IAMGOLD’s (IAG) Essakane mine is situated in Burkina Faso, West Africa. It is 90% owned by IAMGOLD and 10% owned by the government of Burkina Faso. IAMGOLD started operations at this site in 2009, while commercial production started in July 2010.
The company completed the plant expansion at this site to accommodate a substantial rise in hard rock in 2013.
Essakane produced 88,000 ounces of gold in 1Q16. This was a fall of 1% year-over-year (or YoY), owing mainly due to lower grades. Lower grades were offset to an extent by improved recoveries and higher throughput.
Production for 1Q16 also reflected a fall of 10% quarter-over-quarter. While the grade at Essakane was slightly higher in 1Q16, similar to the Rosebel mine, its percentage of hard rock rose from 60% to 79%, which reduced its mill throughput by 12%.
Cash costs fell
While Essakane’s production fell, its cash costs also fell by 9% YoY to $691 per ounce in 1Q16. The fall was mainly due to reduced fuel prices, favorable exchange rates, and improved plant performance. IAMGOLD is continuously exploring options to reduce its fuel consumption, including the addition of a solar plant.
During the company’s 1Q16 conference call, its CEO mentioned that Essakane’s all-in sustaining costs (or AISC) are expected to fall in 2H16, as they are expected to progress on a 15-megawatt solar power plant that will help reduce energy costs.
While cash costs for IAMGOLD fell, its AISC rose by 13% YoY to $1,116 per ounce due to higher sustaining capital, which was the result of higher capitalized waste stripping.
For the last two years, most gold miners (GDX) have been focusing on lowering their costs to weather the volatile gold price environment. Agnico Eagle Mines (AEM), Newmont Mining (NEM), and Goldcorp (GG) have made significant progress in cutting costs, while Harmony Gold (HMY) has been left behind.