Iamgold Earnings Call Insights: Taxes, Forecasting

On Monday, Iamgold Corp (NYSE:IAG) reported its first quarter earnings and discussed the following topics in its earnings conference call. Here’s what executives shared.


Anita Soni – Credit Suisse: I just wanted to ask Carol a question with respect to the tax charge that’s coming or the tax payment that’s coming in Q2, you said $90 million to $110 million, is that cash taxes or?

Carol T. Banducci – EVP and CFO: That cash taxes. That’s right and if you go back and take a look at cash taxes for the last year, it’s going to be less at a comparable level.


David Haughton – BMO Nesbitt Burns Investment: Thank you for the update Steve. A question perhaps for Gord, the throughput at Essakane was really quite good this quarter, so just a function of the softer ore going through?

P. Gordon Stothart – EVP and COO: On the quarter, we treated around 75% soft ore and about 25% trans rock or transition material. It’s more attributable to a number of debottlenecking exercises we undertook that sort of in the second half of last year to juice production. The second half of this year we are going to move into more hard rock and the production will back off a little bit, obviously that’s why we’re building the expansion, but yes it was a good quarter.

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David Haughton – BMO Nesbitt Burns Investment: So it looked like about 29,000 tonnes a day, so we should be thinking, once you get to the harder material back in this year closer to the 25,000 tonnes a day sort of thing?

P. Gordon Stothart – EVP and COO: Yeah, that’s not a bad number in the second half.

David Haughton – BMO Nesbitt Burns Investment: Just putting there a little bit of lower throughput in the second quarter to reflect the weather?

P. Gordon Stothart – EVP and COO: No, we’re well-equipped this year in terms of our water supply, our current estimates have us with water at least into the middle of July. Last year was a late year and first rainfall came on June 26. Normally from our historical records, we’d expect rainy season to start between mid-May and mid-June, so we’re not looking to curtail production at all in the second quarter and the results are looking pretty good. We do have a maintenance shutdown planned in June for a couple of days, but other than that everything looks good. We actually had 8 millimetres of rain David, just before I arrived, so it looks like — it looks good.

David Haughton – BMO Nesbitt Burns Investment: Just switching over to Rosebel if I may, quite a gap between the 1,000 production. I noticed in your commentary that a lot of that has been caught up. Should we think that the inventory build will just be flushed out in the second quarter? Is that a good way to think about it?

P. Gordon Stothart – EVP and COO: Yeah. In fact it already has been flushed out. We had a shipment early in April from Rosebel.

David Haughton – BMO Nesbitt Burns Investment: Just his thinking about Niobec at the moment, I noted that Steve had mentioned the $45 per kilo kind of price received its short of where we were in the first quarter. What gives you the confidence of that being the level going forward?

P. Gordon Stothart – EVP and COO: The projection for $45 in our expansion plans comes, I mean obviously from our internal studies, our internal marketing agents, but we’ve also had a third-party review, I believe it’s on our website. Last year somebody came in and looked at the market and validated that. Internally, we actually feel a little bit stronger than that but when we looked at what we are going to use for the pre-feasibility study, feasibility study, $45 we’re comfortable with. The last three years or the last two years anyway we’ve seen the prices trend up about $2 a year. So we’re still pretty comfortable at $45 from ’16 on.

Stephen J. J. Letwin – President and CEO: David, if you look at $9 for the niobium improving fuel efficiency in a vehicle by 5% and you look at the focus that I think you are going to see going forward on reducing carbon emissions, when you look at the fact that in the world you are going to have $3 trillion of infrastructure replacement and pipeline alone and coming from that world the amount of pipe that’s going to be – have to be replaced in North America alone and the demand for stronger steel to prevent leaks is going to increase. We think $45 could even be conservative because the demand for this product is significant when you have to add so very little to do so very much with the end product of stainless steel.

David Haughton – BMO Nesbitt Burns Investment: A lot of your sales are contracted, how are you going in getting a feel from the market of increasing your contracted sales post expansion?

Carol T. Banducci – EVP and CFO: David, its Carol. Generally, we set our prices on a quarterly basis and as sometimes with certain customers it’s semi-annual. So we’re not locking in prices beyond a year and in fact if you take a look, as Steve mentioned and Gord, the market dynamics continue to be very strong in the first quarter. Steel production was down slightly because of the demand for this product consumption, I will speak to Europe, was up 8% so the dynamics again is three producers, the margins they get generated by the steel producers because of the characteristics it adds and it delivers to its customers make it very attractive for you to use niobium and that’s why we are so confident about where we see the trend for this product.