IAMGOLD REPORTS OPERATING AND FINANCIAL RESULTS FOR THE THIRD QUARTER 2012 All amounts are expressed in U.S. dollars, unless otherwise indicated.
TSX: IMG NYSE: IAG
NEWS RELEASE
IAMGOLD REPORTS OPERATING AND FINANCIAL RESULTS FOR THE THIRD QUARTER 2012
All amounts are expressed in U.S. dollars, unless otherwise indicated.
Toronto, Ontario, November 13, 2012 – IAMGOLD Corporation (“IAMGOLD” or the “Company”) today reported its unaudited consolidated financial and operating results for the third quarter ended September 30, 2012. Revenues were $386.8 million compared to $431.9 million in the third quarter 2011. Net earnings from continuing operations (attributable to equity holders) increased by 56% to $78.0 million ($0.21 per share) from $50.0 million ($0.13 per share) in the third quarter 2011. Excluding items not indicative of underlying operating performance, adjusted net earnings1 (attributable to equity holders) were $60.2 million ($0.16 per share) compared to $112.4 million ($0.30 per share) in the third quarter 2011. This was due mainly to lower gold sales, including 12,000 ounces produced late in the quarter and sold in October, and higher exploration expenses. Operating cash flow1 before changes in working capital was $114.3 million ($0.30 per share) compared to $174.1 million ($0.46 per share) for the third quarter 2011.
President and CEO Steve Letwin commented, “We are performing well at the mines we own and operate. Year-to-date production and cash costs at these operations, which account for 85% of our production, are on target. In contrast, the performance of the mines not operated by us was disappointing and places us at the lower end of our production guidance. This clearly demonstrates the benefits of re-positioning our company to better leverage our expertise as operators.
“In many ways,” continued Mr. Letwin, “we’re ahead of the curve. We have a much more geo-politically balanced asset profile than we did a year ago and a solid pipeline of exploration and development projects. We are prudent about managing our capital spending, and with some of our expansion projects getting off to a later start this year, we’ve reduced our capital expenditure guidance for 2012. We have the capital available to fund a robust portfolio of projects with attractive rates of return. With gold production commencing at our Westwood project in the first quarter of next year, a pre-feasibility study at Côté Gold underway and expansion projects in West Africa, South America and Canada, we expect to nearly double production within five years.”
THIRD QUARTER 2012 HIGHLIGHTS
Financial Performance and Position
- Revenues were $386.8 million, down 10%, or $45.1 million from the same prior year period, mainly the result of lower gold sales volume.
- Net earnings from continuing operations attributable to equity holders increased 56% to $78.0 million ($0.21 per share) from $50.0 million ($0.13 per share) in the same period in 2011.
- Adjusting for items not indicative of underlying operating performance, adjusted net earnings were $60.2 million ($0.16 per share) compared to $112.4 million ($0.30 per share) in the same prior year period.
- Operating cash flow was $97.6 million ($0.26 per share), compared to $174.5 million ($0.46 per share) in the same prior year period. Adjusting for the changes in non-cash working capital items, such as receivables, inventories and long-term stockpiles, operating cash flow before changes in working capital was $114.3 million ($0.30 per share).
- The Company’s cash, cash equivalents and gold bullion (at market value) position was $1,136.1 million at September 30, 2012, compared to $614.9 million at June 30, 2012.
- On September 21, 2012, the Company completed the issuance of $650 million of senior unsecured notes bearing interest at 6.75% due 2020. The Company intends to use the proceeds for general corporate purposes, including the funding of capital expenditures and exploration.
Production, Cash Costs and Margin
Gold Operations
- Attributable gold production of 205,000 ounces in the third quarter 2012 compared to 222,000 ounces in the third quarter 2011. The decrease was mainly due to lower production at Essakane, resulting primarily from the processing of lower-grade ore, and at Sadiola due to lower throughput and lower grades.
- Total cash costs2 were $710 per ounce, up from $674 per ounce in the third quarter 2011. Cash costs increased mainly due to the impact of lower grades on gold production. Cash costs at IAMGOLDoperated sites were $644 per ounce, up from $602 per ounce in the third quarter 2011.
- The gold margin2 was $960 per ounce in the third quarter 2012, down from $1,001 per ounce in the same quarter 2011, reflecting flat gold prices year-over-year and an increase in cash costs.
Niobec Mine
- Niobium production was 1.2 million kilograms for the third quarter 2012, virtually flat with the same period in 2011.
- The operating margin2 of $16 per kilogram increased from $14 per kilogram in the third quarter 2011, mainly the result of higher niobium prices.
Operating Highlights
- IAMGOLD is in the process of disposing of its interest in the Quimsacocha project in Ecuador to INV Metals Inc. ("INV Metals") through the disposal of all shares of its wholly-owned subsidiary IAMGOLD Ecuador S.A., in exchange for 221.2 million common shares of INV Metals. As a requirement of the transaction, INV Metals raised C$20.0 million in equity financing. The Company participated in the financing in the amount of C$1.0 million and will hold approximately 47% of the issued and outstanding INV Metals shares immediately after the closing of the transaction.
- The Westwood project remains on track for start-up in the first quarter 2013. In October, the union membership ratified a six year contract effective from December 1, 2011.
- At the Essakane mine in Burkina Faso, the construction of the expanded plant to double hard rock processing capacity commenced in early July. This followed a favourable outcome to negotiations with the Government of Burkina Faso on fiscal terms related to mine expansions, including a reduction in the import duty on expansion related-materials from 7.5% to 2.5%. Completion of the construction project is expected by the end of 2013. Also at Essakane, a contract was signed with employees allowing for a 5% increase over each of the next three years.
- At the Rosebel mine in Suriname, the completed installation of a temporary pre-crusher, a larger pebble crusher, and an expanded gravity recovery circuit are having a positive impact on recoveries. A third ball mill is under construction and will be completed early in the first quarter 2013. In addition, a feasibility study expected to be completed by the first quarter 2013 will provide greater design detail around various aspects of the expansion project and is intended to further increase the capacity to treat harder ore 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 include attractively priced power to support incremental capacity. The next step will be to complete a concept study to further define the expansion potential of bringing in the satellite resources.
- Production at IAMGOLD’s joint venture operations with AngloGold Ashanti in Mali was challenging due to adverse weather conditions, low grade ore and processing issues in the Sadiola plant resulting in low throughput.
- The Sadiola sulphide expansion project awaits a final decision from the AngloGold Ashanti Board. The agreement on power and fiscal terms was signed by the Malian ministers in May. Negotiations with the Power Authority around the details of the agreement are essentially complete pending the resolution of certain administrative issues, which are expected to be completed shortly. Permits for power line construction enabling connection to the national grid are expected to reduce power costs by approximately 50%. Under the current project schedule, pre-stripping of the Sadiola main pit to access the underlying sulphides will begin in 2013. Project completion and start-up of the new process plant is scheduled for the end of 2014.
- The Company continues to be optimistic about the potential of Niobec, and is making progress on the feasibility study, permitting and the establishment of the financing framework for the expansion. The completion of the feasibility study is expected by the third quarter 2013 and the permitting process should be finalized by 2014. Additional funding is not required until the commencement of construction.
- IAMGOLD continues to evaluate options for exploiting the large Rare Earth Elements (“REE”) resource near its Niobec mine operation. Almost 8,000 metres of diamond drilling was carried out during the third quarter to complete a resource delineation program intended to upgrade the mineral resources. A planned 1,300 metre exploration drift extending from the Niobec mine to the REE deposit was also initiated. The drift is expected to be completed in early 2013 and will allow for the
collection of a bulk sample to support planned metallurgical studies and provide access for future underground drilling programs.
Mineral Resource Update at Côté Gold
- On October 4, 2012, IAMGOLD announced a mineral resource update for the Company’s recently acquired Côté Gold project in northern Ontario. The updated estimate incorporates results from an additional 79 holes (44,856 metres) since the February 24, 2012 estimate announced by Trelawney Mining and Exploration Inc. An NI 43-101 technical report was filed October 24, 2012.
- The results showed a 274% increase in indicated resources and a substantial increase in total ounces compared to the last release (pre-acquisition) by Trelawney Mining in February 2012. The indicated resource increased to 131 million tonnes averaging 0.84 grams of gold per tonne for 3.56 million ounces. The inferred resource is estimated at 165 million tonnes, averaging 0.88 grams of gold per tonne for 4.66 million ounces. The percentage of the resource in the indicated category increased to 44%, up from 14% in the previous estimate.
- Resource delineation drilling will continue into the fourth quarter, together with geotechnical studies and metallurgical test work to support the commencement of a pre-feasibility study. A further resource update will be completed as part of the Company's annual year-end Mineral Reserves and Resources statement.
Commitment to Zero Harm
- The Company received approval from the Quebec provincial authorities to use the inactive Doyon open pit to store tailings generated from the Westwood mine.
- The frequency of all types of serious injuries (measured as DART rate3) across IAMGOLD was 1.06 for the current year to date compared to 1.12 for full year 2011, representing a 5% improvement.
THIRD QUARTER FINANCIAL REVIEW
- Revenues for the third quarter 2012 were $386.8 million, down $45.1 million or 10% from the same prior year period. The decrease in revenues was mainly related to lower gold sales volume ($49.0 million) and a lower realized gold price ($1.2 million), partially offset by higher niobium revenues ($5.3 million). The lower volume of gold sales was the result of lower production (18,000 ounces) and gold produced late in the quarter (12,000 ounces) and sold in October.
- Mining costs for the third quarter 2012 were $222.9 million, down $17.8 million or 7% from the same prior year period. The decrease in mining costs is mainly related to lower asset retirement obligation charges at closed sites ($12.3 million), lower sales due to timing of shipments and less production ($7.3 million) and lower royalties due to lower volume ($2.3 million), offset partially by higher depreciation expense ($4.1 million).
- The gold margin was $960 per ounce during the third quarter 2012 compared to $1,001 per ounce in the same period 2011, reflecting flat gold prices year-over-year and an increase in cash costs.
- Net earnings from continuing operations attributable to equity holders were $78.0 million ($0.21 per share) during the third quarter 2012, compared to $50.0 million ($0.13 per share) in the same prior year period. The increase in net earnings from continuing operations attributable to equity holders was mainly related to higher derivative gains on commodity and foreign exchange contracts ($39.6 million), lower income taxes ($23.6 million) and lower foreign exchange losses ($9.4 million), partially offset by
the net change in gross earnings which negatively impacted earnings ($27.3 million), higher exploration expenses ($13.2 million) and lower other income and net investment gains ($4.3 million).
- Adjusted net earnings attributable to equity holders of $60.2 million ($0.16 per share) in the third quarter 2012 compared to $112.4 million ($0.30 per share) in the same prior year period. Lower gold sales and higher exploration expenses were key contributing factors, partially offset by lower mining costs and lower taxes.
- Operating cash flow in the third quarter 2012 was $97.6 million compared to $174.5 million in the same prior year period. The decrease in operating cash flow is mainly attributed to lower revenues, mostly from lower gold sales volume ($45.1 million), higher income taxes paid ($7.2 million) and higher noncash working capital mainly due to the build-up of finished goods inventories ($17.1 million).
- Operating cash flow before changes in working capital in the third quarter 2012 was $114.3 million ($0.30 per share), compared to $174.1 million ($0.46 per share) in the same prior year period.
Financial Position
- Cash, cash equivalents and gold bullion (at market value) was $1,136.1 million at September 30, 2012, up $521.2 million since June 30, 2012 mainly due to the issuance of long-term senior notes ($650.0 million) cash flow from operating activities ($97.6 million) and higher market value for gold bullion due to higher gold prices ($23.9 million), offset by capital expenditures related to mining assets and exploration and evaluation assets ($186.9 million) and payment of dividends ($54.3 million).
- Working capital4 as at September 30, 2012 was $1,116.9 million, down $55.8 million compared to December 31, 2011 due to lower current assets ($76.9 million) partially offset by lower current liabilities ($21.1 million). Current assets were mainly down due to less cash and cash equivalents of $154.8 million resulting mainly from the acquisition of the Côté Gold project ($485.7 million), capital expenditures related to mining assets and exploration and evaluation assets ($491.4 million), the payment of dividends ($105.2 million) and acquisitions of investments ($48.9 million), offset partially by cash generated from the issuance of 6.75% senior notes ($650.0 million) and operating activities ($322.1 million).
- At September 30, 2012, no funds had been drawn against the unsecured revolving credit facilities of IAMGOLD ($500 million) or Niobec ($250 million). As of September 30, 2012, the Company has committed $70.0 million of its $75.0 million letters of credit facility for the guarantee of certain asset retirement obligations compared to $17.9 million at December 31, 2011. The increase in collateral support to guarantee asset retirement obligations was the result of Quebec, Canada regulators accepting a revised asset retirement plan.
SUMMARIZED FINANCIAL RESULTS
| Financial Position ($ millions, except where noted) | December 31, 2011 | |||
|---|---|---|---|---|
| September 30, 2012 | Change | |||
| Cash, cash equivalents, and gold bullion at market value at cost Total assets Long-term debt Equity | $ 1,262.5 $ 1,148.4 $ 4,349.7 $ - $ 3,528.9 | |||
| $ | 1,136.1 | (10%) | ||
| $ | 993.7 | (13%) | ||
| $ | 5,214.3 | 20% | ||
| $ | 638.3 | - | ||
| $ | 3,767.3 | 7% |
Summary of Financial and Three months ended Nine months ended Operating Results September 30, September 30,
| ($ millions, except where noted) | 2012 | Change | 2011 | 2012 | Change | 2011 | ||||
| Financial Data Revenues Mining costs | $ 431.9 240.7 | $ 1,191.6 650.2 | ||||||||
| $ | 386.8 | (10% | ) | $ | 1,201.6 | 1% | ||||
| 222.9 | (7% | ) | 688.6 | 6% | ||||||
| Gross earnings from mining operations | $ 191.2 | $ 541.4 | ||||||||
| $ | 163.9 | (14% | ) | $ | 513.0 | (5% | ) | |||
| Net earnings attributable to equity holders of IAMGOLD1 Basic net earnings per share ($/share)1 | $ 50.0 $ 0.13 | $ 257.7 $ 0.69 | ||||||||
| $ | 78.0 | 56% | $ | 250.1 | (3% | ) | ||||
| $ | 0.21 | 62% | $ | 0.67 | (3% | ) | ||||
| Adjusted net earnings attributable to equity holders of IAMGOLD1, 2 Basic adjusted net earnings per share ($/share)1,2 | $ 112.4 $ 0.30 | $ 297.9 $ 0.80 | ||||||||
| $ | 60.2 | (46% | ) | $ | 226.6 | (24% | ) | |||
| $ | 0.16 | (47% | ) | $ | 0.60 | (25% | ) | |||
| Operating cash flow1 Operating cash flow ($/share)1 | $ 174.5 $ 0.46 | $ 387.3 $ 1.03 | ||||||||
| $ | 97.6 | (44% | ) | $ | 322.1 | (17% | ) | |||
| $ | 0.26 | (43% | ) | $ | 0.86 | (17% | ) | |||
| Operating cash flow before changes in working capital1, 2 Operating cash flow before changes in working capital ($/share)1, 2 | $ 174.1 $ 0.46 | $ 466.6 $ 1.25 | ||||||||
| $ | 114.3 | (34% | ) | $ | 373.9 | (20% | ) | |||
| $ | 0.30 | (35% | ) | $ | 0.99 | (21% | ) |
1 Amounts represent results from continuing operations and do not include discontinued operations.
2 The Company has included the following non-GAAP measures: adjusted net earnings attributable to equity holders of IAMGOLD, adjusted net earnings per share, operating cash flow before changes in working capital per share. Refer to the Supplemental Information attached to this news release for reconciliation to GAAP measures.
KEY OPERATING STATISTICS
Three months ended Nine months ended September 30, September 30,
| 2012 | Change | 2011 | 2012 | Change | ||||
| 231 217 222 | ||||||||
| 201 | (13% | ) | 635 | (8% | ) | |||
| 188 | (13% | ) | 595 | (8% | ) | |||
| 205 | (8% | ) | 616 | (4% | ) | |||
| $ | 1,670 | - | $ 1,675 $ 674 $ 1,001 | $ | 1,653 | 8% | ||
| $ | 710 | 5% | $ | 708 | 12% | |||
| $ | 960 | (4%) | $ | 945 | 6% | |||
| 1.2 1.0 $ 14 | ||||||||
| 1.2 | - | 3.5 | 3% | |||||
| 1.2 | 20% | 3.6 | 9% | |||||
| $ | 16 | 14% | $ | 15 | 7% |
2011
Key Operating Statistics–Gold Mines
Gold sales – 100% (000s oz)1 690 Gold sales – Attributable (000s oz)1 648 Gold production – Attributable (000s oz)2 643 Average realized gold price ($/oz)1 $ 1,524 Total Cash cost ($/oz)1, 3 $ 634 Gold margin ($/oz)1, 3 $ 890
Key Operating Statistics – Niobec mine
Niobium production (millions of kg Nb) 3.4
Niobium sales (millions of kg Nb) 3.3 Operating margin ($/kg Nb)3 $ 14
1 Amounts represent results from continuing operations and do not include discontinued operations.
2 Excludes attributable ounces from discontinued operations of nil for the three months and nine months ended September 30, 2012 (three months ended September 30, 2011: 9,000 ounces, nine months ended September 30, 2011: 76,000 ounces). Discontinued operations include Mupane, Tarkwa and Damang, which were sold in 2011.
3 The Company has included the following non-GAAP measures: total cash cost per ounce, gold margin per ounce, and operating margin per kilogram of niobium sold at the Niobec mine. Refer to the Supplemental Information attached to the MD&A for reconciliation to GAAP measures.
ATTRIBUTABLE GOLD PRODUCTION AND CASH COSTS
The table below presents the gold production attributable to the Company along with the weighted average cash cost per ounce of production.
Gold Production (000s oz) Total Cash Cost1 ($/oz)
Three months ended Nine months ended Three months ended Nine months ended September 30, September 30, September 30, September 30,
| 2012 2011 2012 2011 2012 2011 2012 2011 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| IAMGOLD Operator Rosebel (95%) 95 94 282 281 $ 689 $ 629 $ 674 $ 622 Essakane (90%) 77 86 238 243 594 535 580 513 Doyon division2 (100%) - 5 4 5 - 1,203 137 1,203 | ||||||||||
| 95 | 282 | $ | 689 | $ | 674 | |||||
| 77 | 238 | 594 | 580 | |||||||
| - | 4 | - | 137 | |||||||
| 172 | 185 | 524 | 529 | $ | 644 | $ 602 | $ | 627 | $ 577 | |
| Joint Ventures Sadiola (41%) 26 30 73 93 $ 978 $ 839 $ 1,059 $ 755 Yatela (40%) 7 7 19 21 1,324 1,793 1,587 1,510 | ||||||||||
| 26 | 73 | $ | 978 | $ | 1,059 | |||||
| 7 | 19 | 1,324 | 1,587 | |||||||
| 33 37 92 114 $ 1,050 $ 1,031 $ 1,169 $ 894 | ||||||||||
| Continuing operations 205 222 616 643 $ 710 $ 674 $ 708 $ 634 | ||||||||||
| Discontinued operations3 | 9 | 76 | $ 1,287 | $ 847 | ||||||
| - | - | $ | - | $ | - | |||||
| Total | 205 | 231 | 616 | 719 | $ | 710 | $ 697 | $ | 708 | $ 656 |
| Continuing operations Cash cost excluding $ 623 $ 584 $ 620 $ 550 royalties Royalties 87 90 88 84 Total cash cost1 $ 710 $ 674 $ 708 $ 634 | $ 584 90 | $ 550 84 | ||||||||
| $ | 623 | $ | 620 | |||||||
| 87 | 88 | |||||||||
| $ | 710 | $ 674 | $ | 708 | $ 634 |
1 Total cash cost is a non-GAAP measure. Refer to the Supplemental Information section attached to the MD&A for reconciliation to GAAP measures.
2 As a cost savings initiative, the ore mined from Mouska was stockpiled in 2011. In 2012, the mine will not be producing other than marginal gold derived from the mill clean-up process.
3 Discontinued operations include Mupane, Tarkwa and Damang which were sold in 2011.
OPERATIONS
ROSEBEL MINE, SURINAME
Operating Performance
Attributable gold production of 95,000 ounces for the third quarter 2012 was marginally higher than the same prior year period, primarily as a result of higher recoveries, partially offset by lower throughput. Recoveries have improved with the nearly complete installation of the gravity circuit.
Total cash costs per ounce in the third quarter were higher than the same period in 2011 mainly due to higher labour, fuel and power costs. Labour costs were higher due to inflationary factors in the Surinamese economy and the increase in manpower attributable to a higher tonnage mined. The processing of a greater proportion of hard rock drove up power costs.
CAPEX
During the third quarter 2012, Rosebel’s capital expenditures were $27.9 million and included advancing the third ball mill project ($10.1 million), new mining equipment ($6.6 million) and resource development and near-mine exploration ($4.7 million).
Exploration
Approximately 34,000 metres of diamond drilling was completed during the quarter, mainly at the J Zone, Koolhoven, Rosebel, Mayo and West Pay Caro deposits, to increase the confidence in the existing resource inventory and target resource expansions. Intersections were obtained from most targeted zones and results will be incorporated into updated resource models as they are received. Targeted geological mapping and geochemical sampling programs continued elsewhere on the property, as did a mechanical auger drilling program over domains of thick alluvium that cover projected extensions of the Rosebel district mineralized trends.
ESSAKANE MINE, BURKINA FASO
Operating Performance
Attributable gold production of 77,000 ounces was 11% lower than the same period in 2011 mainly due to lower recoveries and processing of lower-grade ore, which offset the increase in ore milled.
Total cash costs in the third quarter 2012 were higher compared to the same prior year period mainly due to the impact of lower grades on gold production and a higher strip ratio.
CAPEX
During the third quarter 2012, Essakane’s capital expenditures were $85.6 million and included the expansion project ($62.1 million) and capitalized stripping costs on the push-back of the pit ($12.2 million).
Exploration
Approximately 28,000 metres of diamond and reverse circulation drilling was completed during the quarter, including approximately 13,500 metres targeting potential extensions of the Essakane Main Zone to the north beyond the current life of mine pit and at depth, within or slightly below the expansion feasibility study pit design. Drilling programs designed to test for southeast extensions of the Falagountou satellite deposit and to evaluate the resource potential of selected target areas along the 10 kilometre long Gossey - Korizena mineralized trend were concluded due to arrival of seasonal rains. Integration and interpretation of results is in progress as assay data comes to hand.
DOYON DIVISION, CANADA
During the third quarter 2012, the site continued to stockpile ore which will be processed in the refurbished mill in 2013.
SADIOLA MINE, MALI
Operating Performance
Attributable gold production of 26,000 ounces for the third quarter 2012 was 13% lower than the prior year period due to lower throughput and lower grades.
Total cash costs per ounce were higher in the third quarter than in the same quarter 2011 due to lower production and the processing of harder ore which increased the consumption of power and consumables.
CAPEX
The Company’s attributable portion of capital expenditures during the third quarter 2012 was $11.6 million and included spending on the Sadiola sulphide project ($8.5 million) and capitalized stripping ($1.6 million).
Sadiola did not distribute a dividend during the third quarter 2012.
YATELA MINE, MALI
Operating Performance
Attributable gold production of 7,000 ounces for the third quarter 2012 was unchanged compared to the prior year period.
Cash costs in the third quarter 2012 were lower compared to the third quarter 2011 due to the impact of the impairment to inventories during 2012 which have reduced the net cost of gold produced. As expected, the short-term non-capitalized waste stripping activities were completed in the third quarter and this has resulted in improved access to ore.
There were no significant capital expenditures year-to-date for both 2012 and 2011.
Yatela did not distribute a dividend during the third quarter 2012.
NIOBEC NIOBIUM MINE, CANADA
Operating Performance
Niobium production of 1.2 million kilograms in the third quarter 2012 was unchanged compared to the same period in 2011 as higher throughput and recovery was offset by lower Nb2O5 ore grades.
Niobium revenues increased to $47.7 million in the third quarter 2012 compared to $42.4 million in the same period in 2011 due to higher realized niobium prices and higher sales volume. Operating margin during the third quarter 2012 was higher compared to the third quarter 2011 as a result of higher realized niobium prices partially offset by higher labour costs and lower grades.
CAPEX
In the third quarter 2012, capital expenditures were $17.1 million and included underground development ($3.8 million), the service hoist project ($3.8 million), and feasibility study ($3.5 million).
ATTRIBUTABLE GOLD SALES VOLUME AND REALIZED GOLD PRICE
Gold sales (000s oz) Realized gold price ($/oz)
Three months ended Nine months ended Three months ended Nine months ended September 30, September 30, September 30, September 30,
| 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | ||
| 170 | 193 38 | 546 | 578 112 | $ | 1,674 | $ 1,672 $ 1,693 | $ | 1,654 |
| 31 | 89 | $ | 1,645 | $ | 1,648 | |||
| 201 | 231 | 635 | 690 | $ | 1,670 | $ 1,675 | $ | 1,653 |
2011
Operator Joint ventures1 Total sales from continuing operations 2,3 1 Attributable sales of joint ventures: Sadiola (41%) and Yatela (40%).
2 Attributable sales volume for the third quarters 2012 and 2011 were 188,000 ounces and 217,000 ounces, respectively, and for the first nine months 2012 and 2011 were 595,000 ounces and 648,000 ounces respectively after taking into account 95% of the Rosebel sales and 90% of the Essakane sales.
3 Continuing operations exclude Mupane, Tarkwa and Damang which were sold in 2011 and are discontinued operations.
NIOBEC PRODUCTION, SALES AND OPERATING MARGIN
Three months ended Nine months ended September 30, September 30,
| 2011 | 2011 | ||||||||
| 2012 | Change | 2012 | Change | ||||||
| Total operating material mined (000s t) Ore milled (000s t) Grade (% Nb O ) 2 5 Niobium production (millions of kg Nb) Niobium sales (millions of kg Nb) Operating margin ($/kg Nb)1 | 546 | 12% | 487 524 0.55 1.2 1.0 $ 14 | 1,599 | 2% | 1,562 1,574 0.57 3.4 3.3 $ 14 | |||
| 560 | 7% | 1,637 | 4% | ||||||
| 0.54 | (2% | ) | 0.54 | (5%) | |||||
| 1.2 | - | 3.5 | 3% | ||||||
| 1.2 | 20% | 3.6 | 9% | ||||||
| $ | 16 | 14% | $ | 15 | 7% |
1 Operating margin per kilogram of niobium at the Niobec mine is a non-GAAP measure. Refer to the Supplemental Information section attached to the MD&A for reconciliation to GAAP measures.
EXPLORATION
IAMGOLD was active at 20 mine sites, near mine and greenfields exploration projects in eight countries of West Africa and North and South America for the nine months ended September 30, 2012.
In the third quarter 2012, exploration expenditures totaled $43.7 million, including $33.6 million for expensed exploration and $10.1 million for capitalized exploration, compared to $27.1 million in the same period last year. The third quarter 2012 expenditures of $43.7 million included near-mine exploration and evaluation expenditures of $12.1 million, and greenfield exploration expenditures of $31.6 million.
The outlook for 2012 exploration expenditures is $157.3 million, up $48.7 million from the 2011 full year exploration spend. The outlook for 2012 is higher due to the expanded exploration program which is mainly from the Côté Gold project in Ontario ($24.1 million).
2012 OUTLOOK
| IAMGOLD full year 2012 guidance | |
| Attributable gold production (000s oz) | 840 – 910 |
| Cash cost ($/oz) 1 | $670 – $695 |
| Niobec production (millions of kg Nb) Niobec operating margin ($/kg Nb)1 | 4.6 – 5.1 |
| $15 – $17 | |
| Capital expenditures ($ millions) | $750 – $780 |
1 Cash cost per ounce and operating margin per kilogram of niobium sold at the Niobec mine are non-GAAP measures. Refer to the Supplemental Information attached to the MD&A for reconciliation to GAAP measures.
IAMGOLD expects 2012 gold production at the lower end of the guidance range due to the underperformance of the Company’s joint venture operations. 2012 cash costs year-to-date for the Company’s owned and operated mines are below the bottom of the guidance range, and are expected to be within guidance for the full year. However, consolidated cash costs are expected to be within ± 3% of the upper end of the $670-$695 per ounce range, due to lower production at the Company’s joint venture operations. The Company maintains its 2012 guidance for niobium production and operating margin.
The Company is reducing its 2012 capital expenditure guidance from a range of $800 to $840 million to a range of $750 to $780 million. The lower expenditure is primarily due to timing assumptions with respect to the Sadiola and Essakane expansion projects. Further delays are expected with the Sadiola sulphide project, and the agreement on fiscal terms related to the Essakane expansion was concluded later than originally anticipated.
The effective tax rate for the third quarter 2012 was 35.0% compared to 54.0% for the same period in the prior year. The decrease in the effective tax rate is primarily attributable to unrealized foreign exchange gains and losses on the translation of inter-company loans and non-monetary assets from their tax currency (i.e., Canadian dollar, CFA, etc.) to their functional currency (i.e., the U.S. dollar). In 2011, the translation resulted in a net unrealized foreign exchange gain and a tax expense, whereas in 2012, the translation resulted in a net unrealized foreign exchange loss and a tax benefit.
The effective tax rate for the first nine months 2012 was 34.7% compared to 36.3% for the same period in the prior year. The decrease in the year to date effective rate is attributable to unrealized foreign exchange gains and losses, changes in enacted tax rates and the geographical mix of income.
The Company maintains its guidance for the effective tax rate to be in the range of 35% to 37% as previously disclosed.
The outlook is based on 2012 full year assumptions for average realized gold price of $1,700 per ounce, $C/$US exchange rate of 1.00, $US/€ exchange rate of 1.40 and average crude oil price of $90 per barrel.