IAMGOLD Corporation (IAG) Q4 2017 Earnings Report, Transcript and Summary

Thank you for standing by. This is the conference operator. Welcome to the IAMGOLD 2017 Fourth Quarter and Full-Year 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 would like to turn the conference over to Ken Chernin, Vice President, Investor Relations for IAMGOLD. Please go ahead, Mr. Chernin.

Great. Thank you, Arial. Welcome to the IAMGOLD fourth quarter conference call. Joining me on the call are Steve Letwin, President and CEO of IAMGOLD; Gord Stothart, EVP and COO; Carol Banducci, EVP and CFO; Craig MacDougall, SVP, Exploration; and Tim Bradburn, Vice President, Legal and Corporate Secretary. Our remarks on this call will include forward-looking statements. Please refer to the cautionary language regarding forward-looking information in our discussion documents, and be advised that the same cautionary language applies to our remarks during the call today. The slides that are referred to, during the presentation, can be viewed on our website. I will now turn the call over to our President and CEO, Steve Letwin.

Thanks, Ken, and good morning, everyone. I’m going to start on slide four. I think as you already know, we had an outstanding finish to the year. Exceptional exploration results drove our gold reserves up 86%. Our operating performance was robust as core assets proved to be significant catalyst for growth. Our achievements in 2017 set us up with a growing long-life production profile at a time when many of our peers are struggling with reserve life. And I do recall, when I joined the Company, it’s coming up to eight years, where our reserve life was literally less than eight years. And when you look at it today at 1 million ounces a year, we believe by the end of the year, it will be on 16 years. So, literally, a doubling in our life of mines around the planet, which has been a very, very positive experience. And, a lot of -- thanks to Craig MacDougall and Gord Stothart for that. Our growth in the gold business whether organic-driven or through acquisition is a major challenge for a lot of companies, but for us, we have a great organic pipeline in front of us. We’ve had a lot of great success. And as I said, a lot of that credit goes to the people at the sites and the people in corporate that headed that up. On slide five, I think, you’ve seen this map many, many times. We’ve focused, as you know, on extending the life of our mines and lowering our costs. At Rosebel by itself, the significant increase in reserves was a result of mine plan optimization and cost reduction. That allowed us to extract more value from this asset than we could otherwise. Our strategy to consolidate properties within the vicinity of the Rosebel mill is working. Saramacca is proven to be a significant discovery. We expected initial reserve estimate in the second half of this year, followed by a production start a year later. Just last month, we secured the exploration rights to Brokolonko. If you look on your map, up to the northwest, we see the Saramacca deposit in the red dot; and between that, you see the Sarafina concession and then Brokolonko. That little dark area is where you seen some what I would called just small scale mining that’s been there for years; a lot of that from more Brazilian influx than the Surinamese people. In fact, the President of country lived there and grew up there. So, we were just out there about two weeks ago. And I can tell you that Brokolonko looks very, very attractive, looks very, very robust. And I know, Craig is going to talk about his program coming up. But, we are extremely excited about the fact that this is about 15 to 20-kilometer stretch of very prospective property that we now have 70% of. And the government is working in a very accelerated pace to get all the permits that we need. So Board is going to talk about where Saramacca is going. But, as most of you know, this has totally transformed Rosebel. And given that we’re within 20 to 25 kilometers of the mill that’s been paid for, our strategy of maximizing and leveraging off of current infrastructure has really paid dividends. So, the economic returns of these properties are going to be very significant for the Company and obviously our shareholders. So, a lot of excitement in and around this new gold district that’s development, and we’re going to paying a lot of attention obviously. With very small amounts of capital we’re going to be getting and realizing some very significant increases in cash flow, lowering of costs and overall economic returns. At Essakane, slide six, we’re seeing a similar experience, and Gord is going to talk more about this. We’re heading to Essakane in two weeks. So, March 10th, I’m heading out there to basically start the solar hybrid operation, which we’re very, very excited about. And the heap leach project will be announced in June, and we’re going to have analyst tour celebrating that in the second week of June. And we believe that his heap leach project could potentially increase Essakane’s mine life by 2 to 5 years. The completion of the prefeas study in the second quarter is expected to lead to an increase in reserves and resources. And satellite prospects surrounding the mine could add more years to Essakane. So, Essakane has basically the same look as Rosebel. And you saw that with Falagountou where we 8 kilometers from our mill, Essakane main zone, we added about a 1 million ounces at a higher grade and softer rock. And I know Craig’s having success north of the mill and south of the mill that we believe over time will do what is happening at Rosebel. We’re going to had life to Essakane; we’re going to lower cost. And as we do that, we’re bringing in new technology, like the solar hybrid farm, which is going to, I guess at the end of the day, be legacy for us because it’s going to change the region significantly, and lowers our overall cost and time. It brings in the fact that we no longer have to rely on hydrocarbon. And it provides us source of energy for people in the community. All of these are huge pluses for the Company and for the people that live in the region in Burkina Faso. Westwood, we were just there, what, two weeks ago, Gord, a week ago, had a great tour of Westwood, now operating at a normal level. Production targets are being achieved. Unit costs are declining. The ramp up to full production is expected by 2020. Last year, Westwood produced 125,000 ounces. So, two years from now, we hope to see production nearly 50% higher. I was very pleased when I went out there, we have a new GM in place, Martial Tremblay, seasoned gentleman from -- spent four years at our Essakane operation. The morale is high; the productivity is higher than what we were forecasting. They’re looking at again new technology coming into Westwood, which is very, very exciting. I was in China in January. I went to Nanchang where Naran [ph] Engineering exists. And I spent a couple of days looking at new robotic tools that are used for underground mining and digital mining. And I will tell you that Westwood is in front of this, and we’re seeing some really nice opportunities to improve productivity and improve safety over time with this new technology. On slide eight, Côté is advancing towards a development. And as you know, the second way we’re achieving organic growth is by moving ahead with one of Canada’s largest undeveloped goal projects. We were never in a rush to build Côté. It was more important to do it at the right time and with a partner. As a result, we have a project with 6 million ounces in reserve. Together with our partner, Sumitomo, we’re working towards completing the feas study in the first half of 2019 with a potential production start in 2021. And again, I think, what you’re going to see as you’ve seen at Rosebel and Essakane, the opportunity to see some short cycle opportunities around Côté over time. It’s a large land package, it’s surrounded by infrastructure. As you know, we’re basically 6 kilometers off the highway. All the energy, infrastructure we need, labor force et cetera. So, as the Côté infrastructure is developed and the mine starts to operate and we do further exploration, I’m convinced that we’re going to be able to bring more ounces into this mine and improve the economics which are already quite healthy. Slide nine, Boto, and as you know, we’ve had some great success in exploration. Craig’s going to talk about this. One thing we didn’t do during the tough years was cut back to the point where it could be detrimental to our future production pipeline, and we’re seeing some great results and benefits because of that. The 86% increase in gold reserves was driven by the conversion of resources at Côté, the significant increase in reserves at Rosebel, and most recently, the 1.4 million ounce reserve at Boto Gold. Based on the prefeas study, Boto has the potential to produce nearly 100,000 ounces annually for 13.5 years. This is organic growth; it’s not the result of acquisitions. Future growth in our reserves and resources is expected this year. We’re pursuing expansion opportunities at existing deposits and expect initial resource estimates at Monster Lake, Nelligan and Eastern Borosi. Slide 10, we are looking at our strategy to increase the value of our assets, advance attractive development projects, and invest in exploration. And this has all worked very well for us over the last number of years. We’re confident we can keep growing production and reducing costs. We’re going to see this Company grow to about 1.2 or 1.3 million ounces by 2022 and all-in sustaining cost dropping towards $800 an ounce. This improves our cash flow significantly, as you know. You could do the math, 1 million ounces times to $200 an ounce, $200 million in free cash flow that basically flows to the bottom line. This is huge for us. And because the portfolio is changing so dramatically, with the short cycle and long cycle strategy we’ve had, our cost structure is dropping at a rapid rate and our production is moving up in concert with that. And here is the extra set of good news is that as we move from about 7.5 million ounces of reserves towards 15 million ounces in the last two years, I am completely convinced and confident that that reserve base will continue to grow. And when you match that up against some of our peers, and I’m not being critical of them at all, we’ve been in the tough spot ourselves for a number of years, but when you measure us up against our peers, we have a good look. And it’s a byproduct of a lot of good work, but the profile of the Company looks very robust going forward. On that note, I’m going to pass it over to Carol Banducci to review our financial results.

Thanks, Stephen, and good morning, everyone. We had another solid year. Our financial results in 2017 reflect strong operating performance and continued cost improvement. Our balance sheet is in excellent shape, providing us with significant financial flexibility. Last year, we completed steps to improve our capital structure, and I’ll talk more about that in a moment. Then, Gord will cover our capital spending plans around our growth projects. This slide presents key performance highlights for the fourth quarter and for the full-year. The fourth quarter attributable gold production was 228,000 ounces, bringing full production to 882,000 ounces for the year. The increase in all-in sustaining costs in the fourth quarter from the previous year was due to higher, sustained capital expenditures due to timing and higher cost of sales. Higher energy cost and a weaker U.S. dollar relative to the euro and the Canadian dollar contributed to the increase in the cost of sales. We made excellent progress in reducing cost over the past five years. All-in sustaining costs for the year were $1,003 per ounce, 5% lower than 2016. Revenue of $291 million in the fourth quarter was us up 15% from the same period in 2016. Revenue for the full-year of $1.1 billion was up 11% from 2016 with revenue increasing at all sites. And more specifically, Westwood accounted for two-thirds of the increase as sales nearly doubled from the previous year. Gross profit in the fourth quarter increased by 116% to $41 million and for the year was up 50% to $153 million. Net operating cash flow was $65 million in the fourth quarter, up slightly from the fourth quarter 2016. Net operating cash flow for the year was $295 million. Turning to the earnings slide. Pretax earnings were $13.4 million. Fourth quarter net earnings were impacted by a significant tax expense of $30.3 million. This resulted in a reported net loss attributable to IAMGOLD equityholders of $17.7 million for the fourth quarter. There are very few adjusting items in the quarter including $8.4 million increase for changes in asset retirement obligations. However, those few items required recognition of an additional tax expense of $9.1 million. So, reflecting these adjustments, we had adjusted net loss of $0.03 per share. So, the fourth quarter, as I mentioned, had a significant tax expense relative to both income before tax and adjusted earnings before tax. And the principal factor producing that result was fluctuations in foreign currency exchange rates. I’m just going to pause here to better explain what happened in the quarter. So, what happened was the euro got stronger relative to the U.S. dollar, and we have a deferred tax asset in Burkina Faso. And that deferred tax asset, when you translate it into U.S. dollar terms was actually reduced, which means you’ve got fewer tax reductions in the future. And so historically, we’ve not actually adjusted for FX movement in the tax expense line. And from a compliance perspective, we didn’t adjust it this quarter because we in fact had a favorable movement in the third quarter. So, it wouldn’t be appropriate to just adjust it for the fourth quarter. But, it’s something that we’ll definitely be looking at in the future. So, turning to the full-year reported net earnings for 2017 that included a $524 million impairment reversal for both Côté project and the Rosebel mine, and these reversals were recorded in the second quarter 2017. This $43 million tax adjustment was mainly related to the reversal of the impairment charge at Rosebel. And again, what I’ll mention here is that when you take a look at the reversal for the Côté Gold project, in fact, we didn’t actually have to recognize a deferred tax expense on that, because we had a deferred tax asset that was -- that we had not recognized that we’re able to offset that deferred tax expense. On an adjusted basis, net earnings attributable to equityholders for 2017 were $29.3 million or $0.06 per share. The next slide presents the Company’s hedge positions which have been updated since those reported at year-end. In the New Year, we took the opportunity to layer in some additional hedges. So, as of today, we have hedges in place for the Canadian dollar and euro for 2018 while hedges for oil are in place out to 2022. Turning to our financial position. We had $816 million in cash, cash equivalents, short-term investments in money market instruments and restricted cash as of December 31, 2017. We have a manageable level of debt. The refinancing of our long-term bonds reduced our long-term debt to $400 million and extended the maturity date by five years out to 2025. Excluding our long-term debt and the $25 million in restricted cash, we had a net cash position of $391 million. So, total liquidity exceeded $1 billion, and this included the virtually undrawn $250 million credit facility. Amendments to our credit facility in December extended the maturity date out to March 2022, improving the pricing and it also provides us an accordion option to add another $100 million. So, as Steve said, the year ahead is all about execution. We have an enviable pipeline of growth projects with many catalysts ahead. And as we execute, we’ll continue to manage our business prudently and with much financial discipline. So, with that I’ll turn it over to Gord.

Well, thank you, Carol. On February 12th, we’ve released our 2017 year-end reserves and resources statement. This slide compares reserves and resources year-over-year. Our gold price assumptions at our owned and operated mines remained unchanged. Reserves including the Côté Gold and Boto Gold projects were based on $1,200 per ounce. Resources for Essakane and Rosebel were based on $1,500 per ounce and for Westwood $1,200 per ounce. Resource estimates for Côté Gold Boto, Pitangui and Diakha, Siribaya remained unchanged to $1,500 per ounce. Reserve and resource estimates at Sadiola prepared by our JV partner, used price assumptions of $1,200 per ounce for reserves, up from an $1,100 for previous year; and $1,400 per ounce for resources, unchanged from 2016. Proven and probable attributable gold reserves after depletion, increased by 86% to 14.5 million from 7.8 million ounces at the end of 2016. The main drivers were initial reserves of 3.8 million attributable ounces at Côté Gold and 1.4 million ounces for the Boto Gold project, following positive result from prefeasibility studies and a significant increase in reserves at Rosebel. Last July, we reported an 80% increase in reserves for Rosebel. Taking into account depletion, Rosebel’s reserves at the end of 2017 were up 69% or 1.4 million ounces, as well, both Essakane and Westwood more than replaced depletion year-over-year. Attributable, measured and indicated resources, inclusive of reserves increased by 6% to 24.7 million ounces. The increase was mainly due to a 51% increase at Rosebel and the initial resource estimate of 0.7 million attributable ounces for Saramacca. This was partially offset by lower attributable resources at the Côté Gold project following the sale of the 30% interest to Sumitomo Metal Mining. Attributable inferred ounces increased by 44% to 8.8 million ounces, driven primarily by Rosebel, Boto, Saramacca and Diakha where inferred resources doubled after acquiring our 50% JV partner, Merrex Gold last year. Turning to the production and cost summary for 2017. Consolidated attributable production increased 8% to 882,000 ounces, which was at the top end of guidance. Production from our owner operated sites was up 11%. All-in sustaining costs at $1,003 an ounce came in at the bottom end of guidance, and we were down $54 an ounce from 2016. Note that all-in sustaining costs at the consolidated level include corporate G&A cost. All-in sustaining costs at each of our owner operated sites were below $975 an ounce. Now, for a recap of performance by site and starting with Essakane. Essakane achieved a record production of 389,000 attributable ounces in 2017. Annual mill throughput of 13.9 million tons was up 16% from 2016 and exceeded nameplate capacity by 29%, despite the hard rock content reaching 86%. In 2017, an updated SAG mill liner design and improved operating and maintenance practices increased mill capacity, speed, and circuit availability. In 2018, we expect grades and recoveries to improve further. The results of the geometallurgical study at the end of this quarter should allow us to better anticipate and mitigate the impact of graphitic ores. And the oxygen plant which will help us well is expected to go into operation at the end of this year. All-in sustaining costs of $957 an ounce at Essakane improved from the previous year, mainly due to the timing of sustaining capital expenditures, which were 35% lower than 2016. Essakane year-end reserves were up 2% after depletion to 3.1 million attributable ounces. Measured and indicated resources declined by 7.5% after depletion, and inferred ounces were down by about 90,000 ounces. Essakane continues to work at improving mining and milling efficiency, which will help lower unit costs further, even at higher proportions of hard rock. We expect the solar power plant, which will be integrated with the existing thermal generating plant, to be in operation by the end of this quarter. The prefeasibility study on the heap leach project is expected to be completed during the second quarter of 2018, and we are expecting to begin construction later this year. In addition to allowing us to process marginal and low-grade mineralization, heap leaching when used in combination with the carbon and leach plant, justifies additional push backs of the main pit. Although the prefeasibility study is not completed, we are contemplating treating about 10 million tons per year of heap leach ore, which would give us incremental gold production of about 20% annually and potentially increase the life of the mine by two to five years. I’ll talk a little bit more about the project when we get to the CapEx summary slide for 2018. When you consider Essakane’s robust operating performance, improving cost efficiencies, growth potential from heap leaching and highly prospective land package, this mine has significant upside potential, as Steve talked about earlier. Turning to Rosebel, it’s well into its transformation with the significant increase in reserves, as reported previously with Saramacca advancing towards production, with the granting of exploration rights to the Brokolonko concession on the same mineralization trend as Saramacca, and with the continued trajectory of cost reductions over the past two years with the optimization of the workforce and improvements in productivity. All-in sustaining costs are down 20% or over $230 an ounce since 2015. And of course, more news is expected to come. Rosebel produced 302,000 trillion ounces in 2017. Marginal increases in throughput and grade were partially offset by a slight decline in recoveries. Throughout continues to benefit from strategic mill improvements over the past few years. The percentage of hard rock in the mill was 49% in the fourth quarter of 2017, nearly twice the previous year’s 26%, yet throughout has held study. We expect grades to improve in 2018, which will help offset an expected decrease in throughput as hard rock content approaches 60%. Like Essakane, Rosebel continues to work at improving SAG mill performance and reducing power consumption. In 2017, Rosebel’s all-in sustaining costs were $931 per ounce, 6% lower than the previous year due to lower sustaining capital expenditures. Note that all-in sustaining costs at $1,018 per ounce in the fourth quarter 2017 were higher than third quarter. This was expected due to timing of sustaining capital expenditures related to fleet and mill maintenance. Efforts to improve cost efficiency continue, such as strategic pit dewatering to increase tire life and lower dilution. We’re also seeing drill yields improvements and higher payloads for the hauling fleet to increase mining capacity. Additionally, Rosebel’s unit production cost profile is expected to further improve when Saramacca with its higher grades and soft rock comes on line. With Saramacca project is on track, we expect the preliminary reserve estimate and completion of permitting by the second half of this year. There has been excellent progress with mine design and infrastructure design. We’ve determined that the most cost effective mode of transporting ore to the mill will be by road haul trucks, hydrogeology and geotechnical work has been completed and we’re waiting on final reports. And comprehensive metallurgical test work is currently underway at COREM in Quebec City, as we speak. New mine designs and integrated scheduling with the main Rosebel resources will happen this year is they move toward the production start in the second half of 2019. Looking at Westwood, as Steve mentioned, Westwood had a pivotal year as it resumed operating at normal level of production in the second quarter. Production was nearly double the previous year. The progress with ramp breakthroughs and infrastructure development has been outstanding. 18 kilometers of underground development work completed in 2018 with another 12 kilometers to be completed this year. Cost of sales and all-in sustaining cost per ounce continue to improve with a significant increase in the volume of sales. Cost of sales per ounce at $844 was 36% lower than in 2016 and AISC fell by 18% to $972 in ounce. The drilling program focused on resource conversion continues to yield positive results with reserves up 12% year-over-year to 1.2 million ounces after depletion. Overall, great progress at Westwood as we head toward the full ramp up in production by 2020. Turning to our Sadiola joint venture, annual production was 63,000 attributable ounces, down from 2016 with lower grades, partially offset by lower throughput. Steve filled you in with where we stand on the SSP, so I’ll just add that the retrenchment plan at Yatela was completed in December of last year. The next slide presents our production and costs guidance for 2018. Total attributable production is expected to range between 850,000 and 900,000 ounces. At Rosebel, the production outlook reflects expectations for higher grades and improving productivity together with lower throughput as the proportion of hard rock approaches 60%. At Essakane, grades and recoveries are expected to improve while throughput is planned to be slightly lower than it was in 2017. And at Westwood, guidance reflects planned production from two of the six designed mining blocks during the year. This is our annual guidance; and as always, there will be some quarterly variation. Production is expected to be somewhat lighter in the first half of the year compared to H2. So, expect cash costs and AISC per ounce to trend lower in the second half of the year with the higher production. Turning to our capital expenditure outlook for 2018. We’re anticipating $365 million plus or minus 5% in total. The significant increase over 2017 is due to the advancement of our growth projects. Sustaining capital is expected to be similar to 2017. Of the $75 million of sustaining capital for Essakane, $40 million is for capitalized waste stripping. Non-sustaining CapEx is estimated at $225 million, $147 million higher than 2017, again due to growth projects. The increase is entirely related to Essakane and Rosebel as the $45 million for Westwood related development work is unchanged from 2017. $75 million of non-sustaining CapEx for Essakane includes the heap leaching project and the tailings raise, and the $85 million for Rosebel is predominantly for the development work at Saramacca. Both the heap leaching project at Essakane and the Saramacca project at Rosebel are spread over two years. Only the portion of the capital required for this year is included in this year’s guidance. The full cost estimates for these projects will be refined as we work through the ongoing technical studies. We plan to disclose that information once those studies are complete. The $15 million for corporate and development is mainly for the Côté Gold feasibility study currently underway. And talking further about Côté, the study at Côté should be completed in the first half of 2019 subject to acceptable results, a favorable development environment and a corporate decision to proceed with construction from both ourselves and our partner; we would be targeting a commercial production start in 2021. As part of the feasibility work, the drilling program continues with the objectives of upgrading in-pit inferred resources to indicated, and further evaluating grade continuity in the starter pit. I’ll now turn you over to Craig to talk about exploration.

Thank you, Gord, and good morning, everyone. By any measure, 2017 was a standout year with an 86% increase in reserves and multiple exploration successes. It’s important to note that this was not just a one year effort but the result of the disciplined approach to exploration over time. And I would say, it was well worth the wait. In 2017, we spent $57 million on greenfield and brownfield exploration projects. The 46% increase over the previous year mainly reflects increased spending on brownfield exploration including Saramacca. In 2018, we planned to spend $60 million, a level similar to 2017. Investment in feasibility and other studies will be higher this year with the advancement of such projects as Boto and Côté Gold. Before I begin, please note that the results I talk about today have been previously disclosed in accordance with security regulations and signed off by the qualified persons within the Company reporting them. Let’s start with our Boto Gold project in Senegal. Most of you probably saw the February 12th news release. The exploration team has done an outstanding job to advance this project from its initial discovery nearly five years ago to a feasibility stage project. Boto is located on the mineralized trend that hosts a number of significant producing gold mines and therefore has the right address. The prefeasibility study supported an initial reserve estimate of 1.4 million ounces creating 1.64 grams per ton gold. The study is demonstrated that Boto has potential to be a low-cost long-life operation. At this stage, we’re looking at a 13.5-year mine life with annual production of nearly 100,000 ounces, and a life of mine all-in sustaining cost of $829 per ounce. With optimization of the project design and the feasibility study that’s using 25% higher mill throughput as the base case, we could see higher annual gold production and better project returns. Feasibility study is scheduled for completion in the second half of this year. Additionally, we continue to explore priority targets with potential for increasing the size of the resource. So, this two will contribute towards improving project economics and increasing life of the mine. Moving on to Saramacca. The development work is on track as Gord said, and significant exploration activity continues at the site. It’s significant -- it does have potential to grow both at depth and a long striking in both directions. Drilling completed since the initial resource estimate has been focused on increasing our confidence in the resource, expanding [ph] the deposits and discovering new zones and mineralization. In the second half of 2017, we completed nearly 30 kilometers of diamond and reverse circulation drilling. On November 16th, we announced drilling results from an initial 37 holes that continue to indicate high grade intersections from both infill and expansion drilling. Highlights included 3.47 grams per ton gold over 39 meters and 4.5 grams per ton gold over 34.5 meters. These results are expected to have a positive impact on future resource estimates. As Gord said, we expect to declare initial reserve estimate in the second half of 2018. The mineralized structure at Saramacca appears to trend Northwest onto the Sarafina and Brokolonko properties, as Steve has mentioned earlier. Much of our future exploration work will be focused on exploring this highly prospective trend in these areas. On the next slide, you can see that the Brokolonko property is located immediately northwest of Saramacca; it’s both 30 kilometers from the Rosebel mill. Comprising a 105 square kilometers, it’s similar in size to the Sarafina concession and larger than Saramacca. Together, they represent an important consolidation of exploration rates along the Saramacca trend. Early stage exploration work by previous owners identified a series of gold anomalies on the property, which is our starting point to the exploration program. We have commissioned an airborne magnetic and VTEM survey due to start this quarter, which will cover 15 kilometers long corridor extending from Saramacca through Sarafina and onto the Brokolonko concessions. This will be followed by the field work and our first pass drilling program later this year designed to confirm the location and intensity of the historical anomalies. Let’s turn to our other projects. At Pitangui in Brazil, our objective in 2017 was to evaluate the up-plunge extension of the São Sebastião deposit, an area where we saw potential to -- for additional resources. We completed the drilling program which identified a number of ore body extensions, resulting in a 21% year-over-year increase in the inferred resource to now 819,000 ounces. In 2018, we will continue to assess remaining targets on the property. At our Eastern Borosi, joint venture project in Nicaragua, our drilling program in 2017 focused on evaluating the resource potential of the Guapinol, Riscos de Oro, East Dome and Cadillac vein systems. We’re in the process of updating a 43101 resource estimate, which will incorporate an additional 26,000 meters of drilling that we’ve completed over the past four years. At our Siribaya project in Mali, the indicated and inferred resource doubled in size from the end of 2016 as a result of consolidating our ownership to 100%. From January 31st of this year, we announced the results of the 2017 drilling program. Highlights included 6.79 grams per ton gold over 26 meters, which included 20.5 grams per ton gold over 8 meters. These results not only better delineate high grade structures within the know resource, they also confirmed extensions and mineralization both to the north and south of along strike beyond the current resource pit shell. These extensions have nearly doubled the strike length of the mineralized footprint. Our drilling program this year will continue to advance towards our objective of achieving a targeted resource threshold of 2 million ounces. We will use the estimate -- we’ll use these results to refine the deposit model and deliver an updated resource estimate by year end. Lastly, at Monster Lake and Nelligan projects in Quebec, extensive drilling programs were completed last year that will continue in 2018. This year, our objective is to declare initial resource estimates for both projects. To wrap up, we plan to build on last year’s exploration successes and to advance earlier stage projects in the pipeline. Major catalysts for 2018 are the initial reserve estimates at Saramacca, updated resource estimate at Diakha, Siribaya, and initial resource estimates at Eastern Borosi, Monster Lake and Nelligan. At the same time, we will continue to advance near-mine exploration including a potential initial resource estimate for the prospects [ph] at Essakane. With that, I’ll call on Steve to wrap up.

Thanks, Craig. So, slide 33 really was meant to give you an idea of what we’re looking at for 2018 in terms of growth catalysts. And as Carol mentioned, it really is a year of execution but it’s also a year of some pretty important events for us. And as I said earlier, we’re looking at some really good opportunities, and Craig talked about this, at Saramacca in the second half of ‘18, some fantastic opportunities there to improve our production profile at Rosebel, both from a volume standpoint and a cost standpoint. And we’re looking at second half of 2019 that that would get going. But, in between now and then, you’re going to see a lot of announcements around our reserves and certainly as we develop our project, and we have an outstanding project leader down there, we’ll be giving you more news. We’re going to be doing further exploration at Brokolonko, as Craig indicated. I’m really excited about seeing that program get started, as Craig will tell you. I bother him pretty well everyday about it. And I’m excited to see what that mineralization looks like. And we’ll be walking that property in the next few weeks down in Suriname. So, I’m excited about going back there and taking a look at what we’re going to be able to do, given that we now have the property in our hands. And that will result in further consolidation of additional concessions at Rosebel. We’re looking at some great opportunities to the north of the mill and to the further northwest. There are some great opportunities that people are presenting to us now that we have this gold district established to the southwest. The completion of the heap leach, as I mentioned earlier, I’ll be heading there in the next couple of weeks to take a look at the solar hybrid, which will begin commercial operation here first part of March and certainly be operating and ramping up by the end of the quarter. We’re also going to walk the property there and take a look at some of the exploration opportunities that we’re seeing on the concession. Essakane has been a first-class performer, as Gord indicated. And again, Falagountou east comes on. We’re expecting to see Essakane perform as well, if not better than it did in 2017. Mentioned again that Westwood, I was there just few weeks ago, performing extremely well. Westwood is the topic of the President’s message this month, nothing, but kudos and appreciation for the hard work there. Martial is doing a great job. He’s only been in the job for a few months but he’s making a big impact already. And this mine is going to be a long life asset for our Company and producing, as we said, in the next couple of years around that 180,000 ounces a year. And then, of course Côté, we are working very closely with Sumitomo. We have an oversight committee which consists of representation from both companies. We have a number of Sumitomo employees stationed in [ph] now that are working daily with our people. The relationship is very strong. We’re really pleased with the partnership. And some of you may know, IAMGOLD is the recipient of the Viola MacMillan Award where we received the deal of the year from PDAC, and Sumitomo will be joining us for that award ceremony on March 6. So, we’ll be walking arm in arm to receive that. It really has been a great team effort by both companies, and we are excited about what the future might bring with the relationship that we have with Sumitomo. What I say to our people is we’ve had a good run here. We want to stay humble. We want to do the blocking and tackling. We don’t want to get too full of ourselves. Let’s just continue to execute our strategy, keep our heads down, keep delivering results in line with expectations, and execute on what we believe is a very robust set of projects that will take the Company in a very positive direction over the next number of years. So, on that note, thank you very much for listening in.

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from David Haughton of CIBC.

Good morning, Steve and team. Thank you very much for the update. I got a couple of questions. Perhaps I could start with Essakane and the heap leach, maybe for Gord. I’m looking at page six of the presentation at the main zone pit. And I think I heard you correctly in looking at layback of that pit. There is just not a lot of space, looking at the image that we’ve got on page six. Can you just talk us through what your idea would be there?

The layback is mostly to the north and east. You can see, there is actually -- there is couple of hundred meters between the current rim of the pit and the base of the stockpile there. So, that’s -- the primary area for expansion is to the north and east.

Okay. And for the heap leach, you were saying that there is potential for a two to five-year life extension. I think presuming that the heap leach of around about 10 million ton per annum would be operating simultaneously with the existing pit. Is it because you can reduce your cutoff grade, reduce your strip ratio that you could think about an extension of life?

Exactly. It’s the strip ratio reduction, it’s the combined value of both the heap leach ore, the newly defined heap leach ore, plus the CIL ore that’s helping to drive to pay for that stripping, on that pushback.

Okay. So, I will stay tuned for later in the year getting an update on this. Going over to Saramacca, you’ve changed your plan of transportation from rail to road. Was that to allow you more flexibility for other satellites in that area such as the Brokolonko deposit and Sarafina?

Yes. I mean, it was certainly one of the considerations. As part of the some of the scoping work that was ongoing at Saramacca, the team there went through a detailed sort of review of a number of different haulage options. I know previously we’ve discussed rail. As they looked into it more deeply, they felt that the capital costs were moving up more aggressively for rail than they had expected. And there was some potential uncertainties around that option. And obviously as we moved towards consolidating Brokolonko and understanding that the district was going to be expanding, the flexibility offered by road haul trucks, sort of made it rise to the top of the pile in terms of options.

As you’re working through more detail on Saramacca, has your thinking about how it could contribute to Rosebel changes from when it was first introduced maybe about six months ago?

As of right now, I mean, the work we’ve done so far is more or less along the same lines as we talked about previously, i.e., ore delivery as a satellite operation, taking advantage of the soft rock primarily or initially from Saramacca to supplement primary hard rock feed from Rosebel. That being said, we’re quite literally just in the last week and half sort of started to move into new LOM planning. So, there is actually quite a matrix of options that are being looked at as a part of that LOM exercise right now. I don’t want to presume what the final answers will be. So, we’re all sort of watching very closely and making sure that the team there has resources to do the evaluations properly as we move forward. And one of the interesting exercises for us there will be that -- we don’t always do with the LOM exercise, but for Rosebel this year, we are -- it’s really looking at some blue sky options, if we can fully exploit resources what that this thing need to look like. Because that will really drive how we’ll think about things later this year.

Our next question comes from Dan Rollins of RBC Capital Markets.

Yes. Thanks very much. Gord, really have you on the queue. I was wondering if you might be able to provide some color what the run a mine network at Essakane on the heap leach has been, if you’re able to release that right now.

Yes. I mean, we’ve reported previously that we’ve seen -- we saw last year sort of results in the 70% to 80%, maybe in our internal evaluations, we sort of looked at 60% to 65%. Currently, we’re running a lot more columns, a lot more variability, plus some additional composites. We’re seeing those results repeated. I was at a presentation here last week. Results are showing anywhere from 65% to 85% recoveries, depending on what type of material and what part of the pit. Initial round of work, we looked at crushers of 19 mills and 8 mills. This time, we’re looking at crushers of 8 mills; and also considering HPGR, down to a final grind and including some agglomeration, really trying to find where the sweet spot is in terms of the project for throughputs and capital intensity. But, yes, those recoveries -- there is certainly -- I would describe them as far as heap leach recoveries, certainly towards the good end of heap leach recoveries, and very consistent.

Okay. So, right now, you’re favoring going to a crush than stacking instead of just going direct run a mine.

Yes. We did some evaluation work on run a mine. We didn’t do any met test around run of mine. But, understanding the really close correlation we’re seeing between the crust size and the recovery results and also understanding that -- run a mine sounds cheap but there is still capital involved fro pads and distribution systems and so forth that -- for right now the dump leach stuff seems to be of a lower priority for us.

Okay, perfect. And then, quickly just Saramacca, any ability to give us the cost holdout [ph] at the mill?

I don’t have the number in my head right now, but I mean -- I’ll follow up on it. When we look at haulage from Rosebel pit to the mill which is about half the distance that’s in the order of about $1.25, something like that.

Okay, perfect. And then, Steve, maybe a question for you just on Sadiola, we’ve asked this before and I know your level of frustration seems to ebb and flow of the progress there. But, when is sort of the deadline to pull the trigger on this, put on care and maintenance and then just run the stockpile? How much more can you and your partner really go along with this plan without pulling the trigger on something?

Well, Dan, nothing has changed there. We continue to work with Anglo and I’m hoping to meet up with Venkat here next week. We continue to try and negotiate. The good news for IAMGOLD is that we have so many other things happening that Sadiola, which is a very -- I mean, it’s a world class opportunity but it’s got to have the right economics and it’s got to have the right fiscal regime associated with and more, and probably right at the top of the list what I call, protection of the tenure, which ensures the sustainability of the agreement. So, I’d love to see Sadiola go ahead. We’re just seeing a lot of Chinese companies coming into Mali right now. They’re donating a lot of money to the government. And the Chinese I think are running into a very quick grade degradation in their own country, their gold supply is being challenged. And as you probably know, Dan, China has now become the number one gold buyer in the world. They surpassed India. And so, what we’re running into, and if you look at the Shanghai Gold Exchange, it’s very robust. So, we’re seeing the Chinese take a very, I would call, aggressive position in gold, worldwide. So, we’re bumping into them in Mali. And they can probably offer more aggressive terms than what we’re willing to agree to. I’m not saying that we’re going to roll over there at all. But realistically, when we have something like Saramacca, Sarafina, Brokolonko, we have what’s going on at Essakane with the heap leach and exploration opportunities in the concession, you take a look at Côté, you take a look at Westwood ramping up, you look at Boto, you look at some of the exploration success we’re having at Monster Lake and Nelligan. I just reiterate, I don’t worry about it from a growth standpoint. We have plenty on our play. Does it frustrate me with respect to the 1,200 to 1,400 people that work there that will lose their jobs ultimately if nothing moves ahead, of course it does. We’ve been there 20 years. We’ve built a hospital, we’ve built a school. It’s sad. So, I’d love to see Sadiola go ahead. But, I’m not going to compromise our principles to get a deal done. And our shareholders are very much aligned with that philosophy. Mali has its own risks at the best of times, and we’ve been able to manage it. We’ve never had a problem with our mine at Sadiola. And I would stand up today and tell you that we would invest tomorrow, if they were willing to meet what I would call it and what Venkat would call, the terms that work for us under the 1991 Code. So it’s not a big ask. But, the government for whatever reasons seems to be taking a much more aggressive stand on the terms of the agreement, which leaves in my opinion, and I’m not being critical of anybody else in Mali, but in our opinion, a much riskier position than we’re able or wanting to accept. So, a long answer to a short question, but we need to see it or we will go in care and maintenance, we will start retrenchments in a more aggressive way and the mine will sit there. We have the concession till 2024. We have a lot of time to realize those reserves. And at my age, Dan, and you will find this so when you get to my age, you learn to be patient, and I’m not rushing this. I’m going to wait and make sure that the deal we’ve put in front of our shareholders is the right deal.

Okay, perfect. And one last question for me quickly, just Rosebel, you’ve talked about potentially buying a larger chunk of the UJV from the Suriname government, any discussions on that front to update?

Well, Carol and I were just down in the jungle there two weeks ago and we -- the President was supposed to have a walk with me like we did originally seven years ago when we developed the UJV on the back of a [indiscernible] And so, we said you wanted to have a walk with me. And at the end of the day, he did -- got a lot in his plate. As you Suriname is struggling with their economy and they’ve had some challenges. We have an excellent relationship with the President. And we’re proud that we have an excellent relationship with the resources. We would look at the opportunity to acquire more of Saramacca, if we could reach deal terms that made sense. It would be much more efficient for us. But obviously, I am agnostic about it in many respects. We’ve got a lot in front of us at Sarafina. If the government of Suriname would like to dispose of their 30% in Saramacca at terms that are fair to them and fair to us, we would -- we could do that and would do that. It would help them; it would help us in terms of our operations. But, again, it has to be the right kind of deal. So, the answer is yes, we would look to expand our position if the deal terms are right. If the deal terms aren’t right, we have so much in front of us in terms of upside there. I’m not going to push it. And my relationship with the President which developed over the years is so strong that he knows at the end of the day, whatever deal we work out will be a win-win. And you’ve seen that happen there over the last few years. It’s been a great relationship and it’s been a great strategic move for our Company. It’s just changed our Company, changed years ago. So, same has happened at Essakane. Anyhow, that’s where we are at.

Our next question comes from Mike Parkin of National Bank.

Hi, guys. Just a couple of questions. With the Saramacca initial reserve coming in the second half, how much of the drilling, post the maiden resource will be factored into that if any?

Well, all of the stuff that’s been done, certainly up till recently, will be factored into it. We are starting another campaign. So, Craig’s exploration teams have now moved off the footprint of the base deposit and they’ve moved into other exploration zones. The mine geology team has now sort of taken over accountability for Saramacca. So, Craig’s team completed their program. That is going to be factored into the next block model, and we’re going to be doing some infill drilling. And by the time we actually come out in the second half with the reserves and resources, there may be a second model to try incorporate as much of this current infill program as possible. So, I guess, the short answer is as much as we can, Mike.

Okay. And are we still waiting on a fair number of drill results of the tail end of that first campaign?

We’ve put out about 30% of the drill results and the rest will be coming out in the next couple of weeks. We’re just looking at that now. So, as soon as we complete all the QA/QC work and validation, then we’ll be ready to put [ph] rest of them out.

Okay. And then with the next campaign there, what would the timing that you possibly expect to update the market on, how about campaigns going to [technical difficulty] half of that’s done or whether?

Yes. We quite honestly haven’t had a huge discussion about it. Given that it’s really infill drilling, I mean, we can discuss it, but it probably won’t be -- it will be more around conversion than addition. That being said, Craig’s exploration campaigns maybe -- obviously if we start to see some material results there, we’d be very aggressively looking to put those out.

Okay. And then, one other thing. On the Essakane heap leach, do you feel like you’ll need any agglomeration on that project or would it just be a crush and stack?

We’ve looked at it both ways, Mike. And as I said, I just saw presentation on it. At prefeasibility, the current estimate, what we’re going to be looking at is HPGR with the single stage of agglomeration. So, yes.

And then, can you just remind us the impact on cost per ton at Essakane once the solar plant comes up and running fairly soon here?

Yes. I mean, Essakane, the current cost of the hydrocarbon side is probably in the $0.21 to $0.22 kilowatt and the solar is running at 17 on a taker pay for 9.5 years. And then, after 9.5 years, which we didn’t think actually we’d have to worry or think about, goes literally to zero. So, but, now with the extension of the Essakane mine life, that is going to be a huge help to us. I would say, because you’re looking at probably a 20% efficiency factor there Mike, so on 15 megawatts probably 3 megawatts of plus, it’s not a huge help. But here is the upside and this is what I’m excited about. We’ve got batteries there, where we’re at the frontend with Erin Energy, [ph] which is our based firm of testing new batteries. And the real upside here is whether or not these batteries can capture the solar power and then feed the mill. And we believe with the amount of advancement that’s happening on that site and the technology improvements that long term, it will have a dramatic impact on our cost there. As you know, probably about 30% of our cash costs related to energy there. And it would be significant for us. So, we’re very, very pleased about where that is going. And we’re very optimistic about the long-term gains on that. And you’ll notice as well that Carol’s genius hedging has helped us out the oil side because we’ve got some nice employees [ph] there which are really helping us with the volatility in oil. So, good luck to the year already. She’s going to offset that against deferred taxes next quarter.

I wish I could.

Our next question comes from Steven Butler of GMP Securities.

Well, thanks, operator. Guys, a quick question here, a couple of have been asked and answered already. With respect to Essakane, Gord, the strip ratio, what’s the effective decline at strip ratio that comes with this heap leach project that you’re visiting?

I don’t have the number right in my head. But I believe we go from our current 3.5 to below 3.

Okay. That’s fine we have. We’ll see more on the delivery...

Yes.

This concludes time allocated for questions on today’s call. I will now hand the call back over to Ken Chernin for closing remarks.

Thanks very much, Arial. And thank you ladies and gentlemen for your continued interest in IAMGOLD. We look forward to having you join us for our first quarter 2018 conference call in May. Thanks again.

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