Iamgold’s Strong Operating Results Driven by Significant Reduction in All-in Sustaining Costs and Growth in Production Through 2014 Fourth Quarter All-in Sustaining Costs Down $209 per Ounce Yr/Yr Begins 2015 with ~$800 Million in Cash and Bullion
TSX: IMG NYSE: IAG
NEWS RELEASE
IAMGOLD’S STRONG OPERATING RESULTS DRIVEN BY SIGNIFICANT REDUCTION IN ALL-IN SUSTAINING COSTS AND GROWTH IN PRODUCTION THROUGH 2014
FOURTH QUARTER ALL-IN SUSTAINING COSTS DOWN $209 PER OUNCE YR/YR
BEGINS 2015 WITH ~$800 MILLION IN CASH AND BULLION
All monetary amounts are expressed in U.S. dollars, unless otherwise indicated.
Refer to the annual Management Discussion and Analysis (MD&A) and Audited Consolidated Financial Statements as at December 31, 2014 for more information.
Toronto, Ontario, February 18, 2015 – IAMGOLD Corporation (“IAMGOLD” or the “Company”) today reports its consolidated financial and operating results for the fourth quarter and year ended December 31, 2014.
IAMGOLD’s President and CEO, Steve Letwin, stated, “Strong operating performance reflecting consistent improvements enabled us to either meet or exceed our operating targets in 2014. Robust growth at Essakane, improving grades at Rosebel, and a solid ramp-up at Westwood in its first six months of commercial operation drove production higher for three consecutive quarters to end the year with 844,000 ounces. We beat our cost guidance, with all-in sustaining costs falling consistently throughout the year to $1,021 an ounce in the final quarter - $209 per ounce less than the same quarter last year.
“Our operating teams have been highly effective at optimizing performance at both our mines and mills, and with our spending outlook reduced from last year we expect further success in 2015,” continued Mr. Letwin. “With the sale of Niobec driving our cash and bullion position to approximately $800 million, we have the financial capacity to enhance the profitability of our existing assets while at the same time take advantage of growth opportunities. We’re seeing some excellent results from our advanced exploration projects and will continue to drive these forward. Rosebel and Essakane both generated positive free cash flow in 2014 and by the end of 2015 we expect to see that at a consolidated level.”
Fourth Quarter 2014 Highlights
Attributable gold production of 241,000 ozs. increased for third consecutive quarter; up 7% from Q3/14 due to improving grades at Essakane and Rosebel.
- Attributable gold sales of 234,000 ozs.
- All-in sustaining costs1,2 – gold mines3 of $1,021/oz. declined for fourth consecutive quarter; down $94/oz. from Q3/14 and $209/oz. from Q4/13.
- Total cash costs1 – gold mines of $788/oz. declined for third consecutive quarter; down $63/oz. from Q3/14 and $40/oz. from Q4/13.
- Net cash from operating activities, including discontinued operations, of $72.0 million; up 64% from Q4/13.
2014 Full-Year Highlights
Attributable gold production of 844,000 ozs. within guidance.
- Attributable commercial production of 834,000 ozs., up 9% from 2013.
- Attributable gold sales of 835,000 ozs.
- Essakane grew production 33%; driven by higher grades and throughput.
- Westwood ramped up commercial production, producing 70,000 ozs. in first six months.
- All-in sustaining costs – gold mines of $1,101/oz., $49/oz. below bottom of guidance and down 10% or $121/oz. from 2013.
- Total cash costs – gold mines of $848/oz., in line with guidance.
- Capital expenditures of $325 million were 10% below guidance and 51% lower than 2013.
- Cash, cash equivalents and gold bullion (at market value) from continuing operations of $321.0 million at December 31, 2014; compared to $334.4 million at September 30, 2014 and $384.6 million at December 31, 2013.
- Initiatives to monetize non-cash working capital contributed more than $50 million in cash.
- Net cash from operating activities, including discontinued operations, increased 27% to $312.2 million.
Subsequent to Year End
- On January 22, 2015, we completed the sale of Niobec and received cash of $500 million after tax, increasing cash, cash equivalents and gold bullion (at market value) to approximately $800 million.
- Positive results continued from the 2014 drilling program at the 100% owned Boto Gold project in Senegal, West Africa. Highlights from further drilling included 9 metres grading 10.5 g/t Au, 44 metres grading 4.46 g/t Au and 40 metres grading 3.24 g/t Au. (Refer to news release dated February 3, 2015).
- In February 2015, we issued flow-through shares for proceeds of CAD$50 million.
SUMMARY OF FINANCIAL AND OPERATING RESULTS
| Three months ended December 31, Years ended December 31, | ||||
|---|---|---|---|---|
| Financial Results ($ millions, except where noted) | 2014 | 2013 | 2014 | 2013 |
| Continuing Operations | ||||
| Revenues | $ 272.5 | $ 1 95.1 | $ 1,007.9 | $ 9 47.5 |
| Cost of sales | $ 239.5 | $ 1 61.8 | $ 8 92.9 | $ 6 68.5 |
| Earnings from continuing mining operations 1 | $ 33.0 | $ 33.3 | $ 1 15.0 | $ 2 79.0 $ (832.5) $ ( 2.21) $ 1 37.3 $ 0 .36 $ 2 46.3 $ 3 05.6 $ 0 .81 $ 3 0.1 $ 0 .08 740 762 835 $ 1 ,399 $ 801 |
| Net losses including discontinued operations attributable to equity holders of IAMGOLD Net losses including discontinued operations attributable to equity holders of IAMGOLD per share ($/share) | $ ( 122.0) $ (0.32) | $ (840.3) $ ( 2.23) | $ (206.8) $ ( 0.55) | |
| Adjusted net earnings including discontinued operations attributable to equity holders of IAMGOLD1 Adjusted net earnings including discontinued operations per share ($/share)1 | $ 10.2 $ 0.03 | $ 19.7 $ 0 .05 | $ 32.8 $ 0.09 | |
| Net cash from operating activities including discontinued operations Net cash from operating activities before changes in working capital including discontinued operations 1 Net cash from operating activities before changes in working capital including discontinued operations ($/share)1 | $ 72.0 $ 93.7 $ 0 .25 | $ 44.0 $ 54.7 $ 0 .15 | $ 3 12.2 $ 3 17.3 $ 0.84 | |
| Net earnings from discontinued operations attributable to equity holders of IAMGOLD Net earnings from discontinued operations attributable to equity holders of IAMGOLD ($/share) | $ 2 6.7 $ 0 .07 | $ 3 .5 $ 0 .01 | $ 62.7 $ 0.17 | |
| Key Operating Statistics Gold sales - attributable (000s oz) Gold commercial production - attributable (000s oz) Gold production - attributable2 (000s oz) | 234 241 241 | 173 175 195 | 835 834 844 | |
| Average realized gold price1 ($/oz) Total cash costs1,3,4 - gold mines5 ($/oz) | $ 1,201 $ 788 | $ 1 ,273 $ 828 | $ 1 ,259 $ 848 | |
| Gold margin1 ($/oz) | $ 413 | $ 445 | $ 411 | $ 598 |
| All-in sustaining costs 1,4,6 - gold mines ($/oz) All-in sustaining costs including discontinued operations - total 7 ($/oz) | $ 1,021 $ 938 | $ 1 ,230 $ 1 ,113 | $ 1 ,101 $ 992 | $ 1 ,222 $ 1 ,143 5.3 4.9 $ 18 |
| Financial results from discontinued operations Niobium production (millions of kg Nb) Niobium sales (millions of kg Nb) Operating margin1 ($/kg Nb) | 1.5 1.5 $ 2 0 | 1.6 1.3 $ 20 | 5.6 5.8 $ 20 |
1 This is a non-GAAP measure. Refer to the non-GAAP performance measures section of the MD&A.
2 Attributable gold production includes Westwood pre-commercial production for the year ended December 31, 2014 of 10,000 ounces, and for the three months and year ended December 31, 2013 of 20,000 ounces and 73,000 ounces, respectively.
3 The total cash costs computation does not include Westwood pre-commercial production for the year ended December 31, 2014 of 10,000 ounces, and for the three months and year ended December 31, 2013 of 20,000 and 73,000 ounces, respectively.
4 By-product credits are included in the calculation of this measure; refer to the non-GAAP performance measures section of the MD&A for the reconciliation to GAAP.
5 Gold mines, as used with total cash costs and all-in sustaining costs, consist of Rosebel, Essakane, Westwood (commercial production), Mouska, Sadiola and Yatela on an attributable basis.
6 In the third quarter 2014, we began including the income from our Diavik royalty as an offset to operating costs in the calculation of this measure. Previous periods were revised for comparability.
7 Total, as used with all-in sustaining costs, includes the impact of niobium contribution which is classified as discontinued operations, defined as the Niobec operating margin and sustaining capital, on a per gold ounce sold basis. Refer to the all-in sustaining costs table in the non-GAAP performance measures section of the MD&A.
FOURTH QUARTER AND FULL-YEAR 2014 HIGHLIGHTS
Sale of Niobec
On January 22, 2015, we completed the sale of our Niobec business and the adjacent rare earth element deposit (“REE”) for a total consideration of $530 million. We received $500 million in cash for the niobium business upon the closing of the transaction. An additional $30 million is due when the REE deposit commences commercial production, as well as a 2% gross royalty on REE production.
Niobec Disclosed as Discontinued Operations As at December 31, 2014, the assets and liabilities of Niobec were classified as held for sale in the consolidated balance sheet. The net earnings for Niobec are presented separately as net earnings from discontinued operations, net of tax, in the consolidated statement of earnings. Comparative periods have been adjusted accordingly. The net earnings from discontinued operations for 2014 were $62.7 million, up $32.6 million from the prior year.
Financial Performance
- Revenues from continuing operations for the fourth quarter 2014 were $272.5 million, up 40% from the same prior year period, mainly due to higher gold sales volume partially offset by a lower average realized gold price. Revenues for 2014 were $1,007.9 million, up 6% from 2013. The increase was the result of higher gold sales of 122,000 ounces at our owner-operator mines ($163.3 million) partly offset by a lower average realized gold price ($103.7 million). The growth in sales volume in 2014 was mainly due to Essakane, as the expanded mill and a 21% increase in grades drove production higher by 33%. Also contributing to the increase was the commencement of commercial production at Westwood, partially offset by lower sales from Mouska as it ceased production in the third quarter 2014.
- Cost of sales from continuing operations for the fourth quarter 2014 was $239.5 million, up $77.7 million from the same prior year period, the result of higher production volumes and depreciation. Cost of sales for 2014 was $892.9 million, up $224.4 million from the previous year. The increase was mainly the result of increased production at Essakane ($102.5 million), higher costs of processing more hard rock and lower capitalized stripping at Rosebel ($56.6 million), commencement of commercial production at Westwood ($50.9 million) and higher depreciation expense ($61.2 million), partially offset by closure of Mouska ($40.6 million).
- The depreciation expense in 2014 was $205.0 million, up 43% from the prior year. This is primarily the result of the commencement of commercial production at Westwood in the third quarter 2014, Essakane’s commissioning of the expanded milling facilities, and higher amortization of capital stripping at Essakane and Rosebel.
- Income tax expense for the year was $117.9 million, of which $113.7 million was deferred. With substantial losses from continuing operations prior to income taxes for the year, it would be reasonable to expect an income tax benefit rather than an income tax expense. However, we had significant loss carry forwards valued at $76.0 million that were recorded as a deferred tax asset, and with the sale of Niobec we no longer had the benefit of the projected future taxable income that would have offset taxable losses in Canada. Accordingly, we wrote off the entire asset in the third quarter in accordance with IFRS. This resulted in a non-cash deferred tax expense. In addition, the strengthening U.S. dollar reduced the tax base of mining assets in foreign jurisdictions that had the effect of lowering future tax deductions when translated into U.S. dollars, and higher mining duty tax rates and other tax related adjustments also contributed to the deferred tax expense totalling $113.7 million. These are non-cash items and the write off of the asset is not indicative of the economic value of the underlying tax pools that may be used to reduce cash income taxes in the future.
Net losses from continuing operations attributable to equity holders for the fourth quarter 2014 were $148.7 million, compared to net losses of $843.8 million for the same prior year period. This improvement is mainly due to the following factors explaining the year over year variance. Net losses from continuing operations attributable to equity holders for 2014 were $269.5 million, or $0.72 per share, an improvement of $593.1 million, or $1.57 per share, from the prior year. This improvement mainly related to the non-recurrence of the prior year impairment charges on goodwill and mining assets ($888.1 million) and marketable securities and associates ($72.5 million), higher revenues ($60.4 million), lower write-down of receivables ($54.6 million), lower share of net losses from investments in associates and joint ventures ($41.2 million), and lower exploration expense ($26.5 million). This is partially offset by the increased cost in estimates of asset retirement obligations at closed sites, mainly related to Doyon ($57.5 million), net derivative losses mostly related to hedging a portion of anticipated fuel consumption over the next three years ($48.5 million), and higher cost of sales and income tax expense as noted above.
- Adjusted net earnings including discontinued operations attributable to equity holders1 for the fourth quarter 2014 were $10.2 million ($0.03 per share1), down $9.5 million ($0.02 per share) from the fourth quarter 2013. Adjusted net earnings including discontinued operations attributable to equity holders for 2014 were $32.8 million ($0.09 per share), down $104.5 million ($0.27 per share) from the prior year.
- Over the past 12 months, the initiative to convert a portion of non-cash working capital to cash has contributed over $50 million to our cash position. In 2015, we will continue to manage working capital, effectively balancing our liquidity position, while maintaining appropriate inventory levels to support operations.
- Net cash from operating activities including discontinued operations was $72.0 million for the fourth quarter 2014, up $28.0 million from the fourth quarter 2013. For 2014, net cash from operating activities including discontinued operations was $312.2 million, up $65.9 million from the prior year. The increase was mainly due to reducing inventory levels ($51.3 million), lower income taxes paid ($95.4 million) and managing vendor payment terms ($15.3 million), partially offset by lower earnings from operations.
- Net cash from operating activities before changes in working capital including discontinued operations for the fourth quarter 2014 was $93.7 million ($0.25 per share1), up $39.0 million ($0.10 per share1) from the same period in 2013. For 2014, net cash from operating activities before changes in working capital including discontinued operations was $317.3 million ($0.84 per share), up $11.7 million ($0.03 per share) from 2013.
Financial Position
- Cash, cash equivalents and gold bullion (at market value) was $321.0 million as at December 31, 2014, excluding the discontinued operations ($12 million), compared with $384.6 million as at December 31, 2013. The variance was mainly due to capital expenditures on property, plant and equipment and exploration and evaluation assets ($376.7 million) and dividends to non-controlling interests and interest paid ($26.8 million), partially offset by cash generated from operating activities ($312.2 million), proceeds on sale and leaseback arrangements ($31.5 million) and net repayments from related parties ($14.7 million). Cash held by the discontinued operations was $12.0 million.
Production and Costs
Gold Operations
- Attributable gold production, inclusive of joint venture operations, grew in each consecutive quarter throughout the year. In the fourth quarter we produced 241,000 ounces, up 24% from the same quarter 2013 and 7% from the third quarter 2014, mainly due to higher grades at Rosebel and Essakane. For the full year, attributable gold production was 844,000 ounces, up 9,000 ounces from 2013. The increase year-over-year reflects 33% growth in production at Essakane (82,000 ounces) due to higher grades and increased throughput with the mill expansion, and the ramp-up of production at Westwood (7,000 ounces). Partially offsetting were lower ounces at Mouska as the operation came to a close (51,000 ounces), lower production at Rosebel due to lower grades (11,000 ounces) and the winding down of the joint venture operations. Excluding the pre-commercial production from Westwood prior to July 1, 2014 (10,000 ounces in 2014 and 73,000 ounces in 2013), attributable commercial production was 834,000 ounces, up 72,000 ounces from the prior year.
- Attributable gold sales, inclusive of joint venture operations, for the fourth quarter 2014, were up 61,000 ounces or 35% from the same prior year period, mainly due to the recognition of Westwood sales, increased production at Essakane and Rosebel, partially offset by the closure of Mouska in 2014 and the winding down of production from the joint venture operations. For 2014, attributable gold sales, inclusive of joint ventures, was 835,000 ounces compared to attributable commercial gold production of 834,000 ounces. The variance of 1,000 ounces was due to a decrease in gold inventory at Rosebel (7,000 ounces), the depletion of remaining gold doré at Mouska (4,000 ounces) and timing of sales at Sadiola (1,000 ounces), partially offset by the timing of sales at Essakane (6,000 ounces) and Westwood (5,000 ounces).
- Total cash costs1, 4 - gold mines3 – for the fourth quarter 2014 were $788 per ounce, down $63 an ounce from the third quarter 2014. A major contributor to this improvement was the 18% decline in cash costs per ounce at Rosebel, reflecting the benefits from initiatives to improve operating efficiency and grades. Total cash costs for 2014 were $848 per ounce, up 6% from 2013. The increase was mainly due to the higher proportions of hard rock processed at Rosebel and Essakane, partially offset by the benefits from the ongoing cost reduction initiatives.
- All-in sustaining costs1, 2 - gold mines3 – declined for the fourth consecutive quarter, reflecting lower sustaining capital. At $1,021 per ounce sold in the fourth quarter, all-in sustaining costs fell $94 per ounce from the third quarter and $209 per ounce, or 17%, from the fourth quarter 2013. For the full year 2014, all-in sustaining costs were down 10% to $1,101 per ounce sold from 2013, reflecting the significant reduction in sustaining capital expenditures at Rosebel and Essakane.
Commitment to Zero Harm Continues
- As safety is a critical performance metric at IAMGOLD, we deeply regretted having to report the death of an employee at Rosebel in May 2014, in an area of the operation being prepared for mining later in the year.
The frequency of all types of serious injuries (measured as DART rate5), an important health and safety measure, was 0.66 in 2014, a 35% improvement from 1.01 in 2013.
RESERVES AND RESOURCES
(Additional detail behind the gold price assumptions used to determine reserves and resources can be found in the Reserves and Resources section of the MD&A)
Effective at December 31, 2014, we reduced our gold price per ounce assumption for estimating mineral reserves by $100 as compared to 2013 to $1,300 in line with current industry trends and prudent business practices. This, along with other factors in the estimation process, has contributed to a decrease in total proven and probable mineral reserves.
- Total attributable proven and probable gold reserves decreased by 15% or 1.5 million ounces (net of depletion) to 8.6 million ounces of gold at the end of 2014, mainly due to general mine depletion not compensated by the addition of new reserves at Rosebel, Essakane and Westwood (0.8 million ounces), economic and geotechnical parameters at Rosebel (0.7 million ounces), and the use of a lower gold price per ounce assumption to estimate reserves at owner-operated sites (0.4 million ounces). This was partially offset by positive economic parameters at Sadiola (0.3 million ounces) and a transfer of resources at Westwood (0.1 million ounces). The weighted average gold price assumption used to determine mineral reserves as at December 31, 2014 was $1,263 per ounce compared to $1,357 per ounce as at December 31, 2013.
- Total attributable measured and indicated gold resources (inclusive of reserves) decreased by 9% or 2.0 million ounces to 21.4 million ounces of gold at the end of 2014, mainly due to the influence of economic parameters and depletion at Rosebel (1.6 million ounces) and Essakane (0.5 million ounces), partially offset by the addition of resources from the Boto project (0.1 million ounces) and Côté Gold project (0.1 million ounces).
2015 OUTLOOK
| IAMGOLD Full Year Guidance | 2015 |
| Rosebel (000s oz) Essakane (000s oz) Westwood (000s oz) | 290 - 300 |
| 360 - 370 | |
| 110 - 130 | |
| Total owner-operator production (000s oz) Joint ventures (000s oz) | 760 - 800 |
| 60 | |
| Total attributable production (000s oz) | 820 - 860 |
| Total cash costs1 – owner-operator ($/oz) Total cash costs – gold mines2 ($/oz) | $825 - $865 |
| $850 - $900 |
| All-in sustaining costs1 – owner-operator ($/oz) All-in sustaining costs – gold mines ($/oz) | $1,050 – $1,150 | |
| $1,050 – $1,150 | ||
| $1,075 – $1,175 |
1 This is a non-GAAP measure. Refer to the non-GAAP performance measures section of the MD&A.
2 Gold mines, as used with total cash costs and all-in sustaining costs, consist of Rosebel, Essakane, Westwood, Sadiola and Yatela on an attributable basis.
Our 2015 guidance is based on the following assumptions:
- Average realized gold price of $1,250 per ounce.
- Canadian $/U.S.$ exchange rate of 1.15.
- U.S.$/€ exchange rate of 1.20.
- Average crude oil price of $73 per barrel, reflecting a weighted average of multiple fuel contracts ranging between $75 and $95 per barrel for 77% of our anticipated fuel purchases and the consensus forecasted price for WTI, for which we could purchase the unhedged portion of our anticipated fuel purchases on the open market.
GOLD PRODUCTION AND COST GUIDANCE
In 2015, we expect to produce between 820,000 and 860,000 ounces of gold. We expect a ramp-up in production at Westwood in its first full year of commercial production. There will be some variation from quarter to quarter, with the first and final quarters the lightest due to the sequencing of underground development activity. Building on the 33% increase in production that we had at Essakane in 2014, this operation is expected to have four strong quarters of production as the operation continues to benefit from higher grades and the previous mill expansion to accommodate a higher proportion of hard rock processing. At Rosebel, we continue to focus on improving grades and increasing productivity. The joint ventures are expected to produce 60,000 ounces.
In 2014, we made significant progress in reducing our all-in sustaining costs throughout the year, particularly given the increased costs associated with the higher consumption of power and reagents required to process an increasing proportion of hard rock at Rosebel and Essakane. Building on this momentum, we have reduced our all-in sustaining cost guidance by $75 an ounce from what we guided in 2014 to a range of $1,075 to $1,175 an ounce. This reflects the positive impact from the reduction in the oil price and a stronger US dollar. It should be noted that depending upon the terms of contractual supply agreements for oil with select host countries, we may experience a lag in recognizing the effect of a change in oil prices as compared to spot oil prices. This is due to the timing of pricing reviews over which we have no control.
INCOME TAXES
We expect to pay cash taxes in the range of $17.0 million to $22.0 million for the twelve months ending December 31, 2015. In addition, adjustments to deferred tax assets and or liabilities may also be recorded during this period.
DEPRECIATION
Depreciation expense, excluding Niobec, is expected to increase by approximately 40% in 2015 from 2014 as a result of a full year of commercial production at Westwood, higher amortization of capitalized stripping costs at Rosebel, lower reserves at Essakane and Rosebel, and expected timing of capital additions. Depreciation expense in 2015 is expected to be within the range of $285 to $295 million.
CAPITAL EXPENDITURES OUTLOOK1
| Development/ ($ millions) Sustaining Expansion (Non-sustaining) | Total | |
|---|---|---|
| Gold segments Rosebel $ 70 $ 10 Essakane 55 5 Westwood 30 50 | ||
| $ 80 | ||
| 60 | ||
| 80 | ||
| 155 65 Côté Gold - 5 | 220 | |
| 5 | ||
| Total owner-operator 155 70 Joint venture - Sadiola 5 - | 225 | |
| 5 | ||
| TOTAL (±10%) $ 160 $ 70 | $ 230 |
1 Capitalized borrowing costs are not included.
Total Cash Costs1,2 All-in Sustaining Costs1 Gold Production (000s oz) ($ per gold ounce produced) ($ per gold ounce sold)
| Three months ended December 31 | 2014 | 2013 | 2014 | 2013 | 2014 |
| Continuing operations | |||||
| Owner-operator Rosebel (95%) Essakane (90%) Doyon division (100%) | 94 89 35 | 70 59 15 | $ 6 78 828 845 | $ 6 74 822 813 | $ 9 16 955 1,119 |
| 218 | 144 | 766 | 749 | 1,001 | |
| Joint ventures Sadiola (41%) Yatela (40%) | 20 3 | 24 7 | 931 1,532 | 1,181 1,223 | 1,100 1,954 |
| 23 | 31 | 995 | 1,191 | 1,199 | |
| Total commercial operations | 241 | 175 | 788 | 828 | 1,021 |
| Doyon division (100%) | - | 20 | - | - | - |
| 241 | 195 | 788 | 828 | 1,021 | |
| Cash costs, excluding royalties Royalties | 738 50 | 770 58 | |||
| Total cash costs3 | $ 7 88 | $ 8 28 |
2013
$ 1,104 1,242
1,198
1,351 1,429 1,369
1,230 - 1,230
All-in sustaining costs3,4 - gold mines5 1,021 1,230
Including discontiued operation
Niobium contribution6 (83) (117) All-in sustaining costs - total7 $ 938 $ 1,113
1 This is a non-GAAP measure. Refer to the non-GAAP performance measures section of the MD&A.
2 The total cash costs computation does not include Westwood pre-commercial production for the quarter ended December 31, 2013 of 20,000 ounces.
3 By-product credits are included in the calculation of this measure; refer to the non-GAAP performance measures section of the MD&A.
4 In the third quarer 2014 we began including the income from our Diavik royalty as an offset to operating costs in the calculation of this measure. Previous periods have been revised for comparability 5 Gold mines, as used with total cash costs and all-in sustaining costs, consist of Rosebel, Essakane, Westwood (commercial production), Mouska, Sadiola and Yatela on an attributable basis.
6 Niobium contribution consists of Niobec mine’s operating margin and sustaining capital on a per gold ounce sold basis.
7 Total, as used with all-in sustaining costs, includes the impact of niobium contribution which is classified as discontinued operations, defined as the Niobec operating margin and sustaining capital, on a per gold ounce sold basis. Refer to the all-in sustaining costs table in the non-GAAP performance measures section of the MD&A.
BUTLE GOLD PRODUCTION AND ALL-IN SUSTAINING AND TOTAL CASH COSTS
| Total Cash Costs1,2 All-in Sustaining Costs1 Gold Production (000s oz) ($ per gold ounce produced) ($ per gold ounce sold) | ||||||
|---|---|---|---|---|---|---|
| Years ended December 31 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 $ 1 ,063 1,177 889 1,162 1,476 1,789 1,551 1,222 - 1,222 |
| Continuing operations Owner-operator Rosebel (95%) Essakane (90%) Doyon division (100%) | 325 332 82 | 336 250 63 | $ 804 852 768 | $ 7 18 753 832 | $ 1,045 1,060 955 | |
| 739 | 649 | 822 | 743 | 1,090 | ||
| Joint ventures Sadiola (41%) Yatela (40%) | 84 11 | 86 27 | 985 1,590 | 1,101 1,243 | 1,083 1,929 | |
| 95 | 113 | 1,055 | 1,136 | 1,182 | ||
| Total commercial operations | 834 | 762 | 848 | 801 | 1,101 | |
| Doyon division (100%) | 10 | 73 | - | - | - | |
| 844 | 835 | 848 | 801 | 1,101 | ||
| Cash costs1, excluding royalties Royalties | 790 58 | 729 72 | ||||
| Total cash costs 3 | $ 848 | $ 8 01 | ||||
| All-in sustaining costs 3,4 - gold mines5 | 1,101 | 1,222 (79) $ 1 ,143 | ||||
| Including discontinued operations Niobium contribution6 | (109) | |||||
| All-in sustaining costs - total7 | $ 9 92 |
1 This is a non-GAAP measure. Refer to the non-GAAP performance measures section of the MD&A.
2 The total cash costs computation does not include Westwood pre-commercial production for the years ended December 31, 2014 and 2013 of 10.000 ounces and 73,000 ounces respectively.
3 By-product credits are included in the calculation of this measure; refer to the non-GAAP performance measures section of the MD&A.
4 In the third quarter 2014 we began including the income from our Diavik royalty as an offset to operating costs in the calculation of this measure. Previous periods have been revised for comparability 5 Gold mines, as used with total cash costs and all-in sustaining costs, consist of Rosebel, Essakane, Westwood (commercial production), Mouska, Sadiola and Yatela on an attributable basis.
6 Niobium contribution consists of Niobec mine’s operating margin and sustaining capital on a per gold ounce sold basis.
7 Total, as used with all-in sustaining costs, includes the impact of niobium contribution which is classified as discontinued operations, defined as the Niobec operating margin and sustaining capital, on a per gold ounce sold basis. Refer to the all-in sustaining costs table in the non-GAAP performance measures section of the MD&A.
OPERATIONS ANALYSIS BY MINE SITE
(Refer to the MD&A for further details and analyses about our operations.)
WESTWOOD MINE – CANADA (IAMGOLD Interest – 100%)
| Three months ended December 31, Years ended December 31, | ||||
|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 233 326 7.45 94 73 66 - - - | |
| Westwood operating statistics Ore mined (000s t) Ore milled (000s t) Head grade (g/t) Recovery (%) Pre-commercial gold production - 100% (000s oz) Pre-commercial gold sales - 100% (000s oz) Commercial gold production - 100% (000s oz) Commercial gold sales - 100% (000s oz) | 132 140 8.12 96 - - 35 31 | 69 78 8.47 95 20 20 - - | 327 328 7.98 95 10 11 70 65 | |
| Westwood performance measures Average realized gold price1 ($/oz) | $ 1,206 | - | $ 1,237 | |
| All-in sustaining costs 1 ($/oz) | $ 1,119 | - | $ 1,031 | - |
| Cash costs1 excluding royalties ($/oz) Royalties ($/oz) Total cash costs 1 ($/oz) | $ 845 $ - $ 845 | - - - | $ 822 $ - $ 822 | - - - |
1 This is a non-GAAP measure. Refer to the non-GAAP performance measures section of the MD&A.
The Westwood mine commenced commercial production on July 1, 2014, producing 70,000 ounces of gold in the first six months, split evenly between the third and fourth quarters. During the precommercial stage, the operation produced 10,000 ounces of gold in 2014 and 73,000 ounces in the prior year. Westwood is our highest grade mine, with grades in the fourth quarter of 8.12 grams of gold per tonne.
Total cash costs of $845 an ounce in the fourth quarter and $822 an ounce for the year were in line with our estimated range of $750 to $850 per ounce for the first six months of commercial production. All-in sustaining costs per ounce reflect the impact of underground development work, and over time will trend lower as the operation ramps up to design capacity over the next four to five years.
For 2015, which will be Westwood’s first full year of commercial production, the operation is expected to produce between 110,000 to 130,000 ounces of gold. While the mill will operate continuously throughout the year, we expect some variation in production levels from quarter to quarter due to the sequencing of underground development which will offer flexibility to the mine over the ramp-up period. Our plan shows the first and fourth quarters to be the lightest, with the second and third quarters accounting for approximately 60% of the year’s production.
ROSEBEL MINE – SURINAME (IAMGOLD interest – 95%)
| Three months ended December 31, Years ended December 31, | ||||
|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 13,508 47,818 61,326 3.5 12,349 0.94 95 354 336 342 | |
| Mine operating statistics Ore mined (000s t) Waste mined (000s t) Total material mined (000s t) Strip ratio1 Ore milled (000s t) Head grade (g/t) Recovery (%) Gold production - 100% (000s oz) Attributable gold production - 95% (000s oz) Gold sales - 100% (000s oz) | 4,112 11,896 16,008 2.9 3,341 0.96 96 99 94 96 | 4,163 12,560 16,723 3.0 3,125 0.78 95 74 70 80 | 13,851 49,215 63,066 3.6 13,050 0.86 95 342 325 349 | |
| Performance measures Average realized gold price2 ($/oz) | $ 1,200 | $ 1,271 | $ 1,256 | $ 1,400 |
| All-in sustaining costs2 ($/oz) | $ 9 16 | $ 1,104 | $ 1,045 | $ 1,063 |
| Cash costs2 excluding royalties ($/oz) Royalties ($/oz) Total cash costs2 ($/oz) | $ 6 13 $ 65 $ 6 78 | $ 6 12 $ 62 $ 6 74 | $ 732 $ 7 2 $ 804 | $ 639 $ 7 9 $ 718 |
| 1 |
2 This is a non-GAAP measure. Refer to the non-GAAP performance measures section of the MD&A.
In 2014, Rosebel produced 325,000 attributable ounces of gold. The lower production compared to the previous year was the result of lower grades in the first half of 2014, partially offset by higher throughput. To mitigate the impact of an increasing proportion of hard rock on throughput, we have been stabilizing the mill feed blend prior to it reaching the primary crusher. The reduced variation in the rock hardness contributed to a 6% increase in mill throughput in 2014 from the previous year.
A more consistent ore feed blend has also helped to reduce costs as it provides for more stability in the milling circuit, which in turn reduces the consumption of power and reagents. We’re also having success with initiatives to improve grades, such as moving to reverse circulation drilling for in-pit grade control. A 14% increase in the grade in the third quarter was followed by another 14% increase in the fourth quarter. In the third and fourth quarters of the year, attributable production increased by 22% and 13%, respectively, reflecting higher throughput and grades in the third quarter and higher grades in the fourth.
Comparing the fourth quarter 2014 to the same quarter in 2013, attributable gold production of 94,000 ounces was up 34%, the result of better grades and higher throughput. The higher production, together with cost efficiencies resulted in cash costs per ounce in the fourth quarter that were in line with the same quarter in 2013.
Cash costs improved significantly in the second half of the year, reflecting both higher production and the initial benefits from the many operational enhancements implemented throughout 2014. Also helping to lower cash costs in the fourth quarter was the effect of lower oil prices on power costs. Total cash costs of $678 per ounce in the fourth quarter were down from $828 an ounce in the third quarter and from $942 an ounce in the second quarter. All-in sustaining costs of $916 an ounce in the fourth quarter were 17% lower than the same quarter in 2013 mainly due to lower sustaining capital and higher sales volume.