Iamgold (TSX IMG), (NYSE: IAG) has cut reserves by 48% at its Westwood gold mine in southwestern Québec, Canada, and outlined a “cautious” approach to a long-term plan for the operation.
The Toronto-based miner has been reviewing Westwood for months. In February, it booked a $395 million charge on the mine, which has operated at reduced capacity after an earthquake in late 2019.
Iamgold now says the asset’s total attributable reserves sit at 0.6 million ounces, grading 7.1g/t gold.
“While overall mineral resources have remained largely unchanged, mineral reserves were impacted primarily by more conservative geotechnical assumptions related to specific zones located in higher seismic risk areas,” the company said.
Measured and indicated resources, inclusive of reserves, increased by 6% to 1.56 million ounces grading 10.2g/t, and inferred by 4% to 1.77 million ounces at 8.6g/t.
Iamgold said Westwood would produce between 100,000 to 125,000 ounces of gold a year during a three to four year ramp-up period. After that, the mine is expected to churn out 130,000 to 145,000 ounces of gold annually.
“We have adopted a cautious and empirical based approach that reflects current operational reality, with significant opportunities to improve on the base case,” president and chief executive Gordon Stothart said in the statement.
The figures adjustment come as the company reported second-quarter net income of $25.5 million, or $0.05 per share, compared to a loss of $18.6 million, or $0.04 per share, in the same period last year.
The miner revised once again its 2020 production guidance to 645,000-700,000 ounces of gold.
Iamgold had suspended its annual guidance in March to 700,000 and 760,000 ounces, which then lowered it in May to 685,000-740,000 ounces of gold.
It attributed the revision partly to the temporary suspension of Rosebel in Suriname due to coronavirus-related matters.
“Weaker company 2020 guidance and lower Westwood reserves could be initially viewed as negative, although we expect management will offer strategies to replace these reserves,” BMO analyst Jackie Przybylowski said in a note to investors.