IAMGOLD Corporation (TSX:IMG) (NYSE:IAG) (BOTSWANA:IAMGOLD) today announced the following:
- A new record for quarterly gold production with over 310,000 attributable ounces of gold in the fourth quarter of 2010;
- The Company's 2010 total year gold production at the high end of the forecast range of 940,000 to 970,000 ounces, at an average cash cost within guidance of $565 to $585 per ounce;
- In 2010, the Company produced 4.4 million kilograms of niobium with an average operating margin at the high end of the guidance range of $17 to $19 per kilogram;
- The Company confirms its 2011 guidance (released December 9, 2010) that it expects attributable gold production to be in the range of between 1.1 million and 1.2 million ounces of gold at a cash cost of between $565 and $595 per ounce;
- The Company confirms its 2011 guidance to produce between 4.7 million and 5.0 million kilograms of niobium at a margin of between $15 and $17 per kilogram;
- Capital expenditures for 2011 are budgeted at $460 million;
- The primary focus of the 2011 capital program is to advance and expand the Company's core long-life assets comprised of:
- the expansion of the Rosebel gold mine;
- the expansion of the Essakane gold mine;
- the continued development of the Westwood gold project for startup in 2013; and
- the continued underground expansion of the Niobec niobium mine;
- The three-year production and capital outlook for the mines IAMGOLD operates which is detailed below.
2010 GOLD AND NIOBIUM PRODUCTION
The Company announced record fourth quarter attributable gold production of over 310,000 ounces and 2010 total year attributable gold production at the high end of the guidance range of 940,000 to 970,000 ounces and cash cost within guidance of $565 to $585 per ounce. The Essakane mine produced 80,000 attributable ounces in the quarter notwithstanding a three-week interruption in November due to an electrical issue. The Essakane mine attained nameplate throughput capacity in December. In 2009, total year attributable gold production was 939,000 ounces at a cash cost of $461.
In 2010, IAMGOLD also produced 4.4 million kilograms of niobium at an average margin at the high end of the guidance range of $17 to $19 per kilogram as compared with 4.1 million kilograms produced at an average margin of $20 per kilogram in 2009. The Company's mid-year niobium guidance for 2010 was to produce between 4.5 and 4.7 million kilograms at an average margin in the range of $17 to $19 per kilogram. 2010 niobium production was slightly less than the guidance due to the processing of higher amounts of lower grade material in the fourth quarter.
MANAGEMENT OF CASH COSTS AND MARGINS
The Company's average cash costs for gold rose in 2010 as compared with 2009. In addition to the increasing cost of consumables, increased costs are partially due to higher gold prices. Increases in the gold price resulted in increased royalty rates and increased price driven royalty amounts. As the prices rise, lower grades of ore become economic to mine. By choosing to mine these lower grade deposits of the ore body and managing the cut-off grade, the Company can mine previously uneconomic portions of its resource base, increase the yield from the ore bodies and extend the life of the mines. Notwithstanding increased costs, this yields positive cash flow for the Company. IAMGOLD's continuous improvement programs and cost control efforts focus on aggressively managing unit operating costs (such as cost per tonne mined and cost per tonne milled) and productivities at the operating sites.
Further to the guidance that the Company published in early December 2010, IAMGOLD is providing its production and capital spending profile for years 2011 through 2013 for the mines it operates. For 2011, 2012 and 2013, the Company has respectively assumed:
- annual average gold prices per ounce of $1,300, $1,250 and $1,150;
- U.S. dollar values of the Euro of 1.35, 1.35 and 1.30; and
- Canadian dollar values of the U.S. dollar of $1.00, $1.05 and $1.05.
2011 CAPITAL EXPENDITURES
For 2011, IAMGOLD's capital expenditure program is $460 million focused primarily on the brownfield growth opportunities at its core platform of gold mines including the Rosebel mine in Suriname, the Essakane mine in Burkina Faso and the Westwood development project in Canada.
IAMGOLD's President and CEO, Steve Letwin said, "We are confident that superior returns will be generated by re-investing in these brownfield opportunities which will expand and extend our long-life, lower-cost mines where we are the operators and have a controlling ownership position. It is on these sites that we can best leverage the existing infrastructure and take advantage of the competencies and significant experience within the Company. The Rosebel and Essakane mines are world-class assets that have already demonstrated the excellence of our corporate social responsibility programs and our development and operational teams."
Mr. Letwin further commented, "We believe that our share price is significantly undervalued. We have actively engaged in various discussions with current and potential investors to explore ways to unlock value. Specifically, we believe that investors are not assigning full value to our minority interest mines in West Africa and our niobium mine in Quebec, Canada. The management team has just returned from a targeted trip to South-East Asia where it had promising discussions with regard to various options that the Company is exploring to unlock value in these assets."
The Rosebel mine expansion is primarily an optimization of this open pit mine. Without expansion, Rosebel mill throughput would decline going forward as the ore mix will trend to higher proportions of hard rock. The cost of the staged expansion is expected to total an additional $185 million over the next seven years versus the no-expansion case with sustaining and replacement capital only. The project entails additional grinding capacity to allow mill throughput to be maintained between 12 and 14 million tonnes per year, even with the increased hard rock volumes, coupled with additional mining equipment to increase annual mining capacity to 70 million tonnes to optimize mill feed grades. The expansion essentially brings gold production forward in time and reduces long-term fixed costs by reducing the currently planned mine life. The benefits are substantial, including:
- A 60% return on the expansion capital, after tax;
- A payback period of 2.7 years; and
- Annual gold production of 400,000 to 450,000 ounces throughout the life of mine.
Source: IAMGOLD Corporation