IAMGOLD - Earnings Call - Q2 2025
August 8, 2025
Transcript
Speaker 4
Thank you for standing by. This is the conference operator. Welcome to the IAMGOLD Second Quarter 2025 Operating and Financial Results Conference Call and Webcast. As a reminder, all participants are in a listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star, then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star, then zero. At this time, I would like to turn the conference over to Graeme Jennings, VP Investor Relations for IAMGOLD. Please go ahead, Mr. Jennings.
Speaker 1
Thank you, Operator, and welcome everyone to our conference call today. Joining us on the call are Renaud Adams, President, Chief Executive Officer, Marthinus Theunissen, Chief Financial Officer, Bruno Lemelin, Chief Operating Officer, Annie Tourigny-Lagacé, Chief Legal and Strategy Officer, and Doreena Quinn, Chief People Officer. We're calling today from IAMGOLD's Toronto office, which is located on Treaty Thirteen Territory, on the traditional lands of many nations, including the Mississaugas of the Credit, the Anishinabek, the Chippewa, Haudenosaunee, and the Wendat people. At IAMGOLD, we believe respecting and upholding Indigenous rights is founded upon relationships that foster trust, transparency, and mutual respect. Please note that our remarks on this call will include forward-looking statements and refer to non-IFRS measures.
We encourage you to refer to the cautionary statements and disclosures on non-IFRS measures, including the presentation and the reconciliations of these measures in our most recent MD&A, each under the heading Non-GAAP Financial Measures. With respect to the technical information to be discussed, please refer to the information in the presentation under the heading Qualified Person and Technical Information. The slides referenced on this call can be viewed on our website. I will now turn the call over to our President and CEO, Renaud Adams.
Speaker 4
Thank you, Graeme, and good morning, everyone, and thank you for joining us to walk you through our quarterly results, highlighting our operations, financial performance, and strategic priorities. Overall, at the halfway point of 2025, IAMGOLD has made major advancements as a leading mature Canadian gold producer. This starts with a highlight of the quarter, which was the successful ramp-up of Côté Gold in the endplate capacity ahead of plan. The second quarter was also significant as it was a full quarter where the mine achieved overall operating milestones, including throughput in grade, in line with consensus estimates, and with gold recovery and reconciliation of mill reserves in line with plans as well. As we continue to stabilize Côté, we are confident that the ability to operate the mine with consistency and predictability and stability quarter over quarter will be rewarded by the market.
Further, with another quarter behind us, we get closer to unlocking the expansion potential of Côté, where we outlined to the market a larger Côté in scale and scope, targeting ounces from both the Côté and Gosselin zone at the conclusion of our 2025 drilling program of 20 million ounces plus of measured and indicated resources. As we will discuss today, work on this plan is in motion, and we will be announcing an updated Côté life of mine in the second half next year. Operationally, IAMGOLD is on track to achieve its production guidance target of 735,000 to 820,000 ounces of gold this year, though at a revised consolidated all-in sustaining cost range of between $1,830 and $1,930 per ounce, as we will discuss more on the revision in a moment.
Financially, we have now concluded our gold prepayment arrangement with 75,000 ounces delivered this year in an environment where the gold price averaged $3,100 an ounce. These deliveries translate to approximately $200 million of value that went towards what can be considered a form of debt servicing this year. With this behind us, IAMGOLD is now the 800,000 and 1,000,000 ounces plus gold producer with full exposure to gold price and significant cash flow generation. Beyond Côté, IAMGOLD offers a robust organic growth portfolio with our own backyard in Canada, with the rapid growth of the Nelligan and Monster Lake assets in Quebec, which combined have nearly 9 million ounces of gold resources. Turning to the quarter, and we are now on slide five.
Above all, the safety of our people remains our top priority, and I'm proud to report that our total recordable injury frequency rate continues to trend below prior year levels, reflecting our commitment to a culture of safety and continuous improvement. In addition, in May, we released our 2024 sustainability report, which marked the eighth year in a row we have documented and disclosed our achievement and dedication to responsible mining practices. Looking at operation on an attributable basis, IAMGOLD produced 173,000 ounces of gold in the second quarter, bringing the year-to-date production to 334,000 ounces of gold.
The quarterly performance was led by strong results at Côté Gold, which produced 96,000 ounces on a 100% basis, followed by improved quarter over quarter production at Westwood with 29,000 ounces, and at Essakane at 77,000 ounces of attributable production as the mine continues to work through the lower grades early in phase seven. On a cost basis, IAMGOLD reported the Q2 cash cost of $1,556 per ounce and an all-in sustaining cost of $2,041 an ounce. Costs were higher in the first half of the year due to a combination of higher royalties, foreign currency movement, and a higher unit cost as we continue to work on stabilizing Côté at maximum throughputs and grade mill, as we will discuss next. Looking at our guidance, total attributable production in the first half of the year was 334,000 ounces.
The company expects attributable production in the second half of the year to be much stronger, ensuring that we are on track to achieve the full-year production guidance of 735,000 to 820,000 ounces of gold. The stronger second half is due to continued improvement at the Côté Gold Mine during its full first year of operation, coupled with an increase in expected grades at both Essakane and Westwood based on respective mining sequences. Our Q3 performance to date at our assets reinforced our confidence in our production guidance for the year. On Essakane, the attributable guidance was estimated at the beginning of the year, assuming IAMGOLD's 90% ownership interest in the project. With the change in ownership to now 85% at the end of the second quarter, the company expects Essakane's attributable production to fall towards the lower end of the original guidance range.
Looking at cost, we have revised our cost guidance upwards, with cash costs now expected to be in the range of $1,375 to $1,475 an ounce, so approximately $150 per ounce higher, and an all-in sustaining cost of $1,830 to $1,930 per ounce. The increase in cash costs is a combination of external and operational factors, including higher royalty being paid as gold prices rise at Côté and Essakane. At Essakane, the government increased the royalty structure when gold prices are above $3,000 an ounce. Further, the recent strength in the euro has necessitated a revision of its impact to our costs in the country. At Côté, we are seeing temporary higher costs at the mine and mill associated with the ramp-up in stabilization activities.
Processing costs at the mine are expected to fall following the installation of the additional secondary crusher in the fourth quarter, and the mining costs are expected to improve as the team continues to transition to bulk mining and allow for more direct feed mine to mill with less rehandling. In the short term, while rehandling is adding costs, it also allows, until the mine is set for it, to boost the mine grade of 0.95 grams per ton in Q2 to a 1.1 grams per ton mill, adding approximately $0.25 to $0.30 per ton mine, or roughly $1 per ton mill, but also unlocking additional value of nearly $15 per ton mill by uplifting the grade mill. Same idea with the extra milling costs.
We have accelerated the endplate in part because we found a way to temporarily maximize throughput by incorporating additional refeed systems using contractors for aggregate plants. Moving ahead, the endplates by five to six months allow for maximizing ton mill over just waiting for the second crusher to support. This idea of allowing for extra milling costs brings also the opportunity to monetize additional tons already mined till the end of the year by building finite core stockpiles that could be used during planned longer shutdown, in particular around the installation of the second cone crusher. As we move forward, we will eliminate that practice and replace by in-house crushing and refeed system once the second crusher is commissioned, allowing for extra capacity.
On the capital side at Côté, we have increased our sustaining capital estimate by $20 million this year for projects that will further improve the availability of the plant and working conditions. This includes a more robust dust management system, as well as a finite refeed system to support the mill during scheduled downtime of the crushing plant. These adjustments at Côté are a byproduct of where we are in the life cycle of the project. This is the first full year of operation, and in Q2, we achieved the first full months of endplate production. Extending back, the ramp-up of Côté has gone extremely well, and the project is delivering and displaying its potential. With that, I will pass the call over to our CFO to walk us through our financial results and position. Marthinus?
Speaker 7
Thank you, Renaud, and good morning, everyone. In terms of our financial position, at the end of the second quarter, IAMGOLD is at $223.8 million in cash and cash equivalents and net debt of $1 billion. The company has $250 million drawn on the credit facility and approximately $391.7 million remains available, resulting in liquidity at the end of June of approximately $660.5 million. We note that within our cash and cash equivalents, $91.4 million was held in the corporate treasury, $56.4 million representing IAMGOLD's 70% share was held by the Côté Gold UJB, and $85.1 million was held by Essakane in Burkina Faso. IAMGOLD's interest in Essakane was adjusted from 90% to 85% effective June 20, 2025, as per the updated Burkina Faso Mining Code adopted in August 2024.
Following the change in ownership, Essakane declared a significant dividend of approximately $855 million, representing all of the undistributed profits of Essakane up to and including the 2024 profits. The company's 85% portion of the dividend, net of withholding taxes, is approximately $680 million. Essakane will make dividend payments during the third quarter based on the cash flows generated during the period, and the remaining balance of the dividend will be converted into a shareholder account between Essakane and IAMGOLD. The shareholder account structure works like an intercompany loan and allows for the company's portion of the dividend to be repaid at any time of the year using excess cash generated by Essakane, therefore improving the efficiency of cash repatriation and aligning the interests of both IAMGOLD and the government of Burkina Faso, being more regular cash flow movements from Essakane.
The government of Burkina Faso received its portion of the dividend, $128.3 million, in June of 2025. Looking at our debt obligation, IAMGOLD is in a good position to execute on our strategy to responsibly deliver the balance sheet. Over the last four to five years, in order to fund the construction and completion of Côté, IAMGOLD put in place numerous financial vehicles with the goal to avoid permanent encumbrances or transactions that would permanently decrease IAMGOLD's ownership interest in Côté. These included the gold prepayment arrangements and the second lien term loan. In the second quarter, we concluded delivering into the gold prepayment arrangements. Year to date, the company delivered 75,000 ounces into the arrangements, resulting in the third revenue of $154 million being recognized.
The third revenue represents the cash IAMGOLD received when entering into these arrangements, adjusted for the impact of any gold aging structures included in the arrangements. If those ounces were delivered at today's gold prices, cash would have been higher by approximately $200 to $225 million, illustrating the potential increase in our future cash flows as we will now sell all production at market prices. We are now prioritizing repaying the highest cost debt, which is our second lien term loan, and it has a funding rate of more than 12%. Repaying the term loan will also reduce our average debt carrying costs. We're proud to announce that subsequent to quarter end, the company makes the first step on its deleveraging strategy and repays 10%, or $40 million, of the term loan, reducing the principal balance to $360 million.
Looking further ahead for IAMGOLD, we are continuously analyzing what the proper capital structure is for an organization of this size with our expected cash flow generation. Ultimately, we look forward to discussing the potential of returning value to our shareholders, whether through share buybacks or dividends, once we have addressed our capital structure. Looking at our Q2 financial results, revenues from continuing operations totaled $580.9 million from sales of 182,000 ounces on a 100% basis and a record average realized price of $3,182 per ounce, which includes the impact of the gold prepayment arrangement in comparison to the spot price of $3,302 per ounce. Cost of sale, excluding depreciation, was $287.1 million, and adjusted EBITDA was a record $276.4 million compared to $191 million in the second quarter of 2024. At the bottom line, adjusted earnings per share in the second quarter was $0.13.
Looking at the cash flow waterfall at the bottom of slide eight, which is explaining the cash flow movements for the first half of the year, we can see the year-to-date combined impact of the gold prepayment delivery and the dividend payment to the government of Burkina Faso following Essakane's large dividend declaration. On a mine-site free cash flow basis, IAMGOLD generated $140.5 million in the second quarter, including $92.9 million from Côté and $36.6 million at Westwood. Essakane reported $10 million in mine-site free cash flow in the second quarter, which is important to highlight as impacted by approximately $47.5 million for the timing of cash tax payments related to the final assessment on 2024 earnings, as well as an increase in working capital and the VAT receivable. I would also like to note that subsequent to quarter end, Essakane received a $27 million VAT refund, reducing the receivable.
With that, I will pass the call to Bruno, our Chief Operating Officer. Bruno.
Speaker 2
Thank you, Marthin. Starting with Côté Gold, as Renaud noted in the opening remarks, this was an important quarter for Côté as the mine transitions from ramp-up to optimization and stability. We are very proud of our progress at the mine. Sixteen months ago, on March 31, Côté poured its first gold bar, followed by commercial production four months later, and ultimately achieving an endplate throughput of 36,000 tonnes per day on June 23, well before the 20-month estimate at project initiation. Looking at the quarter, Côté produced 96,000 ounces on a 100% basis. Mining activity totaled 11.8 million tonnes in the quarter, with 3.2 million ore tonnes mined equating to a strip ratio of 2.7.
The average grade mined increased from the prior quarter to 0.95 grams per tonne, in line with the updated mining plan, as in-pit activities continue to broaden the mining area within the pit to support the transition to bulk mining. On a cost basis, we saw unit mining costs of $3.88 per tonne due to the higher than expected diesel consumption associated with additional rehandling, as well as contractor costs, consumable parts related to an increase in drilling, loading, and blasting activities. Mining costs are expected to reduce in the second half of the year, closer to the $3.50 per tonne level. This will be achieved by targeting an objective of 1 million tonnes a week and the reduction of rehandling through an increased proportion of direct feed material, coupled with improved blasting and pit management.
Turning to processing, mill throughput totaled 2.9 million tonnes, with successive increases in throughput each month during the quarter. Head grades of 1.1 grams per tonne were in line with plan, with feed material comprised of a combination of direct feed ore and stockpiles. Mill recoveries averaged 93% in the quarter, beyond plan, as we believe we are seeing the benefits of the microfracturing created by the HPGR. Reconciliation between the reserve models, grade and control models, mill feed, and production continues to be in line with expected tolerances, with Q2 ex-pit production seeing 7% positive reconciliation to both reserve tonnes and grades. Milling unit costs saw quarter over quarter improvement to $6.94 per tonne milled, though they remain elevated from our target of about $12 per tonne.
Unit costs are impacted by the supplementary crushing and coarse ore refit activities, which have performed well to provide additional capacity during maintenance windows, but come at an increased cost. The supplementary crushing is temporary, and we expect unit costs to decline following the installation of the additional cone crusher in the fourth quarter. Looking ahead, we remain confident in our Côté Gold production guidance of 360,000 to 400,000 gold ounces on a 100% basis, which is essentially a doubling of production from last year. The primary focus continues to be the stabilization of the processing plant to operate at or above the designed capacity of 36,000 tonnes per day. On costs, as Renaud highlighted, cost guidance has been revised.
Cash costs are now expected to be in the range of $1,100 to $1,200 per ounce, so an all-in sustaining cost is now expected to be $1,600 to $1,700 per ounce. The cash cost increase is primarily associated with higher royalties due to the higher gold price equating to an increase of about $50 to $60 per ounce, coupled with the higher than planned costs to operate the temporary coarse ore refit crushing circuit and higher maintenance costs that contributed close to $150 per ounce over the course of the year. The all-in sustaining cost revision includes the additional $20 million, or $40 per ounce, for the additional non-recurring capital to improve overall plant habitability and operating conditions, including dust mitigation systems inside the facilities.
We are looking forward to seeing the impact of the installation of the second cone crusher in Q4, which will provide further capacity and flexibility in the dry side of the plant in support of the operation and potential future expansions. This leads us to what is the most exciting slide, the advancement of the Côté GasLine Super Pit scenario. Our drills are busy at work with over 32,000 meters completed on this 45,000-meter program. This program is prioritizing the resource conversion at GasLine to provide the foundation for an updated technical report that is expected to outline a significantly upsized reserve base, combining Côté and GasLine into a super pit. This report is expected to be released in the second half of next year.
As currently designed, Côté has the mining capacity to average an annual ore mining rate of 50,000 tonnes per day versus our current endplate processing rate of 36,000 tonnes per day. As part of the 2026 technical report, we will look to find the right balance between an increased processing rate with mining rates targeting the combined Côté GasLine super pit. It is interesting to note that the Côté deposit itself has over 400 million tonnes of measured and indicated material. If mined at a rate of 20 million tonnes of ore per year, or 50,000 tonnes per day, the Côté deposit itself would have a mine life of potentially 20 years prior to bringing GasLine into plan. This would allow for considerable flexibility for phase permitting and capital offsites. Altogether, there's a significant amount of value to continue to uncover at Côté.
Turning to Quebec, the second quarter at Westwood saw improvement from the prior quarter, with production of 29,000 ounces, as the mine operates through some lower grade stopes and conducts additional underground activities to set up the mine for a stronger second half. Underground mining totaled 98,000 tonnes, averaging nearly 1,100 tonnes per day, as volumes from the underground continue to increase compared to the prior year and previous quarters. Production drilling has continued to improve quarter over quarter, achieving 193 meters per day, a record since the mine restarted in 2021, building confidence that our underground mining methodologies and systems are proving to be effective. The Geologic Satellite Open Pit reported 315,000 tonnes mined, higher than the previous quarters, in line with the mining schedule. Mill throughput in the second quarter totaled 323,000 tonnes, at an average head grade of 3.07 grams per tonne.
The strong throughput was due to plant availability in the quarter of 96%, which was higher than the same prior year period of 89%. The mill achieved recoveries of 92% in the second quarter of 2025, in line with the same prior year period. Cash costs and all-in sustaining costs came in above our updated guidance ranges for the year, as production is expected to be second half weighted, with cash costs averaging $1,562 an ounce and all-in sustaining costs averaging $2,140 an ounce in the quarter. Looking ahead, we remain confident in Westwood's ability to meet our production guidance, with production of 125,000 to 140,000 gold ounces.
Underground mining rates are expected to be maintained at around 1,000 tonnes per day from multiple active mining zones, while grade is expected to increase in the second half of 2025, as the mining sequence transitions to higher grade zones during the period. As previously discussed, cost guidance has been revised, and cash costs are now expected to be in the range of $1,275 to $1,375 per ounce, with all-in sustaining costs to be between $1,800 to $1,900 per ounce. Unit costs were higher in the first half of the year due to higher mining and maintenance costs, combined with lower production from lower average grades relative to plan in the first half of the year. Unit costs are expected to decline in the second half of the year on higher production expectations.
Turning to Essakane, it was a challenging quarter as we worked through the lower grades of the upper benches of phase seven, while being impacted by higher costs on increased royalties, a stronger euro, increased maintenance and consumables costs, and a higher proportion of sweeping activities being expensed. Production on a 90% basis in Q2 totaled 77,000 ounces. Mining activity totaled 10.7 million tonnes, with ore tonnes mined of 2.2 million tonnes, equating to a strip ratio of 4:1. Mill throughput was 3.1 million tonnes at an average head grade of 0.93 grams per tonne, the grade decrease as the mining activities progressed through the upper benches of phase seven. Grades tend to reconcile slightly below the reserve model during the earlier stages of mining a new phase, and conversely to the positive as mining moved deeper into the phase.
As we saw in the first half of 2024, when we were mining the later stages of phase five, the transition to the higher grade benches in phase seven occurred later than forecast, with increases in grade materializing subsequent to quarter end. On a cost basis, Essakane reported cash costs of $1,855 per ounce and all-in sustaining costs of $2,224 per ounce in the quarter. Costs were higher in the quarter due to a lower proportion of capitalized waste in the period, higher maintenance activities, and an increase in consumable costs, including diesel and grinding media. Labor, contractor, and facility costs also increased due to the appreciation of the local currency, which is pegged to the euro.
Royalties accounted for $257 per ounce in the quarter, representing an increase of nearly $100 per ounce from the prior year period, primarily due to higher realized prices and a revision in royalty rates. Looking ahead, we estimate that Essakane will be on the lower end of the attributable production guidance target, ranging from 360,000 to 400,000 gold ounces. The guidance accounts for the revision of the company's interest in the projects to 85% from 95% to 90% previously. Our Essakane cost guidance has been revised, and cash costs are now expected to be in the range of $1,600 to $1,700 per ounce, so an all-in sustaining cost is now expected to be between $1,850 to $1,950 per ounce.
Costs at Essakane are higher than planned, primarily due to the increased royalty rate previously mentioned and the impact higher gold prices have on royalties, resulting in an increase of approximately $77 per ounce and the continued impact of a stronger euro on operating costs. While the costs of operation in the country have risen over the recent years, Essakane continues to be a world-class mine and is positioned to generate significant free cash flows moving forward. Finally, it is worth highlighting that work is ongoing at the second largest gold mining camp, the Nelligan and Monster Lake project in Chibougamau, Quebec. Year to date, we have completed over 12,000 meters of drilling at Nelligan, with an upsized drill program of 15,000 meters and 11,000 meters of drilling at Monster Lake. The Nelligan program prioritized the extension of the deposit at this.
Nelligan's mineral resources estimate was updated earlier this year, which saw indicated ounces increased to 3.1 million ounces, with an average grade of 0.95 grams per ton and an additional 5.2 million ounces in inferred at similar grades. We plan to have assay results from this program later in the year as we work to grow Nelligan, targeting over 10 million ounces, making it among the largest on the level gold project in Canada. With that, I will pass it back to Renaud. Renaud?
Speaker 4
Thank you, Bruno. Thank you all. There are no questions. We have to be exceptionally diligent at our operations to ensure cost management, containment, and management, particularly during a rising gold price environment, to ensure the margin expansion is protected. Looking beyond this, it is a very exciting time for IAMGOLD. We are now completely exposed to the gold price with the conclusion of our prepaids. We are expecting a strong second half of the year, and our Côté Gold project is performing very well, with significant value growth opportunity ahead. Thank you for your support. With that, I would like to pass the call back to the operator for the Q&A. Operator?
Speaker 5
Thank you. We will now begin the question and answer session. To join the question queue, you may press star, then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then two. Our first question comes from Anita Soni with CIBC World Markets. Please go ahead.
Speaker 0
Hi, good morning, Renaud and team. A couple of questions. Firstly, on the cost increase at Côté, could you give us an idea of what the, I think you mentioned that the stripping, the amount of material moved would be around 11 to 12 million tons per quarter for the back half of this year. Could you give a breakdown of what the strip ratio would be for those two quarters? I'm sorry if you've already said it. I've just gone to competing calls right now.
Speaker 4
On the strip ratio, we should be slightly below, I guess, the H1. The most important thing is when you look at the rehandling, it's not just rehandling that has to do with moving the grade mine to the mill. We talk a lot about the aggregate plan and the support from contractors. That's also encouraged some rehandling around this. All in all, yes, we had about over 2 million tons of total move above the total mine. This is all those movements. What I like about this, at least in the short term, is it does, as I said, bring some uplifting grade at the mill and so forth. Obviously, the benefits are set largely. In the long run, we talked largely about it. In the long run, we see more direct feed. We see bulk mining.
We see the ability to reduce on rehandling while continuing to separate at the source and the pit, the lower grade from there. Bruno, you have maybe more detail on the strip ratio.
Speaker 2
Good morning, Anita. We're going to have a stripping ratio closer to 2.5 in the second half, which is quite similar to what we had in H1. As Renaud mentioned, the rehandling is due to be reduced as we transition toward a direct ore feed strategy that will be helped, coupled with the installation of the secondary cone crusher or the second cone crusher. We expect a sharp decline in rehandling for that activity after the installation of the cone crusher.
Speaker 4
What I can add maybe to this is we have roughly 2 million tons of ore stockpiled, you know, what we call the NGO, which, as Bruno mentioned, by processing it, you know, we had the positive reconciliation on it. That's bringing what we call the project today pretty bang on. We're very, very pleased with that. Eventually, it's a strategy to continue to deplete, so you'll reach the point where you wouldn't have, you know, all those stockpiles to play with. The mine will continue to ramp up, reach a point where the excess ore tonnes in all lower grade will be stockpiled for the long run in the direct feed. This is really the strategy. We're not there yet, but we're advancing well and we're facing the fifth and so forth. It's a matter of time.
For the time being, the rehandling while adding costs actually adds quite a bit of revenue as well.
Speaker 0
Okay. A second question on the processing. I noticed you had a pretty good drop in the processing unit costs. How does that evolve with the two shutdowns? We've got a maintenance shutdown in Q3 and also the tie-in that we knew about in Q4. Do you expect the processing costs to go up temporarily, and then in 2026 could they be at the costs that you delivered in Q2 or lower?
Speaker 4
Not necessarily for the exact same reason you just mentioned, you know. That's the reason why we decided to maintain external support. We got some tie-in to do. Renaud can speak about that. There was quite a bit of work around the crushers as well and safety first and all that. We decided to maintain. That's the reason why we adjusted the $150, because you could argue that the rehandling, extra rehandling in the short term, all those extra milling costs, yes, some also rent and maintenance power as well, you know, to help. All that in the short term, which is kind of a $4 or $5, you know, on a combined basis. Basically explain the $150. We're going to maintain this in place, making sure we maximize the throughput once the second cone is installed, and that whole dynamic would change as we move forward.
Bruno, any additional comments?
Speaker 2
We have our annual shutdown in August, the 5V shutdown. We want to remain prudent. It's the first year of operation. There will be training. We're going to be doing it the safe way. After that, in Q4, with the installation of the cone crusher, we're trying to strategize as to not to interrupt the mill too much. There will be some interruption to make all the tie-ins and everything. All in all, we are very confident that we're going to be producing as expected within the production guidance, but we need some support to complete those two activities. The activity of installing the second cone crusher is an activity that will bring us to a position where we will see after that a decline in the milling cost and also in the mining cost because you will have a reduction in the rehandling.
Speaker 4
Maybe the last comment on this is I know we talked about cost and I know it's, you know, it's all about this industry to remain very disciplined and so forth. We see those additional costs kind of temporary, you know, and not really. What I like about our cost structure, even though we're just in the first year, if you look at our targeted, you know, cost for the mine, cost for the year, $3.50, target is eventually it's always a $3. We're not that far. You still have about a $0.30, you know, build-in and rehandling, which will reduce all your mining processes would continue to improve. You're not that far. You're like barely 10%, you know, of improvement down the road to get to your objective. We're going to get there. We're now mining at the 12 million tons run rate.
That's the 48 and continue to improve. We're very confident on the mining side. Reconciliation works well and so forth. On the milling side, if you could break down basically line by line, there is one line that really outspans, you know, the others, and it's the contractor use of external services to continue to support. That is one line. On its own, consider about $4 to $5. As we move forward, this is the line, you know, we target. It's not like all the cost structure is under control. Actually, it works extremely well. You know, all the variable, you know, consumption versus cost and price. If you would, you would say an ultimate target of $10.50, the difference in between is basically we achieve something like $14.80 in June as a milling cost. We're very, very confident. We take the hit in the short term.
We're going to continue to bring some additional value. Down the road, we're extremely confident in positioning the cost structure where we want.
Speaker 0
One final question, and apologies, Smith, I'll run this. My last question is with respect to the Goslin integrated study. I think I was expecting it nearer to the end of this year or early next year, and I think you mentioned by the end of 2026. Is that a change? I think you mentioned in the opening comments that Côté itself would sustain about 20 years of mine life. Is that just to give you more time to drill, or was I wrong about that? Yeah.
Speaker 4
No, let's separate reserve from resources, right? The plan is that we're going to extend our drilling to the end of the year, maybe even June, January. For the reserve resource estimate, don't expect anything more than a kind of a deflation exercise at year end. We're going to complete, maximize our drilling up to probably January, then update our new resource base within that. From that new resource base, which we're targeting late Q1 and maybe early Q2 for disclosure, this is a resource base where we're targeting to have after the completion of the drilling a 20 million ounces plus of measured indicated, which will form the base of the mine plan in a new reserve. All this, the final will be released in the later part of 2025, 2026. The resource will be earlier in the year.
Speaker 0
Okay. Thanks for clearing that up. That's it for my questions.
Speaker 4
Thank you.
Speaker 5
Our next question comes from Matthew Murphy with BMO. Please go ahead.
Hi. Just a few more questions on Côté Gold. How's the HPGR holding up at this point? Are there any risks? When you do this maintenance, is it a chance to take a look at how wear rates have been and so on, or do you already have a good grasp of how it's faring?
Speaker 4
I'm sure, Bruno, I see a little smile because Bruno and I, we definitely see this like on a very, very glass half full and not half empty. It is true, you know, that as we mentioned earlier in the other day, the abrasiveness and so forth may look like, you know, we're going to achieve maybe less hour on the tires, but the performance of the machine is extraordinary. To a point that when we feed the wet, we're capable to process and crush more with HPGR, and we can actually extract. We're still using external, you know, for longer, but the machine is operating very well.
Speaker 2
Yes. Matthew, this is Bruno. What we see is we see a very good performance from the tires, although they are wearing fast due to the abrasiveness of the ore. We see performance exceeding very often, like beyond 40,000 tons per day. It is not a matter of daily performance. I think the team is managing those roles better. They understand now the behaviors of the equipment. Right now, what we're doing is we're going to be ultimately replacing those tires with a new generation, which will have longer studs. We hope that is going to increase the longevity. It is more like a longevity issue than a performance issue. There will be, after that, another generation of tires with a larger diameter of the studs. All in all, we believe that the HPGR actually is a piece of equipment that is bringing a lot of value for Côté.
The team has been trained and educated as how to operate the HPGR. It works well. Right now, it's just like we need to change those tires more often than was first expected. The goal is to get there eventually.
Speaker 4
Having said that, two things that are important. With the addition of the second cone crusher, we should be in a position to restabilize even further, crushing a little finer, feeding the HPGR more in its sweet spot zone. We might see a reverse back to better life. We are not so concerned as long as it doesn't bring, you know, additional downtime. As we mentioned, this additional improvement on the refeed system will be allowing us, as we crush, to extract and refeed. This is all going to be done in-house. We are going to adjust to that, but the performance of the machine is extraordinary.
Okay, that's great. I'm just trying to understand some of these temporary costs. It sounds like a pretty abrupt drop-off in extra costs once you get the secondary additional crusher up and running. Are there any sort of temporary costs that you see persisting into 2026?
I like to say that it is absolutely possible that all in all, if you would compare like a SAG milling operation, let's say with an HPGR, you might have to face a little higher maintenance cost or replacement of your wear part. As we mentioned, this would probably be offset anyway by additional benefit brought to you. That is the only thing. On the wet side, there is absolutely nothing that I see remaining. Once you're positioned to extract and refeed internally from your coarse and your fine, you'll take care of that. We have a lot of additional extraordinary costs of repair, extraordinary repair, which we've seen super, like much, much, much better now in stabilizations and so forth. A lot will disappear, but it could be possible that $10 a ton, as normally for $10 million assets like that should be doing, could be a little shy.
Other than that, I'm pretty confident.
Okay, thank you.
Speaker 5
The next question comes from Stephen Green with TD Securities. Please go ahead.
Yeah, morning everybody. Just a quick one on the new agreement at Essakane, the new framework deal with the government. Obviously, better to have, good to have the better certainty on the cash flows. Is this something that you were seeking, or is this something the government was looking to do in terms of the new agreement?
Speaker 4
I'll pass it to Marthinus.
Speaker 7
Morning, Steve. If so, the government wants to have a maximum dividend, and IAMGOLD wants to make sure that we have an efficient structure to continue to be able to move excess cash out of the country. Basically, by declaring the full distributable profit from the past, it allowed us to pay that maximum dividend to the government, so we achieved their objective. Now what IAMGOLD has is, instead of writing and only being able to pay dividends during the third quarter every year, we have this intercompany loan structure where, as Essakane generates free cash flow in the next period, we can repay that loan using that free cash flow. Essakane paid a lot of taxes and other working capital amounts in Q2, but now going forward, we expect Essakane to continue to produce good cash flows, and that is then available for us.
We achieve both benefits, and we work well with the government on this.
Okay, thanks. Is there a stability agreement associated with this?
Speaker 2
The government is a 15% shareholder, so these things are done in board meetings as shareholders. It's not that there's a specific agreement, but there is, of course, agreements with Essakane for these types of instruments, and the government had to agree to these things as a shareholder.
Okay, great. I guess just larger picture, with this in place, with this new agreement in place, is there a potential for Essakane to be something that you would look to divest at some point, just given your focus on Canada and Côté now?
Speaker 4
I would say at this stage, all eyes are on the focus of cash flow and debt repayment. This is a very good cash flow. Strategically, as we move forward, we continue to believe that Essakane is capable, you know, to bring, you know, good ounces, cash flow, and an opportunity, you know, to further reward our shareholders down the road. This is what we see. I mean, we reached a point with 800,000 ounces attributable. We have expectations to pay down quite a bit of our debt this year and next year. We could be in a position where we're mid-next year. If you would have this excess cash available, you would also be in a possibility to increase a reward to shareholders. It is very strategic as we move forward, but we're extremely pleased now.
With this vehicle in place, we'll be capable to have more predictable and so forth. Down the road, we continue to monitor the situation.
Okay, that's helpful. Thanks a lot.
Speaker 5
Our next question comes from Tanya Jakusconek with Scotiabank. Please go ahead.
Speaker 6
Hi, good morning everybody. Thank you for taking my three questions. A lot of them have been answered, just some follow-ups on some of the ones that were asked. Just finishing off on Essakane, if I could. Renaud, how do you see the mine life there? We've got this higher gold price. I'm just thinking about as we get to year-end, your reserve pricing and resource pricing, and you know, how does Essakane look in terms of extending beyond that, the technical study that you filed?
Speaker 4
Let's start first by looking at a bit of the regulation attached to this. It is a bit of understanding, you know, that renewal of permit, you know, down the road could be, you know, for a period of five years. Let's see now we're focusing on looking beyond 2028 up to 2033. It looks extremely well. Like if we wanted to stay, you know, and develop and increase the life of mine and invest, you know, to extend, we're pretty confident we could easily bridge, you know, the first five years extension. Beyond that, this is not our focus at this stage.
If you increase the gold price a bit, if you look at Essakane as you would accept that it's more at $2,000, $2,100 an ounce, extended life of mine and so forth, there is a lot of additional value, and we're more than confident we could extend for an additional five beyond.
Speaker 6
Okay, so I should be thinking probably 2033 as sort of what you're targeting for.
Speaker 4
Yeah, so now we have a 43-101, so it would imply, of course, successful conversations with the government. We would not obviously be inclined to inject—inject capital is a big word because the mine is free cash flowing and would probably pay for its own investment. The point is before you engage in such a thing, you would like to have certainty on permit extension and so forth now in 2026, and then the expansion and so forth and refiling up. That's one scenario over the current scenario of 2028. Yes, definitely, definitely at this rising gold price, without using at all, maintaining a significant margin around the $2,000, $2,100 kind of reserve, you would extend quite easily.
Speaker 6
Okay. If I can just come back to Côté. As I'm thinking about getting these costs stabilized, you mentioned that you're $0.30 or thereabout, you know, $0.50 on the mining cost per ton to get to $3. As you get rid of this rehandling, when do you think that will be? Is that this year or is that into next year we're going to finish the rehandling? I'm trying to understand when I can get this money down to $3.
Speaker 4
Yeah. There would always be a little bit of rehandling from the moment you mine more than the milling, but not to the extent of what we see. A big portion of the rehandling as well takes place at the aggregate plan or around, you know, you move the ore quite a few times. That's one thing. It's more at 2026, Tania. I think we feel strong that we probably can exit on an average of about $350, and as we continue, I see about half of it is about rehandling and half of it is about just continuing improvement, volume, bigger denominator type of to bring us to the $300 eventually. It's more 2026 than 2023.
Speaker 6
Okay. On the processing side, once we get, we eliminate these contractors and these other, you know, get this more stabilized and get the secondary crusher, are we looking at this $12 a ton also like in the second half of next year? I'm just trying to understand when the mine ends up.
Speaker 4
I would like it earlier than that. I would like it earlier than that, but you know, we'll be commissioning. It should be straightforward commissioning of the second cone. At that point, you know, we would have already improved the in-house ore refeed system on the fine side, maybe a little bit of improvement on the feeding system on the coarse side. Yes, technically, you'll be in a position already in Q1 next year to see reductions of those costs, but it could go to the mid-year, you know, where you would stabilize there. In the long run, we would continue to improve beyond the $12, but I think it's a fair call by mid-next year, we should stabilize there.
Speaker 6
Okay. Hopefully mid-next year, mining and processing where you are or close to where you want to be, and we'll move forward from that. Would that be a fair comment?
Speaker 4
Yeah.
Speaker 6
Okay. That's helpful. Thank you. Finally, my final.
Speaker 4
Thank you for your question.
Speaker 6
My final question is on the, when we talked about improvement in the second half, I'm just trying to understand, you have the same number of tons mined, and for Essakane in Q3, Q4, and similar grades, but you have that maintenance downtime in August, and then you have the secondary crusher going in. Should I be thinking that the quarters would be evenly distributed? I just don't know how long you think a secondary crusher is going to take to install. Should I be thinking Q3, you know, a little bit better than Q4? I'm just trying to understand how Côté looks for the next quarter.
Speaker 4
Yeah, a little bit of the same, I guess. Like Bruno Lemelin mentioned, this quarter we had a planned shutdown, annual, then Q4 is a tie-in. We'll be capable to reduce those by using some. I would say Côté Gold is probably more a kind of look-alike, Q3, Q4, strong boat. And Essakane, you know, you're probably expecting Q4 a little higher.
Speaker 2
Yeah, the maintenance at Essakane in August, we have a 24-hour maintenance on line A and a 16-hour maintenance on line B, so the impact is going to be somehow marginal.
Speaker 6
Okay.
Speaker 2
We're still aiming at.
Speaker 6
Okay, that's fair enough. It's really Essakane that has a stronger Q4, and does Westwood as well with the grade. I'm just trying to see if that quarter over quarter improvement Q3, Q4 still stands.
Speaker 4
Yeah, no, you're absolutely right. You can take the view that Essakane and Westwood will have a stronger Q4 than Q3, and Côté should be about more or less the same.
Speaker 6
Is Westwood as well, more or less the same?
Speaker 4
No, Westwood, and just like Essakane, should have a stronger Q4 as you continue to improve on the grade.
Speaker 6
Okay. Quarter on quarter improvement still. That's very helpful.
Speaker 4
Yeah.
Speaker 6
Thank you, and good luck with getting all the.
Speaker 4
Thank you very much.
Speaker 6
The secondary crusher in as well for Côté Gold. That would be great to see.
Speaker 4
Working on it. Thank you, Tanya.
Speaker 5
The next question comes from Mohamed Siddiqui with National Bank Financial. Please go ahead.
Morning, Renaud and team, and thanks for taking my question. Maybe just on the second half expected at Essakane, just wanted to know if you could provide us with a little bit more color on some of the grades you're expecting out of phase seven, or should we also anticipate a little bit more increase of throughput in the second half versus the first year? Thank you.
Speaker 4
Renaud?
Speaker 2
Yes. Good morning, Mohamed. You know what? I used to be the GM at Essakane, and it's not necessarily the first time that we see lower grade material at the upper benches of a new phase, so it's not like it's not new. What we expect in the second half is that as we dig deeper, we're going to enjoy higher grade material. For subsequent to this quarter, this is what we see. We expect grades to pick up and to increase, and also the reconciliation to be positive after month end. Our plans are somewhat conservative, but we are anticipating still a stronger H2.
Speaker 4
Thanks, Bruno. The second question would just be on the tax paid and the increased guidance there. Could you give us maybe some color on the cadence that we can expect for Q3, Q4? I know it's impacted by the dividend declaration at Essakane, but should we expect Q3 to be higher versus Q4, or how should we look at that? Thank you.
Speaker 2
Good morning, Mohamed. In Q3, in July, we actually paid the withholding taxes on the dividend. That was just over $40 million. The rest of the tax payment should be equal over the rest of the quarter.
Speaker 4
Great. Thanks for that.
Speaker 2
Thank you, Marthinus.
Speaker 4
The rest of the answer.
Speaker 5
Thank you. This concludes the time allocated for questions on today's call. I will now hand the call back over to Graeme Jennings for closing remarks.
Thank you very much, Operator. Thank you to everyone for joining us this morning. As always, should you have any additional questions, please reach out to Renaud or myself. Thank you all. Be safe and have a great day.
This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.