Iamgold posts strong net earnings for Q2

Staff Writer | Thursday August 14, 2008 00:00

 

The BSE-listed company said in a statement that stripping out the effects of the impairment, profit rose 169 percent year-on-year, thanks to higher gold and niobium prices as well as slightly increased production levels.

Iamgold realised an average gold price of P5,777/oz compared with P4342/oz in the same period a year ago, and gold production rose to 255, 000 oz, from 251, 000 oz in the second quarter of 2007.

Cash costs increased to P3105/oz, compared with P2717/oz a year earlier.
'Our cash costs and increased production guidance demonstrate our focus on cost improvement and production initiatives,' said President and CEO Joseph Conway.

The company raised its production guidance for the full year to 950, 000 oz of gold, from an earlier forecast of 920, 000 oz.

However, cash costs have also been revised to between P3191/oz and P3257/oz, an increase from its previously published expectations of between P2,993/oz and P3092/oz.

The Mupane gold mine transitioned to owner-mining in July 2008, which is expected to lower cash costs by at least $40 per ounce compared to the previous life-of-mine plan.

As a result, the reserves at Mupane were increased by 64,000 ounces and the life of the operation was extended by four to six months to mid-2012.

The use of a smaller local mining contractor at Mupane during the second quarter of 2008 lowered unit costs and overheads, the company said.

After mining 37,000 oz at Mupane during the first six months of 2008, the company was able to increase mineral reserves by 27,000 oz by June-end. The reserves were calculated using a gold price of $600/oz at December 31, 2007, and $650/oz at June 30, 2008. 

The mine was expected to have begun closing at the end of 2011, but the company plans to continue to evaluate mining costs to determine whether it could develop additional resources that could extend the mine life even beyond 2012.

Conway said the increase in reserves is a direct result of Iamgold's aggressive cost and production initiatives.

'Our lower operating costs due to the switch to owner-mining at Mupane will allow for profitable mining of satellite pits that had been previously excluded from the original mine plan,' he said.