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Soaring costs push back IAMGOLD project completion date to 2024

IAMGOLD reported strong progress this week in its Côté Gold project, with 92 per cent of construction completed and the overall project 90.6 per cent complete. (File) IAMGOLD reported strong progress this week in its Côté Gold project, with 92 per cent of construction completed and the overall project 90.6 per cent complete. (File)
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Surging global inflation is among the factors causing major problems for IAMGOLD's plans to develop a massive gold find about an hour south of Timmins.

The company is building the large-scale Côté Gold project on the property, which it acquired in 2012.

Construction began in 2020 and was expected to take three years and cost the company around $900 million. The lifespan of the mine is expected to be 16-18 years and produce 495,000 ounces of gold a year in its first six years. Average production over the full 18 years is estimated at 365,000 ounces a year, starting in the fourth quarter of 2023.

However, rising costs and other challenges recently pushed back the opening to early 2024. IAMGOLD's share of the remaining costs to complete the project have soared from $750 million to an estimated $1.3 billion.

Further adding to the challenges is turnover of company executives. Chief financial officer Daniella Dimitrov left her position at the company Sept. 16, and is being replaced by the company's current vice-president of finance, Maarten Theunissen.

Dimitrov was named interim CEO when Gordon Stothart stepped down from the post in January. However, a major investor in the company, Resource Capital Fund VII, issued an open letter in February criticizing how the company was being run and calling for major changes to its board of directors.

"We have lost all faith in the current board during the past two weeks of our engagement," the letter said.

"Our attempts to reach a cooperative framework have been met with a pattern of disingenuous interactions. We no longer trust the current board to make any material decisions on IAMGOLD's future leadership that reflect the best interests of its shareholders."

The letter was also critical of the appointment of Dimitrov as interim CEO.

"The board does not have the credibility to attract and retain an appropriate turnaround CEO, nor to manage a strategic review and any consequential asset sales," the letter said.

"The most recent (interim) CEO appointment of Ms. Dimitrov is case in point and follows a predecessor that was another internal appointment who lasted less than two years with scant achievement."

IAMGOLD agreed to appoint three new members to the board -- Maryse Bélanger, David Smith and Ian Ashby – with Bélanger replacing Dimitrov as interim CEO in May.

Bélanger announced Dimitrov's departure Sept. 16 and announced Theunissen as the interim replacement.

"We would like to thank Daniella for her commitment and dedication to IAMGOLD and wish her the very best in the future," Bélanger said in the announcement.

"Maarten is an extremely capable and experienced finance professional and I am looking forward to working directly with him as we continue to advance the financing plan for Côté."

Last month, Bélanger said the revised cost estimates gave the company a much clearer picture on what is required to complete the project.

“Coté Gold is a project that is being advanced in an environment with significant headwinds, including COVID-19, inflation and other global events – and their impacts on global supply chains, labour availability and the associated costs of doing business,” she said in a statement.

"Given the importance of Coté Gold to achieve our goal of becoming a leading high-margin gold producer, we are actively pursuing various alternatives to increase liquidity to complete construction and deliver Coté on the updated schedule."

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