Canada Business Report 2017

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Discovery Reports

IAMGOLD leverages existing infrastructure and robust exploration to sustain reserve growth

Toronto-based international gold producer expects to increase production by 20 to 25 per cent in the next three years, and seeks collaborative opportunities in Hong Kong and Japan

PUBLISHED : Monday, 13 November, 2017, 5:36pm
UPDATED : Monday, 13 November, 2017, 5:36pm

Emerging from the deep freeze, the gold industry is regaining its hot commodity crown. More resilient and cost-efficient than ever, the sector is regaling gold producers and investors worldwide, but the reawakening comes at a time of reckoning.

To sustain growth, the industry needs to favour reserve replacement strategies that increase the global pot rather than pour reserves from one pot to another. This is according to Stephen Letwin, president and CEO of Toronto-based international gold producer IAMGOLD.

Not very long ago, the industry known as a global safe haven was reeling from dim scenarios: for every ounce of gold produced, only half was being discovered; the average life of a gold mine declined to 12 years from 19 years in 2009; and mineable gold reserves dropped 17 per cent from 2013 to 2015. The industry, however, is rising from the bottom of the gold cycle, and IAMGOLD is ecstatic.

With more than US$1 billion in liquidity and an enduring commitment to high-potential brownfield and greenfield exploration projects, IAMGOLD expects to grow its production by 20 to 25 per cent in the next three years. From 813,000 attributable ounces of gold last year, it aims to produce at least 1 million ounces by 2020.

IAMGOLD’s strong liquidity has provided it security through uncertain economic times. Its success in reducing expenses and improving productivity has helped it cut costs by more than US$175 million since 2013. By managing its balance sheet, IAMGOLD avoided financial compromises.

“We transformed the company and emerged as a new player,” Letwin says. “We cut back on large capital long cycle capacity investments to protect our balance sheet.”

Resilient as the gold it mines, IAMGOLD is no stranger to adversity. When the gold price fell in 2013, the company expertly tackled costs and moved to short cycle capacity investments, which required less capital and had faster payback. It drilled more aggressively around existing infrastructure with a focus on developing existing resources and bolstering near mine exploration.

We transformed the company and emerged as a new player
Stephen Letwin, president and CEO, IAMGOLD

“We adjusted our strategy very quickly,” Letwin says. “We are flexible and agile so we worked to maximise returns around current mines.”

Robust exploration and opportunities to leverage existing infrastructure back IAMGOLD’s path to achieving sustainable reserve growth. Cultivating opportunities in its own backyard, IAMGOLD is ramping up its Westwood mine in Quebec to double production this year and to achieve full production by 2019.

The company also formed a partnership with Sumitomo Metal Mining of Japan to advance the development of Côté Gold, one of the largest undeveloped deposits in Canada located six hours

north of Toronto. This is on top of major plans to extend mine lives at its open pit mines in West Africa and South America, such as the Rosebel Mine in Suriname, the Sadiola joint venture in Mali and the Essakane Mine in Burkina Faso.

“We are seeing huge opportunities at our concessions alone because we are using better technology so we continue to drill new holes,” Letwin says. “It just makes more sense to leverage existing infrastructure, the permits and the community relationships.”

Eagle-eyed on collaborative opportunities in Hong Kong and Japan, the Toronto and New York stock-exchange-listed company seeks to share its purpose of enriching lives and its vision of generating value through accountable mining with like-minded institutions.

“Growth strategies that replace only half of production will not create long-term value for the gold industry,” Letwin says. “We should expand resources at existing mines and identify near mine deposits that leverage infrastructure and lead to more greenfield discoveries. This is what we are doing. IAMGOLD is carving a path to sustainable growth in reserves.”