IAMGOLD Reports Second Quarter 2022 Results
NEWS RELEASE
TSX: IMG NYSE: IAG
IAMGOLD REPORTS SECOND QUARTER 2022 RESULTS
All monetary amounts are expressed in U.S. dollars, unless otherwise indicated.
Toronto, Ontario, August 3, 2022 – IAMGOLD Corporation (NYSE:IAG, TSX:IMG) (“IAMGOLD” or the “Company”) today reported its financial and operating results for the second quarter ended June 30, 2022.
Q2 2022 HIGHLIGHTS:
- Attributable gold production of 170,000 ounces in the second quarter, and 344,000 ounces year to date (“YTD”), on continued strong performance from Essakane and improvements at Rosebel; annual production is expected to be in the upper end of the guidance range of 570,000 to 640,000 ounces.
- Cost of sales per ounce sold of $1,130 ($1,081 YTD), cash costs1 per ounce sold of $1,119 ($1,066 YTD) and allin sustaining costs1 ("AISC") per ounce sold of $1,604 ($1,545 YTD); cost guidance for 2022 is unchanged with cash costs¹ expected to be between $1,100 and $1,150 per ounce sold and AISC¹ expected to be between $1,650 and $1,690 per ounce sold.
- Mine-site free cash flow1 of $42.8 million ($130.3 million YTD).
- Net earnings and adjusted net earnings1 per share attributable to equity holders of ($0.02) and ($0.01), respectively; YTD net earnings1 and adjusted net earnings1 per share attributable to equity holders of $0.03 and $0.04, respectively.
- Earnings before interest, income taxes, depreciation and amortization ("EBITDA")1 of $101.4 million ($236.3 million YTD) and adjusted EBITDA1 of $110.0 million ($247.5 million YTD).
- Cash, cash equivalents and short-term investments and liquidity1 at the end of the quarter of $452.9 million and $801.6 million, respectively.
- Announced the remaining costs to complete, project economics and updated life-of-mine (“LOM”) plan for Côté Gold to be included in a new NI 43-101 technical report (see news release dated August 3, 2022). The Company's share of remaining spend to complete construction and bring Côté Gold into production is estimated to be between approximately $1.2 and $1.3 billion from July 1, 2022, net of leases and working capital.
- Advanced the strategic review process to evaluate options for Rosebel and initiated review of development and exploration assets in South America and West Africa.
- Published its 2021 Sustainability Report and named as one of the Corporate Knights' Canada's Best 50 Corporate Citizens of 2022, ranking as one of the top 50 companies in Canada for corporate citizenship.
“We are pleased to report that our operations continued their strong production performance in the second quarter, driven by the continued outperformance at Essakane and operational improvements at Rosebel,” said Maryse Bélanger, Chair and Interim President and CEO of IAMGOLD. “In the current inflationary environment, it is essential to mitigate the impact of rising costs through diligent focus on operations and productivity initiatives. Every gold ounce produced has to be done safely, and we applaud our teams for their continued commitment to Zero Harm® and the Côté construction team for achieving the milestone of 5.7 million hours with no lost time injuries to date.
“Alongside our quarterly results today, we also announced the completion of the Côté Gold project review, risk analysis and updated mine plan. This is the culmination of months of in-depth analysis of the project, by the Company’s management and project teams, EPCM contractor and technical experts. Côté Gold is transformational for IAMGOLD, offering robust cash flow generation once in production with significant potential for future growth. We truly believe that Côté Gold is not just a project, but the start of a district, with the addition of Gosselin and minimal historical exploration targeting Côté/Gosselin style intrusion-hosted deposits within our 595 km2 land package.
“The construction of Côté is happening in an environment with significant headwinds, including COVID-19, inflation and other global events. The project today is over 57% complete and the updated project costs and schedule give us greatly improved visibility towards completion. Given the strategic importance of Côté Gold to achieve our goal of becoming a leading high-margin gold producer, we are actively pursuing various alternatives to increase liquidity to deliver Côté on its updated schedule. The strategic review process of Rosebel is active and ongoing and we will provide updates when appropriate. Further, we have initiated a separate review of development and exploration assets in South America and West Africa. I am confident we will address the near-term challenges in order to advance Côté and better position IAMGOLD as a more resilient, agile company for the current environment.”
For more information, refer to the Management Discussion and Analysis (“MD&A”) and unaudited consolidated interim Financial Statements as at and for the three and six months ended June 30, 2022, that are available on the Company's website at www.iamgold.com and on SEDAR at www.sedar.com. The Company uses certain non-GAAP financial performance measures throughout this news release. Please refer to the "Non-GAAP Financial Performance Measures" section of this news release and the MD&A for more information.
QUARTERLY REVIEW
The following table summarizes certain operating and financial results for the three months ended June 30, 2022 (Q2 2022), March 31, 2022 (Q1 2022), June 30, 2021 (Q2 2021) and six months ended June 30, 2022 (YTD 2022):
| Q2 2022 | Q1 2022 Q2 2021 | YTD 2022 | YTD 2021 | ||
|---|---|---|---|---|---|
| Key Operating Statistics Gold production – attributable (000s oz) Gold sales – attributable (000s oz) Average realized gold price1 ($/oz) Cost of sales2 ($/oz sold) – attributable Cash costs1 ($/oz sold) – attributable AISC1 ($/oz sold) – attributable | 174 139 181 135 $ 1,813 $ 1,800 $ 1,035 $ 1,150 $ 1,017 $ 1,149 $ 1,490 $ 1,422 | 295 288 $ 1,788 $ 1,110 | |||
| 170 | 344 | ||||
| 170 | 351 | ||||
| $ 1,799 | $ 1,806 | ||||
| $ 1,130 | $ 1,081 | ||||
| $ 1,119 | $ 1,149 | $ 1,066 | $ 1,108 | ||
| $ 1,604 | $ 1,545 | $ 1,324 | |||
| Financial Results ($ millions, except where noted) Revenues Gross profit EBITDA1 Adjusted EBITDA1 Net earnings (loss) attr. to equity holders | $ 356.6 $ 265.6 $ 81.0 $ 27.9 $ 134.9 $ 87.0 $ 137.5 $ 84.8 $ 23.8 $ (4.5) $ 26.1 $ (3.6) $ 0.05 $ (0.01) $ 0.05 $ (0.01) $ 133.9 $ 54.9 $ 142.3 $ 37.3 $ 87.5 $ 1.9 $ 76.6 $ 23.9 $ 92.1 $ 128.4 | $ 563.0 $ 72.1 $ 200.8 $ 184.9 $ 15.0 $ 2.6 $ 0.03 $ 0.01 $ 137.4 $ 139.0 $ 91.4 | |||
| $ 334.0 | $ 690.6 | ||||
| $ 49.4 | $ 130.4 | ||||
| $ 101.4 | $ 236.3 | ||||
| $ 110.0 | $ 247.5 | ||||
| $ (9.6) | $ 14.2 | ||||
| Adjusted net earnings (loss) attr. to equity holders1 | $ (6.3) | $ 19.8 | |||
| Net earnings (loss) per share attr. to equity holders Adjusted EPS3 attr. to equity holders1 Net CFO4 before changes in working capital1 Net cash from operating activities Mine-site free cash flow1 Capital expenditures1,5 – sustaining Capital expenditures1,5 – expansion | $ (0.02) | $ 0.03 | |||
| $ (0.01) | $ 0.04 | ||||
| $ 93.9 | $ 227.8 | ||||
| $ 81.9 | $ 224.2 | ||||
| $ 42.8 | $ 130.3 | ||||
| $ 67.1 | $ 143.7 | $ 37.6 | |||
| $ 189.0 | $ 281.1 | $ 217.2 | |||
| June 30 | March 31 December 31 2022 2021 | June 30 | December 31 2021 | ||
| 2022 | 2022 | 2022 | |||
| Financial Position ($ millions) Cash, cash equivalents and short-term investments Long-term debt Net cash (debt)1 Available credit facility | $ 524.4 $ 552.5 $ 463.5 $ 464.4 $ (6.5) $ 16.3 $ 498.2 $ 498.3 | $ 552.5 $ 464.4 $ 16.3 $ 498.3 | |||
| $ 452.9 | $ 452.9 | ||||
| $ 612.0 | $ 612.0 | ||||
| $ (225.1) | $ (225.1) | ||||
| $ 348.7 | $ 348.7 |
1. This is a non-GAAP measure. See "Non-GAAP Financial Measures".
2. Throughout this news release, cost of sales, excluding depreciation, is disclosed in the cost of sales note in the annual consolidated financial statements.
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3. EPS: “net earnings (loss) per share “
4. CFO: “cash from operating activities”
5. 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".
Operating Results
Attributable gold production for the second quarter was 170,000 ounces, down 4,000 ounces or 2% from the prior quarter. Attributable gold sales of 170,000 ounces were in-line with production, with the average realized gold price of $1,799 per ounce reflecting the delivery of 37,500 ounces at $1,500 per ounce under the 2019 prepay arrangement.
Cost of sales (excluding depreciation) per ounce sold was $1,130 for the second quarter, up $95 per ounce or 9% from $1,035 per ounce sold in the prior quarter. Excluding depreciation, cost of sales per ounce sold increased from the prior quarter due to higher production costs and lower production volume.
Cash costs1 per ounce sold in the second quarter were $1,119, up $102 per ounce or 10% from the prior quarter on higher production costs and lower gold sales. Included was a non-cash NRV write-down of short-term ore stockpile and finished goods inventories of $19 per ounce sold (first quarter 2022 - $9 per ounce sold). AISC per ounce sold of $1,604 was up $114 per ounce or 8% from the prior quarter, primarily due to the increase in cash costs per ounce sold.
Health and Safety
Health and safety is core to the Company’s relentless pursuit of its Zero Harm® vision. Through various programs, the Company continuously promotes a safe work environment and a wellness program at all sites. The DARTFR2 (days away, restricted, transferred duty frequency rate) was 0.31 for the first half of 2022, tracking below the global annual target of 0.42. The TRIFR2 (total recordable injuries frequency rate) was 0.85 for the first half of 2022, tracking above the global annual target of 0.73. Côté Gold has surpassed over 5.7 million hours with no lost time injuries to date. The operations have been increasing focus on situational awareness and preventative activities related to work tasks.
The global COVID-19 pandemic continues to evolve and the management thereof remains a focus for the business. The Company continues to closely monitor developments and is taking necessary measures to manage the impact of the COVID-19 pandemic on its personnel, operations, construction and development projects and exploration activities. COVID- 19 detection and mitigation protocols at our sites are reviewed on an ongoing basis to adapt to the evolving situation.
Financial Results
For the second quarter ended June 30, 2022, net earnings and adjusted net earnings1 per share attributable to equity holders were ($0.02) and ($0.01), respectively, EBITDA1 was $101.4 million and adjusted EBITDA1 was $110.0 million.
Second quarter 2022 mine site free cash flow was $42.8 million, down $44.7 million from the prior quarter, due to lower operating cash flow at Essakane ($54.6 million) and Westwood ($11.1 million), mainly due to higher operating costs, lower sales volume and a lower average realized gold price, and higher capital expenditures at Rosebel ($16.0 million), partially offset by higher operating cash flow from Rosebel ($21.5 million) and lower capital expenditures at Essakane ($17.1 million).
Net cash from operating activities for the second quarter 2022 was $81.9 million, a decrease of $60.4 million from the prior quarter, primarily due to lower net cash earnings ($19.9 million), higher income taxes paid resulting from withholding taxes on repatriation of funds ($26.9 million) and a net outflow in non-cash working capital movements ($20.4 million), partially offset by an increase in cash inflows from the settlement of derivatives ($6.3 million).
Net cash used in investing activities for the second quarter 2022 was $269.2 million, an increase of $108.7 million from the prior quarter, primarily due to an increase in capital expenditures for property, plant and equipment ($87.4 million) related to the Côté Gold construction and timing of financing costs paid and capitalized as borrowing costs ($13.1 million).
Net cash from financing activities in the second quarter 2022 was $129.9 million, an increase of $137.4 million from the prior quarter, primarily due to proceeds from drawdowns from the Company’s secured revolving credit facility (the “Credit Facility”) ($150.0 million), partially offset by an increase in dividends paid to non-controlling interest ($11.6 million) on the declaration of dividends from subsidiaries.
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Liquidity and Capital Resources
As at June 30, 2022, the Company had $451.1 million in cash and cash equivalents, $1.8 million in short-term investments and net debt1 of $225.1 million. Restricted cash in support of environmental closure costs obligations related to Essakane totaled $38.9 million.
Approximately $348.7 million was available under the Credit Facility resulting in liquidity1 at June 30, 2022 of approximately $802 million. The Côté unincorporated joint venture (the "Côté UJV") required its joint venture partners to fund three months of future expenditures. Subsequent to quarter end, the Côté UJV has amended this requirement to two months. The Company has funded its portion of the Côté UJV funding through cash generated from its operations and the Credit Facility. The Company uses dividends and intercompany loans to repatriate funds from its operations and the timing of dividends may impact the timing and amount of required financing, including the Company’s drawdown under the Credit Facility.
The following table summarizes the Company's outstanding long-term debt:
| ($ millions)1 | June 30, | March 31, December 31, 2022 2021 | |
|---|---|---|---|
| 2022 | |||
| Credit Facility 5.75% senior notes Equipment loans | $ 150.0 | $ — $ — | |
| 447.4 | 447.0 | 445.7 | |
| 14.6 | 16.5 18.7 | ||
| $ 612.0 | $ 463.5 $ 464.4 |
1. Long-term debt does not include: 2019 and 2022 prepay arrangements and leases of $62.0 million as at June 30, 2022 (March 31, 2022 - $62.5 million; December 31, 2021 - $65.6 million),
Prepay Arrangements
During 2019, the Company entered into a gold sale prepayment arrangement (the “2019 Prepay Arrangement”) with a collar range of $1,300 to $1,500 per ounce at a cost of 5.38% per annum. Pursuant to the 2019 Prepay Arrangement, the Company received a cash prepayment of $169.8 million in December 2019 in exchange for delivering 150,000 gold ounces in 2022. During the three and six months ended June 30, 2022, 37,500 ounces and 75,000 ounces, respectively, were physically delivered into the 2019 Prepay Arrangement and the Company received $7.5 million and $15.0 million, respectively, in cash in relation to the collar.
During 2021, the Company entered into gold sale prepayment arrangements (the "2022 Prepay Arrangements") at a weighted average cost of 4.45% per annum in respect of 150,000 gold ounces. These arrangements have an average forward contract price of $1,753 per ounce on 50,000 gold ounces and a collar range of $1,700 to $2,100 per ounce on 100,000 gold ounces. This will result in a total prepayment to the Company of $236 million over the course of 2022 and the requirement on the part of the Company to physically deliver such ounces over the course of 2024. The 2022 Prepayment Arrangements have the effect of rolling the 2019 Prepay Arrangement from 2022 to 2024 after the completion of the construction of Côté Gold. The Company received cash prepayments of $59.0 million and $118.0 million, respectively, during the three and six months ended June 30, 2022 pursuant to the 2022 Prepay Arrangements.
OUTLOOK
Liquidity Outlook
The remaining attributable spend to complete the construction of the Côté Gold project are estimated to be between $1.2 and $1.3 billion from July 1, 2022, net of leases and working capital (see “Côté Gold Project”). The Côté Gold UJV requires its joint venture partners to fund, in advance, previously three and now two months of future expenditures. 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, including the Company's drawdowns under the Credit Facility. Primarily due to the timing of a dividend payment from Essakane, the Company drew down an additional $80 million at the end of July 2022 and issued a $19 million letter of credit under the Credit Facility.
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Based on the recently updated cost estimate and schedule of construction of the Côté Gold project, information currently available and prevailing market prices, which impact operating cash flows, the Company will require additional liquidity to complete construction of the project and continues to seek to implement a fully funded financing plan by the end of the year and prior to the necessity to make any potential adjustments to the timing of the advancement of the project based on the updated schedule.
As such, the Company is actively pursuing various alternatives to increase its liquidity and capital resources including disposition of one or more of the Company’s assets and/or an interest therein and/or joint-venture partnerships, additional secured debt which could be provided by banks, private capital providers and/or institutional investors, additional unsecured debt including unsecured and/or convertible notes, sales of common shares and/or the extension of the 2022 Prepay Arrangements.
In January 2022, the Company announced that it was commencing a strategic review process to evaluate options for its Rosebel/Saramacca mining complex, including a potential sale of this complex. The Company advanced this process in the second quarter 2022. In addition, the Company is evaluating strategic alternatives with respect to certain of its development and exploration assets in South America and West Africa (excluding Essakane), that may include the disposition of all or an interest in one or more of such assets.
However, there can be no assurance that the Company will be successful in achieving financing solutions in time and/or on terms acceptable to the Company or that the strategic evaluations discussed above will result in a transaction. In this case and in order to execute its plans for the foreseeable future, including financing alternatives, the Company has developed certain potential alternatives to defer or reduce its capital spending and various other expenditures. These alternatives may impact future operating and financial performance and/or could extend the Côté Gold project construction timeline and significantly increase project costs, and/or dilute the Company’s interest in the Côté Gold project. Reductions in capital expenditures at the Côté Gold project requires majority approval from the Côté UJV oversight committee.
The Company’s financial results are highly dependent on the price of gold and future changes in the price of gold will, therefore, impact performance. The Company will be dependent on the cash flows generated from the Côté Gold project to eventually 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
| Actual YTD 2022 | Full Year Guidance 20221 | |
|---|---|---|
| Essakane (000s oz) Rosebel (000s oz) Westwood (000s oz) | 219 | 360 – 385 155 – 180 55 – 75 |
| 95 | ||
| 30 | ||
| Total attributable production (000s oz)2 | 344 | 570 – 640 |
| Cost of sales2 ($/oz sold) Cash costs2,3 ($/oz sold) AISC2,3 ($/oz sold) Depreciation expense ($ millions) Income taxes paid | $ 1,081 | $1,100 – $1,150 $1,100 – $1,150 $1,650 – $1,690 $280 – $290 $69 – $79 |
| $ 1,066 | ||
| $ 1,545 | ||
| $ 153.8 | ||
| $ 45.3 |
1 The full year guidance is based on the following 2022 full year assumptions: average realized gold price of $1,700 per ounce, USDCAD exchange rate of 1.25, EURUSD exchange rate of 1.20 and average crude oil price of $70 per barrel.
2 Consists of Essakane, Rosebel and Westwood on an attributable basis of 90%, 95% and 100%, respectively.
3 This is a non-GAAP financial measure. See "Non-GAAP Financial Measures".
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Production Outlook
Attributable gold production guidance for 2022 is unchanged and is expected to be in the upper end of the range of 570,000 to 640,000 ounces.
Costs Outlook
Costs guidance for 2022 is unchanged with cash costs¹ expected to be between $1,100 and $1,150 per ounce sold and AISC¹ expected to be between $1,650 and $1,690 per ounce sold. These estimates, issued in January 2022, included an inflation assumption of 5% to 7% on key consumables, translating to an increase of 1% to 2% in cash costs and AISC (reflected in the guidance figures). Additional cost pressures continue from systemic inflation, constrained global supply chains and the sanctions on trade with Russia, increasing the average cost of key consumables such as oil, ammonium nitrate, grinding media, lime and cyanide. The Company continues to work with its supply chain and seek alternatives to mitigate ongoing costs pressures, including the sourcing of appropriate alternatives, as well as progressing productivity initiatives at its operations through the IAMALLIN operational improvement program. Increases in oil prices have been partially mitigated by the existing oil hedge program, please refer to the MD&A for more detail. The Company notes that continued external cost pressures may result in an increase to costs and capital expenditures.
Income Taxes Paid
Income taxes paid guidance has been updated to be between $69 and $79 million ($55 – $65 million previously) to primarily account for withholding taxes on the repatriation of funds from Essakane.
Capital Expenditures1
| ($ millions) | Actual YTD 2022 | Full Year Guidance 2022 Sustaining2 Expansion3 Total | ||
|---|---|---|---|---|
| Sustaining2 | Expansion3 | Total | ||
| Essakane Rosebel4 Westwood | $ 78.8 | $ 1.5 | $ 80.3 | $ 165 $ 5 $ 170 105 35 140 40 10 50 |
| 48.2 | 20.7 | 68.9 | ||
| 16.1 | 1.2 | 17.3 | ||
| Boto Gold Corporate | 143.1 | 23.4 | 166.5 | 310 50 360 — 20 20 — — — |
| — | 9.6 | 9.6 | ||
| 0.6 | — | 0.6 | ||
| Total5,6,7,8 (±5%) | $ 143.7 | $ 33.0 | $ 176.7 | $ 310 $ 70 $ 380 |
1 100% basis, unless otherwise stated.
2 Sustaining capital includes capitalized stripping of (i) $17.2 million for Essakane and $7.3 million for Rosebel in Q2 2022 (ii) $47.1 million for Essakane and $19.8 million for Rosebel YTD 2022 and (iii) $110 million for Essakane and $45 million for Rosebel for the full year guidance. See "Outlook" sections below.
3 Expansion capital includes capitalized stripping of (i) $nil million for Essakane and $11.3 million for Rosebel in Q2 2022 (ii) $nil for Essakane and $14.8 million for Rosebel YTD 2022 and (iii) $nil for Essakane and $20 million for Rosebel for the full year 2022 guidance. See "Outlook" sections below.
4 Rosebel includes Saramacca at 70%.
5 Includes $10 million of capitalized exploration and evaluation expenditures also included in the Exploration Outlook guidance table.
6 Capitalized borrowing costs are not included.
7 In addition to the above capital expenditures, $24 million in total principal lease payments are expected.
8 See "Costs Outlook" section above.
Exploration
| ($ millions) | Actual YTD 2022 | Full Year Guidance 2022 Capitalized Expensed Total | ||
|---|---|---|---|---|
| Capitalized | Expensed | Total | ||
| Exploration projects – greenfield Exploration projects – brownfield1 | $ — | $ 14.7 | $ 14.7 | $ — $ 21 $ 21 10 4 14 |
| 3.9 | 2.6 | 6.5 | ||
| $ 3.9 | $ 17.3 | $ 21.2 | $ 10 $ 25 $ 35 |
1 Exploration projects - brownfield includes planned near-mine exploration and resource development of (i) 3.9 million YTD 2022, and (ii) $10 million for the full year 2022 guidance.
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OPERATIONS AND PROJECTS
Essakane Mine (IAMGOLD interest – 90%)1 | Burkina Faso
| Q1 2022 Q2 2021 | YTD 2021 | |||
|---|---|---|---|---|
| Q2 2022 | YTD 2022 | |||
| Key Operating Statistics Ore mined (000s t) Waste mined (000s t) Material mined (000s t) – total Strip ratio2 Ore milled (000s t) Head grade (g/t) Recovery (%) Gold production (000s oz) – 100% Gold production (000s oz) – attributable 90% Gold sales (000s oz) – 100% Average realized gold price3 ($/oz) | 3,832 3,559 11,346 11,730 15,178 15,289 3.0 3.3 3,162 3,169 1.39 1.44 88 81 124 118 112 106 131 115 $ 1,885 $ 1,801 | 7,994 22,167 30,161 2.8 6,358 1.40 81 231 208 229 $ 1,795 | ||
| 3,803 | 7,635 | |||
| 7,602 | 18,948 | |||
| 11,405 | 26,583 | |||
| 2.0 | 2.5 | |||
| 2,704 | 5,866 | |||
| 1.52 | 1.45 | |||
| 90 | 89 | |||
| 119 | 243 | |||
| 107 | 219 | |||
| 117 | 248 | |||
| $ 1,882 | $ 1,883 | |||
| Financial Results ($ millions)1 Revenues4 | $ 248.2 $ 208.2 | $ 412.3 | ||
| $ 218.8 | $ 467.0 | |||
| Operating costs Royalties | (86.4) | (90.4) (98.8) (12.3) (10.5) | (176.8) | (202.2) (20.6) |
| (10.6) | (22.9) | |||
| Cash costs3 Other mine costs5 | $ (97.0) | $ (102.7) $ (109.3) (0.4) (0.1) | $ (199.7) | $ (222.8) (0.4) |
| (0.3) | (0.7) | |||
| Cost of sales4 Sustaining capital expenditures3,6 Other costs and adjustments7 | $ (97.3) | $ (103.1) $ (109.4) (47.7) (11.3) 1.7 (1.7) | $ (200.4) | $ (223.2) (16.7) (3.4) |
| (31.1) | (78.8) | |||
| (2.0) | (0.3) | |||
| AISC3 Expansion capital expenditures3,8 | $ (130.4) | $ (149.1) $ (122.4) $ (1.0) $ (18.6) | $ (279.5) | $ (243.3) $ (33.1) |
| $ (0.5) | $ (1.5) | |||
| Performance Measures9 Cost of sales excluding depreciation ($/oz sold) Cash costs3 ($/oz sold) AISC3 ($/oz sold) | $ 784 $ 947 $ 781 $ 946 $ 1,134 $ 1,060 | $ 973 $ 971 $ 1,061 | ||
| $ 838 | $ 810 | |||
| $ 836 | $ 807 | |||
| $ 1,124 | $ 1,129 |
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 27 of the consolidated interim financial statements for revenues and cost of sales. Cost of sales is net of depreciation expense.
5 Other mine costs exclude by-product credits.
6 Includes sustaining capitalized stripping for the second quarter 2022 of $17.2 million (first quarter 2022 - $29.9 million; second quarter 2021 - $nil) and YTD 2022 of $47.1 million (YTD 2021 - $nil).
7 Other costs and adjustments include 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 second quarter 2022 of $nil (first quarter 2022 - $nil; second quarter 2021 - $12.9 million) and YTD 2022 of $nil (YTD 2021 - $22.1 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.
Essakane continued to deliver strong results and achieved attributable gold production of 107,000 ounces in the second quarter, lower by 5,000 ounces compared to the prior quarter. Lower production compared with the prior quarter is attributed to planned maintenance and supply chain challenges (described below), partially offset by higher grades than the reserve block model and continued improvements in recoveries.
Mining activity of 11.4 million tonnes in the second quarter was lower than the prior quarter, primarily due to lower waste stripping activities due to constraints in consumables from supply chain challenges in country and abroad, and the prioritization of ore mining. The reduction in stripping activities is not expected to materially impact production in 2022 and 2023.
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Mill throughput of 2.7 million tonnes at an average head grade of 1.52 g/t Au and plant availability of 86% was lower by 14% compared to the prior quarter. While the head grades were higher than the prior quarter, the feed rate and mill availability were lower due to the mill feed consisting of higher hard rock volumes, annual planned maintenance and supply chain challenges. Mill recovery of 90% in the second quarter was 2% higher than the prior quarter due to lower graphitic and sulfur content, combined with increased recovery from the gravity circuit that was optimized in 2021.
The security situation in Burkina Faso has further deteriorated during the second quarter and impacted the in-land supply chain resulting in delays in the delivery of consumables. The Company continues to take proactive measures to ensure the safety and security of in-country personnel and managed to limit the impact on production in the second quarter. The Company continues to adjust its protocols and the activity levels at the site according to the security environment. The Company is furthering certain additional investments in security infrastructure in the region and at the mine site, with the support of the government.
The IAMALLIN improvement project has continued with the execution phase in the second quarter, with the focus on mine equipment availabilities, mill feed optimization and supplies inventory management.
Outlook
Attributable gold production at Essakane in 2022 is expected to approximate the top-end of the guidance range of 360,000 to 385,000 ounces. The Company is investigating whether the updated block model may be underestimating grade as the complexity of mineralization has increased in the lower portions of the pit with higher amounts of coarse gold. The operation continues to execute on targeted operational improvements including improving mill throughput through optimizing blast fragmentation and further optimizing the gravity circuit through the planned addition of a double deck screen.
Cash costs continue to be under pressure due to systemic inflation and constrained global supply chains. The Company continues to actively work with authorities and suppliers to mitigate potential impacts and manage continuity of supply due to the security situation noted above while also investing in additional security infrastructure. Certain input costs at Essakane, including labour, are expected to be lower due to a weakened EURUSD exchange rate.
Bambouk District
The Bambouk District includes the Boto Gold project and the Karita Gold project and the Diakha-Siribaya Gold project located within 15 kilometres of the Boto Gold project in adjacent countries. The Company is undertaking an evaluation of strategic alternatives with respect to these development and exploration assets in West Africa that may include the disposition of all or an interest in one or more of such assets.
The Boto Gold project is a shovel ready development project located in southeastern Senegal along the border with Mali. During the second quarter 2022, geotechnical drilling was completed to further de-risk the Malikoundi pit design. At the Karita discovery in Guinea, the Company is undertaking a delineation drilling program to support an initial resource estimate. Subsequent to quarter-end, the Company reported initial assay results with highlights including: 34.0 metres grading 5.81 g/t Au, 25.0 metres grading 5.32 g/t Au and 12.0 metres grading 9.49 g/t Au (see news release dated July 6, 2022). At the Diakha deposit in Mali, work is continuing towards the completion of an updated mineral resource estimate aiming to convert mineral resources to a higher confidence level.
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Rosebel Mine (IAMGOLD interest – 95%)1 | Suriname
| Q1 2022 Q2 2021 | YTD 2021 | |||
|---|---|---|---|---|
| Q2 2022 | YTD 2022 | |||
| Key Operating Statistics Ore mined2 (000s t) Waste mined2 (000s t) Material mined2 (000s t) – total Strip ratio2,3 Ore milled (000s t) – Rosebel Ore milled2 (000s t) – Saramacca Ore milled2 (000s t) – total Head grade2,4 (g/t) Recovery2 (%) Gold production2 (000s oz) – 100% Gold production1 (000s oz) – owner operator Gold production (000s oz) – attributable 95% Gold sales1 (000s oz) – owner operator Average realized gold price5 ($/oz) | 1,588 1,102 11,128 6,956 12,716 8,058 7.0 6.3 1,555 1,412 757 803 2,312 2,215 0.81 0.52 91 83 55 31 49 27 46 25 49 25 $ 1,886 $ 1,793 | 2,349 | ||
| 1,500 | 3,088 | |||
| 13,965 | 25,093 | 15,866 | ||
| 15,465 | 28,181 | 18,215 | ||
| 9.3 | 8.1 | 6.8 | ||
| 1,572 | 3,127 | 3,052 | ||
| 629 | 1,386 | 1,711 | ||
| 2,203 | 4,515 | 4,763 | ||
| 0.88 | 0.84 | 0.68 | ||
| 92 | 91 | 86 | ||
| 57 | 112 | 88 | ||
| 51 | 100 | 76 | ||
| 49 | 95 | 72 | ||
| 54 | 103 | 70 | ||
| $ 1,861 | $ 1,873 | $ 1,765 | ||
| Financial Results ($ millions)1 Revenues8 | $ 91.6 $ 45.2 | $ 124.0 | ||
| $ 101.9 | $ 193.5 | |||
| Operating costs Royalties | (65.9) | (58.0) (40.7) (5.8) (3.9) | (123.9) | (91.2) (9.4) |
| (6.8) | (12.6) | |||
| Cash costs5,6 Other mine costs7 | $ (72.7) | $ (63.8) $ (44.6) (2.7) 0.1 | $ (136.5) | $ (100.6) — |
| (1.1) | (3.8) | |||
| Cost of sales8 Sustaining capital expenditures5,9 Other costs and adjustments10 | $ (73.8) | $ (66.5) $ (44.5) (20.5) (10.5) 0.4 (1.4) | $ (140.3) | $ (100.6) (18.1) (3.0) |
| (27.7) | (48.2) | |||
| (1.1) | (0.7) | |||
| AISC5 Expansion capital expenditures5,11 | $ (102.6) | $ (86.6) $ (56.4) $ (6.0) $ (15.7) | $ (189.2) | $ (121.7) $ (26.5) |
| $ (14.7) | $ (20.7) | |||
| Performance Measures12 Cost of sales excluding depreciation13 ($/oz sold) Cash costs5 ($/oz sold) AISC5 ($/oz sold) | $ 1,369 $ 1,767 $ 1,315 $ 1,766 $ 1,784 $ 2,237 | $ 1,432 $ 1,431 $ 1,732 | ||
| $ 1,349 | $ 1,359 | |||
| $ 1,327 | $ 1,321 | |||
| $ 1,874 | $ 1,832 |
1 Rosebel at 100% and Saramacca at 70%, as included in the consolidated interim financial statements, unless otherwise stated.
2 Includes Saramacca at 100%.
3 Strip ratio is calculated as waste mined divided by ore mined.
4 Includes head grade / tonne for the second quarter 2022 related to the Rosebel concession of 0.85 g/t and the Saramacca concession of 0.94 g/t (first quarter 2022 - 0.78 g/t and 0.86 g/t respectively; second quarter 2021 – 0.48 g/t and 0.58 g/t respectively).
5 This is a non-GAAP financial measure. See "Non-GAAP Financial Measures".
6 Cash costs includes by-product credits.
7 Other mine costs include the add-back of non-cash long-term portion of stockpile inventory NRV write-downs for the second quarter 2022 of $1.1 million (first quarter 2022 - $2.6 million; second quarter 2021 - $nil) and the exclusion of by-product credits.
8 As per note 27 of the consolidated interim financial statements for revenues and cost of sales. Cost of sales is net of depreciation expense.
9 Includes sustaining capitalized stripping for the second quarter 2022 of $7.3 million (first quarter 2022 - $12.5 million; second quarter 2021 - $nil) and YTD 2022 of $19.8 million (YTD 2021 - $nil).
10 Other costs and adjustments include sustaining lease principal payments and environmental rehabilitation accretion and depletion, partially offset by by-product credits.
11 Includes expansion capitalized stripping for the second quarter 2022 of $11.3 million (first quarter 2022 - $3.5 million; second quarter 2021 - $7.6 million) and YTD 2022 of $14.8 million (YTD 2021 - $14.9 million).
12 Cost of sales, cash costs and AISC per ounce sold may not be calculated based on amounts presented in this table due to rounding.
13 Includes non-cash ore stockpile and finished goods inventories NRV write-down of $1.1 million for the second quarter 2022 (first quarter 2022 - $2.6 million; second quarter 2021 - $6.4 million) and $3.7 million for YTD 2022 (YTD 2021 - $6.4 million), which had an impact on cost of sales per ounce sold for second quarter 2022 of $21 (first quarter 2022 - $53 per ounce sold; second quarter 2021 - $41 per ounce sold) and $36 per ounce sold for YTD 2022 (YTD 2021 - $41 per ounce sold).
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Rosebel achieved attributable gold production in the second quarter of 49,000 ounces, 7% higher than the prior quarter, continuing to benefit from improved recovery and higher head grades, partially offset by lower throughput.
Mining activities in the second quarter have returned to pre-pandemic levels with material mined of 15.5 million tonnes being 22% higher compared with the prior quarter. The site focused on advancing waste stripping activities in line with future production plans. The grade mined at Saramacca is improving reflecting the increased mining activity benefitting from an increase in the fleet allocation and upgrades to the haul road to access higher grade phases and improve ore transport to the mill.
Mill throughput achieved 2.2 million tonnes, 5% lower than the prior quarter, at an average head grade of 0.88 g/t. Throughput was impacted by maintenance work required on the SAG feed chute and refurbishment of the apron feeders. In terms of mill feed, Rosebel provided 45% with an average head grade of 0.90 g/t, Saramacca provided 23% with an average head grade of 0.93 g/t and the remaining 32% was sourced from lower grade ore stockpiles with an average head grade of 0.60 g/t. Mill recovery of 92% for the second quarter was in line with the prior quarter, continuing to benefit from improvements to the carbon adsorption/desorption circuit completed at the end of 2021.
The impact of illegal miners disrupting the operations, noted during the first quarter 2022, reduced during the second quarter. The Company is continuing its collaboration efforts with the government task force assigned to manage the security situation at the site as well as village communities and other stakeholders around the mine site.
The dewatering wells and other earthworks activities, including slope remediation and the East bypass road at Saramacca are now expected to be completed in the third quarter 2022. All permits have been obtained.
Outlook
Attributable gold production at Rosebel in 2022 is expected to be in the range of 155,000 to 180,000 ounces. In the first half of the year, additional cost pressures emerged as discussed under “Outlook”. Rising oil prices continue to be partially mitigated by the existing hedge program. The Company also expects higher power costs, compared to 2021, which have links to the price of gold and oil. The collective labour agreement expires in August 2022 and negotiations for a new agreement have commenced in the third quarter, which have, in the past, been prolonged and, at time, disruptive to the operations.
The Government of Suriname continues to be under pressure to resolve its economic situation and has proposed certain measures which may negatively impact the financial condition of the Company. The Company is following the development of these measures and is engaging with the authorities as necessary in respect of such proposed measures.
In the second quarter 2022, the Company advanced a strategic review process to evaluate options for its Rosebel/Saramacca mining complex which could include the sale of this complex. See “Outlook – Liquidity Outlook”.
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Westwood Mine (IAMGOLD interest – 100%) | Quebec, Canada
| Q2 2022 | Q1 2022 Q2 2021 | YTD 2022 | YTD 2021 | ||
|---|---|---|---|---|---|
| Key Operating Statistics Underground lateral development (metres) Ore mined (000s t) – underground Ore mined (000s t) – other sources Ore mined (000s 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) – 100% Gold sales (000s oz) – 100% Average realized gold price1 ($/oz) | 848 148 63 14 | 148 14 | |||
| 1,207 | 2,055 | ||||
| 53 | 116 | ||||
| 218 | 159 | 273 | 377 | 519 | |
| 271 | 222 | 287 | 493 | 533 | |
| 284 | 250 | 264 | 534 | 491 | |
| 4.01 | 6.05 | 4.50 | 5.06 | 4.50 | |
| 1.04 | 0.97 | 0.74 | 1.00 | 0.91 | |
| 1.62 | 2.18 | 0.92 | 1.88 | 1.00 | |
| 93 | 91 | 93 | 92 | 93 | |
| 14 | 16 | 8 | 30 | 15 | |
| 14 | 16 | 7 | 30 | 15 | |
| $ 1,854 | $ 1,872 | $ 1,810 | $ 1,864 | $ 1,795 | |
| Financial Results ($ millions) Revenues2 | |||||
| $ 27.1 | $ 30.8 | $ 12.2 | $ 57.9 | $ 26.7 | |
| Cash costs1 Other mine costs3 | $ (34.8) | $ (30.5) | $ (13.9) | $ (65.3) | $ (23.1) |
| (0.6) | (0.5) | (0.2) | (1.1) | (0.3) | |
| Cost of sales2 Sustaining capital expenditures1 Other costs and adjustments4 | $ (35.4) | $ (31.0) $ (14.1) (7.3) (2.1) (0.1) 0.1 | $ (66.4) | $ (23.4) (2.5) 0.2 | |
| (8.8) | (16.1) | ||||
| (0.9) | (1.0) | ||||
| AISC1 Expansion capital expenditures1 | $ (45.1) | $ (38.4) $ (16.1) $ (0.5) $ (1.2) | $ (83.5) | $ (25.7) $ (1.8) | |
| $ (0.7) | $ (1.2) | ||||
| Performance Measures5 Cost of sales excluding depreciation6 ($/oz sold) Cash costs1 ($/oz sold) AISC1 ($/oz sold) | $ 1,922 $ 2,100 $ 1,886 $ 2,085 $ 2,376 $ 2,412 | $ 1,580 $ 1,566 $ 1,743 | |||
| $ 2,463 | $ 2,176 | ||||
| $ 2,427 | $ 2,141 | ||||
| $ 3,147 | $ 2,738 |
1 This is a non-GAAP financial measure. See "Non-GAAP Financial Measures".
2 As per note 27 of the consolidated interim financial statements for revenues and cost of sales. Cost of sales is net of depreciation expense.
3 Other mine costs exclude by-product credits.
4 Other costs and adjustments include sustaining lease principal payments and environmental rehabilitation accretion and depletion, partially offset by by-product credits.
5 Cost of sales, cash costs and AISC per ounce sold may not be calculated based on amounts presented in this table due to rounding.
6 Includes non-cash ore stockpile and finished goods inventories NRV write-down of $3.3 million for the second quarter 2022 (first quarter 2022 - $1.7 million; second quarter 2021 - $3.0 million) and $5.0 million for YTD 2022 (YTD 2021 - $3.0 million), which had an impact on cost of sales, excluding depreciation, per ounce sold of $232 for second quarter 2022 (first quarter 2022 - $106; second quarter 2021 - $88) and $165 for YTD 2022 (YTD 2021 - $88).
Westwood achieved gold production of 14,000 ounces in the second quarter, 13% lower than the prior quarter, as a result of lower head grade from the underground mine partially offset by higher throughput and mill recovery, as the ramp up of operations continued following the re-start of underground operations in June 2021.
Mining activities totaled 271,000 tonnes in the second quarter, with underground mining activities contributing 53,000 tonnes and the open pit mining at Grand Duc contributing 218,000 tonnes. Mining volumes were 22% higher than the prior quarter due to reduced absenteeism resulting from COVID-19 and supplemental tonnes from Grand Duc.
Underground development continued to improve significantly in the second quarter, with more than 1,200 metres of lateral development completed, over 350 meters higher than in the previous quarter, however, development of raises and bolting productivity continued to be adversely impacted by increasing underground rehabilitation requirements, challenging ground conditions and global supply chain challenges. Mining activities in western and central underground zones recommenced in June 2022. Break-through to the main ramp is completed, connecting the surface with the lower part of the mine, enabling development of some higher grade zones. These new accessible zones are located below the existing production areas and will create additional flexibility in the mining sequence and access to new stopes for exploitation.
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Mill throughput of 284,000 tonnes in the second quarter was achieved at a head grade of 1.62 g/t Au with average recovery of 93% and plant availability of 92%. Mill throughput was 14% higher than the prior quarter as a result of successfully executing mill maintenance strategies for improved availability as well as reduction in unplanned shutdowns during the quarter.
Outlook
Gold production at the Westwood complex in 2022 is expected to be in the range of 55,000 to 75,000 ounces. Production levels are expected to continue to increase each quarter based on the planned ramp-up of the underground mine delivering higher grade ore in the second half of the year, in addition to higher grade ore sourced from the Grand Duc open pit. Development rates are required to continue to increase month-over-month to achieve production guidance.
During the first half of 2022, additional cost pressures emerged as discussed under “Outlook”. Despite these impacts, cash costs per ounce sold are expected to decrease each quarter with anticipated increases in production and sales. The current collective bargaining agreement with the Westwood union ends in November, with negotiations scheduled to start in the third quarter.
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