Shares in Iamgold Corp. fell 14.6 per cent Thursday – their steepest drop in nearly five years – as the Canadian miner faces heavy criticism for its alleged poor disclosure over the death of a miner at a South American mine site.
Last week, the Toronto-based company suspended mining at its second-biggest mine, Rosebel in Suriname, after an “unauthorized” artisanal miner was killed, following a confrontation with police. Iamgold said the fracas, which involved an unspecified number of artisanal miners, also caused equipment damage. The company said there are continuing security concerns for its staff at Rosebel.
Artisanal mining is common in Africa and South America, often involving impoverished locals mining by hand. While occasionally legal, artisanal miners often trespass on concessions controlled by international mining companies.
Iamgold didn’t disclose how many miners were involved in the incident, the extent of the equipment damage or the reasons for the security threat. No information was provided on how long mining would be shut down.
“In some of these countries these things rise up, and need to be settled and need to be settled in the right way, and that takes time,” Stephen Letwin, chief executive officer of Iamgold, said in a conference call with analysts on Thursday, after the release of its second-quarter results.
Mr. Letwin was repeatedly pressed on the call for details on what exactly transpired at Rosebel, but he gave out little new information.
When asked by an analyst how exactly the equipment damage occurred at Rosebel, Mr. Letwin said the site experienced an “influx” of locals after the death of the miner but did not elaborate.
"Honestly we don’t have any idea what’s going on,” said Andrew Kaip, an analyst with BMO Nesbitt Burns Inc. who participated in the call.
“What exactly happened here? What’s the current situation? What are you doing? Is there more threat? ... The answer from management was: ‘We really don’t want to get into that.’
“Optically it’s all wrong – the reluctance to want to even deal with the situation and address investor concerns," he added.
In an e-mail to The Globe and Mail, Mr. Letwin wrote, “We’ve had both internal and external legal counsel involved from the beginning and we are very comfortable and confident in both the level and timing of disclosure.”
During the conference call Thursday, Mr. Letwin said he was hopeful that “partial mining” might start again in a few weeks at Rosebel, but later in the call said the company’s reduced production forecast for the year incorporated the possibility that mining could be sidelined for the rest of the year. At the moment, Iamgold is able to process existing stockpiles on site.
Iamgold is working with the Suriname government to try to get the situation under control and Mr. Letwin stressed the company’s strong relations with the President. Earlier in the year, the company was critical of the government’s efforts to crack down on illegal mining, describing its existing legislation as “outdated” and calling out the “lax enforcement."
Commenting on Iamgold’s financial results, which missed street estimates on earnings per share and cash flow, Mr. Letwin said the company had endured “a very tough” first half of the year. Apart from security concerns at Rosebel, the company also has experienced a shortfall in grade at the mine. In addition, the company is in the midst of drawing up a new mine plan at Westwood in Quebec, as the site grapples with seismic activity underground.
“We’ve got to pull ourselves up and get out of this particular funk we’re in at Rosebel and Westwood,” Mr. Letwin said.
Iamgold shares closed at $4.55 apiece on the Toronto Stock Exchange, their worst single-day performance since November, 2014.
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