IAMGOLD Corp (IAG) 2020 Q3 法說會逐字稿

Thank you for standing by.

This is the conference operator.

Welcome to IAMGOLD's Third Quarter 2020 Operating and Financial Results Conference Call and Webcast.

(Operator Instructions) The conference is being recorded.

(Operator Instructions) At this time, I would like to turn the conference over to Indi Gopinathan, Vice President, Investor Relations & Corporate Communications for IAMGOLD.

Please go ahead, Ms. Gopinathan.

Thank you very much, and welcome, everyone, to the IAMGOLD Third Quarter 2020 Conference Call.

Joining me today on the call are Gordon Stothart, President and Chief Executive Officer; Carol Banducci, Executive Vice President and Chief Financial Officer; Bruno Lemelin, Senior Vice President, Operations & Projects; Craig MacDougall, Senior Vice President, Exploration; and Tim Bradburn, Vice President, Legal and Corporate Secretary.

Our remarks on this call will include forward-looking statements.

Please refer to the cautionary language regarding forward-looking information in our disclosure documents and be advised that the same cautionary language applies to our remarks during the call.

With respect to the technical information to be discussed, please refer to the technical information and qualified person slide.

The slides referenced on this call can be viewed on our website.

I will now turn the call over to our President and CEO, Gordon Stothart.

Well, thank you, Indi.

Good morning, everyone, and thank you for joining us.

Last night, we issued our third quarter 2020 operating results reflecting how we've adapted to our new normal with COVID-19.

Solid operating cash flows of $105 million on increased margins and solid mine site free cash flows of $80 million, underpinned by production of 159,000 ounces of gold despite the challenges of the quarter.

Our strong balance sheet, supplemented by the enhanced flexibility from our debt refinancing, wherein we issued new bonds and retired the old bonds, extending the maturity date by 3 years to 2028 and lowering our annual interest rate cost and the transformational growth we anticipate with the Cote Gold project following the formal construction announcement in July.

As reported on Monday, we had a seismic event at Westwood with all employees safely brought above ground.

I would like to recognize our Westwood team for their safe and successful response to this event.

The Westwood mill restarted yesterday evening on stockpiles and open pit ore from Grand Duc, while the underground operation remains suspended as we assess our business continuity plan.

We are now in our eighth month of adapting to a new normal of COVID, like most of the world.

From rapid crisis response at the end of the first quarter through extended rotations at Essakane, a shutdown and restart at Westwood, suspension and restart at Rosebel, we have come full circle with embedded protocols, operations at full capacity or close to normal, 0 COVID cases and ongoing vigilance.

At Essakane, we completed the expansion of the sleeping quarters, adding 200 beds.

Operations are substantially back to normal capacity.

At Westwood, following Québec government's COVID-19 cure and maintenance directive, we were back online as of mid-April.

At Rosebel, we continue to expand our camp capacity to facilitate social distancing, adding 300 beds, and we expect to be back to our full workforce complement in Q1 2021.

For our construction Project Cote, we have taken our learnings from our operating sites and instituted protocols including screenings, assessments, mandatory protective wear, social distancing and temperature tests.

Our response to COVID-19 also has an important community support and engagement perspective.

A few examples from the quarter include in Burkina Faso, where we donated 10 respirators worth $100,000 to the Ministry of Health and the Regional Health Directorate of the Centre Region to support its COVID-19 efforts.

Essakane further donated medical equipment to the Dori Hospital.

And in Colombia, we provided financial support and technical training to 23 families in the beekeeping sector of the Antioquia municipality with expected production of 100 kilos of pollen and 1 tonne of honey in 2020.

This project comes as an economic alternative to improve the quality of life of these families.

IAMGOLD is committed to achieving high standards in environmental, social and governance practices, which reflected our long-held 0 harm vision.

Highlights from the quarter include recognition and rankings by Moody's affiliate, the Vigeo Eiris, as fourth out of 45 sector peers, including senior producers, on its assessment of environmental, social and governance practices.

IAMGOLD's assessment reflected notable strengths in community involvement, environmental strategy, health and safety and governance.

Donations to local communities totaled $1.5 million year-to-date, including cleaning equipment and supplies, such as hand-washing stands and hand sanitizing gel; protective medical equipment, including masks, gloves and face shields; and life support equipment in the nature of ventilators and hospital beds.

Essakane's respirator donations, as mentioned on the prior slide, and our Rosebel operation, has partnered with Global Impex, a global personal protective equipment supplier, to provide previously trained women in the community with internship opportunities at one of global Impex's local factories.

We are also lobbying our partners and other stakeholders for the second phase of the Triangle D’eau project in Burkina Faso now that Phase 1 has been completed, with the goal of extending water infrastructure to 2 other communities nearby our Essakane mine.

Looking at 2020, we have further refined our guidance.

We are lowering our 2020 production guidance range to 630,000 to 680,000 ounces for 2020 due to the suspension of operations at Westwood Underground, resulting from the seismic event reported earlier this week.

We are adjusting upward our cost of sales guidance by approximately 5% to between $1,045 and $1,075 per ounce sold.

Total cash cost guidance is adjusted upward by approximately 4% to between $980 and $1,010 per ounce sold.

And all-in sustaining costs are adjusted upward by approximately 3% to between $1,240 and $1,270 per ounce sold.

The revisions to cost of sales and total cash costs reflect higher costs incurred from processing lower grade stockpiles to compensate for lower levels of production as a result of the COVID-19 crisis.

All-in sustaining costs were adjusted to reflect higher operating costs incurred to date, lower Westwood production and higher royalties.

I would note here that we are withdrawing our 2021 production guidance, which had been under review, and expect to provide a regular annual guidance in early 2021.

Our outlook for capital expenditures was modestly adjusted.

At Essakane, the nonsustaining capital expenditures forecast was increased by $5 million to $70 million.

At Westwood, sustaining and nonsustaining capital expenditures have been decreased by $10 million and $8 million, respectively.

At Cote, our development capital expenditures for 2020 were revised down to $66 million from $77 million, reflecting a timing difference for expenditures.

At Boto, planned capital expenditures were lowered by $1 million to $24 million for 2020.

These adjustments reflect a net decrease of $10 million in our sustaining capital and a net decrease of $15 million in our nonsustaining capital guidance.

Our resulting updated total capital spend for 2020 is expected to be $325 million for a net decrease of $25 million versus prior guidance.

In the quarter, we have progressed in a number of areas.

At Rosebel, we continue to ramp up Saramacca production with an aim to complete the road by year-end.

We continue to expect to be at the target run rate for mining at Saramacca later in the year.

We advanced the mill optimization project at Essakane and adjusted the startup date to the first quarter of 2021.

Again, in the quarter, Westwood continued to deliver steady production with the Grand Duc pit providing -- Grand Duc Open Pit, excuse me, providing supplemental ore.

We also continued derisking Boto with investment in local infrastructure and advancement of detailed engineering.

In Exploration, we continued our resource delineation work at various projects, including Nelligan, the Rouyn project and the recently acquired Fayolle property in Québec, as well as Gosselin near Cote and the new Karita discovery in Guinea.

As we have indicated before for 2021, Westwood has potential to expand production with supplemental feed from the Grand Duc Open Pit, subject to the assessment of our business continuity plan.

We also see Rosebel production ramping up with Saramacca online and an optimized Essakane mill to demonstrate increased throughput.

For our growth projects, the Cote work plan will be focused on major earthworks during 2021, while we continue to derisk the Boto project.

And for Gosselin, we are targeting a maiden resource.

On that note, I will pass the call over to Carol to review our financial results.

Thank you, Gord, and good morning, everyone.

We are pleased to say that the company continued its trend of robust gold margins in the third quarter, demonstrating both strong operating cash flows and strong mine site free cash flows.

We completed a bond refinancing for $450 million, lowering the interest rate to 5.75% from 7%, and importantly, extending the maturity of the senior notes to 2028.

Following this, credit agencies, S&P and Moody's, reaffirmed IAMGOLD's stable outlook.

We continue our well-established approach of prudently managing our balance sheet with cash, cash equivalents and short-term investments of $897 million, excluding restricted cash of $30.8 million at the end of the quarter and our largely undrawn credit facility of $500 million.

We implemented a gold hedging strategy to mitigate gold price exposure and to further derisk the balance sheet during the Cote Gold project construction period.

The company intends, under appropriate conditions, to hedge 15% to 20% of the total production between 2021 and mid-2023 through a combination of options and/or collars.

During the quarter, we executed gold bullion collar option contracts with a minimum floor price of $1,800 per ounce and a ceiling of $3,000 per ounce on 114,000 ounces for 2021 and 18,000 ounces for 2022.

Subsequent to the end of the third quarter, we added to our gold hedge position for 2021 using a 0 cost collar of $1,600 to $2,505 per ounce on 28,000 ounces as well as a collar of $1,700 to $2,800 per ounce on 50,040 ounces.

In the third quarter, we also executed hedges for the Cote Gold project, including Canadian dollar forwards, for approximately 6% of our exposure at a blended exchange rate of 1.3604 and 0 cost fuel collars for 90% of our exposure with floors starting at $33.80 per barrel and a ceiling of $50 per barrel.

Our earnings before adjusting items were impacted by the redemption of -- the redemption premium paid on the early redemption of our 7% senior notes, a noncash loss on the embedded derivative related to the 7% senior notes, the time value of our input cost derivatives in addition to COVID-19 expenses.

We continue to expect depreciation expense in 2020 to be in the range of $245 million to $255 million, with our cash taxes guidance remaining unchanged at $30 million to $45 million.

Turning to the third quarter results.

Revenues were $335.1 million, supported by strong gold prices while cost of sales were up compared to the same prior year period and the prior quarter.

Adjusted net earnings for the quarter were $52.1 million or $0.11 per share.

Net cash from operating activities before changes in working capital totaled $108.4 million.

Our gross profit margin has steadily improved quarter-over-quarter with the third quarter at 23%.

Starting this quarter, we are presenting mine site free cash flows, which reflects free cash flows from our operating mine sites with development capital and non mine site activities adjusted out.

We believe this measure demonstrates how far we have come in the past year with $80 million in mine site free cash flow, up almost 4x from the third quarter of 2019.

On a year-to-date basis, we have generated $145.5 million in mine site free cash flows, up dramatically from just $3.7 million year-to-date last year.

Following the strength in gold prices and our prudent management of the balance sheet, our liquidity, excluding restricted cash and including our largely undrawn $500 million credit facility totaled $1.4 billion.

Again, our 5.75% bond for $450 million is not due until 2028.

Therefore, we are well positioned financially for the construction of the Cote Gold project.

Finally, our disciplined approach enables us to continue to be a leader among our peers with a net cash position and leading liquidity.

Our liquidity, combined with anticipated free cash flows from our existing operations together with our risk management measures, is expected to enable us to cover the construction of our transformational Cote Gold project.

I will now pass the call to Bruno to discuss operations.

Thank you, Carol.

IAMGOLD is committed to the health and safety of our employees, and we are pleased to say that our statistics from the quarter continue to reflect this commitment.

In the third quarter of 2020, we again achieved better than target rates for both DARTs, which stands for days away, restricted or transferred duty, and TRI, which stands for total recordable injuries recording 0.36 and 0.48, respectively, per 200,000 hours worked.

At the end of last week, we were tested on our [total capability] to act as needed and when needed to ensure the safety of our colleagues.

I applaud our colleagues at Westwood for their success in ensuring the safety of our workforce.

Our goal every day is to meet or exceed our safety targets, implementing and refreshing a number of initiatives to ensure a safer work environment, including a comprehensive [modern-based] safety program.

For the quarter, we are reporting total consolidated attributable production of 159,000 ounces, cost of sales of $1,098 per ounce sold, total cash cost of $1,006 per ounce produced and all-in sustaining cost of $1,206 per ounce sold.

I will now review each operation in turn.

At Essakane, attributable gold production for the third quarter 2020 was 94,000 ounces compared to 83,000 ounces in the second quarter, reflecting a material increase in third quarter production.

Higher grades in the quarter relative to the second quarter were offset by the impact of graphitic ore on recoveries, in line with expectations and by the impact of maintenance on throughput.

We did have a slightly higher capitalized stripping in the third quarter compared to the second quarter, with total cash costs impacted by higher royalties while all-in sustaining costs were impacted by maintenance, higher input costs and royalties.

All-in sustaining costs were $1,054 for the quarter compared to $1,123 in the second quarter.

COVID-19 protocols are now embedded at Essakane with 0 cases and operations effectively back to normal.

For the balance of 2020, we continue to expect graphitic ore with the [unintended] negative impact on recovery.

But despite this, we expect a solid finish to the year.

As Gord noted earlier, we now expect the mill optimization project to be delivered in the first quarter of next year due to equipment certification and delivery timing delays.

At Rosebel, attributable gold production for the third quarter was 42,000 ounces, impacted by the suspension, which ended on July 24 and processing of low-grade stockpiles mixed with ore material from Saramacca.

At Saramacca, we resumed activity to complete the final construction touches on the overall targeted for the fourth quarter.

I would remind you that we have been utilizing the whole road since the first quarter, while this work was being completed.

Total cash costs were impacted by lower production volumes and royalties with all-in sustaining costs lower due to lower milling costs and sustaining capital.

All-in sustaining costs were $1,164 per ounce for the quarter.

Our COVID-19 protocols have been updated with the camp expansion underway.

We expect to reach our normal workforce capacity in the first quarter of 2021 with our mining complement ramping up over the fourth quarter.

The fourth quarter is expected to be a full quarter of continuous mill operations.

We expect to complete noncritical infrastructure for Saramacca in the first half of 2021.

We are also in the preparatory stage of our upcoming collective labor agreement discussion.

You can see our progress in this picture of the truck shop, the run-of-mine facility pad and the formworks and concrete at the facility pad.

Westwood produced 23,000 ounces in the third quarter 2020.

In August and September, we achieved record throughput rates.

We achieved our target production by blending open pit Grand Duc ore with Westwood underground ore.

The increased proportion of Grand Duc ore relative to the second quarter was due to the timing of stove sequencing along with higher Gran Duc contribution.

The higher Grand Duc proportion contributed to higher total cash costs with all-in sustaining costs also impacted by equipment replacement and deferred development.

As a result, all-in sustaining costs were high at $1,515 per ounce sold.

To provide an update from our news release on Monday, the Westwood restarted yesterday evening, while the underground operation remains suspended.

You would have seen this slide before, but I wanted to remind you that the hub-and-spoke model we have for Westwood is based on the excess capacity we have at the mill, which acts as a hub with regional targets acting as spokes.

This model would see Grand Duc ore fill eventually followed by Fayolle ore fill, pending permitting with target production for Fayolle commencing at the end of 2022 and running for 2 years.

I will now provide an update on our construction project, Cote Gold.

We believe the Cote Gold project lead the (inaudible) as a Tier 1 asset boasting a long life potentially in excess of 18 years, 493,000 gold ounce annually in the first 5 years on a 100% attributable basis.

Second quarter total cash cost of $600 per ounce, second quartile all-in sustaining cost of $771 per ounce.

And location in the mining-friendly jurisdiction with further potential upside from exploration.

We expect the Cote Gold project to provide tremendous value to IAMGOLD, with a net present value of $2.5 billion on a 100% basis and a gold price of $1,900 per ounce and internal rate of return of 25.9%.

We are proud to have strong stakeholder relationship with our joint venture partner, Sumitomo, as well as indigenous communities, Flying Post and Mattagami, and of course, our Northern communities.

Today, detailed engineering for Cote has advanced to approximately 66%, and we expect to ramp up activities in Q4.

These include early works activities such as limiting of the camp pad, fish salvage operation in the future tailings area, expansion of the site access road network and aggregate production.

In the fourth quarter, we plan to focus on camp construction to increase the accommodation capacity on site ahead of the imminent manpower ramp up.

Other construction work will also include site preparation and the finalization of the fish salvage activity.

Detailed engineering will continue to advance and procurement will focus on the fabrication phase for critical equipment.

Major earthworks are on track to start in the second quarter 2021.

We have continued to advance our permitting for construction.

We received 2 key permits under the Lakes and Rivers Improvement Act.

We received just yesterday the TMF Starter Dam approval under that act for the key priority structures under that application for construction.

We received relevant environmental approval for dewatering activities within the tailings management for our TMF footprint to support construction of the TMF Starter Dam structure.

We also received the permit to take water.

We have a few picture here from our ground breaking -- official groundbreaking ceremony in September, which was attended by the Prime Minister of Canada, Premier of Ontario, First Nation and other dignitaries and stakeholders.

There are also some pictures of fish relocation program underway.

This slide really highlights Cote's sensitivity to the gold price with both after-tax net present value and internal rates of return shifting dramatically up in the current gold price environment.

While we are pleased to see this potential, our internal modeling for Cote is based on consolidative prices and assumptions so that this project is defensively positioned for gold price volatility.

I will now turn the call over to Craig to discuss development and exploration.

Thanks, Bruno, and good morning, everyone.

As usual, please note that the results I talk about today have been previously disclosed in accordance with the securities regulations and signed off by the qualified persons within the company reporting them.

In 2020, our planned exploration spend has been reduced to $41 million from $52 million excluding project development activities and studies.

The main drivers of these adjustments were the various regional restrictions caused by COVID-19 during key program activity windows, followed by the usual work reductions from seasonal impacts such as the rainy season in West Africa.

I have included here a few updates from the quarter.

In Québec, drilling activities resumed at the Nelligan project with 2,600 meters of diamond drilling completed from both infill and step-out holes.

Recall that resources on 100% basis for the project totaled 3.2 million ounces in an inferred category at a grade of 1.02 grams per tonne gold.

We also reported assay results from the winter drilling program with highlights of 39.1 meters at 2.14 grams per tonne gold and 34.5 meters at 1.85 grams per tonne gold.

At the Monster Lake Project located 15 kilometers north of the Nelligan Project, we reported drilling results from the Annie Shear Zone target, including 3.8 meters at 16.9 grams per tonne gold, 2.8 meters at 5.63 grams per tonne gold and 12.3 meters at 2.09 grams per tonne gold.

Also during the quarter, our joint venture partner at Monster Lake, TomaGold, announced that both companies had signed an asset purchase agreement under, which IAMGOLD would acquire the remaining 25% interest in the project held by TomaGold.

Upon closing, this will increase IAMGOLD's ownership to an undivided 100% interest in the project.

The completion of the sale is subject to usual shareholder and regulatory approvals for TomaGold, which are expected in the fourth quarter.

We announced further results at the Rouyn gold project from our infill diamond drilling program to support the completion of a maiden resource estimate for the Lac Gamble Zone, which we feel may have potential to provide future satellite feed to our Westwood operation.

Highlights include 4.1 meters at 10.4 grams per tonne gold, 8.9 meters at 4.3 grams per tonne gold and 7.4 meters at 8.3 grams per tonne gold.

During the quarter, we also completed some 5,600 meters of additional diamond drilling to evaluate the resource potential of the nearby historic Astoria deposit located several kilometers to the east of the Lac Gamble area.

As we have shown before, industry reserves have been on a steady decline since 2012, representing a significant challenge to the future of our industry.

IAMGOLD has worked hard to differentiate ourselves from this industry trend.

Our objective is more than just replacing reserves at the rate of annual mine depletion, but also to grow and expand our reserves.

Because mine sites constantly deplete reserves and eventually mature, reserve replacement becomes increasingly difficult over time.

To counter this, resource and reserve growth must also be achieved through exploration success at greenfield development and early stage projects.

As shown on the slide, our success to date has been commendable.

Besides our continuing efforts at our mine sites and development projects, our greenfield exploration program has delivered a number of important exploration discoveries that will continue to supply the building blocks necessary to not only sustain reserves, but to provide opportunities for further reserve growth in the years ahead.

As I have said many times, this can only be achieved through a sustained commitment to exploration through the cycle and of course, the tireless dedication of our mine geology and exploration teams.

At the Cote Gold project, we were able to advance our work relating to assessing the resource potential of our new Gosselin discovery located 1.5 kilometers Northeast of the Cote Gold deposit.

Drilling activities resumed during the third quarter and we completed approximately 3,000 meters of diamond drilling from a very supportive program.

Drilling continues to focus on infill and step-out drilling to support an initial resource estimate expected in 2021.

Switching gears a little bit to talk about development at Boto.

We continued derisking activities in the quarter, with detailed engineering advancing to approximately 50% complete.

Activities included engineering and preparations for the access road construction and upgrades to the installation of the camp.

We also awarded engineering contracts related to plant equipment design, as well as for the start of construction of the access road site.

Restrictions related to COVID-19 crisis have delayed the advancement of certain local site initiatives such as community engagement and environmental activities.

We expect to reschedule these as local conditions allow.

In West Africa, exploration activities were restricted during the third quarter due to the rainy season.

Efforts focused on data compilation of exploration results and target generation to guide future programs across our portfolio.

At the Boto Gold Project in Senegal, drilling data obtained in the previous quarters is being incorporated to refine the resource and reserve models.

Again, highlighting our exploration success along this portion of the Senegal-Mali Shear Zone with several discoveries located within 15 kilometers of the Boto Gold Project in adjacent countries, we are working to advance a strategic development concept we refer to as the Bambouk Gold Complex, which will prioritize and advance resource development and delineation programs as the Diakha-Siribaya and Karita projects to support the evaluation of potential development scenarios and identify regional synergies.

Finally, I will finish with our project pipeline.

A robust and balanced project pipeline, strategically assembled and advanced is a fundamental asset to the future viability of any mining company.

And this is even more important in the current environment of bullish gold prices and declining global resources.

Competition for and access to quality exploration projects at acceptable entry costs remain challenging for the industry.

IAMGOLD has developed and continues to invest in a healthy pipeline of early to advanced greenfield exploration projects to support our future growth as well as support near-mine brownfield exploration with a view to extend mine life and leverage our existing infrastructure.

With that, I will now pass the call back over to Gord to conclude.

Well, thanks, Craig.

So IAMGOLD's transformational strategy centers on delivering the Top Tier Cote Gold Project, derisking the Boto Gold Project, optimizing our current operations and continuing to invest in our pipeline of brownfield and greenfield exploration.

Together with our financial strategy of maintaining a strong balance sheet, opportunistically securing favorable hedges on cost inputs and protective hedges on a portion of gold production during Cote construction, we believe IAMGOLD is positioned to deliver on its goal of superior returns to shareholders.

In this context, we look forward to updating you on our ongoing progress at our operations and at Cote.

I would like to close by acknowledging the hard work and dedication of our teams across the globe in these particularly challenging and unusual times.

And thanks to everyone for joining our call today.

And I'll now pass the call back over to the operator.

We'll now begin the question-and-answer session.

(Operator Instructions) Our first question is from Fahad Tariq from Crédit Suisse.

First, on Westwood.

Look, I think there's been a history of seismic events at the mine, and you've revised the mine plan already and tried to accommodate or deal with it a little bit.

What more can be done that is in the company's control?

And is there an increased focus now on brownfield exploration near Westwood, perhaps recognizing that the seismic events at the underground mine might be just a reality going forward?

So maybe there's other deposits that need to be brought forward?

Yes.

I'll take that one, Fahad.

Look, obviously, we're still investigating what happened with this specific incident.

It was in an area distinct from earlier incidents, and it's also in an area in a different rock unit than the prior incidents.

But it was an area that was developed before the last round of engineering that was done, and the work we're looking at going forward is focusing on a different type of development sequencing.

So we'll continue to look at it.

We are aggressively looking at the hub-and-spoke model and what the regional opportunities are, and some of that is in hand and we're just in the process of permitting or developing it, including Grand Duc and Fayolle.

Obviously, the opportunity at Rouyn Gold continues to improve for us, the more we drill it out.

And as we complete our business recovery plan at Westwood underground, we'll assess what that opportunity is.

At the end of the day, our goal is to have a safe, profitable operation, and that will be first and foremost in our minds.

If we're not able to achieve that safety we'll have to adapt the plan going forward to get us there.

Okay.

Great.

And my only other question, on the cost guidance, that's higher now, how much of that is Westwood related, meaning lower production?

How much of it is something else?

Because I'm trying to bridge that with, I think in another slide you said that the COVID -- incremental COVID costs are not being included in the unit cost.

So it sounds like the higher cost guidance is not necessarily COVID related.

Maybe just some color on the components of the higher cost guidance, that would be helpful.

Yes.

I don't have a detailed breakdown of the components of the cost.

But the adaptation in the cost is related to the incident at Westwood and us taking a conservative view of what the rest of the fourth quarter is going to look like at Westwood, and what the impact then were on our consolidated costs.

We looked at it fairly closely.

There are some impacts with lower production in Q3 from Rosebel, although that certainly is ramping up nicely and seeing some nice costs -- sorry, some nice production out of Essakane as well.

In the absence of the event at Westwood, I don't believe we would have adjusted all of the cost parameters.

We may have adjusted one of them just to adapt to the actuals from Q3.

But it certainly was a significant driver for the decision to modestly change our cost guidance.

And Gord, maybe I could add to that.

And what we are also seeing is higher royalties as a result of the higher gold price.

And we had to push off some of our sustaining capital during COVID occurrences at the mine site.

So you'll see more of that coming into the fourth quarter.

The next question is from Jackie Przybylowski from BMO Capital Markets.

I guess on my first question, I just want to follow-up with Fahad's first question on Westwood.

The guidance revision you gave for 2020, specifically the production guidance at Westwood, do you assume in that production guidance that Westwood restarts in Q4 2020?

Or is the guidance reflecting processing of lower-grade stockpiled ore through the entire quarter?

So Jackie, yes, we took a very conservative view.

We have -- we've obviously started our investigation, but we don't want to be pressuring the operation to restart until we're ready to restart.

The guidance is based, as you sort of stated on the production up until the actual incident, so basically through the end of November.

And sorry, the end of October and then 2 months of processing from the open pit and from stockpiles.

That's what that guidance analysis is based on.

So yes, I mean, I guess that's helpful because we can't read into your guidance that you're expecting 2021 to be back up and running at full run rate or anything like that.

It's still open-ended in terms of when the restart will happen and what it would look like.

Well, as we said, I think starting with the Q1 and Q2 results, we have been reviewing the 2021 guidance and not obviously just for Westwood, but also the larger picture.

At this point in time, we're withdrawing that guidance, and we'll be working really diligently over the next couple of months to firm up what the picture looks like going forward.

And as of right now, pending the outcome from this investigation, we're not comfortable saying anything about Westwood until we understand it.

We will be updating in early in 2021 with 2021 guidance for the larger picture as well.

Okay.

That's helpful.

And my second question would be on the hedge program that you've reported for 2021, I guess, specifically.

So you've said that you're aiming for about 15% to 20% of total production.

I mean, I'm assuming that's attributable production to IAMGOLD.

And based on that and based on the information that you gave, it looks like you're kind of there for 2021 already with the hedges that you've disclosed.

Is that fair?

Or do you expect that you'll be adding additional hedges for 2021?

Or do you think that you're sort of at your target already for next year?

Jackie, it's Carol.

Yes, that's -- yes, you're spot on.

So we have -- we don't expect to add anything further for 2021 where we're there.

And if you take a look at the weighted average on the floor, we're looking at 1,747 and on the ceiling, it's a weighted average of close to $2,900.

So we're pretty comfortable with where we're sitting with 2021.

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

Just a little further on Westwood.

Gord, you mentioned it was in a different zone that were separate from where the previous issues have occurred.

Can you just remind me what zone that was?

I'm just trying to think of what information is out there.

But...

I think you labeled them zones 1 through 6.

Yes.

I'm just trying to remember my sequencing there.

What it is, it's the zone that's on the hanging wall side of Corridor 2, whereas the prior incidents had been on the footwall side of Zone 2.

Okay.

But how close is it to the main infrastructure?

Oh, it's a long -- it's quite distal from the main infrastructure.

This was a set of workings to recover a zone that was a little bit further to the West.

And we actually had -- have about 90%, 95% of that panel completely removed so far.

Okay.

And relative to the average grade of the asset there, what was the average grade in that zone?

You've got me there, Anita.

I don't have it.

My understanding was a reasonable grade.

It was probably close to average grade.

It wasn't the best material, but it certainly wasn't low grade.

All right.

And then just moving to 2021.

I mean, I think within, by Q1 or Q2, you had already started to talk about 2021 guidance not yet revoked, but definitely being under review, and this is obviously prior to anything that was happening with Westwood but more COVID-related impacts.

So outside of the Westwood impact, can you talk about some of the other moving parts that might be impacting 2021 guidance?

Like I think one thing that I would be thinking about would be just the slower ramp-up at Rosebel this quarter post the COVID-related shutdowns and how that kind of winds its way into 2021.

Yes.

I mean, that's -- you know us quite well, Anita.

That is part of it.

Obviously, with the impacts of COVID, we have resequenced some of our zones and probably more at Rosebel.

But at all the operations, there has been some resequencing.

So part of the guidance adjustment is to do with -- will be or once we have it in hand, will be really looking at those timing impacts and how that sequencing now falls in 2021, and just regular ongoing geologic assessments as to which -- how the different deposits are performing.

It's part of the regular operation, and we continue to look at it.

The timing sequence is due to COVID, I think, is probably the bigger impact.

And obviously, now understanding Westwood is also a significant impact.

Okay.

And then my last question is back to Rosebel again.

Just on the back of the -- I was just looking at the operations.

It looks like Saramacca delivered some good grade and pretty good tonnage.

But I guess, the Rosebel proper was delivering a little bit more stockpile than I had anticipated.

So can you just give us an idea of what the rest of like outside of Saramacca, what the ore split was in terms of stockpile and ore source from the Rosebel pit?

I'm going to have to turn that one over to Bruno.

I mean the impact really has to do with the ramp-up of the workforce following the suspension and our work on the camp.

So I know we got Saramacca back up and running relatively quickly.

On the main Rosebel section, we were mining -- we certainly were mining some priority pit.

But given the reduction in the number of people that could stay in camp while we expand the camp, we were focusing on -- or we weren't focusing, but we were actually exploiting some of the on-site stockpiles, the lower grade on-site stockpiles to keep the mill full.

But I'll just let Bruno sort of expand on that.

Gord, yes.

So we -- in Q3, we were able to ramp up our activity at Saramacca, close to 8,000 tonne per day after the resumption of our activities.

Actually, we have close to 600,000 tonnes of stockpile at Saramacca.

So we'll continue to ramp up for Q4.

That's what is planned.

Bruno, the question was for the Rosebel proper contribution, do we understand the tonnage split between stockpiles and direct pit feed in Q3?

I will have to come back with the number.

Yes.

I just want to get an idea of like what the actual run rate is relative to full throttle production at the Rosebel pit.

Yes.

Understood.

Okay.

The next question is from Josh Wolfson with RBC.

Another question on Westwood.

Is there any sort of context you could provide as to what the damage is right now?

Or maybe how it would compare to the prior sort of incidents on the 104 level?

Bruno?

Sorry, can you repeat the question, please?

Is there any ability to characterize or quantify the level of damage as it would have compared to prior seismic events, I guess, the closest one would be the 104 level incident a number of years ago?

Yes.

Well, as we mentioned, like we need to assess what caused the seismic event, okay?

And like what you're saying is the impact on the production schedule right now.

In that zone, we were about to finish the -- and complete the mining of the zone.

I would say we'll have to be giving you more details after the investigation.

And looking after that, what is the consequence of event on future production.

We'll provide an update on this in due course.

Okay.

And is there any ability to maybe quantify the reserve volume that would be in that area?

Like I mentioned, like so far, we were almost done with the zone.

So at this moment, we're looking at the impact on the mine plan.

But we -- in terms of evaluation or reserves, that's not necessarily what we at this stage are evaluating more on the mining plan side.

So the impact is less since it is on the far West of the mine, to be exact.

Okay.

And then for Saramacca, you mentioned the stockpile that was in place.

If I recall looking at the old tech report mine plan, there was about a 2-ish year ramp-up, including, I guess, 2021, which would have been in there, where the mine -- or Saramacca's contribution would be below its steady-state.

So when you say -- or the guidance for full throughput is expected at year-end, is that rate expected to be in line with what the old mine plan was?

Or should that be close to that 6,700, 6,800 kind of tonnes per day processing from Saramacca?

Yes.

Actually, we see a stronger ramp-up in Q4, definitely with great impact at the mill.

So the contribution for Saramacca for Q4 is expected to be [tonnes].

As we said right now, we are finalizing the plan for 2021.

So we will be able to guide on this with regard to what Saramacca is expected to give versus the original plan.

Okay.

And then last question, just in terms of gold price assumptions for year end reserves or resources.

Any thoughts on that?

Yes, Josh, we're not planning on moving our gold price assumptions on reserves or resources this year as part of the overall strategy, and we've said a bunch of times, we really are focused on generating cash flow out of the existing operations, at least through the construction period for Cote.

And at this point in time, we're not looking to modify cutoff grades and move away from that plant.

In the medium term, higher gold prices persist.

And I hope and pray they do on a daily basis.

At some point in the future, we will start to consider looking at it.

And specifically, most importantly, I think, in reference to Essakane, which has the shorter mine life, and understanding what the impacts are.

That being said, the long-term planning group is evaluating on a regular basis what those impacts might be.

But for corporate disclosure, we're not going to be moving our numbers.

The next question is from Don MacLean with Paradigm Capital.

Most of my questions on Westwood were answered.

I guess, it's unfortunate that relatively small contributor to the production and cash flow is occupying so much intellectual horsepower at the company.

I mean, Gord, I guess the underlying question here is at what point do you throw in the towel on this thing?

Do you get to that point?

Is it sufficiently profitable if you look at it from a macro perspective to be worth all this effort?

I mean, it's a great question, Don, and certainly, the conversation we've been having internally.

I think for us right now, we're going to wait for the analysis of the incident and what the business recovery plan is.

I think our assessment will be like any assessment around any asset.

Where are we best providing returns for our shareholders through our allocation of capital?

And that will be the question that our efforts at Westwood will have to answer in comparison to our other opportunities.

It's too early to talk to that now.

As I think I said and Bruno said as well, the incident really hasn't impacted our reserve ounces in a big way, in any way, shape or form.

However, as we look at -- do we -- if we ask ourselves a question, do we need to modify anything else with respect to how we're mining this deposit to maximize hazard abatement, does that require a different capital profile than we had laid out through our prior plan?

We haven't gone into that point.

But it's a matter -- it's a question of capital allocation, obviously, following our ability to mine safely.

Yes.

I mean, it's a tough one when -- if we just stand back and look at it from a market perspective when you're being held sort of -- or judged operationally on something that is really totally out of your control.

And Essakane and Rosebel are challenging in their own rights, but it's something you can manage.

But Westwood is just, you get these situations that are totally outside of all your best efforts that really throw your whole sort of operational perception on the market off kilter.

So it's most unfortunate.

It'd be nice if you could somehow isolate it in some way that people could judge Essakane and Rosebel, the real backbone of the company, on a fair basis without it being colored by Westwood.

The...

Those are the questions we're asking ourselves there now, Don.

I agree with you.

And can Grand Duc and Fayolle and possibly Rouyn.

Could they actually sustain the mill as a profitable entity?

Without (inaudible)?

Yes.

Again, that's the question.

None of them were intended to be 100% producers.

So we'll have to look at it.

Maybe there are other opportunities as well.

And it really is a holistic picture.

I mean the hub-and-spoke concept that Bruno described very well, really, the underlying assumption there was that Westwood was profitable in and of itself and providing a baseload fill of the mill.

If that sequencing is different, then we need to evaluate sort of the overall picture.

As you pointed out earlier on most models, the proportion of value that's assigned to Westwood within our portfolio is relatively small.

The whole hub-and-spoke concept that Bruno and the team at site and the team at Longueuil have been driving towards was to provide a longer-term valuation superior to sort of the Westwood base case, and we'll need to understand it all sort of in a holistic way.

And then just -- you may not be able to answer this.

But have you ever had expressions of interest from potential buyers for Westwood?

Like you say, Don, that's something we really -- we don't typically answer it publicly until things get a little further along, if that were to ever happen.

Okay.

Just thought I'd ask that question.

Then lastly, Gord, any kind of color on 2021 compared to what we've seen in Q3?

If we cross out Westwood, how Rosebel and Essakane will look in a broad sense?

Will they look better or pretty much the same?

At a high level, my expectation is Essakane will -- Essakane is a fairly steady producer along the lines.

Yes, we had some COVID impacts this year.

If you remove those COVID impacts, I think you'll see Westwood next year something comparable to the steady state without those impacts, obviously, assuming that there's no further future impacts.

And Rosebel, as Saramacca starts to deliver a big component -- a bigger component of production on a sustained basis for a full year, we do start to see some improvement with Rosebel.

We're just in the process of dimensioning exactly how much that improvement is.

And as I spoke with -- to Anita's question earlier, at the same time, we're trying to understand what has the COVID impact done to our sequencing plan at Rosebel proper and how does that impact 2021.

So we're right in the midst of putting all that together.

This concludes the question-and-answer session.

I'll now turn the call back over to Indi Gopinathan for closing remarks.

Thank you very much, and thanks to everyone for joining us this morning and for your continued interest in IAMGOLD.

We look forward to having you join us again for our fourth quarter and full year 2020 conference call in February.

Goodbye.

This concludes today's conference call.

You may disconnect your lines.

Thank you for participating and have a pleasant day.