Challenges at the Westwood mine
IAMGOLD’s (IAG) Westwood project is located in southwest Quebec, Canada. This site started production in the first quarter of 2013. It achieved commercial production in 2014, producing 70,000 ounces in the first two quarters of the year.
During the early stages of the mine’s ramp-up, a seismic event occurred, which left part of the operation in a rehabilitative state for most of 2015. This led to lower production at higher costs in 2015.
Based on its revised plan for the mine, for 2016, IAMGOLD is focused on underground development to expand the mining area and on doing remedial work in the area impacted by the seismic event.
The company has guided that the mill will operate on a reduced schedule throughout 2016 due to the low level of mining taking place. Its ramp-up to full capacity is expected by 2019.
Gold production during 1Q16
As expected, the gold production at the Westwood mine during 1Q16 was 15,000 ounces, 32% lower than in 1Q15.
IAG reduced inventory costs by $6.1 million in 1Q16 to normalize for the amount of fixed overhead on a per-unit basis due to abnormally low production.
Cash costs per ounce and all-in sustaining costs (or AISC) for 1Q16 were $857 per ounce and $890 per ounce, respectively. These were falls of 24% and 41% YoY, respectively. The company expects to continue with this normalization for the rest of 2016 for Westwood.
IAMGOLD’s CEO mentioned during the company’s earnings call that Westwood is making “excellent progress with the revised ramp-up plan.” The company still expects Westwood to be the lowest-cost operation with at least a 20-year mine life.
Westwood mine remains key
For next year, the company expects to significantly increase its production due to better grades. A ramp-up to full production of between 180,000 and 200,000 ounces per year is expected by 2019.
The structure of IAMGOLD’s Essakane and Rosebel mines remains high-cost due to the presence of hard rock, while Sadiola is marching toward the end of its mine life unless extended through capex (capital expenditure). Under these circumstances, Westwood remains key for IAMGOLD to increase its production while reducing costs.