IAMGOLD, the junior miner that operates Mupane mine outside Francistown in Botswana, this week released third quarter results that showed that revenues rose while net earnings (profits) declined.
The Botswana Stock Exchange (BSE) and Toronto Stock Exchange (TSX) listed gold mining outfit reported that revenues for the third quarter were up at $227 million (about P1.8 billion) while profits stood at $18.8 million (about P149.5 million).
The revenues were up 33% from $170 million (about P1.3 billion) while profits went down from $19.5 million (about P155 million) recorded in the third quarter of 2007. The President of the outfit Joseph Conway celebrated the results and added that they are planning to use the cash wisely amid the global credit crunch.
“We are pleased to report record revenues and operating cash flow during the current quarter. Gold production and cash costs continued to meet guidance,” Conway said in a statement accompanying the results.
“With our strong cash and gold bullion holdings, we are well positioned to continue to execute our growth strategy in West Africa and the Americas while applying very stringent criteria to all capital expenditure projects through these tight credit markets,” he added.
The group’s financial statements also noted that the company remains bullish about the gold production for 2008 as it remained unchanged at 950, 000 ounces. So far, the company added that the attributable gold production is up by 5% from 253, 000 of the 2007 third quarter with an average cash cost of $481/ounce compared third quarter of 2007, which was $437/ounce.
The company has revised cash cost guidance by -1% to $480-$490/ ounce adding that the current financial volatility might affect future cash costs either positively or negatively through changes in oil price, changes in gold price as it impacts royalty payments, and currency exchange rates.
However, the company has cash and gold bullion position of $307 million (about P2.4 billion) valuing gold at market September 2008 with a $140 million (about P1.1 billion) five year revolving credit facility, which can weather the storm.
“Given the current economic environment, IAMGOLD is reviewing its capital programs as well as the investment opportunities that are becoming attractive,” the company added.
Meanwhile, the company has filed a draft tender to acquire outstanding shares in Euro Resources SA (EURO) although it will not come at a cost to shareholders since the deal will be financed though cash reserves or credit facility. The deal will be an all cash offer $1.69 per share to acquire outstanding shares in EURO.
IAMGOLD has agreed to keep $105 million (or P834.6 million at current exchange rate) available under the credit facility to fund the acquisition of EURO.
Mupane mine is a Botswana’s subsidiary of IAMGOLD, the world tenth biggest gold mining company.
Mupane mine formerly an operation of Gallery Gold until April 2006 is 45 kilometers east of Francistown.
The mine has not discovered more reserves as was indicated at the pre-listing statement and currently survive with the operation of two pits namely, Tholo and the main one being Tau.
The mine is designed to hold a capacity of 1 million tones or 100,000 ounce per annum.
IAMGOLD is the tenth largest publicly listed gold mining company in the world with other operation in Mali and Ghana and prospecting rights in South America.
Further, it has huge gold reserves and is undertaking explorations in a number of countries such as Argentina, Brazil and Ecuador.