TORONTO (miningweekly.com) ? Toronto-based Iamgold has halted operations at its Essakane mine in Burkina Faso in response to unrest by a small group of workers, but hopes to have resolved the situation and restart production soon, likely by the weekend, CEO Steve Letwin said on Thursday.
The company has been negotiating with employee representatives because workers want better wages and benefits amid tough inflation conditions in the country, he said.
However, the ?unrest? by a small group of 40 to 50 workers had continued despite the discussions, prompting a decision to halt operations on Thursday morning.
?This is a new mine for us and it's a country that hasn't had a lot of experience in what I would call labour negotiations,? Letwin told analysts on a conference call.
?My message has been we are very willing to talk and work with employees to resolve issues and seek a fair solution to the problems through negotiations.
?However I have zero tolerance for strikes that are illegal. And, as they will find out, will not tolerate anything that has a negative impact on our stakeholders.?
Letwin said he did not expect the issue would affect production levels, and believed the situation would be resolved by the weekend.
Iamgold achieved commercial production at Essakane in 2010, and expects the mine will produce between 370 000 and 390 000 oz this year.
The project was the biggest foreign investment in Burkina Faso to date and the government owns 10% of the asset.
Besides Essakane, Iamgold also has mines in Canada, Suriname, Botswana and Mali.
COSTS
Like other miners, the company itself is also dealing with inflation, and said on Wednesday it has increased its cost forecast for 2011 by $25/oz, to between $590/oz and $620/oz.
The cost change reflected increased royalty payments as a result of higher gold prices, as well as rising costs for things like fuel, steel and other inputs.
Letwin said the group is looking at ways to contain costs, including the potential to use solar power at Essakane.
The company also revised its production guidance to between 950 000 oz and 1,05-million ounces, to account for the sale ofs in two Ghanaian mines to South Africa's Gold Fields.
Iamgold published first-quarter financial results after markets closed on Wednesday, including a 170% increase in net profit, thanks to increased production and higher gold prices.
Shares in the company were 2,1% lower on Thursday afternoon, at C$18,20 apiece by 14:10 in Toronto.
AMX Price at posting:
$2.10 Sentiment: Hold Disclosure: Held
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