A move by Iamgold Corp. to reduce exploration activity in Mali marks the latest move by the Toronto-based company to protect itself from political risk in the region.
Iamgold has operations in Canada, South America and Africa, but half its output comes from mines in Mali, and neighbouring Burkina Faso. In Mali it is a 41-per-cent owner in the Sadiola gold mine and a 40-per-cent owner in Yatela, also a gold mine.
“Although it is business as usual at the Sadiola and Yatela mines operated by the company’s joint venture partner and which are approximately 1,300 kilometres by road from the regions of conflict, the company is reducing its exploration activity in the region at this time as a precautionary measure,” Iamgold stated in a news release on Tuesday.
The company said, however, that production at the joint venture operations had not been disrupted by the conflict in Mali, where Islamic militants have taken over a large swath of the territory.
Iamgold, one of the largest mining companies operating in Mali, has been shifting its focus away from the African continent for the past two years, selling stakes in mines in Ghana in early 2011.
The shift in strategy coincided with an investor shift away from Africa after the 2008/09 global economic crisis and a subsequent wave of resource nationalism that has swept the developing world in its wake.
Iamgold redeployed much of the proceeds from the Ghana sales a year later in Canada, where it acquired Trelawney Mining and Exploration Inc., and with it exposure to a large gold deposit, called Cote Gold – in northern Ontario, or practically in its backyard.
The deposit will likely take $1-billion to develop and is years away from production, but early signs have been positive. On Tuesday the company said it raised the indicated resource estimate on the asset by 114 per cent.
In the short term, however, Iamgold appears to have some challenges.
Several analysts lowered their recommendations on Iamgold stock on Wednesday after the company said full-year gold production was slightly below the lower end of guidance, primarily due to poor performance at the Sadiola joint venture.
The company also said total cash cash costs per ounce would likely rise this year due to inflation and lower ore grades.
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