Earnings Call: Q4 2018

Feb 21, 2019

Thank you for standing by. This is the Chorus Call conference operator. Welcome to the IAMGOLD 2018 4th Quarter and Full Year 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, Investor Relations Lead for IAMGOLD. Please go ahead, Andy Gopinhaften. Thank you very much, and welcome everyone to the IAMGOLD conference call. Joining me today on the call are Steve Lutwin, President and CEO of IAMGOLD Gord Stothert, Executive Vice President and Chief Operating Officer Carol Banducci, Executive Vice President and Chief Financial Officer Craig MacDougall, Senior Vice President, Exploration and Jeff Snow, General Counsel and Senior Vice President, Business Development. I'll turn you to Slide number 3, our cautionary statement. 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, Steve Levitt. Good morning, everybody. Well, the cover slide basically shows you a picture of our haul road from our Rosebel mine to Saramacca. Gord will update you on that, but that's going extremely well. And it's fitting because our theme song is building a cash flow pipeline. 2018 was a transitional year for us as we build our company for the future. We remain focused on creating superior shareholder value through operational improvements and a disciplined approach to realizing the value of our portfolio and by maintaining a strong balance sheet and ensuring a robust and geopolitically diverse pipeline. At Slide 6, in addition to achieving guidance on 2018 production at 882,000 attributable ounces of gold and on 2018 all in sustaining cost at $10.57 per ounce sold, we increased proven and probable reserves by 23% for a 3 year increase of 129% and delivered robust feasibility studies for both the Cote Gold and Boto Gold projects. We began commissioning of the hot oxygen plant at Essakane and the carbon in column plant at Rosebel. These low capital quick return projects add low cost marginal ounces to production. In 2018, we declared reserves at Saramacca and commenced development to deliver that ore to the Rosebel Mill. We consolidated the district as well, acquiring rights to Broklonco Exploration. We also announced initial resources at Monster Lake, Eastern Brosi and Gossey and enjoyed significant greenfield success at both Nelligan and Diaka Sarabaya. In addition, we are building a framework for the role of technology in mining. In 2018, we completed a 15 Megawatt Peak Hybrid Solo Thermal power plant for our Essakane operations. This installation is expected to save approximately 6,000,000 liters of fuel per year and reduce carbon dioxide emissions by 18,500 tons annually. In fact, for the period ending December 31, 2018, we exceeded expectations with Essakane saving approximately 3,900,000 liters of fuel and reducing carbon dioxide emissions by approximately 12,000 tons over 7 months of service. So on a pro rated basis, we're well ahead of our estimates. We invested in enhanced systems to identify that our gold production is ethically sourced. We believe the future is showing our commitment to the highest standards of ethics through traceable production and in differentiating our product on that basis. Subsequent to the year end, based on feedback from our shareholders, we announced we would defer the Cote construction decision. This was not an easy decision for us as a company as you might expect, but we spent a great deal of time listening to investor concerns and absorbing that information to arrive at the conclusion that this is not the right time given market conditions to make a construction decision on Cote. We will continue, however, to progress early works, and you'll see that in some of the capital we're spending and engineering, so when the time is right, we will be ready to start. We simply are continuing to de risk the project, and we have no intention of making a construction decision on Cote in the near term. Upcoming in 2019 are significant milestones in our ongoing operational improvement work. We anticipate the Essakane CIL feasibility study in the first half of the year with Saramacca first production, maiden Nelligan resource and an updated Westwood plan in the second half of the year. We're also conducting a scoping study on the underground potential of Saramacca, which may substantially reduce waste volumes. When I joined the company almost 9 years ago, our reserve life was less than 8 years. Today, assuming a production rate of 1,000,000 ounces a year, we have about 18 years of reserve life. We have doubled our life of mine, setting the stage for a long future for the company. I'd like to thank Craig McDougall and Gord Stoddart, who are sitting here with me. Thank you, gentlemen, for your efforts in making this happen. This is an small margin around life of mine in terms of time into the future to a very significant increase in cushion to protect our assets and our shareholders going forward. We maintained our financial strength, thank you, Carol Banducci, with over $750,000,000 in cash and cash equivalents. Kudos to you and your team for ensuring this continues to be a strength of our company and always will. We have a tremendous organic pipeline, which we continue to advance and expand, robust operations, a strong balance sheet, and great people making it all happen. I just want to say a few things about strategy before I turn it over to Carol, and I know that we're going to get a number of questions. So, let me just talk a little bit about our strategy because logically people are asking us, okay, well, what next? You've deferred Cote. And I'm going to without naming names, I had a lot of good input, not only from our shareholders, but a number of analysts that have been very, very, I would say, helpful in giving us feedback and helping guide us as we look at our strategy going forward. And this is, I think, part of our culture at IAMGOLD. We may not always agree with everything that's being said, but we do listen. And one analyst who's a very senior individual in the industry said to me, Steve, you really do need to work off a proof of concept strategy where the market today really wants to be shown that you can add value on a step by step basis going forward. They don't like big bets right now. They're not in the mood to see more risk. There have been a lot of big missteps over the last couple of years with various projects, which gives the market a lot of concern. I understand that. And I'm not going to we're not going to sit back here at IAMGOLD and be stubbornly, inattentive or unattentive to views of our shareholders and analysts. So when we look at the strategy, we literally are going to go what I would call a greater emphasis on short cycle economics. So, Stotter, who is one of the best operations guys I've ever worked with and certainly technically superior from what I can tell to most in the industry. He is going to be focused on making sure Saramacca delivers what we are expecting it deliver. We're going to focus on making sure that that haul road gets completed and that we can start moving ore into the mill, which runs like a charm, thanks to John Grignon down at Roosevelt, who I call magic man. We're going to get that ore into the mill in the second half of twenty nineteen. And that will boost economics at Rosebel significantly and add to the value of our shareholders. At Essakane, we're going to be doing debottlenecking, enhancing our CIL network and the oxygen plant as an example to enhance recoveries. All these things that add to short cycle boost in economics are where we're focusing. At Cote, this was not easy. Believe me, personally, and for Jeff Snow, who is sitting across from me today, who is our Henry Kissinger on negotiating this, and Gord Stoddart, who has a team of people, some of the I've ever run into to build this and Craig McDougall who's done such a great job building those ounces from less than 2,000,000 to close to 10,000,000 M and I. Listen, this is not an easy decision, but it's the right decision. And we do what's right. So do we have a partner who doesn't agree with this? Of course, we do. But we'll deal with that. They're a good partner. They're a strong partner, but we have to make sure we do what's right for our shareholders and for all of our stakeholders. So we will be focusing on short cycle economics, boosting our returns, reducing our costs, improving our cash flow and improving returns. The fact that we have an inventory of resources that is not matched by anybody in our peer group. We have thanks to some great success, we have 18,000,000 ounces of reserves. And this is a huge improvement from where we were just 3 years ago. And our mines, because of our focus on leveraging off our asset base, have got an economic picture that's far more robust than it was 3 years ago. So I think that's why people have got buy ratings on us. They see us as a great opportunity as a leverage to gold prices. We're going to take that advice. We're going to take that good counsel from both analysts and shareholders and we're going to put it to work. We haven't come out with a new plan on what our volumes are going to look like because we're still working on it. Gord Stoddart is working diligently on our Westwood update, but he's going to do it right. And these things take time. We will finish derisking Cote. And by the way, we have a lot of interest in Cote outside of us, outside of our company. So I want to make sure that asset is as clean, has got as much potential as possible. We need to finish off permitting. We need to finish off things that basically put that asset as shiny and new as possible going forward. So we need to spend a little money to do that. So I'm happy with the strategy. We had to make a tough decision. We made the decision. We made that decision with some great feedback from a lot of people, our key shareholders being part of that, and we listen to our shareholders. So that's where we're headed. More news as we move along. And I'd like to say news at 11 because we will update you as we go forward, as we get the right information to make sure you are as knowledgeable as we are about what our overall strategy is. We're very transparent, as you know, with our reporting and we're going to continue to be that way. So on that note, I'll turn it over to Carol. Thank you, Steve, and good morning, everyone. Turning to Slide 8, 2018 was another solid year of performance, while we continue to advance our various projects. We continue to have a strong balance sheet, which provides us with significant financial flexibility. We've taken some steps during 2018 and subsequent to the year end to improve our capital structure, which I'll speak to in a few minutes. This slide presents key performance highlights for the Q4 and the full year 2018. Revenues of $274,000,000 in the 4th quarter were down 6% from the same period in 2017. Revenues for the full year of $1,100,000,000 were up slightly from 2017 on stronger Essakane sales volume and a higher realized gold price during 2018, partially offset by lower sales volume at Rosebel and Westwood. Gross profit in the 4th quarter decreased to $24,000,000 primarily due to the lower sales volume combined with a lower realized gold price. For the year, gross profit was down 10% to $137,000,000 primarily due to slightly higher cost of sales. The adjusted net loss for the 4th quarter was $16,100,000 or $0.03 per share. For the full year, adjusted net earnings were $29,800,000 or $0.06 per share. Net cash from operating activities was $23,000,000 in the 4th quarter and 191,000,000 dollars for the full year. The decrease of net cash from operating activities from the same period in 20 17 was primarily due to an increase in non cash working capital items and non current ore stockpiles and lower earnings from non cash adjustments, partially offset by lower income taxes paid. For the full year, net cash from operating activities before changes in working capital for 2018 was $288,000,000 down 5 point $6,000,000 from 2017. For the Q4, net cash from operating activities before changes in working capital was $56,000,000 down $13,000,000 from the Q4 2017. Turning to Slide 9, changes in working capital. I'm focusing on the full year 2018 in this graph. The $97,300,000 change in movement in non cash working capital items and non current ore stockpiles was due to 4 main drivers. The first driver was a $48,000,000 increase in mine supplies at Rosebel and Essakane. This amount resulted from a number of maintenance initiatives to improve equipment availability at a lower cost and a strategic decision to rebuild parts in house rather than outsourcing. Both these initiatives are in the early stages of being realized, and we do expect to see benefits going forward. And we will be focusing on bringing that working capital on supplies down during this year. The second driver was a $32,000,000 increase in total ore stockpiles due to planned increases in ore production at Rosebel and Essakane and a buildup of low grade heap leach ore stockpiled at Essakane. The 3rd driver was an $11,000,000 temporary increase in bad receivable at Essakane solely due to timing over year end. And finally, the 4th driver was a temporary increase in $7,000,000 in finished goods inventory due to the timing of shipments, primarily at Essakane. The next slide summarizes our hedge positions as of December 31, 2018. For our fuel hedges, we have hedged between 49% 90% of our annual WTI oil consumption for the next 5 years and between 50% 90% of our annual Brent oil consumption for the next 4 years. We use 0 cost option collars in both cases. For our FX exposures, we have hedged between 75% 50% of our Canadian dollar expenditures for 2020 respectively and 75% of our euro expenditures for 2019. This was done using 0 collar options as well as opportunistically purchasing Canadian dollar and euros to add to our foreign account balances. Turning to our financial position, we had $734,000,000 in cash, cash equivalents and short term investments as of December 31, 2018. Our net cash position at the end of the year was 3 $34,000,000 In the Q4, we amended our revolving credit facility to double the amount to $500,000,000 and extend the term out to January 2023 with an option to increase commitments by $100,000,000 as well as provide leasing for up to 2 $50,000,000 On January 15, 2019, we entered into a Ford Gold sale arrangement to receive 170 $1,000,000 in December of this year in exchange for delivering 150,000 ounces of gold in 2020 2. The prepaid provides additional liquidity to IAMGOLD at attractive terms, while also mitigating any downside price risk below $1300 an ounce on 150,000 ounces of production. Including our undrawn $500,000,000 credit facility, total liquidity exceeded $1,200,000,000 at the end of the year. As Steve said, our focus is on creating superior shareholder value. We are executing on our operational improvement and hold an enviable pipeline of growth projects, and we will continue to manage our business in a prudent and disciplined manner. I'd now like to turn it over to Gord. Thanks, Carol. So we continue to focus on safety and improving our performance in this area. Based on 200,000 man hours, our total recordable injury rate or TRI for 2018 was 1.13, slightly above target of 1.09. The DART rate or days away restricted or transferred duty was 0.66, also above our objective of 0.50. We are working to meet or exceed our safety goals, implementing several initiatives, including behavior based safety programs to ensure a safer working environment. On February 19, we released our 2018 year end reserves and resources statement. This slide compares reserves and resources year over year. Our gold price assumptions at our owned and operated mines remain unchanged. All reserves numbers, including the Cote gold and Boto gold projects are based on $1200 an ounce. M and I resources are inclusive of reserves and resources for Essakane, Rosebel and our resource stage projects were based on $1500 per ounce and for Westwood, dollars 1200 per ounce. Reserves and resources estimates at Sadiola prepared by our joint venture partner used price assumptions of $1200 per ounce for reserves and $1400 per ounce for resources, both unchanged from 2017. Proven and probable attributable gold reserves after depletion increased by 23% year over year to 17,900,000 ounces from 14,500,000 ounces at the end of 2017. The main drivers were an increase in reserves at Rosebel as we declared initial reserves at Saramacca of 1,000,000 attributable ounces in September 18, plus further additions due to upgrading resources at the Coolhoven deposit to reserves. Essakane saw an increase of 29% net of depletion to 3,900,000 attributable ounces, Increases in reserves attributable to IAMGOLD at Cote of 900,000 ounces and at Boto of 300,000 ounces, primarily due to successful in drilling infill drilling campaigns to support the feasibility studies released during the second half of twenty eighteen. Attributable measured and indicated resources, inclusive of reserves, increased by 13% to 27,900,000 ounces. The increase was mainly due to a 24% increase in M and I Resources at Cote to 6,500,000 ounces and a 16% increase at Boto to 2,200,000 ounces as part of the feasibility studies, combined with a 24% increase at Essakane to 4,800,000 ounces as part of the pre feasibility study. Even with the increase in M and I resources through conversion, we maintained attributable inferred ounces at a comparable level to 2017 at 8,700,000 ounces in the inferred category due to discovery of additional resources. Turning to the production and cost summary for 2018. Consolidated attributable production was unchanged from 2017 at 882,000 ounces, which was at the top end of guidance. All in sustaining costs at $10.57 an ounce came in at the top end of guidance, and we were up $54 an ounce from 2017. Note that all in sustaining costs at the consolidated level include corporate G and A costs. Now for a recap of performance site by site, starting with Essakane. So Essakane in 2018 achieved record for the 2nd consecutive year at 405,000 attributable ounces, up 4% compared to 2017 and 4th quarter attributable gold production of 103,000 ounces, up 1% compared to Q4 of 2017. The higher production was due to ore feed being sourced from higher grade zones. The impact of higher grades was partially offset by lower realized throughput caused by a higher proportion of hard rock in the mill feed as well as lower mill availability due to planned major maintenance shutdowns on the crushing and grinding circuits. Full year all in sustaining costs were $1,002 an ounce, an increase of 5% from the previous year, mainly due to higher sustaining capital, partly offset by lower cost of sales. Q4 AISC was 13% higher than in 2017 at $11.14 an ounce for the same reasons. Dry commissioning of the oxygen plant started in December and the plant is now operational. We expect overall recoveries to increase by a minimum of 0.5% as a result. Essakane continues to work at improving fleet availability through a planned maintenance initiative designed to support increased mining volumes while decreasing maintenance costs. In 2019, we are guiding to 375,000 to 390,000 attributable ounces at Essakane. We are focusing on CIL optimization with the heap leach facility planned after CIL rather than parallel as this scenario yields superior economics. The 2019 mill debottlenecking project at Essakane will increase CIL capacity to 13,500,000 tonnes per annum@100 percent 25% increase a 25% increase above the original 10,800,000 tonne per year nameplate capacity. Sub projects include replacing the secondary crusher, modifying the core store screening system and enhancing the gravity recovery circuit through additional screen capacity. Optimizing the gravity circuit is expected to deliver an increase in the overall CIL recovery. A feasibility study is expected to be completed in the second quarter, which will outline opportunities to further optimize the CIL in addition to end of life heap leach processing. I'll talk more about the expected capital numbers in a few moments when we get to the CapEx summary slide for 2019. Turning now to Rosebel. Attributable gold production for 2018 was 85,000 ounces in the 4th quarter and 287,000 ounces for the full year, 8% higher and 5% lower compared to the same prior year periods, respectively. For the quarter, the difference was primarily due to higher head grades and recoveries, partially offset by lower throughput. Our mine sequencing took us into higher grade zones, but also harder rock. For the year, production was lower due to higher planned maintenance levels, which impacted throughput. All in sustaining costs for the quarter and full year were $981 $1,006 per ounce, respectively. For the quarter, costs were 4% lower compared to the same prior year period, primarily due to lower sustaining capital expenditures, partially offset by higher cost of sales per ounce. Year over year, costs were 8% higher, primarily due to higher cost of sales per ounce, partially offset by lower sustaining capital expenditures. 2019 attributable attraction at Rosebel is forecast to be in the range of 315,000 to 330,000 ounces. Key efforts for this year include strategic pit pushbacks to unlock higher grade ore zones and mill improvements to improve recoveries and throughput, including the addition of a carbon in column plant and revisions the SAG mill liner. In 2019, Rosebel is conducting a study on enhancing the mill design by running an open circuit SAG mill combined with a secondary pebble crusher to enhance hard rock throughput and increase gold production. While mill throughput in 2019 is expected to be at levels consistent with 2018, head grades are expected to improve, benefiting from the commencement of ore deliveries from the Saramacca deposit in the second half of the year. At Saramacca, construction continues on the 23 kilometers of Newhall Road, linking the deposit to the Rosebel Mill with targeted completion by mid-twenty 19. Construction of infrastructure items at Saramacca is expected to commence in the Q2 of 2019. Rosebel is also conducting a study to evaluate the underground mining potential of Saramacca, which could substantially reduce waste volumes and thereby reducing overall cost. Open pit mining of saprolite in the initial years will continue as planned with future potential for underground mining once hard rock is reached. Moving at Westwood. Gold production at Westwood was 28,000 ounces for the Q4 2018, 3% lower than the same prior year period, primarily due to lower head grades. Gold production for full year 2018 was 129,000 ounces 3% higher than the prior year, primarily due to higher throughput, partly offset by lower head grades. The lower grades reflected mining activity that sequenced through lower grade stopes as part of the mine plan. Head grade, including marginal ore for the Q4 year ended 2018, was 6.78 grams per tonne gold and 7.6 grams per tonne gold, respectively. During the quarter, development continued to focus on the ramp breakthrough on level 132 in line with our safety protocol, 3 new bolting equipment units, which can operate remotely and reduce worker exposure in challenging ground during the quarter. Infrastructure development continued in future levels levels of $13.34 for the 4th quarter and $10.73 for the full year ended 2018 were higher compared to the same prior periods by 31% and 10%, respectively, primarily due to higher cost of sales per ounce and higher sustaining capital expenditures. 2019 production guidance is 100,000 to 120,000 ounces for the year as mining and development activities continue to progress. Sadiola attributable gold production of 14,000 ounces for the Q4 and 59,000 ounces for the year ended 2018 was lower by 22% and 6 percent respectively compared to the same prior year period, primarily due to lower head grades as a result of greater drawdowns of marginal ore stockpiles. All in sustaining cost per ounce sold of $8.71 for the 4th quarter and $9.30 for the full year ended 2018 were lower than compared with the same prior year periods as a result of lower sustaining capital expenditures. Mining activity ceased at Sadiola during the Q2 of 2018, while processing of ore stockpiles continued from the 2nd through 4th quarters. Processing of the oxide ore stockpiles is expected to be completed by mid year 2019, at which time the operation will be suspended. While not included in the slide set here, I will add that the Yatela mine, which is on residual leach, IAMGOLD along with JV partner, AngloGold Ashanti, have entered into an agreement with the government of Mali for the sale of the partner's 82% indirect interest sorry, 80% indirect interest in the Atela mine for $1 subject to conditions and a one time payment to cover costs related to rehabilitation, closure and social programs. At the Cote Gold Project here in Ontario, we announced a positive feasibility study with 2P reserves of 7,300,000 ounces and M and I resources including reserves of 10,000,000 ounces on 100% basis. Highlights of the extended mine plan include a mine life of 18 years with average annual production of 372,000 ounces at an AISC of $703 per ounce sold, low strip ratio and a 15.4 IRR at a gold price of $12.50 per ounce with a 4.4 year payback. Following our announcement to defer the construction decision on the Cote gold project, pending improved and sustainable market conditions, we plan to refocus on further derisking the project in 2019 through advancement of engineering, permitting and definition drilling. We also announced positive feasibility study results for the Gubodo gold project in Senegal. Highlights included reserves of 1,900,000 ounces on 100 percent basis, mine life of 12.8 years, average production of 140,000 ounces and a life of mine all in sustaining cost of $7.53 per ounce sold with a 23% return and a 3.4 year payback. For 2019, our global guidance includes total owner operated production of 709,000 to 840,000 ounces with total attributable ounces including joint venture production of 810,000 to 870,000 ounces. Our projected total cash costs are $7.65 to $8.15 per ounce with our AISC guidance at $10.30 to $10.80 per ounce. Turning to our capital expenditure outlook for 2018. We are guiding to $355,000,000 plus or minus 5%. The significant increase over 2017 due to the advancement of our growth projects. Sustaining capital is expected to be similar to 2017 at $160,000,000 Of the $75,000,000 of sustaining capital for Essakane, dollars 40,000,000 is for capitalized waste stripping. Nonsustaining CapEx is estimated at $195,000,000 with $75,000,000 allocated to Rosebel for the development of Saramacca and $50,000,000 at Essakane for tailings, liners, dams and the thickening plant as well as the mill debottlenecking upgrade. Westwood's $30,000,000 is mainly for expansion corporate and development projects is inclusive of our 70% proportional expenditures at Cote for further derisking activities as well as Boto work. I'll now turn the presentation over to Craig to talk about exploration. Thanks, Gord, 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. Also note that any references to exploration target potential, including potential quantity and grade, are conceptual in nature, and insufficient exploration work has been completed to define a mineral resource and there can be no certainty that an exploration target will result in a mineral resource being delineated. As Gord noted, in 2018, we continued the trend in increasing the company reserve and resource profile with a 23% increase in proven and probable reserves, combined with a 13% increase in measured and indicated resources. When combined with 20 seventeen's reserve increase, this represents 129% increase in 2P reserves over the prior 2 years. Achieved with our own organic projects. This is a significant achievement and is in contrast to the current state of the industry. Not only have we been able to upgrade resources to reserves, we've been able to more than replenish and grow our resource ounces, including the declaration of initial resource estimate at multiple projects during 2018. Starting with Rosebel and the surrounding land packages, during 2018, we declared initial attributable reserves Saramacca 1,000,000 ounces. During the Q4, we announced drill results of 27 drill holes totaling just over 4.5 kilometers along the Saramacca Brok along with highlights including 7.5 meters grading 4.58 grams per tonne gold and 10.5 meters grading 1.73 per ton gold. During 2018, we completed approximately 56 kilometers of reverse circulation in diamond drilling. In 2019, we plan to continue these exploration efforts along Saramacca broke along from trend as well as on the Rosebel concession with approximately 45 kilometers of reverse circulation in diamond drilling. We continue to evaluate potential resource expansion and exploration targets in the vicinity of the existing operation. At Essakane, exploration focused on extending the mine life beyond 2,030. During 2018, approximately 56 kilometers of reverse circulation and diamond drilling was completed on the mine lease and surrounding concessions. Drilling was focused on infill and resource conversion at the Essakane main zone to support the ongoing feasibility study and infill drilling at Balangruntu West to improve the resource models. At the Gossey prospect, we announced an initial resource estimate of 10,500,000 tons of indicated resources grading 0.87 grams per ton gold for 291,000 ounces and 2,900,000 tons of inferred resources trading 0.91 grams per ton gold for 85,000 contained ounces. 2019, we will continue our efforts in evaluating the potential other potential prospects along the Dziakorozina trend. At our Diakah Siribaya project in Mali, the attributable indicated resources increased by 539,000 ounces to 6 168,000 ounces, while our inferred resources more than replaced the upgraded ounces and remained relatively unchanged at 1,100,000 ounces. During 2018, as part of our infill program, we completed over 14.5 kilometers of reverse circulation in diamond drilling, which included highlights such as 13 meters grading 6.05 grams ton gold and 13 meters of 11.6 grams per ton gold. We plan to continue our efforts to validate the mineralization north and south of the current pit shell with a further 10 kilometer to drilling plan in 2019. And as I always like to remind our listeners, Dayakka is on the same mineralized trend as their own Voto project in Senegal as well as B2Gold's Fekola project in Mali, which continues to impress with strong resource upside. At Petungi in Brazil, we completed approximately 17.6 kilometers of drilling to evaluate potential resource extensions at the South Sebastian deposit as well as test priority targets elsewhere on the property for additional zones of mineralization. We continue to incorporate these results into the resource model and guide ongoing drilling programs. At our Eastern Barossi joint venture project in Nicaragua, our drilling program in 2018 focused on testing selected vein structures for mineralized extensions. In early 2018, we announced the updated resource estimate comprising 4,400,000 tons grading 5.7 grams per ton of gold equivalent for 812,000 contained ounces gold equivalent ounces. Addition to that, we completed just under 11 kilometers of diamond drilling, of which highlights include 15.9 meters grading 5 point 7 5 grams per ton gold and 34.3 grams per ton silver as well as 8 meters grading 10.9 grams per ton gold and 8.59 grams per ton silver. Lastly, moving to our Monster Lake and Elegant projects in Quebec. At Monster Lake, we reported an initial resource estimate, assuming an underground operation of 1,100,000 tons of inferred resources, grading 12 0.15 grams per ton gold for 433,000 contained ounces. Subsequently, we released highlights from additional drilling from 8.3 kilometers of drilling, which included high grade results such as 2.6 meters grading 72.17 grams per ton gold and 5.3 meters grading 40.9 grams per ton gold. The team will complete approximately kilometers of drilling in 2019 to continue to evaluate target areas with potential to host additional zones of mineralization. At Nelligan, we completed 13.4 kilometers of diamond drilling to evaluate the resource potential of the Renard zone, which intersected wide zones of alterations and associated mineralization. Highlights reported from the 2018 program include 42 point 1 meters grading 3.6 grams per ton gold, 27.8 meters grading 5.7 grams per ton gold, and 82.6 meters, grading 3.3 grams per ton gold. During 2019, we plan to drill between 12 15 kilometers of infill to test the continuity of the mineralization of the Renard zone, which will be integrated to complete an initial resource estimate during 2019. To wrap up exploration, you have seen that we have not only advanced projects successfully to the feasibility level, but have also advanced our greenfield project through discovery to initial resource stage, and we continue to conduct exploration programs on a number of medium and long term discovery stage projects, which we hope will become the future catalyst for the company. We plan to build on our 2018 exploration successes. We will work to advance some of these early stage projects, including a mating resource at Nelligan, while continuing to support our near mine So just to repeat what I said earlier, we've got a very focused strategy going forward. We've listened to our shareholders. We've listened to all of our stakeholders. And our aim simply is to create as much superior shareholder value as possible by building strong cash flows from our current operations, while maintaining a disciplined approach to realizing the value of our portfolios. We have almost 30,000,000 ounces in measured and indicated resources, and we're at a market cap of CAD2.3 billion. Our company has a lot of inherent value that can be realized. And thanks to the hard work of the operations and financial team, we not only have a very robust inventory of resource, we have a very strong balance sheet to support it. So from an operating perspective in the near term, this simply means, again, back to the proof of concept strategy that we're putting in place, let's debottleneck the Essakane Mill. We're going to continue the Saramacca development. We're going to progress the development of Westwood, and we're going to complete the Essakane CIL feasibility study. For our development growth opportunities, this means finishing up the work of engineering and permitting at Cote and pausing, as we said, we are not going to be making any kind of construction decision at Cote, expecting delivery of the mine permit at Boto, issuing a maiden resource for Nelligan and making sure we get that first production from Saramacca in the second half of twenty nineteen, again, proof of concept. With a strong balance sheet, robust pipeline of projects and balanced geopolitical risk, plus the commitment and skill of our people at all our sites and offices. We're very confident and with the belief that we can achieve our goals. Thank you for joining us. We're happy to take questions. Thank Our first question comes from Fahad Tariq with Credit Suisse. Please go ahead. Hi, good morning. Thanks for taking my question. Just one for me. In the release, you mentioned $34,000,000 of growth CapEx in the first half for Cote for engineering, permitting and drilling. Were these contracts that you were locked into and couldn't get out of even though you shelved the project? Any color on that would be helpful. Just trying to figure out why the CapEx for that particular project went from under $20,000,000 to $34,000,000 in the first half or am I missing something in the numbers? Thanks. Maybe I can start off answering that question. So the outlook that we had originally for Cote included the spend up until really the Q1 because we said that we would be making a construction decision in the Q1. And so we had nothing forecast or Cote beyond that spend initially identified for the 1st few months. Yes. And I'll let Gord answer it, but it's one of those things where we've got a great asset there. We're not moving ahead with it. So I don't want anybody seeing it as a signal that we're sort of tucking in a quarter and going to surprise anybody. We're not surprising anybody here, but we need to finish off what we started. We do have some commitments. We're deforesting now because we need to do it now given environmental constraints. We have permitting we have to finish. We have work with the First Nations. We need to clean it up. And that's what it's going to require to put it in the kind of shape that we want to put it in. And Gord, maybe you can add to that. Yes. And I mean, we've never used the word shelf. We said deferred. The project needs to be put in a shape in an orderly fashion. It's not like you pull the lights and unplug the refrigerator and run away from the house. There's a lot of work needs to be done to put it in the right shape. Our next question comes from Mike Jalonen with Bank of America. Please go ahead. Hi, Steve, and everyone. Steve, going to your original comments there at the start talking about what happened at Cote, talking to your shareholders, talking to analysts. I guess maybe a philosophical question for you, a bit unfair you hear the comparison, but it brought me back to 1989, January of 'eighty nine when American Barrick announced the $900,000,000 Betz Post development plan. At the time, Betz Post had about 5,000,000 ounces of gold. It was going to produce 900,000 ounces and had a lot more resources. But if this plan faced huge criticism from the buy and sell side and autoclaving wasn't really a known technology. In fact, a year earlier, an autoclave in Nevada had blown up at one of the mines, dewatering. There was analysts saying you couldn't dewater 40,000 gallons per minute. And the capital cost of 900,000,000 dollars that was eye opening for that era. Remember, this was after the market crash of 'eighty seven when confidence in the market was low. Bob Smith is the CEO then. I remember talking to him saying he believed in his team that they could deliver this. And obviously, we have the benefit of hindsight, it worked out. But I remember investors back then, I had a buy on Barrick telling me that I was going to ruin my career if I put a buy on it because this wouldn't work. Well, I'm still here and they're not. But so I guess it's more philosophical for you. Obviously, Goldstrike turned out to be one of the best mines ever. But there was an example where the buy and sell side were against this, a lot of people, and they were wrong. So I just wonder how you what you think about that in terms of Cote now? Well, it's an excellent commentary and you've been around a long time, Mike, and you're one of the guys we listen to the most. And we always appreciate whether it's over a beer or a coffee, what you have to say because you have a lot of fantastic advice for us. But I very simply tell you, and I think you guys know me by now after 9 years on in this job, we try to be as truthful as we can without selective disclosure. But this is probably one of the toughest things I've had to do certainly at my career at IAMGOLD and I've had to make similar decisions in the oil and gas space when I was there. I mean, we have a tremendous team of people that have been working on this and a tremendous group of people from Sumitomo and a relationship with Sumitomo, which we treasure. But I was very worried when we and we weren't scheduled to make a decision until the end of Q1. And when we did the gold prepay because we knew investors were concerned about the gold price and the fact that our ASIC sits higher than average. We were worried if that gold price fell, it would squeeze our margins and it would drain our cash. So the $1300 to 15 $100 collar that we put in place with the prepay was meant to not only protect our margins, but also give us extra cash to complete the project. And it's not new news. The market saw that as an indirect decision on Cote, which it wasn't. But in many respects, it was good to see the reaction to Cote. And in fairness to our investors, we started to hear rumblings of concern back at the Denver Gold Show. We had gone from, geez, Cote, let's move ahead to hang on, maybe you need to go to the sidelines. So when you look at a company like IAMGOLD with 18,000,000 ounces in reserves and close to 30,000,000 ounces of measured and indicated resources valued at a very attractive price. And the fact that we dropped almost 20% in 2 days after the prepay announcement. And now in fairness, that was also tied to the revision we had or the expected revision, not unexpected, but a revision of the expectation around Westwood. It put us into a territory where we could have easily lost the company to bids from others seeing a value buy at a deep discount. So you make that you have to make a hard choice and protect your shareholders. And I'm the biggest independent shareholder of IAMGOLD, as you know. So I have a lot of skin in the game and I think I can think like a shareholder given how many shares I have. I just said, look, we believe in this project. We think it's an asset that's going to add a lot of value to full headed and move ahead with a decision on this in the face of shareholder discontent and lack of support. And I may Gord Stater 2 years from now may say to me, I told you we should have gone ahead with it, you dope. And because he says that to me every morning. But my job as CEO is to take a balanced approach. And maybe it's the wrong decision right now, but it's the right decision for our shareholders and our stakeholders. And I would do it again because my job is to protect our shareholders. And right now in the short term, nobody wants to hear about large CapEx, bulk tonnage opportunities in Canada. They just don't want to hear about it. They want us to focus on our near term short cycle economics and produce as much cash flow as we can. With 18 years of mine life at 1,000,000 ounces a year, we have the luxury of doing that. We're not going to hurt ourselves economically by doing that. So that's what we're going to do. But was this easy for me? Not at all. But I want to underline and for everybody on the line, what we said we are going to do. We're not going to surprise anybody. We're not going to come out and surprise them with some sort of decision here to the contrary of what I just talked about. This is the path we are following. And if there's a change in the market conditions out there, if there's a change in the sentiment, if somebody wakes up in the morning all of a sudden and the market starts saying, we need to go back to a longer cycle growth prospect, then we can do that with the support of the market. But right now, I think it would be foolhardy to go against where the market sentiment is. And again, we can do what we're talking about without losing any value for our shareholders because of the robust resource base we have and the strong technical capability that we have at our sites. That's a long answer, but it was a great question, Mike, and I appreciate you asking it. Our next question is from Don MacLean with Paradigm Capital. Please go ahead. Good morning, guys. Yes, comment from another fossil out there like Mike. I think I like the way Gord put it that it's deferred, not shelved Cote and I think most of us been around for a while know that there's a cost to doing that, but there's a value de risking the project and making it ready to progress quickly into production when the time is right. But that understood, when one takes a look at Boto, that's a good looking project. How does that fit into the development strategy and schedule now? Boto is an extremely attractive project, and we haven't worked out the sequencing yet of what we're going to do now that we have deferred concept strategy. And all I can say right now is that if the economics of Boto hold and we're able to get the kind of permits that we need to move ahead and our shareholders support that kind of strategy, which is far less capital intensive than Cote, then we are going to take a hard look at whether we should move it ahead or not. And again, we don't want to lose value because it's great value. But it will be a consultation process where we get feedback and we have the balance sheet to do it. And we certainly have the resource, both human resource and technical support around the resource to move ahead. So we haven't decided, Don. And but it certainly would be an attractive project for us to pursue if everything lines up. And Gord, how straightforward is the permitting that remains to be done? Well, I mean, it's the fact that at least the negotiation with the government of Senegal. There we've had several meetings with them. They're going very well. We're still apart on a few specific issues, but it's certainly a collegial negotiation. Just remind everybody, there is a presidential election underway in Senegal, I believe this week. So that will obviously cause a little bit of disruption to the regulatory bodies there for a period of time, especially when you're talking about a negotiation of a mineral lease. We're still projecting that sometime mid year, second half negotiation and that should be completed and we'll have that lease in hand. Great. And then one last comment while I got you, Gord, on this underground potential at Saramacca. Maybe that should be Craig that touches on it too. Well, obviously, with the grades and thicknesses done that we see there, there's quite an opportunity for us with the underground potential. The rock conditions are very favorable. The geometry of the main structure is very favorable to us. So I mean, we see quite an opportunity there, and we're currently evaluating how far that main structure projects below the current resource pit. And as those results kind of come into hand, our team will be looking at that with a kind of a scoping study approach to see what it's going to do. Gord has already foreshadowed that we are able to go underground, it does fundamentally change what kind of pit we need, how much waste stripping, what kind of waste rock piles will be around this thing. So there's some big impacts and there are a lot of moving parts. The first thing we got to deliver to him though is some grade over thickness at depth, which is what we're trying to do. And then he'll turn his engineers on it, and we'll be able to compare the outcomes from the two scenarios. But on first blush, looks pretty interesting to us. Your ounces per vertical meter below the resource, they stand up well? We think they're going to stand up, William. Our next question is from Tanya Jakusconek with Scotiabank. Please go ahead. Yes, good morning everybody. I have more technical questions for you. Maybe a quick one, just on the Essakane mill debottlenecking upgrades. Gord, how much is that in total capital to be spent this year and next? We've allocated about $15,000,000 $15,000,000 $15,000,000 $15,000,000 And that's it for the whole program? Yes. Okay. Okay, that's an easy one. And then just on turning to Westwood, appreciate that you're going to have a new life of mine plan coming out at the end of the year. But just from a high level, I mean, what triggered the change to the to getting this new mine plan? I mean, is it the difficult ground condition and seismicity? Are we looking at potentially a more selective mining method, obviously impacting throughput and grade and costs, maybe a little bit from how you're approaching it? I guess the short answer is yes. So, yes, we are looking at the seismicity, we are looking at mining methods, and we will be examining the opportunity to use differential mining methods in different parts of the deposit. The whole deposit is not affected by seismicity, but there are some specific areas that are, and we need to be able to deal with that. We'll be looking at what's the size of the workforce, what's the development rate and selectivity is a very significant piece of what we'll be looking at. So, can we assume, Gord, that that 180,000 ounces ramping up longer term is probably too optimistic for this asset from what we know today? I'm not assuming that yet. Again, I've really I put it in the hands of the team and my job is to sort of give them the space to come up with the answers. Okay. And when you say year end, is that with the year end results or is it in calendar 2019 that we will actually get this life of mine plan? Hopefully in calendar 2019. That's the goal that's been put in place. And it will be an interim plan. I mean, we actually feel it'll probably take a little longer to put all of the bells and whistles on it, but we will certainly have a good indication by the Q4 of this year. Okay. And that helps. And then maybe Steve, just for you, and I appreciate you've got the deferral of Cote. And I know you've come back and said a few times on pending market conditions. Maybe just for us to understand, we appreciate that large capital and investors and analysts don't want you to build it, but what would it take for you to go ahead with it? I mean, you mentioned market conditions. Is it a gold price? $13.50 long term if we stay here for a year, is that enough? Or what do you see as it going ahead? What will it take? Well, Tanya, you're one of the people as well that we pay a lot of attention to and you've always given us good advice. And I know your advice was to certainly hold off on Cote. I got that messaging. And again, we're very appreciative of the feedback. And I know you've been here as long as I've been here. And I know when I first joined from the oil and gas side, the complete focus of the industry was on ounces. In fact, you will recall in 2011, the euphoria around this industry, dollars 8,000,000,000 in equity raised that year. You can't raise the dollar today. And I remember selling Tarquay and Demang for $666,000,000 after tax and getting criticized for selling ounces even though the deal was unbelievable for us. So it's almost going to be a place where our shareholders stand up and say, you know what, depletion is running at a very high rate relative to replacement in the add more production to the system. We want to see you take your cash flow and invest it in a mine in Canada that's bulk tonnage, low grade, but surrounded by infrastructure and has all the bells and whistles that we believe it has. So I honestly, Tanya, will probably be talking to you. We'll be talking to Mike, Don and our shareholders, Don Smith, Tocqueville, Fidelity, the guys over in London, Ruffer. I mean, we spend a lot of time with them, and we garner their feedback. And it's important to me. I don't run the company by consensus, but when the majority of our investment community is opposing a large CapEx project, I'm just not going to stubbornly go ahead and do it just because I think I'm right. At 63 years of age, I've learned that it's best to listen and take everybody's feedback in and make the right decision. So I don't know when that decision, the construct is going to be made. I do know, I don't see anything in the near term that would move us in that direction unless there's a change at our company, unless we get bigger in some fashion, unless somebody comes up to us and says, boy, we can help you really derisk this. It's going to be basically tied to a bunch of factors that enhance the attractiveness to the market that we haven't seen yet. So right now, we're on the sidelines. Our next question comes from Dan Rollins with RBC Capital Markets. Please go ahead. Yes, thanks very much. I appreciate the candor, Steve, around Cote. Not to nitpick or sort of continue on this focus, but I think the last cycle, I think we can all agree and a lot of investors are there's some long term investors, there's some short term investors. What we saw in the last cycle was more of a flavor a day approach where people were telling companies pay a dividend, lever up, build and then everyone complained when everyone built at top of the market and there was write downs. Do you think listening fully to investors and saying not going with the project right now is the best way? Or maybe when the environment is right for people, that's when the attitudes change and everyone wants growth, but then you potentially miss you top take the cycle and then you basically turn on Cote during a down cycle where then you have to reflect the write downs. Is there not a way you say, okay, I know we didn't it's not the right time to build it now, but we think gold is going in the right direction. We know we still have a lot of people who don't like the project, want to go with it, but we think it's the right time to build it. Do you have are you going to come to a period where that's going to be the argument from a company basis or you're going to make the decision based on what investors are telling you to do with Cote? Well, they took Gord. Gord has been around here longer than I have. He's forgotten more than what I know about building mines. And I value when I met him at the Royal York when I first came to join the company, he was extremely patient with my complete ignorance about the industry. And he says to me, we should be building in the low part of the cycle. This is the way you make money. You build it in the low part of the cycle and then when the gold price moves up, we're going to lever off of that and our shareholders will make tons and tons of money. And the problem with that right now, Dan, and you know this as well as anybody, is that we make that decision, our stock, because people don't want to own our stock today if we're taking risk on Cote. They're going to wait to buy our stock 2 years out when we finally proven we can build it. And so what we're going to get is a bunch of people saying, well, why would I want to own IAMGOLD with all the construction risk that goes with Cote, why wouldn't I just wait? That makes us extremely vulnerable to unsolicited offers for the company at a very low share price. That isn't doing our shareholders any favors today. And it's the shareholders today that I have to worry about the most, not the shareholders of tomorrow. So I am driven without a doubt by the shareholders of today. And I'm one of them, by the way. And I sure don't want to see our share price whacked 20% to 25% and then have a company come in and say, jeez, at a 30% premium, I can take all these resources, all these projects, all these enhancements for $0.50 on the dollar. That isn't happening. So not going to do it. We're going to focus on adding value on the short cycle time until we see some evidence that our shareholders are willing to walk with us and support us on a bigger project that they aren't going to exit on and make us vulnerable in the short term. So that's where my head is. I'm not deviating from it. Do I get beat up every morning over it? Yeah, I do internally and from our partner, by the way. But I'm big enough and old enough to deal with that and we are sticking to that strategy. Okay. That brings me in. My next point or question is, basically noted the differential between the short cycle investment horizon and the fact that mining is a multi decade game and those two strategies sometimes compete viciously against each other. And it sounds like right now, you don't have the free cash flow within the current portfolio to support the development of Cote gold at this point in time. Does that open IAMGOLD up to deploying its excess cash and strong balance sheet towards adding producing mines through non core asset sales that could come up over the next 2 to 3 years to build the base which then would justify and help support the development of Cote in 3 to 4 years? The short answer would be yes and we're always looking at those opportunities. I don't know whether or not I think there's a fallacy when Crystal gets up and talks about disposing of 2,500,000 ounces of production and Goldcorp Newmont talk about $1,500,000,000 of assets. You've been around long enough. Generally, those are the straps and roadkill that you get that they don't want. And I am not we will always look at these opportunities, but I'm not optimistic that anybody's going to get deals of the century from the sale of these assets. I think that's naive. Having said that, we have an obligation and fiduciary responsibility to look at all these opportunities and we will. We always do. So, if they come up for sale, we're going to take a look at them. We always have done that. Don't know whether or not that will give us an opportunity or not. Okay. That's great. Appreciate the color. Okay. Thanks, buddy. And This concludes time allocated for questions on today's call. I will now hand the call back over to Indi Gopinathan for closing remarks. Thank you very much and thanks to everyone for joining us this morning and for your continued interest in IAMGOLD. We look forward to having you join us for our Q1 2019 conference call in early May. Thank you.