IAMGOLD Corp

TSX:IMG

Earnings Call Transcript 2024-Q1

[Operator]

Thank you for standing by. This is the conference operator. Welcome to the IAMGOLD First Quarter 2024 Operating and Financial Results Conference Call and Webcast. [Operator Instructions] At this time, I would like to turn the conference over to Graeme Jennings, VP, Investor Relations for IAMGOLD. Please go ahead, Mr. Jennings.

[Graeme Jennings, executive]

Thank you, operator, and welcome, everyone, to our first quarter 2024 operating and financial results conference call. Joining me today on the call are Renaud Adams, President and Chief Executive Officer; Maarten Theunissen, Chief Financial Officer; Bruno Lemelin, Chief Operating Officer; and Tim Bradburn, Senior Vice President, General Counsel and Corporate Secretary. We are joining today from IAMGOLD's Toronto office, which is located on Treaty 13 territory on the traditional lands of many nations, including the Mississaugas of the Credit, the Anishnabeg, Chippewa, Haudenosaunee, and the Wendat peoples. 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 in the 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'll now turn the call over to our President and CEO, Renaud Adams.

[Renaud Adams, executive]

Thank you, Graeme, and good morning, everyone, and thank you for joining us. It is an exciting time at IAMGOLD. As a company, we're gaining momentum towards our goal of becoming a leading mid-tier and modern gold producer.The highlight of the quarter was, of course, the first pour at Cote Gold. With this achievement, we brought online a key cornerstone producing asset in our third producing mine alongside of operations at Essakane and Westwood. At steady run rate, Cote Gold will be among the largest gold mines in Canada and is critical for the repositioning of IAMGOLD, as Cote provides a higher production base, lower cost profile and a longer life of cash flow generation and growth opportunity in Canada. We believe that Cote will be a model of modern mining done right here in Canada and for many decades to go.To the whole Cote Gold team and partner, I really want to express my congratulations and appreciation for a job well done, but a special thought to our resilient project and commissioning teams. This expands us well to our operating teams in Quebec and Burkina Faso, as IAMGOLD started this year with strong performance at both Essakane and Westwood, positioning the company well on the path towards our guidance targets for the year.Looking ahead, our primary target is on the safe and steady ramp-up of Cote. As we will discuss in a moment, the ramp-up has been progressing well with all key equipment improving itself to be able to operate near nameplate, and this compared to our target of exiting the year at 90% plus of nameplate. We remain very confident to achieve commercial production in the third quarter of this year.On the finance side, we will continue to prioritize the options to return to our 70% interest in Cote, as we believe that the value of this project is well above the current market sentiment and repurchase price. Longer term, we have a clear road map for IAMGOLD with strong free cash flow generation and will -- which will be essential to ultimately improve our balance sheet and deliver value to our shareholders.With that, we will now dive into the operating and financial results and highlights for the quarter. Starting with health and safety, IAMGOLD is committed to our guiding principle of Zero Harm in every aspect of our business, putting the health and safety of the company's employee, contractor and consultant first. IAMGOLD started the year with a good performance on safety with the days away, restricted, transferred, duty rate of 0.53 and a total recordable injury rate of 0.61, tracking below where we were last year.I want to take a moment to congratulate Essakane, which once again achieved a remarkable performance in health and safety with a total recoverable injury days away, restricted, transferred, duty rate of 0.06. This is among the best health and safety performance in our industry and is a testament to the professionalism and commitment to a culture of safety of our people in Burkina Faso.On production, IAMGOLD started the year with strong attributable production of 151,000 ounces, including a solid production of 150,000 ounces from Essakane and Westwood, which position us well for our annual guidance of 430,000 ounces to 490,000 ounces on an attributable basis and excluding Cote production.As we will get into a moment, the first quarter production results were driven by Essakane being able to operate without disruptions and benefiting from positive grade reconciliations, coupled with the continued ramp-up at Westwood, as the mine benefits from the rehabilitation of the underground and opening of new mining areas.The strong production and sales volume translated to a decline in our cash costs and all-in sustaining costs in the first quarter, excluding Cote to $1,053 an ounce and $1,493 an ounce, respectively, proving -- providing a major benefit to operating cash flow.With that, I will pass the call over to our CFO, to walk us through our financial results and position. Maarten?

[Marthinus Theunissen, executive]

Thank you, Renaud, and good morning. In terms of our financial position, IAMGOLD ended the quarter with cash and cash equivalents of $291.2 million, and our credit facility remains undrawn, equating to total liquidity of approximately $603.8 million. We note that within cash and cash equivalents, $76.4 million was held by Cote Gold and the $99.7 million was held by Essakane. The Cote Gold unincorporated joint venture agreement requires its joint venture partners to fund in advance 2 months of future expenditures and cash calls are made at the beginning of each month, resulting in a mounting cash balance approximating the following month's expenditure.Essakane normally pays the dividend in the second half of the year and the size of the dividend is dependent on the cash held by Essakane in Burkina Faso and its working capital requirements, which is impacted by the ability of the company to receive value added tax, or VAT reimbursements from the government of Burkina Faso or to sell the VAT receivable to local banks. We are seeing an emerging risk with the ability to recoup these receivables is declined and the company has not received VAT reimbursements in Q 2023 -- Q4 2023 or Q1 2024. Further, the company still expects the remaining Bambouk transactions related to the sales of assets in Guinea in Mali to close this year for gross proceeds of approximately $84.4 million.Subsequent to quarter end, we announced another amendment to our gold prepay commitments that included a new forward sale arrangement and a partial amendment to one of our existing gold prepay arrangements. The arrangements will effectively increase cash flow by more than $73.6 million during the second quarter of 2024 at current gold prices. The forward sale arrangement is for 31,250 ounces and includes a gold collar, where the company will also participate in the gold price from $2,100 per ounce up to $2,925 per ounce at the time of delivery. Therefore, ensuring gold price participation in the second quarter of 2025 should the gold price remain above $2,100 per ounce.These arrangements are similar to the amendments we made previously to transfer the cash impact of the gold delivery obligations out of the first quarter this year into the first quarter of next year. These gold forward arrangements allowed for improved financial flexibility for the company at a reasonable cost, while also benefiting from favorable forward gold prices, particularly in the first half of the year, while we are commissioning and ramping up Cote.Looking at our Q1 financials, revenue from continuing operations totaled $338.9 million from sales of 163,000 ounces on a 100% basis at a record average realized price of $2,077 per ounce. The realized price includes the impact of the gold prepay arrangement that was delivered into during Q1 2024.The strong operating results, coupled with the high gold price translated to an adjusted EBITDA of $152.5 million compared to $110.6 million in the fourth quarter of 2023 and $83 million in the first quarter of 2023.Adjusted earnings per share was $0.11 for the quarter compared to $0.06 in the fourth quarter of 2023 and $0.05 in the first quarter of 2023.Looking at mine site free cash flow, which is calculated as cash flow from mine site operating activities, less capital expenditures from the operating mine sites, Westwood returned its first quarter of positive mine site free cash flow since the restart of operations of $10.5 million. At Essakane, we note mine site free cash flow in the first quarter of $35.7 million compared to $18.4 million during the first quarter of 2023. The Q1 2024 mine site free cash is net of working capital payments of $58.9 million, including the impact of the increase in the VAT receivables referred to earlier of $11.1 million. It also includes $13.4 million in tax payments, which are normally paid in the first quarter.And with that, I'll pass back the call to Renaud. Thank you, Renaud.

[Renaud Adams, executive]

Thank you, Maarten. We will now walk through our operating performance at Essakane and Westwood before we dive into Cote. At Essakane, the mine reported attributable gold production 118,000 ounces in the first quarter, which was the highest quarter of productions on record, a high watermark in the nearly 14 years of operation. This was made possible by our mining operation being able to perform to plan in the quarter without disruptions in fuel supplies to the site, compound by higher-than-expected grades. Mining activities totaled 11.3 million tons in the quarter with 3.5 million tons of ore -- the rates, which are generally in line with our updated mine plan.Head grades increased from the prior quarter to 1.52 grams a ton due to the continued positive reconciliation upgrade from the reserve model, as we mine deeper into Phase 5. This positive grade reconciliation in the deeper portions of Essakane was seen previously in Phase 5 -- 4 of the pit, and the influence has continued in the early weeks of this quarter. However, we are seeing head grades decline in line with the life of mine, as volumes from Phase 6 and 7 increasing from increased proportion of stockpile.On a cost basis, Essakane reported first quarter cash cost of $1,002 per ounce and an all-in sustaining cost of $1,312 per ounce, an improvement from the prior quarter on the higher productions and sales volume. While on a unit basis, costs came down, our total cost spending in the quarter was in line with plans and reflects the increase in Essakane cost profile over the last 12 months to 18 months due to the updated royalty rates implemented at the end of the last year, coupled with sustained higher realized prices for inputs such as landed fuel prices, transportation and chem costs, as a result of the security situation in country.With a strong start of the year, Essakane is positioned well to achieve our guidance target of 330,000 ounces to 370,000 ounces of attributable production at a cash cost of between $1,300 an ounce and $1,400 an ounce and an all-in sustaining cost of $1,675 an ounce to $1,800 an ounce. We are continuing to examine opportunities to extend the mine life of Essakane, which is currently defined out to the end of 2028, with drill campaigns ongoing within the fence to ensure the safety of our teams.Turning to Westwood. The first quarter was a major milestone for the operation, as the mine not only returned the highest quarter of gold production since the mine restarted in 2021, but also produced, as Maarten noted, positive mine free cash flow of $10.5 million.On operations, Westwood produced 32,000 ounces, as the ramp-up of underground operations provided increased volumes of higher grade underground material for the mill, supplemented with material from the satellite open pit of Grand Duc and Fayolle. Our mine from underground totaled 83,000 tons in the first quarter, contributing to an average head grade from underground or of 8.8 grams a ton, which is the highest grade from underground in over 5 years, as rehabilitation efforts have allowed access to previously closed higher grade underground stopes.The mill throughput in the first quarter was 249,000 tons at an average blended head grade of 4.27 grams a ton and a 94% recovery. The mill availability averaged 85% in the quarter, which is roughly about 5% below, where we would like to be, as the plant team managed unplanned maintenance requirement on the SAG mill liners, though the plans are in place to further improve availability through an ongoing maintenance program.The cost profile for Westwood continues to see improvements with the increase in production. Cash costs averaged $1,236 an ounce and all-in sustaining cost averaged $1,836 an ounce in the first quarter, which was also a record since the restart of operations and down nearly 30% from the high watermark from last year.Looking ahead, there is no change to our guidance to the year -- for the year with Westwood expected to produce between 100,000 ounces and 120,000 ounces at a cash cost of $1,250 an ounce to $1,375 an ounce and an ASIC between $1,800 ASIC and $2,000 an ounce.Work has begun on the planned updated technical report, and the mine plan for Westwood, which will be announced later this year and will provide details of the results of the last 2.5 years of mine optimization efforts and strategic assessment of the Westwood complex. So congratulations to the Westwood team for a very special and successful turnaround story, an example of resilience and team efforts, and I'm sure more to come.Turning to Cote Gold, and with the big smile on everyone's face, this is the slide and images we have all been long waiting for. We poured the first gold at the end of the first quarter, but the image refers to a subsequent pour.Mining activity totaled 7.6 million tons in the first quarter, including 1.9 million tons of ore. Combined with the 4.9 million tons of previously stockpiled to start the year, 6.7 million tons of material was available at the end of the quarter for the ramp-up of the processing plant. As we mine through the early benches in the pit, we are saying that the great control model supports our current reserve model. Additionally, as mines rates ramp up, we are getting visibility on our actual mining costs, which were $3.32 per ton in the first quarter with further cost improvement expected through the year, an exceptional performance at this very early stage of mining operation.The mining team continues to improve efficiencies of the mining operation with new daily records achieved in April in excess of 160,000 tons hauled per day. The mining rate improvements include the commissioning of 2 additional autonomous haul trucks, the deployment of the second hydraulic electric shovel travel and the commencement of double-side loading in the pit.On processing, the first quarter was primarily focused on commissioning and buildup of the in-circuit inventory, which allow the company to complete its first pour. Subsequent to this, the ramp-up of the plant has been progressing well. Throughout March and April, the crushing and milling circuits utilization rates progressively increased, and the mill throughput capacity is in line with our expectations at this stage of the ramp-up.The primary and secondary crushers have been operated up to 1,900 tons per hour and our HPGR and ball mill operated up to 1,600 tons per hour during April. In other words, together representing over 95% of nameplate capacity, meaning the primary components of the processing plant have demonstrated their ability to operate near nameplate capacity. This means it is all about increasing mill availability and stability in order to ramp up the processing circuit utilization rates towards a goal of achieving commercial production in the third quarter of this year. Recoveries in the plant has been steadily improving. And I will note, this is prior to start-up of the gravity circuit, which will be commissioned later this quarter.I will now hand the call back to Maarten for quick discussions on project expenditures.

[Marthinus Theunissen, executive]

Thank you, Renaud. Before we get into the capital numbers, I want to remind everyone that under the latest IFRS guidelines, revenue and cost of sales are to be recognized from the first sale. We shipped and sold our first gold bars in April, and so we will be recognizing revenue and costs in the second quarter. Further, it is worth reinforcing that IAMGOLD will continue to fund operating and capital expenditures through cash calls at a 60.3% interest and will receive 60.3% of the gold production. Now with that said, as we discuss project expenditures, please note that all the costs being quoted are on a 100% basis.Project and capital expenditures in the first quarter totaled $196.3 million and includes the incurred project expenditures up to first gold of $151.7 million. which also includes the cost of consumables and supplies inventory purchased during the first quarter of 2024. This brings the total project expenditures incurred for Cote Gold since the commencement of construction to first gold to $2.935 billion of the planned $2.965 billion.In addition to the project expenditures, approximately $27 million of operating expenditures were capitalized related to milling, surface cost, administration and indirect costs that will be incurred during commissioning, ramp up and up to commercial production. Further, there were capital expenditures related to ongoing operations of $17.6 million, including $8.1 million of capitalized stripping, $8 million for tailings and earthworks and other projects of $1.5 million. The total and timing of these expenditures are in line with our forecast and guidance for the year.If we look at the bottom of the [ project ] 2024 outlook slide, we can see the construction to capital of first gold is finalized at $151.7 million. Accordingly, we have revised our project constructed related capital outlook post first gold upwards to $67 million and the total construction capital for the year, therefore, remains guided at $219 million. The construction post first gold is for the additional ancillary infrastructure and earthworks projects that were outlined in the project scope, but not required for first gold.The other [indiscernible] estimates for project capital expenditures related to operations and capitalized waste stripping are also unchanged. I would also like to note that the Cote Gold capital expenditures related to operations this year are expected to be higher than the life of mine average, as the mine extends to the full tailings dam footprint to support the life of mine. The classification of capital expenditures, as either sustaining or expansion prior to commercial reduction will be dependent on the timing of achieving production and the nature of expenditure.Back to you, Renaud.

[Renaud Adams, executive]

Thank you, Maarten. So our goal this year is very clear. We need to ramp up the plant availability and utilization to reach commercial production in the third quarter of this year, which will position us very well to achieve our goal of exiting the year at a throughput rate of approximately 90% of nameplate. Based on this time line, our production guidance for this year at Cote Gold, on a 100% basis is unchanged at between 220,000 an ounce and 290,000 an ounce for the year. We continue to estimate that -- as Cote achieved 90% throughput exiting the year, cash costs at that time are expected to be in the range of approximately $700 per ounce to $800 per ounce sold, and all-in sustaining cost of $1,100 per ounce to $1,200 per ounce sold.This brings us to the slide, we'd always like to finish out. and this is what the future is for Cote. As a reminder, the Cote deposit has estimated a mineral reserve on a 100% basis of 7.6 million ounces. These reserves are constrained by permitted tailings capacity and form the basis of the current economics of the project.But on a measured and indicated resource basis, the Cote [ depth ] is currently estimated at a total of 12.1 million ounces. The adjacent Gosselin pit has an additional 4.4 million ounces of measured and indicated resources and nearly 3 million ounces of inferred. So bringing the project to a total of 16.5 million ounces of measured and indicated and an additional 4 million ounces of inferred. The size of Cote and Gosselin together puts the project in a very exclusive category among the large scales producing Canadian assets.We are continuing to advance our understanding of the -- and the impact of Gosselin and potential of the project. At year end 2023, we updated the Gosselin mineral reserve and resources estimate with an additional 35,000 meters of drilling, which was drilled over the 2 years prior. This year itself, we are conducting a 35,000 meters of drill program targeting the central zone between the pit shelf, where we see indication of [ continuations ] of mineralization and hydrothermal breccias, as well as some deeper holes to understand the continuity of mineralizations below the current picture.We expect to have the result of this program later in the year, which will greatly inform our understanding of how to incorporate Gosselin into a potential future [ mine ].. As I said before, Cote Gold today is a project, but we believe strongly that this is the start of the mining camp and will provide a strong foundation for IAMGOLD for many years to come. So thank you all, and I look forward to an exciting year ahead.With that, I would like to pass the call back to the operator for the Q&A. Operator?

[Operator]

[Operator Instructions] First question comes from Anita Soni with CIBC World Markets.

[Anita Soni, analyst]

Firstly, on Essakane, you mentioned that the grades are declining to life of mine. Like how did that decline look over the course of the year?

[Renaud Adams, executive]

Yes. If you look at -- thanks, Anita, for your questions. And if you look at the [ 43-101 ], which reflects well the first year 2024 at the time. So we originally estimated the grade at about [ 1.1 ]. Of course, in the Q1, we massively needed on the Phase 5. The reason why we're saying that we see a potentially decreasing, remember, as well back in 2023, as we entered the Phase 5.So we also have like some negative reconciliation at the start, eventually [indiscernible]. So same behavior as Phase 4. So we will be entering a Phase 6 and 7, as we advance in the year. So there is no reason at the time -- this time to believe that we will not return to the more. But we will obviously benefit the Q1 ahead. And as we said so far in Q2, we've seen the same behavior from the Phase 5. But eventually, we'll have to transition to 6 and 7.

[Anita Soni, analyst]

And then also a good turnaround at Westwood after some challenges over the last decade. Moving to Cote. Can I -- I was wondering what is your mill utilization rates? Like where are they right now? And obviously, you're trying to get to 60% of throughput for the commercial production in Q3. But I just wanted to get an idea of like how many days on, days off? Or is the plant like operating like daily, consistently? And then it's just a matter of small starts and stops or is there a big shutdown still at this stage?

[Renaud Adams, executive]

Yes. The -- thanks for your questions, and we're not discussing on a week-by-week basis, but we will definitely remain. But as we said, it's not about the throughput. I think we're already extremely well positioned. We just came out of 5 days -- a 5-day shutdown, where we had the opportunity to improve some aspects that we've seen. We know that the ore is abrasive. So we needed some adjustment around chutes, elbows, and lining and stuff. So this is done.So we feel now that from let's call, where we are now to the Q3, we'll move this up over the 60% average throughput. So it's tough to say, where we are now because we've been systematic and disciplined to correct as we go. So when we see some bottlenecks, or we remove and we go. So we don't really judge well. We're very comfortable that from now to as we exit Q2 enter Q3, that we will be achieving our objective.

[Anita Soni, analyst]

And both like 100% of the flotation tanks are working now, right? I remember like I think it's about 6 months, 9 months ago, there was...

[Renaud Adams, executive]

Yes. Correct. This is -- but the first gold was achieved with the first half of the circuit and post first gold, we started the second half.

[Anita Soni, analyst]

And then these questions are for Maarten. The CapEx number, I'm a little confused on. I think the -- if you look in the financial statements, it says around [ $153 ] million and you just mentioned that Cote alone was about $151 million. So is this still the Sumitomo financing coming through? Or like what's the differential there?

[Marthinus Theunissen, executive]

Yes. Anita, this we, of course, really like our partnership deal with Sumitomo, but it does make the accounting a little bit complicated. So for IFRS, we have to recognize everything on our balance sheet [ at 70% ]. So that means the additions that you see in the financial statements is stated at [ 70% ] as well. So what we've tried to do to help with that is if you look at our segmented note, we then provide a breakdown of the capital in there that excludes the right-of-use assets, as well as the borrowing cost. And then -- so we show a total for the company of $188 million. And then in our non-GAAP reconciliation at the back of the MD&A, we take that $188 million convert it to 60% for Cote and show the Cote number there. So hopefully, that's helpful. But we are, of course, more than happy to jump on a call with you to go through the details [ later ] with more time.

[Anita Soni, analyst]

I will take you up on that. You might need to clear an hour. And then secondly, that's the -- also on the -- all the collars and the hedges or the prepay and how that's working. So like I [ let's ] take more than this call to answer the question. But I guess, I was looking at it, like is all of it coming through in -- like where -- some of it come through in the interest and non-financial like the interest and derivative instruments and some of it comes through in the revenue line. Is that how it works?

[Marthinus Theunissen, executive]

So for revenue on the gold prepays, we still have to deliver 75,000 ounces this year into the collar structure. Those ounces, the revenue will basically be recognized at $2,100 if the gold price remains above $2,100 because we hit the top of that collar. And then for the answers this year that we have to deliver on the fixed rate, which would be about 12,500 ounces, that could be recognized at a price of $1,753. Then for next year, in Q1, we deliver another 75,000 ounces over Q1 and Q2. There's 31,000 ounces that we will get revenue of [ $2,135 ]. That's for the fixed portion in Q1.And then in Q2, the same 31,000 ounces, we will participate between $2,100 and $2,925. If the gold price is in between those ranges, we will effectively recognize revenue at spot. So maybe this is also another one for us to go through in details, but it comes down to for the ones on the collars, revenues recognized at spot and for the fixed term or the forward ones, we would be recognizing revenue at the forward rates.

[Anita Soni, analyst]

And I definitely would want to talk to you offline on that. That's it for my questions.

[Operator]

The next question comes from Mike Parkin with National Bank.

[Michael Parkin, analyst]

Congrats on the strong quarter. Nice to hear everything at Cote is going well. Just following up on your earlier comments around getting money out of Burkina Faso. Can you give us a sense of the cash reported, how much of that is in-country versus in your accounts in, I assume, Canada?

[Renaud Adams, executive]

Thanks. And first of all, Mike, nice to have you back. So Maarten, can you answer that?

[Marthinus Theunissen, executive]

So in our disclosures, if we break out our cash balance between Essakane, Cote and corporate, the cash balance for Essakane, which was $99 million or around $100 million for Q1. That is all in Burkina Faso.

[Michael Parkin, analyst]

Thanks, Renaud. It's good to be back. That's it for me.

[Operator]

[Operator Instructions] The next question comes from Tanya Jakusconek with Scotiabank.

[Tanya Jakusconek, analyst]

Thank you so much for taking my questions and congrats on the good operating quarter, and that Cote is on track. A couple of questions I have. I'm going to start with just understanding, I mean, that realized gold price, Maarten, was amazing given the fact that it includes the prepays in there. It looks like you've realized $2,091 without the prepay, was just -- I mean, I have to believe it was just like $20 an ounce higher than the quarterly average, just the way you sold your gold through the quarter? Or was there anything else I should be aware of?

[Marthinus Theunissen, executive]

There's nothing else that you need to be aware of. We try to sell our gold equally over the month, every month. It doesn't get delivered and shipped equally, but we've got some sales strategies just to try to hit the peaks, but no instruments or anything, just trying to sell -- meet the market and sometimes we're lucky and we hit the fees. But that's -- all that it was.

[Tanya Jakusconek, analyst]

Yes. It's just the first company I saw that I cover that had such a delta to the gold price given your [ prepaid ]. Second question I have is just following up on Anita's questions on the profile for this year. So just wanted to confirm that it looks like Westwood is evenly distributed during the year and Essakane would be Q1, Q2 stronger and then lower with the grades in Q3, Q4. Would that be a safe assumption to model?

[Marthinus Theunissen, executive]

Definitely for the Westwood and because we -- Phase 5 has been behaving the way it is and it's kind of continuing into [ Q2 ], I would also agree with your assessment. Originally, of course, it was more some sort of a flat type of same H1, H2 Essakane, but we're very pleased with the positive reconciliation. So you could assume a higher, stronger H1 over H2, as you said.

[Tanya Jakusconek, analyst]

So that's very helpful. And then, if I can move over to Cote and just to finish off some of Anita's questions on that. Just -- can you give us an idea how April and May have gone like in some of the stats like you -- the -- so much more on the processing side. You mentioned that the recovery is 81%. We have the gravity circuit coming in, in Q2. So that should move your recoveries up. So can you just walk me through how April, May is and sort of where you see this recovery moving at once we get the gravity circuit in?

[Marthinus Theunissen, executive]

I guess, what I can say and that I really like the approach of the team is to kind of understanding the next milestones ahead of time. So when we enter the pre-commissioning, we obviously are positioning ourselves to be able to do this like in a relatively short, so all the prep behind. So about the same thing and in April and May.So yes, there was about stabilization, but it was also to understand at the very early stage if the capacity was installed was there. And so, I think April, May was really about understanding a few bottlenecks, which we've done a lot of corrections in the last shutdown, but it was really at a very early stage to understand that the next milestones of the 90% nameplate was achievable.So we -- that was largely the focus of April and May. So now we know that it's about now to ramp up the availability and stability until we reach the commercial. But that's what I could say has been the focus in April and May. At the same time of ramping up and improving the mining operation, which is now basically very close to the plan of sustaining a full capacity mill.

[Tanya Jakusconek, analyst]

Okay. And so, the mining is now ramping up with the mill, the sustainability there. What about this recovery once we get this circuit in, the gravity, 81% is, I think, what you have right now?

[Marthinus Theunissen, executive]

No. Yes, Renaud.

[Renaud Adams, executive]

Yes. Hello, Tanya, so, so far, we're seeing like a very good result in terms of recovery despite that the gravity circuit is not fully commissioned yet. That's right away at target, if not a bottom. But again, be careful because we're still ramping up. So the [ resident tanks ] and our tank is greater than when we're going to be processing at full capacity. But so far, we're pretty pleased with what we're seeing.

[Tanya Jakusconek, analyst]

So what should I be thinking about when you go commercial this recovery?

[Renaud Adams, executive]

Still [ at 91 ].

[Tanya Jakusconek, analyst]

Sorry about [ 81].

[Marthinus Theunissen, executive]

[ 91 ].

[Tanya Jakusconek, analyst]

[ 91 ], sorry. Okay. And then maybe over to Maarten, again, my final question is just a reminder. When I look at the prices for gold today and I look at your ability, let's assume everything also is positively, and in terms of buying back your option back from Sumitomo, would it be fair to assume that looking at current spot prices, assuming everything goes well, that, that would be achievable in the first half of '25. Is that what you have in your model?

[Marthinus Theunissen, executive]

So Tanya, there's a lot of different factors that, of course, come into that to say that we can generate enough free cash flow to buy back in the first half of 2025 going through all the inputs and outputs and risk, it's hard to say with 100% confidence. But for us, we continue to see that the value of what we're paying in for the underlying asset to make sense for us to buy it back, and we continue to look at all the options that's available to us to realize that value.

[Tanya Jakusconek, analyst]

Okay. Well, all right. I mean, I assume you have a model that would show some -- if you assume everything goes well, there's a time line, and I understand things come and go [ and this ] Burkina Faso money in-country, but assuming you can't access it, would it be fair to have it in first half? Or should I be thinking later in the year?

[Marthinus Theunissen, executive]

You're talking about later in the year...

[Tanya Jakusconek, analyst]

2025.

[Marthinus Theunissen, executive]

2025. Yes, I mean there's 2 ways to look at it. Of course, I mean, it depends on the gold price you're using and so forth. We will see this summer how it goes. Yes. I mean, yes, I guess, if you assume that, yes, at some point in time, the cash flow of the company will be sufficient, of course, to prepay it. It's just a matter of time line -- timing.

[Operator]

This concludes the question-and-answer session. I would like to turn the conference back over to Graeme Jennings for any closing remarks. Please go ahead.

[Graeme Jennings, executive]

Thank you very much, operator, and thank you, everyone, for joining us this morning. As always, if you have any further questions, please reach out Renaud or myself. Thank you all. Be safe, and have a great day.

[Operator]

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