TORONTO (miningweekly.com) – It is a case of 'no news is good news' for Iamgold's large Essakane gold project, in Burkina Faso, which continues to track within its $422-million capital budget, and is on schedule to begin commercial production 12 months from now.

Toronto-based Iamgold, which bought the project earlier this year when it acquired Canadian junior Orezone Resources, has moved up the projected start-up date from late next year, after removing the engineering, procurement and construction management contractor and assuming control of development itself.

Around $219-million has been spent to date, with some $210-million still remaining, Iamgold CEO Joseph Conway said on Thursday.

The company had worked to complete infrastructure items, including the off-channel reservoir, pumping station, dams and spillway, before the May to August rainy season began in Burkina Faso, said senior vice-president for project development Denis Miville-Deschênes.

“They were tested in the last few months, they are full of water, and the system is working as planned,” he said.

Engineering and procurement are on schedule and, if anything, delivery of key equipment will take place earlier than initially expected, Miville-Deschênes indicated.

Iamgold is also working on a new mining schedule and operating cost estimate based on the new block model and pit design and the development team is continuing to assess the construction plan and is “proactively” looking to advance the project schedule, Conway said.

The project is expected to contribute an estimated 340 000 attributable ounces of gold in its first twelve months.

Iamgold currently produces gold in Botswana, Canada and Suriname, as well as Ghana and Mali, where it has joint ventures with Gold Fields and AngloGold Ashanti respectively.

In June, the company announced an updated gold reserve and resource statement for Essakane with an increase of 8% or 245 000 oz in probable reserves to 3,37-million ounces.

An exploration programme is also under way at Essakane, focusing on extending the pit limits and infilling some of the areas, as well as testing a number of satellite targets.

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.

ECUADOR DELAYS

Meanwhile, at Iamgold's Quimsacocha project, in Ecuador, the company continues to await final permission from the government to resume drilling.

“There is a level of frustration, no question,” Conway said on a conference call on Thursday.

Ecuador passed a new mining law in January, replacing the mandate that ordered a suspension of all mining and exploration work in the country last year, and then in May issued new transitional regulations to expedite the resumption of mining activities.

However, although Iamgold has received its environmental permits, the firm is still waiting for the final go ahead from the Mining Ministry to restart field activities.

The company has complied and delivered everything required under the transitional regulations, and, with no new requests being made, “it seems to be an administrative delay within the government's side,” said corporate affairs vice-president Larry Phillips.

“As far as we're concerned, that letter could arrive tomorrow.”

Once the final authorisation is received, Iamgold expects to complete a feasibility study on Quimsacocha within 12 months.

DEEP SULPHIDE

At the Sadiola mine, in Mali, in which Iamgold and AngloGold Ashanti own 38% each (with the balance held by the Malian government and the International Finance Corporation), the company is “pleased” with the results it has been getting in a study on developing the large deep sulphide resource below the current pit.

AngloGold is the operator at Sadiola, but Iamgold has taken the lead in reengineering and updating a prefeasibility study on the deep sulphide project, and expects to have the results ready by year end, Conway said.

One thing that is being looked at in the study is the potential to move to owner mining, which would make a big difference to the economics, he said.

There are also discussions under way with the government on the potential for the mine to plug into the Malian power grid, Conway said.

“As you can appreciate, the economics of the deep sulphides are one thing with heavy fuel oil, but will be dramatically different if we can access that grid power.”

Shares in Iamgold, which posted a 33% increase in second-quarter profit earlier on Thursday, rose 5,3%, to C$12,22 apiece by 15:28 in Toronto.

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