Toronto, Ontario, February 24, 2009
All dollar amounts are expressed in US dollars, unless otherwise indicated. This press release contains unaudited numbers.
2008 Highlights
- Record gold production of 997,000 ounces exceeds January 2008 original projection by 8%. Cash costs (1) for 2008 were $459 per ounce and in line with January 2008 guidance.
- Record revenues of $869.6 million, a 28% increase over the prior year. Fourth quarter revenues reached $209.6 million, an 8% increase over the same quarter of 2007.
- Operating cash flow for 2008 more than doubled to $254.5 million ($0.86 per share). Operating cash flow during the fourth quarter of 2008 was $65.2 million ($0.22 per share), compared to $56.6 million in the fourth quarter of 2007.
- Commitment of “ZERO HARM” to employees, communities and environment demonstrated by a 24% reduction in total accident frequency, zero fatality and no significant impact to communities and the environment.
- Adjusted net earnings(2) climbed 87% for the full year of 2008 to $107.5 million ($0.36 per share). Net loss for the full year was $9.9 million ($0.03 per share) including a non cash impairment charge of $117.4 million (net of income taxes), primarily related to the Buckreef project in Tanzania. The net loss in 2007 was $42.1 million ($0.14 per share), including an impairment charge of $99.6 million for the Mupane property.
- Fourth quarter adjusted net earnings(2) were $16.4 million ($0.06 per share), 14% higher than the same quarter of 2007. The net loss for the fourth quarter of 2008 was $96.4 million ($0.33 per share), compared to net earnings of $8.5 million ($0.03 per share), in the fourth quarter of 2007.
- Financial position remains very strong at year end with cash and cash equivalents (net of bank debt), and gold bullion at market of $219 million, together with availability under a line of credit of $80 million.
- Announced eighth straight annual dividend - $0.06 per share totalling $17.7 million.
- Announced acquisition of Orezone Resources Inc. (Essakane project), one of West Africa’s largest undeveloped gold properties. The transaction is expected to close on February 25, 2009.
- Gold reserves increased by 20% or 1.6 million ounces to 9.6 million ounces, which more than replaces the depletion in 2008. A further 3.1 million ounces will be added to reserves with the Orezone Resources Inc. acquisition. Niobium reserves increased by 36% to 137,800 tonnes of contained Nb2O5 representing an 18 year mine life at current production rates.
- The Company acquired 84.55% of the common shares of Euro Ressources S.A. - cost reduction focus driving down per ounce royalty cost at the Rosebel mine by $40-$50 based on recent gold prices.
CEO Commentary
“2008 was an outstanding year in terms of operational results achieving record revenues and record operating cash flow. Gold production exceeded guidance for 2008 while cash costs were on plan. We are very proud of the safety performance achieved by employees in 2008. IAMGOLD has taken the next step to establish itself as a high quality operator with a strong and effective management team. The acquisition in early 2009 of the Essakane property in West Africa will expand our resource base and further demonstrate the Company’s expertise in construction and development, in a region where we have been engaged for nearly 20 years. Management continues to evaluate additional opportunities to maximise the Company’s growth potential and shareholder value,” stated Joseph Conway, President & CEO.
Summarised Financial Results
|
(in $ millions, except where noted) |
Three months ended December 31, |
Year ended December 31, |
|
(unaudited) |
2008 |
2007 |
2008 |
2007 |
|
Results of Operations |
$ |
$ |
$ |
$ |
|
Revenues |
209.6 |
194.2 |
869.6 |
678.1 |
|
Mining costs |
100.1 |
114.2 |
451.8 |
426.5 |
|
Depreciation, depletion and amortization |
41.0 |
38.1 |
169.6 |
117.6 |
|
Earnings from mining operations |
68.5 |
42.0 |
248.2 |
134.1 |
|
Earnings from working interests |
1.7 |
7.9 |
24.3 |
25.4 |
|
Total earnings from operations and working interests(4) |
70.2 |
49.9 |
272.5 |
159.5 |
|
Net earnings (loss) |
(96.4) |
8.5 |
(9.9) |
(42.1) |
|
Impairment charges (net of related income taxes) |
112.8 |
5.9 |
117.4 |
99.6 |
|
Adjusted net earnings(2) |
16.4 |
14.4 |
107.5 |
57.5 |
|
Basic and diluted net earnings (loss) per share ($/share) |
(0.33) |
0.03 |
(0.03) |
(0.14) |
|
Adjusted basic and diluted net earnings per share(2) ($/share) |
0.06 |
0.05 |
0.36 |
0.20 |
|
Cash Flows |
|
|
|
|
|
Operating cash flow |
65.2 |
56.6 |
254.5 |
117.1 |
|
Gold sales (including working interests) |
|
|
|
|
|
Gold sales (000oz – IMG share) |
253 |
244 |
997 |
962 |
|
Average realized gold price ($/oz) |
793 |
787 |
855 |
693 |
| |
|
|
|
|
|
Revenues
Revenues for the full year of 2008 reached a record $869.6 million, a 28% increase over the prior year. Fourth quarter revenues reached $209.6 million, an 8% increase over $194.2 million for the same quarter of 2007.
Revenues for the fourth quarter of 2008 increased compared to the fourth quarter of 2007 primarily due to higher gold production and higher niobium prices. Revenues for the full year of 2008 increased significantly compared to 2007, driven by higher gold and niobium prices and gold production.
Mining Costs
Mining costs for the fourth quarter of 2008 decreased compared to 2007 with the purchase of royalties related to the Doyon division and the Rosebel mine. Additionally, movements in the average exchange rate between the Canadian and US dollar positively impacted mining costs for the Canadian operations.
Increased mining costs for the full year of 2008 compared to 2007 were due to higher royalty expenses and operating costs. Higher royalty expenses were attributable to an increase in the average gold price as well as higher gold production. The cost of diesel fuel and other mining consumables increased significantly for the majority of the year. Movements in the average exchange rate between the Canadian and US dollar negatively impacted full year mining costs for the Canadian operations.
Rising input costs were mitigated as IAMGOLD continued its focus on cost improvement measures across all operations including the change from contract mining to owner mining at Mupane, fleet and mine planning optimisation at Rosebel and acceleration of the Sleeping Giant mine closure.
Depreciation, Depletion and Amortization
Depreciation, depletion and amortization for the fourth quarter and the full year of 2008 increased as a result of higher production and the effect of the prospective application of adjustments made at the end of 2007 to finalise the purchase price equation for the Cambior acquisition. The closure of Sleeping Giant in October 2008 and increases in reserves at Mupane and Niobec partially offset the above.
Earnings from Working Interests
Fourth quarter earnings from working interests related to the Tarkwa and Damang mines were lower compared to the fourth quarter of 2007 as a result of lower sales volume and higher mining costs. Year over year earnings from working interests remained steady as higher realised gold prices partially offset the impact of higher operating and administrative costs.
Net Earnings (loss)
The net loss for the fourth quarter of 2008 was $96.4 million ($0.33 per share) compared to net earnings of $8.5 million ($0.03 per share) in the fourth quarter of 2007. The net loss was the result of non cash impairment charges largely associated with the Buckreef project in Tanzania. Net loss for the full year of 2008 was $9.9 million ($0.03 per share) compared to a net loss of $42.1 million ($0.14 per share) in 2007.
Impairment Charges
Asset and goodwill non cash impairment charges for 2008 consist of $4.6 million recorded in the third quarter relating to capitalised exploration expenditures and $125.3 million ($112.8 million net of income taxes), recorded in the fourth quarter of 2008 relating primarily to the Buckreef project in Tanzania. In 2007 a non cash pre tax impairment charge of $99.6 million related to Mupane was recorded.
Adjusted Net Earnings (2)
Adjusted net earnings increased during the fourth quarter and the full year of 2008 compared to 2007 mainly due to stronger earnings from operations (as described above). Higher corporate administration expenses in 2008 are mainly due to an expanded management team and corporate initiatives dedicated to delivering improved results. One time pre tax expenses in 2008 included a $4.9 million termination benefit recorded in the fourth quarter of 2008 relating to the closing of the Doyon and Mouska mines planned in 2009 and early 2010 respectively, and a VAT receivable writedown of $5.4 million. The Company also increased its exploration expenses in 2008 by 18% to $33.6 million.
Cash Flow and Liquidity Position
Operating cash flow during the fourth quarter of 2008 was $65.2 million ($0.22 per share) compared to $56.6 million ($0.19 per share) in the fourth quarter of 2007. Operating cash flow in 2008 was $254.5 million ($0.86 per share) compared to $117.1 million ($0.40 per share) in 2007. The significant increase in operating cash flow was mainly driven by higher niobium and gold prices. The majority of operating cash flow was reinvested in expanding existing operations and pursuing new growth opportunities.
IAMGOLD ended the year with $219 million in cash and cash equivalents (net of bank debt) and gold bullion at market. The Company has approximately $80 million of available credit remaining on its facility net of the $50 million draw and approximately $10 million in Letters of Credit. The Company is actively reviewing funding sources to support its current acquisition activities and potential new opportunities that fit the IAMGOLD portfolio.
In 2009, the Company entered into contracts to sell approximately 74,000 of the 174,000 ounces of gold held at December 31, 2008. The approximate selling price and cost of $900 and $400 respectively, will yield a gain before income taxes of nearly $37 million.
IAMGOLD Attributable Gold Production and Costs
The table below presents the gold production attributable to the Company along with the weighted average cash cost per ounce of production.
|
(Unaudited) |
Gold Production |
Total Cash Cost(1) |
Gold Production |
Total Cash Cost(1) |
|
|
Three months ended |
Three months ended |
Year
ended |
Year
ended |
|
|
December 31, |
December 31, |
December 31, |
December 31, |
|
|
2008 |
2007 |
2008 |
2007 |
2008 |
2007 |
2008 |
2007 |
|
IMG Operator |
(000 oz) |
(000 oz) |
$/oz |
$/oz |
(000 oz) |
(000 oz) |
$/oz |
$/oz |
|
Rosebel (95%) |
86 |
77 |
404 |
403 |
315 |
263 |
466 |
452 |
|
Doyon Division (100%) |
33 |
34 |
419 |
529 |
118 |
131 |
548 |
528 |
|
Sleeping Giant (100%) |
6 |
18 |
94 |
418 |
69 |
67 |
303 |
358 |
|
Mupane (100%) |
30 |
23 |
271 |
482 |
101 |
86 |
367 |
548 |
|
Joint Venture |
|
|
|
|
|
|
|
|
|
Sadiola (38%) |
49 |
40 |
351 |
406 |
172 |
140 |
389 |
401 |
|
Yatela (40%) |
16 |
22 |
512 |
231 |
66 |
120 |
514 |
217 |
|
|
220 |
214 |
377 |
416 |
841 |
807 |
440 |
423 |
|
Working interests |
|
|
|
|
|
|
|
Tarkwa (18.9%) |
26 |
30 |
584 |
452 |
119 |
124 |
521 |
395 |
|
Damang (18.9%) |
9 |
9 |
635 |
628 |
37 |
34 |
676 |
533 |
|
|
35 |
39 |
598 |
491 |
156 |
158 |
558 |
425 |
|
Total |
255 |
253 |
408 |
427 |
997 |
965 |
459 |
423 |
|
Cash cost excluding royalties |
|
|
364 |
372 |
|
|
403 |
378 |
|
Royalties |
|
|
44 |
55 |
|
|
56 |
45 |
|
Cash cost |
|
|
408 |
427 |
|
|
459 |
423 |
Consolidated gold production and cash costs
IAMGOLD’s total attributable gold production in the fourth quarter and for the full year of 2008 increased by 1% and 3% respectively as a result of higher throughput at Rosebel and Mupane in addition to higher gold grades and recoveries at Sadiola.
Fourth quarter cash costs of $408 per ounce decreased 15% over the third quarter of 2008 and were down by 4% over the same period last year.
Cash cost per ounce of gold produced in 2008 was in line with the original guidance of $455-$470 per ounce issued in January 2008 as higher production and higher productivity were offset by increases in energy and other input costs.
The following table summarises the change in the consolidated cash cost per ounce of gold from 2007 to 2008.
|
|
Three months ended
December 31, 2008 |
Year ended December 31, 2008 |
|
|
$/oz |
$/oz |
|
Increase (decrease) in consolidated cash cost of IAMGOLD operated mines and Mali joint ventures |
(29) |
18 |
|
Impact of higher cash costs at Tarkwa and Damang |
10 |
18 |
|
Increase (decrease) in consolidated cash costs, compared to 2007 |
(19) |
36 |
Cash costs per ounce of gold at IAMGOLD operations and the Mali joint ventures decreased during the fourth quarter of 2008 compared to the fourth quarter of 2007 as a result of higher gold production, lower energy costs, lower royalty expenses and lower costs at Sleeping Giant as it neared the end of its life.
Cash costs per ounce of gold at IAMGOLD operations and the Mali joint ventures were higher year over year mainly due to higher royalty expenses and energy costs, partially offset by higher gold production.
Cash costs per ounce for the fourth quarter and full year at Tarkwa were impacted by a decline in production due to lower recoveries in the heap leach plant. Cash costs per ounce for the fourth quarter and full year at Damang increased as a result of higher costs associated with consumables, energy and waste stripping.
Rosebel Mine, Suriname
Rosebel’s production increased in the fourth quarter and for the full year in 2008 compared to 2007 by 12% and 20% respectively, due to a new and enhanced mining fleet, a revised pit design, processing of higher gold grades and other efficiency initiatives.
Cash costs per ounce increased marginally in the fourth quarter and for the full year compared to 2007, as increased productivity and the acquisition of a participation royalty right partially offset higher input costs.
Doyon Division, Canada
The Doyon Division’s gold production declined slightly in the fourth quarter of 2008 and full year as compared to 2007. The decline in production reflects the expected reduction in tonnage mined as the mines are nearing closure.
Cash costs per ounce declined by 21% in the fourth quarter of 2008 compared to 2007 primarily as a result of a decline in royalty expenses. Cash costs per ounce for the full year of 2008 were 4% higher compared to 2007 due mainly to lower production.
Sleeping Giant Mine, Canada
The fourth quarter and full year production and cash costs per ounce for 2008 reflects the completion of mining and mill operations at the Sleeping Giant mine. The sale of the Sleeping Giant mine occurred in the fourth quarter of 2008.
Mupane Mine, Botswana
Gold production increased by 30% during the fourth quarter and by 17% for the full year of 2008 compared to 2007. Increased mill throughput resulted from increased crusher availability, higher SAG and ball mill capacity and a higher instantaneous throughput rate.
Cash costs per ounce for the fourth quarter and the full year of 2008 declined by 44% and 33% respectively, compared to 2007 due to higher production as well as decreased mining costs following the transition from contractor to owner mining.
Sadiola Mine, Mali
Attributable gold production was up 23% for both the fourth quarter and the full year of 2008 compared to 2007 due to higher gold grades and higher mill recoveries. The gravity circuit commissioned in the year improved absolute recovery of both sulphide and oxide ores. In addition, a higher proportion of oxide ore was processed.
Cash costs per ounce improved in 2008 due to increased production, despite higher royalties and consumable costs.
Yatela Mine, Mali
Attributable gold production for the fourth quarter and the full year in 2008 decreased by 27% and 45% respectively compared to 2007, as a greater proportion of low grade marginal ore from stockpiles was processed.
Cash costs per ounce were higher in 2008 compared to 2007 as a direct result of lower production and higher waste costs capitalised in 2007 as the strip ratio of the push back decreased and the ore body was accessed in the fourth quarter of 2008. Improvements in mining costs were realised late in the year resulting from the engagement of a new mining contractor.
Tarkwa Mine, Ghana
Attributable gold production declined in the fourth quarter and the full year of 2008 compared to the same period in 2007 as a result of lower production from the heap leach process. Production was down in the fourth quarter of 2008 due to lower recoveries in the heap leach plant.
Cash costs per ounce increased for the fourth quarter and for the year in 2008 compared to 2007 primarily due to lower production and increased costs of consumables and significantly higher cost of power.
Damang Mine, Ghana
Attributable gold production in the fourth quarter of 2008 was unchanged from the prior year. Processing of higher grade ore resulted in a 9% improvement in full year gold production.
Year over year cash costs per ounce increased significantly due to higher costs for consumables and energy and lower waste stripping costs capitalised in 2008.
Niobium Operations
Niobec mine, Canada
Niobec continued to achieve strong operating results for the fourth quarter and the full year in 2008 with operating cash flow of $25.5 million and $69.5 million respectively. Revenue from niobium increased as the realised price for niobium during the fourth quarter and the full year rose by 33% and 37% respectively, compared to 2007. This increase was partially offset by a decrease in sales volume of 9% for the quarter and 3% for the year. Operating margins per kilogram of niobium(3) for the fourth quarter and the year in 2008 increased by 118% and 90%, respectively, compared to 2007.
Recent Events and Initiatives
Essakane Project, Burkina Faso
On December 11, 2008, IAMGOLD announced a plan of arrangement with Orezone Resources Inc. (“Orezone”) that, upon completion, will result in the acquisition of Orezone and its 90% owned Essakane gold project in Burkina Faso, West Africa. Subsequent to year end, shareholders of Orezone approved the plan of arrangement at a special meeting held February 18, 2009. Closing of the transaction is expected on February 25, 2009. As part of the transaction, several of Orezone’s exploration properties, not related to the Essakane development project, will be spun out into a new exploration company (“Orezone Gold”). Pursuant to the transaction, IAMGOLD will acquire all of the outstanding shares of Orezone, with each Orezone shareholder to receive 0.08 of an IAMGOLD share and 0.125 of a share of Orezone Gold. Approximately 28.7 million IAMGOLD shares will be issued to Orezone shareholders.
The Essakane project is fully permitted and under construction. A feasibility study dated July 2008 indicates proven and probable reserves of 3.1 million ounces using a $600 per ounce gold price (reserves of 3.4 million ounces using a $700 per ounce gold price) and measured and indicated resources of 4.0 million ounces. Average gold production is expected to be approximately 315,000 ounces over the mine life at an average cash operating cost of $358 per ounce, using a $600 per ounce gold price and an $85 per barrel oil price. Full production is anticipated to commence in late 2010, requiring a remaining capital expenditure of approximately $350 million to be invested by that time.
EURO Ressources S.A., France
Through the bid process conducted in the fourth quarter of 2008, the Company acquired control of 84.55% of the outstanding shares of Euro Ressources S.A. (“EURO”). EURO has a participation right royalty on production from IAMGOLD’s Rosebel gold mine. As a result, royalty costs at the Rosebel mine will be reduced by approximately $40-$50 per ounce based on recent gold prices. The total purchase price was $83.9 million, including transaction costs of $3.3 million.
La Arena, Peru
In early 2008, IAMGOLD announced it had entered into an agreement for the sale of its Peruvian development gold-copper La Arena project. The sale was contingent on financing arrangements with the buyer. Due to the constraints of the current credit markets, alternative financial structures are being considered by the buyer to conclude the transaction. The Company has received additional expressions of interest for the property from other parties. In addition, the Company will continue to assess the option of developing the property.
Sleeping Giant, Canada
In October 2008, the Company completed the sale of the Sleeping Giant property resulting in a gain of $2.6 million. By accelerating the mining schedule, gold production was increased, cash costs were reduced and IAMGOLD successfully mined and processed all reserves prior to the sale.
Buckreef, Tanzania
Since the acquisition of the Buckreef project in early 2006, comprehensive exploration programs have been completed including approximately 100,000 metres of drilling. This work did not materially increase the resource base and preliminary metallurgical results indicate only low to moderate recoveries could be expected from heap leaching. As a result of estimated capital costs for mine development being significantly higher than anticipated, an impairment charge of $111.6 million ($98.9 million after impact of income taxes), was recorded in the fourth quarter of 2008.
Merrex, Mali
In December, 2008, IAMGOLD entered into an option agreement with Merrex Gold Inc. (“Merrex”), to earn a 50% interest in its Siribaya gold project in Mali, West Africa by spending C$10.5 million over four years. As part of the agreement, IAMGOLD subscribed for 4,285,714 units through a C$1.5 million private placement, resulting in IAMGOLD holding approximately 6.5% of Merrex. Each unit is comprised of one common share of Merrex and one 12 month warrant, exercisable at C$0.45 per share.
The Siribaya gold project consists of a 700 square kilometre land package in western Mali that covers two major regional structural trends that hold significant potential for economic gold mineralisation. Merrex has spent over C$8.0 million to date on exploration at Siribaya and has reported significant gold intersections along a two kilometere segment of an anomalous gold trend that extends for more than six kilometres within the land package.
Reserves and Resources
Please refer to press release issued February 23, 2009 and the Reserves and Resources section of the Company’s website for more details.
IAMGOLD’s total proven and probable reserves increased by 20% or 1.6 million ounces to 9.6 million ounces as at year end 2008, compared to a year earlier. Including depletion of 1.1 million ounces attributed to 2008 gold production, reserves increased by 2.7 million ounces. The main contributors to the increase are the Rosebel mine and the Quimsacocha project, although reserve replacement was achieved at all continuing IAMGOLD operations. Upon the closing of the acquisition of Orezone, an additional 3.1 million ounces using a $600 per ounce gold price (or 3.4 million ounces using a $700 per ounce gold price), related to the Essakane project in Burkina Faso will be added to IAMGOLD’s proven and probable reserves. Niobium proven and probable reserves increased by 36% to 137,800 tonnes of contained Nb2O5. This presents an 18 year mine life at current production rates and a production expansion plan is being reviewed.
Project Updates
Westwood Project, Canada
In January 2009, IAMGOLD completed a positive preliminary assessment study, which provides further confidence to move towards production in early 2013. The study shows that during the first 13 years, production will average about 200,000 ounces of gold per year with cash costs averaging $290 per ounce. The operation is projected to generate a pre tax operating cash flow of $665 million over the mine life, with $287 million over the first five years using a gold price of $700 per ounce.
Quimsacocha, Ecuador
Ecuador’s National Assembly ratified a new Mining Law on January 26, 2009. The next step is for companies to sign individual exploitation licenses with the Ministry of Mines and Petroleum. Concurrently, the government will proceed with the development of mining and environmental regulations to support the Mining Law. Upon signing a satisfactory exploitation contract with the government, IAMGOLD will proceed with the remaining studies. A final feasibility study for Quimsacocha is expected to take approximately 12 months to complete at a cost of $14 million.
Camp Caiman, French Guiana
The French authorities have not yet announced a new mining framework for French Guiana, but have published a working document as a first step. This working document has been circulated to a group of stakeholders for review, providing the context for mining development and recommends areas for mineral development, as well as outlining environmentally sensitive areas that they suggest should be considered for exclusion. Consistent with previous communications with the French authorities, the document indicates that the Camp Caiman deposit lies within one of these suggested areas of exclusion.
The working document will proceed through a stage of informal and formal consultation during which time IAMGOLD will be actively working with government officials and key stakeholders to develop a plan that would permit development of the Camp Caiman deposit using an alternative approach, subject to appropriate restrictions and regulations. Following the period of consultation, the government is expected to prepare the final mining framework.
If the Company is unable to reach an agreement on an acceptable project development plan, there may be an adverse impact on existing rights and interests, the impact of which is difficult to assess at this time. Based on information currently available, the Company believes there is insufficient evidence to indicate an impairment exists. In order to protect the interests of the Company’s shareholders for damages incurred to date, a legal action has been filed and the appropriate legal claims have been prepared for filing. The Company’s objective remains to bring the Camp Caiman project into production.
Exploration and Development Update
In 2008, the Company spent $83.5 million on exploration and development stage projects compared to $74.9 million in 2007. The total includes greenfields exploration, near mine exploration and development and development stage projects in the Company’s project pipeline.
Expenditures on greenfields exploration in 2008 were $29.7 million including $4.6 million of capitalised expenditures and $3.1 million expensed costs at Buckreef in Tanzania. Greenfields work totalling $22.0 million was carried out at more than fifteen early stage projects in eight countries of South America and Africa. As part of the Company’s emphasis on organic growth, a total of 77,000 metres of drilling were completed on eleven projects.
Near mine exploration and development expenditures totalled $20.4 million with $13.0 million and $7.4 million in capitalised and expensed expenditures respectively. More than half of the total relates to near mine exploration work at Rosebel as part of a 64,800 metre diamond drilling program that successfully replaced and expanded the year end mineral reserves within and near the known deposits. Near mine expenditures of $6.5 million at the Doyon mine were part of a deep drilling program beneath and adjacent to the current operation.
Expenditures at development stage projects including Westwood, Camp Caiman, La Arena and Quimsacocha were $33.3 million in 2008. Capitalised expenditures of $27.1 million or 81% of this total was related to Westwood. Spending at the three other properties were reduced and reflected lower activity.
Outlook
|
|
Outlook |
|
|
2009 |
|
Attributable share of gold production (000 oz) |
880 |
|
Cash cost ($/oz) |
$470-$480 |
|
Projected gold price ($/oz) |
$800 |
|
Projected oil price ($/barrel) |
$65 |
|
Projected foreign exchange rate (C$/US$) |
1.15 |
Attributable Gold and Niobium Production
The 2009 production guidance reflects the completion of mining at Sleeping Giant in October 2008, the planned closure of the Doyon mine by the middle of 2009 and lower gold grades at Sadiola and Mupane. These decreases are expected to be partially offset by throughput increases at Rosebel and Tarkwa and a grade increase at Yatela, which has already begun to positively impact production.
Niobium production at Niobec is forecast to be 4,400 tonnes and is comparable to 2008 levels. Operating margins(3) are projected in the $17-$19 per kilogram range with commitments for approximately 75% of 2009 production.
Cash Cost
Cash costs(1) per ounce are expected to increase marginally in 2009 compared to 2008, due mainly to lower production.
Notwithstanding the Company’s hedging strategy below, the current market volatility may affect future cash costs either positively or negatively through changes in gold price, oil price, overall operating costs and currency rates. Changes in these assumptions may have a material impact on cash costs, results of operations and overall financial position of the Company.
Hedging Strategy
As part of IAMGOLD’s focus on managing costs, the Company recently entered into hedging of its fuel and currency exposures to mitigate price volatility of the underlying costs. IAMGOLD has hedged approximately 50% of its 2009 exposure to both fuel and Canadian dollar costs through the use of option and forward contracts.
IAMGOLD’s fuel or diesel costs exposures (excluding Tarkwa and Damang), have been hedged by entering into call option contracts against heating oil due to the similar pricing behavior of diesel and heating oil. Furthermore, due to the price correlation between heating oil and light crude, the hedge contracts have capped the costs at an average price of $64 per barrel.
IAMGOLD’s exposure to underlying Canadian dollar costs has been hedged by entering into various currency contracts to reduce its exposure to fluctuations in the Canadian dollar volatility. The option contracts have created an effective average exchange rate range of 1.14 to 1.29 and the forward contracts have an effective average exchange rate of 1.23.
Capital Expenditures
The Company plans to invest significantly in mine development and exploration in 2009. Including the Essakane project, capital expenditures of approximately $435 million are projected. In addition, $34 million in greenfields exploration expenditures are planned in the year.
Corporate Strategy
The Company will continue to focus on cost reduction and increasing reserves and production by building on its strengths in identifying opportunities, project management, construction and operational efficiency. The Company plans to continue to maintain a strong balance sheet and the liquidity to support its strategic initiatives going forward.
Acquisition opportunities will focus on superior economic returns with a particular emphasis on decreasing the Company’s long term cost structure. Other key acquisition criteria include a minimum increase to production of 100,000 ounces per annum, a demonstrated exploration upside and a geographic fit with the Company’s existing profile.
(1) Cash costs is a non GAAP measure. Please refer to Section 3.b. of the Supplemental information attached at the end of this press release for reconciliation to GAAP.
(2) Adjusted net earnings is a non GAAP measure. Please refer to Section 3.a. of the Supplemental information attached at the end of this press release for reconciliation to GAAP.
(3) The Niobec operating margin is a non GAAP measure. Please refer to Section 3.c. of the Supplemental information attached to the end of this press release for reconciliation to GAAP.
(4) Total earnings from operations and working interests is a non GAAP measure. Please refer to Page 15, Consolidated Statement of earnings in the Supplemental Information attached to the end of this press release for reconciliation to GAAP.
Conference Call
A conference call to review the Company’s fourth quarter and annual results will take place on Wednesday, February 25, 2009 at 11:00 a.m. EST. N.A. toll-free: 1-866-551-1530 or 1-212-401-6700 passcode: 5415694#. This conference call will also be audiocast on IAMGOLD’s website (www.iamgold.com).
A replay of this conference call will be available from 2:00 p.m. February 25 to March 31, 2009 by dialing N.A. toll-free: 1-866-551-4520or 1-212-401-6750 passcode: 243151#.
Technical Information and Qualified Person/Quality Control Notes
The mineral resource estimates contained in this news release have been prepared in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”), JORC and/or SAMREC. The Qualified Persons responsible for the supervision of the preparation and review of all resource estimates for IAMGOLD Corporation are Réjean Sirois, Eng., Manager, Mining Geology and Francis Clouston, Eng., Manager, Project Evaluation. Each is considered a “Qualified Person” for the purposes of National Instrument 43-101 with respect to the mineralization being reported on. The technical information has been included herein with the consent and prior review of the above noted Qualified Persons. The Qualified Persons have verified the data disclosed, and data underlying the information or opinions contained herein.
Cautionary Note
Inferred mineral resources are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Forward Looking Statements
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 subject to a number of risks and uncertainties 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, 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 U.S. 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.
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. The Company may use certain terms in this press release such as “measured”, “indicated” and “inferred” “resources” that are prescribed by Canadian regulatory policy and guidelines but are prohibited by the SEC from use by U.S. registered companies in their 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 2007 Form 40-F is available to shareholders, free of charge, upon written request addressed to the Investor Relations Department.
For further information please contact:
IAMGOLD Corporation:
Joseph F. Conway
President & CEO
Tel: (416) 360-4712
Toll-free: 1 888 IMG-9999
Carol Banducci
Chief Financial Officer
Tel: (416) 360-4742
Toll-free: 1 888 IMG-9999
Elaine Ellingham
Senior VP, Investor Relations and Communications
Tel: (416) 360-4743
Toll-free: 1 888 IMG-9999
Please note:
This entire press release may be accessed via fax, e-mail, IAMGOLD's website at www.iamgold.comand 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/edgar.shtml, or http://www.iamgold.com
Si vous désirez obtenir la version française de ce communiqué, veuillez consulter le http://www.iamgold.com/fr/accueil.html