IAMGOLD Corporation (IAG) Q4 2015 Earnings Report, Transcript and Summary

Welcome to the 2015, Q4 and Full Year Operating and Financial Results Conference Call. As a reminder, all participants are in listen only mode. And the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn the conference over to Bob Tait, Vice President, of Investor Relations. Please go ahead.

Thank you. And welcome to the IAMGOLD conference call. Joining me on the 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, General Counsel and Senior Vice President, Business Development. Our remarks on this call will include forward-looking statements. Please refer to the cautionary language regarding forward-looking information in our disclosure documents and be advised that the same cautionary language applies to our remarks during the call. The slides that are referred to during the presentation can be viewed on our website. I'll now turn the call over to our President and CEO, Steve Letwin.

Thank you, Bob. And good morning, everybody. While as you can see we had very strong operating results in 2015, as gold prices fell for the third year in a row we continue to optimize our performance in net production and cost guidance, production of 806,000 ounces was above the midpoint of the range. All-in sustaining costs were $1,118 per ounce. However, excluding a number of unusual items that Carol will walk you through, we came in at $1,057 an ounce for the year. This is a tremendous improvement over we were just three years ago, and I'm very, very proud of the team for what they've been able to do. Essakane had another outstanding year, production was up 15% and all-sustaining cost down $50 an ounce. The indicated resource Essakane [ph] selling into deposit increased 84%. Although production at Rosebel was off guidance by 2,000 ounces mainly due to lower grades and harder rock. A lot of hard work is done to extend the mine life, reduce cost ad improve productivity. And I'll just reinforce my optimism for Rosebel, that we're going to be able to do what we did at Essakane at Rosebel over time. A significant amount of development and rehabilitation work was completed at Westwood. The mining strategy has been redesigned. We have the robust mine plan. Our cost structure is improving as we systematically remove cost and drive productivity higher. We reduced capital spending and our overall liquidity is strong with $700 million, nearly $700 million in cash and bullion and a $100 million line of credit, that is fully committed and available with the option to add another 150 million. A lot of hard work by Carol Banducci and her team and operations [indiscernible] with Carol a great achievement for the company. Exploration results have been positive, including a 27% increase in Boto's indicated resource and an initial resource estimate for the Diakha project. In January, we announced updated mine plan with current gold price environment that confirm a portfolio of assets capable of delivering higher economic returns. At Westwood the focus is on underground development to expand the mining area as we ramp up production over the next four years. We expect Westwood to be a 20 year mine, the lowest unit cost of any of our operations. At Rosebel and Essakane, we see more opportunities to increase operating returns, including solar power at Essakane in securing soft rock resources at Rosebel. We will continue to look at investment opportunities that have the potential to increase our near term cash flow. With respect to guidance for 2016 we expect to produce between 770,000 and 800,000 ounces of gold. We lowered our all-in sustaining cost guidance by $75 an ounce for the second year in a row. In 2016, we expect all-in sustaining cost of between $1000 and $1100 an ounce. With that, I'll turn you over to Carol for a review of our financial results.

Thanks, Steve. And good morning, everyone. We began 2016 in a strong financial position with $691 million in cash and bullion. As Steve said, the underlying performance of our business was strong. At the same time, our financial results in 2015 and were specifically in the fourth quarter were impacted by a number of significant items. As I walk through the slides, I'll point out the impact these items had on cost of sales, operating cash flow and earnings. The largest item was $580 million after tax impairment charge relating to the Côté Gold project and the Westwood mine. This was a non-cash charge comprising of $400 million against the carrying amount of the Côté Gold exploration and evaluation asset and $180 million against the carrying value of Westwood property, plant and equipment. The assessment was based on a $1,100 per ounce gold price assumption for 2016, and $1,200 per ounce long-term. In the previous year, we used $1,250 per ounce for 2015 and $1,300 long-term. The next item relates to derivative contract for fuel and currency. We made an $86.5 million cash payment to sell derivative contract in the fourth quarter, of this amount, $72.5 million related to the early termination of the 2016 and 2017 derivative contract. The remainder relates to realized losses on the 2015 derivative contract. The cash payment for the full year was $128 million. The P&L was impacted by a net loss of $15.6 million in the fourth quarter. Of this amount a $11 million related to the early termination of fuel contract and the remainder related to realized losses on currency contract settled in the quarter. The full year net loss was $65.5 million, and included $45.5 million of losses on early terminated and settled fuel contract. The third item was the $28 million one-time purchase of assets held under finance leases at Rosebel. The $9.8 million write-down in the fourth quarter related to non-current stockpile inventory. The write-down was based on the net realizable tax for each of our site and is driven by an assumed lower gold price assumption. And the $7.8 million relates to the reduction in fixed costs attributed to inventory at Westwood, as a result of the abnormally low production. We began applying such an adjustment in the second quarter of 2015 in accordance with IFRS. For the full year 2015, the amount was $28 million. Looking more closely as our financial results, I'll begin with the top line. Revenues from continuing operations in 2015 were $917 million, down 9% from the year before. And this is mainly due to a 8% decline in the average realized gold price. The increase in sales at Essakane was offset by the lower sales at Rosebel and the closure of Mouska in the third quarter of 2014 which resulted in a small decline in sales overall. Cost of sales for 2015 was $972 million. The operating costs component of $672 million include a number of significant items, $17 million related to currency hedge losses, $17 million related to stockpile and other write-down, and $28 million related to the normalization of Westwood's costs, which reduced the costs attributed to inventory, but were included in operating cost. Depreciation in 2015 was $261 million, which was below the bottom end of our guidance range. Note that depreciation included a full year of straight-line depreciation at Westwood compared to only six months in the prior year. Slide 10 presents reported net cash from operating activities. Both the fourth quarter and the full year were impacted by the cash payout related to the early termination of the 2016 and 2017 derivative contracts and the settlement of the 2015 fuel and currency contract. As a result, net cash in the fourth quarter was negative and for the full year much lower than it would otherwise have been. After normalizing earnings for items not representative of our underlying business, the adjusted net loss per share for continuing operations was $0.44 for 2015 and $0.16 for the fourth quarter. Again, the most significant adjusting items were the non-cash impairment charge related to Côté Gold and Westwood which accounts for most as of the forecast $621 million. The $28.2 million adjusted - adjustment related to the normalization of Westwood cost, the $17.4 million adjustment related to the write-down of non-current stockpile inventory, and the net loss of a $11 million due to the early termination of derivative contracts related to fuel. Note that while they incurred higher derivative losses we only normalized earnings for the 2016 and '17 contracts that were terminated early. We did not normalize for hedging losses related to 2015. The $42.8 million gain on the sale of assets was primarily the gain on the sale of the Diavik royalty asset. Turning to the balance sheet, as of December 31st, 2015, cash, cash equivalents, restricted cash and gold bullion was $691 million compared to $321 million at the end of 2014. We recently secured a four year $250 million revolving credit facility, an appropriate amount given our liquidity requirements. The facility consists of $100 million which is fully committed and secured and option for an additional $150 million. We will continue to look at other sources of financing to strengthen our liquidity. And last year we raised $43 million from the issuance of flow-through share which allowed us to fund development expenditures at Westwood without reducing our liquidity. We had short term bank indebtednessof $70 million which was repaid in January, and the carrying amount of our long-term debt is $635 million, having purchased $50 million of our bonds at face value in 2015. The notes are not due until October 2020. The net debt to EBITDA is well in compliance with our loan covenant of three and half times. Attributable gold production for 2015 was 806,000 ounces, which was above the midpoint of our guidance range. The year-over-year variance is mainly due to record high production at Essakane, offset by lower grades at Rosebel and Sadiola, the closure of Mouska and lower production at Westwood. Production of 199,000 ounces in the fourth quarter was up slightly from the third quarter as the lower grades and throughput at Essakane were offset by an increase at Westwood. Production at Rosebel and the joint ventures were unchanged quarter-over-quarter. All-in sustaining costs in 2015 were distorted by a number of unusual items to provide a more accurate picture of our operations are performing against this metrics, we've adjusted for these items. The realized derivative loss is related to currency hedges and fuel contracts increase all-in sustaining costs at each of our sites. At a consolidated level the increase was $59 an ounce for the fourth quarter and $63 per ounce for the year. The one time purchase of assets that were previously held under finance leases at Rosebel increased their all-in sustaining costs by $382 an ounce in the fourth quarter. At the consolidated level, it increased all-in sustaining costs by $123 an ounce for the fourth quarter. The third item was the $28.2 million reduction in fixed costs attributed to inventory at Westwood as a result of the abnormally low production. At the consolidated level, this adjustment reduced all-in sustaining costs by $36 for the quarter and $35 for the year. We expect to continue normalizing cost at Westwood in 2016 on a similar basis as 2015, although it could be slightly higher because of the full year of production and exchange rate differences. Adjusting for these unusual items, all-in sustaining costs would be $1,056 for the fourth quarter and $1,057 for the year. On the next slide, the all-in sustaining costs numbers for prior periods have also been adjusted in a similar manner where applicable to present apples-to-apples comparison. The derivative losses impacted all quarters in 2015, the normalization of Westwood cost began in the second quarter of the year and the buy back is the previously asset at Rosebel occurred in the fourth quarter. Now, really the takeaway message from this slide is that for the past five quarters all-in sustaining costs per ounce have consistently been around the 10, 50 mark or lower supporting our lower guidance for 2016. We will continue to be financially disciplined and to build on our success in reducing costs and enhancing operating performance. And with that, I'll turn it over to Gord for review of our operating results.

Thanks Carol. As you know, last night we released our 2015 year-end reserves and resources statement, so I'll begin with that. This slide shows a year-over-year comparison of our reserves and resources. Please keep in mind that our mineral resource estimates are inclusive of mineral reserves. In total, proven and probable attributable gold reserves after depletion decreased by 11% or 0.9 million ounces to 7.7 million ounces at the end of 2015. The decline was primarily due to depletion as we produced 806,000 attributable ounces in 2015. Other notable factors contributing to the revised estimate were a lower gold price assumption, which accounted for a decline of 294,000 ounces. Our gold price assumption used for reserves at the end of 2015 was $1,200 per ounce compared to $1,300 per ounce the year before. At Westwood, 213,000 ounces of resources were converted to reserves, partially offset by refinement of the reserve model that resulted from additional infill drilling and modeling. A change in economic parameters, including improved operating costs at Essakane had a positive impact of 337,000 ounces, and at Sadiola 211,000 ounces were converted from reserve - resources to reserves and the gold price assumption increased to $1190 an ounce from $1100 the year before. Total attributable measured and indicated resources, inclusive of reserves increased at all sites and overall by 10% or 2.1 million ounces to 23.5 million ounces at the end of 2015, using the exact same gold price of $1500 per ounce for resources. Turning now to review of operation, I'll focus on the performance highlights from last year, and our outlook for 2016. Essakane, had another record year in 2015 with attributable production up 15% to 383,000 ounces. This reflects continued mill optimization and 15% grade increase and the mining of the Falagountou pit in the second half. Although the percentage of hard rock milled at Essakane increased by 65% in 2015 - increased to 65% in 2015 from 50% a year before, it was still lower than the 90% anticipated beginning of the year. This was due to additional saprolite ore from stockpiles and from the Falagountou department. As we mine deeper in the pit we should be at 90% hard rock by the end of the first quarter of this year. All-in sustaining cost were 1,010 per ounce in 2015 at Essakane, excluding realized losses on fuel and currency hedges, all-in sustaining cost were $935 per an ounce, which is $125 per ounce lower than 2014. Operational enhancements, lower fuel cost and stronger US dollar relative to the euro, as well as higher sales were behind the improvement. In 2016, we expect Essakane can produce between 365,000 to 375,000 attributable ounces with a full year of mining at Falagountou, mining tonnage should he higher, but gold production is expected to be marginally lower than 2015 due to lower grades deeper in the pit. To improve gold recoveries, we are looking at oxygen injection into the carbon-in-leach tanks and the installation of an intensive leach reactor for the gravity circuit. With the higher proportion of hard rock expected for 2016, the emphasis is on increasing mining and milling efficiencies, performance improvement initiatives include optimized drill and blast practices to decrease the amount of explosive used, automated cyanide injection to enhance circuit stability, installation of a carbon fines incinerator to reduce gold-in-process inventory, and reduced fuel consumption and improved power plant efficiencies Our updated mine plan shows Essakane to be a robust profitable operation for at least another 8 years or longer depending on the exploration success with the soft rock targets in surrounding areas. Looking at Rosebel, Rosebel produced 287,000 attributable ounces in 2015, lower than the previous year by 38,000 ounces. Most of the decline was due to lower grade and lower throughput, as the proportion of soft rock fell from 38% to 25%. Production in the fourth quarter of 70,000 ounces, although down from the same quarter in 2014 due to the strike in December was unchanged from the third quarter in 2015 which was also lower than the prior year due in part to a plant mill shutdown. All-in sustaining cost for Rosebel was skewed high at $1,420 per ounce in the fourth quarter and $1,165 per ounce for the year, due to the one time purchase of assets held under finance leases and the realize losses on fuel and currency hedges. Vesting ph for both these items, all-in sustaining costs were $980 per ounce in the fourth quarter, representing a 12% improvement from the third quarter. In 2016, we expect Rosebel to produce between 285,000 and 295,000 ounces. This is at a similar level to last year as the lower mill throughput through the increasing hard rock will be offset by higher grades. In 2015, we processed 12.3 million ton, 30% of which was hard rock, once we achieved 80 to 100% hard rock, in the next couple of years, annual throughput would be expected to drop below 8 million tons. However to reduce that impact, we plan to install and commission a permanent secondary crusher this year at a cost of about $15 million. This will increase throughput by about 20% relative to the case where we don’t install the crusher and will allow Rosebel to process around 9.5 million tons annually at the higher proportion of hard rock. To further increase the capacity to process hard rock, we're changing the grinding media size and configuration of the SAG mill liners. This will also reduce the steel and cyanide consumption. This improvement comes at no additional net cost as the liners involved need to be replaced on an ongoing basis regardless. Rosebel has made great strides improving operating efficiency and reducing cost over the past few years, productivity have increased 25%, shovel productivity have increased by 30%, mill availability is currently running over 96% and the employee base is been trimmed by about 10%. There continue to be opportunities for further cost reduction still. This year we plan to reduce cycle times through enhanced dispatching and road optimization and we're looking at options from improving drilling productivity. Increasing bench height will help lower mining cost and optimizing the gravity circuits and the carbon-in-leach configuration will help us manage milling cost downward. Based on the updated mine plan for Rosebel, the remaining life of mine is at least another seven years, production will average 300,000 ounces for the next several years, before tailing off near the end of mine life as we move into the lower grade pit. However, we think we can do better than that, which is why securing a source of softer rock to enhance the [indiscernible] to the Rosebel mill remains a major objective this year. Looking at Westwood, the focus over the next years will be on underground development to expand the number of active mining sectors. The development work is necessary to open up access to multiple mine blocks for future years and for operational flexibility. Early development in new sectors will also allow us to complete infill drilling in resource areas to allow us to convert them into reserves ahead of future mining. Once we are mining in two, to three asset sectors, Rosebel can achieve its design for production cadence of 180 to 200,000 ounces a year. In 2016, and 2017, Westwood would carryout remedial work in the area affected by last year’s seismic event. The seismic event was in the principal high grade sectors that have been opened up for mining to that point, which is why the impact on production in 2015 was significant. However, the affected area accounts for only 6% to 7% of Westwoods total resources. Based on the review of the incident and our recovery plan, we expect to eventually mine nearly all of that ore. Our mine plan for Westwood shows a 20 year mine life at a minimum and the lowest life of mine all-in sustaining cost of any of our operations. The life of mine plan at Westwood is based on a significant amount inferred resources, unlike Rosebel and Essakane which are based only on reserves. As mentioned previously, our priority will be the ongoing conversion of the inferred resources to mineable reserves. Through 2016 the mill will operate on a reduced schedule due to low level ore being mined. We expect to ramp up to full design capacity by 2019. In 2016, production guidance for Westwood is between 50,000 and 60,000 ounces of gold, similar to 2015. Our development and remediation plan is well underway and we will closely track and monitor development rate. Although it’s still early days, I am happy to tell you that we are currently tracking slightly ahead of budget and that we are achieving that development in the priority heading. Increasing development productivity provides greatest opportunity to lower our capital and operating cost at Westwood in the near future and accordingly guys where we are focusing our continuous improvement effort. In addition, we will continue to take advantage of other opportunities to improve operating efficiencies throughout the Westwood operations, such as negotiating better terms for supplier contract and augmenting more our processes and systems. All of our sites have worked hard to find ways to cut cost and with much success. To give you an example, last year alone we saved a net $13 million in global procurement by negotiating better prices and terms to surpassing the $12 million that had been saved in the previous two years. While we don’t expect to repeat that again in 2016, there are number of key contracts up for renewal which present opportunities for further savings. At our Sadiola joint venture in Mali attributable gold production in 2015 is 69,000 ounces, with 16,000 ounces produced in the final quarter. The decline over the previous year was due to lower grade. Compared to 2014, all-in sustaining cost were 23% lower due to lower prices for fuel and consumables and favorable exchange rate. In 2016, we expect Sadiola to account for 9% to 10% of our total attributable production. The operating came at Sadiola is been doing some excellent work there to bring down cost. Additionally, the positive results from last years RC, reverse circulation drilling program to test rock site target have delivered an increase in year end reserves and resources estimate. Improved cost and increased reserves have combined to allow the team to extend the life beyond what we initially thought for the outside operation. And the current assessment indicates two more years of mining and milling op sites which is expected to take us at least into early 2018. At the same time, although gold prices have been challenge, we continue to look at expansion options with our partner and update the feasibility study. And finally to closeout my section, in 2016 our capital expenditure guidance is $250 billion, plus or minus 10%, which is up 5% from 2015, mainly due to development work at Westwood and capitalize stripping at Essakane. About 30% - 37% of the sustaining capital total for our owned and operated mines is for capitalize stripping at the open pit operations at Rosebel and Essakane. Of the $80 million planned for CapEx at Westwood this year, $65 million is development capital required to expand its new mine sectors that described earlier, development mining work in existing stoping areas is classified as sustaining capital. Other then Westwood, our largest development expenditure will be $15 million for the secondary crusher at Rosebel as I mentioned earlier. That completes the operations review and Craig will now give an update on exploration

Thank you, Gord. And good morning, everyone. In 2015, we spent $49 million on exploration and evaluation studies, down 30% from the year before and 50% from the year before that. This is noteworthy because despite the fiscal restraints the exploration teams has done a great job advancing our high potential projects through the pipeline. Our budget for this year of $47 million is little changed from last year, although the allocation shift to less spending on Greenfield and Brown field exploration and more and development and evaluation studies such as for the Boto project. Results I will refer to have been previously disclosed in accordance with securities regulations and has bee duly signed off by qualified persons within the company's we reported them. As you hear from Gord, our overall measured and indicated resources increased by 10% in 2015. There was no change in our gold price assumption for resources of $1500 at our owned and operated sites. Contributing to the increase was a positive change in the economic parameters, which drove Rosebel's measured and indicated resources up 9% and Sadiola is up 6%. At Essakane indicated resources increased by 7% with the major reason an 84% increase in indicated resource at the Falagountou deposits of 613,000 contained ounces. Now turning to our exploration project. At the Boto Gold project in Senegal the results from the infill drilling program on the Malikoundi deposit were incorporated into a revised resource model. This resulted in a 27% increase in Boto's indicated resource to 1.6 million ounces and the average grade increased by 7% to 1.8 grams per ton gold. Inferred is 125,000 ounces with an average grade of 1.3 grams per ton gold. In 2016 we expect to continue with technical study to support the economic evaluation of the projects and to begin preparing an application for an exploitation permit. And exploration drilling program is also planned at the site with the objective of identifying higher grade zone as deeper in the deposits. At the Siribaya project in Mali, the results of this used reverse circulation and diamond drilling program were incorporated into a revised geological model and initial resource estimates for the Diakha deposit was announced last week, the 43-101 compliant resource estimate affective December 31, 2015 comprises an indicated resource of 2.1 million tons averaging 1.9 grams per ton gold for a 129,000 contained ounces and an improved resource of 19.8 million tons averaging 1.71 grams per ton gold for 1.1 million ounces. This amount includes resources estimated for previously known zones along the Siribaya joint venture. With the Diakha deposit opened in all directions there is significant potential to expand the current resource base. This will be an objective of the future exploration programs. At our Pitangui project in Brazil, we completed an infill diamond drilling program at Sao Sebastian deposit. This work is resulted in a more robust geologic model to support revised resource estimate. Inferred resources have increased 6% to 679,000 ounces, along with a slight increase in grades to 5 grams per ton gold. This year drilling will continue testing various electromagnetic anomalies and geological targets previously identified on the property. At our Monster Lake project in Quebec the exploration team completed diamond drilling on the Megane-32zone and other priority targets identified on the properties. Drilling has extended the high grade 325 zone to depth and several new gold bearing structures have been identified for further exploration. As previously announced at the end of October, we amended the earn-in option, the joint agreement with TomaGold. We now hold a 50% interest in the project with an option to increase our interest to 75%. This increase in our stake speaks to the confidence we have in this new discovery stage project based on the results we have seen to date. Lastly, at our Eastern Borosi project in northeast Nicaragua, the focus of last years diamond drilling was to test selected gold and silver vein system. Results to date confirm multiple vein systems with high grade. The results from the 2015 drilling program are being complied and assessed and will guide the 2015 exploration program. Overall, our exploration program at our mine and Greenfield sites continues to deliver promising results. Including Bodo's Malikoundi deposit, the new Diakha discovery is the affecting Greenfield discovery made by our exploration team in West Africa in the last three years. Despite the reduced budgets our exploration group has advanced these projects from the discovery phase to the delineation of initial resources in just two years. With that I'll turn you over to Steve to wrap up.

Thank you very much Craig. Our priorities this year are to meet guidance again, advance the ramp up development plan for Westwood, secure a source of soft rock for Rosebel and drive cost down further. Obviously cash preservation is key to us and we demonstrated our ability to do this last year. The morality [ph] in gold price continues. We're in enviable position. We're highly leveraged to the price of gold, in fact, I think most studies indicate we're the best proxy for gold out there. And as you can see on this slide we are far more toward potential in arising gold environment than any of our peers. Thank you for listening and we'll take questions now.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from David Haughton of CIBC. Please go ahead.

Good morning. Steve, Carol and Gord. Thanks for the call. I got a question, and Steve, you don’t mind if it probably relates to Gord. Having a look at the reserves that are come out, can you confirm that the profile that were given for the various assets are consistent with the reserves and resources that have come out overnight?

There are some slight differences between the LOML plans that you received in the reserves and resources, some of those LOM plans were completed ahead of the completion of the reserves and resources and were based on the prior years RNR [ph] statement. So I guess, the answer is – I won't confirm it, there are some slight variances.

Okay. And would you be able to give us an idea as to where those might be?

Dave, I'd have to look at it, I believe Rosebel is quite close and Essakane is quite close. I think there are some additional ounces in the resources for Westwood on the current mine plan. But I doubt, I will look at them.

Okay. Thank you for that. And you had mentioned Gord in your discussion that Westwood is so far looking as expected, would you just like to elaborate what you're seeing there please?

Yes, I mean, I was just up with [indiscernible] last week, with Craig and some other people and looking at what they are doing. They've got a fairly comprehensive system for tracking where development is occurring on a – actually on a ship-by-ship basis. And currently as of the couple days ago when I talked to the sites, they were running 2% or 3% above budget in terms of development productivity and hitting pretty close to their targeted planning, like mining where they are expecting to be planning that always ships a little bit on a week-to-week basis, but catches up through the year. So I - we started out with a pretty aggressive cadence. We will be ramping up later in the year as we get into some new areas and we're able to bring on another crew. We're thinking that would be around mid year or that’s what the current plan is. So the first quarter is not equal to sort of the year, the production or the year of development plan provided by board, it’s a little lower than that because the crews are displaced. But I like where we're headed, we're well ahead on lot of the development and we're just still ramping up some of the attractive element and the vertical development is slightly behind, but it’s catching up as well.

And the grades are lining up as expected?

Yes, definitely.

All right. Thank you very much for that.

The next question comes from Matthew Field with Bank of America Merrill Lynch. Please go ahead.

Hey, guys. Thanks for taking question. In the MD&A you said that regarding the asset sale proceeds you kept observed, performed and fulfilled your obligations under the bond indenture with regards to those proceeds. I think it was about %560 million as of the last quarter earnings call that had to be kind of allocated by March of 2016. Can you tell us how you fulfilled and performed those obligations with that cash balance?

I can respond to that question Matthew. So if a take a look at our expenditures for 2015, you'd pick up our capital expenditures, you would look at the hedges that we settled both naturally, as well as the early termination. We also have commitments for capital that we'll be spending fund on for 2016 within six months time period, that’s allowable until we have the indenture. And we also cash collateralized our letters of credit. So when you combine all of those activities we fulfilled those obligations.

Okay. Do you mind giving us a break out of sort of roughly what each of those four buckets, how those add up to the total?

I can certainly do that, following the call, but I would say a large majority of that expenditure is capital.

Okay. For 2015 and 2016?

That’s correct. And if you go through our financial statements and there is lot disclosure on the call today, the settlement after hedges, so all that detail is there as well.

Okay. Great. Thanks. And then lastly, I noticed in your sort of listing up the priorities for 2015 and forward, I didn’t mention you're leveraging as one of those. How closely are you paying attendant to your balance sheet? It looks like leverages has gone up quite significantly over the last year and with your bonds sort of trading the way they are, it seems like a pretty high IRR investment to keep buying some of those back? Is that something that you're interested in pursuing?

I think, again, as we look, we've done historically, we look at our capital allocation and we weigh it against our liquidity and we've got one of the strongest balance sheet over there in the mining’s and metal sector and its because we've been very conscientious of managing our balance sheet in a very prudent way and we will continue to do that.

Okay. Thanks very much.

The next question comes from Dan Rollins of RBC Capital Markets. Please go ahead.

Yes, thanks very much. Thanks for taking the question. Just a couple of different questions, one on Rosebel to start. You've mentioned the potential for the satellite soft rock feed, I know its been a developing story, couple of years they talked about potential heap leaching and that’s seem to have fallen off. But could you give us an update on when we potential could see a resource on some of the softer rock feet from the satellite deposits?

Hi, Dan. I did mention heap leaching, but we actually are continuing to do studies in that area and we've just chosen to - until we actually have something noteworthy to talk about to bring it forward. But we are continuing work in that area. The satellite resources, it’s an ongoing push, the Serotonin [ph] option is – we've had a number of years of – or couple of years of exploration there. We're into some news zones, it looked very, very promising, it’s still early days. So we're still probably a couple years away. In addition to the existing areas that we're looking at, we are doing a lot of work with our partners and the government and looking at some other norm resources, certainly deposits, whether they are ore or not we still need to prove out. But there are some – there is a few significant soft rock deposits out there that we're looking to see if we can bring into the portfolio with the government and then begin mining. The timing on that might be hard to say, we're pushing pretty hard in that regard, but when dealing with governments and third parties it sometimes takes a while.

Okay. Understood. And the agreement you have in place with the government Suriname, one the lower power rate on the expanded land package. There is no expiry that on that option, correct?

No, there is no expiry date. There is an expiry date on the existing mineral lease, I think it’s in the 20, 30s sometime I believe, but we can get the number too. And we can – not yield laterally, but we can apply for an extension to that. So the huge AV sort of attracts that.

Okay. So you continue focus on this offer which you should see some color hopefully next couple of years?

I sure, hope so.

Okay. Perfect. And then just on – just that Sadiola, could you guys maybe I don’t know, if you have the numbers off hand, but could you just give a breakdown of how much of the current reserve at Sadiola is for the existing authorized operation from both tons and ounces? Just trying to get a split, because there is a quite bit thus far included from the Sadiola [ph] project?

Yes. It’s certainly off a little bit, give me a second…

You can offline respond to.

Yes, okay.

And then just to some of the exploration projects, actually quite bit of success in West Africa, how do you see of the project you have right now, which were sort of the top priorities and which ones are you starting to get excited about that could become your next operation in the region?

Well, obviously we're excited about the advances that we've had at both Boto and the new the Diakha discovery, the Boto is a little more advanced in it, we're now moving towards applying for the exploitation permits there which we'll be submitting before the end of the year. In terms of continued upside, certainly we're excited about the new Diakha discovery which remains open as we've indicated in all directions. So we haven’t closed up one off yet and the initial resource is very promising and the grades look interesting. So we're going to keep working on those projects and adding ounces to them for this year and we continue it as Gord mentioned we have been doing work around Sadiola as well and that’s delivered some early results for us and extending the off site mining life there. So we have a number of things that we're working on, that are improving our asset base and certainly our outlook for the future.

Okay. Perfect. And how long that once you submit the permit or get the application for the exploitation permit, what's the typical timeframe there to get clarity on that?

We have to submit I think it’s in November and the notice from the government should come out around March of the following year, that’s what we would expect. They do sometimes suffer from some bureaucratic vagrancy that we'll have to push through but that’s the timing that we're expecting right now.

Okay. Perfect. And just maybe Gord, just at Sadiola, Yatela, is there any significant reclamation liabilities at Yatela, now that’s its coming to an end and as to how much – what's the annual spend there from your equities stake going forward?

There is an outstanding amount, I think it covered off in the MD&A under ARO [ph] The total amount on a 100% basis which were liable to our – I believe is somewhere in the neighborhood of $50 million to $55 million and I think the span right now is I want to say it in the $5 million to $10 million range and we're in that neighborhood.

Okay. And that spend would..

That’s a 100% basis, we're up for half of it.

Okay. And then that spend would be nether off the dividends coming from the JV partner?

Unfortunately not, they are different companies.

Okay. Okay, that’s great. Thank you very much.

This concludes time allocated for questions on today's call. I would now like to turn the conference back over to Bob Tait for any closing remarks.

Thank you, operator. And thank you all for dialing in. If you have any further questions please don’t hesitate to get in touch with me or Laura in the investor relations department. I know you have a lot of calls today. It’s been busy evening for a lot of you. So thank you very much for participating today.

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