Iamgold’s Niobec to see US$47M expansion

Iamgold’s (IMG-T, IAG-N) board has given the green light to a major expansion of the company’s wholly owned Niobec underground niobium mine, located just north of Chicoutimi in Quebec’s Lac St. Jean region.

The company will spend US$47 million to expand Niobec’s mill capacity by 24% and build a paste backfill plant.

Right now, the Niobec mine has an average hoisting capacity of 260 tonnes per hour but a mill throughput capacity of only 210 tonnes per hour. The planned mill expansion will bring its hourly capacity up to 260 tonnes.

Mill expansion is underway and should be finished in the third quarter of 2010, with about US$13.5 million to be spent this year, and US$14.5 million in 2010.

Iamgold reckons the higher milling rate should add about US$20 million per year of cash flow versus the non-expanded case, based on current niobium prices of about US$35 per kg.

Iamgold says building the paste plant boosts proven and probable reserves by 36% and inferred resources by 72%.

This is because mining at Niobec has traditionally been carried out using longhole open-stoping methods without backfill, which leaves behind significant ore grade rock in the form of vertical and horizontal pillars.

Using paste backfill will allow miners to extract virtually the entire orebody since ore-grade pillars will no longer be required.

Construction of the paste backfill plant is also underway and due for completion in the second quarter of next year, with US$9.9 million to be spent this year and US$9 million the next.

At the end of 2008, taking into account the use of paste backfilling methods, reserves at Niobec stood at 23.5 million tonnes grading 0.59 Nb2O5, or 137,800 contained tonnes Nb2O5. This is enough for another 18 years of mine life at current mining rates.

Another 52 million tonnes at similar grades lie in the measured, indicated and inferred resource categories.

Niobec is the only primary niobium mine in North America and one of only three major producers in the world. Producing 10% the world’s niobium supply, Niobec’s a distant third two large Brazilian operations.

Niobec began producing pyrochlore (niobium ore) concentrates in 1976 and, in 1994, added ferroniobium conversion using an aluminothermic process.

Iamgold picked up its 100% interest in Niobec through its 2006 acquisition of Montreal-based Cambior, which had boosted its stake in Niobec from 50% to 100% by buying its equal partner at the mine, Sequoia Minerals, in 2004.

Sequoia was a short-lived niobium vehicle spun off from Quebec-based asbestos miner Mazarin which, in turn, had its bought its half stake in Niobec from Teck in 2001.

Expansion programs at Niobec in 2005 and 2006 increased the mine’s capacity to its current daily level of 4,800 tonnes. In 2007 and 2008, Iamgold installed a new hoist and headframe, and deepened the shaft by almost 900 metres to 2,700 metres.