Operator
Thank you for standing by. This is the conference operator. Welcome to the I Am Gold Third Quarter 2026 Operating and Financial Results Conference Call and Webcast. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star, then 1 on your telephone keypad. Should you need assistance during the conference call, you may reach an operator by pressing star, then 0. At this time, I would like to turn the conference over to Graham Jennings, Vice President, Business Development and Investor Relations for IM Gold. Please go ahead, Mr. Jennings.
Hello, everyone, and welcome, everyone, to our conference call this morning. Joining us on the call are Bruno Adams, President and Chief Executive Officer, Martin Janusen, Chief Financial Officer, Bruno Lemlem, Chief Operating Officer, Ankit Shah, Chief Strategy Officer, and Annie Tortilla-Legacy, Chief Legal Officer. We are calling today for Mayan Gold's Toronto office, which is located on 313 Territory, on the traditional lands of many nations, including the Mississaugas of the Credit, the Anishinaabeg, the Chippewa, Haudenosaunee, and the Wendat peoples. At I Am Gold, we believe respecting and upholding Indigenous rights is founded upon relationships that foster trust, transparency, and mutual respect. Please note that our remarks on this call will include forward-looking statements and refer to non-IFRS measures. We encourage you to refer to the cautionary statements and disclosures on non-IFRS measures included in the presentation and the reconciliations of these measures in our most recent MD&A, each under the heading Non-GAAP Financial Measures. With respect to the technical information 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, Graham, and good morning, everyone. Thank you for joining us today. The third quarter was another safe and steady quarter for IMG. We produced 186,900 attributable ounces, bringing year-to-date productions to 558,600 ounces. We are on track to meet full-year guidance and expect the fourth quarter to be our strongest, led by Cote. A year ago, IMG carried more than $800 million of net debt. Today, we are in a net cash position with more than $1.6 billion of liquidity. Over the last 12 months, we've generated $2.4 billion of adjusted EBITDA, and since launching our buyback program last December, we have repurchased over 32 million shares of nearly $600 million. Yesterday, we notified Franco-Nevada that we have exercising. Our right to repurchase half of its gross margin royalty on Cote for approximately $525 million. IMGOLD will fund the full amount and keep the full benefit, lowering CODIS cash costs, including royalties, by roughly $150 an ounce, starting in 2027. Put simply, we are using our balance sheet to retain more of the value of our largest, longest-life Canadian asset. Operationally, the third quarter was a turning point at Cote, its first full quarter without contractor crushing. In September, the plant averaged 37,100 tons per day above nameplate, and processing costs fell to $15.36 per day per ton. September showed what the operation can deliver, and we expect a strong finish to the year. Meanwhile, Issacan remains the engine behind our buyback, and Westwood is tracking toward the upper end of its guidance. Looking ahead, every asset has a meaningful catalyst through 2027. It started this quarter with the updated Cote Mine Plan, which will combine Cote and Gosselin for the first time, followed by studies across Issacan, Nelligan, and Westwood through 2027. This is where IM Gold stands today. A strong balance sheet, significant capital return to a shareholder, and a portfolio of long-life, Canadian-focused assets with real growth ahead. With that, let's get into the quarter. Starting with health and safety, our total recordable injury frequency rate is tracking at 0.57 for the year, with no significant environmental incident reported. Our health and safety and environment team to continue to redefine what responsible mining is today, and I thank them for their commitment to each other and our community. On productions, we have produced nearly 559,000 ounces of tributal year today. We need about 161,000 of tributal ounces in the fourth quarter to reach the low end of for consolidated guidance, well below what we produce. in each of the first three quarters of the year. On cost, year-to-date cash costs, including royalties, are $1,351 per ounce, and all in sustaining costs, including royalties, are $1,821 per ounce. We expect both to finish in the upper range of the manual guidance. Both Cote and Issacan carries royalties that are directly linked to the gold price. With our realized gold price year-to-date averaging more than $500 above our $4,000 guidance assumption, royalties have averaged $370 per ounce this year, or $45 per ounce above guidance. On input, we saw inflations of about 3% on certain commodities input in the first nine months within our expectation. Labor rates and retention continue to be a significant priority for IMDb, particularly in Canada. On energy, as noted here, a $10 per barrel of mold in oil represents about $12 per ounce on a consolidated cost, including indirect inflation, equating to an approximate $25 per ounce cost increase above our guidance. With that, I will pass the call over to our CFO to walk us through our financial results. Martin?
Thank you, Renaud, and good morning, everyone. Strong operating results and supportive gold price environment, again translated into significant cash flow. Mindset-free cash flow was $404.3 million in the quarter, bringing year-to-date Mindset-free cash flow to $1.3 billion. Operating cash flow before working capital and taxes for the first nine months was $1.7 billion. Working capital adjustments include $65.3 million of VAT refunds that ISACAN received this year. The operating cash flow funded capital expenditures of $320.3 million, $542.6 million of share repurchases, the net repayment of $200 million on a credit facility, $74 million paid to the government of Kina Faso for each portion of the ISACAN dividend and $27 million of withholding taxes on ABGOL's portion of the dividend. The net result is an increase in our cash balance of $344.7 million since the start of the year. In August, we also completed the sale of our 35% interest in the Benpagi joint venture in Senegal for $69.7 million. or $48 million near of taxes and transaction costs. As a result, at September 30th, I'm Gold had $766.6 million in cash and cash equivalents, with our $850 million credit facility undrawn for total liquidity of approximately $1.6 billion. Our only remaining debt is the $450 million of senior notes due October 2028. Redeemable at par since October 15th. We will continue to evaluate the most efficient use of a balance sheet with respect to the loans. Of our cash at quarter end, 321 million was held at Issacan. Cash at Issacan built up between distributions and after quarter end, a further 135.8 million was repatriated to Canada. Turning to our financial results, revenues for the third quarter was $856.5 million from sales of 199,900 ounces at an average realized gold price of $4,277 per ounce, slightly above the market price of $4,263 per ounce for the quarter. Adjusted EBITDA in the third quarter was $503.9 million. Adjusted net earnings attributable to equity holders were $237 million, or $0.42 per share, compared with $170.9 million, or $0.30 per share, in the prior period. Earnings were primarily adjusted for the gain on sale of the Bombardier assets. Incurred capital expenditures were $109.7 million in the third quarter and $339.4 million year-to-date. Our full-year total capital expenditure guidance of $500 million, plus or minus 5%, is unchanged, which implies a step up in spending in the fourth quarter. Within that total, we have reduced sustaining capital at Cote to $130 million on an attributable basis from $160 million. Due to the reprioritization of resources and referral of less-quality projects of 2027, this is an offset by an increase in stoning capital as it can to $105 million from $165 million due to the change in the mining sequence that resulted in additional capitalized waste stripping. Turning to capital returns, during the third quarter, we repurchased and cancelled approximately 7.6 million shares. For $134.7 million at an average price of $17.58 per share. Since the program began in December 25, we have repurchased 32.1 million shares for $592.6 million at an average price of $18.47 per share. Our current normal course issuer bid runs to December 11, 2026, and subsequent quarter-end, our board authorised the company to seek TSX approval for a new normal course issuer bid for further 12 months for up to approximately 10% of our outstanding shares. The buyback continues to be funded by cash repay credit from IssaCan. In June, IssaCan declared a dividend of approximately $500 million from its 2025 earnings. On gold's portion, net of the government's share and folding taxes, is approximately $400 million. Of this amount, we have received a total of approximately $225 million since June, with the balance expected to be distributed through the rest of 26 and early 2027, as SACAN generates cash in excess of its working capital needs. On the front of Nevada Royalty, as you now mentioned, We have delivered an irrevocable notice to repurchase 50% of the Franco-Nevada 7.5% gross margin royalty on Cote. Sumitomo elected not to participate, so Iron Gold will fund the full price of approximately $525 million from available liquidity and retain the full economic benefit, reducing our effective gross margin royalty from 7.5% to 2.14%. We expect the transaction to close in December with economic effect from January 1, 2027. This is an important transaction as it allows us a greater share of the cash flow from our largest asset. This fits squarely within our capital allocation framework. Cash flows from our Canadian operations fund our Canadian growth at Cote, Westwood, and Elicon, as well as the Franco-Nevada royalty repurchase, further strengthening of the balance sheet, and a possible introduction of a dividend, which we are contemplating initiating in 2027. CAST from ESSACAN continues to fund the share buyback, an approach we continue to evaluate for 2027. And with that, I will pass the call to Bruno Lemelin, our Chief Operating Officer, to discuss our operating results and outlook. Bruno?
Thank you, Martin. Starting with KoteGo. Cote produced 92,000 ounces on a 100-person basis in the third quarter, or 64,400 ounces to our account. This brings production for the year to 262,900 ounces on a 100-person basis. On the mining site, we moved a quarterly record of 12.4 million tons of total material. This included 3.8 million tons of ore at a strip ratio of 2.3 to 1. Grain mine was 0.93 grand per ton in line with the mine plan as we continue to open up the pit through the pushback. We expect good mining rates in the fourth quarter as the fleet that supported the contractor crusher is back in the pit. The pioneering on the pushback is mostly complete and three new all trucks come into service. In the plant, we milled 2.9 million tons, which averaged below nameplate for the quarter due to the extended annual shutdown in August, and the plant's first quarter running on owner-only crushing. By September, the improvement was clear. The plant averaged 37,100 tons per day, or 1.1 million tons in the month, above nameplate of 36,000 tons per day, with record crusher in HPGR throughput. Headgrades in the quarter averaged 1.1 grams per ton, with recoveries of 90%. Recoveries were lower than in prior quarters due to downtime on one of our two vertimills early in the quarter. With both vertimills both in operation, recoveries have improved, and we continue to optimize grind size through the circuit. Reconciliation of the reserve model through mill feed and production continues to be excellent. Looking at the fourth quarter, we expect the plant to average nameplate of about 36,000 tons per day with higher grades as mining moves into higher grade zones of the mine plant. With that, we expect Cote to finish at the lower end of its guidance range of 390 to 440,000 ounces on a 100% basis. Turning to costs, Cote reported third-quarter cash costs excluding royalties of $1,243 per ounce, cash costs of $1,544 per ounce, and all-interesting costs of $2,056 per ounce. In dollar terms, production costs were down 5% from last year as we began to see the benefit of owner-only crushing. On a unit basis, Mining costs were $4.77 per ton, which remained above target due to contractor support for pioneering work on the pit pushback, plus higher explosive costs and diesel prices. We expect mining costs to decline in the fourth quarter on higher volumes and as pushback-related activities wind down. Milling costs were $18.92 per tonne for the quarter, down from $20.85 in the second quarter. The best data point is September, in which milling averaged $15.36 per tonne. Our targets are unchanged. We plan to exit 2026 at about $4 per tonne for mining and about $15 per tonne for milling. For the full year, we now expect cash costs, excluding royalties at Protea, to be above the top end of our guiding range of $900 to $1,050 per ounce, and all in sustaining costs, excluding royalties at the top end of the $1,475 to $1,625 range. We expect four-quarter costs to be lower with more ounces, more tons, and better unit costs. Royalties at Cote were $301 per ounce in the quarter, or 19% of cash costs. With the repurchase of half of the Franco-Nevada royalty, this will reduce the royalty impact on cash costs by approximately $150 per ounce. Now to what comes next to Kovic. We remain on track to release the updated Côté mine plan and Mineral Reserve estimate this quarter, followed by the technical report shortly after. For the first time, this plan will bring Côté and Gosselin together into a single pit and one mine plan. With a consolidated pit, we expect the plant to show an increase in reserves and mine life. It will also set out a near-term path to take the plant from 36,000 tonnes per day to 40,000 tonnes per day. This comes from level filmmaking and targeted improvements to the existing plant. The second comb crusher is already in place and work has started on the third birdie mill, which we expect to install early in 2027. The remaining elements include improvement to the refeed systems, additional final dome capacity, and likely additional leach tanks. In parallel, we are continuing trade-off studies on a larger expansion. Given the size of the combined Cote and Gosling resource, we see meaningful long-term potential, and our focus is on determining the right scale and the right path to unlock it. The phase two pushback underway today also gave us more flexibility in the pit as we evaluate those options. Turning to Westwood. The mine produced 28,500 ounces in the third quarter and 97,100 ounces year-to-date. We now expect Westwood to finish at the upper end of its guiding range of 110,000 to 130,000 ounces. Underground, we mined 99,000 tons of ore at 8.09 grams per tonne. Tons were 10% higher than the prior year period, unfavorable stoke sequencing and improved mining recovery, and grade benefited from sequencing and lower dilution. The mill processed 309,000 tons at a blended grade of 3.0 g per ton, with recoveries of 94%. Most importantly, Westwood generated $51.7 million of mine site free cash flow in the quarter and $218.2 million year-to-date. I also want to expand on the gold-bearing sludge-type material our mill team identified at the bottom of the pregnant solution tank during a review of the electro-winning circuit. The material is believed to have accumulated over a number of years. It has been recovered and placed in drums with a total combined weight of 14,700 kilograms. Samples indicated solids content of 19% to 27% and gold content in the solids of 6% to 47%. For illustrative purposes only, using the average of those ranges, the material could contain approximately 30,000 ounces of gold. I want to be very clear. This is not an estimate of a recoverable or payable gold of production or of the financial benefit. We do not have a representative sample of the material. The illustration is subject to significant uncertainty and should not be regarded as a reliable estimate, and the actual gold recovered may differ materially. The material will be processed by an external refinery, and subject to completion of refining an assay, we expect the gold recovered to be reflected in our fourth quarter production results, although there can be no assurance as to the quantity or timing. Any gold recovered from this material is not included in our 2026 guidance. Turning to costs. Cash costs at Westwood were $1,794 per ounce in the quarter, and audience sustained costs were $2,118 per ounce. Year-to-date cash costs are $1,529 per ounce, and audience sustaining costs are $1,980 per ounce, both within our guidance ranges. Costs per ounce were higher this quarter compared with the first half of the year, reflecting fewer ounces sold, and more drilling and stock preparation underground, with underground mining costs of $322 per ton. Looking ahead, we have invested $12 million of expansion capital so far this year on development into the eastern zone of the mine to support the study of bulk mining options. The updated technical report planned for the second half of 20-square. 2027 is expected to highlight that potential. Bulk mining could potentially support higher underground throughput at a lower mining cost, replacing the lower grade feed from Grandsouc with higher grade feed from underground. We see this as a meaningful opportunity for Westwood, and we look forward to advancing that work. Turning to SACAN. The mine produced 94,000 attributable ounces in the third quarter, or 110,500 ounces, on a 100% basis. Year-to-date, SACAN has produced 277,500 attributable ounces, and we are on track for our guidance of 340,000 to 380,000 ounces. Mining total 11 million tons, including 3 million tons of ore. The mill processed 3.3 million tons at a head grade of 1.18 grams per ton. Both mining and milling rates were in line with the plan, which reflects the continued strong management of our supply chain by the team at ESECAM. Most importantly, SACAM continues to generate strong cash flows. Mine-site free cash flows was $271.1 million in the quarter and $735 million year-to-date on a 100% basis. Looking further ahead, we plan to publish an updated technical report for SACAM in mid-2027. Which is expected to outline the potential to extend the mine life up to 2035. through additional phases in the Issacan pits and adjacent areas. Turning to cost, Issacan had a strong water. Cash costs excluding royalties were $1,122 per ounce, 21% lower than the prior year period. Cash costs were $1,603 per ounce, and all-in-sustained costs were $2,063 per ounce. Mining costs were $5.44 per ton, down from $7.13 a year ago, as the separolite and the transition material in the lava pit requires less drilling and blasting. Royalties were $481 per ounce, or 30% of cash costs. Our average royalty rate was 11% in the quarter, compared with 9% a year ago. On energy, our fuel supply and costs have not been materially impacted by the conflict in the Middle East to date, although fuel prices increased by about 3.5% in September, and we continue to monitor the risk closely. For the year, we expect cash costs. Excluding royalties to be within the guidance range of $1,150 to $1,300 per ounce, and all in sustained costs excluding royalties at the top end of $1,550 to $1,700 range. Finally, on the matter of the government decree, requiring companies to use local refiners and working at Paso. As we noted, we have received a temporary exemption from this requirement. Meanwhile, we are working closely with the government and related stakeholders to ensure there is no interruption in the refining process. With that, I will pass it back to Renaud.
Thank you, Bruno. And beyond our three operating mines, the Nelligan Mining Complex in Quebec is where we see the next chapter of IFGOL. The complex holds 4.3 million ounces of indicated and 7.5 million ounces of inferred mineral resources across a dominant land position of approximately 134,000 experts, making one of the largest pre-production gold camps in Canada. This year is about drilling, and we have expanded our programs, milling in from 18,000 to up to 30,000 meters, focused on upgrading ounces and testing extensions along stripe and adapt, and at Monster Lake, from 15,000 to at least 20,000 meters, following high-grade hits deeper in the median zone. In total, we have completed more than 70,000 meters across Nelligan, Monster Lake, and Philiber so far this year. All of the primary deposits is within a 17-kilometer radius, which support our vision of a central processing facility fed by multiple or sources. On October 27, we released our latest drill results from the complex, and they continue to build our confidence in what we have in the Shibugimu region. What stands out to me is that all three primary deposits are moving in the right direction. At Milligan's, mineralization's continued downplunge, with several intersections grading well above the current resource average. Hall NE26272 is a good example. It intersected 77 meters at 2.23 grams per tent, well below the current mineralized envelope, at more than twice the average resource rate. At Monster Lake, we have extended the high-grade maiden zone to a depth of 600 meters, and the grades are holding. Hall ML25293 returns 7.7 meters at 24.5 grams per ton, starting 760 meters down the hall. And at Philiber, our first drilling program confirmed the previously defined zones and grades and points to further potential at depth. Given these results, we intend to run a substantially larger drill program at the complex in 2027. We expect to publish a preliminary economics assessment for the complex in mid-2027, which will bring the larger 2026 drills program into the study and bring these deposits together into one development concept for the first time, and we see the potential for the complex to continue to grow well beyond it. Stepping back, Nelligan, Monster Lake, and Filiber are each 100% owned by I&Go, so our shareholders return the full benefit of the value we create. With continued success, we see the potential for Nelligan Mining Complex to become one of the largest assets in I&Go's portfolio over time, and we are excited about the works ahead. With that, we will progress to questions. I want to congratulate our teams for another quarter of safe and consistent execution. IM Gold is on track for our production guidance. We have generated nearly $1.3 billion of mine site free cash flow so far this year, and we have returned close to $600 million to shareholders through our buyback since December 25. All while building a net cash position and a strong balance sheet. At the same time, we are investing in our future, and through 2027, every one of our assets has a clear catalyst, which will demonstrate the potential of our portfolio from a position of financial strength. Thank you for your continued support. Operator, you can now open the line for questions.
Operator
Thank you. We will now begin the question and answer session. To join the question queue, you may press star then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then 2. We will pause for a moment as callers join the queue. The first question comes from Anita Soni with CIBC World Markets. Please go ahead.
Good morning, guys. Thanks for taking my questions, and congratulations on a solid quarter. Firstly, at Cote, it's good to see the reduction in processing costs in September. It looks like you got down to that 15-ish mark that you were targeting. Would that be sustained into Q4 in 2027?
Yes, that's the plan. Actually, the goal for Q4 is to sustain the momentum that we have at operating at main plate capacity for the whole quarter. So this is the goal, and we believe that with that current production level, it should be in line with that target.
Okay, and then with that also, that $36,000 a ton per day, is that the goal and the $15 a ton for 2027, or are there other shutdowns or maintenance that we should be thinking about?
No major shutdowns until the end of the year, and for 2027.
Okay, and then on mining costs, I just wanted to go over what you need to do in Q4 in 2027 to drive that closer to the sub-$4 per ton mark, and is that ultimately what you see as the target still, or are you still targeting something closer to the mid-threes on mining costs per ton? So, what do you need? I'm assuming it's a pushback in opening up the pit from what I recall from the mine tour, but now that we have some numbers around it, I just wanted to get a little bit more colour on what you need to do to drive those costs down.
Yes. In Q4, we're going to rely less on re-handling and taking refeed from the low-grade stockpile. So we're going to try to maximize most of the extent of the mill. So you will increase the efficiency of the whole fleet. After that, also, as we expand the pit, you're going to be able to have better packet definition, larger blasts. We're also working on the fragmentation. Loading efficiency as well. So we have a very good plan ahead to decrease the cost from where we are right now toward the $4 and even like in the mid-trees like later on. That's for gold.
Okay. And the last one I'm going to ask, and I'll jump back in the queue and let other people ask questions. Martin, this one's for Martin. Can you just walk me through how that royalty would be modeled? I just want to make sure that I've got it correct, but I would just assume the revenue times 2.14%, and that would be the royalty portion of your cash cost. Is that correct?
It would be revenue less cash cost, so your gross margin, times the 2.14%. Okay. And then that is for IMGOLD if you model IMGOLD at 70%. The asset on its own is 3.75%. The 30% that we now own that was previously owned by Sumitomo is what is reducing our portion at 70% further from 3.75% to 2.14%.
Yeah, that's where the complexity comes in. I might need a follow-up call. So yeah, I was just trying to figure out exactly how you would report these cash costs versus what the, like, the effective benefit. So I'd be modeling those, the gross margin at 3.75% if I model this at 100% basis and then apply. Anyway, we'll take it offline. I think I'm running myself in circles on this one. Okay, thank you.
Looking good. Thank you. Thank you for your question, and I appreciate it.
Operator
Thank you. The next question comes from Fahad Tariq with Jeffries. Please go ahead.
Hi, thanks for taking my question. On the Cote royalty buyback, can you just confirm that you're using cash on the balance sheet to fund the $525 million and not adding debt? And then second, just any thoughts around how you came to the decision on the buyback now? Any internal models on the payback period, IRR, etc., would be helpful. Thanks.
Good morning. So for the royalty, sorry, I missed part of your question, but basically for us, we will be using cash from the balance sheet. We're going to continue to use cash as it comes in from this account to buy back shares as well. If there is a need, we might have to draw on a credit facility, but it would be very short term if we have to do that. The timing for us makes sense now because then it is effective on the 1st of January next year and it's keen for the next year. Here, if you look at the valuation that Franco-Nevada Did on the asset a year and a half ago when they bought the royalty from a third party. We are buying it at that same valuation effectively. But the gold price environment is a lot higher. So that is what is having the impact for us. And the additional $150,000 per ounce is also a big contributing factor for our decision to do this. So, it gives a good return. It's all dependent on gold prices, and I think having the full study later this year will help people understand that better.
Okay, and then on that study, can you just talk about how we should be thinking about the reserve price assumption? And then also, just to confirm, will that study only show the 40,000 tons per day base case, or is there some sort of upside case that will also show higher expansion?
No, as we're not here, so to make it short, no. So the study, somewhat a bit of an update, kind of a new base case of 2022, where the asset was moving from 36 towards 42 with additional equipment that are currently being installed. So, it's going to highlight the full resource potential that we've discussed, Cote-Goslin, which will be turned into the reserve. We're going to use $2,100 an ounce for the reserve price for the study. And it does not highlight beyond, but would highlight a production profile that gave us the time to rethink and execute on time should we decide down the road to have an extension without losing the production profile. That is the objective. And on the reserve price? At $2,100 an ounce. Thank you. Thank you.
Operator
Thank you. The next question comes from Mohamed Sidibe with National Bank Financial. Please go ahead.
Good morning, Rono and Tim, and thanks for taking my questions. I just wanted to ask a question on the Burkina refining order and that November 1st requirement. I think you noted that you do have a temporary exemption on that requirement. First, how long does that last? And secondly, is this requirement impacted in any way, shape, or form, the cash repatriation or settlement timing that you currently have and the benefit that you have of basically taking cash out of this again?
Yeah, so here is that there's kind of nothing really new here. I mean, this refinery, the government announced like it wasn't more than a year ago, the constructions of refining with the view to give them a chance as well to refine in-house from the small scales up to the commercial. There is quite a bit of a ramp up and so forth. So there is no date on the exemption. So business as usual for the time being, and eventually down the road, it would be. There would be discussions with the refiner, and our view in this is when everything and everyone is ready, and there could be a potential for us to refine in-country, a portion of all, but there's quite a bit of work to be done before we get there. In terms of any change or things like that, you know, in the process, so Martin, if you want to add anything, but for the execution per se, there is nothing.
Good morning, Mohamed. So the real risk of the impact here is really working capital and if it delays the gold sales process, but there's very good alignment with the government in these discussions because once the gold gets exported, that's when it triggers the royalty payments to the government as well. So everybody wants to, of course, make sure that we can convert the gold into cash as quickly as we can, and that would then... This will allow us to not have that working capital impact. If it is a bit slower, there would be some working capital, but it doesn't affect our ability to repatriate cash. It may just slow it down slightly.
Great. Thanks a lot for that caller. And then for my second question, just on the Westwood sludge, I know that, you know, in the MD&A, there is a potential mention of the gold coming in or landing in Q4, but could you maybe give us a little bit more color on the refining, the asset timelines, and how you're working through this? Thank you. Martin?
So, the... The material is being shipped in batches to the external refiner and processing has just started this week. So we expect over the course of November and first half of December to finish that process so that we should at least pass the assays. Because we're doing batches, we'll be able to then convert it into sales as well. So when we get to the end of the year, we should have a good understanding.
Great. Thanks for taking my questions, and congrats on a good call. Thank you.
Operator
Thank you. The next question comes from Harrison Reynolds with RBC Capital Markets. Please go ahead.
Hi, good morning. I'm Gold Team, and congratulations on the good quarter and appreciate all the detail provided so far. I wanted to follow up on the sludge there. Do you have any indication, early days still, but on the payabilities you might receive on the gold? And also, is there an opportunity to recover this material from the circuit on a go-forward basis?
Bruno, do you want to give some call in today?
Yeah, so in terms of moving forward, we have modified our standard operating procedures so this type of event don't occur again, and all future tactical that could evade, like the electro-winning cell, would be captured and taken into account that in every month. So, it's mostly the... The process has been improved with the team that, when investigated this area, we're able to measure area as to how we could improve the system. So, yes, the answer is yes, it's going to be managed on a monthly basis, but no.
The most important thing I think here is that to know that we do not feel there's been loss of gold over those years. I think, you know, for those of you that knows the installation, so while the... Well, the processing facilities recovered at a very high rate and functioned extremely well, but it's not necessarily the most modern, so that there is always a golden circuit that you expect to recover, of course, at the end of the facilities. But in this specific case, there were gold being accumulated in one specific area that we had not noticed before. This is done now, and moving forward, you should not expect any adjustment.
Got it. Thank you. And on the payabilities of that material, what are your early discussions with the refiner like as it relates to how much you might get paid for the gold?
So it's commercially sensitive information, so I can't give you the exact rate, but it is the same as when companies would send carbon fines or material involved with more liners. So it's the same that you would get normally on those prices. Mid to very high 90%.
Got it. Thank you. And just one last one. Good to see the metrics reached at COTA in September, and I appreciate the detail you gave so far. But, you know, anything you can provide on how operations trended in October? You know, were you able to be near nameplate throughput and how costs were tracking on a month-to-month basis?
We do not have visibility yet on the cost of October because, but operationally speaking, I could say that our trends continue. We're very, very pleased to how since September it's been operating, and the tendency and the return, you know, has continued in October.
Got it. Thank you so much for taking my questions, and congrats on the quarter again.
Operator
Thank you. Thank you. Once again, if you have a question, please press star, then one. The next question comes from Delvin G with Scotiabank. Please go ahead.
Hello, everybody. Good morning, and congrats on the strong quarter. Thank you for taking my questions. So, first will be on the Q4, just based on your guidance and your two days. So, like, System Q4 will be a bit stronger on production, and do you have any directional color on the unit cost?
If you refer to Coletay, per se, as Aron, of course, you've seen the productions at Tributal on 400 basis to date. We say we remain very, very confident to hit. So by definition, there has to be a strong quarter, and we're very confident that the team can pull. We've achieved 1536 in milling costs in September, and we think that we could achieve towards a 15 for the full quarter. This is the objective. We still have, as Bruno has mentioned earlier, mentioned that, you know, our mining cost remains a little higher. But we feel strong that while we may not totally achieve our objective, but we think you'll see an improvement in the Q4 on the mining cost and enter 27 wealth positions. So that's what I could say so far for Cote. We definitely need a strong water to meet. We are fully aware of it, but as we mentioned on the throughput and so forth, so it's going well.
Right, absolutely. Thank you. And turning on to 2027, what kind of inflation assumptions shall we assume, and what kind of inflation have you seen, like, among the costs, 27 over 26?
Yeah, yeah. Good morning, Dalvin. We're going through the budget process. If we look at the impact of inflation based on the current inputs, not the impact of drivers, we are seeing 3%, maybe 4%, depending on the operation. So, in that range of 3% to 4% would be the inflation assumption for next year, excluding the impact of diesel. So, diesel has an impact mainly at Cotain if it can. I would say about 12% of the total operating cost is for diesel and energy, so it does not have a significant impact, but it does have an impact, and we continue to look at putting in additional gold hedges at Cote in Burkina Faso. So, the... Price is less predictable, but it also doesn't change that often because of the way that it's purchased in Burkina. So that's kind of our main assumptions that we're seeing this far.
Right, absolutely, yeah. Turning to the Nelligan, the PEA coming next year, so do you have a cut-off date for the drilling, and will you be incorporating, like, combined economics of Nelligan, Monster Lake, and Silver?
Yeah, the PEA is going to give us a pretty many idea of the economic nature of Nilligan. The plan we'll have to look at if we can combine Monster Lake as an underground operation, the Nilligan pit, and also filiber all together and see how long of a life we have and kind of a cost structure that we can have in the area. We're working also on the general arrangement plan to locate infrastructures and how big they are going to be and like a preliminary cost of all those items. So, yeah, mid-2027, we will have a pretty first glance of what Medigan could look like.
Right. Thank you. And the call of grade, call of day of drilling will be end of year or early next year?
Sorry, could you repeat that one, then?
For the PEA, the cut-off date for the drilling, where you, like, can update your economics and resources?
Yeah, a year in, correct.
And you would understand that every other aspect has advanced extremely. The most important was ready to complete as much as possible the Philiber, and we confirmed, you know, from what we had acquired back in 2025 to incorporate it, but, of course, when it comes to overall cost and capital and so forth and infrastructure, we've advanced enormously, and as we complete the drilling, do the cutoff and complete the resource, we'll just incorporate the work and be on time for mid-27.
Right. I see. That's all from you. Thank you.
Operator
Thank you. The next question comes from Majina Abdelina with Freedom Burger. Please go ahead.
Good morning, everyone. Thanks for taking my questions. So, with 2026 sustaining capital of SECA increased from 165, to around, like, $200 million. Should we expect stripping expenditures to remain at similar levels in 2027?
Martin? Good morning, Najina. So, we are working through our budgeting process and we are looking at that, but for SFCAN for next year, we will be spending additional capital to... Good morning, everyone. We will advance the Block 3 and MineLife extension, so the capital would be slightly higher, but we are just working through those numbers as far as our planning process at this point.
Thank you. And at Westwood's underground mining costs increased like to $320 per ton in Q3, partly due to additional stock preparation. So as underground development progresses, should we expect these costs to normalize in the next year?
On the underground side, you refer, obviously, to the Westwood. I think, and we have discussed that one largely. Like, if you look at 26, 27, 28, they should be somewhat, you know, pretty similar years as we continue to work on the eastern and incorporation of the eastern corridor. While they will never be perfectly copy-paste, but you should expect 27 to be somewhat in the range of 26.
Yeah, and the all guidance for 27, of course, will come early in 27 for the plan of 27, and with the plan of Cote, of course, would highlight somewhat, you know, a little more than it would be.
Operator
And the next question is a follow-up from Anita Soni with CIBC World Markets. Please go ahead.
Hi, just a couple more questions. Firstly, can I go back to the Cote-Gosselin study? Are you still targeting around 70% to 75% conversion of the 20 million ounces that you have in global mineral inventory at this point?
Well, you know, we've released our resource update, which has highlighted the $20 million. And, of course, you have to go through some sort of the depletions of the year. So if you do all the math, yes, we continue to be very confident that we could convert that to 70% plus.
Yeah. And then now that you're, you know, I guess, I mean, like, if I'm trying to anticipate how to model Gosselin within the profile, would it be fair to say that it goes near the end of the mine life if you're going to try to sequence the tailings dam into an empty Kote pit? I'm just trying to get an understanding of that in light of the, you know, in light of the royalty, right? I think part of the economics of that buyback of the royalty is that you're buying it ahead of the Gosselin update.
So the sequence that favors the 40,000 ton per day scenario is more sequential, more linear, so we focus much more on Cote for the beginning of the life of mine, and subsequently Gosselin comes last. And we're actually at the...
Yeah, so which would create some opportunities, of course. But again, this is the new, this is a kind of an updated, what we call like really new base case, and we'd highlight a pretty interesting production profile for the next years to come. But eventually, down the road, we maintain the door open, of course, to eventually go towards an expansion, but this is not. For this time limit.
Yeah, I was just trying to figure out a way to. You know, quickly model this because I'm currently just using the Cote and then have some in-situ value for Gosselin. But to try to show the economics on that royalty buyback, I'd have to start to model Gosselin ahead of your update. But okay, thanks. And then just on the Burkina, the requirement to refine in-country, how long does that exemption last? And how do you see these early days, but what kind of things should we be thinking about if you do have to refine in-country in terms of the cost and the cost impact?
In terms of exemption, there is no date. I mean, they literally just inaugurated the refinery. And as I mentioned, there's also all the small-scale mining as well. We'll see. There is no date of exemption. So we continue. As a matter of fact, I think we were shipping this week and so forth as business as usual. In terms of cost per se, as mentioned, Martin has mentioned, it's not so much about cost more than making sure we don't create further delays.
Okay. All right. Thank you. That's it for my question.
Operator
Thank you. Thank you. This concludes the question and answer session. I would like to turn the conference back over to Graham Jennings for any closing remarks.
Thank you very much, operator, and thanks to everyone for joining us this morning. As always, if you have any additional questions, please reach out to Renauer and myself. Thank you all. Be safe.
Operator
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.
