EXPLORATION

Exploration at the Niobec mine is concentrated only within the carbonatite complex, as this is the only known occurrence of niobium. Exploration is focused at depth to extend the known mineralisation and mine life.

During 2009, niobium proven and probable mineral reserves at the Niobec Mine have increased by 32% to 181.3 million kilograms of contained Nb₂O₅. This increase is a result of infill drilling that allowed the conversion of inferred to indicated mineral resources in blocks 5 and 6. The Company also increased inferred mineral resources by 53.6 million kilograms of contained Nb₂O₅ as a result of drilling below the 6th level.

Future drilling will continue to focus on infill drilling of mining areas on the lower blocks to convert resources into reserves and will also begin to explore extensions to the orebody primarily at depth.

RECENT DEVELOPMENTS as at September 30, 2011

Niobium production during the third quarter of 2011 was 9% higher than the same quarter in the prior year as higher throughput offset the impact of lower grades.

Niobium revenues were $42.4 million in the third quarter of 2011 compared to $40.4 million in the same period in 2010, due to a higher realized niobium price partly offset by lower volume of Niobium sold. The operating margin per kilogram of niobium¹ decreased by $5 per kilogram during the third quarter of 2011 compared to the same quarter in the prior year. Notwithstanding the higher average price sold, the decline in operating margin was due to lower grades and costs resulting from mine re-sequencing to align to future plan changes in mining approach, higher prices of consumables and a stronger Canadian dollar.

Outlook

On June 20, 2011 the Company announced that it had filed an independently prepared NI 43-101 compliant preliminary economic assessment ("PEA") on the Niobec mine. The PEA reflects potential for a near 700% increase in measured and indicated mineral resources to over 1.9 billion kilograms of contained niobium pentoxide, and a potential threefold increase in niobium production to a level of 15 million kilograms per year.

Based on higher metal prices and lower operating costs, the operating margin is estimated to increase to $28 per kilogram of niobium. Under the above assumptions, the remaining mine life would exceed 40 years with an estimated after-tax net asset value of up to $2.0 billion.

The PEA examined the impact of changing the existing underground mine to either of two bulk mining methods, the open pit scenario or the block caving scenario. Planned for completion by the end of 2011, a pre-feasibility study is currently underway to determine which of the two methods will provide the best financial returns.

While the development studies continue, IAMGOLD has undertaken to adjust its mining sequence for the current operation to be well prepared for the future significant change in mining approach. The changes are being made to take advantage of opportunities that arise out of the mining method change, and to preserve cash flows and production capacity in the interim period. Important changes to the plan include a shift from mining in the centre of the orebody to the margins of the orebody and a gradual cessation of paste backfill use in the mine. As a result of these mine plan changes, some additional development is required in the near term as well as some rehabilitation of older mining areas to provide ore feed whilst access is driven to the new stopes. These changes have impacted the result with marginally lower grades and additional underground costs and the impacts are expected to continue through to early 2013.

In the third quarter of 2011, the Company continued executing on its strategic initiative to unlock the value of Niobec. This included establishing a framework of financing alternatives to fund expansion without reliance on cash flow from the gold business, which may include the sale of a minority interest to a strategic investor. Towards this end, discussions with potential private investors continued throughout the quarter and specific due diligence work was conducted. While discussions have been constructive despite the market volatility, the Company is committed to executing a deal that reflects the fair value of Niobec.