Iamgold (TSX: IMG; NYSE: IAG) has announced that it plans to begin production at its Saramacca open-pit gold deposit in the second half of 2019. The mine is located 18 km from the company’s Rosebel mine in Suriname.
Ore is expected to arrive at the Rosebel mill later in the year. The project’s Environmental and Social Impact Study was approved in January, allowing for infrastructure construction to start, including the creation of a haul road between the two deposits.
The company is undertaking a scoping study to evaluate Saramacca’s underground mining potential after saprolite mining reaches hard rock. An underground component to the mine could result in higher grades and reduced waste stripping costs, Iamgold says. Drilling to support the scoping study began in the first quarter of the year.
“We did some desktop work late last year on the underground option, really looking at mining the saprolite and some of the transition open pit and then converting the higher grade zones below that to underground,” Gord Stothart, the company’s executive vice president and chief operating officer said during a question and answer session on a conference call in May. “The net impacts are very substantial in terms of the volume of waste. There are over 150 million tonnes less waste from open pit in that scenario, which obviously creates a pool of cash in your cash flow that can be redirected in a different direction.”
The company’s near-mine and regional exploration program on the Rosebel mining concession remains focused on resource expansion and exploration targets in the vicinity of the existing operation. Iamgold drilled about 8,800 metres in the first three months of 2019, to test for resource expansion at and along trend of the Saramacca deposit, including evaluating mineralization at depth. Another 2,300 metres of condemnation reverse circulation (RC) drilling was undertaken near the Rosebel pit.
Rosebel, including Saramacca, contains attributable proven and probable reserves of 141.5 million tonnes grading 1 gram gold per tonne for 4.6 million oz. gold.
Total attributable measured and indicated resources, including reserves, stand at 296.4 million tonnes averaging 0.9 gram gold for 9.1 million oz., while total attributable inferred resources add up to 69.4 million tonnes grading 0.9 gram gold for 1.9 million ounces.
Iamgold owns a 95% stake in the Rosebel mine, which produced 68,000 oz. gold in the first three months of the year at total cash costs of US$901 per ounce. All-in sustaining costs (AISCs) of US$1,064 per oz. sold in the first quarter were up 16% year-on-year, due to an increase in mining and milling volumes with harder rock, in addition to higher labour costs after the Collective Labour Agreement was signed in the third quarter of 2018.
First quarter production was 5% higher compared to the same quarter in 2018, due to recoveries, which improved when the carbon in column (CIC) plant became fully operational in January. (An additional 2,200 oz. were recovered from tailings.) The plant is located between two existing tailings ponds at Rosebel’s tailings facility and will be used to passively treat tailings decant water to recover residual gold in the solution. In May, the plant was on track to surpass the minimum expected recovery of 5,000 oz. gold annually at a marginal operating cost of US$35 per oz. to cover additional power and elution costs.
Rosebel, 85 km south of Paraimbo, the capital city, in the mineral-rich Brokopondo district in northeastern Suriname, began production in 2004. Iamgold’s mining concession covers 170 sq. km, with the Suriname River to the east, the Saramacca River to the west and the Brokopondo reserve to the south. Suriname, a former Dutch colony, is situated in South America, bordering the Atlantic Ocean between French Guiana and Guyana.
Iamgold expects its attributable gold production from Rosebel in 2019 to be in the range of 315,000 to 330,000 oz. of gold. Capital expenditures are forecast to run to about US$145 million (US$70 million in sustaining capital and US$75 million in non-sustaining capital).
Iamgold anticipates total gold production this year of 810,000 to 870,000 oz. at AISCs per oz. sold of US$1,030 to US$1,080. It has four operating gold mines on three continents: Essakane in Burkina Faso, Rosebel in Suriname, Westwood in Canada and Sadiola in Mali.
Iamgold posted a first-quarter net loss attributable to shareholders of US$41.3 million, or US9¢ per share, compared to net earnings of US$42.3 million, or US9¢ per share, in the same period last year. The decrease was due to a lower gross profit of US$76.7 million and higher expenses of US$17.3 million, including a US$12.5 million impairment charge, and US$3.2 million in restructuring costs at Westwood. These were partially offset by lower incomes taxes.
“Obviously, we had one of our tougher quarters here in a long time,” president and CEO Steve Letwin told analysts and investors on a May 7 conference call. “I want to reinforce that Iamgold is committed to achieving a self-funding model, with all of our cash requirements met by our mines.”
“We want to be able to cover our corporate exploration and project expenditures, and those will draw from the overall pool, but our goal, and we will be aggressively pursuing it this year, is to reduce our cost, improve productivity and create a model where we are simply self-funding across the board.”
The company ended the quarter with cash and equivalents of US$697 million.
Iamgold trades at $3.19 per share in a 52-week trading range of $3.15 to $8.20. The mid-tier gold producer has a $1.5-billion market capitalization.