IAMGOLD Corp (IAG) 2023 Q2 法說會逐字稿

Thank you for standing by. This is the conference operator. Welcome to the IAMGOLD Second Quarter 2023 Operating and Financial Results Conference Call and Webcast. (Operator Instructions) The conference is being recorded. (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, and welcome, everyone, to the IAMGOLD Second Results -- Second Quarter 2023 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; Tim Bradburn, Senior Vice President, General Counsel and Corporate Secretary; and Jerzy Orzechowski, Executive Project Director, Cote Gold.

Before we begin, we are joining today from IAMGOLD's Toronto office, which is located on 313 territory on the traditional lands of many nations, including the Mississaugas of the Credit, the Anishinaabe, the Chippewa, the Haudenosaunee and the Wendat Peoples. At IAMGOLD, we believe respecting and upholding indigenous rights is founded upon relationships that foster trust, 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 included in 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 that is being 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 President and CEO, Renaud Adams.

Thank you, Graeme, and good morning, everyone, and thank you for joining us. The second quarter for IAMGOLD was an important period for the company as our operating teams made significant stride at both Essakane and Westwood to bring our year-to-date attributable production to 220,000 ounces of gold at cash costs of $1,234 per ounce, while keeping a safe work environment.

We will walk through the quarterly operating results in more detail in a moment, but I want to congratulate our Essakane team for their remarkable resilience to allow for the mine to resume both mining and milling at full capacity in a very complex environment. Secondly, we saw significant progress at the Cote Gold Project. In June, the site reached over 1,900 workers signed, working together to push the project to approximately 86% completion. We remain on track with the top end of our cost to complete guidance in line with the project planned capital. Further, we are now seeing activities begin the critical transition from bulk construction to finishing activities in our operational readiness. At Westwood, we continue to execute on optimization plan with the objective to turn the mine into a positive cash flow producer in the near term.

The second quarter was my first 4 quarters as CEO of IAMGOLD, and my conviction has only grown that this is a company poised -- position itself amongst our peers. We are entering a transformational period for the company, and I'm extremely pleased with the expertise, relevant experience and leadership in place at IAMGOLD. Our Zero Harm missions continue to be our priority #1, and we are looking at our corporate ESG strategy and execution.

When we look ahead to 2024, once Cote comes online, and should Westwood take the next step -- the next step down in production post-rehabilitation, the company will have a significantly higher production base and lower cost profile, providing strong foundations of cash flow and growth opportunities in Canada. Yet, before we get there, the short-term goals for IAMGOLD are clear: Bring Cote online with a focus on achieving a steady and sustainable ramp-up of operations; and manage our operations at Essakane and Westwood to improve our margins, while ensuring the safety of the community in which we operate. Longer term, our goal is for IAMGOLD to become a high-margin intermediate gold producer with a strong operating base in Canada. Financially, we will prioritize returning our 70% position in Cote with our partner, Sumitomo, as well as use our cash flow to optimize our balance sheet and deliver the company to have a more efficient and balanced capital structure.

With that, we will now dive into the operating and financial results and highlights for the quarter. I'm on Slide 5. Starting with health and safety. The company has seen an improving trend year-over-year with a days away, restricted, transferred duty frequency rate of 0.39 and a total recordable injury rate of 0.66, based on 200,000 hours worked. Entering a safe work environment will always be our primary focus at IAMGOLD, and our goal continues to be Zero Harm.

On production, in Q2, the company produced 107,000 ounces of gold on an attributable basis, putting us well on the path for production guidance target of 410,000 to 470,000 ounces of gold this year. As we will get into a moment, the production results were driven by Essakane performing to plan and higher grades from recently rehabilitated underground zone at Westwood, which helped to mitigate the impact of some operating restructuring due to the poor air quality in the region of the forest fires in the quarter.

The second quarter saw IAMGOLD report cash costs of $1,372 an ounce sold and an all-in sustaining cost of $1,912 per ounce. Our cost increase over the year prior mainly due to increased cost of lending supplies, including fuel, higher power costs and previously forecasted lower grade at Essakane, as well as an increased rehabilitation cost, Westwood. As a result, we expect cost to come in at the top end of our annual guidance ranges.

On Slide 6. Turning to Essakane. The mine reported Q2 attributable gold production of 88,000 ounces, bringing the year-to-date total to 180,000 ounces of gold. Mining activities totaled 13.5 million tonnes, a significant increase quarter-over-quarter as the mining fleet return operations to full capacity. Mining activity in the second quarter completed the transition to Phase 5, resulting in a higher strip ratio, in line with our plans as the operations moved to new mining phases and lower grades from the prior quarter when grades were positively influenced from the direct feed of material from the bottom of Phase 4 from the bet.

Mill throughput in the second quarter was 3.1 million tonnes at an average head grade of 1.11 grams a tonne, with throughput 42% higher than the first quarter as operations were able to resume at full capacity due to the improved ability to move necessary supply around the country. The mill reported an average recovery of 89%, which declined slightly from the prior quarter and the year prior due to lower grades, including higher concentration of graphitic carbon and sulfur.

On a comp basis, Essakane reported cash cost of [$473] an ounce, an increase from the first quarter, has head grades of [20], 30% from Q1 at the higher strip ratio. Additionally, we saw sustained higher price of consumer as inflation pressures peaked, but with flying -- with few signs of reversal, as well increase of the landed cost of fuel due to the impact of the security situation in the supply chain, higher labor costs to depreciation of the local currency, and an increase in power generation costs as heavy fuel normally used for power generation was periodically substitute with more expensive light fuel in order to maintain operations during the period where supplies was limited.

We are currently building additional tank at Essakane, which will increase the HFO head of storage capacity at (inaudible) by approximately 50%. We expect that the extra capacity will be in place in early Q4.

On the all-in sustaining cost basis, stock increased to $1,587 per ounce due to the higher operating costs as well as a schedule higher volume with stripping as the mine enters the new phases.

Looking ahead, Essakane is on track for a production guidance range of 340,000 ounces to 380,000 ounces of down. Mining activity is expected to maintain normal operating levels in the second half of the year, including increased level of waste stripping to open phases for 2024 onwards. The mill feed will consist of a combination of direct feed and stockpile as the mine fleet sequences through the targeted phases of waste stripping.

Capital expenditure guidance for Essakane is unchanged at approximately $155 million with increased volume of capitalized waste in the second half of the year, while total tonnes moved are in line with the second quarter to provide access to mine areas in support of the 2024/2025 reduction plan. It is worth noting that the mining activity and stripping programs assume no significant disruptions in the supply chain resulting from the security situation in the country and the region.

The company plans to file an updated life of mine plan for Essakane and updated mineral reserve mineral resources during the fourth quarter of 2023. This will include the details of processing the 9.9 million tonnes of stockpile material through the CIL versus the prior plan to outline a capital-intensive heap leach scenario.

On Slide 7. Turning to Westwood. Gold production was 19,000 ounces in the quarter, 40,000 ounces in gold year-to-date. Westwood continues to be in a unique position as IAMGOLD has been essentially rebuilding the underground mine at the same time as active mining operations are being conducted. The mine has made significant stride over the year towards taking the next steps in production entering 2024.

Mining activity in the second quarter totaled 212,000 tonnes of ore, which was lower than the prior quarter due to the impact of heavy wildfire smoke in the vicinity of the mining operations requiring for multiple underground shifts to be cancelled to ensure the continued safety of our workforce. However, it is worth highlighting that underground mining activities returned 56,000 tonnes of ore at a grade of 7.6 grams a tonne, which is the highest grade mine from underground in over 5 years as we begin to see the benefit of preapplication activities reopening previously closed stopes.

Mill throughput in the second quarter was 251,000 tonnes at an average head grade of 2.52 grams a tonne and improved recoveries of 94% on the higher grade. Cash costs and all-in sustaining costs continued higher at Westwood with a very high sensitivity to mine output and due to the increased levels of ground support required for the development and reapplication work relative to the annual plan. Additionally, mining activity started at the satellite open pit, Fayolle, with minimal production in the quarter, yet adding $2.4 million of the Fayolle development capital to operating costs.

Looking ahead, Westwood is well on track with our guidance range of 70,000 to 90,000 ounces this year. Production levels and unit costs are expected to improve into the second half of the year, benefiting from the continued advancement of underground development providing access to more and higher grade stope sequence. Mill feed will continue to be supplemented from available satellite surface deposits, including increased proportion of ore feed from the Fayolle property in the second half of the year.

On Slide 8, I just want to take a moment to dive a little deeper into our activities at Westwood. Underground development year-to-date is near record development rate with 2,875 meters of lateral development completed to secure safe access to multiple ore faces, including high grade pass producing areas, which would allow for increased operational flexibility and support into 2024 and beyond production plan.

We have increased the sustaining capital expenditure guidance for Westwood by $35 million as the underground rehabilitation and development has been progressing ahead of schedule due to better than planned productivity rates, moving some of the 2024 work into 2023 and reducing the work required in 2024, while some of the rehabilitation work requires more ground support, increasing costs. This work not only is allowing the return of mining into a higher grade area that were previously closed, but also open the door for potential mineral reserve increases should these areas be upgraded from resources as they are proven to be mineable. We will have an update at 43-101 for Westwood in the fourth quarter. As production volumes increases and rehabilitation work decrease, we expect to see costs step down with the goal of positioning the asset for positive free cash flow for a better and profitable 2024 and beyond.

Slide 9. Turning to Cote Gold. I am pleased to have our Executive Project Director here with us today to walk us through the development and progress in the quarter. Jerzy?

Thank you, Renaud. The second quarter, considerable progress was made at Cote, achieving recently the milestones from earthworks, processing plants and operating readiness. It was a critical quarter as we started the quarter in the spring/fall for the [fresh hot] season. Water management systems that have been put in place handled the tasks of (inaudible). And I must compliment the teams for their planning and management.

At the end of the quarter, the project was approximately 86% complete. And as Renaud mentioned, we are now seeing activities move from the bulk construction to the more detailed and very important finishing activities. The physical changes at the site have been remarkable, and I'll walk you through some pictures in a moment.

We currently have over 1,900 workers at the site with the count at peak capacity. Despite the counts, our construction teams, contractors and subcontractors have done a great job, and we have reached the 11.5 million hours' worth milestone.

On earthworks, we completed Phase 1 on the TMF and have started to accumulate water in preparation for the plant startup. The primary and secondary crushing circuit made considerable achievements with the HPGR arriving on site and installation progressing at a fast pace. Inside plant, the installation of the ball mill liners was ongoing, and the motors have arrived to the site installation [early] in Q3.

We have deferred the completion of the leach tanks and installation of the agitators for approximately 6 to 8 weeks later than originally planned in order to prioritize the workforce on the critical installation of the crushing circuits.

Finally, the power substation is now being commissioned with the connection to the provincial hydro grid scheduled for this month, which will allow the full electrification of sites and the deployment of electric shovel later in this quarter.

Moving to recent pictures. Let me walk you through the main project areas of the site. Moving left to right, on top to the bottom. Here, we can see the TMF as we are looking northeast of the plant. The first line that we see, the boundary was at 92 meter location, which was completed in Q1 in preparation for the fresh hot season. The second liner boundary at 396, which completes Phase 1 and allows for accumulation of water for the startup, as you can see, it was also done. The next phase, we'll see the dam rising from 409 elevation to allow for the full first 12 months of operations.

Next, in the middle top is the [high voltage] substation. And as I mentioned earlier, the substation focus has shifted from construction to the commissioning to prepare for (inaudible) and connection of 115 kV hydro grid.

Top right is the view of the primary crusher, where the steel and accelerators are complete, and we are now putting the (inaudible) in place to commission the bridge crane for the final [fuel lifts] of the crusher components.

Bottom left, we have an HPGR area illustrating very advanced mechanical installation, and the teams are focusing now on electrical installation.

The bottom middle is grinding with the bottom middle action very advanced. We are transitioning to the final stages of construction and early commissioning activities.

And on the bottom right, you see the leach tank front area, where we are concentrating on finalization of mechanical erection, electrical and completion of the piping installation.

Moving on to the time line. The Cote Gold continues to track well to the updated project schedule towards production in early 2024. We are working in close alignment with our partner, Sumitomo, and our contractors to ensure that Cote is both safe, on time and in the current area and scope. Our focus in Q3 will be on complementing the construction of the remaining portions of the plant and starting decommissioning activities. Q4 will be focused on finalization of recommissioning in preparation for the ore production early in the new year.

With that, I will turn it back to you, Renaud.

Thank you. Thank you, Jerzy. And on Cote, I'd like to add that our goal is straightforward. We want the ramp-up of Cote to be among the most successful major gold project startups. That is not to say we are naive about the challenges ahead. With the team we have in place and continue to build, I've done this before. We are excited about the future of Cote and what it means for IAMGOLD.

On Slide 12. Of course, when talking about the future, we need to continue to highlight Gosselin. We are continuing to drill at Gosselin with nearly 13,000 meters complete so far this year. The deposit has only been drilled with a fraction of the meters compared to Cote and to half the depth and remains open along strike in a depth. Our last batch of assays result earlier this year successfully intersected mineralization to the south to the sell-out and below the current resource boundary of the deposit.

The goal of the current drill program is 2-fold: continue to expand the mineralized envelope of Gosselin; as well as infill to support ongoing technical study to advance metallurgical testing and to support mining and infrastructure study to begin reviewing alternatives for potential inclusion of the Gosselin deposit into a future Cote Gold life of mine plan. We expect to have results for the ongoing drilling program in early Q4. We believe that Gosselin, with its initial resources of 3.4 million indicated ounces and 1.7 million ounces deferred, continue to be in the early stage of discovery. And considering this location admittedly adjacent to the Cote deposit, has the potential to add real value to the Cote project.

With that, I will pass the call over to our CFO who will walk us through Cote spending and a financial review. Maarten?

Thank you, Renaud, and good morning, everyone.

Looking at project spending, the Cote Gold UJV incurred $270.1 million in project expenditures on a 100% basis, or $189.1 million on a 70% basis during the quarter. It is worth highlighting that for accounting purposes, the JV funding and amending agreement does not meet the requirements under IFRS to recognize the dilution of the company's interest in the Cote UJV sale. And so the company will continue into account for 70% of the assets and liabilities of the joint venture, as well as 70% of the incurred project expenditure.

The company has recognized the financial liability on the balance sheet that approximate the current repurchase price, representing the $250 million funding contribution that Sumitomo made on IAMGOLD's behalf that resulted in our interest being diluted to 60.3% as well as incremental funding that Sumitomo made due to their increased ownership and the good fee for the repurchase option. The liability will continue to increase with the 9.7% of incremental funding that Sumitomo provides until Cote achieves commercial production.

Since commencement of construction, $2.23 billion of the planned $2.965 billion of the project expenditure has been incurred. Looking ahead, the remaining costs to incur to complete Cote is estimated at $665 million to $735 million at 100%, or $465 million to $515 million at 70%. The higher range of the estimate to complete of $735 million will take us to the $2.965 billion for the August 2022 technical report. The table at the bottom outlines the progression of the quarterly cost to complete guidance with the actual spending amount incurred quarter-over-quarter.

In order to convert the expected incurred cost to complete at 70% to IAMGOLD's actual funding requirements at a 60.3% joint venture partner, the incurred costs adjust for changes in working capital, lease funding received, and the decrease in the required cash balance held by the UJV when the level of expenditures reduces after the completion of construction. IAMGOLD need to fund 60.3% of (inaudible) going forward, now that funding arrangement and dilution has been concluded. During Q2, Sumitomo funded the remaining $61 million of the $250 million total, as per the agreement, on behalf of the company and an additional $18 million due to increased ownership. Sumitomo funded all of the joint venture cash flows up to May, and the company commenced funding in June and funded approximately $60 million to the UJV during Q2. IAMGOLD will now fund 60.3% of the UJV cash calls that is approximately $425 million to $475 million during the construction phase.

Turning to the Q2 financials. Revenue from continuing operations totaled $238.8 million from sales of 111,000 ounces at an average realized price of $1,973 per ounce. Adjusted EBITDA from continuing operations was $63.8 million for the quarter, translating to an adjusted loss per share of $0.01.

In terms of our financial position, IAMGOLD ended the quarter with $747.7 million in cash and cash equivalents and $452.5 million available via the fully undrawn credit facility, which equates to total liquidity of approximately $1.2 billion. We are investing excess cash and funds in Canada at rates close to 5%. We note that within cash and cash equivalents, $91.3 million was helped by Cote Gold, and $170.1 million was held by Essakane.

For Cote, the Cote UJV requires its joint venture partners to fund in advance 2 months of future expenditures, and cash calls are made at the beginning of each such month, resulting in the month end cash balance approximating the following month's expenditure.

For Essakane, the company mainly uses dividends to repatriate funds, of which the company will receive 90% based on its ownership, net of dividend taxes. It's a time to give a dividend during the second quarter of $120 million, which was received by IAMGOLD subsequent to the quarter end, net of minority interest and withholding taxes.

We note that the full extent of the credit facility availability is subject to a net debt to EBITDA run and interest coverage covenant. Therefore, the full extent of the additional liquidity of the facility is relied on the ability of our operations to generate sufficient EBITDA to support the debt load of the company. This is one of the reasons why we announced $400 million term loan in the quarter, which allowed the company to pay down the credit facility and use a term loan for the capital requirements of Cote, and therefore, delinking Cote funding from certain items in the macroeconomic environment and our other operations. The term loan improves IAMGOLD's balance sheet and strength and flexibility, allowing the credit facility to be available to support working capital requirements during a pivotal year where we are ramping up Cote as well as delivering the legacy Gold prepayment agreement and give us some measure of insurance in case of unforeseen challenges or changes in the operating or macroeconomic environment.

IAMGOLD will fund its remaining portion of the Cote UJV funding estimate of $425 million to $475 million from available cash balances and the remaining proceeds from the Bambouk asset sales. And as we noted at the beginning of the call, as Cote ramps up, we can then redirect our attention to key longer-term financial goals of returning to a 70% position in the Cote UJV and delevering our balance sheet towards a more optimal capital structure.

With that, I will pass the call back to Renaud. Thank you, Renaud.

Thank you, Maarten, and I really want to take a moment here to thank everyone on the IAMGOLD team for their tireless efforts and dedications. This is an exciting time for this company. I should also note that we will be holding a Cote mine tour for investors and analysts in October, and I encourage you to reach out to Graeme and myself to save a spot on the trip. We expect it will be very well attended considering the progress at Cote to date.

With that, I would like to pass the call back to the operator for the Q&A. Operator?

(Operator Instructions) Our first question is from Lawson Winder with Bank of America Securities.

Renaud and team, and Bruno, it's very nice to hear from you. I wanted to just ask your -- get an idea for your long-term vision for IAMGOLD. Now that you've been in the role for about a quarter, a little over a quarter, particularly with respect to geographic focus and could IAMGOLD look to potential potentially exit Burkina Faso once Cote is ramped up. And yes, I guess, I'll leave it there for now and follow up after.

Yes. I appreciate the questions. And as I mentioned on the call, our priority right now is definitely focused on Cote building a strong Canadian platform, continue to operate safely. Essakane is a significant mine for us as generate and continue to generate cash flow. We appreciate the situation right now in Burkina and the regions, but our effort and focus continue to make the mine work well for us and additional contributor. As we move forward in the future, we'll address on the step by step the building of this company. But I would say at this stage, while we continue to focus on the strong and the safe operation of Essakane, in parallel, as I mentioned, this is also to develop and grow a very strong base in Canada. This is as we see it again.

I also wanted to ask about the plan to update the life of mine plan for Essakane. So just -- I know it's still early and you haven't released the study yet, but is the thinking that the mine life might be reduced as a result of the move away from the heap leach?

No, we're definitely not seeing a reduction. There was obviously a question about those tonnes that were previously meant to be on the heap leach. But I believe the team has worked very hard and diligently to incorporate those. We've been capable as well to replace some ounces might. So no, we are not expecting a reduction of life of mine.

Okay. Great. And I wanted to touch on Westwood, just given that -- I mean, you've had knowledge of this asset for just about as long as anyone. You've kind of painted a picture of an improved outlook going forward in the -- in your prepared remarks and in the MD&A. I'm just curious, like what is the upside for this mine? And you would well know that when this mine was first conceived of, the thought was it could produce 200,000 ounces a year. We're far from that. But is even anything in the 100,000 ounce range potentially achievable, in your view?

Well, we already in the guidance -- this year in the guidance, 70,000 to 90,000, which we feel pretty strong that we're going to meet well as we continue. But you mentioned the 200,000 ounces. That's definitely not the goal in the near future to push the mine to its limit. I would rather see this mine focused on quality, returning to a very strong and higher grade underground, which will really lead the economics of this mine. So in the short term, of course, we're using the satellite, the surface satellite. But the real game here as we continue to diligently prepare the mine is to return to the higher grade area and focused on quality as we move forward. So while we don't see this mine necessarily now returning to the 200,000, we definitely feel strong that it could be what 125,000 to 150,000 ounces producer at a much better margin.

And then if I could just ask about Cote, finally, and the autonomous truck haulage. Is the assumption that you will be operating at 100% autonomous truck haulage from day 1? Or is there some flexibility built in there to sort of allow for potential hiccups? And the reason I'm asking is we've seen other autonomous truck programs roll out and take quite a time -- quite amount of time to get up to sort of a full run rate. And obviously, it's great you started early this year, but would just love to get your thoughts on that sort of ups and downs.

Well, I'm surely looking forward to the site tour in October to see the enormous progress and how it's been. But I'll ask Renaud to add a bit to that question.

Hello, Lawson. It was part of the original assumption to start from the get-go with the autonomous fleet. And right now, what we see is we see a ramp-up that is on par as target. And again, there is no need for an operation of the fleet via operator. So actually, we are commissioning trucks one after the other, and they are fully utilized autonomously, and it works real good.

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

A few questions for me. Just in terms of Cote. Can you talk a little bit more about the process where you are -- the leach tanks and that you said you were optimizing just to look for the critical leach tanks or to get those up and running. Can you talk about like how many of the total leach tanks that you have that you're just -- those are the ones that are going to be running at the beginning? And how does that impact the ramp-up going into 2024?

I would ask Jerzy to give some details to it. But what I could tell you that overall, we are not seeing issues with the things that would impact the commissioning of the mine. Jerzy?

Yes. Thank you, Renaud. Maybe if we can go back to the slide we have shown with the leach tanks. As you can see, the installation is quite advanced. We are in the piping, electrical installation work. Most of the additions have been installed. And we have to reshuffle the workforce to deal with critical areas, which is the crushing circuit. As I mentioned, we had at capacity right now, so we are making tactical decisions of where to shift the manpower to deal with the critical pieces of work to move forward with the pre-commissioning activities. As you see from that picture, the tonnes are in quite advanced stage, and we are basically getting them ready for the pre-commissioning work on the hydro tests. We will be starting with the first 4, 5 tonnes, and then we will be gradually introducing more tonnes into the circuit as the startup progresses.

Okay. Can I get -- I have a second question with regards to the tailings facility. I think you gave us a little bit of color on that. But could you tell me how much capacity in the Phase 1? And then how much additional capacity were you looking for in the Phase 2 of the dam?

Well, Phase 2 of the dam is the full 1-year capacity of production. Phase 1 is about 1.5 million cubic meters, which allows us to accommodate enough of the water for the startup and commission. And Phase 1 is complete. This is why some color on it, as you mentioned, because the best way to visualize it is to look at the liner lines. So what you see, the second line there is basically Phase 1 completion. As you can see, this picture is from July. So you can see there was actually -- if you look at the bottom of that picture, there's quite a bit of work which is already advanced in the Phase 2.

Okay. So the Phase 2 is the full-on -- my understanding is that you probably -- you would definitely want that completed by Q4, right? I mean, it's a central line dam, right? So you need the retention, the time for the beaching to occur. Is that the case?

That's correct, yes.

Okay. Sorry, go ahead.

Yes, please repeat the -- we are okay for the startup. We have enough capacity to start up right now.

Sure. Okay. And then just in terms of when we think about next year, you said early 2024. With 6 months out, can you give us some color on what early means? Like when do you expect to have first gold pour? Is that like the beginning of the quarter in January, or is it the end of the quarter, or are we getting into Q2? I just want to try to get an idea of what 2024 would look like.

I don't think we're prepared to give you a much finer date than the first quarter. I think this is…

Yes. I mean, one thing that is very important here, Anita, is we had the chance to discuss that previously as the focus is really on ramp-up and achieving and getting as close to the nameplate possible rather than focusing on the single item of the gold pour. We want the gold pour to be incorporated in the most efficient way to reach our nameplate. So having said that, we're still pretty confident that the gold pour would occur early in the Q1.

Early in Q1. Okay. All right. And then I just wanted to circle back on Westwood. You talked about maybe getting to 125,000 to 150,000 ultimately there. And I think you said the Fayolle property should be adding -- contributing to the mix in the back half of the year. Could you remind me what the grades are at that one in the open pit?

Bruno?

Hello, Anita. Fayolle is pegged at around 4 to 5 gram tonne. So we intend to have close to 100,000 tonnes this year for us from Fayolle.

Okay. And how much have you done to date, or zero to date on Fayolle?

Just started.

(Operator Instructions) Our next question is from Mike Parkin with National Bank.

Can I just confirm the timing of the life of mine update for Essakane? When is that due at?

Did you say the technical report of Essakane, Mike?

Yes.

Yes. So Q4, probably somewhere like in mid-Q4. So we want to have everyone a chance to digest properly their report prior to our early 2024 guidance.

Okay. And then you've guided to higher costs. And obviously, that's again kind of your bigger asset. It's been a bit lumpy, but it's been kind of tracking around $110 million over the last 12 months with Q1 being a bit light given the lower throughput. Can you give us a sense of like what's going to drive? You were about $120 million of direct operating costs in Q2. To get in line with guidance and kind of have a sense that it's got to come down a bit in the second half, what changes there to get you into a slightly lower cost profile to get in line with guidance?

Well, you would appreciate, of course, if you compare with the last couple of years, a big gap is, of course, the increased spending around the security. I mean, it is what it is. We need to do what needs to be done to keep everyone safe, and the team has done an awesome job on this. But one of the biggest ticket, of course, as mentioned, is fuel. And if you look at the Q2, for instance, the overrun and the LFO, using LFO to generate power is a very big ticket. This is basically a $100 an ounce on overall impact on the Q2.

So moving forward, having said that, even though the cost has increased, there was a significant decrease in the mining unit cost in Q2 compared to Q1 of almost $1 a tonne. So the mine is operating extremely well, but unfortunately, you have some inflation. So if we -- I think the extra capacity of storage as we move towards Q4 will be a big element of it, having more storage inventory and providing us with more chance to operate power 100%, which HFO will be a big, big, big ticket to it. But other than that, I am totally convinced this is not a performance and operating performance issue. It's a procurement issue. It's a security and it's a difficulty sometimes to provide HFO for power. As we advance, should we have better controls on the fuel supply and power generation with HFO, those will be the big, big tickets to return to level costs.

The next question is from Tanya Jakusconek with Scotiabank.

Just wanted to know, when is the technical study of Gosselin coming out? You mentioned that you're working on that one as well.

Yes. I think at this stage is metallurgical studies is probably the priority. And as we mentioned, more we drill Gosselin, more we grow in. And I think it's relevant to say that at this stage, we need to have a pretty good idea of the size of Gosselin and what it needs before we dive too quick into studies and so forth. So I think 2023 and a part of 2024, we're going to continue to be very aggressive on the drilling and growing the deposit, doing our metallurgical studies. And we know you can have, but I definitely do not see the rush to any integration study, probably even late 2024/2025.

Exactly. Hello, Tanya. This is [Kevin]. And in addition with the metallurgical testing, we have also the geotech testing to perform and obviously the initiation drilling that is currently ongoing.

Okay. So all of this combined, maybe late 2024, 2025 until the market gets some sense?

Yes, that's correct. Yes.

That seems fair? Okay. All right. So that's helpful there. And just on Essakane, I know Mike asked about the cost. So should we just be thinking the rest of the year, because you mentioned Westwood, we're progressively getting better quarter-on-quarter and improvement in cost quarter-on-quarter. Is Essakane more evenly balanced for the rest of the year? So would that be a fair way of looking at that mine?

Hello, Tanya. We should see a forecast to be moderately lower in Q3 and Q4 as the situation with the fuel don't get normalized. We also expect capitalized waste stripping to pursue the current planned program as well. And for mining as well, overall to have relatively the same kind of cost pressure we see on the input and cases.

Okay. So production evenly split?

No, the grade is going to be also relatively the same.

Okay. Okay. And then can I ask, because obviously, getting the cash flow -- getting cash flow from Essakane, we've got higher risks with the security issues in country. Can you just remind me what you're doing there to try and mitigate this risk as much as you can with inventories on site? Can you just remind me what you have there, so should something occur, which we hope doesn't, but just an idea of what you have on site and inventory levels.

Of course, Tanya. As we are trying to secure supplies, we are increasing -- or working capital will have a slight impact relative to the additional capacity for fuel storage in Q4. We're doing -- trying to do the same for ammonium nitrate for explosives. Maybe you want to talk a bit more about that, Maarten?

Yes. Good morning, Tanya. So we are seeing an increase in the inventory at the site as we are trying to build more capacity when there's good opportunities to bring supplies in. So there was an increase in there. I think your question also asked about cash, getting cash out of the country. We -- Essakane declared a dividend of $120 million during the quarter. They had about $170 million of cash at the end of the quarter because of buildup. And we received that dividend after the close of the quarter. So we continue to be successful. No issues in moving funds from the country or having gold sales out of the country.

Okay. I was just wondering more like fuel, explosives, other consumables that you're carrying inventory the 6 months. Should I be thinking like that's sort of your inventory levels. 3, 6 months? Is that a fair…

In fact for fuel, we usually have an inventory growth in between 15 days to 30 days. The expectation now is to increase that capacity close to 40 to 45 days.

Okay. Some reason I thought you had longer, sorry.

No, no, we -- no, unfortunately, this is very much in line with -- especially for field with best practices. So usually like when you said, like 20 days will be more than enough usually, and it has been in the past. Now because of the logistic of the convoy systems rather than frequent and periodically. So we accumulate trucks and then we can avoid them. So there is a need here to increase because we do not have, as previously, like a daily shipment and so forth. So we accumulate, we convoy, so we need to increase the capacity, but it is very much in line with -- in fact, in Canada, you would have less than that.

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

Thank you very much, operator, and thank you to everyone for joining us this morning. As always, should you have any additional questions, please reach out to Renaud or myself via phone or e-mail. Thank you all, be safe, and have a great day.

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