EXPLORATION & DEVELOPMENT

Iamgold cuts reserves in cautious approach at Westwood

Iamgold has cut reserves by 48% at its Westwood gold mine in Canada and outlined a “cautious” approach to a long-term plan for the seismically-impacted operation.

Staff reporter
 Iamgold’s Westwood mine in Canada

Iamgold’s Westwood mine in Canada

The company has been reviewing Westwood and last year recognised a US$395 million impairment owing to the mine operating at reduced capacity after an earthquake late in 2018.

Iamgold yesterday said Westwood's total attributable reserves decreased by 48% to 0.6 million ounces grading 7.1g/t gold, as it filed a technical report on the mine's feasibility study.

"While overall mineral resources have remained largely unchanged, mineral reserves were impacted primarily by more conservative geotechnical assumptions related to specific zones located in higher seismic risk areas," the company said.

Measured and indicated resources, inclusive of reserves, increased by 6% to 1.56 million ounces grading 10.2g/t, and inferred by 4% to 1.77Moz at 8.6g/t.

It maintained gold price assumptions of US$1,200/oz for underground resources and $1,500/oz for the satellite Grand Duc openpit resource.

Iamgold said the feasibility study results were in line with expectations and reaffirmed long-term guidance for Westwood as outlined in December, which had indicated a three to four year ramp-up targeting steady state production of 130,000-145,000oz per year.

"We have adopted a cautious and empirical based approach that reflects current operational reality, with significant opportunities to improve on the base case," president and CEO Gordon Stothart said.

He reiterated the company was pursuing a "hub and spoke" strategy to take advantage of significant available mill capacity. 

Iamgold said it intended to continue mining using bottom-up long-hole open stoping (LHOS) methods, but would use underhand LHOS in areas of higher seismic risk for better induced stress management.

Guidance reduced

Iamgold described "solid" operating results for the June quarter, with attributable gold production of 155,000oz, down 29,000oz on a year earlier owing to the temporary suspension of Rosebel in Suriname due to COVID-19. 

It also further trimmed its 2020 attributable production guidance to 645,000-700,000oz due to the Rosebel stoppage.

Iamgold had suspended its 2020 production guidance in March of 700,000-760,000oz then lowered it in May to 685,000-740,000oz.

Net income and margins improved thanks to the rising gold price, with revenues of $284.6 million for the June quarter reflecting an average realised gold price of $1,724/oz sold.

Iamgold reported adjusted net earnings of $20.1 million or 4c per share, compared with a net loss of $15.5 million or 3c per share for the previous corresponding period.

The miner reported at all-in sustaining costs of $1,189/oz, up 4% from the same prior year period, and down 3% from the first quarter.

It ended June with cash, equivalents, short-term investments and restricted cash of $866.3 million.

The company also said EVP and CFO Carol Banducci would retire in March 2021 and its general counsel and senior VP business development Jeffery Snow would retire effective August 31.

Its shares (TSX: IMG) touched a one-year high of C$7.08 intraday and closed up 1.47% to $6.90, capitalising it at $3.3 billion (US$ billion).

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