Iamgold Corp Q1 FY2021 Earnings Call

Thank you very much, Ariel. And welcome, everyone, to the IAMGOLD first quarter 2021 operating and financial results conference call. Joining me today on the call are Gordon Stothart, President and Chief Executive Officer; Daniella Dimitrov, 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 thanks for joining us. I hope everyone is happy and healthy in these challenging times. I'd like to start by saying how pleased I am to introduce Daniella Dimitrov as our new CFO. Daniella joined us at the end of March, upon the retirement of Carol Banducci, who had been with IAMGOLD for almost 15 years. I'm sure that Daniella is well known to many of you as a seasoned executive involved in our sector, with experience in the investment, corporate, and banking components of the mining industry. I'm very happy that she's agreed to join us, bringing her wide skill set to further enhance our strong executive and finance teams, as we move forward through this exciting growth phase we're in. Now let's get into an overview of our first quarter of 2021. At the corporate and strategic level, IAMGOLD generated $89.5 million in mine site free cash flow during the period with adjusted earnings of $6 million, or $0.01 per share. On our balance sheet at quarter-end, we have $968 million in cash and approximately $1.5 billion in total liquidity, which fully funds our construction plans. For each of our sites, we have continued our proactive management of COVID-19 with rapid response and strict protocols, some of which I will expand on in a moment. We continue our comprehensive community engagement programs including funding the infrastructure improvement projects through the Rosebel Community Fund in Suriname, and starting the planning for Phase 2 of the Burkina Faso Triangle d'eau project to bring much-needed potable water to the communities around Essakane in Northeastern Burkina. The board has amended its renewal and diversity policies targeting the average tenure of the board to be 10 years or less, and 30% or better female representation. Additionally, the policy has been adjusted to limit the board chair and each committee chair to a maximum tenure of 10 years in their respective roles. From an operations and growth perspective, we continue to execute our growth plan with Cote construction well underway and advancing rapidly, achieving 18% overall completion at quarter-end. Overall completion is a composite metric accounting for progress on all aspects of the project including engineering, procurement, fabrication, construction, and commissioning. At Essakane, we delivered strong operating performance and have completed the CIO upgrade project. At Rosebel, our first quarter of the year was impacted by heavy rain and camp capacity restrictions. However, we expect a much stronger second half with the completion of the camp expansion in Q2 and as we move past the rainy season. At Westwood, we continue to take a cautious approach, targeting a safe restart of the underground operations in the second half of the year, following a decision point this quarter. Additionally, we are advancing our development pipeline by de-risking the Boto Gold project, continuing delineation drilling at the Gosselin target near Cote, and advancing exploration work targets, including at Nelligan and in the Bambouk district. Bruno and Craig will provide some additional details on all of this activity shortly. IAMGOLD is committed to achieving high standards in environmental, social, and governance practices, which reflect our long-held Zero Harm vision. In the first quarter, we committed to investing $950,000 in a four-year Giants of Africa program, aimed at encouraging youth development through sports in Burkina Faso, Senegal, and Mali. We also joined a few of our like-minded companies in sponsoring the Artemis project, which aims to promote female business owners and entrepreneurs in the mining sector, including innovative and award-winning social and natural scientists. We applied $400,000 in funding from the Rosebel Community Fund towards solar LED streetlights for public security, electrification, and potable water supply in the communities around Rosebel and Saramacca. We continue our public-private partnership with Canada's government, the One Drop Foundation, and Cowater on the Triangle d'eau project by completing Phase 1, which provides potable water to 60,000 people in Essakane and advancing Phase 2, which aims to bring potable water to an additional 75,000 people. We are humbled to receive recognition for our efforts, ranking 10 out of 116 global mining companies reviewed in the Corporate Knights 2021 Global 100 Sustainability Scorecard. IAMGOLD has been recognized for a third consecutive year as part of Bloomberg 2021 Gender Equality Index among 380 global companies fostering a more inclusive workplace. We received the Mining Association of Canada's prestigious Towards Sustainable Mining Excellence Award in the Environmental category for innovative recycling of plastic at Essakane. Essakane recognized in 2010 that there was a need to enhance its plastic waste management, particularly as there were no recycling facilities in the region, which meant public and plastic waste had to be buried. Working with local entrepreneurs, Essakane has been able to recycle rather than bury plastic while supporting local businesses and creating jobs with over 65 tons recycled to date. On behalf of the whole company, I offer our congratulations to the Essakane team on their well-deserved recognition. COVID-19 health and safety protocols are embedded in our operations and projects. These protocols are continuously adapted and enhanced. In the quarter, Essakane implemented additional measures, including thermal screening of all personnel and visitors entering the mine site and the Ouagadougou office. The 20-bed field hospital and medical confinement house established in Ouagadougou in 2020 remains available to accommodate any future COVID-19 cases. At Westwood, in addition to existing protocols, random antigen testing was implemented on site to further protect the workforce against COVID-19. At Rosebel, following the increase of COVID-19 cases in the country, there was a temporary suspension of daily commuting by employees during the quarter, with off-site employees required to remain at the site during their shift cycle. To enable mining capacity to increase the full site complement while respecting COVID-19 protocols and accommodating the workforce, Rosebel added 150 beds to the camp in the first quarter, with an additional 210 beds expected to be completed in the second quarter. At Cote, in addition to existing protocols, a combination of PCR and antigen testing for all personnel and visitors entering the site has been established. Furthermore, mandatory antigen testing at the Sudbury and Timmins bus terminals has been implemented to detect COVID-19 cases before there is an opportunity for contact as personnel board the bus. COVID-19 related community activities include financing the Suriname Bureau of Public Health cooling system of the Central Laboratory, which provides critical testing capacity for HIV, malaria, influenza, tuberculosis, and, more recently, COVID-19. Funding was provided through the Rosebel Community Fund and the Suriname Environmental and Mining Foundation, funded wholly or partly by Rosebel. Additionally, IAMGOLD contributed $250,000 to UNICEF to support the international ACT A/COVAX Emergency Vaccination Response effort in West Africa. Now looking at our operating results. In the first quarter, attributable production was 156,000 ounces. Total cash costs were $1,052 per ounce produced, and all-in sustaining costs were $1,238 per ounce sold. Additionally, capital expenditures, including both sustaining and expansion expenditures at our operating sites, as well as capital spent at our construction and development projects, were just over $102 million in the quarter. We've included a few bar charts to provide a comparison of results over time. Attributable gold production was low compared to recent quarters due to the heavy rains and COVID-19 restrictions impacting Rosebel, as well as Westwood's reliance on open-pit feed following the cessation and suspension of underground activities. Total cash costs have increased in the quarter due to the lower production base. All-in sustaining costs were a bit lower in the quarter, primarily reflecting lower sustaining capital spend. Operating capital expenditures were also relatively lower in the quarter due to lower capitalized stripping at Essakane and impact of the rainy season and COVID restrictions at Rosebel. In the quarter, we made good progress in a number of areas while experiencing some setbacks in others. At Essakane, the mill optimization project was completed, with expected improvement in hard rock ore processing capacity over the balance of the year. The site is working on optimization following the upgrade. At Rosebel, we achieved approximately 85% of mining capacity by the end of the quarter, with Saramacca, non-critical path infrastructure work ongoing. At Westwood, we announced a couple of weeks ago that we have started recalling our underground employees for rehabilitation work underground and training in April. We expect to make a decision this quarter on a second-half restart of the mine. At the Cote Construction project, we have commenced major earthworks ahead of our target schedule and continue to expand the construction camp. Bruno and I had a COVID-safe visit to Cote a couple of weeks ago, and I'm very excited about the progress that I saw. We have continued to progress the access road construction and project infrastructure de-risking work at the Boto project, and exploration resource delineation work continues at Gosselin, where we are targeting a maiden resource later this year. Finally, we have ongoing resource delineation work at Nelligan, the Rouyn project and the Fayolle property in Quebec, Diakha in Mali, and the Karita discovery in Guinea. I will now pass it over to Daniella to review our financial results.

Thank you, Gord, and good morning everyone. I'm very pleased to be joining IAMGOLD at such a transformational stage of the company. With my diverse background and experiences, I am confident I will add value. I look forward to working alongside the entire team to successfully drive the company to the next major milestone: 1 million-plus ounce producer at all-in sustaining costs of less than $1,000 per ounce by 2024. The following are key highlights of our first-quarter financial results. We generated revenues of $297.4 million, down from the previous quarter due to lower sales and lower realized average gold price of $1,781 per ounce. Earnings were $19.5 million or $0.04 per share, and adjusted earnings were $6.2 million or $0.01 per share. We generated $89.5 million in mine-site free cash flow, reflecting lower operating CapEx this quarter. In terms of our financial position, we ended the quarter with cash and equivalents of $967 million, benefiting from net VAT inflows of $36 million at Essakane and the net proceeds of $36 million from our non-core royalty portfolio sale. We maintain a largely undrawn credit facility of $500 million, resulting in total available liquidity of approximately $1.5 billion at quarter-end. In the quarter, we extended the term of $490 million available under the credit facility to January 31, 2025. Subsequent to quarter-end, we entered into a new gold sale prepaid arrangement for 50,000 ounces at $1,753 per ounce and a cost of 4.44% per annum. We will receive a prepayment of $80.3 million in equal monthly payments in 2022, with the obligation to physically deliver such 50,000 ounces in equal monthly installments in 2024. This transaction effectively rolls one-third of our obligation to physically deliver 150,000 ounces under the 2019 prepay from 2022 to 2024 after Cote is in production. Looking forward, sales are expected to improve with stronger expected production in the second half of the year at Rosebel and Westwood. Unit costs are expected to trend down in the second half of the year, driven by higher production and sales, potentially offset by some cost pressures on energy and supplies, along with continued strengthening of the Canadian dollar and euro. CapEx is expected to trend up for the balance of 2021, reflecting increased activity at our operating sites, Cote Construction, and Boto de-risking. Taking a closer look at our cash flows in the quarter: cash inflows from operating activities reflect earnings after adjustments and before changes in non-cash working capital of $87.3 million, partially offset by $7.5 million in income tax paid. The inflow from working capital of $19.2 million benefited from cash received from the Essakane VAT refunds, partially offset by the timing of payments of approximately $13 million. Net cash used in investing activities of $63 million reflects $102 million CapEx spend, partially offset by the cash received from the royalty sale. Please note that an additional $10.5 million was received from the sale in April as the final payment. Net cash used in financing activities of $14.2 million reflects payments for financing cost, leases, and loans as well as dividends to minority interests. Our cash position was $970 million at quarter-end, with net cash at $436 million and total available liquidity of almost $1.5 billion. Our senior notes mature in 2028. Our financial position combined with mine site free cash flow, continuous improvement at our operations, and a disciplined management of our growth pipeline supports the transformation of IAMGOLD into a lower cost, higher margin million-ounce producer in a few years' time. I will now pass the call to Bruno to discuss operations.

Thank you, Daniella. I'm happy to report that we started the first quarter of the year with our safety performance metrics tracking better than target levels. Our DART and PRI rates were 0.46 and 0.67 respectively, per 200,000 hours worked. We continue to implement several initiatives, including I am safe, the revamped health and safety management program to promote a safe work environment. I will now review operating performance at each site in turn. At Essakane, attributable gold production was 120,000 ounces for the quarter. Production reflected above plant grades due to complex ore, partially offset by lower gold recoveries on the same material. We have completed the mill optimization project with an anticipated 10% improvement in hard rock processing over the course of the year, from annualized 10.8 million tonnes to 11.7 million tonnes. This improvement in capacity is important as this site moves to greater volumes of transition in hard rock versus softer ore in the coming years. All-in sustaining costs for the quarter were $1,061 per ounce sold, reflecting lower sustaining capital. Looking forward to the balance of the year, production remains on track relative to guidance, and we expect higher capital in the second half of the year due to the initiation of strategic pushbacks. At Rosebel, attributable gold production for the first quarter was 47,000 ounces, impacted by lower grade stockpiling and lower throughput caused by unusually high rains. At Saramacca, we still experienced lower grades due to mining at the edges of the top of the deposit in some areas. The community bypass road, part of the Saramacca infrastructure program, was completed in the quarter. All-in sustaining costs at Rosebel were $1,450 reflecting lower sales on this lower production. With the ramp-up of accommodation, as Gord mentioned earlier, we expect to reach normal capacity in the second half of the year. To generate increased recoveries, we have started the engineering and procurement process for the adsorption disruption and recovery project. At Saramacca, completion of non-critical infrastructure work has been rescheduled, and the project is now slated for completion in the fourth quarter due to lodging restrictions. Finally, we have been progressing negotiations on the collective labor agreement, and these efforts continue into the second quarter. Westwood produced 7,000 ounces in the first quarter of 2021, with the mill processing equivalent ounces this quarter while the underground remains in care and maintenance. The business continuity assessment is ongoing, including geotechnical engineering work. All-in sustaining costs for the quarter were $1,187 per ounce sold, lower quarter-over-quarter due to lower sustaining capital level. In April, we announced the recall of underground employees for rehabilitation work and training. A decision to restart the underground operations is under consideration in the second quarter, after which we would anticipate the restart at Westwood in the second half of 2021. The restart would target lower seismicity extraction zones starting with the E zone. We are advancing the final study to assess the potential of the asset in the Westwood hub and spoke concept. Work on this includes further engineering and permitting. I will now provide an update on our construction project Cote Gold. This slide highlights the key metrics that we believe make the Cote Gold project a tier one asset. Cote has an 18-year mine life under the extended case, almost 500,000 ounces per year of production in the first five years, and all-in sustaining costs of $770 per ounce sold, and Cote is located in a mining-friendly Ontario with access to experienced labor in close proximity to key infrastructure. The first quarter was a busy one at Cote. As of March 31, detailed engineering for Cote has advanced to approximately 18% project completion. Procurement and expediting of major equipment contracts are progressing. The contract for the mining fleet was awarded in the first quarter, securing pricing of major items as part of early works has helped mitigate pricing pressure. However, we remain cautious given recent copper and steel price movement. The project incurred $67 million in the quarter and $143 million since July 1, 2020. In the first quarter, the team started major earthworks ahead of the milestone schedule and focused on whole widening and overburden stripping. We commenced water management infrastructure for the tailings management facility and set up temporary camps, with the construction of the permanent camp underway. From a health and safety perspective, to date, we have not experienced any impact on the schedule due to COVID-19. For the balance of the year, we will focus on earthwork construction, road construction, initial open pit pre-stripping, and water management infrastructure around the pit. We aim to commission a portion of the permanent camp in the second quarter and fully commission the final camp in the third quarter. Civil works are also underway at the plant site, with concrete activities expected to start in the second quarter as planned. This slide summarizes our progress to date. We remain on track, and we are working steadily to meet our time and cost targets. We look forward to providing you with our quarterly updates as we progress the project.

Thank you, Bruno, and good morning, everyone. Before I begin, please note that the results I discuss today have been previously disclosed in accordance with securities regulations and signed off by qualified persons within the company reporting. In the quarter, our brownfield exploration work included drilling at Essakane and an air core drilling advancing program to help screen the sand-covered area, which we refer to as DEM for potential targets located northwest of the Essakane operations and within hauling distance. Results will be used to guide the planned pole of drilling program expected to commence in the second half of the year. At Rosebel, the team completed approximately 13,300 meters of diamond and RC drilling, focusing on resource development and conversion of known deposits, as well as targeting selected high-priority targets within our exploration concession. At Westwood, surface drilling focused on operating inferred resources at the Grand Duc satellite pit, while underground drilling focused on supporting the potential restart of underground mining operations. Greenfield exploration in the quarter included the reporting of assay results from the Gosselin zone at the Cote gold project from an ongoing delineation drilling program, which will support an initial resource estimate expected in the second half of the year. We are also moving forward with further drilling at the Lac Gamble zone at the Rouyn gold project in Quebec, to support a future maiden resource estimate, as well as the reporting of assay results from a drilling program completed at the new zone. We initiated infill drilling at the Diakha deposit in Mali, located south of the Boto Gold's development project. Exploration spending in the quarter was $10.4 million, roughly split evenly between brownfield and greenfield programs. On this slide, you can see a few assay results reported during the quarter at the Gosselin zone, where growing continues to intersect wide zones of mineralization with locally high grades. Over the balance of the year, the Greenfield exploration budget for the Cote district is $2.8 million, reflecting approximately 13,000 to 16,000 meters of planned diamond drilling, which includes 12,000 to 14,000 meters of delineation drilling on the Gosselin zone itself. We are targeting a maiden resource for Gosselin in the second half of the year. At the Boto gold development project in Senegal, we continue to make progress in de-risking the project. We have advanced the construction of year-round access roads and permanent camp construction, with the award of a camp contract during the second quarter. Geotechnical and hydro-geological assessments are underway to refine the mine facilities and pits design. Plant detailed engineering has advanced to 75%. COVID-19 restrictions have eased somewhat since the first quarter, allowing work on site to progress with appropriate protocols in place. Our development capital guidance for the year reflects the early works package, which includes completion of the year-round access road and an airstrip, engineering for critical plant equipment, and the implementation of local sustainability programs. We've included a few pictures here of the access road, campsite, and bridgework on the slide. The Boto gold project anchors the Bambouk district, where exploration efforts have led to several additional discoveries, building on the resource potential in this part of the Senegal Mali shear zone. Infill drilling has commenced at the Diakha deposit in Mali with two diamond and one RC rig currently operating. The program is designed to upgrade additional inferred ounces, while at Karita, in Guinea, a diamond drill rig is on site and will commence an initial delineation drilling program to support a future maiden resource estimate. We've updated this slide to show industry reserve trends over the past few years, but also indicated resource trends. The story unsurprisingly is the same; our industry has been on a steady decline since 2012, which represents a significant challenge to maintain future production levels. Finally, I will recap our project pipeline. As I've said many times previously, competition for access to quality exploration projects and acceptable entry costs remains challenging for the industry, especially in the face of current bullish gold prices. At IAMGOLD, we believe that a balanced project pipeline strategically advanced is a fundamental asset to the future growth and viability of any mining company. As such, IAMGOLD continues to invest in a healthy pipeline of early to advanced greenfield exploration projects to support future growth, as well as near mine brownfield exploration programs with a view to extend the mine life and leverage our existing infrastructure. I will now pass the call back to Gord to conclude.

Well, thank you, Craig. In the first quarter of 2021, the IAMGOLD team made good progress towards our operating and development goals. With the normalization of operations and continuous improvement, we expect to see better production levels and costs over the balance of the year, and continue to steadily advance our development projects and pipeline. We look forward to continuing our quarterly conversations with you on performance and cash generation from IAMGOLD's operating mines, on construction progress at Cote and de-risking progress at Boto, as we realize our transformational growth strategy and our exploration and development pipeline news, as we set the business up for the long run. On an editorial note, I'd encourage everyone to get your vaccines as soon as you can. If you haven't already done so, it's important for the safety of us all as we get the world restarted. Thank you to everyone for joining our call today. I will now pass the call back over to the operator, who will be happy to answer a few questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Fahad Tariq of Credit Suisse. Please go ahead.

Hi, good morning. Thanks for taking my two questions. Maybe first on Cote Gold and the spend for the rest of the year. You mentioned, I think you used the word cautious on some of the cost pressures you're seeing on copper and steel, maybe even timber. Can you talk a little bit about the potential risk to the CapEx spend this year? Like how much higher could it be? How much has already been locked in in contracts already? Any color there would be helpful. Thanks.

Thanks very much. So look, we're having a good hard look at all of our costs right now. We don't see a significant vulnerability for this year or for the rest of the project. However, steel prices have moved up, as well as concrete, and there are some general inflation pressures on labor costs for construction. Currently, over 50% of the total spend is already locked up in term contracts. Some of those are unit price contracts or cost-plus contracts. So there is still some exposure to inflation, but not huge. As we move towards the end of this year, we're going to have a very clear picture of where the total cost spend is going to go. I think we're comfortable that there's nothing coming at us that provides too much concern for us regarding costs, other than some minor aspects of what we're looking at. Additionally, 85% of the total costs at Cote are Canadian-dollar-based. We have done quite a bit of hedging and have a lot of Canadian dollars in the bank to support that. I think we're covered over 70% of our Canadian dollar exposure for 2021. However, the Canadian dollar does continue to strengthen, and we look at it regularly.

Okay, great. That's helpful. And then maybe just switching gears on the labor agreement negotiations at both Rosebel and Essakane. Any updates on how - maybe it's too early for Essakane. But maybe how Rosebel is proceeding? Any potential hurdles?

Look, Rosebel is very near the end of the process. We have a presentation into the board, and they are looking for ratification in the coming couple of weeks here. So we do hope that the Rosebel situation will clear up here very, very shortly. Essakane is just entering into their process. I think it's been two or three years since they last negotiated, so that one's still ahead of us. With all of these projects, we start that work very early and initiate discussions to ensure alignment on issues to be talked about. But I'm certainly hoping that Rosebel shakes out sooner rather than later.

Our next question comes from Anita Soni of CIBC World Markets. Please go ahead.

Good morning, everyone. My first question comes on Cote? Could you just give me an idea of, when you're measuring the 18% completion? What basis are you using dollars or units of production?

So the 18% of total project completion is a composite measure. It incorporates a weighted average score between engineering, procurement, construction, commissioning, and fabrication. Each of those components is weighted, with construction being the biggest component but not the only one. Each metric is measured under different KPIs. Construction is based on construction spend, procurement is based on advancement towards schedule, and engineering is based on hours. So each component has a different weighting. I don't want to give anyone the impression that the spend versus advancement can be extrapolated to final costs. What’s different about Cote compared to other projects, is that because engineering and procurement were so far advanced compared to traditional project execution models, we are seeing additional value in that 18% metric due to that advancement.

Thanks. Switching to some operations. So on Westwood, I noticed you guys said you were focused on remediation and training. Does that mean that, maybe there's not as much focus on pulling ore and putting it through the mill in Q2?

With respect to Westwood, what we said is we want to get underground. There's some rehabilitation, training, and new development protocols we want to implement. Right now, we're working internally to reach a decision on when to start pulling the work. Our guidance estimate contemplates that ore production from underground will start relatively early in the second half. So we're not pulling ore right now, but it shouldn't be too long before we get there assuming we reach the go-ahead internally.

So then, do you feel it would be similar grades for Q2?

Bruno, could you help with that?

Yes. I think there will be similar grades, around one gram per tonne. Also, what's interesting with Grand Duc is that we have increased the amount of reserves. We have more than 50,000 ounces additional than when we first started the project. So Grand Duc is going to help Westwood complement its production over the next two years.

And then my last question and I'll leave it for others, is Rosebel. So could you give a little more detail on that one? You had some rain in Q1. I'm looking at one of my weather maps. Q2 is your traditional rainy season. So could we expect similar types of softness in the throughput levels and in the grades? I noticed the mill did well, but it seems like there were some stockpiles that you were pulling from. Can you give us an idea of what the stockpile level is to help gauge where Q2 will end up?

Bruno?

Yes, Anita, you're right. Rosebel experienced an unusual amount of seasonal rain. Normally, it starts in Q2, but there was a smaller season in Q1. This year, we had twice the volume compared to the same period in 2020. Consequently, we were limited in terms of rock all-in capacity. The material added moisture content, which forced us to rely on lower-grade material from the stockpiles, as you mentioned. These stockpiles are at elevated numbers. For now, I don't have the precise number, but it’s certain that as we progress through H2, the rainy season will subside and we will have additional capacity to increase our mining. Right now, with COVID restrictions, we have to limit the number of people on-site for social distancing, so with the additional capacity and the seasonal rains subsiding, we forecast an increase in production and better grades in Q4.

Yes. Good morning, everyone. Thank you for taking my question. Following up on Anita's question regarding mine performance. In particular, Essakane, that had very high costs in Q1. Bruno, can you talk us through what you're expecting cost-wise as we go through the rest of the year?

Certainly. Sorry, Tanya! Yes, we had cost increases due to the higher consumption of reagent due to the complexity of the material that we have in Phase 3. The Phase 3 material is high-grade, higher than what we forecasted. Although, the recovery on some complex ore requires more consumption of reagent. We were also impacted by higher energy costs and higher royalties due to the higher realized gold price. For the remaining year, we expect to remain within guidance. Additionally, we had maintenance activities in Q1 that won't be repeated in the coming quarters, so we expect costs to revert to our target planning for Essakane.

So just on Essakane, is it safe to assume that due to maintenance and factors like these, we would see a bit of relief in the cost structure for Essakane going forward?

Yes. It’s going to depend on various parameters, such as fuel prices and whether we continue with high-grade material in Phase 3, which impacts our reagent consumption. We expect strong production for Essakane in 2021 and overall a good performance in terms of cost, but that depends on fluctuations in inputs.

Maybe just overall, is it correct to think that Q2 will be similar to Q1 from a production standpoint, with a better outlook in the second half of the year, potentially a stronger Q4 due to Saramacca?

I think that’s a pretty safe way of looking at it, Tanya. We will see a rebound in Q2 from a couple of things, but overall, I think your assessment is fair.

Gordon, regarding the inflationary pressures, you mentioned copper, steel, and concrete. Labor is a big part of the cost structure. Should we expect costs to go higher in the next few years due to labor agreements? Can you provide insight into the wage inflation we’re seeing? Is it about 3% to 5%?

Your numbers aren’t bad. They’re more or less accurate, though I can’t share the exact figures as we don't have everything finalized. The cost estimates and guidance are based on expectations of some increases, and we are within those estimates currently. The guidance you see for this year already incorporates higher labor costs. When I referenced higher costs earlier, I was specifically relating to construction labor costs for Cote. While there are some inflationary pressures, we will see improved production at Westwood and Rosebel in future years, which will more than offset the cost inflation on the labor side.

Okay, that's good to know. Lastly, I didn't see any updated mine plan for Westwood. Where do things stand on that?

Assuming a favorable decision to move forward, we expect to release our mine plan for the next couple of years later this year. We want to gather empirical information from the underground restart on some of the new development design we’re putting in place. We look to utilize a bit more remote equipment as well. Our expectation is we will be able to provide a multi-year short-term plan later this year and revisit the overall after that.

Great, I appreciate that. I'll hand it over to someone else.

Good morning, everyone, and thanks for taking my questions. I want to start with Cote. Usually, the civil side of things is challenging to gauge. How is that coming along, Gord and Bruno? Is the earthworks and civil construction proceeding as expected?

Generally, the civil work is coming along as expected. We have encountered slightly less overburden and more rock in a few areas, which has changed the mix a bit. However, actual progress looks really good. Bruno and I visited the site a couple of weeks ago and were very impressed with the progress, especially since I hadn’t been there in about seven months. Overall, we’re not getting surprises; the project is following the recipe we laid out for ourselves, and we're excited about its direction.

You're not finding situations where the mill footings have 30 feet of extra shifts?

Actually, it’s the opposite; the overburden was shallower in most places than we anticipated.

Could you touch on your lease costs of $120 million versus $80 million? Can you provide some color on that?

When we originally set the project, our expectation was to lease just around the mining fleet. As we progressed, we found opportunities to lease additional equipment, specifically for camp and related uses. From a payback perspective, it's much better to lease these items rather than having the costs upfront. Thus, we are exploring additional leasing agreements for various components, which is factored into the current estimate.

And how does the mining fleet cost for the lease compare to what you initially expected?

The total cost of the mining fleet, we haven't finalized all orders yet, but our largest order was placed last month. The costs are about 1% or 2% below our initial capital estimates for the mining fleet, so overall it has aligned well with our plan.

At Saramacca, the grade wasn't particularly stellar. Can we get a bit more detail on how grades can improve over the year?

I'll let Bruno answer that.

At this early stage, we're mining at the edges of the deposit, so grades are lower than average. As we access more of the heart of the deposit, we expect grades to improve significantly, eventually aligning with our block model’s average grade.

Additionally, the present reconciliation versus the block model shows positive results, indicating this is a sequencing issue.

That's great to hear that you have positive reconciliations. What about security at Essakane?

For Q1, we were not impacted by security issues at the mine. The region is stable, and we continue to implement increased security measures and protocols while monitoring the situation closely.

Thank you, guys.

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

Thank you very much, everyone, for joining us this morning and for your continued interest in IAMGOLD. We look forward to having you join us again for our second-quarter 2021 conference call in August. Goodbye.

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