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IAMGOLD experiences ‘exceptional year' at operations

IAMGOLD says gold production will decline from 997,000 ounces in 2008 to 880,000 ounces in 2009.

Author: Dorothy Kosich
Posted: Friday , 30 Jan 2009

RENO, NV -

As IAMGOLD announced 2008 gold production which exceed original guidance by 8%, the company predicted a decline in this year's production to 880,000 ounces of gold at an average cash cost of $470 to $480 per ounce.

Gold production for IAMGOLD was reported at 997,000 ounces in 2008 with cash costs expected to be below $480 to $490 per ounce.

In financial results issued Thursday, Joseph Conway, IAMGOLD'S president and CEO said, "We had an exceptional year at our operations, with gold production of almost one million ounces, exceeding our guidance by about 8%. We are particularly proud of our success with the many cost reduction measures at our majority-owned operations."

However, on a preliminary, unaudited basis, IAMGOLD expects to record an asset and goodwill impairment charge of $90 million to $125 million on an after-tax basis relating primarily to the Buckreef project in Tanzania. Since the 2006 acquisition of Buckreef, IAMGOLD has invested $15 million in exploration and development, and completed 100,000 meters of drilling.

"This work has not materially increased the resource base and preliminary metallurgical testwork indicates only low to moderate recoveries could be expected from heap leaching. As a result, estimated capital costs for mine development are significantly higher than anticipated," the company said.

Meanwhile, IAMGOLD plans a $216 million capex budget this year or $435 million including the acquisition of Orezone and its Essakane gold deposit in Burkina Faso. The acquisition of Orezone Resources is expected to be completed at the end of February with the Orezone shareholder vote scheduled for February 18th.

The four-million ounce Esskane gold project is expected to produce an average annual gold production of 315.000 ounces over a minimum nine-year mine life. Production is anticipated to begin during the third quarter of 2010. IAMGOLD is now trying to secure a $220 million project debt facility with a group of lenders familiar with the project.

The company also plans to invest more in its development-stage projects in Quebec and Ecuador. Capital expenditures of $81 million allocated for Westwood during this year include: beginning shaft sinking, construction of the headframe, completion of a ventilation shaft, and further development of the exploration ramp.

The approval of Ecuador's new mining law means that, upon signing a satisfactory exploration contract, IAMGOLD will proceed with remaining studies of the Quimsacocha, Ecuador project. A final feasibility study is expected to take a year to complete and cost $14 million.

Capital expenditures of $55 million are planned for the Rosebel Mine in Suriname this year. Major components include a $14 million near-mine exploration program, $8.2 million to complete the mill expansion during the first quarter, and $10.4 million for additional mine equipment for the expansion.

Meanwhile, sales agreements for approximately 75% of IAMGOLD's projected niobium production have been signed and an additional 15% have been allocated on an options basis to specific customers. Production is expected at the same levels as last year.

Capital expenditures of $56 million at Niobec "will facilitate significant increases in production, reserves and resources," IAMGOLD said. A mill expansion is scheduled for completion in the third quarter of 2010 that will support a production increase of up to 25%. This year's niobium production is forecast a t 4,400 tonnes with operating margins project in the $17-$19/kg range.

IAMGOLD plans a greenfields exploration expenditure of $34 million of which $2.5 million is expected to be capitalized. The company spent $35 million for greenfields exploration last year.