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Why IAG’s Westwood Is on Track for Full Production by 2020

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IAG’s Westwood mine: significant growth

IAMGOLD’s (IAG) Westwood project had a pivotal year in 2017, as it resumed operating at the normal production level in 2Q17. Investors might recall that, 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.

Westwood’s gold production increased 92% YoY (year-over-year) to 125,000 ounces. The continued ramp-up resulted in more tons mined and higher throughput.

IAG expects Westwood to produce between 125,000 and 135,000 ounces of gold in 2018. The continued ramp-up to full production should aid the production growth.

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Cost improvement

IAG has been normalizing its costs at its Westwood operations, which were attributed to inventory since the seismic event in May 2015. At the start of 2Q17, the company stopped normalizing these costs when Westwood reached normal production levels. Westwood’s all-in sustaining costs (or AISC) decreased 18% year-over-year (or YoY) to $972 per ounce. The company is expecting a full ramp-up by 2020, which should drive its unit costs further down. Once the mine is operating at full capacity, it’s expected to have the lowest unit costs of any of its operating mines.

Due to the presence of hard rock, the cost structure for IAG’s Essakane and Rosebel mines remains high. While exploration results at these mines have shown encouraging results, Westwood remains a key for the company to increase its production while lowering costs.

Peer (NUGT)(GDXJ) Eldorado Gold (EGO) is also facing issues at several of its mines, including its mines in Greece. New Gold’s (NGD) capital expenditure requirements for its key project, Rainy River, have crept higher. While Kinross Gold (KGC) also initially faced issues at its Tasiast expansion project, work on the project is now going as planned.

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