Q2/17 gross profit up 47%,
operating cash flow up 25%, production up 13%; all-in
sustaining costs/oz down 12%
All monetary amounts are expressed in U.S.
dollars, unless otherwise indicated.
Refer to the
Management Discussion and Analysis (MD&A) and Unaudited
Consolidated
Interim Financial Statements for the six
months ended June 30, 2017 for more
information.
TORONTO, Aug. 9, 2017 /CNW/ - IAMGOLD Corporation
("IAMGOLD" or the "Company") reported its consolidated financial
and operating results for the quarter ended June 30, 2017.
"We had another outstanding quarter," said Steve Letwin, President and CEO of IAMGOLD.
"Rosebel and Essakane are benefitting from major operational
improvements and the Westwood
ramp-up remains on track. Net operating cash flow increased 25%
from the same quarter last year and 30% from the previous quarter,
and our year-to-date gross profit was 129% higher than the previous
year. Our balance sheet remains strong with $800 million in cash, cash equivalents and
restricted cash.
"The pace of transformation at IAMGOLD is accelerating,"
continued Mr. Letwin. "A number of catalysts have moved into gear
as we execute both short-cycle and long-cycle growth strategies.
The Rosebel concession increased its reserves by 80% and next month
we expect an initial resource estimate for Saramacca. We entered
into a joint venture for our Côté Gold Project and completed a
pre-feasibility study, which saw a significant conversion of
resources to reserves and demonstrated low operating costs and an
attractive rate of return."
Second Quarter 2017 Highlights
Operating Performance
- Attributable gold production of 223,000 oz, up 13% from
Q2/16.
- Cost of sales1 of $767/oz, down 5% from Q2/16.
- All-in sustaining costs2 of $975/oz sold, down 12% from Q2/16.
- Total cash costs2 of $735/oz produced, down 3% from Q2/16.
- Gold margin2 of $516/oz, up $3/oz
from Q2/16.
- Maintaining 2017 production and cost guidance.
Financials
- Gross profit of $35.9 million, up
$11.5 million or 47% from Q2/16.
- Net earnings of $506.5 million
($1.09 per share), up from a net loss
of $12.2 million ($0.03 per share) in Q2/16, primarily due to
impairment charge reversals at the Côté Gold Project and the
Rosebel mine.
- Adjusted net earnings2 of $4.3 million ($0.01
per share2), down $1.6
million ($nil per share2) from Q2/16.
- Net cash from operating activities of $88.7 million, up 25% from Q2/16 and 30% from
Q1/17.
- Net cash from operating activities before changes in working
capital2 of $70.4 million,
up 7% from Q2/16
- Cash, cash equivalents and restricted cash of $800.1 million as at June
30, 2017.
- Replaced the restricted cash held by the Government of
Quebec to guarantee the asset
retirement obligation related to the Doyon mine with
uncollateralized surety bonds of C$123.6
million (June 30, 2017 -
$95.2 million).
Developments
- On June 20, 2017, completed the
sale of a 30% interest in the Côté Gold Project to Sumitomo Metal
Mining Co., Ltd. for $195 million. As
a result, we recognized a reversal of the previously recorded
impairment charge of $400 million,
and a gain on the sale of $19.2
million.
- On June 5, 2017, announced
positive results from a pre-feasibility study for the Côté Gold
Project, which outlined an economically viable project and
confirmed the development concept previously set out in the
Preliminary Economic Assessment. Highlights of the project
economics include attributable proven and probable reserves of 3.8
million ounces, a mine life of 17 years with average annual
attributable production of 207,000 ounces, life-of-mine cash costs
of $605 an ounce and all-in
sustaining costs of $689 an ounce, an
after-tax Net Asset Value of $703
million and an after-tax Internal Rate of Return of
14%.
- On May 15 and June 16, 2017, reported final drilling results
from the Saramacca drilling campaign in preparation for an initial
resource estimate in September 2017.
Highlights include 43.5 metres grading 12.26 g/t Au and 41.0 metres
grading 5.56 g/t Au.
- On May 11, 2017, reported final
results from the winter 2017 drilling program at the Monster Lake
Project in Quebec, indicating
continuity of very high grades and new areas of mineralization.
Highlights include 4.4 metres grading 5.21 g/t Au and 3.1 metres
grading 121.67 g/t Au. Subsequent to the quarter-end, on
July 6, 2017, additional results were
reported, with highlights including 5.0 metres grading 80.28 g/t
Au.
- On May 31, 2017, reported
additional drilling results at the Boto Gold Project in
Senegal in preparation for a
resource update later this year. Highlights include 19 metres
grading 3.28 g/t Au, and 77.0 metres grading 4.35 g/t Au, including
9.0 metres grading 11.76 g/t Au.
Subsequent to Quarter-End
- On July 26, 2017, reported a
reserve and resource update for the Rosebel Mining concession,
including an 80% increase in attributable reserves to 3.5 million
ounces from 2.0 million ounces at the end of 2016, which is
expected to extend the life of mine to 2028, leading to the
reversal of a previously recognized impairment charge. The reserve
and resource update does not include Saramacca.
SUMMARY OF
FINANCIAL AND OPERATING RESULTS
|
|
|
|
|
Three months
ended
June 30,
|
Six months
ended
June 30,
|
Financial Results
($ millions, except where noted)
|
2017
|
2016
|
2017
|
2016
|
Revenues
|
$
|
274.5
|
$
|
232.5
|
$
|
535.0
|
$
|
452.2
|
Cost of
sales
|
$
|
238.6
|
$
|
208.1
|
$
|
464.1
|
$
|
421.3
|
Gross
profit
|
$
|
35.9
|
$
|
24.4
|
$
|
70.9
|
$
|
30.9
|
Net earnings (loss)
attributable to equity holders of IAMGOLD
|
$
|
506.5
|
$
|
(12.2)
|
$
|
488.5
|
$
|
40.9
|
Net earnings (loss)
attributable to equity holders ($/share)
|
$
|
1.09
|
$
|
(0.03)
|
$
|
1.06
|
$
|
0.10
|
Adjusted net earnings
(loss) attributable to equity holders of
IAMGOLD1
|
$
|
4.3
|
$
|
5.9
|
$
|
9.4
|
$
|
(1.4)
|
Adjusted net earnings
(loss) attributable to equity holders
($/share)1
|
$
|
0.01
|
$
|
0.01
|
$
|
0.02
|
$
|
—
|
Net cash from
operating activities
|
$
|
88.7
|
$
|
71.2
|
$
|
157.0
|
$
|
122.6
|
Net cash from
operating activities before changes in working
capital1
|
$
|
70.4
|
$
|
65.9
|
$
|
156.2
|
$
|
117.6
|
Key Operating
Statistics
|
|
|
|
|
Gold sales –
attributable (000s oz)
|
219
|
187
|
431
|
378
|
Gold production –
attributable (000s oz)
|
223
|
197
|
437
|
388
|
Average realized gold
price1 ($/oz)
|
$
|
1,251
|
$
|
1,269
|
$
|
1,241
|
$
|
1,228
|
Cost of
sales2 ($/oz)
|
$
|
767
|
$
|
805
|
$
|
768
|
$
|
816
|
Total cash
costs1 ($/oz)
|
$
|
735
|
$
|
756
|
$
|
751
|
$
|
751
|
All-in sustaining
costs1 ($/oz)
|
$
|
975
|
$
|
1,114
|
$
|
983
|
$
|
1,099
|
Gold
margin1 ($/oz)
|
$
|
516
|
$
|
513
|
$
|
490
|
$
|
477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 This is
a non-GAAP measure. Refer to the non-GAAP performance measures
section of the MD&A.
|
2 Cost of
sales, excluding depreciation, as disclosed in note 29 of the
Company's consolidated interim financial statements is on an
attributable ounce sold basis (excluding the non-controlling
interests of 10% at Essakane and 5% at Rosebel) and doesn't include
Joint Ventures which are accounted for on an equity
basis.
|
SECOND QUARTER 2017 HIGHLIGHTS
Financial Performance
- Revenues for the second quarter 2017 were $274.5 million, up $42.0
million or 18% from the same prior year period, primarily
due to higher sales at Essakane ($30.0
million) and Westwood
($17.4 million), partially offset by
a lower realized gold price ($4.3
million) and lower sales at Rosebel ($1.4 million).
- Cost of sales for the second quarter 2017 was $238.6 million, up $30.5
million or 15% from the same prior year period. The increase
was primarily due to higher operating costs ($19.7 million), higher depreciation ($9.2 million) and higher royalties expense
($1.6 million). Operating costs were
higher primarily as a result of higher sales and lower capitalized
stripping at Essakane and higher mining activities at Westwood.
- Depreciation expense for the second quarter 2017 was
$71.5 million, up $9.2 million from the same prior year period
primarily due to higher production and sales and higher
amortization of capitalized stripping at Essakane, partially offset
by lower amortization of capitalized stripping at Rosebel.
- Income tax expense for the second quarter 2017 was $53.5 million, up $39.5
million from the same prior year period. Income tax expense
for the second quarter 2017 comprised current income tax expense of
$19.7 million (2016 - $4.6 million) and deferred income tax expense of
$33.8 million (2016 - $9.4 million). The increase in income tax expense
was primarily due to changes to deferred income tax assets and
liabilities as a result of the reversals of impairment charges and
fluctuations in foreign exchange, and differences in the level of
taxable income in our operating jurisdictions from one period to
the next.
- Net earnings attributable to equity holders for the second
quarter 2017 was $506.5 million
($1.09 per share), up from a net loss
of $12.2 million ($0.03 per share) for the same prior year period.
The increase of $518.7 million or
$1.12 per share was mainly due to
reversals of impairment charges relating to the Côté Gold Project
and the Rosebel mine ($524.1 million)
and the resulting gain on the sale of a 30% interest in the Côté
Gold Project ($19.2 million), and
higher gross profit ($11.5 million),
partially offset by higher income tax expense ($39.5 million).
- Adjusted net earnings attributable to equity
holders2 for the second quarter 2017 were $4.3 million ($0.01
per share2), down $1.6
million ($nil per share) from the same prior year
period.
- Net cash from operating activities for the second quarter 2017
was $88.7 million, up $17.5 million from the same prior year period.
The increase was mainly due to higher earnings after non-cash
adjustments ($13.3 million), a change
in the movement of non-cash working capital items ($13.0 million), and lower net settlement of
derivatives ($3.7 million), partially
offset by an increase in income taxes paid ($12.0 million).
- Net cash from operating activities before changes in working
capital2 for the second quarter 2017 was $70.4 million, up $4.5
million from the same prior year period.
Financial Position
- Cash, cash equivalents and restricted cash were $800.1 million at June 30,
2017, up $37.4 million from
December 31, 2016. The increase was
primarily due to net proceeds from the issuance of the 7.00% senior
secured notes on March 16, 2017
($393.6 million), cash generated from
operating activities ($173.7
million), net proceeds from the sale of a 30% interest in
the Côté Gold Project ($96.5
million), proceeds from the issuance of flow-through shares
($15.1 million), partially offset by
the redemption of the 6.75% senior unsecured notes ($505.6 million), spending on Property, plant and
equipment and Exploration and evaluation assets ($93.8 million), interest paid ($16.5 million) and income taxes paid
($16.7 million).
Production and Costs
- Attributable gold production, inclusive of joint venture
operations, was 223,000 ounces for the second quarter 2017, up
26,000 ounces from the same prior year period. The increase was due
to the continued ramp-up at Westwood (17,000 ounces) and higher throughput
at Essakane (12,000 ounces), partially offset by lower grades at
Sadiola (4,000 ounces).
- Attributable gold sales, inclusive of joint venture operations,
were 219,000 ounces for the second quarter 2017, up 32,000 ounces
from the same prior year period, primarily due to higher sales at
Essakane (21,000 ounces) and Westwood (14,000 ounces).
- Cost of sales1 per ounce for the second quarter 2017
was $767, down 5% from the same prior
year period due to higher sales, partially offset by the factors
noted in the Cost of sales discussion in the Financial Performance
section above.
- Total cash costs2 per ounce produced for the second
quarter 2017 were $735, down 3% from
the same prior year period primarily due to higher production,
partially offset by lower capitalized stripping due to mine
sequencing at Essakane. The normalization of Westwood's costs was discontinued in the
second quarter 2017 (Q2/16 - $23 per
ounce produced) and realized derivative losses were $nil (Q2/16 -
gain of $2 per ounce produced).
- All-in sustaining costs2 per ounce sold were
$975 for the second quarter 2017,12%
lower than the same prior year period as a result of lower
sustaining capital expenditures. The normalization of Westwood's costs was discontinued in the
second quarter 2017 (Q2/16 - $24 per
ounce sold) and realized derivative losses were $nil (Q2/16 - gain
of $2 per ounce sold).
Commitment to Zero Harm Continues
- The DART rate3, representing the frequency of all
types of serious injuries across IAMGOLD for the second quarter
2017 was 0.44, below our target of 0.56.
ATTRIBUTABLE GOLD
PRODUCTION AND COSTS
|
|
|
|
|
|
|
Gold
Production
(000s oz)
|
Cost of
Sales1 ($ per ounce)
|
Total Cash
Costs3 ($ per ounce
produced)
|
All-in
Sustaining
Costs3
($ per ounce sold)
|
Three months ended
June 30,
|
2017
|
2016
|
2017
|
2016
|
2017
|
2016
|
2017
|
2016
|
Owner-operator
|
|
|
|
|
|
|
|
|
Essakane
(90%)
|
101
|
89
|
$
|
750
|
$
|
728
|
$
|
698
|
$
|
679
|
$
|
922
|
$
|
1,090
|
Rosebel
(95%)
|
74
|
73
|
752
|
789
|
722
|
765
|
923
|
1,051
|
Westwood
(100%)2
|
33
|
16
|
843
|
1,278
|
800
|
948
|
995
|
1,157
|
|
208
|
178
|
$
|
767
|
$
|
805
|
723
|
738
|
975
|
1,130
|
Joint
Ventures
|
15
|
19
|
|
|
910
|
926
|
965
|
970
|
Total
operations
|
223
|
197
|
|
|
$
|
735
|
$
|
756
|
$
|
975
|
$
|
1,114
|
Cost of
sales1 ($/oz)
|
|
|
$
|
767
|
$
|
805
|
|
|
|
|
Cash costs, excluding
royalties
|
|
|
|
|
$
|
682
|
$
|
703
|
|
|
Royalties
|
|
|
|
|
53
|
53
|
|
|
Total cash
costs3
|
|
|
|
|
$
|
735
|
$
|
756
|
|
|
All-in sustaining
costs3
|
|
|
|
|
|
|
$
|
975
|
$
|
1,114
|
|
Gold
Production
(000s oz)
|
Cost of
Sales1 ($ per ounce)
|
Total Cash
Costs3 ($ per ounce produced)
|
All-in Sustaining
Costs3
($ per ounce sold)
|
Six months ended
June 30,
|
2017
|
2016
|
2017
|
2016
|
2017
|
2016
|
2017
|
2016
|
Owner-operator
|
|
|
|
|
|
|
|
|
Essakane
(90%)
|
194
|
177
|
$
|
770
|
$
|
741
|
$
|
730
|
$
|
685
|
$
|
946
|
$
|
1,103
|
Rosebel
(95%)
|
148
|
141
|
745
|
802
|
724
|
766
|
904
|
1,004
|
Westwood
(100%)2
|
63
|
31
|
818
|
1,256
|
780
|
906
|
980
|
1,017
|
|
405
|
349
|
$
|
768
|
$
|
816
|
736
|
737
|
983
|
1,120
|
Joint
Ventures
|
32
|
39
|
|
|
937
|
877
|
988
|
908
|
Total
operations
|
437
|
388
|
|
|
$
|
751
|
$
|
751
|
$
|
983
|
$
|
1,099
|
Cost of
sales1 ($/oz)
|
|
|
$
|
768
|
$
|
816
|
|
|
|
|
Cash costs, excluding
royalties
|
|
|
|
|
$
|
699
|
$
|
699
|
|
|
Royalties
|
|
|
|
|
52
|
52
|
|
|
Total cash
costs3
|
|
|
|
|
$
|
751
|
$
|
751
|
|
|
All-in sustaining
costs3
|
|
|
|
|
|
|
$
|
983
|
$
|
1,099
|
|
|
|
|
1 Cost of
sales, excluding depreciation, as disclosed in note 29 of the
Company's consolidated interim financial statements is on an
attributable ounce sold basis (excluding the non-controlling
interests of 10% at Essakane and 5% at Rosebel) and does not
include Joint Ventures which are accounted for on an equity
basis.
|
2 Cost of
sales per ounce for Westwood does not include the impact of
normalization of costs for the three and six months ended June 30,
2017 of $nil and $12 per ounce (three and six months ended June 30,
2016 - $283 and $315), respectively.
|
3 This is
a non-GAAP measure. Refer to the non-GAAP performance measures
section of the MD&A. Consists of Essakane, Rosebel, Westwood
and the Joint Ventures on an attributable basis.
|
OPERATIONS ANALYSIS BY MINE
SITE
(Refer to the Q2 2017 MD&A for further details.)
Essakane Mine - Burkina Faso
(IAMGOLD interest - 90%)
Attributable gold production of 101,000 ounces for the second
quarter 2017 was 13% higher than the same prior year period due to
higher throughput, partially offset by lower grades. Mill
throughput was 24% higher despite 85% hard rock (Q2/16 - 70%)
as a result of increased circuit availability, as well as the new
SAG mill liner design, which increased capacity and mill speed.
With annualized throughput of almost 14 million tonnes per annum,
the mill is performing significantly above nameplate capacity of
10.8 million tonnes per annum, which provides upside to the current
life of mine plan. To further increase reserves and resources, and
extend the life of mine, a heap leach pre-feasibility study has
been initiated and is expected to be completed by the second
quarter 2018. A heap leach plant could provide a low-cost method
for processing marginal and low grade ore as well as some existing
stockpiles, which together with the carbon-in-leach plant would
increase total annual production.
Due to mine sequencing, grades were lower in the second quarter
2017 compared to the prior year period. Mining activity increased
with the continuation of initiatives to improve mining efficiency,
including the commissioning of two production drills and a new
loader which entered production during the quarter. Mill recoveries
have improved as mining continues in non-graphitic zones.
Optimization and analysis of the ore characterization is underway
as part of the geometallurgical study which commenced last year to
help better identify where there are pockets of graphitic material
in the ore zones. The scope of the geometallurgical study has been
expanded and is now expected to be completed by the end of 2017. In
addition, Essakane is in the engineering stage of adding an oxygen
plant to the circuit, which is expected to be commissioned at the
end of 2018. The oxygen plant is expected to increase recoveries
through improved leach kinetics and to improve the efficiency of
the circuit by reducing reagents consumption. During the
second quarter, construction of the solar plant commenced and is
expected to be completed by the end of 2017.
Cost of sales of $750 per ounce
and total cash costs of $646 per
ounce produced for the second quarter 2017 were both 3% higher than
same prior year period. The increases were primarily the result of
lower capitalized stripping costs due to mine sequencing and higher
processing costs with the increased throughput of hard rock,
partially offset by higher sales and production, respectively.
All-in sustaining costs per ounce sold for the second quarter
2017 of $922 were 15% lower compared
to the same prior year period, primarily due to lower sustaining
capital expenditures and higher sales.
The impact on cash costs per ounce produced and all-in
sustaining costs per ounce sold from realized derivative losses was
$nil in the second quarter 2017 (Q2/16 - $4 per ounce produced and $3 per ounce sold).
Rosebel Mine - Suriname (IAMGOLD interest - 95%)
Attributable gold production for the second quarter 2017 was
74,000 ounces compared with 73,000 ounces for the same prior year
period. Although the percentage of hard rock in the mill feed
increased to 42% from 36% in the prior year, the mill maintained
throughput due to major mill improvements completed in the latter
half of 2016, including the installation of a secondary crusher and
power flex drive combined with the new liner design. The grade was
up slightly due to mine sequencing, while a marginally lower
recovery rate was attributed to circuit maintenance, resulting in
slightly coarser grinds and lower retention times. Mining
activities increased due to mine sequencing and less rainfall.
Cost of sales of $752 per ounce
and total cash costs of $651 per
ounce produced for the second quarter 2017 were 5% and 6% lower,
respectively, than the same prior year period. The improvement
was primarily due to lower fuel consumption, partially offset
by higher realized fuel prices.
All-in sustaining costs of $923
per ounce sold for the second quarter 2017 were 12% lower than the
same prior year period primarily due to lower cost of sales and
sustaining capital expenditures.
Reserve and Resource Update Announced on July 26, 2017
As a result of continuous efforts to maximize reserves through
mine design optimization, cost reductions, and near-pit
exploration, Rosebel announced a reserve and resource update for
the Rosebel Mine concession on July 26,
2017. Estimated attributable proven and probable gold
reserves at Rosebel increased by 80% to 3.5 million ounces at the
end of June 2017 from 2.0 million
ounces at the end of 2016. There was no change in the
$1,200 per ounce gold price
assumption for estimating Rosebel's reserves. The significant
increase in reserves extends the life of the Rosebel mine to 2028.
Total attributable measured and indicated gold resources (inclusive
of reserves) increased by 55% to 8.9 million ounces and the
attributable inferred resource increased by 322% to 2.5 million
ounces. There was also no change in the $1,500 per ounce gold price assumption for
estimating mineral resources. (Refer to IAMGOLD's July 26, 2017 news release)
The reserve and resource update excludes the Saramacca
deposit. The current phase of the infill drilling program at
the Saramacca project has been completed with approximately 20
kilometres of drilling completed to date during 2017. Deposit
models continue to be updated with drill results to support a
resource estimate, which is expected to be completed in the third
quarter 2017. Once the resource model is completed, the Rosebel
team will complete project plans and mine designs to allow
incorporation of the Saramacca feed into the overall Rosebel life
of mine plan. This work should be completed sometime in the
first half of 2018. We expect our ongoing exploration program at
Saramacca will further enhance the value of Rosebel.
Additionally, Rosebel has initiated baseline environmental
studies as well as detailed work on a 30-kilometre rail corridor to
efficiently transport ore from the deposit to the mill.
Westwood Mine - Canada
(IAMGOLD interest - 100%)
Production of 33,000 ounces of gold in the second quarter 2017
was 106% higher than the same prior year period, primarily due to
the continued ramp-up resulting in increased tonnes mined and
higher throughput. Although head grade for the quarter of 6.37 g/t
Au was higher than the prior year period, it was lower than the
grade mined during the quarter. This was due to processing marginal
ore stockpiles to exploit available mill capacity resulting from
the continued ramp-up. Head grade excluding marginal ore was 8.60
g/t for the second quarter 2017.
During the quarter, underground development continued opening up
access to new mining areas with lateral and vertical development of
approximately 4,500 and 700 metres, respectively, averaging 57
metres per day. The plan for Westwood includes 20 kilometres of development
during 2017, including lateral and vertical development of 17.8 and
2.6 kilometres, respectively, with a focus on ramp breakthroughs
and infrastructure development in future development blocks at
lower levels.
Cost of sales of $843 per ounce
and total cash costs of $800 per
ounce produced for the second quarter 2017 were 34% and 16% lower,
respectively, than the same prior year period. The improvement was
primarily due to higher sales and production, respectively,
resulting from the continued ramp-up.
All-in sustaining costs of $995
per ounce sold for the second quarter 2017 were 14% lower than the
same prior year period, primarily due to higher sales volume and
lower cost of sales, partially offset by higher sustaining capital
expenditures.
Westwood had been normalizing
costs attributed to inventory in accordance with International
Financial Reporting Standards since the seismic event in
May 2015. Normalization of these
costs ended at the onset of the second quarter 2017 when
Westwood reached normal production
levels (June 30, 2016 - $4.6 million). In the same prior year period,
total cash costs and all-in sustaining costs were reduced by
$280 per ounce produced and
$283 per ounce sold,
respectively.
Sadiola Mine - Mali (IAMGOLD
interest - 41%)
Attributable gold production of 14,000 ounces for the second
quarter 2017 was 22% lower than the same prior year period due to
lower grades, partially offset by increased throughput.
Total cash costs of $898 per ounce
produced and all-in sustaining costs of $936 per ounce sold decreased by 5% and 4%,
respectively, as a result of greater drawdowns of marginal ore
stockpiles compared to the prior year period.
At this time there has been no change in the status of the
Sadiola Sulphide Project. Discussions with the Government of
Mali continue. A decision to
move forward will be contingent upon the Government's renewal of
the construction and operating permits, the power agreement and
fiscal terms related to the project. In parallel, a review of the
current life-of-mine plan is being undertaken.
DEVELOPMENT PROJECT
(Refer to the Q2 2017 MD&A for further details.)
Côté Gold Project
Joint Venture with Sumitomo Metal Mining Co., Ltd.
("SMM")
On June 20, 2017, we completed the
sale of a 30% interest in the Côté Gold Project in Ontario to SMM for aggregate consideration of
$195 million, of which $100 million was received upon the closing of the
transaction. The remaining $95
million is due upon the earlier of: (i) 18 months following
the closing date (December 20, 2018),
(ii) the date the Côté Gold Project feasibility study is made
available to the public, and (iii) should it elect to do so and
only as permitted under the Joint Venture Agreement, the date SMM
sells its participating interest. Upon closing of the transaction,
IAMGOLD entered into a Joint Venture Agreement with SMM, forming an
unincorporated joint venture with respect to the Project, with
IAMGOLD having 70% and SMM having 30% of the total outstanding
participating interests under the Joint Venture Agreement.
Completed Pre-feasibility Study ("PFS")
During the quarter, we announced the results of a
pre-feasibility study completed jointly by IAMGOLD, Amec Foster
Wheeler, and Roscoe Postle Associates Inc., with inputs from
technical studies completed by other consultants (see news release
dated June 5, 2017). The PFS
represents a comprehensive study of the technical and economic
viability of the Project that has advanced to a stage where a
preferred mining method is established and an effective method of
mineral processing is determined. IAMGOLD is using the PFS to
identify the preferred development option, to demonstrate economic
viability of the Project, to support mineral reserve disclosure,
and to identify additional work recommended to support the
completion of a feasibility study.
The PFS outlines a potentially economically viable project that
at a $1,250 per ounce gold price
would generate an estimated 14.0% after-tax internal rate of
return. The Project would have a 17-year mine life, producing on
average 207,000 attributable ounces of gold a year at average cash
costs of $605 per ounce produced and
all-in sustaining costs of $689 per
ounce sold. A technical report summarizing the PFS has been filed
on SEDAR. A feasibility study is expected to be completed in the
second half of 2018.
Based on the results of the PFS as described above, we declared
estimated mineral reserves as at May 26,
2017 on a 100% project basis comprising probable reserves
totaling 196.1 million tonnes grading 0.94 g/t Au for 5.9 million
ounces of gold. Also on a 100% basis, estimated indicated resources
(inclusive of reserves) are 281.2 million tonnes grading 0.89 g/t
Au for 8.0 million ounces and inferred resources of 76.5 million
tonnes grading 0.50 g/t Au for 1.2 million ounces (see news release
dated June 5, 2017).
Regional exploration activities continue within the
516-square-kilometre property surrounding the Côté Gold deposit to
develop and assess exploration targets that could further maximize
our flexibility with respect to any future development decisions. A
diamond drilling program continued during the quarter with
approximately 2,000 metres completed as part of a planned 10,500
metre drilling program in 2017 to test selected high priority
exploration targets. The results will be validated and compiled as
they are received to guide the ongoing exploration program.
EXPLORATION
(Refer to the Q2 2017 MD&A for further details.)
In the second quarter 2017, we spent $17.3 million on exploration and project studies,
of which $12.1 million was expensed
and $5.2 million capitalized. This
compared to $9.9 million in the same
prior year period. The following summarizes the status of our most
advanced projects:
Wholly-Owned Projects
Boto - Senegal
During the second quarter, approximately 3,600 metres of diamond
drilling were completed to follow up encouraging results from the
2016 drilling program at the Malikoundi deposit as well as to
further explore for additional mineral resources along known
mineralized trends associated with the Boto 5 and 6 zones. Assay
results were reported during the quarter, with highlights
including: 3.38 g/t Au over 19.0 metres and 4.35 g/t Au over 77.0
metres, including 11.76 g/t Au over 9.0 metres (see news release
dated May 31, 2017). The results of
this drilling will be incorporated into a revised geological model
to support an updated resource estimate in 2017. Technical and
environmental studies are ongoing to advance the economic
evaluation of the project.
Pitangui - Brazil
In late 2016, we received the necessary permits to complete
drilling of the interpreted up-plunge extension of the São
Sebastião deposit within a densely-vegetated area. As such, the
focus of the 2017 exploration drilling program will be to evaluate
the up-plunge extension area for additional resources. Just over
2,000 metres of diamond drilling were completed in the second
quarter. Drilling continues and the results will be used to update
the mineral resources in 2017. Technical and environmental studies
are ongoing to advance the economic evaluation of the project.
Siribaya - Mali
During the second quarter, approximately 12,700 metres of
diamond and reverse circulation drilling were completed. The
drilling program is designed to confirm the geometry of the known
mineralized zones of the Diakha deposit, and to extend
mineralization north and south along strike from Diakha where
previous exploration results have been encouraging. The delineation
drilling results at Diakha will be used to update the mineral
resources in 2017.
Joint Venture Projects
Following are the highlights for our joint venture exploration
projects. The agreements are typically structured in a way that
gives us the option of increasing our ownership interest over time,
with the decision dependent upon the exploration results as time
progresses.
Monster Lake - Canada
(Option Agreement with TomaGold Corporation)
During the second quarter, just over 2,000 metres of diamond
drilling were completed as part of the program to better define and
extend the 325-Megane zone, as well as to test a parallel lower
shear zone and a possible second zone discovered in 2016 located
north of the 325-Megane zone. Initial assay results were reported
during the quarter, with highlights including: 5.21 g/t Au over 4.4
metres, 121.67 g/t Au over 3.1 metres and 85.27 g/t Au over 1.8
metres (see news release dated May 11,
2017). Subsequent to the quarter-end, final assay results
from the drilling campaign were reported. Highlights
included: 67.42 g/t Au over 3.5 metres, 80.28 g/t Au over 5.0
metres and 39.48 g/t Au over 1.6 metres (see news release dated
July 6, 2017). The drill results will
be used to guide future drilling and, if results merit, will be
incorporated into a deposit model to support the completion of an
initial mineral resource estimate in 2017.
Nelligan - Canada (Option
Agreement with Vanstar Mining Resources Inc.
During the second quarter, 750 metres of diamond drilling were
completed. The program was designed to follow up on the encouraging
results from the 2016 program, further explore a newly discovered
mineralized zone located north of the Liam zone, and test other IP
geophysical anomalies on the property. Highlights from
results reported in the quarter include: 29.9 metres grading 1.29
g/t Au, 24.0 metres grading 1.16 g/t Au, and 8.0 metres grading
3.23 g/t Au (see Vanstar news release dated June 1, 2017). Further results of the drilling
program are pending, and once received and validated will be used
to guide future drill targeting.
Eastern Borosi - Nicaragua
(Option Agreement with Calibre Mining Corporation)
During the second quarter, approximately 3,500 metres of diamond
drilling were completed. The program's objective is to evaluate the
resource potential of the Guapinol, Riscos de Oro and East Dome veins. If the results
are positive, they will be used to complete a National Instrument
43-101 resource estimate. Initial assay results from the ongoing
program were reported during the quarter, with highlights
including: 8.0 metres grading 1.57 g/t Au and 38.3 g/t Ag, and 1.8
metres grading 5.69 g/t Au and 71.1 g/t Ag from the East Dome
target (see Calibre news release dated June
2, 2017).
During the second quarter, we completed the requirements to earn
the right to an initial 51% interest in the project and exercised
our right to enter the second option to earn up to a 70% interest
in the Project by completing additional exploration expenditures
totaling $4.5 million and making
$0.5 million in payments to Calibre
by May 26, 2020.
Other
Loma Larga (formerly Quimsacocha) - Ecuador
IAMGOLD, through its 35.6% equity ownership of INV Metals, has
an indirect interest in the Loma Larga gold, silver and copper
project in southern Ecuador. INV
Metals has completed a preliminary feasibility study supporting the
proposed development of an underground mine with an anticipated
production rate of 3,000 tonnes per day, average annual gold
production of 150,000 ounces, and a mine life of approximately 12
years (see INV Metals news release dated July 14, 2016). During the second quarter, INV
Metals announced that it concluded the terms of an agreement with
the Ministry of Mines in Ecuador
concerning its Exploitation Contract relating to the future
development of the Loma Larga Project (see INV Metals news
release dated May 29, 2017), and has
commenced a feasibility study that is expected to take 18 months to
complete (see INV Metals news release dated June 22, 2017).
End Notes (excluding tables)
1
|
Cost of sales,
excluding depreciation, as disclosed in note 29 of the Company's
consolidated interim financial statements is on an attributable
ounce sold basis (excluding the non-controlling interests of 10% at
Essakane and 5% at Rosebel) and does not include Joint Ventures
which are accounted for on an equity basis.
|
2
|
This is a non-GAAP
measure. Refer to the reconciliation in the non-GAAP performance
measures section of the MD&A.
|
3
|
The DART refers to
the number of days away, restricted duty or job transfer incidents
that occur per 100 employees.
|
CONFERENCE CALL
A conference call will be held on Thursday, August 10, 2017 at 8:30 a.m. (Eastern Daylight Time) for a
discussion with management regarding IAMGOLD`s second quarter 2017
operating performance and financial results. A webcast of the
conference call will be available through IAMGOLD`s website -
www.iamgold.com.
Conference Call Information: North America Toll-Free:
1-800-319-4610 or 1-604-638-5340.
A replay of this conference call will be accessible for one
month following the call by dialling: North America toll-free: 1-800-319-6413 or
1-604-638-9010, passcode: 1535#.
CAUTIONARY STATEMENT ON
FORWARD-LOOKING
INFORMATION
All information included in this news release, including any
information as to the Company's future financial or operating
performance, and other statements that express management's
expectations or estimates of future performance, other than
statements of historical fact, constitute forward looking
information or forward-looking statements and are based on
expectations, estimates and projections as of the date of this news
release. For example, forward-looking statements contained in this
news release are found under, but are not limited to being
included under, the heading "Second Quarter 2017 Highlights", and
include, without limitation, statements with respect to: the
Company's guidance for production, cost of sales, total cash costs,
all-in sustaining costs, depreciation expense, effective tax rate,
capital expenditures, operations outlook, cost management
initiatives, development and expansion projects, exploration, the
future price of gold, the estimation of mineral reserves and
mineral resources, the realization of mineral reserve and mineral
resource estimates, the timing and amount of estimated future
production, costs of production, permitting timelines, currency
fluctuations, requirements for additional capital, government
regulation of mining operations, environmental risks, unanticipated
reclamation expenses, title disputes or claims and limitations on
insurance coverage. Forward-looking statements are provided
for the purpose of providing information about management's current
expectations and plans relating to the future. Forward-looking
statements are generally identifiable by, but are not limited to
the use of the words "may", "will", "should", "continue", "expect",
"estimate", "plan", "guidance", "outlook", "potential", "targets",
"strategy" or "project" or the negative of these words or other
variations on these words or comparable terminology.
Forward-looking statements are necessarily based upon a number of
estimates and assumptions that, while considered reasonable by
management, are inherently subject to significant business,
economic and competitive uncertainties and contingencies. The
Company cautions the reader that reliance on such forward-looking
statements involve risks, uncertainties and other factors that may
cause the actual financial results, performance or achievements of
IAMGOLD to be materially different from the Company's estimated
future results, performance or achievements expressed or implied by
those forward-looking statements, and the forward-looking
statements are not guarantees of future performance. These risks,
uncertainties and other factors include, but are not limited to,
changes in the global prices for gold, copper, silver or certain
other commodities (such as diesel, and electricity); changes in
U.S. dollar and other currency exchange rates, interest rates or
gold lease rates; risks arising from holding derivative
instruments; the level of liquidity and capital resources; access
to capital markets, and financing; mining tax regimes; ability to
successfully integrate acquired assets; legislative, political or
economic developments in the jurisdictions in which the Company
carries on business; operating or technical difficulties in
connection with mining or development activities; laws and
regulations governing the protection of the environment; employee
relations; availability and increasing costs associated with mining
inputs and labour; the speculative nature of exploration and
development, including the risks of diminishing quantities or
grades of reserves; adverse changes in the Company's credit rating;
contests over title to properties, particularly title to
undeveloped properties; and the risks involved in the exploration,
development and mining business. With respect to development
projects, IAMGOLD's ability to sustain or increase its present
levels of gold production is dependent in part on the success of
its projects. Risks and unknowns inherent in all projects include
the inaccuracy of estimated reserves and resources, metallurgical
recoveries, capital and operating costs of such projects, and the
future prices for the relevant minerals. Development projects have
no operating history upon which to base estimates of future cash
flows. The capital expenditures and time required to develop new
mines or other projects are considerable, and changes in the price
of gold, costs or construction schedules can affect project
economics. Actual costs and economic returns may differ materially
from IAMGOLD's estimates or IAMGOLD could fail to obtain the
governmental approvals necessary for the operation of a project; in
either case, the project may not proceed, either on its original
timing or at all.
For a more comprehensive discussion of the risks faced by the
Company, and which may cause the actual financial results,
performance or achievements of IAMGOLD to be materially different
from the company's estimated future results, performance or
achievements expressed or implied by forward-looking information or
forward-looking statements, please refer to the Company's latest
Annual Information Form, filed with Canadian securities regulatory
authorities at www.sedar.com, and filed under Form 40-F with the
United States Securities Exchange Commission at
www.sec.gov/edgar.shtml. The risks described in the Annual
Information Form (filed and viewable on www.sedar.com and
www.sec.gov/edgar.shtml, and available upon request from the
Company) are hereby incorporated by reference into this news
release.
The Company disclaims any intention or obligation to update or
revise any forward-looking statements whether as a result of new
information, future events or otherwise except as required by
applicable law.
Qualified Person Information
The technical information relating to exploration activities
disclosed in this news release was prepared under the supervision
of, and reviewed and verified by, Craig
MacDougall, P.Geo., Senior Vice President, Exploration,
IAMGOLD. Mr. MacDougall is a Qualified Person as defined by
National Instrument 43-101.
About IAMGOLD
IAMGOLD (www.iamgold.com) is a mid-tier mining company with four
operating gold mines on three continents. A solid base of strategic
assets in North and South America
and West Africa is complemented by
development and exploration projects and continued assessment of
accretive acquisition opportunities. IAMGOLD is in a strong
financial position with extensive management and operational
expertise.
Please note:
This entire news release may be accessed via fax, e-mail,
IAMGOLD's website at www.iamgold.com and through CNW Group's
website at www.newswire.ca. All material information on IAMGOLD can
be found at www.sedar.com or at www.sec.gov.
Si vous désirez obtenir la version française de ce communiqué de
presse, veuillez consulter le
http://www.iamgold.com/French/accueil/default.aspx.
SOURCE IAMGOLD Corporation