IAMGOLD REPORTS FIRST QUARTER 2012 FINANCIAL RESULTS All amounts are expressed in U.S. dollars, unless otherwise indicated.
TSX: IMG NYSE: IAG
NEWS RELEASE
IAMGOLD REPORTS FIRST QUARTER 2012 FINANCIAL RESULTS
All amounts are expressed in U.S. dollars, unless otherwise indicated.
Toronto, Ontario, May 11, 2012 – IAMGOLD Corporation (“IAMGOLD” or the “Company”) today reported its unaudited consolidated financial and operating results for the first quarter ended March 31, 2012. Revenues from continuing operations were $404.2 million compared to $414.0 million in the first quarter of 2011. Net earnings from continuing operations attributable to equity shareholders were $119.2 million ($0.32 per share) compared to $133.2 million ($0.36 per share) in 2011. The operating cash flow from continuing operations before changes in working capital1 was $185.7 million ($0.49 per share) compared to $214.5 million ($0.57 per share) during the first quarter of 2011.
“We had a good start to 2012 and are on track to meet our annual guidance for production and cash costs,” said Steve Letwin, President and CEO of IAMGOLD. “We finished the first quarter strongly at our two flagship operations, with attributable production in March of over 32,000 ounces at Rosebel and over 30,000 ounces at Essakane. Both mines are running well and meeting the objectives per their mine plans, and the Westwood project is on track to begin production in the first quarter of 2013.”
Mr. Letwin further commented, “We have been clear about the strategic direction for our company, and look forward to expanding our gold production pipeline through the proposed acquisition of Trelawney. This transaction offers a very attractive return on capital. Trelawney's location in northern Ontario will give us a much more geographically balanced production profile. Its large defined resource will increase our global resource base by close to 30% and has expansion potential. Trelawney is an excellent strategic fit and dovetails perfectly into our project development timeline. At the same time, the ground work is being laid for the Niobec expansion and we’re developing a plan to bring our rare earth elements to market.”
FIRST QUARTER 2012 HIGHLIGHTS
Financial Performance and Position
- Revenues from continuing operations were $404.2 million, down 2% from $414.0 million in the first quarter of 2011, the result of lower gold sales partly due to the timing of shipments, partially offset by higher gold prices and niobium sales.
- Net earnings from continuing operations attributable to equity shareholders were $119.2 million ($0.32 per share) compared to $133.2 million ($0.36 per share) in the same period in 2011.
- Adjusting for items not indicative of future operating performance, adjusted net earnings from continuing operations attributable to equity shareholders1 were $92.4 million ($0.25 per share1) compared to $117.8 million ($0.32 per share) in the first quarter of 2011.
- The operating cash flow from continuing operations before changes in working capital1 of $185.7 million ($0.49 per share1),decreased by 13% compared to $214.5 million ($0.57 per share) in the first quarter of 2011.
- Cash, cash equivalents and gold bullion (at market) were $1.3 billion at March 31, 2012. Operating cash flow during the current quarter effectively funded investments in operating, exploration and development sites.
Production, Cash Costs and Margin
Gold Operations
- The attributable gold production of 207,000 ounces declined by 11% from 233,000 ounces in the first quarter of 2011.
- The gold margin2 increased by 20% from $854 per ounce during the first quarter of 2011 to $1,023 per ounce during the first quarter of 2012 as 22% price increases more than offset the increases in costs.
- Weighted average cash costs2 were $679 per ounce, compared to $544 per ounce in the first quarter of 2011. Cash costs at IAMGOLD-operated sites were $596 per ounce compared to $487 per ounce in the first quarter of 2011.
Throughout 2011 the Company faced cost pressures from higher labour costs, higher energy costs, and higher costs of consumables. Despite the recent decline from high prices, the worldwide price for crude oil continues to be higher than during the prior year. This increase in energy prices led to higher haulage and power generation costs. The Company has entered into various hedges to partially mitigate the impact. Royalties increased by $17 per ounce compared to the first quarter of 2011 due to higher gold prices. In addition, lower grades and hard rock contributed to increasing costs per ounce.
Niobec Mine
- The niobium production of 1,109 thousand kilograms during the first quarter of 2012, was consistent with the 1,087 thousand kilograms of niobium produced in the first quarter of 2011.
- The operating margin of $16 per kilogram was consistent with that of the first quarter of 2011.
Operating Highlights
- In April 2012, the Company re-affirmed the resource study for the Westwood project. The commercial start-up date for production remains on track for early 2013.
- At the Essakane mine in Burkina Faso, the development study to double hard rock processing was completed at the end of 2011. Pending final agreement on fiscal terms with the Government of Burkina Faso, a construction start is planned for the second half of 2012 followed by commissioning of the expanded plant in 2014.
- At the Rosebel mine in Suriname, the installation of a third ball mill this year, along with a temporary pre-crusher, a larger pebble crusher, and an expanded gravity recovery circuit, is expected to have a positive impact on throughput by the second half of 2012. In addition, a feasibility study expected to be completed by the end of 2012, will provide greater design detail around various aspects of the expansion project and is intended to further increase the capacity to treat harder ores at the mill.
- In December 2011, IAMGOLD announced an initial agreement with the Surinamese government on the terms and conditions related to further expansion at Rosebel. The Company is making good progress towards reaching a definitive agreement, which will be followed by a concept study to further define the expansion potential of bringing in the satellite resources.
- The military unrest in Mali has not had a significant impact on production at the Company’s joint venture operations with AngloGold Ashanti. The Company continues to monitor the situation.
- The Sadiola sulphide project in Mali has progressed cautiously given recent political events. The Company and its joint venture partner are monitoring the transition of the government. IAMGOLD expects the project will be back on track in the coming months.
- The Company continues to move forward in unlocking the value of Niobec, including progress on the feasibility study based on block-caving and establishing the financing framework for the expansion. The framework is premised on obtaining funding without reliance on cash flow from the gold business.
- IAMGOLD continues to evaluate options for exploiting the large Rare Earth Elements (“REE”)
resource near its Niobec mine operation.
In line with a higher exploration budget in 2012, exploration expenditures totaled $28.4 million during the first quarter of 2012, compared to $20.7 million during the first quarter of 2011. Exploration spending included near-mine exploration and resource development at Rosebel, Essakane and Westwood, and greenfield exploration on 18 projects.
Trelawney Acquisition
- On April 27, 2012, IAMGOLD announced that it has entered into a definitive agreement to acquire, through a plan of arrangement, all of the issued and outstanding common shares of Trelawney Mining and Exploration Inc. (“Trelawney”), a Canadian junior mining and exploration company, focused on the development of a significant mineral deposit in northern Ontario. The fully diluted in the money value of the transaction is approximately C$608 million with an enterprise value of C$505 million net of cash. Shareholders will receive C$3.30 in cash for each Trelawney share held.
- The cash transaction is made possible by the Company’s strong liquidly position which was bolstered by the inflow of over $700 million in cash from divesting of non-core assets in 2011.
- The proposed transaction will increase the Company’s resources by approximately 30% or 7 million ounces of contained gold with potential for significant exploration and expansion.
- This proposed transaction is expected to provide an accretive return on invested capital. The acquisition is consistent with the Company’s strategy to invest in development projects that it owns and operates so maximum benefit can be derived from leveraging existing operational and development expertise.
- The proposed Trelawney acquisition significantly strengthens the Company’s future gold production profile and provides a more geographically balanced asset mix.
Commitment to Zero Harm
Zero Harm is an underlying core value for all that we do at IAMGOLD. The Company operates to benefit all stakeholders through a commitment to leadership at all levels, daily engagement of its employees in responsible operating, and by fostering a culture of finding and eliminating potential impacts.
- IAMGOLD was added to the Jantzi Social Index (JSI), a socially screened, market capitalizationweighted common stock index, modeled on the S&P/TSX 60. IAMGOLD is one of only eight mining companies on the index.
- IAMGOLD participates in Towards Sustainable Mining (TSM), a program developed by the Mining Association of Canada (MAC) and a national Community of Interest panel. In the first quarter, IAMGOLD completed a third party external verification of its 2011 TSM self-assessment and reported on the new health and safety performance indicators provided by MAC. Overall, and on average, IAMGOLD achieved an “A” rating. Most noteworthy, was the achievement of a AAA rating by the Rosebel mine under the External Outreach protocol. In achieving this rating, Rosebel has become the first international site as a MAC member to achieve a AAA rating in External Outreach.
- Requested and received approval from the Quebec provincial authorities to use the inactive Doyon open pit to store tailings generated from the Westwood mine. This process will begin in 2013, commensurate with the scheduled start-up of Westwood.
- The frequency of all types of serious injuries (measured as DART rate3) across IAMGOLD was 1.03 for the first quarter of 2012 compared to 1.12 for full year 2011.
- The Total Recordable Injury rate (TRIR) is also trending downward, showing a reduction of 18% over 2011. The TRIR is a measure of all injuries occurring across IAMGOLD.
FIRST QUARTER FINANCIAL REVIEW
- Revenues from continuing operations in the first quarter of 2012 were $404.2 million, a 2% decrease from $414.0 million in the first quarter of 2011. The variance was due to lower gold sales partly offset by higher realized gold prices and higher revenue from the sale of niobium. For IAMGOLD’s continuing operations including joint ventures, the number of ounces of gold sold decreased by 58,000 ounces while the average realized gold price rose by 22% compared to the first quarter of 2011. Gold sales declined for three reasons:
Build-up of inventory in process in the first quarter 2012 which was sold in April (13,000 ounces);
- Late timing of production at the end of 2010 which was carried forward and sold in the first quarter of 2011 (17,000 ounces); and
- Lower gold production in the first quarter of 2012 (28,000 ounces), mainly the result of harder ore and lower grades.
- Net earnings attributable to equity shareholders were $119.2 million ($0.32 per share) during the first quarter of 2012, compared to $153.4 million ($0.41 per share) in the first quarter of 2011. The gold margin per ounce2 increased from $854 during the first quarter of 2011 to $1,023 in the current quarter as price increases more than offset the increases in costs. Net earnings for the comparative quarter included the positive impact of earnings from discontinued operations of $20.2 million.
- Adjusted net earnings from continuing operations attributable to equity shareholders1 of $92.4 million ($0.25 per share1) in the first quarter of 2012 decreased by 22% compared to $117.8 million ($0.32 per share) in the first quarter of 2011.
- The operating cash flow from continuing operations in the first quarter of 2012 was $170.3 million compared to $199.0 million in the first quarter of 2011. Operating cash flow from continuing operations before changes in working capital1 in the first quarter of 2012 was $185.7 million ($0.49 per share1), a decrease of 13% compared to $214.5 million ($0.57 per share) in the first quarter of 2011. The decrease is mainly due to the impact of lower production partially offset by higher per ounce gold margin.
Financial Position
- The Company’s cash, cash equivalents and gold bullion (at market value) position was $1.3 billion at March 31, 2012, consistent with the end of 2011.
- As at March 31, 2012, no funds were drawn against the Company’s $750.0 million total unsecured revolving credit facilities.
SUMMARIZED FINANCIAL RESULTS
| (in $millions) | March 31, | Change | December 31, 2011 |
|---|---|---|---|
| 2012 | |||
| Financial Position | $ | $ | |
| Cash, cash equivalents and gold bullion at market value at cost Total assets Equity | 1,262.5 1,148.4 4,349.7 3,528.9 | ||
| 1,257.1 | - | ||
| 1,130.1 | (2%) | ||
| 4,456.6 | 2% | ||
| 3,660.9 | 4% | ||
| (in $millions, except where noted) | First quarter | Change | First quarter ended March 31, 2011 |
| ended March | |||
| 31, 2012 | |||
| Results of Continuing Operations Revenues Mining costs including depreciation, depletion and amortisation | 414.0 209.5 | ||
| 404.2 | (2%) | ||
| 215.6 | 3% | ||
| Gross earnings from mining operations | 188.6 | (8%) | 204.5 |
| Net earnings from continuing operations attributable to equity shareholders Basic earnings from continuing operations attributable to equity shareholders per share ($/share) | 133.2 0.36 | ||
| 119.2 | (11%) | ||
| 0.32 | (11%) | ||
| Net earnings attributable to equity shareholders Basic net earnings attributable to equity shareholders per share ($/share) | 119.2 | (22%) | 153.4 0.41 |
| 0.32 | (22%) | ||
| Adjusted net earnings from continuing operations attributable to equity shareholders(a) Basic adjusted net earnings from continuing operations attributable to equity shareholders per share ($/share)(a) | 117.8 0.32 | ||
| 92.4 | (22%) | ||
| 0.25 | (22%) | ||
| Cash Flows Operating cash flow from continuing operations Operating cash flow from continuing operations before changes in working capital(a) Operating cash flow from continuing operations before changes in working capital per share ($/share)(a) | 199.0 214.5 0.57 | ||
| 170.3 | (14%) | ||
| 185.7 | (13%) | ||
| 0.49 | (14%) |
(a) Adjusted net earnings from continuing operations attributable to equity shareholders of the Company, adjusted net earnings from continuing operations attributable to equity shareholders per share and operating cash flow from continuing operations before changes in working capital per share are non-GAAP measures. Refer to the Supplemental Information for reconciliation to GAAP measures at the end of this news release.
KEY OPERATING STATISTICS
| First | First quarter ended March 31, 2011 | |||
|---|---|---|---|---|
| quarter | ||||
| ended | ||||
| March 31, | ||||
| 2012 | Change | |||
| Gold mines (Continuing operations) Gold sales – 100% (000oz) Gold sales – Attributable (000oz) Average realized gold price ($/oz) | 266 249 1,398 | |||
| 208 | (22%) | |||
| 195 | (22%) | |||
| 1,702 | 22% | |||
| Attributable gold production (000 oz) Continuing operations Discontinued operations(a) | 233 57 | |||
| 207 | (11%) | |||
| - | (100% | ) | ||
| Total | 207 | (29% | ) | 290 |
| Cash cost from continuing operations ($/oz)(b) | 679 | 25% | 544 | |
| Gold margin from continuing operations ($/oz)(b) | 1,023 | 20% | 854 | |
| Niobec mine – Operating results Niobium production (thousands of kg Nb) Niobium sales (thousands of kg Nb) Operating margin ($/kg Nb)(b) | 1,087 1,018 16 | |||
| 1,109 | 2% | |||
| 1,183 | 16% | |||
| 16 | - |
(a) Discontinued operations include Mupane, Tarkwa and Damang which were sold in 2011.
(b) Cash cost per ounce, gold margin per ounce, and operating margin per kilogram of niobium at the Niobec mine are non-GAAP measures. Refer to the Supplemental Information attached to the MD&A for reconciliation to GAAP measures.
ATTRIBUTABLE GOLD PRODUCTION, CASH COST AND GOLD MARGIN PER OUNCE
The table below presents the gold production attributable to the Company along with the weighted average cash cost per ounce of production and the gold margin.
| Gold Production Total Cash Cost(a) First quarter ended March 31 2012 2011 2012 2011 | ||||
|---|---|---|---|---|
| 2012 | 2012 | |||
| IAMGOLD Operator Rosebel (95%) Essakane (90%) Doyon division(b) (100%)1 | (000 oz) | (000 oz) 100 95 - | $/oz | $/oz 544 428 - |
| 93 | 637 | |||
| 80 | 562 | |||
| 2 | 134 | |||
| 175 | 195 | 596 | 487 | |
| Joint Ventures Sadiola (41%) Yatela (40%) | 30 8 | 724 1,312 | ||
| 25 | 1,010 | |||
| 7 | 1,613 | |||
| 32 | 38 | 1,135 | 840 | |
| Continuing operations Discontinued operations(c) | 207 | 233 57 | 679 | 544 701 |
| - | - | |||
| Total | 207 | 290 | 679 | 575 |
| Continuing operations Cash cost excluding royalties Royalties | 470 74 | |||
| 588 | ||||
| 91 | ||||
| Total cash cost(a) | 679 | 544 | ||
| Gold margin | ||||
| First quarter ended March 31 2012 2011 | ||||
| 2012 | ||||
| Gold margin from continuing operations Realized gold prices Total cash cost | $/oz | $/oz 1,398 544 | ||
| 1,702 | ||||
| 679 | ||||
| Gold margin(a) | 1,023 | 854 |
(a) Total cash cost per ounce and gold margin per ounce are a non-GAAP measures. Refer to the Supplemental Information attached to the MD&A for reconciliation to GAAP measures.
(b) As a cost savings initiative, the ore mined from Mouska was stockpiled in 2012 and in 2012 the mine will not be producing other than marginal gold derived from mill clean-up process.
(c) Discontinued operations include Mupane, Tarkwa and Damang which were sold in 2011.
OPERATIONS
ROSEBEL MINE, SURINAME
Gold production during the first quarter of 2012 was 7% lower than the same quarter in the prior year, primarily as a result of lower grades and recoveries partially offset by higher throughput.
During the quarter, Rosebel initiated waste stripping at the second phase of the East Pay Caro pit and capitalized 0.8 million tonnes of waste mined from the area.
Total cash costs per ounce were higher compared to same quarter of the last year mainly due to higher labour and energy costs. Royalties were higher as a result of higher realized gold prices.
Rosebel’s attributable production in 2012 is expected to be between 370,000 and 395,000 ounces. Capital expenditures of $160 million for 2012 includes mill expansion project ($68 million), mine expansion ($15 million), resource delineation and near mine exploration ($16 million), replacement of mining equipment ($51 million), and other sustaining capital expenditures ($10 million). The 95,000metre near-mine drill program is designed to upgrade additional resources to reserves and pursue targets in close proximity to existing resources.
ESSAKANE MINE, BURKINA FASO
The attributable production during the first quarter of 2012 was 80,000 ounces, compared to 95,000 ounces during the first quarter of 2011. The decrease in production was anticipated and is the result of harder ore and lower grades encountered.
Total cash costs in the first quarter of 2012 were higher compared to the first quarter of 2011 mainly due to lower production. Other factors such as higher energy prices, upward pressure on consumable prices and higher royalties due to higher gold prices contributed towards the remaining increase in total cash costs.
Essakane’s attributable production in 2012 is expected to be between 320,000 and 345,000 ounces. Capital expenditures for 2012 of $330 million are planned at Essakane and include expansion ($208 million), capitalized stripping ($50 million), additional water storage ($15 million), additional power generation for hard ore ($12 million), resource delineation and near-mine exploration program ($8 million) and other sustaining capital ($37 million).
DOYON DIVISION, CANADA
During the quarter, the Mouska mine produced 2,000 ounces as a result of the mill clean-up activities. Mine production continues to proceed well and the site is continuing to stockpile ore which will be processed in 2013.
In 2012, Mouska will continue stockpiling ore which will be processed in 2013 at the mill currently being refurbished for the start-up of Westwood. Except for gold produced during mill clean-up, there is no gold production planned at Mouska in 2012.
SADIOLA MINE, MALI
The attributable gold production for the first quarter of 2012 was lower compared to the prior year period due to lower throughput from lower mill availability and lower recoveries due to graphitic ore.
Total cash costs rose during the first quarter of 2012 compared to the first quarter in the prior year primarily as a result of lower production coupled with higher energy costs, consumables costs, and increased royalties from higher realized gold prices.
The military unrest in Mali, which commenced in late March 2012, has not had a significant impact on production at the Company’s joint venture operations with AngloGold Ashanti. The Company continues to monitor the situation.
Sadiola did not distribute any dividends during the first quarters of 2012 and 2011.
YATELA MINE, MALI
The attributable gold production was lower in the first quarter of 2012 compared to the same quarter in 2011 as a result of lower gold stacked in prior periods.
Total cash costs during the first quarter of 2012 were higher than the same quarter in the prior year. This was primarily due to lower gold production, higher energy costs and higher royalties due to higher realized gold prices.
Yatela did not distribute a dividend during the first quarter of 2012.
NIOBEC NIOBIUM MINE, CANADA
Niobium production during the first quarter of 2012 was slightly higher than the same period in 2011 as higher throughput partially offset lower grades. Productivity improvement initiatives continued to show results and the mine achieved a record for material mined during the quarter.
Niobium revenues increased to $48.4 million in the first quarter of 2012 compared to $39.6 million in the same period in 2011 due to a higher realized niobium price and sales volume. Notwithstanding the higher average sales price realized, the operating margin was in line with operating margin for the same period in 2011 due to higher prices of consumables and higher labour costs.
The Niobec mine’s production for 2012 is expected to be between 4.6 million and 5.1 million kilograms of niobium with an operating margin between $15 and $17 per kilogram. In 2012, capital expenditures at Niobec of $90 million are planned for advancing the feasibility study ($30 million), underground development ($16 million), flotation optimization project ($9 million), service hoist ($8 million), mining equipment ($6 million), pumping station ($4 million) and sustaining capital ($17 million).
ATTRIBUTABLE GOLD SALES VOLUME AND REALIZED GOLD PRICE
| Gold sales Realized gold price | ||||
|---|---|---|---|---|
| First quarter ended March 31 | 2012 | 2011 | 2012 | 2011 |
| Operator Joint ventures(a) | (000 oz) | (000 oz) 229 37 | $/oz | $/oz 1,400 1,387 |
| 178 | 1,704 | |||
| 30 | 1,690 | |||
| Total sales from continuing operations(b)(c) | 208 | 266 | 1,702 | 1,398 |
(a) Attributable sales of joint ventures: Sadiola (41%) and Yatela (40%).
(b) Attributable sales volume for the first quarters of 2012 and 2011 were 195,000 ounces and 249,000 ounces, respectively, after taking into account 95% of the Rosebel sales and 90% of the Essakane sales.
(c) Continuing operations exclude Mupane, Tarkwa and Damang which were sold in 2011.
NIOBEC PRODUCTION, SALES AND OPERATING MARGIN
| First quarter ended March 31 | 2012 | Change | 2011 | |
| Operating results – Niobec mine Niobium production (thousands of kg Nb) Niobium sales (thousands of kg Nb) Operating margin ($/kg Nb)(a) | 1,087 1,018 16 | |||
| 1,109 | 2% | |||
| 1,183 | 16% | |||
| 16 | - |
(a) Operating margin per kilogram of niobium at the Niobec Mine is a non-GAAP measure. Refer to the Supplemental Information attached to the MD&A for reconciliation to GAAP measures.
EXPLORATION
IAMGOLD’s exploration efforts remain focused in West Africa, select countries in South America, and the provinces of Ontario and Quebec in Canada. With a strategic mandate for organic growth, the Company has numerous projects already underway and continues to pursue additional advanced exploration joint venture or acquisition opportunities that will provide the foundation for future growth.
These advanced opportunities include an on-going resource expansion and delineation drilling program of more than 95,000 metres at Rosebel in Suriname, an underground exploration and resource delineation drilling program of more than 89,000 metres at the Westwood development project in Quebec and a resource delineation program of approximately 49,000 metres at Essakane in Burkina Faso.
In the first quarter of 2012, IAMGOLD incurred $28.4 million on exploration projects compared to $20.7 million in the first quarter of 2011. The first quarter of 2012 expenditures included:
- near-mine exploration and resource development expenditures of $10.3 million, and
- greenfield exploration expenditures of $18.1 million conducted at 18 projects, including two advanced exploration sites, in 8 countries in Africa and the Americas as part of IAMGOLD’s long-term commitment to reserves replenishment and organic growth.
2012 Outlook
IAMGOLD guidance for production and cash costs has been maintained for 2012 and is as follows:
| 2012 | |
| Plan | |
| Attributable gold production (000 oz) Mines owned and operated by IAMGOLD Rosebel Essakane | |
| 370 - 395 | |
| 320 - 345 | |
| Sadiola and Yatela mines | 690 - 740 |
| 150 - 170 | |
| Total attributable production | 840 - 910 |
| Cash cost ($/oz of gold) from continuing operations(a) | $670 - $695 |
| Average gold price ($/oz) Average crude oil price ($/barrel) Average foreign exchange rate (C$/US$) Average foreign exchange rate (US$/€) | 1,700 |
| 90 | |
| 1.00 | |
| 1.40 | |
| Niobium production Niobec (millions of kilograms) Operating margin ($/kg Nb)(a) | |
| 4.6 - 5.1 | |
| $15 - $17 |
(a) Cash cost per ounce and operating margin per kilogram of niobium at the Niobec mine are non-GAAP measures. Refer to the Supplemental Information attached to the MD&A for reconciliation to GAAP measures.
The company maintains its annual gold production guidance of 840,000 to 910,000 ounces for 2012, with the potential for some seasonal variation, particularly in the second quarter. Based on historical patterns, the typical rainy season in Suriname could result in a softer second quarter at Rosebel. However, with planned pit sequencing in the second half of 2012, production is expected to be on track to meet guidance for the year. Cash costs are expected to be trending higher in the second quarter due to seasonal variation and mine sequencing at both Rosebel and Essakane. In the second half of the year, cash costs are expected to be on track and within the annual guidance.
At Niobec, production numbers indicate that the Company is on track for meeting its annual guidance of 4.6 million to 5.1 million kilograms of niobium. A scheduled maintenance shutdown on the service hoist could result in a lighter second quarter.
The Company is reducing its annual capital expenditures guidance for 2012 from $880 million to a range of between $810 and $840 million. The first quarter expenditures were lower than expected given initial project ramp assumptions that have not materialized. At Essakane, the Company continues working with the government of Burkina Faso on the resolution of fiscal terms, and, based on recent discussions, is optimistic the project will be up to speed in the near term. In addition, advance delivery of key equipment did not arrive at certain sites. At Sadiola, the deep sulphide project initiative has progressed cautiously given the ongoing political events. The Company is monitoring the situation and is ready to move forward when appropriate.
The effective tax rate for 2012 is expected to be in the range of 32% to 34%. Cash income and mining tax payments of $15.5 million were made during the first quarter of 2012. Cash income and mining tax payments, for the final payments of the 2011 income and mining tax liabilities and installments for the estimated income and mining tax liabilities for 2012, will be in the range of $90 to $110 million for the second quarter of 2012.