Canada-based Iamgold has a robust pipeline of development projects and is looking to bolster its credit facility to facilitate its growth strategy, president and CEO Steve Letwin said on Tuesday, after reporting lower third-quarter production and revenue.
The company, which operates mines in the Americas and Africa, is in advanced discussions with a syndicate of lenders to increase its existing credit facility from $250-million to $500-million to provide additional flexibility to execute its growth plans. The facility is expected to close before the end of the year.
Letwin said in a news release announcing the third-quarter results that Iamgold’s development projects were “looking more robust than ever”, listing several upcoming “growth catalysts”. These include an oxygen plant at the Burkina Faso-based Essakane mine to improve recoveries, forthcoming investment and construction decisions for the Senegal-based Boto project and the Canada-based Côté projects, as well as a production start at Saramacca, in Suriname, and a ramp-up to full production at Westwood, in Canada.
“The declaration of reserves at Saramacca, with the grade nearly double that of Rosebel's, drove Rosebel's reserves up 51% adding five years to the life of the mine,” he said.
Letwin also noted that shifting heap leach construction at Essakane until closer to the end of the mine life would free up capital for other high-value growth projects.
Commenting on the recent feasibility studies for the Côté and Boto projects, he said they showed increased reserves and significant improvements in project economics compared to earlier studies.
The company has applied for a mining concession for the 140 000 oz/y Boto project and expects a decision in the first half of 2019, after which an investment decision will follow.
A construction decision for Côté - a 70:30 joint venture between Iamgold and Sumitomo Metal Mining - is expected in the first half of 2019, with production to begin in mid-2021. The company last week unveiled the feasibility study results for the project, which is expected to produce 367 000 oz/y over a 16-year mine life in a base case scenario. An extended mine plan scenario adds two years to the base case mine pan and increases average production to 37 000 oz.
When compared with the prefeasibility study, the Côté feasibility study base case net present value (NPV) increases by 13% to $795-million and the extended mine plan NPV increases by 29% to $905-million. The base case has an internal rate of return (IRR) of 15.2%, with a payback period of 4.4 years and the second option has an IRR of 15.4%, with a similar payback period.
Both plans will require $1.15-billion in initial capital.
Meanwhile, Iamgold maintained its 2018 guidance of 850 000 oz to 900 000 oz at an all-in sustaining cost (AISC) of $990/oz to $1 070/oz, despite the third-quarter production falling to 208 000 oz – down 9 000 oz from the third quarter of 2017. AISC increased by $117/oz to $1 086/oz.
The production decrease was owing to lower throughput and head grades at Rosebel (8 000 oz) and Westwood (3 000 oz), as well as lower head grades at the joint ventures (1 000 oz), partially offset by higher head grades at Essakane (3 000 oz).
Attributable gold sales decreased by 8 000 oz to 202 000 oz, resulting in lower revenue of $244.8-million. The company posted a net loss of $9.5-million, or $0.02 a share, compared with net earnings of $30.8-million, or $0.07 a share, in the third quarter of 2017.
Its adjusted net loss amounted to $6.9-million, or $0.01 a share, compared with adjusted net earnings of $33.7-million, or $0.07 a share, in the prior-year quarter.