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IAMGOLD seeking both acquisitions and exploration

IAMGOLD Corporation – a leading mid-tier gold mining company listed on the Toronto and New York stock exchanges – sees Africa playing a significant role in achieving its short-term objective of almost doubling its annual production to 1.8 Moz by 2012.

The company – which has seven operating gold mines, a niobium mine and four development projects on three continents – produced close to the one-million mark last year, with production of 997 000 oz. Its proven and probable reserves right now stand at 12.4 Moz – of which about 50% are in Africa, 30% in South America and 20% in Canada.

“In order to achieve our target of 1.8 Moz, we are definitely considering acquisitions, in addition to exploration, as a way forward, said senior vice president of corporate affairs Larry Phillips. “Very much so,” he insisted. “If you look at the organic growth within our existing projects, it could take us to the 1.3 to 1.4 Moz pa range. The balance of 400 000 to 500 000 oz to make up our 1.8 Moz target could come from exploration, but in the time-frame of our current objectives it is far more likely to emanate from additional acquisitions,” he explained.

Brian Chandler

IAMGOLD’s senior
vice president for Africa
Brian Chandler

“Our production in Africa this year is expected to be about 450 000 oz, but will rise to around 530 000 oz with the start-up of our new Essakane mine in Burkina Faso in the second half of next year,” said senior vice president for Africa Brian Chandler. “And when Essakane reaches full production of more than 300 000 oz in 2011, total African output will be roughly 670 000 oz,” he calculated.

“So we are actively looking at opportunities – advanced-stage projects in areas where we can add value to our existing experience and operations,” Phillips added.

“Our African operations currently represent roughly 50% of our production profile,” said Chandler , “and there is no reason why they should not maintain or increase this proportion. We are identifying plenty of opportunities, and clearly there are areas which have been under-explored.”

IAMGOLD has committed to an ongoing presence in West Africa and has established an administration and exploration office in Dakar with the clear objective of maintaining its balance of at least 50% from Africa going forward.

“We have a large team of experienced people that are dedicated to the task of identifying opportunities,” said Phillips. “It’s a multi-disciplined strategy, which involves the geological team, part of the exploration group, and our production engineering people. It’s a significant part of our strategy, and I would say that at any given time there are dozens of scenarios that are being reviewed, researched or actively assessed for acquisition purposes,” he said.

“We are involved in three types of action: in the short term we are looking for mergers and acquisitions so that we can add immediate production to the equation, and earn immediate income – that’s a primary focus,” Chandler explained.

“Secondly we are looking at brownfields exploration – exploration that is close to or just starting a feasibility study, or even a project that has begun, and is very close to permitting and moving forward,” he continued. “Third is greenfields exploration which caters for the longer term, and we have interests in many different places in Africa where we have exploration underway – some of our own, and others as joint ventures with junior mining companies,” Chandler said.


The plant at the Tarkwa mine
in Ghana

“It would be inappropriate to name the countries we are investigating at this stage. We are obviously focused mainly on West Africa, because that’s where we have most of our production at the moment,” he added.

“I must emphasise that we are not confining our efforts to West Africa,” Phillips pointed out. “We would definitely look at opportunities elsewhere in Africa too. We have an operation in Botswana, and we’ve been active in other regions on the exploration front. So we will go where the opportunities present themselves, consistent with our strategy and with our own abilities,” he declared.

A key factor in IAMGOLD’s drive to double production is the newly-acquired US$350 million (R2.8 billion) Essakane gold mine in Burkina Faso – 90% owned by IAMGOLD – which will be producing at a full rate of approximately 370 000 oz pa from the second half of 2010.

“We are now concentrating on how to expand this production profile that was originally set through the feasibility study by our predecessor, Orezone,” said Phillips. “We are examining our options, and intend reporting to our shareholders and the market on our findings by the end of the year. At the same time we will be reporting on our evaluation of the process, the engineering and the opportunities that could mean further optimisation of production,” he added.

IAMGOLD is already undertaking near-mine exploration in the vicinity of Essakane. “The ore body is open in both directions, and includes one nearby satellite body identified by Orezone that is promising, and prospects of extending life of mine here are good,” Chandler revealed.

“We are busy with training at Essakane – everything from trade skills to operating skills. Mining itself is only part of what we do,” he emphasised. “We need to have a very strong commitment to health, safety and sustainability. We are focusing very strongly on these three aspects – not only the safety and environmental work, where we bring world standards to the table, but also the social responsibility schemes for the local community,” said Chandler.

IAMGOLD owns 38% of the Sadiola mine in Mali, as do AngloGold Ashanti. The mine produced 172 000 attributable oz in 2008 at a cash cost of US$389/oz – but is only expected to produce about 132 000 attributable oz this year, because of the move out of the main higher grade pit into lower grade satellite pits. It has a 2.3 Moz resource and is due to close in 2013.

“Sadiola Deeps has a 3Moz-plus resource below the main Sadiola pit, and our pre-feasibility on this will be complete by mid-2010,”Chandler said. “We see Sadiola Deeps as an extension of the primary Sadiola pit, and there is a strong possibility of adding anything from another four to six years to Sadiola’s life of mine, taking it from 2013 to 2018.”


The pit at the Yatela mine in Mali

Yatela in Mali – also 38% held by IAMGOLD and 38% by Anglogold – is expected to produce 85 000 attributable oz this year, but it will wind down from next year with current life of mine ending in 2011. Hence the company is committed to immediate exploration.

“Exploration to add resources to these two mines is underway, and we are spending about US$14 million (R112 million) this year and next on near-mine exploration because we believe there is scope around both of them,” Chandler revealed. “If no additional reserves are found at Yatela, the plan is to close the mine in 2011.”

The Tarkwa mine, in Ghana – with a big new expansion to its CIL plant – is scheduled to produce at a rate of about 690 000 to 700 000 oz (of which 130 000 oz is attributable to IAMGOLD). The mine – which is 18.9% owned by Iamgold – has a 2.5 Moz measured and indicated reserve, plus a half-million oz inferred resource, and its life of mine is currently estimated at 19 years.

Damang, also in Ghana, produces considerably less – about 200 000 to 210 000 oz, which gives IAMGOLD an attributable 35 to 40 000 oz. “This mine was scheduled for closure in 2013, but recent exploration has shown potential for further extension,” Chandler revealed.

“Finally, our Mupane mine in Botswana produced a record 101 000 oz last year at a cost of US$367/oz, but output will drop sharply this year to an estimated 63 000 oz,” he said.

“There is an excellent team at Mupane working hard to maximise the potential, so the mine should have an improved year in 2010. Mining is scheduled to wind down at the end of 2010, and then the plant will continue to process stockpiled ore through to the end of 2011,” Chandler added.

“We’ve come a long way since Sadiola was discovered in 1992, and the company has certainly grown over the years,” Phillips reminisced. “When we started in 1990 there was myself and three other individuals, none of us with any particular mining expertise. Today we have more than 4 000 people working for IAMGOLD around the world,” he concluded.