Cost overruns, operating engineers’ strike wreaking havoc at Côté mine project
Recent developments have not been kind to Toronto’s IAMGOLD Corp. in its quest to get its massive Côté Gold project built.
On May 4, the Toronto mining company saw its share price drop by more than 25 percent after it warned that the signature mine project – located between Timmins and Sudbury – would require an extra $1.2 billion to $1.3 billion to complete.
That figure blows the company’s previous assessment of between $710 million and $760 million out of the water, representing an increase of 90% over previous estimates.
The firm reports that cost increases are due to misjudgements in earthworks, processing plant, infrastructure, and other factors. It estimates that scope gaps in earthworks, lower than expected productivity, and scope gaps in dams and dewatering account for approximately 25% of the increase.
It also estimates that scope gaps relating to the processing plant, underestimation of winter concrete and steel costs, and impacts on underground utility construction account for a further 25% of the cost increase.
Approximately 40% of the cost increase stems from owner's costs, the cost of the engineering, procurement, and construction, and operations readiness.
The company has appointed board chair Maryse Belanger as interim president and chief executive to bring the situation under control, and find funding for the remainder of the work. Belanger takes over from CFO and executive VP of strategy and corporate development, Daniella Dimitrov, who in turn assumed the role after Gordon Stothart walked away earlier this year.
“This isn’t entirely a surprise,” said BMO analyst Jackie Przybylowsk. “We were highly skeptical of the previous budget, but the magnitude of the increase is above our previous estimates, and this is ahead of the release of a detailed project review later in Q2 22.”
Meanwhile, a province-wide strike by the members of the International Union of Operating Engineers, launched on May 2, poured further salt in IAMGOLD’s wounds.
As many as 70 members of the IUOE Local 793 in Northern Ontario are affected by the strike, and have all but brought work at the mine project to a halt.
The strike affects crane work, steel erection, foundation, piling and caisson boring, excavation and earth moving, and some aspects of general construction.
With work halted on those trades, there’s not much work left for anyone else to be doing at the site, union steward and strike captain Denis Deschenes told Sudbury.com.