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IAMGOLD digging for funds to finish Gogama open-pit mine project

Toronto mining company weighs financing options while aiming for early 2024 production start
(IAMGOLD photo)

IAMGOLD is scrounging for funds in order to push its Côté open-pit mine project across the construction finish line.

The Toronto gold company made the admission in releasing its third quarter financial and production numbers this week, reporting revenues of US$343.3 million, a net loss of $108.3 million and its highest quarterly gold production in two-and-half years from its other mines in Burkina Faso, Suriname and Canada.

At the end of September, the Côté project was 64 per cent complete as activity heads into a peak construction period with approximately 1,500 workers at the site.

The company is aiming for a first gold pour and the start of mining at Côté early in 2024. So far, everything is on schedule. 

The project is located halfway between Sudbury and Timmins and is 25 kilometres southwest of Gogama. Côté is a joint venture between IAMGOLD (64.75 per cent), Sumitomo Metal Mining (27.75 per cent) with other partners (7.5 per cent).

The mining company ran into a raft of issues earlier this year, involving a COVID outbreak, inflation, and supply chain issues that blew up the mine project pricetag.

IAMGOLD’s reports its remaining share of project spending to bring Côté  into production is between US$1 billion and 1.1 billion. They’ve conducted a cash call with their joint venture partners is requiring them to advance two months of future spending.

The company is also selling its 95 per cent ownership in the Rosebel Gold Mine in Suriname, South America to Zijin Mining of China for US$360 million. The deal closes early next year. The proceeds from that sale will be funnelled into the Cote project.

But the company said it’s not enough to fully fund Côté to completion. They are evaluating further options to raise cash through borrowing, selling common shares, doing royalty or streaming deals or selling off some mineral prospects in the development pipeline in West Africa.

IAMGOLD management said it will come up with a financing plan by year’s end.

In a Nov. 9 webcall with analysts, Maryse Belanger, IAMGOLD’s interim president-CEO, said she was “100 per confident” in their ability to address these challenges to keep Côté  on track for first production.

She praised the project team for the significant progress being made on the ground, itching forward at three to four per cent each month.

“I was up at site a couple of weeks ago and I have to recommend the project management team for their diligence and focus to keep everyone on task.”

All the detailed engineering work is done. The focus is on execution and the mechanical installation, Belanger said, particularly with the processing plant, the tailings storage area for waste rock, and the remaining water management construction.

But the company cautions if funding issues become critical over the next couple of months, it could curtail capital spending which may extend Côté  construction timelines and increase the project costs. 

While IAMGOLD runs other mines in Canada and Burkina Faso, Côté is a super important development for the company.

When the mineral estimate of the main Côté deposit is combined that of a nearby sister deposit, the Gosselin Zone, it amounts to 13.5 million ounces of gold in the measured and indicated category, well beyond the 18-year mine life predicted when construction at Côté  started in 2020.

Exploration drilling at Gosselin continued this year. 

The last resource estimate for Gosselin, posted earlier this year, showed 3.4 million ounces of measured and indicated gold with an additional 1.7 million ounces on the inferred side.  Drill results aren’t back yet from this year’s 16,000-metre drill program in and around Gosselin but the company fully expects that gold footprint will widen.

“We firmly believe that Côté Gold is not just a project but the start of a new mining district,” said Belanger today, “and there is significant upside to be uncovered as there has been minimal historical exploration targeting these Côté -Gosselin style intrusion hosted deposits within our 596 square kilometre land package.”