Iamgold Corp Q4 FY2020 Earnings Call

Thank you very much, Sachi, and welcome, everyone, to the IAMGOLD Fourth Quarter and Full Year 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; Craig MacDougall, Executive Vice President, growth; Bruno Lemelin, Senior Vice President, Operations and Projects; and Tim Bradburn, Senior Vice President, General Counsel and Corporate Secretary. Our remarks on this call will include forward-looking statements. Please refer to the cautionary language regarding forward-looking information in our disclosure documents and be advised that the same cautionary language applies to our remarks during the call. During the call, non-GAAP measures will be referenced, and we direct you to review the reconciliations in our disclosures relating to these measures. 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 reporting on our Q4 and 2020 results. 2020 was certainly a challenging year for the whole world, but we're really eagerly looking forward to 2021. So I'll start with the key highlights of the fourth quarter and the year. At the corporate level, IAMGOLD demonstrated strong leverage to the gold price with a 280% increase year-over-year in mine site free cash flows, generating more than $223 million. We ended the year with almost $1 billion in cash and short-term investments on our balance sheet and nearly $1.5 billion in total liquidity. We continue to proactively manage the impacts of the global COVID-19 pandemic on our operations, development projects, and exploration activities with a rapid response and strict safety protocols. Reflecting our long-held Zero Harm vision, we were recognized for our peer-leading environmental, social and governance practices by a number of independent organizations. Focusing on governance, we embraced evolving best practices through Board renewal. Switching to the operational highlights, Essakane continues to deliver with a strong finish to the year and its best quarterly performance in 2020 in Q4. Rosebel demonstrated a strong increase in mining rates in the fourth quarter. And Westwood, despite its challenges, was free cash flow positive and continues to process open pit ore from the adjacent Grand Duc satellite pit. Westwood has a significant resource base, and we are taking a cautious approach as we assess its business continuity plan, while the underground mine is in care and maintenance mode following the seismic event last quarter. At Cote, construction commenced in the fall of 2020 and continues to progress well, with major earthworks having commenced in January, ahead of schedule. Looking forward, we continue to develop our districts with delineation drilling at Gosselin near Cote in support of an initial resource estimate later in the year with project derisking at Boto and with further drilling at Nelligan ahead of an updated resource. We are coming upon almost a year of living with COVID-19 in our midst. I'm proud of the rapid and adaptable response across the company to this challenging situation. Noteworthy efforts included Essakane, the reconfiguration of the camp to accommodate new protocols, establishment of a two-bed field hospital at site as well as setting up a medical confinement house in Ouagadougou for managing quarantines. With these protocols and systems in place, Essakane has been operating at normal capacity since Q3 of 2020. At Westwood, no cases have arisen at site with health and safety protocols implemented immediately upon restart last April following the government-mandated shutdown. After the seismic event in the fourth quarter, mill operations continue to operate under our well-established protocols, processing Grand Duc ore while the mine remains suspended under care and maintenance. In fact, we have seen the mill achieve a record rate of throughput during this period. At Rosebel, the camp expansion is well advanced following the receipt of all the modules required, and we expect to accommodate our full workforce through the staged addition of 300 new beds by the second quarter of 2021. The site was operating at 75% of mining capacity at year-end and is currently operating at 85%. At Cote, we've taken what we've learned from our operating sites and established robust testing and operating protocols to protect both the local communities and the workforce, and to date, we have had no COVID-19 cases at Cote. Community support and engagement are fundamental aspects of our Zero Harm commitment. In the fourth quarter of 2020, COVID-19-related activities included, at Rosebel, the creation of a local community field squad to assist the local governments in promoting COVID-19 awareness and preventative measures. At Essakane, drones were deployed to help spread the message of awareness and social distancing. Through 2020, IAMGOLD contributed $1.5 million to local communities in which we operate globally, including cleaning equipment and supplies, protective medical equipment, and life support equipment. As you know, IAMGOLD is committed to achieving high standards in environmental, social and governance practices, which reflect our long-held Zero Harm vision. Highlights of activities include hosting our annual health, safety and environment days event over four days at Essakane, co-chaired by the Minister of Energy and the Ministry of Environment, green economy and climate change of Burkina Faso. Completion of Phase one of the Triangle d'eau public-private partnership to bring potable water to 60,000 people in Burkina Faso. We are also lobbying our partners and other stakeholders for the second phase of the Triangle d'eau project now that Phase one has been completed with the goal of extending water infrastructure to two other communities nearby our Essakane mine. Our ultimate goal is to bring potable water to 200,000 people in the area. Also at Essakane, we completed a one-year-long pilot internship program consisting of 10 local mining engineering students. Our ESG efforts have been recognized by independent parties, including Moody's affiliate, Vigeo Eiris, assessment of environment, social and governance practices, which ranked us fourth out of 45 sector peers, including senior producers. IAMGOLD's assessment reflected notable strengths in community involvement, environmental strategy, health and safety, and governance. MSCI's ESG ratings, where we maintained an A rating, placed IAMGOLD in the top one-third of precious metal companies. Bloomberg's 2021 Gender Equality Index recognized IAMGOLD for a third consecutive year among 380 global companies across various industries that foster a more inclusive and equitable workplace. And the prestigious Corporate Knights 2021 Global 100 Sustainability Scorecard, where we have been ranked 10th out of 116 global mining companies reviewed and among 8,000 global companies spanning various industries reviewed. Looking forward to operations in 2021, we are planning for global production of 630,000 to 700,000 ounces for the year; cost of sales between $980 to $1,030 per ounce sold; total cash cost between $930 and $980 per ounce produced; and all-in sustaining costs between $1,230 and $1,280 per ounce sold. The first quarter of 2021 is expected to be at a slightly lower level of production than the second quarter of 2020 due to the Westwood underground operations being placed on care and maintenance with a restart targeted for H2 and also due to lower production anticipated at Rosebel as the mining sequencing continues to advance to normal rates commensurate with camp expansion as described earlier. Costs are expected to be lower in the second half of 2021, benefiting from a higher anticipated production relative to the first half of 2021. Guidance for the year reflects ongoing efforts to improve productivity and optimize performance across our operating sites while safeguarding operations against any resurgent COVID-19 risks. Our 2021 outlook for capital expenditures includes at Essakane sustaining capital of $60 million and non-sustaining capital expenditures of $90 million; at Rosebel, sustaining capital of $50 million and non-sustaining capital expenditures of $75 million; at Westwood, sustaining capital of $10 million and non-sustaining capital of $10 million; at Cote, development capital expenditures of $355 million; and at Boto, derisking capital expenditures of $60 million. For the year, total sustaining capital expenditures will be $120 million while non-sustaining capital totals $590 million, plus or minus 5%. In 2021, we look forward to updating you on Rosebel resuming its operating cadence following the camp expansions as well as completion of the Saramacca infrastructure construction. Essakane completed the mill optimization project in the first quarter of 2021 with expected improvement in hard rock ore processing capacity, the advancement of our growth projects, including major earthworks at Cote and the expansion of the construction camp and access road, and project infrastructure derisking work at Boto. In exploration at Gosselin, we are planning resource delineation work and targeting a maiden resource later this year. We are also planning resource delineation work at various projects, including Nelligan, the Rouyn project, the recently acquired Fayolle property in Quebec, Diakha in Mali, and the new Karita discovery in Guinea. On that note, I will now pass the call over to Carol to review our financial results.

Thank you, Gord, and good morning, everyone. As Gord highlighted, we showcased our advantage in relation to gold prices this year, generating $223 million in mine site free cash flow, which is a 280% increase compared to last year. The mine site free cash flow for the fourth quarter was $78 million. We are carefully managing our balance sheet since we have a significant capital commitment to our transformative growth project, Cote Gold. By year-end, we reported $948 million in cash, cash equivalents, and short-term investments, not accounting for restricted cash of $39 million. Along with our largely undrawn $500 million credit facility, our total liquidity at year-end was almost $1.5 billion. This month, we further extended the maturity of $490 million available under the credit facility by one year to January 2025. With this level of liquidity, we feel confident in executing our growth plans. In the fourth quarter, and following year-end, we successfully entered into beneficial hedges on gold, fuel, and currency. This included the addition of gold hedge collars for 2021 priced between $1,600 and $2,800 per ounce on 78,040 ounces, along with hedge collars on 24,000 ounces priced from $1,700 to $2,700 per ounce for the first half of 2023. To clarify about the collars, if gold prices fall below $1,700, we will receive a minimum price of $1,700; if prices exceed $2,700, we will be capped at $2,700. We will receive the spot price for gold within that range. Additionally, we obtained several zero-cost collar options on fuel contracts priced below $55 per barrel for the period of 2021 to 2024. Regarding IAMGOLD shares, collars are being used to manage our currency risk. For 2021, approximately 44% of our Canadian dollar exposure is hedged within a range of 1.28 to 1.47; this, along with nearly CAD145 million in hand, raises our Canadian dollar hedged position for 2021 to 73%. For 2022, about 28% of the Canadian currency exposure for Cote was hedged between 1.30 and 1.48, while for 2023, approximately 65% was hedged within the range of 1.30 to 1.46. Looking ahead to 2021, we expect depreciation between $295 million and $305 million, with cash taxes between $78 million and $88 million for the year. Note that in 2020, we reported COVID-19 expenses and other costs, considering them as additional costs not usually included in our production costs. Turning to the fourth quarter financial results, revenues reached $348 million, which is an 18% increase from the previous period and 4% from the third quarter. Adjusted net earnings for the quarter were $19 million or $0.04 per share, impacted by the removal of deferred tax recoveries solely due to fluctuations in foreign exchange rates, primarily at Essakane, where the euro increased from 1.12 to 1.22 relative to the U.S. dollar. We also faced higher general and administrative expenses linked to executive retirements and increased depreciation costs. Net cash from operating activities before adjusting for working capital totaled $108 million. The gross profit margin was just above 24%, showing a significant improvement from the previous year's 14%. For the year ending in 2020, revenues were $1.24 billion, boosted by higher gold prices, though somewhat offset by lower sales volumes compared to the previous year. Cost of sales remained relatively stable, influenced by lower depreciation expense but also higher royalties due to the increase in gold prices. Adjusted net earnings for the year were $88 million, or $0.19 per share. Net cash from operating activities before changes in working capital was $368 million, with an average gross profit margin of 20% for the year. Mine site free cash flows represent free cash flows from our operational mine sites after excluding development capital and non-mine site activities. As mentioned earlier, mine site free cash flows have been strong, reflecting a 41% rise in the fourth quarter of 2020 compared to the same period in 2019, and a 280% increase year-over-year. Thanks to the upswing in gold prices and our careful management of the balance sheet, our liquidity, not including restricted cash and taking into account our largely undrawn $500 million credit facility, stands at nearly $1.5 billion. During the year, we successfully refinanced our bonds at a 5.75% coupon rate for $450 million due in October 2028. Both S&P and Moody's reaffirmed IAMGOLD's stable outlook after the refinancing. As noted earlier, this month we extended the maturity of $490 million under the credit facility to January 2025. With our liquidity, prudent balance sheet management, and effective risk management strategies, along with projected free cash flows from our existing operations, we believe we are financially well-prepared for the construction of our transformative Cote Gold project. In the final slide, it’s evident that our disciplined strategy positions us favorably among our peers, showcasing our net cash position and strong liquidity.

Thank you, Carol. IAMGOLD is committed to the health and safety of our employees. In 2020, I am pleased to say, particularly given the context of the COVID-19 pandemic, that we outperformed our health and safety targets. For 2020, our DART and PRI rates were 0.46 and 0.67, respectively, for 200,000 hours worked. Unfortunately, the fourth quarter performance was affected by the Westwood seismic incident. With that being said, we were still able to meaningfully outperform our annual DART and PRI targets and achieved noteworthy year-over-year improvements of 10% and 23%, respectively. We continue to implement several initiatives, including I Am Safe, the revamped health and safety management program, to promote a safe work environment. We just released our updated reserve and resource estimate for 2020, which reflects 13.9 million ounces in attributable proven and probable reserves for a 17% decline year-over-year; 23.9 million ounces in attributable measured and indicated resources for a 12% decline year-over-year; and 11.3 million ounces in attributable inferred resources for a 6% decline year-over-year. The updated figures reflect the sales of the non-core Sadiola mine at the end of 2020. Excluding the sale of Sadiola, total attributable proven and probable reserves decreased by 1.2 million ounces or 7%. The updated figures also include operating mine depletion and the reclassification of reserves at Westwood previously reported in August of last year. Mining is a depleting activity, and this is the first time in several years that we have seen a decline in our reserves and resources. However, as Craig will discuss, we are working hard in exploration to develop further resource potential. For the quarter, we are reporting total consolidated attributable production of 169,000 ounces and attributable gold sales of 172,000 ounces; cost of sales of $1,045 per ounce sold; total cash costs of $998 per ounce produced; and all-in sustaining cost of $1,294 per ounce sold. We achieved the midpoint of 2020 production guidance reporting total consolidated attributable production of 653,000 ounces; cost of sales of $1,057 per ounce sold; total cash costs of $984 per ounce produced; and all-in sustaining cost of $1,232 per ounce sold. I will now review each operation in turn. At Essakane, attributable gold production was 103,000 ounces for the quarter and 364,000 ounces for the year. Production was up quarter-over-quarter due to the mining of high-grade zones, though partially offset by lower recoveries. Total cash costs for the year were $936 per ounce produced, up year-over-year due to increased royalties on higher gold prices and higher operating costs due to stockpiles, drawdowns, and increased cyanide consumption. All-in sustaining costs for the year were $1,098 per ounce sold, up year-over-year due to higher cost of sales partially offset by lower sustaining capital. I note that the election process in Burkina Faso was concluded smoothly with the prior administration. As Gordon noted earlier, at Essakane, we have reconfigured the camp to accommodate new COVID-19 protocols and have been operating at normal capacity since the third quarter. In addition, we have a steady production outlook for 2021 with additional pushback work planned. The mill optimization project is targeted for completion in the first quarter with an anticipated 10% improvement in processing. As you can see from the table, 2020 reserves and resources were updated to include annual mine depletion. At Rosebel, attributable gold production for the fourth quarter was 52,000 ounces, demonstrating a steady increase in mining activity. Rosebel recovered from the midyear suspension, reaching 75% operating capacity at year-end and is operating at 85% currently. For the full year, Rosebel produced 210,000 ounces of gold, reflecting the suspension and the gradual resumption of the mining activity. We have established an offsite field hospital facility to accommodate any cases. Total cash costs for the year of $1,017 per ounce produced were higher year-over-year. Lower production volumes from the temporary suspension midyear and higher royalties on higher gold prices are among the main drivers of the increase. All-in sustaining costs were $1,224 per ounce sold for the year, higher year-over-year due to higher cost of sales offset by lower sustaining capital. In terms of ESG, the Rosebel Community Fund is operational with two worthy projects funded, one for solar energy and another for potable water in the village of Saramacca. Our COVID-19 protocols are in place, and we expect to reach our normal workforce capacity in the first quarter of 2021. In 2021, our outlook reflects sequencing and the shift of waste stripping from 2020. We expect to complete the noncritical PEP infrastructure for Saramacca in the first half of 2021 and continue the collective labor agreement negotiation process. Year-end 2020 reserves and resources noted in the table below were updated to include mine depletion. On this slide, you can see an area and direct view of the truck shop, on-site genset, the tire shop, the 23-kilometer all road and bridge, which was completed, achieving a noteworthy milestone of zero last time incident over more than 700,000 work hours. Westwood produced 14,000 ounces in the fourth quarter 2020 with the mill processing stockpiles and open pit ore while the underground remains suspended. For the full year, Westwood produced 79,000 gold ounces. Both figures were lower than the prior year period due to the suspension. I will note that the transitioning to 24-hour seven days a week mining, the Westwood mill achieved the highest annual mill throughput performance seen since 2005. Total cash costs for the year were $1,117 per ounce produced, higher year-over-year on lower production. All-in sustaining costs for the year were $1,286 per ounce sold, higher year-over-year due to higher cost of sales partially offset by lower sustaining capital due to the COVID-19 restriction and underground mine suspension. From a COVID-19 perspective, Westwood was impacted in late Q1 with the government-mandated shutdown, from which we were able to establish strong protocols to manage the health and safety of our workforce. These protocols continue to work well. Our outlook for Westwood in 2021 is tempered by the pending business resiliency plan. Our national instrument 43-101 report, published in August 2020, is paused as a result. We anticipate a restart at Westwood in the second half of 2021, targeting safe extraction from multiple zones. In addition, we are advancing the study to assess the potential of assets in the Westwood's hub-and-spoke concept. Reserve and resources increased slightly net of annual depletion with the addition of incremental ounces from the Grand Duc open pit deposit as we incorporated more drilling data completed in 2020. Underground reserves and resources were adjusted for mine depletion with no further refinements. The hub-and-spoke model 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 includes ore feed eventually followed by Fayolle ore feed pending permitting, with target production for Fayolle commencing at the end of 2022 and running for two years.

Thank you, Bruno, and good morning, everyone. Before I begin, please note that the results I talk about today have been previously disclosed in accordance with securities regulations and signed off by the qualified persons within the company reporting them. In 2020, our exploration spend was $36.3 million compared to $47 million in 2019, exclusive of project studies, a reduction largely reflective of the impacts of COVID-19 restrictions on our exploration programs in various regions. In 2021, planned exploration spending totals $56 million, split approximately 60-40 between greenfield and brownfield targets. I will now review a few highlights from the exploration work completed in 2020. At our Nelligan project in Canada, we reported assay results from our 2020 infill expansion diamond drilling program throughout the year. Starting in the second quarter, highlights included 25.1 meters grading 1.9 grams per tonne gold and 27 meters grading 2.9 grams per tonne gold. Additional assay results were reported in the third quarter with highlights of 39.1 meters grading 2.1 grams per tonne gold and 34.5 meters grading 1.9 grams per tonne gold. Finally, the remaining results from this program were reported in the fourth quarter of 2020 and included 17.3 meters grading 7.6 grams per tonne gold and 21.8 meters grading two grams per tonne gold. At our Gosselin discovery adjacent to the Cote Gold deposit in Ontario, we reported assay results in January 2021 from 24 diamond drill holes totaling just over 10,000 meters completed as part of our 2019-2020 delineation drilling program, which continue to intersect wide zones of alteration and associated mineralization similar to that observed at the Cote deposit itself. Highlights included 86 meters grading 5.6 grams per tonne gold, which included a 30.5-meter interval grading 14.7 grams per tonne gold. We had 164 meters grading 1.5 grams per tonne gold; 417.3 meters grading 1.0 grams per tonne gold, which included 197.3 meters grading 1.6 grams per tonne gold; another intersection of 202 meters grading 1.2 grams per tonne gold and 353 meters grading 1.0 grams per tonne gold, which included a 46-meter interval grading 3.4 grams per tonne gold, very impressive intersections from that program. At Boto, we completed 23,000 meters of infill reverse circulation drilling aimed at resource conversion. At our Monster Lake project in Canada, we successfully consolidated our ownership to 100% and reported assay results from the 2020 drilling program targeting the Annie Shear Zone area, a long strike from the defined mineral resources at the 325 Megane zone. Drill highlights from that program included 3.8 meters grading 16.9 grams per tonne gold; 2.8 meters grading 5.6 grams per tonne gold; and 12.3 meters grading 2.1 grams per tonne gold. 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. Although this year, we did see a decline primarily due to the sale of the non-core asset, Sadiola, the usual mine depletion from our annual mine production, and a reclassification of reserves that Westwood announced earlier in the year, we continue to commit to discovery-oriented exploration programs to support future growth. In 2021, we have several brownfield exploration targets. At Essakane, drilling is focused on resource potential at targets within trucking distance of the mine and include our gem target, Korizena, and Tassiri. At Rosebel, we are focused on resource development at our existing deposits and exploring high-potential targets within our extensive concessions. At Westwood, we are planning continued resource definition drilling and development, supported by geotechnical drilling, along with plans to advance our regional greenfield targets, including the further delineation of the Lac Gamble Zone at the Rouyn Gold project. This work will support a future maiden resource estimate for this target. In addition, we are planning the evaluation of the resource potential at the historic Augmitto deposit and the Cinderella zone, also at the Rouyn Gold project. At the Gosselin discovery located 1.5 kilometers northeast of the Cote deposit, continued delineation drilling is in progress to support an initial resource estimate later this year. At the Boto Gold project in Senegal, $60 million in capital expenditures was planned in 2021 for the continued derisking of the project, including the construction of an all-year access road, engineering for critical plant equipment and advancement of sustainability programs to both promote social collaboration with local communities and ensure adequate environmental protections. It is important to note that the capital cost estimate and the optimization study reflects pricing as at the second quarter of 2019 and is deemed to have an overall accuracy of plus or minus 15%. The study estimate excludes escalation, inflation, and the impact of project and schedule changes. The derisking activities at Boto will help position the project for an eventual construction decision subject to market conditions and the construction progress at Cote, among other factors. Anchors are Bambouk District, where our exploration efforts have led to several additional discoveries building on the resource potential of the area. In 2021, infill drilling is planned at the Diakha deposit in Mali to upgrade additional inferred resources, while at Karita in Guinea, initial delineation drilling is planned to support a future maiden resource estimate. In North America, exploration at the Nelligan deposit in Quebec is intended to focus on resource expansion after the drilling results from the 2020 program confirm the expansion of mineralization beyond the current resource boundaries. This program will help support the completion of an updated resource estimate in the second half of 2021, while drilling at the nearby Monster Lake project will work to evaluate the resource potential of the Annie Shear Zone target area. Finally, I will finish with our project pipeline. Competition for and access to quality exploration projects at acceptable entry costs remains challenging for the industry and especially so in the face of the current environment of bullish gold prices. At IAMGOLD, we believe that a robust and balanced project pipeline strategically assembled and advanced is a fundamental asset for the future viability of any mining company. As such, IAMGOLD has developed and continues to invest in a healthy pipeline of early to advanced greenfield exploration projects to support future growth as well as support near-mine brownfield programs with a view to extend mine lives and leverage our existing infrastructure.

Well, thank you very much, Craig. So IAMGOLD is beginning an exciting transformation as we focus on the future through the execution of our growth pipeline. In 2020, we announced the decision to proceed with the construction of the Cote Gold project located in Ontario, which, along with the derisking of the Boto project in Senegal, positions IAMGOLD in a few years' time as a one million-ounce producer with all-in sustaining costs well below $1,000 per ounce, greater geographic balance, and long-life mines. We look forward to continuing our quarterly conversations with you on IAMGOLD's operating mines, construction progress at Cote, derisking progress at Boto, and exploration news. Thank you to everyone for joining our call today. I will now pass the call back over to the operator.

The first question is from Fahad Tariq from Credit Suisse.

Hi, good morning. Thanks for taking my question. On Westwood, can you give some more color on what the business continuity plan assessment entails? It sounds like the decision to access underground in the second half of the year has already been made. And I'm guessing that's already baked into the guidance, but maybe talk about what exactly is being evaluated in that plan. And how could that change the way it's mined this year or what that means for the guidance this year? Thanks.

Bruno, would you like to discuss that?

Yes. We are currently investigating the incident from October 30. It's important for us to ensure that the same issues do not exist in the other areas where we plan to mine. We are completing geotechnical drilling and logging, and analyzing the results to ensure that Westwood remains safe, profitable, and sustainable in the long term when we resume operations. This investigation will help us determine when we can expect to restart the mining activities. However, we must first complete the investigation summary.

And does the guidance for this year already incorporate accessing the underground or parts of the underground in the second half? Or is that upside to this?

Yes, roughly around 50% of the ounces in the guidance are deemed to come from underground. That being said, Grand Duc is already somewhat overproducing. But the guidance is based on an assumption of a second half restart at a limited pace initially and then building through the remainder of the year.

The next question is from Josh Wolfson from RBC Capital Markets.

With regards to this royalty transaction, what payments would you expect to receive up front? And is there any sort of anchor asset that's driving the overall value?

Craig, did you want to cover that?

The portfolio consists of a collection of historical royalty assets that go back quite far in the company’s history. There are variable values associated with these assets, but there isn't a single main asset that determines the overall value. Instead, it is a compilation of well-placed royalties that have value in the current market. We have assembled these assets and had groups evaluate them, and the transaction outlined in the release reflects the value assigned by the prospective buyer. It will be all cash upfront as noted in the disclosure.

Okay, got it. And for Cote, I understand the capital ranges have been reiterated. Within the overall expenditures so far, is there any sort of additional insight you can provide on directionally what's coming ahead of expectation, what's coming below? Just kind of giving us some insight on some of the inflation or perhaps even maybe deflation trends you're seeing on the line items.

As we fulfill our commitments and finalize our contracts, we are not encountering any significant deviations from our initial budgets. We have set aside some contingency funds for certain situations, and in some areas, we've actually recaptured some of that contingency. Given the level of engineering work completed by the time we made our construction announcement, and the fact that many agreements were pre-negotiated, we have not experienced many surprises. What remains uncertain are the volume variances related to earthmoving. We have already commenced major earthworks for the tailings and the plant site, as shown in the photos, and we will soon begin work on the pit. We are not particularly concerned about volume variances in the pit. However, we expect to complete most of the foundational work in the tailings area by the end of summer this year. Overall, as we navigate through the project, things are proceeding as planned. There are minor variances, but nothing has raised material concerns either way. This is largely because of how advanced the project was at its launch, which is a similar approach we are applying for Boto as we progress.

Got it. Okay. And then, maybe last question on Gosselin and looking at the opportunity there for the resource in the second half of the year. Assuming that, that turns out to be as expected in larger contribution to resources and perhaps reserves, would that result in any potential scope changes for the project? I know there's obviously some constraints on tailings. But is there anything maybe between today and actual first production where you would look at leveraging what that opportunity could be in the mine plan?

It's a great question, Josh, and we've definitely considered it. That said, our main focus is on executing the project we've outlined. I can confidently say that the design of the plant includes a potential future expansion of about 20%, which is already incorporated into the layouts. We aren't planning on that expansion right now, but it's something we will consider. Another aspect where Gosselin might be relevant is in the production and grade profile for Cote throughout the mine's life. We expect a solid six or seven years of relatively high grades, followed by a period of lower grades in the production cycle. We're still assessing what Gosselin might offer, but if it has a similar grade distribution, particularly with some higher-grade areas near the surface, we could potentially use those higher-grade materials from Gosselin to offset the lower grades during that dip. Those are the two main influences we see from Gosselin, and while we are evaluating them, our priority remains on executing the project as planned.

The next question is from Anita Soni from CIBC World Markets. We're still assessing what Gosselin looks like. However, if it has a similar grade distribution and particularly if there are higher-grade areas nearer to the surface, we might have the chance to use higher-grade materials from Gosselin to fill over that valley if the opportunity arises. Those are the two main impacts we anticipate from Gosselin, and we are currently evaluating it, but we are primarily focused on executing that project as it stands.

First question is regarding Saramacca. There was some commentary in the release last night about the grades from Saramacca. Can you provide some insight into what’s happening there? Q4 was a bit lighter than I expected. Overall, how can we anticipate the situation evolving into 2021 for both Saramacca and Rosebel?

Bruno?

In 2020, while we were developing the Saramacca project, we accessed the first ore packets that consisted of lower-grade material. The initial mineralization blocks are indicating a grade below average. We anticipate that in 2021, the grade will approach the average for the deposit and should continue to improve over time, positively impacting overall gold production. The same applies to growth at Rosebel. For our other pits, we have some stripping to catch up on that was supposed to occur in 2020 but will now be completed in 2021 due to reduced capacity with our mining crew. Following that, we expect to see an increased grade for Rosebel as well after a couple of years.

Okay. So was that in line with your expectations regarding the first few packets? Or is that what the block model is predicting? Or was that something else?

So far, it has reconciled very well, and we are somewhat satisfied with what we are seeing right now. Again, it depends on the pit sequencing and also the position of your shovel. Additionally, at this time, we don't have any surprises for Saramacca.

Yes. The topography of Saramacca began in the southeast at the highest point of the deposit, and we observed that the grade improves slightly as you head towards the Northwest or west Northwest. As we continue mining down the sequence and accessing further west, we expect those grades to increase. Overall, the reconciliation for Saramacca has gone very well.

Okay. And then just still on Saramacca, a bit more about the more about the reserves and resources. I noticed in the M&I category, there are some higher-grade materials. Is that the underground, and that's why it's not in reserves right now?

We haven't included any of the underground in our resources. There is a higher-grade zone closer to the northwest that we'll be mining, but we haven't accounted for any underground resources yet.

Okay. So that pocket that was like a 3.8 gram per tonne material. Is there a reason why it's not in the reserves right now?

I need to get back to you on that. I'm not sure if Craig or Bruno have any insights to share.

Yes. I think just to clarify, resources have been calculated at 1,500, and the reserve shells have been set at 1,200. It's really about understanding the stripping ratio and the assumptions used at that time. However, we can check back with Anita for more details on that.

So that makes sense. Yes.

It does make because it might be getting down into those underground zones, even with a pit at that higher price.

Got it. Okay. Regarding the reserve resource update you mentioned, you typically have a strong track record of reserve replacement, nearly a decade long. Given that COVID affected everyone this year, could you explain why reserve replacement was nearly nonexistent? Was it primarily a timing issue, or were there factors that hindered the conversion of resources to reserves or the drilling process? Or was it simply due to insufficient drilling this year?

Originally, we intended to provide more comprehensive updates on reserves and resources at the sites. We did scale back our drilling programs in 2020 due to COVID and camp capacity issues. So, it primarily comes down to us gaining a clearer understanding of where those reserves and resources are. That said, we have resumed those programs and expect to deliver a clearer picture this year. We are also assessing our mining sequences and related factors. I think it's important to mention that we have maintained a $1,200 gold price for reserve definition mainly to safeguard cash flows during the construction phase for Cote and eventually Boto. However, for the shorter life assets, we will at some point need to consider the gold prices we apply, as there is certainly more gold available at Essakane and Rosebel that could be accessed if prices were higher.

Okay. And last question for me is with respect to the special unity levy, is that what they're calling it in Suriname, so that's your best understanding is that that's just for this year, and it will expire into 2022?

That's the way it's been written. It's for this year. And we're still in discussions with them as to how that applies.

Okay. And that's as a result of COVID? Or was there some other precipitator for that?

No. I think the new government coming in, the treasury was in a bit of a mess. So they've done a lot of work on refinancing the country and trying to get things straightened out. Several years of lower gold prices and oil prices hadn't helped them. I think they're just trying to put the house in order. The reason it's relatively temporary and something that a lot of developing countries don't have is they recently had a significant oil find in Suriname. The expectation is that as that gets developed over time, it will significantly change the finances of the country. So it's a short and medium-term issue more than a systemic long-term issue for them.

The next question is from Tanya Jakusconek from Scotiabank.

I just wanted to circle back to Westwood, and I appreciate some of the information on what's happening there with the geotechnical drilling and logging and trying to assess the other parts of the mine and the impact. Just a question for when are we going to get some more clarity for the longer-term outlook for this mine? We're obviously waiting. We've had a change in sort of the mine plan, I guess. We are now looking at more satellite deposits being supplemented to the production profile. So when are we going to get an update on the long term?

Bruno?

Thank you, Gord. We issued the 43-101 report last August, which included not only derisking some mineral areas but also new mining methods. We strongly believe that these new methods will be crucial for the future success of Westwood. The seismic event occurred in an area developed in 2016, which is now nearly mined out. For future development and extraction, we will depend on these new mining methods, which are still part of our plans for 2021. I want to emphasize that the conditions seen during the seismic event on October 30 are not present in the other areas with previous development. Once we have verified this and can restart operations, we will update our life of mine, incorporating the new mining methods, and will publish this information. We expect to provide a clearer forecast for the longevity of Westwood in the upcoming quarters. The Longueuil stop will certainly assist us by reducing constraints in the mining zone. We have engaged many experts from around the globe to work on the Westwood plan, and we are confident that these new mining methods will enable us to maintain a more predictable, safe, and sustainable mining operation. We just need to ensure we conduct our checks and balances with the geotechnical data before resuming operations, and afterwards, we will implement these new mining methods in the undeveloped zones. There are still many other areas to develop that will also use the new mining practices and stock sequencing.

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

Thank you very much, Sachi, 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 first quarter 2021 conference call in May. Goodbye.

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