Sadiola

Overview

Sadiola is situated in the far southwest of Mali, 77km south of the regional capital, Kayes.

The Sadiola Mining Permit covers an area of 302 square kilometres. La Societe D’Exploitation des Mines d’Or de Sadiola S.A. (SEMOS) holds title to the mining lease area. The shareholders of SEMOS are IAMGOLD, which indirectly owns 41%, AngloGold Ashanti, which indirectly owns 41%, and the Government of Mali, which owns 18%.

Mining at Sadiola takes place in five open pits. Ore is treated and processed in a CIL gold plant with a monthly capacity of 364,000t.

The Sadiola Mining Permit is for an initial term of 30 years, expiring in 2024, and may be extended by order of the President of Mali if mining operations are ongoing.

An extension to the project to be approved in 2012 could extend the mine life thorough 2025 and increase annual production to between 350,000 and 500,000 ounces per year.

Location

Sadiola is situated in the far southwest of Mali, 77km south of the regional capital, Kayes. Mali is a landlocked country in Western Africa.

The gold mine is located in a remote part of Mali with almost no infrastructure. Establishing the mine and process plant required upgrading of the regional gravel road linking the mine to Kayes, and access to the Sadiola Gold Mine from Kayes is now by a regional all-weather road. There is an airstrip at the Sadiola Gold Mine capable of handling light aircraft. Kayes is serviced by rail, road and air from Bamako, the capital of Mali, and from Dakar, the capital of Senegal.

Geology & Mineralization

The deposit is located in the Kenieba-Kedougou inlier, which is made up of Lower Proterozoic metasediments and metavolcanics intruded by granitic batholiths. The metamorphic units are subdivided into three supergroups (Mako, Diale and Dalema) representing two or three geological terranes separated by a crustal-scale shear. The deposit lies to the east of the regional Senegalo-Malian Fault near a sinistral releasing bend. The SMF separated the metavolcanics of the Mako Group from the metasediments of the Diale-Dalema Groups. The deposit occurs along the Sadiola Fracture Zone, a N-S trending, steeply west dipping shear developed at the contact between impure limestone and greywacke of the Kofi Formation. The SFZ is related to the SMF and may merge into it. The SFZ is intruded by diorite sills linked to a south dipping diorite sill emplaced into a regional thrust within the impure limestone. The sediments record two periods of folding.

At depth, mineralization is closely associated with the SFZ and subparallel structures, and with NNE trending splays below the sill. Reverse faulting has caused a stacking of the deposit to the north. Pervasive mineralization ranging in grade from 2 - 20 g/t occurs along the SFZ over a 2 km strike length at an average true width of 40 m. Mineralization is mainly hosted in altered carbonates and, to a lesser extent, greywacke, diorite and quartz-feldspar porphyry. Gold is spatially associated with prominent calc-silicate, potassic, propylitic, calcareous, dolomites and albitic alteration. The calc-silicate alteration appears to pre-date the diorite intrusion and affects all rock units except the porphyry.

As of December 2011, proven and probable reserves totaled 107.1 Mt grading 1.6 g/t gold for 5.6 million ounces of gold.

Mining & Operation

Mining is carried out using conventional open pit techniques with a carbon-in-pulp processing plant. There are currently five open pits. The main pit oxide resource recently completed mining however mining is currently occurring in the satellite orebodies FE3 and FE4 southeast of the main pit.

The pit slopes have been engineered to industry standards of stability for the range of lithologies present at Sadiola, following risk management principles. Grade control is effected by drilling 10 metre long vertical holes on a 10 metre by 5 metre grid. Ore is transported to the ore stockpile located one kilometre from the pit and waste is disposed of in dumps adjacent to the pit.

Approximately 90% of ore is stockpiled before processing. The ore stockpiling facility is located between the pit and the process plant and its purpose is twofold. Primarily, the area allows stockpiles of ore with differing oxide and sulphide mineralogy, gold grades, hardness, viscosity levels to be laid down separately. Ore is reclaimed from the stockpiles and fed into the process plant on a blended basis contributing to the efficiency of the process plant and maximising gold recovery. The second function of the stockpile is to provide a reserve of ore to sustain feed when pit operations are affected by external factors such as heavy rains.

Processing

The Sadiola Gold Mine processing plant consists of two identical parallel circuits, collectively capable of treating approximately 5.3 million tonnes of saprolite ores per year. This twin-stream design allows for a degree of flexibility in plant operation and maintance in the event of equipment failure, important in this case as local infrastructure and maintenance support for heavy industry is virtually non existent.

Most of the ore is delivered from the pit to a stockpile/reclaim area, adjacent to the processing plant site. The ore blend is reclaimed from the stockpile and fed to two parallel mineral sizers, a type of crusher designed to handle the softer ores that are found at the Sadiola Gold Mine. The ore passes to surge bins located ahead of the two SAG mills. A single regrind mill is incorporated, serving both circuits, to further grind the coarse fraction contained in the output from the SAG mills.

The discharge from the mills is fed to cyclones, the overflow from which goes to the leach circuit where the pulp is subject to cyanide leaching while the underflow goes to the regrind mills. Following leaching, the pulp is fed to CIP adsorption tanks where the gold is absorbed onto activated carbon. This ‘‘loaded’’ carbon is stripped of its gold and the gold bearing solution is pumped to storage tanks. The stripped carbon is regenerated in an oil fired kiln and then reused. After leaching, the barren slurry after removal of the gold is pumped to the tailings dam 3 kilometres southeast of the process plant for final disposal. The gold is recovered from the solution by electroplating onto stainless steel wool cathodes. The cathodes are washed and the gold bearing sludge dried and placed in an induction furnace for smelting to produce gold bullion.

A 57 kilometre pipeline from the Senegal River, the only reliable source of water in the region, was built to provide approximately eight million cubic metres per year of process water. Electrical power is provided through Sadiola's diesel powered generating sets which are capable of meeting an average demand of 16.7 MW and a peak demand of 17.7 MW.

Sadiola Sulphide Project (SSP)

In December 2010, a feasibility study on the mining and processing of the hard sulphide ore at Sadiola was completed. The current Sadiola Gold Mine life of mine plan indicates declining gold production over time going forward until end of mine life in 2017. The feasibility study projects an increase in production at the Sadiola Gold Mine to between 350,000 and 500,000 ounces per year (on a 100% basis running from 2013 through 2018) with an end of mine life in 2025, increasing the total gold production at the Sadiola Gold Mine by approximately 2.2 million ounces beyond the current mine plan.

The feasibility study calls for mining to continue on an open pit basis and incorporate larger mining equipment. This study is based on construction of a new crushing, grinding and CIL plant for treatment of the deep sulphide ores and existing hard ore stockpiles while the existing mill would continue to treat soft oxide ores in parallel, or treat additional sulphide ore once oxide ore is exhausted. The total nominal treatment capacity of the proposed operation would be 8.5 million tonnes per year on the combined feeds versus 5 million tonnes per year nominal capacity with the current plant treating primarily softer oxide ores.

A construction decision on the SSP is expected in 2012.

Environment & Community

Under the concession agreement with the Republic of Mali, SEMOS is obligated to minimize the environmental and social impact of mining activities and is required to rehabilitate the mine site once the mine permanently ceases operation. A baseline program monitors environmental parameters, including seasonal differences in climatic data, water quality for surface and groundwater and groundwater levels.

The two principal environmental concerns are the potential for the contamination of surface and ground water resources, particularly with cyanide, arsenic and antimony, and the rehabilitation of the tailings dam and waste rock dumps.

As at December 31, 2011, the recorded amount of estimated restoration and closure costs for the property was $57.8 million.

The mine maintained its OHSAS 18001 certification in 2010.

Annual workshops comprising government, national and regional authorities, local communities, media, Non- Governmental Organisations (NGOs) and other associations have been held since 2003. These workshops provide a forum to communicate the activities planned by Sadiola and Yatela, while providing an opportunity for the relevant stakeholders to comment and make recommendations.

The Integrated Development Action Plan (IDAP) has been in place since 2004. Covering villages located around the Sadiola and Yatela mines, it focuses on agricultural capacity-building and micro-financing activities. The plan is managed by the communities themselves and includes a general assembly with representatives from each village. The IDAP has received funding from Sadiola and Yatela which enables it to function successfully and independently.

Community members from the villages surrounding Sadiola and Yatela have been trained in malaria mitigating techniques, which has aided a decline in the incidence of the illness since the implementation of the programme in 2005.

It is the responsibility of both Sadiola and Yatela to contribute to an HIV/AIDS programme. Initiatives focus specifically on awareness, testing and peer educators in the workplace. The company partnered with NGOs during the soccer World Cup 2010 to attract villagers to central locations to watch games and participate in voluntary testing.

One reportable environmental incident occurred on 26 April 2010 when the incorrect disposal of 75 litres of a pesticide into drains led to contamination of the final effluent from the sewage treatment plant, resulting in the death of more than 200 birds. This incident resulted in a fine levied by local authorities. Management implemented measures to prevent a repeat of the incident by including regular inspections of the site and the education of employees on the importance of adhering to the correct disposal procedures.

The environmental impact assessment for the Sekokoto road diversion was completed and approved by government. ISO 14001 certification was maintained following an external surveillance audit.