IAMGOLD ups credit facility to $350 million

Iamgold (IMG-T, IAG-N) more than doubled its existing credit facility to US$350 million and added a second US$50-million facility shortly after reporting record yearly earnings.

The improved credit facility, which is now unsecured, gives Iamgold access to 143% more capital than the previous US$140-million facility. The new facility, which gives the company access to another US$50 million through the issuance of letters of credit to support certain asset retirement obligations, is supported by Export Development Canada.

Along with its newfound credit, the company raised $31.5 million in early March by issuing 1.6 million flow-through shares at $20 per share to fund development studies on its Westwood Project in Quebec. The company plans to spend US$373 million on capital expenses and US$38 million on exploration this year.

Iamgold also recently announced its results for 2009, a year in which the company achieved record adjusted net earnings and significantly higher gold reserves.

A new geological model for the advanced-stage Essakane project in Burkina Faso added 1.1 million oz. to that site, which helped the company increased its total proven and probable reserves count by 2.1 million oz. or 17% to 14.5 million oz. Iamgold managed the increase despite depletion as well as a decrease in reserves of 1.1 million oz. at the company’s Camp Caiman project.

The company almost doubled its adjusted net earnings to US$212 million, or US60¢ per share, compared to US$107.5 million or US36¢ per share in 2008. The earnings included US$27 million from foreign exchange gains.

Unfortunately, non-cash impairment charges of US$98.1 million reduced Iamgold’s net earning to US$114.1 million. The impairment charges were largely related to the Camp Caiman project in French Guiana.

In mid-2009 French authorities released a draft mining framework that put Iamgold’s Camp Caiman project in a zone excluded from mining. The company is not confident the project will be able to go forward and so has recorded a non-cash impairment charge of US$88.8 million for the net carrying value of the project. The company has sued French Guyana for €275 million for damages incurred to date.

The company’s Quimsacocha Project in Ecuador also continues to be affected by government suspension as the country works out the details of its new Ecuadorian Mining Law. In November the detailed regulations of the law were passed and now Iamgold’s project needs only a confirmation of water permits and an authorization to resume mining activity to do so.

The company produced a total of 939,000 oz. gold at an average cash cost of US$461 per oz. in 2009, a US$2 increase over 2008. The increase was largely due to rising energy costs, lower gold production, lower grades and higher royalties due to the impact of a higher realized gold price. Iamgold operates seven mines on three continents.

Iamgold expects to begin production at its Essakane project by August. The mine should produce at a rate of 480,000 oz. annually for the first 14 months, after which time the apce will slow to 315,000 oz. gold per year for the rest of the mine’s life. Iamgold acquired the project when it took over Orezone Resources in early 2009 for US$238.1 million and has already spent US$245.5 million on developing the mine.

The company continues to move its Westwood project in Quebec towards production in early 2013, following a positive preliminary economic assessment at the end of last year. Over 70,000 metres of drilling is planned on the site for 2010.

As of Dec. 31 the company had US$300.1 million in cash, equivalents, and gold bullion.

Iamgold’s share price moved up 24¢ on the day to close at $13.76. The company’s 52-week share price range is between $8.94 and $21.95; it has 370.5 million shares outstanding.