IAMGOLD Reports First Quarter 2023 Results
NEWS RELEASE
TSX: IMG NYSE: IAG
IAMGOLD REPORTS FIRST QUARTER 2023 RESULTS
All monetary amounts are expressed in U.S. dollars, unless otherwise indicated.
Toronto, Ontario, May 11, 2023 – IAMGOLD Corporation (NYSE:IAG, TSX:IMG) (“IAMGOLD” or the “Company”) today reported its financial and operating results for the first quarter ended March 31, 2023.
HIGHLIGHTS:
Operations
- Attributable gold production from continuing operations was 113,000 ounces.
- Revenues from continuing operations were $226.2 million from sales of 119,000 ounces (109,000 ounces on an attributable basis) at an average realized gold price of $1,893 per ounce.
- Cost of sales per ounce sold from continuing operations was $1,176, cash cost1 per ounce sold from continuing operations was $1,094 and all-in-sustaining-cost1 ("AISC") per ounce sold from continuing operations was $1,525.
Financial
- Net earnings attributable to equity holders1 of $6.3 million or $0.01 per share and adjusted net earnings attributable to equity holders1 of $24.9 million or $0.05 per share.
- Net cash from operating activities was $13.4 million. Net cash from operating activities, before movements in noncash working capital and non-current ore stockpiles1, was $55.7 million.
- Earnings before interest, income taxes, depreciation and amortization ("EBITDA")1 from continuing operations was $68.4 million and adjusted EBITDA1 was $83.0 million.
- Mine-site free cash flow1 from continuing operations was $2.7 million.
- Cash and cash equivalents of $532.1 million as at March 31, 2023. The Company repaid $255.0 million of the secured revolving credit facility (“Credit Facility”) during the first quarter 2023 and the available balance is $257.3 million as at March 31, 2023.
Côté Gold
- As of March 31, 2023, the Côté Gold project was estimated to be 79.8% complete.
- The Company incurred attributable construction costs at Côté of $158.6 million in the first quarter 2023, and approximately $1.37 billion since the commencement of construction, on a 70% basis.
- Sumitomo Metal Mining Co., Ltd. and SMM Gold Cote Inc. ("Sumitomo" or "SMM") funded $189.0 million of the Company's funding obligation and an incremental $7.1 million based on its increased ownership during the first quarter 2023 as per the Côté Gold Joint Venture Funding and Amending Agreement ("JV Funding and Amending Agreement"), reducing the Company's interest in the unincorporated joint venture to 62.5%.
- Sumitomo funded a total of $61.0 million of the Company's contributions during April and May, further decreasing the Company's interest to 60.3% and concluding the funding arrangement. It is estimated that SMM will contribute an additional $82.8 million during the remainder of 2023 based on its increased ownership.
- The estimated attributable cost to complete the construction is $625 to $700 million, on a 70% and incurred basis. IAMGOLD is expected to fund $460 to $535 million during the remainder of 2023 based on its 60.3% ownership in the Côté Gold unincorporated joint venture. See "Côté Gold Project".
Corporate
- On January 31, 2023, the Company completed the sale of its interests in the Rosebel mine to Zijin Mining Group Co. Ltd. ("Zijin") that was announced on October 18, 2022. The Company received cash proceeds of $386.4 million in the first quarter 2023, consisting of sales proceeds of $360.0 million, plus $29.8 million of cash held by Rosebel on January 31, 2023, less preliminary working capital adjustments of $3.4 million. The Company is due to receive approximately $9.8 million by June 30, 2023, consisting of the remaining cash balance held by Rosebel on January 31, 2023 of $9.6 million plus $0.2 million of final working capital adjustments.
- On April 25, 2023, the Company completed the sale of its 90% interest in the Boto Gold Project in Senegal and its 100% interest in the early stage exploration properties of Boto West, Senala West, Daorala and the vested interest in the Senala Option Earn-in Joint Venture, also in Senegal for aggregate gross cash proceeds of $197.6 million (pre-tax). The gross proceeds include deferred payments of $32.0 million which are anticipated to be received during the third quarter 2023. See "Bambouk Assets".
- The Company has available liquidity of $789.4 million comprised of cash and cash equivalents of $532.1 million and the available balance of the Credit Facility of $257.3 million as at March 31, 2023. Following the closing of the remaining strategic asset sales described above, the Company believes that it has sufficient liquidity to fund the remaining $460 to $535 million required for the completion of construction of the Côté Gold Project based on the current schedule and estimate. The Company continues to advance additional financing initiatives to strengthen its balance sheet and improve its liquidity in order to place the Company in a strong position to return to a 70% interest in the Côté Gold Project. See “"Liquidity Outlook".
“Looking at the first quarter, IAMGOLD reported impressive production results from both Essakane and Westwood, while cost pressures remained in line with our estimates and what is appearing to be a new normal for our industry,” said Renaud Adams, President and Chief Executive Officer of IAMGOLD. “The Essakane mine reported 92,000 ounces of attributable production, with our Burkinabe teams demonstrating remarkable resilience and flexibility, as higher than modeled grades helped to offset lower than expected mining tonnes due to the ongoing challenges managing the in-country supply chain and security. At Westwood, we saw the continued ramp up of production, with 21,000 ounces produced in the quarter as the operation begins to reap the benefits of the past 18 months of rehabilitation work which is ongoing and expected to position the operation well for exiting the year.”
“At Côté Gold, the project continues to advance rapidly towards initial production early next year. The project was approximately 80% complete at the end of March, and is now ramping up to peak activity levels now that the spring thaw is nearing completion with a clear roadmap in front of us to achieve success. The impact of Côté Gold on this company will be substantial, with the long life, low cost asset shifting our production base to Canada. Further, we continue to examine opportunities to increase the strength and flexibility of IAMGOLD’s balance sheet in order to better position the company for an ultimate return to the 70% interest at Côté in the future. IAMGOLD is a company that is undergoing a significant transition, and as we move forward we are eager to shift our focus from fixing operations and building – to optimizing and realizing the growth potential of our projects – which in turn will accelerate and unlock our value drivers for the benefit of all stakeholders,” added Mr. Adams.
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QUARTERLY SUMMARY
The following tables summarize certain operating and financial results for the three months ended March 31, 2023 (Q1 2023) and March 31, 2022 (Q1 2022) and certain measures of the Company's financial position as at March 31, 2023, December 31, 2022, and March 31, 2022. Financial results of Rosebel include the one month period ended January 31, 2023, prior to the closing of the sale to Zijin.
| Q1 2022 | ||
|---|---|---|
| Q1 2023 | ||
| Key Operating Statistics Gold production – attributable (000s oz) - Essakane - Westwood Total from continuing operations - Rosebel Total gold production – attributable (000s oz) Gold sales – attributable (000s oz) - Essakane - Westwood Total from continuing operations - Rosebel Total gold sales – attributable (000s oz) Cost of sales1 ($/oz sold) – attributable - Essakane - Westwood Total from continuing operations - Rosebel Total cost of sales1 ($/oz sold) – attributable Cash costs2 ($/oz sold) – attributable - Essakane - Westwood Total from continuing operations - Rosebel Total cash costs2 ($/oz sold) – attributable AISC2 ($/oz sold) – attributable - Essakane - Westwood Total from continuing operations - Rosebel Total AISC2 ($/oz sold) – attributable Average realized gold price ($/oz) - Continued operations - Discontinued operations Total average realized gold price ($/oz) | 112 16 | |
| 92 | ||
| 21 | ||
| 113 | 128 46 | |
| 25 | ||
| 138 | 174 119 16 | |
| 88 | ||
| 21 | ||
| 109 | 135 46 | |
| 24 | ||
| 133 | 181 | |
| $ 1,063 | $ 784 | |
| 1,657 | 1,922 | |
| $ 1,176 | $ 921 | |
| 949 | 1,369 | |
| $ 1,136 | $ 1,035 | |
| $ 964 | $ 781 | |
| 1,646 | 1,886 | |
| $ 1,094 | $ 914 | |
| 949 | 1,315 | |
| $ 1,068 | $ 1,017 | |
| $ 1,157 | $ 1,134 | |
| 2,508 | 2,376 | |
| $ 1,525 | $ 1,389 | |
| 1,358 | 1,784 | |
| $ 1,495 | $ 1,490 | |
| $ 1,893 | $ 1,789 | |
| 1,905 | 1,886 | |
| $ 1,895 | $ 1,813 |
1. Throughout this news release, cost of sales, excluding depreciation, is disclosed in the cost of sales note in the consolidated interim financial statements.
2. This is a non-GAAP measure. See "Non-GAAP Financial Measures" disclosure at the end of this news release for a description and calculation of these measures.
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| Q1 2023 | Q1 2022 | |
|---|---|---|
| Financial Results ($ millions from continuing operations) Revenues Gross profit EBITDA1 | ||
| $ 226.2 | $ 265.0 | |
| $ 43.1 | $ 71.0 | |
| $ 82.8 | $ 135.0 | |
| - Continuing operations | $ 68.4 | $ 110.3 |
| - Discontinued operations | $ 14.4 | $ 24.7 |
| Adjusted EBITDA1 | $ 106.4 | $ 137.6 |
| - Continuing operations | $ 83.0 | $ 110.8 |
| - Discontinued operations | $ 23.4 | $ 26.8 |
| Net earnings attributable to equity holders | $ 11.9 | $ 23.8 |
| - Continuing operations | $ 6.3 | $ 16.0 |
| - Discontinued operations | $ 5.6 | $ 7.8 |
| Adjusted net earnings attributable to equity holders1 | $ 39.5 | $ 26.1 |
| - Continuing operations | $ 24.9 | $ 16.4 |
| - Discontinued operations | $ 14.6 | $ 9.7 |
| Net earnings per share attributable to equity holders - continuing operations Adjusted net earnings per share attributable to equity holders1 - continuing operations Net cash from operating activities before changes in working capital1 - continuing operations Net cash from operating activities | $ 0.01 | $ 0.03 |
| $ 0.05 | $ 0.03 | |
| $ 55.7 | $ 108.7 | |
| $ 28.8 | $ 142.3 | |
| - Continuing operations | $ 13.4 | $ 116.0 |
| - Discontinued operations | $ 15.4 | $ 26.3 |
| Mine-site free cash flow1 | $ 8.6 | $ 86.6 |
| - Continuing operations | $ 2.7 | $ 86.9 |
| - Discontinued operations | $ 5.9 | $ (0.3) |
| Capital expenditures1,2 – sustaining Capital expenditures1,2 – expansion | $ 35.0 | $ 56.1 |
| $ 159.1 | $ 80.0 | |
| March 31 | December 31 | |
| 2023 | 2022 | |
| Financial Position ($ millions) Cash, cash equivalents and short-term investments Long-term debt Net cash (debt)1 Available Credit Facility | ||
| $ 532.1 | $ 407.8 | |
| $ 661.8 | $ 918.7 | |
| $ (261.6) | $ (605.6) | |
| $ 257.3 | $ 26.6 |
1. This is a non-GAAP measure. See "Non-GAAP Financial Measures" disclosure at the end of this news release for a description and calculation of these measures.
2. Capital expenditures represent incurred expenditures for property, plant and equipment and exploration and evaluation assets
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OUTLOOK
Operating Performance Outlook
| Actual Q1 2023 | Full Year Guidance 20231 | |
|---|---|---|
| Essakane (000s oz) Westwood (000s oz) | 92 | 340 – 380 70 – 90 |
| 21 | ||
| Total attributable production (000s oz)2 | 113 | 410 – 470 |
| Cost of sales2 ($/oz sold) Cash costs2.3 ($/oz sold) AISC2,3 ($/oz sold) Depreciation expense ($ millions) Income taxes4 paid ($ millions) | $1,176 | $1,125 – $1,175 $1,125 – $1,175 $1,625 – $1,700 $245 – $255 $70 – $80 |
| $1,094 | ||
| $1,525 | ||
| $44.0 | ||
| $11.0 |
1. The full year guidance is based on the following 2023 full year assumptions, before the impact of hedging: average realized gold price of $1,650 per ounce, USDCAD exchange rate of 1.32, EURUSD exchange rate of 1.10 and average crude oil price of $91 per barrel.
2. Consists of Essakane and Westwood on an attributable basis of 90% and 100%, respectively.
3. This is a non-GAAP financial measure. See "Non-GAAP Financial Measures".
4. The income taxes paid guidance reflects continuing operations and does not include the cash tax obligation arising as part of the Bambouk sales process. See "Bambouk Assets" for additional details.
Production Outlook
Attributable gold production guidance for 2023 is unchanged and is expected to be in the range of 410,000 to 470,000 ounces.
Costs Outlook
Costs guidance for 2023 is unchanged with cash costs1 expected to be between $1,125 and $1,175 per ounce sold and AISC1 expected to be in the range of $1,625 to $1,700 per ounce sold. The Company anticipates that costs will increase during the second and third quarters of 2023 and could be at or above the high end of the annual guidance range due to higher volumes of waste stripping planned during these periods.
Pricing for the main consumables including cyanide, lime and grinding media remains in line with the levels realized in the second half of 2022. Pricing of fuel and fuel-linked products are expected to remain under pressure, reflecting continued imbalances in global supply and demand. Increases in oil prices are expected to be partially mitigated by the existing oil hedge program. Excluding the impact of the Company’s hedging program, a $10/bbl increase in the oil price is estimated to result in an increase to cash costs of $12 per ounce sold. With current hedges in place, the same movement is estimated to result in an increase in cash costs of $7 per ounce sold.
Capital Expenditures1
Sustaining capital expenditures¹ for 2023 are expected to be approximately $195 million (± 5%) of which the majority is related to capitalized stripping at Essakane (see Operation Section on "Essakane, Burkina Faso”) and underground development at Westwood. Expansion capital expenditures¹ for 2023 are expected to be approximately $805 to $880 million with Côté Gold expenditures, on an incurred basis, expected to be approximately $800 to $875 million, based on IAMGOLD's 70% accounting for Côté Gold (see also “Côté Gold Project"). Other expansion capital expenditures¹ (excluding Côté Gold) are expected to be approximately $5 million (± 5%) at Essakane in fulfillment of the relocation commitment to the Essakane village.
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| ($ millions) | Actual Q1 2023 | Full Year Guidance 20232 | ||||
|---|---|---|---|---|---|---|
| Sustaining3 | Expansion | Total | Sustaining3 | Expansion | Total | |
| Essakane Westwood | $ 17.1 | $ 0.5 | $ 17.6 | $ 150 $ 5 $ 155 45 — 45 | ||
| 17.8 | — | 17.8 | ||||
| Côté Gold4 Corporate | $ 34.9 | $ 0.5 | $ 35.4 | $ 195 | ||
| — | 158.6 | 158.6 | ||||
| 0.1 | — | 0.1 | ||||
| Total5,6,7,8 | $ 35.0 | $ 159.1 | $ 194.1 | $ 195 $ 805 – 880 $ 1,000 – 1,075 |
1. 100% basis, unless otherwise stated.
2. Capital expenditures guidance (±5%) at Essakane and Westwood.
3. Sustaining capital includes capitalized stripping of (i) $6.4 million for Essakane and $2.7 million for Westwood in the first quarter 2023 and (ii) $90 million for Essakane and $6.0 million for Westwood for the full year guidance. See “Outlook” sections below.
4. 70% basis.
5. Includes $3.0 million of capitalized exploration and evaluation expenditures also included in the Exploration Outlook guidance table.
6. Capitalized borrowing costs are not included.
7. See “Costs Outlook” section above.
8. The full year guidance does not include expenditures for the Boto asset currently held for sale. See “Bambouk Assets” for additional details.
Exploration Outlook
Exploration expenditures for 2023 are expected to be approximately $18.0 million, including $3.0 million on the Gosselin resource delineation drilling program, as well as other near-mine and greenfield programs.
| ($ millions) | Actual Q1 2023 | Full Year Guidance 20231 Capitalized Expensed Total | ||
|---|---|---|---|---|
| Capitalized | Expensed | Total | ||
| Exploration projects – greenfield2 Exploration projects – brownfield | $ — | $ 2.8 | $ 2.8 | $ — $ 13 $ 13 3 2 5 |
| 1.1 | 0.5 | 1.6 | ||
| $ 1.1 | $ 3.3 | $ 4.4 | $ 3 $ 15 $ 18 | |
| 1. The full year guidance does not include expenditures for the Boto asset currently held for sale. See “Bambouk Assets" for additional details. 2. Exploration projects - greenfield does not include $2.3 million of expenditures for the Boto asset currently held for sale. | ||||
| 2. Exploration projects - greenfield does not include $2.3 million of expenditures for the Boto asset currently held for sale. |
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
IAMGOLD is committed to maintaining its culture of accountable mining through high standards of ESG practices and the principle of Zero Harm® in every aspect of its business, with particular emphasis on respecting the natural environment, building strong community partnerships and putting the health and safety of the Company's employees, contractors and consultants first.
Health and Safety
Health and safety is core to the Company’s relentless pursuit of its Zero Harm® vision. Through various prevention programs, the Company continuously promotes a safe work environment and a wellness program at all sites. The DARTFR (days away, restricted, transferred duty frequency rate) was 0.60 as at March 31, 2023 (compared to 0.29 as at March 31, 2022), tracking above the Company’s annual target of 0.40, with an increasing trend since October 2022. The TRIFR (total recordable injuries frequency rate) was 0.84 as at March 31, 2023 (compared to 0.83 as at March 31, 2022), tracking above the Company’s annual target of 0.69.
The increasing trend is due to the recordable incidents at Westwood that impacted the global TRIFR and DARTFR during the first quarter 2023. In addition to the existing preventive Health and Safety program, specific actions have been implemented to mitigate the reoccurrence of these incidents.
Environment
The Company recognizes that mining activities are energy intensive and generate significant greenhouse gas (“GHG”) emissions. In September 2021, the Company announced that it had set a global target of reaching net negative GHG emissions by no later than 2050. The Company also announced a target of achieving net positive biodiversity. Medium-term targets will be set as part of the Company’s roadmap to achieve these global targets. An external review of the Company’s GHG emissions profile across all sites has been completed and a draft action plan of the Company’s global commitments
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is currently being updated with the recent sale of some Company assets. The details of the roadmap will be published in the inaugural TCFD report in 2023.
At Côté Gold, permitting efforts continued in the first quarter 2023 with permit amendments received allowing for additional temporary camp infrastructure to support an increase in workers on site during construction. During the first quarter 2023, the Company applied to the Ontario Ministry of the Environment, Conservation and Parks for initial entry into the Emissions Performance Standards program to further compliance with its environmental obligations including establishing an emissions baseline for the Côté operation.
At Essakane, significant progress has been made in the studies and the action plan for the update of the mine closure plan, in consultation with government authorities. The updated closure plan is scheduled to be completed by mid-2023.
Social and Economic Development
The Company is continuously exploring opportunities for investing and partnering with the communities impacted by its continuing operations.
At Essakane, the Company continued its participation in the Mining Fund for Local Development in Burkina Faso, a program established by the government, pursuant to which the Company committed to contribute 1% of its annual revenues. The contribution for the first quarter 2023 is estimated at $1.9 million. Phase 2 of the Water Triangle project, the Company’s partnership with Global Affairs Canada, Cowater and One Drop was approved and signed by the parties in late December 2022. In February 2023, Cowater carried out an exploratory information collection mission and presentation of Phase 2 to the partnership’s stakeholders in Dori. A subsequent mission is scheduled for April 2023. Phase 2 of the project is expected to benefit an additional estimated 75,000 people once completed.
At Côté Gold, the Minister of Mines and Chief of Flying Post First Nation visited the site for a tour during the first quarter 2023. Various committee meetings were held with First Nations partners including the annual Impact Benefit Agreement (IBA) Leadership Committee, IBA Committee, Environmental Management Committee, Employment and Training sub- Committee and Socio-economic Management and Monitoring Committee. An IBA Implementation Committee was held with the Abitibi Inland Historic Métis Community (Métis Nation of Ontario, Region 3). Through a partnership with Indspire, an Indigenous education charity, four educational bursaries were awarded to post-secondary students from Mattagami First Nation, Flying Post First Nation and the Métis Nation of Ontario. Outreach also occurred with regional stakeholders in Timmins and Sudbury.
Governance
The Board of Directors of IAMGOLD (the “Board”) adopted new diversity and renewal guidelines in 2021, reflecting governance best practices. Currently, women represent approximately 44% of the directors and the average tenure of directors on the Board is less than two years.
- On February 22, 2023, Christiane Bergevin was appointed to the Company’s Board as an independent director.
- On March 6, 2023, Renaud Adams was appointed by the Board as President and Chief Executive Officer, effective April 3, 2023. Mr. Adams is replacing Maryse Bélanger, Chair of the Board, who was acting as Interim President and CEO during the executive search process. Ms. Bélanger will continue in her role as Chair of the Board.
- On March 6, 2023, Maarten Theunissen was appointed permanent Chief Financial Officer, having served as Interim CFO since September 2022.
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OPERATIONS – CONTINUING
Essakane Mine (IAMGOLD interest – 90%)1 | Burkina Faso
| Q1 2022 | ||
|---|---|---|
| Q1 2023 | ||
| Key Operating Statistics1 Ore mined (000s t) Grade mined (g/t) Waste mined (000s t) Material mined (000s t) – total Strip ratio2 Ore milled (000s t) Head grade (g/t) Recovery (%) Gold production (000s oz) – 100% Gold production (000s oz) – attributable 90% Gold sales (000s oz) – 100% Average realized gold price3 ($/oz) | 3,832 1.05 11,346 15,178 3.0 3,162 1.39 88 124 112 131 $ 1,885 | |
| 1,657 | ||
| 1.82 | ||
| 4,628 | ||
| 6,285 | ||
| 2.8 | ||
| 2,175 | ||
| 1.62 | ||
| 91 | ||
| 103 | ||
| 92 | ||
| 98 | ||
| $ 1,893 | ||
| Financial Results ($ millions)1 Revenues4 Cost of sales4 Production costs (Increase)/decrease in finished goods Royalties Cash costs3 Sustaining capital expenditures3,5 Expansion capital expenditures3 Total capital expenditures Earnings from operations | $ 248.2 103.1 | |
| $ 186.5 | ||
| 104.6 | ||
| 97.4 | 80.9 9.9 12.3 | |
| (2.3) | ||
| 9.5 | ||
| 94.9 | 102.7 47.7 1.0 48.7 90.2 | |
| 17.1 | ||
| 0.5 | ||
| 17.6 | ||
| 43.6 | ||
| Performance Measures6 Cost of sales excluding depreciation ($/oz sold) Cash costs3 ($/oz sold) AISC3 ($/oz sold) | $ 784 $ 781 $ 1,134 | |
| $ 1,063 | ||
| $ 964 | ||
| $ 1,157 |
1. 100% basis, unless otherwise stated.
2. Strip ratio is calculated as waste mined divided by ore mined.
3. This is a non-GAAP financial measure. See "Non-GAAP Financial Measures".
4. As per note 28 of the consolidated interim financial statements for revenues and cost of sales. Cost of sales is net of depreciation expense.
5. Includes sustaining capitalized stripping for the first quarter 2023 of $6.4 million (first quarter 2022 - $29.9 million).
6. Cost of sales, cash costs and AISC per ounce sold may not be calculated based on amounts presented in this table due to rounding.
Operations
Attributable gold production in the first quarter 2023 was 92,000 ounces, lower by 20,000 or 18% compared to the same prior year period, primarily as a result of lower throughput, partially offset by higher grades.
Mining activity of 6.3 million tonnes in the first quarter 2023 was 59% lower than the same prior year period as the mining fleet could not be operated at full capacity during January and February as a result of considerable disruptions in fuel supply, resulting from the security situation further described below. The situation improved during March and the mining fleet was operating at near full capacity during April.
Mill throughput in the first quarter 2023 was 2.2 million tonnes at an average head grade of 1.62 g/t, with throughput 31% lower than the same prior year period. The decline in throughput during the quarter is primarily due to lower plant utilization due to the fuel supply constraints described below. The head grade was higher than the prior period due to positive grade reconciliation and the direct feed of material from the bottom of Phase 4. The head grade is expected to decrease over the course of the year as the mill feed will include lower grade material from the stockpiles.
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The mill achieved recoveries of 91% in the first quarter 2023, as the mill continues to benefit from recent improvements to ore blending practices and the gravity recovery circuit. The gravity recovery achieved in the quarter continues to increase over historical levels with additional screens planned for installation in the second half of the year.
The security situation in Burkina Faso continues to be a focus for the Company due to continued terrorist related incidents occurring in the country and the northeastern region including the Seno and Oudalan provinces adjacent to the Essakane mine. The Company continues to take proactive measures to ensure the safety and security of in-country personnel and is constantly adjusting its protocols and the activity levels at the site according to the security environment, combined with its program to make investments in security and supply chain infrastructure in the region and at the mine site, with the support of the government. The security situation continues to apply pressures to the in-country supply chain and continued escalation could have a material adverse negative impact on future operating performance.
Financial Performance
Production costs of $97.4 million were higher by $16.5 million or 20%, primarily due to inflationary pressures and the reduced operating activity described above which resulted in an additional $23.4 million of mining costs allocated to production costs rather than being capitalized as a result of the reduced waste stripping program, partially offset by lower mining and milling costs due to lower activity levels. The reduced operating capacity resulted in abnormal costs of $9.5 million and $0.6 million included in production costs and depreciation, respectively for the first quarter 2023 (first quarter 2022 - $nil and $nil). The abnormal costs have been excluded from cash costs and AISC, reducing both metrics by $97 per ounce sold.
Cost of sales, excluding depreciation, of $104.6 million was in line with the prior year period as higher production costs in the first quarter 2023 were offset by timing of sales in the quarter. Cost of sales per ounce sold, excluding depreciation, of $1,063 was higher by $279 per ounce or 36%, primarily due to higher production costs and lower production and sales.
Cash costs of $94.9 million were lower by $7.8 million or 8% due to higher production costs in the first quarter 2023, excluding abnormal costs, offset by timing of sales in the quarter. Cash costs per ounce sold of $964 were higher by $183 or 23%, primarily due to higher production costs and lower production and sales.
AISC per ounce sold of $1,157 was higher by $23 or 2%, due to higher cash costs per ounce sold, partially offset by lower capitalized waste stripping and other sustaining capital expenditures.
Total capitalized stripping of $6.4 million was lower by $23.5 million or 79% due to the prioritization of ore mining in the quarter due to the fuel supply constraints described above.
Sustaining capital expenditures, excluding capitalized stripping, of $10.7 million included capital spares of $3.6 million, tailings management of $1.7 million, mobile and mill equipment of $1.1 million, resource development of $1.0 million and other sustaining projects of $3.3 million. Expansion capital expenditures of $0.5 million were incurred in support of fulfilling the community village resettlement commitment.
Outlook
Attributable gold production at Essakane in 2023 is expected to be in the range of 340,000 to 380,000 ounces. Mining activity is expected to progressively return to normal operating levels over the course of the year, including increased levels of waste stripping in the second half of the year. The mill throughput in the second quarter is expected to return to a normal level and mill feed will consist of a combination of direct feed and stockpiles.
Capital expenditures are expected to be approximately $155 million, with increased volumes of capitalized waste in the second and third quarter to provide access to mining areas in support of the 2024 and 2025 production plan, assuming no significant disruptions in the supply chain resulting from the security situation described above.
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Westwood Mine (IAMGOLD interest – 100%) | Quebec, Canada
| Q1 2023 | Q1 2022 | |
|---|---|---|
| Key Operating Statistics Underground lateral development (metres) Ore mined (000s t) – underground Ore mined (000s t) – other sources Ore mined (000s t) – total Grade mined (g/t) – underground Grade mined (g/t) – other sources Grade mined (g/t) – total Ore milled (000s t) Head grade (g/t) – underground Head grade (g/t) – other sources Head grade (g/t) – total Recovery (%) Gold production (000s oz) Gold sales (000s oz) Average realized gold price1 ($/oz) | 848 63 | |
| 1,494 | ||
| 68 | ||
| 193 | 159 | |
| 261 | 222 | |
| 6.35 | 6.10 | |
| 1.44 | 0.90 | |
| 2.73 | 2.37 | |
| 255 | 250 | |
| 6.56 | 6.05 | |
| 1.34 | 0.97 | |
| 2.77 | 2.18 | |
| 92 | 91 | |
| 21 | 16 | |
| 21 | 16 | |
| $ 1,892 | $ 1,872 | |
| Financial Results ($ millions) Revenues2 Cost of sales2 Production costs (Increase)/decrease in finished goods Cash costs1 Sustaining capital expenditures1,5 Expansion capital expenditures1 Total capital expenditures1 Earnings (loss) from operations | ||
| $ 39.6 | $ 30.8 | |
| 34.5 | 31.0 | |
| 35.8 | 31.7 (0.7) | |
| (1.3) | ||
| 34.3 | 30.5 | |
| 17.8 | 7.3 0.5 7.8 (5.0) | |
| — | ||
| 17.8 | ||
| (5.2) | ||
| Performance Measures3 Cost of sales excluding depreciation4 ($/oz sold) Cash costs1 ($/oz sold) AISC1 ($/oz sold) | ||
| $ 1,657 | $ 1,922 $ 1,886 $ 2,376 | |
| $ 1,646 | ||
| $ 2,508 |
1. This is a non-GAAP financial measure. See "Non-GAAP Financial Measures".
| As per n | ote 28 o |
| Cost of sales, cash costs and AISC per ounce sold may not be calculated based on amounts presented in this table due to rounding. | |
| Includes non-cash ore stockpile and finished goods inventories NRV write-down of $0.6 million for the first quarter 2023 (first quarter 2022 - $1.7 million), which had | |
| an impact on cost of sales, excluding depreciation, per ounce sold of $30 for the first quarter 2023 (first quarter 2022 - $106). | |
| Includes sustaining capitalized stripping for the first quarter 2023 of $2.7 million (first quarter 2022 - $nil). |
Operations
Gold production in the first quarter 2023 was 21,000 ounces, higher by 5,000 ounces or 31% compared to the same prior year period. Higher production is due to higher grades from both the underground mine and the Grand Duc open pit.
Mining activity in the first quarter 2023 was 261,000 tonnes of ore, an 18% increase from the same prior year period due to continued improvements in mine productivity at the underground mine and increased ore production from the Grand Duc open pit, together with an increased strip ratio in order to provide greater access for future ore supply.
The ore feed from the underground mine continues to exhibit positive grade reconciliation as compared to reserve grades, which is attributable to the nugget effect in higher grade areas of the mine. The ore from Grand Duc also indicates positive grade reconciliation relative to the reserve block model.
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Underground development in the first quarter 2023 continued to successively improve over prior periods, with 1,494 metres of lateral development completed. The progressive ramp-up in development and rehabilitation work continues to secure safe access to multiple ore faces at different levels in the mine, increasing operational flexibility to allow simultaneous exploitation of multiple stope sequences in line with the 2023 production plan. The rehabilitation work program consists of repairing and upgrading the existing underground infrastructure in line with the revised rock mechanic standard, which have been developed to ensure that safe work conditions are maintained in seismic portions of the mine. This activity enables production activities to safely recommence once rehabilitation work on a specific level has been completed. The rehabilitation work program, which was expected to be completed over the course of 2023 and 2024, is currently experiencing better than planned productivity rates moving more of the work and costs in 2023 while reducing the work required in 2024.
Mill throughput in the first quarter 2023 was 255,000 tonnes at an average head grade of 2.77 g/t, 27% higher compared to the same prior year period and the highest grade since the underground mine resumed full operations in June 2021.
In March 2023, all required environmental and regulatory permits were received to commence mining of the Fayolle satellite deposit, located approximately 30 kilometres northwest of the Westwood complex. The first ore was successfully hauled during the end of March for processing in the second quarter 2023. The comparatively higher grade material from the Fayolle deposit is expected to increase the average head grade of ore milled from surface sources as the year progresses.
Financial Performance
Production cost of $35.8 million was higher by $4.1 million or 13%, as the underground mining activities continue to increase, including an increase of non-recurring rehabilitation work described above, combined with the impact of inflation and higher maintenance costs of the underground mining fleet, in addition to higher mining costs per tonne at Grand Duc compared to the prior year period due to inflation.
Cost of sales, excluding depreciation, of $34.5 million was higher by $3.5 million or 11%, due to higher production costs. Cost of sales per ounce sold, excluding depreciation, of $1,657, was lower by $265 or 14%, due to higher gold sales, partially offset by higher mining costs.
Cash costs of $34.3 million were higher by $3.8 million or 12%, due to higher production costs. Cash costs per ounce sold of $1,646 were lower by $240 or 13%, primarily due to higher gold sales, partially offset by higher production costs.
AISC per ounce sold of $2,508 was higher by $132 or 6% primarily due to higher sustaining capital expenditures, including non-recurring rehabilitation work, partially offset by lower cash costs per ounce sold.
Sustaining capital expenditures, excluding capitalized stripping, in the first quarter 2023 of $15.1 million included underground development and diamond drilling of $9.4 million and other sustaining capital projects of $5.7 million.
Outlook
Westwood gold production is expected to be in the range of 70,000 to 90,000 ounces in 2023, with an increasing proportion of ore sourced from the underground mine. Production levels are expected to continue to progressively increase over the course of the year, benefiting from the continued advancement of underground development providing access to more and higher grade zones in the second half of the year. Mill feed will continue to be supplemented from available satellite surface deposits, including ore feed from the Fayolle property, primarily in the second half of the year.
Capital expenditures are expected to be approximately $45 million of sustaining capital in support of underground development and rehabilitation work, the renewal of the mobile fleet and fixed equipment, repairs to the Westwood mill, and other capital projects.
OPERATIONS – DISCONTINUED
On January 31, 2023, the Company completed the sale of its interests in the Rosebel mine to Zijin that was announced on October 18, 2022. Attributable gold production and attributable gold sales for January 2023 were 26,000 ounces and 25,000 ounces, respectively.
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The Company received cash proceeds of $386.4 million in the first quarter 2023, consisting of sales proceeds of $360.0 million, plus $29.8 million of cash held by Rosebel on January 31, 2023, less preliminary working capital adjustments of $3.4 million. The Company is due to receive approximately $9.8 million by June 30, 2023, consisting of the remaining cash balance held by Rosebel on January 31, 2023, of $9.6 million plus $0.2 million of final working capital adjustments. On closing, the Company recognized a loss on disposal of $7.4 million, net of income tax, which has been included in earnings from discontinued operations.
PROJECTS
Côté Gold Project | Ontario, Canada
As of March 31, 2023, overall, the project was estimated to be 79.8% complete. The following provides an update on project activities:
| Project Activity | Update |
| Health and safety | Total project hours worked of 9.8 million hours with a LTIFR of 0.02. The first lost time injury |
| was recorded in the quarter after a security guard lost their footing on ice and suffered a | |
| leg injury. COVID-19 impacts and associated absenteeism have been limited and remain | |
| closely monitored. | |
| Labour and workforce | The current workforce on site exceeds 1,500 workers and is currently at peak capacity. The |
| 264 room camp expansion is on target for completion during the second quarter. The first | |
| tranche of rooms has been placed in operation in late March. The expansion will support | |
| additional workforce for peak SMPEI construction activities and commissioning/operation | |
| resources in spring/summer. | |
| Earthworks activities | Earthworks activities advanced with a focus on the tailing management facility (“TMF”) |
| dams, preparing haul roads for autonomous deployment and overburden removal. | |
| • The intermediate phase (elevation 392) of the TMF was completed in March in | |
| preparation for freshet and to allow for water accumulation to support commissioning | |
| activities. | |
| • Completion of TMF Phase 1 is expected towards the end of the second quarter as some | |
| of the waste rock was classified as ore reducing the amount of waste available for | |
| construction. | |
| • All critical infrastructure was completed in preparation for spring thaw including the | |
| sedimentation ponds, TMF east starter dam and the main pit sump. | |
| Mining activities are continuing to ramp up to debottleneck mine production and prepare for | |
| final hand-off of all pit related activities to the operations team later in the third quarter. | |
| Processing plant | Processing plant civil works and concrete pours are effectively complete. Structural steel |
| work in the HGPR and secondary crushing areas continued to progress and has begun on | |
| the primary crusher. Cable tray installation and cable pulling is ongoing on the HGPR, | |
| secondary crushing and screening buildings. The fine ore bin with feed conveyors was fully | |
| erected. Installation of the leach tanks is nearly complete with agitators expected in May. | |
| All of the major equipment has been installed in the coarse ore area. | |
| Structural, mechanical and piping work activities in the processing plant continued. | |
| Installation of ball mill and utility pipe rack on the north wall of refining area are both nearly | |
| complete. Significant progress in the plant on installation of CIP tanks, vertimill mechanical | |
| works and associated structural steel and cyclone installations. |
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