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Where Investors Stand on IAMGOLD’s Transformation

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Part 3
Where Investors Stand on IAMGOLD’s Transformation PART 3 OF 7

Has IAMGOLD’s Rosebel Mine Started to Turn around for Good?

IAG’s Rosebel mine: significant reserve increase

IAMGOLD’s (IAG) Rosebel mine is located in north-eastern Suriname, South America. This mine started commercial production in 2004.

Has IAMGOLD’s Rosebel Mine Started to Turn around for Good?

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Investors might recall that IAG announced its reserve and resource update for Rosebel on July 26, 2017. Rosebel’s gold reserves rose an impressive 80% to 3.5 million ounces from 2.0 million ounces at the end of 2016.

This increase extends Rosebel’s mine life to 2028. The majority of the increase in reserves was due to the optimization of mine plans and cost reduction.

Rosebel mine: production increased

Rosebel’s attributable production rose 4% from 3Q16, coming in at 75,000 ounces in 3Q17. During its 3Q17 earnings call, IAG COO (chief operating officer) Gord Stothart mentioned that while the proportion of hard rock at Rosebel rose to 44% in 3Q17, up from 37% in 3Q16, mill throughput rose 5% due to major mill improvements. This supported higher production in 3Q17.

IAG maintained its Rosebel production guidance for 2017 at 295,000–305,000 ounces.

Unit costs fell

Rosebel’s AISC (all-in sustaining costs) came in at $898 per ounce in 3Q17, an impressive 24% improvement over 3Q16. This improvement is mainly due to lower sustaining capital expenditures. IAG’s cost of sales in 3Q17, on the other hand, came in only 1% lower than in 3Q16.

Historically, IAMGOLD has been less successful in controlling costs than peers (GDX) Newmont Mining (NEM), Agnico-Eagle Mines (AEM), and Goldcorp (GG). But a more focused approach now might finally lead IAG toward lower costs.

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