TORONTO (miningweekly.com) – Toronto-based gold-miner Iamgold will oversee the engineering and construction of the new Essakane mine, in Burkina Faso, itself, after removing the engineering, procurement and construction management (EPCM) contractor for the project.
Iamgold bought the project earlier this year when it acquired Canadian junior Orezone Resources, and the firm's project development team has been “happily surprised by the constructability” of the project, said senior vice-president for project development Denis Miville-Deschênes.
The firm is pleased with the quality of the work force at Essakane and the government support it has received, and is confident that the mine will be built on schedule, with first production expected before the end of 2010.
The dry climate is also a pleasant change from the wet climate of South America, where the company's flagship Rosebel mine is located, Miville-Deschênes told analysts and investors on a conference call.
“We're well set up to deliver on the construction,” he said.
In fact, “the biggest overall surprise is that it's really hot there!” quipped Iamgold CEO Joseph Conway.
As well as the switch to owner-managed construction, Iamgold is looking for ways to accelerate the project schedule and reduce costs, and the company expects to announce an updated capital cost and schedule in mid-June.
It will also publish a new reserve and resource estimate at the same time.
According to a July 2008 feasibility study, the Essakane mine is expected to produce an average of 315 000 oz/y of gold at an average cash operating cost of $358/oz.
Iamgold has already ordered most of the additional equipment that will be required after removing the EPCM contractor, and the company has also completed a review of the engineering and design work that was inherited from Orezone.
Most of the changes planned to the design have been processed or requested and the detailed engineering is proceeding on schedule, the firm said on Thursday.
The three onsite 800 kVA generators have been commissioned, and connected to the local grid and the temporary fuel-storage facility has been installed.
Five villages were successfully relocated during the first quarter, and the company has started building some of the 1 800 houses, plus public buildings, that will go up over the next ten months at the new Essakane village, as well as the mine village.
The earthwork required for the construction of the processing facility is almost completed, some other infrastructure work is under way, and some mine equipment has already been commissioned, allowing the mine department to begin extensive earthwork with the five 100-t trucks in operation.
At its other projects, Iamgold expects to receive the approvals it needs to resume drilling at its Quimsacocha project, in Ecuador, after a mandate halting all mining and exploration activity was lifted in March.
Once the necessary authorisations are received, the firm plans to complete a feasibility study on Quimsacocha within 12 months.
Closer to home, Iamgold has begun building the headframe at its Westwood project, in Quebec, and is targeting first production in early 2013, Conway said.
However, little progress has been made at the Camp Caiman project, in French Guiana. The government refused an application to start building the project in January last year, and Iamgold is now waiting for a new mining framework to be announced, hopefully this year.
Conway also said the company has had expressions of interest from a number of parties in its Buckreef prospect, in Tanzania, and is discussions with potential buyers.
After raising $282-million in an equity sale, Iamgold has more than $550-million in available capital, which will cover the requirements to build Essakane, and keeps the door open for further acquisitions, Conway said.
The company had initially planned to secure project financing for Essakane, but after extensive negotiations, decided that the lenders' requirements for hedging were too onerous.
“The important thing is that, right now we have a little over $550-million in funds available, our cash requirements for capital expenditure are about $435-million this year, and we continue to generate cash flow, obviously.”
“So we feel that we are in a very strong financial position, particularly in this type of market, to not only build what we have, but also perhaps through acquisition activity, bring on additional projects that will add to our pipeline in the future.”
Iamgold shares declined 0,17% on Thursday, to C$11,54 apiece by 14:17.