Inside IAMGOLD’s Essakane Mine: What Caused Improved Costs in 1Q17

Anuradha Garg - Author

Nov. 20 2020, Updated 10:58 a.m. ET

IAG’s Essakane mine

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.

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Increased production

Essakane produced 93,000 ounces of gold in 1Q17, which represents a YoY (year-over-year) rise of 6%, mainly due to a 27% increase in throughput, which was partially offset by planned lower grades. The improved throughput was mainly the result of improved mill tonnage. Investors should note that this improved production at the site came despite the increase in the proportion of hard rock in the feed.

During its 1Q17 earnings call, Gordon Stothart, IAG’s chief operating officer, stated: “We will also be adding an oxygen plant at Essakane to improve recoveries and reduce reagent consumption. As well, we’re kicking off a new study to assess the economics of heap leaching for processing low and marginal grade ore.”

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IAG’s improvements in unit costs

In line with its improvements in production, Essakane’s AISC (all-in sustaining costs) improved during the quarter. Its AISC came in at $973 per ounce, which was 13% lower than in 1Q16. The fall was mainly due to lower sustaining capital.

IAMGOLD is continuously exploring its options to reduce its fuel consumption, including the addition of a solar plant. The company mentioned the following during its 1Q17 call: “Integrating the new 15-megawatt solar power plant with our existing 57-megawatt HFO plant will save us about 6 million liters of fuel annually.”

For the past two years, most gold miners (GDX) have been focusing on lowering their costs to weather the volatile gold price environment. Notably, Agnico-Eagle Mines (AEM), Newmont Mining (NEM), and Goldcorp (GG) have also made significant progress in cutting costs, while Harmony Gold (HMY) has fallen behind on that front.


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