Iamgold rakes in profits from Sadiola Hill

The Sadiola Hill gold operation in Mali has allowed Iamgold (IIMG-T) to post hefty profits and boost its balance sheet to US$72.7 million in cash.

The company and operating partner AngloGold (AU-N) each hold a 38% interest in the open-pit operation; the government of Mali holds an 18% share; while International Finance Corp. has the remaining 6%.

In the first quarter of 2000, Sadiola Hill churned out 139,397 oz. gold at an average cash cost of US$106 per oz. and an average total cost of US$128 per oz. Iamgold posted net earnings of US$2.7 million for the quarter, about the same as in the corresponding period of the previous year. Gold revenues reached US$16.4 million, compared with US$14.1 million a year ago.

At the end of March, the company’s US$72.7-million treasury included US$30.6 million in discretionary cash, with no debt.

In July, Iamgold and partner AngloGold expect to begin production at the nearby Yatela deposit, which hosts reserves of 12.3 million tonnes of oxide ore grading 3.6 grams, plus additional resources.

Site construction is already under way at Yatela. The mine is expected to produce a total of 1.23 million oz. over 5-6 years at an average direct cost of US$154 per oz. and a total cost of US$174 per oz.

The mine life at Yatela could be extended a few more years by the Alamoutala deposit, 12 km to the south. It hosts a drill-inferred oxide resource of about 2 million tonnes grading 2.5 grams.

Capital costs for Yatela are estimated at US$70 million. Iamgold must fund US$23 million of the total in order to hold a 40% stake. AngloGold will provide the balance of funding for its 40% share. The government will hold the remaining 20% stake.

While Iamgold is best known for its projects in Mali, the company has numerous other gold projects in West Africa, as well as projects in South Africa, Ecuador, Brazil and Argentina. AngloGold recently agreed to earn a 50% interest in the newly expanded Hockey Stick project in Ecuador by spending US$6.5 million over five years. This land package is said to be geologically similar to regions hosting important gold deposits in neighbouring Peru.

Meanwhile, in Tocantins state, Iamgold has expanded its ground position in the Almas greenstone belt, which has been compared with the Abitibi greenstone belt in eastern Canada.