Nouveau Monde Graphite Inc. press release
IAMGOLD Reports Second Quarter 2022 Results
TSX - Toronto Stock Exchange · Graphite · Canada
All monetary amounts are expressed in U.S. dollars, unless otherwise indicated.
Toronto, Ontario--(Newsfile Corp. - August 3, 2022) - IAMGOLD Corporation(NYSE: IAG) (TSX: IMG) ("IAMGOLD" or the "Company") today reported its financial and operating results for the second quarter ended June 30, 2022.
Q2 2022 HIGHLIGHTS:
Attributable gold production of 170,000 ounces in the second quarter, and 344,000 ounces year to date ("YTD"), on continued strong performance from Essakane and improvements at Rosebel; annual production is expected to be in the upper end of the guidance range of 570,000 to 640,000 ounces. Cost of sales per ounce sold of $1,130 ($1,081 YTD), cash costs1per ounce sold of $1,119 ($1,066 YTD) and all-in sustaining costs1("AISC") per ounce sold of $1,604 ($1,545 YTD); cost guidance for 2022 is unchanged with cash costs¹ expected to be between $1,100 and $1,150 per ounce sold and AISC¹ expected to be between $1,650 and $1,690 per ounce sold. Mine-site free cash flow1of $42.8 million ($130.3 million YTD). Net earnings and adjusted net earnings1per share attributable to equity holders of ($0.02) and ($0.01), respectively; YTD net earnings1and adjusted net earnings1per share attributable to equity holders of $0.03 and $0.04, respectively. Earnings before interest, income taxes, depreciation and amortization ("EBITDA")1of $101.4 million ($236.3 million YTD) and adjusted EBITDA1of $110.0 million ($247.5 million YTD). Cash, cash equivalents and short-term investments and liquidity1at the end of the quarter of $452.9 million and $801.6 million, respectively. Announced the remaining costs to complete, project economics and updated life-of-mine ("LOM") plan for Côté Goldto be included in a new NI 43-101 technical report (see news release dated August 3, 2022). The Company's share of remaining spend to complete construction and bring Côté Gold into production is estimated to be between approximately $1.2 and $1.3 billion from July 1, 2022, net of leases and working capital. Advanced the strategic review process to evaluate options for Rosebel and initiated review of development and exploration assets in South America and West Africa. Published its 2021 Sustainability Report and named as one of the Corporate Knights' Canada's Best 50 Corporate Citizens of 2022, ranking as one of the top 50 companies in Canada for corporate citizenship.
"We are pleased to report that our operations continued their strong production performance in the second quarter, driven by the continued outperformance at Essakane and operational improvements at Rosebel," said Maryse Bélanger, Chair and Interim President and CEO of IAMGOLD. "In the current inflationary environment, it is essential to mitigate the impact of rising costs through diligent focus on operations and productivity initiatives. Every gold ounce produced has to be done safely, and we applaud our teams for their continued commitment to Zero Harm®and the Côté construction team for achieving the milestone of 5.7 million hours with no lost time injuries to date.
"Alongside our quarterly results today, we also announced the completion of the Côté Gold project review, risk analysis and updated mine plan. This is the culmination of months of in-depth analysis of the project, by the Company's management and project teams, EPCM contractor and technical experts. Côté Gold is transformational for IAMGOLD, offering robust cash flow generation once in production with significant potential for future growth. We truly believe that Côté Gold is not just a project, but the start of a district, with the addition of Gosselin and minimal historical exploration targeting Côté/Gosselin style intrusion-hosted deposits within our 595 km2land package.
"The construction of Côté is happening in an environment with significant headwinds, including COVID-19, inflation and other global events. The project today is over 57% complete and the updated project costs and schedule give us greatly improved visibility towards completion. Given the strategic importance of Côté Gold to achieve our goal of becoming a leading high-margin gold producer, we are actively pursuing various alternatives to increase liquidity to deliver Côté on its updated schedule. The strategic review process of Rosebel is active and ongoing and we will provide updates when appropriate. Further, we have initiated a separate review of development and exploration assets in South America and West Africa. I am confident we will address the near-term challenges in order to advance Côté and better position IAMGOLD as a more resilient, agile company for the current environment."
For more information, refer to the Management Discussion and Analysis ("MD&A") and unaudited consolidated interim Financial Statements as at and for the three and six months ended June 30, 2022, that are available on the Company's website at www.iamgold.comand on SEDAR at www.sedar.com. The Company uses certain non-GAAP financial performance measures throughout this news release. Please refer to the "Non-GAAP Financial Performance Measures" section of this news release and the MD&A for more information.
QUARTERLY REVIEW
The following table summarizes certain operating and financial results for the three months ended June 30, 2022 (Q2 2022), March 31, 2022 (Q1 2022), June 30, 2021 (Q2 2021) and six months ended June 30, 2022 (YTD 2022):
| | | Q2 2022 | | | Q1 2022 | | | Q2 2021 | | | YTD 2022 | | | YTD 2021 | | | Key Operating Statistics | | | | | | | | | | | | | | | | | Gold production - attributable (000s oz) | | 170 | | | 174 | | | 139 | | | 344 | | | 295 | | | Gold sales - attributable (000s oz) | | 170 | | | 181 | | | 135 | | | 351 | | | 288 | | | Average realized gold price1($/oz) | $ | 1,799 | | $ | 1,813 | | $ | 1,800 | | $ | 1,806 | | $ | 1,788 | | | Cost of sales2($/oz sold) - attributable | $ | 1,130 | | $ | 1,035 | | $ | 1,150 | | $ | 1,081 | | $ | 1,110 | | | Cash costs1($/oz sold) - attributable | $ | 1,119 | | $ | 1,017 | | $ | 1,149 | | $ | 1,066 | | $ | 1,108 | | | AISC1($/oz sold) - attributable | $ | 1,604 | | $ | 1,490 | | $ | 1,422 | | $ | 1,545 | | $ | 1,324 | | | Financial Results($ millions, except where noted) | | | | | | | | | | | | | | | | | Revenues | $ | 334.0 | | $ | 356.6 | | $ | 265.6 | | $ | 690.6 | | $ | 563.0 | | | Gross profit | $ | 49.4 | | $ | 81.0 | | $ | 27.9 | | $ | 130.4 | | $ | 72.1 | | | EBITDA1 | $ | 101.4 | | $ | 134.9 | | $ | 87.0 | | $ | 236.3 | | $ | 200.8 | | | Adjusted EBITDA1 | $ | 110.0 | | $ | 137.5 | | $ | 84.8 | | $ | 247.5 | | $ | 184.9 | | | Net earnings (loss) attr. to equity holders | $ | (9.6 | ) | $ | 23.8 | | $ | (4.5 | ) | $ | 14.2 | | $ | 15.0 | | | Adjusted net earnings (loss) attr. to equity holders1 | $ | (6.3 | ) | $ | 26.1 | | $ | (3.6 | ) | $ | 19.8 | | $ | 2.6 | | | Net earnings (loss) per share attr. to equity holders | $ | (0.02 | ) | $ | 0.05 | | $ | (0.01 | ) | $ | 0.03 | | $ | 0.03 | | | Adjusted EPS3attr. to equity holders1 | $ | (0.01 | ) | $ | 0.05 | | $ | (0.01 | ) | $ | 0.04 | | $ | 0.01 | | | Net CFO4before changes in working capital1 | $ | 93.9 | | $ | 133.9 | | $ | 54.9 | | $ | 227.8 | | $ | 137.4 | | | Net cash from operating activities | $ | 81.9 | | $ | 142.3 | | $ | 37.3 | | $ | 224.2 | | $ | 139.0 | | | Mine-site free cash flow1 | $ | 42.8 | | $ | 87.5 | | $ | 1.9 | | $ | 130.3 | | $ | 91.4 | | | Capital expenditures1,5- sustaining | $ | 67.1 | | $ | 76.6 | | $ | 23.9 | | $ | 143.7 | | $ | 37.6 | | | Capital expenditures1,5- expansion | $ | 189.0 | | $ | 92.1 | | $ | 128.4 | | $ | 281.1 | | $ | 217.2 | | | | | June 30 | | | March 31 | | | December 31 | | | June 30 | | | December 31 | | | | | 2022 | | | 2022 | | | 2021 | | | 2022 | | | 2021 | | | Financial Position ($ millions) | | | | | | | | | | | | | | | | | Cash, cash equivalents and short-term investments | $ | 452.9 | | $ | 524.4 | | $ | 552.5 | | $ | 452.9 | | $ | 552.5 | | | Long-term debt | $ | 612.0 | | $ | 463.5 | | $ | 464.4 | | $ | 612.0 | | $ | 464.4 | | | Net cash (debt)1 | $ | (225.1 | ) | $ | (6.5 | ) | $ | 16.3 | | $ | (225.1 | ) | $ | 16.3 | | | Available credit facility | $ | 348.7 | | $ | 498.2 | | $ | 498.3 | | $ | 348.7 | | $ | 498.3 | |
1. This is a non-GAAP measure. See "Non-GAAP Financial Measures". 2. Throughout this news release, cost of sales, excluding depreciation, is disclosed in the cost of sales note in the annual consolidated financial statements. 3. EPS: "net earnings (loss) per share " 4. CFO: "cash from operating activities" 5. Starting in 2022, a higher portion of stripping costs are categorized as sustaining capital versus expansion capital, due to the particular areas that are scheduled to be mined and the stage of the life of mine aligning with World Gold Council guidelines. See "Non-GAAP Financial Measures section".
Operating Results
Attributable gold production for the second quarter was 170,000 ounces, down 4,000 ounces or 2% from the prior quarter. Attributable gold sales of 170,000 ounces were in-line with production, with the average realized gold price of $1,799 per ounce reflecting the delivery of 37,500 ounces at $1,500 per ounce under the 2019 prepay arrangement.
Cost of sales (excluding depreciation) per ounce sold was $1,130 for the second quarter, up $95 per ounce or 9% from $1,035 per ounce sold in the prior quarter. Excluding depreciation, cost of sales per ounce sold increased from the prior quarter due to higher production costs and lower production volume.
Cash costs1per ounce sold in the second quarter were $1,119, up $102 per ounce or 10% from the prior quarter on higher production costs and lower gold sales. Included was a non-cash NRV write-down of short-term ore stockpile and finished goods inventories of $19 per ounce sold (first quarter 2022 - $9 per ounce sold). AISC per ounce sold of $1,604 was up $114 per ounce or 8% from the prior quarter, primarily due to the increase in cash costs per ounce sold.
Health and Safety
Health and safety is core to the Company's relentless pursuit of its Zero Harm®vision. Through various programs, the Company continuously promotes a safe work environment and a wellness program at all sites. The DARTFR2(days away, restricted, transferred duty frequency rate) was 0.31 for the first half of 2022, tracking below the global annual target of 0.42. The TRIFR2(total recordable injuries frequency rate) was 0.85 for the first half of 2022, tracking above the global annual target of 0.73. Côté Gold has surpassed over 5.7 million hours with no lost time injuries to date. The operations have been increasing focus on situational awareness and preventative activities related to work tasks.
The global COVID-19 pandemic continues to evolve and the management thereof remains a focus for the business. The Company continues to closely monitor developments and is taking necessary measures to manage the impact of the COVID-19 pandemic on its personnel, operations, construction and development projects and exploration activities. COVID-19 detection and mitigation protocols at our sites are reviewed on an ongoing basis to adapt to the evolving situation.
Financial Results
For the second quarter ended June 30, 2022, net earnings and adjusted net earnings1per share attributable to equity holderswere ($0.02) and ($0.01), respectively, EBITDA1was $101.4 million and adjusted EBITDA1was $110.0 million.
Second quarter 2022 mine site free cash flow was $42.8 million, down $44.7 million from the prior quarter, due to lower operating cash flow at Essakane ($54.6 million) and Westwood ($11.1 million), mainly due to higher operating costs, lower sales volume and a lower average realized gold price, and higher capital expenditures at Rosebel ($16.0 million), partially offset by higher operating cash flow from Rosebel ($21.5 million) and lower capital expenditures at Essakane ($17.1 million).
Net cash from operating activities for the second quarter 2022 was $81.9 million, a decrease of $60.4 million from the prior quarter, primarily due to lower net cash earnings ($19.9 million), higher income taxes paid resulting from withholding taxes on repatriation of funds ($26.9 million) and a net outflow in non-cash working capital movements ($20.4 million), partially offset by an increase in cash inflows from the settlement of derivatives ($6.3 million).
Net cash used in investing activities for the second quarter 2022 was $269.2 million, an increase of $108.7 million from the prior quarter, primarily due to an increase in capital expenditures for property, plant and equipment ($87.4 million) related to the Côté Gold construction and timing of financing costs paid and capitalized as borrowing costs ($13.1 million).
Net cash from financing activities in the second quarter 2022 was $129.9 million, an increase of $137.4 million from the prior quarter, primarily due to proceeds from drawdowns from the Company's secured revolving credit facility (the "Credit Facility") ($150.0 million), partially offset by an increase in dividends paid to non-controlling interest ($11.6 million) on the declaration of dividends from subsidiaries.
Liquidity and Capital Resources
As at June 30, 2022, the Company had $451.1 million in cash and cash equivalents, $1.8 million in short-term investments and net debt1of $225.1 million. Restricted cash in support of environmental closure costs obligations related to Essakane totaled $38.9 million.
Approximately $348.7 million was available under the Credit Facility resulting in liquidity1at June 30, 2022 of approximately $802 million. The Côté unincorporated joint venture (the "Côté UJV") required its joint venture partners to fund three months of future expenditures. Subsequent to quarter end, the Côté UJV has amended this requirement to two months. The Company has funded its portion of the Côté UJV funding through cash generated from its operations and the Credit Facility. The Company uses dividends and intercompany loans to repatriate funds from its operations and the timing of dividends may impact the timing and amount of required financing, including the Company's drawdown under the Credit Facility.
The following table summarizes the Company's outstanding long-term debt:
| | | June 30, | | | March 31, | | | December 31, | | | ($ millions)1 | | 2022 | | | 2022 | | | 2021 | | | Credit Facility | $ | 150.0 | | $ | - | | $ | - | | | 5.75% senior notes | | 447.4 | | | 447.0 | | | 445.7 | | | Equipment loans | | 14.6 | | | 16.5 | | | 18.7 | | | | $ | 612.0 | | $ | 463.5 | | $ | 464.4 | |
1. Long-term debt does not include: 2019 and 2022 prepay arrangements and leases of $62.0 million as at June 30, 2022 (March 31, 2022 - $62.5 million; December 31, 2021 - $65.6 million),
Prepay Arrangements
During 2019, the Company entered into a gold sale prepayment arrangement (the "2019 Prepay Arrangement") with a collar range of $1,300 to $1,500 per ounce at a cost of 5.38% per annum. Pursuant to the 2019 Prepay Arrangement, the Company received a cash prepayment of $169.8 million in December 2019 in exchange for delivering 150,000 gold ounces in 2022. During the three and six months ended June 30, 2022, 37,500 ounces and 75,000 ounces, respectively, were physically delivered into the 2019 Prepay Arrangement and the Company received $7.5 million and $15.0 million, respectively, in cash in relation to the collar.
During 2021, the Company entered into gold sale prepayment arrangements (the "2022 Prepay Arrangements") at a weighted average cost of 4.45% per annum in respect of 150,000 gold ounces. These arrangements have an average forward contract price of $1,753 per ounce on 50,000 gold ounces and a collar range of $1,700 to $2,100 per ounce on 100,000 gold ounces. This will result in a total prepayment to the Company of $236 million over the course of 2022 and the requirement on the part of the Company to physically deliver such ounces over the course of 2024. The 2022 Prepayment Arrangements have the effect of rolling the 2019 Prepay Arrangement from 2022 to 2024 after the completion of the construction of Côté Gold. The Company received cash prepayments of $59.0 million and $118.0 million, respectively, during the three and six months ended June 30, 2022 pursuant to the 2022 Prepay Arrangements.
OUTLOOK
Liquidity Outlook
The remaining attributable spend to complete the construction of the Côté Gold project are estimated to be between $1.2 and $1.3 billion from July 1, 2022, net of leases and working capital (see "Côté Gold Project"). The Côté Gold UJV requires its joint venture partners to fund, in advance, previously three and now two months of future expenditures. The Company uses dividends and intercompany loans to repatriate funds from its operations and the timing of dividends may impact the timing and amount of required financing, including the Company's drawdowns under the Credit Facility. Primarily due to the timing of a dividend payment from Essakane, the Company drew down an additional $80 million at the end of July 2022 and issued a $19 million letter of credit under the Credit Facility.
Based on the recently updated cost estimate and schedule of construction of the Côté Gold project, information currently available and prevailing market prices, which impact operating cash flows, the Company will require additional liquidity to complete construction of the project and continues to seek to implement a fully funded financing plan by the end of the year and prior to the necessity to make any potential adjustments to the timing of the advancement of the project based on the updated schedule.
As such, the Company is actively pursuing various alternatives to increase its liquidity and capital resources including disposition of one or more of the Company's assets and/or an interest therein and/or joint-venture partnerships, additional secured debt which could be provided by banks, private capital providers and/or institutional investors, additional unsecured debt including unsecured and/or convertible notes, sales of common shares and/or the extension of the 2022 Prepay Arrangements.
In January 2022, the Company announced that it was commencing a strategic review process to evaluate options for its Rosebel/Saramacca mining complex, including a potential sale of this complex. The Company advanced this process in the second quarter 2022. In addition, the Company is evaluating strategic alternatives with respect to certain of its development and exploration assets in South America and West Africa (excluding Essakane), that may include the disposition of all or an interest in one or more of such assets.
However, there can be no assurance that the Company will be successful in achieving financing solutions in time and/or on terms acceptable to the Company or that the strategic evaluations discussed above will result in a transaction. In this case and in order to execute its plans for the foreseeable future, including financing alternatives, the Company has developed certain potential alternatives to defer or reduce its capital spending and various other expenditures. These alternatives may impact future operating and financial performance and/or could extend the Côté Gold project construction timeline and significantly increase project costs, and/or dilute the Company's interest in the Côté Gold project. Reductions in capital expenditures at the Côté Gold project requires majority approval from the Côté UJV oversight committee.
The Company's financial results are highly dependent on the price of gold and future changes in the price of gold will, therefore, impact performance. The Company will be dependent on the cash flows generated from the Côté Gold project to eventually repay its existing and any additional indebtedness that it may incur to fund the remaining construction costs of the Côté Gold project. Readers are encouraged to read the "Caution Regarding Forward Looking Statements" and the "Risk Factors" sections contained in the Company's 2021 Annual Information Form, which is available on SEDAR at www.sedar.comand the "Caution Regarding Forward Looking Statements" and "Risk and Uncertainties" section of the MD&A.