IAMGOLD’s Westwood Ramp-Up Is Proceeding as Planned
IAG’s Westwood mine: significant growth
IAMGOLD’s (IAG) Westwood project is located in southwestern Quebec, Canada. This site started production in 1Q13 and achieved commercial production in 2014.
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In 2Q17, Westwood reported 106% higher production compared to 2Q16 due to the continued ramp-up of the mine, which resulted in higher tons mined. Underground development work at the mine continued in 2Q17 to open access to new mining areas. The company is aiming to develop 20 kilometers in 2017. IAG maintained its full-year 2017 production guidance of 115,000–125,000 ounces as the project continues to ramp up. The project remains on track for full production by 2019.
IAG was normalizing its costs attributed to inventory at its Westwood operations since a seismic event in May 2015. It ended this practice at the start of 2Q17, when the mine reached normal production levels.
In 2Q17, IAG reported AISC (all-in sustaining costs) of $995 per ounce—an improvement of 14% year-over-year (or YoY) due to higher sales volume.
Importance of Westwood
Due to the presence of hard rock, the cost structure for IAG’s Essakane and Rosebel mines remains high-cost. While exploration results at Rosebel have shown encouraging results, Westwood remains key for the company to increase its production while lowering costs.
IAG’s peer Eldorado Gold (EGO) is also facing issues at several of its mines, including its mines in Greece. New Gold’s (NGD) capital expenditure requirements for its key project, Rainy River, have crept higher. While Kinross Gold (KGC) also initially faced issues at its Tasiast expansion project, work on the project is now going as planned.
Read on to the next and final part of this series for IAG’s valuation.