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Has Iamgold Pulled off a Lasting Turnaround?

PART:
1 2 3 4 5
Part 2
Has Iamgold Pulled off a Lasting Turnaround? PART 2 OF 5

Why Iamgold’s Saramacca Exploration Results Surpassed Expectations

Saramacca’s resources

On September 5, 2017, Iamgold (IAG) announced a significant gold discovery at its Saramacca site in Suriname. The first mineral resource estimate consisted of 14.4 million tons of indicated resources averaging 2.2 grams of gold per ton for 1.02 million ounces, and 13.6 million tons of inferred resources averaging 1.18 grams of gold per ton per ton for 518,000 ounces.

This estimate assumes a long-term gold price of $1,500 per ounce and surpassed the company’s initial resource expectations.

Why Iamgold&#8217;s Saramacca Exploration Results Surpassed Expectations

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The Saramacca project is 25 kilometers southwest of Iamgold’s Rosebel gold mine processing facility.

Attractive economics

Notably, about 60% of the resources are contained within shallow, softer laterite and saprolite hosted mineralization. But IAG’s unit costs for mining gold are higher than its peers (GDX), primarily because of the prevalence of higher proportions of hard rock at its major mine sites.

A majority of the resources in the shallow depths and softer rock would mean lower costs at this operation. Historically, Iamgold has been less successful at controlling costs than peers (GDX) Newmont Mining (NEM), Agnico-Eagle Mines (AEM), and Goldcorp (GG).

That said, the average grade of the indicated resource at Saramacca is double the average reserve and resource grade at Rosebel. IAG had updated its reserves and resources for Rosebel on July 26, 2017, and according to this update, Rosebel’s attributable proven and probable gold reserves rose 80% to 3.5 million ounces, compared with the end of 2016.

The majority of this increase was due to the optimization of mine plans and cost reductions. This has extended Rosebel’s mine life to 2028, and now, with the successful exploration in Saramacca, even more years could be added to Rosebel.

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