IAMGOLD Corporation (IAG) along with its subsidiary, Rosebel Gold Mines (:RGM), will develop and operate a solar power project in Suriname. The project with an installed capacity of 5 megawatts will cost IAMGOLD around $12 million to $14 million, including site access and preparation.
IAMGOLD is fulfilling a prior commitment to the Government of Suriname through this green project. The deal had chopped the company’s power costs. The project started commercial production in 2004.
The solar power project is slated to be operational from the beginning of the third quarter of 2014. The Solar Project will be managed and operated by Rosebel Gold Mines. The equipment will be connected to the local power grid.
During the course of mining for gold, the transition process from soft rock to harder rock deposits requires a higher amount of power to crush and grind the ore. This solar project will help meet the mine’s requirement and lower RGM’s operating costs, while freeing up existing power capacity for use by other customers in Suriname.
IAMGOLD had reported big drops in third-quarter revenues and earnings, due to lower prices for gold and higher operating costs. Net earnings plunged 68% to $25.3 million or 7 cents per share in the quarter. Revenues fell 13% to $293.5 million from $336.2 million as lower gold prices were only partially offset by a higher volume of sales.
Reducing energy costs will provide a boost to IAMGOLD’ margins. Given that some South American countries have high solar irradiance levels along with limited grid infrastructure, partnerships of this kind between mining companies and governments could be useful to assist long-term development in mining and energy sphere. Furthermore, with increasing energy costs, it is a wise move to shift to renewable energy sources.
IAMGOLD currently maintains a Zacks Rank #3 (Hold). Some better-ranked stocks in the mining-gold sector include Golden Star Resources, Ltd. (GSS), Agnico Eagle Mines Ltd. (AEM) and AngloGold Ashanti Ltd. (AU). While Golden Star Resources carries a Zacks Rank #1 (Strong Buy), Agnico Eagle and Agnico Eagle hold a Zacks Rank #2 (Buy).
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