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Rating Action:

Moody's downgrades IAMGOLD's CFR to B2; outlook stable

29 Oct 2021

Toronto, October 29, 2021 -- Moody's Investors Service, ("Moody's") downgraded the ratings for IAMGOLD Corporation's corporate family rating to B2 from B1, its probability of default rating to B2-PD from B1-PD, its senior unsecured notes rating to B3 from B2 and its speculative grade liquidity ("SGL") rating to SGL-3 from SGL-1. The ratings outlook remains stable.

"The dowgrade reflects operating challenges at Rosebel and Westwood, a materially higher construction cost estimates at Côté, very high operating costs per ounce, and reduced liquidity," said Jamie Koutsoukis, Moody's Vice President, Senior Analyst.

Downgrades:

..Issuer: IAMGOLD Corporation

.... Corporate Family Rating, Downgraded to B2 from B1

.... Probability of Default Rating, Downgraded to B2-PD from B1-PD

.... Speculative Grade Liquidity Rating, Downgraded to SGL-3 from SGL-1

....Senior Unsecured Regular Bond/Debenture, Downgraded to B3 (LGD5) from B2 (LGD5)

Outlook Actions:

..Issuer: IAMGOLD Corporation

....Outlook, Remains Stable

RATINGS RATIONALE

IAMGOLD's B2 CFR is challenged by 1) the company's high operating cash costs ($1240/gold equivalent ounce ("GEO") LTM Q2/21) (Revenue-EBITDA)/GEO) following operational challenges at its Rosebel mine in Suriname, and Westwood mine in Canada, 2) execution risk in developing its Côté Gold project and the consumption of its liquidity as the project progresses, 3) a concentration of production and cash flows at its two largest mines, 4) its moderate scale (~700 thousand GEOs) and 5) geopolitical risk (mines in Burkina Faso and Suriname). IAMGOLD has historically maintained low leverage (1.8x LTM Q2/21) however it will rise above 4x in 2022 (closer to 8x using a $1500 gold price for 2022) as the majority of spending on the Côté Gold project is incurred (with an expected increase in debt as the company draws on its revolver to partially fund the construction) without any contributing production until the second half of 2023.

IAMGOLD together with joint venture partner Sumitomo Metal Mining Co. Ltd., sanctioned the construction of the Côté Gold project in Ontario Canada in 2020. IAMGOLD's large cash balance of $825 million at June 2021 will largely be consumed in 2022 to and 2023 to fund the remaining $930 - $980 million (as of July 2021) project construction costs (this is for its 70% share of the project). However, once completed, (commercial production is expected in the second half of 2023) the company will benefit from improved diversification in a low risk jurisdiction, and an increased production profile from a long life mine with expected lower cash costs.

IAMGOLD has adequate liquidity (SGL-3) through 2022. The company has $1.3 billion of sources compared to $1.1 billion of uses in the 18 months to December 2022. Sources for IAMGOLD include about $825 million in cash at June 2021 and a $500 million committed facility ($490 million matures Jan 2025, remainder matures Jan 2023) which is largely undrawn. Uses are our expectation the company will be free cash flow negative by about $1.1 billion over the 18 months, using a gold price sensitivity of $1500 for 2022 as spending for the Côté gold project is at its highest. IAMGOLD has no refinancing risk over the near term: its $500 million credit facility largely matures in January 2025 and its $450 million in notes are due in 2028. IAMGOLD's credit facility includes financial covenants with which we believe the company will remain in compliance.

In the second quarter of 2021, IAMGOLD entered into gold sale prepayment arrangements whereby it will receive $236 million over the course of 2022 with the requirement to physically deliver 150,000 ounces over the course of 2024. These transactions have the effect of rolling the Company's 2019 prepayment arrangement on 150,000 gold ounces from 2022 to 2024, which is after the completion of the construction of Côté Gold.

The stable outlook reflects Moody's expectation that IAMGOLD has sufficient funding and liquidity in place to develop its Côté Gold project. It also incorporates the expectation that the company will maintain financial discipline and leverage will be sustained below 4x past 2023 once production from Côté Gold is realized.

FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS

The CFR rating could be upgraded to B1 if IAMGOLD is able to achieve increased mine diversity and demonstrates its ability to execute on new mine development without meaningful setbacks, total cash costs per ounce (revenue less adjusted EBITDA divided by total production) are maintained below $1000/oz ($1240/GEO LTM Q2/21) , and leverage is sustained below 3x (1.8x LTM Q2/2021).

The CFR rating could be downgraded to B3 if there are further cost increases at the Côté Gold project, or operational challenges at its existing mines negatively affect the company's liquidity position. It could also be downgraded if leverage is expected to be sustained above 4x (1.8x LTM Q2/2021).

The principal methodology used in these ratings was Mining published in October 2021 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1292752. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288235.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Jamie Koutsoukis
Vice President - Senior Analyst
Corporate Finance Group
Moody's Canada Inc.
70 York Street
Suite 1400
Toronto, ON M5J 1S9
Canada
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Donald S. Carter, CFA
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Canada Inc.
70 York Street
Suite 1400
Toronto, ON M5J 1S9
Canada
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.
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