Earnings Call: Q1 2020

May 5, 2020

Thank you for standing by. This is the Chorus Call conference operator. Welcome to the IAMGOLD First Quarter 2020 Operating and Financial Results Conference Call and Webcast. As a reminder, all participants are in 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 Gopinathan, Vice President, Investor Relations and Corporate Communications for IAMGOLD. Please go ahead. Thank you very much, Ariel, and welcome, everyone, to the IAMGOLD First Quarter 2020 Conference Call. Joining me today on the call are Gord 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 Jeff 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 information in our disclosure documents and be advised that the same cautionary language applies to our remarks during the call. 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 Stoddard. Well, thank you, Andy. Good morning, everyone, and thank you for joining us. I hope everyone is safe and healthy and managing through their own little private Groundhog Day experience. Anyways, so last night we issued our Q1 2020 results, which demonstrate our leverage to gold price and strong operating cash flows. Before we get into the discussion of the quarter, I wanted to touch on the current environment and how our company is situated. In this uncertain environment caused by the global COVID-nineteen crisis, IAMGOLD is fortunate to be operating from a position of strength. We have a strong balance sheet to withstand operational and or market disruptions. We have operations in diverse jurisdictions, which in turn diversifies our risk of exposure to the current crisis. Our team has enacted an effective multilevel crisis management process very early on in the outbreak, which has enabled timely implementation of strict protocols and a quick and agile response to a fluid situation. IAMGOLD has a deep bench strength across the organization at both the operations and corporate level to support the business and we have been successful in taking a collaborative approach to government and community relations. Despite the challenges of the current situation, we have continued to move the business forward as evidenced by the completion of the Saramacca UJB agreement with the Suriname state owned petroleum company, Stazoli, that we announced a couple of weeks ago. Bruno will provide some additional details a little later, but I'd like to say that Stazoli represents a solid partner for Rosebel, given their experience as a partner with Newmont over the past several years on the Meriam mine in Suriname. So our strengths have enabled us to respond in a timely and effective manner to the global COVID-nineteen crisis, once again reflecting our commitment to 0 harm. Our response started with the activation of our cross functional crisis committees, which combine expertise from various disciplines across the company to assess and plan actions. From a health and safety perspective, we have taken extensive steps to protect the health and safety of employees and contractors. And Bruno will be sharing some pictures in a few minutes to give you a better sense of what has been implemented. In addition, we've been working with our host regional and local governments to safeguard vulnerable communities by bolstering food security, donating medical equipment and contributing to COVID-nineteen relief programs. The crisis had a limited impact on our mining operations in Q1 with production interrupted uninterrupted, excuse me, at Essakane and Rosebel, while the impact to Westwood was limited to the 6 days in March, the operation was placed on care and maintenance along with other mining companies province wide following a directive from the Quebec provincial government. However, sales were impacted at Essakane as they were postponed at the quarter end due to the global COVID-nineteen crisis. Those gold ounces not sold in March were we have sold since in April. IAMGOLD is committed to achieving high standards in environmental, social and government practices. It's been a very straight it's been very straightforward for the organization to maintain these standards as they are perfectly aligned with our 0 harm vision, which has been a guiding principle of the company for over a dozen years. One of the recent highlights is a public private partnership with the Canadian government, the One Drop Foundation and Co Water on the Triang D'lo project in Burkina Faso in order to bring potable water to 200,000 people around the Essakane mine over the past few years. We have also developed the Suriname Community Fund this past year with initial funding of $2,500,000 to provide grants to local projects, which demonstrate positive economic and social impacts. I'm very pleased to announce that we strengthened our leadership, technical and stakeholder engagement talent with the appointment of Bruno Lemelin to Senior Vice President, Operations and Projects, who will speak a little later, and also the appointment of Umar Toganyani to Senior Vice President, International Affairs and Sustainability. In his new role, Bruno has oversight of all operational and project development activities across the organization, having joined the company in 2014 after a 10 year career with Xstrata, now Glencore, and then with SNC Lavalin. Bruno transitions from the role of Regional Vice President, Americas for IAMGOLD. Umar's new responsibilities will be to manage IAMGOLD's relationships with overseas host governments and other stakeholders in West Africa and South America. Umar joined IOMGOLD in 2012, bringing over 25 years experience in exploration, project development and operations for various commodities including gold, base metals and bauxite in Africa, Europe, South America and the Caribbean. Umar transitions from the role of Regional Vice President West Africa for IAMGOLD. Following our review of 2020 guidance in the context of impacts of the COVID-nineteen crisis to date, we have made the following revisions. We have lowered production guidance for Essakane to the range of 350,000 to 370,000 ounces. We have slightly increased production guidance for Rosebel to the range of 250,000 to 270,000 ounces. We have lowered production guidance for Westwood to 85,000 to 100,000 ounces largely due to the impact of the mandated care and maintenance shutdown from March 26 through April 15, combined with the restart activities and adjustments to new working protocols. These changes shift attributable guidance for the company down about 2% to the range of 685,000 ounces to 740,000 ounces for 2020. With the impact on production and the adjustments we are all making, we have adjusted cost guidance as follows. Cost of sales between $9.55 $9.95 per ounce sold. Total cash costs of $9.20 $9.60 per ounce produced, all in sustaining costs of between $11.95 $12.45 per ounce sold. Our outlook for capital expenditures was also adjusted in the context of COVID-nineteen. The main changes are at Essakane, a reduction of non sustaining costs to $80,000,000 from $100,000,000 due to lower levels of capitalized stripping and timing of spend. At Rosebel, increase of $5,000,000 of sustaining capital due to a shift of spend from non sustaining capital. At Westwood, a reduction of $10,000,000 in non sustaining capital due to reduced development. At Cote, our planned capital expenditures for 2020 were increased by $10,000,000 to $45,000,000 to support progress on the early works phase, including site tree clearing work from the Q1, access road development, advancement of the construction camp facilities and advancement of detailed project engineering. At Boto, planned capital expenditures in 2020 are reduced by $5,000,000 to $25,000,000 In total, these adjustments comprise a net increase of $5,000,000 in sustaining capital and a net decrease of $30,000,000 in non sustaining capital. And the total capital spend in 2020 is planned at $345,000,000 a net decrease of $25,000,000 I'll note here that our 2021 guidance remains unchanged, but is under review as the COVID-nineteen pandemic unfolds and we better understand the effect of 2020 adjustments on our plans for 2021. As we continue to optimize our existing operations and de risk our development projects, we have a number of catalysts upcoming in 2020. We are currently working on the NI 40three-1 101 report for Westwood for mid-twenty 20. This is expected to outline the details of a safe, profitable and long life mine plan. At Rosebel, the main haul road is substantially complete for Saramacca and we're hauling on it now. We expect to be at the target run rate for mining at 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 toward the end of the year. In exploration, we are working on further resource delineation programs at various projects including Nelligan and the Rouham project in Quebec, Goscelin at Cote in Ontario and the new Corita discovery in Guinea. And we continue to review our options for strategic growth with a pending decision as to which of our shovel ready greenfields projects, Boto or Cote, will move forward into construction once it is appropriate to do so. Our work plan for 2020 sets up 2021 for Westwood to expand production in accordance with the new mine plans announced last December. For Rosebel production to increase with Saramacca online and for an optimized Essakane mill demonstrating increased throughput. On that note, I will now pass the call over to Carol to review our financial results. Thank you, Gord. The company saw strong gold margins in the quarter, resulting in strong operating cash flows, although Rosebel and Essakane were impacted by lower sales volumes in the quarter compared to the same prior year period. Earnings were impacted by embedded derivatives related to the Rosebel Power purchase agreement and our senior notes. We have continued to prudently manage our balance sheet with cash, cash equivalents, short term investments and restricted cash totaling $829,800,000 at March 31. We also amended our credit facility, extending the maturity of $447,000,000 of credit to January 31, 2024. As we all know, COVID-nineteen has impacted mining operations globally, and we are no exception. However, in this time of uncertainty, we also see opportunity and we are able to execute a number of currency and fuel hedges at levels that compare very favorably to our internal planning rates. Earlier, Gord laid out our revised production and cost guidance for 2020. I'll note here that we expect depreciation expense in 2020 to be in the range of 250,000,000 to $260,000,000 down $10,000,000 from the previous guidance. Guidance for cash taxes remains the same at $30,000,000 to $45,000,000 Revenues in Q1 were $274,500,000 on strong gold prices, while cost of sales were lower compared to the same prior year period and the prior quarter. The adjusted net loss for the quarter was $4,900,000 or $0.01 per share. Net cash from operating activities before changes in working capital totaled $72,800,000 As I noted earlier, we are prudently managing our balance sheet in these uncertain times. We have a total liquidity position, excluding restricted cash and including our current $500,000,000 credit facility of $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. And as you can see, we are in a net cash position with peer leading liquidity. I will now pass along the call over to Bruno to discuss operations. Thank you, Carol. We are committed to the health and safety of our employees. The Q1 of 2020, we were slightly above our target. As noted with a dark rate, which stands for days away restricted or transfer duty of 0.65. We work every day to meet or exceed our safety goals, implementing and refreshing a number of initiatives to ensure a safer work environment, including a comprehensive day of year based safety program. Slide 20. This slide summarizes our results for the quarter with total consolidated attributable production of 170,000 ounces, cost of sales of $10.54 per ounce sold, total cash cost of $9.93 an ounce produced. All in sustaining costs were 12 $30 per ounce sold for the Q1. I will now review each operation in turn. At the second, attributable gold production for the Q1 2020 was 84,000 ounces. The key factor negatively impacting production was lower tons mined than planned due to lower utilization rates and sequencing. Sales volumes were lower for the quarter as noted earlier. All in sustaining costs were $10.54 for the quarter, largely impacted by the lower than planned volumes. In response to COVID-nineteen, Essakane was moved to island mode with quarantine processes in place for personnel moving in and out of the site. In 2020, our focus is on mill optimization as a second, which targets improvements in throughput of about 10% as well as recovery improvements. Completion of this work is slightly delayed and we expect this to be completed late this year. It is a highway stripping year for Essakane with about $65,000,000 in non sustaining capital planned for pushbacks. In addition, on the exploration front, drilling at Tassery is complete and we are compiling these results to assess resource potential. As Gord mentioned, we have a number of measures in place to protect our workforce from the coronavirus. In these pictures, we highlight the frequent cleaning and disinfection of cargo that takes place at Essakane as well as the stations installed to encourage frequent unwashing. At Rosebel, attributable gold production for the Q1 was 64,000 ounces. Production benefited from higher grades at Royal Hill and Mayo, which were higher than planned and improved grade reconciliation in the quarter. However, throughput was supplemented with lower grade stockpile material. The carbon and carbon plant continued to operate as expected, recovering 3,000 ounces from tailings in the Q1 at marginal operating costs of approximately $35 per ounce to cover additional power and dilution costs. All in sustaining costs were $12.48 for the quarter. I will mention as well that we have made good progress since last year with the unauthorized miners in our pit at Rosebelle. We have been back to normal operations since the fall last year and we continue to work with our community and government stakeholders toward developing a sustainable long term solution. In response to COVID-nineteen, Rosebel like Efacan was also moved to island mode with quarantine processes in place for personnel moving in and out of the site. Saramacca is progressing well with the main ore road connected through to Saramacca in the Q1 and all in of Saramacca ore since mid March. We expect mining rates to increase from Q2 to Q4 and are on schedule to achieve our target run rate in the second half of the year. In late April, Rosebel signed an unincorporated joint venture agreement with Stazzoli relating to the concession areas within the UGV area of interest, which includes Saramacca. The UGV excludes the existing gross Rosebel Mining concession, which is 95% owned by Rosebel and 5% owned by the Republic of Suriname. Rosebel holds a 70% participating interest and Stazzoli holds a 30% participating interest in the UGV on behalf of the Republic of Suriname. Stetsoli has paid Rosebel an initial amount of $34,000,000 toward an aggregate owing of 54.9 $1,000,000 for all operating and capital expenses related to the Saramacca project. The remaining amount will be paid out of Stazzoli Gold entitlement. I would note that this is not a new agreement. The UGV was previously agreed to in the second amendment to the mineral agreement announced in June 2013 with Stetsori now the new UGV partner replacing the original entity designated by the Republic of Srinam to hold their 30 person interest. From a health and safety perspective, we included a couple of pictures from Rosebel highlighting our strict physical distancing protocols in place in areas such as the kitchen lineup and the bus pickup point. Production at Westwood was 22,000 ounces for the Q1 2020. I will note that target production rates and costs were achieved prior to the impact of COVID-nineteen responses. Westwood was on care and maintenance for 6 days in the Q1. Care and maintenance suspension of work at Westwood continued through the first half of April and the operation has since resumed production. All in sustaining costs were 12 $42 per ounce sold for the quarter, while higher than the same period last year due to the normalization of the all in system card then, I would note that our AISC guidance for Westwood during the ramp up period was indicated at $11.25 to 12 $25 per ounce sold. Our next milestone for Westwood is the completion of the life of mine plan and accompanying National Instrument 40 three-1 101 technical report mid year 2020. We will also provide an updated resource and reserve statement at that time. I want to add here that the team at Crossroads did an outstanding job in responding quickly and efficiently in putting the site on care and maintenance and again in bringing it back online with the new protocols in place. In the picture on the left, you can see our successful first attempt to bring workers on the ground under the new work protocol. At right is a picture of the supervisors' booths, which are separated with panels and enclosed with screens. On the project front, we have 2 shovel ready projects in Botel Gold and Kotigold. We continued to derisk in Q1 both prior to the COVID-nineteen crisis and then during the crisis with non field activities. At Boto, engineering work is ongoing and we are able to continue exploration given the remote nature of the site. At Cote, we have completed approximately 56% of detailed project engineering at the end of the quarter and have largely completed the pre clearing work with our First Nation partner firm before winding down this activity. We continue to derisk Cote with ongoing detailed engineering work. I will now turn the call over to Craig to discuss exploration. Thank you, Bruno, and good morning, everyone. Before I begin, please note that the results I talked 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 $52,000,000 excluding project development activities and studies, which represents an increase of $5,000,000 from our prior guidance in order to support additional resource development drilling at Rosebel. Our 2020 resource development and exploration program includes approximately 190,000 to 210,000 meters of diamond and reverse circulation drilling. Let's begin with this chart, which shows the compilation of the industry reserve base among some of our peers. As you can see, industry reserves have been on a steady decline since 2012, while IAMGOLD has been working hard to differentiate ourselves from this industry trend, generating a 48% increase in reserves over that time. Since 2016, we have added some 8,900,000 ounces, more than doubling the ounces in our reserve base. This is the result of a sustained commitment to exploration and the hard work of our exploration and mine geology teams. We believe this is a significant competitive advantage for IAMGOLD and our future. Now on to a few highlights for the quarter. During the quarter at Nelligan, we completed approximately 5,000 meters of diamond drilling designed to infill and further test continuity of mineralization associated with the Renard zone. As you will remember, we announced a maiden mineral resource estimate for the Nelligan gold project in the Q4 of 2019, with resources on a 100% basis totaling 3,200,000 ounces in an inferred category at a grade of 1.02 grams per tonne gold. At the nearby Monster Lake project located 15 kilometers south of the Nelligan gold project, we have completed approximately 1600 meters of diamond drilling, focused on testing the Annie Shear zone target in an effort to extend the mineralization we intersected there in 2019. We also completed approximately 4,700 meters of diamond drilling during the quarter focused on evaluating the resource potential of the newly discovered Gosselin zone at our Cote gold project, taking advantage of the winter drilling conditions this winter. In West Africa, during the Q1, exploration activities were focused on resource conversion at the Boto gold project in Senegal, as well as exploring selected high priority geochemical and geophysical targets within a 20 kilometer radius of the Diakka deposit located to the south in Mali. We also announced an updated mineral resource estimate at the Petangi gold project in Brazil during the quarter, upgrading over 52% of the inferred resources to an indicated category. Current mineral resources are comprised of indicated resources totaling 3,300,000 tonnes at a grade of 4.4 grams per tonne gold for 470,000 ounces of contained gold, while inferred resources totaled 3,600,000 tonnes at a grade of 3.8 grams per tonne gold for 430,000 ounces of contained gold. Ongoing exploration continues to evaluate sorry, ongoing exploration continues to evaluate selected targets within the remainder of the 180 Square Kilometer project with the objective of discovering additional mineralized zones. IAMGOLD has developed and continues to invest in a healthy pipeline of early to advance greenfield projects in geographically diverse locations as well as near mine brownfield exploration targets to leverage our existing infrastructure. I will now pass the call over to Gord to conclude. Well, thanks, Greg. I want to take a moment to truly thank our team around the organization who have exhibited outstanding professionalism while dealing with this unprecedented situation brought on by the COVID-nineteen pandemic. We believe that IAMGOLD has an exciting future with a great foundation of existing operations, a superior balance sheet and one of the best growth portfolios of development assets and exploration projects in the industry. All of this is underpinned by a savvy experienced team of technical, operational and financial professionals. We remain focused on improving our cash flow outlook, while safely executing on or better than planned. Our goal over the next few months is to provide clarity regarding our company growth strategy, and we look forward to speaking with you again at that time. Thank you for joining us. Our first question comes from Fahad Tariq of Credit Suisse. Please go ahead. Hi, good morning. Thanks for taking my question. Can you give a bit more color on the 2020 cost guidance? I'm just trying to reconcile production guidance was revised down just a little bit 2%, but costs went up quite a bit more 8% or 9%. And 2 out of the 3 mines weren't really shut down for COVID, I can appreciate there are some additional protocols in place. But I'm just trying to figure out how much of this is kind of COVID related, the cost escalation? How much of it is maybe something else, whether it's mine sequencing or something else? Just any color on that would be helpful. Thanks. Yes. Go ahead, Farik. So there's a couple of things at work. As you correctly point out, the guidance has changed in terms of production. So we are producing fewer ounces than we had originally booked into our analysis. On the cost guidance, we are seeing some direct COVID related costs and some indirect COVID related costs. As you point out, both the changes in the productivities due to the protocols, some outright additional costs as we've had to change some of our housing facilities and our housing of employees. We're not bringing in employees on a daily basis from a few of the sites. We have seen some additional costs due to hedge reconciliation with a lower oil price. So that has added to the cost. And as well, our initial budget numbers were done at a $13.50 gold price. So we're seeing significant increases up to I think it's around $15 an ounce going forward. Looking at royalty costs, which are also embedded in the cash costs. There is some resequencing and we have while Essakane and Rosebel continued to produce through the full period, we have seen some adjustments and we are we have at both sites been putting more stockpile material in when we have some productivity or manpower adjustments to the mining rates. As we look forward, that impact is really going to mostly fall in Q2 and we feel we'll be recovering a lot of that in the second half of the year. Carol, would you add anything else? No, I think that's a good summary. I think, again, having to draw on the stockpile certainly impacted the cost. And as you pointed out, just the productivity levels were impacted at the two sites, more specifically Essakane and Rosebelle due to just different protocols and measures that we took with social distancing. And of course, we went into care maintenance with Westwood. So I think you summed it up pretty well, Gord. Thanks. That's it for me. Thanks. Our next question comes from Josh Wolfson of RBC Capital Markets. Please go ahead. You might be on mute, Josh. Sorry about that. First question relates to Sadiola. When should we expect closing for that transaction and what ultimately is pending here for approval? Actually, I'm going to turn that call over to Jeff Snow, who's on the call. Sorry, Josh, you cut out. Can you repeat the question? Yes. Sorry. For Sadiola, what remains pending for the approval here of the sale and when should we expect closing? We're scheduling closing for end of May. And the only things remaining really are the government to sign off on the documentation. All has been agreed, but it takes a while to work its way up to the various levels in the government in terms of obtaining signatures. But we're scheduling end of May for the finalization of the deal. Okay, great. Thank you. And then with regards to 2021 guidance, Gord, the existing numbers were maintained, but they are noted as being under review. What do you consider to be the big factors here that could change the forecasts for next year? Really, the only well, I guess the 2 biggest factors that we're reviewing right now is as we're working with our forecast, not only through the end of this year, but through the end of 2021, is just understanding if any sequencing changes, arising from changes to this year's plan impact next year's plan. And also of course just reviewing the costs and trying to understand productivity levels and being prudent around how long the current protocols will have to be kept in place going forward and what if any impacts that will have. As of right now, we don't see any specific impacts on 2021. We just felt it was prudent to complete our reviews and be transparent with the market that in fact we are having a good hard look at that to understand where 2021 might go. Got it. And then last question on Cote with, I guess, 60% of the detailed engineering now complete, are there any sort of indications of directionally how the project is looking versus what expectations were beforehand? I mean, certainly, there are some changes to the timing of what the schedule looked like versus where we'd looked at it earlier. The current situation has forced us to go back and sort of revisit timing. On a cost basis, we have seen on a total basis slightly a little bit of cost up just more from holding costs over the last while. However, going forward, we do see some real opportunities to maybe recoup some of those. And the go forward cost is really not materially different from anything we've said previously. We can execute on this project pretty well within the budget. I mean one nice thing about advancing the engineering is it's really narrowed the goalposts on what the size of the capital nut will be. We have a lot of or not a lot, but we have a number of bids in hand already that help us understand rather than an engineering estimate, what a real life estimate of those costs will be. So we're adjusting our plans accordingly. And the other piece that we're looking at in our favor over the next little while is our opportunity to perhaps do some hedge work on the Canadian dollar exchange rate and on the fuel price through the construction period as our estimates to date have all been done at CAD1.30 exchange rate and I think $65 or $70 oil price. So we can maybe lock in some nice benefits on that side if and when we choose to move forward with Cote. And those will be pretty substantial. I mean the Canadian dollar exposure to the capital cost is around 80% to 85% of the capital cost. So, a CAD1.41 dollars is hugely beneficial to us in U. S. Dollar terms. Okay, great. And when should we expect an update either on the project or the strategic review? We're just going through that analysis now. We had our board meeting yesterday and we're discussing the timing. I'm hoping certainly by the middle of the year, we'll be able to come out with a really clear message as to how we're going to proceed. Great. Those are all my questions. Thank you very much. Thanks, Josh. Our next question comes from Tanya Jakusconek of Scotiabank. Please go ahead. Good morning, everybody. Just wanted to come back Gord to just this these costs that have gone up higher than we had expected for 2020. And I'm trying to just understand, and thank you for some of the clarity on the COVID costs. But of the 8%, 9% increase that you put out in overall estimates, I mean, are those half related to COVID? It's just trying to get an understanding. Well, and I appreciate that, Tanya. We ourselves have been looking at it. It's been a challenge. We did look at perhaps putting a bit of a reconciliation in our disclosure. But as we went back through it, it's a little challenging to date to specifically assign some of the costs in and out. However, I would at a high level, I would say at least 75 percent of that increase or in the neighborhood of 75% of that increase, is split between, the COVID, the increases in the direct COVID costs, some productivity adjustments we've had to make and some costs incurred, obviously for care and maintenance and other costs, the oil hedge adjustment and the royalty the increased royalties at the higher gold price. So that we can see pretty clear line of sight to as I say, around 75%, maybe even a little more percent of that increase directly tied to those 3 items. It's just for us to understand going forward because maybe just share with us the productivity. I mean, how much have you seen in productivity loss? Well, it varies by site and again, it's tough to quantify it. I mean, we haven't in the mine department, we've probably seen 80% productivity impacts at Rosebel and maybe 85 percent versus down 20% or down 15% at Essakane. At Westwood, we're still evaluating what those impacts are. In the mill, the mills are still running full out. We haven't really seen any throughput impacts. And that again sort of washes over into what you're seeing on the grade impact. Certainly at EthocaN, Rosebel is because of sequencing has gotten into some nicer grade material. So they've been able to compensate for that split. But that's roughly what you're seeing. When we're looking at our forecast going out, we see that ongoing for Q2. And we also see that as we get into the second half of the year through some improvements, through some adjustments, we expect to claw most of that back and we'll be operating pretty close to full productivities in the second half of the year. Okay. So then looking forward, there's going to be some going back to full productivity, let's say, the second half, but there's going to be some incurred costs from this COVID-nineteen that you're still trying to quantify that you think are going to now be embedded in the cost structure going forward? Yes, for a while. We'll work on trying to pretty dynamic situation and attributing costs to one center or another is a little bit of a judgment call. So we want to make sure we get the numbers right before we come out with full disclosure on it. And then just maybe on asset count because I was a bit surprised on the impact for that asset. Is it just that the mill optimization is taking 3 months longer to do, which is why our throughput is declining in Q2? Is that what No, it's much more of the COVID impacts. The throughput expansion was only scheduled to come into effect for Q4. So really the impact is more on the sequencing as Bruno alluded to and the use of stockpiles in the first half of the year. And yes, I'll leave it at that. So it's just a Q2 impact and then we're back to normal capacity in Q3, Q4? We're back to current capacity, but we won't see the completion of the debottlenecking for Q4. Okay. That gap is correct. Okay. And then just my last question, I'll pass it on to someone else. Maybe someone can just give us some insights on this new government FX regulation in Suriname? Yes, I could speak to it. So this new currency law was brought forward in Suriname about 5 weeks ago now, and I'm not sure of the exact timing. We obviously studied the issue very, very closely. What I can say is that civil society, both from the general populace standpoint as well as the business community has pushed back very, very aggressively with the government. So even though the law was passed, they haven't enacted, they haven't started enacting any of the main provisions that were in that law. Our position and we validated that with external counsel and internal counsel and with the government is that our mineral agreement stands carries precedence over this revised law because of embedded stability agreements. And the mineral agreement was actually very thorough and quite explicit as to what our own currency options are and what we are allowed to do. And we can they're the same things we've always done and we have clarified with the government that we expect the same going forward and haven't received any pushback. Okay. Good luck. Thank you. Thanks very much, Tanya. Our next question comes from Anita Soni of CIBC. Please go ahead. Hi. Most of my questions have been asked, but could you just let me know this surface deposit that you're using I assume it's a surface deposit, but the low grade deposit that you I think it was 109 ks tonnes that went into the into mill at Westwood. Is that something that we should be modeling going forward for the remainder of the year? Is that more just a localized issue due to COVID? Bruno, do you want to speak a little bit to Grand Duke and what the plan is for that and what they'll see in the 40 three-1 101? Yes, Gord. Hello, Anita. So the Eganzik pit is going to be a very small deposit to complement the ore production for Westwood for this year only. So in terms of modeling, it's very limited. And the goal or the task that we have at hand is to ensure that Westwood stand on its own merit for the underground operations. So as per the press release in December, aiming at having a nice ramp up over the next 3, 4 years at about 120,000 go downs for Westwood. So, Guernsey is just a nice opportunity that we are now capturing considering the gold price environment. And it was Anita, I would also add that Grand Duke was in our original guidance for 20 2020 21. We're actually, as we're getting in and mining it, seeing maybe a little bit more opportunity, but we're just evaluating that right now. I mean, you will see Grand Duke numbers in the 40three-1 101 that's released at mid year. It's a small opportunity, but we had this spare capacity in the mill, so we're exploiting it. Okay. And then just in terms of the cost associated with that, obviously, it's not as it's not as costly for those ounces as the underground. Could you just give us an idea of how we should be modeling that in terms of mining cost per ton? Bruno, do you have the mining cost per ton? Yes. Maybe what we can do is to come back to Anita in that regard because we have the accumulated cost for the surface and the underground. So we can do that split. Okay, sounds good. Thank you very much. Those are all my questions and welcome Bruno. Thanks Anita. This concludes time allocated for questions on today's call. I will now hand the call back over to Indi Gopinathan for any closing remarks. Thank you very much, Ariel, 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 Q2 2020 conference call in August. Stay safe everyone and goodbye.