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IAMGOLD Corporation (IAG)
Q4 2009 Earnings Call
February 17, 2010 11:00 AM ET
Peter C. Jones - Acting Chief Executive Officer, Director
Carol T. Banducci - Chief Financial Officer, Executive Vice President
Gordon Stothart - Chief Operating Officer, Executive Vice President
Paul Burchell - Dundee Securities Corporation
Heather Douglas - Thomas Weisel Partners
Steven Butler - Canaccord Adams
Sarah Hassan - ASA Limited
David Christie - Scotia Capital
Isudu Sanive - Equinox Partners
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Joining me this morning are Gordon Stothart, our Chief Operating Officer, Carol Banducci, our Chief Financial Officer and Mike Donnelly, Vice President of Exploration. They would be here to answer questions at the end when we have the Q&A session.
In terms of our highlights, the fourth quarter was a solid quarter in a very good year. Adjusted net earnings of $0.11 a share represent 152% increase over Q4 of last year. Excluding the impact related to changes in asset retirement obligations for certain closed properties and impairment of the carrying value of marketable securities, adjust net earnings for the quarter were $0.15 a share.
We've maintained a strong balance sheet and have over $420 million in available funds. The Sadiola deeps pre-feasibility study was approved by the Sadiola joint venture board in the fourth quarter and the feasibility study is now in progress. This is another illustration of the company's continued commitment to organic growth and maintains our focus on Sadiola as a long-term asset.
We definitely had a great year in terms of our stock performance. The rising gold price helped, but looking back at the full year, you can see that IAMGOLD out performed the gold index by nearly 150% delivering leading shareholder value compared to many of our peers.
Some of the ways that IAMGOLD consistently delivered results throughout 2009 included exceeding our original production guidance by 7% and achieving record production on Rosebel.
We acquired, integrated and advanced the Essakane project. Just 7 months after assuming control, we now think we would advance commercial production, which is now expected in August this year versus the end of 2010.
We completed the expansion of the Rosebel mill, increasing through put from 8 million tons a year to a nameplate 11 million tons a year, which was exceeded for most of the second half of the year.
We increased our growth pipeline through exploration success and announced the paste backfill and mill expansion at Niobec. And all this time, we continued our commitment to zero harm.
On both our gold and non-gold operations, we saw record margins in 2009. In the fourth quarter we produced 234,000 ounce of gold, bringing the year's production total to 939,000 ounces, inline with our most recent guidance and exceeding original guidance set in January 2009 by 7%. Production was down from 2008 due to the closure of the Sleeping Giant mine.
Our operating team worked to contain costs throughout the year with an average cash cost of $461 an ounce for 2009. Though fourth quarter cash costs of $488 an ounce are more in line with our forecast for this year.
The average realized gold price for 2009 was $960 an ounce contributing to a record margin of $499 an ounce. Operating results to our niobium operation in Quebec remained strong and we achieved fourth quarter production of 1.2 million kilograms of niobium.
This resulted in full year production of 4.1 million kilograms at a record operating margin of $20 a kilogram. The Q4 operating margin per kilogram was $4 lower than Q4 of 2008 primarily due to the stronger Canadian dollar. However, on a full year basis the operating margin increased to $20 a kilogram as a result of a favorable Canadian dollar and higher sales volume.
Turning to financial results, Q4 adjusted net earnings rose to $41 million or $0.11 a share after taking into account unusual items. Fourth quarter gold sales of 233,000 ounces at an average price of $1096 an ounce and strong niobium production drove revenues of $265.3 million in the quarter as compared to $209.6 million in 2008.
In 2009 full year adjusted net earnings of $212.2 million nearly doubled from $107.5 million in 2008. On an annual basis 2009 adjusted net earnings included a positive impact from foreign exchange gain due to a strengthening Canadian dollar and a gain on sale of gold bullion, partially offset by Doyon ended of mine asset retire retirement costs.
Annual operating cash flow from 2009 activities was $257 million, almost identical to 2008 though it was delivered from a higher margin on fewer ounces produced. Taking a look at our balance sheet you can see we're definitely positioned for growth and could easily accommodate our capital needs.
Cash and bullion of $300 million and an available credit facility of a $123 million, leaves us with a total of $423 million in available funds. The cash draw down during the fourth quarter was a result of capital expenditures primarily at Essakane and Westwood.
The graph on the right illustrates that even in a lower gold price environment, say except in a $100 gold price, we're certainly still well funded to develop our current growth pipeline. This allows us the financial flexibility to take advantage of opportunities such as the Essakane project, which would likely one of the best priced deals in 2009.