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Iamgold mining operation in Rouyn Que.John Hryniuk

Iamgold Corp. is looking for a gold project that has the potential to become a low-cost mine.

The company, which is under pressure to cut operating costs, will soon have $500-million (U.S.) from the sale of its niobium mine in Quebec.

The ideal scenario for Iamgold would be to use its stock to buy a company that has a gold project that is close to production. Then Iamgold would use the $500-million to develop the project into a mine.

That's the "best formula," Iamgold's chief executive Steve Letwin said in an interview.

If that does not work, Mr. Letwin said Iamgold could use the $500-million cash and company stock to make a bigger bid for a mine.

Iamgold operates mines in Canada, West Africa and South America. It will spend between $1,150 (U.S.) and $1,250 to produce an ounce of gold this year. If gold prices stay below $1,200 an ounce or fall to $1,100 an ounce, Iamgold will lose money.

Hence the need for Iamgold to find a lower cost mine. It is hoping to find one that costs less than $1,000 to produce an ounce.

Mr. Letwin said Iamgold has no interest in China, Russia or the central Asian "stan" countries such as Afghanistan and Kazakhstan. The new mine could be in the countries Iamgold already operates, though "we're not necessarily restricted to those areas," Mr. Letwin said.

The Toronto-based gold producer is one of world's highest-cost producers. Like the rest of the industry, the miner is attempting to reduce expenses to deal with the weaker precious metal price.

Iamgold could idle its Rosebel mine in Suriname if it is unable to reduce operating costs there. So far, the company has spent about $1,100 to produce an ounce of gold at the South American mine.

"We are not going to run the mine in the red," Mr. Letwin said.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 4:00pm EDT.

SymbolName% changeLast
IAG-N
Iamgold Corp
+4.39%3.33
IAG-T
IA Financial Corp Inc
-0.58%84.15
IMG-T
Iamgold Corp
+4.39%4.52

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