IAMGOLD Corporation (IAG) Q1 2022 Earnings Report, Transcript and Summary

Thank you for standing by. This is the conference operator. Welcome to the IAMGOLD First Quarter 2022 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 now like to turn the conference over to Graeme Jennings, VP, Investor Relations and Corporate Communications for IAMGOLD. Please go ahead, Mr. Jennings.

Thank you, operator and welcome everyone to the IAMGOLD first quarter 2022 operating and financial results conference call. Joining me today on the call are Maryse Bélanger, Chair of the Board and Interim President and CEO; Daniella Dimitrov, Chief Financial Officer and Executive Vice President, Strategy and Corporate Development; Craig MacDougall, Executive Vice President, Growth; and Bruno Lemelin, Senior Vice President of Operations and Projects. Our remarks on this call will include forward-looking statements. Please refer to the cautionary statement included in the presentation under the heading cautionary statement regarding forward-looking information and be advised that the same cautionary language applies to our remarks during the call. Non-GAAP measures will also be referenced on the call, and we direct you to review the cautionary statement included in the presentation and the reconciliations of these measures included in our most recent MD&A, each under the heading non-GAAP financial measures. With respect to the technical information that we discussed, please refer to the information in the presentation under the heading qualified person and technical information. The slides referenced on this call can be viewed on our website. I will now turn the call over to our Chair and Interim President and CEO, Maryse Bélanger. Maryse Bélanger: Thank you Graeme. Good morning everyone and thank you for joining us. As you saw in the announcement last night, I have agreed to step in as Interim President and CEO. This appointment is a great honor and I am very pleased to be here and look forward to working closely with the rest of the management team at IAMGOLD, specially to navigate the challenges and opportunities ahead. The decision to come aboard was given careful consideration. Given the complexity of the business, both from an operational and project development standpoint, further management capacity is needed to bridge the gap until a search for a permanent CEO is concluded. On behalf of the Board I want to thank Daniella for effectively leading the company through a difficult period as Interim CEO in addition to her roles as President and Chief Financial Officer. Each of these roles demand tremendous time and commitment and my coming on board will allow Daniella to turn more of her attention to investigating measures to increase the company’s liquidity. Since being appointed Chair earlier this year, I have been working very closely with Daniella and the Executive team. I just spent the weekend at Côté and was very impressed to see the ramp up of activities as the weather improved. I am confident we will address the crew in near-term challenges and know that we remain fully focused on our goal of becoming a leading high margin gold producer. With that I would like to turn the call over to Daniella to take us through the events of the quarter. Daniella, please.

Thank you very much Maryse and thank you again everyone for joining us on this call today. I know it is a busy day of earnings so we will do our best to expedite our presentation. Before I begin I would like to welcome Maryse as Interim President and CEO. As she mentioned, she has been actively engaged in the business since being appointed Chair and we very much look forward to working with her in her new role. Her proven strengths and experience in operational and efficiency improvements and in project development bring important additional capacity and capability to the management team as we actively addressed the challenges before us. Turning to the quarter, IAMGOLD delivered a strong start to the year with attributable gold production of 174,000 ounces up 21,000 ounces or 14% from the prior quarter on continued strong performance from Essakane and improvements at Rosebel. The strong production results and higher sales volumes directly translated to improvements in cash cost at $1017 per ounce sold and all in sustaining cost at $1490 per ounce sold. On a unit cost basis, costs were effectively flat quarter-over-quarter. Health and safety ensuring all of our employees go home safe continues to be a key focus for IAMGOLD as reflected in our long held zero harm vision. For the quarter, our DART Frequency Rate which translates to days away or transfer duty was 0.29, tracking below our annual target of 0.42, and a total recordable injuries rate was 0.85 currently above our target of 0.73 for the year. Côté Gold achieved another milestone surpassing over 4.7 million hours with no lost time injuries to date. The COVID-19 pandemic continues to evolve and managing the impacts of it remained a significant focus for us in the first quarter. The rising positive cases at our operations including at Rosebel, Westwood, and Côté resulted in rising rates of workforce absenteeism early to mid-first quarter 2022. We will address these impacts further in the following remarks. Looking ahead our attributable gold production guidance for the year remains unchanged and is expected to be in the range of 570,000 to 640,000 ounces. Cost guidance for 2022 is also unchanged at this time with cash costs expected to be between 1100 and 1150 per ounce sold and all our sustaining costs expected to be between 1650 and 1690 per ounce sold. As previously reported these estimates issued in January included an inflation assumption of 5% to 7% on key consumables. Towards the end of the first quarter additional cost pressures emerged arising from systemic inflation, constrained global supply chains, and the sanctions on trade with Russia further increasing the average cost of certain key consumables such as oil, ammonium nitrate, grinding media, lime, and cyanide. We continue to work with our supply chain to seek alternatives to mitigate ongoing cost pressures including the sourcing of appropriate alternatives although at higher prices and sometimes at varying quality as well as progressing productivity initiatives at our operation through the IAMALLIN operational improvement program in an effort to offset certain of these cost increases. Increases in oil prices have been partially mitigated by our existing oil hedge program. For reference, a $10 per barrel increase in the oil price equates to approximately $6 per ounce increase in our cash cost. Without our hedging contracts the same $10 per barrel increase which translates to a $15 per ounce increase in cash card. In our MD&A we noted that continued external cost pressures may result in an increase to 2022 cost guidance estimates and that we will provide further updates next quarter. The following are some key highlights of our first quarter 2022 financial results. Gold revenues in the first quarter totaled 356.6 million from sales of 196,000 ounces or 181,000 ounces on an attributable basis. The average realized gold price for the first quarter was $1813 per ounce. These revenues and average realized prices included the impact of the physical delivery of 37,500 at $1500 per ounce under our 2019 prepay arrangement as we closed monthly contracts. Adjusted EBITDA came in at 137.6 million for the quarter translating to first quarter adjusted net earnings up 26.1 million or $0.05 per share. Operating cash flow before changes in working capital was almost 134 million for the quarter and mine site free cash flow was 87.5 million. In terms of our financial position we ended the quarter with $520 million in cash and cash equivalents and almost $5 million in short-term investments for a total of just over 524 million. During the quarter we received the first $59 million in cash of the 236 million to be received over the course of the year in relation to the 2022 prepay arrangement on 150,000 ounces which will be physically settled in 2024. On April 29th we entered into a master lease agreement with CAT Financial to release mobile equipment expected to be delivered over the course of 2022 and 2023 with a value of approximately 125 million. This is in line with our budgeted expectations and Côté project costs which we have been reporting net of these leases. In terms of cash flows we started the year with $545 million in cash and equivalents and the balance decreased by just over 25 million over the course of the first quarter. Cash generated from operations of 133.9 million net of income taxes was offset by outflows from investing activities reflecting capital expenditures of 168.3 million at Côté Gold, Essakane, Rosebel, Westwood, and Boto. We will now walk through each of our operations in more detail. Essakane delivered the highest quarter production to date with attributable gold production of 112,000 ounces or 14% higher quarter-over-quarter, benefiting from higher head grades and optimized or blend management at the mill. Mining activity of 15 million tons was in line with the prior quarter due to efficiencies achieved from material rehandling procedures. Mill throughput of 3.2 million tons was modestly lower quarter-over-quarter and was offset by higher head grades of 1.39 grams per ton, higher average recoveries of 88%, and higher plant availability of 95%. Head grades came in above expectations as a result of higher than anticipated or [indiscernible]. Ore blending strategy up the mill feed, optimize the feed grade, and helps to mitigate the negative impact of the graphitic content on recovery. Cash cost and all in sustaining costs per ounce sold for the quarter of 781 and 1134 per ounce sold were lower by 14% and in line respectively quarter-over-quarter primarily due to higher production and sales and higher sustaining capital expenditures of 47.7 million versus 22.9 million in the prior quarter. COVID-19 cases peaked at the end of 2021 and the situation is currently stable. The operation continued normally following the political developments in Burkina Faso reported on earlier in the year. Although it is continually challenged by the on the ground security circumstances, we continue to take proactive measures to ensure the safety and security of our in country personnel and we continue to adjust our protocols and the activity levels at the site according to the security environment and the supply chain circumstances. We are furthering certain additional investments in security infrastructure in the region and at the mine site. These measures and investments are captured in our cost and CAPEX guidance. Looking ahead attributable gold production at Essakane in 2022 is expected to approximate the top end of the range of 360,000 to 385,000 ounces reflecting the higher than expected grades in the first quarter and the potential for further positive reconciliation between mine grades and the reserve block model. Head grades are expected to normalize closer to the reserve grades over the course of the year and we are investigating whether the updated block model may be under estimating grades as the complexity of mineralization has increased in the lower portions of the pit with higher amounts of coarse gold. Turning to Rosebel, it had a good start to the year. The operation reported first quarter attributable production of 46,000 ounces which is a 10% increase quarter-over-quarter benefiting from improved recovery and head grades partially offset by lower throughput. Material mined at 12.7 million tons with 8% lower quarter-over-quarter as waste stripping activities lagged in the quarter with a ramp up in March due to some impact from weather and the continued challenge of managing head intrusions by illegal miners. The grade mined at Saramacca continued to be lower than reserve grade due to the phase that is currently mined. The completion of a haul road which is in progress is expected to provide access to the higher grade phases in the fourth quarter of 2022. Near throughput achieved 2.3 million tons or 6% lower than the prior quarter at an average head grade of 0.1 grams per ton impacted by mill maintenance work including the relining of the fag [ph] mill. Mill recovery was 91% which is 6% higher than the prior quarter benefiting from improvements to the carbon ADR circuit which once completed at the end of the 2021. Cash cost of $1315 per ounce sold and all in sustaining costs of $1784 per ounce sold were lower by 13% and 2% respectively quarter-over-quarter primarily due to higher sales volume and partially offset by higher sustaining capital expenditures mostly related to stripping. The COVID situation at the site stabilized during the quarter following an increase in new cases in January. Looking ahead, attributable gold production guidance for 2022 at Rosebel remains unchanged at between 155,000 to 180,000 ounces weightage to the second half of the year as the seasonal rains subside which typically peak in the first half of the year. We note that the collective labor agreement expires in August of 2022 and negotiations for a new agreement are scheduled to commence in the third quarter and have in the past at times been prolonged and disruptive to the operations. Turning to Westwood, quarterly gold production of 16,000 ounces was 23% higher than in the fourth quarter of last year. Mining volumes of 222,000 tons were lower due to higher absenteeism resulting from COVID-19, and general labor shortages which continue in the region. This was partially mitigated by higher grades and lower dilution. Underground development improved significantly in the first quarter with over 800 meters of lateral developments completed which is double that of the prior quarter. The COVID-19 situation at sites and in the district stabilized in the second half of the quarter. Gold production guidance at the Westwood complex remains unchanged for 2022 in a range of 55,000 to 75,000 ounces and assumes the safe restart of the central and west underground zones at the end of the second quarter of 2022 which is on track. I will now provide you with an update on our Côté Gold construction project. Before we get into the updates on the project review and risk analysis and cost and schedule estimates, I will provide some key project updates. In the first quarter we expanded $82.3 million and incurred $130 million in project cost. The balance between spend and incurred costs relates to completed work not yet invoiced and timing of payments. As previously announced, our concrete batch plant was rendered inoperable following a fire on February 24th. Our project and contractor teams quickly announced a mitigation plan starting with sourcing concrete from local suppliers and [indiscernible]. This was followed by the sourcing of a mobile batch plants in mid-March which could handle small to medium sized ores and then a replacement batch plant was commissioned and has been operational since mid-April. The impact to the project schedule as a result of the batch plant fire has been incorporated into the ongoing schedule and project costs re-estimation work which we will discuss in a moment. We do want to take a moment to applaud the efforts of our project and contractor teams in their rapid and agile response and proactive mitigation of this event. All critical infrastructure is complete for the spring thaw. Earthworks productivity improved over the quarter, however, continued to lag due to COVID-19 absenteeism in January and February, lower productivity rates compared to plan, as well as reduced equipment due to spare parts availability and other maintenance challenges faced by the contractor. The concrete foundation work inside the grinding area is nearing completion and should be completed in the second quarter allowing for the preparation of the commencement of structural and mechanical installation in the interior of the building. Structural steel erection and the high bay grinding section of the building has been completed. Installation of the pre-leach thickener and leach tanks concrete foundation has commenced. Wall panel cladding installation has progressed with over 90% completed for the high bay building section including the roof of the plant. However, this is not on a critical path. The camp was connected to grid power and pole installation work on the 42 kilometer power line is ongoing. We reported with our year-end results that the rapid rise in cases in Ontario and other provinces had a negative impact on construction activities in the first quarter. Site staffing was approximately 60% of plan in the first part of January with a large number of infections including in the steel construction work force. Our mandatory vaccination policy was introduced in January and 100% of site personnel had two doses of the vaccine by April 1. Côté Gold is a project that is being developed with a background of COVID-19 inflation and global events and their impact including on the global supply chains, labor availability and productivity, cost of materials, commodities, and consumables. As previously disclosed, following the appointment of Jerzy Orzechowski as Executive Project Director in December 2021, a project cost scheduled execution strategy and risk review commenced to assess the previously estimated cost and schedule along with the evaluation of potential mitigation and/or optimization opportunities. This project review and risk analysis is continuing and is being undertaken by the IAMGOLD project team, EPCM contractor, and certain other technical experts and has been dubbed super trend. Following this on February 23rd we announced that certain inflationary and other cost pressures had been identified impacting Earthworks, electrical and instrumentation components, operation spare parts, key consumables, and other indirect costs resulting in projected remaining cost to completion at that time to trend upwards above the high-end of the previous estimate range of 710 million to 760 million and the timing of cost to potentially vary. Based on the ongoing analysis, assessment, and preliminary information available to date including provisions for certain commodities escalation and contingencies, the company currently estimates that the remaining project cost to completion at April 1, 2022 could be between approximately 1.2 billion to 1.3 billion net of leases and with a preliminary increase in project costs estimated at an FX rate of 1.25. This range includes between approximately 100 million to 150 million in contingencies and other risk. Accordingly, the company has withdrawn its 2022 and 2023 Côté Gold project cost guidance. We do caution that this is a preliminary estimate and that the company intends to provide a more detailed updated cost and schedule estimates before the end of the second quarter once the ongoing work is completed. In the last number of months, the Côté Gold project has seen several changes in leadership and oversight, both at the project level and corporate level. Since the appointment of a new Executive Project Director teams have been strengthened to target efficiencies while leveraging knowledge, experience and team integration between the owner’s team, EPCM contractor, and the various other project contractors that are working at Côté Gold. The preliminary estimated updated cost to completion, excluding contingencies result from additional cost and schedule impacts in the cost categories which I will review shortly and include COVID-19 related impacts and delays as well as inflation impacts. Earthworks, approximately 25% of the increase is associated with scope gaps, lower than expected productivity as a result of an overestimation of earthmoving equipment efficiencies based on geotechnical data and scope gaps in additional dams and dewatering. Process plants and infrastructure, approximately 25% of the increase is associated with scope gaps relating to the processing plant, under estimation of winter concrete and steel costs, impacts on the underground utility construction, and received bids for the SMPEI packages. Number three indirect, approximately 40% is associated with impacts from increased project costs and scheduled extension, including EPCM, owners cost, mining, operations readiness, and other indirect costs. And finally others including procurements account for approximately 10% of the increase. As part of this work, a study by an independent capital project management service company estimated direct and indirect COVID related impacts to the project to be in the range of approximately $150 million to $300 million on a 70% basis at an exchange rate of 1.3. Looking at the schedule, based on preliminary results, the timing of commercial production is expected to be extended by approx -- to approximately the end of 2023. While this is consistent with previous guidance of the second half of 2023, it does represent a four to five-month delay resulting from certain of the factors that we previously discussed. This year has always been critical for project advancement as project activities are expected to ramp up into the summer and fall months with a coordination of Earthworks, concrete, plants structural mechanical piping work, and power and electrical installation being very important. The increase in the oversight team, managing contractors, and contracting packages which will facilitate the expected increase in the number of contractors working at site. Our Board of Directors has also retained an independent technical consultant to assist with the Board's review of the results of the Côté Gold project review and risk analysis. We do caution that potential further disruptions including caused by COVID-19, the Ukraine war, weather, potential labor disruptions, and the tight labor market could continue to impact the timing of activities, availability of workforce, productivity, and supply chain and logistics and consequently could further impact the timing of actual commercial production, and consequently project costs. Taking a look at the project metrics, Côté Gold continues to be a transformational asset for the company with the addition of a Tier 1 long life generational asset in Canada to our portfolio. We note that the results of the ongoing re-estimation work will also include a reanalysis of the project ramp up assumptions and other project metrics, including operating costs which we expect will increase based on headcount assumptions, and to better capture the current pricing environment for consumables and increased labor rates. As we mentioned, these results will be issued before the end of the second quarter. Turning to liquidity, as of March 31 the company had $524.4 million in cash, cash equivalents, and short-term investments, coupled with approximately 498 million available under our secured revolving credit facility, resulting in total available liquidity at quarter-end of $1 billion. We drew down $100 million on the credit facility at the end of April to prepare for Côté Gold cash costs during the remainder of the second quarter while we complete certain cash repatriation initiatives, including a dividend declared and paid by Essakane at the end of April. Based on current information, total current available liquidity taken together with estimated net cash from operations is expected to be sufficient to continue to fund the construction of Côté Gold, to meet obligations, and to fund planned investing activities at our existing operations for approximately the next 12 months. We expect that the change in the remaining cost to complete and schedule of the CÔTÉ Gold project will result in the company requiring additional financing in 2023 in addition to the existing credit facility to complete the Côté Gold construction through the ramp up period to take us to positive free cash flow. We are therefore actively investigating measures to increase liquidity and capital resources, including additional debt and/or equity financing, strategically disposing of assets, and/or pursuing joint venture. Thank you to everyone for joining us today. And I will now pass the call back over to the operator for Q&A.

Thank you. [Operator Instructions]. The first question is from Josh Wolfson with RBC Capital Markets. Please go ahead.

Thank you very much. Maybe Daniella on some of the points you made about the funding gap for 2023. Could you first highlight perhaps what would be some higher priority assets that could be divested, there's been, I guess, various views partially by some of your shareholders that have pointed to assets with the potential that may no longer be a priority for sale? And then also, when you talk about joint ventures, is that related to Côté or other assets and then how would that work with your existing partner there, if it is Côté?

Thanks very much for the question, Josh. We certainly are actively investigating measures to increase liquidity and capital resources, as we talked about some of the options that are available to us. At this time, we're not going to speculate on specific alternatives or on potential outcomes, and updates will be provided when warranted. We're very much focused on completing the super trend work and getting the report done and the detailed information out into the marketplace, which will also allow us to -- provide us the tools to complete the liquidity analysis that we're going through on that. And certainly non-core assets in our portfolio are something that we're certainly looking at.

Okay, but be able to sort of identify what the specific non-core assets would be, will those be the non-operating assets or could that be some of the producing assets as well?

When I indicate non-core, at this time I do not mean the operating assets. We do have some assets in our portfolio where we've been doing some exploration in non-core jurisdictions, for example, in Brazil.

Okay. On Côté with obviously a lot of changes on the capital side. Should we expect any update on the operating cost expectations with the update later in the second quarter or is that still under review?

We certainly are doing work on updating our mine plan. We've had the scheduled extension that we talked about, which takes us closer to the end of 2023. On that so the production under our original schedule we were expecting to see greater production in 2023. We have identified a number of opportunities to optimize the mine plans, particularly in the first couple of years of operation. And so we're incorporating that optimization in there and are doing and have been doing an assessment of headcount, labor rates, and other operating costs, which has obviously been impacted by the inflation that we're seeing on key consumables that we and all of our peers have been talking about. And so we will be publishing, we will be providing an updated information on those metrics.

Okay, and then one final one on Rosebel. Is there any more information you can provide on some of these proposals from the government, it is just kind of the typical royalty tax type of increase or could it be something more?

They fall within three categories Josh. Number one is VAT, which currently does not exist in the country. And as a measure that has been talked about for a fair bit of time now, the original plan on the part of the government was to introduce this in 2022. And, of course, there's a lot of administration that comes with implementing something like this and we're not seeing that come right around the corner yet. However, that is one of the measures. Number two is to your point royalties and that's something again, that's been talked about, it's nothing got to come forward. But it is a discussion point as the government looks for additional measures to increase revenues. And the third one is, through our solidarity payments and where the government would be in a sense looking for advance payments on future taxes, and the ability to then offset those payments against future taxes that then become the conduit. So those would be the three categories.

Great, those were my questions. Thank you.

Thank you, Josh.

The next question is from Jackie Przybylowski with BMO Capital Markets. Please go ahead.

Good morning Daniella and Maryse. Thanks very much for the call. I think I just want to ask, just to start, what do you see as the differences between yesterday's release and the detail you've given us and the upcoming full results from the study later this quarter. Is it -- do you expect material changes in the dollar amounts or is it really more just adding detail into the existing estimates, I am just a little confused about why the numbers sort of came out ahead of the full update?

Thanks, Jackie. We felt that our work had progressed sufficiently that it warranted providing this information to the market. The work that we're going to be completing over the course of May is some update work and risk analysis around the schedule, particularly around the peak period. And we're doing, we're completing work on the contingency and we do have some follow-ups in some of the contracting packages. However, we are not expecting a material change to the range that we provided in yesterday's release.

Okay, and with the full study completion, you expect to reinstate your 2022 and 2023 guidance, is that right?

Yes, yes, we do. We would intend on providing a more detailed update of the final cost estimate as well as the timing of payments over the course of 2022 and 2023 as well as confirmation of the preliminary estimate that we provided with respect to the schedule, as well as providing the updated mine plan information as we've just chatted about with Josh.

Okay, and can you maybe give us a sense of what you're looking at in terms of the financing options, I realized you still have over a year before you need to complete any kind of financing or fill any financing gaps, but would that include potentially equity, new debt stream, all of the above and have you been in discussions with Sumitomo in terms of its plans to participate in any new financing?

And so with respect to Sumitomo’s involvement, they've been involved in the work that has been ongoing, along with their own technical experts on that, and they continue to progress their review of the preliminary estimate and the expected extension of the start of commercial production. And similar to our Board, retaining an independent technical expert to conduct similar review of the results, they have done the same. With respect to financing alternatives. We are investigating measures to increase liquidity and capital resources as we've talked about. And similar to what I've just said, we're not going to speculate at this time on the specific alternatives or on potential outcomes. I can comment on one alternative which would relieve some pressure off us in 2024, which relates to the prepay. The 2022 prepay which is physically to be delivered in 2024 and that really results in an obligation on our part, to in a sense we pay $240 million of debt over a 12-month period. That is one of the things that we are considering similar to what we've done last year to in a sense extend that obligation. And beyond that, we're not going to speculate at this time on specific alternatives or potential outcomes.

And if I can just -- probably just one last question, we were at site at Côté in October and the personnel at site at the time were incredibly insistent that they had dotted all the i's and crossed all the t's. So it's a little disappointing but, frankly, not super surprising to see some scope changes with material impacts on the budget. Can you maybe go through and I know you've Côté leadership level, but can you maybe go through any other changes, whether it's personnel or just in the process, I guess, that you've gone through to make sure that, that you've got things nailed down a little bit tighter going forward?

Sure. So in addition to detailed engineering, which is just about complete, and the addition of Jersey which we mentioned and we talked about, we've updated these estimates based on performance productivity metrics. And so for example, for Earthworks, which is 25% of the increase, the updated estimate takes into consideration actual performance productivity metrics that we achieved or the contractor achieved over the course of the second half of last year. We've also supplemented the completion of our works with an additional contractor for some of the work and this contractor comes in with smaller available equipment and they are currently mobilizing. We have incorporated escalation in the contracts to manage potential additional quantity problems. We are re-estimating contingencies and other risks to the schedule. We've increased oversight with resources or additional resources and area management, project controls, site coordination, both on the part of Wood and on the part of IAMGOLD. We've got better integration between our teams, the EPCM and contractors. We've got a more robust tracking progress of construction progress and trends. And I would add that, I think that we really have increased the agility to drive flexible execution strategy, and that is the ability to rapidly pivot in response to problems such as a response that we executed on to increased COVID cases in January and February. And the response to the batch plan flyer which the team executed on. So it's got agility to deal with the unplanned challenges that has very much increased over the last number of months. There are things obviously in the Earthworks and dewatering and water management infrastructure that has led to the increases. And we talked about the performance productivity metrics that we included on the re-estimation. And with respect to water management and certain of that infrastructure, a lot of that work is now behind us in terms of wet water management. So those are some of the examples.

That's great. Thanks very much for the color and I will let somebody else ask your questions. Thanks, Daniella.

Thanks, Jackie.

The next question is from Mike Parkin with National Bank Financial. Please go ahead.

Hey Mike.

Hi, thanks for taking my questions. In terms of productivity assumptions, have you re-budgeted the schedule based off your productivity rates as of today or are you assuming any kind of significant improvement in those productivity rates through the course of 2022 and 2023?

We're particularly on Earthworks we've updated the estimate based on performance productivity metrics to date. And we've supplemented that with the additional contractor that we've talked about. And that is one area where we did see a scope gap that was much different than in the original project cost estimate. And that was not really visible to us mid last year. We had just started Earthworks at the beginning of 2021 and as we were coming into the summer, in that sort of two to five-month period, we did not have enough additional full data, including in relation to ground conditions throughout key side areas, to really sort of recast that estimation as we took over Earthworks in the summer time, and worked to recalibrate and improve productivity and supplement getting the work done. We had pushed to try and recover some of that underestimation as we progressed through the second half of 2021 and just did not get there. So to answer your question, certainly on Earthworks, that is how we approached it. And in terms of the overall schedule for the summer, and getting into the fall, Mike, we're at about 950 people at site right now. We're expecting that to increase to about 1700 or so peak construction in the summer and heading into the fall. And that's where those additional resources in terms of oversight and managing the contractors, the contracting packages, and making sure that we don't have any hiccups as a result of congestion at site is going to be very, very critical.

Okay, and in the release, you mentioned challenges with maintenance and spare parts for the Earthworks fleet. Is that just excessive wear and tear like, can you give us a bit of color in terms of like is the overburden proving less ideal for the equipment, it's using like I recall some other operations, kind of scoping out larger equipment when smaller equipment would have been more ideal just given the topography and challenges of the wetness of it, is that what you're looking at facing or any additional color there would help?

Yeah, that is definitely want one of the factors Mike. The additional contractor that we're mobilizing does come in with smaller available equipment than the current contractor is using. And therefore we're being more selective around which area is being progressed by which of those two contractors. With respect to the existing contractor with the larger equipment, it is just simply what we're seeing in the supply chain and just accessing parts to do regular maintenance on the equipment. And again, that's something that we've addressed by escalating our own relationships and our own arrangements with a particular distributor of the spare parts. And really pushing to unblock that logjam for them really flush for us.

Okay. And then the revised budget for Côté, what are you assuming for oil or diesel price?

So in that 152 -- in that $100 million to $150 million range that we're calling contingencies another risk. There is some escalation included in there for oil, really. We at the project level, we're using $70, we're tracking the escalation in that range to 100 million to 150 million. And then we've got obviously the hedges that are laid out and in detail in MD&A. And we've actually just done a bit more work to help people understand the value of our hedge book and we have broken down more distinctly the FX oil hedges and then separately the gold hedges that we have in place. And we layered on a few more gold hedges in the quarter in accordance with our current policy on how much of the production we're hedging.

Okay. Yeah, that's it for me. Thanks so much.

Thanks Mike.

The next question is from Anita Soni with CIBC World Markets. Please go ahead.

Good morning, Daniella and Maryse. Just maybe a question for Maryse, I'm not sure if she's on the call. But I am trying to take a step back here and look at the NPV of the project, I think originally was around $1.6 billion. And we've had capital cost escalation, and now you're reevaluating the OPEX. And, I noted on the site tour that the mining costs, in my opinion, were pretty optimistic. I think it was 227 and even that had already been revised up a couple of times. [Indiscernible] back and evaluate whether or not like this project needs to pause in terms of -- I mean, we've seen blowouts like this so like task one -- those companies, they have to basically step back, relook, reconfigure, rather than just continuing to push forward and hoping that the operating costs will be okay and that they'll have something at the end of all this?

You want to take that Maryse.

Maybe I'll give it a shot and see if Maryse can jump in here. At the end of the quarter we were 49% project completion, construction was about 35% or so complete. And, with the -- certainly with the major components in place. As we chatted about we are looking at an update at operating costs, and expect that some of that impact will be taken into -- will be softened the impact of that by the optimization that we're doing on the mine plan. We've got 18 years of life there. We've got [indiscernible] in two kilometers next door. And the additional drilling that we've done since that resource has come out has, I believe, is demonstrating that the mineralization is extending both at strike and at depth. So I mean to your point, NPV we have seen NPV erosion and certainly there will be NPV erosion when we put all of those into it. We do expect this asset to be here to be a multi-generational asset and certainly look at it from that perspective. And I'm not sure, maybe I'll check if Maryse can now hear me. I know she spent a week on Côté and perhaps she would like to supplement my comments. Maryse Bélanger: Sure, and I think it is a bit early. We probably need an extra month now to fully assess some of the opportunities, demand. And these opportunities will be included with a new mine plan. Probably a bit of a more aggressive mining schedule in the first two years. And on top of that, I see some other opportunities to really optimize and develop the pit in a way that would allow also for better interaction between the pit itself and the water body to the East. So there's some ideas that are being explored and as the full assessment continues, we will be looking at integrating some of those opportunities.

And then, as you looked at the -- so you mentioned a more aggressive mining plan in the first couple of years. I mean, you guys are using autonomous haulage right and contracting this from Caterpillar and some Pormount [ph]. And I believe that the delivery of the truck schedule was also pretty tight timing to when you needed a lot of the mining and the stripping to be done. I mean, how are you incorporating the autonomous haulage fleet and given that it's a new technology, it's a mine that’s starting up, you've seen other people who've used autonomous haulage and have had startup issues and those were at established mine. So have you factored -- as you look at this have you factored in the extra complication of using AHS? Maryse Bélanger: Yeah, it has been factored in. And I must say that at this point, we have 994 being erected. We have a calibration pad that's already ready to be utilized. And a deferred 793 will be outside early July. So I think there's ample time to be working on the autonomous trucks. And at this point, I don't see any issues with further delay. And I see also some opportunities to really take the time for the implementation. So calibration plan 994 in systems implementation will start in earnest, the first week of July, which gives us lots of time in my mind.

Okay, thank you very much. And I'll pass it off to someone else for questions. Maryse Bélanger: Thank you.

The next question is from Lawson Winder with Bank of America Securities. Please go ahead.

Hi, good morning. And thank you for the detailed update so far. This is all very useful. I maybe wanted to ask a question about your partner's Sumitomo in a bit of a different way, which is, I know you can't speak for them. But, given the potential situation that they may decide to dilute their interest down, what would your preference be, would it be to find another partner or to just assume whatever interest they dilute down?

I guess I'm going put that in the category of we're not going to speculate on that at this time. Sumitomo continues to review the preliminary results in terms of cost and schedule estimates. At this point in time I think although, none of us are obviously happy about these circumstances, we're all very, very disappointed and are working diligently to address it. We've not received any indication that they're looking to otherwise exit the project. There certainly is a lot of interest in the exploration activities that we have undertaken to date. And if recall part of our 2021 budget, we only allocated $2.1 million for our account to exploration activities. So we really -- we achieved those results with very little capital allocated to that. And they've certainly indicated their desire to get more involved in the exploration initiatives in relation to site and that's the communication that we've had around the current development.

Okay, that is very helpful. Thank you very much. So my next question might also fall into the bucket of not wanting to speculate, but look, I'm going to ask it anyway and you can take it for what it is. But when you think about sort of financing the additional costs, I mean, at this point can you say that equity is off the table or is being considered?

That does fall into the categories of not looking to speculate on the outcomes at this time. Listen, we are really pushing to have to finish this work, we're working diligently on getting those done and in really all hands on deck and having a good summer at the project. This is really, really critical, for the project schedule on having a very productive summer and fall months before the winter comes. So, I would say that's the key focus and we'll look forward to achieving that and demonstrating that to the market as the project gets more derisked.

Okay. And then maybe if I may ask just one more just thinking about your decision. I mean, it seems like you're moving into the project and so, at this point, when you factor in the higher OPEX and the higher CAPEX, I mean, is the decision to proceed based on an IRR and are you able to share with us kind of what your IRR expectations are at this point?

I'm going to say that bit of a dissimilar response in a sense that we are well progressed on the project. We believe that a number of the areas have continued to be de-risked. The preliminary cost estimate, as we've talked about, incorporates actual productivity rates, particularly on the Earthworks side of it. And we feel that with the work that still need to get completed, that we're working to very much have our arms around that range. We complete the work and look at the updated cost metrics and schedule. We will complete our assessment on that. However, again we were looking at this as a multi-generational asset and certainly have expectations that the current mineral inventory, that is there, there are tremendous opportunities to continue to grow that and extend the mine life.

Okay. Alright. That's very helpful. Thank you very much for your time today.

Thank you.

And next question is from Carey MacRury with Canaccord Genuity. Please go ahead.

Hi, good morning, Daniella. Just in terms of additional debt financing, do you have a sense of what your debt capacity could be or what you'd be comfortable with at this point?

So, currently our net debt to EBITDA financial covenant in our credit facility is three and a half times. Certainly at quarter-end we were close to net cash or slightly in a net debt scenario. So, we do have capacity assuming the full drawdown under our credit facility to assume additional debt. The pre-pay arrangements do not count as debt in our financial covenant. Although of course, as far as we are all concerned, they are debt and they do need to get paid back and where I was talking about the extension of the prepay from 2024 as an alternative to help us manage through 2023-2024 on that. And so -- and then, of course, ultimately what is a price tag. The price tag we used to make the comment in the liquidity outlook around having sufficient liquidity for the next 12 months, is 1800 for this year, 1700 for 2023, and then 1600 for 2024 and thereafter.

Great, and then maybe one other question. Just in terms of when you sort of get to the peak spending rate, like how much are we talking per quarter, the past quarter you spent about 80 billion -- your share, last quarter it has been 140. Is this going to ramp up to like 200 million a quarter or where do you see this sort of peak spending rate at?

Yeah, we're just finalizing the updated timing of the spend. The one thing that we share, when we talk about liquidity is the following. We have the obligation along with our joint venture partners, so we tell them to stay ahead by three months in terms of expected expenditures under the joint venture. And so therefore, when we manage our liquidity on a monthly basis, we've talked about in the past that our monthly -- that our minimum cash balance that we're targeting to maintain, is somewhere around $200 million. And we talked about the fact that, look for drawdowns when our cash balance might be well above that, as we're repatriating funds, and so on. So, just to come back to your question, we'll update the timing and provide an updated spend of the updated cost estimate when we come out before the end of the quarter. So we'll provide you with what we're estimating are 2022 and 2023 spend to be. And then just keep in mind that we're managing that liquidity on an ongoing basis and have a bit more cash tied up as we progress the project.

Thanks, Daniella.

The next question is from Tanya Jakusconek with Scotiabank. Please go ahead.

Yes. Good morning, everyone. Thank you for taking my questions. I just want clarification on the prepaid that you mentioned Daniella, did you say that that's the potential to push it out a little bit beyond the 2023-2024, did I hear that correctly?

That is one of the alternatives we are looking at, as we did last year. In a sense, you're settling as you would know, you're settling the contract that you've entered into and you're layering on new contracts. And that is an option to sort of manage liquidity beyond project completion and into commercial production on that and sort of manage whatever our capital structure ends up looking like. So that is one of the options we're looking at.

And so then your ability to layer on debt as a financing option, it will give you a bit of breathing room if you're able to push that out a little bit?

That's exactly, that would be the intention of it. It is an obligation in a sense that repay $240 million in 2024 as it sits right now.

Okay, and maybe someone can just help me with a bit of sensitivity on the costs on your Côté project. We did notice that you're using $0.89 a liter for your fuel pricing. Is someone there that can give us a sensitivity for your diesel exposure at Côté?

We can take that back, Tanya and come back to you on that.

Okay, because that will be helpful. And maybe a question to Maryse if I could, as you look at this project Maryse, do you -- what do you think an appropriate internal rate of return should be on this project? Maryse Bélanger: Tanya, thanks for the question. I mean, until we've finalized all the work in the next month or so, cannot give you a firm answer. But typically, we'd be looking at 10% to 12% at a minimum. And this is just based on my experience, it is not based on the Côté and what I've seen so far. So we will continue with the work for the next month or so. We will finish that re-baselining and then we'll share with the market the results. That's all I can say at this point Tanya.

Yeah. It's just, looking and I follow to a need of questions. And we've all seen these projects, there comes a point in time when you're putting so much money behind them. And, sometimes you have to pause and so I'm just wondering, what internal rate of return would you need to see at these prices, I guess Daniella gave us 1800, 1716 long term for you to pause, like, is it 5%, is it, we're just trying to understand at what point there is a pause? Maryse Bélanger: Despite no formal answer for you, but it's definitely something that's going to be assessed in the next four weeks.

Okay. Maryse Bélanger: And we'll have to get back to you.

When is that study going to be released to the market, so we're going to be able to see it, you said at the end of Q2 is that when it's going to be finished, will we get it with Q3 results, I'm just trying to understand when we can see that? Maryse Bélanger: It will be before the end of the second quarter, Tanya.

Okay, thank you very much. And we'll take it offline on the sensitivity for the…

Thank you.

This concludes the time allocated for today's call for questions. And I would now like to hand the conference back over to Maryse Bélanger for closing remarks. Maryse Bélanger: Thank you very much operator. And thanks to everyone for joining us this morning and for your continued engagement with IAMGOLD. There is no doubt that we have many challenges and lots of hard work ahead of us. But myself, the Board, and the management team are 100% focused on advancing Côté to production, addressing our capital needs, and continuing on the solid operational performance at our operating mines. I intend to be very hands on to provide support to our team. I also wanted to say that I look forward to directly engaging with you, our investors and analysts community. So please reach out to myself or Graeme Jennings if you would like to set up a meeting and have a separate conversation. Thank you all and have a good day.

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