$117m write-down sinks miner Iamgold Tanzania
Posted Monday, November 9 2009 at 00:00
Canadian mid-tier gold producer Iamgold Tanzania has closed down its operations in the country after making a $117 million write-down of the value of its Buckreef project.
This is the second firm to terminate its mining activities in the country after the De Beers-owned Williamson Diamond Ltd shut shop in September 2008, citing financial losses.
The EastAfrican has been informed that Iamgold, which suspended its exploration activities in Tanzania earlier in the year as part of a strategic reorientation of its exploration focus, has returned the assets of Buckreef Joint Venture Agreements to the government pending the entry of another investor.
A senior government official in the Ministry of Energy and Minerals told this newspaper that the closure of Iamgold’s Tanzanian exploration activities is expected to be completed by the end of the year.
Peter Dalali Kafumu, the Commissioner of Minerals in the Ministry of Energy, said Iamgold informed the government in September this year that it was winding up its activities.
This was after realising that there were minimal prospects of gold at the formerly government-owned Buckreef project.
Joseph Conway, chief executive officer of Iamgold, has confirmed that since acquiring the Buckreef project, the firm has spent about $15 million and completed over 100,000 metres of drilling.
Mr Conway said that, regrettably, the work has not increased the resource base materially, and that preliminary metallurgical studies indicate only low to moderate recoveries from heap leaching.
“Consequently, capital costs to develop a mine will be much higher than first thought. This has resulted in an after-tax impairment charge of $98.9 million on the project. We have, therefore, decided to close our activities in Tanzania,” he said.
Dr Kafumu said the government has already conducted environmental impact assessments at Kitongo and Buckreef projects and was now waiting for Iamgold to surrender the prospecting licence.
“The government formed a committee to conduct environmental impact assessment before issuing a certificate of closing the business where Iamgold was operating,” he said.
The EastAfrican has been informed that Iamgold is also at an advanced stage of talks concerning the sale of the company’s interest in the Kitongo project, with another Canadian mining firm being tipped to buy the mine.
The Buckreef project, in which Iamgold had 80 per cent ownership and the government the remaining 20 per cent, was acquired through Gallery Gold transaction in March 2006.
Upon the completion of the sale of Kitongo there will be a reduction of “inferred resources” of 291,000 ounces from the company’s reserve and resource statement.
The completion of the surrender of Buckreef will also see the reduction of “Measured Resources” of 212,000 ounces, “Indicated Resources” of 573,000 ounces and “inferred resources” of 727,000 ounces from the company’s reserve and resource statement.