IAMGOLD Corp. (IAG) Prelim. Q4 All-In Sustaining Costs Lower than Expected; Updates on Outlook

IAMGOLD Corp. (NYSE: IAG) announces preliminary operating results for 2014 and guidance for 2015.

IAMGOLD's President and CEO, Steve Letwin said, "Our operating results in 2014 underscore our commitment to operational excellence. Production climbed steadily throughout the year, with production at Essakane growing 33% and Westwood successfully ramping up commercial production. We ended the year a much more efficient and productive company, reflecting the successful implementation of cost reduction initiatives by our sites and the restructuring of our corporate office. All-in sustaining costs, which declined in each consecutive quarter, were better than the lower end of our guidance, and pave the way for 2015 guidance $75 an ounce lower than that of the previous year.

"We enter 2015 with a strong balance sheet, further bolstered by the sale of Niobec. Presently, we are seeing an improving gold price and a stronger U.S. dollar relative to the Canadian dollar and the Euro, and we are beginning to benefit from the significant decline in oil prices," continued Mr. Letwin. "Although we benefit from these positive factors, our strategy is to build on our achievements in 2014 to optimize the performance of our operations and to continue focusing on cost reduction, disciplined capital spending and cash preservation."

Performance Highlights for 2014

• Attributable gold production of 844,000 ounces; with 241,000 ounces in the fourth quarter.
• Preliminary total cash costs1 – gold mines2 estimated at $845 to $865 per ounce, in line with guidance; fourth quarter expected at or below low end of guidance.
  • Cash costs for IAMGOLD owner-operator mines for 2014 expected to be at the upper end of guidance of $790 to $830 per ounce.
• Preliminary all-in sustaining costs1,3 – gold mines estimated at $1,100 to $1,120 per ounce, better than the lower end of guidance of $1,150 per ounce; fourth quarter estimated to be approximately $100 per ounce below low end of guidance.
  • All-in sustaining costs for IAMGOLD owner-operator mines for 2014 expected to be at the low end of guidance of $1,100 to $1,200 per ounce.
• Capital expenditures were approximately $325 million in 2014, 51% lower than 2013 and well below the 2014 guidance.
• Revenue for 2014 was $1.2 billion compared to $1.1 billion in 2013.
• In the second half of 2014, as part of the Company's risk management strategy, we entered into a number of fuel contracts to hedge a portion of our expected fuel consumption. Subsequent to entering into these contracts, oil prices continued to decline significantly resulting in non-cash unrealized losses of $49.9 million being recorded in the fourth quarter. See the section OIL HEDGES on page 2 for further detail.
• As a result of the year-end review of asset retirement obligations, the Company recorded non-cash expenses of approximately $40.5 million related to the rehabilitation costs associated with the closure of the Doyon Mine.
• As at December 31, 2014, cash, cash equivalents and gold bullion (market value) was approximately $333 million.

Guidance Highlights for 2015

• Attributable gold production expected to range between 820,000 and 860,000 ounces.
• Total cash costs – gold mines expected to range between $850 and $900 per ounce.
  • IAMGOLD owner-operator mines expected at a lower range of $825 to $865 per ounce.
• All-in sustaining costs – gold mines expected to range between $1,075 and $1,175 per ounce.
  • IAMGOLD owner-operator mines expected at a lower range of $1,050 to $1,150 per ounce.
• Capital expenditures guidance of $230 million ±10%, approximately 30% lower than 2014.
• With the closing of the Niobec sale, the Company's cash, cash equivalents and gold bullion (at market) position increases by $500 million.

OIL HEDGES

Fuel is a key input in our mining operations. To mitigate the risk of price fluctuations, particularly in volatile markets, we enter into derivative contracts to hedge a portion of the fuel we expect to consume. A portion of the exposure remains unhedged so that particularly in a falling commodity price environment the Company can continue to benefit from further price declines. At the end of 2014, the following zero cost contracts were in place covering 2015 to 2017:

• For 2015, 73% of fuel exposure hedged at a price of $75 - $95/barrel of WTI crude
• For 2016, 75% of fuel exposure hedged at a price of $68 - $95/barrel of WTI crude
• For 2017, 50% of fuel exposure hedged at a price of $71 - $95/barrel of WTI crude

The price range, or collar, protects the Company in a rising price environment by locking in a ceiling price, allows the Company to trade at the spot price within the boundary of the range and locks in a floor price, all at a zero cost. Subsequent to entering into these future contracts, oil prices continued to decline significantly, resulting in non-cash unrealized losses of $49.9 million being recorded in the fourth quarter. This means that the losses have not been realized, but only reflect what the loss would be were the contract to have been exercised, in this case, below the floor price. Should oil prices begin to recover over the three year duration of the contracts, these unrealized losses could potentially reverse.

2014 GOLD OPERATIONS

Full year attributable production was 844,000 ounces, within the guidance range of 835,000 to 850,000 ounces. Attributable gold production for the fourth quarter 2014 was 241,000 ounces, the best quarter of the year as a result of improved grades at Rosebel and Essakane.

For the full year 2014, total cash costs – gold mines are expected to range between $845 and $865 per ounce, with total cash costs for IAMGOLD owner-operator sites expected to be at the upper end of our guidance. All-in sustaining costs – gold mines for 2014 are expected to range between $1,100 and $1,120 per ounce, with IAMGOLD owner-operator sites at the low end of guidance.

For the fourth quarter 2014, total cash costs - gold mines and owner-operator are expected to be at or below low end of guidance. All-in sustaining costs - gold mines are expected to be approximately $100 per ounce below the low end of guidance and all-in sustaining costs owner-operator are expected to be lower than guidance.

The following table presents actual production by site:

1The Doyon Division consists of ore from both Mouska and Westwood. Westwood was in pre-commercial production in the first half of the year and entered commercial production in the third quarter of 2014.

2014 NIOBIUM OPERATIONS

IAMGOLD produced 5.6 million kilograms of niobium in 2014 at an average operating margin1 of approximately $20 per kilogram, which exceeded guidance of 5.2 - 5.5 million kilograms at $17 - $19 a kilogram. Record performance was achieved through excellent recoveries and grade together with higher throughput.

2015 PRODUCTION AND COST GUIDANCE

The following assumptions have been used for 2015 guidance:

• Average gold price per ounce of $1,250;
• Average crude oil price per barrel of $73;
• U.S. dollar value of the Euro of $1.20; and
• Canadian dollar value of the U.S. dollar of $1.15.

1 This is a non-GAAP measure.2 By-product credits are included in the calculation of this measure.

Gold Production and Cash Costs

Our production outlook for 2015 is between 820,000 and 860,000 ounces of gold. We expect a ramp-up in production at Westwood in its first full year of commercial production. There will be some variation from quarter to quarter, with the first quarter the lightest due to the significant amount of underground development. Building on the 33% increase in production that we had at Essakane in 2014, this operation is expected to have four strong quarters of production as the operation continues to benefit from higher grades and the previous mill expansion to accommodate a higher proportion of hard rock processing. At Rosebel, we continue to focus on improving grades and increasing productivity. The joint ventures are expected to produce 60,000 ounces. In 2014, the Company made significant progress in reducing its all-in sustaining costs throughout the year. Building on this momentum, we are reducing our all-in sustaining cost guidance by $75 an ounce from what we guided in 2014 to a range of $1,075 to $1,175 an ounce.

2015 CAPITAL EXPENDITURE GUIDANCE

1 Includes capitalized stripping of $20 million at Rosebel and $20 million at Essakane.

The Company is forecasting capital spending of $230 million ± 10%. This represents an approximate 30% reduction from 2014, reflecting the completion of the Essakane expansion and divestment of Niobec. Options for Sadiola continue to be explored; however, expansion related capital is not planned at this time. With respect to all future expansion and development projects, our focus continues to be on de-risking the projects, completing the permitting and continuing to monitor market conditions.

Of the $160 million allocated to sustaining capital, approximately 25% is for capitalized stripping at Essakane and Rosebel. The following summarizes the primary uses for capital spending by site:

• Rosebel - Capital spending of $80 million includes non-sustaining capital for the tailings dam expansion ($7 million) and tailings pump upgrade ($3 million). Sustaining capital includes capitalized stripping ($20 million), capital spares ($18 million), mobile equipment ($9 million), tailings dam raise ($6 million), resource development ($4 million), and other sustaining capital ($13 million).
• Essakane - Capital spending of $60 million includes non-sustaining capital primarily of $5 million. Sustaining capital includes capitalized stripping ($20 million), capital spares ($10 million), generator overhaul ($5 million), mobile equipment ($4 million), resource development ($3 million), and other sustaining capital ($7 million).
• Westwood – Capital spending is expected to be $80 million, and includes capitalized development ($57 million), mobile and underground equipment ($11 million), underground construction ($9 million), and development drilling ($3 million). Non-sustaining capital of $50 million included above relates to ramp-up to full production design levels in mining blocks that are not expected to be in production in the near term.
• Côté Gold – Expansion capital is for completion of the pre-feasibility study, initiation of the feasibility study and ongoing work for the permitting process.

2015 EXPLORATION PLAN

The Company remains highly disciplined with respect to exploration spending. In 2014, the exploration spend was reduced by 29% to $68.9 million, including a greater than 50% reduction in spending for brownfield exploration and the scoping and feasibility study at the Côté Gold project in Ontario, Canada.

A focused plan to advance the best properties has resulted in a pipeline of quality projects with high-grade potential. In addition to targeting soft rock around the Rosebel and Essakane mines, the Company is advancing the wholly-owned projects of Boto Gold in Senegal and Pitangui in Brazil as well as several joint venture projects in South and Central America, West Africa and Canada.

In 2015, with planned spending of $58.5 million, the greenfield and brownfield exploration programs will continue to focus on discovering "new ounces". In 2015, project studies have been reduced to $11.7 million, and will focus on both the Côté Gold and Boto Gold projects.

The following table presents 2014 actual and 2015 plan for exploration and project studies:

1 Exploration projects - brownfield excludes planned expenditures related to Sadiola and Yatela of $0.9 million for 2014 Actual and $1.2 million for 2015 Plan, and includes planned near mine and resource exploration of $14.7 million for 2014 Actual and $11.3 million for 2015 Plan.

END NOTES (excluding tables)

1. This is a non-GAAP measure.
2. Gold mines, as used with total cash costs and all-in sustaining costs, consist of Rosebel, Essakane, Westwood (commercial production), Mouska, Sadiola and Yatela on an attributable basis.
3. We have begun including the income from our Diavik royalty as an offset to operating costs in the calculation of this measure.

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