Iamgold weighs construction decision at Cote in Ontario

Iamgold‘s (TSX: IMG) 70%-owned Côté gold project in northern Ontario has received a key federal permitting approval, taking it one step closer to a construction decision.

The approval, under the Fisheries Act, is related to impacts on fish habitats and tailings management for the site, located 20 km southwest of Gogama.

Iamgold says it’s working toward a construction decision with Sumitomo Metal Mining, its 30% partner at Côté, and that the final decision would factor in the implementation of Covid-19 protocols and the risk of interruption.

If a positive decision is made in the next few months, the partners could begin construction in 2020, with work completed in 2023.

In the meantime, the company has completed advanced mine planning and additional resource and geotechnical studies; 60% of detailed project engineering, including the tailings facility; a preconstruction camp; all tree-clearing required to begin construction; and advanced development of construction protocols during the Covid-19 pandemic.

It’s also carried out detailed implementation studies on technology, including automated truck haulage and drilling.

“A key part of the future of Iamgold is our organic growth pipeline, starting with the Côté gold project in northern Ontario,” Gordon Stothart, Iamgold’s president and CEO, said in a news release. “The transformative impact of Cote Gold on Iamgold’s production profile and global cost structure, in addition to its long mine life in an attractive jurisdiction, establishes clear and compelling reasons for this project to proceed.”

“Our current financial position supports our proposed growth plans, with over $800 million in cash on hand, access to a currently undrawn $500 million committed revolving credit facility, and expected stronger operating cash flows from our current mining operations, including anticipated contributions from Saramacca at Rosebel and steady performance from Essakane and Westwood.”

A feasibility study for Cote released in 2018 shows the project could produce 367,000 oz. gold annually at average all-in sustaining costs (AISCs) of US$694 per oz. over a 16-year mine life. The initial capex is pegged at US$1.2 billion.

Iamgold expects it would be responsible for US$875-925 million.

Cote has an approved environmental assessment and closure plan in place, as well as Impact Benefits Agreements with First Nations partners.

At press time in Toronto, Iamgold was trading at $4.93 per share within a 52-week trading range of $2.00 and $5.56.

The company has 473 million common shares outstanding for a $2.3-billion market capitalization.

Commenting on the permitting news, BMO Capital Markets’ Jackie Przybylowski wrote: “This is a lot of progress on an unsanctioned project and is, in our view, an indication that Iamgold is preparing to announce a go-ahead construction decision. At this volatile time, we think a major growth project could be viewed as negative given investor preferences for cost discipline.”

— This article first appeared in the Canadian Mining Journal. The Northern Miner and the Canadian Mining Journal are part of Glacier Resource Innovation Group.