The downward revision of production guidance at Westwood will dampen the share price.
Unstable ground conditions are proving to be a major hindrance for Iamgold at the Westwood gold mine, in the Doyon-Bousquet – LaRonde mining camp in Quebec.
Seismic issues – mostly mining-related – at underground mines in the region are nothing new and can require extensive monitoring and management.
But, after a couple sizeable rock bursts, Iamgold is now having to peddle back on projections and reconsider how much gold it can produce at the mine.
Back in January four Iamgold workers were stuck, briefly, underground after a rock fall blocked access. Then, in a similar incident in May, nine workers were again blocked by a rock fall.
The latest incident forced a hefty production cut with guidance falling from 110,000-130,000 ounces gold (oz) to 60,000 to 75,000oz in 2015 at Westwood. Iamgold reported the revised outlook for 2015 last week, noting mining could not go ahead on one level, and that the extent of the issue was more serious than management previously thought.
The production downgrade and the recurring rock-burst issues at the mine also cast a shadow over longer term production plans at the mine. Iamgold had outlined plans to grow production at the mine to between 150,000 to 200,000oz/year by 2019. It’s part of a production profile that underscores the importance of Westwood to Iamgold as a mine with higher output, low projected costs and a long minelife.
Just how that longer term outlook may now be affected is not clear. In particular, the question is whether Iamgold will have to revise mineplans farther out on the horizon to address the difficulties it’s facing in mining the fairly high grade but narrow deposit.
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