MELBOURNE – Canadian gold miner Iamgold is committed to Mali despite the conflict in the African nation and poor production performance of its mining joint ventures there, its chief executive said.
While Mali, where French forces have been bombing sites controlled by Islamist insurgents, may appear unattractive to investors, it is one location in Africa where the company is eager to stay as the mines should be highly profitable, CEO Steve Letwin told Reuters in an interview on Thursday.
“I just think as an investment it is a good investment if we can all collectively get our heads around it and the Malians can get some semblance of stability,” Letwin said. The situation in northern Mali has not disrupted operations at Iamgold’s joint ventures — the Sadiola and Yatela mines in the south.
But its partner in the ventures, AngloGold Ashanti, is considering getting out as part of a broader revamp of its operations. Letwin said Iamgold is not big enough to take on AngloGold’s share.
“We have people who are interested, but they need to talk to Anglo, and I’m sure they have,” he said, declining to name who was interested. “I want to make it work, because it makes sense. I want to work with the Malians and whomever partner we have.”
More broadly, the company wants to shift its asset base to locations with cheap power costs and reliable infrastructure, like Canada, aiming to produce 36% of its gold in North America by 2017, up from 3% in 2010.
Iamgold has been punished by investors who have chopped the company’s market value nearly in half over the past three months to $3.2-billion after it cut its 2013 gold output forecast and warned that cash costs were going to jump by about a third.
It warned in January that cash costs would rise to between $850/oz and $925/oz this year, against gold prices currently around $1 673. “These costs are our clear and present danger across the board,” Letwin said.
Lower power costs are crucial as miners need more electricity for drilling and processing ore when the rock is harder and there is less gold per ton of rock.
In Suriname, where the company’s Rosebel mine is the biggest single power consumer, electricity costs have doubled over the past four years, while the company has faced harder rock.
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