Earnings Call: Q2 2020

Aug 6, 2020

Thank you for standing by. This is the conference operator. Welcome to the IAMGOLD Second Quarter 2020 Operating and Financial Results Conference Call and Webcast. As a reminder, all participants are in a listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. At this time, I would like to turn the conference over to Indi Gupinatham, Vice President, Investor Relations and Corporate Communications for IAMGOLD. Please go ahead. Thank you very much, Claudia, and welcome, everyone, to the IAMGOLD Q2 conference call for 2020. Joining me today on the call are Gordon Stothart, President and Chief Executive Officer Carol Banducci, Executive Vice President and Chief Financial Officer Bruno Lemelin, Senior Vice President, Operations and Projects Craig McDougall, Senior Vice President, Exploration and Jeffrey Snow, Senior Vice President, Business Development and General Counsel. Our remarks on this call will include forward looking statements. Please refer to the cautionary language regarding forward looking statements in our disclosure documents and be advised that the same cautionary language applies to our remarks during the call. With respect to the technical information to be discussed, please refer to the technical information and qualified persons slide. 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 Stothers. Well, thank you, Andy, and good morning, everyone, and thank you for joining us. So last night, we issued solid operating results for the Q2 of 2020, demonstrating strong operating cash flows on increased margins and further improvement to our already strong balance sheet. Subsequent to the quarter, we announced our decision to go forward with the construction of Cote, a transformational growth project. And like all of you, we've been adapting to our new normal with COVID-nineteen, changing the way we work and for some, where we work. We will provide an update on our activities with respect to COVID-nineteen in a minute. Finally, we are providing updated guidance for the year, taking into account the suspension of operations at Rosebel and the resumption of capital sustaining expenditures. Before I move on to the next slide, I wanted to note here that last night, we also announced the retirement of 2 key members of our executive leadership team. After 13 years with the company, Carol Banducci has advised us of our intention to retire from IAMGOLD on March 31, 2021. Arrow has steadfastly seen the company through a bull market, a bear market and several transitions. Her disciplined approach to financial management is the reason we have the balance sheet we have today and her success in building an outstanding finance and accounting team has positioned the company exceptionally well today for both challenges and opportunities. I certainly wish her all the best in retirement and look forward to our continued work together over the next several months. In addition, Jeff Snow will be retiring from the company effective August 31, 2020. Jeff has had a storied 39 year career at the intersection of law and mining, and we will miss his wise counsel and wish him all the best in his well deserved retirement. These are both big changes for the company and certainly personally. I certainly enjoyed working with Carroll since I came to IAMGOLD 12 years ago. And we've gone through a lot of battles together and it's she's been a great teammate. I started working with Jeff, I think in the early '90s at Noranda office in Toronto and he's a I count him certainly amongst my friends and certainly a valued colleague. The Q2 was really about learning to live in a time of COVID-nineteen. At the end of the Q1, we proactively implemented a multifaceted response, including screening, physical distancing and personal protective equipment and sessional personnel policies. In the Q2, we were able to rechange shifts at Essakane following the lifting of the local administrative quarantine. Westwood came back online in mid April following placement in care and maintenance in accordance with provincial directives. And as you know, we experienced COVID-nineteen cases at the Rosebel site as we saw outbreaks in the region and notably Brazil. Fortunately, the cases at Rosebel are now largely resolved. We continue to work to enhance protocols and further expand the camp facilities to support social distancing as is the case at Rosebel. One of the more unique approaches is at Essakane where we've been using drones equipped with loudspeakers to raise awareness of the coronavirus and our protocols to help ensure compliance. And of course, we have also considered COVID-nineteen protocols in planning our construction activities for Cote. From a community engagement perspective, I'd like to share a couple of stories. In May, the female employees of Essakane made a symbolic in kind donation to the vulnerable communities surrounding Ouagadougou, the capital city of Burkina Faso, worth CHF2 1,000,000 of West African francs, approximately CAD4,700. This contribution was a result of a fund fundraiser they initiated at the mine. The donation was made through the association FEM and included 50 bags of rice, 50 cans of oil, sugar and soap for 55 households in the Ouagadougou region. In Suriname, entrepreneurs from the community of Marshall Creek located near the mine site have been engaged to supply 1,000 non medical mouth caps or masks for Rosebel. This follows on a 2019 community initiative led by the Community Relations Department to help develop marketable skills and experience. IAMGOLD is committed to achieving high standards in environmental, social and governance practices, which reflect our long held zero harm vision. IAMGOLD donations to local communities in response to the global COVID-nineteen crisis include cleaning equipment and supplies, hand washing stands and hand sanitizing gel for the communities, medical protection equipment, including masks, gloves, etcetera, as well as life support equipment such as ventilators and hospital beds. As we know, this equipment developing nations. IAMGOLD and our employees across the globe are proud to highlight through these donations our true and lasting partnerships with the governments as well as our deep commitment to these countries and their populations. Following the suspension of operations at Rosebel, we reviewed our 2020 guidance. As a result of this view, we've lowered our 2020 guidance for Rosebel to the range of 210,000 to 230,000 ounces. This change shifts attributable guidance for the company down to the range of 645,000 to 700,000 ounces for 2020. With this change to attributable reduction, we have adjusted cost guidance as follows: pasta sales between 900 dollars $10.30 per ounce sold total cash costs of $9.40 to $9.80 per ounce produced and all in sustaining costs of between $11.95 $12.45 per ounce sold. I would note here that all in sustaining costs in the Q3 this year are expected to be higher than the Q2 due to the resumption of sustaining capital programs with similar production levels. In addition, costs are expected to be higher in the Q3 as compared to the Q2 due to additional COVID-nineteen related expenditures. Our outlook for capital expenditures has also been adjusted. At Essakane, a reduction of non sustaining capital to $65,000,000 from an original $80,000,000 due to lower level of capitalized stripping and timing of spends. At Rosebel, a decrease of $10,000,000 in sustaining capital, which reflects the delay caused by the suspension as well as a $15,000,000 decrease in non sustaining capital due to the delay of capitalized stripping work, again due to the suspension. At Westwood, an adjustment in non sustaining capital to $18,000,000 from $15,000,000 on additional development work. At Rocotte, our development capital expenditures for 2020 are $77,000,000 increased from $45,000,000 earlier and reflecting early works on construction. At Boto, planned expenditures in 2020 remain the same at $25,000,000 In total, these adjustments comprise a net decrease of $10,000,000 in sustaining capital and a net increase of $5,000,000 in non sustaining capital. Total capital spend in 2020 is planned at $340,000,000 a net decrease of $5,000,000 While our 2021 guidance remains unchanged, we note that this continues to be under review given the current global uncertainty with respect to the spread of COVID-nineteen and the effect it may have on the company's operations. Following the major significant catalyst, which was our decision to proceed with Cote construction, in addition to the recent filing of an AI 40 three-1 101 report for Westwood, along with reaffirmed production guidance originally released in 2019, we see the following catalysts for the balance of 2020. At Rosebel, we resumed long hauling Saramacca ore and worked to complete the road. We expect to be at the target run rate for Saramacca later in the year. The mill optimization project at Essakane aimed at increasing throughput by about 10% is ongoing, and we hope to get that online towards the end of the year or in early 2021. We continue to de risk Boto with investment in local infrastructure. And in exploration, we are working on further resource delineation at various projects, including Nelligan, the Rouen project and the recently acquired Fayeul property in Quebec, Goscelin at Cote and the new Carita discovery in Guinea. 2021, we expect to see Westwood continue to expand production with supplemental feed from the Grand Duke open pit. We also see Rosebel production ramping up with Saramacca online for the full year and for an optimized ethikan mill to demonstrate increased throughput. In addition, the Cote work plan is focused on major earthworks, while we continue to derisk Bodo. And on that note, I will now pass it on over to Carol to review our financial results. Carol, I think you're on mute. Thanks, Gord. Look, I'm going to go off script a little bit here and I just want to thank Gord for those kind words he said earlier. I think it's very much as a personal decision to retire and I'm confident that under Gord's strong leadership that we have a strong path to transforming this company. We have a great company, we have great people and we have a great future. So with that, again, good morning everybody and turning to the Q2. The company continued the trend of strong gold margins in the 2nd quarter with strong operating cash flows. The quarter also presented opportunities to execute favorable input cost hedges on both currency and fuel exposures for Cote. With the development of Cote, IAMGOLD will become a growing, diversified Canadian company, generating superior returns while prudently managing risks. To achieve this transformational strategy and in order to mitigate gold price exposure and revenue risk over the construction period, the company intends under appropriate conditions to hedge 15% to 20% of its total gold production between 2021 mid-twenty 23 through a combination of options and our callers. Following our construction decision announcement on Cote, credit agencies S and P and Moody's reaffirmed IAMGOLD's stable outlook. We continue to prudently manage our balance sheet with cash, cash equivalents, short term investments and restricted cash of $866,000,000 at the end of the quarter and our virtually undrawn credit facility of $500,000,000 As Gord mentioned, COVID-nineteen did impact us in different ways in the quarter. Working capital was higher due to our intentional increase in supplies inventory as well as the buildup of finished goods due to timing of shipments and the higher cost of inventory. We expect depreciation expense in 2020 to be in the range of $245,000,000 to $255,000,000 down $5,000,000 from the previous guidance. Our cash taxes guidance remains unchanged at $30,000,000 to $45,000,000 Revenues in the 2nd quarter were $284,600,000 due to strong gold prices, while cost of sales were lower compared to the same prior year period and the prior quarter. The adjusted net earnings for the quarter was $20,100,000 or $0.04 per share. Net cash from operating activities before changes in working capital totaled $79,000,000 Following the strength in gold prices, our prudent management of the balance sheet, our liquidity excluding restricted cash and including our $500,000,000 credit facility totaled over $1,300,000,000 Our $400,000,000 in senior notes are not due until 2025. This next slide highlights the strength of our financial position relative to our peer group of gold producers. And as you can see, we continue to be in a net cash position with peer leading liquidity. I will now pass the call over to Bruno to discuss operations. Thank you, Carol. On Slide 17, we are committed to the health and safety of our employees and especially so during this time of the global COVID-nineteen crisis. In the Q2 of 2020, we achieved notably better than target on the dark rate, which stands for days a week restricted or transfer duties of 0.11. We work every day to meet or exceed our safety goals, implementing and refreshing a number of incentives to ensure a safer work environment, including a comprehensive behavior based safety program. This slide summarizes our results for the quarter with total consolidated attributable production of 155,000 ounces, cost of sales of 10.30 dollars per ounce sold, total cash costs of $9.35 an ounce produced and all in sustaining costs were $11.89 per ounce sold for the 2nd quarter. I will now review each operation in turn. At Tifakan, attributable gold production for the 2nd quarter was 83,000 ounces. We mined higher grade zones in the quarter, but also completed less capitalized waste stripping. All in sustaining costs were $11.23 for the quarter. By the lifting of the local and effective quarantine during the quarter, we experienced improved productivity. We were able to proceed with the crew change. The prior shift was particularly long as some employees were on-site for almost 2 months. For the balance of 2020, we are expecting some graphitic ore, which typically negatively impacts recoveries. We anticipate as well the mill optimization project to be delivered late this year or early next. In addition, on the exploration front, drilling at Tassir is complete and we are compiling these results to assess resource potential. We continue to be vigilant with respect to COVID-nineteen with enhanced protocols in place to protect our workforce from the coronavirus. In these pictures, we highlight some of the sanitation measures implemented at site, including frequent cleaning and disinfection, convenient handwashing stations, setup of isolation zones and a drone equipped with speakers to communicate awareness of protocols. At Rosebel, attributable gold production for the 2nd quarter was 52 1,000 ounces largely impacted by the mid June suspension of operations. All in sustaining costs were $11.50 for the quarter. The COVID-nineteen cases we experienced on-site are largely resolved with a limited number of active cases remaining, which are currently off-site. Operations resume on July 24, and we are processing stockpiles and high grade materials from Santa Monica. Going forward, we expect slightly weaker third quarter production output for Rosebud, mainly due to the suspension of the operation on till July 24. We have moved to 1 person only per room, that is the same person day and night, which constrains the number of employees we can have on-site. This in turn means that we will need to expand health and safety perspective, we included a couple of pictures from Rosebel highlighting our enhanced physical distancing protocols in the launch rooms and maintenance shop configuration. Slide 21 highlights a number of pictures showing our progress at Saramacca. On the left is the Mieux Greneti bridge, which is now complete. On the right is the infrastructure in progress at the Ceramica site. Westwood resumed mining in mid April, producing 20,000 ounces in the Q2 2020 at all in sustaining cost of $11.33 per ounce sold. We just filed our National Instrument 40 three-1 101 technical report for Westwood, which outlines a safe, profitable and long life mine and we reaffirm longer term production guidance originally disclosed in December 2019. While reserve ounces declined by 48%, overall resources including reserves increased slightly. As it is typical for underground mine, our guidance includes resource ounces converted during our planned development and it is based on our historic operational experience. We have included a few pictures here of our general manager meetings at Westwood, reflecting physical distancing front of us. Just a couple of weeks ago, we made a momentous decision to proceed with the construction of the Cote Gold project. We believe in Cote because of the transformational value it brings to Iron Gold and to all of our stakeholders. This Canadian project expands our production profile, brings greater geographic diversity to the company and lowers our overall cost profile. Coty is well advanced even as we made the decision to construct with key permits and approvals in hand, strong stakeholder relationships with our joint venture partner Sumitomo as well as indigenous communities flying post in Matagami and of course, our northern communities. Further, Cote has significant district potential with the Gosselin and Yum China discoveries. We note here that Cote is highly levered to the gold price. In fact, at today's gold price of $2,000 per ounce, the project's net present value at a 5 percent discount rate is $2,800,000,000 with an internal rate of return of 27.6%. On this slide, we include pictures we shared a couple of weeks ago, our Chester construction camps, which can house 264 people in a view of the 3 clearing completed earlier this year. I will now turn the call over to Craig to discuss exploration. Thanks, Bruno, and good morning, everyone. Before I begin, please note that the results I talk about today have been previously disclosed in accordance with securities regulations and signed off by the qualified persons within the company reporting them. In 2020, our planned exploration spend is 50 $2,000,000 excluding project development activities and studies and will involve the completion of diamond and reverse circulation drilling to support resource development programs and exploration target evaluation. Although we are maintaining our outlook on our exploration program, we continue to reassess the impacts of the COVID-nineteen crisis going forward and we'll adjust accordingly. As we have said before, industry reserves have been on a steady decline since 2012. IAMGOLD has been working hard differentiate ourselves from this industry trend. Beyond just replacing reserve ounces depleted from mine production, we have also achieved a significant increase in reserves over that time. In 2016, we have not only replaced every ounce mine, but also added over 8,000,000 ounces more than doubling our reserve base. This is the result of a sustained commitment to exploration through this cycle and the tireless efforts of our exploration and mine geology teams. We believe this is a significant competitive advantage for IAMGOLD and for our future. During the quarter, we announced further infill diamond drilling results from the Ruwan Gold project as we work to delineate maiden resorts at the Lac Gammel zone, which we feel may have potential to provide satellite feed to our Westwood operation. Highlights include 9.8 meters grading 27.8 grams per ton gold, which included 4.4 meters grading 58.4 grams per ton gold and another hole with 9.8 meters grading 10.4 grams per tonne gold, which included a 3 meter interval grading 22.8 grams per tonne gold. This along with the announced acquisition of the Foyou project some 35 kilometers from Westwood continues to build on our hub and spoke model in the region centered on the Westwood operation. Still in Quebec, you will remember we announced a maiden mineral resource estimate at the Nelligan Gold Project in the Q4 of 2019 with resources on a 100% base totaling 3,200,000 ounces in an inferred category at a grade of 1.02 grams per ton of gold. In 2020, we completed nearly 5,000 meters of diamond drilling before activities were temporarily suspended due to the COVID-nineteen crisis. This program was designed to infill the deposit to improve confidence in the resource model as well as test for extensions of mineralization beyond the existing resources. Initial results reported during the quarter include 27 meters grading 2.86 grams per tonne gold and 25 meters grading 1.87 grams per ton gold both from infill intersections. As well, we reported a 10.5 meter intersection grading 10.5 grams per ton gold, which included 1.5 meters grading 69.1 grams per ton gold and this from a step out goal outside of the existing resources. Although we no longer have the advantage of the winter access for which this property is well suited, a summer drilling program has been designed and has commenced, which will continue to advance the objectives of this program. At the nearby Monster Lake project located 15 kilometers north of the Nelligan project, drilling activities also resumed during the quarter, completing an additional 1400 meters of diamond drilling. The program focused on testing the anti shear zone in an effort to extend mineralization intersect during 2019. Assay results from this work will be reported once received, validated and compiled. Although our drilling program to evaluate the resource potential at our new Gosselin discovery located 1.5 kilometers northeast of the Cote gold deposit was also suspended before completion as a result of the COVID crisis. Core logging and sampling on the holes that were completed is well advanced and we expect new results shortly. Reminder of this program is being redesigned utilizing our product supported drilling program, which should commence in August. In West Africa, exploration activities continued during the quarter, extensions to the Diakka deposit located to the south in Mali and exploring selected high priority targets within 20 kilometer radius of that deposit. Taking into consideration the current favorable gold price environment, you can certainly see the meaningful impact this has on photo project economics on a standalone basis. Building on our exploration success along this portion of the San Miguel Mali Shear Zone with several discoveries located within 15 kilometers of the Boto Gold project in adjacent countries, the company has initiated a strategic concept study referred to as the Bamboo Gold Complex to advance resource evaluation and delineation programs at Dayakta and the Corita projects, which will support the evaluation of various potential development scenarios and identify regional synergies. Driven by increasing gold prices, competition for and access to quality exploration projects is challenging for the industry. Iongold has developed and continues to invest in a healthy pipeline of early to advance greenfield exploration projects to support our future growth as well as support near mine brownfield exploration with a view to lengthen mine lives and leverage our existing infrastructure. With that, I will now pass the call back over to Gord to conclude. Thanks very much, Craig. So from a strategic perspective, Q2 2020 was really a milestone quarter for the company with the announcement of Cote moving forward. We remain focused on lowering our consolidated cost profile to improve margins and cash flow, increasing our gold production, increasing our operational flexibility, enhancing the geographic diversity of our overall portfolio and of course, improving returns to shareholders. To best achieve this, we believe we need to achieve self funding at each of our existing operations to ensure exploration activities, corporate functions and financing obligations in aggregate are not a burden on our balance sheet. Sequenced development of our organic growth pipeline, starting with the construction of Cote and continued de risking of Boto. We will also be planning for an exciting future with the advancement of our rich district brownfield and greenfield exploration prospects, which include Goscelin, Corita and Diakasirabaya along with Bodo in the Bamboo District in West Africa, Nelligan Monster Lake in Northeastern Quebec, along the Saramacca Broklanco trend in Suriname and our Westwood hub and spoke model in the Abitibi. Importantly, this all needs to be accomplished while continuing to be leaders in ESG performance through relentless pursuit of our 0 harm vision. We continue to guide our efforts in accordance with our vision to be the global leader in creating superior value for our stakeholders through accountable mining, supported by our experienced team of technical, operational and financial professionals. Thank you for joining us today, and I will now pass the call over to the operator. Thank Our first question is from Fahad Tariq with Credit Suisse. Please go ahead. Hi, good morning. Thanks for taking my questions. Maybe first on Saramacca, can you remind us what construction is left for this year and whether the lower growth CapEx guidance for this year, does that mean there's some spillover of CapEx into 2021? Maybe if you can just give some context on what's left to do at Saramacca and what the CapEx could look like for next year? Thanks. Bruno, can you address that, please? Yes, certainly. Hello, Fahad. So the infrastructure that remains to be built is watery paint, maintenance shop and some offices. And the rest is just finalizing the paving of the road with the fine rock and that's it. So we don't expect to have much capital to be extended to 2021 as we speak right now. Okay, great. That's helpful. And just one other question on Westwood. I know you reaffirmed the longer term guidance, but the reserves declined. How should we be thinking about the mine life now at Westwood? So we still expect a mine life beyond 2,030. And as we guided on December 2019, we were doing a slower and pop from 100,000 ounces to 125,000 and then to try to get to a run rate of 130,000 to 145,000 go downs. And we are pretty confident the target is to try to convert back resources into reserve by adding drilling at Westwood in the North Corridor and in the Zone 2 over the next few years. And so we can upgrade the inferred resources to NKS and the measures then finalizing the mining plan so they can be put into reserve. And also we have adjusted our reserve according to our ground condition by adding a geotechnical risk adjustment cycle and also changing the dilution and recovery factors associated to our new mining philosophy. However, we're going to continue to work around these sectors to improve our extraction strategy. So we can put some of those answers back into the reserves. So when you look at it, all in all, with the resource base that we have and the conversion factor that we've had in the past, also looking also at the reconciliation history that we have from reserve to the mill, we are quite confident about our guidance that I just described and to go beyond 2,030. Our next question is from Josh Wolfson with RBC Capital Markets. Please go ahead. Thanks. First question on West Wood. Just trying to understand what mining cost assumptions we should be incorporating longer term. I did notice that the technical report had a mining cost for the mine plan of around CAD224, but the cutoff for reserves was about CAD50 lower in the CAD170 range. Bruno, can you speak to that? Yes. So for the we made I'm just trying to find the difference between just give me one second. Sure. I can then give you back the answer because I have the color grade calculation. And then maybe what I'll do is I'll come back to see what the mining cost and because we have hands from Grand Duke and Westwood and also we have the cutoff grade mining cost. So I want to make sure that we have the difference Okay. And on the capital side, so the CapEx of $200,000,000 ish is for the current reserve base. Should we be assuming a similar amount of capital for reserves that will be added? Or is there a lot more development that's required for the current reserve base that's been defined? At Cerro Pekka? For Westwood. Okay, sorry. Yes, so in fact, we're going to continue to keep developing westward. So associated to it, you have lateral development, that's called and other mining infrastructure that needs to be associated to this when you want to model the additional ounces for that. Okay. And then last question related to Westwood. The shaft at one point that had been discussed historically, I don't believe that's incorporated for the current reserves. Is that still part of the plan longer term or is that needed to access reserves that you would project out to that 2020, 30 plus timeline? Right now, we believe that the main access is sufficient as we speak. And again, what we need to do speak is to further investigate Delaware and the Eastern side of the mine, and then we'll be able to develop a mine plan and access associated with. Okay. And then Sorry, Josh. As we've looked at it, because of the dip of the deposit, the shaft is starting to become a long ways at the bottom end from the deposit. So we've evaluated putting a wins and we've looked at some declines and we're sort of going through that analysis now. Either one of those solutions still supports the declaration of resources. Obviously, as we get into reserves, we'll need to crystallize the current plan, the final plan, sorry. Great. And then one final question. Sorry, I'm logging in a lot of your time here. For Saramacca, at one point there was a discussion about coming out with an underground study, which would have been, I guess, most beneficial early in the mine life to reduce some of that upfront stripping. Is that currently the plan? Or should we expect to study on that upcoming? Yes. Right now, we're still figuring out the best option whether to pursue with the open pit at the current price environment versus on the underground. We keep we still have some investigation to do for the underground to further understand the full value of this option. So right now, as we speak, it's still conceptual and we're still assessing our options that we have at hand whether to continue thinking with the open pit or converting it to the underground potential. But as we speak right now, it's too soon to tell. Great. Those are all my questions. Thank you. Our next question is from Jake Chibilovsky with BMO Capital Markets. Please go ahead. Hi, thanks very much. I guess I'll start off. I noticed in the release last night, you didn't talk too much about the Sadiola sale. It was previously forecasted, I guess, to be completed around the end of April. So I was wondering if you could give us an update on that. I'm guessing there's some delays due to COVID. Do you have any idea when that might close? So Jack, yes, you're entirely correct. We have seen some delays due to COVID. Most of everything has been inked up. There is a little bit of political machinations going on in Mali right now, not with respect to Sadiola, but more just with respect to the overall politics in Mali and figuring out the path forward for the government. Everything is signed up and ready to go. We're just really just waiting for a new cabinet to be formed and a new mines minister and finance minister to be put in place. We anticipate that that may add a little bit of additional time as the new ministers familiarize themselves with the file. But from a bureaucratic point of view and certainly from a business point of view between ourselves and AngloGold Ashanti and Allied, everything is ready to go. So just waiting on finalization right now. Got it. And maybe if I could just ask a different question on Rosebel. You lowered the guidance and a lot of that looks like it's due to Rosebel. I understand that there was a strike and that you've got productivity hits from the social distancing. Can you quantify how much of the guidance revision, the 40,000 ounce guidance revision, how much of that is due to the strike and how much of that is due to the going forward productivity hits? And I guess the question being like, would you expect some productivity hits similarly to affect 2021 as well? I mean, I'll let Bruno answer. I mean, my perspective, about 80% to 90% of it is due to the suspension. There are some productivity hits in the near term, although we are seeing better grades for the remainder of the year. So we are able to compensate some of that. But it's almost a direct one to one, the change in guidance with respect to Rosebel being the suspension period. That's the amount of production we would have had out of Rosebel. As we look to 2021, we're not anticipating any further productivity impacts. We have a plan in place to get back to our full complement of manpower through some additional camp construction. And once we're at full manpower, we'll see full productivity. I don't know if you'd want to add anything else, Bruno? That's correct, Gord. About 90% of the ounces are coming from the suspension of the operation and the rest is just the ramp up to our National Bank. Please go ahead. Thanks, guys. Most of my questions were answered. Just one housekeeping one. The cash taxes guidance, what gold price is that based off of? It's $1500 Mike. Okay. And just a little bit on Westwood. With the change here, is there any additional labor changes? Like I know you've made some changes recently and we're seeing U. S. Dollar operating costs come down. Just trying to get a sense of like what we could expect going forward with the lower mining rates. Is that going to call for further reduction in manpower? Farrell? Yes. So we don't expect any further decrease in the workforce. We did an adjustment a year ago to that end. However, for now, we believe we have the workforce to complete the life of mine that we have designed with a little bit more personal needed for the underground operation. But right now, as we speak, we believe that the workforce is going to be quite stable, if not just increase a little bit. To come back to the mine operating costs for mining at Wishwad, those are CAD 2.24 per tonne. And then will milling costs and site G and A costs be up just because of the lower throughput? Yes. So 26 dollars 0.09 for milling and $42.95 for administration, G and A. So it's all Canadian dollar. Okay. What we're seeing Mike is actually with the additional rock that we're putting through from Grand Duke and we anticipate to put through from Fayol and so forth, the administrative and milling costs milling costs actually are lower for the complex as we move forward on a per ton basis that's assigned to Westwood. Are you guys doing owner operated for the open pits or are those contracts? Contracts. And is that getting reported through OpEx or is that? Yes. Yes. It's getting it's coming through OpEx. Okay. All right. That's it for me guys. Thanks. Thanks, Mike. Our next question is from Terry McRury with Canaccord Genuity. Please go ahead. Good morning, everyone. Just had a question on 2021 CapEx, the press release notes around $250,000,000 for 2021, which isn't too far off from the 2020 guidance once you strip out cocaine photo. So I'm just wondering with Saramacca spending expected to be down and I know the press release talks about lower stripping into 2021. Just how do we how should we put both capital that number relative to this year's number? Bruno, do you have a thought on that? Can you repeat the question, please? What's the just because the question is around what's our capital expectations for 2021 given the shifts that we've made for 2020? Yes, I guess capital looks flat in 2021 versus 2020. But again, we would assume that Terra Mica should be down a bit and that it notes that capital stripping should be lower in 2021. So I'm just trying to understand the 2021. Yes. That assumption of our sustaining CapEx for the remainder of 2020 is the increase in Q3 and Q4 and some of the capital projects in Q4 and some of the capitalized restructuring also will take place in 2021. Right now, it's a little bit early to see the full impact of the overall envelope. We don't believe that's going to be that material. We believe that we can keep having same production level with a reasonable capital envelope. And maybe I can add that. I mean, again, the 2021 is under review, just given what transpired with COVID this year. And we did reduce some of our capitalized stripping this year. So we'll have to kind of look at the new mine plans as Bruno has alluded to. And so we'll have to look at updating that perhaps in Q3, but it is under review and just it's something that we're looking at. And maybe just on the middle debottlenecking at Essakane, just what the status of that is and is that going to also flow over into 2021? So, I mean, the current schedule we have right now, Kerry, is to complete by the end of the year. There is a possibility that it gets pushed a little bit into Q1, mostly on delivery of some of the supplies, again, related to COVID. Our capital assumptions that we put in place assume that we run it out and it's up and running by the end of the year versus I mean, our original intention was to have it up and running in Q3. But that was one of the areas where we when we went into reduced or COVID impacted activities that we did reduce the level of work on that project. Our next question is from Tanya Jekuszkonen with Scotiabank. Please go ahead. Good morning, everyone. Can you hear me? Yes. Great. Thank you. First of all, just I want to say congrats to Carol and Jeff on their retirement. Well done. Maybe I have 3 questions and I wanted to talk about a couple are quite easy. Maybe for you, Carol, just on the incremental COVID-nineteen expenses, those are going to be included in other expenses going forward and excluded from your total cash cost and all in sustaining cost. Yes. And again, we do a very detailed review of all the COVID costs, Tanya. So anything that we think is going to continue will fit in cost of sales. But it's those costs that we think are one time, like for instance, premiums that we've paid to employees when we're going through the transition and introducing all the protocols or if we brought in some additional housing in order to accommodate the employees and do the spacing, distancing. So anything that we've done on a one time basis has gone through other expenses. So anything to do with obviously productivity levels because of all the protocols we have put in place that we're not excluding that. So that's the way that you should be looking at it. It's the one time cost we're putting through other expenses. And as you said, they'll be they will not be included in cash costs or all in sustaining costs. Okay. And so Carol, what should we expect going forward on these costs for, let's say, the rest of this year? Right. I mean, I think we're hoping that the worst of it is over. And so we had obviously Westwood and Care maintenance, it's ramped up really quite nicely. And the same with Astecan, we had very specific administrative sort of quarantines that went in place in country. And again, we're operating Astecan. It's been able to operate without any significant interruption. And we've had obviously we've just come out of this at Rosebel. So we're hoping that the worst of it is behind us. And so we're not expecting the same level of costs going forward into the rest of the year. We are expecting some costs, but not to the degree that we experienced in Q2. But like you, I don't think anybody really knows what might happen with COVID and whether we see another sort of outbreak. I think we've put all the measures in place and we've been very, very diligent in all the things that we've done and we've worked with the various health officials in countries. So like I said, we were hoping that the worst is over and you won't see the same thing that we experienced in Q2. Okay. And then maybe on capital allocation, Gord, Carol, you just said current gold prices, obviously, you're going to be generating a lot more cash flow than you budgeted. Clearly, the construction of Prote, we'll get some quite a bit of that. But what are you thinking about in terms of allocation on any incremental cash flow that you generate due to the higher gold prices? For right now, I'll let Carol chime in, but our expectation is we'll continue to conservatively manage the balance sheet. As we look strategically out with the Cote construction, we're very, very comfortable with the level of cash flow we have and our internal models are using much, much lower gold prices to ensure that we get through while maintaining the required cash balances and our leverage ratios below the targets that we've set for ourselves. If we generate additional, obviously, that helps us work through. We are considering obviously the development of Boto at a later date. So that is also being factored into our analysis where we go. And obviously, if prices continue to go up and cash continues be generated, we'll look at a little bit of redistribution. Certainly, at some point in the future, I'd love to be able to get back to paying some dividends back to shareholders and help everybody sort of share in the higher gold price. Beyond that, we're happy with where we're at and we'd like to get sort of a year of Cote behind us and really understand that everything is truly solid for us. Carol, would you add anything else? Yes. No, just as Gord said, we expect this company to generate superior returns and Cote is so transformational for us. We've got a significant spend there and with the guidance we provided of $875,000,000 to $925,000,000 And so our first priority is making sure that we've got sufficient capital to get this project built and running. And once that occurs, we're expecting to be significantly generating I mean significantly generating cash flow. So I think in the end term, I think all of us can appreciate everybody on the call, I'm sure can appreciate just a significant volatility around gold price. And so continues to stay at these levels or continues to rise, definitely it will cause us to take a look at sort of what kind of optionality that we have. But it's 3.5 years and we just need to make sure that we protect the balance sheet in the interim. But our goal is absolutely to generate superior returns and return provide returns to our shareholders. And what's our minimum cash balance that you're going to keep on the balance sheet over the next couple of years? Yes, dollars 200,000,000 Okay. And my final question, just for Gord, Runa, just on the Westwood, I just we had moved out 550,000 ounces of reserves into resources. What do you need to see to bring those back into reserves? Yes. Hello, Taneli. This is Ben. So again, like I explained, we were very confronted in our assumptions. We want to offer a safe, sustainable and profitable mine. So we need to increase our knowledge on those specific zones in terms of the extraction strategy. So just at this moment, we prefer to risk adjust those thoughts. So they are not accounted for in the plan as we speak. However, we are doing many activities to be able to put them back in. So we need more geotech drilling and modeling, numerical modeling on those zones and also to look at the extraction of other stocks and to see the behavior of the ground, to see the confidence that we have to extract the others after that. It's just on the specific zone. Specificity is not applied to all the zones at Westwood. It's only on very it's distributed on revenue. But the main the central corridor, it was impacted. We have a lot of work to do to further understand some attributes that and we want to be comfortable with it before we put those answers back in. Okay. Thank you. Our last question is from Anita Soni with CIBC World Markets. Please go ahead. Thank you. So first off, congratulations, Jeffrey and Carol on your impending retirement. And then a second question, Carol, could you just go over I think you mentioned that you have a policy of hedging going forward. Can you just mention those parameters again? Sure. I mean, in terms of so there's a couple of things, Anita. So in terms of the inputs, we've already hedged all the fuel exposure for Cote over the construction period. And so we've hedged that with an upper limit of $50 so we're protected at $50 And on the bottom side, I think it's around 38.50 dollars And then what we've done is we're also looking to hedge the Canadian dollar. So we've hedged about $65,000,000 of it in 2023 at 1.36 and we'll continue to watch the Canadian dollar. It's obviously much stronger relative to the U. S. Dollar. So our intent is we've got some internal thresholds that we're focused on and so we'll continue to watch it. And then what we announced this quarter is that just given the Cote project and wanting to make sure that we can execute on this transformational project and really minimize the revenue risk. What we said is, under the right circumstances, we may hedge or we actually intend to hedge gold production. We haven't done anything yet. I'm just watching the gold price and it's sitting at $2,060 right now. So we would look at doing that and no more than or I should say in the range of 15% to 20% over the next, like I said, 3 years. It's really focused on 'twenty one, 'twenty two and half of 'twenty three. And so we will look at doing it through a combination of options and callers. And as we look at the callers, I mean, what we would want to do, our strategy would be to ensure that we still provided a substantial amount of upside to our shareholders. And so we would look at we're looking at the ranges right now. And then possibly buying some options, which again, out of the money, but creating that floor price on the gold price just because we just feel that it would might be prudent to do that to protect the balance sheet. So that's our thinking, Anita. Okay. Thank you. 2nd question, more for Gord, I guess is, so Saramacca, it's been a while since you really delved in-depth into that. It's kind of supposed to have started about this time last year. And I'm just trying to get a rough idea of what the overall parameters were for the Saramacca in terms of tonnage and grade and what we should have been setting our goal post for because it's been a while since we talked about that? Yes. I think probably Bruno is more familiar with the current plan. We do expect to get up to pretty much run rate by Q4. And run rate for Saramacca is in the neighborhood of about, I think it's 2,500,000 to 3,000,000 tonnes annually coming into the plant. Can you fill that in a little bit more for me, Bruno? Exactly. So we expect to have close to in between 3 quarter to 1,000,000 ton of ore for the per quarter this year was about €2,500,000 like Gord is alluding to. Again, the ramp up is going to depend on the situation at Rosebel. Like I mentioned, we're a bit constrained by the number of employees that we can have on camp. And so we have to add new facilities to increase the workforce on-site. So some activities are going to be delayed. Again, we're going to prioritize the treatment of the stockpiles in the Saramacca ore. So we should see a fair ramp up for the Saramacca mining into Q3 and Q4 and getting to a natural run rate of that fence, around 3,250,000 tons per quarter. But again, for 2021, like Karol alluded, we're going to reaffirm our guidance associated to the other years later. Okay. And then in terms of the ore sorry, the stockpile level, like was that direct ore feed from Saramacca or was that was that or that you had stockpiled from Saramacca? Yes, we stockpile ore at Saramacca and then get transferred and hauled to the mill. So actually, again, it's every month since January, we've been adding on the stockpile. And as we have just started the restarted the operation, now we are taking that part of that stockpile to be processed at the mill. And then the mining will resume as well. Okay. So what's the level of that stockpile right now at Saramacca? About 500,000 tons. Sorry, how much? 500,000 tons. 500,000 tons. Okay. And then just in terms of the grade going forward at Rosebel, it was low because you're processing stockpiles or is that kind of is that once you get through COVID, okay. So we should resume sort of more closer to the reserve grades what you've been doing previously once sort of physical distancing issues are resolved? Exactly. And so that's the plan, stockpile in Saramacca and then we're going to start mining the Faroehan pits with Picayo and Wild Hill and then the other pits. So the grade should be improving. And then the overall tonnage at the at Rosebel is that it can process going forward, given that you've got, say, 2,500,000 to 3,000,000 from Saramacca, what would Rosebel proper be delivering then? Probably around 30,000 ton 30, that's a good number. Okay. We speak now. It depends on the hardness of the material that we're having. So it varies. Okay, sounds good. Now we're talking sort of 12,000,000 to 13,000,000 tons annually, including Saramacca. Okay, sounds good. All right, thanks. And then last question, sort of switching gears to Cote. Just as we start to focus on, I mean, you're going this is full steam ahead and you're going to be sort of trying to break ground on this in Q4. I mean, is it can you just talk about sort of the construction build out like EPCM? Like are you guys managing this? Who's involved? What's going on? I I mean, we've seen a few build outs in the last few years that we've given the size of the capital that's going to be spent, I appreciate a few more details on how this is going to unfold. So in our release in July, we sort of laid out the spend on an annual basis or at least the percentage spend of the total on an annual basis. We are using an EPCM contractor. We're using wood, formerly the guys from AMAC who helped us prepare the feasibility study and have been involved in the detail engineering that we've been doing as part of the derisking exercise. So right now, the model is EPCM. Given the fact that we've advanced a lot of the engineering to such a high level compared to most projects, we are currently evaluating the opportunity to maybe do some of the packages EPC and lock in the fixed price so that we can execute those projects with even lower risk. So they are the main driver of the project per se. We do have a full owners team that is looking after all of the main activities. We will transition as well to an operational readiness team that's being built. We are eager to really start our owner mining towards the end of 2021 as the initial couple of benches and the overburden will be stripped by contractor. But once we get down to Hard Rock, we'll start with our own mining fleet towards the end of next year. And the rollout is, as you said, sort of breaking ground in Q4. We are doing a few activities through the summer here, specifically, some we're looking to do some fish salvage of a couple of the lakes in the tailings dam area that would allow us to get into tailings dam construction early next year. And I'd sort of leave it like that. I mean, we can certainly elaborate a little bit more 1 on 1 if you like, Anita. No, that's okay. Thank you. This concludes time allocated for questions. I will now hand the call back over to Indi Gopinathan for closing remarks. Thank you very much, Claudia, and thanks to everyone for joining us this morning and for your continued interest in IAMGOLD. We look forward to having you join us again for our Q3 2020 conference call in early November. Goodbye.