Iamgold Corp Q2 FY2024 Earnings Call

Thank you, operator, and welcome everyone to the second quarter 2024 operating and financial results conference call. Joining me today on the call are Renaud Adams, President and Chief Executive Officer; Maarten Theunissen, Chief Financial Officer; Bruno Lemelin, Chief Operating Officer; and Tim Bradburn, Senior Vice President, General Counsel and Corporate Secretary. We are joining today from IAMGOLD's Toronto office, which is located on Treaty 13 territory on the traditional lands of many nations, including the Mississaugas of the Credit, the Anishnabeg, Chippewa, Haudenosaunee, and the Wendat peoples. At IAMGOLD, we believe respecting and upholding Indigenous rights is founded upon relationships that foster trust, transparency, and mutual understanding. Please note that our remarks in this call will include forward-looking statements and refer to non-IFRS measures. We encourage you to refer to the cautionary statements and disclosures on non-IFRS measures, including the presentation and the reconciliations of these measures in our most recent MD&A, each under the heading, Non-GAAP Financial Measures. With respect to the technical information to be discussed, please refer to the information in the presentation under the heading, Qualified Person and Technical Information. The slides referenced on this call can be viewed on our website. I will now turn the call over to our President and CEO, Renaud Adams.

Thank you, Graeme, and good morning, everyone, and thank you for joining us. It was another exciting quarter for IAMGOLD with the first full quarters of operations at Cote, and another strong operating performance from Essakane and Westwood, putting us in a position to increase our overall guidance for the year. At a high level, I believe this quarter begins to paint a picture of what IAMGOLD would ultimately look like. Cote Gold is now ramping up, providing for a higher production base, a lower cost profile, and shifting the density of our value to Canada. At a steady run rate, Cote Gold will be among the largest gold mines in Canada and a model for modern mining done right for many decades to come. This is coupled with strong and predictable production and cash flow from Essakane and Westwood. In addition, as a company, we are seeing our financial position growing stronger quarter-over-quarter, with the potential for a significant step change in improvement next year when Cote is running at full steam and our prepaid commitments are behind us. This will position us with a clear roadmap for success, with strong free cash flow generation that will be essential to ultimately deliver the balance sheet and drive value accretion for our shareholders. In the next quarter, we continue to improve the business and get closer to our objectives. With that, we will now dive into the operating and financial results and highlights for the quarter. Starting with health and safety, IAMGOLD has continued to demonstrate an unwavering commitment to safety. At IAMGOLD, our priority is to ensure everyone goes home safely. In the second quarter, our total recordable injury frequency rate was 0.6, an improvement from the prior quarter. I want to comment and congratulate the Essakane team, which recently surpassed the record health and safety milestone of 5 million hours worked without a recordable safety incident. Reaching this milestone over such a period is a monumental achievement in our industry and a testament to the professionalism and commitment to a culture of safety among our people in Burkina Faso. Looking at our operation, on an attributable basis, IAMGOLD produced 166,000 ounces of gold in the second quarter, bringing the year-to-date production to 317,000 ounces of gold. As we will get into shortly, the second quarter production results were driven by Essakane, which operated without disruption and benefited from continued positive grade reconciliation. The continued ramp-up of Westwood has allowed the mine to benefit from the rehabilitation of the underground and the opening of new mining phases, along with the first quarter of production from Cote. The strong production and sales volume translated to cash costs and all-in sustaining costs of $1,071 per ounce and $1,617 per ounce, respectively. Furthermore, capital expenditure continued to step down quarter-over-quarter, totaling $119.7 million in the second quarter as Cote transitions into operations, setting the stage for IAMGOLD to see growing free cash flow moving forward. Regarding our guidance, the strong first half positioned the company to beat on operating guidance for the year. Accordingly, we have increased our production guidance and lowered our cost estimate for the year. On production, IAMGOLD has increased its 2024 attributable gold production guidance for Essakane and Westwood to 495,000 to 440,000 ounces of gold, up from 430,000 to 490,000 ounces previously, as both of these mines had a strong first half of the year. At Cote, we are maintaining our guidance of 130,000 to 175,000 ounces on a 60% basis, but we now expect production to come in at the lower end of this range as improvements are made to mill availability. However, we will discuss this more in detail shortly as we walk through each asset. On operating costs, the 2024 cost guidance for Essakane and Westwood combined is now expected to be in the range of $1,175 to $1,275 for cash costs per ounce sold and $1,700 to $1,825 for AISC per ounce sold. This compares to the previous guidance estimate of cash costs between $1,280 to $1,400 and AISC per ounce sold at $1,780 to $1,940. While we have lowered our cost expectations when compared to previous estimates, the updated guidance ranges are above our year-to-date performance, reflecting the outperformance we observed in the first half, as we expect grades to drop at Essakane as we enter new mining phases. Although inflationary pressures are easing, pricing for certain consumables, including cyanide and grinding media, remains in line with levels experienced in 2023. With that, I will pass the call over to our CFO to walk us through our financial results and position. Maarten?

Thank you, Renaud, and good morning, everyone. In terms of our financial position, IAMGOLD ended the quarter with cash and cash equivalents of $511.4 million, and our credit facility remains undrawn, resulting in total liquidity of approximately $915.7 million. We note that within cash and cash equivalents, $55.9 million was held by Cote Gold, and $188.2 million was held by Essakane. Essakane declared a dividend during the second quarter of $180 million for which the minority interest portion and withholding taxes were paid during the quarter. The net portion due to the Corporation of $151.9 million is expected to be paid by the end of this year, however, this is dependent on Essakane’s estimated future cash flow from operations to leave a sufficient working cash balance in the country. Any unpaid amounts will be settled during 2025. We continue to see a risk regarding our ability to recoup all of the VAT receivables. Although the company was able to sell a small amount to a local bank in Burkina Faso during the second quarter, the company still has considerable obligations and factors that will influence our liquidity during the next 12 months. During May, the company completed a broad deal equity financing for aggregate gross proceeds of approximately $300.2 million, or $287.5 million net of fees. The company intends to use the proceeds from the financing to partially finance the repurchase of the 9.7% interest in Cote Gold from Sumitomo on November 30, 2024, with the difference funded from available liquidity. Additionally, the company has to deliver 150 ounces under its gold prepay arrangements from July 2024 to June 30, 2025. The prepay arrangements were funded at the time of entering into the agreements. The company will receive some cash payments at the time of delivering into the gold prepay arrangements based on the market price of gold at the time of delivery, as follows: for 50,000 ounces that will be delivered from July to December of this year, the company will receive the difference between the spot price and $1,700 per ounce, capped at $2,100 per ounce. For 31,250 ounces that will be delivered during the second quarter in 2025, the company will receive the difference between the spot price and $2,100 per ounce, capped at $2,925 per ounce. Lastly, the company expects to receive $84.4 million in gross proceeds in 2024 with respect to the closing of the remaining transactions arising from the Bambouk asset sales. Please refer to the liquidity outlook section of the MD&A for further details. Looking at our Q2 financial results, high production resulted in lower unit costs as our operating costs remained in line with costs incurred during Q4 2023 and Q1 2024. With costs remaining in line with prior periods, the high realized gold price resulted in higher margins and increased free cash flow. Revenues from continuing operations totaled $385.3 million from sales of 167,000 ounces on a 100% basis at a record average realized price of $2,294 per ounce. The realized price includes the impact of the gold prepay arrangements delivered during the quarter that reduced the realized price by $60 per ounce. The strong second quarter operating results, coupled with the high gold price, resulted in an adjusted EBITDA amount of $191.1 million compared to $152.5 million in the previous quarter, which is $127 million higher than the $63.8 million adjusted EBITDA number in the second quarter of 2023. Adjusted earnings per share was $0.16 for the quarter compared to $0.11 per share in the previous quarter and a $0.01 loss in the second quarter of 2023. Looking at mine site free cash flow, which is calculated as cash flow from mine site operating activities, less capital expenditures from operating mine sites, Westwood and Essakane produced a recent high of $140 million, including Westwood, which returned its second quarter of positive mine site free cash flow since the restart in June 2020, bringing its year-to-date total for the mine to $32.3 million. At Essakane, we note mine site free cash flow in the second quarter was $118.2 million, which is $81.8 million higher than the $36.4 million during the second quarter of 2023. And with that, I will pass the call back to Renaud.

Thank you, Maarten. We will walk through our operating performance at Essakane and Westwood before we dive into Cote. At Essakane, the mine reported attributable gold production of 111,000 ounces in the second quarter, up 26% from prior year periods, bringing the year-to-date total to 229,000 ounces. This was another very strong quarter of operation for Essakane and made possible by our mining operation being able to perform as planned in a quarter compounded with continued higher-than-expected grades. Mining activities totaled 11 million tons in a quarter with only 2.2 million tons of ore mined as mining worked through a higher strip sequencing of the mine, coupled with limited mining in a part of Phase 6 due to localized instability which required reinforcing and has been addressed since then. Head grades remain high at 1.46 grams per ton due to the continued positive reconciliations of grades from the reserve model as we continue to mine deeper into Phase 5. This positive grade reconciliation in the deeper portions of Essakane has been seen previously in Phase 5 and is continuing in Phase 4 as well. However, we are seeing head grades decline in line with the life of mine plan as volumes from Phases 6 and 7 increase along with an increased proportion of stockpiled ore included in the mill feed. On a cost basis, Essakane reported second-quarter cash costs of $1,081 per ounce and all-in sustaining costs of $1,481. The slight increase from the prior quarter was below our previous guidance due to strong production and gold sales. With a strong first half of operations in 2024, Essakane production guidance has been revised upwards with attributable production expected to be in the range of 380,000 to 410,000 ounces. This compares to the prior guidance of 330,000 to 370,000 ounces of gold. The mill is expected to continue operating at nameplate capacity, though at an average head grade slightly lower than in the first half of the year as per the mine plan. The cost guidance for Essakane has also been revised downward, and is expected to be in the range of $1,175 to $1,275 for cash costs per ounce sold, and $1,575 to $1,675 for AISC per ounce sold, approximately $100 to $125 per ounce improvement on both metrics due to the outperformance in the first half of the year. Capital expenditure guidance has been increased to approximately $175 million, primarily due to an increase in the strip ratio, not total tons mined, resulting in more mining costs being included in capitalized waste and equipment replacement. Essakane continues to be a significant cash flow contributor for IAMGOLD. With the current mine life through 2028, this operation has the capability to generate over $1 billion in cash flow at current gold prices. We are continuing to examine the opportunities to extend the mine life of Essakane, targeting options to ensure the safety of our teams. Turning to Westwood, I want to congratulate the team on another improvement in the quarter. As the mine continues to test new highs and quarterly volumes from underground grades and production since the mine was restarted in 2021. This improvement has meant that Westwood has generated, as Maarten noted, positive mine site free cash flow of nearly $22 million in the second quarter, bringing the year-to-date total to just over $32 million. On operation, Westwood produced 35,000 ounces in the quarter, a significant 84% increase over the prior year period, bringing the year-to-date total to 67,000 ounces. Our mines from underground continue to step up and deliver at a higher grade with 89,000 tons in the second quarter contributing to an average head grade from underground ore of 9.2 grams per ton. Mill throughput also increased in the quarter to 302,000 tons processed at an average blended head grade of 3.92 grams per ton and 92% recovery. The increase in throughput was driven by improved availability of 89% due to the ongoing maintenance program. The cost profile for Westwood continues to decline as operations improve. Cash costs averaged $1,131 per ounce and all-in sustaining cash averaged a promising $1,663 per ounce in the second quarter, continuing the trend of quarter-over-quarter cost improvement. Looking ahead, we have raised our guidance for this year, with Westwood now expected to produce between 115,000 to 130,000 ounces of gold at lower cash costs of $1,200 to $1,300 per ounce and AISC of $1,775 to $1,900 per ounce. In the fourth quarter, we will be issuing an updated technical report and mine plan for Westwood, which will provide an updated mineral resource and reserve estimate and life of mine based on the last two and a half years of mine optimization efforts at Westwood. Turning to Cote Gold, we couldn't be more impressed with the work of our teams on the ground as they brought Cote to commercial production only four months after the initial gold pour on March 31st, which was achieved within 90 days of first pre-commissioning activity. The ramp-up of Cote has seen the project hit significant milestones in its first few operational steps. We took the path of testing first the capacity of the main equipment that drives the ultimate nameplate objective, and then built availability as we ramp up. From early on, the primary components of the processing circuits—primary and secondary crushing, HPGR, conveyors, ball mill, leaching, etc.—have proven their capability to operate under their design load when provided with stable conditions. During this time, we also took the opportunity to stop and correct several deficiencies, as is usually the case in the early days of ramping up a large-scale facility. The first half of the second quarter was focused on this with the subsequent weeks dedicated to cranking up the engine, testing the stability and overall availability of the processing facility while identifying all potential limiting factors to achieving our objective of exiting the year at 90% nameplate. In early July, the team pushed the commercial production button and reached our objective 30 days later, with nameplate production of 36,000 tons achieved on August 1st as the target date. On the dry side, we can report that we are very pleased with the performance of our HPGR and believe that it will bring significant value moving forward. During the ramp-up phase, we have identified a need for improvements on the dry side in order to achieve design availability and performance. The first one pertains to mitigating the effect of abrasiveness on wear parts. The materials at Cote are highly abrasive, which was known, but the actual effects were more pronounced than expected. The availability of the crushing and screening circuit in the second quarter was somewhat impacted by accelerating wear on the liners, feeders, and chute due to this abrasiveness. The new lining materials have been identified and tested with good results in critical areas. Secondly, the continued core screening performance was also limited during ramp-up. New panel designs are being proposed. Finally, dust management was challenging in the early days, particularly in the screening building. While significant improvements have been made, further corrective action is still needed. We are testing additions of suppression systems, both water and surfactants, in critical areas with promising results. So all in all, everything is solvable. We have identified corrective actions and initiated implementation of those. The company is planning a multi-day shutdown in September, during which we will deploy key optimizations to address all of the issues and improve the long-term availability of the plant. We are very confident in Cote's ability to ramp up effectively this year once we address these issues. Moreover, the power requirements of the plant have been lowered and are now suspended, providing critical available capacity for future needs. In the second quarter, mining activities achieved a new high of 10.5 million tons of total material mined. Furthermore, grades mined are continuing to align with our grade control block model in the current life of mine. Mining costs in the quarter, despite not yet running at full run rate, were comparable to Canadian open-pit peers at just under $4 a ton. An increase from the prior quarter is due to temporary optimization activities on blasting patterns and production drilling, as well as some power curtailments experienced in June due to an unseasonal heatwave. On processing, mill throughput in the second quarter was 834,000 tons at an average head grade of 1.4 grams per ton for a total of 34,000 ounces produced on a 100% basis. The revenue circuit was successfully commissioned toward the end of the quarter, and recovery has responded well to the ramp-up of operations, averaging 90%. In July, Cote Gold processed over 620,000 tons of ore with production of nearly 26,000 ounces of gold. We have maintained our guidance at Cote for this year, though we have guided to the lower end of the range of 220,000 to 290,000 ounces on a 100% basis. As improvements to mill availability continue during the ramp-up of operations, we are addressing the issues at hand. We believe that achieving nameplate production by the end of the year will set both Cote and IAMGOLD up for substantial success starting early 2025. I will now hand the call back to Maarten for a brief update on projects by the end of this year.

Thank you, Renaud. I want to note that as we discuss project expenditures, all costs are being quoted on a 100% basis. Project and capital expenditures totaled $92.6 million in the second quarter and $288.9 million year-to-date. The expenditures include project expenditures of $30.7 million to support the completion of commissioning and certain scopes of non-critical path earthworks and infrastructure. Prior to the first gold pour on March 31, project expenditures amounted to $151.7 million, totaling $182.4 million for the year. $24.5 million of operating expenditures related to milling and surface costs have been capitalized in the second quarter and $51.5 million year-to-date in support of the commissioning and ramp-up efforts in advance of achieving commercial production. Capital expenditures related to operations for the second quarter were $37.4 million and $55 million year-to-date. Capitalized waste stripping and capitalized operating costs are expected to be higher when compared to guidance, offset by lower capital related to operations due to some of the equipment being purchased through our increased leasing facility. The total of all capital expenditures of $454 million, as well as the timing of the expenditures, are in line with the forecast and guidance for the year. Back to you, Renaud.

Thank you, Maarten. So that is that. Our goal this year is very clear. We need to ramp up the plant's availability and utilization to exit the year at a throughput rate of approximately 90% of nameplate and start 2025 on a very strong footing. This brings us to the slide we always like to finish on and this is what the future is for Cote. We are continuing to advance our understanding of the impact of Gosselin and the potential of the project. At year-end 2023, we updated the Gosselin mineral reserve and resources estimate with an additional 35,000 meters of drilling, which was completed over the two years prior. This year itself, we are conducting a 35,000-meter drill program targeting the central zone between the pit shells where we see indications of continuity of mineralization and hydrothermal breccias, as well as some deeper holes to understand the continuity of the mineralization beneath the current pit shelf. When we look at the resource and reserve statement, the Cote deposit has estimated mineral reserves on a 100% basis of 7.6 million ounces. These reserves form the basis of the current economics of the project. On a measured and indicated resource basis, the Cote pit is currently estimated at a total of 12.1 million ounces. The adjacent Gosselin pit has an additional 4.4 million ounces of measured and indicated resources and nearly 3 million ounces of inferred, bringing the project to a total of 16.5 million ounces of measured and indicated and an additional 4 million ounces of inferred. The size of Cote and Gosselin together places the project and the mine among an exclusive number of large-scale producing Canadian assets. We expect to have the results of this program later this year, which will greatly inform our understanding of how to incorporate Gosselin and remaining measured and indicated into a potential future mine plan. So, thank you all, and I look forward to a very exciting year ahead. With that, I would like to pass the call back to the operator for the Q&A. Operator?

Thank you. We'll now begin the question-and-answer session. The first question comes from Anita Soni with CNBC World Markets. Please go ahead.

Good morning, Renaud, everyone. My first question is with respect to Cote. What are the main factors that drove the indication that you're going to be near the bottom end of the production guidance range at Cote? Is it throughput rate, recovery rate? And then the second one probably relates to that: How long will that shutdown last in September?

Thanks for your questions. As you're aware, you asked me earlier in the year how we developed the original guidance. I would say that it's mostly a matter of the total tons milled. So, if you recall, we set the guidance early in the year of 220,000 to 290,000, emphasizing our confidence in the high grade, which is happening, but also basically stating that at perfect commissioning without any need for further downtime we would target 290,000. As I explained in my comments, we took the time in Q2 to properly address and correct issues as we move forward. This has been our philosophy from day one, and I'm very pleased with it, even though it caused some short-term pain in total ounces; however, we will shift the production profile starting in 2025. Regarding your point, initially, we estimated about five days of shutdown in September, but we are prepared to extend that if necessary. So, if it requires additional downtime, perhaps another five to seven days for a total of 10 to 15 days, given the work we have to accomplish. If it takes less time, we may exceed the lower end, but we want to ensure we are prepared for these adjustments. Therefore, let's consider a range of 10 to 15 days, and we'll assess the progress as we advance.

Okay. Thank you. And then I noticed you provided mining costs per ton for Q2. Thank you for that. I know it's a relatively short period since you've declared commercial production on August 7th, but can you give us an indication of how the processing costs are going at this stage?

Good morning, Anita. The processing costs on a total basis are actually well within our expectations and plans. There are, of course, some additional costs being incurred as we fix or replace certain components. But when we look at our current position, we anticipate the dollar per tonne cost at the end of the year will be in the ranges we previously guided and disclosed. So, this aligns with the 43-101, albeit with slight increases due to inflation, but our expectations for mill costs have not significantly changed at this point.

I think Maarten, it’s fair to say that the range of 10 to 15 days is just a matter of the tons milled. We were still low globally, with 839,000 tonnes milled in the second quarter, but with only one month contributing 620,000, we’re expecting to get closer to the 10 to 11 target as we conclude the year. It is primarily a timing issue.

And that power, as you mentioned, that you're using less power or is that factoring into that lower benefit on cost?

Yes, power costs are significant, even though it's a massive undertaking. The power cost per kilowatt will be extremely low at Cote as we manage our pricing, and we expect it to be one of the lowest in the industry. The main benefit, beyond potential savings, is the opportunity to use this extra power for future needs. As we've documented, there's around 72 megawatts available; therefore, how we utilize it is flexible. This is our most exciting aspect, especially since we feel the main equipment on the wet side could process more tons as we ramp up operations to the nameplate levels.

And then just to gain clarity on the summer construction phase, I noticed the mining rates on the ore were similar to last quarter. I am assuming that you guys were focusing on building the tailings dam over the summer months. Is that correct? How much did you have to deliver to the tailings dam in Q3?

I don’t have the details on the tons, but if you recall, as described in the 43-101, we're executing the entirety of Phase 2. This will be combined with the throughput ramp-up, positioning us for 18 months of capacity ahead, along with planned summer improvements. But yes, we are completing Phase 2 that we initiated last year and will complete this year. By a minimum, we should have 18 months ahead of us and will continue to raise annually. Our target is to maintain at least 24 months of capacity in the long term.

Okay. And my last question is regarding stockpile levels. Could you tell us how many tons of ore you have stockpiled ahead of the mill right now, and what the average grade is?

Yes. So far we have 8 million tons grading at 0.75 grams. We have different categories of stockpiles, including direct feed, high-grade ore and low-grade ore. Overall, we are satisfied with the level of stockpiles, and the reconciliation on the high-grade category looks good.

And you mentioned that you are directing more higher-grade ore from the pit to the mill, what would that high-grade average be?

We define high-grade as anything above the 0.7 to 0.8 gram per ton category. Currently, we have a fair amount of stockpile at 1.6 grams per ton, and we also have some run-of-mine ore at 1.14 grams.

We'll try to keep the mill towards 1.5 until the end of the year. We performed very well in July, so there is no reason to believe we won't deliver on that grade. It's mainly about ramping up the tonnage or throughput, but the mine has been doing very well so far.

Okay, thank you. That's it for my questions, and congratulations on achieving commercial production.

Thank you so much.

Thanks, guys. Good morning, everyone. I'm just wondering if you could speak to the performance of the autonomous operations data and the haulage and drilling, especially any challenges and how you’ve mitigated those risks?

I wouldn't call too many risks to be mitigated. Every quarter, we get more comfortable with autonomous hauling, and it has been operating very well. As Renaud mentioned, the stockpile processing is performed using autonomous trucks, which has been operating extremely well at very high availability. I do not see any issues with them and hopefully over time we can improve further, particularly with our drilling automation. So we are working hard on both fronts but so far, so good, and I'm giving a very high score to the implementation of our autonomous hauling.

Great. It sounds like things are going pretty well. Moving on to Westwood, could you share insights on the positive grades there relative to the reserves? Do you see those grades continuing through the year? And with the upcoming technical report, do you envision upside to the targeted run rate from the underground beyond the 900 tons per day? Given the strong performance of the mine now with the underground fully rehabilitated, do you envision that asset to stay in the portfolio longer term or could it potentially be considered non-core?

Regarding our key performance indicators, I've seen the asset ramp up with increasing tons from underground and overall grades improving. We have a reserve of approximately 10.4 grams per ton. Our target is to reach that reserve grade at Westwood, and this will be a key indicator of stability and sustainability. I can confidently state that we are very pleased with both Essakane and Westwood, and we see these two mines as continuing contributors to our story.

Thank you, Renaud. In fact, the underground’s performance is consistently improving due to the extensive work we have completed over the last two and a half years. This has proven to be very beneficial in reaching our targets of 900 tons per day. Our vision includes increasing closer to 1,100 tons per day, which are the targets we’re looking at. The new 43-101 will provide clearer insights into those targets alongside the life of mine estimates and our updated block model.

Thanks. Can you provide more clarity on the final payment regarding the Bambouk assets and whether there are any credit risks associated with that? It seems to have been a bit delayed, and I'm wondering what the risks are in receiving that final payment.

Yes, it's a fair comment that it has taken longer than expected. I assure you that we feel the impact as well. However, I believe we are making great progress. We remain confident about closing the transactions in Guinea in the second half, followed by an additional close in Mali. We aim to close both this year, targeting approximately $80 million in gross proceeds for both, which is significant. It is crucial for everyone involved to move forward. We are actively working on closing both states this year.

Hi, guys. Congrats on the solid quarter. Most of my questions have been addressed, but I have a couple of follow-ups. You provided good insights on expected shutdowns at Cote. Could you share guidance around planned shutdowns at Westwood or Essakane?

Definitely nothing extraordinary beyond the regular averages. We aim to maintain around the 89% average availability for Essakane and Westwood until the end of the year, achieved through plant shutdowns, minor maintenance, and routine work. We don't expect any disruptions. I would expect both mines to maintain a similar availability to what's observed in Q2.

Great, and regarding your target at Cote to be at 90% of nameplate by year-end, what's the basis for that figure? Are you considering a trailing four-week average?

I'd be delighted to see a four-week average to achieve our objectives. It’s vital to repeat the performance we accomplished in commercial production while maintaining 50% nameplate towards the 290,000 target. We are firmly aware of our capabilities and want to ensure consistency as we ramp up. By December, let's aim for an average of 90%. That will be our key goal.

Hi, good morning. Just a follow-up on the mill throughput. Given that you've achieved commercial production, should we assume that the mill will run at around 60% through August up until the shutdown? Or is the mill performing better than that currently?

Definitely, upon reaching 60% has become our new baseline. While September will present a dip due to the planned shutdown, the mill should see a steady ramp-up moving forward. Post-August, we'd anticipate rising upward towards our objectives.

I have a question for Maarten regarding the Sumitomo buyback. I see that the option is at around $380 million. Given the ramp-up, do you expect this figure to fluctuate significantly?

Good morning, Carey. We do not expect that number to change significantly, but it does depend on the August costs and sales as that will still be incorporated into this figure. The gold price will also impact it, but we don’t anticipate any major fluctuations from the expected $380 million.

Good morning, everyone. Just a quick accounting question for you. Up until now, you've been capitalizing your interest on Cote. Can we expect that to start being expensed after the August 2nd date?

Yes, we will start depreciating the asset and cease capitalizing interest costs after achieving commercial production, most likely starting from early August.

Great. Good morning. Thank you for taking my questions and congrats on achieving commercial production. I just wanted to revisit a few points, starting with Cote. Can I ask about the availability of your trucks? What are they currently operating at availability-wise?

We are definitely within specs, operating around 85%. That is the expected target.

I'd like to revisit the processing facility. Regarding the stockpiles, you provided 8 million tons at 0.75. Can you please clarify how much of that is at 1.6 grams per ton and what the stockpile tonnages look like?

We're currently managing around 500,000 tons at 1.6 grams, located directly in front of the mill.

So you plan to feed in more higher-grade stock from the mill as well?

Yes, while we might be introducing some stockpiled material, we expect the mine to produce more higher-grade material continuously until the end of the year.

Thank you for that. Lastly, can you share guidance for the remaining portion of the year for the company as a whole? We have lower grades coming in at Essakane, is that coming in slowly, like Q3 is lower than Q2, then a further drop in Q4? Or have we already seen the low grades impact?

Yes, the first part, July was somewhat transitional. We had good grades and now transitioning gradually. For the guidance, it looks like we are performing better year-to-date. There is some risk adjustment reflected there as well. However, it could take just a month of supply interruptions to impact performance. If stability persists in the second half, we have no reason to believe we won’t meet the updated guidance.

Understood. So Q3 will be lower, followed by Q4. As for Westwood, are we still targeting quarter-over-quarter improvements in grades from Q3 to Q4?

Yes, as I mentioned, we're already very close to the reserve grade. As we progress, we see improved performance from the underground. While that may fluctuate slightly, we could still maintain a solid position as we adjust to the new guidance.

Thank you again for indulging my questions, and congrats on your progress.

Thank you very much.

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

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

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