Earnings Labs

IAMGOLD Corporation (IAG)

Q4 2022 Earnings Call· Fri, Feb 17, 2023

$16.30

-0.91%

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Transcript

Operator

Operator

Thank you for standing by. This is the conference operator. Welcome to the IAMGOLD 2022 Fourth Quarter and Year End Operating and Financial Results Conference Call and Webcast. [Operator Instructions] At this time, I’d like to turn the conference over to Graeme Jennings, Vice President, Investor Relations and Corporate Communications for IAMGOLD. Please go ahead, Mr. Jennings.

Graeme Jennings

Analyst

Thank you, operator and welcome everyone to our conference call today. Joining me on the call are Maryse Bélanger, Chair of the Board and Interim President and Chief Executive Officer; Maarten Theunissen, Interim Chief Financial Officer; Bruno Lemelin, Senior Vice President, Operations and Projects; and Tim Bradburn, Senior Vice President, General Counsel and Corporate Secretary. 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 to be discussed, please refer to the information in the presentation under the heading qualified persons and technical information. 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. The last 12 months have been a transformative period for IAMGOLD. The company took significant steps towards this goal of becoming a leading high-margin gold producer with the advancement of funding of Côté as we prioritize our capital allocation on key jurisdictions and value-accretive assets, all for the benefit of our stakeholders and partners. Operationally, the company exceeded its targets, producing 713,000 ounces for the year, coming in above our revised guidance of 650,000 to 700,000 ounces. This performance was fueled by the record production at Essakane. Essakane is the backbone of our current production…

Maarten Theunissen

Analyst

Thank you, Maryse and good morning. As you would have seen, Rosebel has been classified as a discontinued operation due to its sale and are not included in our continuing operating results. Revenue from continuing operations totaled $958.8 million last year from sales of 555,000 ounces or 506,000 ounces on an attributable basis at an average realized price of $1,721 per ounce. The price was below spot due to the impact of physically delivering 150,000 ounces into the prepay arrangement that has a $1,500 per ounce color. IAMGOLD received $30 million in cash this year in relation to the dollar completing the 2019 prepay arrangement. Earnings before interest, income taxes, depreciation and amortization from continuing operations, was $292.3 million for the year or $313.4 million on an adjusted basis. Mine site free cash flow from continuing operations. Calculated as cash flow from mine site operating activities, less mine site-related capital expenditures was $167.2 million for the year. Looking at cash flow, net cash flow from operating activities, including working capital, was $408.7 million, with $277.6 million coming from continuing operations and $151.1 million from discontinued operations. Net cash used in investing activities totaled $891.9 million, of which $761.2 million was used by continuing operations, a major component of which was the ongoing construction at Côté and in discontinued operations of $130.7 million. Finally, net cash in financing activities totaled $404 million, primarily due to the drawdown of the credit facility. In terms of our financial position, we ended the quarter with approximately $408 million in cash and cash equivalents and $27 million available under our credit facility. After drawing down $455 million in 2022 and accounting for letters of credit in the amount of $18.4 million issued under the credit facility as collateral for certain surety bonds issued as environmental…

Operator

Operator

[Operator Instructions] Maryse Bélanger: Thank you very much, operator. There doesn’t seem to be any questions. So, I would like to thank everyone for joining us. Sorry, I think we have. Okay, questions coming in.

Operator

Operator

Yes. The first question is from Mohamed Soubra [ph] of CIBC. Please go ahead.

Unidentified Analyst

Analyst

Hi. Thanks for taking my question. Sorry about the mishap over there. So, my question is mainly – I am here on behalf of Anita Soni from CIBC. Question is really related to Essakane and the heap leach expansion. So, first of all, I just wanted to understand whether or not the heap leach material is currently included in either the reserves and resources? Yes, that’s my first question. Maryse Bélanger: Thanks for your question. And if I understood well, you wanted to know in that potential – the 10 million tons we mentioned that was supposed to be heap leach if it’s included in the resource or in the reserves and it’s not. And if I misunderstood the question, maybe you would repeat, please.

Unidentified Analyst

Analyst

Yes. No, for sure. That was the question. It was related to the 9.8 million tons that you mentioned in the call. And if not those, going back to the technical report, I recall that heap leach expansion was about 43 million tons at about 0.37 grams per ton, would you be able to maybe give us a little bit more color on what we could expect from that a more economical material and when we expect to see that in resource or reserves? Maryse Bélanger: So, didn’t provide much clarity in terms of the material that was considered in the heap leach scenario in the past. But all I am going to see is that by midyear, we should have a new technical report where we will have studied all of the potential options for processing and different processing pathways. So, we will keep the market informed as the work is completed.

Unidentified Analyst

Analyst

Okay. Sounds good. Thank you for that. And then finally, I guess given the fact that you are not going ahead with the heap leach expansion anymore, should we just expect the mine life to stand around 2026, 2027 mark as per the technical report? Maryse Bélanger: At this point, we think with this possibility to extend the mine life. But as you know, we would need to collect more drilling data and update all of our resource models. So, work is progressing. And as I have said, we will provide more clarity by midyear.

Unidentified Analyst

Analyst

Okay. Sounds good. Thank you.

Operator

Operator

Your next question is from Sean Wondrack with Deutsche Bank. Please go ahead.

Sean Wondrack

Analyst

Hi. Good morning and nice job on liquidity this quarter. Just as we take a look at your cash position today, is it fair to say that pro forma cash, assuming the receipt of the funds from Boto and from South America is roughly $1 billion as we stand today?

Maarten Theunissen

Analyst

Yes. If we – if you take our cash position that we had at the end of the year of $407 million and we add in the additional cash proceeds on the close of Rosebel that was included in our assets held for sale. That gets us to the $450 million. And then if you add in the net proceeds from the others, the other two transactions, it would get us to approximately $1 billion.

Sean Wondrack

Analyst

Okay. Great. Thank you. And then just surrounding Burkina Faso, there has been a few headlines out there. There was a headline with Endeavor yesterday. Can you just tell us a little bit more about maybe what’s going on, on the ground there? There has been rumors about the French potentially leaving, is that true? And how do you control your own destiny there? I know you have operated in the country for a long time. There has always been some kind of turmoil. So, I am just curious to get your opinion on, has anything changed there? Is it sort of it’s always been a difficult environment and we are coping with it. Maryse Bélanger: Okay. I will take this. Well, first let’s – I will try to address my knowledge, the headline news we heard about early this week with cool sale. So, we are aware of media reports relating to the Burkina Faso government buying gold. And the government actually issued a statement clarifying that they arranged an agreement with Endeavor for that sale. And by the way, in the mining code, Article 16 does allow for this transaction. And in our case, we sell a small amount frequently directly to the West African Central Bank. But we have not received such a request from the Burkina Faso government. And I would not comment further on this. In terms of the security and a bit more color, as we noted the situation is complex in Burkina is deteriorated in 2022. And for us, it’s always relative to our convoys of supplies going to the mine. It’s a logistical challenge. And the company continues to take proactive measures to ensure the safety of our people. And we are constantly adjusting our protocols and activity levels, and we are monitoring closely security environment. And also, we are – we continue to make some investments in supply chain infrastructure and also in storage capacity on the mine side and we do have the support of the government. So, two components to this, our situation at Essakane and then Rosebel sale, which we have not received that type of request and for Essakane. I hope that’s helpful.

Sean Wondrack

Analyst

Yes, that’s very helpful. Thank you very much.

Operator

Operator

Thank you. We have a follow-up question from Mohamed Soubra. Please go ahead.

Unidentified Analyst

Analyst

Thanks. Thanks for taking my question there. Just a follow-up question on the current low-grade material at Essakane, I was just looking through the reserve and resource table. I was wondering if you could give me maybe just the tonnage and grade that you currently have there in the low-grade material if that’s available? Thank you. Maryse Bélanger: For low-grade material, I do not have that. If you don’t mind Mohamed, we could take that slowly.

Unidentified Analyst

Analyst

Yes, for sure. Thank you so much. Maryse Bélanger: Thanks.

Operator

Operator

This concludes the question-and-answer session. I would now like to hand the call 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. As always, we are available should we – should you have any additional questions, please do not hesitate to reach out to Graeme Jennings or myself if would like to set up a meeting. Thank you all, and have a great day.

Operator

Operator

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