Iamgold reported in early November 2009 that the board of directors of SEMOS, the operating company that owns the Sadiola gold mine in Mali, has approved a $9-million feasibility study of open-pit mining of deep sulphide ores at the property. SEMOS is owned 38% by Iamgold, 38% by operating partner AngloGold Ashanti, 18% by the Mali government, and 6% by the International Finance Corp. (IFC). Iamgold took the lead in re-engineering and updating the pre-feasibility study of deep sulphide ore mining.

Iamgold also announced that it had reached a tentative agreement to purchase IFC’s 6% interest in Sadiola for $12 million, plus additional payments in 2010, 2011 and 2012, if gold prices average $900/oz for the year (payments of $500,000 per year) or $1,000/oz (payments of $1 million per year) in each of those years. The remaining partners have the opportunity to take up their proportionate share of the IFC interest. Iamgold anticipates that the transaction will be completed before the end of 2009.

The current Sadiola life-of-mine plan estimates production of 350,000 oz/y of gold in 2009, declining over time until production ends in 2015. Improving on that scenario, Iamgold’s pre-feasibility study projects an increase in production to between 400,000 and 500,000 oz/y from 2013 through 2018, with mine life ending in 2019, increasing total gold production from Sadiola by about 2.2 million oz. Mining would continue on an open-pit basis, using larger mining equipment.

The pre-feasibility study assumes construction of a new crushing, grinding and carbon-in-leach (CIL) plant to treat Sadiola’s deep sulphide ores and existing hard ore stockpiles. The existing mill would continue to treat soft oxide ores or would treat additional sulphide ore once oxide ore is exhausted. The total nominal treatment capacity of the proposed operation would be 8.5 million mt/y of combined feeds versus 4.5 million mt/y for the current plant, primarily treating oxide ores.

Assuming positive results from the 11-month feasibility study and a positive investment decision, construction would begin in late 2010, pre-stripping would begin in 2011 with the new fleet, and the new plant would start operations in 2012.

The pre-feasibility study demonstrates an after-tax project internal rate of return of 11% at a gold price of $800/oz and a breakeven gold price of $625/oz based on an initial investment of $400 million for the treatment plant, mining fleet, waste pre-stripping, and various infrastructure elements. Average cash costs are projected to be $490/oz on a life-of-mine basis, including royalties.

The expanded mine and plant capacity would also improve the profitability of any new resources that may be discovered as a result of a current $14-million exploration program.