IAMGOLD Corporation - Fourth Quarter News Release
TSX: IMG NYSE: IAG BSE: IAMGOLD
NEWS RELEASE
IAMGOLD REPORTS RECORD PRODUCTION, RECORD NET EARNINGS, RECORD OPERATING CASH FLOW FOR THE FOURTH QUARTER
All amounts are expressed in US dollars, unless otherwise indicated.
Toronto, Ontario, February 24, 2011 – IAMGOLD Corporation (“IAMGOLD” or “the Company”) today reported its unaudited consolidated financial and operating results for the fourth quarter ended December 31, 2010. Net earnings were $144.5 million ($0.39 per share), an increase of $191.9 million compared to the fourth quarter of 2009, and operating cash flow was $221.3 million ($0.59 per share(1)), representing an increase of 228% from the fourth quarter of 2009.
“We had an excellent fourth quarter, with a 35% increase in gold production the key driver behind record highs in net earnings and cash flow,” said Steve Letwin, IAMGOLD’s President and CEO. “Gold production was at the top end of our latest guidance reflecting the hard work and resourcefulness of our employees. These strong financial results, however, were overshadowed by the death earlier this month of an employee of a contractor at our Rosebel mine in Suriname. We are saddened by this tragic accident and extend our deepest sympathies to his family. Safety is, and will continue to be, our top priority.”
“Our plan in 2011 is to build on our strong operational competencies to maximize the growth potential of our core gold assets,” continued Mr. Letwin. “With our strong performance in 2010 and a 13% increase in gold reserves, we are on track to achieving our production target of 1.1 to 1.2 million ounces of gold for the year. We continue to assess the business alternatives to unlocking the value of our niobium asset, and together with our focus on organic growth, are powerful drivers of future performance and improved shareholder returns.”
FOURTH QUARTER 2010 HIGHLIGHTS
- Net earnings of $144.5 million ($0.39 per share) increased by $191.9 million, compared to a net loss of $47.4 million (loss of $0.13 per share) in the fourth quarter of 2009.
- Adjusted net earnings(2) of $144.9 million ($0.39 per share) increased by 155% from $56.8 million ($0.15 per share) in the fourth quarter of 2009.
- Operating cash flow of $221.3 million ($0.59 per share(1)) increased by 228% from $67.5 million ($0.18 per share(1)) in the fourth quarter of 2009.
- Gold production increased by 35% to 315,000 attributable ounces at a cash cost(3) of $574 per ounce compared to 234,000 attributable ounces at a cash cost of $488 per ounce during the fourth quarter of 2009. At IAMGOLD operated sites, the average cash cost per ounce was $508 in the fourth quarter of 2010.
- On February 9, 2011, IAMGOLD received $49 million for the sale of its La Arena project.
- On February 24, 2011, IAMGOLD entered into an agreement for a private placement of flow-through shares. The issuance of 1.7 million shares at a price of $25.48 per share, raised gross proceeds of C$43.3 million.
FULL-YEAR 2010 HIGHLIGHTS Financial Results and Position
- Record results for net earnings, adjusted net earnings and operating cash flow in 2010.
• Net earnings of $279.8 million ($0.75 per share) increased by 145% compared to $114.1 million ($0.32 per share) in 2009.
- Adjusted net earnings(2) of $285.7 million ($0.77 per share(2)) increased by 68% from $170.0 million ($0.48 per share) in 2009.
- Operating cash flow of $415.1 million ($1.12 per share(1)) increased by 62% compared to $257.0 million ($0.73 per share) in 2009.
- The Company’s financial position has improved with $761.3 million in available liquidity, reflecting an increase from the previous quarter due mainly to the impact of the Essakane mine now fully operational. Cash, cash equivalents and gold bullion (at market value) were $411.3 million and the undrawn credit facility was $350.0 million at December 31, 2010.
- Tenth straight annual dividend and increased to $0.08 per share with $29.8 million paid in January 2011.
Production and Cash Costs
Gold Operations
- Gold production of 967,000 ounces increased by 3% from 939,000 ounces in 2009.
- Weighted average cash costs(3) were $574 per ounce compared to $461 per ounce in 2009.
- Annual average cash costs at IAMGOLD’s operating sites (Rosebel, Essakane, Mupane, and the Doyon division) were $525 per ounce in 2010 compared to $657 per ounce for the Company’s joint ventures and working interests (Sadiola, Yatela, Tarkwa and Damang).
- Commercial production at Essakane began on July 16, 2010. Total attributable production in 2010 was 122,000 ounces at a cash cost(3) of $429 per ounce. Throughput continued to ramp up with over 22,000 tonnes per day in December 2010, and is in line with its goal of 25,000 tonnes per day while processing soft rock.
Niobium Operation
- Strong niobium production of 4.4 million kilograms in 2010, 7% higher than production in 2009, and an operating margin(4) of $18 per kilogram compared to $20 per kilogram in 2009.
Exploration
- Exploration expenditures of $86.3 million in 2010 included accelerating work on promising results at the Company’s joint ventures in West Africa and the Charmagne discovery in Suriname. These successes supported supplemental funding approval for both near-mine exploration and greenfields exploration in 2010 along with aggressive programs planned for 2011.
Reserves
- The proactive exploration program at IAMGOLD resulted in increases in reserves and resources.
- Gold proven and probable reserves increased by 1.9 million ounces, or 13%, to 16.4 million ounces.
- Niobium proven and probable reserves increased by 34% to 243.8 million kilograms of contained niobium pentoxide (Nb2O5).
Development Projects
- The Westwood project is on track to commence commercial production in early 2013. Shaft sinking achieved a depth of 1,063 metres at the end of 2010.
- The Sadiola sulphide project feasibility study was completed and a construction decision is expected to be made in the first half of 2011.
- On February 9, 2011, IAMGOLD received $49 million in cash from Rio Alto Mining Limited (“Rio Alto”) for the sale of its La Arena project. In addition, as part of the option and earn-in agreement in June 2009, IAMGOLD received 8 million shares of Rio Alto with an approximate market value of $18 million as of February 23, 2011.
REVIEW OF 2010 RESULTS
Financial Results
- Revenues were $1,167.2 million in 2010, a 28% increase from 2009 primarily due to higher realized gold prices. The average realized gold price in 2010 for IAMGOLD’s operations and joint ventures rose 31% compared to 2009 and the number of ounces of gold sold increased by 2%.
- In 2010, net earnings were $279.8 million ($0.75 per share) compared to $114.1 million ($0.32 per share) in 2009. Adjusted net earnings(2) of $285.7 million ($0.77 per share(2)) increased by 68% compared to $170.0 million ($0.48 per share) in 2009. The impact of higher sales and gold prices was partially offset by increases in mining costs and income and mining taxes.
- Operating cash flow was $415.1 million ($1.12 per share(1)) in 2010, an increase of 62% compared to $257.0 million ($0.73 per share) in 2009. The increase is mainly due to increased sales partially offset by higher mining costs and income and mining taxes.
Financial Position
- The Company’s cash, cash equivalents and gold bullion (at market value) position has improved with $411.3 million available at December 31, 2010 compared to $300.1 million available at December 31, 2009. During 2010, cash and cash equivalents increased mainly due to record cash flow from operating activities, partially offset by capital expenditures in mining assets and exploration and development projects. The Company’s financial position reflects an increase of $167.9 million compared to September 30, 2010 as Essakane ramped up towards its design capacity during the fourth quarter of 2010. As at December 31, 2010, $350.0 million of unused credit remained available under the Company’s credit facility.
- On February 9, 2011, IAMGOLD received $49 million for the sale of its La Arena project. The proceeds add to IAMGOLD’s strong financial position.
- On February 24, 2011, IAMGOLD entered into an agreement for a private placement of flow-through shares. The issuance of 1.7 million shares at a price of $25.48 per share raised gross proceeds of C$43.3 million.
- In 2011, the Company plans to incur $460.0 million in capital expenditures and approximately $51.0 million in exploration expenses. With strong cash, cash equivalents and gold bullion positions, the available credit facility and expected operating cash flows, the Company has the financial capacity to fund the continuing 2011 requirements of exploration and development projects and expansion of existing operations.
Production and Cash Costs
Gold production and cash costs In 2010, IAMGOLD’s attributable gold production increased by 28,000 ounces, or 3%, compared to 2009. The increase in production was a result of:
• Ramp-up of production at Essakane after achieving commercial production on July 16, 2010, and
- Higher throughput at Tarkwa, Rosebel and Mupane,
Partially offset by:
- Closure of the Doyon mine in December 2009 and mining the Mouska mine at a reduced rate in 2010, and
- Lower grades at Sadiola and Yatela.
The 2010 annual average cash cost(3) of $574 per ounce has increased $113 per ounce from $461 per ounce in 2009 mainly due to lower grades, higher energy costs, and higher royalties of $13 per ounce.
Average annual cash costs at IAMGOLD operated sites (Rosebel, Essakane, Mupane and the Doyon division) were $525 per ounce(3) during 2010, an increase of 16% compared to $453 per ounce during 2009. The weighted average cash cost for IAMGOLD’s two main operations (Rosebel and Essakane) was $471 per ounce which highlights the strong performance in 2010. Cash costs for the Company’s joint ventures and working interests (Sadiola, Yatela, Tarkwa and Damang) were $657 per ounce during 2010, an increase of 39% compared to $473 per ounce during 2009.
As gold prices rise, lower grades of ore become economical to mine. By choosing to mine these lower grade deposits of the ore body and managing the cut-off grade, the Company can mine previously uneconomical portions of its resource base, increase the yield from the ore bodies and extend the life of the mines. Notwithstanding increased costs, this yields positive cash flow for the Company. IAMGOLD's continuous improvement programs and cost control efforts focus on aggressively managing unit operating costs (such as cost per tonne mined and cost per tonne milled) and increasing productivity at the operating sites. Increases in the gold price and increased royalty rates have driven higher royalty amounts.
Niobium production and operating margin Niobium production increased in 2010 compared to 2009, resulting primarily from higher throughput. The site successfully completed the paste backfill project and the mill expansion project in the second and third quarter of 2010, respectively. The operating margin per kilogram of niobium(4) decreased by $2 per kilogram during 2010 compared to 2009, the result of commissioning the paste backfill process, the strengthening in the Canadian dollar and higher prices and volumes of aluminum used in processing. Paste backfill process will enable near complete extraction of the ore body including areas with lower grades, impacting mining costs and operating margin.
Development Projects
In 2010, the Company’s total development project expenditures were $260.7 million, mainly related to Essakane in Burkina Faso and Westwood in Northern Québec.
Burkina Faso – Essakane mine – Achieved commercial production effective July 16, 2010
Construction of the Essakane mine is completed and commercial production began on July 16, 2010. Final costs for the construction of the project totalled $464.8 million which was on plan.
Canada – Westwood project – On schedule for early 2013
Completion of the Westwood project is on schedule with commercial production planned for early 2013. Project expenditures in 2010 totaled $94.9 million, with significant infrastructure preparation and construction. Shaft sinking has reached 1,063 metres compared to 1,220 metres expected during the year mainly due to the excavation of a loading station at a higher level than originally planned. More excavation has also been completed on level 60-0 and 84-0. The significant exploration and resource delineation programs resulted in over 74,000 metres of drilling in 2010.
In 2011, significant progress will continue, including the following projected activities: completing the construction of the surface waste silo to allow ore development to begin by the end of 2011, achieving the current shaft sinking plan (1,560 metres by end of 2011), and carrying out an 82,000-metre infill and extensions drilling program for resource development.
South America – Ecuador – Quimsacocha project
The Company has obtained the requisite permits to allow the use of reservoir water for exploration and feasibility work. Regular contact and dialogue is maintained with senior government officials in order to obtain clarity on fiscal and other matters. A model mining contract, which is expected to clarify some of these issues, is being developed by the Ecuadorian government.
Exploration
IAMGOLD’s exploration efforts remain focused in West Africa, select countries of South America, and the province of Québec in Canada. With a strategic mandate for organic growth, the Company has numerous projects underway and continues to pursue additional advanced exploration joint ventures and acquisition opportunities that will strengthen the foundation for future growth.
In 2010, IAMGOLD incurred $86.3 million on exploration projects, a 35% increase from $63.8 million in 2009. The 2010 expenditures included:
- Near-mine exploration and resource development expenditures of $48.7 million, including a resource expansion and delineation drilling program of more than 94,000 metres at Rosebel in Suriname for $14.7 million, a drill delineation program of more than 40,000 metres at Essakane in Burkina Faso for $13.4 million, and an $8.7 million exploration and resource delineation drilling program of more than 74,000 metres at the Westwood development project in the province of Québec; and
- Greenfield exploration of $37.6 million conducted at 16 projects, including two advanced exploration sites, in 10 countries in Africa and the Americas as part of IAMGOLD’s long-term commitment to reserves replenishment and organic growth.
Reserves
In 2010, the proactive exploration program at IAMGOLD resulted in a total proven and probable mineral reserves increase of 1.9 million ounces to 16.4 million ounces of gold, a 13% increase over the previous year.
Total proven and probable mineral reserves of niobium increased by 34% to 243.8 million kilograms of contained Nb2O5.
Commitment to Zero Harm Continues
In 2010, IAMGOLD was awarded the Corporate Social Responsibility award at the Corporate and Community Social Responsibility Conference for its Zero Harm vision of maintaining the highest standards in human health, minimizing the impact on the environment, and working co-operatively with host communities.
The frequency of all types of serious injuries across IAMGOLD during 2010 increased marginally to 0.58 compared to 0.54 in 2009.
The Company is committed to connecting its Zero Harm vision to performance, and regrets the tragic deaths of an employee at the Niobec mine in the province of Québec in 2010 and, more recently, an employee of a contractor at the Company’s Rosebel mine in Suriname.
The importance of continually striving for Zero harm is a core value for IAMGOLD. The Company strives to eliminate all injuries and tragedies through programs that reinforce the importance of constant vigilance in the workplace and the adoption of safe work practices. Recently, IAMGOLD joined the Mining Safety Roundtable, an industry forum for the industry’s most safety-focused leaders.
Outlook for Growth
As previously disclosed on January 17, 2011, the following is IAMGOLD’s guidance for production for years 2011 through 2013.
2010 2011 2012 2013 Actual Forecast Forecast Forecast
Attributable gold production (000 oz)
Mines owned and operated by IAMGOLD
| Rosebel | 395 | 360 – 380 | 390 – 410 | 360 – 380 |
| Essakane | 122 | 370 – 390 | 310 – 330 | 380 – 400 |
| Mouska(a) | 33 | 25 – 30 | – | 30 – 35 |
| Westwood | – | – | – | 130 – 150 |
| Mupane | 57 | 55 – 60 | 40 – 45 | 15 – 25 |
| 607 | 810 – 860 | 740 – 785 | 915 – 990 | |
| Other – Joint ventures and working interests in Africa | 360 | 290 – 340 | (b) | (b) |
| Total attributable gold production | 967 | 1,100 – 1,200 | (b) | (b) |
| Cash cost ($/oz of gold)(3) | 574 | 565 – 595 | (b) | (b) |
| Average realized gold price ($/oz) | 1,252 | 1,300 | 1,250 | 1,150 |
| Average foreign exchange rate (C$/US$) | 1.03 | 1.00 | 1.05 | 1.05 |
| Average foreign exchange rate (US$/€) | 1.33 | 1.35 | 1.35 | 1.30 |
Niobium production
Niobec (100%) (millions of kg) 4.4 4.5 – 5.0 4.5 – 5.0 4.5 – 5.0 Operating margin ($/kg Nb) (4) 18 15 – 17 16 – 18 16 – 18
(a) In 2012, the mill will be shut down and refurbished in preparation for processing ore from Westwood. All ore mined at Mouska in 2012 will be processed in 2013.
(b) Updated forecasts for 2012 and 2013 are not yet available.
The current financial market volatility may affect future cash costs either positively or negatively through changes in gold price, oil price, overall operating costs and currency rates. Changes in these assumptions may have a material impact on cash cost, results of operations and overall financial position of the Company. Actual results may vary significantly from guidance.
The following table provides estimated sensitivities around certain inputs that can affect the Company’s operating results, based on the Company’s guidance for 2011.
Impact on the Annualized Change of 2011 Cash cost by $/oz
| Gold price | $50/oz | $3 |
| Oil price | $10/barrel | $6 |
| Canadian dollar per US dollar | $0.10 | $3 |
| €uro per US dollar | $0.10 | $5 |
Capitalized mining assets, exploration and development expenditures
As announced on January 17, 2011, the Company plans to continue making significant investments in mine development and exploration throughout the year. Planned capital expenditures for 2011 assume favourable outcomes for the feasibility studies to expand Essakane and to mine and process the underlying sulphide ore at the Sadiola mine. In addition, IAMGOLD has undertaken a feasibility study to expand the plant capacity at the Rosebel mine in Suriname. It also includes the continued underground expansion of the Niobec niobium mine.
The following table shows the site allocation of IAMGOLD’s planned capital expenditures for 2011, 2012 and 2013.
Planned Capital Expenditures ($ millions)
2011 2012 2013 Details
Westwood 146 132 54 The mine remains on track for startup in early 2013. These expenditures will be for deepening the shaft and developing drift levels for future mining.
Essakane 139 191 25 A favourable outcome to the current feasibility study is assumed for expansion construction to start in the second half of 2011.
Rosebel 95 38 23 Primarily for new equipment, sustaining capital, engineering and civil work related to an expansion and resource development.
Niobec 39 20 13 This capital budget is to be allocated to sustaining capital, underground development, a pumping station and for water treatment.
Sadiola (41%) 22 98 92 This assumes a favourable outcome of the current feasibility study of the sulphide project.
| Mupane | 4 | 5 | - For sustaining capital and resource development. |
| Other | 15 | 16 | 13 |
| Total | 460 | 500 | 220 |
Planned capital expenditures of $460.0 million in 2011 include $41.2 million of capitalized exploration expenditures mainly related to near-mine development sites. In addition, the Company plans to incur $50.9 million of exploration expenses in 2011. Total of near-mine and greenfield exploration planned expenditures in 2011 is $92.1 million with drilling of over 500,000 metres. The Company plans to test more than 18 grassroots projects in Senegal, Mali, Colombia, Peru, Brazil and the Canadian province of Québec.
SUMMARIZED FINANCIAL RESULTS
| (in $ millions) | As at | As at % December 31 Change 2009 | |
|---|---|---|---|
| December 31 | |||
| 2010 | |||
| Financial Position Cash and cash equivalents and gold bullion • at market value • at cost Total assets Shareholders’ equity | $ | $ | $ 37% 300.1 34% 231.8 17% 2,996.8 15% 2,416.7 |
| 411.3 | |||
| 311.2 | |||
| 3,494.9 | |||
| 2,775.8 |
| (in $ millions, except where noted) | Fourth quarter ended | Year ended | ||||||
|---|---|---|---|---|---|---|---|---|
| December 31 | December 31 | |||||||
| 2010 | % Change | % Change | ||||||
| 2009 | 2010 | 2009 | ||||||
| Results of Operations Revenues Mining costs Depreciation, depletion and amortization | $ | $ | $ 73% 265.3 55% 139.2 (18%) 43.3 | $ | $ | $ 28% 914.3 28% 446.8 (14%) 153.8 | ||
| 459.0 | 1,167.2 | |||||||
| 216.1 | 570.6 | |||||||
| 35.3 | 132.7 | |||||||
| Earnings from mining operations Earnings from working interests | 207.6 | 151% 82.8 48% 12.0 | 463.9 | 48% 313.7 57% 36.0 | ||||
| 17.8 | 56.5 | |||||||
| Total earnings from operations and working interests(5) | 225.4 | 138% 94.8 | 49% 349.7 | |||||
| 520.4 | ||||||||
| Net earnings (loss) Basic and diluted net earnings (loss) per share ($/share) | 144.5 | n/a (47.4) n/a (0.13) | 279.8 | 145% 114.1 134% 0.32 | ||||
| 0.39 | ||||||||
| 0.75 | ||||||||
| Adjusted net earnings(2) Basic adjusted net earnings per share (2) ($/share) | 144.9 | 155% 56.8 160% 0.15 | 285.7 | 68% 170.0 60% 0.48 | ||||
| 0.39 | ||||||||
| 0.77 | ||||||||
| Cash Flows Operating cash flow Operating cash flow per share(1) ($/share) | 228% 67.5 228% 0.18 | 62% 257.0 53% 0.73 | ||||||
| 221.3 | 415.1 | |||||||
| 0.59 | ||||||||
| 1.12 | ||||||||
| Key Operating Statistics Gold mines (including working interests) Gold sales (000 oz) Average realized gold price ($/oz) Attributable gold production (000 oz) Cash cost ($/oz)(3) | 49% 233 26% 1,096 35% 234 18% 488 | 3% 944 30% 960 3% 939 25% 461 | ||||||
| 347 | 977 | |||||||
| 1,379 | 1,252 | |||||||
| 315 | 967 | |||||||
| 574 | 574 | |||||||
| Niobium mine Niobium sales (millions of kg Nb) Niobium production (millions of kg Nb) Operating margin ($/kg Nb) (4) | (29%) 1.4 (17%) 1.2 (15%) 20 | (2%) 4.4 7% 4.1 (10%) 20 | ||||||
| 1.0 | 4.3 | |||||||
| 1.0 | 4.4 | |||||||
| 17 | 18 |
REVENUES
Fourth quarter record revenues of $459.0 million were up 73% over $265.3 million for the same quarter of 2009. This increase was primarily due to an increase in gold sales from IAMGOLD’s operations and joint ventures, and an increase in related realized gold prices.
Record revenues for the full year of 2010 were $1,167.2 million, a 28% increase over the previous year mainly resulting from the increase in realized gold prices.
MINING COSTS
Mining costs in the fourth quarter of 2010 were $216.1 million, a 55% increase over $139.2 million for the same quarter of 2009. Mining costs for the full year of 2010 reached $570.6 million, a 28% increase over the previous year.
The increase in mining costs was due to growth in production, higher consumables costs as well as higher labour costs at Rosebel, higher energy costs across all sites, increased royalties from a rise in gold prices, and adjustments to asset retirement obligations at Doyon due to changes to remediation plans.
DEPRECIATION, DEPLETION AND AMORTIZATION
Depreciation, depletion and amortization decreased from $153.8 million in 2009 to $132.7 million in 2010 due mainly to the increase in reserves for gold sites and Niobec. This decrease was partially offset by additional depreciation expenses following the beginning of commercial production at the Essakane mine during the third quarter of 2010.
EARNINGS FROM WORKING INTERESTS
Year over year earnings from working interests increased mainly as a result of higher sales and higher realized gold prices, partially offset by higher mining costs.
CORPORATE ADMINISTRATION
Corporate administration expenses in 2010 were $46.9 million compared to $49.1 million in 2009. The decrease was primarily related to process improvements, costs containment and one-time costs in 2009 related to the Essakane acquisition.
EXPLORATION AND DEVELOPMENT EXPENSES
Exploration and development expenses in 2010 were $46.0 million compared to $39.8 million in 2009. Exploration expenses in 2010 included accelerating work on promising results at the Company’s joint ventures in West Africa and the Charmagne discovery in Suriname.
NET INTEREST EXPENSE
Net interest expense in 2010 was $3.6 million compared to $0.7 million in 2009. The increase is mainly due to costs associated with maintaining the increased credit facility.
FOREIGN EXCHANGE GAIN/LOSS
The foreign exchange loss in 2010 was $1.7 million compared to a foreign exchange gain of $27.0 million in 2009. The majority of the foreign exchange loss during 2010 and the gain in 2009 were related to the impact of foreign exchange variation on cash held in Canadian dollars. The amount was larger in 2009 resulting from the equity financing in Canadian dollars during the first quarter of 2009.
DERIVATIVE GAIN/LOSS
The total derivative loss was $13.3 million in 2010 compared to a gain of $7.0 million in 2009. The loss in 2010 was mainly due to the market variation of gold option contracts for the Mupane mine, which were undertaken to support a positive cash flow for the remaining limited life of the operation. In addition, the derivative loss was impacted by foreign exchange and heating oil option contracts, partially offset by the positive change in the fair value of warrants held as investments.
OTHER INCOME/EXPENSE, NET
The total other income, net was $24.4 million in 2010 compared to other expense, net of $1.8 million in 2009. The other income/expense, net in 2010 was mainly related to gains on disposal of marketable securities.
NON-CONTROLLING INTERESTS
The total non-controlling interests charge in 2010 was $18.2 million compared to $8.8 million in 2009. The increase is mainly due to the inclusion of the Essakane operation in 2010.
INCOME AND MINING TAXES
The Company does not recognize tax benefits on losses generated in countries where the recent history of operating losses do not satisfy the “more likely than not” criterion for the recognition of deferred tax assets. Consequently, there are no income tax benefits recognized on the pre-tax losses in these jurisdictions as valuation allowances are recorded to offset the associated benefit.
In 2010, income and mining taxes totaled $135.4 million compared to $108.0 million in 2009. The income tax rate varies from the combined federal and provincial income tax rates of 31% in 2010 and 33% in 2009 primarily due to fluctuations in exchange rates for foreign currency, the geographic distribution of income, non-deductible expenses, withholding taxes related to repatriations of international earnings, and the existence of valuation allowances.
ATTRIBUTABLE GOLD PRODUCTION AND CASH COST PER OUNCE
The table below presents the gold production attributable to the Company along with the weighted average cash cost(3) per ounce of production.
| (Unaudited) Total Cash Gold Production Cost(3) | Total Cash Gold Production Cost (3) | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Fourth quarter Fourth quarter ended ended December 31 December 31 | Year Year ended ended December 31 December 31 | ||||||||
| 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | ||
| IAMGOLD Operator Rosebel (95%) Essakane (90%) Doyon division (100%) Mupane (100%) | (000 oz) | (000 oz) 99 - 24 11 | $/oz | $/oz 422 - 528 885 | (000 oz) | (000 oz) 392 - 109 51 | $/oz | $/oz 396 - 524 735 | |
| 119 | 449 | 395 | 484 | ||||||
| 80 | 414 | 122 | 429 | ||||||
| 18 | 843 | 33 | 655 | ||||||
| 15 | 1,062 | 57 | 941 | ||||||
| 232 | 134 | 508 | 478 | 607 | 552 | 525 | 453 | ||
| Joint Ventures and Working interests Sadiola (41%)(a) Yatela (40%) Tarkwa (18.9%) Damang (18.9%) | 32 28 32 8 | 616 323 505 652 | 135 89 125 38 | 483 339 513 619 | |||||
| 29 | 785 | 118 | 653 | ||||||
| 9 | 1,379 | 60 | 780 | ||||||
| 34 | 611 | 139 | 605 | ||||||
| 11 | 673 | 43 | 662 | ||||||
| 83 | 100 | 762 | 502 | 360 | 387 | 657 | 473 | ||
| Total | 315 | 234 | 574 | 488 | 967 | 939 | 574 | 461 | |
| Cash cost excluding royalties Royalties | 516 | 439 49 | 519 | 419 42 | |||||
| 58 | 55 | ||||||||
| Cash cost (3) | 574 | 488 | 574 | 461 |
(a) On December 29, 2009, the Company purchased an additional 3% interest in Sadiola resulting in a 41% interest in the Sadiola joint venture.
ATTRIBUTABLE GOLD SALES VOLUME AND REALIZED PRICE
The following table presents the total ounces of gold sold and the realized gold price per ounce.
| Realized gold Gold sales price | Realized gold Gold sales price | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Fourth quarter Fourth quarter ended ended December 31 December 31 2010 2009 2010 2009 | Year Year ended ended December 31 December 31 2010 2009 2010 2009 | ||||||||
| 2010 | 2010 | 2010 | 2010 | ||||||
| IAMGOLD Operator Joint ventures Working interests | (000 oz) | (000 oz) 131 62 40 | $/oz | $/oz 1,098 1,090 1,101 | (000 oz) | (000 oz) 557 224 163 | $/oz | $/oz 951 973 973 | |
| 1,383 | 619 | 1,271 | |||||||
| 263 | |||||||||
| 39 | 1,367 | 176 | 1,211 | ||||||
| 45 | 1,366 | 182 | 1,225 | ||||||
| Total(a) | 347 | 233 | 1,379 | 1,096 | 977 | 944 | 1,252 | 960 |
(a) Attributable sales volume for the fourth quarters of 2010 and 2009 were 331,000 ounces and 228,000 ounces, respectively, and for the entire years of 2010 and 2009, 945,000 ounces and 925,000 ounces, respectively, after taking into account 95% of Rosebel sales and 90% of the Essakane sales.
Operations Summary
The Company’s 2010 gold operations are summarized below.
ROSEBEL MINE, SURINAME
Rosebel achieved record gold production in the fourth quarter and full year 2010, which was higher than the same periods in the prior year by 20% and 1%, respectively. This strong production level was achieved despite lower grades and a difficult rainy season. The Rosebel site achievement was the result of record throughput levels, higher productivity and operational efficiencies. Moreover, the fourth quarter benefitted from increased recoveries resulting from the commissioning of additional leach tanks.
Cash costs per ounce(3) increased 6% in the fourth quarter of 2010, compared to the same period last year, primarily due to higher energy, labour and consumables costs, and higher royalties due to rising gold prices. Cash costs per ounce have increased by 22% on a full year basis for similar reasons. In addition, grades were lower as the mine was unable to access higher grades in previous quarters of the year due to higher precipitation levels in the rainy season.
In 2011, the Company began another expansion at Rosebel. The expansion will result in additional grinding capacity to allow mill throughput to be maintained between 12 and 14 million tonnes per year offsetting the impact of processing increased hard rock volumes. The expansion essentially brings gold production forward in time and reduces long-term fixed costs by reducing the currently planned mine life.
ESSAKANE MINE, BURKINA FASO
Essakane gold mine achieved commercial production effective July 16, 2010. Attributable production during the fourth quarter and full year 2010 was 80,000 ounces and 122,000 ounces, respectively. Attributable production nearly doubled during the fourth quarter over the third quarter of 2010 despite a two-week shutdown in November caused by an electrical failure at the SAG mill. Cash costs(3) since the beginning of commercial production were $429 per ounce compared to life of mine estimate of between $400 and $410 per ounce.
A feasibility study to expand the mine is currently in progress and is expected to be completed in the third quarter of 2011. The study is expected to demonstrate that the hard rock capacity of the mill could be expanded to process 10.8 million tonnes per year, compared to the current estimate of 5.4 million tonnes per year. The expectation is for life-of-mine average annual gold production between 450,000 and 470,000 ounces (on a 100% basis) compared to the current estimate of 315,000 ounces. The current mine plan includes processing of soft rock for the first three years at a rate of 9.0 million tonnes per year, followed by approximately nine years of processing hard rock.
DOYON DIVISION, CANADA
Gold production at the Doyon division declined in the fourth quarter and for the full year in 2010 compared to 2009. The decline in production reflects the closure of the Doyon mine in December 2009 and reduced production at the Mouska mine nearing the end of its life. As a cost reduction initiative, the ore mined from Mouska during the first eight and a half months of 2010 was stockpiled and batch processed starting mid-September and completed in December.
Cash costs per ounce(3) increased during the fourth quarter and full year of 2010, largely due to lower production, higher royalties due to higher gold prices and the impact of a stronger Canadian dollar on the operation.
MUPANE MINE, BOTSWANA
Gold production at Mupane increased in the fourth quarter and for the full year in 2010 by 36% and 12%, respectively, compared to 2009. The increase was the result of higher throughput levels with improved performance of the ball mill in the current year which was unavailable for the second half of 2009. Cash costs per ounce(3) for the fourth quarter and the full year of 2010 rose mainly due to higher mining and energy costs. This is the result of more volume of material mined coupled with longer hauling distances from more distant pits and higher diesel fuel prices.