IAMGOLD Corporation ("IAMGOLD")(TSX: IMG)(NYSE: IAG)(BOTSWANA:
IAMGOLD) is pleased to provide an update of 2008 operational
performance and provide guidance for 2009 production, costs,
development and exploration.
All dollar amounts in this press release are expressed in US
dollars, unless otherwise indicated. This press release contains
unaudited numbers for the year ended December 31, 2008.
HIGHLIGHTS
2008
- Gold production in 2008 reached 997,000 ounces of gold, a 3%
increase over 2007 and exceeding original guidance by 8%
- Attributable gold production at the Rosebel Mine increased 20%
over 2007 to 315,000 ounces
- Cash costs(1) for 2008 are expected to be below the most
recent guidance range of $480 to $490 per ounce of gold and closer
to our original guidance of $455 to $470 per ounce, despite a
significant increase in input costs for much of the year
- Based on preliminary assessment, IAMGOLD expects to record an
impairment charge in the range of $90 to $125 million, on an
after-tax basis, related primarily to its Buckreef project in
Tanzania
2009
- Production for 2009 is forecast to total 880,000 ounces of
gold at an average cash cost(1) of $470 to $480 per ounce based on
an $800 per ounce gold price and $65 per barrel oil price
- Niobium production from the Niobec mine is forecast at 4,400
tonnes with operating margin levels projected in the $17-$19/kg(1)
range, with firm sales contracts for roughly 75% of 2009
production
- Capital expenditures of $216 million (or approximately $435
million including Essakane(2)) and greenfields exploration
expenditures of $34 million are planned for 2009
- (2)Acquisition of Orezone Resources Inc. ("Orezone") and its
Essakane project is scheduled for completion by end of February
with the Orezone shareholder vote planned for February 18th
Joseph Conway, IAMGOLD's President and CEO reports, "We had an
exceptional year at our operations, with gold production of almost
one million ounces, exceeding our initial guidance by about 8%. We
are particularly proud of our success with the many cost reduction
measures at our majority-owned operations."
2008 Preliminary Operating Results
IAMGOLD's 2008 gold production reached 997,000 ounces which
exceeds the revised 2008 guidance of 950,000 ounces by 5% and
original guidance by 8%. IAMGOLD operations performed very well in
2008 with increased throughput being the main contributor to
exceeding expectations. Gold production in the fourth quarter of
2008 was 255,000 ounces. Average cash costs(1) for 2008 were closer
to our original January 2008 estimates of $455 to $470 per ounce.
Higher prices for consumables, particularly fuel, were offset by
higher production.
On a preliminary, unaudited basis, IAMGOLD expects to record an
asset and goodwill impairment charge of $90 to $125 million on an
after-tax basis. The impairment relates primarily to the Buckreef
project in Tanzania.
Since the acquisition of Buckreef in mid-2006, IAMGOLD has
invested $15 million in exploration and development on the
property, completing over 100,000 metres 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. As previously noted, the majority of the $90 to $125
million impairment charge relates to the Buckreef project.
Mine Production - Actual 2008 & 2009 Forecast
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2008 Actual Production 2009 Forecast Production
(attributable oz gold) (attributable oz gold)
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Suriname - Rosebel 315,000 325,000
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Ghana - Tarkwa 119,000 136,000
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Ghana - Damang 37,000 40,000
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Mali - Sadiola 172,000 132,000
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Mali - Yatela 66,000 88,000
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Botswana - Mupane 101,000 80,000
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Canada - Doyon Division 118,000 79,000
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Canada - Sleeping Giant 69,000 0
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TOTAL 997,000 880,000
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2008 Actual Production 2009 Forecast Production
(tonnes Niobium) (tonnes Niobium)
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Canada - Niobec 4,396 4,400
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2009 Outlook
In 2009, IAMGOLD expects to produce 880,000 ounces of gold at a
cash cost(1) of $470 to $480 per ounce. The 2009 production level
reflects the completion of mining at Sleeping Giant in Q3 2008, the
closure of the Doyon mine by mid-year 2009, and lower grades at
Sadiola and Mupane, partly offset by throughput increases at
Rosebel and Tarkwa, and a grade increase at Yatela. Niobium
production at Niobec is forecast to be comparable to 2008
levels.
Assumptions used in the 2009 forecasts include $800 per ounce
gold, $65 per barrel oil and a Canadian/US dollar exchange rate of
1.15. As part of IAMGOLD's focus on controlling costs, pricing for
approximately 50% of the fuel required for 2009 at IAMGOLD
operations (excluding Tarkwa and Damang) has been capped at an
average price of $61.50 per barrel through the use of call options.
Currency contracts covering approximately 50% of IAMGOLD's exposure
to the Canadian dollar have been put in place to reduce exposure to
fluctuations in the Canadian dollar.
2009 Expenditures & Project Updates
Capital expenditures are expected to total $216 million in 2009
or $435 million including the acquisition of Orezone and its
Essakane gold project in Burkina Faso. The major planned capital
expenditures by project are as follows:
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Development Projects 2009 Forecast Capital 2010 Forecast Capital
Expenditures (millions) Expenditures (millions)
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Westwood $81 $86
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Quimsacocha $14 To Be Determined
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---------------------------------------------------------------------------
Pending Acquisition 2009 Forecast Capital 2010 Forecast Capital
Expenditures (millions) Expenditures (millions)
---------------------------------------------------------------------------
Essakane(2) $219 $131
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(2) completion of the acquisition of Essakane is subject to, among other
things approval by the shareholders of Orezone
------------------------------------------------
Mining Operations 2009 Forecast Capital
Expenditures (millions)
------------------------------------------------
Rosebel $55
------------------------------------------------
Niobec $56
------------------------------------------------
Others combined $10
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Pending Acquisition
Essakane Project, Burkina Faso
On December 11, 2008, IAMGOLD announced a transaction with
Orezone which, upon completion of a plan of arrangement, will
result in the acquisition of the Essakane gold project in Burkina
Faso, West Africa. Completion of the transaction is expected in
late February, subject to the approval by Orezone shareholders at a
special meeting to be held on February 18 and final court
approval.
Orezone commenced construction in September 2008 on the 4
million ounce Essakane gold project that will contribute average
gold production of 315,000 ounces per year over a minimum nine-year
mine life. Production is anticipated in Q3 2010, with initial
annual production as high as 375,000 ounces due to higher grade,
near surface, soft rock zones. Capital expenditures of $219 million
are planned by IAMGOLD for Essakane for 2009 with major components
including mill equipment and construction, mining equipment,
pre-stripping, and the construction of water management
structures.
IAMGOLD is in the process of securing a $220 million project
debt facility with a group of lenders familiar with the
project.
Development Stage Projects
Westwood Project, Quebec
An updated Preliminary Assessment Study for Westwood was
announced January 2009 demonstrating potential for production
commencing 2013 at 200,000 ounces per year over the first 13 years,
with average cash costs(1) of $290 per ounce. The raise boring,
exploration shaft, and ramp that commenced in 2008 will continue in
2009. Capital expenditures of $81 million for 2009 include: costs
to commence shaft sinking with a target of 500 metres for 2009,
construction of the headframe, completion of a ventilation shaft,
significant lateral development work, and furthering development of
the exploration ramp. The plan includes 41,000 metres of infill
drilling to upgrade resources to a higher confidence level. A
further 32,000 metres of exploration drilling will test both down
dip and along strike on the three major mineralized corridors at
Westwood.
Quimsacocha, Ecuador
The recent approval of Ecuador's new Mining Law by the
legislative assembly is another significant step towards the final
signing of the Mining Law by President Correa, which is expected
shortly. Companies will also need to sign individual exploitation
contracts with the Ministry of Mines and Petroleum (MMP). This
process is expected to be concurrent with the development of mining
and environmental regulations in support of the Mining Law. Upon
signing a satisfactory exploitation contract, IAMGOLD will proceed
with the remaining studies and a final feasibility study for
Quimsacocha is expected to take about 12 months to complete at a
cost of $14 million.
Camp Caiman, French Guiana
The new mining framework expected by the end of 2008 has not yet
been announced by the French authorities. This new framework is to
focus on responsible mining with further, specific consideration of
the bio-diversity of French Guiana. IAMGOLD has had successful
discussions with many of the stakeholders and has proposed an
alternative, lower-impact Project Harmonie development plan. Until
the framework is announced, IAMGOLD is not able to confirm the
likelihood that a new application for a mining permit will be
granted. Sufficient funds have been allocated to maintain the
property and infrastructure pending a government decision.
Operations
Rosebel Mine, Suriname
At Rosebel, IAMGOLD's flagship operation, attributable gold
production in 2008 of 315,000 ounces represents a 20% increase over
2007. The increase reflects improvements in throughput, cut-off
grade optimization and recovery. In 2009, attributable production
is anticipated at 325,000 ounces, a further 3% increase reflecting
the successful increase in throughput at the mine, offset somewhat
by lower grades.
Capital expenditures of $55 million are planned for Rosebel in
2009. Major components include a $14 million near-mine exploration
program consisting of 90,000 metres of drilling, $8.2 million to
complete the mill expansion in Q1, and $10.4 million for additional
mine equipment for expansion and as part of the on-going equipment
replacement schedule. The 90,000-metre near-mine drill program is
designed to upgrade additional resources to reserves and pursue
targets along the favourable geological horizon that extends a
considerable distance along both limbs of the syncline.
The cash cost(1) at Rosebel is expected to decline in 2009 due
to IAMGOLD's acquisition in Q4 2008 of an 84.5% equity interest in
Euro Ressources SA ("EURO"), which holds a participation royalty in
Rosebel. This acquisition effectively reduces Rosebel's cash
cost(1) by about $45 per ounce at current gold prices. This allows
for a lower cut-off grade to be applied to the calculation of
reserves, which is expected to increase Rosebel reserves by
approximately one year's production but result in a slightly lower
overall grade.
Niobec Mine, Quebec:
The Niobec mine contributes approximately 7.5% of the world's
annual production of niobium, a key component in specialty high
strength steels. Notwithstanding the fall in steel demand,
IAMGOLD's realized price for niobium remained strong in Q4. Firm
sales agreements for approximately 75% of IAMGOLD's projected 2009
niobium production have been signed and a further 15% has been
allocated on an options basis to specific customers, all at prices
similar to Q4 2008. Niobec is a long life, high margin operation
that contributes solid cash flow to advance IAMGOLD's growth
strategy.
In 2009, production is expected at approximately the same levels
as 2008. The shaft deepening project that commenced in 2007 will be
completed in March 2009 and will provide access to mine three lower
levels.
In 2009, capital expenditures at Niobec of $56 million will
facilitate significant increases in production, reserves and
resources. Most significantly, $30 million is allocated in 2009
(plus $9 million in 2010) for a mill expansion to be completed in
Q3 2010 that will allow a production increase of up to 25%. This
project includes a new water pumping station with increased
capacity to service the expanded mill. After positive results from
a study in 2008, a $9 million plan ($3 million in 2010) was
approved for construction by mid-2010 of a paste backfill plant and
underground piping network that will have the effect of doubling
the resources and mine life at Niobec. Other capital projects at
Niobec relate to the continued underground development and
expansion to reach future stopes in the lower mine areas ($7.2
million). A program of 8,400 metres of exploration drilling over
two years is testing for extensions of the orebody, which remains
open at depth.
Exploration Activities
IAMGOLD plans greenfields exploration expenditures for 2009 of
$34 million, of which $2.5 million is expected to be capitalized.
This compares with approximately $35 million spent in 2008.
IAMGOLD's exploration is focused in a few key areas, namely West
Africa, the Guyana Shield of South America, and in the Andes and
Brazil regions of South America. A portion of the exploration funds
is earmarked to take advantage of the opportunities resulting from
current market conditions.
Financial Position
IAMGOLD continues to maintain a strong cash position and
positive cash flow from operations. In addition, IAMGOLD has held
approximately 170,000 ounces of gold bullion. In anticipation of
the acquisition of Orezone and the construction of the Essakane
mine, a portion of the gold position is being sold and an estimated
$220 million project debt facility is to be completed. Funds will
be drawn from the facility as required which is not expected to be
until the latter part of 2009.
Joseph Conway, President and CEO comments "We now have a number
of quality development stage projects in the pipeline towards
production. Westwood in Quebec will be advanced significantly in
2009 after continued positive results and we anticipate that
Quimsacocha will be able to move forward towards feasibility with
the recent positive steps on Ecuador's new Mining Law. In addition,
our pending acquisition of the Essakane project in West Africa
provides another large scale project and is expected to be in
production by the latter half of 2010."
ABOUT IAMGOLD
IAMGOLD is a leading mid-tier gold mining company producing
almost one million ounces from 7 mines on 3 continents. IAMGOLD is
focused on growth with a target to reach 1.8 million ounces gold
production by 2012. IAMGOLD is uniquely positioned, with a strong
financial base, together with the management and operations
expertise to execute on our aggressive growth objectives. IAMGOLD
is focused in West Africa, the Guiana Shield of South America and
in Quebec with a pipeline of development and exploration projects.
IAMGOLD continues to assess accretive acquisition opportunities
with a strategic fit. IAMGOLD is listed on the Toronto Stock
Exchange ("IMG"), the New York Stock Exchange ("IAG") and the
Botswana Stock Exchange.
(1) CASH COSTS
Cost and operating margin are non-GAAP measures. Please refer to
the Supplemental information attached to the Company's MD&A
filed on sedar for additional details.
Forward Looking Statement
This press release contains forward-looking statements. All
statements, other than of historical fact, that address activities,
events or developments that the Company believes, expects or
anticipates will or may occur in the future (including, without
limitation, statements regarding the estimation of mineral
resources, exploration results, potential mineralization, potential
mineral resources and mineral reserves) are forward-looking
statements. Forward-looking statements are subject to a number of
risks and uncertainties that may cause the actual results of the
Company to differ materially from those discussed in the
forward-looking statements. Factors that could cause actual results
or events to differ materially from current expectations include,
among other things, failure to establish estimated mineral
resources, the possibility that future exploration results will not
be consistent with the Company's expectations, changes in world
gold markets and other risks disclosed in IAMGOLD's most recent
Form 40-F/Annual Information Form on file with the US Securities
and Exchange Commission and Canadian provincial securities
regulatory authorities. Any forward-looking statement speaks only
as of the date on which it is made and, except as may be required
by applicable securities laws, the Company disclaims any intent or
obligation to update any forward-looking statement.
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.
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
Elaine Ellingham Senior VP, Investor Relations (416) 360-4743 or
Toll-Free: 1-888-IMG-9999 Email: info@iamgold.com Website:
www.iamgold.com
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