Record production at Sadiola Hill

On the strength of record production at the Sadiola Hill gold mine in western Mali, Iamgold (IMG-T) posted a profit of US$4.7 million (US6 per share) on revenue of US$17.6 million for the three months ended June 30.

Iamgold, which has a 38% interest in the Sadiola mine, operated by Anglogold (AU-N), made US$2.8 million on revenue of US$14.9 million in the corresponding period in 1999. For the first six months of 2000, Iamgold ran a profit of US$7.8 million on revenue of US$34.1 million. The comparable 1999 figures were US$6.2 million in earnings and US$29 million in revenue.

Sadiola poured 163,414 oz. gold during the quarter and has produced 302,811 oz. so far this year. Cash production costs at Sadiola averaged US$99 per oz. in the 3-month period and US$102 for the first half-year. In 1999, the mine produced 542,955 oz. at an average US$102 per oz.

Anglogold and Iamgold have equal interests in the mine. The Malian government owns 18% and International Finance Corp., a World Bank agency, owns 6%.

About 45% of the mine’s production is hedged, largely through forward sales at an average of US$298 per oz. Call options sold by the project are currently out of the money, with average strike prices at around US$302.

Development at the Yatela gold deposit, about 25 km north of Sadiola, started in April. Anglogold and Iamgold, which each own 40% of Yatela, intend to start heap leaching late in the year and to have the open pit in commercial production by mid-2001.

More drilling is planned on the deep sulphide mineralization at Sadiola, and a US$1-million budget has been presented to the directors of the Sadiola mine. If the project is approved, the partners will do about 8,000 metres of drilling in 16 holes to assess the economics of underground mining or deepening the existing pit.

More mineralization has also been blocked out on the southern and eastern sides of the Sadiola pit, and it is likely to be brought into the mine’s resource base by the end of the year.