IAMGOLD Corporation (IAG - Free Report) announced that its joint venture with AngloGold Ashanti (AU - Free Report) and the government of Mali will suspend mining excavation activities at the Yatela mine in Mali, effective Sep 30, 2013.
Both IAMGOLD and AngloGold Ashanti hold a 40% stake in the joint venture -Societe d'Exploration des Mines d'Or de Yatela S.A – with the rest owned by the government of Mali. The mine is situated over 600 kilometers north-west of the Malian capital of Bamako and roughly 25 kilometers north of the Sadiola mine.
The Yatela SA mine project started operations in 1997, the mining license was issued in 2000 and the first gold poured in 2001. The initial expected life of the mine was six years, and thus, its closure was scheduled to occur in 2007. The discovery of additional economically exploitable deposits extended the life of the mine and led Yatela SA to defer the closure date several times.
According to IAMGOLD, rising costs and falling gold prices made it extremely difficult to extend the life of mine at Yatela. IAMGOLD acknowledged the contributions of contracted workers and the employed Malian mine workers of the Yatela mine.
However, the company stated that the mining activities at Yatela are no longer capable of making a positive contribution to any of its stakeholders. IAMGOLD also mentioned that Yatela's community development activities will not be affected with the closure of mining activities as a new plan is being developed which focuses on the expansion and marketing of community development and current socio-economic projects.
With this news, the contractual arrangements with Yatela's mining contractors (AMS and BME) will end, leading to cancellation of mine workers' contracts. AngloGold Ashanti as the mine operator will focus on compliance with all regulations governing the reduction of staff. While the process of gradual dismantling of the site is planned to start from Sep 30, 2013, the processing of heap leach pads and ore already mined will continue till end-2016.
IAMGOLD currently maintains a Zacks Rank #3 (Hold).
Other companies in the mining industry with favorable Zacks Rank are Gold Fields Ltd. (GFI - Free Report) and US Energy Corp. . Both retain a Zacks Rank #2 (Buy).