IAMGOLD Corporation (TSX: IMG) (NYSE: IAG) provides preliminary operating results for the second quarter 2021. The Company also announces a reduction in its production guidance and an increase in its costs guidance for 2021 as well as an increase in the costs estimate for its Côté Gold Project. All dollar amounts are in US dollars and a CAD:USD exchange rate of $1.30, unless otherwise indicated.
PRELIMINARY OPERATING RESULTS
The following table summarizes preliminary second quarter operating results and updated full year 2021 guidance on an attributable basis for certain metrics. The guidance changes are based on the Company’s performance in the first half of 2021 and subsequent efforts to develop an updated preliminary outlook for the second half of 2021.
|Q2 2021||YTD 2021||Updated Full Year Guidance 20211||Previous Full Year Guidance 20212|
|Essakane (000s oz)3||106||208||390 – 400||365 – 390|
|Rosebel (000s oz)3||25||72||140 – 160||220 – 245|
|Westwood (000s oz)3||8||15||35 – 45||45 – 65|
|Total attributable production (000s oz)||139||295||565 – 605||630 – 700|
|Cash costs4 ($/oz sold)||$1,102||$1,064||$1,115 – $1,150||$930 – $980|
|All-in sustaining costs3,4 ($/oz sold)||$1,422||$1,324||$1,395 – $1,435||$1,230 – $1,280|
1 The updated full year guidance is based on the following 2021 full year assumptions: average realized gold price of $1,745 per ounce, USD:CAD exchange rate of 1.22, EUR:USD exchange rate of 1.20 and average crude oil price of $65 per barrel.
2 The previous full year guidance was based on the following 2021 full year assumptions: average realized gold price of $1,750 per ounce, USD:CAD exchange rate of 1.30, EUR:USD exchange rate of 1.19 and average crude oil price of $47 per barrel.
3 Consists of Essakane and Rosebel on an attributable basis, and Westwood on a 100% basis.
4 This is a non-GAAP performance measure. Refer to the Non-GAAP Performance Measures section at the end of this news release.
Total Company-wide attributable production guidance for 2021 has been reduced due to lower actual production in the first half of 2021 from the Westwood and Rosebel mines and their anticipated output for the remainder of 2021, partially offset by higher production at the Essakane mine in the first half of 2021. Total per-ounce costs guidance for 2021 has been increased mainly to reflect the lower total attributable production guidance. Site capital expenditure estimates are expected to be slightly lower than previously provided guidance (news release dated January 19, 2021), primarily due to an expected reduction in planned work at Rosebel. In accordance with IFRS, the Company is reviewing the approximately $120 million carrying amount of the Westwood mine to determine whether there is any indication of impairment, and if so, whether an adjustment is necessary.
Essakane delivered strong second quarter results with higher gold production, despite ongoing challenges in processing ore with high graphitic content, through operational efficiencies and the completion of the mill upgrade. Essakane 2021 production guidance has been increased to reflect the higher production in the first half of 2021.
Westwood 2021 production guidance has been reduced primarily to reflect additional safety measures through the implementation of further ground support and egresses required in the East Zone and in preparation for mining the Central and West Zone as well as slower-than-expected ramp-up of personnel. We are also assessing the impact of these factors on 2022 planning.
Mining activities at Rosebel were primarily impacted in the second quarter by difficult operating conditions caused by continuing unusually heavy rains and by challenging industrial relations up until the resolution of the collective bargaining agreement in May. In addition, there was a significant increase in COVID-19 cases due to the emergence of a new variant in Suriname during the second quarter. The increase in COVID-19 cases and social impacts, including multiple lockdowns in-country and a strained healthcare system, adversely affected operations and projects. Furthermore, management of the high clay content ore from the Saramacca deposit, exacerbated by the heavy rains, negatively impacted ore handling and mill throughput. Due to the above-mentioned factors, and continued uncertainty related to the COVID-19 situation, Rosebel’s 2021 guidance has been adjusted downward. The Company is continuing to assess what, if any, ongoing impacts these challenges may have on ore sequencing and 2022 production. Strategic mine development activities have resumed and are intended to expose higher grade ore zones.
CÔTÉ GOLD PROJECT UPDATE
Construction at Côté, a 70:30 joint venture between IAMGOLD, as the operator, and Sumitomo Metal Mining Co., Ltd. continues with the earthworks contractors advancing road widening and overburden stripping and the commencement of work on water management infrastructure and the tailings management facility. Plant site concrete works have commenced including the commissioning of the concrete batch plant and the raft foundations for the ball mill. Construction of the permanent camp is progressing well with approximately 50% of the planned rooms complete. The Project is currently on schedule and is 27% complete at June 30, 2021. The Project schedule remains on track for commercial production in H2-2023.
Costs Estimate Update
The Company has identified certain estimated project costs increases from a project review. The Company’s 70% share of updated estimated project costs from July 1, 2020, net of leasing, is now estimated at $1,125 million to $1,175 million (exclusive of expenditures prior to such date) at a CAD:USD exchange rate of $1.30 compared to the previous estimate of $875 million to $925 million at a CAD:USD exchange rate of $1.35. In accordance with the terms of the joint venture, the updated capital costs will be reviewed by SMM.
The table below summarizes the updated estimated project costs:
|Project costs estimate||July 2020||July 2021|
|Company’s 70% share of project costs estimate||$875 – $925 million||$1,125 – $1,175 million1,2|
|Leasing (on a 70% project basis)||$80 million||$100 – $120 million3|
|CAD:USD exchange rate||$1.35||$1.30|
|Expended4 – July 1, 2020 to June 30, 2021||–||$193.0 million|
|Company’s remaining 70% share of project costs estimate||$875 – $925 million||$930 – $980 million|
1 Total costs are approximately 95% capital expenditures and 5% non-capitalized costs. Approximately 95% of the estimated capital costs are in Canadian dollars. The Company has implemented a hedge program which includes CAD:USD exchange rate hedging which will be described in greater detail in the Company’s second quarter results.
2 Approximately $33 million of the increase is attributable to the unfavourable change in the currency exchange rate.
3 Leasing is net of lease payments during the construction period. Previously $120 million at a CAD:USD exchange rate of $1.30 (see news release dated May 3, 2021).
4 Calculated at an average CAD:USD exchange rate of $1.2871.
The change was primarily driven by increased structural, mechanical, piping, electrical and concrete estimates for the process facility; increases to mine facilities costs; increases in earthworks materials and manpower estimates; certain scope changes; inflation (including pricing increases due to COVID-19 related supply chain challenges); changes in the currency exchange rate; and costs related to COVID-19. The project costs range increase includes new contingency amounts for the remaining expenditures estimate.
SECOND QUARTER 2021 RESULTS AND CONFERENCE CALL
Additional details regarding the second quarter operating and financial results as well as the progress of activities at Côté will be provided when the Company discloses its second quarter financial results after market hours on Wednesday, August 4th, 2021.
A conference call will be held on Thursday, August 5th, 2021, at 8:30 a.m. (Eastern Time) for a discussion with management regarding the Company’s operating performance and financial results for the second quarter 2021. A webcast of the conference call will be available through the Company’s website at www.iamgold.com.
IAMGOLD is a mid-tier gold mining company operating in three regions globally: North America, South America and West Africa. Within these regions the Company is developing high potential mining districts that encompass operating mines, construction, development, and exploration projects. The Company’s operating mines include Westwood in Canada, Rosebel (including Saramacca) in Suriname and Essakane in Burkina Faso. A solid base of strategic assets is complemented by the Côté Gold construction project in Canada, the Boto Gold development project in Senegal, as well as greenfield and brownfield exploration projects in various countries located in the Americas and West Africa.
IAMGOLD employs approximately 5,000 people. IAMGOLD is committed to maintaining its culture of accountable mining through high standards of Environmental, Social and Governance practices, including its commitment to Zero Harm®, in every aspect of its business. IAMGOLD is listed on the New York Stock Exchange and the Toronto Stock Exchange and is one of the companies on the JSI index1.
1 Jantzi Social Index (“JSI”). The JSI is a socially screened market capitalization-weighted common stock index modeled on the S&P/TSX 60. It consists of companies which pass a set of broadly based environmental, social and governance rating criteria.
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