IAMGOLD (IAG) Q4 2010 earnings summary

Executive summary

• Full-year gold production reached 967,000 oz; record net earnings of $279.8M and operating cash flow of $415.1M reflected higher gold prices and increased sales.

• Q4 gold production rose 35% YoY to 315,000 oz, including 80,000 oz from Essakane; Q4 net earnings were $144.5M versus a $47.4M loss a year earlier.

• Essakane entered commercial production in July, ahead of schedule and effectively on budget, completing the transition to an integrated producer.

Financial highlights

• Revenue was a record $1,167.2M, up 28% YoY; average realized gold price rose 31% and gold sales volume increased 2%.

• Net earnings were $279.8M ($0.75/share), up 145%; adjusted net earnings were $285.7M ($0.77/share), up 68% YoY.

• Operating cash flow reached $415.1M ($1.12/share), up 62% YoY; mining costs were $570.6M, up 28%.

• Q4 revenue rose 73% YoY to $459.0M, primarily on 56% higher gold sales and higher realized prices.

• Adjusted earnings excluded items including the $11.8M unrealized Mupane hedge loss; 2010 reported net earnings exceeded adjusted earnings by $5.9M.

Outlook and guidance

• 2011 attributable gold production target: 1.1–1.2M oz at cash costs of $565–$595/oz; full-year Essakane output is expected to offset lower grades and harder ore at Rosebel.

• 2011 Niobec production guidance is 4.5–5.0M kg at a $15–$17/kg operating margin; lower margin reflects lower block mining and paste-backfill costs.

• Essakane expansion study targets 450,000–470,000 oz annual production on a 100% basis versus the current 315,000-oz estimate; construction could start in Q4 2011 subject to a favourable study.

• Westwood remained on track for commercial production in early 2013; 2011 capital spending was planned at $460M, with approximately $51M in exploration expense.

• 2011 exploration budget was $92.1M, including $43.5M for greenfield work; drilling across near-mine and greenfield programs was projected to exceed 500,000 metres.