IAMGOLD Corporation (NYSE:IAG) Q3 2022 Earnings Conference Call November 9, 2022 8:30 AM ET
Company Participants
Graeme Jennings – Vice President of Investor Relations & Corporate Communications
Maryse Bélanger – Chair of the Board & Interim President & Chief Executive Officer
Maarten Theunissen – Interim Chief Financial Officer
Conference Call Participants
Tanya Jakusconek – Scotiabank
Anita Soni – CIBC World Markets
Lawson Winder – Bank of America
Sean Wondrack – Deutsche Bank
Operator
Thank you for standing by. This is the conference operator. Welcome to the IAMGOLD Third Quarter 2022 Operating and Financial Results Conference Call and Webcast. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions]
I would now like to turn the conference over to Graeme Jennings, VP, Investor Relations and Corporate Communications for IAMGOLD. Please go ahead, Mr. Jennings.
Graeme Jennings
Thank you, operator, and welcome everyone to the IAMGOLD third quarter 2022 operating and financial results conference call. Today, joining me on the call are, Maryse Bélanger, Chair of the Board and Interim President and CEO; Maarten Theunissen, Interim Chief Financial Officer; Bruno Lemelin, Senior Vice President, Operations & Projects; Craig MacDougall, Executive Vice President, Growth; and Tim Bradburn, Senior Vice President, General Counsel and Corporate Secretary.
Our remarks on this call will include forward-looking statements. Please refer to the cautionary statement included in the presentation under the heading cautionary statement regarding forward-looking information, and be advised that the same cautionary language applies to our remarks during the call.
Non-GAAP measures will also be referenced on the call and we direct you to review the cautionary statement included in the presentation and the reconciliations of these measures included 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 Web site.
I will now turn the call over to our Chair and Interim President and CEO, Maryse Bélanger.
Maryse Bélanger
Thank you, Graeme. Good morning, everyone, and thank you for joining us today. IAMGOLD reported another strong quarter, building on operational and productivity initiatives put in place earlier in the year.
Based on the exceptional performance of our operating teams, we forecast that 2022 production will exceed the top end of our guidance. Consequently, we increased our production guidance for the year to between 650,000 and 705,000 ounces up from 570,000 to 640,000 ounces as previously guided.
On behalf of the Board and the Executive Team, we applaud the tireless efforts of the IAMGOLD team for their continued commitment to operating safely, responsibly and consistently.
The Côté Gold project saw a significant ramp-up in activity and is advancing well. It is following the schedule and cost rebase line provided to the market in the summer. Currently, Côté is over 64% complete and is nearing peak manpower capacity with approximately 1,500 workers at site. The site recently celebrated 6.9 million hours without a long-term injury, which is a testament to the safety commitment, skills and dedication of the Côté Gold team.
Financially, the company took a significant step in addressing its funding requirements for the Côté Gold project, with the announcement of the sale of our interest in the Rosebel Mine Complex to Zijin Mining for $360 million in cash and $40 million in assumed liability. The transaction also showed the strong support from our lenders as we provided consent to release Rosebel from their security package. The remaining funding alternatives are well advanced, and we expect to be able to provide further updates in the fourth quarter.
I am 100% confident in our ability to address the near-term challenges in order to — Côté on its updated schedule for initial production early in 2024. Our goal remains the same, to be a leading high-margin gold producer and we will better position IAMGOLD as a more resilient and agile company.
Now starting with health and safety. Our performance continues to improve and trend below our annual targets with a days away restricted and transferred with a rate of 0.27 million and total recordable injury rate of 0.72. Ensuring all of our employees go home safe after every shift is fundamental and core to our business. Every gold ounce produced has to be done safely.
In the third quarter, IAMGOLD reported 184,000 ounces of attributable production achieving the highest quarter of production in over 2.5 years. This performance was driven by record production at Essakane, steady performance from Rosebel and early signs of operating improvements at the Westwood.
The strong production results in sales volumes translated to cash cost of $1,126 per ounce sold and all-in sustaining cost of $1,559 per ounce sold. We have seen continued cost pressure from inflation, though days pressures stabilized during the third quarter of 2022 relative to the first half of the year.
Further, the impact of these cost pressures on mining and processing costs were partially mitigated through the production performance of our operations. Based on the strong operating performance this year, the company expects that annual production will exceed the top end of the previous guidance range of 570,000 – 640,000 ounces and is revising its guidance upward to between o 650,000 – 705,000 ounces. The primary driver of this increase is at Essakane, where we have increased guidance to 410,000 to 430,000 ounces, up from 360 to 385 ounces previously.
We also adjusted guidance on cost with all-in sustaining cost forecast to be below original expectations, coming in between $1,600 to $1,650 per ounce sold down from the original $16.50 to $16.90 per ounce.
As noted on the prior slide, we are seeing continued cost pressures from external market forces, which are shown to stabilize and have been partially mitigated through our operating performance.
Further, we continue to see benefits from our oil and foreign exchange hedge. For example, this year, we have an 80% hedge ratio on WTI in a 71% ratio on Brent contracts at price points between $38 and $65 per barrel. These hedges further insulated us from rising costs in the first nine months of the year.
I will now turn it over to Maarten to walk us through financial review.
Maarten Theunissen
Thank you, Maryse, and good morning. The following are some key highlights of our third quarter financial results. Gold revenues in the third quarter totaled $343 million, for a year-to-date total of just over $1 billion. The average realized sales price for gold for the quarter was $1,690 per ounce and that includes the impact of delivering 37,500 ounces at $1,500 per ounce under our 2019 prepay arrangement. We have 37,500 ounces remaining to be delivered in the fourth quarter under the prepay arrangement.
Adjusted EBITDA came in at $103 million for the quarter and exclude the $74 million after-tax non-cash impairment charge recognized to align the carrying value of the Rosebel cash generating unit with the sales price of the asset as well as the impact of unrealized non-hedged derivatives and foreign exchange losses, mainly due to the impact of the weakening Canadian dollar on the cash balances held in Canadian dollar.
Year-to-date adjusted EBITDA was $350.6 million. The company reported the third quarter net loss of $129.1 million and an adjusted net loss of $13.7 million or $0.03 per share, bringing the adjusted earnings year-to-date to $6.1 million or $0.01 per share. The adjustments mainly related to the non-cash impairment charge in Rosebel and the foreign exchange differences previously mentioned.
Operating cash flow changes in working capital was $108.8 million for the quarter and $336.6 million for the year-to-date. And mine site free cash flow increased to $59.2 million in the quarter and totaled $189.3 million for the year-to-date.
In terms of our financial position, we ended the quarter with approximately $536 million in cash and cash equivalents and short-term investments, and we had approximately $107 million available under our credit facility after drawing down $380 million year-to-date, and accounting for the letters of credit in the amount of $19.3 million issued under the facility as collateral for certain surety bonds issued as environmental indemnities.
Taken together, this translates to approximately $637 million in total liquidity at quarter end. Of note, $238 million of our cash and cash equivalents entailed by Côté and Essakane. As the Côté Gold JV requires its joint venture partners to fund in advance two months of future expenditures, and at Essakane, the company uses dividends and intercompany loans to repatriate funds from its operations and the timing of dividends is usually in the second and third quarter of every year. As a result, we typically hold between $200 million and $250 million of cash on our balance sheet for normal course business purposes.
At the end of the third quarter, the remaining attributable spend to complete the construction of the Côté Gold project is estimated to be between $1 billion and $1.1 billion. Based on information currently available and providing market conditions, we continue to expect that IAMGOLD will require additional liquidity in 2023, in addition to the proceeds expected to be received from the sale of Rosebel to complete the construction of the project.
The company is actively pursuing various alternatives to increase its liquidity and capital resources, including the options listed here. The funding alternatives are advancing well and we expect to be able to provide an update later in the fourth quarter. It is worth highlighting that the strategic review of our development and exploration assets in the Bambouk region of West Africa is active and ongoing, and we will provide further updates in due course.
Maryse Bélanger
Thank you, Maarten. Now on operations, and I will talk first about Essakane. Essakane achieved its highest quarter of production ever, reporting attributable gold production of 115,000 ounces. The mine continues to benefit from the higher grade mineralization in the lower portion of the Phase 4 pit with a higher amount of Côté Gold.
Mining activity of 12.6 million tonnes increased from the prior quarter as mining operations resumed at full capacity in September, thanks to an easing of supply chain challenges in country and abroad. Mill throughput increased in the third quarter to 3 million tonnes, benefiting from improved grind size and a higher plant availability at 93%. Head grades were reported at 1.5 grams per tonne and recoveries at 90%, remaining at the same level as seen in the second quarter.
As announced subsequent to quarter end, there were political developments in Burkina Faso with a change of leadership within the military land government. All IAMGold personnel were safe and the Essakane operation continues to operate as per the business plan. The company continues to take proactive measures to ensure the safety and security of our in-country personnel, and we continue to adjust protocols and activity levels at site according to the security situation.
As we look to the end of the year, we have increased our production guidance for a second to between 410,000 and 430,000 ounces, up from 360,000 to 385,000 ounces previously. Essakane is well positioned to have its best production year ever, and that’s the best year on record.
We’re continuing to review the positive reconciliation between head grades and the updated block model, while we are also executing on targeted operational improvements. Recent initiatives focused on increasing mill throughput and recovery with improved blast fragmentation and enhanced gravity circuit recoveries between the planned addition of a double-deck screen.
Now turning to Rosebel. Operationally, the turnaround at Rosebel has continued with Q3 attributable production of 50,000 ounces. This is the fifth progressive quarter of higher production as a result of the infrastructure improvements initiated at the end of last year and the new life of mine plan announced earlier this year. It document a roadmap to return Rosebel to being a 300,000 ounces plus producer by 2025.
Subsequent to quarter end on October 18th, the company announced that it had entered into a definitive agreement with Zijin Mining Group to sell its interests in the Rosebel mine for total consideration of $401 million with cash consideration of $360 million and the assumption of $41 million of liabilities related to equipment leases.
When we initiated our strategic review process for Rosebel, our goal was to find a new owner committed to the future of the Rosebel complex, and it would make the necessary investments in the operation and place it on a path for long-term success. Rosebel has been an important contributor to IAMGOLD and we are pleased that a company with the capability and reputation of Zijin, a leading global mining company will be taking over this operation for the benefit of all stakeholders.
The transaction is expected to close in the first quarter of 2023 or earlier subject to some regulatory approvals. With the exceptional diligence and efforts of our Rosebel employees and management, Rosebel is expected to produce 175,000 to 200,000 ounces, up from our prior guidance of 155,000 to 180,000 ounces.
Cost pressures remain in Surinam as the country is heavily exposed to the US dollar and a net importer of goods to oil prices continue to be partially mitigated by our existing hedge program.
On Westwood, gold production was 19,000 ounces in the quarter as a result of higher volumes of underground ore at a higher grade and higher tonnages from the Grand Duc satellite open pit. Lateral development in the third quarter was 151 meters, lagging from the previous quarter due to continued labor constraints and lower mechanical availability of underground equipment.
However, underground rehabilitation progress at the planned rate despite challenging ground conditions and impacts from supply chain challenges. Underground mining activity in the third quarter focused on accessing additional stope sequences in the Eastern Zones to supplement the recently opened higher-grade Western and Central Zones in order to secure multiple ore faces, which will allow for simultaneous exploitation underpinning the 2023 production plan.
As a result of the improvements seen in Q3 and expectations for Q4, we raised the bottom end of our production guidance to 65,000 to 75,000 ounces, up from 55,000 to 75,000 ounces previously.
Now turning to Côté Gold. The project has made significant progress over the last few months. Progress rates are currently at peak levels in line with the updated project plan. The site is currently near capacity, with approximately 1,500 workers. I would not – all that site a couple of weeks ago, and I have to commend the project management team for due diligent and focused to keep everyone on task.
As of September 30, the company’s estimated attributable remaining project spend to complete construction and bring Côté Gold into production is $1 billion to $1.1 billion net of leases and working capital. It is worth noting, considering current market that, this estimate also assumes a Canadian to US exchange rate of 1.2521, so any further strength in the US dollar provides the benefit to Côté Gold construction cost and our contracts and expenses on Canadian dollar denominated.
The company is putting in additional Canadian dollar foreign exchange hedges in addition to its existing hedges to increase exposure to current rates over the construction period. The project at the end of September was 64.2% complete, with monthly project advancements estimated to be approximately 3% to 4% per month during this big construction per year.
Detailed engineering is now 100% complete. So our focus is on execution and mechanical installation. Key progress milestones in the third quarter, include structural, mechanical and piping activities in the processing plant, with the ball mill now mounted on the reception cradle and the pump — sorry, the pump box set in place.
Significant progress on the tailings management facility, water realignment, channel, publishing pan dam and other volume management infrastructure dams. The handover and assembly of the Autonomous Control Room. Completion of the primary crusher concrete to the 409 elevation, with just one more vertical lift remaining and concrete foundations for the HPGR/secondary crusher, screening building and fine ore bins handed over to SMPEI contractors. So Côté Gold continues to track well to the updated project schedule towards initial production in early 2024. IAMGOLD and our partner, Sumitomo, are aligned and focused on building Côté safely, on time and to the current scope and budget. As this on the critical path for the project continues to be through the processing plant and all teams are focused on ensuring outdoor work has been executed to facilitate mechanical installation within the plant once the winter season hits.
The company cautions that potential further disruption including without limitation caused by COVID-19, the Ukraine war, weather, potential labor disruption and the tight labor market could continue to impact the timing of activities, availability of workforce productivity and supply chain and logistics and consequently could further impact the timing of actual commercial production in project cost.
Now right next to Côté, Gosselin. At the end of last year, we announced an initial resource for the Gosselin deposit, which is located immediately adjacent to Côté. Gosselin contains 3.4 million ounces of measured and indicated resources and an additional 1.7 million ounces of inferred resources.
Notably, Gosselin has only been drilled to us the depth of Côté and is open along strike and adept. This year, we conducted a 16,000-meter diamond drill campaign targeting further delineation of the model the resource and extension of the mineralization zone outside the resource boundaries. Results of this program will be reported once up complete.
It is worth reminding everyone that the Côté Gold Life of Mine plan as defined today is based on mineral reserves of 7.2 million ounces contained within the Côté deposit. Taken together, Côté and Gosselin have a total of 13.5 million ounces in measured and indicated results. We firmly believe that Côté Gold is not just a project, but the stock of the new mining district, and there is significant upside to be uncovered as there has been minimal historical exploration targeting these Côté, Gosselin installed intrusion-hosted deposits within our 596 square kilometer line package.
With that update, I would like to pass the call back to the operator for Q&A.
Question-and-Answer Session
Operator
Thank you. We’ll now begin the question-and-answer session. [Operator Instructions] Our first question comes from Tanya Jakusconek with Scotiabank. Please go ahead.
Tanya Jakusconek
Great. Good morning and thank you for taking my questions. Maryse, Maarten, thank you for the insights. Maryse, can I ask a couple of things? I have three questions. So I’m going to start number one on inflationary pressures. I want to get an understanding that, are you starting to see any easing of inflation in your cost in either labor and/or diesel and/or consumables? Just are you starting to see that ease a little bit? That’s my first question.
Maarten Theunissen
Good morning, Tanya, if you don’t mind, I’ll answer the question. We have seen sharp increases like our peers in the first half of the year with inflation for oil type costs and oil linked commodities, such as our grinding media. In Q3, we started seeing those costs plateau. So we have not seen further increases, but the costs remain elevated at those levels that we saw in Q2.
Tanya Jakusconek
Okay. All right. And where would you — so you’re seeing it mainly in diesel and other consumables related to fuel, petrochemicals and other?
Maarten Theunissen
Yes. Yes. And items like steel grinding media that requires energy to produce.
Tanya Jakusconek
Okay. Nothing in labor.
Maarten Theunissen
No.
Tanya Jakusconek
Okay. My second question, again, is another technical question, which has to do with the reserves. I’m just interested to understand, what exactly is happening at Essakane that you’re getting this positive block model reconciliation on the grade. Like, what do you think is happening with this complex geology? And my second part would be, as you look at your reserves in year-end 2022, are you thinking about adjusting the gold price upward to reflect these additional or higher costs. I don’t know, Maarten, you or Maryse on that one.
Maryse Bélanger
Okay. I’ll take the question on Essakane. We’ve added few consecutive months of positive reconciliation at Essakane. It is linked to really Côté Gold in the Phase 4 pit. And that Côté Gold, in fact, seems to report directly to gravity. So, we have great benefits from that. And we are into process of validating those blocks — our block model. And further, we are now drilling and trying to better understanding the type of mineralization and what’s going on. So, I would suspect next quarter, we would be able to provide more visibility to what we see Essakane adept and talking about cost and all of the technical aspects, we are not seeing any changes to our kind of grade at Essakane.
Tanya Jakusconek
That is what about the company itself for 2022 year-end.
Maryse Bélanger
Sorry, Tanya, would you please read
Tanya Jakusconek
I guess it was just — you’re only left with really Westwood. So it’s an underground operation. So that’s fine. I just answered my own question there. So my last question, if I could, was just on the additional liquidity that you’re looking to put in place by year-end. You mentioned that the Boto and exploration is well advanced. I thought my understanding was that you wanted to get all of that drilling done and then sort of get additional like a resource and/or other before that would be sold. Does it appear that you can get all of this done before year-end to give us an update in Q4?
Maarten Theunissen
Tanya, so our discussions with the various bodies is commercially sensitive. But what I think we can say is that for these assets, we continue to make sure that we get the value for the asset as part of the sales process and that it’s not a prior sale. So we are looking closely at the proceeds and the underlying value that bodies are offering for it.
Tanya Jakusconek
Okay. So you feel you could get this done in Q4?
Maarten Theunissen
Yes
Tanya Jakusconek
Okay. And then I noticed in your language, in your release that you removed joint ventures off as one of your options – joint venture partnership. We had mentioned these on previous calls. So we’re still looking to keep 100% of Essakane and Westwood. Is that a fair statement?
Maryse Bélanger
Yes, it is, Tanya.
Tanya Jakusconek
Okay. And then my last question just on this funding gap. It’s just once we sell or get value for Boto and other exploration, would you put your packing order as options on royalties and streams as a preferred option to debt and/or equity. I’m just trying to understand the ranking of the remaining funding
Maarten Theunissen
So we are looking at the options with the various solutions in the capital structure. And is a trade-off between the cost of capital and the permanency of solutions. So we have not decided a picking order. We are dropping through the various options with that competitive tension between the cost of capital and the permanency of the solutions.
Tanya Jakusconek
I guess I’ll stay to, do you think you will have the full funding, so including your other option, in addition to the sale of Boto and other by year-end?
Maryse Bélanger
Yes, we will be able to communicate these debt to the market before year end.
Tanya Jakusconek
Okay. That’s good. Congratulations on the progress.
Maryse Bélanger
Thank you, Tanya.
Operator
The next question is from Anita Soni with CIBC World Markets. Please go ahead.
Anita Soni
Good morning, everyone. Thanks for taking my questions. First question, you mentioned the amount of capital – or the amount of cash that is held between Essakane and Côté. Could you give us a breakout of that? I think it’s probably – is critical to my thinking in terms of how much is actually put ahead for the Côté construction already.
Maarten Theunissen
So Anita, the way that the Côte spending all cash costs work is we have to provide two months of funding, but the cash cost is on the beginning of the month. So at the end of the month, we have approximately one month of expenditures remaining and then we need to fund on the next day. So we see it as two months of cash. I would say that it’s roughly 50-50 of that amount that we’ve included in the MD&A.
Anita Soni
Okay. So 50-50 between Essakane and how long does it take you to upstream cash from Essakane to go into Côté?
Maarten Theunissen
It doesn’t take us long at all. However, we only can do it in a certain window, and that window is normally Q2 and Q3. So that’s why our — the cash balance built up in Q4 and Q1 and then we start repatriated cash again in that window.
Anita Soni
Okay. Sorry. And then as I look to just a minor point, but going into Q4, the guidance for the year at Essakane would imply a weaker quarter. So somewhere around the range, I think, it was about 85,000 ounces or so. And you did mention that you — you’d be focusing on stripping to prepare yourself for the grade profile in 2023 and 2024. So is that accurate, my assumption that, you know, you’d be focused more on stripping and less on delivering ore to the mill at Essakane in Q4?
Maryse Belanger
Anita, thanks for the question. First of all, we do expect grades to normalize closer to reserve grade in the fourth quarter. We also expect the mill to be processing 100% hard rock as opposed to a combination of Fayolle [ph] and hard rock. And also we have noted the security situation in the country. That’s putting a bit of pressure on our people. The situation is managed. But at this point, I would rather be a little conservative when it comes to Essakane.
Anita Soni
Okay. And then just moving backwards to the funding gap and the ZenBook [ph] package of assets. I believe you carry it on the balance sheet right now for about $258 million. Is that, I mean, is that an accurate assumption of the value that you’re trying to achieve when you sell that, or is there something else that we should be thinking about?
Maarten Theunissen
Anita, thanks for the question. It is very commercially sensitive at this stage in our process, and we cannot comment on value. That is not our carrying value of these assets on our balance sheet. It’s for Boto, it’s closer to $80 million.
Anita Soni
No, I meant the package of assets, all of them together were $250 I thought. But Boto itself is $80 million, you said?
Maarten Theunissen
So the other assets is exploration assets, and we don’t — we expense our exploration expenditures. We don’t have significant value on the balance sheet, but value of the accounting carrying – the carrying, carrying value is not represented of the value of the package in our view…
Anita Soni
Okay. All right. Okay. Thank you very much.
Maarten Theunissen
You’re welcome.
Operator
[Operator Instructions] The next question is from Lawson Winder with Bank of America. Please go ahead.
Lawson Winder
Hi. Good morning and thank you for the update. On the African asset sales, I just wanted to sort of, drill down a little bit more on your previous comment. So when you say you expect to have some sort of announcement with regard to the strategic alternatives for West Africa by the end of Q4, do you mean for to — also, what’s the smaller exploration stage assets?
Maryse Bélanger
Yes. Yes, it would be the package. It would be for the three properties, yes.
Lawson Winder
And is the idea that they would all be sold together as a package, or could there be multiple buyers for each of those assets within that package?
Maryse Bélanger
They could be sold separately, two of them, three of them together. It really depends on where we see the value and where we can create some value for the company. So, no definitive answer yet on this, and it’s still a work-in-progress.
Lawson Winder
Okay. Got it. That’s great. And then just on Rosebel, with the higher guidance, I mean, I think it’s great that you’re getting the benefit of that improved guidance. What I want to understand, will there be any sort of adjustments upon closing as a result of that higher guidance, or why IAMGOLD be able to fully benefit from that?
Maarten Theunissen
Good morning, Lawson. So for Rosebel, the purchase price is $360 million, would not be adjusted based on the agreement. But there is certain working capital adjustments that will be made based on the standard working capital. And the company also received the cash on the balance — at the time of the sale. So if there is over-performance, it could result in an increase in proceeds. In our negotiations, we have shared these forecasts with the purchaser as well. So it’s in line with what they are seeing as well.
Lawson Winder
Okay. Excellent. And then, just going to Essakane, with the CapEx now running at 100 — sorry for this, $75 million of sustaining CapEx. And if you look into 2023, I mean — and even beyond, is that kind of the correct level for maintaining that operation?
Maarten Theunissen
We are currently working on the budget, Lawson, right now. I think it’s too early to tell. There will be some stripping to be to be done in 2023 and 2024 for sure. But, again, to give you the best level of the capital for the coming years, we are actually finalizing our budgets.
Lawson Winder
Okay. Well, we’ll stay tuned for that. And then, just finally, I’m not sure if Maryse, you can provide any color on the search for a permanent CEO. Is there sort of any sense of timing at this point?
Maryse Bélanger
Well, the CEO search is active and ongoing. And the Board has been conducting an extensive process, because we really want to find the right candidate for the job. And I would say, in terms of timing, we’d expect to be able to make an announcement before the end of the year.
Lawson Winder
Okay. Excellent. Thank you very much for answering my questions.
Maryse Bélanger
Thank you.
Operator
We have a follow-up question from Anita Soni with CIBC World Markets. Please, go ahead.
Anita Soni
Hi. Can I just get some — I guess, some color, I’m sure I could probably find in the technical report, if I looked, but the working capital requirements that you would have for Côté, sort of leading up into the, I guess — leading up into the commercial production declaration early 2024. Could you give me a ballpark number of what you’re looking at there?
Maarten Theunissen
The technical report does have information in there. I think what is important because it’s an unincorporated joint venture, we will continue to have to fund two months of expenditures going forward. And then each partner gets the gold credits back.
So, the working capital is included in the cost assumptions for the construction period, but also included in the technical report once it’s in operation.
Anita Soni
Okay. Thank you.
Maarten Theunissen
So, from — we need to continue to fund the cash costs for the ongoing cash outflows of the project.
Anita Soni
All right. Thank you.
Operator
The next question is from Sean Wondrack with Deutsche Bank. Please go ahead.
Sean Wondrack
Hi, good morning. Thanks for taking my questions. Just the first question, I believe you provide a liquidity bridge on slide nine. Your cash balance went up about $130 million quarter-over-quarter. Can you just describe what exactly drove that? Sorry if I missed it.
Maarten Theunissen
We drew down on our credit facility at the end of September and that was to assist us to make the cash goal for Côté at the beginning of October. We also drew down a bit more and for a bit longer period to take advantage of savings in an increasing interest rate environment. So, we drew down more on the facility than we needed in the short-term.
Sean Wondrack
Okay. That makes sense. Thank you. And then if I take a look at your income statement, it does appear that exploration and SG&A expense both came down a little bit. Is this a fair run rate to use moving forward?
Maarten Theunissen
We are working through our updated plans and budget process, and we would be giving an update on that in our guidance. So, I don’t think it’s — we’re in a position to say that, that is our run rate and we’re also kind of looking at our exploration expenditures and levels based on what happens with the asset disposition of exploration assets in West Africa, for example, as well. So, we just need to complete our assessment of our planned activities.
Sean Wondrack
Understood. Understood. And then is there any concern out there around the Rosebel sale closing? Anything in particular that could slow the closing or gives you any pause with it?
Maryse Bélanger
At this point, know this nothing that gives me pause. We have the normal regulatory requirements and we are proceeding through those. As a matter of fact, I’m on my way to Surinam with the representatives to do a joint visit and it’s really just about customary regulatory approvals at this point.
Sean Wondrack
Okay. Thank you very much.
Operator
This concludes the time allocated for questions. I’d like to hand the conference back over to Maryse Bélanger for closing remarks.
Maryse Bélanger
Thank you very much, operator. And thanks to everyone for joining us this morning and for your continued engagement with IAMGOLD. As always, should you have any additional questions, please do not hesitate to reach out to myself or Graeme Jennings if you would like to set up a meeting. Thank you all, 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.
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