IAMGOLD Corporation (IAG) Q1 2013 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to IAMGOLD Corporation's 2013 First Quarter Financial Results Conference Call. [Operator Instructions] I would like to remind everyone that this conference call is being recorded on Wednesday, May 8, 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, Meryl, and welcome to IAMGOLD's conference call for the first quarter of 2013. Last night, we released our financial results for the first quarter of 2013, which, along with accompanying 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, Exploration; and Jeff Snow, Senior Vice President and General Counsel. Our remarks today will include forward-looking statements. I refer you the cautionary language on Slide 3 regarding forward-looking information there and also in our disclosure documents and advice that the same cautionary language applies to our remarks during the call. We have prepared slides, which can be viewed via our website. This call is being recorded, as the operator said, for playback purposes. And I'll now turn the call over to our President and CEO, Steve Letwin.

Thank you, Bob, and good morning, and thank you all for joining us on the call. Well, apart from the market malaise, our first quarter results and expectation for the rest of the year are in line with our full year guidance, so we're really pleased to be able to say that. The recent drop in the gold prices weighed heavily on an industry feeling the pain from cost pressures. How we weather the downturn in this new chapter is going to depend on our ability to adapt and that's where we're ahead of the curve. As you know, even before the drop in the gold price we announced our commitment to reducing costs by $100 million, a decision driven by the need to counter the increasing pressure we're seeing on cost from inflation and the higher mix of hard rock. And at the same time, we've renewed our commitment to disciplined capital allocation. We do not have to proceed with expansion and development projects where the gold price environment would prohibit us from delivering the rates of return we demand, and I'd like to underline that. Our immediate priority is on enhancing the returns from our existing operations, and of course, delivering on our targets and guidance. On Slide 5, topping our successes in the first quarter was Westwood. The refurbished plant began production at the end of March. The same in-house project development team that built Essakane 3 years ago delivered on time and on budget. Westwood had little impact on our first quarter production given that production started at the end of March. Carol will talk about how production is expected to ramp up this year. IAMGOLD's total production in the first quarter was 188,000 attributable ounces, lower than the previous year, but as expected given the lower grades at Essakane. Westwood will ramp up throughout the year, and we will remain on track for meeting our guidance. Our total cash costs for the quarter are very encouraging. At $787 an ounce they were $63 below the bottom of our guidance. We know the increasing hard rock at Rosebel and Essakane will continue to put pressure on our costs, but we expect to counter that through our cost reduction initiatives. Early in the second quarter, our joint venture agreement with the government of Suriname received legislative approval. This opens up a new chapter for Rosebel as we expected to increase returns from our operations in that country. And on the Suriname agreement, which is on Slide 6, IAMGOLD and the government of Suriname will have a 70-30 split participating interest. The joint venture will target an area within a 45-kilometer radius of the Rosebel mill. The focus is on bringing in softer rock resources under a power rate that is 1/2 what we're paying today. So this is a very positive development for us. We're now in talks with the government to reduce the power rate applicable to our existing operation. On Slide 7, we have our focus on cash preservation and that gives us an advantage in this market as it gives us an optionality around capital spending. Net [ph] of our $650 million debt obligation, we have about $200 million in cash. So we will not do anything that jeopardizes the strength of our balance sheet. And again, I want to underline that: we will not do anything that jeopardizes the strength of our balance sheet. On the cost reduction slide, Slide 8, where it just reinforces we're reducing our costs, $54 million from our mine sites, including G&A; $40 million from exploration; and $6 million from corporate G&A. This is a company-wide initiative. It affects every aspect of our operations from the mine site to our corporate offices. Whether it's resequencing of mining to defer waste stripping, fuel and waste oil management programs, prioritization of exploration projects, negotiating discounts with suppliers, traveling in economy and exercising greater control over discretionary spending, we intend to deliver. So everybody's onboard and everybody's focused on it. We're 2 months into the initiative and the urgency with which we're pushing this forward can be felt throughout the organization. On Slide 9, return on capital. You can see when it comes to our capital spending we have a history of generating robust returns. As this slide illustrates, we stack up very well against the competition. In deciding whether or not to proceed with a project, having an attractive return on capital trumps all other measures. And on Slide 10, we talk about our capital allocation strategy. This is what you need to know about where we stand going forward and we've reinforced this many, many times. And even though we do reinforce it, we tend to get questions which challenge that commitment. And I would just say you should not assume anything beyond capitalized stripping and that which is essential to maintaining the current operations. That means Niobec will not expand without a partner to jointly fund the project and the economics makes sense. That means the future path of our existing Rosebel operation will be determined by economics as well, and obviously, our ability to negotiate on the power costs related to those transition to hard rock. It also means that we will not move forward with the Sadiola sulphide expansion on our own. We simply can't do that. We don't have the cash position to do it and we don't want to have that risk profile right now. It also means that Côté Gold is something that we're not going to move ahead with aggressively and spend a lot of capital on unless the gold price environment shows us the kind of returns that the market is going to be acceptable to and our investors, more importantly, enjoy. So once we're done, the development studies and permitting by the end of 2014, we'll have to make a decision whether or not we drive on or whether we defer the project. If the gold price environment doesn't make sense, we're simply not going to move ahead. If the gold price environment does make sense and we see the kind of rates of return we've enjoyed in the past on our projects, then we'll make a decision to go ahead. But it's going to be dependent on what the environment looks like at that time. And in the meantime, we're going to derisk our projects and make sure that we're in a position to take advantage of whatever the environment is at that time. So this is our renewed commitment and it's a commitment we've had all through our history on the return on capital. And on that note, Carol, we're going to have you take us through our financial results.

All right. Thanks, Steve, and good morning, everyone. Let me begin with a reminder that effective January 1 of this year, we are required under the new IFRS 11 accounting standard to change how we account for our joint ventures. We now account for them using the equity method instead of proportionate consolidation. IAMGOLD's share of after-tax earnings from Sadiola and Yatela is now reported in the income statement as a single line, share of net earnings in associates and joint ventures. The individual line items comprising net earnings have been collapsed into that line, so there's no net impact on earnings. However, our cash -- our share of cash flow from Sadiola and Yatela is not included in the cash flow statement. Exceptions would be if we paid a dividend and on advances and repayments of any loans. On the balance sheet, our interest in the joint venture is reported under noncurrent assets as investments in associates and joint ventures. The 2012 comparatives have been aligned to the accounting change, and we continue to report attributable production in cash costs for Sadiola and Yatela. Revenues in the first quarter were $305.3 million, down $48.8 million from the first quarter 2012. The decline in gold sales volume accounted for more than 0.75% of the decline. The decline in gold sales was mainly due to the expected lower production at Essakane. This reflected the processing of ore with grade lower than the life of mine average. The other factor was the timing difference between when gold was produced and sold by the Rosebel and Mouska mines, and I'll come back to that in a moment. Adjusted net earnings in the first quarter were $57.7 million or $0.15 a share compared to $91.6 million or $0.24 a share in the first quarter of 2012. Adjusted net earnings exclude such items as impairment of investments and gains and losses on both derivatives and foreign exchange. We've also excluded interest on the long-term debt. Nearly 1/3 of the interest on our high-yield debt was capitalized in the first quarter. Based on projected capital spend for the year, approximately 50% of the annual interest will be capitalized. These items reduced reported earnings per share by $0.12 in the first quarter 2013, compared to an $0.08 gain in the prior year. The impairment of investments in 2013 included an $18.6 million charge for our equity investment in INV Metals. Not having a controlling interest in the investment, we are required to recognize the decline in the market value of INV shares in the first quarter. Since we no longer control the investment, we're not permitted to use alternate valuation method, which we believe would show the underlying asset to have a value in excess of its carrying amount. Taxes were significantly impacted by the impairment of investments. We were not able to recognize the related tax benefit and that contributed to an effective tax rate of 68% in the first quarter. After adjusting for the impairments and other items, our normalized effective tax rate in the first quarter was 36%, in line with our 2013 guidance of 38%. Keep in mind that, as with the previous years, taxes in the second quarter will include the final payments for 2012 along with the estimated income tax installment for 2013. Compared to income and mining taxes of $14.3 million paid in the first quarter, we expect second quarter payments in the range of $50 million to $60 million. As you know, earlier this week, Québec released its change to mining taxes effective January 1, 2014. We appreciate the constructive and pragmatic efforts made by the Ministry of Finance to consult with industry on the changes to the tax regime. We believe that the changes announced yesterday, which we expect to have a minimal impact on our life of mine tax rates represent a major improvement over earlier proposals, which carried very significant risk to the industry. That said, any increases right now are untimely in the context of significant continuing cost pressures and lower commodity prices. With regard to the impact of these tax changes on the ramp-up of our west -- new Westwood mine and our possible expansion of the Niobec mine, we are currently carefully analyzing the application of these new rules. Operating cash flow before changes in working capital was $115.2 million in the first quarter or $0.31 a share. This compares to $180.8 million or $0.48 a share in the first quarter 2012. The decline was mainly due to lower revenue. I'd like to point out, though, that lower costs in the first quarter offset the impact of lower prices -- lower gold prices. Attributable gold production in the first quarter was 188,000 ounces compared to 207,000 ounces a year ago. Lower grades at Essakane, which are expected to be 10% to 15% lower than the life of mine average this year accounted for most of the difference. As we expand the crushing capacity in the next phase of the new mine, we are stockpiling higher-grade hard ore and processing lower grades. Production was down at Rosebel due to lower throughput, although grades and recoveries were higher than expected. And at Sadiola, lower production was due to lower grades. Increased grades drove up production at Yatela and Westwood began processing previously stockpiled ore at Mouska. Looking ahead at Westwood, total year production from Mouska ore is expected to be around 60,000 ounces. The balance of production should be fairly even over the second, third and fourth quarters. Production from the Westwood mine in 2013 is estimated at 80,000 ounces and will ramp up throughout the year. Until the Westwood mine reaches commercial production expected in October, the contribution from ounces sold from Westwood will be netted against capital expenditures. Gold sales lagged production in the first quarter by 17,000 ounces. This was mainly due to Rosebel where a change in the refiner for carbon fines and the required batch testing of the initial shipment pushed sales into the second quarter. In addition, the nominal amount of production at Westwood from stockpiled Mouska ore at the end of the first quarter was not sold. Turning to gold margin. The increase in cash costs and lower gold prices in the quarter resulted in gold margins of $844 compared to $1,023 a year ago. The average realized gold price in the quarter was $1,631. In light of the recent volatility in gold prices, we've revised our outlook for 2013 from $700 to $1,600 an ounce. Total cash costs were $787 an ounce compared to $679 an ounce in the first quarter of 2012 and are $63 below the bottom of our guidance range. Lower grades and harder rock continued to be the main reasons for the year-over-year increase in costs. At Rosebel, longer hauling distances as the mine pits further away from the mill are also a factor. So we've taken steps to mitigate cost increases by changing the mine sequencing, which has allowed us to access higher grade material. Cash costs are expected to trend higher throughout the year due to increasing rock hardness at Rosebel and Essakane. We continue to focus on opportunities to mitigate increasing costs and Gord will touch on that in a moment. We maintain our cash cost guidance for 2013. And on and all-in sustaining cost basis, we are guiding at to $1,150 to $1,250 an ounce for IAMGOLD-operated sites and $1,200 to $1,300 an ounce on a combined basis, so that's including Sadiola and Yatela. These numbers include sustaining CapEx, sustaining exploration spending and corporate G&A. Once the World Gold Council finalizes the standard definition of all-in sustaining costs, we will conform to that definition although having participated on the task force, we don't expect any material change to our numbers. Turning to Niobec. Niobec generated revenues of $49.7 million in the first quarter, up slightly from the first quarter 2012. Production increased 9%, and margins remained flat at $16 a kilogram. About 97% of 2013 production has been sold forward. Turning to our balance sheet. Our financial position, as Steve mentioned, remains strong. We have more than $850 million in cash, cash equivalents and gold bullion at market value. The reduction in cash this quarter reflects the capital spending at Westwood and Essakane. Our success in preserving a strong balance sheet has proven to be a major advantage, and we will continue that focus through cost reduction and disciplined capital allocation. With that, I'll turn it over to Gord for a closer look at our operations and for an update on our cost cutting initiatives.

Well, thanks, Carol, and good morning, everybody. Moving to Slide 23. At Rosebel, lower throughput was impacted by an unscheduled 7-day plant shutdown to repair the SAG mill motor. However, feeding of higher-grade ore as a result of additional ore encountered during mining, as well as planned resequencing, helped to mitigate the lower throughput. Installation of the third ball mill was completed just after the close of Q1 and is currently being commissioned. This additional grinding capacity will allow us to treat a higher proportion of hard rock for the remainder of the year. Looking ahead, we expect Q2 production at Rosebel to be similar to Q1, assuming an average rainy season. Costs are expected to rise above Q1 levels for the rest of the year as we will be milling slightly lower grade and harder ore. With respect to the expansion feasibility study. Discussions with the government of Suriname around the power rates applicable to the existing concession will have a strong bearing on the optimum mine plant scenario and allow us to make a decision about whether or not we proceed with the expansion. Some examples of cost management initiatives at Rosebel include retiring end-of-life smaller haul trucks in favor of new larger trucks to improve productivity, feeding of higher-grade material than originally planned, waste oil and tire management programs. In the mill, full implementation of an automated supervisory control system will reduce consumption of reagents and grinding media and improve power efficiency. Moving to Essakane. Lower production at Essakane reflected planned processing of significant amounts of lower-grade stockpiled softer light [ph] ore. We forecast for grades for 2013 to be 10% to 15% lower than the life of mine average as a result. Continued stripping in the Phase 2 push-back of the main pit will enable us to access higher grade, but harder ore in future years. Production for the rest of 2013 is expected to be similar to Q1. Costs are expected to rise slightly with increasing proportions of hard ore milling and higher fuel costs, but will be offset somewhat by better ore grades and recoveries. In April, 2 elements of the ongoing expansion project were commissioned early. While it's still early days, we are seeing promising results with the new pebble crusher, which allows for the processing of a significantly higher proportion of hard rock without impacting total throughput. And the additional leach tanks are having a positive impact on our gold recovery. Some examples of cost savings initiatives for Essakane include deferring about 2 million tonnes of capitalized waste, consolidating employee transport contracts and not filling some of the expatriate roles of the operation as was originally planned. Looking at Westwood and Mouska on Slide 25. As expected, in Q1, the Westwood plant began processing stockpiled high-grade ore from the Mouska Mine, which built up over the past 14 months while the mill was being refurbished. The newly renovated mill has restarted cleanly and is comfortably processing at the planned rates of about 2,000 tonnes per day, currently working on a 5-day week. Recovery was initially a bit of a challenge on the Mouska ore, running 3% or 4% below plan, but action taken in the past few weeks is starting to deliver positive results and the recovery is now approaching planned levels. Processing of ore from the Warrenmac zone of the Westwood mine will begin this month. Underground development rates are on plan and we continue to work on improving productivity in this area. The Westwood shaft was successfully transitioned during March and April from a sinking configuration to a production configuration and hoisting performance is exceeding plans since the transition was completed. Mouska and Westwood are also contributing to cost savings initiatives. Westwood is working with local suppliers and contractors on reducing input costs, and an automated ventilation management system will allow us to reduce our power requirements underground. Looking at Sadiola. Production was down year-over-year as the operation moved to much lower grades, partly offset by higher recoveries. The operation is stabilized compared to last year, albeit at a lower production rate. Mine production is up and mining costs are down with the increased focus on the management of and coordination with the mining contractor. Mill feed performance has improved as the portable crushers are doing a better job of managing oversized feed ahead of the mineral sizers and the operation has improved its understanding and management of the graphitic ores that caused problems during 2012. Looking forward, gold production is expected to improved somewhat in the last 3 quarters of the year compared to Q1. We continue to work with our partner, AGA, on the timing of the Sadiola sulphide project. At Niobec, the mine continues to operate very well with a small increase in production year-over-year, and operating margins remain unchanged. The Niobec concentrator recently commissioned some additional flotation capacity and will be starting up some other new mill equipment in the coming weeks. Again, it is early days, but we are seeing some material improvement in recovery since additional residence time was added. Niobec is a complex ore and it will take some time to fully understand the impact of these circuit modifications. To save costs, Niobec is focused on managing reagent consumption, managing manpower levels and reduced use of contractors. The improved safety performance in recent years at Niobec is also contributing economic benefits as workers' compensation insurance payments have been substantially reduced. Craig MacDougall will now talk about our exploration efforts.

Thank you, Gord. As part of the announced corporate-wide $100 million cost reduction program, we've committed to reducing our exploration spending by $40 million in 2013. We've reprioritized and redesigned projects and we scaled back the resources to support them. Our spending outlook for the year has been reduced from $142 million to $102 million or $99 million when we exclude Sadiola and Yatela. Overall, the reductions include $16 million for greenfields projects, $19 million for near mine and brownfields program and $5 million for the scoping and pre-feasibility work at Côté Gold. For our greenfield program, we continue to advance key projects in Senegal and Brazil and to support the ongoing evaluation of the Côté Gold project in Ontario. At the Boto project in Senegal, we have advanced an infill and delineation diamond drill program, which will underpin a resource estimate expected for completion in the second quarter. At our Pitangui project located in the state of Minas Gerais in Brazil, a drilling campaign continues to test the extent of the São Sebastião iron formation-hosted gold discovery we announced last year. Recent drill results several kilometers to the east hold promise for the discovery of a possible second mineralized system, which has elevated the exploration potential for the entire district. And at the Côté Gold project, infill drilling continued during the winter months to take advantage of better access conditions in the central part of the deposit, as well as to evaluate for a continuation along straight to the Northeast. Results are pending and will be incorporated in an updated resource estimate as part of the ongoing pre-feasibility study. Although we have deferred some of the exploration spending this year as part of the expenditure reductions, this won't impact the timing of the project. In March, we filed the project description, a key requirement of the permitting process, and we remain on schedule to complete the pre-feasibility by the end of 2013. As Steve mentioned, if the project economics based on the gold price environment at the time are such that the rate of returns does not meet our criteria, we have the option of deferring the project. During the first quarter, we also announced our decision to terminate our participation in the Kalana joint venture in Mali. Despite a sustainable multi-year exploration campaign, the results achieved fell short of the vesting requirements under the terms of the joint venture agreement. On the brownfield sites, we continue to conduct exploration and resource development at Rosebel, Essakane, Westwood and Niobec. At Essakane, we plan to bring in softer ore from Falagountou satellite resource located approximately 8 kilometers from the plant. The site has been working hard to advance as scheduled and was successful in signing the relocation action plan agreement with the local community in March. As a result, additional site evaluation drilling is expected to commence in the second quarter. The goal of this work is to advance evaluation and development study so as to bring the resource into production in 2014, a year ahead of the original mine plan. To wrap up, I would like to emphasize that despite the cutbacks in our global exploration program, we remain committed to exploration for the cornerstone of long-term growth and value. I'll now turn you back to Steve to wrap up.

Thank you, Craig, Carol and Gord for a very thorough account of how we are adapting to the challenges in this new chapter. And we've already talked about balance sheet preservation, and on this particular slide, reinforced guidance, cost reduction and disciplined capital allocation. That's the track we're running on and that's the track we plan to stay on. We're maintaining our guidance for the year. We do mention in the press release that we're going to revisit our cash cost guidance end of the second quarter. Obviously, we've done very well in the first quarter. We'd like to get more traction, get more data, and at the end of the second quarter, come out with what our view is for cash cost guidance. Obviously, based on performance in the first quarter, we hope to continue the trend, to have it lower than our original guidance and that's where we're heading. So on that note, we remain very, very optimistic about meeting our targets and meeting the guidance and bettering our guidance as it relates to our cash cost guidance. So let's open it up for questions.

[Operator Instructions] Our first question comes from Dan Rollins with RBC.

Gord, I guess, maybe the first question is for you. You guys are starting to bear fruit on your cost savings program, but with respect to deferring of waste stripping and going after higher grade, how sustainable is this strategy and how long can you continue to do it before you need to start spending more money on moving that waste and then having the grades revert back to a reserve grade?

On the resequencing of waste, that's all been based on some new LOM plans, so we see that as sustainable. At Rosebel, it's not necessarily all deferral. There is some additional ore x resource that's coming to the plant and is certainly in the first quarter and we see a little bit more of it. So in that case, although it looks somewhat like deferral of waste, it's actually a conversion and we don't need to take the waste as quickly to maintain the strip ratio. At Essakane, it fits well within the LOM plan. I've seen the new LOM plan and it's not going to cause us any grief and allows us to, as I said, bring some of the grade forward.

Okay, perfect. And then maybe just on Essakane, what is the current -- how much -- how many gold -- how much gold is currently at Falagountou and what's the current grade of that?

It's in the resource statement. I believe we have somewhere in the neighborhood -- and I'm going to really qualify this, I'm pulling this out of my memory, it's somewhere around 225,000 ounces in reserve. And I believe the grade is in the order of 1.2 to 1.3 gram.

Perfect. And then Steve, maybe touching base on -- you've talked about not proceeding with projects unless they make the economic merits. Could you maybe just give us sort of an idea what type of returns you would need to pursue Sadiola if you did have a partner? And also what type of returns you need to -- for Côté Gold?

Well, in Canada, Dan, we've always said we look in Canada for 12% to 14% after-tax at a minimum and in terms of rates of return. And I would think that we're going, in terms of Canada, look at that 15% mark as something that would at least get us interested in moving the project ahead. Below that, then I think that we'd be very cautious and we would take more of a deferral strategy with respect to the allocation of capital. In Mali, given the country risk, we'd be looking at something around the 20% after-tax rate of return, given the -- at least the perceived risk. We've never had any problems in Mali in the 17 years we've been there, as you know. We've never lost a day of operation. But I know perception is reality when you get into this business, and as a result of that, we'd obviously factor that in.

And what -- based on the studies that have been done to date, what is the current return of the sulphide expansion?

Well, right now, it's in and around the 20%, running at around the $1,400 gold price. But we are going to revisit Sadiola. Depending on where Anglo ends up, we're still not sure about. So we're obviously going to make sure we refresh all of our analysis given the current gold price environment and make sure that we're satisfied that those rates of return are acceptable. And if they're not, then we're not going to move ahead.

Our next question comes from Patrick Chidley with HSBC.

Just a quick follow-up on Falagountou. What would the strip ratio be approximately on that reserve?

I honestly don't have that number handy. I believe it's in the neighborhood of 3.5 to 4:1, something in that neighborhood.

Okay. And then just you mentioned that you're still seeing cost pressures and cost trends. In terms of unit costs, are you seeing any costs coming down in terms of, for example, we've heard a lot about exploration costs coming down and some of the drilling costs, but any other sort of trends in terms of input costs. Oil prices, for example, are a little lower?

Costs are in line with our old forecast, so I don't really view them as coming down too much. Some of the reagent costs have moved down a little bit. Aluminum's off a little bit, which is a reagent we use at Niobec. Cyanide is down slightly, but really not materially. Certainly, a lot of the contractors are looking and we're talking with a lot of our contractors. So you mentioned diamond drilling, there are other service contractors that are a little hungrier these days and we do see some decreases there. The other place we're starting to see some decreases is in development projects for capital equipment, starting to see both reduced delivery times and lower total costs.

Okay. That's interesting. And the last question on the Québec tax. Can you just outline why that is that you're not going to see a significant impact at your operations, I guess, in particular, at Niobec?

I'll respond to that. This is Carol Banducci. Having examined the minimum tax, the royalty and the graduated tax rate, what's also been facilitated in the new tax regime is an increase in the processing allowance. So when you factor that into the equation and as we run it through our model, again we've done some preliminary analysis, the impact that we have seen is minimal.

Patrick, it's Steve Letwin. We did a lot of work with the government. And to the government's credit, they factored in a lot of the feedback from industries. So a lot of work was done by Ben Little and his group and Steve Crozier, along with Carol's group. And I know others that are in Québec did similar things and I'm not -- obviously, I'm not going to say I'm pleased that they increased anything. I mean, that wouldn't make any sense. But am I pleased that it's not as significant as they once thought? Obviously, I am and when I look at it, it's immaterial to us. So it's a good outcome for us.

Okay. And just on that processing allowance you mentioned, can you explain that?

We're actually processing ore then we do get a credit. And right now, there is a credit that we received and that's been increased in light of the increase in the royalty and the graduated tax rate. So that -- it's a function of just operating the mine in the province.

Our next question comes from Anita Soni with Crédit Suisse. Anita Soni - Crédit Suisse AG, Research Division: My question is with regard to Essakane and the grade guidance that you guys have given there. You said 10% to 15% below life of mine grade. So is that looking historically or looking specifically forward?

It's looking specifically forward. If you look at the reserve grade and apply those sort of adjustments you'll come in pretty close as to where we see 2013. Anita Soni - Crédit Suisse AG, Research Division: All right. So your reserve grade right now is 1 gram per tonne. You posted -- you put in 0.9 gram per tonne material. What does this do to the end of the life of the mine? I mean, presumably some of the grade -- we should be modeling about 1 gram per tonne material, life of mine, at this point then?

Yes, 1 gram life of mine, but you can take 2013 out at the reduced rate and you'll see that when we come out with reserve next year, I would expect to see the remainder to be adjusted accordingly. Anita Soni - Crédit Suisse AG, Research Division: Okay. And then in terms of your stripping at that asset, I noticed that the waste that was expensed went down. What should we think about in terms of waste as the expense amount for 2013 and going forward?

I really don't have that number handy. Total stripping ratio at Essakane is, I believe, it's in the 3.5:1 against the total reserve, somewhere in that neighborhood. It's somewhat front loaded and that includes both capitalized and expensed. I don't have the exact split on the waste times between what will be capitalized and what will be expensed. Anita Soni - Crédit Suisse AG, Research Division: Okay. Couple more questions. In terms of your unit mining cost per tonne there right now, what are you running at Essakane per tonne of ore?

For mining costs, we're in the low $2 -- low -- yes. Anita Soni - Crédit Suisse AG, Research Division: Low $2. And then your process costs then?

I don't -- we don't really typically get into that level of guidance.

Maybe, Anita, you can do it offline and get more granular with the cost with Gord and... Anita Soni - Crédit Suisse AG, Research Division: Sure. And then last question with respect to the capitalized stripping costs. What was the budget for this year and what are you running right now? I think you came in at about $20 million or so this quarter?

Yes, the total for the year is $74 million. Anita Soni - Crédit Suisse AG, Research Division: Okay. And this quarter, how much did you actually capitalize?

Let me get back to you on that. It was in that sort of order of magnitude, but I can confirm that number later with you, Anita. I'm sorry, $15 million, Anita.

Our next question comes from David Haughton with BMO.

Just having a look at Rosebel, you had some downtime with the maintenance. Has the throughput bounced back up to the levels that you would expect post the maintenance?

Could you repeat -- sorry, could you repeat that, Dave?

Yes, Gord. So your throughput at Rosebel was down in the first quarter mainly due to maintenance. Has it bounced back up and should we expect a consistent run rate of 37,000 tonnes a day sort of thing for the balance of the year?

Yes, that's the plan.

Okay. And the grade there was pretty good in the first quarter. I didn't see an explanation for it, and I'm just wondering what we should be thinking about going forward?

I mean, there's a couple explanations for it. We did find for additional alluvial ore, a high-grade alluvial ore that was not in the reserve or the original mine plan and we resequenced a couple of the pits to get some higher-grade ore forward, especially as we were having the throughput issues in Q1. When I look at the remainder of the year, we aren't going to be able to sustain those higher grades for the full year. We'll come back down for the remainder of the year pretty close to sort of the life of mine grades.

All right. And life of mines, around about the 1 gram mark even.

Yes, slightly higher. But yes, very slightly higher.

Our next question comes from Steve Butler of Canaccord Genuity.

Carol, you made a comment, which is kind of nice to hear that you said it was a minimal tax impact on the net change proposal. Can you give us a sense, are we talking about a 1 or 2 percentage point increase in the net effective tax rate in Québec, maybe to keep it easy that way?

Yes, I think that would not be a bad estimate. Again, we're still running through the numbers, Steve, but we're really focusing around that 1% range.

Okay. And Gord, a question for you on the production numbers as you've come up through the balance of the year. I mean, it was a quarter that had basically minimal production from the Doyon division, and in fact, no sales. But if we sort of adjust for that and recognize that Westwood will be a big contributor to production or even pre-commercial production as you go throughout the year, are you expecting any other production gains in other mines relative to Q1 performance? Because otherwise that gets you pretty tight on the -- towards the bottom end of your production range otherwise.

Well, certainly, as part of the cost savings initiative, some of the productivity gains we're hoping will deliver some more. We're not -- as Steve mentioned, we're still trying to get the numbers straight in our head before we go out with more. When I look at the forecast, Rosebel and Essakane will continue to produce at more or less the same rates. Sadiola does show somewhat of an increase for the final 3 quarters. It's not huge to our bottom line, but I'm just sort of comparing relative to what they did in the first quarter, there is an increase. And as you identified, really the bulk of the pickup comes from the Abitibi.

Our next question comes from Robert Reynolds with Credit Suisse.

My question relates to the Doyon division. I just wanted to clarify, is the 60,000 ounces of Mouska ore, will that be treated as commercial production?

Yes, correct.

Our next question comes from Michael Scoon with Stifel, Nicolaus. Michael A. Scoon - Stifel, Nicolaus & Co., Inc., Research Division: Just a quick question regarding sustaining capital levels kind of expectations for this year. And then life of mine, what should I be assuming particular to Rosebel? The number I think for this quarter was $36 million. Should I be extrapolating that forward over the life of mine or how should I trend that in my model?

Well, what we're seeing for sustaining capital for most of the operation going forward and Rosebel is into a bit of a rollover on mining equipment for the next year or so, some life of mine stuff. But generally, what we guide is look at sort of $25 million to $50 million per operation per year for the operation on a 100% basis. As I look at Rosebel, probably in the upper end of that range, but probably not right at the top of it.

Maybe I could add to that as well. I mean, if you take a look at our disclosure and just more specifically, our MD&A, what we've done this quarter is really provided some further details around sustaining an expansion capital. So if you look at the descriptive, you'll see a fair amount of detail there. And what we've also done in our disclosure, when you take a look at our full year CapEx program, we have divided it into buckets so that you can see the difference between what's been picked up and sustaining versus what's in expansion. So that's to provide some level of guidance. Michael A. Scoon - Stifel, Nicolaus & Co., Inc., Research Division: Absolutely, I noticed that. That's it for me.

I just want to correct myself on capitalized stripping for Essakane. I've been giving you $15 million; that was for Rosebel. For Essakane, this quarter, it's $19.4 million.

You had it right the first time, Carol.

Yes.

Our next question comes from James Bender with Scotiabank.

I have 2 questions, they'll probably be for Carol. Again, on the Québec taxes, you said the impact will be minimal. A 1% increase was mentioned. Is the 1% at the mine level or is that overall effective corporate tax rate? Do you have any losses that you can use there to mitigate it as well?

Okay, all right. And again, I just want to caution everybody we're still going through the analysis and Steve highlighted that as did I. So we're still working through the numbers. And the 1% is an estimate and it is on the total effective tax rate for the corporation. And in terms of losses, the way that the calculation of profit is prepared under the new tax regime. It's not the same as what you would see in taxable profits. It's a different definition. Part of it is to achieve minimum tax and so we do have a fair amount of losses in Canada, but not all of them could be used to offset this calculation.

Okay. And as far as the cost reduction program, would it be possible to get some guidance as to where and what mines. And I'm talking specifically on the operating level, so the $54 million, where you see the greatest potential cost savings?

It's Gord here. As Steve mentioned, we're still working on getting a little more granularity around -- on the mine-by-mine and initiative-by-initiative level to get our numbers together. We've chosen for the first quarter to be a little less specific on purpose. I know we're going to get all of the numbers, and as Steve said, everybody's working very, very hard to achieve them. But we're not prepared at this time to get down to the granular level on a mine site-by-mine site basis.

And we have a follow-up question from Anita Soni. Anita Soni - Crédit Suisse AG, Research Division: In 2014, what is your expected capitalized stripping cost? I'm just looking at disclosure from last year, and the projected amount for this year would have been about $40 million, $50 million and it's risen to $74 million. So I'm just trying to figure out how to factor up the last time we had sort of stripping guidance for 2014 and '15?

Anita, why don't we take that off-line and we can sit down and go through it with you.

That was our last question. I will now turn it back to Mr. Bob Tait for closing remarks.

Okay. Thank you, everyone. Obviously, there are a couple of questions that need some follow-up and we're happy to do that. If any other questions do come up, you can contact me directly or Laura Young, and thank you very much for participating today.

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