IAMGOLD Corporation (IAG) Q4 2016 Earnings Report, Transcript and Summary

Thank you for standing by. This is the Chorus Call conference operator. Welcome to the IAMGOLD 2016 Fourth Quarter and Year-End Operating and Financial Results Conference Call and Webcast. 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]. At this time, I’d like to turn the conference over to Lori Young, Director, Investor Relations for IAMGOLD. Please go ahead, Ms. Young.

Good morning, and welcome to the IAMGOLD conference call. Joining me on the call today are Steve Letwin, President and CEO of IAMGOLD; Gord Stothart, EVP and Chief Operating Officer; Carol Banducci, Executive Vice President and CFO; Craig MacDougall, Senior Vice President, Exploration; and Tim Bradburn, Vice President, Legal and Corporate Secretary. Our remarks on this call will include forward-looking statements. So 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 Web site. I’ll now turn the call over to our President and CEO, Steve Letwin.

Good morning, everybody. I’m going to apologize ahead of you’re going to hear coughing in the background. That’s Stothart and he gave me his cold, so I’ve got a bit of a raspy throat, so apologies ahead of time. While you saw the results and I couldn’t be happier. We had a great year. Operating cash flow rose 721% to 314 million. Along the road we reduced our long-term debt by 146 million and we ended the year with 763 million in cash, all of course in U.S. dollars. Our strong financial results underscore outstanding operating performance. Production rose from one quarter to the next with 813,000 ounces for the year, exceeding guidance. All-in sustaining costs came in at the low end and we beat on cash costs. Many of the initiatives that we’ve been working on over the past few years were aimed at lowering costs and extending the life of our mines. These were the two major challenges that the company’s faced I think over the last five to six years, at least since I’ve been at the helm, have been the higher cost structure as you know and the life of mines being relatively short to where it appears. I’m really pleased to tell you that we’ve really done a lot in 2016, 2015, 2014 along the objectives setting the stage for continuing to cut costs, continuing to lengthen our life of mines and growing production as we look forward by 25% and reducing all-in sustaining costs by 15% by the year 2020. So our work is not complete. I think we want to be mindful of the fact that no matter what we’ve done in the past, that’s the path. And as our famous hockey player Wayne Gretzky said, you’re only as good as your last shift. And we keep that in mind at IAMGOLD. We still have a lot of work to do and we’re going to continue to do it, and you’re going to see that in our results. Our priority is to grow organically. M&A is not off our radar. We’re always looking at opportunities. But it’s not something we have to do. We’ve identified in advance high potential targets for resource expansion throughout our project pipeline, including areas surrounding our existing operations. And without getting too robust about it, I’m not shy in telling you I think 2017 is going to be the year of IAMGOLD, because we’re seeing some fantastic opportunities to set the stage for growth. And if you look at Slide 5 and Rosebel in particular, we turned the page with an agreement to acquire the rights to the Saramacca property. We had relentlessly pursued this asset not I’d assess for several years in this script here, but it’s actually for five years. And I was personally very frustrated along this tonnage [ph]. I’d indicated that it would be like a two-year process. It ended up being much longer than that. At the end of the day, the rewards that have come with this are huge, I believe transformational for Rosebel. And after an intensive drilling program in the latter part of 2016, we released the initial assay results last week. They appear to confirm mineralization which could eclipse earlier estimates and we’re very encouraged by what we are seeing in the transformative Essakane would have on this particular mine. An initial resource estimate is expected in the third quarter and will let Craig MacDougall talk to that. With Saramacca only 25 kilometers away from the mill, we can leverage the existing infrastructure which is one of the most cost effective ways to achieve growth. And that’s been our strategy over the last five years. As you know, any time that we can find deposits within hearing distance of the mill and leverage off the current infrastructure, the returns for us are infinite. And what you’re going to see from IAMGOLD this year are much more enhanced life of mine, particularly at Rosebel. We’ve seen the same effect at Essakane with Falagountou. We also are moving ahead with the Sadiola Sulphide project in Mali. We are shovel ready as soon as agreements with the Malian government are finalized. I will tell you I’m disappointed with how slow it’s going with the Malians right now. It took us a number of years, as you know, to get on the same page with Anglo. We’re now brothers walking together on this particular project for the first time in five years. So I’m really pleased. Technically, we’re on the same page and we’re walking basically together in front of the government to move this ahead. In the meantime, we want to make sure that the project economics hold. And we know this project could add another 10 years and lower the cost structure of this existing mine; then owes us nothing after producing between [indiscernible] over 7 million ounces. We’re also seeing Westwood on track to achieve full production ramp up by 2019. A special kudos to the management team at Westwood, outstanding performance. And production is expected to double this year. The Westwood team did great work in meeting their ramp up targets in 2016. And with 25 kilometers of underground development, again world class in terms of performance. Their resource conversion infill drilling program increased reserves by 75% year-over-year and the advanced underground development and opened up new drill sites. We expect the rated conversion to accelerate. At Essakane, the mine is surrounded by a number of highly prospective targets, which can prolong the life of the mine. At Falagountou there’s an opportunity to expand their footprint and we’re looking at potentially delineating a resource for the eastern portion of the deposit. Here we have a portfolio of assets with organic growth opportunities that would take us to 1 million ounces by 2020 and the expansion of Sadiola and the development of Saramacca would be funded internally through operating cash flow and cash on our balance sheet. Beyond that, we have a pipeline of growth options also in our own backyard. The Côté Gold project with an estimated 8 million indicated ounces and 1 million inferred ounces is an exceptional option for future growth. In January, we announced positive results from the preliminary economic assessment that demonstrated Côté has the potential to be a low-cost mine with a 21-year mine life. The results of the pre-fea study which we expect to complete by the end of the second quarter would see a portion of the indicated resources converted to reserves. The other good news is with positive decisions on the environmental assessments from both provincial and federal governments, we’ve cleared a major regulatory hurdle. Our advanced exploration projects present additional options for growth. There are not a lot of new mines being build, so investing in exploration is critical to building a pipeline of future development projects. In 2017, we’re targeting resource upgrades for Boto, Pitangui and Diakha and we are working towards declaring initial resources for Eastern Borosi and Monster Lake. So look, it’s been a while and many of you have been very patient with us and we appreciate it. It’s been a long haul after a gold run that was some 10 to 12 years long. Our company in particular had a cost structure that got a little bit ahead of itself. Gord Stothart and his team, Carol Banducci and her team, Craig MacDougall and his team have done an outstanding job. And if there’s anything that I would say without trying to sound like we’re patting ourselves on the back for which is not my intension, I think we’ve at least demonstrated to you that we’ve been able to execute on our plans. We’re still not happy with the cost structure. We still have to bring it down. We’re extremely happy with the way the balance sheet’s been managed by Ms. Banducci. And we’re extremely pleased with the way Mr. MacDougall with a very, very low capital program has been able to add reserves, replace reserves and as I say, I think 2017 from an exploration perspective, particularly on the ground field side will be the year of IAMGOLD. So thank you. And I’ll turn it over to Carol.

Thanks, Steve. Good morning, everyone. As Steve said, we had an excellent year. Our positive financial results reflect outstanding performance across our operations. We begin 2017 in a strong financial position, the results of ongoing financial discipline and how we manage the business and actions taken to further strengthen our capital structure. In 2016, operating cash flow increased by $276 million compared to 2015. We ended the year with $763 million in cash, cash equivalents and restricted cash. Excluding restricted cash, this leaves us with a net cash position of $163 million. And we secured a $250 million credit facility. Slide 7 highlights how we performed year-over-year on multiple financial and operating metrics. The variances are positive and they’re significant. Revenues were up $70 million, adjusted net earnings per share were up $0.45, net operating cash flow was up $276 million and cost of sales was down $111 per ounce. Note that the main reasons for the increase in capital expenditures year-over-year were the higher capitalized stripping at Essakane and the higher underground development at Westwood. The overall message that these numbers convey is that across the board we are driving operating performance higher. Although we expect the price of gold will continue to fluctuate, we will keep directing our efforts on what we can control. We recorded $102 million in gross profit in 2016 which was up $157 million from the year before. This was the result of an 8% increase in revenue coupled with a 9% reduction in cost of sales. The gross profit in the fourth quarter was $19 million, up $64 million from the fourth quarter of 2015. The 8% increase in revenue to $987 million was driven by a higher gold price, as consolidated sales volume was flat year-over-year. While sales volume increased at Westwood with the higher production, sales at Rosebel were down slightly and Essakane sales were flat year-over-year. The 9% reduction in cost of sales was due to a 14% or $92 million reduction in operating costs. Depreciation expense was virtually unchanged year-over-year. The mixed factors behind the lower operating costs were higher capitalized stripping at Essakane, lower fuel prices, lower inventory write-downs, cost denominated in currencies that lost value against the U.S. dollar, lower labor costs at Rosebel as a result of the workforce reductions in 2015, and lower realized derivative losses. These were partially offset by higher fuel consumption at both Essakane and Rosebel. Cost of sales per ounce for 2016 was $794 compared to $905 in the prior year. The 12% improvement reflects a reduction in operating costs. In 2016, we generated $314 million in net cash from operating activities which was up 721% from 2015. Before the changes in working capital, net cash flow from operating activities was $290 million, up $211 million or 265% from the previous year, a significant improvement of such higher earnings in 2016. The prior year included the cash payout related to the early termination of 2016 and 2017 derivative contracts and the settlement of 2015’s fuel and currency contracts. Net earnings attributable to equity holders was $52.6 million. Adjusting for items not indicative of our core business, including the gain on the sale of gold bullion and the normalization of Westwood’s cost, adjusted net earnings were $3.9 million or $0.01 a share compared to an adjusted net loss of $0.44 a share in 2015. Adjusted net earnings in the fourth quarter 2016 were $3.3 million or $0.01 a share compared to an adjusted net loss of $0.16 a share in the fourth quarter of 2015. The next slide shows the significant improvement in our gold margin year-over-year. The 7% increase in our average realized gold price together with an 11% reduction in total cash cost drove the gold margin up 56% to $505 an ounce. We are in excellent financial shape. Cash, cash equivalents and restricted cash were $763 million at the end of 2016, exceeding long-term debt by $274 million. We have a manageable level of debt and strong credit metrics. In line with our credit facility, total liquidity is $900 million excluding restricted cash of $111 million. Note that the restricted cash is related to contingent liabilities having to do with asset retirement obligations. During 2017, we expect to replace a portion of that maturity bonds or letters of credit. Steve has already outlined our strategies for growing the business, so let me reinforce that cost containment, disciplined capital allocation and cash preservations continue to be fundamental to maximizing profitability and maintaining financial strengths. So with that, I’ll turn you over to Gord.

Thank you very much, Carol. And like Steve, I will apologize ahead for my voice. I have a little bit of a cold here but we’ll persevere. So last night, we released our 2016 year-end reserves and resources table, so I’ll begin with that. So this slide compares reserves and resources year-over-year. Our gold price assumption at our owned and operated mines remained unchanged. Reserves for all the owned and operated sites were based on $1,200 per ounce and resources were based on $1,500 an ounce for Essakane and Rosebel and on $1,200 an ounce for Westwood. Resource estimates for Côté Gold, Boto, Pitangui, Diakha and Siribaya remained unchanged at $1,500 per ounce. Reserve and resource estimates at Sadiola prepared by our joint venture partner used price assumptions of $1,100 and $1,400 per ounce of gold respectively. Proven and probable attributable gold reserves after depletion increased by 108,000 ounces to 7.8 million ounces at the end of 2016. The increase was primarily due to the increase in reserves at Westwood and Essakane, partially offset by depletion with the production of 813,000 attributable ounces in 2016. Westwood had a strong result from their resource definition work and they realized a net addition after depletion of 448,000 ounces from the conversion of resources to reserves. At Essakane, changes to the mine design and economic parameters added 331,000 attributable ounces to reserves offsetting most of the depletion. Moving to resources. Total attributable measured and indicated resources, inclusive of reserves, were 23.3 million ounces at the end of 2016, which is about 150,000 ounces below the 2015 year-end measured and indicated resources. Finally, attributable inferred ounces for the company came in at 6.1 million. Now turning to our operating results. Consolidated production increased in each consecutive quarter of 2016 bringing full year attributable production to 813,000 ounces. All of our operations exceeded production guidance and major performance optimization initiatives were completed throughout the year yielding substantial benefits. I’ll speak to some of them in a moment. We gave cash costs guidance at $739 an ounce and all-in sustaining costs were at the low end of guidance at $1,057 an ounce. Essakane produced 377,000 attributable ounces in 2016, slightly lower than 2015 mainly due to lower recoveries as a result of encountering some graphitic ore. However, we are addressing this issue with a lot of focus and expect to turn that around this year. Recoveries are expected to increase with the use of the new intensive leach reactor which was commissioned in the second quarter last year and results of a geo-metallurgical study this quarter will help us better identify where there are pockets of graphitic material within the ore zones. We are also looking at the economics of processing low-grade transition material through heap leaching and potentially adding an oxygen plant to further improve recoveries. Essakane also commissioned a carbon fines treatment plant last year which allows them to process the gold and the carbon fines at the site with that gold ultimately ending up in our regular gold dore bars rather than having to ship it outside the country to a third-party treatment facility. Operating costs declined by 16% year-over-year driving cost of sales lower to $716 per ounce. The main factors were higher capitalized stripping partly due to mining Falagountou and pit sequencing, lower fuel prices, lower hedge losses partially offset by higher fuel consumption with the mining of Falagountou and an increase in maintenance costs due to harder rock. The reduction in all-in sustaining costs to $977 an ounce for the full year was roughly below our cost of sales partially offset by higher sustaining capital expenditures, including capitalized stripping. Essakane’s operating team has done an outstanding work to act on opportunities that have been identified to achieve operational excellence. In the same way, they are determined to extend the life of the mine. Essakane’s land package exceeds 1,200 square kilometers with several mineralized showings and extensive artisanal workings surrounding the mine. So as we did with Falagountou, we want to tap into as many highly prospective targets as we can. Under the current mining plan, Essakane has another set of years. But with continuous improvement and ground field growth opportunities, we expect to extend its life beyond 2023. Turning to Rosebel on the next slide. As you heard from Steve, we are starting to hear some very promising news coming out of Saramacca. Craig will talk about the positive results and the timeline in a few minutes, so I’ll focus on Rosebel’s operating performance. So Rosebel produced 296,000 attributable ounces in 2016, up 3% from 2015. There was a notable grade improvement in the fourth quarter, as grades increased to 0.90 gram per ton gold, which compares to 0.82 gram per ton in Q3 of 2016 and 0.79 gram per ton gold in Q4 of 2015. Rosebel historically hasn’t incorporated dilution into reserve estimates when it was mostly soft oxide reserves. Because of the redistribution of grade in the weathering profile, the nature of the soft rock was that dilution material is typically very close in grade to the targeted ore, so the impact on average grades was minimal. In fact, in soft rock we typically realize the significant pickup in tons at similar grades to plan. As we are now getting into more and more hard rock, we’re still seeing the pickup in tons, sometimes with significant volumes as we do encounter additional ore zones not identified in the resource block model. However, we also experienced some dilution of the fresh rock ore by barren waste, which is reducing ore grades. Our mine planning projections for the coming year are assuming a 10% grade dilution in fresh rock and year-to-date, we are seeing much better reconciliation using this assumption. We are currently in the midst of a revision to do Rosebel block models on all of the ore bodies and the next version of the Rosebel reserves/resources estimates will incorporate appropriate dilution factors. In 2016, Rosebel completed three important improvements to the mill to manage the increasing proportion of hard rock; a power flex drive to increase torque capacity was installed in segment, the grinding circuit was outfitted with a newly designed shell liner and larger grinding medium [ph]. And in December, a new permanent secondary crusher was commissioned to increase throughput capacity on hard rock by reducing the feed size of the grinding circuit. The effect on throughput and costs is significant at 90% hard rock. We now expect to be able to maintain a processing rate of 9 million tons per year. Without these initiatives, the rate would have dropped to about 6.9 million tons per year at higher hard rock proportions. The combined impact of all three improvements is estimated to have about $20 per ounce positive impact on all-in sustaining costs starting this year. All-in sustaining costs in 2016 fell $177 an ounce to $988, the result of a lower cost of sales and a 21% decrease in sustaining capital expenditures. In the fourth quarter, there were $799 an ounce. The decrease in cost of sales to $768 per ounce reflected a 13% decrease in operating costs. The main factors were the devaluation of the SRD against the U.S. dollar, lower labor costs with the workforce reduction at the end of 2015, lower inventory write-downs and lower fuel prices. Rosebel’s step-change approach to performance optimizations put them on the path to sustainable business excellence. This positions them extremely well to benefit from the organic growth opportunities that will leverage their existing infrastructure. The initial results from drilling in saddle zones between the pits have been encouraging and now with the initial results from Saramacca are better than anticipated, we’re looking at a significant transformation for Rosebel, as Steve mentioned. Looking at Westwood, year 2016 was a pivotal one. The focus on ramping up production continued; higher grades partially offset by lower throughput increased production to 65,000 ounces. The results of underground development over the past 20 months have been outstanding. By the end of this year, we expect to be operating at a commercial level of production from three of the five mining block, including the zone where remedial work was completed last year. All five bypass drifts providing access to the 104 mining block are now open and mining should recommence later this year. This is reflected in the 2017 production guidance. This has nearly doubled the ounces produced in 2016. With Westwood resuming operations at normal level of production this quarter, we plan to discontinue normalizing cash costs and all-in sustaining costs. As shown on the next slide, Westwood completed nearly 25 kilometers of underground development in 2016 averaging 74 meters a day. This was achieved hand-in-hand with a strong safety record. In 2017, underground development is expected to total 20 kilometers. Westwood remains on track to ramp up the full production of 180,000 to 200,000 ounces annually by 2019. At our Sadiola joint venture, attributable gold production in 2017 was 70,000 ounces consistent with the previous year. Although input costs were lower, the processing of a higher proportion of ore stockpiles in 2016 versus the processing of more marginal ore in 2015 resulted in higher cash costs year-over-year. This is because the marginal ore would have been expensed as waste at the time of mining in prior years compared to the expensing of full grade ore stockpiles in the same period as they are processed. As Steve said, we’re ready to move ahead with the SSP project as soon as agreements with the Malian government are finalized. Construction will take about 18 months, so our goal would be to complete the expansion by the end of 2018. With the mining of oxides expected to continue into early 2019, this would allow us to avoid a gap in production. Slide 23 presents our 2017 guidance. Total attributable production is expected to range between 845,000 to 885,000 ounces. Westwood is expected to nearly double production from last year. At Rosebel, we expect higher grades and improving recoveries to somewhat offset the increased treatment of harder rock. At Essakane, grades are likely to be lower in 2017 but throughput and recoveries are expected to increase. All-in sustaining costs are expected to be in the $1,000 to $1,080 an ounce range. To wrap up, our CapEx guidance for 2017 was $250 million plus or minus 5% with 75 million development capital and 175 million sustaining capital; the sustaining capital includes 39 million in capitalized stripping for Essakane and 28 million in capitalized stripping for the Rosebel. Westwood’s all-in sustaining capital expenditures are expected to be 30% lower than 2016. At $45 million, the majority will again be for underground development associated with the ramp up. The construction expenditures for the Sadiola Sulphide Project are not included, although the $10 million relates to the advancement of the project. It only includes certain aspects of the expansion such as the optimization study to refine project economics and does not include construction costs. Once we have our approvals and we know the timing for construction, we will provide a CapEx guidance update for the project. Craig will now review exploration.

Thank you, Gord, and good morning, everyone. Please note that the results I refer to today have been previously disclosed in accordance with securities regulations and signed off by the qualified persons within the company reporting them. In 2016, we continued to work towards upgrading our existing resource stage projects at Boto, Pitangui and Siribaya and to advance others closer to an initial resource. We spent approximately 39 million on exploration, excluding project studies. Although this is the lowest level of spending on exploration in a decade and marks four successive years of reductions, we have continued to advance our key projects and to deliver ongoing exploration success. This year, we plan to increase spending by 20% to 47 million reflecting increased spending on ground field exploration, mainly the Saramacca project in Suriname; saddle zones at Rosebel; and prospective targets at Essakane. The major catalyst to watch this year are initial resource estimate for Saramacca in the third quarter and resource upgrades at Boto, Pitangui and Siribaya. At Essakane, we expect to delineate and upgrade resources at Falagountou eastern mine planning sites. In addition, depending on results, we’re targeting initial resource estimates for Monster Lake and Eastern Borosi. Before turning to an update on our greenfield projects, I want to talk a bit about the results we’re seeing at Saramacca in Suriname. Progress in a short period of time has been outstanding and I want to recognize the efforts of our exploration team on the ground. When we began our exploration program back in August of last year, we had two objectives. We wanted to duplicate or twin some of the historic mineralized intersections drilled by previous explorers to confirm the reported mineralization. And once confirmed, we moved to delineate a full strike and width of the interpreted mineralized footprint on 100 x 50 meter drill spacing. By year end, we had completed 67 diamond and 37 RC drill holes totaling nearly 19,000 meters. The assay results from that program have confirmed the presence of significant mineralization. Highlights include 4.3 grams per ton gold over 101 meters; 5.2 grams per ton gold over 46 meters; and 3.98 grams per ton gold over 78 meters. Importantly, we have intersected mineralization in soft rock at depths ranging from 50 to 100 meters. In 2017, we will focus on completing a 50 x 50 meter infill drilling pattern to confirm continuity of the mineralized structures for modeling. We’re targeting the third quarter of this year to declare initial resource estimates. Let’s now turn to our greenfield projects. At our Boto gold project in Senegal, we completed a diamond drilling program in 2016 that confirmed wider intervals of mineralization in the footwall of the Malikoundi deposit. This was an area that had not been completely drilled out in previous campaigns. We also successfully targeted high-grade mineralization along strike to the north of the deposit. Most of the work in 2016 was focused on expanding the Malikoundi deposit. We have developed a good understanding of the controls in mineralization and that’s our largest deposit discovery to-date. And in 2017, we’re going to use this information to guide further exploration along the Boto 4, Boto 6 trend further south. Once we have all the results from the 2016 drilling program, we will incorporate them into a resource update for 2017, and we are continuing to advance technical and environmental studies as part of the ongoing economic evaluation of this project. Moving on to Pitangui in Brazil, our diamond drilling program last year confirmed that targets along strike of the São Sebastião deposit has favorable iron formation horizons similar to those hosting the main deposits, which means these areas could host additional mineralization. In 2017, we will continue with diamond drilling to expand the current resource, testing a newly permitted area up plunge of the deposit for its extensions where we see potential for additional resource ounces. We’ve also started working on technical and environmental studies to advance the economic evaluation of the project. Moving on to the Siribaya project in Mali, which is a 50-50 joint venture with Merrex Gold. In 2016, the main objective was to increase the confidence in the resource, extend the deposit at depth below the current pit shell and test for potential northern extension of the deposit. We had great success with the RC drilling as results confirm the presence of mineralization along strike immediately north of the Diakha deposit. This year, we will focus on further increasing our confidence in the current resource to better understand the controls on mineralization and delineating the newly discovered mineralization along strike. With the completion of this program, we will be working towards updating the resource estimate for this year. In December, we signed an agreement to acquire all of the issued and outstanding shares in Merrex that we do not own, which would consolidate our full ownership of this key exploration asset. The transaction is expected to close before the end of the first quarter. At our Eastern Borosi joint venture project in Nicaragua, encouraging results were ordered in 2016 including the discovery of the new Veta Loca vein system which returned a drill intersection of 6.3 meters grading 10.2 grams per ton gold and 6.9 grams per ton silver. In 2017, diamond drilling will focus on the resource potential of the Guapinol, Riscos de Oro and East Dome vein systems. If the drilling results are positive, we will use them to complete initial resource estimates by year-end. This year, we also expect to vest an initial 51% interest in the project upon which we may then elect to enter a second option to earn up to 70%. We’re also targeting an initial resource estimate this year at Monster Lake in Quebec. Drilling in 2016 intersected a second mineralized structure which we believe to be parallel to the main shear structure hosting the 325-Megane Zone. This new zone is located 200 to 400 meters north of the Megane Zone and requires additional drilling. While today’s intersections have been narrow, we have cited visible goals in several drill holes which is very encouraging. The accumulated results together with the geologic and structural mapping programs completed last year will guide us in better defining and extending the known mineralization along the shear zones. The last project I’ll talk about is Nelligan also with northwestern Quebec, about 15 kilometers south of the Monster Lake project. Drilling results in 2016 identified the discovery of a new zone mineralization coinciding with an IP anomaly located immediately north of known mineralized zones. This new discovery is a little over 1 kilometer long and is a wide open system where just about every hole we’ve drilled has intersected wide zones of hydrothermal alterations and associated mineralization. The results of the diamond drilling completed in the fourth quarter are pending but once received, they will be used to further guide drilling in 2017. Building on last year’s successes, we expect 2017 to be a year in which we achieve a number of important milestones. Saramacca is now in the pipeline and we continue to advance other satellite opportunities at our existing mines. We’re also expecting resource upgrades at several of our more advanced greenfield projects and we’re working hard to deliver initial resource estimates at several others. Please stay tuned. With that, I’ll hand you back to Steve to wrap up.

Thanks, Craig. Well, as we’ve said a number of times we’re very excited about the year ahead. We’ve achieved excellent traction in 2016 but just to reinforce that we are not going to stop in our mission to reduce costs and not forget where we were a number of years ago in terms of that cost structure. So we don’t want to get back to that. We’re going to build on the momentum as we work to extend the life of our mines. You’ve heard Craig and Gord both talk about that; just some excellent achievements. And we’re going to continue to further our operating efficiencies. We expect a good volume of news flow this year from IAMGOLD with a number of catalysts and initial resource, as Craig indicated for Saramacca. And by the way, I’m going to head down – we’re going to head down to Saramacca in the first week in September, so I guess September 5. I’m going to take our directors down. I was just down at Saramacca about three weeks ago. And you saw some of the drilling results. I’m really excited about that. And we’re going to see if Carol and Laura and Shae can organize on the backend of that tour with the directors and analysts too, and invite you down there. It’s a site to behold, it really is, about 25 kilometers from the mill. And either I’m hearing things or I actually do hear it, I believe I do hear our mill at Rosebel when I’m standing on the hill at Saramacca, which is a great thing when you think what that resource might ultimately be for our company. We’re going to complete the pre-feasibility study for Côté by the end of the second quarter. I’m going to be focusing a lot of my time on Sadiola and getting us over the goal line. Venkat and I have been having a lot of discussions with the government. Omar [ph], our Senior Vice President over in Africa has just done an outstanding job for us. We need to get this moving. I’m going to be very honest with you, I’m a bit frustrated about how long this takes but I’m going to make it a top priority. I have made it a top priority. It’s extremely time consuming when you’re dealing with any government. But we’re going to really focus on this and get it over the goal line. It’s an important project for Mali. It’s a very important project for the community at Sadiola. It’s obviously a very important project for the shareholders both of IAMGOLD and AngloGold Ashanti. So you have my personal commitment I’m going to be focusing a lot of time to get that moving ahead, and I know Gord’s doing the same. We’ve got resource updates for Boto, Pitangui and Diakha as Craig talked about coming forward, we have a potential initial resource estimate from Monster Lake and Eastern Borosi and potential results when tapping into the soft rock saddle zones. I know a number of you were down at Rosebel. We’ve got saddles which are between the pits at Rosebel and the highly prospected targets in Essakane including Falagountou. And it would be nice to get that tour going for us again. Again, I know we ran into some time constraints for reporting but again, if you get out to Essakane and you see 8 kilometers from our mill, you see basically just under 1 million ounces of soft rock reserves. It’s a very, very positive thing for Essakane going forward. It helps with our cost reduction. It also helps with our extension of our life of mine. And of course, we’ve had a number of tours at Westwood and Westwood continues to basically confirm our belief that this is a 20-year asset at lower cost. And with the ramp up this year, we are going to continue to reinforce our belief that this asset is going to be a very high-performing asset for the company. So that’s a quick summary of the significant catalysts. On our [indiscernible] organically, I believe they’re going to change IAMGOLD. I continue to buy shares in this company and you’ll note that once again this year, I’ve taken all of my bonus and shares. My goal is to be the largest individual shareholder of IAMGOLD and I have now achieved that. And I’m very proud of that. So we will continue to invest in the company. I’m a big believer in that. And when we look at our growth over the next few years and our lower cost structure, I’m very, very excited about what we’re hoping to deliver for our shareholders. So on that note, Shae.

A number of companies are reporting today and so at this point in time, there are no questions, which is unusual which is I think a function of our disclosure as well. So if there aren’t any questions following the call, by all means please direct them to Laura and Shae and we’ll be happy to follow up. And as Steve mentioned, we are planning to have a slight visit to both Rosebel and Essakane. And if you do have an interest, again I’d ask you to reach out to Laura and Shae. Thank you.

Pardon me, this is the operator. There are questions.

Okay.

Let me give the instructions. We will now begin the question and answer session. [Operator Instructions]. The first question is from David Haughton with CIBC World Markets. Please go ahead.

Good morning, Steve and team. Thank you for the update. Just looking at the Westwood profile on Page 20 of your release, quite the step-change happening from 2018 through 2019. Perhaps, Gord, you can just talk us through what your expectations are for the mining rate at Westwood, and perhaps a little bit about what’s happening for that significant step-change?

David, you’re exactly right. This is what we talked to over a year ago that we wanted to do and it was sort of driving us to pick up our development rates. So last year, we milled I believe in the neighborhood of around 330,000 tons. For this year and next year, we are expecting to mill in the neighborhood of around 600,000 tons give or take. And by 2019, we’ll be able to step that up to 900,000 tons annually. And really what’s driving that is just the development work. So as we open up new zones and bring on new major blocks, it really allows us to drive step changes in the throughput. The site is working on the new LOM based on the expanded reserve announcement we just made and we will expect to update that LOM sometime this year, and maybe smooth it out a little bit. But we still expect a fairly aggressive ramp up and we do want to be into our nameplate range of 180,000 to 200,000 ounces a year by 2019.

And as we’re standing at the moment, Gord, are you seeing mining rates in the order of above 1,200 tons a day getting closer to your run rate for the year of 1,600 tons a day?

Definitely. We’re already there. The first two months are going very well.

Okay. And I presume that looking at the cost that you’ve got – both the cash cost and the all-in sustaining costs that with that step change, you’re going to just get more tons over the same fixed cost and it’s the fixed cost that’s really driving those cost down, as we’re seeing it on a per ounce basis?

That’s exactly right, David.

Okay. So that’s looking pretty healthy. And just also looking at the Rosebel profile, it looks slightly different to what we had before. My interpretation of it is that you gain to encounter better grade in 2018 and dropdown in '19 and then back up in '20. Is that a correct interpretation of the chart?

So the profiles you’re looking at are the same ones we’ve had for the past year. We are looking to update them. They’re just not complete yet. And Rosebel is a really particular case; one, because on the existing ore bodies we’re in the midst of a fairly significant review of all of the block models. They didn’t make it into the year-end reserves and in fact when you look at our year-end reserves for Rosebel, all we did was apply a depletion equation from the year end of 2015 because the new models weren’t ready yet. So we’ve put a bit of a fire under the team down in Rosebel and they’re working to get those new models in place for incorporation into our mine planning exercise in the first half of the year. So what you’re looking at doesn’t include any assumptions around any additional material from the saddle zones, from any of the pickup from the new modeling that we’re hoping to see or from anything from Saramacca. So that grade profile, you’re interpreting it correctly, but I can pretty clearly say that one is going to be superseded by something that I feel is going to be quite superior to what you’re looking at, as we go through sort of this year and next and really understand what we have at Saramacca, in the saddle zones and really start to apply the new thinking around the existing block models.

All right. I look forward to seeing that. Just jumping back to Westwood, if I may, looking at your reserve and resource statement. Reserve Westwood 8.8 grams; resource is around about the 11 through 13 kind of gram level. I presume that the resource number does not include dilution?

Correct.

Okay. And what kind of dilution factor should we be thinking about to the grades that we’re seeing in the resource?

So for this year, we’re still applying the same dilution factors that we applied previously, which is around 65% on all zones. Our dilution experienced in 2016 was better than that and in fact part of the reason we processed less tons because we had less dilution than expected. However, we’re still working on a lot of primary zones, initial stopes and new catals [ph] and so forth. So we want to stay on the conservative side with our dilution estimate until we get some more empirical data in front of us. The one change and part of what’s contributing to the pickup in grade is in prior years, we had included dilution at zero grade. After some pretty extensive analysis we’re now applying a grade, and it depends on what area you’re in, between 0.5 and 0.7 to dilution material, which is contributing as well to the change you see year-over-year in our reserve grade estimates. Although obviously with a bigger reserve, it’s incorporating some new areas as well.

All right. Thank you, Gord. I appreciate it. It’s a bit of an effort when you’re struggling with the flu.

That’s natural.

The next question is from Steve Parsons with National Bank Financial. Please go ahead.

Good morning. A couple of questions on Rosebel please. With the transition to hard rock this year at 70% from 26% in Q4, how do you see that transition playing out? Is that sort of backend of the year transitional or is it gradual throughout the year?

It’s not really backend loaded. We already picked up so far year-to-date. We’re not quite at that full rate yet. But yes, it’s coming on right at the start. We’re using – the new secondary crushing circuit is running quite well. We’re actually during February here doing some calibration surveys within the grinding circuit. We made so many changes to the circuit over the past while we need to recalibrate our grinding simulation models. So that requires us to do some survey work around the plant and we’re doing that right now. But we are looking at much higher hard rock through all quarters.

Right. Have you had any days or months where you could run it 70% before?

Yes, we’ve run it 100% before. In fact that’s one of the things we’re doing for the grinding surveys is running it 100% hard rock. And again, it’s sort of depends how much of the harder transition is included in the [Technical Difficulty].

Got it, okay. And then also on Rosebel on the reserve and maybe the resource, how we might see some of the soft rock saddle zones start to show up in the resource at year end? Was that the case? Did you see them show up and did any of these saddle zones show up in the mine plan for 2017?

The answer is no and no. I was twisting arms pretty hard to get some of those in, but for a number of reasons they didn’t get there. We’ve asked them to work very hard on a priority basis and cycle through those saddles, so that we can start to get some results out and we can get a better understanding of what the implications are both for the reserve and for the mine planning. But the base answer is there’s no saddles included in the year-end reserve and there’s no saddles included in our projections for production going forward yet.

Steve, this is Letwin here. I had the same expectation as you and we lost some of our top guys there for family reasons he had to leave and it delayed us. So your expectation is appropriate. And I was disappointed for 2016 and will be even better for 2017 because Gord has been cracking the whip a bit to get that into 2017. So our expectation is that not only will we announce Saramacca but we will get the saddle zones into the reserve estimates, that were in resource estimates that we’re going to put forward. So it was an appropriate expectation. We just unfortunately had a guy leave us for family reasons which caused the delay.

Okay. Thanks for the update on that. Maybe over to Saramacca and perhaps this is a question for Craig. Prior to drilling I think you guys had pegged the resource potential between 0.5 million and 1.4 million ounces for Saramacca. Based on the drilling you’ve done to-date, the twining and the diamond drilled holes, how do you feel about that range? So are you sticking to it or do you think there’s maybe upside bias to that range?

Look, I think we’ve been very encouraged with the results. They have exceeded our expectations. As you can appreciate, the ranges were developed from the historical data base which is somewhat limited and we have a lot more information now. So I would expect we’re going to start heading towards the upside part of that range. The reason issue will be the proportion of oxide versus hard rock. So that’s something that we don’t have a feel for just yet. But I would think we’re heading to the upper side of that range.

Perfect. Thanks for the update.

Our next question is from Steven Butler with GMP Securities. Please go ahead.

Sorry, I didn’t get that Steve but I’ll --

No, I said just keep asking him, Steve. I keep asking him that every morning.

Okay. Sorry, Steve Butler. Craig on Saramacca just to start there, how much more drilling did you do in '16 campaign than historical results, because the assays at least for the diamond drilled results where you drilled them came through like gangbusters. So you’re pointing towards maybe the high-end of the range, I know you expect that. But how much more drilling has been done there and why did you think you got better than you were expecting? In other words, why the current positive reconciliation on grade drilling?

Okay. With historical data base we were playing with was roughly comprised of about 50 historical drill holes, fairly widely spaced, not necessary systematic through the deposit and obviously we weren’t there at the time of the exploration program. So can’t really judge really what the merits were. So we acquired the property with 50 drill holes. We completed 67 diamond holes and 37 RC holes. 17 of the holes that we drilled of our diamond holes were designed to twin previous holes where we knew from the data base they had intersected mineralization. And the reason we did that was that we wanted to be able to confirm the veracity of the historical data base. So if we could implicate those intersections in terms of thickness and grade and everything looked pretty straight forward, then that would allow us to incorporate the entire 50 holes for use in our work going forward. And that was very successful. So once we had confirmed that mineralization with our first 17 holes, it then allowed us to optimize our drilling pattern around that historical data base and really start to step out and selectively target some of these zones that were in the previous drilling. So when you’re able to do that, hopefully if you have a good mineralized system, you’re going to start to see some good hits with lots of pick up in grade and that’s exactly what we were able to do. And we’ve expanded the footprint with a lot more data points now through the mineralized systems.

Great. And those twins, what – also were they [ph] largely reconciled closely?

Yes. In just rough numbers I would have to say that 90% of the holes that we drilled duplicated very well the intersections that we were anticipating. In some cases, we did dig some additional intersections that the previously drilling didn’t pick up. And in other cases, we didn’t duplicate. But by and large, well over 90% did come through and zones were where we thought they were. And then as we stepped away from those with our own drilling, we started to expand that zone and get some very surprising results in terms of some of the grade of intersections. And we have extended the mineralization at depth. We’ve gone below the oxide profile just to make sure we know what those fractures look like and we’ve been very happy with that as well.

Okay. And Gord, are you going to crack the whip – continue to crack the whip enough to get saddle zone into a Q3 resource or reserve statement, or is that wait until probably year end most likely?

It’s our goal to try and – obviously depending on the timing that we see from the Saramacca and when we can come out with those results, it would be nice to be able to wrap in an update for Rosebel itself. First priority is to get the new models on the existing zones wrapped up and get those into our LOM plans. What we’ve asked for them to do on the saddle zones is pick some higher priority ones and take those through the resource as quickly as possible. So I guess the answer is I expect we’ll get some of them in by midyear. I don’t expect we’ll get all of them in by midyear. I would certainly like to see all of them in by the end of the year, but that’s the objective.

Yes. And Craig or Gord, if Gord has still a voice, Falagountou. Was Falagountou the driving force for the reserve increase at Essakane or was it some other factor?

It contributed somewhat but really the driving force there was some redesign within the Essakane main zone pit and some new intercepts at Essakane main zone.

Okay. And you have about 1 million ounces. Is that right of soft ore now at Essakane?

Between Fala west and Fala east, we’re not quite there but we’d like to be able to get there. We’ll see where we can get to.

At Fala, okay. Sorry, one last thing just on the time it’s taken on Sadiola, Steve, and maybe key areas where you have a bone of contention or maybe not quite this effort but with the Malian authorities, what are your key items you’re trying to hammer on in terms of negotiating in fiscal terms?

Well, basically we have a Minister of Finance who was Minister of Mines and had agreed to all the terms who is now not agreeing to all the terms. So we have a very attractive economic model for both the government and for us and Anglo particularly attracted for the government when you look at the current situation. I’m very confident we can get them over the goal line. The Minister of Finance is a very bright guy. He’s a very good businessman. I think with his change in roles, he’s trying to do the best he can for the people of Mali given the situation they’re in. I know they get a lot of pressure from the INF to try and extract more from the mining which to me is a bit of an enigma, because the mining business really gives them so much more than they would normally get from a GDP standpoint. So I think it’s just a time issue and we will get there. But I’d rather not get into the nitty-gritty detail on what we agree on and what we don’t agree on. The bottom line here is this is a hell of an attractive project for everybody and nobody wins at all if we have to close that mine. It would be absolutely ridiculous if we did that. He knows that, we know that and it’s just getting him over the goal line. And I’m confident that with some tweaking and compromising we can do that. But we’re not going to agree to anything that jeopardizes what we believe to be appropriate returns for our shareholders. So you’ve been in this business as long – probably longer than I have. I was in the resource side and oil and gas side; worked in Colombia, Ecuador. I worked in all over the world and even in Ontario. It’s hard to work with some of these governments in what I would an efficient manner. And it just takes time. The good news is, Anglo and us are of one mind, we’re walking together on this for the first time and we’re going to work really hard with the government over the next month or two to bring them our side.

Okay. Thanks for that, Steve. Thank you.

This includes the time allocated for questions on today’s call. I would now hand the call back over to Ms. Young for closing remarks.

Okay. Thank you very much for calling in today. And if you have any further questions, please contact Shae or myself and we’d be happy to help you. Thank you.

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