Earnings Call: Q2 2021

Aug 5, 2021

Thank you for standing by. This is the conference operator. Welcome to the IAMGOLD's 2nd Quarter 20 21 Operating and Financial Results Conference Call and Webcast. As a reminder, all participants are in listen only mode and the conference is 2 being recorded. 20. 20. At this time, I'd like to turn the conference over to Indi Gulpinathan, Vice President, Investor Relations and Corporate Communications for IAMGOLD. 20. Please go ahead, Ms. Gulpinathan. Thank you, Gaylene, and welcome, everyone, to the IAMGOLD's Q2 2021 operating and financial results conference call. 20. Joining me today on the call are Gordon Stothers, President and Chief Executive Officer and Daniella Dimitroff, Executive Vice President and Chief Financial Officer. 2019. Our remarks on this call will include forward looking statements. Please refer to the cautionary language regarding forward looking information in our disclosure documents 2nd quarter 2020. During the call, non GAAP measures will be referenced, and we direct you to review the reconciliations 2nd quarter. With respect to the technical information to be discussed, please refer to the technical information and qualified persons slides. 20. The slides referenced on this call can be viewed on our website. I will now turn the call over to our President and CEO, Gordon Stoppard. 20. Well, thank you, Indi. Good morning, everyone, and thank you for joining us. The Q2 of 2021 2. It was extremely challenging for IAMGOLD and we will walk you through both the challenges and mitigations in our discussion today. 2. Attributable production guidance was reduced to between 565,605,000 gold ounces due to lower actual production in the first 2nd half of the year from Westwood and Rosebel and their lower anticipated output for the second half of the year. This is partially offset by higher production at Essakane. 2. We increased cash operating cost guidance mainly to reflect the lower production, cost pressures and stronger Canadian dollar and euro versus the U. S. Dollar. 2. All in sustaining cost guidance also reflects increased sustaining capital spending in the second half of the year. 2. Total capital expenditures for 2021 are expected to increase by about $35,000,000 2, primarily due to expected capital expenditure increases at Cote Gold. Site capital expenditures are expected to be lower, primarily due to 2nd quarter 2020. To an unexpected reduction in planned work at Essakane and Rosebel. Totate Gold's estimated 2021 capital expenditures are 2nd quarter. We are now expected to increase by $75,000,000 to $430,000,000 So 2. I'll now touch on a few items in this slide. At a corporate and strategic level, IAMGOLD generated $1,900,000 in mine site free cash flow during the period 2 with an adjusted loss of $3,600,000 or $0.01 per share. We have approximately $830,000,000 in cash, cash equivalents 2nd quarter and approximately $1,300,000,000 in total liquidity. And during the quarter, 2. We effectively rolled forward our 2019 gold prepayment arrangement from 2022 to 2024. 2. From a growth perspective, as indicated in our July update news release and Cote quarterly update, we have adjusted capital at 22nd quarter. The Cote gold project with total project costs recast to $1,125,000,000 to $1,175,000,020 based on a number of factors, which I will discuss in more detail shortly. We continue to progress per schedule 2nd quarter with the project achieving 27% completion overall at quarter end. We've also achieved over 2,000,000 hours 2nd quarter without a lost time accident Cote. And consolidated company safety metrics are tracking better than targets in the first half of the year. 2. We continue to develop our districts with work done in the quarter to derisk Bodo and delineate Gosselin. 2. IAMGOLD is committed to achieving high standards in environmental, social and governance practices, which reflect our long held Zero Harm Vision. 2. At the end of June, the company, the Metis Nation of Ontario and Sumitomo Metal Mining Company Limited celebrated the signing of an 2 IBA related to the Cote gold project. This completes the IBAs that we were expecting to sign for Cote. 2. At the Boto Gold project and the exploration program at Senegal, the company is committed to investing $3,400,000 in local community development activities over the 2020 to 2023 period. The program, developed with local stakeholders, 2. We'll focus first on responding to the development of priority infrastructure to meet the basic needs of the communities and initiatives aimed at the long term empowerment of the communities 2 by initially focusing on the implementation, local employment and local procurement strategies. We are proud to share that at the end of the quarter, 2. Corporate Knights released its best fifty list, which identifies the top 50 Canadian corporate citizens across all sectors evaluated based on up 24 Environmental, Social, Governance and Economic Key Performance Indicators. IAMGOLD placed 44th 2 across all corporate sectors and 8 out of 122 companies in the mining sector. And in April, 2. We are upgraded to a AA rating on the MSCI ESG assessment, placing IAMGOLD in the top 15% of precious metal companies. 2. For each of our sites, we have continued our proactive management of COVID-nineteen. However, we did have an increase in COVID-nineteen cases in Suriname 2nd quarter and corresponding increase in cases at Rosebel with mandatory antigen testing now in place among other mitigating controls. Q2 also saw an increased number of COVID-nineteen cases in the Timmins area. Although some 2.5% of the year. The increase in the number of workers at Cote during this wave. Heightened testing and additional constraints on-site circulation were implemented, 2, which strongly limited the number of cases experienced. Subsequent to the end of the second quarter, several contract workers at 2. Photo tested positive for COVID-nineteen and remain under observation before being released into isolation. 2. Testing and contact tracing has been undertaken and the situation is being monitored. At this time, the company does not expect a material 2nd quarter. The previously implemented protocols across our operations and offices globally remain in place and there 2. There have been no other material impacts on our operations, construction and development projects or exploration sites during the Q2. 2nd quarter. Our DART or days away restricted and transferred duty frequency rate was 0.35 2nd quarter. And the TRI or total recordable injury frequency rate was 0.70, respectively, per 200,000 man hours worked. 2. We continue to implement several initiatives, including IAMSAFE, the revamped health and safety management program 2nd quarter. I will now cover review the operating performance at each site in turn. 2. So Essakane continued to perform strongly in the quarter with attributable gold production of 106,000 ounces for the quarter 2 at an all in sustaining cost of $10.60 per ounce sold, consistent with the prior quarters. Production reflected above planned grades, 2, partially offset by lower gold recovery. We have completed the mill optimization project with an anticipated 10% 2 improvement in hard rock processing over the course of the year from an annualized 10,800,000 tons to 11,700,000 tons. 2. As noted last quarter, this improvement in capacity is important as Essakane moves to greater proportional volumes of 2nd quarter. We have also renewed a 3 year collective bargaining agreement 2 with our unionized Essakane workforce in July, which will be in effect for 3 years until the end of June 2024. 2. Looking forward to the balance of the year, we have revised production guidance at Essakane upward to 390,000 to 400,000 ounces 2 to reflect the production from higher grades achieved in the first half of the year and which are expected to normalize in the second half. 2. The mill feed is expected to be supplemented by ore stockpiles in the Q3 to offset the impacts of seasonal rain. 2. And we will have higher capital spend in the second half of the year for strategic pushback work as previously planned. 2. A number of events negatively impacted Rosebel this quarter. Beyond the unusually heavy rain, output fell because 2. Because of a significant increase in COVID-nineteen cases in the region and because of challenging industrial relations up to the point of the resolution of the collective bargaining agreement in May, 2, which resulted in multiple lockdowns, illnesses and impacts on workforce availability that affected operations. 2nd quarter. At the Saramacca pit, management of the high clay content ore exacerbated by the heavy rains negatively impacted the ore handling 2 and Mills throughput. As a result, attributable gold production for the Q1 was 25,000 ounces with all in sustaining costs $2,237 per ounce sold, reflecting lower sales volumes, higher cost of sales and higher sustaining capital. 2. Due to the collective impact of these challenging factors, among others, and continued uncertainty related to the COVID-nineteen situation, 20. We have reduced Rosebel's 2021 guidance to 140,000 to 160,000 ounces. 2. At Saramacca, construction of required infrastructure is continuing with the infrastructure pad and sedimentation dams scheduled for completion in the Q4 of 2021 and the West Dump Rock Drain Dewatering Wells and Bypass Road Phase 2 scheduled for completion 22. We expect certain cost pressures to persist in the second half of the year, and we are 22 production. 2. In addition, we have been working on a new geological model to form the basis of an updated mineral inventory estimate 2019 guidance to be released before the end of 2021. Based on currently available information and given the negative impact of certain factors, 2. We expect the total mineral resource estimate will decrease. To address the issues we have encountered in the 2nd quarter, 2. We are implementing a number of initiatives. To manage the increase in COVID-nineteen cases at Rosebel, we have implemented mandatory antigen testing and can 2. Safely now accommodate the necessary workforce, having commissioned the 360 additional beds that we've previously spoken to. 2. To improve production rates, the operation is undertaking, among other activities, pit dewatering, geotechnical assessments, 2, optimization of the mine design and sequence and in pit road haulage improvements. These activities are expected to reestablish and increase pushback access 2nd half of twenty twenty one, provide additional productive faces at Rosebel and increase the overall mine grade over the remainder of the year, albeit 2nd quarter. Conditions in the pits are being improved and the operation has met its updated plan for July. 2. To improve equipment availability, we have ongoing improvements to the maintenance program, while additional mobile equipment is scheduled to arrive by the end of the year. 2. This is expected to improve equipment availability, loading and reduce reliance on higher cost hauling contractors. 2. To address process and plant challenges, Rosebel has initiated an asset integrity program with 2nd quarter. Multiple improvement initiatives to be run over the next 18 months and to bottleneck congested mill areas. And the ongoing adsorption desorption project 2. Westwood produced 8,000 ounces in Q2 of 2021 with the mill processing Grand Duke open pit ore while mining in East Zone Underground restarted in June, albeit at a more tempered pace 2nd quarter. Slower productivity and underground mining activities reflect the implementation 2 of additional safety measures recommended by a group of external experts in conjunction with our own internal 2. In addition and also with a focus on safety, we will be implementing 2nd quarter. Additional egresses in the planned zones of extraction. Open pit mining at Grand Duke sequenced through a small pushback with access to higher grade zones 2nd quarter was delayed by a slowdown of ore haulage due to ore stockpiling limitations at the mill. 2. All in sustaining costs for the quarter were $2,412 per ounce sold, primarily due to higher cost of sales and higher 18. Capital expenditures when compared to the prior quarter. Cost of sales were higher than prior periods, primarily due to lower sales volume and higher mining costs 22nd quarter due to the start of underground mining. We have reduced Westwood 2021 production guidance to 35,000 to 45,000 ounces, 2, primarily to reflect the additional safety measures noted as well as a slower than planned ramp up of personnel. 2. Development, rehabilitation and extraction activities are expected to ramp up in the second half of twenty twenty one, and we are assessing the impact of all of these 2. Work on a medium term 3 year operating plan is expected to be completed before year end 2 as we continue to evaluate this asset to identify the optimal path forward for the company and for our site workforce. 2. I'll now provide you an update on our construction project at Cote Gold. At Cote, as previously disclosed, 2. We identified certain estimated project cost increases from a project review, resulting in our 70% share of updated project costs 20.8% from July 1, 2020, net leasing to be now estimated at $1,125,000,000 to $1,175,000,002. Given expenditures to date, our remaining 70% share of project costs from July 21 forward based on these assumptions is estimated at $930,000,000 to $980,000,000 As we disclosed 2. And based on available information and work completed to date, which is ongoing, the change in the project cost estimate was primarily driven by increased structural, mechanical, 2nd quarter. 2 percent of the increase. Additional increases were estimated in mine facilities costs, including 2 with the inclusion of a portion of the camp cost previously that had been earmarked in operating costs as a lease, 2, resulting increases in indirect costs, EPCM and owner costs, direct costs related to COVID-nineteen and changes in the currency exchange rate, 2, partially offset by the transfer of certain costs to the operating period. The revised project costs 2 range includes new contingency amounts for the remaining expenditures estimate. These revisions result from increases in estimates, including quantities and manpower, 2. Changes in scope, the negative impact of COVID-nineteen on labor productivity and due to inflation. 2. As of June 30, detailed engineering for Cote has advanced to approximately 82% complete. 2. Cote has advanced to 27 percent overall project completion. The project expanded $89,700,000 in the quarter 2 and has expanded $193,000,000 since July 1, 2020. Activities in the quarter included progression of procurement 2 and expediting of major equipment contracts with logistics contract awarded. Progression of earthworks with roadwork, 2 water pumping, fish relocation and the completion of the tailings management coffer dam and drill and blast activities in the open pit. 2. The concrete batch plant was commissioned and is in production. 2. With concrete pouring and formwork started, we have focused on the ball mill and vertical mill foundation work. 2. The permanent camp has also progressed with about 60% of the planned permanent capacity commissioned at the end of July, accommodating over 700 workers at site. 2. For the balance of the year, the work plan will continue to focus on earthworks, haul road construction and water management infrastructure around the pit site. 2. Pre stripping work in the pit is expected to continue during the Q3. Permanent camp is expected to be fully commissioned as well in the Q3. 2. Civil works currently underway at the plant site are expected to continue with the placement of precast and cast in place concrete as 2 wells preparation for the plant building shell erection. Updated 2021 project costs 2.4 $30,000,000 with about $301,000,000 remaining in the second half of the year. And we expect to have an initial mineral 2nd quarter. This slide summarizes our progress to date. We remain on track and 2. This slide shows a few pictures 2. I'll now switch over to a discussion on our development and exploration projects. 2. From a development perspective, we continue to derisk the Boto project infrastructure, including the year round access road 2nd quarter and Airstrip Engineering for Critical Plant Equipment and the Implementation of Local Sustainability Programs. We are assessing these activities 2 and the associated capital spending and timing. Our brownfield exploration focus is on drilling to evaluate 2. NSS resource potential of targets near Essex County and Rosebel with surface drilling at Westwood focused on evaluating the resource potential 2nd quarter between the Grand Duke and the old Doyon pit and underground drilling focused on supporting the restart of underground mining operations. 2. And with that, I will pass the call over to Daniela. Thank you, Gord, and good morning, everyone. 2. The following are some key highlights of our 2nd quarter financial results. We reported adjusted EBITDA of 85 $2,000,000 from sales of 135,000 ounces at an average realized gold price of $1800 per ounce. 2. For the 1st 6 months of the year, adjusted EBITDA was $185,000,000 from sales of 288,000 ounces 2 at an average realized gold price of $17.88 per ounce. Net loss was $4,500,000 or $0.01 per share and adjusted net loss was $3,600,000 or $0.01 per share. We generated $1,900,000 in mine site free cash flow in the 2nd quarter, reflecting the operating challenges in the quarter that Gord discussed. 2. For the 1st 6 months of the year, mine site free cash flow was $91,400,000 2. In terms of our financial position, we ended the quarter with cash, cash equivalents and short term investments of $830,000,000 2. We continue to maintain a largely undrawn credit facility of $500,000,000 maturing in January of 2025, 2, resulting in total available liquidity of approximately $1,300,000,000 at June 30. 2. We entered into further gold sale prepayment arrangements this quarter at a weighted average cost of 4.45 percent per annum 20. In respect of 150,000 gold ounces, with an average forward contract price of $17.53 per ounce on 50,000 gold ounces and a collar range of $1700 to $2,100 per ounce 2 on 100,000 gold ounces. These transactions have the effect of rolling all of the 2019 prepayment arrangement on on 150,000 ounces from 2022 to 2024 after the completion of the construction of the Cote Gold project. 2. The new arrangement will result in total cash prepayment to the company over the course of 2022 20 18.5%. In respect of the 150,000 ounces that we pre sold in 2019 under that particular prepayment arrangement, 2. We will receive $30,000,000 in cash payments over the course of 2022, assuming the gold price remains above $1500 per ounce. In the quarter, we also continued to further manage our Canadian dollar risk exposure 20 and entered into a target accrual redemption forward or a TARF structure on CAD120 1,000,000 2. Assuming the USD Canadian exchange rate is below the strike price of $1.30 2nd quarter 2020, and that's to risk manage the $1.30 FX, on which our assumptions are based. This is described in further detail in our MD and 18. Looking forward, total per ounce cost guidance for 2021 has been increased, 2019 guidance, mainly to reflect the lower total attributable production guidance and cost pressures experienced in the first half of the year, 2nd quarter, certain of which are expected to continue in the second half of twenty twenty one, along with a stronger Canadian dollar and euro. 2. All in sustaining cost per ounce sold guidance is expected to be impacted by the factors that we've discussed and also it reflects increased planned spending on sustaining capital investments in the second half of twenty twenty one at our operations. 2nd quarter. Taking a closer look at our cash flows in the 2nd quarter, cash generated from earnings $26,200,000 was partially offset by income tax paid of almost $21,000,000 2nd quarter. Moving to non cash working capital items and non current or stockpiles resulted in an outflow of $17,600,000 reflecting the use of cash in receivables and other current assets of $6,000,000 2019, primarily due to new claims for VAT, outflows related to inventories and non current ore stockpiles of 23,000,000 2019, primarily due to higher cost of production at Rosebel and an increase in accounts payable and accrued liabilities of almost $12,000,000 primarily due to the timing of payment of suppliers. Net cash used in investing activities reflected capital expenditures of almost $152,000,000 and July's borrowing cost of $9,000,000 partially offset by cash received from the second and final closing of our royalties portfolio sale of $10,000,000 Net cash used on financing activities reflects interest paid on our outstanding senior notes, 2 leases, loans and dividends paid to minority interests. As noted earlier, our cash position was $830,000,000 at the end of the quarter and net cash was $292,300,000 with total available liquidity to the company of $1,300,000,000 at June 30. 2. Assuming the continuation of prevailing commodity prices and exchange rates and operations performing in accordance with updated guidance mine plans, 2. We believe we have adequate liquidity to implement near term operational plans and complete the development of the Cote Gold project. 2 liquidity and flexibility in support of our strategy, taking into consideration market conditions, ongoing operational and financial performance and project development progress. I will now pass the call back over to Gord to conclude. 2. Thank you, Daniella. Looking ahead at Essakane, the mill optimization project 2.5% has already demonstrated improvement in hard rock core processing capacity, which is expected to continue 2nd quarter over the balance of the year and into the future and to stabilize and to provide additional crushing capacity for hard rock throughput. 2. At Rosebel, we are implementing a number of initiatives to address the headwinds encountered in the Q2, and we are progressing on the remaining Saramacca infrastructure. 2. At Westwood, we have restarted mining in the East Zone. At the Cote construction project, we are at 27% overall project completion. 2. At Foto, we continue to derisk. And in exploration, we are targeting a maiden resource for Gosselin later this year. 2. Thank you to everyone for joining us today. I will now pass the call back over to the operator for Q and A. 2. Our first question is from Josh Wolfson with RBC Capital Markets. 2. Please go ahead. Good morning. Just sort of focusing on the Cote capital number, 20. I'm curious to understand what specifically changed. Obviously, I know there's impacts from 2nd quarter. But obviously, the historical guidance had been fixed price contracts in place, a lot of hedging. So 2. I'm just wondering what beyond those items resulted in the overall change in capital? 2. Thanks, Josh. Well, as we stated in our disclosure, we undertook a project review 2. During the quarter, in parallel, obviously, with advancing the detailed engineering and procurement work. And through this process, 2. We identified additional costs, some of which were both significant and unexpected. The biggest impacts are related to 2. Structural mechanical piping, electrical and instrumentation, we call that SMPEI, 2. And earthworks and concrete costs, which together accounted for roughly 50% of the increase. So there were estimate changes 2. That included increases in both quantities of material and manpower. 2. Additionally to those impacts, which were, as I said, quite significant, and as you commented, we did see some impacts 2. Some minor changes in scope and growth projects. We do see impacts of COVID-nineteen 2 on productivity assessments as well as some direct COVID in costs and impacts of currency exchange. 2. And additionally, we've done a probabilistic reassessment of the remaining work and applied a prudent contingency to those numbers. 2. So there are a number of sources of change. The bigger changes were with the SMPI and the concrete 2. With some changes on Earthworks and others. Okay. And what's the I guess either percentage or dollar amount of the new 2. We're not going to release that contingency number at this point in time, 20. But we feel it's prudent and has really looked at us 2. Applying a number that allows us to complete the remaining project within the revised estimate. 2. Okay. And then for the actual construction activities, 20. What are the critical path items today to keep this second half twenty twenty three scheduling? 2. Critical path, I guess, is really for us around completion of the process building. 2. So we're working on foundations, foundation mats for the larger processing equipment, the ball mill and the Verdi melt. 2. That's ongoing. We're also building the foundation materials, both cast in place and precast 2. For the structure of the building itself, our current timeline for the process building 2. Enclosure is in Q1 of next year. We're working very aggressively to see if we can improve upon that. 2. Other time line, other critical path time line, we are working through the pre stripping 2. On the pit, we expect to start owner mining in Q3 next year. It's not fully on the critical path because there 2. There's certainly some ability to accelerate it if we need to later on. However, it's one of our key activities right now. 2. And we're getting into tailings dam foundation work. Again, tailings specifically is not on the critical path, 2. But it's obviously an activity that we need to get out of the way. Most of the critical path goes through the process building. 2. Okay. And then for the operating cost targets, for the, I guess, dollars 800 per 2. Could you remind us what the forecast unit cost items are if you happen to have those numbers? 2. Actually, right now, Josh, we are reworking and re looking at what our operating cost model is looking like. 2. We aren't ready to release that right now. There's obviously been some short term inflation issues that 2 we are reviewing. That being said, we are going back in 0 basing and really looking at 2. What the operating cost impacts are? When we made the announcement in July of last year and through the technical session, 2. We did go into a fair bit of detail as to where we saw the operating costs sitting and updated them from what had been used 2. Again, I don't have those numbers for you today, but we are looking to enhance that model and update that model, 2. And we will release it when we have that information available. Okay. And I apologize for taking up so much air 2. Last one just on Westwood. Is there any sort of additional insight as 2. When the company could receive approval for mining in some of the other areas, I guess, the West or Central area? And then what 2. If there's visibility on when a new mine plan comes out or new projections there? 2. Yes. So a couple of questions there. With respect to the West Zone and the Central Zone, 20. Currently, we are expecting to be able to restart those early next year, although they will be staged. 2. We're doing some additional design work and rehabilitation and working through our work in the East Zone to understand 2. The implications of all of that, as well as looking at the design with a real focus on safety 2 as we move into those new areas. The team is working very hard on a medium term mine plan 2. That we plan to have out before the end of the year. Great. Thanks so much. Thanks, Josh. 2. The next question is from Mike Parkin with National Bank. Please go ahead. 2. Thanks guys for taking my questions. Following up on some of the stuff that Josh mentioned, I know you're reviewing the OpEx. 2 sorry, the yes, June 2020 on 2. Cote had AISC at 771. In terms of what you've transferred over to cost, 2. Do you have a sense of like what that will do on a per ounce basis with this update in terms of CapEx with some flowing over to OpEx? 2. Thanks, Mike. Actually, as we look at the numbers, there were some transfers 2 to the operating period of some of the capital, mostly some additional mine tons that have been pushed into the operating period 2 and some equipment to go with it. On the flip side, there were also some changes coming 2nd quarter. From the operating cost side back into the capital period, I think we mentioned in the disclosure that the 2. The balance between those two changes is close to negligible. So 2. With respect to the transfers into the operating period, we're not anticipating a big impact on the all in sustaining costs from that transfer. We are reviewing, along with our operating costs, we're obviously reviewing our sustaining capital at the same time. And 2. When we're ready to come out with operating costs, we'll be able to speak to sustaining capital at the same time. That includes 2. Capitalized stripping, obviously, any impacts we see on operating costs will bear directly on the cost of capitalized stripping. 2. And as well, reviewing the construction sequence for the tailings dam 2. And working to understand what opportunities or changes might come out of that. So it's sort of a complete package 2. And we're working through that right now, Mike. All right. Are you seeing any like I 2. I recognize it's pretty early days, but are you seeing any signs that your estimated costs on either tailings dam development or 2. Early strip work on the pit are showing signs that your life of mine estimates are too low 2. Or is that too early to say? It's pretty early to say. There are both gives and takes we're seeing. 2. We're really focused on assessing what the impact of the inflationary pressures are on some of the input costs. 20. At the same time, as we're looking at our productivity assumptions for operating and other measures of 2. That nature, there are some there are actually some opportunities and some improvements we expect to see out of that. So 2. There's a few moving parts. I don't want to speculate as to what the net impact will be, 2. But it is something that is being assessed for sure. Okay. And then with the comment around 2. The project review and identifying additional costs. Was any of that you realized you need more cement 2. Or concrete work or steel work? Yes. Effectively, yes. 2. As we reassessed the volumes and we did the re estimate, we saw there were some significant changes 2. On those volumes as being applied to the cost estimate. 2. So yes, we have seen some increase in concrete and steel versus what was used in the original estimate. 2. And that in fact is driving a lot of the overall increase, significant increase. 2. And what drove that in terms of concrete volumes? Is that as you got down into bedrock 2. For foundation work, you just realized you had to go a bit deeper or is it a structural stability 2. Change that additional foundational materials required? 2. There's some of that, not a significant amount of that. There is also some 2. Scope change, if you will, within the building. We wanted to put additional reinforcement in and around the primary sorry, 2. The crusher aisle and some of the structures around some of the larger pieces of equipment. So there was a little bit of scope change there. 2. But a lot of it is just going back to the original estimate and 2. How that estimate was done versus as we got into the details with the more advanced engineering and going through it. 2. It's not scope change as much as it is that the estimate needed to be redone 2. And identified that there was certainly additional materials and labor required to install it. 2. Okay. And then just last question for me. Your partner Sumitomo is reviewing these changes. 2. What's the path there? Like is that is there anything where they can come back and challenge 2. The scope changes or are there hands kind of tied and they have to kind of come to the table with their share of the capital? 2. Look, our JV agreement with Sumitomo is, I think, I would describe it as relatively standard with respect to this. 2. Like us, they are very keen on the reconciliation exercise we're going through and understanding it. 2. We have majority vote as the senior partner on the budget going forward for construction. 2. And we do expect them to challenge the assumptions just as we expect our own 2 owners team on an ongoing basis to challenge the assumptions and look 2 for opportunities for savings. That being said, as you'd well imagine with a project moving forward, 2. The senior partner, the majority partner, basically has 2. The ability to push forward the project. Okay. Thanks guys. That's it for me. 2. And next question is from Anita Soni with CIBC World Markets. Please go ahead. Good morning, everyone. Thanks for taking my call. 2. So Gord, can I just ask in terms of your near term capital plans, are there any changes to the outlook for the spending at Boto at this stage? Would you consider deferring that or plan to go ahead with that kind of spend? And could you remind us how much that is in 2022? 2. So I believe the guidance and I will confirm it with you afterwards Anita, but I believe 2. The guidance for 2021 for Boto is $55,000,000 2. There was some overlap from the prior year. That being said, we are 2. Obviously, given the revised guidance and given the cost increase at Cote, 2. We are looking at all of our expenditures around the company and Boto among them. We've always 2. It reiterated that the spend at Boto is on behalf of derisking that project 2nd quarter 2020. And providing the opportunity to execute it at the appropriate time when we want it. So understanding that and understanding the 2. And scheduling, our focus is on Cote, on executing and completing that project. 2. So we will be looking at Bodo amongst other capital requirements, and we want to make sure 2 that we're solidly founded in order to complete Cote 2. Sorry, I just had to put myself on mute there for a sec. 2. The second question, I guess, is with regards to operating costs. Josh asked this a little bit, but is there any 2. I mean, are you I think I ask this every time Cote comes up, but how confident are you in that mining cost per ton number and 2. The efficacy of these HPGRs when they come on stream. That's a relatively low mining cost number relative to 20. I just wanted to get your latest thinking on where that could go. 2. And then secondly, how that would impact your assumptions on reserves? Can you remind me, are we doing the base case scenario or the extended case scenario in your current 20 25. I think the extended case had 0.93 gram per ton material versus 0.98 as the average. 2. Yes. The extended case, it has some additional low grade at the very end. So it may have that. We are using extended case in our 20. The impact is really just, I think an extra year and a half of low grade ore handling at the end of the mine life. 20. With respect to the cost estimate, as I said, we're reviewing it and have been doing so on an ongoing basis. 2. From a productivity standpoint, we think we're comfortable and the numbers we're using are conservative, both on the mining and the milling costs. 2. With respect to the inputs, the consumables and so forth, we do recognize that there has been 2. Some relatively sharp inflation in some of the input the consumables numbers, and we need to assess 2. What the impact on cost will be for that. With respect to HPGR and milling, 2. Again, we are comfortable there are several HBGR installations around the world. So there's a fairly good database 2. Of understanding what the impacts of that are and quite typically HPGR versus SAG 2 from a cost per ton basis, especially for brittle ores like we have at Copay, is significantly 2. Superior from an operating cost standpoint, both in terms of energy consumption, but also consumables like steel consumption. 2. And that was part of our rationale for moving to HPGR for this project 2. Versus SAGNOI. The ore sort of told us where to go with it. Okay. And then just in terms of 2, the tailings facility. Could you remind me what kind it is? I'm assuming it was central line, or was it modified central line in your 2nd quarter. Yes, it's modified centerline. I mean, I believe the first couple of lifts are downstream. 20. Once the pond is up and established, it moves to center line at the top. But the first couple of lifts are typical downstream construction. 2. Okay. Last, probably a little bit ignored with this release, but could you just remind us or kind of give us some indication of the amount how you see Rosebelle unfolding into 2022 given the issues that you've had 2 in the first half of the year with the camp in the labor and productivity rate. So how should we think about carryover impacts into 2022 for Saramacca and Rosebel. So Anita, 2. We're currently assessing what 2022 is going to look like. I don't want to speculate on what those final numbers will be. And 20. At the end, some of it will be determined by the success of our mediation 2 plans that we're putting in place or activities that we're putting in place right now at Rosebel. So as we build those back and as we get a little 20. Further on, we will be having a very good look at what 2023 and the remainder of the life of mine 2. For Rosebel looks like and understanding what that deposit can give us. We have a new block model as well 2. We are focused on and incorporating it. We do want to make sure that we have appropriate conservative estimates 2. As we move forward with Rosebel, so that's a bit of a stay tuned and 2. As we move forward here, we will be providing additional color on what Rosebel looks like. 2. Thank you for answering all my questions. Thanks, Anita. The next question is from Tanya Jakusconek with Scotiabank. Please go ahead. Good morning, everyone, and thank you for taking my call. 2. Maybe just starting on just some of the smaller items. Just on photo, you said you're looking at 20. All options and hence value optimize value there. Is selling the asset one of them one of your options? 20. Look, Tanya, we really do like Boto and what it provides for us as 2. As well as the regional opportunities there. That being said, it's part of our role 2 as stewards of this company to assess all of our assets at any given point in time. And 2. The current situation really demands that we have a good hard look at each and every asset in the portfolio and understand 2. What the appropriate path forward is for us to achieve sort of the longer term strategy. 2. I'm going to leave it at that, but we are looking at what's possible with Boto just like we're looking at what's possible 2 with Westwood and other assets. Okay. Maybe then just moving on, I know we've asked 2nd quarter. Quite a number of questions on Cote and we'll wait for as you get through your costs of reviewing your costs, but maybe 2. What you can share with us is right now inflation wise, can you review with us what you are seeing inflationary pressures 2. And your costs and jurisdictions you're operating, so Canada, Africa and South America, like labor, consumables, 2, etcetera. I don't have all of the percentages for you, Tanya, but we are seeing 2. Increased fuel prices, certainly. Some of that is offset by our hedging program 2nd quarter that we have run for several years in managing our fuel costs, primarily at the open pit operations, but also 2. Managing the input fuel costs for the Cote construction project. So we are seeing some pressures there. 2. We are seeing some general supply chain pressures on costs, 2. I think in a few areas, both on the expediting and transport. Obviously, the shipping industry 2. Out there in the world is a little bit topsy-turvy, so we have seen increases in that. 2. Consumables like steel, as everybody is well aware, the price of steel is up right now. 2. We do have fixed term contracts on grinding media and liners and that sort of thing, 2. But they're not longer term. So as we look at it, we would expect to see some pressures there. Major inputs 2. Like explosives as well have been affected by the increase in 2. Fuel prices, but also by the transportation cost increases. On the positive side, we were able to resolve 2, our collective bargaining agreement at Rosebel. And so 2. Those numbers are baked into our current estimates as we move forward. Likewise, with respect to Essakane, 2. Albeit it was a much shorter period of time required to resolve it, we were also able to sign off on the collective 2 bargaining agreement at Essakane during the year for a 3 year term. So those things are going to serve us 2. Well, from that side, productivity, contractor costs, there are inflationary 2. And I am like everything, and I imagine like a lot of our competitors, 2. Evaluating whether there are permanent inflationary impacts or temporal inflationary impacts, 2. Kind of like we saw with lumber here in Canada, it's a challenging 2 analysis to say are these numbers up and are they going to stick? Or is it something that's a bit ephemeral and will go away 2. Maybe just the labor costs in Canada then, Gord. What are you seeing there? 2. Yes. No, labor costs in Canada, I mean, we were looking at labor cost 2. Inflationary statistics out of the government here as part of the work that we're doing right now in analyzing Cote. 2. And there has been inflation of labor costs above and beyond what 2. The general inflation in Canada, I believe the number I saw was some, 2. I believe in the order of 5.5%, 6%, something like that over the past year 2. In labor costs, industrial labor costs. I don't have the exact figure at 2. The tip of my tongue, but certainly happy to report that back to you. Yes, that is. Westwood 2. Westwood is under an existing CBA, so we're sort of managed there, although there is a degree of indexing to CPI. 2. At Cote, we don't have any kind of a specific labor agreement for the operation. We do have some agreements in place 2. With respect to the construction programs, so it's one that's out there and as we move to the 2. I think one of the things that we did at Cote, 2. Specifically, understanding the Canadian labor market was the move to automated haulage and automated drilling, 2. Really to help us mitigate somewhat our exposure to Canadian labor rates. 2. Okay. And then maybe if I could just ask on Rosebelle, there's a lot of things happening there from the pit to the mill. 2. You have change in management at the mine site. You're still dealing with illegal miners. Just a bit concerned about everything going there. So maybe if you can just review from the pit 2nd quarter. To the mail, to all the management changing and the illegal miners, just what has happened? 2. Well, in some ways, a bit of a perfect storm, if you will, Tanya, at Rosebel. 2. As we reported, I'll start with the weather because it was one of the biggest smacks in the head. 20. So to the middle of the year, Rosebel is experiencing a 2. It's beyond a 1 in 20 year event, probably closer to a 1 in 100 year event in Suriname 2. In the month of May, nearly 3 quarters of a meter of rainfall 2. It was experienced at Rosebel. So that had a number of impacts. And 2. To delineate in the Rosebel Pit, it obviously impacted our ability to dewater the pit 2nd quarter. And forest mining at Rosebel more into the expansion phases, which are lower grade and restricts our access into the bottom of the pit. 2. Overall, rain impacts obviously affected our just our ability to mine generally. 2. In the pushbacks at Rosebel as well, because the pushbacks tend to be in softer rock and access is difficult. 20. At Saramacca, it had some very strong effects, the rainfall during the quarter. Again, mostly input. 2. The main haul road between Saramacca and Rosebel is built out of rock and is well drained and generally performed very, very well despite the high 2. But the access areas within the pit itself were very, very challenged for the quarter. Saramacca is all saprolite. 2. There is no hard rock there to help with road bedding. The team has been working on a number of technical solutions to improve the in pit access, 2. It was impacted. And as a result, part of what was done at Saramacca during the quarter 2. It was a move to a small satellite lower grade pit, which was easier to access while they worked on reestablishing the access into the pit. 2. We are back hauling a lot of rock from Rosebel into Saramacca. And as we move forward, we really do see 2. We'll get that footing in place. Another important impact given the nature of the process at Saramacca, 2. There are typically sort of 2 or 3 rehandles of the ore before it hits the mill. 2. And that was the original plan. The additional rain, coupled with the high play nature of The ore that we're mining right now meant that that ore was becoming saturated and extremely sticky 2 and had follow on effects at the mill. So that was the primary mill effect. 2. We are working on the carbon management system at the mill. The one we have in place has been there for a while and needs some work. 2. So we do have a program in place to really bolster the capacity of the mill to manage sticky rock 2 as well as Hardrock and to treat the carbon effectively. So we're expecting 2. That capital project to be completed by the end of the year. It's not a big capital project, but we are very much looking forward to the expected 2. I guess the other key impact obviously for the quarter was COVID 2. And COVID impacted us in a lot of different ways. COVID directly, 2. There was a big wave in Suriname towards the second half of the third quarter of the second quarter, excuse me. 2. And that led to a number of countrywide shutdowns. It led to some unrest and some civil unrest in and around the country, some blockades, 2, which did challenge us. So at a macro level, we had those COVID impacts locally within the mine. 2. We also had COVID impacts. And just like everyone reads the news around how COVID 2 impacts areas. You get clusters within a mine site just as you get clusters within the general population. 2. And for Rosebel, some of those clusters occurred in the maintenance departments. So it's not like if you're down 10%, every 2. You can be down 10% and have some departments much, much more drastically affected by COVID, 2. Not only from direct infection, but also contact tracing and contact isolation. And for Rosebel, the maintenance departments, both in the mine and mill, 2 were impacted. And that's driven backlog in maintenance required in both of those areas. 2. And that's been incorporated into the plan going forward. We as you pointed out, we have 2. Sent in some reinforcements. We've made a few management changes and are significantly reinforcing the maintenance team so that 2. We can pick up on that backlog, both in the mill and with the mining group. 2. And the last one, and we are working through it. We did have a protracted 2 collective bargaining negotiation with the union at Rosebel. It was finally resolved in May. But prior to that, 2. Yes, we did see some impacts on productivity. As we look at the remainder of the year 2. And throughout the organization, we are implementing a cost savings and productivity improvement exercise called IAM All In. 2. Rose, it started at Essakane. We're already starting to see 2. Some nice opportunities there going forward and very shortly we'll be implementing that at Rosebel as well. 2. So the confluence of all of these factors really put us behind the 8 ball, not only impacted the production, 2, obviously, very severely for Q2, but also impacted our sequencing and our ability to react going forward 2nd quarter. And hence the reduction in the forecast for the remainder of the year. 2. I'm happy with the team we have in place and we are working very aggressively to get 2. And maybe just on the illegal miners and what we're doing there to just keep them away from the pit. 22. Yes. With respect to your legal miners, we've been working very closely with the government. We have signed some agreements with the government with respect 2. We overall versus prior years are seeing a steady decrease 2. In the number of illegal miners that we have at site. That being said, they are challenging. 2. We are implementing some additional security measures to allow us to manage that situation better. We're 2. So obviously working very hard with the communities on our community development programs and other opportunities 2. To provide alternatives for people who are being impacted by the valuation and inflation in country 2 and are obviously looking to find a way to generate some income for themselves. So 2. It's not only the immediate reactionary work we're doing 2 to manage that issue, but it's also going back to the root cause behind that issue and 2. And working closely with the government and with our communities to find ways to reduce it 2nd quarter. They may be illegal, but they're not necessarily bad miners. They know where 2. High grade material is and they're pretty creative 2. In their tactics, so we need to find a way to remove the incentive. Okay. Well, good luck at Roosevelt. 2. This concludes the time allocated for questions on today's call. 2. I'll now hand the call back over to Indi Galpinayton for closing remarks. Thank you very much, Gayleen, and thanks to everyone for joining us 2nd quarter this morning and for your continued engagement with IAMGOLD. We look forward to having you join us again for our Q3 conference call in November. Goodbye. 20. This concludes today's conference call. Thank you for participating and have a pleasant day.