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Edited Transcript of IMG.TO earnings conference call or presentation 23-Feb-17 1:30pm GMT

Thomson Reuters StreetEvents

Q4 2016 IAMGOLD Corp Earnings Call

TORONTO Feb 23, 2017 (Thomson StreetEvents) -- Edited Transcript of IAMGOLD Corp earnings conference call or presentation Thursday, February 23, 2017 at 1:30:00pm GMT

TEXT version of Transcript


Corporate Participants


* Laura Young

IAMGOLD Corp. - Director, IR

* Steve Letwin

IAMGOLD Corp. - President, CEO

* Carol Banducci


* Gordon Stothart


* Craig MacDougall

IAMGOLD Corp. - SVP, Exploration

* Tim Bradburn

IAMGOLD Corp. - VP, Legal, Corporate Secretary


Conference Call Participants


* David Haughton

CIBC World Markets - Analyst

* Steve Parsons

National Bank Financial - Analyst

* Steven Butler

GMP Securities - Analyst




Operator [1]


This is the Chorus Call conference operator. And welcome to the IAMGOLD 2016 fourth-quarter and yearend operating and financial results conference call and webcast.

As a reminder, all participants are in listen-only mode and the conference is being recorded. (Operator Instructions).

At this time, I'd like to turn the conference over to Laura Young, Director, Investor Relations for IAMGOLD. Please go ahead, Ms. Young.


Laura Young, IAMGOLD Corp. - Director, IR [2]


Good morning, and welcome to the IAMGOLD conference call. Joining me on the call are Steve Letwin, President and CEO of IAMGOLD, Gord Stothart, EVP and Chief Operating Officer, Carol Banducci, Executive Vice President and CFO, Craig MacDougall, Senior Vice President, Exploration, and Tim Bradburn, Vice President, Legal, and Corporate Secretary.

Our remarks on this call will include forward-looking statements, so 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 that are referred to during the presentation can be viewed on our website.

I'll now turn the call over to our President and CEO, Steve Letwin.


Steve Letwin, IAMGOLD Corp. - President, CEO [3]


Well, good morning, everybody. I'm going to apologize ahead, you're going to hear coughing in the background. That's Stothart. And he gave me his cold, so I've got a bit of a raspy throat. So our apologies ahead of time.

Well, use all the results, and I couldn't be happier. We had a great year. Operating cash flow rose 721% to $314 million.

Along the road, we reduced our long-term debt by $146 million and we ended the year with $763 million in cash, all, of course, in U.S. dollars.

Our strong financial results underscore outstanding operating performance. Production rose from one quarter to the next, with 813,000 ounces for the year, exceeding guidance.

All-in sustaining cost came in at the low end and we beat on cash costs. Many of the initiatives that we've been working on over the past few years were aimed at lowering costs and extending the life of our mines. These were the two major challenges that the Company's faced, I think, over the last five to six years, at least since I've been at the helm, have been the higher cost structure, as you know, and the life of mines being relatively short compared to peers.

I'm really pleased to tell you that we've really done a lot in 2016, 2015, 2014 on the objectives, setting the stage for continuing to cut costs, continuing to lengthen our life of mines and growing production, as we look forward by 25% and reducing all-in sustaining cost by 15% by the year 2020.

So our work is not complete. I think we want to be mindful of the fact that no matter what we've done in the past, that's the past. And as our famous hockey player, Wayne Gretzky, said, you're only as good as your last shift.

And we keep that in mind at IAMGOLD. We still have a lot of work to do, and we're going to continue to do it and you're going to see that in our results.

Our priority is to grow organically. M&A is not off our radar. We're always looking at opportunities. But it's not something we have to do. We've identified an advanced high-potential targets for resource expansion throughout our project pipeline, including areas surrounding our existing operations.

And without getting too robust about it, I'm not shy in telling you I think 2017 is going to be the year of IAMGOLD, because we're seeing some fantastic opportunities to set the stage for growth.

And if you look at slide five at Rosebel in particular, we turn the page with an agreement to acquire the rights to the Saramacca property. We had relentlessly pursued this asset, it says for several years in the script here, but it's actually for five years.

And I was personally very frustrated with how long this took, as you know. I'd indicated that it would be like a two-year process. It ended up being much longer than that.

But you know at the end of the day, the rewards that have come with this are huge, I believe transformational for Rosebel.

And after an intensive drilling program in the latter part of 2016, we released the initial assay results last week. They appear to confirm mineralization, which could eclipse earlier estimates. And we're very encouraged by what we are seeing in the transformative effect it would have on this particular mine.

An initial resource estimate is expected in the third quarter. We'll let Craig MacDougall talk to that.

With Saramacca only 25 kilometres away from the mill, we can leverage the existing infrastructure, which is one of the most cost-effective ways to achieve growth. And you know that's been our strategy over the last five years.

As you know, any time that we can find deposits within hearing distance of the mill and leverage off the current infrastructure, the returns for us are infinite.

And what you're going to see from IAMGOLD this year are a much more enhanced life of mine, particularly at Rosebel. We've seen the same effect at Essakane with Falagountou.

We also are moving ahead with the Sadiola Sulphide project at Mali. We are shovel ready as soon as agreements with the Malian government are finalized.

I will tell you I'm disappointed with how slow it's going with the Malians right now. It took us a number of years, as you know, to get on the same page with Anglo. We're now brothers walking together on this particular project for the first time in five years. So I'm really pleased. Technically, we're on the same page. And we're walking basically together in front of the government to move this ahead.

In the meantime, we want to make sure that the project economics hold. And we know this project could add another 10 years and over the cost structure of this existing mine, then owes us nothing after producing between Yatela over seven million ounces.

We're also seeing Westwood on track to achieve full production ramp up by 2019. A special kudos to the management team at Westwood - outstanding performance. And production is expected to double this year. The Westwood team did great work in meeting their ramp-up targets in 2016. And with 25 kilometres of underground development, again, world-class in terms of performance.

Their resource conversion infill drilling program increased reserves by 75% year over year, and they advanced underground development and opened up new drill sites. We expect the rate of conversion to accelerate.

At Essakane, the mine is surrounded by a number of highly prospective targets, which could prolong the life of the mine.

At Falagountou, there's an opportunity to expand our footprint and we're looking at potentially delineating a resource for the eastern portion of the deposit there.

Here we have a portfolio of assets with organic growth opportunities that would take us to one million ounces by 2020, and the expansion of Sadiola and the development of Saramacca would be funded internally through operating cash flow and cash on our balance sheet.

Beyond that, we have a pipeline of growth options also in our own backyard. The Cote Gold project with an estimated eight million indicated ounces and one million inferred ounces is an exceptional option for future growth.

In January, we announced positive results from the preliminary economic assessment that demonstrated Cote has the potential to be a low-cost mine, with a 21-year mine life. The results of the [pre-fee] study, which we expect to complete by the end of the second quarter, could see a portion of the indicated resources converted to reserves.

The other good news is that with positive decisions on the environmental assessments from both the provincial and federal governments, we've cleared a major regulatory hurdle.

Our advanced exploration projects present additional options for growth. There are not a lot of new mines being built, so investing in exploration is critical to building a pipeline of future development projects.

In 2017, we're targeting resource upgrades for Boto Pitangui, and Diakha, and we were working towards [declaring] initial resources for Eastern Borosi and Monster Lake.

So look, it's been a while. Many of you have been very patient with us, and we appreciate it. It's been a long haul after a gold run that was some 10 to 12 years long. Our Company, in particular, had a cost structure that got a little bit ahead of itself.

Gord Stothart and his team, Carol Banducci and her team, Craig MacDougall and his team, have done an outstanding job.

And if there's anything that I would say without trying to sound like we're patting ourselves on the back here, which is not my intention, I think we've at least demonstrated to you that we've been able to execute on our plans.

We're still not happy with the cost structure. We still have to bring it down. We're extremely happy with the way the balance sheet's been managed by Ms. Banducci here. And we're extremely pleased with the way Mr. Macdougall, with a very, very low capital program, has been able to add reserves, replace reserves.

And, as I say, I think 2017, from an exploration perspective, particularly on the brownfield side, will be the year of IAMGOLD.

So thank you, and I'll turn it over to Carol.


Carol Banducci, IAMGOLD Corp. - EVP, CFO [4]


Thanks, Steve. Good morning, everyone. As Steve said, we had an excellent year. Our positive financial results reflect outstanding performance across our operations.

We begin 2017 in a strong financial position as the results of ongoing financial discipline and how we manage the business and actions taken to further strengthen our capital structure.

In 2016, operating cash flow increased by $276 million compared to 2015. We ended the year with $763 million in cash, cash equivalents and restricted cash.

Excluding restricted cash, this leaves us with a net cash position of $163 million. And, we secured a $250 million credit facility.

Slide 7 highlights how we performed year over year on multiple financial and operating metrics. The variances are positive and they're significant.

Revenues were up $70 million. Adjusted net earnings per share were up $0.45. Net operating cash flow was up $276 million, and cost of sales was down $111 per ounce.

Note that the main reasons for the increase in capital expenditures year over year were the higher capitalized stripping at Essakane and the higher underground development at Westwood.

The overall message that these numbers convey is that across the board we are driving operating performance higher. Although we expect the price of gold will continue to fluctuate, we will keep directing our efforts on what we can control.

We recorded $102 million in gross profit in 2016, which was up $157 million from the year before. This was the result of an 8% increase in revenue, coupled with a 9% reduction in cost of sales. So gross profit in the fourth quarter was $19 million, up $64 million in the fourth quarter 2015.

The 8% increase in revenue to $987 million, was driven by a higher gold price, as consolidated sales volume was flat year over year. While sales volume increased at Westwood with the higher production, sales at Rosebel were down slightly and Essakane sales were flat year over year.

The 9% reduction and cost of sales was due to a 14%, or $92 million reduction in operating costs. Depreciation expense was virtually unchanged year over year.

The main factors behind the lower operating costs were higher capitalized stripping at Essakane, lower fuel prices, lower inventory write-downs, cost denominated in currencies that lost value against the U.S. dollar, lower labor costs at Rosebel as a result of the workforce reductions in 2015, and lower realized derivative losses.

These factors were partially offset by higher fuel consumption at both Essakane and Rosebel.

Cost of sales per ounce for 2016 was $794 compared to $905 in the prior year. The 12% improvement reflects reduction in operating costs.

In 2016, we generated $314 million in net cash from operating activities, which was up 721% from 2015. Before the changes in working capital, net cash flow from operating activities was $290 million, up $211 million, or 265%, from the previous year. The significant improvement reflects higher earnings in 2016.

The prior year included the cash payout related to the early termination of 2016 and 2017 derivative contracts and the settlement of 2015 fuel and currency contracts.

Net earnings attributable to equity holders was $52.6 million. Adjusting for items not indicative of our core business, including the gain on the sale of gold bullion and the normalization of Westwood's costs, adjusted net earnings were $3.9 million or $0.01 a share compared to an adjusted net loss of $0.44 a share in 2015.

Adjusted net earnings in the fourth quarter 2016, were $3.3 million, or $0.01 cent a share, compared to an adjusted net loss of $0.16 a share in the fourth quarter of 2015.

The next slide shows the significant improvement in our gold margin year over year. The 7% increase in our average realized gold price, together with an 11% reduction in total cash cost, drove the gold margin up 56% to $505 an ounce.

We are in excellent financial shape. Cash, cash equivalents, and restricted cash were $763 million at the end of 2016, exceeding long-term debt by $274 million.

We have a manageable level of debt and strong credit metrics.

In line with our credit facility, total liquidity is $900 million, excluding restricted cash of $111 million. Note that the restricted cash is related to contingent liabilities having to do with asset retirement obligations. During 2017, we expect to replace a portion of that with surety bonds or letters of credit.

Steve has already outlined our strategies for growing the business. So let me reinforce that cost containment, disciplined capital allocation, and cash preservation continue to be fundamental to maximizing profitability and maintaining financial strength.

So with that, I'll turn you ever to Gord.


Gordon Stothart, IAMGOLD Corp. - EVP, COO [5]


Thank you very much, Carol. And like Steve, I'll apologize ahead for my voice. I have a little bit of a cold here, but we'll persevere.

So last night we released our 2016 yearend reserves and resources statement, so I'll begin with that.

So this slide compares reserves and resources year over year. Our gold price assumption at our owned and operated mines remained unchanged. Reserves for all the owned and operated sites were based on $1,200 per ounce. And resources were based on $1,500 an ounce for Essakane and Rosebel, and on $1,200 an ounce for Westwood.

Resource estimates for Cote Gold, Boto, Pitangui, and Diakha, Siribaya, remained unchanged at $1,500 per ounce.

Reserve and resource estimates that Sadiola, prepared by our joint venture partner, used price assumptions of $1,100 and $1,400 per ounce of gold, respectively.

Proven and probable attributable gold reserves after depletion, increased by 108,000 ounces to 7.8 million ounces at the end of 2016.

The increase was primarily due to the increase in reserves at Westwood and Essakane, partially offset by depletion with the production of 813,000 attributable ounces in 2016.

Westwood had a strong result from their resource definition work and they realized a net addition after depletion of 448,000 ounces from the conversion of resources to reserves.

And at Essakane, changes to the mine design and economic parameters added 331,000 attributable ounces to reserves, offsetting most of the depletion.

Moving to resources, total attributable, measured and indicated resources, inclusive of reserves, were 23.3 million ounces at the end of 2016, which is about 150,000 ounces below the 2015 yearend measured and indicated resources.

Finally, attributable inferred ounces for the Company came in at 6.1 million.

Now turning to our operating results, consolidated production increased in each consecutive quarter of 2016, bringing full-year attributable production to 813,000 ounces. All of our operations exceeded production guidance and major performance optimization initiatives were completed throughout the year, yielding substantial benefits. I'll speak to some of them in a moment.

We beat cash cost guidance at $739 an ounce, and all-in sustaining costs were at the low end of guidance at $1,057 an ounce.

Essakane produced 377,000 attributable ounces in 2016, slightly lower than 2015, mainly due to lower recoveries as a result of encountering some graphitic ore. However, we are addressing this issue with a lot of focus and expect to turn that around this year.

Recoveries are expected to increase with the use of the new intensive leach reactor, which was commissioned in the second quarter last year. And the results of a geometallurgical study this quarter will help us better identify where there are pockets of graphitic material within the ore zones.

We are also looking at the economics of processing low-grade transition material through heap leaching and potentially adding an oxygen plant to further improve recoveries.

Essakane also commissioned a carbon finds treatment plant last year, which allows them to process the gold and the carbon finds at the site, with that gold ultimately ending up in our regular gold Dore bars, rather than having to ship it outside the country to a third-party treatment facility.

Operating costs declined by 16% year over year, driving cost of sales lower, to $716 per ounce. The main factors were higher capitalized stripping, partly due to mining Falagountou and PIP sequencing, lower fuel prices, and lower hedge losses, partially offset by higher fuel consumption with the mining of Falagountou, and an increase in maintenance costs due to harder rock.

The reduction in all-in sustaining costs to $977 an ounce for the full year reflected the lower cost of sales, partially offset by higher sustaining capital expenditures, including capitalized stripping.

Essakane's operating team has done outstanding work to act on opportunities that have been identified to achieve operational excellence. In the same way, they are determined to extend the life of the mine.

Essakane's land package exceeds 1,200 square kilometres with several mineralized showings and extensive Artisanal workings surrounding the mine.

So, as we did with Falagountou, we want to tap into as many highly prospective targets as we can.

Under the current mine plan, Essakane has another seven years. But with continuous improvement and Brownfield growth opportunities, we expect to extend its life beyond 2023.

Turning to Rosebel on the next slide, as you heard from Steve, we are starting to hear some very promising news coming out of Saramacca. Craig will talk about the positive results and the timeline in a few minutes, so I'll focus on Rosebel's operating performance.

So Rosebel produced 296,000 attributable ounces in 2016, up 3% from 2015. There was a notable grade improvement in the fourth quarter, as grades increased 0.90 gram per tonne gold, which compares to 0.82 grams per tonne in Q3 of 2016, and 0.79 grams per tonne gold in Q4 of 2015.

Rosebel historically hasn't incorporated dilution into reserve estimates when it was mostly soft oxide reserves, because of the redistribution of grade in the weathering profile, the nature of the soft rock with a dilution material was typically very close in grade to the targeted ore, so the impact on average grades was minimal.

In fact, in soft rock, we typically realize the significant pickup in tonnes at similar grads to plan.

As we are now getting into more and more hard rock, we're still seeing the pickup in tonnes, sometimes in significant volumes as we do encounter additional ore zones not identified in the resource block model. However, we also experienced some dilution of the fresh rock ore by barren waste, which is reducing ore grades.

Our mine planning projections for the coming year are assuming a 10% grade dilution in fresh rock, and, year to date, we are seeing much better reconciliation using this assumption.

We are currently in the midst of a revision to the Rosebel block models on all of the ore bodies, and the next version of the Rosebel reserves and resources estimates will incorporate appropriate dilution factors.

In 2016, Rosebel completed three important improvements to the mill to manage the increasing proportion of hard rock. A power flex drive to increase torque capacity was installed in the SAG mill. The grinding circuit was outfitted with a newly designed shell liner and larger grinding medium, and in December a new permanent secondary crusher was commissioned to increase throughput capacity on hard rock by reducing the feed size to the grinding circuit.

The cumulative effect on throughput and cost is significant. At 90% hard rock, we now expect to be able to maintain a processing rate of nine million tonnes per year. Without these initiatives, the rate would have dropped to about 6.9 million tons per year at high hard rock proportions.

The combined impact of all three improvements is estimated to have about a $20 per ounce positive impact on all-in sustaining costs starting this year. All-in sustaining costs in 2016, fell $177 an ounce to $988, the result of lower cost of sales and a 21% decrease in sustaining capital expenditures.

In the fourth quarter, they were $799 an ounce. The decrease in cost of sales to $768 per ounce reflected a 13% decrease in operating costs. The main factors were the devaluation of the SRD against the U.S. dollar, lower labor costs with the workforce reduction at the end of 2015, lower inventory write-downs, and lower fuel prices.

Rosebel's step-change approach to performance optimization has put them on the path to sustainable business excellence. This positions them extremely well to benefit from the organic growth opportunities that will leverage their existing infrastructure.

Initial results from drilling in the saddle zones between the pits have been encouraging, and now, with initial results from Saramacca better than anticipated, we're looking at a significant transformation for Rosebel, as Steve mentioned.

Looking at Westwood, year 2016 was a pivotal one. The focus on ramping up production continued, higher grades partially offset by lower throughput increased production to 65,000 ounces.

The results of underground development over the past 20 months have been outstanding. By the end of this year, we expect to be operating at a commercial level of production from three of the five mining blocks, including the zone where remedial work was completed last year.

All five bypass drifts providing access to the 104 mining block are now open, and mining should recommence later this year. This is reflected in the 2017 production guidance. This is nearly double the ounces produced in 2016.

With Westwood resuming operations at normal level of production this quarter, we plan to discontinue normalizing cash costs and all-in sustaining costs.

As shown on the next slide, Westwood completed nearly 25 kilometres of underground development in 2016, averaging 74 metres a day. This was achieved hand in hand with a strong safety record.

In 2017, underground development is expected to total 20 kilometres.

Westwood remains on track to ramp up to full production of 180,000 to 200,000 ounces annually by 2019.

At our Sadiola joint venture, attributable gold production in 2017, was 70,000 ounces, consistent with the previous year. Although input costs were lower, the processing of the higher proportion of ore stockpiles in 2016 versus the processing of more marginal ore in 2015, resulted in higher cash costs year over year.

This is because the marginal ore would have been expensed as waste at the time of mining in prior years, compared to the expensing of full-grade ore stockpiles in the same period as they are processed.

As Steve said, we're ready to move ahead with the SSP project as soon as agreements with the Malian government are finalized. Construction will take about 18 months. So our goal would be to complete the expansion by the end of 2018.

With the mining of oxides expected to continue into early 2019, this would allow us to avoid a gap in production.

Slide 23 presents our 2017 guidance. Total attributable production is expected to range between 845,000 to 885,000 ounces. Westwood is expected to nearly double production from last year.

At Rosebel, we expect higher grades and improving recoveries to somewhat offset the increased treatment of harder rock.

At Essakane, grades were likely to be lower in 2017, but throughput and recoveries are expected to increase. All-in sustaining costs are expected to be in the $1,000 to $1,080 an ounce range.

To wrap up, our CapEx guidance for 2017 is $250 million, plus or minus 5%, with $75 million development capital and $175 million sustaining capital. The sustaining capital includes $39 million in capitalized stripping for Essakane and $28 million in capitalized stripping for Rosebel.

Westwood's non-sustaining capital expenditures are expected to be 30% lower than 2016. At $45 million, the majority will again be for underground development associated with the ramp up.

The construction expenditures for the Sadiola Sulphide project are not included. Although the $10 million relates to the advancement of the project, it only includes certain aspects of the expansion, such as the optimization study to refine project economics, and does not include construction costs.

Once we have our approvals and we know the timing for construction, we will provide a CapEx guidance update for the project.

Craig will now review exploration.


Craig MacDougall, IAMGOLD Corp. - SVP, Exploration [6]


Thank you, Gord, and good morning, everyone. Please note that the results I refer to today have been previously disclosed in accordance with securities regulations and signed off by the qualified persons within the company reporting them.

In 2016, we continued to work towards upgrading our existing resource stage projects at Boto, Pitangui, and Siribaya, and to advance others closer to an initial resource.

We spent approximately $39 million on exploration, excluding project studies. Although this is the lowest level of spending on exploration in a decade and marks four successive years of reductions, we have continued to advance our key projects and to deliver ongoing exploration success.

This year, we plan to increase spending by 20%, to $47 million, reflecting increased spending on Brownfield exploration, mainly the Saramacca project in Suriname, saddle zones at Rosebel, and prospective targets at Essakane.

The major catalyst to watch this year are our initial resource estimate for Saramacca in the third quarter and resource upgrades at Boto, Pitangui, and Siribaya.

And at Essakane, we expect to delineate and upgrade resources at Falagountou East's [use and mine] planning study. In addition, depending on results, we're targeting initial resource estimates for Monster Lake and Eastern Borosi.

Before turning to an update on our greenfield projects, I want to talk to you a bit about the results we're seeing at Saramacca in Suriname. The progress in a short period of time has been outstanding. And I wanted to recognize the efforts of our exploration team on the ground.

When we began our exploration program back in August of last year, we had two objectives. We wanted to duplicate or twin some of the historic mineralized intersections drilled by previous explorers to confirm the reported mineralization. And once confirmed, we move to delineate the full strike and width of the interpreted mineralized footprint on 100-by-50 metre drill spacing.

By yearend, we had completed 67 diamond and 37 RC drill holes, totaling nearly 19,000 metres. The assay results from that program have confirmed the presence of significant mineralization.

Highlights include 4.3 grams per tonne gold over 101 metres, 5.2 grams per tonne gold ever 46 metres, and 3.98 grams per tonne gold over 78 metres.

Importantly, we have intersected mineralization in soft rock at depths ranging from 50 to 100 metres.

In 2017, we will focus on completing a 50-by-50 metre infill drilling pattern to confirm continuity of the mineralized structures for modeling. We're targeting the third quarter of this year to declare initial resource estimate.

Let's now turn to our greenfield projects. At our Boto gold project in Senegal, we completed a diamond drilling program in 2016, that confirmed wider intervals and mineralization in the footwall of the Malikoundi deposit. This was an area that had not been completely drilled out in previous campaigns.

We also successfully targeted high-grade mineralization along strike to the north of the deposit.

Most of the work in 2016 was focused on expanding the Malikoundi deposit. We have developed a good understanding of the controls and militarization in this, our largest deposit discovery to date.

And in 2017, we're going to use this information to guide further exploration along the Boto 4, Boto 6 [trend] further south.

Once we have all the results from the 2016 drilling program, we will incorporate them into a resource update for 2017, and we are continuing to advance technical and environmental studies as part of the ongoing economic evaluation of this project.

Moving onto Pitangui in Brazil, the diamond drilling program last year confirmed that targets along strike of the Sao Sebastiao deposit have favorable iron formation horizons similar to those hosting the main deposit, which means these areas could host additional mineralization.

In 2017, we will continue with diamond drilling to expand the current resource, testing a newly permitted area up plunge of the deposit for its extensions where we see potential for additional resource ounces.

We've also started working on technical environmental studies to advance the economic evaluation of the project.

Moving on to the Siribaya project in Mali, which is a 50/50 joint venture with Merrex Gold. In 2016, the main objective was to increase the confidence in the resource, extend the deposit depth below the current pit shelf, and test for potential northern extension of the deposit.

We had great success with the RC drilling, as results confirm the presence of mineralization along strike immediately north of the Diakha deposit.

This year, we will focus on further increasing our confidence in the current resource to better understand the controls on mineralization and delineating the newly discovered mineralization along strike.

With the completion of this program, we will be working towards updating the resource estimate this year.

In December, we signed an agreement to acquire all of the issued and outstanding shares in Merrex that we do not own, which would consolidate our full ownership of this key exploration asset. The transaction is expected to close before the end of the first quarter.

At our Eastern Borosi joint venture project in Nicaragua, encouraging results were reported in 2016, including the discovery of the new Veta Loca vein system, which returned a drill intersection of 6.3 metres, creating 10.2 grams per tonne gold and 6.9 grams per tonne silver.

In 2017, diamond drilling will focus on the resource potential of the Guapinol, Riscos de Oro, and East Dome vein systems. If the drilling results are positive, we will use them to complete an initial resource estimate by yearend.

This year we also expect to vest an initial 51% interest in the project, upon which we may then elect to enter a second option to earn up to 70%.

We're also targeting an initial resource estimate this year at Monster Lake in Quebec. Drilling in 2016, intersected a second mineralized structure which we believe to be parallel to the main shear structure hosting the 325-Megane Zone.

This new zone is located 200 to 400 metres north of the Megane Zone and requires additional drilling. Although, to date, the intersections have been narrow, we have cited visible gold in several drill holes, which is very encouraging.

The accumulated results, together with the geologic and structural mapping programs completed last year, will guide us in better defining end extending the known mineralization along the shear zones.

The last project I'll talk about is Nelligan, also in Northwestern Quebec, about 15 kilometres south of the Monster Lake project. Drilling results in 2016, identified the discovery of a new zone of mineralization coinciding with an IP anomaly located immediately north of known mineralized zones.

This new discovery is a little over a kilometre long and is a wide open system where just about every hole we've drilled has intersected wide zones of hydrothermal alteration and associated mineralization.

The results of the diamond drilling completed in the fourth quarter are pending, but, once received, they will be used to further guide drilling in 2017.

Building on last year's successes, we expect 2017 to be a year in which we achieve a number of important milestones. Saramacca is now in the pipeline and we continue to advance other satellite opportunities at our existing mines.

We're also expecting resource upgrades at several of our more advanced greenfield projects, and we're working hard to deliver initial resource estimates at several others. Please stay tuned.

With that, I'll hand you back to Steve to wrap up.


Steve Letwin, IAMGOLD Corp. - President, CEO [7]


Thanks, Craig. Well, as we've said a number of times, we're very excited about the year ahead. We've achieved excellent traction in 2016.

But just to reinforce that we are not going to stop in our mission to reduce costs and not forget where we were a number of years ago in terms of that cost structure. So we don't want to get back to that.

We're going to build on the momentum as we work to extend the life of our mines. You've heard Craig and Gord both talk about that, just some excellent achievements. And we're going to continue to further our operating efficiencies.

We expect a good volume of news flow this year from IAMGOLD with a number of catalysts. An initial resource, as Craig indicated for Saramacca -- and, by the way, we're going to head down to Saramacca the first week in September. I guess, Tim, September the 5th?


Tim Bradburn, IAMGOLD Corp. - VP, Legal, Corporate Secretary [8]




Steve Letwin, IAMGOLD Corp. - President, CEO [9]


We're going to take our Directors down there. I was just down at Saramacca about three weeks ago and you saw some of the drilling results. I'm really excited about that.

And we're going to see if Carol and Laura and Shae can organize on the back end of that tour with the Directors, an analyst tour and invite you down there.

It's a sight to behold, really is, 25 kilometres from the mill. And either I'm hearing things or I actually do hear it, I believe I do here our mill at Rosebel when I'm standing on the hill at Saramacca, which is a great thing when you think what that resource might ultimately be for our Company.

We're going to complete the pre-feasibility study for Cote by the end of the second quarter.

I'm going to be focusing a lot of my time on Sadiola and getting this over the goal line. Venkat and I have been having a lot of discussions with the government. [Umar], our Senior Vice President over in Africa, has just done an outstanding job for us.

We need to get this moving. I'm going to be very honest with you, I'm a bit frustrated about how long this takes. But I'm going to make it a top priority. I have made it a top priority.

It's extremely time consuming when you're dealing with any government. But we're going to really focus on this and get it over the goal line.

It's an important project for Mali. It's a very important project for the community at Sadiola. It's obviously a very important project for the shareholders, both of IAMGOLD and AngloGold Ashanti.

So you have my personal commitment I'm going to be focusing a lot of time to get that moving ahead, and I know Gord's doing the same.

We've got resource upgrades for Boto, Pitangui, and Diakha, as Craig talked about, coming forward. We have a potential initial resource estimate for Monster Lake in Eastern Borosi. And potential results from tapping into the soft rock saddle zones. I know a number of you were down at Rosebel. We've got saddles, which are between the pits at Rosebel in the highly prospected targets around Essakane, including Falagountou.

And it'd be nice to get that tour going for Essakane again. I know we ran into some time constraints for reporting. But again, if you get out to Essakane and you see eight kilometres from our mill, you see basically just under a million ounces of soft rock reserves, it's a very, very positive thing for Essakane going forward. Helps with our cost reduction, also helps with our extension of our life of mine.

And, of course, we've had a number of tours at Westwood. And Westwood continues to basically confirm our belief that this is a 20-year asset, lower cost. And with the ramp up this year, we are going to continue to reinforce our belief that this asset is going to be a very high-performing asset for the Company.

So that's a quick summary of the significant catalysts on our path to grow organically. I believe they're going to change IAMGOLD.

I continue to buy shares in this Company. And you'll note that once again this year I've taken all my bonus in shares. My goal is to be the largest independent shareholder of IAMGOLD, and I have now achieved that. And I'm very proud of that.

So we will continue to invest in the Company. I'm a big believer in that.

And when we look at our growth over the next few years and our lower cost structure, I'm very, very excited about what we're hoping to deliver for our shareholders.

So on that note, Shae?


Gordon Stothart, IAMGOLD Corp. - EVP, COO [10]




Carol Banducci, IAMGOLD Corp. - EVP, CFO [11]


A number of companies are reporting today. And at this point in time, if there are no questions, which is unusual, which is, I think, a function of our disclosure as well.

So if there are any questions following the call, by all means, please direct them to Laura and Shae, and we'll be happy to follow up.

And as Steve mentioned, we are planning to have a site visit to both Rosebel and Essakane, and if you do have an interest, again I'd ask you to reach out to Laura and Shae. Thank you.


Operator [12]


Pardon me. This is the operator. There are questions.


Carol Banducci, IAMGOLD Corp. - EVP, CFO [13]




Gordon Stothart, IAMGOLD Corp. - EVP, COO [14]


Yes, that's what I was --


Questions and Answers


Operator [1]


Okay. (Operator Instructions) David Haughton with CIBC World Markets.


David Haughton, CIBC World Markets - Analyst [2]


Thank you for the update. Just looking at the Westwood profile on page 20 of your release, quite the step change happening from 2018 through 2019.

Perhaps, Gord, you can just talk us through what your expectations are for the mining rate at Westwood, and perhaps a little bit about what's happening for that significant step change.


Gordon Stothart, IAMGOLD Corp. - EVP, COO [3]


Well, David, you're exactly right. I mean, this is what we talked to over a year ago that we wanted to do, and it was sort of driving us to pick up our development rates.

So last year, we milled, I believe in the neighborhood of about 330,000 tonnes. This year, next year, we are expecting to mill in the neighborhood of around 600,000 tonnes, give or take. And by 2019, we'll be able to step that up to 900,000 tonnes annually. And really what's driving that is just the development work.

So as we open up new zones and bring on new major blocks, it really allows us to drive step changes in the throughput.

The site is working on the new LOM, based on the expanded reserve announcement we just made. And we will expect to update that LOM sometime this year and maybe smooth it out a little bit. But we still expect fairly aggressive ramp up. And we do want to be into our nameplate range of 180,000 to 200,000 ounces a year by 2019.


David Haughton, CIBC World Markets - Analyst [4]


And as we're standing at the moment, Gord, are you seeing mining rates in the order of above 1,200 tonnes a day, getting closer to your run rate for the year of 1,600 tonnes a day?


Gordon Stothart, IAMGOLD Corp. - EVP, COO [5]


Oh, definitely. We're already there. The first two months are going very well.


David Haughton, CIBC World Markets - Analyst [6]


Okay. And I presume that looking at the costs that you've got there, both the cash cost and the all-in sustaining cost, that with that step change, you're going to just get more tonnes over the same fixed cost, and it's the fixed costs that's really driving those costs down as we're seeing it on a per ounce basis?


Gordon Stothart, IAMGOLD Corp. - EVP, COO [7]


That's exactly right, David.


David Haughton, CIBC World Markets - Analyst [8]


Okay. So that's looking pretty healthy.

And just also looking at the Rosebel profile, it looks slightly different to what we had before. My interpretation of it is that you're going to encounter a better grade in 2018, and drop down in 2019, then back up in 2020.

Is that a correct interpretation of the chart?


Gordon Stothart, IAMGOLD Corp. - EVP, COO [9]


So the profiles you're looking at are the same ones we've had for the past year. We are looking to update them, they're just not complete yet.

And Rosebel is a really particular case, one because on the existing ore bodies, we're in the midst of a fairly significant review of all of the block models. They didn't make it into the yearend reserves.

And in fact, when you look at our yearend reserves for Rosebel, all the did was apply a depletion equation from the yearend of 2015, because the new models weren't ready yet.

So we've put a bit of a fire under the team down in Rosebel, and they're working to get those new models in place for incorporation into our [long-planning] exercise in the first half of the year.

So what you're looking at doesn't include any assumptions around any additional material from the saddle zones, from any of the pickup from the new modeling that we're hoping to see, or anything from Saramacca.

So that grade profile, you're interpreting it correctly. But I can pretty clearly say that one's going to be superseded by something that I feel is going to be quite superior to what you're looking at, as we go through sort of this year and next and really understand what we have at Saramacca in the saddle zones and really start to apply the new thinking around the existing block models.


David Haughton, CIBC World Markets - Analyst [10]


All right. Look forward to seeing that. Just jumping back to Westwood, if I may, looking at your reserve and resource statement. Reserve at Westwood, 8.8 grams. Resource is around about the 11 through 13 kind of gram level.

I presume that the resource number does not include dilution is that -- ?


Gordon Stothart, IAMGOLD Corp. - EVP, COO [11]




David Haughton, CIBC World Markets - Analyst [12]


Okay. And what kind of dilution factor should we be thinking about to moderate the grades that we're seeing in the resource?


Gordon Stothart, IAMGOLD Corp. - EVP, COO [13]


So for this year, we're still applying the same dilution factors that we applied previously, which is around 65% on all zones.

Our dilution experience through 2016 was better than that. And, in fact, part of the reason we processed less tonnes is because we had less dilution than expected. However, we're still working on a lot of primary zones, initial stokes in new panels and so forth.

So we want to stay on the conservative side with our dilution estimate until we get some more empirical data in front of us.

The one change, and part of what's contributing to the pickup in grade, is in prior years we'd included dilution at zero grade. After some pretty extensive analysis, we're now applying a grade, and it depends on what areas you're in, of between 0.5 and 0.7 to dilution material, which is contributing as well to the change you see year over year in our reserve grade estimates, although, obviously, with a bigger reserve, it's incorporating some new areas as well.


David Haughton, CIBC World Markets - Analyst [14]


All right. Thank you, Gord. I appreciate it. It's a bit of an effort when you're struggling with the flu.


Gordon Stothart, IAMGOLD Corp. - EVP, COO [15]


I'll get through it.


Operator [16]


Steve Parsons with National Bank Financial.


Steve Parsons, National Bank Financial - Analyst [17]


Couple questions on Rosebel, please. With the transition to hard rock this year, 70% from 26% in Q4, how do you see that transition pulling out? Is that sort of back end of the year transition or is it sort of gradual throughout the year?


Gordon Stothart, IAMGOLD Corp. - EVP, COO [18]


It's not really back-end loaded. We're already picked up so far year to date. We're not quite at that full rate yet. But, yes, no, it's coming on right at the start.

We're using the new secondary crushing circuit is running quite well. We're actually, during February here, doing some calibration surveys within the grinding circuit.

We made so many changes to the circuit over the past while, we need to recalibrate our grinding models, our grinding simulation models. So that requires us to do some survey work around the plant, and we're doing that right now. But we are looking at much higher hard rock for all quarters.


Steve Parsons, National Bank Financial - Analyst [19]


Right. Have you had any days or months where you've run at 70% before?


Gordon Stothart, IAMGOLD Corp. - EVP, COO [20]


Yes, we've run at 100% before. In fact, that's one of the things we're going for the grinding surveys is running at 100% hard rock. And again, it sort of depends how much of the harder transition is included in the (technical difficulty).


Steve Parsons, National Bank Financial - Analyst [21]


Got it. Okay. And then also on Rosebel on the reserve and maybe resource, I thought we might see some of the soft rock saddles zones start to show up in the resource at year end.

Was that the case? Did you see any of them show up? And did any of these saddle zones show up in the mine plan for 2017?


Gordon Stothart, IAMGOLD Corp. - EVP, COO [22]


The answer is no and no. I was twisting arms pretty hard to get some of those in, but, for a number of reasons, they didn't get there.

We've asked them to work very hard on a priority basis and cycle through those saddles so that we can start to get some results out and we can get a better understanding of what the implications are, both for the reserve and for the mine planning.

But the base answer is there's no saddles included in the year-end reserve and there is no saddles included in our projections for production going forward yet.


Steve Letwin, IAMGOLD Corp. - President, CEO [23]


Steve, it's Steve Letwin here. I had the same expectation as you, and we lost one of our top guys there for family reasons had to leave, and it delayed us.

So your expectation is appropriate. And what was disappointing for 2016, will be even better for 2017, because Gord has been cracking the whip a bit to get that into 2017.

So our expectation is that not only will we announce Saramacca, but we will get the saddle zones into the reserve estimates and resource estimates that we're going to put forward.

So it was an appropriate expectation. We just, unfortunately, had a guy leave us for family reasons which caused a delay.


Steve Parsons, National Bank Financial - Analyst [24]


Okay. Thanks for the update on that. Maybe over to Saramacca., and perhaps this is a question for Craig.

Prior to drilling, I think you guys had pegged the resource potential at between 0.5 and 1.4 million ounces for Saramacca. Based on the drilling you've done to date, the twinning and the diamond drill holes, how do you feel about that range? Are you sticking to it or do you think there's maybe upside bias to that range?


Craig MacDougall, IAMGOLD Corp. - SVP, Exploration [25]


Look, I think we've been very encouraged with the results. They have exceeded our expectations.

As you can appreciate, the ranges were developed from the historical database, which is somewhat limited, and we have a lot more information now.

So I would expect we're going to start heading towards the upside part of that range. The real issue will be the proportion of oxide versus hard rock. So that's something that we don't have a feel for just yet. But I would think we're heading to the upper side of that range.


Steve Parsons, National Bank Financial - Analyst [26]


Perfect. Thanks for the update.


Operator [27]


Steven Butler with GMP Securities.


Steven Butler, GMP Securities - Analyst [28]


Craig, on Saramacca, just to go back there. How much more drilling did you do in the 2016 campaign than historical results, because the assays, at least on me diamond drill hole results where you drilled them, came through like gangbusters. So you're pointing towards maybe the high end of the range, and I respect that.

But how much more drilling's been done there? And why did you think you got better that you were expecting? In other words, why the apparent positive reconciliation on grade drilling?


Craig MacDougall, IAMGOLD Corp. - SVP, Exploration [29]


Okay. So I mean, the historical database we were playing with was roughly comprised of about 50 historical drill holes, fairly widely spaced, not necessarily systematic through the deposit and, obviously, we weren't there at the time of the exploration program. So can't really judge really what the merits were.

So we acquired the property with 50 drill holes. We completed 67 diamond holes and 37 RC holes. 17 of the holes that we drilled of our diamond holes were designed to twin previous holes, where we knew from the database they had intersected mineralization.

And the reason we did that was that we wanted to be able to confirm the veracity of the historical database. So if we could duplicate those intersections in terms of thickness and grade and everything looked pretty straightforward, then that would allow us to incorporate the entire 50 holes for use in our work going forward. And that was very successful.

So once we had confirmed that mineralization with our first 17 holes, it then allowed us to optimize our drilling pattern around that historical database and really start to step out and selectively target some of these zones that were in the previous drilling.

So when you're able to do that, hopefully, if you have a good mineralized system, you're going to start to see some good hits and with lots of pickup in grade, and that's exactly what we were able to do. And we've expanded the footprint with a lot more data points now through the mineralized system.


Steven Butler, GMP Securities - Analyst [30]


Great. And those twinned holes, did they largely reconcile closely?


Craig MacDougall, IAMGOLD Corp. - SVP, Exploration [31]


Yes. I mean, I would, in just rough numbers, I would have to say that 90% of the holes that we drilled duplicated very well. The intersections that we were anticipating, in some cases we did get some additional intersections that the previous drilling didn't pick up and in other cases we didn't duplicate.

But by and large, well over 90% did come through and the zones were where we thought they were.

And then, as we stepped away from those with our own drilling, we started to expand that zone and get some very surprising results in terms of some of the grade of intersection.

And we have extended the mineralization at depth. I mean, we've gone below the oxide profile just to make sure we know what those structures look like, and we've been very happy with that as well.


Steven Butler, GMP Securities - Analyst [32]


And, Gord, are you going to crack the whip, continue to crack the whip enough to get saddle zone into a Q3 resource or reserve statement or [does] that wait until probably year end most likely?


Gordon Stothart, IAMGOLD Corp. - EVP, COO [33]


It's our goal to try and, obviously, depending on the timing that we see from the Saramacca and when we can come out with those results, it would be nice to be able to wrap in an update for Rosebel itself.

First priority is to get the new models on the existing zones wrapped up and get those into our LOM plan.

And what we've asked for them to do on the saddle zones is pick some higher priority ones and take those through the resource as quickly as possible.

So I guess the answer is, I expect we'll get some of them in by midyear. I don't expect we'll get all of them in by midyear. I would certainly like to see all of them in by the end of the year, but that's the objective.


Steven Butler, GMP Securities - Analyst [34]


And Craig or Gord, Gord, if you still have a voice, Falagountou, was Falagountou the driving force for the reserve increase at Essakane or was it some other factor.


Gordon Stothart, IAMGOLD Corp. - EVP, COO [35]


It contributed somewhat, but, really, the driving force there was some redesign within the Essakane main zone pit and some new intercepts at Essakane main zone.


Steven Butler, GMP Securities - Analyst [36]


Okay. And you have about a million ounces, is that right, of soft ore now at Essakane?


Gordon Stothart, IAMGOLD Corp. - EVP, COO [37]


At Falagountou, between [Fala] West and Fala East, we're not quite there, but we'd like to be able to get there. We'll see where we can get to.


Steven Butler, GMP Securities - Analyst [38]


At Fala, okay. Yes. Sorry one last thing. Just on the time it's taken on Sadiola, Steve, and key -- maybe key areas where you have a bone of contention, or maybe not quite -- that was the wrong word. But with the Malian authorities, what are your key items you're trying to hammer on in terms of negotiating the fiscal terms?


Steve Letwin, IAMGOLD Corp. - President, CEO [39]


Well, basically we have a Minister of Finance who was Minister of Mines and had agreed to all the terms, who is now not agreeing to all the terms.

So we have a very attractive economic model for both the government and for us and Anglo, particularly attractive for the government when you look at their current situation.

I'm very confident we can get them over the goal line. The Minister of Finance is a very bright guy. He's a very good businessman. I think, and with his change in roles, he's trying to do the best he can for the people of Mali, given the situation they're in.

I know they get a lot of pressure from the IMF to try and extract more from the mining, which, to me, is a bit of an enigma because the mining business really gives them so much more than they would normally get from a GDP standpoint.

So I think it's just a time issue, and we will get there. But I'd rather not get into the nitty-gritty detail on what we agree on and what we don't agree on.

The bottom line here is this is a hell of an attractive project for everybody and nobody wins at all if we have to close that mine. It would be absolutely ridiculous if we did that. He knows that. We know that, and it's just getting him over the goal line.

And I'm confident that with some tweaking and compromising, we can do that. But we're going to agree to anything that jeopardizes what we believe to be appropriate returns for our shareholders.

So you've been in this business as long, probably longer than I have. I was in the resource side, oil and gas side, worked in Colombia, Ecuador. I worked all over the world and even in Ontario. It's hard to work with some of these governments, what I would call in an efficient manner. And it just takes time.

And the good news is Anglo and us are of one mind. We're walking together on this for the first time. And we're going to work really hard with the government here in the next month or two to bring them on side.


Steven Butler, GMP Securities - Analyst [40]


Okay. Thanks for that, Steve. Thank you.


Operator [41]


This concludes the time allocated for questions on today's call. I will now hand the call back over to Ms. Young for closing remarks.


Laura Young, IAMGOLD Corp. - Director, IR [42]


Okay. Thank you very much for calling in today. And if you have any further questions, please contact Shae or myself, and we'd be happy to help you. Thank you.


Operator [43]


This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.