TORONTO (miningweekly.com) – Toronto-based Iamgold is looking to planned expansions at its new Essakane mine in Burkina Faso and the Rosebel operation in Suriname, combined with the Westwood development project in Quebec, for future gold production growth.
Simultaneously, the firm is asking questions about the future of its minority interests in mines in West Africa, where options could be to either find ways to assume operational control of the assets or else potentially look at selling the stakes and investing the money elsewhere, spokesperson Bob Tait said on Tuesday.
The company is also considering options for its Niobec niobium operation in Quebec.
Essakane and Rosebel, together with the Westwood project that is scheduled to start up in 2013, represent Iamgold's core group of assets, and will be the focus for capital spending and growth going forward, he said in an interview.
However, the company also believes that the market is not properly recognising the value of its niobium operations in Quebec, and will be looking for ways to change that. Niobium is used in specialty high-strength steels.
Iamgold produced more than 310 000 attributable gold ounces in the fourth quarter, a new record for the company, helped by rising production from Essakane, which achieved commercial production in August.
Shares in the company rose 5,3% on Tuesday, to C$18,00 apiece by 16:00 in Toronto.
Iamgold is “actively engaged” in discussions with current and potential investors to improve the way the company is valued by the market, CEO Steve Letwin said.
"We believe that our share price is significantly undervalued,” Letwin said.
The company believes that investors are not giving full value to the interests it holds in mines in Ghana and Mali, and particularly views the Niobec mine in Quebec as undervalued by the market.
Iamgold's management team recently returned from a trip to Asia, where talks included potential interest in both Niobec and the African joint-venture assets.
Iamgold owns 18,9% in the Tarkwa and Damang mines, both of which are majority owned and operated by gold major Gold Fields.
At the Sadiola and Yatela mines, Iamgold and partner AngloGold Ashanti hold equal stakes – 41% and 40% respectively for the two operations – and the government of Mali owns the balance, but AngloGold operates both mines.
Iamgold has a strong operating and development team, and so the company would prefer to be involved in assets where it can use its expertise to add value, Tait said.
“We'd prefer to be the operator, or if we can't be, then maybe we need to take that same investment in those assets and invest them in assets where we can be the operator,” he told Mining Weekly Online.
“How those end up resolving themselves remains to be seen, and it's still early discussions, but we are exploring the opportunities.”
Representatives from AngloGold and Gold Fields both declined to comment.
Iamgold has budgeted $460-million for capital expenditure this year, and will focus its efforts on preparing for expansions at the Rosebel and Essakane operations, while continuing development of the Westwood mine, Tait said.
There is also a study under way into developing the large deep-sulphide resource at the Sadiola mine. Although AngloGold operates the mine, Iamgold has taken the lead in studying the sulphides project.
At Essakane, the firm is looking at increasing annual production to between 450 000 oz/y and 470 000 oz/y by boosting the hard-rock processing capacity in the mill to 10,8-million tons a year, from the initial 5,4-million tons.
At Rosebel, Iamgold is planning additional grinding capacity that will allow mill throughput to continue at between 12-million and 14-million tons a year, despite increased hard-rock volumes being mined.
More mining equipment will also be added, to increase the annual mining capacity to 70-million tons, to optimise mill feed grades.
The expansion would result in an average annual gold production of between 400 000 and 450 000 oz/y, essentially bringing gold production forward in time and resulting in lower long-term fixed costs by reducing the mine life.
Iamgold said it still expects to produce 1,1-million ounces of gold this year, at average cash costs of between $565/oz and $595/oz.
Niobium production is forecast at between 4,7-million and five-million kilograms, at an expected margin of $15/kg to $17/kg.
For the full year in 2010, gold output was at the “higher end” of the revised 940 000 oz to 970 000 oz range that the company issued in November, Iamgold said in a statement overnight.
The firm, which produced 939 000 oz in 2009, had lowered its 2010 guidance from an earlier 980 000 oz to 1,01-million ounces forecast, after a temporary shutdown because of mechanical issues at the Essakane mill.
Average cash costs are also estimated to have come in within the guidance of between $565/oz and $585/oz, Iamgold said.
The company also produced 4,4-million kilograms of niobium in 2010, with an average operating margin at the high end of the $17/kg to $19/kg forecast.