Signing of Ecuador new mining law means even more good news for IAMGOLD

IAMGOLD's CEO Joseph Conway says the company is ready to resume activity at its Quimsacocha project in Ecuador as a new mining law was signed by Ecuador's President Correa.

RENO, NV - 

As IAMGOLD CEO Joseph Conway delivered a conference call presentation Wednesday including his company's record earnings, Ecuador's President Rafael Correa signed the mining law reform that could help IAMGOLD and other companies set the stage for gold, copper and silver production.

IAMGOLD says it is ready to resume activity at the Quimsacocha gold, silver and copper project. Once an authorization is received from the Ecuadorian government, a feasibility study and an environmental assessment are expected within 12 months.

Over a 7.5-year mine life, Quimsacocha is expected to produce 202,000 ounces of gold, one million ounces of silver and 9.3 million pounds of copper annually. IAMGOLD hopes to begin first production in 2012, the same time Correa said Ecuador will begin mineral exports.

IAMGOLD, Kinross Gold, and Corriente Resources have Ecuador's three largest mining projects.  The new Mining Law signed Wednesday stresses responsible mining and provides for taxation including a royalty rate of not less than 5% on gold production.

Meanwhile, Conway told analysts IAMGOLD achieved record net earnings of $64.9 million or 18-cents per share during the third quarter. Another record was achieved by the Rosebel mine in Suriname which recorded record production for the quarter of 106,000 gold ounces, a 29% increase over 2008.

Because of the Rosebel production and the extended life of the Doyon gold mine in Quebec, the company increased its gold production guidance to between 940,000 and 950,000 ounces for this year compared to the second-quarter update of between 910,000 and 920,000 ounces.  Despite the Rosebel record production, IAMGOLD's production during the third quarter actually dropped by 9,000 ounces or 4% to 244,000 ounces. For the first nine months of this year, overall gold output dropped from 742,000 ounces in 2008 to 705,000 thousand ounces. Lower gold production was reported at Mupane and Sadiola due to lower gold grades.

Regarding the Sadiola project, IAMGOLD also has the approval of the Societe D'Explotation Des Mines D'Or De Sadiola to proceed with a $9 million deep sulphide feasibility study of the project. If the results are positive, construction would begin in 2011. IAMGOLD has also reached a tentative agreement with the IFC to purchase its 6% interest in the project for $16 million. AngloGold Ashanti and the Republic of Mali may also elect to buy their proportionate share of the IRC interest. The IFC's 6% share represents 1,000 ounces of gold.

Meanwhile, niobium production declined 15% to 982,000 kilograms during the third quarter of this year as a result of mechanical problems in the converter at the Niobec Niobium Mine in Quebec this year to 982,000 kilograms as a result of mechanical problems in the converter leading to lower conversion of niobium oxide concentrate to ferroniobium at the Niobec Niobium Mine in Quebec.  For the first nine months of this year production decline 14% to 2.87 million kilograms.

Niobium is used as an alloying agent, predominantly in the steel production industry.

FINANCIALS

IAMGOLD reported net earnings of $64.9 million or 18-cents per share during the third quarter, a 245% increase over the $18.8 million and 6-cents/sh reported during the same quarter a year ago.

For the first nine months of this year, IAMGOLD reported a net income of $170.8 million or 46-cents per share, an 87% increase over the $86.5 million or 29-cents/sh reported during the first nine months of 2008. Income during the third-quarter 2009 included higher forex gains primarily from Canadian dollars, higher derivative gain and other items.

Disclaimer

MINEWEB is an interactive publication, with rolling deadlines through each day, commencing in the Sydney morning,  and concluding, 24 hours later,  in the Vancouver evening.  If you believe your side of an issue deserves inclusion, but has failed to meet one of our deadlines, you are invited to notify the Editor in Chief in Johannesburg, and we will include you in our editing and expanding on our stories. Email him at alechogg@gmail.com

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