Sadiola chugs along for Iamgold

Iamgold (IMG-T) has posted net earnings of US$3.5 million (or 5 per share) on revenue from gold sales of US$23.1 million during the first three months of 2001. Iamgold is based in Markham, Ont.

During the same period of 2000, net earnings totalled US$3.1 million (4 per share) on revenue of US$16.5 million. Operating cash flow between the two periods increased to US$7.1 million from US$6.8 million.

During the three months ended March 31, the Sadiola gold mine in Western Mali poured 130,406 oz. gold at an average cash cost of US$123 per oz. and a total cash cost of US$156 per oz. In the corresponding period of the previous year, the figures were 139,397 oz. gold at an average cash cost of US$106 per oz. and a total cash cost of US$128 per oz. The company realized an average of US$277 per oz. for its production. This was US$20 per oz. lower than a year earlier and US$13 per oz. higher than the quarter’s average spot price.

Iamgold holds a 38% stake in the Sadiola gold mine through Mali-based SEMOS (La Societ d’exploration des mines d’or de Sadiola). Its other joint-venture partners include AngloGold (AU-N) with 38%, the Malian government with 18% and International Finance with 6%.

Sadiola is expected to mine 5.3 million tonnes to produce 522,000 oz. gold in 2001. Cash costs are pegged at US$124 per oz., with total costs at about US$144.

Of Sadiola’s production, 443,700 oz. are sold forward through 2004 at an average price of US$315 per oz.

Sadiola’s reserves stand at 32.6 million tonnes grading 3.2 grams gold per tonne, with a total resource (including reserves) of 138.8 million tonnes at a grade of 2 grams. Resources in smaller deposits near the Sadiola pit make up a further 9.9 million tonnes averaging 2.4 grams.

Drilling wrapped up in January to test the potential of deepening the Sadiola open pit past the planned depth of 140 metres. The holes consistently cut values exceeding 3 grams gold per tonne over the 500-metre strike length that was tested. Narrower, higher-grade intersections were also encountered. The zone remains open to the north and south and at depth.

A US$2-million drilling program will aim at extending the 2-km strike length of the main sulphide zone during the third quarter. Drilling also continues on a number of satellite oxide targets near the Sadiola mine. Grade-control drilling on the FE-3 satellite deposit is under way in preparation for mining.

At the adjoining Yatela property, the stacking of ore on the leach pads began in March. First production from the operation is expected in June. For 2001, Yatela production is pegged at 136,000 oz. at US$185 per oz. This is expected to increase to 245,000 oz. from 2.5 million tonnes in 2002. Over six years, the mine is projected to pour 1.4 million oz. at a total cash cost of US$174 per oz.

Yatela’s reserves stand at 13.4 million tonnes grading 3.7 grams gold per tonne. The total resource (including the reserve) is pegged at 36.9 million tonnes averaging 2.2 grams.

Iamgold and AngloGold each own 40% of Yatela. The balance is held by the Malian government. Capital cost to bring the project to production is US$75 million.

At the end of March, Iamgold had US$42 million in cash and equivalents.