Mr. Steve Letwin reports
IAMGOLD DELIVERS SOLID OPERATING RESULTS IN 2015
Iamgold Corp. has released its consolidated financial and operating results for the quarter and year ended Dec. 31, 2015.
Iamgold's president and chief executive officer, Steve Letwin, said: "Our performance was strong in 2015. Essakane had another record year. We met overall guidance, improved our cost structure and maintained a strong balance sheet. The industry continues to operate against a backdrop of economic uncertainty, yet Iamgold has shown that it can optimize performance under tough conditions. We are confident that we can build on these achievements and have lowered our cost guidance for the second year in a row.
"Our mine plans, recast for the current gold price environment, are robust. At Rosebel and Essakane we're taking advantage of opportunities to improve operational returns in 2016, and are targeting soft rock resources in the surrounding areas with the potential to extend mine life. At Westwood, we will be focused on underground development to expand the mining areas as we ramp up production over the next four years. Our expectation for Westwood is a low-cost, high-grade mine with a minimum 20-year mine life. We're seeing positive developments from our portfolio of exploration projects, including a 27-per-cent increase in indicated resources at Boto and an initial resource estimate for the Diakha prospect in Mali. We remain tied to a strategy of cost reduction and disciplined investments aimed at improving margins and delivering higher economic returns."
Highlights
-- 2015
- Attributable gold production of 806,000 ounces exceeded midpoint of guidance range;
- All-in sustaining costs of $1,118/ounce were within guidance and would have been $61 per ounce lower excluding the impact of realized hedge and non-hedge derivative losses ($63/ounce), and the purchase of assets held under finance leases at Rosebel ($33/ounce), partially offset by normalization of Westwood's costs following the interruption in production ($35/ounce);
- Capital expenditures of $243.6-million, 13 per cent lower than capital expenditures on gold assets in 2014;
- With no impact on cash, an aftertax impairment charge of $580-million was recorded in the fourth quarter relating to the Cote gold project and the Westwood mine. For impairment testing purposes, the company used a gold price assumption of $1,100 per ounce for 2016 and a long-term gold price assumption of $1,200 per ounce. In 2014, the company used $1,250 per ounce for 2015 and $1,300 per ounce long term;
- Cash, cash equivalents, restricted cash and gold bullion (at market value) of $691.3-million at Dec. 31, 2015, compared with $321.0-million at Dec. 31, 2014;
- Significant progress on development and remediation activities at Westwood;
- Continued focus on cost reductions, including a reduction in Rosebel's employee base;
- Record year for Essakane, with production up 15 per cent in 2015; Falagountou indicated resource increased by 84 per cent.
Subsequent to year-end:
-
Jan. 19, 2016 -- announced updated life-of-mine plans for Westwood, Rosebel and Essakane;
- Feb. 1, 2016 -- entered into a four-year $250-million revolving credit facility, comprising a $100-million fully committed secured facility plus an option to add a further $150-million.
SUMMARY OF FINANCIAL AND OPERATING RESULTS
(In millions, except where noted)
Three months ended Dec. 31, Year ended Dec. 31,
2015 2014 2015 2014
Continuing operations
Revenues $238.2 $272.5 $917.0 $1,007.9
Cost of sales 283.5 239.5 971.6 892.9
Earnings (loss) from operations (45.3) 33.0 (54.6) 115.0
Net (loss) including discontinued
operations attributable to
equityholders of Iamgold (675.9) (122.0) (755.3) (206.8)
Net (loss) including discontinued
operations attributable to
equityholders of Iamgold
per share ($/share) (1.73) (0.32) (1.93) (0.55)
Adjusted net earnings (loss)
including discontinued operations
attributable to equityholders of
Iamgold (62.8) 10.2 (167.2) 32.8
Adjusted net earnings (loss)
including discontinued operations
per share ($/share) (0.16) 0.03 (0.43) 0.08
Net cash from (used in) operating
activities including discontinued
operations (45.5) 72.0 26.0 312.2
Net cash from (used in) operating
activities before changes in working
capital including discontinued
operations (68.1) 93.7 67.2 317.3
Net cash from (used in) operating
activities before changes in working
capital including discontinued
operations ($/share) (0.17) 0.25 0.17 0.84
Net earnings from discontinued
operations attributable to
equityholders of Iamgold - 26.7 41.8 62.7
Net earnings from discontinued
operations attributable to
equityholders of Iamgold ($/share) - 0.07 0.11 0.17
Key operating statistics
Gold sales -- attributable (000 oz) 219 234 808 835
Gold production --
attributable (000 oz) 199 241 806 834
Average realized gold price ($/oz) 1,101 1,201 1,158 1,259
Total cash costs ($/oz) 825 788 835 848
Gold margin ($/oz) 276 413 323 411
All-in sustaining costs ($/oz) 1,202 1,021 1,118 1,101
Non-cash impairment charge
In the fourth quarter 2015, the company recorded a non-cash aftertax impairment charge of $580-million relating to the Cote gold project and the Westwood mine. For impairment testing purposes, the company used a gold price assumption of $1,100 per ounce for 2016 and a long-term gold price assumption of $1,200 per ounce. In 2014, the company used $1,250 per ounce for 2015 and $1,300 per ounce long term. Aftertax impairment charges of $400-million against the carrying amount of Cote gold's exploration and evaluation assets, and $180-million against the carrying amount of Westwood's property, plant and equipment were recorded.
Full year and fourth quarter 2015 highlights
Financial performance
Revenues from continuing operations for 2015 were $917.0-million, down 9 per cent from the prior year. The decrease was primarily the result of a lower realized gold price ($78.8-million), lower sales volume at Rosebel ($59.8-million), the closure of Mouska in 2014 ($21.0-million) and lower royalties following the sale of the Diavik royalty asset ($8.2-million), partially offset by higher gold sales at Essakane ($76.9-million). Revenues from continuing operations for the fourth quarter 2015 were $238.2-million, down 13 per cent from the same prior year period mainly due to lower sales volume and lower realized gold prices.
Cost of sales from continuing operations for 2015 was $971.6-million, up 9 per cent from the prior year. The increase was the result of higher depreciation expense ($55.9-million) and higher operating costs ($28.9-million), partially offset by lower royalties due to a lower realized gold price ($6.1-million). Operating costs were higher primarily due to the commencement of commercial production at Westwood in the third quarter 2014 and the writedown of inventories, partially offset by lower fuel prices, a stronger U.S. dollar relative to the euro and the Canadian dollar, and lower cost of consumables. Cost of sales for the fourth quarter 2015 was $283.5-million, up 18 per cent from the same prior year period. The increase was the result of higher depreciation expense ($6.9-million) and higher operating costs ($37.8-million), partially offset by lower royalties due to a lower realized gold price ($700,000). Operating costs were higher primarily due to higher sales volume at Essakane and the writedown of inventories, partially offset by lower fuel prices, a stronger U.S. dollar relative to the euro and the Canadian dollar, lower cost of consumables, and lower sales as a result of the production interruption at Westwood.
Depreciation expense from continuing operations for 2015 was $260.9-million, up 27 per cent from the prior year. The increase was primarily the result of a full year of straight-line depreciation at Westwood compared with six months in 2014, higher production at Essakane and higher amortization of capitalized waste stripping. Depreciation expense for the fourth quarter 2015 was $63.9-million, up 12 per cent from the same prior year period primarily due to higher amortization of capitalized waste stripping.
Income tax expense for the year was $11.5-million, which comprised a current income tax expense of $30.4-million and a non-cash deferred tax recovery of $18.9-million. With losses from consolidated continuing operations prior to income taxes for the year, it would have been reasonable to expect an income tax benefit rather than an income tax expense. However, the company has not recognized a tax benefit on losses generated by certain entities within the consolidated group given their recent history of losses, which resulted in the criteria for the recognition of tax benefits not being met. This resulted in a lower non-cash deferred tax recovery being realized in the period than otherwise anticipated.
The impairment charge against the Westwood mine recognized during the year resulted in a non-cash deferred tax recovery of $29.1-million for Quebec mining tax purposes. However, this was partially offset by the net non-cash deferred tax expense of $10.2-million which related primarily to the strengthening of the U.S. dollar which reduced the tax basis of mining assets in foreign jurisdictions.
Net loss from continuing operations attributable to equityholders for 2015 was $797.1-million or $2.04 per share, compared with $269.5-million in the prior year. The increase was mainly due to the pretax impairment charge ($621.3-million), and lower revenues and cost of sales as noted above, partially offset by lower income tax expense ($106.4-million), lower changes in estimates of asset retirement obligations for closed sites ($45.1-million), gain on the sale of the Diavik royalty asset ($43.5-million), higher share of net earnings from investments in associates and joint ventures ($35.9-million), and lower exploration expense ($12.0-million). Net loss from continuing operations attributable to equityholders for the fourth quarter 2015 was $675.9-million, up from $148.7-million in the same prior year period, mainly due to the factors explaining the year-over-year variance.
Net earnings for Niobec were presented separately as net earnings from discontinued operations, net of income taxes in the consolidated statements of earnings. Comparative periods have been adjusted accordingly. Net earnings from discontinued operations for 2015 were $41.8-million including the gain on the sale of $39.0-million, down $20.9-million from the prior year due to the sale of Niobec in the first quarter 2015.
Adjusted net loss including discontinued operations attributable to equityholders for 2015 was $167.2-million (43 cents per share), down from adjusted net earnings of $32.8-million (eight cents per share) for the prior year. Adjusted net loss including discontinued operations attributable to equityholders for the fourth quarter 2015 was $62.8-million (16 cents per share), down from adjusted net earnings of $10.2-million (three cents per share) for the prior year.
Net cash from operating activities including discontinued operations for 2015 was $26.0-million, down $286.2-million from the prior year. The decrease was mainly due to lower earnings from operations ($160.8-million), higher net settlement of derivatives including the early termination of derivative contracts ($122.2-million) and lower payables ($28.3-million), partially offset by lower income tax paid ($27.1-million).
Net cash from operating activities before changes in working capital including discontinued operations for 2015 was $67.2-million (17 cents per share), down $250.1-million (67 cents per share) from the prior year. Net cash used in operating activities before changes in working capital including discontinued operations for the fourth quarter 2015 was $68.1-million (17 cents per share), up $161.8-million (42 cents per share) from the same prior year period. Included in net cash from (used in) operating activities before changes in working capital including discontinued operations in the fourth quarter and year ended 2015 was the early termination of derivative contracts of $72.5-million.
Financial position
Cash and cash equivalents, restricted cash, and gold bullion (at market value) were $691.3-million at Dec. 31, 2015, up $370.3-million from Dec. 31, 2014. The increase was mainly due to net proceeds from the sale of Niobec ($491.2-million), drawdown on the credit facility ($70.0-million), cash proceeds from the sale of the Diavik royalty asset ($52.5-million), proceeds from the issuance of flow-through shares ($43-million) and cash generated from operating activities ($26.0-million), partially offset by spending on property, plant and equipment, and exploration and evaluation assets
($200.7-million), interest paid ($45.4-million), purchase of assets held under finance leases ($28.3-million), decrease in the market value of gold bullion ($19.2-million), and purchase of long-term debt ($11.5-million).
In 2015, the company issued 15.8 million flow-through common shares for proceeds of $43-million. The issuance of flow-through shares effectively transfers the tax deduction of exploration and project development expenses in Canada to the purchaser of the flow-through shares. Flow-through shares are designed to provide an incentive for financing qualifying exploration and development ventures in Canada. These transactions allow us to finance previously planned expenditures without reducing the company's liquidity. The flow-through common shares were primarily issued to finance development expenditures on the Westwood mine in Quebec.
Production and costs
Attributable gold production, inclusive of joint venture operations, for 2015 was 806,000 ounces, down 38,000 ounces from the prior year. The decrease was due to lower grades at Rosebel (38,000 ounces), lower production at Westwood following the production interruption in May, 2015 (20,000 ounces), lower grades at Sadiola (15,000 ounces), closure of Mouska (12,000 ounces) and closure of Yatela (4,000 ounces), partially offset by record high production at Essakane (51,000 ounces) driven by higher grades. Attributable production, inclusive of joint venture operations, for the fourth quarter 2015 was down 42,000 ounces or 17 per cent from the same prior year period mainly due to the reasons noted above, in addition to a work stoppage at Rosebel in December, 2015.
Attributable gold sales, inclusive of joint venture operations, for 2015 were 808,000 ounces, which was higher than attributable gold production of 806,000 ounces primarily due to the drawdown of gold dore inventory at Westwood.
Total cash costs for 2015 were $835 per ounce produced, down 2 per cent from the prior year. The decrease was mainly due to higher production at Essakane, lower fuel prices and a stronger U.S. dollar relative to the euro and the Canadian dollar, partially offset by higher realized hedge and non-hedge derivative losses, lower grades at Rosebel and Sadiola, and lower production at Westwood. Total cash costs for the fourth quarter 2015 were $825 per ounce, up 5 per cent from the same prior year period, mainly due to lower production at Rosebel, partially offset by lower fuel prices and consumable costs, a stronger U.S. dollar, and higher production at Essakane.
All-in sustaining costs for 2015 were $1,118 per ounce sold, up 2 per cent from the prior year. The increase was primarily due to lower sales and higher sustaining capital. All-in-sustaining costs for the fourth quarter 2015 were $1,202 per ounce sold, up 18 per cent from the same prior year period primarily due to higher cash costs and an increase in sustaining capital. All-in sustaining costs in 2015 included:
- Purchase of assets held under finance leases ($28.3-million) at Rosebel in the fourth quarter, which increased all-in sustaining costs at the consolidated level by $123 an ounce in the fourth quarter and by $33 per ounce for the full year;
- Realized hedge (currency) and non-hedge derivative (fuel) losses, which increased all-in sustaining costs by $63 per ounce for the full year (nil for 2014) and $59 per ounce (nil for Q4 2014) for the fourth quarter;
- Normalization of Westwood's costs by $28.2-million for the full year and $7.8-million in the fourth quarter due to the production interruption, which reduced all-in sustaining costs at the consolidated level by $35 per ounce for the full year and $36 per ounce for the fourth quarter.
Fuel hedges
Fuel oil and diesel are key inputs in extracting ore, and, in some cases, wholly or partially powering operations. To limit the impact of fluctuations in crude prices the company entered into derivative contracts at the beginning of 2015 to hedge a portion of anticipated diesel and fuel oil consumption at the Rosebel and Essakane mines up to 2017. However, the subsequent sharp decline in the price of crude oil throughout 2015 resulted in realized losses on the hedged portion of 2015 anticipated fuel purchases. In the fourth quarter 2015, the company terminated the hedges for 2016 and 2017, resulting in a net loss on the settlement of these contracts, and entered into new contracts for approximately 75 per cent of anticipated consumption for 2016 and approximately 62 per cent of anticipated consumption for 2017. The new contracts qualify for hedge accounting resulting in future changes in the fair values to be recorded in other comprehensive income. The total net loss on the crude oil derivatives was $43.7-million for the year.
Commitment to zero harm continues
The frequency of all types of serious injuries (measured as DART rate), an important health and safety measure, was 0.67 in 2015, which was in line with the target of 0.69 and 0.66 in 2014.
The Rosebel, Essakane and Westwood mines were awarded the prestigious Towards Sustainable Mining (TSM) Leadership Award for 2015 by the Mining Association of Canada. This is the first time that mines outside Canada have been eligible for the TSM Leadership Award. Essakane and Rosebel were respectively the only winners in Africa and South America.
Guidance
-- 2016
On Jan. 19, 2016, the company announced its guidance for gold production, total cash costs and all-in sustaining costs, and capital and exploration expenditures (refer to the Jan. 19, 2016, news release and annual management's discussion and analysis for more detail).
Attributable gold production: 770,000 to 800,000 ounces
Total cash costs: $775 to $815 an ounce
All-in sustaining costs: $1,000 to $1,100 an ounce
Capital expenditures: $250-million plus or minus 10 per cent, of which $155-million is sustaining capital and $95-million development capital. The development capital is mainly for underground development at Westwood as well as a secondary crusher installation at Rosebel. Capitalized stripping at Essakane and Rosebel accounts for 37 per cent of the sustaining capital.
Exploration: $47-million, of which $18-million will be capitalized and is included in the $250-million of anticipated capital expenditures for 2016
Depreciation: Depreciation expense for 2016 is expected to range between $260-million and $270-million, compared with $261-million for 2015. The expected increase is the result of lower reserves and higher amortization of capitalized waste stripping at Rosebel, and the timing of capital additions, partially offset by higher reserves at Essakane.
Cash taxes: The company expects to pay cash taxes in the range of $15.0-million to $20.0-million for 2016. In addition, adjustments to deferred tax assets and/or liabilities may be recorded during the year.
ATTRIBUTABLE GOLD PRODUCTION, AND ALL-IN SUSTAINING AND TOTAL CASH COSTS
Gold production Total cash costs All-in sustaining costs
(000 oz) ($ per ounce produced) ($ per ounce sold)
Three months Three months Three months
ended Dec. 31, ended Dec. 31, ended Dec. 31,
2015 2014 2015 2014 2015 2014
Continuing operations
Owner-operator
Rosebel (95%) 70 94 $812 $678 $1,420 $916
Essakane (90%) 98 89 802 828 1,024 955
Westwood (100%) 13 35 995 845 1,265 1,119
181 218 820 766 1,218 1,001
Joint ventures
Sadiola (41%) 16 20 866 931 1,010 1,100
Yatela (40%) 2 3 998 1,532 1,386 1,954
18 23 877 995 1,043 1,199
Total operations 199 241 $825 $788 $1,202 $1,021
Cash costs, excluding royalties 771 738
Royalties 54 50
Total cash costs $825 $788
All-in sustaining costs $1,202 $1,021
ATTRIBUTABLE GOLD PRODUCTION, AND ALL-IN SUSTAINING AND TOTAL CASH COSTS
Gold production Total cash costs All-in sustaining costs
(000 oz) ($ per ounce produced) ($ per ounce sold)
Year ended Dec. 31, Year ended Dec. 31, Year ended Dec. 31,
2015 2014 2015 2014 2015 2014
Continuing operations
Owner-operator
Rosebel (95%) 287 325 $849 $804 $1,165 $1,045
Essakane (90%) 383 332 808 852 1,010 1,060
Westwood (100%) 60 82 1,001 768 1,292 955
730 739 840 822 1,145 1,090
Joint ventures
Sadiola (41%) 69 84 769 985 839 1,083
Yatela (40%) 7 11 974 1,590 1,104 1,929
76 95 787 1,055 862 1,182
Total commercial operations 806 834 $835 $848 $1,118 $1,101
Westwood (100%) - 10 - - - -
Total operations 806 844 $835 $848 $1,118 $1,101
Cash costs, excluding royalties 784 790
Royalties 51 58
Total cash costs $835 $848
All-in sustaining costs $1,118 $1,101
Operations analysis by mine site
Westwood mine -- Canada
(Iamgold interest -- 100 per cent)
Gold production for the fourth quarter and year ended 2015 was 13,000 and 60,000 ounces, respectively, compared with 35,000 and 70,000 ounces in the same prior year periods. Production was lower than the prior year as a result of the production interruption in May, 2015, following the seismic event.
Subsequent to the production interruption, the company completed a thorough review to investigate the cause of the seismic event and to develop the plan forward. During the review, mining activity outside of the affected zone was undertaken at a moderate pace and many mining employees were diverted from stoping activities to development activities. This contributed to production in 2015 being lower than 2014.
To normalize for the amount of fixed overhead on a per-unit basis, as a consequence of abnormally low production, in accordance with international financial reporting standards the company reduced the costs attributed to inventory by $7.8-million for the fourth quarter and $28.2-million for the full year. As a result, cash costs per ounce were reduced by $586 for the fourth quarter and by $471 for the full year. All-in sustaining costs per ounce were reduced by $826 for the fourth quarter and by $436 for the full year. Therefore, on a normalized basis, total cash costs per ounce produced were $995 for the fourth quarter and $1,001 for the full year. All-in sustaining costs per ounce sold were $1,265 for the fourth quarter and $1,292 for the full year.
Outlook -- 2016
Westwood is expected to produce between 50,000 and 60,000 ounces of gold in 2016. Following the production interruption in 2015 and based on the revised life-of-mine plan, 2016 efforts will be focused on underground development to expand the number of mining areas and on remedial work in the zone affected by the seismic event, which is an area accounting for only 6 to 7 per cent of Westwood's resources, and on development activities providing access to production blocks for future years. Throughout 2016, the mill will operate on a reduced schedule due to the low level of ore mining, with ramp-up to full capacity over the next four years. The company expects to complete approximately 22 kilometres of lateral development and two km of vertical development in 2016. Cost improvement initiatives are focused on improving development productivity.
The company expects to continue normalizing all-in sustaining costs for Westwood in 2016 on a similar basis as in 2015.
Rosebel mine -- Suriname
(Iamgold interest -- 95 per cent)
Rosebel produced 70,000 attributable ounces of gold in the fourth quarter, bringing full year production to 287,000 ounces. Production was below that of the previous year due to lower mill throughput and lower grades resulting from pit sequencing. Mill throughput during the fourth quarter was impacted by an 11-day work stoppage in December. In addition, mill throughput for the quarter and the year was impacted by a decrease in the proportion of soft rock.
Total cash costs per ounce produced of $812 for the fourth quarter and $849 for the full year were 20 per cent and 6 per cent higher than the same periods in the previous year, respectively, due to lower production, and higher realized hedge and non-hedge derivative losses relating to 2015, partially offset by lower fuel prices.
All-in sustaining costs per ounce sold of $1,420 for the fourth quarter and $1,165 for the full year reflect the significant impact from purchases of assets held under finance leases, and higher realized hedge and non-hedge derivative losses relating to 2015, partially offset by lower fuel prices during the fourth quarter 2015. Excluding the impact of the purchase of assets held under finance leases ($382 and $94 per ounce sold for the fourth quarter and year ended 2015), and the realized hedge and non-hedge derivative losses relating to 2015 ($58 and $46 per ounce sold for the fourth quarter and year ended 2015), all-in sustaining costs per ounce were $980 for the fourth quarter and $1,025 for the full year.
Outlook -- 2016
Rosebel is expected to produce between 285,000 and 295,000 attributable ounces of gold in 2016. Mill throughput is expected to be lower in 2016 as the proportion of hard rock milled continues to increase. The decrease in throughput will be offset by grade improvements. To manage the increasing proportion of hard rock, Rosebel plans to increase capacity for processing hard rock through a number of initiatives such as changing the configuration of mill liners, changing grinding media size and continuing the use of engineered stockpiles. In an effort to optimize mining capacity and reduce costs, the company plans to reduce cycle times through enhanced dispatching and road optimization, decrease costs by increasing mine bench heights, and continue to improve grade controls and reduce dilution through reverse circulation drilling. In addition, Rosebel plans to reduce costs through optimization of the elution, gravity and acid wash circuits, and the carbon-in-leach configuration. In 2016, the site will install a permanent secondary crusher, which, when commissioned at the end of 2016, will aid in mitigating the impact of a higher proportion of hard rock being processed in future years.
The company continues to focus its drilling program around Rosebel on targeting higher-grade, softer rock in the vicinity of the Rosebel operation and on the Sarafina option property, and to look at opportunities to acquire additional properties with oxide potential.
Essakane mine -- Burkina Faso
(Iamgold interest -- 90 per cent)
Attributable gold production of 98,000 ounces in the fourth quarter was up 10 per cent from the same quarter last year due to higher mill throughput, partially offset by lower grades. Full year production was 383,000 ounces, up 15 per cent from 2014. The record production in 2015 reflects the continued optimization of the expanded mill and processing of higher-grade ore at improved recoveries.
Total cash costs per ounce produced of $802 for the fourth quarter and $808 for the full year were 3 per cent and 5 per cent lower than the same prior year periods, respectively, due to record high production combined with lower fuel prices and a stronger U.S. dollar relative to the euro, partially offset by the impact of higher realized hedge and non-hedge derivative losses relating to 2015.
All-in sustaining costs per ounce sold of $1,024 in the fourth quarter were 7 per cent higher than the same prior year period, primarily due to higher sustaining capital expenditures, and the impact of higher realized hedge and non-hedge derivative losses relating to 2015, partially offset by the increase in gold sales, lower fuel prices and a stronger U.S. dollar relative to the euro. All-in sustaining costs per ounce sold for the full year of $1,010 were 5 per cent lower than the prior year due to higher gold sales, lower fuel prices and a stronger U.S. dollar relative to the euro, partially offset by higher realized hedge and non-hedge derivative losses relating to 2015, and higher sustaining capital expenditures. Excluding the impact of the realized hedge and non-hedge derivative losses ($55 and $75 per ounce for the fourth quarter and year ended 2015), Essakane's all-in sustaining costs were $969 per ounce for the fourth quarter and $935 per ounce for the full year.
Outlook -- 2016
The company expects Essakane to produce between 365,000 and 375,000 attributable ounces in 2016. Mining tonnage is expected to be higher with a full year of mining at Falagountou. The expected decrease in production reflects a decrease in grades, partially offset by higher throughput. Building on operational enhancements in 2015, the company will continue to optimize production, lower unit costs, and increase mine and mill efficiencies at higher proportions of hard rock. The site will undertake a number of performance improvement initiatives, such as adjustment to drilling techniques to decrease explosives consumption, the installation of an intensive leach reactor for the gravity circuit, investigation of oxygen injection to the carbon-in-leach tanks to improve gold recovery and automation of cyanide injection to enhance circuit stability. The company will also continue to look for opportunities to decrease fuel consumption and increase power plant efficiencies. Also planned is the commissioning of a carbon fines incinerator at the site which coincides with the company's working capital initiatives.
Sadiola mine -- Mali
(Iamgold interest -- 41 per cent)
Attributable gold production for the fourth quarter was 16,000 ounces. Full year production of 69,000 ounces was 18 per cent lower than the previous year due to a 17-per-cent decline in grade.
Total cash costs per ounce produced of $866 in the fourth quarter and $769 for the full year were down 7 per cent and 22 per cent, respectively, from the same prior year periods mainly due to lower fuel and consumable prices, and favourable foreign exchange rates.
All-in sustaining costs per ounce sold of $1,010 in the fourth quarter and $839 for the full year were down 8 per cent and 23 per cent, respectively, from the same prior year periods primarily due to lower cash costs, partially offset by higher sustaining capital.
Following positive results from the reverse circulation drilling program testing, the company increased the year-end reserves and resources estimate for Sadiola. The current assessment indicates an extension of the mining and milling of oxides into early 2018. The company continues to update the feasibility study on the sulphide expansion project and, with its partner, AngloGold Ashanti, to look at options to extend the life of the mine.
Exploration
In 2015, the company spent $48.5-million on exploration, of which $30.7-million was expensed and $17.8-million capitalized. Compared with the previous year, exploration spending was down 30 per cent due to continued initiatives to reduce spending and project prioritization. The following summarizes the status of the most advanced projects.
Wholly owned projects
Boto
--
Senegal
In 2015, the company completed approximately 14,400 metres of diamond drilling as part of a 50-metre-by-50-metre infill program, principally on the Malikoundi deposit. All drilling results were incorporated into a revised geological model to support an updated resource estimate. Effective Dec. 31, 2015, the Boto gold project hosts an indicated resource of 27.7 million tonnes averaging 1.8 grams per tonne gold for 1.56 million ounces, and the inferred resource is 2.9 million tonnes averaging 1.3 g/t Au for 125,000 ounces (refer to news release dated Feb. 17, 2016). During the fourth quarter, the company continued with various technical and environmental studies to advance the economic evaluation of the project.
Pitangui
--
Brazil
In 2015, just over 12,800 metres of diamond drilling was completed as part of the continuing resource delineation drilling program initiated in 2014 on the newly discovered Sao Sebastiao deposit. Drilling was also started to begin testing various electromagnetic anomalies identified on the property from the airborne EM survey completed in 2014. These EM anomalies bear similarities to the EM anomaly observed at the Sao Sebastiao deposit and represent priority exploration targets. During the fourth quarter, all drilling results were incorporated into an updated geological model to support an updated resource estimate. Effective Dec. 31, 2015, reported mineral resources at the Sao Sebastiao deposit comprised an inferred resource of 4.3 million tonnes grading five g/t Au for 679,000 contained ounces (see news release dated Feb. 17, 2016).
Joint venture projects
The following are the highlights for the company's joint venture exploration projects. The agreements are typically structured in a way that gives the company the option of increasing its ownership interest over time, with the decision to do so a function of the exploration results as time progresses.
Monster Lake -- Canada (option agreement with TomaGold Corp.)
The Monster Lake project, located 50 kilometres southwest of Chibougamau, Que., is held under an earn-in option to joint venture agreement with TomaGold. On Oct. 30, 2015, Iamgold and TomaGold amended the option agreement to allow Iamgold to earn an immediate undivided 50-per-cent interest in the property for a cash payment of $3.2-million (Canadian) and to have an additional option to earn a further 25-per-cent undivided interest, for a total 75-per-cent undivided interest in the project, should it spend a further $10.0-million (Canadian) on the project within a seven-year period, beginning Jan. 1, 2015. Should a development decision be made by the joint venture, or should the joint venture declare commercial production, TomaGold would be entitled to a further $1.0-million (Canadian) payment. During the year, just over 11,700 metres of diamond drilling was completed, including 3,000 metres completed in the fourth quarter, targeting the Megane-325 zone as well as priority target areas identified from the summer field programs. The drill results will be validated and assessed as they are received to guide future exploration programs.
Eastern Borosi -- Nicaragua (option agreement with Calibre Mining Corp.)
Located in the Golden Triangle of northeast Nicaragua, the Eastern Borosi project is held under an earn-in option to joint venture agreement with Calibre Mining. Signed on May 26, 2014, Iamgold may earn up to a 70-per-cent interest in the project by completing scheduled cash payments and exploration work expenditures totalling $10.9-million over six years. During 2015, just over 5,900 metres of diamond drilling was completed to drill test selected gold-silver vein systems. Encouraging assay results were reported by Calibre throughout the year from a number of vein systems tested, including: 5.37 metres grading 2.99 g/t Au and 31.60 g/t silver from drill hole BL15-015; 19.16 metres grading 1.11 g/t Au and 223.40 g/t Ag from drill hole BL15-017; 9.44 metres grading 0.69 g/t Au and 488.60 g/t Ag from drill hole BL15-018; and 4.58 metres grading 7.84 g/t Au and six g/t Ag from drill hole BL15-023 (refer to Calibre news releases dated July 20, 2015). The results of the 2015 program are being compiled and assessed to aid in the planning of the 2016 exploration program.
Siribaya -- Mali (50/50 joint venture with Merrex Gold Inc.)
The Siribaya exploration project in Mali is operated by Iamgold under a 50/50 joint venture with Merrex Gold. During the year, the company completed just over 18,500 metres of reverse circulation and diamond drilling as part of a delineation drilling program on the newly discovered Diakha prospect. During the fourth quarter, all results were incorporated into a geological model to support the estimation of a National Instrument 43-101-compliant mineral resource commissioned for the project. Effective Dec. 31, 2015, total resources estimated for the Siribaya project include indicated resources of 2.1 million tonnes grading 1.90 g/t Au for 129,000 contained ounces and inferred resources of 19.8 million tonnes grading 1.71 g/t Au for 1.09 million contained ounces. Of the inferred resources, the newly discovered Diakha deposit hosts 14.8 million tonnes grading 1.81 g/t Au for 863,000 contained ounces, accounting for 75 per cent of the total tonnage and 79 per cent of the contained gold within the total inferred resources at Siribaya (see news release dated Feb. 9, 2016). Preliminary metallurgical testwork has confirmed that favourable recoveries exceeding 90 per cent can be expected with conventional mineral processing. The Diakha deposit remains open in all directions and further exploration is planned in 2016 to continue to expand and upgrade the resource.
CONSOLIDATED STATEMENTS OF EARNINGS
(In millions of U.S. dollars, except per share)
Three months ended Dec. 31, Year ended Dec. 31,
2015 2014 2015 2014
Continuing operations
Revenues $238.2 $272.5 $917.0 $1,007.9
Cost of sales 283.5 239.5 971.6 892.9
General and administrative expenses 9.2 10.5 39.1 44.8
Exploration expenses 6.6 11.9 30.7 42.7
Impairment charges 621.3 - 621.3 -
Other expenses 1.5 47.0 16.3 70.1
Operating costs 922.1 308.9 1,679.0 1,050.5
(Loss) from operations (683.9) (36.4) (762.0) (42.6)
Share of net earnings (loss) from
investments in associates and
joint ventures, net of income taxes 4.4 (5.3) 9.7 (26.2)
Finance costs (9.1) (10.3) (38.3) (26.5)
Foreign exchange gain (loss) (3.4) (6.4) 0.5 (8.2)
Interest income and derivatives and
other investment gains (losses) (10.5) (47.4) 6.3 (40.2)
(Loss) before income taxes (702.5) (105.8) (783.8) (143.7)
Income taxes 25.0 (42.0) (11.5) (117.9)
Net (loss) from continuing operations (677.5) (147.8) (795.3) (261.6)
Net earnings from discontinued operations - 26.7 41.8 62.7
Net (loss) (677.5) (121.1) (753.5) (198.9)
Net (loss) from continuing operations
attributable to
Equityholders of Iamgold (675.9) (148.7) (797.1) (269.5)
Non-controlling interests (1.6) 0.9 1.8 7.9
Net (loss) from continuing operations (677.5) (147.8) (795.3) (261.6)
Net (loss) attributable to
equityholders of Iamgold (675.9) (122.0) (755.3) (206.8)
Non-controlling interests (1.6) 0.9 1.8 7.9
Net (loss) (677.5) (121.1) (753.5) (198.9)
Attributable to equityholders
of Iamgold
Basic and diluted (loss) per share
from continuing operations ($ per share) (1.73) (0.39) (2.04) (0.72)
Basic and diluted earnings per share
from discontinued operations ($ per share) - 0.07 0.11 0.17
Basic and diluted (loss) per share
($ per share) (1.73) (0.32) (1.93) (0.55)We seek Safe Harbor.
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