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UNAUDITED CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
AS AT JUNE 30, 2017
 







Consolidated balance sheets
30

 
 
Consolidated statements of earnings
31

 
 
Consolidated statements of comprehensive income
32

 
 
Consolidated statements of changes in equity
33

 
 
Consolidated statements of cash flows
34

 
 
Notes to condensed consolidated interim financial statements
35 to 58







CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions of U.S. dollars)
Notes
June 30,
2017
December 31,
 2016
Assets



Current assets



Cash and cash equivalents
 
$
776.2

$
652.0

Restricted cash
6(a)
—

92.0

Receivables and other current assets
7
57.8

61.0

Inventories
8
195.1

207.9



1,029.1

1,012.9

Non-current assets



Investments in associates and incorporated joint ventures
9
62.7

52.6

Property, plant and equipment
10
1,968.8

1,868.2

Exploration and evaluation assets
11
441.4

169.2

Income taxes receivable

17.9

29.2

Restricted cash
6(b)
23.9

18.7

Long-term receivable
5, 28
93.2

—

Other assets
12
249.6

249.7



2,857.5

2,387.6



$
3,886.6

$
3,400.5

Liabilities and Equity



Current liabilities




Accounts payable and accrued liabilities
 
$
164.8

$
162.9

Income taxes payable

16.3

14.7

Dividends payable

1.0

—

Current portion of provisions
13
16.6

15.8

Other liabilities
14
0.3

2.1



199.0

195.5

Non-current liabilities



Deferred income tax liabilities
 
190.1

159.0

Provisions
13
289.2

289.8

Long-term debt
16(a)
392.2

485.1

Other liabilities
14
3.2

—



874.7

933.9



1,073.7

1,129.4

Equity



Equity attributable to IAMGOLD Corporation shareholders



Common shares
 
2,671.2

2,628.2

Contributed surplus

40.4

40.1

Retained earnings (deficit)

78.8

(409.7
)
Accumulated other comprehensive loss

(31.1
)
(36.9
)


2,759.3

2,221.7

Non-controlling interests
 
53.6

49.4



2,812.9

2,271.1

Contingencies and commitments
13(b), 27



Subsequent events
30
 
 


$
3,886.6

$
3,400.5

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.


IAMGOLD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - JUNE 30, 2017
PAGE 30


CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
 
Three months ended June 30,
Six months ended June 30,
(In millions of U.S. dollars, except per share amounts)
Notes
2017
2016
2017
2016
Revenues

$
274.5

$
232.5

$
535.0

$
452.2

Cost of sales
22
238.6

208.1

464.1

421.3

Gross profit
 
35.9

24.4

70.9

30.9

General and administrative expenses

(8.6
)
(9.4
)
(18.9
)
(18.8
)
Exploration expenses

(12.1
)
(8.1
)
(23.0
)
(14.1
)
Reversal of impairment charges
26
524.1

—

524.1

—

Other expenses

(6.9
)
(0.9
)
(9.5
)
(8.3
)
Earnings (loss) from operations

532.4

6.0

543.6

(10.3
)
Share of net earnings from investments in associates and incorporated joint ventures, net of income taxes
9
5.4

1.4

6.6

5.0

Finance costs
23
(2.5
)
(7.1
)
(7.5
)
(15.4
)
Foreign exchange gain (loss)

6.0

(2.1
)
6.8

1.0

Interest income and derivatives and other investment gains
24
23.8

6.6

7.5

83.2

Earnings before income taxes

565.1

4.8

557.0

63.5

Income taxes
15
(53.5
)
(14.0
)
(62.2
)
(20.0
)
Net earnings (loss)

$
511.6

$
(9.2
)
$
494.8

$
43.5

Net earnings (loss) attributable to





Equity holders of IAMGOLD Corporation

$
506.5

$
(12.2
)
$
488.5

$
40.9

Non-controlling interests

5.1

3.0

6.3

2.6

Net earnings (loss)

$
511.6

$
(9.2
)
$
494.8

$
43.5

Attributable to equity holders of IAMGOLD Corporation





Weighted average number of common shares outstanding
(in millions)





Basic
20
464.6

405.9

461.1

401.3

Diluted
20
469.3

405.9

465.4

403.5







Earnings (loss) per share ($ per share)








Basic
20
$
1.09

$
(0.03
)
$
1.06

$
0.10

Diluted
20
$
1.08

$
(0.03
)
$
1.05

$
0.10

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.



IAMGOLD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - JUNE 30, 2017
PAGE 31


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
Three months ended June 30,
Six months ended June 30,
(In millions of U.S. dollars)
Notes
2017
2016
2017
2016
Net earnings (loss)

$
511.6

$
(9.2
)
$
494.8

$
43.5

Other comprehensive income (loss), net of income taxes

 
 


Items that will not be reclassified to the statements of earnings





Movement in marketable securities fair value reserve






Net unrealized change in fair value of marketable securities

(1.5
)
6.4

4.7

11.8

Net realized change in fair value of marketable securities
17(a)
(0.2
)
—

(0.2
)
(2.0
)
Tax impact

0.8

(1.2
)
(0.4
)
(1.5
)


(0.9
)
5.2

4.1

8.3

Items that may be reclassified to the statements of earnings





Movement in cash flow hedge fair value reserve





Effective portion of changes in fair value of cash flow hedges
17(b)
2.6

7.2

3.4

10.6

Time value of options contracts excluded from hedge relationship
17(b)
0.9

0.9

(2.7
)
0.6

Net change in fair value of cash flow hedges reclassified to the statements of earnings
17(b)
(0.1
)
0.7

(0.1
)
4.3

Tax impact

—

(0.6
)
0.2

(1.1
)


3.4

8.2

0.8

14.4

Currency translation adjustment

0.5

(2.3
)
0.9

(0.4
)
Total other comprehensive income

3.0

11.1

5.8

22.3

Comprehensive income

$
514.6

$
1.9

$
500.6

$
65.8











Comprehensive income (loss) attributable to:









Equity holders of IAMGOLD Corporation

$
509.5

$
(1.1
)
$
494.3

$
63.2

Non-controlling interests

5.1

3.0

6.3

2.6

Comprehensive income

$
514.6

$
1.9

$
500.6

$
65.8

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.




IAMGOLD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - JUNE 30, 2017
PAGE 32


CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)
 
Six months ended June 30,
(In millions of U.S. dollars)
Notes
2017
2016
 
 
 
 
Common shares
 
 
 
Balance, beginning of the period
 
$
2,628.2

$
2,366.2

Issuance of common shares
4, 19
27.4

—

Issuance of flow-through common shares
19
13.4

27.5

Issuance of common shares for share-based compensation
 
2.2

3.0

Balance, end of the period
 
2,671.2

2,396.7

 
 

 
Contributed surplus
 


Balance, beginning of the period
 
40.1

38.2

Issuance of common shares for share-based compensation
 
(2.2
)
(3.2
)
Share-based compensation
 
3.1

2.5

Other
 
(0.6
)
—

Balance, end of the period
 
40.4

37.5

 
 



Retained earnings (deficit)
 



Balance, beginning of the period
 
(409.7
)
(461.2
)
Net earnings attributable to equity holders of IAMGOLD Corporation
 
488.5

40.9

Balance, end of the period
 
78.8

(420.3
)
 
 



Accumulated other comprehensive loss
 



Marketable securities fair value reserve
 



Balance, beginning of the period
 
(29.0
)
(32.5
)
Net change in fair value of marketable securities, net of income taxes
 
4.1

8.3

Balance, end of the period
 
(24.9
)
(24.2
)
Cash flow hedge fair value reserve
 




Balance, beginning of the period
 
(3.8
)
(11.1
)
Net change in fair value of cash flow hedges recognized in property, plant and equipment
17(b)
—

0.2

Net change in fair value of cash flow hedges recognized in other comprehensive income, net of income taxes
 
0.8

14.4

Balance, end of the period
 
(3.0
)
3.5

Currency translation adjustment
 




Balance, beginning of the period
 
(4.1
)
(3.8
)
Change for the period
9
0.9

(0.4
)
Balance, end of the period
 
(3.2
)
(4.2
)
Total accumulated other comprehensive loss
 
(31.1
)
(24.9
)
Equity attributable to equity holders of IAMGOLD Corporation
 
2,759.3

1,989.0

 
 




Non-controlling interests
 




Balance, beginning of the period
 
49.4

42.1

Net earnings attributable to non-controlling interests
 
6.3

2.6

Dividends to non-controlling interests
 
(2.1
)
(1.5
)
Balance, end of the period
 
53.6

43.2

 
 
$
2,812.9

$
2,032.2

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.


IAMGOLD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - JUNE 30, 2017
PAGE 33


CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Three months ended June 30,
Six months ended June 30,
(In millions of U.S. dollars)
Notes
2017
2016
2017
2016
Operating activities
 
 
 
 
 
Net earnings (loss)
 
$
511.6

$
(9.2
)
$
494.8

$
43.5

Adjustments for:
 




Finance costs
23
2.5

7.1

7.5

15.4

Depreciation expense
 
71.7

62.9

135.3

125.2

Income tax expense
15
53.5

14.0

62.2

20.0

Gain on sale of gold bullion

—

—

—

(72.9
)
Share of net earnings from investments in associates and incorporated joint ventures, net of income taxes
9
(5.4
)
(1.4
)
(6.6
)
(5.0
)
Write-down of inventories
8
1.5

1.0

10.0

3.0

Loss on 6.75% Senior unsecured notes
16(a)
—

—

20.2

—

Reversal of impairment charges
26
(524.1
)
—

(524.1
)
—

Gain on sale of a 30% interest in the Côté Gold Project
5
(19.2
)
—

(19.2
)
—

Effects of exchange rate fluctuation on restricted cash
6
(0.5
)
0.3

(1.4
)
(4.4
)
Effects of exchange rate fluctuation on cash and cash equivalents
 
(5.9
)
0.4

(5.3
)
(1.3
)
Other non-cash items
25(a)
(0.8
)
(3.5
)
1.1

7.1

Adjustments for cash items:
 


 




Settlement of derivatives

0.1

(3.6
)
0.1

(8.5
)
Disbursements related to asset retirement obligations
 
(1.2
)
(0.7
)
(1.7
)
(1.1
)
Movements in non-cash working capital items and non-current ore stockpiles
25(b)
18.3

5.3

0.8

5.0

Cash from operating activities, before income tax paid
 
102.1

72.6

173.7

126.0

Income tax paid
 
(13.4
)
(1.4
)
(16.7
)
(3.4
)
Net cash from operating activities
 
88.7

71.2

157.0

122.6

Investing activities





Property, plant and equipment









Capital expenditures
 
(47.5
)
(79.3
)
(93.0
)
(146.4
)
Capitalized borrowing costs
23
(11.2
)
(7.4
)
(11.2
)
(7.4
)
Net proceeds from sale of a 30% interest in the Côté Gold Project
5
96.5

—

96.5

—

Proceeds from sale of gold bullion
 
—

—

—

170.3

Net decrease (increase) of restricted cash
6
88.2

(3.1
)
88.2

(3.1
)
Capital expenditures for exploration and evaluation assets
 
(0.3
)
(0.5
)
(0.8
)
(3.0
)
Purchase of additional common shares of associate
9
—

—

(7.4
)
—

Other investing activities
25(c)
(0.1
)
3.2

(1.3
)
(2.5
)
Net cash from (used in) investing activities
 
125.6

(87.1
)
71.0

7.9

Financing activities
 








Net proceeds from issuance of senior notes
16(a)
—

—

393.6

—

Repayment of 6.75% senior unsecured notes
16(a)
(505.6
)
—

(505.6
)
—

Repayment of credit facility
16(b)
—

—

—

(70.0
)
Interest paid
23
(5.3
)
(14.1
)
(5.3
)
(14.2
)
Net proceeds from issuance of flow-through common shares
19
—

—

15.1

30.3

Long-term prepayment for finance lease
12
(4.9
)
—

(4.9
)
—

Other financing activities
25(d)
(1.3
)
(2.1
)
(2.0
)
(4.7
)
Net cash used in financing activities
 
(517.1
)
(16.2
)
(109.1
)
(58.6
)
Effects of exchange rate fluctuation on cash and cash equivalents
 
5.9

(0.4
)
5.3

1.3

Increase (decrease) in cash and cash equivalents
 
(296.9
)
(32.5
)
124.2

73.2

Cash and cash equivalents, beginning of the period
 
1,073.1

586.7

652.0

481.0

Cash and cash equivalents, end of the period
 
$
776.2

$
554.2

$
776.2

$
554.2

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.


IAMGOLD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - JUNE 30, 2017
PAGE 34


NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2017 and 2016
(Amounts in notes and in tables are in millions of U.S. dollars, except where otherwise indicated) (Unaudited)
1.
CORPORATE INFORMATION
IAMGOLD Corporation (“IAMGOLD” or “the Company”) is a corporation governed by the Canada Business Corporations Act and domiciled in Canada whose shares are publicly traded. The address of the Company’s registered office is 401 Bay Street, Suite 3200, Toronto, Ontario, Canada, M5H 2Y4.
The principal activities of the Company are the exploration, development and operation of gold mining properties. 
2.
BASIS OF PREPARATION
(a)    Statement of compliance
The unaudited condensed consolidated interim financial statements ("consolidated interim financial statements") of IAMGOLD and all of its subsidiaries, joint ventures and associates have been prepared in accordance with IAS 34, Interim Financial Reporting, and do not include all of the information required for annual consolidated financial statements. Accordingly, certain information and disclosures normally included in annual financial statements prepared in accordance with International Financial Reporting Standards ("IFRS") have been omitted or condensed.
These consolidated interim financial statements should be read in conjunction with IAMGOLD's audited annual consolidated financial statements and related notes as at and for the year ended December 31, 2016.
The consolidated interim financial statements of IAMGOLD were authorized for issue in accordance with a resolution of the Board of Directors on August 9, 2017.
(b)
Basis of measurement
The consolidated interim financial statements have been prepared on a historical cost basis, except for items measured at fair value as discussed in note 18.
(c)
Basis of consolidation
Subsidiaries, divisions and investments in joint ventures related to significant properties of the Company are accounted for as outlined below.
Name
Property
– Location
June 30,
2017
December 31,
2016
Type of
Arrangement
Accounting 
Method
Essakane S.A.
Essakane mine (Burkina Faso)
90%
90%
Subsidiary
Consolidation
Rosebel Gold Mines N.V.
Rosebel mine (Suriname)
95%
95%
Subsidiary
Consolidation
Doyon division including the Westwood mine
Doyon division (Canada)
100%
100%
Division
Consolidation
Côté Gold division 1
Côté Gold Project
(Canada)
70%
100%
Division
Proportionate share
Euro Ressources S.A.
France
90%
90%
Subsidiary
Consolidation
Société d'Exploitation des Mines d'Or de Sadiola S.A.
Sadiola mine
(Mali)
41%
41%
Incorporated joint venture
Equity accounting
Merrex Gold Inc.
Siribaya project (Mali)
100%
23%
Subsidiary2
Consolidation2
1
Effective June 20, 2017, the Company holds an undivided interest in the assets, liabilities, revenues and expenses of the Cote Gold division through an unincorporated joint venture (note 5).
2
As of February 28, 2017 (note 4).
(d)
Significant accounting judgments, estimates and assumptions
The preparation of consolidated interim financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities as at the date of the consolidated interim financial statements and reported amounts of revenues and expenses during the three and six months ended June 30, 2017. Estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events which are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

IAMGOLD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - JUNE 30, 2017
PAGE 35


(e)
Significant accounting policies
These consolidated interim financial statements, including comparatives, have been prepared following the same accounting policies and methods of computation as the audited annual consolidated financial statements for the year ended December 31, 2016.
3.
NEW ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE
The following new accounting standards were not yet effective for the six months ended June 30, 2017, and have not been applied in preparing these consolidated financial statements.

IFRS 15 - Revenue from Contracts with Customers
In May 2014, the IASB issued IFRS 15 Revenue from Contracts with Customers, which will replace IAS 11 Construction Contracts and IAS 18 Revenue. The mandatory effective date of IFRS 15 is January 1, 2018. The objective of IFRS 15 is to establish a single, principles based model to be applied to all contracts with customers in determining how and when revenue is recognized. IFRS 15 also requires entities to provide users of financial statements with more informative and relevant disclosures. The Company generates revenue primary from selling gold. The Company is currently evaluating the potential impact of IFRS 15, primarily analyzing its dore sales agreements. The Company does not expect any material changes in the gross amounts of revenue recognized but the timing of revenue recognition may differ under IFRS 15, if the timing of transfer of control to customers is deferred and/or there are additional performance obligations which are currently not recognized separately, such as shipping and insurance services arranged by the Company on behalf of its customers. The impact of adoption of IFRS 15 is expected to be disclosed by the Company in its third quarter 2017 consolidated interim financial statements.

IFRS 9 - Financial Instruments
In July 2014, the IASB issued the final version of IFRS 9 (2014) - Financial Instruments (“IFRS 9”) to replace IAS 39 - Financial Instruments: Recognition and Measurement. IFRS 9 provides a revised model for recognition and measurement of financial instruments and a single, forward-looking ‘expected loss’ impairment model (the “ECL model”). IFRS 9 also includes substantially reformed approach to hedge accounting. The standard is effective for annual periods beginning on or after January 1, 2018, with early adoption permitted.
Effective April 1, 2014, the Company had early adopted all of the requirements of IFRS 9 (2013), which was the previously issued version of IFRS 9. As a result of early adoption of IFRS 9 (2013), which is largely aligned with the requirements of IFRS 9, the Company will have no further impact on adoption of IFRS 9, with respect to the classification of financial assets and liabilities and hedge accounting.
The Company has completed a preliminary assessment of the ECL model, which is not expected to have a material impact on the Company's consolidated financial statements, given the Company sells its products exclusively to large international financial institutions and other organizations with strong credit ratings and the short term nature of the Company’s receivables.

IFRIC 22 - Foreign Currency Transactions and Advance Consideration
In December 2016, the IASB issued IFRIC Interpretation 22 Foreign Currency Transactions and Advance Consideration. The interpretation clarifies which date should be used for translation of a foreign currency transaction when an entity recognizes a non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration before the entity recognizes the related asset, expense or income (or part of it). The interpretation is applicable for annual periods beginning on or after January 1, 2018. The Company is currently in the process of reviewing relevant transactions which could be impacted by IFRIC 22  and expects to disclose further details in its third quarter 2017 consolidated interim financial statements.

IFRS 16 - Leases
In January 2016, the IASB issued IFRS 16, Leases.  The objective of IFRS 16 is to bring all leases on balance sheet for lessees. IFRS 16 requires lessees to recognize a "right of use" asset and a lease liability calculated using a prescribed methodology. The mandatory effective date of IFRS 16 is for annual periods beginning on or after January 1, 2019. Early adoption is permitted provided that IFRS 15, Revenue from Contracts with Customers, is also adopted. The extent of the impact of adoption of this standard has not yet been determined.

IFRIC 23 Uncertainty over Income Tax Treatments
On June 7, 2017, the IASB issued IFRIC Interpretation 23 Uncertainty over Income Tax Treatments. The Interpretation provides guidance on the accounting for current and deferred tax liabilities and assets in circumstances in which there is uncertainty over income tax treatments. The Interpretation is applicable for annual periods beginning on or after January 1, 2019. The extent of the impact of adoption of the Interpretation has not yet been determined.

IAMGOLD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - JUNE 30, 2017
PAGE 36


4.
ACQUISITION
Merrex - Siribaya Project
On February 28, 2017, in an all-share transaction, the Company acquired all of the issued and outstanding common shares and all of the outstanding common share purchase warrants and options of Merrex Gold Inc. ("Merrex"), that it did not already own. Merrex owns a 50% interest in the Siribaya project in Mali. Including the 50% interest held directly, the Company now has a 100% interest in the Siribaya project. IAMGOLD issued an aggregate of approximately 6.9 million common shares. The total purchase price amounted to $27.5 million, which includes transaction costs of $0.2 million, and is net of cash and cash equivalents acquired of $0.1 million.
Based on management’s judgment, the acquisition does not meet the IFRS definition of a business combination as the primary asset (Siribaya project) is an exploration stage property and has not identified economically recoverable ore reserves. Consequently, the transaction has been recorded as an asset acquisition.
The total purchase price was allocated to the assets acquired and the liabilities assumed based on the fair value of the total consideration transferred at the closing date of the acquisition.
Assets acquired and liabilities assumed
Notes
 
Exploration and evaluation assets
11
$
36.6

Current liabilities
 
(3.9
)
Other non-current liabilities
 
(0.4
)
 
 
$
32.3

Consideration transferred
 
 
Share consideration
 
$
27.4

Less: Cash and cash equivalents acquired
 
(0.1
)
Transaction costs
 
0.2

 
 
27.5

Initial investment 1
9
4.8

 
 
$
32.3

1
Prior to completion of the above mentioned transaction, IAMGOLD owned approximately 45.8 million common shares of Merrex, which represented approximately 23% of Merrex's issued and outstanding common shares, and was accounted for as an investment in an associate, using the equity method (note 9). The carrying amount of the investment of $4.8 million on the date of the acquisition has been included in the total cost of the Merrex Exploration and evaluation assets (note 11).
5.
DIVESTITURE
Sale of a 30% interest in the Côté Gold Project
On May 8, 2017, the Company entered into a Memorandum of Understanding with Sumitomo Metal Mining Co., Ltd. (“SMM”) under which SMM would acquire a 30% interest in the Côté Gold Project (the "Project"), including certain assets and liabilities attributable thereto, for an aggregate consideration of $195 million. The Company undertook a reorganization of its interest in the Côté Gold Project so that the Company’s interest would be held directly. Prior to the reorganization, the Company held its interest through wholly-owned subsidiaries.
On June 5, 2017, the Company entered into a definitive Investment Agreement and a definitive Joint Venture Agreement with SMM with respect to the Côté Gold Project and the transaction closed on June 20, 2017. On closing, the Company received $100 million of the consideration and the remaining consideration of $95 million is receivable on the earlier of:
(a)
18 months following the closing date (December 20, 2018);
(b)
the date the Côté Gold Project feasibility study is made available to the public; and
(c)
should it elect to do so and only as permitted under the Joint Venture Agreement, the date SMM sells its participating interest.
The Company paid $3.5 million in transaction costs upon closing of the transaction and has committed to pay a further $2.9 million on receipt of the remaining receivable of $95 million. The remaining $95 million long-term receivable from SMM has been discounted to its present value of $93.2 million.
Upon entering into the Investment Agreement with SMM, the Company performed an impairment assessment of the Project, and as a result, reversed its previously recognized impairment charge of $400 million (note 26), resulting in a carrying amount of exploration and evaluation assets of the Côté Gold Project of $390.4 million.
On closing, the Company recorded a net gain of $19.2 million, on the sale of a 30% interest in the Côté Gold Project to SMM, which has been included under Interest income and derivatives and other investment gains in the Consolidated statements of earnings and is net of transaction costs (note 24).


IAMGOLD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - JUNE 30, 2017
PAGE 37


The Company continues to control the Côté Gold Project. Judgment was applied by the Company in determining the appropriate accounting treatment for its undivided interest in the Côté Gold Project's assets and liabilities beginning June 20, 2017, and based on interpretation of relevant guidance under IFRS 11 Joint Arrangements, the Company has accounted for the Côté Gold Project by recording its 70% share of assets, liabilities, revenues and expenses in these consolidated interim financial statements.
The following represents the Company's 30% interest in the Côté Gold Project which was sold to SMM on June 20, 2017:
Carrying amount
Notes
30% disposal

Current assets
 
$
0.1

Exploration and evaluation assets
11
167.3

Non-current assets
 
0.6

Current liabilities
 
(0.1
)
Other non-current liabilities
 
(0.3
)
 
 
$
167.6

The following represents the Company's gain recorded on the sale of a 30% interest in the Côté Gold Project to SMM:
 
Notes
 
Gross sale consideration
 
$
195.0

Less:
 
 
Sale of a 30% interest in the Côté Gold Project
 
(167.6
)
Transaction costs
 
(6.4
)
Time value discount on long-term receivable
 
(1.8
)
Gain on sale of a 30% interest in the Côté Gold Project
24
$
19.2

6.
RESTRICTED CASH
(a)
Short-term restricted cash
As at June 30, 2017, the Company had no short-term restricted cash (December 31, 2016 - $92.0 million) held by the Government of Quebec to guarantee the asset retirement obligation related to the Doyon mine. The Company replaced the cash collateral, pursuant to arrangements with international insurance companies, with uncollateralized surety bonds, as prescribed by Quebec Government regulations. As at June 30, 2017, C$123.6 million (June 30, 2017 - $95.2 million; December 31, 2016 ‐ $nil), of uncollateralized surety bonds were outstanding to guarantee the asset retirement obligation related to the Doyon mine (note 16(c)).
(b)
Long-term restricted cash
The Company had long-term restricted cash of $18.9 million and $5.0 million as at June 30, 2017 (December 31, 2016 - $13.7 million and $5.0 million) for the guarantee of the asset retirement obligations related to Essakane and Rosebel, respectively.
7.
RECEIVABLES AND OTHER CURRENT ASSETS
 
Notes
June 30,
2017
December 31,
2016
Gold receivables
 
$
0.2

$
2.7

Receivables from governments1
 
41.4

40.4

Receivables from related parties
28
0.2

1.2

Other receivables
 
3.5

4.9

Total receivables
 
45.3

49.2

Marketable securities and warrants
 
—

0.2

Prepaid expenses
 
7.6

7.2

Derivatives
 
4.9

4.4

 
 
$
57.8

$
61.0

1
Receivables from governments relate primarily to value added tax.

IAMGOLD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - JUNE 30, 2017
PAGE 38


8.
INVENTORIES 
 
Notes
June 30,
2017
December 31,
2016
Finished goods
 
$
52.0

$
49.1

Ore stockpiles
 
3.1

9.1

Mine supplies
 
140.0

149.7

 
 
195.1

207.9

Ore stockpiles included in other non-current assets
12
160.4

156.0

 
 
$
355.5

$
363.9

For the three and six months ended June 30, 2017, the Company recognized a net realizable value write-down in non-current ore stockpiles amounting to $nil and $3.4 million, respectively (three and six months ended June 30, 2016 - $nil and $0.1 million, respectively).
For the three and six months ended June 30, 2017, the Company recognized an obsolescence write-down in supplies inventories amounting to $1.5 million and $6.6 million (three and six months ended June 30, 2016 - $1.0 million and $2.9 million), respectively.
For the three and six months ended June 30, 2017, $nil and $0.7 million were recognized in Cost of sales for costs related to operating below normal capacity at Westwood (three and six months ended June 30, 2016 - $4.6 million and $10.7 million), respectively.
9.
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
 
Notes
Associates1
Sadiola2
Yatela2
Total
Balance, January 1, 2016
 
$
7.4

$
49.2

$
—

$
56.6

Currency translation adjustment
 
(0.3
)
—

—

(0.3
)
Share of net earnings (loss), net of income taxes
 
(0.8
)
9.0

(2.1
)
6.1

Share of net loss recorded as provision
 
—

—

2.1

2.1

Share of dividends received
 
—

(11.3
)
—

(11.3
)
Disposal3
 
(0.6
)
—

—

(0.6
)
Balance, December 31, 2016
 
5.7

46.9

—

52.6

Purchase of additional shares of associate4
 
7.4

—

—

7.4

Currency translation adjustment

0.9

—

—

0.9

Share of net earnings (loss), net of income taxes
 
(0.6
)
7.2

—

6.6

Acquisition of control over associate5
4
(4.8
)
—

—

(4.8
)
Balance, June 30, 2017
 
$
8.6

$
54.1

$
—

$
62.7

1
IAMGOLD includes results based on the latest publicly available information.
2
The Company's incorporated joint ventures are not publicly listed.
3
On March 16, 2016, the Company disposed of its 41% ownership interest in Galane Gold Ltd. ("Galane") which had a carrying amount of $0.6 million on the date of disposal for cash proceeds of $0.2 million. The resulting loss of $0.4 million, net of transaction costs, was recognized in Interest income and derivatives and other investment gains in the Consolidated statements of earnings (note 24).
4
Associates include INV Metals Inc. ("INV Metals") a publicly traded company incorporated in Canada and Merrex prior to February 28, 2017 (note 4). The Company's ownership interest in INV Metals as at June 30, 2017 was 35.6% (December 31, 2016 - 35.6%). On March 2, 2017, the Company participated in INV Metals' common shares public equity offering and acquired an additional 9.8 million common shares of INV Metals at a price of C$1.00 per share for an aggregate amount of $7.4 million (C$9.8 million). This acquisition allowed the Company to maintain a 35.6% ownership in INV Metals.
5
On February 28, 2017, Merrex became a 100% subsidiary of the Company (note 4). As a result, the Company accounted for Merrex under the consolidation method as at February 28, 2017. The Company previously accounted for Merrex as an associate, using the equity method.

IAMGOLD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - JUNE 30, 2017
PAGE 39


10.
PROPERTY, PLANT AND EQUIPMENT
 
Construction
in progress
Mining
properties
Plant and
equipment
Total
Cost
 
 
 
 
Balance, January 1, 2016
$
7.9

$
2,133.6

$
1,821.3

$
3,962.8

Additions
34.9

172.1

87.3

294.3

Changes in asset retirement obligations
—

11.7

—

11.7

Disposals
—

—

(42.6
)
(42.6
)
Transfers within Property, plant and equipment
(40.0
)
19.1

20.9

—

Balance, December 31, 2016
2.8

2,336.5

1,886.9

4,226.2

Additions
9.2

72.3

41.5

123.0

Changes in asset retirement obligations
—

(1.0
)
—

(1.0
)
Disposals
—

(0.2
)
(12.2
)
(12.4
)
Transfers within Property, plant and equipment
(9.2
)
9.4

(0.2
)
—

Balance, June 30, 2017
$
2.8

$
2,417.0

$
1,916.0

$
4,335.8

 
Construction
in progress
Mining
properties
Plant and
equipment
Total
Accumulated Depreciation and Impairment
 
 
 
 
Balance, January 1, 2016
$
3.5

$
1,383.0

$
722.5

$
2,109.0

Depreciation expense1
—

98.5

187.5

286.0

Disposals
—

—

(37.0
)
(37.0
)
Transfers within Property, plant and equipment
(3.5
)
—

3.5

—

Balance, December 31, 2016
—

1,481.5

876.5

2,358.0

Depreciation expense1
—

51.9

91.7

143.6

Disposals
—

—

(10.5
)
(10.5
)
Reversal of impairment charges2
—

(124.1
)
—

(124.1
)
Balance, June 30, 2017
$
—

$
1,409.3

$
957.7

$
2,367.0

Carrying amount, December 31, 2016
$
2.8

$
855.0

$
1,010.4

$
1,868.2

Carrying amount, June 30, 2017
$
2.8

$
1,007.7

$
958.3

$
1,968.8

1
Excludes depreciation expense related to Corporate assets, which is included in General and administrative expenses.
2
Note 26.
11.
EXPLORATION AND EVALUATION ASSETS
 
Notes
June 30,
2017
December 31,
2016
Balance, beginning of the period
 
$
169.2

$
155.1

Exploration and evaluation expenditures
 
2.9

14.1

Merrex exploration and evaluation assets
4
36.6

—

Reversal of impairment charge
5, 26
400.0

—

Sale of a 30% interest in the Côté Gold Project
5
(167.3
)
—

Balance, end of the period
 
$
441.4

$
169.2

As at June 30, 2017, Exploration and evaluation assets primarily consist of the Côté Gold Project (carrying amount of $390.4 million), on which the Company recorded an impairment charge reversal of $400 million, as a result of the sale of a 30% interest to SMM (Note 5).

IAMGOLD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - JUNE 30, 2017
PAGE 40


12.
OTHER NON-CURRENT ASSETS
 
Notes
June 30,
2017
December 31,
2016
Ore stockpiles
8
$
160.4

$
156.0

Loan receivable from related party
28
33.1

31.3

Marketable securities and warrants
18(a)
25.9

21.7

Advances for the purchase of capital equipment
 
6.7

19.9

Bond fund investments
18(a)
5.5

5.9

Royalty interests
 
5.6

5.6

Long-term prepayment1
 
4.9

—

Derivatives
 
2.6

4.1

Other
 
4.9

5.2

 
 
$
249.6

$
249.7

1
On March 6, 2017, the Company signed an agreement with a third-party for the construction of a solar power plant to deliver power to the Essakane mine for a period of fifteen years, upon completion of construction expected in December 2017. During the second quarter 2017, the Company issued a prepayment of $4.9 million to the third-party, which will be applied as a credit towards the purchase of solar power from the third- party, over a period of twelve years. The agreement may be terminated by either party if certain conditions are not met. Upon completion of construction of the solar power plant, the Company will account for this arrangement as a finance lease.
As at June 30, 2017, the allowance for doubtful non-current non-trade receivables from related parties was $36.0 million, (December 31, 2016 - $36.0 million).
13.
PROVISIONS
 
June 30,
2017
December 31,
2016
Asset retirement obligations
$
284.0

$
285.1

Yatela loss provision
15.0

15.0

Other
6.8

5.5

 
$
305.8

$
305.6

 




Current portion of provisions
$
16.6

$
15.8

Non-current provisions
289.2

289.8

 
$
305.8

$
305.6

(a)    Asset retirement obligations
The Company’s activities are subject to various laws and regulations regarding environmental restoration and closure provisions for which the Company estimates future costs. These provisions may be revised on the basis of amendments to such laws and regulations and the availability of new information, such as changes in reserves corresponding to a change in the mine life and discount rates, changes in estimated costs of reclamation activities and acquisition or construction of a new mine. The Company makes a provision based on the best estimate of the future cost of rehabilitating mine sites and related production facilities on a discounted basis.
(b)
Provisions for litigation claims and regulatory assessments
As at June 30, 2017, the Company did not have any material provisions for litigation claims or regulatory assessments. Further, the Company does not believe claims or regulatory assessments, for which no provision has been recorded, will have a material impact on the financial position of the Company.

IAMGOLD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - JUNE 30, 2017
PAGE 41


14.
OTHER LIABILITIES
 
Notes
June 30,
2017
December 31,
2016
Finance lease liabilities
18(b)
$
0.1

$
0.1

Derivatives
18(a)
0.5

2.0

Other liabilities
 
2.9

—

 
 
$
3.5

$
2.1

Current other liabilities
 
$
0.3

$
2.1

Non-current other liabilities
 
3.2

—

 
 
$
3.5

$
2.1

15.
INCOME TAXES
The Company estimates the effective tax rate expected to be applied for the full fiscal year and uses this rate to determine income provisions in interim periods. The impact of changes in judgments and estimates concerning the probable realization of losses, changes in tax rates, and foreign exchange rates are recognized in the interim period in which they occur.
The tax expense for the three and six months ended June 30, 2017 were $53.5 million and $62.2 million, respectively (three and six months ended June 30, 2016 - $14.0 million and $20.0 million, respectively) and varied from the tax expense calculated using the combined Canadian federal and provincial statutory income tax rate of 26.6%. The variance was mainly due to changes to deferred income tax assets and liabilities as a result of the reversals of impairment charges and net fluctuations in the mix of income for the recognition of certain tax benefits and related deferred tax assets. 
16.
LONG-TERM DEBT AND CREDIT FACILITIES
(a)
Senior notes
i.7.0% Senior secured notes ("Notes")
On March 16, 2017, the Company issued at face value $400 million of Notes due in 2025 with an interest rate of 7.00% per annum. The Notes are denominated in U.S. dollars and mature on April 15, 2025. Interest is payable in arrears in equal semi-annual installments on April 15 and October 15 of each year, beginning on October 15, 2017. The Notes are guaranteed by some of the Company's subsidiaries.
The Company incurred transaction costs of $6.4 million which have been capitalized and offset against the carrying amount of the Notes within Long-term debt in the Consolidated balance sheets and are being amortized using the effective interest rate method.
Except for the prepayment options as noted below, the Notes are not redeemable, in whole or part, by the Company until April 15, 2020. On and after April 15, 2020, the Company may redeem the Notes, in whole or in part, at the relevant redemption price (expressed as a percentage of the principal amount of the Notes) and accrued and unpaid interest on the Notes up to the redemption date. The redemption price for the Notes during the 12-month period beginning on April 15 of each of the following years is: 2020 - 105.25%; 2021 - 103.50%; 2022 - 101.75%; 2023 and thereafter - 100%.
Prior to April 15, 2020, the Company may redeem some or all of the Notes at a price equal to 100% of the principal amount of the Notes plus a "make-whole" premium, plus accrued and unpaid interest.
Prior to April 15, 2020, using the cash proceeds from an equity offering, the Company may redeem up to 40% of the original aggregate principal amount of the Notes at a redemption price equal to 107% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, up to the redemption date.
The fair value of the prepayment option embedded derivative (note 18(a)), which is an option that represents a derivative asset to the Company, is presented as an offset to the Notes on the Consolidated balance sheets. The debt component was initially recognized as $4.2 million, which represents the difference between the fair value of the financial instrument as a whole and the fair value of the embedded derivative.
Subsequently, the debt component is recognized at amortized cost using the effective interest rate method. The embedded derivative represents the prepayment option and is classified as a financial asset at fair value through profit or loss ("FVTPL"). The embedded derivative is subsequently recognized at fair value with changes in the fair value recognized in the Company’s Consolidated statements of earnings. The fair value of the embedded derivative as at June 30, 2017 was $5.8 million (note 17(c)).




IAMGOLD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - JUNE 30, 2017
PAGE 42


Under the indenture governing the Notes‎, if the Company makes certain asset sales it may use an amount equal to the net proceeds to repay certain debt obligations and/or reinvest, or commit to reinvest, in the Company’s business, within 365 days after the applicable asset sale.  At the end of the 365-day period, if there remains $50 million or more of the net proceeds that the Company has not used in this manner, the Company would be required to use any such excess proceeds to offer to purchase the Notes at par in the manner described in the indenture.
The following are the contractual maturities related to the Notes, including interest payments:
 
Payments due by period1
Notes balance as at
Carrying amount2
Contractual cash flows
<1 yr
1-2 yrs
3-5 yrs
>5 yrs
June 30, 2017
$
400.0

$
625.2

$
29.2

$
56.0

$
56.0

$
484.0

December 31, 2016
$
489.1

$
621.1

$
33.0

$
66.0

$
522.1

$
—

1
Note 25(e).
2
The carrying amount of the long-term debt excludes unamortized deferred transaction costs of the Notes of $6.2 million as at June 30, 2017 (December 31, 2016 – $4.0 million). The carrying amount of the long-term debt also excludes the embedded derivative classified as a financial asset at fair value through profit or loss (note 17(c)).
ii.6.75% Senior unsecured notes
On September 21, 2012, the Company issued at face value $650 million of Senior unsecured notes with an interest rate of 6.75% per annum. The 6.75% Senior unsecured notes are denominated in U.S. dollars and mature on October 1, 2020. Interest is payable in arrears in equal semi-annual installments on April 1 and October 1.
In April 2016, the Company canceled, at face value, $15.0 million of Notes it purchased in 2015.
In the third quarter of 2016, the Company purchased at face value, pursuant to a tender offer, an additional $145.9 million of the 6.75% Senior unsecured notes for cash consideration of $141.5 million. The resulting gain, net of transaction costs was $4.0 million and was recognized in the third quarter of 2016 in Interest income and derivatives and other investment gains in the Consolidated statements of earnings.
On March 16, 2017, the Company issued a notice to redeem its 6.75% Senior unsecured notes for a total amount of $505.6 million and completed the redemption on April 3, 2017. As a result of the change in the estimated future cash flows, the amortized cost of $485.4 million of the 6.75% Senior unsecured notes was adjusted during the first quarter 2017 to reflect the actual future cash flows of $505.6 million. The resulting loss of $20.2 million was recognized in the first quarter 2017 in Interest income and derivatives and other investment gains in the Consolidated statements of earnings (note 24).
(b)
Credit facilities
On February 1, 2016, the Company entered into a four-year $250 million credit facility consisting of a fully committed $100 million secured revolving credit facility and a $150 million accordion. During 2016, the Company amended the credit facility to increase the fully committed credit facility from $100 million to $170 million, resulting in $80 million remaining under the accordion. On February 7, 2017, the Company amended the credit facility, utilizing the remaining accordion and adding additional commitments of $80 million, bringing the total commitments under the facility to $250 million, with similar terms and conditions. The key terms of the facility include limitations on incremental debt, restrictions on distributions and financial covenants including Net Debt to EBITDA, Tangible Net Worth, Interest Coverage and Minimum Liquidity. The credit facility provides for an interest rate margin above London Interbank Offered Rate (“LIBOR”), banker’s acceptance (“BA”) prime rate and base rate advances which varies according to the total net debt ratio of the Company. Fees related to the credit facility vary according to the total net debt ratio of the Company. This credit facility is secured by some of the Company's real assets, guarantees by some of the Company’s subsidiaries and pledges of shares in some of the Company's subsidiaries. The maturity date of this credit facility is February 1, 2020. The Company was in compliance with its credit facility covenants as at June 30, 2017.
Upon entering into the $250 million credit facility described above, the Company terminated its four-year $500 million unsecured revolving credit facility. During the first quarter 2016 and prior to termination, the Company repaid the $70 million outstanding on the previous credit facility. Letters of credit worth $2.9 million were issued under the Company’s revolving credit facility and $0.4 million under a separate letter of credit. As of June 30, 2017, letters of credit worth $2.9 million were drawn against the credit facility for the guarantee of certain asset retirement obligations.
(c)
Uncollateralized surety bonds
As at June 30, 2017, C$123.6 million (June 30, 2017 - $95.2 million; December 31, 2016 ‐ $nil) of uncollateralized surety bonds were outstanding to guarantee the asset retirement obligation related to the Doyon mine.  The uncollateralized surety bonds were issued pursuant to arrangements with international insurance companies (note 6(a)).

IAMGOLD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - JUNE 30, 2017
PAGE 43


17.
FINANCIAL INSTRUMENTS
(a)Financial assets measured at fair value through other comprehensive income
Marketable securities fair value reserve
Share market price exposure risk is related to the fluctuation in the market price of marketable securities. The Company’s portfolio of marketable securities is not part of its core operations, and accordingly, gains and losses from these marketable securities are not representative of the Company’s performance during the period. Consequently, the Company has designated all of its investments in marketable securities to be measured at fair value through Other comprehensive income ("OCI"). The Company’s portfolio of marketable securities is primarily focused on the mining sector and relates entirely to investments in equity securities.
 
Three months ended June 30,
Six months ended June 30,
 
2017
2016
2017
2016
Proceeds from sale of marketable securities
$
0.3

$
—

$
0.3

$
0.1

Acquisition date fair value of marketable securities sold
(0.1
)
—

(0.1
)
(2.1
)
Gain (loss) on sale of marketable securities recorded in OCI
$
0.2

$
—

$
0.2

$
(2.0
)
(b)Cash flow hedge fair value reserve
(i)
Hedge gain/loss
 
Gain (loss) recognized in cash flow hedge reserve
(Gain) loss reclassified or adjusted from cash flow hedge reserve
 
Three months ended June 30, 2017
Six months ended June 30, 2017
Three months ended June 30, 2017
Six months ended June 30, 2017
Exchange rate risk
 
 
 
 
Canadian dollar option contracts
$
1.1

$
1.5

$
—

$
(0.1
)
Euro option contracts
1.9

1.8

(0.1
)
—

Crude oil option contracts
(0.4
)
0.1

—

—

 
2.6

3.4

(0.1
)
(0.1
)
Time value of option contracts excluded from hedge relationship
0.9

(2.7
)
—

—

 
$
3.5

$
0.7

$
(0.1
)
$
(0.1
)
 
Gain (loss) recognized in cash flow hedge reserve
(Gain) loss reclassified or adjusted from cash flow hedge reserve
 
Three months ended June 30, 2016
Six months ended June 30, 2016
Three months ended June 30, 2016
Six months ended June 30, 2016
Exchange rate risk
 
 
 
 
Canadian dollar option contracts
$
2.4

$
2.8

$
1.2

$
3.6

Euro option contracts
(0.6
)
1.8

(0.6
)
(0.8
)
Crude oil option contracts
5.4

6.0

—

1.7

 
7.2

10.6

0.6

4.5

Time value of option contracts excluded from hedge relationship
0.9

0.6

—

—

 
$
8.1

$
11.2

$
0.6

$
4.5


IAMGOLD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - JUNE 30, 2017
PAGE 44


 
(Gain) loss reclassified from cash flow hedge reserve to:
(Gain) loss reclassified from cash flow hedge reserve to:
 
Three months ended June 30, 2017
Three months ended June 30, 2016
Six months ended June 30, 2017
Six months ended June 30, 2016
Consolidated balance sheets
 
 
 
 
Property, plant and equipment
$
—

$
(0.1
)
$
—

$
0.2

Consolidated statements of earnings
 
 


 
Cost of sales
—

0.3

—

3.0

General and administrative expenses
(0.1
)
0.4

(0.1
)
1.3

Total
$
(0.1
)
$
0.6

$
(0.1
)
$
4.5

There was no hedge ineffectiveness for the three and six months ended June 30, 2017 and 2016.
(ii)
Currency exchange rate risk
Movements in the Canadian dollar (C$) and the Euro (€) against the U.S. dollar ($) have a direct impact on the Company’s consolidated financial statements.
The Company manages its exposure to the Canadian dollar and the Euro by executing option contracts. The Company’s objective is to hedge its exposure to these currencies resulting from operating and capital expenditure requirements at some of its mine sites and corporate offices.
The Company has designated option contracts as cash flow hedges for its highly probable forecasted Canadian dollar and Euro expenditure requirements. The Company has elected to only designate the change in the intrinsic value of options in the hedging relationships. The change in fair value of the time value component of options is recorded in OCI as a cost of hedging.
An economic relationship exists between the hedged items and the hedging instruments as the fair values of both the hedged items and hedging instruments move in opposite directions in response to the same risk. The hedge ratio is determined by dividing the quantity of option contracts by the quantity of the forecasted Canadian dollar and Euro expenditure exposures.
As at June 30, 2017, the Company's outstanding derivative contracts which qualified for hedge accounting and the periods in which the cash flows are expected to occur and impact the Consolidated statements of earnings, are as follows:
 
2017

2018

Total

Cash flow hedges
 
 
 
Exchange rate risk
 
 
 
   Canadian dollar option contracts (millions of C$)
78

155

233

   Contract rate range ($/C$)
1.30-1.401

1.30-1.452



   Euro option contracts (millions of €)
63

—

63

Contract rate range (€/$)
1.00-1.203

—



1
The Company purchased three types of Canadian dollar options in 2017, which consist of U.S. dollar put options at a strike price of $1.30, U.S. dollar put options at a strike price of $1.35, and collar options in the range of $1.30 and $1.40. The Company will benefit from the margin between the lower market price and the set U.S. dollar put strike price of $1.30 and $1.35. If U.S dollar to C$ market prices are above the $1.40 call strike prices in 2017, the Company will incur a loss from the margin between the higher market price and the $1.40 call strike price.
2
The Company purchased Canadian dollar collar options with strike prices within the given range in 2018. If U.S dollar to C$ market prices are below the low end of the range of the U.S. dollar put strike prices in 2018, the Company will benefit from the margin between the lower market price and the set put strike price. If U.S dollar to C$ market prices are above the high end of the range of the U.S. dollar call strike prices in 2018, the Company will incur a loss from the margin between the higher market price and the set call strike price.
3
The Company purchased Euro collar options with strike prices within the given range in 2017. If EUR to U.S. dollar market prices are below the low end of the range in 2017, the Company will incur a loss from the margin between the lower market price and the set put strike price. If EUR to U.S. dollar market prices are above the high end of the range of the call strike price in 2017, the Company will benefit from the margin between the higher market price and the set call strike price.

IAMGOLD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - JUNE 30, 2017
PAGE 45


Additional information on hedging instruments and hedged forecast transactions related to currency exchange rate risk as at June 30, 2017 and December 31, 2016 were as follows:
 
Carrying amount
 
Fair value changes used for calculating hedge ineffectiveness
As at June 30, 2017
Assets
Liabilities
Accumulated cash flow hedge fair value reserve (before tax)
Hedging instruments
Hedged items
Canadian option contracts
$
4.5

$
—

$
1.5

$
1.5

$
(1.5
)
Euro option contracts
1.6

—

1.4

1.4

(1.4
)
 
$
6.1

$
—

$
2.9

$
2.9

$
(2.9
)
 
Carrying amount
 
Fair value changes used for calculating hedge ineffectiveness
As at December 31, 2016
Assets
Liabilities
Accumulated cash flow hedge fair value reserve (before tax)
Hedging instruments
Hedged
items
Canadian option contracts
$
2.1

$
—

$
0.2

$
0.2

$
(0.2
)
Euro option contracts
0.2

(2.0
)
(0.4
)
(0.4
)
0.4

 
$
2.3

$
(2.0
)
$
(0.2
)
$
(0.2
)
$
0.2

(iii)
Oil and fuel market price risk
Low sulfur diesel and fuel oil are key inputs to extract tonnage and, in some cases, to wholly or partially power operations. Brent crude oil and West Texas Intermediate (WTI) are components of diesel and fuel oil, respectively, such that changes in the price of crude oil directly impacts diesel and fuel oil costs. The Company established a hedging strategy to limit the impact of fluctuations in crude oil prices and to economically hedge future consumption of diesel and fuel oil at the Rosebel and Essakane mines. The Company has designated option contracts as cash flow hedges for the crude oil component of its highly probable forecasted low sulfur diesel and fuel oil purchases.
As at June 30, 2017, the Company’s outstanding crude oil derivative contracts, which qualified for hedge accounting, and the periods in which the cash flows are expected to occur and impact the Consolidated statements of earnings, are as follows:
 
2017

2018

2019

Total

Brent crude oil option contracts (barrels)1
252

452

324

1,028

Option contracts with strike prices at ($/barrel)
602

46-603

44-603

 
WTI crude oil option contracts (barrels)1
198

366

276

840

Option contracts with strike prices at ($/barrel)
602

42-603

42-603

 
1
Quantities of barrels are in thousands.
2
The Company purchased call options with a strike price of $60. If crude oil prices are greater than the call strike price ($60) in 2017, the Company will benefit from the margin between the higher market price and the set call strike price.
3
The Company purchased Brent and WTI collar options with strike prices within the given range in 2018 and 2019. If Brent and WTI market prices are below the low end of the range in 2018 and 2019, the Company will incur a loss from the margin between the lower market price and the set put strike price. If Brent and WTI are above the high end of the range of the call strike price in 2018 and 2019, the Company will benefit from the margin between the higher market price and the set call strike price.

IAMGOLD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - JUNE 30, 2017
PAGE 46



Additional information on hedging instruments and hedged forecast transactions related to oil and fuel market price risk as at June 30, 2017 and December 31, 2016 were as follows:
 
Carrying amount
 
Fair value changes used for calculating hedge ineffectiveness
As at June 30, 2017
Assets
Liabilities
Accumulated cash flow hedge fair value reserve (before tax)
Hedging instruments
Hedged items
Brent crude oil option contracts
$
1.0

$
(0.1
)
$
—

$
—

$
—

WTI crude oil option contracts
0.4

(0.4
)
—

—

—

 
$
1.4

$
(0.5
)
$
—

$
—

$
—

 
Carrying amount
 
Fair value changes used for calculating hedge ineffectiveness
As at December 31, 2016
Assets
Liabilities
Accumulated cash flow hedge fair value reserve (before tax)
Hedging instruments
Hedged items
Brent crude oil option contracts
$
4.0

$
—

$
—

$
—

$
—

WTI crude oil option contracts
2.2

—

—

—

—

 
$
6.2

$
—

$
—

$
—

$
—

(c)Gain (loss) on non-hedge derivatives and warrants
Gain (loss) on non-hedge derivatives and warrants is included in Interest income and derivatives and other investment gains (note 24) in the Consolidated statements of earnings. These gains relate to warrants associated with the Company's investments in marketable securities and the fair value movement of the embedded derivative.
 
 
Three months ended June 30,
Six months ended June 30,
 
Notes
2017
2016
2017
2016
Embedded derivative
16(a)
$
1.6

$
—

$
1.6

$
—

Warrants
24
(1.0
)
2.7

(0.4
)
4.0

 
 
$
0.6

$
2.7

$
1.2

$
4.0

18.
FAIR VALUE MEASUREMENTS
The fair value hierarchy categorizes into three levels the inputs to valuation techniques used to measure fair value. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs).
▪
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities which the entity can access at the measurement date.
▪
Level 2 inputs are inputs other than quoted prices included within Level 1 which are observable for the asset or liability, either directly or indirectly such as those derived from prices.
▪
Level 3 inputs are unobservable inputs for the asset or liability.
There have been no changes in the classification of the financial instruments in the fair value hierarchy since December 31, 2016.

IAMGOLD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - JUNE 30, 2017
PAGE 47


(a)
Financial assets and liabilities measured at fair value on a recurring basis
As at June 30, 2017, the Company’s fair value of financial assets and liabilities were as follows:
 
June 30, 2017
December 31, 2016
 
Carrying Amount
Level 1
Level 2
Level 3
Total Fair Value
Total Fair Value
Assets
 
 
 
 
 
 
Cash and cash equivalents
$
776.2

$
776.2

$
—

$
—

$
776.2

$
652.0

Restricted cash
23.9

23.9

—

—

23.9

110.7

Marketable securities and warrants
25.9

21.5

4.4

—

25.9

21.9

Bond fund investments
5.5

5.5

—

—

5.5

5.9

Derivatives
 
 
 
 
 
 
Currency contracts
6.1

—

6.1

—

6.1

2.3

Crude oil contracts
1.4

—

1.4

—

1.4

6.2

Embedded derivative
5.8

—

5.8

—

5.8

—

 
$
844.8

$
827.1

$
17.7

$
—

$
844.8

$
799.0

Liabilities
 
 
 
 
 

Derivatives






Crude oil contracts
$
(0.5
)
$
—

$
(0.5
)
$
—

$
(0.5
)
$
(2.0
)
6.75% Senior unsecured notes
—

—

—

—

—

(474.0
)
Long-term debt
(400.0
)
(414.5
)
—

—

(414.5
)
—

 
$
(400.5
)
$
(414.5
)
$
(0.5
)
$
—

$
(415.0
)
$
(476.0
)
 
(b)
Valuation techniques
Marketable securities and warrants
The fair value of marketable securities included in Level 1 is determined based on a market approach. The closing price is a quoted market price from the exchange market which is the principal active market for the particular security. The fair value of warrants included in Level 2 is obtained through the use of Black-Scholes pricing model, which uses share price inputs and volatility measurements. The fair value of investments in equity instruments which are not actively traded is determined using valuation techniques which require inputs that are both unobservable and significant, and therefore were categorized as Level 3 in the fair value hierarchy. The Company used the latest transaction price for these securities, obtained from the entity, to value these marketable securities and warrants.
Bond fund investments
The fair value of bond fund investments included in Level 1 is measured using quoted prices (unadjusted) in active markets.
Derivatives
For derivative contracts, the Company obtains a valuation of the contracts from counterparties of those contracts. The Company assesses the reasonableness of these valuations through internal methods and third-party valuations. The Company then calculates a credit valuation adjustment to reflect the counterparty’s or the Company’s own default risk. Valuations are based on the present value of market valuations considering interest rate and volatility, taking into account the credit risk of the financial instrument. Valuations of derivative contracts are therefore classified within Level 2 of the fair value hierarchy.
Embedded Derivative
The fair value of the embedded derivative as at June 30, 2017 was $5.8 million and is accounted for at FVTPL. The valuation is based on the discounted cash flows at the risk-free rate to determine the present value of the redemption option. Key inputs used in the valuation include the credit spread, volatility parameter and the risk-free rate curve. Valuation of the redemption option is therefore classified within Level 2 of the fair value hierarchy.
Senior Notes
The fair value of Senior Notes required to be disclosed is determined using quoted prices (unadjusted) in active markets, and is therefore classified within Level 1 of the fair value hierarchy. The fair value of the Notes as at June 30, 2017 was $414.5 million (December 31, 2016 - $474.0 million).

IAMGOLD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - JUNE 30, 2017
PAGE 48


Investments in associates
Investments in associates are measured at fair value on a non-recurring basis when an impairment charge or reversal is to be recorded. After application of the equity method, the fair value of an investment in associate is determined for purposes of assessing whether an impairment charge or reversal of a previously recorded impairment charge is required. For publicly traded companies, the Company determines the fair value of its investments in associates based on a market approach reflecting the closing price of the investments in the associates' shares at the balance sheet date. Since there is a quoted market price, this is classified within Level 1 of the fair value hierarchy. As at June 30, 2017, no investments in associates were measured at fair value.
Finance lease liabilities
Finance lease liabilities are accounted for at amortized cost, using the effective interest rate method. The fair value required to be disclosed is determined using market interest rate inputs and is therefore classified within Level 2 of the fair value hierarchy (note 14). The fair value at June 30, 2017 of the Company's finance lease liabilities approximates their carrying amount of $0.1 million (December 31, 2016 - $0.1 million).
Other financial assets and liabilities
The fair value of all other financial assets and liabilities of the Company approximate their carrying amounts.
19.
SHARE CAPITAL
The Company is authorized to issue an unlimited number of common shares, first preference shares issuable in series and second preference shares issuable in series.
 
 
Six months ended June 30,
Number of common shares (in millions)
Notes
2017
2016
Outstanding, beginning of the period
 
453.8

393.4

Equity issuance - Merrex acquisition
4
6.9

—

Issuance of flow-through common shares
 
3.4

12.0

Issuance of shares for share-based compensation
 
0.7

0.6

Outstanding, end of period
 
464.8

406.0

Flow-through common shares
In March 2017, the Company issued 3.4 million flow-through common shares at C$5.91 per share for net proceeds of $15.1 million (C$20.0 million), which included a $1.7 million premium reported as a deferred gain on the balance sheet to be recognized in earnings as eligible expenditures are made. A total of $13.4 million was recognized in equity based on the quoted price of the shares on the date of the issue less issuance costs. The flow-through common shares were issued to fund prescribed development expenditures on the Westwood mine. Flow-through common shares require the Company to incur an amount equivalent to the proceeds of the issue on prescribed expenditures in accordance with the applicable tax legislation. As at June 30, 2017, there was no remaining unspent amount.
During the fourth quarter 2016, the Company issued 0.9 million flow-through common shares at prices ranging between C$6.56 and C$6.63 per share for net proceeds of $4.4 million (C$5.9 million), which included a $1.1 million premium reported as a deferred gain on the balance sheet to be recognized in earnings as eligible expenditures are made. A total of $3.3 million was recognized in equity based on the quoted price of the shares on the date of the issue less issuance costs. The flow-through common shares were issued to fund prescribed exploration expenditures on the Côté Gold Project.  As at June 30, 2017, the remaining unspent amount was $1.3 million.
Additionally, during the fourth quarter 2016, the Company issued 2.2 million flow-through common shares at prices ranging between C$5.34 and C$5.60 per share for net proceeds of $8.9 million (C$11.9 million), which included a $0.8 million premium reported as a deferred gain on the balance sheet to be recognized in earnings as eligible expenditures are made. A total of $8.1 million was recognized in equity based on the quoted price of the shares on the date of the issue less issuance costs. The flow-through common shares were issued to fund prescribed development expenditures on the Westwood mine. As at June 30, 2017, there was no remaining unspent amount.
For the three and six months ended June 30, 2017, $1.5 million and $3.3 million were recognized as amortization of the gains related to the issuances of flow-through common shares described above (three and six months ended June 30, 2016 - $1.4 million and $2.1 million), respectively, and was included in Interest income and derivatives and other investment gains in the Consolidated statements of earnings (note 24).





IAMGOLD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - JUNE 30, 2017
PAGE 49


Contingently issuable shares
On December 12, 2016, the Company finalized the agreement with the Government of Suriname to acquire the rights to the Saramacca property. Under the terms of the agreement, the rights to the Saramacca property were transferred to Rosebel in exchange for an initial cash payment of $10.0 million which was accounted for as an Exploration and evaluation asset as at December 31, 2016. The purchase consideration also included 3.125 million contingently issuable IAMGOLD common shares to be delivered in three approximately equal tranches in 12 month intervals, from the date the rights to the Saramacca property were transferred to Rosebel. In addition, the agreement provides for a potential upward adjustment to the purchase price based on the contained gold ounces identified at the Saramacca property in National Instrument 43-101 indicated and measured resource categories, within a certain Whittle shell, over the first 24 months, to a maximum of $10.0 million. Under the terms of the agreement, the Company can at any time during the course of the agreement provide 60 days' notice to the Government of Suriname and terminate the agreement. In such an event, any contingently issuable IAMGOLD common shares not already issued will no longer be required to be delivered to the Government of Suriname.
20.
EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share computation
 
Three months ended June 30,
Six months ended June 30,
 
2017
2016
2017
2016
Numerator
 
 
 
 
Net earnings (loss) attributable to equity holders of IAMGOLD
$
506.5

$
(12.2
)
$
488.5

$
40.9

Denominator (in millions)




Weighted average number of common shares (basic)
464.6

405.9

461.1

401.3

Basic earnings (loss) attributable to equity holders of IAMGOLD ($/share)
$
1.09

$
(0.03
)
$
1.06

$
0.10

Diluted earnings (loss) per share computatio
 
Three months ended June 30,
Six months ended June 30,
 
2017
2016
2017
2016
Denominator (in millions)
 
 
 
 
Weighted average number of common shares (basic)
464.6

405.9

461.1

401.3

Dilutive effect of share options
1.3

—

1.2

—

Dilutive effect of restricted share units
3.4

—

3.1

2.2

Weighted average number of common shares (diluted)
469.3

405.9

465.4

403.5

Diluted earnings (loss) attributable to equity holders of IAMGOLD ($/share)
$
1.08

$
(0.03
)
$
1.05

$
0.10

Equity instruments excluded from the computation of diluted earnings (loss) per share, which could be dilutive in the future, were as follows:
 
 
Three months ended June 30,
Six months ended June 30,
(in millions)
Notes
2017
2016
2017
2016
Share options
 
2.8

6.5

2.8

5.6

Restricted share units
 
—

3.8

—

—

Contingently issuable shares
19
3.1

—

3.1

—

 
 
5.9

10.3

5.9

5.6

 

IAMGOLD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - JUNE 30, 2017
PAGE 50


21.
SHARE-BASED COMPENSATION    
(a)Share option award plan
Six months ended June 30, 2017
Share
options
(in millions)

Weighted average
 exercise price 
(C$/share)1

Outstanding, beginning of the period
6.0

$
7.79

Granted
1.6

5.24

Exercised
(0.1
)
3.74

Forfeited
(0.1
)
14.72

Outstanding, end of the period
7.4

$
7.18

Exercisable, end of the period
3.6

$
9.89

1
Exercise prices are denominated in Canadian dollars. The exchange rate at June 30, 2017 between the U.S. dollar and Canadian dollar was
$0.7702/C$.
The following were the weighted average inputs to the Black-Scholes model used in determining the fair value of the options granted. The estimated fair value of the options is expensed over their expected life.
Six months ended June 30, 2017
 
Weighted average risk-free interest rate
1.1
%
Weighted average expected volatility1
66
%
Weighted average dividend yield
0.00
%
Weighted average expected life of options issued (years)
5.0

Weighted average grant-date fair value (C$ per share)
$
2.89

Weighted average share price at grant date (C$ per share)
$
5.24

Weighted average exercise price (C$ per share)
$
5.24

1
Expected volatility is estimated by considering historic average share price volatility based on the average expected life of the options.
(b)Full value award plans
Full value awards consist of restricted share units.
Six months ended June 30, 2017 (in millions)
 
Outstanding, beginning of the period
3.7

Granted
2.2

Issued
(0.6
)
Forfeited
(0.3
)
Outstanding, end of the period
5.0

The following were the weighted average inputs to the Black-Scholes model used in determining the fair value of the restricted share units granted. The estimated fair value of the awards is expensed over their vesting period.
Six months ended June 30, 2017
 
Weighted average risk-free interest rate
0.8
%
Weighted average expected volatility1
72
%
Weighted average dividend yield
0.00
%
Weighted average expected life of RSUs issued (years)
2.8

Weighted average grant-date fair value (C$ per share)
$
5.24

Weighted average share price at grant date (C$ per share)
$
5.24

1
Expected volatility is estimated by considering historic average share price volatility based on the average expected life of the restricted share units.

IAMGOLD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - JUNE 30, 2017
PAGE 51


22.
COST OF SALES
 
Three months ended June 30,
Six months ended June 30,
 
2017
2016
2017
2016
Operating costs1 
$
155.7

$
136.0

$
307.4

$
278.5

Royalties
11.4

9.8

21.8

19.0

Depreciation expense2
71.5

62.3

134.9

123.8

 
$
238.6

$
208.1

$
464.1

$
421.3

1
Operating costs include mine production, transport and smelter costs, and site administrative expenses.
2
Depreciation expense excludes depreciation related to Corporate assets, which is included in General and administrative expenses.
23.
FINANCE COSTS
 
Three months ended June 30,
Six months ended June 30,
 
2017
2016
2017
2016
Interest expense
$
1.7

$
6.7

$
5.9

$
14.0

Credit facility fees
0.6

0.4

1.2

0.8

Accretion expense
0.2

—

0.4

0.6

 
$
2.5

$
7.1

$
7.5

$
15.4

Total interest paid during the three and six months ended June 30, 2017 was $16.5 million and $16.5 million, respectively (three and six months ended June 30, 2016 - $21.5 million and $21.6 million, respectively). Interest paid relates to interest charges on notes, credit facilities and finance leases.
24.
INTEREST INCOME AND DERIVATIVES AND OTHER INVESTMENT GAINS
 
 
Three months ended June 30,
Six months ended June 30,
 
Notes
2017
2016
2017
2016
Interest income
 
$
2.5

$
0.6

$
3.9

$
1.1

Gain on non-hedge derivatives and warrants
17(c)
0.6

2.7

1.2

4.0

Gain on sale of gold bullion

—

—

—

72.9

Amortization of gains related to flow-through common shares
19
1.5

1.4

3.3

2.1

Loss on 6.75% Senior unsecured notes
16(a)
—

—

(20.2
)
—

Recovery of receivables
 
—

1.9

—

1.5

Gain on sale of a 30% interest in the Côté Gold Project
5
19.2

—

19.2

—

Other gains
 
—

—

0.1

1.6

 
 
$
23.8

$
6.6

$
7.5

$
83.2

 
25.
CASH FLOW ITEMS
(a)    Adjustments for other non-cash items within operating activities
 
 
Three months ended June 30,
Six months ended June 30,
 
Notes
2017
2016
2017
2016
Share-based compensation
 
$
1.7

$
1.2

$
3.1

$
2.5

Amortization of gains related to flow-through common shares
24
(1.5
)
(1.4
)
(3.3
)
(2.1
)
Changes in estimates of asset retirement obligations at closed sites
 
0.7

(0.4
)
1.3

3.3

Derivative gain
 
(0.6
)
(1.8
)
(1.2
)
(0.5
)
Write-down of assets

0.3

0.1

1.3

2.8

Other
 
(1.4
)
(1.2
)
(0.1
)
1.1

 
 
$
(0.8
)
$
(3.5
)
$
1.1

$
7.1


IAMGOLD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - JUNE 30, 2017
PAGE 52


(b)
Movements in non-cash working capital items and non-current ore stockpiles
 
Three months ended June 30,
Six months ended June 30,
 
2017
2016
2017
2016
Receivables and other current assets
$
3.0

$
(0.2
)
$
2.3

$
(7.1
)
Inventories and non-current ore stockpiles
1.9

(11.9
)
(0.8
)
2.6

Accounts payable and accrued liabilities
13.4

17.4

(0.7
)
9.5

 
$
18.3

$
5.3

$
0.8

$
5.0

(c)
Other investing activities
 
 
Three months ended June 30,
Six months ended June 30,
 
Notes
2017
2016
2017
2016
Disposal (acquisition) of investments
 
$
0.8

$
2.2

$
0.4

$
(3.5
)
Advances to related parties
28
(1.4
)
(1.1
)
(2.3
)
(1.8
)
Repayments from related parties
28
0.2

2.0

0.5

2.1

Other
 
0.3

0.1

0.1

0.7

 
 
$
(0.1
)
$
3.2

$
(1.3
)
$
(2.5
)
(d)
Other financing activities
 
Three months ended June 30,
Six months ended June 30,
 
2017
2016
2017
2016
Repayment of finance lease liabilities
$
—

$
(0.5
)
$
—

$
(0.9
)
Dividends paid to non-controlling interests
(1.1
)
(1.5
)
(1.1
)
(1.5
)
Other finance costs
(0.2
)
(0.1
)
(0.9
)
(2.3
)
 
$
(1.3
)
$
(2.1
)
$
(2.0
)
$
(4.7
)
(e)
Reconciliation of long-term debt arising from financing activities
 
Notes

 
Balance, December 31, 2016
 
$
485.1

Net proceeds from issuance of senior notes
16(a)
393.6

Non-cash changes:
 


     Amortization of deferred financing charges
 
0.5

     Change in fair value of embedded derivative
17(c)
(1.6
)
Cash changes:
 


     Loss on 6.75% Senior unsecured notes
16(a)
20.2

     Repayment of 6.75% Senior unsecured notes
16(a)
(505.6
)
 Balance, June 30, 2017
 
$
392.2


26.
REVERSAL OF IMPAIRMENT CHARGES


Three months ended June 30,
Six months ended June 30,

Notes
2017
2016
2017
2016
Suriname CGU1









Property, plant and equipment
10
$
124.1

$
—

$
124.1

$
—

Côté Gold Project









Exploration and evaluation assets
11
400.0

—

400.0

—



$
524.1

$
—

$
524.1

$
—

1 The Suriname CGU consists of Euro Ressources S.A. and Rosebel Gold Mines N.V.

IAMGOLD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - JUNE 30, 2017
PAGE 53


Property, plant and equipment
The Company performs an assessment at each reporting date to determine whether there is an indication of potential reversal of previously recognized impairment losses. On July 26, 2017 (effective June 30, 2017), the Company identified a significant increase in reserves and resources and corresponding extension of the life of mine ("LOM") for the Rosebel mine, which were considered to be an indicator of reversal, as these represented a significant change in the key inputs used to determine the cash generating unit's ("CGU") recoverable amount. As a result, an assessment was performed for the Company’s Suriname CGU, and it was determined that the recoverable amount, representing the CGU’s fair value less costs of disposal ("FVLCD"), exceeded the carrying amount. This resulted in a reversal of the impairment charge recorded in 2013, which was limited to the carrying amount of the Suriname CGU that would have been determined had no impairment charge been recognized in prior years, net of depreciation charges. The pre-tax and after-tax amounts of impairment reversal recorded in the Company’s Consolidated statements of earnings in the second quarter of 2017 were $124.1 million and $79.9 million, respectively.
The significant estimates and assumptions used in determining the FVLCD for the CGU were LOM production profiles, future commodity prices, reserves and resources, discount rate, values of un-modeled mineralization and capital expenditures. The estimates of future cash flows were derived from the most recent LOM of approximately eleven years, which is based on Management’s current best estimates of optimized mine and processing plans, future operating costs and capital expenditures. For the assessment, the Company used an estimated gold price of $1,225 per ounce for the first five years starting 2018, decreasing to $1,200 per ounce for 2023 and beyond.
The future cash flows used to calculate the recoverable amount of the CGU were discounted using a real weighted average cost of capital of 6%, which reflects specific market risk factors for the mine. Un-modeled mineralization for the CGU was valued at $45 per ounce. Oil price is a significant component of cash costs of production and was estimated based on the current price, forward prices, forecasts of future prices from third-party sources and the Company’s hedging program.
Exploration and evaluation assets
On June 5, 2017, upon entering into a definitive Investment Agreement with SMM for the sale of a 30% interest in the Côté Gold Project (note 5), the Company performed an assessment of whether the previous impairment charge on the Project had reversed. The Company determined that the consideration agreed to by SMM indicated the recoverable amount exceeded the carrying amount, which resulted in the reversal of the previously recorded impairment charge of $400 million. The reversal is limited to the carrying amount that would have been determined had no impairment charge been recognized in prior years.
27.
COMMITMENTS
 
June 30, 2017
December 31, 2016
Purchase obligations
$
80.3

$
53.2

Capital expenditure obligations
23.2

4.6

Operating leases
20.0

4.3

 
$
123.5

$
62.1

Commitments – payments due by period
 
Payments due by period
As at June 30, 2017
Total
<1 yr
1-2 yrs
3-5 yrs
>5 yrs
Purchase obligations
$
80.3

$
79.5

$
0.8

$
—

$
—

Capital expenditure obligations
23.2

19.4

3.8

—

—

Operating leases
20.0

3.8

9.8

6.4

—

 
$
123.5

$
102.7

$
14.4

$
6.4

$
—



IAMGOLD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - JUNE 30, 2017
PAGE 54


28.
RELATED PARTY TRANSACTIONS
Receivables from related parties
The Company had the following related party transactions included in Receivables and other current assets and in Other non-current assets in the Consolidated balance sheets:
 
 
Three months ended June 30,
Six months ended June 30,
 
 
2017
2016
2017
2016
Sadiola and Yatela (Non-interest bearing)
 
 
 
 
 
 Balance, beginning of the period
 
$
0.1

$
0.1

$
0.2

$
0.2

  Advances
 
0.3

—

0.5

—

  Repayments
 
(0.2
)
(0.1
)
(0.5
)
(0.2
)
Balance, end of the period1
 
$
0.2

$
—

$
0.2

$
—

Sadiola Sulphide Project (LIBOR plus 2%)2
 
 
 
 


  Balance, beginning of the period
 
$
32.0

$
30.0

$
31.3

$
29.3

  Advances
 
1.1

0.2

1.8

0.9

Balance, end of the period1
 
$
33.1

$
30.2

$
33.1

$
30.2

1
Balances as of December 31, 2016 for Sadiola and Yatela and for the Sadiola Sulphide Project were $0.2 million and $31.3 million, respectively.
2
These advances were part of an extended loan agreement, reached in the fourth quarter of 2016, for the Sadiola Sulphide Project, and are to be repaid on the earlier of December 31, 2020 or, at such time as Sadiola has sufficient free cash flow.
29.
SEGMENTED INFORMATION
The Company’s gold mine segment is divided into the following geographic segments:
•Burkina Faso - Essakane mine;
•Suriname - Rosebel mine;
•Canada - Doyon division includes the Westwood mine and the Doyon mine, which is in closure; and
•Incorporated joint ventures (Mali) - Sadiola mine (41%) and Yatela mine, which is in closure (40%).
The Company’s non-gold segments are divided into the following:
•Exploration and evaluation; and
•Corporate - includes royalty interests located in Canada and investments in associates and incorporated joint ventures.
 
June 30, 2017
December 31, 2016
 
Total non-
current
assets
Total
assets
Total
liabilities
Total non-
current
assets
Total
assets
Total
liabilities
Gold mines
 
 
 
 
 
 
Burkina Faso
$
851.5

$
1,076.6

$
182.3

$
883.4

$
1,099.6

$
189.9

Suriname
616.9

801.8

242.3

512.8

667.3

198.1

Canada
686.8

708.1

192.3

675.0

783.7

195.8

Total gold mines
2,155.2

2,586.5

616.9

2,071.2

2,550.6

583.8

Exploration and evaluation
432.6

473.0

7.1

163.1

193.2

8.4

Corporate1
269.7

827.1

449.7

153.3

656.7

537.2

Total per consolidated financial statements
$
2,857.5

$
3,886.6

$
1,073.7

$
2,387.6

$
3,400.5

$
1,129.4

Incorporated joint ventures (Mali)2
$
122.4

$
168.8

$
145.5

$
116.5

$
160.2

$
144.1

1
The carrying amount of the Investment in incorporated joint ventures is included in the corporate segment as non-current assets.
2
The breakdown of the financial information for the incorporated joint ventures has been disclosed above as it is reviewed regularly by the Company’s chief operating decision maker to assess performance of the incorporated joint ventures and to make resource allocation decisions.

IAMGOLD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - JUNE 30, 2017
PAGE 55


Three months ended June 30, 2017
 
Consolidated statement of earnings information
Net capital
expenditures3
 
Revenues
Cost of
sales1
Depreciation
expense
General 
and
administrative2
Exploration
Impairments (reversals)
Other
Earnings
(loss) from
operations
Gold mines
 
 
 
 
 
 
 
 
 
Burkina Faso
$
145.1

$
86.1

$
36.1

$
—

$
—

$
—

$
—

$
22.9

$
18.6

Suriname
90.8

55.3

21.6

—

2.2

(116.0
)
0.7

127.0

11.9

Canada
38.6

25.2

12.8

—

—

—

0.4

0.2

16.9

Total gold mines excluding incorporated joint ventures
274.5

166.6

70.5

—

2.2

(116.0
)
1.1

150.1

47.4

Exploration and evaluation4
—

—

—

—

9.9

(400.0
)
—

390.1

0.3

Corporate5
—

0.5

1.0

8.6

—

(8.1
)
5.8

(7.8
)
0.1

Total per consolidated financial statements
274.5

167.1

71.5

8.6

12.1

(524.1
)
6.9

532.4

47.8

Incorporated joint ventures (Mali)6
19.8

12.2

0.3

—

0.3

—

—

7.0

1.8

 
$
294.3

$
179.3

$
71.8

$
8.6

$
12.4

$
(524.1
)
$
6.9

$
539.4

$
49.6

1
Excludes depreciation expense.
2
Includes depreciation expense relating to Corporate and Exploration and evaluation assets.
3
Includes cash expenditures for Property, plant and equipment, Exploration and evaluation assets, and finance lease payments.
4
Closed site costs on Exploration and evaluation properties included in other operating costs.
5
Includes earnings from royalty interests.
6
Net earnings (loss) from incorporated joint ventures are included in a separate line in the Consolidated statements of earnings. The breakdown of the financial information has been disclosed above as it is reviewed regularly by the Company’s chief operating decision maker to assess its performance and to make resource allocation decisions.
Three months ended June 30, 2016
 
Consolidated statement of earnings information
Net capital
expenditures3
 
Revenues
Cost of
sales1
Depreciation
expense
General
and
administrative2
Exploration
Other
Earnings
(loss) from
operations
Gold mines
 
 
 
 
 
 
 
 
Burkina Faso
$
116.9

$
66.5

$
23.2

$
—

$
—

$
(0.1
)
$
27.3

$
32.0

Suriname
94.4

59.0

26.3

—

0.7

0.2

8.2

21.0

Canada
21.1

20.5

11.6

—

—

(0.3
)
(10.7
)
26.8

Total gold mines excluding incorporated joint ventures
232.4

146.0

61.1

—

0.7

(0.2
)
24.8

79.8

Exploration and evaluation4
—

—

0.1

0.2

7.4

0.1

(7.8
)
0.5

Corporate5
0.1

(0.2
)
1.1

9.2

—

1.0

(11.0
)
—

Total per consolidated financial statements
232.5

145.8

62.3

9.4

8.1

0.9

6.0

80.3

Incorporated Joint ventures (Mali)6
22.5

16.7

1.0

—

0.2

1.5

3.1

0.7

 
$
255.0

$
162.5

$
63.3

$
9.4

$
8.3

$
2.4

$
9.1

$
81.0

1
Excludes depreciation expense.
2
Includes depreciation expense relating to Corporate and Exploration and evaluation assets.
3
Includes cash expenditures for Property, plant and equipment, Exploration and evaluation assets, and finance lease payments.
4
Closed site costs on Exploration and evaluation properties included in other operating costs.
5
Includes earnings from royalty interests.
6
Net earnings (loss) from incorporated joint ventures are included in a separate line in the Consolidated statements of earnings. The breakdown of the financial information has been disclosed above as it is reviewed regularly by the Company’s chief operating decision maker to assess its performance and to make resource allocation decisions.


IAMGOLD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - JUNE 30, 2017
PAGE 56


Six months ended June 30, 2017
 
Consolidated statements of earnings information
Net capital
expenditures3
 
Revenues
Cost of
sales1
Depreciation
expense
General 
and
administrative2
Exploration
Impairments (reversals)
Other
Earnings
(loss) from
operations
Gold mines
 
 
 
 
 
 
 
 
 
Burkina Faso
$
272.0

$
168.0

$
67.0

$
—

$
—

$
—

$
—

$
37.0

$
35.7

Suriname
189.2

113.9

43.4

—

4.8

(116.0
)
1.9

141.2

23.5

Canada
73.6

47.3

22.5

—

—

—

1.0

2.8

33.6

Total gold mines excluding incorporated joint ventures
534.8

329.2

132.9

—

4.8

(116.0
)
2.9

181.0

92.8

Exploration and evaluation4
—

—

0.1

0.1

18.2

(400.0
)
0.2

381.4

0.8

Corporate
0.2

—

1.9

18.8

—

(8.1
)
6.4

(18.8
)
0.2

Total per consolidated financial statements
535.0

329.2

134.9

18.9

23.0

(524.1
)
9.5

543.6

93.8

Incorporated joint ventures (Mali)5
39.1

27.2

0.7

—

0.6

—

—

10.6

3.4

 
$
574.1

$
356.4

$
135.6

$
18.9

$
23.6

$
(524.1
)
$
9.5

$
554.2

$
97.2

1
Excludes depreciation expense.
2
Includes depreciation expense relating to Corporate and Exploration and evaluation assets.
3
Includes cash expenditures for Property, plant and equipment, Exploration and evaluation assets, and finance lease payments.
4
Closed site costs on Exploration and evaluation properties included in other operating costs.
5
Net earnings (loss) from incorporated joint ventures are included in a separate line in the Consolidated statements of earnings. The breakdown of the financial information has been disclosed above as it is reviewed regularly by the Company’s chief operating decision maker to assess its performance and to make resource allocation decisions.
Six months ended June 30, 2016
 
Consolidated statements of earnings information
Net capital
expenditures3
 
Revenues
Cost of
sales1
Depreciation
expense
General
and
administrative2
Exploration
Other
Earnings
(loss) from
operations
Gold mines
 
 
 
 
 
 
 
 
Burkina Faso
$
231.6

$
139.2

$
46.5

$
—

$
—

$
(0.1
)
$
46.0

$
65.5

Suriname
177.2

116.0

51.2

—

1.6

3.4

5.0

33.6

Canada
43.0

42.6

23.8

—

—

3.3

(26.7
)
48.2

Total gold mines excluding incorporated joint ventures
451.8

297.8

121.5

—

1.6

6.6

24.3

147.3

Exploration and evaluation4
—

—

0.1

0.2

12.5

0.2

(13.0
)
2.3

Corporate5
0.4

(0.3
)
2.2

18.6

—

1.5

(21.6
)
0.7

Total per consolidated financial statements
452.2

297.5

123.8

18.8

14.1

8.3

(10.3
)
150.3

Incorporated joint ventures (Mali)6
46.3

33.2

1.9

—

0.3

1.5

9.4

1.6

 
$
498.5

$
330.7

$
125.7

$
18.8

$
14.4

$
9.8

$
(0.9
)
$
151.9

1
Excludes depreciation expense.
2
Includes depreciation expense relating to Corporate and Exploration and evaluation assets.
3
Includes cash expenditures for Property, plant and equipment, Exploration and evaluation assets, finance lease payments and is net of proceeds from finance leases.
4
Closed site costs on Exploration and evaluation properties included in other operating costs.
5
Includes earnings from royalty interests.
6
Net earnings (loss) from incorporated joint ventures are included in a separate line in the Consolidated statements of earnings. The breakdown of the financial information has been disclosed above as it is reviewed regularly by the Company’s chief operating decision maker to assess its performance and to make resource allocation decisions.

IAMGOLD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - JUNE 30, 2017
PAGE 57


30.
SUBSEQUENT EVENTS
On July 26, 2017, the Company announced an updated reserve and resource estimate for its Rosebel mine in Suriname. The Company performs an assessment at each reporting date to determine whether there is an indication for potential impairments and reversals of previously recognized impairment losses. The updated resource and reserve estimate and an increase in the life of mine were considered to be an indicator for reversal, as these represented a significant change in the key inputs used to determine the CGU's recoverable amount. This resulted in a reversal of the impairment loss recorded in 2013, which was limited to the carrying amount of the Suriname CGU that would have been determined had no impairment charge been recognized in prior years, net of depreciation charges. The pre-tax amount of reversal recorded in the Company’s Consolidated statements of earnings in the second quarter of 2017 was $124.1 million (note 26).



IAMGOLD CORPORATION
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - JUNE 30, 2017
PAGE 58