IAMGOLD Corporation (IAG) Q1 2023 Earnings Report, Transcript and Summary

Thank you for standing by. This is the conference operator. Welcome to the IAMGOLD First Quarter 2023 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.

Thank you, operator. Welcome everyone to the IAMGOLD first quarter 2023 operating and financial results conference call. Joining me today on the call are Renaud Adams, President and Chief Executive Officer, Maarten Theunissen, Chief Financial Officer, Bruno Lemelin, Senior Vice President, Operations and Projects, Craig MacDougall, Executive Vice President Exploration, Jerzy Orzechowski, Executive Project Director Cote Gold and Tim Bradburn, Senior Vice President, General Counsel, and Corporate Secretary. Before we begin, we are joined today from IAMGOLD’s strong office, which is located on 313 territories on the traditional lands of many nations including the Mississauga of the credit, [indiscernible] and when that people. And IAMGOLD, we believe respecting and upholding indigenous rights is founded upon relationships that foster trust, and transparency, and mutual respect. Please note that our remarks on this call will include forward-looking statements and refer to non-IFRS measures. We encourage you to refer to the cautionary statements and disclosures on non-IFRS measures, including the presentation and the reconciliations of these measures 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, 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 President and CEO, Renaud Adams.

Thank you, Graeme, and good morning everyone, and thank you for joining us today. First off, I want to thank and congratulate the IAMGOLD team, including our chair, Maryse Belanger, or the Board of Directors and management, our operations findings and business development teams, and everyone in the organization for positioning the company to where it is today. The company reported a strong first quarter responding to challenges with 113,000 ounces of attributable gold production from continuing operation, while diligently focusing on managing our cost inputs. I've been asked by many stakeholders since I joined the company. What brought me to IAMGOLD, and where do I see this company going in the future? I can tell you before officially starting in the beginning of April, I spent several weeks behind the scenes, getting up to speed on the company and learning about the achievement and progress of their operations and coordinate. It was clear to me down and even more so now that IAMGOLD is under constant turning the corner towards the goal of being a leading midterm high-margin goal for this. Our secondary mine has been performing well with the teams in country demonstrating great initiative and resiliency. Our Westwood mine starting to make real gains on completing on-the-ground rehabilitation work and development in support of the future mine plan that is highlighted by new and transformative initiatives. And of course, all rights are uncoating. We're at a project continues to advance rapidly towards initial production early next year. The project was approximately 80% complete at the end of March and is ramping up to peaks activity levels. With a clear roadmap in front of us to achieve success. The impact of Cote Gold on this company will be absolutely substantial, with a long-life low-cost asset shifting our production base to Canada. I'm excited and eager to turn our and market focus from looking back to looking ahead of what is to come. We will soon be making the transition from fixing operations and managing constructions towards the real value drivers in our business and demonstrating execution success, operation optimization, and unlocking gross potential. All for the benefit of all our stakeholders. With that I will not walk us through the required results and highlights. I'm on Slide 5. Starting with health and safety. While our metrics in the first quarter abstract above our internal targets. This share remains in line with our peers with a days away restrictive transfer duty rate of 0.60 and total recordable injury rates of 0.84 based on 200,000 hours work. Ensuring that our employees and contractors go home safely with will always be the primary focus of IAMGOLD. As we like to say every goal ounce produced has to be done safely. And we continue to amend our systems safety protocol to ensure we achieve zero harm. On production, in Q1, the company produced 113,000 ounces of gold on an attributable basis from continuing operations, putting us well on the path of our production guiding target of 410,000 to 470,000 ounces this year. As we will get into a moment, the production results were driven by higher than expected grades at Essakane and it comes into ramp up was wait. The relatively strong production results and sales volume translated to cash costs $1,094 per ounce. So, an all-in-to-sustaining cost of $1,525 per ounce. So lower than our guidance estimate of $1,125 to $1,175 per ounce for cash costs and $1,625 to $1,700 per ounce of all-in sustaining costs mainly due to lower planned stripping in this event. Our costs were higher than in the same period of last year, as the inflation than ourselves. The industry experienced the second half last year, raise the general cost of doing business, and are like unlikely to decrease at the same pace. While the first quarter costs were below guidance. I will know that we expect to see our cost increase in the second and third quarters of this year due to higher volume and of waste stripping plan and it's again during this period. And now turning to Slide 6. Turning to Essakane, the mine reported Attributable Gold Productions of 92,000 ounces with higher than expected head grade due to continued positive grade reconciliation and a direct feed of material from the bottom of Phase 4. Mining activity were impacted by ongoing disruptions in the in country supply chain, but the second mining just over 1.6 million tonnes of ore and 4.6 million tonnes of waste for total material minus 6.3 million tonnes versus the 15.2 million tonnes in the same period last year. As we saw during the period last year, the mining fleet could not be operated at full capacity during January and February, as a result of disruptions and the field supply resulting from the security situation. It should be noted, that the situation improved during March, and the mining fleet was operating at near full capacity during April. Mill throughput within the first quarter was 2.2 million tonnes at an average head grade of 1.6 grams per tonne with throughput 31% lower in the same period, December of the same prior year period. The decline in throughput and lower plan utilization during the quarter is primarily due to the field supply constraint discuss. The mineralogy recovery of 91% in the first quarter, as a plant continues to benefit from recent improvements to power blending practices and the gravity circuit. Recovery from the gravity, and continue to increase over historical level. And we are planning on establishing additional screening the second half of the year to target even further potential input. On a cost basis Essakane report cash costs of $964 per ounce an increase from the $781 announced last year. Due to inflationary pressures being offset by lower mining and milling costs as a result of lower activity level and higher grades. All in sustaining costs were $1,157 an ounce coming in below estimate as we were unable to undertake the planned stripping program. Looking ahead, Essakane is on track to achieve this goal production going into range of 340,000 to 380,000 ounces of gold. Mining activity is trending towards normal operating levels in April and it is expected that we will be able to operate near the normal levels through the remainder of this. Including the plan, waste tripping into the second and third quarter to provide access to the required mining areas in order to meet the 2024, and 2025 production plans. Notes but it expected to return to normal levels, we'd have greater expected to decrease over the course of the year I've been mill feed and complex lower grade material ore stockpile. Turning to Westwood, gold production was 21,000 ounces of Grand Duc as a result of high volume in our grades from underground, as well as the contribution for the Grand Duc. Underground development in the first quarter experience near-record development rates with 14,194 meters of lateral development completed to secure safe access to multiple or faces, including a high-grade pass-producing area, which will allow for increased operational flexibility in support of the 2023 production plan. I was on the ground at Westwood last month, spending in some of the Keystone in the central zone. And it is absolutely impressive what the teams have done to bring access back into these areas. With a strong first quarter, Westwood is well on track to achieve its guidance range of 70,000 to 90,000 ounces of gold. And we expect to see an increasing proportion of sourced from the underground mine. as the year progresses. Mill feed would continue to be supplemented from available surface deposits and we should know that our guidance includes supplemental mill feed from satellite deposits, including from the Fayolle property in the second half of the year. Cash costs and all-in-sustaining costs continue to remain high at Westwood complex, with a very high sensitivity to mine output. But as the production volume increased, and the rehabilitation work decrease, we expect to see significant cost stepped down with the goal of positioning the asset for free cash flow starting towards the end of the year on time for a better and profitable 2024 and beyond. Turning to company goals. And as mentioned by Graeme in the operating remarks, I am pleased to have our executive project director with us today. And I will hands off the call to him in a moment. One of my first initiatives when I stated was to be a Cote where I spend time and fight with the team. It is very exciting to see the progress the team has made and I could see the project firsthand. Cote Gold once up and running will be Canada's third-largest gold mine. And the impact that Cote will have on this company will be substantial. With a long life, low-cost assets shifting a significant proportion of our production base to Canada. Cote is now ramping up to peak activity. Now that the spring is nearing completion, and there is a clear roadmap in front of us to achieve success. Looking at the project spending, in Q1 the project there is UJV and Cote $158.6 million in project expenditures on a 70% basis, bringing the project to date expenditure to $1.37 billion on a 70% basis or $1.96 billion on a 100% basis. Cote Goal remains on schedule and the estimated attributable cost and completed construction on the 70% and interfaces, the $625 to $700 million, assuming U.S. GAAP rate of 132. Current proof of accounting for the Sumitomo funding agreement, which Maarten will go into more detail. IAMGOLD is expected to fund $462 million to $535 million during the remaining of 2023 to bring the project to production, based on its 60.3% ownership and the joint venture. With that, I will turn the call over to our Executive Project Director for additional remarks. Go ahead Jerzy.

Thank you, Renaud. Much first quarter so important progress for the project, achieving significant milestones networks, processing plant, and operation readiness. At the end of the quarter, the project was approximately 80% complete, I think achieved 7% of progress in the first quarter of this year, during which was a cold winter season. We currently have over 1,700 workers on site. Having recently added an additional 264 beds to support additional workforce for peak SMPEI construction activities commissioning operation resources this spring and summer. On Earthworks, we have achieved the first target of the TMF reaching the elevation of 392 in March in preparation for the spring freshet to allow for the wealth accumulation to support commissioning activities later this year. And enrich the freshet milestone with the schedule float on the Earthworks. We have used this opportunity to slow down in the Earthworks progress to advance more progress in the process plant construction. Our focus in Q2 and Q3 will be on completing the construction of the portions of the plant and starting the commissioning activities. Q4 will be focused on an organizational recommissioning of preparation or introduction to achieves first goal in Q1 and sustainable production next year. Let me give you a quick commentary to the pictures on your screens. Take a look from the top left corner. This is the status of the subject [indiscernible] coming substation. We are planning to start early commissioning activities in this area early Q2 in preparation for utility collection of the primary power in August. Moving clockwise, this is a grinding area. You can see the ball mill, which installed be in gear and vertical progress. We have a very good progress lower fleet assembly and commissioning. All procurement is essentially complete and we can have 14,000 fourteen CAT 793F haul trucks, two 994 loaders, and four D10 dozers deliver. This assembly is quite advanced on defense electric shovel. We were started the autonomous operation in the pit and in early January was four to six trucks operating depending on the material delivery target area. And we are running autonomous fleets during the day and are planning to start planning for our operation in Q3. Finally, you can see in the bottom left corner benefit deal from the timeframe side. This is another area which are pushing them to start pre-commissioning activities. Moving to the timeline, this is the high-level view of the goal continues to track well-related project schedule towards initial production within early '24. We are welcome in close alignment with our parts in Sumitomo and our contract is to ensure that progress will be safely on time and on the current budget and scope. And this time the two critical parts of the project continues to be through the processing plant. As mining operations are well advanced. And key event this summer will be connection of the electrical substation to the power line. This allows for electrification of the equipment in the plant as well as the road shovel in the peach. The Hydro One power lines has been completed to site under substations and make significant progress the course. We are very much reliant on our workforce and are a major employer in the region. So, I want to dip my heart for the human resources team ensuring the project is well staffed up. We are only as good as our people and I'm impressed with the team on the ground. With that, I'll turn it back Renaud.

Thank you, Jerzy. Of course, we cannot talk about Cote without talking about Gosselin. Earlier in the quarter we reported as a result from the 2022 drip campaign, which successfully intersected mineralization to the sold off and below the current resource boundary of the deposit. Gosselin within mainland resources of 3.4 million indicated ounces and 1.7 million ounces and third, continue to be in the earliest stage of discovery. The deposit has only been drilled with a fraction of the meters compared to Cote and to half the deck and remains open along strike and adapt. When you look at the Cote in life of mine, there was a step down in productions in the year 2033, which could be a logical set to bring Gosselin into the mine. While there is still a lot of work to do, and all there to realize this. This year, we will be inventing technical studies to start reviewing and alternatives or potential inclusion of Gosselin into a future Cote life of mine. We believe we are in the early days of the Cote district and believe that Cote Gold is not just a project, but the start of the mining camp with substantial outside progress within the our nearly 600 square kilometers land package. Now I will pass the call over to our CFO to walk us through the financial review. Maarten?

Thank you, Renaud, and good morning everyone. It was a busy quarter for the company following the strategic announcements at the end of last year. Before we look at earnings, cash flows, and liquidity picture, it's probably worth a moment to review the transactions and associated implications. Early in the first quarter, we close the sale of the rise of our mine. With total cash proceeds received of 386.4 million. We still expect to receive an additional $9.8 million by the end of the second quarter related to the cash still held in sight and related working capital adjustments. Subsequent to the quarter end, on April 26th, we announced the closing side of our primary assets for pre-tax gross proceeds of $197.6 million. The closing of the other facets of this deal, including the assets in Guinea and Mali are expected to close in the third quarter. Assuming terming funding agreement announced at the end of last year began to take effect in the first quarter, with Sumitomo contributing $189 million of the total $250 million of the IAMGOLD funding obligations during the quarter. This effectively equated to a 7.5% transfer of interest in the project to Sumitomo. Subsequent to the quarter end and as of May 1st, Sumitomo has contributed the remaining $61 million to bring their project interest in 39.7% and IAMGOLD interest to 60.3%. As a result of the increased interest in the project, Sumitomo contributed $7.1 million in incremental funding for project construction. Over the remaining construction timeline, Sumitomo are play approximately $82.8 million for a total of $90 million of incremental expenditures based on the increased 10% exposure to construction costs. As a reminder, I've got this the right gene purchases 10% interest at one of seven future dates up to November 2026. And we want to reinforce that is ours and to Sumitomo's intention for our goals ultimately returned to a 70/30 joint venture structure in the future. With regard to the accounting for the transaction, IAMGOLD continue to account for 70% of the assets and liabilities of rotate on our balance sheet and the transfer interest will not be recognized as a sale due to the existence of the repurchase option. We have recognized a repurchase option liability that represents the amount of Sumitomo contributed on behalf of IAMGOLD that is also equal to the amount that IAMGOLD needs to basic internal to repurchase or transferred interest and eventually returned to 70% interest in the IAMGOLD credit joint venture and this is as at March 31, 2023. After achieving commercial production, we will account for 60.3% of the revenue and costs in our income statement and receive 60.3% of the cash flows. Turning to the Q1 financials, revenues from continuing operations totaled $226.2 million from the sale 219,000 ounces and an average realized price of $1,893 per ounce. Adjusted EBITDA from continuing operations was $83 million for the year, it was lightning to an adjusted earnings per share of $0.05. Net cash flow in Q1 from operating activities was $28.1 million. And this includes investments in working capital related to the build-up of the stock gold in Cote and the reduction in accounts payables. Net cash from investing activities for the fourth quarter, for the first quarter was $160.6 million and includes $386.4 million in proceeds received from the disposition of Rosebel offset by capital expenditures of $215.1 million. Net cash used in financing activities for the first quarter after $2.1 million adjustments to foreign exchange rate impacts on cash and cash equivalents were $64.4 million. That includes the repayment of the credit facility of $255 million offset by proceeds received through the Sumitomo funding arrangement of $196.1 million, of which $189 million related to the funding obligation and $7.1 million of incremental funding associated with Sumitomo increased project interest. In terms of a financial position, we ended the quarter with $532.1million in cash and cash equivalents and $257.3 million available under the credit facility. After $255 million repayment in the quarter. Taken together, this translates approximately $789.4 million in available liquidity at the end of Q1. We note here that approximately $260 million of our cash and cash equivalents is out by the Cote Gold UJV and Essakane. As Cote UJV requires joint venture partners to fund in advance two months of future expenditures. And at its account, the company uses dividends intercompany loan to repatriate funds from its operations. And the timing of dividends is usually in the second and third quarter of every year. We typically hold and guide our investors to account for between $200 million and $250 million of cash being held on our balance sheet for these normal course business purposes. As we discussed, we expect to see the Bambouk Assets to close by Q3 this year, for a total of $282 million of proceeds on a before-tax basis. And we are dying this will translate to approximately $240 million to $250 million on an after-tax basis. It doesn't have to sound Senegal assets was completed in April four $197.6 million. We received $165.7 million in cash, the remaining $32 million expected by the earlier of six months, and in closing off the remaining transactions. And we expect the remaining transactions to close during the third quarter. When we look at the funding picture for Cote Gold, as remaining outlined earlier, we estimated remaining funding requirement to sufficient liquidity of $460 million to $535 million worth of projects that are on schedule as outlined by judging. Based on the prevailing market conditions, which could impact project expenditures and operating cash flows. The company believes that it's available liquidity at March 31, 2023 combined with the cash flows from operations, the Sumitomo funding arrangement, and the expected proceeds from the sale of the Bambouk Assets that is sufficient to complete construction and wrap up of the Cote Gold Project. Based on the current estimated cost and schedule. We continue to advance additional financing initiatives to strengthen our balance sheet and improve liquidity in order to place the company in a strong position to return to 70% interest in the Cote Gold Project. Thank you, Renaud.

Thank you, Maarten. And I want to take a moment here to thank everyone on the IAMGOLD team for their spatial thoughts, or our construction team at Cote. For the tireless efforts and dedication as we continue to position the company for success. This is a real exciting time for this company. With that, I will pass the call back to the operator for the Q&A portion of this call. Operator?

[Operator Instructions] Our first question is from Mike Parkin with National Bank. Please go ahead.

Hi, guys. Thanks for taking my question. With respect to Cote, can you give us an idea of what the split is between mining overburden versus hard rock in the open pit?

I don't have those numbers right now in front of me. But I can tell you that the overall strip ratio of the project is in the range of the, two to one as we move forward. But I don't have the numbers in the detail with me now, when it comes to overburden versus the waste rock in our mining periods, but I'll follow-up with you. Just hold on. Maybe Jerzy has a more detail.

We have really looking in terms of how are you progressing with the pit. Is it going as expected, are you coming across, especially with spring break-up, is there any kind of challenging parts of the pit or are you able to kind of stay in harder rock seems kind of dry up, and then getting back into overburden? Any kind of color that you can share in that would be appreciated.

Sure. As you've seen from the picture, we've managed very well in the past. There was some witch report very well. So, we didn't really get affected this year and whole discussion season. We have accumulated just shy of $1 million on the various ore stockpiles up to now. And obviously, the blend between the rock for construction of Americans, now we're going a little left. And the car is changing dramatically over time, because we are transitioning out of construction into the more, into the mining activities. So, it's a very dynamic situation. So obviously we'll give you the color where we are in the overall progress.

So, Michael when I can add to this as well, I was there, not a long time ago, and obviously visited the mining operations as you know. I've been involved in previous lives with the early days and following freshets, and quite frankly, it looks extremely, like a very impressive, very impressive the lab to see those autonomous trucks operating. It really looks like a solid-operations and then quite frankly. Even though after the recent pressures, it looks pretty dry and we're going to be consuming too often. Then what I'm seeing now is I'm seeing the operation meeting their objective and can wait for the electric travel to join that to dance. So now it looks very good.

And then we're finding a lot of companies are kind of reporting in easing of inflationary pressures, especially in diesel but kind of commenting that price pressures on steel, concrete are stabilizing. Are you seeing any wins like obviously the weak Canadian dollar is helping you? But is there any winds that you're kind of seeing starting to materialize as we move into 2023? Where pricing is actually improving or stabilizing that that's giving you a bit of a tailwind?

Good morning, Mike its Maarten. We are seeing inflationary pressures easing and certain costs are in line with what we experienced in Q4, but not necessarily lowering. The decreasing oil prices is not reflected in our Q1 costs due to the lack of impact of world prices on the local bump prices especially at this again. The impact of oil price changes also lifts due to our hedging program that already offset some of these increases previously recognized. We are seeing price pressures on explosives at the mine, the cost of finite as well as grinding media, which is related to steel in line with what other people have seen. Maybe Renaud, additional comment?

Yeah, on the project we have from 100% procurement complete 99% plus application complete. So, all these elements are not really affecting the purchase piece. There are inflationary pressures on the labor market driven both by the wage razors and also by the trends of the market. And I think that's one of the biggest problems usually hold right now.

And then just switching gears update plant, can you give us an idea of what your inventory capacity is there? Is it like how often do you need to at a minimum, bring in delivery of fuel? And if you had to kind of lock-down due to potential security, tightening situation there? Could you, kind of operate on an isolated bases for months to get through any kind of challenging surrounding issues?

Yeah, no, thanks for that. As I mentioned, Bruno, Bruno is with us in the room. So please, Bruno comment on that.

Yes, thank you, Renaud. For the shoe inventory. We've been seeing some tightness in terms of supply chain. However, in April, we were able to resume or come to the site, then we're able to also replenish our stocks. So, we are four reservoir and we were able now to available it close to full capacity for now. Obviously, when we have difficulty to get securities, the stocks, those reservoirs get depleted, and we have to slow down the mining or mining activities, while palletizing or milling activities. And we have enough stockpiles close to the label to consider gold production.

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

Good morning everyone. And firstly, Renaud, congratulations officially on your appointment to CEO at IAMGOLD. And then my first question, tailings dam one and two. I'm just looking at the chart at Cote and it seems like those two particular aspects as well as a couple of the power projects are a little bit delayed. Can you talk about what the key items that you need to get those back on track? I would assume it's the rope shovel for the tailings dam and once that's assembled, you can get moving a little bit more on the tailings.

Well, thank you, Anita. And thanks for your kind words in that. I'll lead to Jerzy I comment more on the critical path forward. The power is under control. The collection of the power to the power grid in [indiscernible] is actually not on the critical path. The substation commissioning, as I said in my opening notes was scheduled to start in early Q2 and didn't start as planned. So, we don't see that as a risk piece. The TMF itself, we still have to finish raising the down before the end of the year, but there was a float and that's what I said, we need to focus on this area and push harder the process plan, because it got background, so the process plan current, which is the writing section was crushing and then grinding.

Okay. So. The TMF is not only critical, I'm sorry, the TMF is not on the critical path. But I mean, how much capacity are you, would you have by the end of this year for the tailings?

On the capacity, so basically, after this year, we'll be planning for execution of arrays next year. We're going to be operating like this on a case-by-case basis.

And remind me what kind of tailings at upstream, sorry, downstream or central line?

We got into construction as those streams in the next year races are central line.

For next year's are central lines.

Yes.

And then the second question on Essakane, I just trying to understand the sort of overall cost structure, this quarter, you adjusted out some supply chain, I guess, fuel disruption costs. So, when you're guiding to what you're guiding to right now, like, I'm trying to understand that it's going to go up over the next couple of quarters, I think is what I found the commentary. And then you're also saying that it will be at the higher end of what you guided to this quarter, you came in at the lower end. So, I guess I just want a little bit more color about all of these moving parts with, where we should be on our costs for Essakane. I just, I'm trying to understand, it would that like be prior to like, the overall guidance? Would that be prior to adjusting out fuel disruption costs? Or is that including fuel disruption costs?

Yes. So, the first comment on this is obviously, when you look at the current infrastructure, and you look at the capital ways, the capital component that was not achieved. And if you would do the simple math and additional capital. But not to forget that even though the operation isn't was not that 100%, there's a significant part of the fixed costs that are still there. So, it's not a direct map, so as we advance and we bring back the operations to its full capacity. They will be an adjustment here on the ratio of fixed variable. Yes, there is a chance that by the end of the year, we might be more like towards the high end of the guidance, but it's not like a direct match, basically. So, we're confident that our unit costs, for instance under pretend basis would lower as a highest volume, and so far, so. So, remain confident, but there's a chance for more on the high end on the ASIC basis.

[Operator Instructions] The next question is from Farooq Hamed with Raymond James. Please go ahead.

My question really was I just wanted to maybe contextualize and understand the additional Sumitomo funding that you had at the beginning of the year. That's now reached $250 million and well I guess, by the end of this year reached $340 million. So, I'm just trying to send kind of the cost of this funding. So, based on the fee that you'll be paying, which is the SOFR plus 4%. Is that workout to basically somewhere in the kind of high 8% range for the fee that you're paying on that funding. And so, by the end of the year, are we looking at something like $30 million a year in funding costs for that Sumitomo funding? That's the first part of the question.

Good morning Farooq. So, yes, the funding that they've made the $250 million, that is the cash goals that IAMGOLD was supposed to make where they actually submitted our cash goal, and the $250 million is the amount that then reduces our interest in the project. So that is not complete. So, the 60.3% ownership won't change further as we continue on. Because they now have a 9.7% extra on the project, they are actually contributing more to the project in what it was before. The reason we mentioned it, is this approximate incremental contribution by them of $90 million is important to understand IAMGOLD's liquidity position, because under 70% basis, the UJV required funding of $800 million to 875 million and Sumitomo was effectively funding $340 million of that. From a cost perspective, the charge would be on the $340 million, based on Sofer, it's between 89%. So yes, we've had $2.6 million obviously in Q1 on that. And then we expect that to be about $13 million, as you said by the end of the year.

Okay. So, thanks, that is helpful. The next question was really, what's the frequency of the payment? Will you have to pay that on a quarterly basis? Or kind of what's the cadence for how you'll be paying those fees?

So, during this year, the costs will be included in the repurchase price. So, we have to make $340 million plus our pre-purchase option fee that accrues during 2023. And then starting in next year, we'll be buying the option fee in cash, but the fee for '23 will only get paid once IAMGOLD exercises the repurchase option.

So, you're saying the 2023 fee will only get repaid when IAMGOLD exercise is the repurchase option, but 2024 through 2026 that'll be an annual payment?

To repurchase payment [ph] on the '23, in '24, it will be a quarterly payment.

Quarterly basis. And that fee will basically be accrued and paid until you exercise the right to repurchase, correct?

Yes. And also, is not seen as interest. So, it does not [indiscernible] in calculations.

And so then in terms of your ability to repay or your desire to repurchase that 9.7% that you mentioned at the beginning of the call that, it's your intent to repurchase it, I would assume that this source of financing is probably one of the higher costs of your capital structure. So, when you talk about other financing alternatives, would you look at other financing alternatives to help finance the repurchase sooner rather than later?

When we negotiated this deal, we wanted to ensure that we have multiple options and timelines to repurchase it. And for us, it would make the most sense to repurchase it once the project is profitable, because then going forward, you're buying free cash for 9%, extra free cash flow. So, we will be basing it based on that. And then data is kind of what driving the economics of this deal as well, because one Sumitomo marine times the additional 9.7% of project economics going forward repurchasing that makes the deal more cost effective for us.

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

I'll start by following up on [indiscernible] question. On the Sumitomo financing arrangement. I know you mentioned in the release last night and then again in your remarks that you're looking for other options to use to short your liquidity or maybe repay that. Sooner rather than later, can you talk a little bit about what those options might look like, in terms of where you see other sources of potential funding today?

So, Jackie, we were looking at a broad spectrum of options. And when we analyze our options, we consider that the five years of Cote can production is a lot higher than the life of mine production profile, with significant cash flows coming from that period. So, when we look at options, we would want to, we would prefer something that allows us to get back to 70% interest, but that we can revert to something that is less permanent in nature, because Cote can repaid high levels of cash flow, so we don't necessarily want to further encumbered acid with permanent stock transactions.

And maybe similar question. On Essakane, is there any thoughts at this point to selling Essakane in your portfolio, and I recognize that would probably not be possible today, until Cote's up and running. But once Cote's up and running, do you think you will view as you can as core to your operation still at that point?

Well, I can say that any asset that produces this amount of ounces, and that kind of margin and a free cash flow is absolutely welcome. To be very frank, what we're really missing now is to really looking at all kinds of alternatives to extend the life of mine. We have to look at the business of buying gold today as to mega mind capacity of generating significant free cash flow for this company. We do appreciate that. We have some security disruptions, and so far, that in the last month, but the focus of the company right now is to make sure that the operations is back on track at 100% capacity generates the free cash flow that I have. And I'm sure and the opinion that the asset has a lot of capacity for extending the life of mine. And one thing that unfortunately, as occur in the last, while has been the parking or drill. So, this is also one thing we're looking at, how could we get back to jail and play and how could we look at those, this significant potential and so far. What the future is going to bring to us. As we advance in time and as we continue to design, this continue to become a long-life company and high free cash flow high margin and so far, we'll see. I don't have a crystal ball on everything but I can assure you that the focus of the company right now is to make all of our portfolio working and its full capacity and potential.

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

Good morning, everyone. And Renaud again my congratulations on your new appointments. And I look forward to working with you. I'm sorry, I just got on the call as I was stuck on another caller this morning. Maybe just circling back to a couple of things, one is just on this additional source of funding. So, what I heard from the previous question is that you didn't want to, impair the asset any further Cote is within those first five years because of the significantly higher production coming out. So, can I assume from that, an additional royalty and or stream on that asset is not something you're looking at? And then I'm just trying to understand, like the priorities of your additional funding options? Would it be selling of assets, maybe Westwood and/or African first and then it would be equity, and then it would be streams? I'm just trying to understand priorities of your options. And what, specifically at the options would be?

A wide range of possibility you're giving me. first and foremost, thank you for your kind words. And as Maarten was highlighting. Cote is going to be the cornerstone asset of this company moving forward. And the two priorities obviously is first and eventually being in possibility and the positions to get back to our 70% which is our joint venture. And as we see it as a cornerstone asset, I think the last thing we wanted to stages to add anything on top of the curve. So, this is not really work we see for this asset. Now how exactly we're going to be capable over time to address the additional financial flexibility that Maarten was talking about the 70%, there is a wide range. But I think the way we're looking at this company moving forwards is to make sure to not make any move that will position us for the long-term. And that's what I can say at this stage. I think the focus of this company is to make sure that as we move forward, we keep improving the product as we move forward and not at the early stage being in a position to maintain or to position this asset with anything that would remain in time. Maarten, if you want to add anything to this.

I think that is exactly the thing. So, we look at our capital structure and future cash flows very closely when we make this assessment.

So, I guess I get from that that streams and royalties would be like the lowest down the pecking order of options, and equity and asset sales would be higher. Would that be a fair statement?

We don't really want to say exactly, but yes, if we look at permanency, things in our capital structure, data is the least permanent. And then as you look at things like royalties will be gone by bank that would make it more of a domain.

And then maybe Renaud went on, I apologize, I was late on the call again. Maybe if you could just, and I know, you've just been on the roll for a month and a half or so. Maybe if you could just outline sort of your three key strategic focuses for IAMGOLD for the next few months or the rest of 2023, just so that I can try and understand as you look at the year what are your three priorities?

Well, the first one is, of course health and safety, and I really don't want anyone to think that it's just a financial exercise this. So, sustainability ESG health and safety people what always remain, but I think your questions goes more like to the business side. So, the priority number one is obviously, the completion, the successful completions, of course, A and B, the very successful ramp up as we move into 2024, there is one objective is to achieve a very successful ramp up. So, completing the construction in a way that would allow together with the operating rate. And so that is what we're a is the key on the business side of this company as a prior to number one. But equal to that, when you're looking at a candidate, for instance, like what this asset has provided to us over the past year, there's been some security, but I think we're turning slowly in a corner, I've seen significant progress, I see the Renaud mentioned in a previous-questions, our field inventory has increased a level that we haven't seen for a while. That's kind of things and this is where the team is focusing. So, if there's one thing that I would like to achieve before the end of the year is to see the asset returning to his 100% capacity, generating the free cash flow that he was planning to see the drill, if possible, been back at play as well and start working on extending the life of mine. And I must say that, I remain cautiously optimistic to the Westwood, but when I've seen that Westwood when I visited the asset. I think is an unprecedent like set of initiatives. And whether it's how we look at the ground control how we look at this mystery and the control events, how we look at how we minded sequencing events, I've seen for the first time, a team that is addressing the situation in a different way. Sometimes you need to stop and have the courage to stop and think and bring in all my different views. And I think that remains a very, very important objective for us to work towards in our returning and not returning but positioning the asset to the free cash flow towards the end of the year. So, we can start looking at a bright future for Westwood. So, those are really the three assets. Maarten talk about the financial is that we're well funded, and we have no concern about our ability to complete the constructions of Cote Gold to ramp it up. We're good at that. But this is a Cornerstone asset. I wouldn't tell our stakeholders and shareholders that we're not going to be looking at alternative to how we could improve our financial flexibility, and eventually position this company for a successful return to the 70%. So, this is all a lot of activities ongoing, but we have strong team and every pieces of the puzzle, and my role is to make sure that we achieve all of them and working and supporting the team. I hope this answers your question.

This concludes the time allocated for questions on today's call. I will now hand the call back over to Graeme Jennings for closing remarks.

Thank you very much, operator. Thank you, everyone, for joining the call this morning. As always, if you have any additional questions, please reach out to Bruno or myself. That will end the call. Be safe and have a great day.

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