Focused |
IAMGOLD CORPORATION Second Quarter Report 2004 |
Ø | Net earnings for the quarter declined to $0.1 million compared to $2.0 million for the second quarter of 2003 as a result of corporate transaction costs which totaled $5.7 million for the quarter. |
Ø | Attributable production for the quarter amounted to 108,000 ounces (YTD 214,000 ounces) at a cash cost, as defined by the Gold Institute (“GI”), of US$243/oz (YTD US$241/oz). |
Ø | Operating cash flow for the quarter was negative US$6.3 million (YTD negative US$0.5 million) as a result of corporate transaction costs and a temporary increase in working capital requirements for the Company’s Malian operations. |
Ø | Royalty revenues increased five-fold on a year-to-date basis due to the addition of the Diavik diamond royalty. |
Ø | On May 27, 2004, Golden Star Resources Ltd. made an unsolicited offer for the common shares of IAMGOLD. |
Ø | Following shareholders rejection of the proposed business combination between IAMGOLD and Wheaton River Minerals Ltd. on July 6, 2004 the Special Committee of the Board of Directors of IAMGOLD initiated a process to maximize shareholder value. |
|
| Three Months Ended |
| Six Months Ended | |||||||||
|
| June 30, 2004 |
| June 30, 2003 |
| June 30, 2004 |
| June 30, 2003 | |||||
Net earnings | $ | 77 | $ | 2,045* | $ | 5,983 | $ | 5,517* | |||||
Operating cash flow | $ | (6,263 | ) | $ | 7,850 | $ | (490 | ) | $ | 20,142 | |||
Net earnings per share | $ | 0.00 | $ | 0.01 | $ | 0.04 | $ | 0.04 | |||||
Operating cash flow per share | $ | (0.04 | ) | $ | 0.05 | $ | 0.00 | $ | 0.14 | ||||
Gold produced (oz) IMG share | 108,185 | 108,919 | 213,842 | 210,022 | |||||||||
GI cash cost (US$/oz) | $ | 243 | $ | 215 | $ | 241 | $ | 216 | |||||
Total production cost (US$/oz) | $ | 310 | $ | 276 | $ | 311 | $ | 279 | |||||
Average realized gold price (US$/oz) | $ | 401 | $ | 350 | $ | 409 | $ | 355 |
* | Restated to reflect a change in accounting estimates relating to future income taxes and a change in accounting policy related to asset retirement obligations. |
2003 | 2004 | ||||||||||||||||||
1st Qtr |
| 2nd Qtr |
| 3rd Qtr |
| 4th Qtr |
| 1st Qtr |
| 2nd Qtr | |||||||||
-----------------------------(Restated)----------------------------- | |||||||||||||||||||
Net earnings (US$)* | $ | 3,472 | $ | 2,045 | $ | 4,587 | $ | 5,376 | $ | 5,906 | $ | 77 | |||||||
Net earnings per share | |||||||||||||||||||
- basic & diluted (US$)* | 0.03 | 0.01 | 0.03 | 0.04 | 0.04 | 0.00 | |||||||||||||
Operating cash flow (US$) | 12,292 | 7,850 | 6,485 | 4,011 | 5,773 | (6,263 | ) | ||||||||||||
Operating cash flow per share | |||||||||||||||||||
- basic & diluted (US$) | 0.09 | 0.05 | 0.04 | 0.03 | 0.04 | (0.04 | ) | ||||||||||||
Cash and bullion balance (US$) | 93,014 | 99,816 | 106,463 | 113,958 | 113,190 | 94,900 | |||||||||||||
Gold spot price (US$/oz)*** | 352 | 347 | 363 | 391 | 408 | 401 | |||||||||||||
* | 2003 figures have been restated to reflect a change in accounting estimates relating to future income taxes and a change in accounting policy related to asset retirement obligations. |
I A M G O L D C O R P O R A T I O N | 2 | ||
2003 | 2004 | ||||||||||||||||||
1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | 1st Qtr | 2nd Qtr | ||||||||||||||
Production(000 oz) | |||||||||||||||||||
Sadiola - 38% | 40 | 40 | 42 | 50 | 45 | 45 | |||||||||||||
Yatela - 40% | 21 | 30 | 19 | 17 | 20 | 25 | |||||||||||||
Tarkwa - 18.9% | 26 | 25 | 28 | 27 | 26 | 23 | |||||||||||||
Damang - 18.9% | 15 | 14 | 14 | 14 | 15 | 16 | |||||||||||||
Total production | 101 | 109 | 103 | 108 | 106 | 108 | |||||||||||||
GI cash cost(US$/oz - IMG share)* | 217 | 215 | 221 | 246 | 239 | 243 | |||||||||||||
Gold spot price(US$/oz)** | 352 | 347 | 363 | 391 | 408 | 401 |
* | Weighted average Gold Institute cash cost is a non-GAAP measure, calculated in accordance with the Gold Institute Standard wherein cash cost equals the sum of cash operating costs inclusive of production-based taxes and management fees and may include certain cash costs incurred in prior periods such as stockpiling and stripping costs and may exclude certain cash costs incurred in the current period that relate to future production. Refer to individual mining operating results sections for mine GI cash costs and reconciliations to GAAP. |
** | Average gold price as per the London pm fix. |
2003 | 2004 | ||||||||||||||||||
1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | 1st Qtr | 2nd Qtr | ||||||||||||||
Ore milled(000t) | 1,190 | 1,290 | 1,240 | 1,350 | 1,160 | 1300 | |||||||||||||
Head grade(g/t) | 3.1 | 2.6 | 2.7 | 3.7 | 3.9 | 3.8 | |||||||||||||
Recovery(%) | 86 | 93 | 92 | 84 | 80 | 74 | |||||||||||||
Gold production - 100%(000 oz) | 104 | 105 | 111 | 132 | 117 | 117 | |||||||||||||
Gold sales - 100%(000 oz) | 113 | 101 | 105 | 134 | 118 | 116 | |||||||||||||
Gold revenue(US$/oz) | 369 | 359 | 365 | 402 | 418 | 411 | |||||||||||||
Direct cash costs(US$/oz) | 216 | 208 | 187 | 227 | 210 | 234 | |||||||||||||
Production taxes(US$/oz) | 23 | 20 | 20 | 24 | 25 | 23 | |||||||||||||
Total cash costs(US$/oz) | 239 | 228 | 207 | 251 | 235 | 257 | |||||||||||||
Accounting adjustments(US$/oz) | (28 | ) | (11 | ) | (9 | ) | (25 | ) | (15 | ) | (15 | ) | |||||||
GI cash cost(US$/oz) | 211 | 217 | 198 | 226 | 220 | 242 | |||||||||||||
GI cash cost(US$000) | 21,872 | 22,666 | 21,984 | 29,907 | 25,781 | 28,373 | |||||||||||||
IMG share - 38%(US$000) | 8,311 | 8,613 | 8,354 | 11,365 | 9,797 | 10,782 | |||||||||||||
GAAP reconciling items(US$000)**,# | 726 | (950 | ) | (624 | ) | (272 | ) | 565 | 187 | ||||||||||
Mining expense(US$000) | 9,037 | 7,663 | 7,730 | 11,093 | 10,362 | 10,969 |
* | Gold revenue is calculated as gold sales, adjusted for hedge accounting, divided by ounces of gold sold. |
** | Canadian GAAP reconciling items are made up of stock movement, mine interest, exploration and consolidation adjustments. |
# | 2003 figures have been restated to reflect a change in accounting policy related to asset retirement obligations. |
I A M G O L D C O R P O R A T I O N | 3 | ||
I A M G O L D C O R P O R A T I O N | 4 | ||
2003 | 2004 | ||||||||||||||||||
1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | 1st Qtr | 2nd Qtr | ||||||||||||||
Ore crushed(000t) | 740 | 700 | 470 | 680 | 640 | 760 | |||||||||||||
Head grade(g/t) | 2.8 | 3.8 | 2.3 | 2.2 | 3.6 | 3.4 | |||||||||||||
Gold stacked(oz) | 67 | 85 | 35 | 49 | 74 | 81 | |||||||||||||
Gold production - 100%(000 oz) | 53 | 75 | 48 | 42 | 51 | 62 | |||||||||||||
Gold sales - 100%(000 oz) | 54 | 70 | 53 | 45 | 46 | 71 | |||||||||||||
Gold revenue(US$/oz)* | 355 | 346 | 358 | 395 | 405 | 395 | |||||||||||||
Direct cash costs(US$/oz) | 210 | 172 | 247 | 444 | 335 | 283 | |||||||||||||
Production taxes(US$/oz) | 23 | 20 | 24 | 26 | 22 | 28 | |||||||||||||
Total cash costs(US$/oz) | 233 | 192 | 271 | 470 | 357 | 311 | |||||||||||||
Accounting adjustments(US$/oz)** | (20 | ) | 11 | (7 | ) | (134 | ) | (72 | ) | (61 | ) | ||||||||
GI cash cost(US$/oz) | 213 | 203 | 264 | 336 | 285 | 250 | |||||||||||||
GI cash cost(US$000) | 11,400 | 15,231 | 12,743 | 13,874 | 14,536 | 15,487 | |||||||||||||
IMG share - 40%(US$000) | 4,560 | 6,092 | 5,097 | 5,550 | 5,815 | 6,195 | |||||||||||||
GAAP reconciling items(US$000)***,# | 137 | (328 | ) | (272 | ) | 261 | (619 | ) | 1,266 | ||||||||||
Mining expense(US$000) | 4,697 | 5,764 | 4,825 | 5,811 | 5,196 | 7,461 |
* | Gold revenue is calculated as gold sales divided by ounces of gold sold. |
** | Accounting adjustments are made up of stockpile, gold in process, and deferred stripping adjustments. |
*** | Canadian GAAP reconciling items are made up of stock movement, mine interest and consolidation adjustments. |
# | 2003 figures have been restated to reflect a change in accounting policy related to asset retirement obligations. |
I A M G O L D C O R P O R A T I O N | 5 | ||
2003 | 2004 | ||||||||||||||||||
1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | 1st Qtr | 2nd Qtr | ||||||||||||||
Ore crushed (000t) | 3,850 | 3,720 | 4,080 | 3,920 | 4,170 | 3,840 | |||||||||||||
Head grade (g/t) | 1.4 | 1.4 | 1.4 | 1.4 | 1.4 | 1.4 | |||||||||||||
Gold stacked (000 oz) | 172 | 162 | 185 | 191 | 226 | 201 | |||||||||||||
Expected yield (%) | 74 | 75 | 75 | 73 | 74 | 71 | |||||||||||||
Gold production & sales - 100% (000 oz) | 136 | 129 | 148 | 142 | 137 | 123 | |||||||||||||
Gold revenue (US$/oz)* | 342 | 336 | 361 | 391 | 407 | 395 | |||||||||||||
Direct cash costs (US$/oz) | 187 | 204 | 200 | 215 | 244 | 269 | |||||||||||||
Production taxes (US$/oz) | 11 | 10 | 11 | 12 | 12 | 12 | |||||||||||||
Total cash costs (US$/oz) | 198 | 214 | 211 | 226 | 256 | 281 | |||||||||||||
Gold-in-process adjustments (US$/oz) | 14 | 9 | 10 | 13 | (8 | ) | (20 | ) | |||||||||||
GI cash cost (US$/oz) | 212 | 223 | 221 | 240 | 248 | 261 | |||||||||||||
Gold revenue less GI cash cost (US$000) | 17,715 | 14,592 | 20,628 | 21,411 | 21,731 | 16,426 | |||||||||||||
IMG share - 18.9% (US$000) | 3,348 | 2,758 | 3,899 | 4,047 | 4,107 | 3,105 | |||||||||||||
GAAP reconciling items (US$000)** | (1,844 | ) | (1,684 | ) | (1,868 | ) | (1,917 | ) | (1,920 | ) | (1,599 | ) | |||||||
Earnings from working interest (US$000) | 1,504 | 1,074 | 2,031 | 2,130 | 2,187 | 1,506 | |||||||||||||
* | Gold revenue is calculated as gold sales, adjusted for hedge accounting, divided by ounces of gold sold. |
** | Canadian GAAP reconciling items are made up of stock movement, mine interest, mine depreciation, mine taxes and consolidation adjustments. |
I A M G O L D C O R P O R A T I O N | 6 | ||
2003 | 2004 | ||||||||||||||||||
* | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | 1st Qtr | 2nd Qtr | |||||||||||||
Ore milled (000t) | 1,230 | 1,310 | 1,180 | 1,360 | 1,300 | 1,390 | |||||||||||||
Head grade (g/t) | 2.2 | 2.1 | 2.0 | 2.0 | 2.0 | 2.1 | |||||||||||||
Recovery (%) | 91 | 92 | 92 | 90 | 90 | 90 | |||||||||||||
Gold production & sales - 100% (000 oz) | 77 | 78 | 70 | 78 | 78 | 83 | |||||||||||||
Gold revenue (US$/oz)* | 349 | 345 | 359 | 393 | 406 | 395 | |||||||||||||
Direct cash costs (US$/oz) | 215 | 226 | 218 | 202 | 210 | 200 | |||||||||||||
Production taxes (US$/oz) | 11 | 10 | 11 | 12 | 12 | 12 | |||||||||||||
Total cash costs (US$/oz) | 226 | 236 | 229 | 214 | 222 | 212 | |||||||||||||
Gold-in-process adjustments (US$/oz) | 21 | (18 | ) | (1 | ) | 15 | (5 | ) | (6 | ) | |||||||||
GI cash cost (US$/oz) | 247 | 218 | 228 | 229 | 217 | 206 | |||||||||||||
Gold revenue less GI cash cost (US$000) | 7,898 | 9,922 | 9,210 | 12,679 | 14,764 | 15,572 | |||||||||||||
IMG share - 18.9% (US$000) | 1,493 | 1,875 | 1,741 | 2,396 | 2,790 | 2,493 | |||||||||||||
GAAP reconciling items (US$000)** | (1,138 | ) | (1,257 | ) | (1,295 | ) | (904 | ) | (861 | ) | (1,051 | ) | |||||||
Earnings from working interest (US$000) | 355 | 618 | 446 | 1,492 | 1,929 | 1,442 | |||||||||||||
* | Gold revenue is calculated as gold sales divided by ounces of gold sold. |
** | Canadian GAAP reconciling items are made up of stock movement, mine interest, mine depreciation, mine taxes and consolidation adjustments. |
I A M G O L D C O R P O R A T I O N | 7 | ||
Three Months Ended | Six Months Ended | ||||||||||||
June 30, 2004 | June 30, 2003 | June 30, 2004 | June 30, 2003 | ||||||||||
($ 000’s) | (Restated) | (Restated) | |||||||||||
Gold sales | $ | 29,328 | $ | 23,514 | $ | 55,433 | $ | 47,043 | |||||
Mining expense | 18,430 | 13,428 | 33,988 | 27,162 | |||||||||
Depreciation and depletion | 6,251 | 5,699 | 12,981 | 11,239 | |||||||||
Earnings from mining interests | $ | 4,647 | $ | 4,387 | $ | 8,464 | $ | 8,642 | |||||
Three Months Ended | Six Months Ended | ||||||||||||
($ 000’s) | June 30, 2004 | June 30, 2003 | June 30, 2004 | June 30, 2003 | |||||||||
Tarkwa | $ | 1,506 | $ | 1,074 | $ | 3,693 | $ | 2,578 | |||||
Damang | 1,442 | 618 | 3,371 | 973 | |||||||||
Earnings from working interests | $ | 2,948 | $ | 1,692 | $ | 7,064 | $ | 3,551 | |||||
I A M G O L D C O R P O R A T I O N | 8 | ||
Three Months Ended | Six Months Ended | ||||||||||||
($ 000’s) | June 30, 2004 | June 30, 2003 | June 30, 2004 | June 30, 2003 | |||||||||
Gold Royalties | |||||||||||||
Revenue | $ | 664 | $ | 665 | $ | 1,201 | $ | 978 | |||||
Amortization | 419 | 434 | 750 | 658 | |||||||||
Diamond Royalties | |||||||||||||
Revenue | 1,518 | - | 2,508 | - | |||||||||
Amortization | 805 | - | 1,326 | - | |||||||||
Earnings from royalty interests | $ | 958 | $ | 231 | $ | 1,633 | $ | 320 | |||||
I A M G O L D C O R P O R A T I O N | 9 | ||
I A M G O L D C O R P O R A T I O N | 10 | ||
I A M G O L D C O R P O R A T I O N | 11 | ||
June 30, | December 31, | ||||||
2004 | 2003 | ||||||
Working Capital | $ | 112.9 | $ | 118.5 | |||
Current Ratio | 6.9 | 5.3 | |||||
June 30, | December 31, | ||||||
2004 | 2003 | ||||||
Joint venture cash | $ | 10.3 | $ | 13.5 | |||
Corporate cash | 36.9 | 53.2 | |||||
Total | $ | 47.2 | $ | 66.7 | |||
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | June 30, | June 30, | June 30, | ||||||||||
2004 | 2003 | 2004 | 2003 | ||||||||||
Inflows | |||||||||||||
Sadiola cash receipts | $ | 1.5 | $ | 3.8 | $ | 4.2 | $ | 8.4 | |||||
Royalties received, net of withholding taxes and gold bullion receipts | 1.9 | 0.5 | 3.3 | 0.7 | |||||||||
Proceeds from sale of marketablesecurities and loans receivable | - | - | 1.8 | - | |||||||||
Interest income | 0.4 | 0.2 | 0.6 | 0.5 | |||||||||
Share issuances, net of share issue costs | - | 0.5 | 0.5 | 3.0 | |||||||||
Net cash acquired from Repadre | - | - | - | 34.2 | |||||||||
Damang cash receipts | - | 1.9 | - | 3.9 | |||||||||
Tarkwa cash receipts | - | 4.0 | - | 4.0 | |||||||||
Foreign exchange gain on cash balances | - | 1.1 | - | 2.0 | |||||||||
Other | - | 0.2 | - | - | |||||||||
$ | 3.8 | $ | 12.2 | $ | 10.4 | $ | 56.7 | ||||||
I A M G O L D C O R P O R A T I O N | 12 | ||
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | June 30, | June 30, | June 30, | ||||||||||
2004 | 2003 | 2004 | 2003 | ||||||||||
Outflows | |||||||||||||
Investment in Tarkwa | $ | 9.0 | $ | - | $ | 9.0 | $ | - | |||||
Dividends | - | - | 6.7 | 2.5 | |||||||||
Corporate transaction costs | 2.8 | 0.2 | 3.3 | 0.3 | |||||||||
Corporate administration | 2.4 | 2.4 | 3.9 | 4.9 | |||||||||
Exploration and exploration administration | 2.0 | 2.4 | 3.1 | 3.2 | |||||||||
Foreign exchange loss on cash balances | 0.3 | - | 0.5 | 2.0 | |||||||||
Other | 0.2 | - | 0.2 | 0.2 | |||||||||
Gold bullion purchases | - | 3.5 | - | 14.0 | |||||||||
$ | 16.8 | $ | 8.5 | $ | 26.7 | $ | 25.1 | ||||||
Net inflow (outflow) | $ | (13.0 | ) | $ | 3.7 | $ | (16.3 | ) | $ | 31.6 | |||
I A M G O L D C O R P O R A T I O N | 13 | ||
Three months ended | Six months ended | ||||||||||||
June 30, 2004 | June 30, 2003 | June 30, 2004 | June 30, 2003 | ||||||||||
(Restated) | |||||||||||||
Revenue: | |||||||||||||
Gold sales | $ | 29,328 | $ | 23,514 | $ | 55,433 | $ | 47,043 | |||||
Royalties | 2,182 | 665 | 3,709 | 978 | |||||||||
31,510 | 24,179 | 59,142 | 48,021 | ||||||||||
Expenses: | |||||||||||||
Mining | 18,430 | 13,428 | 33,988 | 27,162 | |||||||||
Depreciation and depletion | 6,251 | 5,699 | 12,981 | 11,239 | |||||||||
Amortization of royalty interests | 1,224 | 434 | 2,076 | 658 | |||||||||
25,905 | 19,561 | 49,045 | 39,059 | ||||||||||
5,605 | 4,618 | 10,097 | 8,962 | ||||||||||
Earnings from working interests | 2,948 | 1,692 | 7,064 | 3,551 | |||||||||
8,553 | 6,310 | 17,161 | 12,513 | ||||||||||
Other expenses(income): | |||||||||||||
Corporate administration | 2,257 | 1,596 | 4,089 | 3,599 | |||||||||
Corporate transaction costs(note 8) | 5,718 | - | 6,214 | - | |||||||||
Exploration | 2,016 | 2,354 | 3,084 | 3,232 | |||||||||
Foreign exchange | 43 | 412 | - | 329 | |||||||||
Investment income | (356 | ) | (222 | ) | (1,680 | ) | (455 | ) | |||||
9,678 | 4,140 | 11,707 | 6,705 | ||||||||||
Earnings before income taxes | (1,125 | ) | 2,170 | 5,454 | 5,808 | ||||||||
Income taxes (recovery): | |||||||||||||
Current | 931 | 624 | 2,317 | 1,499 | |||||||||
Future | (2,133 | ) | (499 | ) | (2,846 | ) | (1,208 | ) | |||||
(1,202 | ) | 125 | (529 | ) | 291 | ||||||||
Net earnings | 77 | 2,045 | 5,983 | 5,517 | |||||||||
Retained earnings, beginning of period, as previously reported | 45,912 | 37,325 | 42,023 | 33,709 | |||||||||
Restatement of opening retained earnings(note 2a) | - | - | (2,602 | ) | - | ||||||||
Prior period adjustment(note 2b) | - | - | 585 | 144 | |||||||||
Retained earnings, beginning of period, restated | 45,912 | 37,325 | 40,006 | 33,853 | |||||||||
Retained earnings, end of period | $ | 45,989 | $ | 39,370 | $ | 45,989 | $ | 39,370 | |||||
Number of common shares | |||||||||||||
Average outstanding during period | 145,541,000 | 143,635,000 | 145,511,000 | 141,264,000 | |||||||||
Outstanding at end of period | 145,551,000 | 143,746,000 | 145,551,000 | 143,746,000 | |||||||||
Net earnings per share - basic and diluted | $ | 0.00 | $ | 0.01 | $ | 0.04 | $ | 0.04 | |||||
I A M G O L D C O R P O R A T I O N | 14 | ||
As at | As at | ||||||
June 30, 2004 | Dec. 31, 2003 | ||||||
(Restated) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents(note 2) | $ | 47,233 | $ | 66,675 | |||
Gold bullion (145,707 oz - market value $57,671,000)(note 3) | 47,667 | 47,283 | |||||
Accounts receivable and other | 27,827 | 21,443 | |||||
Inventories | 9,327 | 10,397 | |||||
132,054 | 145,798 | ||||||
Marketable securities | 1,102 | 1,116 | |||||
Long-term inventory | 15,746 | 12,773 | |||||
Long-term receivables | 6,861 | 7,610 | |||||
Working interests | 75,904 | 59,806 | |||||
Royalty interests | 60,866 | 62,941 | |||||
Mining interests(note 1b) | 80,160 | 87,953 | |||||
Future tax asset | 39 | 47 | |||||
Other assets | 1,240 | 1,239 | |||||
Goodwill | 74,886 | 74,886 | |||||
$ | 448,858 | $ | 454,169 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable & accrued liabilities | $ | 19,178 | $ | 27,259 | |||
19,178 | 27,259 | ||||||
Long-term liabilities: | |||||||
Deferred revenue | 828 | 1,655 | |||||
Future tax liability | 17,886 | 21,264 | |||||
Asset retirement obligation(note 1b) | 6,108 | 5,961 | |||||
Non-recourse loans payable(note 4) | 10,870 | 11,342 | |||||
54,870 | 67,481 | ||||||
Shareholders' equity: | |||||||
Common shares (Issued: 145,551,179 shares)(note 5) | 343,282 | 342,208 | |||||
Stock-based compensation(notes 1(a) and 5(b)) | 4,983 | 2,138 | |||||
Share purchase loans | (266 | ) | (266 | ) | |||
Retained earnings | 45,989 | 42,608 | |||||
393,988 | 386,688 | ||||||
$ | 448,858 | $ | 454,169 | ||||
I A M G O L D C O R P O R A T I O N | 15 | ||
Three months ended | Six months ended | ||||||||||||
June 30, 2004 | June 30, 2003 | June 30, 2004 | June 30, 2003 | ||||||||||
Operating activities: | |||||||||||||
Net income | $ | 77 | $ | 2,045 | $ | 5,983 | $ | 5,517 | |||||
Items not affecting cash: | |||||||||||||
Earnings from working interests, net of dividends | (2,948 | ) | 2,300 | (7,064 | ) | 441 | |||||||
Depreciation and amortization | 7,492 | 6,152 | 15,090 | 11,919 | |||||||||
Deferred revenue | (413 | ) | (414 | ) | (827 | ) | (827 | ) | |||||
Future income taxes | (2,133 | ) | (499 | ) | (2,846 | ) | (1,208 | ) | |||||
Stock-based compensation | 436 | 48 | 756 | 89 | |||||||||
Loss (gain) on sale of marketable securities and long-term receivables | 1 | - | (1,120 | ) | 3 | ||||||||
Unrealized foreign exchange losses (gains) | (303 | ) | 1,529 | (524 | ) | 2,308 | |||||||
Change in non-cash current working capital | (7,493 | ) | (3,415 | ) | (7,268 | ) | 2,643 | ||||||
Change in non-cash long-term working capital | (979 | ) | 104 | (2,670 | ) | (743 | ) | ||||||
(6,263 | ) | 7,850 | (490 | ) | 20,142 | ||||||||
Financing activities: | |||||||||||||
Issue of common shares, net of issue costs | 26 | 507 | 563 | 2,974 | |||||||||
Dividends paid | - | - | (6,725 | ) | (2,519 | ) | |||||||
Repayments of non-recourse loans | (600 | ) | (601 | ) | (603 | ) | (602 | ) | |||||
(574 | ) | (94 | ) | (6,765 | ) | (147 | ) | ||||||
Investing activities: | |||||||||||||
Net cash acquired from Repadre Capital Corporation | - | (9 | ) | - | 33,393 | ||||||||
Mining interests | (2,506 | ) | (2,584 | ) | (4,626 | ) | (4,797 | ) | |||||
Note receivable | 72 | 64 | 24 | 7 | |||||||||
Distributions received (paid) from (to) working interests | (9,034 | ) | 1,890 | (9,034 | ) | 3,895 | |||||||
Gold bullion | (222 | ) | (3,661 | ) | (384 | ) | (14,316 | ) | |||||
Proceeds from disposition of marketable securities and long-term receivables | - | - | 1,833 | 24 | |||||||||
Other assets | 15 | (315 | ) | - | 359 | ||||||||
(11,675 | ) | (4,615 | ) | (12,187 | ) | 18,565 | |||||||
Increase (decrease) in cash and cash equivalents | (18,512 | ) | 3,141 | (19,442 | ) | 38,560 | |||||||
Cash and cash equivalents, beginning of period | 65,745 | 51,254 | 66,675 | 15,835 | |||||||||
Cash and cash equivalents, end of period | $ | 47,233 | $ | 54,395 | $ | 47,233 | $ | 54,395 | |||||
Supplemental cash flow information: | |||||||||||||
Interest paid | $ | 39 | $ | (206 | ) | $ | 78 | $ | 109 | ||||
Income taxes | 805 | 587 | 2,158 | 1,447 | |||||||||
I A M G O L D C O R P O R A T I O N | 16 | ||
1. | Change in Accounting Policies: | |
a) | Stock-based compensation: | |
Effective January 1, 2004, the Company adopted the new recommendations of the Canadian Institute of Chartered Accountants in the Handbook Section 3870, “Stock-based compensation and other stock-based payments” (Section 3870) with respect to directors and employees, whereby all stock options granted are accounted for under the fair value based method. Section 3870 is applied retroactively to all stock-based compensation granted to directors and employees on or after January 1, 2002. Opening retained earnings as at January 1, 2004 have been adjusted downwards by $2.6 million and opening share capital has been adjusted upwards by $0.2 million to reflect the cumulative effect of the change in prior periods. Prior periods have not been restated. | ||
b) | Provision for reclamation and closure: | |
On January 1, 2004 the Company adopted CICA Handbook Section 3110: “Asset Retirement Obligations”, which requires that the fair value of liabilities for asset retirement obligations be recognized in the period in which they are incurred. A corresponding increase to the carrying amount of the related assets is generally recorded and depreciated over the life of the asset. The amount of the liability is subject to re-measurement at each reporting period. The prior policy involved accruing for the estimated reclamation and closure liability through charges to earnings basis over the estimated life of the mine. This change has been applied retroactively with prior periods being restated. The effect of the changes to opening retained earnings is summarized as follows: |
Increase in mining assets, January 1, 2003 | $ | 3,671 | ||
Increase in asset retirement obligation, January 1, 2003 | 3,527 | |||
Increase in opening retained earnings, January 1, 2003 | 144 | |||
Increase in net earnings for 2003 | - Q1 | 67 | ||
- Q2 | 25 | |||
- Q3 | 186 | |||
- Q4 | 163 | |||
441 | ||||
Increase in opening retained earnings, January 1, 2004 | $ | 585 | ||
The adjustment to opening retained earnings at January 1, 2004 is further summarized as follows: | ||||
Increase in mining assets, January 1, 2004 | $ | 3,028 | ||
Increase in asset retirement obligation, January 1, 2004 | 2,443 | |||
Increase in opening retained earnings, January 1, 2004 | $ | 585 | ||
I A M G O L D C O R P O R A T I O N | 17 | ||
2. | Cash and Cash Equivalents: |
June 30, 2004 | Dec. 31, 2003 | ||||||
Corporate | $ | 36,858 | $ | 53,171 | |||
Joint ventures | 10,375 | 13,504 | |||||
$ | 47,233 | $ | 66,675 | ||||
3. | Gold Bullion: |
As at June 30, 2004, the Company held 145,707 ounces of gold bullion at an average cost of US$327 per ounce. The market value of this gold bullion, based on the market close price of $396 per ounce was $57,671,000. | |
4. | Non-Recourse Loans Payable: |
June 30, 2004 | Dec. 31, 2003 | ||||||
Yatela loans | $ | 10,870 | $ | 11,342 | |||
Note receivable from the Government of Mali, included inlong-term receivables | 6,611 | 6,635 | |||||
Net Yatela obligation | $ | 4,259 | $ | 4,707 | |||
5. | Share Capital: |
Authorized: | |
Unlimited first preference of shares, issuable in series | |
Unlimited second preference shares, issuable in series | |
Unlimited common shares | |
Issued and outstanding common shares are as follows: | |
Number of | |||||||
shares | Amount | ||||||
Issued and outstanding, December 31, 2003 | 145,333,845 | $ | 342,208 | ||||
Restatement of opening share capital(note 1(a)) | 172 | ||||||
Exercise of options | 217,334 | 902 | |||||
Issued and outstanding, June 30, 2004 | 145,551,179 | $ | 343,282 | ||||
(a) | Share Option Plan: | |
The Company has a comprehensive share option plan for its full-time employees, directors and officers and self-employed consultants. The options vest over three years and expire no longer than 10 years from the date of grant. | ||
A summary of the status of the Company’s share option plan as of June 30, 2004 and changes during the three months then ended is presented below. All exercise prices are denominated in Canadian dollars. |
I A M G O L D C O R P O R A T I O N | 18 | ||
Weighted | |||||||
Average | |||||||
Exercise | |||||||
Options | Price | ||||||
Outstanding, beginning of period | 5,414,535 | $ | 5.13 | ||||
Granted | 805,000 | 9.02 | |||||
ExercisedQ1, 2003 | (217,334 | ) | 3.41 | ||||
Forfeited | (24,001 | ) | 5.33 | ||||
Outstanding, June 30, 2004 | 5,978,200 | $ | 5.72 | ||||
Options exercisable, June 30, 2004 | 4,089,868 | $ | 4.78 | ||||
(b) | Stock-based compensation: |
The Company accounts for all stock-based compensation granted on or after January 1, 2002, using the fair value based method. | |
The fair value of the options granted subsequent to January 1, 2002 has been estimated at the date of grant using a Black-Scholes option pricing model with the following assumptions: risk-free interest rate of 5%, dividend yield of 1%, volatility factor of the expected market price of the Company’s common stock of 37%; and a weighted average expected life of these options of 8 years. The estimated fair value of the options is expensed over the options’ vesting period of 3 years. | |
For the six months ended June 30, 2004, $726,000 was recorded as compensation expense relating to the following options: |
Weighted | Total | ||||||||||||
Average | Weighted | ||||||||||||
Year of Grant/ | Exercise | Average | June 30, 2004 | ||||||||||
Modification | # of Options | (Cdn$) Price | Fair Value | Expense | |||||||||
2002 | 432,667 | $ | 7.27 | $ | 2.27 | $ | 165 | ||||||
2003 | 910,000 | 7.61 | 1.56 | 232 | |||||||||
2004 | 805,000 | 9.02 | 2.14 | 329 | |||||||||
2,147,667 | $ | 8.07 | $ | 1.92 | $ | 726 | |||||||
In 2004, the Company awarded 22,173 restricted common shares to certain executives of the Company under the Company’s share option plan. These restricted shares have a value of Cdn$200,000 and will be issued and expensed over their three-year vesting period. For the six months ended June 30, 2004, $29,000 was recorded as compensation expense relating to the restricted share awards. | |
I A M G O L D C O R P O R A T I O N | 19 | ||
6. | Segmented Information: |
(a) | The Company’s assets, liabilities, revenue and expenses, and cash flows allocated to the appropriate reporting segments identified by the Company are as follows: |
Joint Venture | |||||||||||||
and Working | |||||||||||||
June 30, 2004 | Interests | Royalties | Corporate | Total | |||||||||
Cash and gold bullion | $ | 10,375 | $ | - | $ | 84,525 | $ | 94,900 | |||||
Other current assets | 33,689 | - | 3,465 | 37,154 | |||||||||
Long-term assets | 102,556 | 75,998 | 2,591 | 181,145 | |||||||||
Long-term assets related to working interests | 135,659 | - | - | 135,659 | |||||||||
$ | 282,279 | $ | 75,998 | $ | 90,581 | $ | 448,858 | ||||||
Current liabilities | 9,991 | - | 9,187 | 19,178 | |||||||||
Long-term liabilities | 17,806 | - | 17,886 | 35,692 | |||||||||
$ | 27,797 | $ | - | $ | 27,073 | $ | 54,870 | ||||||
Revenues | $ | 55,433 | $ | 3,709 | $ | - | $ | 59,142 | |||||
Operating costs of mine | 32,739 | - | - | 32,739 | |||||||||
Earnings from working interests | 7,064 | - | - | 7,064 | |||||||||
Depreciation and amortization | 12,981 | 2,076 | 33 | 15,090 | |||||||||
Exploration expense | - | - | 3,084 | 3,084 | |||||||||
Other expense | 5 | - | 10,190 | 10,195 | |||||||||
Interest & investment expense (income), net | 1,249 | - | (1,605 | ) | (356 | ) | |||||||
Income taxes | 2,166 | 67 | (2,762 | ) | (529 | ) | |||||||
Net income (loss) | $ | 13,357 | $ | 1,566 | $ | (8,940 | ) | $ | 5,983 | ||||
(b) | The Company’s share of joint venture cash flows for the six months ended June 30, 2004 is as follows: |
June 30, 2004 | ||||
Cash flows from (used in) operations | $ | 6,256 | ||
Cash flows from (used in) financing | (603 | ) | ||
Cash flows from (used in) investments | (4,602 | ) | ||
7. | Contingencies and Commitments: | |
(a) | The Company was a defendant in an action commenced in the Ontario Court of Justice (General Division) by Kinbauri Gold Corporation (“Kinbauri”). | |
On December 10, 2002, the trial judge released reasons for judgment awarding damages to the Plaintiff in the amount of Cdn $1.7 million. The trial judge awarded pre-judgment interest at the rate of 10% and costs to be determined by assessment. The Company recorded an expense of $2,900,000 in Q4, 2002 in relation to this judgment. | ||
The Plaintiff filed a Notice of Appeal, dated January 20, 2003, appealing the damage award. The Company filed a Notice of Cross-Appeal, dated January 31, 2003, also appealing the damage award and the pre-judgment interest rate. The appeals were argued before the Ontario Court of Appeal on April 15th, 2004. Judgment was reserved. A decision was expected during Q2, 2004, but has not yet been released. |
I A M G O L D C O R P O R A T I O N | 20 | ||
(b) | In December 2003, the Department of Taxation in Mali performed an audit of the mining operations at the Yatela and Sadiola mines in Mali for the years 2000, 2001 and 2002. The audit report claimed taxes and penalties payable of approximately $15.6 million of which the Company’s share is $5.9 million. Sadiola and Yatela management have reviewed the claims with legal and tax advisors and are of the opinion that all taxes were properly paid and that the audit report is without merit. | |
The Company continues to work with the other partners in the Yatela and Sadiola mines to negotiate a settlement of the audit claims. Discussions with the Ministry of Finance in Mali are continuing, failing which the mines may elect to commence arbitration to enforce their rights under their original Convention Agreements with the Government of Mali. | ||
8. | Corporate Transactions: | |
The Company entered into an arrangement agreement on a proposed business combination with Wheaton River Minerals Ltd. on April 23, 2004. The arrangement was rejected through a shareholder vote held on July 6, 2004. Expenses of $2,985,000 and $495,000 relating to this transaction have been charged to second and first quarter 2004 earnings respectively. | ||
During the tenure of the above transaction, Golden Star Resources Ltd. launched an unsolicited takeover bid for the Company. To the end of June 2004, $2,733,000 of expense had been incurred in connection with the bid and this amount was charged to second quarter 2004 earnings. The unsolicited bid continues and advisory costs continue to be incurred. The total expected advisory cost is not quantifiable at this time. |
I A M G O L D C O R P O R A T I O N | 21 | ||
IAMGOLD | |
CORPORATION | |
220 Bay Street, 5th Floor | |
Toronto, Ontario M5J 2W4 | |
Canada | |
Tel: 416 360 4710 | |
Fax: 416 360 4750 | |
Toll free: 1 888 IMG 9999 | |
Email: info@iamgold.com | |
www.iamgold.com |