IAMGOLD Corporation

IAMGOLD Corporation

November 04, 2009 08:00 ET

IAMGOLD Reports Third Quarter 2009 Results; Record Quarterly Net Earnings, Operating Cash Flow & Production at Rosebel

TORONTO, ONTARIO--(Marketwire - Nov. 4, 2009) -

For a full explanation of results, the unaudited interim Consolidated Financial Statements, Management Discussion and Analysis, and mine statistics, please see the Company's website www.iamgold.com. All amounts are expressed in US dollars, unless otherwise indicated.

IAMGOLD Corporation ("IAMGOLD" or "the Company") (TSX:IMG) (NYSE:IAG) (BOTSWANA:IAMGOLD) today reported financial and operating results for the third quarter ending September 30, 2009, with record net earnings of $64.9 million or $0.18 per share.

"IAMGOLD's focus on delivering shareholder value produced outstanding results in the third quarter," said Joseph Conway, President & CEO, "Gold production reached 244,000 ounces at cash costs of $457 per ounce during the quarter driven by record production once again from our flagship Rosebel mine, and continued extensions at the Doyon Division in Quebec. As a result, we have recently increased our 2009 production guidance to between 940,000 and 950,000 ounces up from 880,000 in January 2009. We also continue to focus on the future, having accelerated production at our Essakane project, which is on schedule for commercial production in August 2010, contributing an estimated 480,000 to 490,000 ounces of gold before the end of 2011 and investing in promising exploration properties in our regions of focus."


- Record net earnings of $64.9 million ($0.18 per share)

- Record operating cash flow of $89.3 million ($0.24 per share(1))

- Lower average cash cost(2) of $457 per ounce and gold production of 244,000 ounces

- Record production at Rosebel of 106,000 attributable ounces at a cash cost(2) of $403 per ounce

- Increased 2009 production guidance to between 940,000 and 950,000 ounces, an increase of 60,000 to 70,000 ounces compared to original guidance

- A continued strong financial position with $466.7 million in available funds

- Approval by the Societe D'Exploitation Des Mines D'Or De Sadiola ("SEMOS"), owner of the Sadiola gold mine in Mali, West Africa, to proceed with the $9 million (on a 100% basis) Sadiola deep sulphide feasibility study, and tentative agreement to acquire up to additional 6% interest in Sadiola

(1) Operating cash flow per share is a non-GAAP measure and is calculated by
dividing the consolidated cash flow from operating activities by the
weighted average number of common shares outstanding in the period.
(2) Cash cost per ounce is a non-GAAP measure. Please refer to the
Supplemental Information attached to the MD&A for reconciliation to GAAP

Third quarter gold sales of 244,000 ounces at an average realized gold price of $961 per ounce, resulted in revenues of $235.2 million and record net earnings of $64.9 million ($0.18 per share), compared to $18.8 million ($0.06 per share) for the prior year period. This result includes positive adjustments for a foreign exchange gain due mainly to the strengthening Canadian dollar and future tax recovery.

Operating cash flow from third quarter activities was $89.3 million ($0.24 per share), up from $72.1 million ($0.24 per share) in the third quarter of 2008. Higher revenues and improvements in cash mining costs were partially offset by increased spending on exploration.

Gold production for the third quarter of 2009 was 244,000 ounces at an average cash cost of $457 per ounce. This compares to production of 253,000 ounces (232,000 ounces excluding Sleeping Giant mine closed in late 2008) at an average cash cost of $481 per ounce in the third quarter of 2008. Lower cash cost per ounce in the third quarter of 2009 is primarily a result of productivity improvements at Rosebel combined with royalty expense savings.

With nine months of solid operating results and exceptional productivity improvements at Rosebel, the Company raised its 2009 production guidance by 30,000 ounces to between 940,000 and 950,000 ounces at cash costs of between $460 and $470 per ounce (from June 2009 guidance of 910,000 to 920,000 ounces at $460 to $470 per ounce and an original 880,000 ounces at between $470 and $480 per ounce).

The Company's objective to maintain high standards in health and safety continued, with a reduction of 49% in the frequency of lost time accidents and modified duty injuries, as compared to the first nine months of 2008.

2009 Expenditures Fully Funded - Balance Sheet Remains Strong

The Company's cash and gold bullion (at market value) position remains strong with $343.7 million available at September 30, 2009. In addition, the availability under the credit facility at September 30, 2009 was $123.0 million, for a total of $466.7 million of available funds. The credit facility availability increased during the quarter as the Company repaid $40.0 million previously drawn down.

Capital expenditures in the quarter were $126.2 million, with the majority relating to construction of the Essakane and Westwood development projects and mining fleet improvements at Rosebel.

In 2009, full year capital expenditures are now projected at $422.1 million, down slightly from the previous estimate of $448.4 million. The decrease is mainly due to lower expenditures at Niobec partially offset by earlier purchase of the Rosebel equipment.

With $466.7 million in available funds, the Company is well funded for the development and exploration of its pipeline of gold projects.

Rosebel Mine - Record Production Continues

At the Rosebel mine in Suriname, the recent completion of the mill expansion continued to drive results during the third quarter as the mill again operated at above its nameplate capacity of 11 million tonnes per annum achieving record mill throughput 37% higher than the prior year period. This resulted in record production of 106,000 ounces (on a 95% basis) in the quarter, an increase of 29% over the prior year period.

In addition, the new and enhanced mining fleet, and introduction of contractor mining for long haul pits combined to achieve increased mine production.

The higher gold production at Rosebel combined with royalty expense savings were key contributors to the 19% decrease in average cash cost to $403 per ounce versus the same period in 2008.

Doyon Division Mines - Mouska Mine Life Extended into early 2012

The operating team at the Doyon division continue to achieve better than expected results and the Mouska mine life has now been extended to early 2012 with production of between 20,000 and 25,000 ounces per year from high grade mineralization delineated during 2009. As announced in the second quarter of 2009, the Doyon mine life was extended to the end of 2009.

Niobec Niobium Mine - Paste Backfill & Mill Expansion on Track

Niobium production for the third quarter was 982,000 kilograms compared to 1,154,000 kilograms in the third quarter of 2008. The decrease in niobium production was mainly as a result of mechanical problems in the converter leading to lower conversion of niobium oxide concentrate to ferroniobium. Niobium oxide concentrate inventories are expected to return to normal levels during the fourth quarter.

In June 2009, the Company approved expenditures of $46.9 million and began work on a mill expansion and paste backfill plant at the Niobec niobium mine. The mill expansion will increase mill throughput by 24% and is scheduled to be completed during the third quarter of 2010 with expenditures of $6.5 million in 2009 and $21.5 million in 2010. The paste backfill project will enable near complete extraction of the ore body at lower levels of the mine by using mill tailings mixed with binding material significantly reducing the need for natural ore pillars. Construction of the paste backfill plant and associated underground infrastructure is expected to be completed during the second quarter of 2010 with expenditures of $8.1 million in 2009 and $10.8 million in 2010.

Sadiola - Approval to Proceed with Deep Sulphide Feasibility Study and Offer to Purchase IFC Share in Sadiola

In November, the Company announced approval by the Societe D'Exploitation Des Mines D'Or De Sadiola ("SEMOS") to proceed with a $9 million (on a 100% basis) Sadiola deep sulphide feasibility study. Assuming positive results from the 11-month feasibility study and the investment decision, construction would begin in 2011 and the new plant in 2012.

In addition, IAMGOLD announced it has reached a tentative agreement with the International Finance Corporation ("IFC") for the purchase of the IFC 6% interest in SEMOS for up to $16 million. Under the terms of the existing SEMOS shareholders agreement, the remaining partners, AngloGold Ashanti Limited and the Republic of Mali have the opportunity to elect whether they will take up their proportionate share of the IFC interest on the agreed terms and conditions. IAMGOLD anticipates that the transaction will be completed before the end of the year.

Essakane Project - Accelerated Early Production

In September 2009, the Company announced its plan to accelerate production during the early years at its Essakane development project by increasing the processing rate, and optimizing the mine plan allowing access to higher grade ore sooner. Gold production is now estimated at between 480,000 and 490,000 ounces for the first sixteen-month period from the August 2010 start-up through the end of 2011. Cash costs at Essakane are now expected to be in the $400 to $410 per ounce range, based on the grade change announced in June 2009 and the accelerated production schedule announced in September 2009. Life-of-mine production is estimated at 315,000 ounces per year. The additional pre-production capital stripping expenditures for Essakane are expected to add $21.0 million to capital expenditures for a total of approximately $443.0 million. Construction is progressing as planned.

Westwood Project - Revised Scoping Study due in the Fourth Quarter

At the Westwood project in Quebec, construction is on schedule. As a result of the Company's aggressive development plan, a revised scoping study for the project is expected to be completed in December of 2009. Additional information gathered from the delineation program has improved the geological model and will be used in the study.

The 2009 drilling program of 73,500 metres of projected underground and surface drilling is intended to increase the Company's level of confidence in the current resources in the known lenses and identify additional resources. Specific targets include extensions of two new lenses above the fourteenth level, a sector between the Doyon mine and the western portion of Westwood, and mineralization below the existing resource base.

Construction during the third quarter included shaft sinking which commenced in June 2009. Construction of the headframe was substantially completed and the 6.7 metre diameter ventilation shaft bore has commenced. In addition, 1,635 metres of ramp access were completed from surface to the Warrenmac lens, and exploration drift successfully crossed the Bousquet fault allowing easier access to the resources lying to the east of the fault, and an 8,400 tonne bulk sample was mined in the Zone 2 lens and processed at the Doyon mill.

Quimsacocha Project - Ready to Resume Development

On October 16, 2009, the Government of Ecuador confirmed the Mining and Environmental Regulations to the Mining Law would be completed and approved by President Correa on November 4, 2009. The issuance of such regulations is a necessary final step for allowing the Minister of Mines to provide authorization to resume mining activity at the project site. On May 22, 2009, the Government of Ecuador issued new transitional regulations to expedite the resumption of field work. As of September 30, 2009, the Company has complied with all requirements under the transitional regulations and is ready to resume mining activity at site and complete feasibility work. The Company intends to resume feasibility work at Quimsacocha once the necessary authorization is received. A feasibility study and an environmental impact assessment, at a cost of $14 million, are expected within 12 months of the mining regulations being in place.

Exploration and Development - Aggressive Organic Growth

The third quarter of 2009 exploration activities and new projects focused on the Company's key areas, namely West Africa, Quebec, the Guiana Shield, Brazil and the northern Andean regions of South America.

The 2009 emphasis continues to be acquisition of advanced exploration projects, resource development, resource conversion at Rosebel, and progressing the portfolio of greenfield projects. More than 235,000 metres of drilling is planned on the Company's brownfields, development and greenfields projects in 2009 excluding the 100,000 metres of drilling on joint venture lands at Sadiola / Yatela. Planned exploration expenditures in 2009 are now expected to be $56 million of which $36 million is for greenfield exploration initiatives.

On October 19, 2009, the Company released an update on exploration activities. In the third quarter of 2009, the Company incurred $115.6 million on exploration and development stage projects compared to $20.6 million in the third quarter of 2008. The total includes greenfield exploration, near-mine exploration, and development stage projects in the Company's development pipeline.

Investment in Avnel Gold Mining Limited

In August 2009, the Company entered into an agreement with Avnel Gold Mining Limited on their Kalana Gold property in southwest Mali, West Africa. The Kalana Gold property consists of the Kalana gold mine, a small operating underground mine and an exploration property covering 387.4 square kilometres with a 30 year mining exploitation permit. The investment is consistent with the Company's aggressive exploration strategy and represents an outstanding opportunity to explore a strong gold mineralized system with the view of realizing its large-scale bulk mineable potential. The Company is planning to carry out a minimum $2.5 million drill program in the first year of the agreement focused principally on the immediate mine area as well as initiating exploration work on several priority satellite targets.

Attributable Gold Production and Cash Cost Per Ounce

The table below presents the production attributable to the Company's
ownership in operating gold mines along with the weighted average cash cost
of production.

Production Total Cash Production Total Cash
Cost (1) Cost (1)
Three months Three months Nine months Nine months
ended ended ended ended
September 30, September 30, September 30, September 30,
2009 2008 2009 2008 2009 2008 2009 2008
(000 oz) (000 oz) $/oz $/oz (000 oz) (000 oz) $/oz $/oz
IMG Operator
Rosebel (95%) 106 82 403 495 293 229 387 490
Doyon Division
(100%) 30 27 517 519 85 85 523 597
Mupane (100%) 11 26 744 425 40 71 696 408
Joint Venture
Sadiola (38%) 32 41 525 396 103 123 441 404
Yatela (40%) 22 18 251 565 61 50 347 515
201 194 442 475 582 558 434 479
Tarkwa (18.9%) 33 30 511 575 93 93 516 503
Damang (18.9%) 10 8 572 890 30 28 610 690
43 38 525 645 123 121 539 546
closed mine) 244 232 457 502 705 679 452 491
Closed Mine
Giant) - 21 - 253 - 63 - 320
Total 244 253 457 481 705 742 452 476
(1) Cash cost per ounce is a non-GAAP measure. Please refer to the
Supplemental Information attached to the MD&A for reconciliation to
GAAP measure.

Summarized Financial Results
(in $ millions) As at As at
(unaudited) September 30, December 31,
2009 % Change 2008
Financial Position $ $
Cash and cash equivalents
and gold bullion
(a) at market value 343.7 28% 269.1
(b) at cost 284.5 51% 188.2
Total assets 2,949.1 37% 2,151.7
Long-term debt 5.5 (90%) 56.1
Shareholders' equity 2,456.9 48% 1,655.7

(in $ millions,
except where noted) Three months ended Nine months ended
September 30, September 30,
2009 % Change 2008 2009 % Change 2008
$ $ $ $
Results of Operations
Revenues 235.2 4% 226.9 649.1 (2%) 660.0

Net earnings 64.9 245% 18.8 161.5 87% 86.5
Impairment charge - n/a 4.6 9.3 102% 4.6

Adjusted net earnings(1) 64.9 177% 23.4 170.8 87% 91.1

Basic and diluted net
earnings per share
($/share) 0.18 200% 0.06 0.46 59% 0.29
Adjusted basic and
diluted net earnings
per share(1)($/share) 0.18 125% 0.08 0.49 58% 0.31

Cash Flows
Operating cash flow 89.3 24% 72.1 189.5 - 190.0

Key Operating Statistics

Operating results -
Gold mines
Attributable gold
(000 oz - IMG share)(2) 244 (4%) 253 705 (5%) 742
Attributable gold
(000 oz - IMG Share)(2) 244 (6%) 260 711 (4%) 744
Average realized gold
price ($/oz) 961 13% 853 915 4% 876

Cash cost ($/oz)(3)

Cash cost excluding
royalties 417 (2%) 427 413 (1%) 416
Royalties 40 (26%) 54 39 (35%) 60
Cash cost(3) 457 (5%) 481 452 (5%) 476

Operating results -
Niobium mine
Niobium production
(000 kg Nb) 982 (15%) 1,154 2,870 (14%) 3,340
Niobium sales
(000 kg Nb) 1,082 12% 964 2,896 (10%) 3,227

Operating margin
($/kg Nb)(3) $18 (18%) $22 $20 18% $17
(1) Adjusted net earnings and adjusted net earnings per share are non-GAAP
measures and represent net earnings before the impairment charge. Please
refer to the Supplemental Information attached to the MD&A for
reconciliation to GAAP measure.
(2) Includes gold ounces in the Company's working interests of Tarkwa and
(3) Cash cost per ounce of gold and Unit operating margin per kilogram of
niobium for the Niobec mine are non-GAAP measures. Please refer to
the Supplemental Information attached to the MD&A for reconciliation to
GAAP measure.

A conference call to review the Company's third quarter results will take place on Wednesday, November 4th, 2009 at 12:00 noon. A webcast of the conference call will be available through the Company's website www.iamgold.com.

Conference Call Information: North America Toll-Free: 1-866-551-1530 or 1-212-401-6700, Passcode: 5444070#.

A replay of this conference call will be available from 2:00 p.m. November 4 to November 30, 2009. Access this replay by dialing: North America toll-free: 1-866-551-4520 or 1-212-401-6750, passcode: 257076#

Cautionary Note to U.S. Investors

The United States Securities and Exchange Commission (the "SEC") permits mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. We use certain terms in this press release, such as "mineral resources", that the SEC guidelines strictly prohibit the Company from including in filings with the SEC. U.S. investors are urged to consider closely the disclosure in the IAMGOLD Annual Report on Form 40-F. A copy of the 2008 Form 40-F is available to shareholders, free of charge, upon written request addressed to the Investor Relations Department.

Forward Looking Statement

This press release contains forward-looking statements. All statements, other than of historical fact, that address activities, events or developments that the Company believes, expects or anticipates will or may occur in the future (including, without limitation, statements regarding the estimation of mineral resources, exploration results, potential mineralization, potential mineral resources and mineral reserves) are forward-looking statements. Forward-looking statements are generally identifiable by use of the words "may", "will", "should", "continue", "expect", "anticipate", "estimate", "believe", "intend", "plan" or "project" or the negative of these words or other variations on these words or comparable terminology. Forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Company's ability to control or predict, that may cause the actual results of the Company to differ materially from those discussed in the forward-looking statements. Factors that could cause actual results or events to differ materially from current expectations include, among other things, without limitation, failure to establish estimated mineral resources, the possibility that future exploration results will not be consistent with the Company's expectations, changes in world gold markets and other risks disclosed in IAMGOLD's most recent Form 40-F/Annual Information Form on file with the United States Securities and Exchange Commission and Canadian provincial securities regulatory authorities. Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking statement.

Please note:

This entire press release may be accessed via fax, e-mail, IAMGOLD's website at www.iamgold.com and through Marketwire's website at www.marketwire.com. All material information on IAMGOLD can be found at www.sedar.com or at www.sec.gov.

Contact Information

  • IAMGOLD Corporation
    Joseph F. Conway
    President & CEO
    (416) 360-4712 or Toll-free: 1 888 IMG-9999
    IAMGOLD Corporation
    Carol Banducci
    Chief Financial Officer
    (416) 360-4742 or Toll-free: 1 888 IMG-9999
    IAMGOLD Corporation
    Tamara Brown
    Director, Investor Relations
    (416) 360-4743 or Toll-free: 1 888 IMG-9999