IAMGOLD Reports Fourth Quarter and Year-End 2022 Results
NEWS RELEASE
TSX: IMG NYSE: IAG
IAMGOLD REPORTS FOURTH QUARTER AND YEAR-END 2022 RESULTS
All monetary amounts are expressed in U.S. dollars, unless otherwise indicated.
Toronto, Ontario, February 16, 2023 – IAMGOLD Corporation (NYSE:IAG, TSX:IMG) (“IAMGOLD” or the “Company”) today reported its financial and operating results for the fourth quarter and year ended December 31, 2022. Preliminary operating results for the fourth quarter and year ended 2022 were disclosed on January 17, 2023.
HIGHLIGHTS:
Operations
- Attributable gold production was 185,000 ounces in the fourth quarter and 713,000 ounces for the year, above the top end of revised production guidance of 650,000 to 705,000 ounces.
- Cost of sales per ounce sold in the fourth quarter was $1,130, cash cost1 per ounce sold was $1,173 and all-in sustaining cost1 ("AISC") per ounce sold was $1,672. Cash cost1 per ounce sold of $1,109 for the year was within the bottom end of the revised guidance range of $1,100 to $1,130 per ounce sold and AISC1 per ounce sold of $1,581 for 2022 was below the bottom end of the revised range of $1,600 to $1,650 per ounce sold.
- Attributable gold production from continuing operations, excluding Rosebel, was 116,000 ounces in the fourth quarter and 499,000 ounces for the year. Cost of sales per ounce sold in the fourth quarter was $1,157 ($1,041 for 2022), cash cost1 per ounce sold in the fourth quarter was $1,226 ($1,052 for 2022) and AISC1 per ounce sold in the fourth quarter was $1,741 ($1,508 for 2022) on the same basis.
Financial
- Net earnings (loss) and adjusted net loss per share attributable to equity holders1 of $(0.01) and $(0.02) for the fourth quarter, respectively and net earnings (loss) and adjusted net earnings (loss) per share attributable to equity holders1 of $(0.12) and $(0.07) for the year ended December 31, 2022, respectively.
- Net cash from operating activities was $12.3 million for the fourth quarter and $257.6 million for the year. Net cash from operating activities, before movements in non-cash working capital and non-current ore stockpiles, was $36.2 million for the fourth quarter and $298.2 million for the year.
- Earnings before interest, income taxes, depreciation and amortization (“EBITDA”)1 from continuing operations was $57.8 million during the fourth quarter ($292.3 million for 2022) and adjusted EBITDA1 from continuing operations was $38.9 million for the fourth quarter ($313.4 million for 2022).
- Mine-site free cash flow1 from continuing operations was negative $21.9 million for the fourth quarter ($167.2 million for 2022) and from all operations was $0.2 million for the fourth quarter ($187.6 million for 2022).
- Cash and cash equivalents held by continuing operations of $407.8 million and liquidity1 of $434.4 million at December 31, 2022. Cash and cash equivalents of $40.8 million was held by discontinued operations and assets held for sale at December 31, 2022.
Côté Gold
- As of December 31, 2022, the Côté Gold project was estimated to be approximately 73% complete.
- The estimated attributable cost to complete the construction, on an incurred basis, and the Company’s attributable funding requirement for 2023 is $800 to $875 million, assuming a USDCAD rate of 1.32. Sumitomo is expected to fund approximately $340 million of the 2023 funding requirement as per the amended Côté Gold Joint Venture Agreement (“Amended JVA”), requiring IAMGOLD to fund $460 to $535 million during 2023.
- The Company believes that the aggregate proceeds from the sale of its interest in the Rosebel mine, the anticipated proceeds from the sale of the Bambouk assets and funds to be provided by Sumitomo under the Amended JVA
meet the estimated remaining funding requirements for the completion of construction at the Côté Gold Project based on the current schedule and estimate.
- On February 2, 2023, the Company announced additional assay results from its ongoing diamond drilling program at the Gosselin zone, supporting the anticipated expansion potential at Gosselin, specifically south of and below the interpreted resource boundaries of the deposit model.
Corporate
- On December 19, 2022, the Company announced that it had entered into an agreement with Sumitomo Metal Mining Co., Ltd. and SMM Gold Cote Inc. ("Sumitomo" or "SMM") to amend the Côté Gold Joint Venture Agreement. Commencing in January 2023, Sumitomo will contribute certain of the Company's funding amounts to the Côté Gold Project that in aggregate are expected to total approximately $340 million over the course of 2023. As a result of Sumitomo funding such amounts, the Company will progressively transfer, in aggregate, an approximate 10% interest in Côté to SMM (the "Transferred Interests") as funding is made by SMM, subject to the right for the Company to repurchase the Transferred Interests at one of seven future dates pursuant to the terms of the Amended JVA, to return to its full 70% interest in the Côté Gold Project. Subsequent to December 31, 2022, SMM funded $126.4 million under the funding arrangement, resulting in the Company’s interest in the Côté Gold project being diluted by 5.0% to 65.0%.
- On December 20, 2022, the Company announced it had entered into definitive agreements with Managem, S.A (CAS:MNG) (“Managem”) to sell, for aggregate consideration of approximately $282 million, the Company's interests in its exploration and development projects in Senegal, Mali and Guinea.
- On January 31, 2023 the Company completed the sale of its interests in the Rosebel mine to Zijin Mining Group Co. Ltd. that was announced on October 18, 2022. The transaction closed on January 31, 2023 and the Company received net proceeds of $371.5 million, consisting of sale proceeds of $360.0 million, plus $15.0 million of cash held by Rosebel on January 31, 2023, less a preliminary working capital adjustment of $3.5 million. The Company is due to receive approximately $24.8 million by March 31, 2023 consisting of the balance of cash held by Rosebel on January 31, 2023, subject to final working capital adjustments.
Outlook
- Attributable gold production for 2023, excluding Rosebel, is expected to be in the range of 410,000 to 470,000 ounces, with Essakane attributable gold production expected to be in the range of 340,000 to 380,000 ounces and Westwood gold production is expected to be in the range of 70,000 to 90,000 ounces.
- Cash costs¹ are expected to be between $1,125 and $1,175 per ounce sold, and AISC1 per ounce sold is expected to be in the range of $1,625 to $1,700 per ounce sold. The estimate includes assumptions related to the escalated pricing levels of certain consumables as experienced during the second half of 2022. Cash costs and AISC per ounce sold in the first half of 2023 are expected to be at or above the high end of the annual guidance range due to lower gold production and sales volumes, in addition to higher waste stripping in accordance with the mine plans, as compared to the second half of the year.
“IAMGOLD is successfully emerging from a period of significant transformation over the past year, which was made possible by the dedication and resiliency of our employees at every level of the company who have demonstrated a commitment to working safely and responsibly towards a shared vision of generating superior value for our stakeholders through accountable mining,” said Maryse Bélanger, Chair and Interim President and Chief Executive Officer of IAMGOLD. “Operationally, the Company finished the year with a strong quarter, driving production above the top end of our revised guidance estimates. Our construction teams at Côté Gold continued to advance the project allowing for critical project activities to move inside the plant during the winter season while accelerating the deployment of the autonomous haulage and drilling systems to better position the project for commencement of production next year. Financially, the Company ended the year in a much stronger position with the announcement of key strategic transactions, including the amended agreement with our partner Sumitomo Metal Mining.”
“As we look forward, 2023 will be a pivotal year for the Company, with a strong focus on continuing to execute at Côté. We remain on track to commence production at Côté early next year and are eager to showcase what will be Canada's third
Page | 2 of 32
largest gold mine by production. In 2022, the industry was faced with considerable inflationary headwinds, and this year is expected to continue to underscore the necessity to focus on safety, productivity and efficiency at all our operations. At Essakane, following a record performance last year, we will be conducting additional stripping in the first half of the year to position the mine for stronger production in the second half; while at Westwood, we expect to see continued gains in underground development providing access to higher grade zones in the second half of the year.”
QUARTERLY REVIEW
The following tables summarize certain operating and financial results for the three months ended December 31, 2022 (Q4 2022) and December 31, 2021 (Q4 2021) and the twelve months ended December 31 for 2022 and 2021; and certain measures of the Company's financial position as at December 31, 2022 and December 31, 2021:
| Q4 2022 | Q4 2021 | 2022 | 2021 | |
| 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 ($/oz) Gold margin ($/oz) from continuing operations | 98 13 | 412 35 | ||
| 98 | 432 | |||
| 18 | 67 | |||
| 116 | 111 42 | 499 | 447 154 | |
| 69 | 214 | |||
| 185 | 153 93 12 | 713 | 601 408 34 | |
| 97 | 440 | |||
| 18 | 66 | |||
| 115 | 105 47 | 506 | 442 148 | |
| 68 | 215 | |||
| 183 | 152 | 721 | 590 | |
| $ 958 | $ 1,333 | $ 882 | $ 1,042 | |
| 2,230 | 2,335 | 2,093 | 2,252 | |
| $ 1,157 | $ 1,451 | $ 1,041 | $ 1,135 | |
| 1,085 | 1,922 | 1,269 | 1,674 | |
| $ 1,130 | $ 1,597 | $ 1,109 | $ 1,270 | |
| $ 1,043 | $ 912 2,325 | $ 899 | $ 945 2,240 | |
| 2,210 | 2,068 | |||
| $ 1,226 | $ 1,079 1,514 | $ 1,052 | $ 1,045 1,545 | |
| 1,083 | 1,243 | |||
| $ 1,173 | $ 1,213 $ 1,150 2,775 | $ 1,109 | $ 1,170 $ 1,074 2,600 | |
| $ 1,456 | $ 1,234 | |||
| 2,639 | 2,568 | |||
| $ 1,741 | $ 1,410 1,824 | $ 1,508 | $ 1,281 1,859 | |
| 1,554 | 1,753 | |||
| $ 1,672 | $ 1,537 $ 1,794 1,795 | $ 1,581 | $ 1,426 $ 1,793 1,777 | |
| $ 1,639 | $ 1,721 | |||
| 1,725 | 1,793 | |||
| $ 1,670 | $ 1,794 $ 715 | $ 1,741 | $ 1,790 $ 748 | |
| $ 413 | $ 669 |
1. Throughout this news release, cost of sales, excluding depreciation, is disclosed in the cost of sales note in the annual consolidated 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.
Page | 3 of 32
| Q4 2021 | 2021 | |||
| Q4 2022 | 2022 | |||
| Financial Results ($ millions) Revenues Gross profit EBITDA1 | $ 206.4 $ (42.7) | $ 875.5 $ 62.2 | ||
| $ 207.2 | $ 958.8 | |||
| $ 20.0 | $ 147.9 | |||
| $ 105.4 | $ (193.4) | $ 300.4 | $ 27.1 | |
| - Continuing operations | $ 57.8 | $ 16.7 | $ 292.3 | $ 216.6 |
| - Discontinued operations | $ 47.6 | $ (210.1) | $ 8.1 | $ (189.5) |
| Adjusted EBITDA1 | $ 83.6 | $ 90.0 | $ 434.0 | $ 355.7 |
| - Continuing operations | $ 38.9 | $ 74.3 | $ 313.4 | $ 307.0 |
| - Discontinued operations | $ 44.7 | $ 15.7 | $ 120.6 | $ 48.7 |
| Net earnings (loss) attributable to equity holders | $ 24.0 | $ (194.1) | $ (70.1) | $ (254.4) |
| - Continuing operations | $ (3.8) | $ (51.9) | $ (55.5) | $ (95.8) |
| - Discontinued operations | $ 27.8 | $ (142.2) | $ (14.6) | $ (158.6) |
| Adjusted net earnings (loss) attributable to equity holders1 | $ 16.6 | $ 44.3 | $ 22.7 | $ 26.8 |
| - Continuing operations | $ (9.0) | $ 36.3 | $ (35.6) | $ 25.0 |
| - Discontinued operations | $ 25.6 | $ 8.0 | $ 58.3 | $ 1.8 |
| Net earnings (loss) per share attributable to equity holders – continuing operations Adjusted net earnings (loss) 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) | $ (0.11) | $ (0.12) | $ (0.20) | |
| $ (0.02) | $ 0.08 | $ (0.07) | $ 0.05 | |
| $ 36.2 | $ 63.3 | $ 298.2 | $ 256.0 | |
| $ 66.8 | $ 67.5 | $ 408.7 | $ 285.0 | |
| - Continuing operations | $ 12.3 | $ 52.7 | $ 257.6 | $ 257.8 |
| - Discontinued operations | $ 54.5 | $ 14.8 | $ 151.1 | $ 27.2 |
| Mine-site free cash flow1 | $ 0.2 | $ 10.8 | $ 187.6 | $ 128.3 |
| - Continuing operations | $ (21.9) | $ 26.5 | $ 167.2 | $ 199.6 |
| - Discontinued operations | $ 22.1 | $ (15.7) | $ 20.4 | $ (71.3) |
| Capital expenditures1,2,3 – sustaining Capital expenditures1,2,3 – expansion | $ 50.6 | $ 28.1 $ 173.0 | $ 190.4 | $ 63.2 |
| $ 137.6 | $ 554.2 | $ 463.9 | ||
| Dec 31 | Dec 31 2021 | Dec 31 | Dec 31 2021 | |
| 2022 | 2022 | |||
| Financial Position ($ millions from continuing operations) Cash, cash equivalents and short-term investments Long-term debt Net cash (debt)3 Available credit facility | $ 552.5 $ 464.4 $ 16.3 $ 498.3 | $ 552.5 $ 464.4 $ 16.3 $ 498.3 | ||
| $ 407.8 | $ 407.8 | |||
| $ 918.7 | $ 918.7 | |||
| $ (605.6) | $ (605.6) | |||
| $ 26.6 | $ 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. Throughout this news release, capital expenditures represent cash expenditures for property, plant and equipment and exploration and evaluation assets.
3. Starting in 2022, a higher portion of stripping costs are categorized as sustaining capital versus expansion capital, due to the particular areas that are scheduled to be mined and the stage of the life of mine aligning with World Gold Council guidelines. See "Non-GAAP Financial Measures section".
Page | 4 of 32
Operating Results – Continuing Operations
Note that all figures below are reflective of continuing operations and exclude Rosebel
Attributable gold production for the fourth quarter was 116,000 ounces, up 5,000 ounces or 5% from the prior year period, due to higher production at Westwood resulting from higher mill throughput and grades. Attributable gold production for the full year 2022 was 499,000 ounces, up 52,000 ounces or 12% from the prior year period, due to higher production at Westwood (32,000 ounces) as the underground operations continue ramping up after being in care and maintenance in the first half of 2021 and Essakane (20,000 ounces) resulting from higher grade and recoveries, partially offset by lower throughput.
Attributable gold sales for the fourth quarter was 115,000 ounces, up 10,000 ounces or 10% from the prior year period, due to higher production at Westwood (6,000 ounces) and timing of sales at Essakane (4,000 ounces). Attributable gold sales for the full year 2022 was 506,000 ounces, up 64,000 ounces or 14%, due to higher production and timing of sales at Essakane (32,000 ounces) and higher production at Westwood (32,000 ounces). The average realized gold price for the fourth quarter and the full year 2022 was $1,639 per ounce and $1,721 per ounce, respectively, reflecting the monthly physical gold deliveries of 12,500 ounces at $1,500 per ounce as required under the 2019 Prepay Arrangement. During the year ended December 31, 2022, the Company delivered 150,000 ounces into the 2019 Prepay Arrangement and received $30.0 million in cash in relation to the collar.
Cost of sales (excluding depreciation) per ounce sold for the fourth quarter was $1,157, down $294 or 20% from the prior year period, due to the Essakane NRV adjustment of $441 per ounce sold included in 2021 and higher gold sales, partially offset by higher production costs in the fourth quarter of 2022. Cost of sales includes the positive impact of realized derivative gains of $24 per ounce sold (fourth quarter 2021 - gains of $24 per ounce sold). Cost of sales (excluding depreciation) per ounce sold for the full year 2022 was $1,041, down $94 or 8% from the prior year period, due to the Essakane NRV adjustment of $100 per ounce sold included in 2021 and higher gold sales, partially offset by higher production costs in 2022.
Cash costs per ounce sold in the fourth quarter were $1,226, up $147 per ounce or 14% from the prior year period, primarily due to higher production costs, partially offset by higher gold sales. Cash costs per ounce sold for the full year 2022 were $1,052, in line with the prior year period, as higher production costs were offset by higher gold sales. AISC per ounce sold in the fourth quarter were $1,741, up $331 per ounce or 23% from the prior year period, primarily due to higher production costs and higher sustaining capital expenditures, partially offset by higher gold sales. AISC per ounce sold for the full year 2022 were $1,508, up $227 or 18% from the prior year period, due to higher sustaining capital expenditures, primarily at Essakane.
Health and Safety
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 first.
Health and safety is core to the Company’s relentless pursuit of its Zero Harm® vision. An IAMGOLD employee sadly lost his life in November in Burkina Faso as a result of injuries sustained in an off-site accident. A thorough investigation has been undertaken to implement improvements to prevent future recurrences and respect the Company's Zero Harm® principle. Côté Gold surpassed over 8.3 million hours with no lost time injuries to date. The DARTFR (days away, restricted, transferred duty frequency rate) was 0.31 as of the end of 2022 (compared to 0.37 as of the end of 2021), tracking below the global annual target of 0.42, with an increasing trend since October 2022. The TRIFR (total recordable injuries frequency rate) was 0.76 as of the end of 2022 (compared to 0.76 as of the end of 2021), tracking above the global annual target of 0.73.
Page | 5 of 32
Financial Results
Revenues from continuing operations of $207.2 million in the fourth quarter from sales of 126,000 ounces (115,000 ounces on an attributable basis) at an average realized gold price of $1,639 per ounce and $958.8 million for the year from sales of 555,000 ounces (506,000 ounces on an attributable basis) at an average realized gold price of $1,721 per ounce.
Net earnings (loss) and adjusted net loss per share attributable to equity holders1 of $(0.01) and $(0.02) for the fourth quarter, respectively and net earnings (loss) and adjusted net earnings (loss) per share attributable to equity holders1 of $(0.12) and $(0.07) for the year ended December 31, 2022, respectively.
Net cash from operating activities was $12.3 million for the fourth quarter and $257.6 million for the year. Net cash from operating activities, before movements in non-cash working capital and non-current ore stockpiles, was $36.2 million for the fourth quarter and $298.2 million for the year.
Earnings before interest, income taxes, depreciation and amortization (“EBITDA”)1 from continuing operations was $57.8 million during the fourth quarter and $292.3 million for the year and adjusted EBITDA1 was $38.9 million for the fourth quarter and $313.4 million for the year.
Mine-site free cash flow1 from continuing operations was negative $21.9 million for the fourth quarter and positive $167.2 million for the year. Mine-site free cash flow from all operations was $0.2 million for the fourth quarter and $187.6 million for the year.
Net cash flow from operating activities for the fourth quarter of 2022 was $66.8 million and includes cash flow from operating activities of $12.3 million from continuing operations and $54.5 million from discontinued operations. Net cash from operating activities from the continuing operations decreased by $40.4 million from the same prior year period, primarily due to: lower cash earnings of $35.6 million and a net unfavourable change in non-cash working capital movements of $13.3 million, partially offset by net proceeds from the 2022 Prepay Arrangements of $10.3 million. Net cash flow from operating activities for the year ended 2022 was $408.7 million and includes cash flow from operating activities of $257.6 million from continuing operations and $151.1 million from discontinued operations.
Net cash used in investing activities for the fourth quarter 2022 was $233.3 and included cash used in investing activities from continuing operations of $205.4 million and discontinued operations of $27.9 million. Compared with the fourth quarter 2021, net cash used in investing activities from the continuing operations decreased by $28.3 million, primarily due to a decrease in capital expenditures for property, plant and equipment of $13.4 million and proceeds from the disposal of bond fund investments and marketable securities of $13.3 million. Net cash used in investing activities for the year ended 2022 was $891.9 million and included cash used in investing activities from continuing operations of $761.2 million and discontinued operations of $130.7 million. Net cash used in investing activities from the continuing operations increases by $234.2 million when compared with the prior year, primarily due to an increase in capital expenditures for property, plant and equipment of $217.5 million mainly related to the Cóté Gold construction, an increase in restricted cash of $10 million as well as the increase in borrowing costs of $8.6 million, partially offset by proceeds from the disposal of marketable securities and bond fund investments of $38.0 million. The prior year’s investing activities also included the proceeds of selling non-core royalties for $45.9 million.
Net cash from (used in) financing activities for the fourth quarter 2022 was $64.2 million and included cash from financing activities from continuing operations of $68.6 million and discontinued operations of ($4.4) million. Compared with the fourth quarter 2021, net cash from financing activities for the continuing operations increased by $66.1 million, primarily due to proceeds from the Credit Facility drawdowns of $75.0 million. Net cash from financing activities for the year ended 2022 was $404.0 million and included cash from financing activities from continuing operations of $420.9 million and discontinued operations of ($16.9) million. Net cash from financing activities for continuing operations increased by $443.7 million from the prior year, primarily due to proceeds received from the Credit Facility drawdowns of $455.0 million and the equipment loans of $6.0 million, partially offset by an increase in dividends paid to non-controlling interest of $13.4 million.
Page | 6 of 32
Liquidity and Capital Resources
As at December 31, 2022, the Company had $407.8 million in cash and cash equivalents at its continuing operations and net debt of $605.6 million. Approximately $26.6 million was available under the Company’s secured revolving credit facility (“Credit Facility”) resulting in liquidity1 at December 31, 2022, of approximately $434 million. At December 31, 2022, assets held for sale included cash and cash equivalents of $40.8 million of which $38.5 million was held at Rosebel, resulting in total cash and cash equivalents of $448.6 million. On the closing of the Rosebel sales transaction, the Company received $15 million of the January 31, 2023 Rosebel cash balance of $39.8 million and will receive the remaining balance by the end of March 2023. Restricted cash in support of environmental closure costs obligations related to Essakane, Doyon division and Côté Gold project totaled $56.3 million.
The Côté Gold UJV requires its joint venture partners to fund, in advance, two months of future expenditures. During the third quarter, the Côté Gold UJV amended this requirement to two months from three months. The Company uses dividends and intercompany loans to repatriate funds from its operations and the timing of dividends may impact the timing and amount of required financing at the corporate level, including the Company's drawdowns under the Credit Facility. As at December 31, 2022, $236.4 million of cash and cash equivalents was held by Côté Gold and Essakane. The cash at Côté will be used for expenditures of Côté Gold and excess cash at Essakane is repatriated through dividend payments, of which the Company will receive its 90% share, net of dividend taxes. The Company funded its portion of the Côté Gold UJV funding in 2022 with available cash balances, cash generated from its operations and drawdowns on the Credit Facility.
The following table summarizes the Company's outstanding long-term debt:
| ($ millions)1 | Dec 31 | Dec 31 Dec 31 2021 2020 | ||
|---|---|---|---|---|
| 2022 | ||||
| Credit Facility 5.75% senior notes Equipment loans | $ 455.0 | $ — $ — | ||
| 447.6 | 445.7 | 438.6 | ||
| 16.1 | 18.7 28.0 | |||
| $ 918.7 | $ 464.4 $ 466.6 | |||
| 1. Long-term debt does not include leases in place at continuing operations of $73.8 million as at December 31, 2022 (December 31, 2021 - $11.4 million, December 31, 2020 - $10.3 million). | of $73.8 million as at December 31, 2022 (December 31, 2021 - $11.4 million, December |
Credit Facility
The Company has a $500 million Credit Facility, which was entered into in December 2017 and amended including in February 2021, to primarily extend the maturity date from January 31, 2023, to January 31, 2025, for $490 million of the available credit. During the year ended December 31, 2022, the Company drew down $455 million on the Credit Facility. As at December 31, 2022, the Company had letters of credit in the amount of $18.4 million issued under the Credit Facility to guarantee certain environmental indemnities and $26.6 million was available under the Credit Facility. Subsequent to the year ended December 31, 2022, the Company issued a letter of credit totaling $10.8 million under the Credit Facility to guarantee certain environmental indemnities. The Company repaid $9.1 million on the Credit Facility on January 31, 2023 as the available credit reduced to $490 million.
The Credit Facility provides for an interest rate margin above London Interbank Offered Rate, banker’s acceptance prime rate and base rate advances which vary, together with fees related thereto, according to the total Net Debt to EBITDA ratio of the Company. The Credit Facility is secured by certain of the Company's real assets, guarantees by certain of the Company’s subsidiaries and pledges of shares of certain of the Company's subsidiaries. The key terms of the Credit Facility include certain limitations on incremental debt, certain restrictions on distributions and financial covenants including Net Debt to EBITDA and Interest Coverage. The Company entered into an amendment in conjunction with entering into a definitive agreement to sell its interests in the Rosebel mine where the lenders under the credit facility provided consent to release their security over the Rosebel mine at the close of the transaction. The amendment requires that the proceeds from the sale be used for funding the Côté Gold project with certain exceptions. The Company entered into a further amendment to obtain consent for the amendment to the Amended UJV agreement as part of the funding agreement with SMM. Subsequent to December 31, 2022, the Company obtained consent for the sale of the Bambouk assets.
Page | 7 of 32
OUTLOOK
Liquidity Outlook
The remaining attributable funding required by the Company to the Côté Gold UJV to complete the construction of the Côté Gold Project is estimated to be between $800 and $875 million from January 1, 2023. SMM will be funding up to $340 million of this amount on behalf of the Company as per the funding agreement entered into with SMM on December 19, 2022 (see “Côté Gold Project”), requiring the Company to fund approximately $460 to $535 million during 2023.
The transaction with Zijin Mining Group Co. Ltd. to sell the Company’s interests in the Rosebel mine closed on January 31, 2023, and the Company received total cash consideration of $371.5 million on January 31, 2023, with estimated additional proceeds of $24.8 million expected to be received by the end of March 2023, subject to closing working capital adjustments. The Company is expecting to close the transaction for the sale of its interests in the Bambouk assets during the second and third quarters of 2023 for pre-tax cash consideration of $282 million.
Based on strategic transactions executed in the fourth quarter of 2022, the information currently available and prevailing market conditions, which impact project expenditures and operating cash flows, the Company believes it has met the remaining funding requirements to complete construction of the Côté Gold Project based on the current estimated cost and schedule and does not expect that it will require additional liquidity in 2023. The Company continues to advance additional financing initiatives to strengthen its balance sheet, improve its liquidity and reduce amounts drawn under its credit facility, and in order to place the Company in a strong position to return to a 70% interest in the Côté Gold Project.
The Company’s financial results are highly dependent on the price of gold, oil and foreign exchange rates and future changes in these prices will, therefore, impact performance. The Company will be dependent on the cash flows generated from the Côté Gold project to repay its existing and any additional indebtedness that it may incur to fund the remaining construction costs of the Côté Gold project. Readers are encouraged to read the “Caution Regarding Forward Looking Statements” and the “Risk Factors” sections contained in the Company’s 2021 Annual Information Form, which is available on SEDAR at www.sedar.com and the “Caution Regarding Forward Looking Statements” and “Risk and Uncertainties” section of the MD&A.
Operating Performance Outlook
| Actual 2022 | Full Year Guidance 20231 | |
|---|---|---|
| Essakane (000s oz) Westwood (000s oz) | 432 | 340 – 380 70 – 90 |
| 67 | ||
| Total attributable production (000s oz)2 | 499 | 410 – 470 |
| Cost of sales2 ($/oz sold) Cash costs2.3 ($/oz sold) AISC2,3 ($/oz sold) Depreciation expense ($ millions) Income taxes4 paid ($ millions) | $ 1,041 | $1,125 – $1,175 $1,125 – $1,175 $1,625 – $1,700 $245 – $255 $70 – $80 |
| $ 1,052 | ||
| $ 1,508 | ||
| $ 240.5 | ||
| $ 67.5 |
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 1.00 and average crude oil price of $91 per barrel.
2. Consists of Essakane and Westwood on an attributable basis of 90% and 100%, respectively. Westwood production includes approximately 10,000 to 15,000 ounces of production from the Fayolle property in the second half of 2023.
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 "West Africa – Bambouk assets" for additional details.
Page | 8 of 32
Production Outlook
Attributable gold production for 2023, excluding Rosebel, is expected to be in the range of 410,000 to 470,000 ounces.
Essakane attributable gold production is expected to be in the range of 340,000 to 380,000 ounces as grades are expected to return closer to reserve grades. Production in the first half of the year is expected to be lower as mining will prioritize stripping activities in order to provide access to two new ore phases in the second half of the year and into 2024. Mill feed during the first half of the year will be supplemented with stockpiled ore that has lower grades to sustain throughput rates.
Westwood gold production is expected to be in the range of 70,000 to 90,000 ounces, with an increasing proportion of ore sourced from the underground mine. Production levels are expected to progressively increase over the course of the year benefiting from the continued advancement of underground mining activities into higher grade zones with supplementation from available surface deposits as required. Production from the Fayolle property is expected to commence in the second half of 2023.
Costs Outlook
Cash costs¹ are expected to be between $1,125 and $1,175 per ounce sold. The increase in cash costs per ounce sold compared to that from continuing operations in 2022 is due to an expected return closer to reserve grades at Essakane as well as a continuation of the escalated pricing levels of certain consumables as experienced during the second half of 2022. While pricing for the main consumables including cyanide, lime and grinding media are expected to remain in line with the levels of second half of 2022, certain consumable pricing such as activated carbon, explosives and fuel products are expected to remain under pricing pressure in 2023 reflecting continued imbalances in global supply and demand.
AISC is expected to be in the range of $1,625 to $1,700 per ounce sold. The increase in AISC per ounce sold in 2023 as compared to that from continuing operations in 2022 is due to the same reasons as cash costs per ounce sold as well as the higher per ounce contribution of corporate costs as a result of the sale of the Company’s interest in the Rosebel gold mine.
Cash costs and AISC per ounce sold in the first half of 2023 is expected to be at or above the high end of the annual guidance range due to lower gold production, and sales volumes, in addition to higher waste stripping in accordance with the mine plans, as compared to the second half of the year. The Company notes that continued external cost pressures may result in an increase in costs and capital expenditures.
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 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% current ownership (see also "Côté Gold Project"). Other expansion capital expenditures¹ (excluding Côté Gold) are expected to be approximately $5 million (± 5%) at Essakane in fulfillment of the relocation commitment to the Essakane village.
| ($ millions) | Actual 2022 | Full Year Guidance 2023 | ||
|---|---|---|---|---|
| Sustaining2 | Expansion | Total | Sustaining2 Expansion Total | |
| Essakane (±5%) Westwood (±5%) | $ 158.8 | $ 3.8 | $ 162.6 | $ 150 $ 5 $ 155 45 — 45 |
| 30.3 | 4.8 | 35.1 | ||
| Côté Gold Corporate | 189.1 | 8.6 | 197.7 | 195 |
| — | 531.7 | 531.7 | ||
| 1.3 | — | 1.3 | ||
| Total3,4,5,6 | $ 190.4 | $ 540.3 | $ 730.7 | $ 195 $ 805 - 880 $1,000 - 1,075 |
1. 100% basis, unless otherwise stated.
| Sustaining capital includes capitalized stripping of (i) | $30.2 million for Essakane | |
| for the full year guidance. See "Outlook" sections below. | ||
| Includes | $3 mi |
4. Capitalized borrowing costs are not included.
5. See "Costs Outlook" section above.
6. The full year guidance does not include expenditures for the Boto asset currently held for sale. See "West Africa – Boto Gold Project" for additional details.
Page | 9 of 32
Exploration Outlook
Exploration expenditures for 2023 are expected to be approximately $18 million, including $3.0 million on the Gosselin resource drill program, as well as other near-mine and greenfield programs.
Full Year Guidance 20232
| Actual 2022 | ||
|---|---|---|
| Capitalized | Expensed | Total |
| $ — | $ 25.1 | $ 25.1 |
| 8.1 | 4.4 | 12.5 |
| $ 8.1 | $ 29.5 | $ 37.6 |
| ($ millions) | Capitalized Expensed | Total | |
|---|---|---|---|
| Exploration projects – greenfield | — | 13 | 13 |
| Exploration projects – brownfield1 | 3 | 2 | 5 |
| 3 | 15 | 18 |
1. Of the $8.1 million of capitalized and $4.4 million of expensed brownfield expenditures, $2.7 million and $3.2 million respectively relates assets held for sale. Full year 2023 guidance on brownfield exploration expenditures has also been included in the capital expenditure guidance table. See “Capital Expenditure”.
2. The full year guidance does not include expenditures for the Boto asset currently held for sale. See "West Africa – Boto Gold Project" for additional details.
Page | 10 of 32
OPERATIONS – CONTINUING
Essakane Mine (IAMGOLD interest – 90%)1 | Burkina Faso
| Q4 2022 | Q4 2021 | 2022 | 2021 2020 | |
| Key Operating Statistics Ore mined (000s t) Waste mined (000s t) Material mined (000s t) – total Strip ratio2 Ore milled (000s t) Head grade (g/t) Recovery (%) Gold production (000s oz) – 100% Gold production (000s oz) – attributable 90% Gold sales (000s oz) – 100% Average realized gold price3 ($/oz) | 4,113 10,903 15,016 2.7 3,292 1.13 91 108 98 102 $ 1,794 | 16,015 15,762 44,405 39,479 60,420 55,241 2.8 2.5 12,948 12,439 1.31 1.18 84 86 457 404 412 364 453 399 $ 1,794 $ 1,791 | ||
| 1,691 | 12,585 | |||
| 8,795 | 37,100 | |||
| 10,486 | 49,685 | |||
| 5.2 | 2.9 | |||
| 2,788 | 11,632 | |||
| 1.35 | 1.44 | |||
| 89 | 89 | |||
| 108 | 480 | |||
| 98 | 432 | |||
| 108 | 489 | |||
| $ 1,702 | $ 1,804 | |||
| Financial Results ($ millions)1 Revenues4 | $ 184.2 | $ 813.9 $ 715.0 | ||
| $ 184.1 | $ 883.3 | |||
| Operating costs Royalties | (103.2) | (84.3) (9.2) | (395.7) | (387.6) (364.5) (40.7) (36.8) |
| (9.5) | (43.8) | |||
| Cash costs3 Other mine costs5 | $ (112.7) | $ (93.5) (43.1) | $ (439.5) | $ (428.3) $ (401.3) (43.8) (6.7) |
| 9.3 | 8.3 | |||
| Cost of sales4 Sustaining capital expenditures3,6 Other costs and adjustments7 | $ (103.4) | $ (136.6) (22.9) 41.6 | $ (431.2) | $ (472.1) $ (408.0) (51.2) (37.3) 36.7 7.6 |
| (42.4) | (158.8) | |||
| (11.4) | (13.2) | |||
| AISC3 Expansion capital expenditures3,8 | $ (157.2) | $ (117.9) $ (24.1) | $ (603.2) | $ (486.6) $ (437.7) $ (84.4) $ (76.4) |
| $ (1.3) | $ (3.8) | |||
| Performance Measures9 Cost of sales excluding depreciation10 ($/oz sold) Cash costs3 ($/oz sold) AISC3 ($/oz sold) | $ 1,333 $ 912 $ 1,150 | $ 1,042 $ 1,023 $ 945 $ 1,007 $ 1,074 $ 1,098 | ||
| $ 958 | $ 882 | |||
| $ 1,043 | $ 899 | |||
| $ 1,456 | $ 1,234 |
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 36 of the consolidated interim financial statements for revenues and cost of sales. Cost of sales is net of depreciation expense.
5. Other mine costs include the NRV adjustments of long-term portions of ore stockpiles and excludes by-product credits.
6. Includes sustaining capitalized stripping for the fourth quarter 2022 of $30.2 million (fourth quarter 2021 - $6.7 million) and 2022 of $95.9 million (2021 - $7.7 million).
7. Other costs and adjustments include NRV adjustments of long-term portions of ore stockpiles, sustaining lease principal payments, environmental rehabilitation accretion and depletion and prior period operating costs, partially offset by by-product credits.
8. Includes expansion capitalized stripping for the fourth quarter 2022 of $nil (fourth quarter 2021 - $21.1 million) and 2022 of $nil (2021 - $65.0 million).
9. Cost of sales, cash costs and AISC per ounce sold may not be calculated based on amounts presented in this table due to rounding.
10. Includes non-cash ore stockpile and finished goods inventories NRV write-up of $9.6 for the fourth quarter 2022 (fourth quarter 2021 – $45.2 million write-down) and write-up of $9.6 million for 2022 (2021 - $45.2 million write-down; 2020 - $nil), which had an impact on cost of sales per ounce sold for fourth quarter 2022 of ($89) per ounce (fourth quarter 2021 - $441 per ounce sold) and ($20) per ounce sold for 2022 (2021 - $100 per ounce sold; 2020 - $nil per ounce sold).
Annual attributable gold production for Essakane was a record 432,000 ounces (480,000 ounces on a 100% basis), exceeding the upper end of the updated guidance range of 410,000 to 430,000 ounces, as the mine benefited from higher than expected grades in the year. Attributable gold production in the fourth quarter was 98,000 ounces, in line with the same prior year period.
Mining activity of 10.5 million tonnes in the fourth quarter was 30% lower than the same prior year period, resulting in mining activity of 49.7 million tonnes for the year, an 18% decrease from the prior year. Mining activities were lower as a result of supply chain constraints related to the deteriorating security environment in the country and region while ensuring necessary stripping activities were achieved to secure access to ore planned for mining in 2023.
Page | 11 of 32
Mill throughput in the fourth quarter was 2.8 million tonnes at an average head grade of 1.35 g/t, 15% lower than the same prior year period. On an annual basis, mill throughput was 11.6 million tonnes at an average grade of 1.44 g/t, with volumes 10% lower than the prior year. The decline during the quarter and year is primarily due to higher proportions of hard rock being milled, as well as lower plant availability due to planned maintenance and supply chain constraints. The processing plant achieved recoveries of 89% in the fourth quarter and for the year, with improvements year over year as a result of higher head grades, improved ore blending practices and gravity recovery circuit improvements helping to offset higher graphite and sulphur content.
Production costs were higher in the second half of the year due to inflation mainly impacting certain consumables, energy and fuel input costs and the impact of in country supply chain challenges described below.
Cost of sales, excluding depreciation, in the fourth quarter 2022 of $103.4 million was lower by $33.2 million or 24% from the period prior, due to a NRV write-down of $45.2 million recorded in Q4 2021, partially offset by higher production costs. Cost of sales (excluding depreciation) per ounce sold in the quarter of $958 was lower by $375 per ounce or 28% from the period prior, primarily due to lower cost of sales and higher gold sales. For the year ended 2022, cost of sales, excluding depreciation, of $431.2 million was lower by $40.9 million or 9% from the prior period, due to a NRV write-down of $45.2 million recorded in the prior year, offset by an increase in production costs. Cost of sales per ounce sold in 2022, excluding depreciation, of $882 per ounce sold, was lower by $160 or 15%, primarily due to lower cost of sales and higher gold sales
Cash costs per ounce sold for the fourth quarter of $1,043 were higher by $131 or 14% from the prior period, due to higher production costs, partially offset by higher gold sales. Cash costs per ounce sold for the full year 2022 of $899 were lower by $46 or 5% than the year prior, primarily due to higher gold sales, partially offset by higher cash costs. AISC per ounce sold for the fourth quarter of $1,456 was higher by $306 or 27% from the prior year period, due to higher sustaining capital expenditures and higher cash costs, partially offset by higher gold sales. AISC per ounce sold for the full year 2022 of $1,234 was higher by $160 or 15% than the year prior, primarily due to higher sustaining capital expenditures and cash costs, partially offset by higher gold sales.
Total capitalized stripping in the fourth quarter of $30.2 million was higher by $2.4 million or 9% from the prior year period due to higher mining costs, partially offset by lower volumes of stripping activities as described above. Total capitalized stripping for the full year 2022 of $95.9 million was higher by $23.2 million or 32% due to higher mining costs, partially offset by lower volumes of stripping activities as described above.
Sustaining capital expenditures, excluding capitalized stripping, in the fourth quarter totaled $12.2 million. Expansion capital expenditures in the fourth quarter totaled $1.3 million. Sustaining capital expenditures, excluding capitalized stripping, for the full year 2022 of $62.9 million included mobile and mill equipment of $18.8 million, capital spares of $16.9 million, tailings management of $8.0 million, airstrip extension of $5.5 million, and other sustaining projects of $13.7 million. Expansion capital expenditures, of $3.8 million for 2022 included capital projects associated with community village resettlement and tailings management plant upgrade.
The Company completed a study to assess the viability of the Essakane heap leach project for processing alternatives of the estimated 23 million tonnes of low grade stockpiled material at site. During the study, positive grade reconciliations were observed from the processing of the low grade stockpiled ore through the existing mill. The test results suggested that approximately 9.8 million tonnes of this stockpiled ore can be processed through the CIL circuit economically and as a result the Company will not be pursuing the heap leach project. The company is planning to announce the results of the study in an updated NI 43-101 compliant technical report in the first half of 2023.
The security situation in Burkina Faso continued to deteriorate in 2022, with terrorist related incidents occurring in the country. 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. The Company continues 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 and negative impact on future operating performance.
Page | 12 of 32