Iamgold (TSX: IMG; NYSE: IAG) is considering two mine plan scenarios at its Sumitomo Metal Mining (TYO: 5713) joint-ventured Côté gold project in northern Ontario, according to a feasibility study the company recently announced.
The base case open pit mine plan outlines a US$795 million after-tax net present value (NPV) at a 5% discount rate and a 15.2% after-tax internal rate of return (IRR). The second scenario, called the extended mine plan, raises the after-tax NPV to US$905 million at a 5% discount rate and the after-tax IRR to 15.4%.
The company’s current permit application only covers its base case scenario. The extended mine plan may require additional permits to expand the mine rock area and tailings management facility. It incorporates all the project’s reserves.
The base case mine plan includes 203 million proven and probable tonnes grading 0.98 gram gold per tonne for 6.39 million oz. gold. The extended plan includes an additional 30 million proven and probable tonnes at 0.93 gram gold for 893,000 oz. gold.
Inclusive of reserves, the project contains 355.4 million measured and indicated tonnes grading 0.87 gram gold for 9.97 million oz. gold, as well as 112.8 million inferred tonnes grading 0.67 gram gold for 2.43 million oz. gold.
The base case scenario produces an average 367,000 oz. gold per year over a 16-year mine life at a US$694 per oz. gold all-in sustaining cost for US$1.1 billion in initial capital.
The extended plan increases the mine life by two years. It raises production to 372,000 oz. gold per year and all-in sustaining costs to US$703 oz. gold per year. It requires a larger pit, but no extra infrastructure. It does not affect the initial capital cost.
Shares of Iamgold are currently trading at $4.82 with a 52-week range of $4.43 to $8.20. The company has a $2.2 billion market capitalization.
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