IAG Q1 2025: Cote Throughput Hits 96%, Unlocking Double-Digit Mine Site Cash Flow Growth
IAMGOLD’s Cote ramp-up reached 96% throughput in April, marking a pivotal operational milestone and setting the stage for a step-change in cash flow and production in the second half. Management’s confidence in delivering on full-year guidance is underpinned by improving grades, declining unit costs, and a material reduction in prepay-related debt exposure by mid-year. With organic growth prospects in Quebec and a focus on internal expansion, IAG is positioning itself to re-rate versus peers as operational execution converges with a strengthening gold price environment.
Summary
- Cote Ramp-up Drives Cash Flow Expansion: Record throughput and operational gains at Cote position IAG for stronger H2 earnings leverage.
- Debt Reduction Accelerates: Gold prepay deliveries near completion, enabling balance sheet flexibility and future capital return optionality.
- Organic Growth Pipeline Deepens: Nelligan and Monster Lake resource drilling advances, reinforcing long-term self-funded growth strategy.
Performance Analysis
IAMGOLD’s first quarter results reflected a deliberate operational cadence, with production weighted to the back half of the year as Cote’s ramp-up and plant maintenance shaped early volumes. Mine site free cash flow surged to $140 million, nearly tripling year over year, primarily due to the step-change at Cote, which moved from first gold in March 2024 to 90%+ nameplate throughput by March 2025. Cash costs and all-in sustaining costs (AISC) remained elevated at $1,459 and $1,908 per ounce, respectively, but management expects these to decline as throughput and grades improve across all operations.
Segment analysis reveals Cote’s operational inflection—with March and April throughput exceeding 1 million tons per month and 96% of nameplate achieved in April—while Isakani and Westwood prepare for higher grades and volume in later quarters. Westwood’s underground mining improvements and Isakani’s transition to deeper, higher-grade benches are expected to drive incremental production and margin gains. Q1’s lighter production was anticipated, and management reaffirmed full-year guidance, citing strong operational momentum and a robust gold price tailwind.
- Cote Throughput Surge: March and April saw Cote average 34,500 tons per day, establishing operational reliability.
- Debt Paydown Progress: 75% of gold prepay obligations delivered, with full completion expected by July, unlocking full gold price exposure.
- Segment Margin Expansion: Mining unit costs at Cote fell to $3.49 per ton, down from $4.19, with further reductions expected as ramp-up continues.
With Q2 and the second half set for production and cost improvements, IAG’s operational execution is now more closely aligned with its strategic ambitions and market valuation opportunity.
Executive Commentary
"At Cote, we have recently celebrated the best month of operations in March and April, achieving monthly throughput of 1 million tons processed, with the plant operating now at the 90% plus of nameplates... This progress positions us well to complete the ramp up to an end plate production of 36,000 tons per day by the end of the year."
Bruno Adams, President and Chief Executive Officer
"By July this year, the prepay obligations will be completed and IAMGOLD will be fully exposed to the gold price at a time when we expect to see increases in production... Ultimately, we look forward to discussing the potential of returning value to our shareholders, whether through share buybacks or dividends."
Martin Thunusen, Chief Financial Officer
Strategic Positioning
1. Cote Ramp-up and Operating Leverage
Cote, flagship open-pit project, is at the center of IAG’s value narrative. With throughput now approaching design rates and further capacity investments (second cone crusher installation in Q4), Cote is positioned to double its annual production this year. The move to a bulk mining model and process improvements are driving down unit costs, while the 2026 technical report aims to consolidate Cote and Gosselin into a “super pit” with over 20 million ounces of resources, cementing Cote’s status among Canada’s largest gold mines.
2. Balance Sheet De-risking and Capital Allocation Flexibility
Gold prepay arrangements, structured forward sales used to finance development, are nearly extinguished, with only 25,000 ounces remaining to be delivered by July. This unlocks full exposure to gold prices at a time of cyclical strength and positions IAG to reduce expensive term loan debt, with $400 million eligible for early repayment. Management is targeting a net debt to EBITDA ratio below 1, creating a pathway to future dividends or share buybacks once operational and financial thresholds are met.
3. Organic Growth Focus in Quebec
Nelligan and Monster Lake, Quebec exploration assets, are central to IAG’s organic growth thesis. The 2025 drill program targets resource conversion and expansion, with Nelligan’s indicated ounces already at 3.1 million and inferred at 5.2 million. Management’s two-year goal is to build a large, flexible resource base combining open-pit and high-grade underground potential, with no immediate need for joint venture partners, given internal technical and financial capacity.
4. Operational Improvements at Westwood and Isakani
Westwood, underground mine, is executing on resource-to-reserve conversion and optimizing underground haulage, aiming for a sustainable 1,000-1,200 tons per day mining rate. Isakani, Burkina Faso open-pit, will benefit from positive grade reconciliation and reduced waste stripping in H2, despite persistent cost pressures from fuel and royalties. Both assets are expected to drive incremental free cash flow as grades and volumes improve through 2025.
5. Disciplined Approach to M&A and Expansion
Management signaled no urgency for external M&A, citing a deep internal pipeline and a preference for organic value creation over asset purchases. With industry peers divesting Canadian assets, IAG’s focus remains on internal expansion at Cote and Quebec, with external opportunities only considered if they offer clear accretive value.
Key Considerations
This quarter marks a strategic inflection point for IAG, as operational execution at Cote converges with balance sheet improvement and a robust gold price environment. The company’s multi-asset platform is now positioned for higher cash flow conversion as production volumes and grades rise, while disciplined capital allocation and organic growth underpin the long-term investment case.
Key Considerations:
- Cote’s Reliability and Expansion Potential: Sustained 90%+ throughput validates ramp-up, with upside from process debottlenecking and resource conversion in 2026.
- Cost Structure Trajectory: Declining unit costs expected as fixed cost absorption improves and maintenance normalizes, supporting margin expansion.
- Balance Sheet Flexibility: Gold prepay wind-down and targeted debt reduction set the stage for future capital returns, contingent on execution and gold price stability.
- Organic Growth in Mining-Friendly Jurisdictions: Quebec assets provide scale and optionality, reducing reliance on higher-risk geographies.
- Operational Risks in Burkina Faso: Management downplays security risk, but continued vigilance is warranted given regional instability and cost inflation.
Risks
Execution risk remains elevated as Cote completes its ramp-up and as Isakani and Westwood transition to higher-grade zones. Security and cost inflation in Burkina Faso could pressure margins, while delays in achieving targeted production rates or unforeseen maintenance at Cote would impact cash flow and guidance credibility. Royalty increases tied to gold price escalation add further cost variability, and the transition to full gold price exposure post-prepay increases sensitivity to market volatility.
Forward Outlook
For Q2 2025, IAMGOLD guided to:
- Sequential production increase at all three mines, with Cote and Westwood ramping up and Isakani grades improving.
- Declining unit costs as throughput and grades rise, supporting margin expansion.
For full-year 2025, management maintained guidance:
- Attributable production of 735,000 to 820,000 ounces, with H2 expected to be meaningfully stronger than H1.
- Cost guidance unchanged, assuming $2,500/oz gold price for planning purposes despite current spot above $3,000.
Management highlighted several factors that will shape the year:
- Completion of gold prepay deliveries by July, unlocking full gold price upside.
- Key technical milestones at Cote (second crusher installation) and ongoing resource drilling in Quebec.
Takeaways
IAMGOLD’s Q1 2025 signals a critical turning point for operational reliability, cash flow leverage, and balance sheet strength.
- Cote’s Throughput Inflection: The plant’s sustained 90%+ throughput and upcoming capacity enhancements are the primary catalysts for H2 earnings growth.
- Balance Sheet Reset: Near-completion of gold prepay obligations and targeted debt paydown create real optionality for shareholder returns in 2026 and beyond.
- Growth Pipeline Depth: Quebec’s Nelligan and Monster Lake assets provide organic growth and diversification, with resource expansion and conversion as top priorities for the next two years.
Conclusion
IAMGOLD’s Q1 results underscore the company’s transition from project ramp-up to full-cycle cash flow generation, with Cote’s operational progress and prepay wind-down driving a re-rating narrative. Organic growth and disciplined capital allocation remain central, with management’s focus now shifting to execution and value crystallization in a supportive gold price environment.
Industry Read-Through
IAG’s Cote ramp-up and Quebec-focused pipeline highlight the value of large-scale, low-cost gold assets in stable jurisdictions, especially as peers divest Canadian projects and industry-wide M&A picks up. The successful transition from development to cash flow generation at Cote sets a benchmark for other multi-asset gold producers facing similar ramp-up challenges. IAG’s approach to self-funded organic growth, balance sheet repair, and measured capital returns offers a template for mid-tier miners seeking to close valuation gaps and compete for investor capital in a volatile commodity environment.