IAMGOLD's Côté gold mine in Ontario will now cost between US$1.2 billion and US$1.3 billion to be completed.
Cost increases are due to misjudgements in earthworks, processing plant, infrastructure, and other factors. IAMGOLD estimates that scope gaps in earthworks, lower than expected productivity, and scope gaps in dams and dewatering account for approximately 25% of the increase.
The company also estimates that scope gaps relating to the processing plant, underestimation of winter concrete and steel costs, and impacts on underground utility construction account for a further 25% of the cost increase.
Approximately 40% of the cost increase stems from owner's costs, the cost of the engineering, procurement, and construction, and operations readiness.
The company previously estimated that completing the mine would cost between US$710 million to US$760 million to complete. IAMGOLD spent C$82 million in the March quarter this year.
The current cost estimates include approximately US$100 million to US$150 million in contingencies. IAMGOLD is withdrawing Côté cost guidance for 2022 and 2023.
IAMGOLD has also moved back the estimated start date of production from the second half of 2023 to the end of 2023, a day of four to five months. Delays stem from lower contractor productivity rates, poor weather, Covid absenteeism in January and February, and the impact of a fire at the batch plant in February.
A replacement batch plant has been operational since mid-April.
The company warns that further disruption, whether from the Covid-19 pandemic, the Ukraine war, poor weather, potential labour disruptions and the tight labour market could affect future cost projections as well as project timelines.
IAMGOLD entered into a lease agreement with Caterpillar in April to lease US$125 million of mobile equipment. The equipment will be delivered over the course of 2022 and 2023. Sumitomo Metal Mining entered into a guarantee of 30% for the contract.
The company has appointed a new executive project director for the Côté gold mine, as well as the appointment of a new interim president and CEO.
