IAMGOLD Corporation (TSX: IMG)(NYSE: IAG)(BOTSWANA: IAMGOLD) -
For a full explanation of results, the unaudited interim
Consolidated Financial Statements, Management Discussion &
Analysis, and mine statistics, please see the Company's website,
www.iamgold.com.
"We are pleased to report record revenues and operating cash
flow during the current quarter. Gold production and cash costs
continued to meet guidance.
With our strong cash and gold bullion holdings, we are well
positioned to continue to execute our growth strategy in West
Africa and the Americas while applying very stringent criteria to
all capital expenditure projects through these tight credit
markets," stated Joseph Conway, President & CEO.
All amounts are expressed in US dollars, unless otherwise
indicated.
HIGHLIGHTS OF Q3
- Record quarterly revenues of $227 million increased 33% over
$170 million in last year's third quarter.
- Net earnings were $18.8 million or $0.06 per share compared to
net earnings of $19.5 million or $0.07 per share in Q3 2007.
Adjusted net earnings(1), excluding an impairment charge related to
capitalized exploration expenditures were $23.4 million or $0.08
per share.
- Record operating cash flow of $71.7 million or $0.24 per
share(2), represents a 141% increase over $29.8 million or $0.10
per share(2) in Q3 2007.
- Attributable gold production was up 5% from last year's third
quarter to 253,000 ounces. The average cash cost(1) was $481 per
ounce compared with $437 per ounce in Q3 2007. Rosebel achieved
record mine throughput despite the rainy season, producing 82,000
attributable ounces of gold.
- IAMGOLD has a strong cash and gold bullion position of $307
million (valuing gold at market as at September 30, 2008). In
addition, a $140 million five-year revolving credit facility
provides significant financial flexibility for IAMGOLD.
- IAMGOLD's 2008 gold production outlook is unchanged at 950,000
ounces. Cash cost guidance is revised down 1% to $480-$490 per
ounce. The current financial market volatility may affect future
cash costs either positively or negatively through changes in oil
price, changes in gold price as it impacts royalty payments, and
currency exchange rates.
- The Niobec niobium mine demonstrated superior operating
performance contributing $16.2 million in operating cash flow in
Q3. Unit operating margin (1) increased 57% in Q3 2008 over the
same period in 2007.
- Given the current economic environment, IAMGOLD is reviewing
its capital programs as well as the investment opportunities that
are becoming more attractive.
(1) Cash cost, Adjusted net earnings and Unit operating margin
for the Niobec mine are non-GAAP measures. Please refer to the
Supplemental information attached to the MD&A for
reconciliation to GAAP.
(2) Operating cash flow per share is a non-GAAP measure and is
calculated by dividing the consolidated cash flow from operating
activities by the weighted average number of common shares
outstanding in the period.
RECENT EVENTS AND INITIATIVES
IAMGOLD announced the filing of a draft tender offer in France
on August 29, 2008, that will provide for an all cash offer of
EUR1.20 per share (approximately $1.69 per share using the currency
rate as at September 30, 2008) to acquire all of the outstanding
shares of Euro Ressources S.A. ("EURO"). EURO currently has a
participation right royalty on production from the Rosebel gold
mine. The offer is for all outstanding EURO shares and for any
shares issuable upon the exercise of options. The offer opened on
October 6, 2008 and will close on November 21, 2008. IAMGOLD
intends to fund the offer through its existing cash reserves or its
credit facility. The Company has agreed to keep EUR75.0 million
(approximately $105.6 million using the currency rate at September
30, 2008) available under the credit facility to fund the
acquisition of EURO.
OPERATIONS HIGHLIGHTS
Rosebel Mine, Suriname
During the third quarter of 2008, the Rosebel mine achieved
record quarterly mine and mill throughput, producing 82,000
attributable ounces of gold. Improvements in rainy season operating
practices have led to significantly higher mine production.
Continuous improvement initiatives at the mill have positively
impacted throughput.
Rosebel's $44.4 million mill expansion and optimization projects
are well underway with key circuit components to be completed
within 2008, to allow for the ramp-up in mill throughput as per
schedule. Full completion is now expected during the first quarter
of 2009.
Niobec Mine, Canada
The Company continues to increase the contribution of the Niobec
mine (a non-gold asset), with the expected completion of a $12.0
million paste backfill plant and underground development by mid
2010. A technical report has been prepared that shows that the
paste backfill system will enable the extraction of more ore grade
material and result in an immediate 34% increase in the current
reserves. As underground development proceeds, current resources
are expected to be converted into reserves at a rate of about 2 to
4 million tonnes per year. Pilot plant testing of a Kelsey Jig unit
which may allow Niobec to realize a potential recovery improvement
of over 2%, is scheduled during the fourth quarter. Results will be
used for an economic evaluation on installing a full scale unit in
the future.
During the first nine months of 2008, demand for niobium
remained strong, while North America and to some extent, the
European Union, experienced economic weakness. Asian countries,
mainly China, continued to show strong demand. Although, niobium
demand closely follows the demand for steel, there is a trend over
time to increased usage of niobium per tonne of steel produced. As
have most consumables tied to the production of steel, niobium
prices have continued to rise by more than 15% during the third
quarter of 2008 compared to the second quarter of 2008. Demand and
prices are expected to remain stable in the last quarter of
2008.
PROJECT UPDATES
Westwood Project (Doyon Area), Canada
IAMGOLD continued to accelerate evaluation of the Westwood
Project. In July 2008, the Company announced a 5% increase to 3.5
million contained gold ounces in an inferred resource of 14.2
million tonnes averaging 7.6 grams of gold per tonne, using a
cut-off grade of 3.0 grams per tonne. With nine drill rigs
currently on site, the geologic understanding of the deposit and
mineralization continuity has increased substantially. Engineering
is proceeding on all fronts including mining, metallurgy, and
infrastructure design. The results of a revised scoping study will
be released in the fourth quarter of 2008.
Quimsacocha, Ecuador
IAMGOLD released its pre-feasibility study in July 2008 for the
Quimsacocha project that showed encouraging results. Production is
expected to average 202,000 ounces of gold per year at an average
cash cost (before royalties and profit sharing) of $272 per ounce
over a projected mine life of 7.5 years, with an estimated payback
of 3 years.
Work continues on the final feasibility study, including full
environmental and social impact assessments. The Company is ready
to resume exploration drilling on new targets at Quimsacocha
following the approval of the new Mining Law when drilling permits
become available.
A constitutional referendum held on September 28, 2008, resulted
in a clear mandate for the constitutional reforms proposed by
President Correa, including a mining policy that supports
responsible mining. The government of Ecuador has stated its
intention to complete the new Mining Law before the end of 2008 and
the Company is working proactively with the key ministries of
Mines, Environment, and Taxation to develop an equitable fiscal and
regulatory framework for responsible mining in Ecuador. If the
finalization of the Mining Law and receipt of permits occur in
2008, a final feasibility study will be targeted for the second
half of 2009. Construction of the Quimsacocha project is targeted
to commence in 2010, with commercial production in the second half
of 2011.
Camp Caiman, French Guiana
During the third quarter of 2008, the Company continued to meet
with stakeholders regarding Camp Caiman and the conceptual Project
Harmonie plan to relocate the milling and processing facilities for
its project in French Guiana. The economic feasibility of Project
Harmonie and the likelihood of a mining permit being granted, can
only be assessed after the completion of the new mining framework
for French Guiana scheduled to be completed by the end of 2008. In
order to protect the interests of the Company's shareholders for
damages incurred to date, the appropriate legal claims have been
filed.
EXPLORATION UPDATE
Buckreef, Tanzania
A revised measured and indicated resource was reported in July
2008 of 1.0 million ounces of gold within 15.9 million tonnes with
an average grade of 2.0 grams gold per tonne, incorporating the new
Bukoli-Minzwel trend. Drilling has continued to test additional
targets across the property. Results from the metallurgical heap
leach test work on the Buckreef and Busolwa-Buziba deposits
indicate low to moderate leach recoveries. These results, together
with the new drill results, will be incorporated into a revised
financial model that will be available in December 2008.
FINANCIAL RESULTS
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Three months ended Nine months ended
September 30, September 30,
(unaudited) 2008 2007 2008 2007
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(in $ millions, except where noted) $ $ $ $
Financial Results
Revenues 226.9 170.2 660.0 483.9
Adjusted net earnings(1) 23.4 19.5 91.1 43.1
Net earnings (loss) 18.8 19.5 86.5 (50.6)
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Adjusted basic and diluted net
earnings per share(1) 0.08 0.07 0.31 0.15
Basic and diluted net earnings (loss)
per share 0.06 0.07 0.29 (0.17)
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Cash Flows
Operating cash flow 71.7 29.8 189.3 60.5
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(1) Adjusted net earnings and adjusted net earnings per share are non-GAAP
measures and represent net earnings (loss) before impairment charges.
Please refer to the Supplemental Information attached to the MD&A for
reconciliation to GAAP.
Net earnings in Q3 2008 were $18.8 million or $0.06 per share, a
decrease of $0.7 million compared to $19.5 million or $0.07 per
share in the third quarter of 2007. The decline in earnings is
mainly the result of higher mining costs, higher depreciation,
depletion and amortization, higher income and mining taxes and an
impairment charge of exploration properties, partially offset by
higher revenues. Higher mining costs were primarily the result of
higher royalty expenses and higher costs of inputs such as labour,
energy and consumables. The increase in depreciation, depletion,
and amortization is the result of higher production and the effect
of the prospective application of the finalization of the purchase
price equation of the Cambior acquisition at the end of 2007. The
change in income and mining taxes is mainly due to the higher
taxable income realized by both the Rosebel and the Canadian mining
operations. An impairment charge of $4.6 million was recorded with
respect to capitalized exploration expenditures. Higher revenues
were primarily due to higher realized gold prices in the third
quarter of 2008.
Operating cash flow was $71.7 million in Q3 compared to $29.8
million in the third quarter of 2007. The significant increase in
operating cash flow was mainly driven by higher gold and niobium
prices, and a higher number of gold ounces sold, partially offset
by higher mining costs due to higher production, and increased
royalties, labor, consumables and energy costs. Change in non-cash
working capital items also had a positive impact during the third
quarter of 2008. Cost increases during the quarter were partially
mitigated by cost improvement initiatives which contributed to
increased cash flow during the quarter. Operating cash flow for the
first nine months of 2008 was $189.3 million compared to $60.5
million during the first nine months of 2007.
KEY STATISTICS
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Three months ended Nine months ended
September 30, September 30,
(unaudited) 2008 2007 2008 2007
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Operating results - Gold mines
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Gold production (000 oz - IMG share)(1) 253 242 742 712
Gold sold (000 oz - IMG share)(1) 260 245 744 718
Gold price realized ($/oz) $853 $674 $876 $661
Cash cost ($/oz) (2)
Cash cost excluding royalties $427 $394 $416 $381
Royalties 54 43 60 41
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Cash cost $481 $437 $476 $422
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Operating results - Non-gold mine
---------------------------------
Niobium production (000 kg Nb) 1,154 1,102 3,340 3,292
Niobium sold (000 kg Nb) 964 938 3,227 3,271
Operating Margin for Niobium
($ per kg Nb)(2) $22 $14 $17 $10
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(1) Includes gold ounces in the Company's working interests of Tarkwa and
Damang.
(2) Cash cost and Unit operating margin per kilogram of niobium for the
Niobec mine are non-GAAP measures. Please refer to the Supplemental
Information attached to the MD&A for reconciliation to GAAP.
Operating results:
(i) Operating results - Gold mines
Consolidated cash costs increased by 10% or $44 per ounce to
$481 per ounce in the third quarter of 2008 compared to $437 per
ounce in the third quarter of 2007. Consolidated cash costs were
$476 per ounce in the first nine months of 2008, compared to $422
per ounce in the first nine months of 2007. The change in the
consolidated cash cost per ounce of gold in 2008 compared to 2007
is attributable to the following:
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Three months ended Nine months ended
September 30, September 30,
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$/oz $/oz
Higher gold production (18) (16)
Higher royalty expense 11 19
Higher energy costs 33 26
Higher consumables 6 12
Other 12 13
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Increase in consolidated cash cost per
ounce of gold produced, compared to 2007 44 54
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(ii) Operating results - Non-gold mine
IAMGOLD's Niobec mine in Quebec produces about 10% of the
world's niobium, which is an essential component of specialty steel
alloys. Niobec continued to improve its operating performance with
unit operating margin increases for the third quarter and first
nine months of 2008 of 57% and 70%, respectively, compared to the
same periods in 2007.
A conference call to review the Company's third quarter results
will take place on Thursday , November 6, 2008 at 11:00 a.m. EST.
Local call-in number: 416-915-5761 and N.A. toll-free:
1-800-796-7558. This conference call will also be audiocast on
IAMGOLD's website (www.iamgold.com).
A replay of this conference call will be available from 2:00
p.m. November 6 to November 14, 2008 by dialing local: 416-640-1917
and N.A. toll-free: 1-877-289-8525 passcode: 21286074#.
Forward Looking Statement
This press release includes certain "Forward-Looking Statements"
within the meaning of section 21E of the United States Securities
Exchange Act of 1934, as amended. All statements, other than
statements of historical fact, included herein, including without
limitation, statements regarding potential mineralization and
reserves, exploration results and future plans and objectives of
IAMGOLD, are forward-looking statements that involve various risks
and uncertainties. There can be no assurance that such statements
will prove to be accurate and actual results and future events
could differ materially from those anticipated in such statements.
Important factors that could cause actual results to differ
materially from IAMGOLD's expectations are disclosed under the
heading "Risk Factors" and elsewhere in IAMGOLD documents filed
from time-to-time with the Toronto Stock Exchange, the United
States Securities and Exchange Commission and other regulatory
authorities.
Cautionary Note to US Investors
The United States Securities and Exchange Commission (the "SEC")
permits mining companies, in their filings with the SEC, to
disclose only those mineral deposits that a company can
economically and legally extract or produce. The Company may use
certain terms in this press release such as "measured", "indicated"
and "inferred" "resources" that are prescribed by Canadian
regulatory policy and guidelines but are prohibited by the SEC from
use by US registered companies in their filings with the SEC. US
investors are urged to consider closely the disclosure in the
IAMGOLD Annual Report on Form 40-F. A copy of the 2007 Form 40-F is
available to shareholders, free of charge, upon written request
addressed to the Investor Relations Department.
Please note:
This entire press release may be accessed via fax, e-mail,
IAMGOLD's website at www.iamgold.com and through Marketwire's
website at www.marketwire.com. All material information on IAMGOLD
can be found at www.sedar.com or at www.sec.gov/edgar.shtml, or
www.iamgold.com.
Si vous desirez obtenir la version francaise de ce communique,
veuillez consulter le http://www.iamgold.com/fr/accueil.html.
Contacts: IAMGOLD Corporation Joseph F. Conway President &
CEO (416) 360-4712 or Toll Free: 1-888-IMG-9999 IAMGOLD Corporation
Carol Banducci Chief Financial Officer (416) 360-4742 or Toll Free:
1-888-IMG-9999 IAMGOLD Corporation Elaine Ellingham Senior VP,
Investor Relations and Communications (416) 360-4743 or Toll Free:
1-888-IMG-9999 Email: info@iamgold.com Website: www.iamgold.com
Renmark Financial Communications Inc. John Boidman (514) 939-3989
(514) 939-3717 (FAX) Email: jboidman@renmarkfinancial.com Renmark
Financial Communications Inc. Henri Perron (514) 939-3989 (514)
939-3717 (FAX) Email: hperron@renmarkfinancial.com Website:
www.renmarkfinancial.com
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