As most global miners are reeling from the devastation of the worst economic recession, Iamgold, the gold and niobium mining outfit, said this week that it will focus its cash resources on advancing and expanding its core long-life assets.
The Botswana Stock Exchange (BSE) quoted miner also confirmed its 2011 guidance that it expects attributable gold production to be in the range of between 1.1 million and 1.2 million ounces of gold.
It said on its website that its capital expenditure programme of $460 million (about P3 billion) in the New Year is focused primarily on the brownfield growth opportunities at its core platform of gold mines.
These mines include Rosebel Mine in Suriname, the Essakane Mine in Burkina Faso and the Westwood Development Project in Canada.
“We are confident that superior returns will be generated by re-investing in these brownfield opportunities, which will expand and extend our long-life, lower-cost mines where we are the operators and have a controlling ownership position,” Steve Letwin, the Iamgold’s Chief Executive Officer, said.
Iamgold last year launched a feasibility study to review the expansion of the Essakane Mine.
The expansion could potentially increase production from the currently estimated life-of-mine average production of 315,000 ounces per year to an estimated range of between 450,000 and 470,000 ounces per year.
It said assuming a positive outcome of the study, construction could commence in the fourth quarter of 2011, for completion by 2013.
“It is on these sites that we can best leverage the existing infrastructure and take advantage of the competencies and significant experience within the company. The Rosebel and Essakane mines are world-class assets that have already demonstrated the excellence of our corporate social responsibility programs and our development and operational teams,” he added.
The company added that in 2011, it expects attributable gold production to be in the range of between 1.1 million and 1.2 million ounces of gold at a cash cost of between $565 and $595 per ounce, assuming an average spot price for gold of $1,300.
On the other hand, for niobium Iamgold expects to produce between 4.7 million and 5.0 million kilograms of niobium at a margin of between $15 and $17 per kilogram.
Gold production for the third quarter of 2010 was a record 256,000 attributable ounces at an average cash cost (1) of $577 per ounce.
Iamgold’s attributable gold production in the third quarter of 2010 increased by 12,000 ounces or 5 percent compared to the third quarter of 2009.
It said the increase was mainly the result of the beginning of commercial production at the Essakane mine, and higher throughput at Mupane, partially offset by the closure of the Doyon mine in December 2009, the stockpiling of ore at the Mouska mine and lower grades at Yatela and Rosebel.
Mupane gold production was 45 percent higher during the third quarter of 2010 than in the third quarter of 2009, as a result of higher mill throughput with improved performance of the ball mill.
The Essakane mine produced 80,000 attributable ounces in the quarter notwithstanding a three-week interruption in November due to an electrical issue.
The Essakane mine attained nameplate throughput capacity in December. In 2009, total year attributable gold production was 939,000 ounces at a cash cost of $461 per ounce.
The company’s average cash costs for gold rose in 2010 as compared with 2009.
In addition to the increasing cost of consumables, increased costs are partially due to higher gold prices. Increases in the gold price resulted in increased royalty rates and increased price driven royalty amounts.
“As the prices rise, lower grades of ore become economic to mine. By choosing to mine these lower grade deposits of the ore body and managing the cut-off grade, the Company can mine previously uneconomic portions of its resource base, increase the yield from the ore bodies and extend the life of the mines,” the company said.
Iamgold is a leading mid-tier gold mining company producing approximately one million ounces annually from 8 gold mines on 3 continents.
