, cash, cash equivalent and gold bullion at market, we have $1.8 billion in liquidity. With that, I'll now turn it over to Gord for a closer look at our operations.

Thanks, Carol and good morning, everyone. At Rosebel, the challenges of 2012 included increased proportions of hard rock and transition rock compared to prior years and inflationary pressures on fuel, power and labor. Helping to partially offset these challenges last year was a strong increase in gold recovery at the plant due to better plant feed stability with the installation of an automated supervisory control system in the grinding circuit and completion of the significant expansion of the gravity circuit. As we head into 2013, we will be completing the installation of the third ball mill in Q1, allowing to process more hard rock. The mine department at Rosebel is concentrating on a number of productivity enhancements as we mine deeper into the ore bodies and bring more distant pits into production. Most importantly, as we see the increasing hard rock feed, we are pursuing opportunities to improve power efficiency. As Steve mentioned, we are currently completing a feasibility study to determine the most profitable operating scenario for Rosebel going forward as we treat the harder ores. We expect to have that study complete by the end of this quarter. At Slide 15. Essakane achieved much improved levels of operating stability in 2012 compared to the prior startup phase of the operation. Essakane saw a significant increase in ore throughput for 2012 despite treating 30% transitional ore and started milling of hard ore. Gold production was challenged by lower head grades and lower recovery for the year. The water supply problems experienced in 2011 were overcome and mill availability was also a success. For 2013, Essakane will be working hard to build on the successes of 2012 in improving mining productivity. A number of smaller projects in the plant are planned to enhance gold recovery and mill maintenance and operating practices are being revised to improve mill reliability. The completion of the Essakane expansion project at the end of this year is essential as the operation heads towards predominantly hard rock feed in future years. Two elements of the expansion project are being fast-tracked to enhance production for this year. These include a new pebble crushing circuit and installation of some supplemental leeching capacity. Production at Sadiola in 2012 fell significantly short of expectations. Low head grades and blocky ore negatively impacted gold production. Additionally, some graphitic ore encountered in one of the satellite pits created ongoing recovery issues in the plant. On the positive side, mining productivity improved significantly in 2012 compared to prior years. The civil unrest experienced at Mali during the past year did not significantly affect production results. For 2013, Sadiola is focusing on stabilizing ore feed ahead of the mill by improving crushing and screening capacity. The mine continues to improve controls associated with contract mining and will be gearing up for initiation of owner mining. We continue to evaluate our options for the future of Sadiola and are working with our partners to advance the Sadiola sulphide project. Turning to Slide 17. At Niobec, our operating cost margin -- our operating profit margin, excuse me, remain at the level as the prior year, as minor cost inflation in labor and consumables were compensated for with moderately higher metal prices. Operational stability was greatly improved for 2012 as highlighted by a 61% drop in our most important accident metric, which is a remarkable achievement. 2013 will see Niobec focusing on maintenance practices, development productivity and mucking efficiency underground. In the ferroniobium converter plant, some equipment modifications are being made to improve the productivity and efficiency of the conversion process. At our Westwood development project, we are on track for the startup of ore processing next month. In 2012, work advanced on a number of project elements. The renovation of the Doyon mill has been completed as of January 2013 and also as of January, the Westwood shaft, started in 2008, reached its interim designed depth of 1,958 meters. The shaft will be deepened in future years to access the deepest part of the Westwood ore body. Also importantly, in December of 2012, we signed a 6-year labor agreement with our workforce, which will allow the operation to maintain focus on startup and ramp-up of operations for 2013 and the coming years. The priority for Westwood, as we work to the startup phase of the project, will be to continue to improve development productivity underground. Development productivity will be the key for this operation to achieve its costs and production goals in the future. I'll now pass it over to Craig for an update on exploration.

Thanks, Gord. Looking at Slide 19. In 2012, the company continued to invest in its future and embark on an aggressive exploration program, expending just over $152 million on explorations and completing over 680 kilometers of drilling. The program included the completion of significant resource and reserve delineation drill programs at its ongoing operations, brownfield targeting of potential new resources at Essakane and infill drilling at the company's REE deposits to upgrade and expand the existing resource as part of the plant feasibility. On the greenfield side, an attempt of infill and expansion drilling program was completed at the Côté Gold project, which upgraded the majority of the resource to an indicated category and added significantly to the resource inventory. The success of this program has advanced this project to the prefeasibility stage in 2013 and validated our view of the value yet to be unlocked for this project. In addition, the company enjoyed exploration success at several of its early-stage exploration projects, including the Pitangui project in Brazil and the Boto project in Senegal. Planned exploration programs at both projects in the upcoming year are worked to advance them through the delineation of resources during 2013. On Slide 20, although the company is carefully reviewing its capital and budget expenditures going forward, a strong commitment to exploration remains and the company will continue to invest in exploration opportunities with a view to grow its resource assets, with an ongoing prioritization of its existing near-mine and greenfields programs and the continued search for new opportunities. I'll now turn you back to Steve to wrap up.

Thanks, Craig. So on Slide 21, we show our updated production forecast. We're on track to start up Westwood next month with a target of 130,000 to 150,000 ounces. And this, of course, is enhanced this year by the final production from the adjacent Mouska mine. As Westwood continues to ramp up in 2014 and '15, this will be offset by the reduction of gold production from Mouska and Yatela as they wind down. By 2017, we expect to bring on the Côté Gold project, which, according to the draft project description prepared for the permitting process, they expected to process approximately 60,000 tonnes per day for a 15-year period. This is expected to result in a total annual gold production in the range of 1.4 million to 1.6 million ounces per year. On the guidance slides, Slide 22, we have broken down our production guidance by site and also broken down our cash cost guidance between our owner-operated sites at Essakane, Rosebel and the Doyon division as a separate total from the consolidated cost guidance, which includes our joint ventures in Mali. It should be noted here that we do not expect to reach commercial production at Westwood until October this year, although we're going to be starting up Westwood in March. If our timing is correct, the 40,000 to 50,000 of the ounces that we produce from Westwood would be considered noncommercial and contribute to cash flow. So we will have sales of gold but not revenue and earnings as proceeds from that production will be netted against our 2013 capital expenditures at Westwood. On the final slide, other than our safety and environmental record, we have always had the return on capital employed as the primary measure of our performance. We can continue to perform well on this measure but we also are facing cost pressures and falling gold prices. So we know we need to redouble our efforts to continue to excel on this measure. So let's open it up to questions.

[Operator Instructions] Our first question comes from Paolo Lostritto.

Steve, you've already kind of touched on the fact that the ramp up at Westwood is [indiscernible] till 2015. Can you help map out what 2014 might look like in terms of throughput? And I recognize that this isn't official guidance, but just trying to get a sense of what the ramp-up would look like.

Yes. I think this year we're looking at 80,000 at Westwood and we're eventually going to get to 170,000, 180,000. So I would basically draw linear, a line extrapolating, Paolo. So halfway between that, I guess, would be in that 130,000 to 140,000 for next year and then getting up to the 170,000 to 180,000 in 2015.

Our next question comes from Dan Rollins.

Gord, maybe this is a question for you. Obviously, the situation with the harder rock at both Essakane and Rosebel, and the fact that you're going to go deeper in the pits, are going to be having longer haul distances, do you think -- what should we expect for cash going forward, assuming no more oxides or soft rock can be found at either deposit? Do you think the cost initiatives you're looking at are enough to offset that, or do you expect that these are going to be sort of structurally challenged from a cost level going forward, until you sort of hit steady state throughput on the hard rock?

Well, there's a couple of things at work here and there are sort of different stories for each one. At Essakane, we still have some soft rock resources at Falagontou. The current plan had it coming into our mine plan in 2015. We're certainly working hard to bring that forward and that will help us to offset cost. The other difference you're going to see for 2014 and beyond is you're going to see increasing grades as we get into the harder rock. 2013 was always planned to be a low-grade year from the initiation of the project. And so, as we move into Falagontou, as we get into the higher grade, that will offset some of the increasing cost, stripping is a little bit higher for a few years. And we try to be pretty transparent about where we're going with the power costs. As I stated, we're looking for a number of opportunities to try and drop power costs. At Rosebel, we have had some moderate success in the last little while in locating some additional saprolite resources, which doesn't get rid of the hard rock but allows us to sort of moderate the blend going forward. The other thing we're doing at Rosebel, obviously, we've talked extensively about the agreement with the Government of Suriname and we're looking for opportunities to bring additional soft rock resources from the region into the plant. Until the ink is dry on those agreements, they're still not in our plans but there are a number of opportunities. Likewise, at Rosebel, there are some -- as we get into the feasibility study here, we're looking at some -- a little more creative ways to manage the cash cost going forward, including really, trying to work on reducing stripping ratios by being a little more conservative with the -- a pit selection.

Okay. So basically, you're looking at Essakane to sort of maybe stabilize or move up a little bit as you get much improved, as you get into higher grades. And then Rosebel, it's just sort of trying to continue to look for costs initiatives and control initiatives?

Yes. I mean, that's a good description.

Okay. Just on the government agreement. Is the new power agreement, I know you can't provide too many details, is that on the existing Rosebel facility, or is that just -- would that just be on new deposits that would be unlocked through this new agreement?

So we haven't addressed the current agreement, Dan. And as you know, the power cost has moved up there quite a bit over the last 3 years, sitting in that $0.15 to $0.21 a kilowatt hour range. One time, we were paying as low as $0.06 to $0.09 a kilowatt, so that power cost has increased quite significantly over the last 3, 4 years. So we haven't addressed the current agreement. The new agreement, which is everything outside the mineral agreement is about half of what it's currently costing us, if you use $0.21 as a base. So it's very attractive for us. And obviously, with the split -- the higher split with the government, although they don't give a carry, it's extremely attractive for the government if we can get some of those larger deposits in. So we're waiting for the final approval from the government on it. I'm going to be in Suriname the week of March 10. So we're hopeful to see things come to sort of fruition there and we are continuing to address the current power costs with the government because it affects them. They're paid a royalty but they'll also get a share of our corporate earnings and the lower they are, the less they get. So we're trying to send the message basically, not to be penny wise pound foolish on power because the loss for them as it relates to government take, is far greater when they inhibit the production of economic ounces from Rosebel.

Okay. And just sort of quickly and just moving on to Sadiola, I know Steve, you had an interview with Bloomberg back in January and you said, you were pretty comfortable with the situation in Mali. But obviously, your partner Anglo is sort of pulled the reins back a little bit also, just given the CEO change over there. Where do you stand on Sadiola? Is this a project that you would like to continue to push forward? Would you be willing to take on Anglo's share, or maybe is it an issue where you need bring in a new partner? Or what's the status there?

Well, we don't have the heft to take on the Anglo share, So their 41% would either have to be sold by Anglo or financed by another party for Anglo. We're not in a position to finance Anglo's share, nor are we in a position to buy their share at this point in time. I don't know, I can't speak for Anglo, they just released results yesterday, which didn't seem to go over well in the market. And they -- I'm not sure what direction they're taking. Sadiola will continue to perform this year and next year but then becomes, as you know, problematic for everybody. Using, I'll call, just common sense, we've been writing checks, CMOS, which is the combination of Anglo and IAMGOLD have been writing checks to the Mali and government, of around $140 million a year for royalties and taxes for the last number of years. The Malian budget is around $500 million a year. The Malians have approved everything to do with the expansion, which is a very attractive project for both partners and the government. It's about a 19% after-tax rate of return. We go deeper in the pit, we got higher grade. We have our costs related to the harder rock but the project is very attractive economically. So I don't see the Mali -- Malians sitting back and just watching this mine fall off the cliff. It wouldn't make much sense. That's a big chunk of royalties and taxes that disappear in the absence of any action. So we have the, as you know, the liquidity and the strength to fund the project, assuming gold prices remain attractive. We don't have the heft to take on Anglo share, nor do we have any current intentions of doing that. We remain comfortable with Mali because in 17 years of being there, in 5 or 6 coups, we've never had 1 day of interruption at our mine. We've never lost a day of production because of it. We believe Mali being a democratic government with 16 million people and the history with the French, et cetera, that the West and Europe is not going to let Al Qaeda-based terrorists take over the country. I think that's been shown lately with the French and the support from Canada in logistics in the country, we obviously remain concerned about security for everybody. But in terms of ongoing operation, we don't see the Mali government falling to terrorists nor do we see our mine being under duress because of it. So, yes, I remain comfortable that we can move forward with it but again, we're not in a position to be carrying Anglo or taking them out of their position at Sadiola.

Okay. Just one last question, just a follow-up on this one. What's the sort of the drop dead date on putting a pin in this thing? If you base it by 2015, you got a structural issue there at Sadiola, when do you need to make a decision on moving this forward?

Well, I think, obviously, over the next 18 months, there has to be some kind of a decision. And as they say, I think one morning, somebody in the Malian government is going to wake up and say, "Wait a minute, are we actually going to let this mine fall off the cliff and see the revenues disappear?" I highly doubt it. So whether or not there is some kind of action taken by the Malians or by us or a combination of us with the Malians, I can't predict that. But again, if you use a little bit of common sense around what would happen in a country like this that, where 85% of the people live below the poverty range, it's hard to believe that with an attractive project like we have in front of us, that something wouldn't happen to try and move it ahead, without us having to take on more financial obligation.

Our next question comes from Patrick Chidley.

Just questions on the strip ratio projects. I wonder if you can give us some guidance as to what the strip ratios might be at Essakane and Rosebel in particular, 2013, '14 sort of going forward?

Okay. Gord here. We don't typically guide on strip ratios. I mean, I can certainly tell you that the long-term average strip ratio for Essakane is in the about 3.5 to 1 range. And that is -- well, this year, we're right about that level. And in the coming years, we go above that level for a period of time and then it drops off. For Rosebel, I really don't want to comment right now because that's certainly a big part of the work we're doing with respect to the feasibility study is reviewing where the stripping ratio sets. This year, just trying to get the number in my head, I believe we're in around 4 to 1 for this year.

That's great. And just on that same subject, what are you anticipating for the current resource, the new resource that you have identified? What's the sort of Whittle strip ratio, roughly, for the Cote Gold project?

Like I said, I don't want to comment on that because we're really looking at a number of different options as part of the feasibility work. And until we choose one, I really don't want to go out there and declare something specific.

Okay. All right. And just this final one on Sadiola. The power, you had announced that you'd sort of got a power agreement with the government there, and I wonder if you could sort of share a few details there.

Sure. We do have an attractive power agreement that's been reached with the government. Currently, Sadiola works off of diesel-generated power. Part of the expansion project includes our new hydro line to the main Malian grid, so advancing to the cheaper power is, it sort of goes part and parcel with advancing the project. It could be done independently. But on a declining reserve, I doubt there's payback in disconnecting to the power grid for a couple of years. So it really depends. When the project moves forward, then that cheaper power becomes part of the picture.

And do you think that they have -- they actually have the power availability enough for the expansion project?

Yes.

Our next question comes from Anita Soni. Anita Soni - Crédit Suisse AG, Research Division: Just a quick follow on from that one. If you're -- were you just saying, Gord, that there's not really payback to connect to the power grid for just a couple of years for the cheaper power?

I haven't done the calculation myself. It's not necessarily a cheap project. You're talking about a fairly extensive power line and connection facilities, a new substation at the mine. So it's not -- as part of the overall project, it makes -- it made sense. In fact, it's what makes the project turn over. In order to build it for a couple of years of declining production, I need to do the calculation. I think it would be sort of borderline. Anita Soni - Crédit Suisse AG, Research Division: Okay. Thanks for clarifying that. So in terms of the power -- you've given a little bit of disclosure about the power and the hardness of the ore that's going to be going into the mill for both of those, the assets at Essakane and Rosebel. Can you just let me know what's your power exposure? I assume it's mostly associated with the processing cost side. What would you say is the percentage of your process costs that are associated with power so I can sort of complete the analysis and figure out what your increase would be on the process side?

Well, for 2012, both Rosebel and Essakane have around 22% or 20% to 22% of their total costs related to total power draw. You don't -- yes. I'll leave it at that. Anita Soni - Crédit Suisse AG, Research Division: So is that just process or is that the mining as well?

That's total power draw. We don't use power in our mining operation, in our open pit mining operation. They're all diesel-powered systems. Anita Soni - Crédit Suisse AG, Research Division: Okay. And then when is that feasibility on Rosebel due, or when do you deliver it?

We're, obviously, working very hard on it now. Our target is to get it out by the end of this quarter. But there's some really key questions, and we want to make sure we do the analysis correctly. But we're aiming for the end of this quarter.

Yes. I'd just say that there's obviously ongoing discussions with the government tied to that feasibility study. So I don't want people drawing a line in the sand that it's going to be March 31 because I'll be down there quite extensively this year, and we hope to have it out as soon as it's properly completed here at IAMGOLD, but a lot of interface with the government is required. So it is a work in progress. Anita Soni - Crédit Suisse AG, Research Division: So in terms of the expansion for the sort of satellite deposits that you're negotiating with the government right now, when could you -- I mean, in your minds, when do you think, if you go ahead with that, you could see that ore coming into production?

It's very hard to predict, Anita. I mean, again, we're talking -- whether you're talking about Mali or Burkina or Suriname, these are countries that have a high dependence on our presence and our success. In all of these countries, we contribute about 25% of their GDP or higher. So when we look at an expansion at Rosebel, it had to make economic sense not only for our investors but also for the governments that were involved, and in this case, Suriname. So we are not going to go into an expansion of Rosebel unless it makes good economic sense for IAMGOLD shareholders, which means that we need to have access to not only attractive ore on the current mineral agreement but future deposits that lie outside the curve in mineral agreements. So I can't draw and tell you that that's going to be 6 months away or a year way because we haven't really been able to sit down and discuss it, given that a legislature hasn't finished the approval of the joint venture. But that would be, in my estimation, imminent. Again, it's very attractive for the government of Suriname to see this move ahead and I think, when they see the map, which they've been seeing for a while now, they'll understand that's in their best interest, as it is in ours, to have economic parameters like power costs, not only on the joint venture but in the current mineral agreement that makes sense for both of us. A $0.10 drop in power costs at the current Rosebel agreement results in a net added value of $600 million over 10 years just for the Surinamese people. So that's net of what they would give up on their current power charges. So it's one of those things where -- and you're an economist. If you do the math and drop power from $0.21 to, call it, $0.14, the amount of economic recovery of gold resources at Rosebel increases significantly, has a nice return for us and gives them royalties and taxes that are significantly higher than they would be if they currently -- if they keep the current power costs in place. So that's kind of what we're facing there.

Yes. Anita, I'd just add on the sequence of events, that if you get the approval from the legislator, you still have to do further drilling to bring those external resources into reserves. I mean, they're not even resources. It's just drilling needs to be done. So -- and they need to be brought in, we don't have to wait until we exhaust existing reserves. They could be brought in fairly quickly. But anyway, just keep that in mind that there is a sequence of events that have to take place. Anita Soni - Crédit Suisse AG, Research Division: Right. And that's what I was driving at. So you've negotiated a power agreement, you're waiting now just basically, to figure out rights to the concessions and then after that, sort of a drill program and then -- do you see how you bring it in from that perspective?

Yes. And we've had -- we've done some drilling in Charmagne, West Charmagne. There are some deposits that have a history of drilling from other parties that we would get access to, including the government. So we're not starting from a dead start, but as Bob said, we obviously have to do some work. But from what we see in the area, based on some of the drilling results that we have been privy to, it makes for an attractive prospect for us. We haven't put that in any of our guidance. We haven't factored that in. It's speculative, but it would result in a reinvention of Rosebel, which we're working hard to try and do. Anita Soni - Crédit Suisse AG, Research Division: Now are you doing [indiscernible] for the expansion at the existing concession that you have in -- as a trade-off study between the 2 options, or is it being done sort of in isolation?

No. Originally, what we were doing the expansion as it relates to the current mineral agreement, with really no incorporation of the joint venture. So what we were doing in -- makes sense over the last 3, 4 years. When we look at Rosebel and we're looking at the reserves, right or wrong, people were using certain power cost assumptions and rock hardness assumptions, which, as time moved on, were not in line with where they are today, so they underestimated the impact. As we started to see that, we started to realize that if these power costs don't -- aren't reduced materially, we would need to reach out and bring in softer rock or higher grade ore, which we started to do about 18 months ago. So this feasibility study talks strictly to the current mineral agreement, and whether or not it makes economic sense to do it. We could see, as time goes on in corporation of joint venture-related deposits that affect Rosebel, but because we don't have that information yet, we won't be including that in the current feasibility study. Anita Soni - Crédit Suisse AG, Research Division: Okay, I've got just 2 more questions and then I'll wrap it up. So question, just remind me what the Rosebel royalty rates are and tax structure so that I can just get an understanding of the economic benefits to...?

I would tell you, all in, what we've seen in the last year is probably a take that's 55% to 60% IAMGOLD related and call it 40% to 45% government related, when you roll in the taxes and corporate taxes, et cetera, et cetera. Anita Soni - Crédit Suisse AG, Research Division: Okay. And then the second question. With respect to Westwood, the dilution assumptions on mining dilution, what are you using there?

The mining dilution assumption, I don't have the exact number. It's in the order of about 51%. Anita Soni - Crédit Suisse AG, Research Division: Okay. And that's included in your reserve estimate?

Yes. It's a diluted grade that's in the reserve. Anita Soni - Crédit Suisse AG, Research Division: All right. So what's the undiluted grade that you would have seen? Presumably, something around 16 grams per ton?

No, the undiluted grades are around 11 to 12.

Our next question comes from David Haughton's location.

I haven't heard much about Niobec, what your outlook is for that lately? It appears to be in a steady-state kind of throughput and grade. How would you describe it at the moment?

Steady as she goes.

Yes. It's steady as she goes, David. For the near future, it's well set up to continue to produce at the levels it's been producing at. We are looking for cost savings initiatives there as we are anywhere else. The work for this year with respect to the project is really just focused on completing the feasibility study by Q3 and advancing the permitting by the first half of next year. When we have that feasibility study in hand and obviously, at the time we have the permitting in hand, then we can really start to make some hard decisions about where we go with the expansion.

Right. Now the expansion that you're running is, your base case for the fees is, is going to be going to the 10 million tonnes per annum, but still what you've got in mind with the block cave?

Correct.

And do you still have an intention of finding a partner to help you with that? And what's the status of those inquiries?

Well, given our market cap at $3 billion, it's not practical for us to even think about funding the expansion 100%. It's a $1 billion expansion. So we're not -- we don't even think about expanding Niobec unless we have help, and that help is in the form of either a joint venture partner or some kind of a third-party financing or eventually, spinning Niobec out and having it run as an independent entity with IAMGOLD ownership. Those are all alternatives as you know, David, we've looked at. The market for steel continues to be fairly blasé, but Niobec -- niobium pricing is holding very nicely for us at around $41. So we continue to have a lot of interest in the project, we've had an upgrade in our resources there, including the REEs. But in turn, until the world turns a little bit for the positive, we're just going to continue to derisk Niobec where the permitting is moving ahead nicely. The interface with the government is moving ahead nicely. But I will tell you that we will not, and I underline, we will not commit large capital to this project unless we have certainty around participation along the lines that I described to reduce the amount of capital we would be exposed to in a major expansion.

And the plans that you've been communicating with as a potential partner, have they been changing through time or are they the same kind of entities that you've had ongoing dialogue with interest waxing and waning depending upon the steel market?

It depends. A lot of it -- a lot of them are Chinese steel companies, Japanese steel companies, Korean steel companies, we have Indian steel companies, we've had Russian interest, we've had interest from the Middle East. We've even had U.S.-Australian interest. So we've had interest pretty well from every part of the world. And sometimes it's specific to Niobec, sometimes it's a combination of niobium and REEs. They like the infrastructure there, they like the power costs. But again, we're cautious about saying anything because until somebody sits down and signs a piece of paper that they're willing to help us fund 40% to 50% of the project, it's going to continue to be steady as she goes, as you pointed out at the beginning of the conversation.

On the other side of the equation, looking at your customers, most of this product is contracted and you have welding contracts. How have you found the consumer appetite for the product? Is it a steady baseload or is that also evolving through time?

It's been a steady baseload. I mean, one of the things we're hoping to see is when you look at ferroniobium is that we've seen increase in the intensity of usage in China. China being a very large steel producer, as you know. Of that, had really low penetration so far is around 20%. We hope to see that increase in time. That's why we think a $45 price for niobium is not unrealistic. We -- with the world malaise, we haven't seen much of an increase in that intensity of usage, but we're hopeful to see it improve. We certainly haven't seen a decrease in it. So because it does so much, as you know, $9 of niobium, when you're looking at the manufacturing of a vehicle, decreases the weight 100 kilograms, it increases fuel efficiency, 5%. It's quite significant. And with the focus on reducing the carbon footprint and improving the economics of transportation, niobium continues to be a very, very attractive ingredient, especially when you look at its competing validium being -- having to be basically $60 versus the $41 that we're currently seeing for niobium.

Our next question comes from Michael Scoon. Michael A. Scoon - Stifel, Nicolaus & Co., Inc., Research Division: As I relate to your own assets, maybe, Steve, I'll just ask you to comment on how you're evaluating potential M&A given the current climate and your thoughts on that looking out in the next year to 18 months.

My -- what I spend most of my day and evening doing are looking at costs. We have a cost challenge at IAMGOLD as we move in to the harder rock and in some cases, lower grade. And front and center is that issue. If we saw opportunities in and around current assets, whether it be Rosebel or Westwood or Côté that are small bite-size pieces, we're going to look at it. I have no interest whatsoever in large M&A right now. I have no -- I spend virtually no time even talking about it. Our focus is on current operations, getting the ship pointed in the right direction on cost control, doing everything we can to maximize our margins, and that's basically a restructuring of the company as best we can to make that happen. And that's what we work on.

Our next question comes from Steven Butler.

A question for you. You gave in your MD&A discussion of Essakane the head grades being specifically 10% to 15% lower than life of mine average investment in 2013, Steve. How about Rosebel? Is Rosebel going through a low-grade phase this year or not -- less dramatic reduction in head grade year-over-year?

It's actually Gord here, Steve. Rosebel is slightly below, just slightly below their life of mine average for this year.

Okay. And then, Gord, on the power -- Anita asked a question and maybe I can ask it again a slightly different way. But when you allude to or discuss the potential for a doubling, all else been equal, well, maybe not equal, but if you go to full hard rock, you'll basically double the, call it, hours per ton. Maybe to what level, if you don't mind? And is that assuming a doubling from 2012 levels or from 2013 levels? And what is the power cost per kilowatt hour in -- excuse me, deposits at Essakane?

Yes. When we talk about a doubling, we were doing that in reference to 2012 not 2013, so we're already on that path, if you will. Essakane's power costs, I think that will be generated, but the transport costs are pretty substantial in that part of the world. So we're in the high $0.20 per kilowatt hour, $0.20 -- $0.28 to $0.30 per kilowatt hour at Essakane. There are some big opportunities there that we're looking very hard at to fundamentally change those numbers, looking at the hard grade, looking at alternative power sources.

Okay. And you said these are costs right now in 2012, would we say, were about $0.15 to $0.21 as mentioned by Steve earlier, is that correct?

Well, that was Rosebel.

And I'd say we're at the high end of that range.

Yes, we're at the high end of the $0.15 to $0.21 for Rosebel. Yes. And we are in, what I'd call, a very deep discussions to address power. So it's something that's affecting both Essakane and Rosebel, and we are engaged with both governments in having that conversation. As I said earlier, you can be penny-wise, pound foolish with this power cost, and I think the government -- well, I know the governments understand it. Power tends to be a politically sensitive topic in most countries, especially if companies are seeing to be getting a "break". But from a tax revenue standpoint, these governments, these countries are going to start to suffer just as we are if they don't address it. And that's the conversation that we're continually having.

Now Gord, what is in your control? You said that earlier, you're looking at some alternatives. What is in your control to sort of look at directionally, lower power costs or fuel costs, if you will, at Essakane?

At Essakane, there is a national grid there. It's certainly not -- it doesn't enjoy the kind of prices we see in this part of the world. But a significant proportion of it is still hydrobased, and so it's significantly lower than we see. Obviously, you're talking about some investment to make it happen. We are looking very, very aggressively right now at what the options are with respect to filler. That part of the world, it has one thing. It has an abundance of solar energy. However, again, the technology, certainly, isn't as daunting as it may be, what, 10 years ago. And in terms of the price to get into that, a part of the business is at its lowest that it has been, certainly, in the last 10 years. The prices of solar equipments are way, way down. It's the logistics and the ultimate investment, how do you do that. And in the end, unless you want to really get in to some expensive battery technology, that only really helps you for part of the day.

Right. And lastly, I guess, Gord, what is your hard rock kilowatt hour per ton parameters for Essakane and Rosebel?

The Essakane, I don't have the numbers on the tip of my head, but I can -- I'll get them back to you. It depends on what part of where you're looking at. Typically, Essakane is in the mid-30s in terms of kilowatt hour per ton. It's a Bond Work Index, which is quite hard. However, we don't need to grind it as fine to get the results that we're looking at there. Rosebel is significantly less than that, it's about 13, 14.

Our next question comes from Alec Kodatsky.

I just had 2 quick follow-ups. With respect to Rosebel, Gord, you're talking about moving strip and cut-off. Is there a potential here for perhaps a smaller, higher grade operation, or is this sort of a function of the power and the costs in terms of the adjustments that you have to make to the pit?

Certainly, that's one of the scenarios we're evaluating, whether -- and I wouldn't say -- I don't think I ever call it Rosebel high-grade, but certainly, we're looking at lower-strip higher-grade operations. And as part of the analysis, we need to look at everything as a way to sort of maximize our return from this property.

Okay. If I didn't say high, I meant to say -- or if I did say high, I meant to say higher but...

Okay, no problem.

And just with Sadiola, clearly, the decision is outstanding. Just where is your head currently out with the capital cost for the expansion? And just curious when the last time those numbers were refreshed?

The numbers have been refreshed as recently as a couple months ago, and they're not significantly different from what we were talking about last year. So the project is holding fairly steady in terms of what our projected costs are. The one issue we get into, as Steve alluded to it, is if you pushed past the point where the production at Sadiola starts to fall off, then you incur some additional fixed cost penalties through that period.

Right. And is that window still the 18 months that you talked about earlier, or is it something shorter than that?

No. Yes, I think the 18 months is not a bad number. You'd like to make that efficient. I mean, I'd like to make it tomorrow if we can make it. But we got to deal with the realities of where we're at. The sooner, the better. It's, as Steve described, it's a project with a very attractive rate of return. I'd like to have that rate of return in play today.

Our next question comes from Josh Wolfson.

I'll try to be quick here as we reached the hour-long mark. Just quickly for Westwood, could you talk about how you expect the plant material to be spent this year, given that Mouska or will be fed and ramp up, still, we get your grand mine, will, be progressing, I guess, through October. And then also, could you talk about how stilt development is proceeding and I guess what percentage of the reserves that came out have already been stilted and developed?

So with respect to feeding priority, we have a significant stockpile of Mouska, high-grade Mouska ore sitting in front of the mill. And certainly, we'll be looking to feed some of that. Obviously, you're talking about the Abitibi region, which I know everybody in Toronto likes to think they're cold but they don't know cold. So stockpiles in front of the mill are going to be a bit of a challenge at this time of year. We will feed from those stockpiles -- from Mouska, we will feed direct ore from both Mouska and Westwood. We'll be doing it on a campaign basis, so we won't be comingling. And even at Westwood, there's 2 sort of classes of ore so we have ore coming out of the Warrenmac zone, which is a little more mass of sulfide and then we have the regular Westwood ore. Both of those, again, will be separated, and we're actually looking at some other sort of interesting scenario. So I guess the short answer is we'll start pretty heavily on Mouska and we'll feed in -- there's already stockpiled both Warrenmac and Westwood ore sitting at the mill right now, so that can go in at the times it's appropriate. And obviously, there's a degree of test work involved there. And with respect to how much of the reserve we stated is stilted, I don't have the exact number. I would expect, just thinking about where we are with respect to development and/or stockpiled, we have to be a good 50% of that and probably even a little bit more.

Okay. And then for the reserves, I guess you're looking at developing into the future. Is that going to be similar grades to what the reserves came in at, or will you see that decline to the long-term numbers that were previously outlined in February last year?

Reserves, I think, yes. You're going to see it gravitate towards what the long-term resource number is, over time. There are some opportunities, and this deposit is quite interesting. We've tried to be fairly conservative in our resource classification. Certainly, I would call it even aggressive, with how we talked about the grades at Westwood. As we get into stilting and get to see it firsthand and how it responds to mining, there is some stuff in our pocket that will help us. And certainly, in the near term, almost 100% of any drilling effort is going to be on developing reserves for the near-term. And there's potentially a few little upsides that are there. But long term, the resource number is probably a reasonable number.

And that's all the time we have for questions. So I'd now like to turn the call back to Mr. Bob Tait for closing remarks.

Thank you, Merrell, and thank you, everyone, for dialing in today. Obviously, if you have more questions, both Laura Young and myself, our coordinates are on the last page of the slide deck, so you can contact us for any follow-up. The replay of this call will be airing, I guess, tonight and be available for about a month if anybody wants to re-listen to it. And thank you, all, again for attending. Good day.

Ladies and gentlemen, we thank you for your time and attention. This webcast is now concluded.