reducing cost The new IAMGOLD Cot Lake gold mine project is going to be bigger than most people expect according to the company president and CEO Stephen J.J. Letwin, who spoke to the business community of Timmins at the Dante Club on Friday.
He said the project will generate more than $9 billion in economic activity over the 17-year production life of the mine as well as generating billions in payroll. Letwin said this would create a positive impact on the economies of Timmins, Sudbury, Gogama and Northern Ontario.
Letwin was in Timmins with several other company executives as they were taking part in an inspection tour of the new property located south of Gogama, and just a few kilometres west of Highway 144 in Chester and Yeo Townships.
The mining property was once known as the Trelawney project. It was purchased by IAMGOLD on June 21, 2012. On that day the price of gold was U.S. $1,560 an ounce.
But despite changes in the gold price, Letwin said things are still moving ahead with the plans for the new open pit mine.
Letwin said the lower price of gold this week creates challenges because the shareholders and investors get worried. The price of gold was hovering around U.S. $1205 an ounce Friday afternoon. Sixty days ago it was at U.S. $1,240 an ounce. One year ago it was more than U.S. $1,325 an ounce.
“We are very committed to move this project ahead. It would be nice if the gold price recovered somewhat. As you know gold is very volatile and we’ve got to make commitments in the belief that gold is going to be a sustainable price that works for us,” said Letwin.
He said anyone would doesn’t believe in that shouldn’t be in the gold business, especially with a venture as significant as Cot Gold.
“The project is huge. It’s going to generate over $9 billion in economic activity in the region, $3.9 billion in wages,” said Letwin.
“The project we think will take about two years to build. It will create about 1,000 construction jobs, about 400 to 500 full-time jobs over the long term. And it will have obviously a domino effect on the industry going forward,” he predicted.
The next step he said is to continue working with the provincial and federal governments on the permitting process, building partnerships with First Nations and finalizing the permissions required to install a new electrical power line in to the property from the Shining Tree area.
“I am not going to turn this into a political talk but anything you could do to help us in the permitting with the government is welcome,” Letwin told the chamber audience.
“The one concern I have as a Canadian is that we get bogged in the mass of regulations. It’s not to take away from the need to be environmentally friendly or the need to work with our partners, but it really seems to take a lot longer today and it’s a lot more expensive to get projects going.
“The problem is when you extend a project over time, you become vulnerable to price swings. That can hurt you quite badly,” he said, adding that gold mining can be difficult.
Letwin put it another way when he recalled a conversation he had with the late Peter Munk, the famous Canadian gold mining magnate who died earlier this year.
“I remember him saying to me, Steve it’s the only business I know where you literally have to spend a billion dollars before you make a penny,” said Letwin.
He said IAMGOLD will be spending more than $1 billion at Cot Lake before earning a cent. In a news release, the company said the initial capital cost will be $1.4 billion.
“We need to be efficient, effective and make sure that we get things done on time and work together because the benefits are huge,” he said.
Later in the meeting, after his formal speech, Letwin said one of the key factors IAMGOLD is relying on is new technology. He mentioned the idea of using driverless trucks at the mine. He said technology is going to increase production and reduce costs.
He said the plan for the all in sustaining costs (AISC) at the mine as being in the range of $700 to $750 per ounce, which he said would make Cot Lake the best mine in the company’s portfolio.
After the presentation, Letwin spoke to local reporters.
The Daily Press asked him about his comments asking for help from the business community for the permitting process. Was this an indication of any unexpected or serious delays? Letwin said the plan is still to have the project moving forward early in 2019 with construction.
“I think it is a generic concern because we have seen delays. We haven’t encountered too many delays so far. I’d say it has been about a six-week delay in some of our stuff. I am not going to name names, but it is always a concern of mine when it comes to a project this size that it is not going to move as quickly as you want it too,” Letwin said.
“You know if we call on our business partners to help us, we will be specific about what we’re seeing and why we need the help.”