All amounts are expressed in U.S. dollars, unless otherwise indicated.

TSX: IMG    NYSE: IAG

TORONTO, May 11, 2012 /CNW/ - IAMGOLD Corporation ("IAMGOLD" or the "Company") today reported its unaudited consolidated financial and operating results for the first quarter ended March 31, 2012. Revenues from continuing operations were $404.2 million compared to $414.0 million in the first quarter of 2011. Net earnings from continuing operations attributable to equity shareholders were $119.2 million ($0.32 per share) compared to $133.2 million ($0.36 per share) in 2011. The operating cash flow from continuing operations before changes in working capital1 was $185.7 million ($0.49 per share) compared to $214.5 million ($0.57 per share) during the first quarter of 2011.

"We had a good start to 2012 and are on track to meet our annual guidance for production and cash costs," said Steve Letwin, President and CEO of IAMGOLD.  "We finished the first quarter strongly at our two flagship operations, with attributable production in March of over 32,000 ounces at Rosebel and over 30,000 ounces at Essakane.   Both mines are running well and meeting the objectives per their mine plans, and the Westwood project is on track to begin production in the first quarter of 2013."

Mr. Letwin further commented, "We have been clear about the strategic direction for our company, and look forward to expanding our gold production pipeline through the proposed acquisition of Trelawney. This transaction offers a very attractive return on capital.  Trelawney's location in northern Ontario will give us a much more geographically balanced production profile. Its large defined resource will increase our global resource base by close to 30% and has expansion potential.  Trelawney is an excellent strategic fit and dovetails perfectly into our project development timeline.  At the same time, the ground work is being laid for the Niobec expansion and we're developing a plan to bring our rare earth elements to market."

FIRST QUARTER 2012 HIGHLIGHTS

Financial Performance and Position

• Revenues from continuing operations were $404.2 million, down 2% from $414.0 million in the first quarter of 2011, the result of lower gold sales partly due to the timing of shipments, partially offset by higher gold prices and niobium sales.
  
  
• Net earnings from continuing operations attributable to equity shareholders were $119.2 million ($0.32 per share) compared to $133.2 million ($0.36 per share) in the same period in 2011.
  
  
• Adjusting for items not indicative of future operating performance, adjusted net earnings from continuing operations attributable to equity shareholders1 were $92.4 million ($0.25 per share1) compared to $117.8 million ($0.32 per share) in the first quarter of 2011.
  
  
• The operating cash flow from continuing operations before changes in working capital1 of $185.7 million ($0.49 per share1),decreased by 13% compared to $214.5 million ($0.57 per share) in the first quarter of 2011.
  
  
• Cash, cash equivalents and gold bullion (at market) were $1.3 billion at March 31, 2012. Operating cash flow during the current quarter effectively funded investments in operating, exploration and development sites.

Production, Cash Costs and Margin

Gold Operations

• The attributable gold production of 207,000 ounces declined by 11% from 233,000 ounces in the first quarter of 2011.
  
  
• The gold margin2 increased by 20% from $854 per ounce during the first quarter of 2011 to $1,023 per ounce during the first quarter of 2012 as 22% price increases more than offset the increases in costs.
  
  
• Weighted average cash costs2 were $679 per ounce, compared to $544 per ounce in the first quarter of 2011. Cash costs at IAMGOLD-operated sites were $596 per ounce compared to $487 per ounce in the first quarter of 2011.

Throughout 2011 the Company faced cost pressures from higher labour costs, higher energy costs, and higher costs of consumables.  Despite the recent decline from high prices, the worldwide price for crude oil continues to be higher than during the prior year.  This increase in energy prices led to higher haulage and power generation costs. The Company has entered into various hedges to partially mitigate the impact. Royalties increased by $17 per ounce compared to the first quarter of 2011 due to higher gold prices. In addition, lower grades and hard rock contributed to increasing costs per ounce.

Niobec Mine

• The niobium production of 1,109 thousand kilograms during the first quarter of 2012, was consistent with the 1,087 thousand kilograms of niobium produced in the first quarter of 2011.
  
  
• The operating margin of $16 per kilogram was consistent with that of the first quarter of 2011.

Operating Highlights

• In April 2012, the Company re-affirmed the resource study for the Westwood project. The commercial start-up date for production remains on track for early 2013.
  
  
• At the Essakane mine in Burkina Faso, the development study to double hard rock processing was completed at the end of 2011. Pending final agreement on fiscal terms with the Government of Burkina Faso, a construction start is planned for the second half of 2012 followed by commissioning of the expanded plant in 2014.
  
  
• At the Rosebel mine in Suriname, the installation of a third ball mill this year, along with a temporary pre-crusher, a larger pebble crusher, and an expanded gravity recovery circuit, is expected to have a positive impact on throughput by the second half of 2012. In addition, a feasibility study expected to be completed by the end of 2012, will provide greater design detail around various aspects of the expansion project and is intended to further increase the capacity to treat harder ores at the mill.
  
  
• In December 2011, IAMGOLD announced an initial agreement with the Surinamese government on the terms and conditions related to further expansion at Rosebel. The Company is making good progress towards reaching a definitive agreement, which will be followed by a concept study to further define the expansion potential of bringing in the satellite resources.
  
  
• The military unrest in Mali has not had a significant impact on production at the Company's joint venture operations with AngloGold Ashanti. The Company continues to monitor the situation.
  
  
• The Sadiola sulphide project in Mali has progressed cautiously given recent political events. The Company and its joint venture partner are monitoring the transition of the government. IAMGOLD expects the project will be back on track in the coming months.
  
  
• The Company continues to move forward in unlocking the value of Niobec, including progress on the feasibility study based on block-caving and establishing the financing framework for the expansion. The framework is premised on obtaining funding without reliance on cash flow from the gold business.
  
  
• IAMGOLD continues to evaluate options for exploiting the large Rare Earth Elements ("REE") resource near its Niobec mine operation.
  
  
• In line with a higher exploration budget in 2012, exploration expenditures totaled $28.4 million during the first quarter of 2012, compared to $20.7 million during the first quarter of 2011. Exploration spending included near-mine exploration and resource development at Rosebel, Essakane and Westwood, and greenfield exploration on 18 projects.

Trelawney Acquisition

• On April 27, 2012, IAMGOLD announced that it has entered into a definitive agreement to acquire, through a plan of arrangement, all of the issued and outstanding common shares of Trelawney Mining and Exploration Inc. ("Trelawney"), a Canadian junior mining and exploration company, focused on the development of a significant mineral deposit in northern Ontario. The fully diluted in the money value of the transaction is approximately C$608 million with an enterprise value of C$505 million net of cash. Shareholders will receive C$3.30 in cash for each Trelawney share held.
  
  
  • The cash transaction is made possible by the Company's strong liquidly position which was bolstered by the inflow of over $700 million in cash from divesting of non-core assets in 2011.
    
    
  • The proposed transaction will increase the Company's resources by approximately 30% or 7 million ounces of contained gold with potential for significant exploration and expansion.
    
    
  • This proposed transaction is expected to provide an accretive return on invested capital. The acquisition is consistent with the Company's strategy to invest in development projects that it owns and operates so maximum benefit can be derived from leveraging existing operational and development expertise.
    
    
  • The proposed Trelawney acquisition significantly strengthens the Company's future gold production profile and provides a more geographically balanced asset mix.

Commitment to Zero Harm

Zero Harm is an underlying core value for all that we do at IAMGOLD.  The Company operates to benefit all stakeholders through a commitment to leadership at all levels, daily engagement of its employees in responsible operating, and by fostering a culture of finding and eliminating potential impacts.

• IAMGOLD was added to the Jantzi Social Index (JSI), a socially screened, market capitalization-weighted common stock index, modeled on the S&P/TSX 60. IAMGOLD is one of only eight mining companies on the index.
  
  
• IAMGOLD participates in Towards Sustainable Mining (TSM), a program developed by the Mining Association of Canada (MAC) and a national Community of Interest panel. In the first quarter, IAMGOLD completed a third party external verification of its 2011 TSM self-assessment and reported on the new health and safety performance indicators provided by MAC.  Overall, and on average, IAMGOLD achieved an "A" rating.  Most noteworthy, was the achievement of a AAA rating by the Rosebel mine under the External Outreach protocol.   In achieving this rating, Rosebel has become the first international site as a MAC member to achieve a AAA rating in External Outreach.
  
  
• Requested and received approval from the Quebec provincial authorities to use the inactive Doyon open pit to store tailings generated from the Westwood mine.   This process will begin in 2013, commensurate with the scheduled start-up of Westwood.
  
  
• The frequency of all types of serious injuries (measured as DART rate3) across IAMGOLD was 1.03 for the first quarter of 2012 compared to 1.12 for full year  2011.
  
  
• The Total Recordable Injury rate (TRIR) is also trending downward, showing a reduction of 18% over 2011. The TRIR is a measure of all injuries occurring across IAMGOLD.

FIRST QUARTER FINANCIAL REVIEW

• Revenues from continuing operations in the first quarter of 2012 were $404.2 million, a 2% decrease from $414.0 million in the first quarter of 2011. The variance was due to lower gold sales partly offset by higher realized gold prices and higher revenue from the sale of niobium. For IAMGOLD's continuing operations including joint ventures, the number of ounces of gold sold decreased by 58,000 ounces while the average realized gold price rose by 22% compared to the first quarter of 2011. Gold sales declined for three reasons:
  • Build-up of inventory in process in the first quarter 2012 which was sold in April (13,000 ounces);
    
    
  • Late timing of production at the end of 2010 which was carried forward and sold in the first quarter of 2011 (17,000 ounces); and
    
    
  • Lower gold production in the first quarter of 2012 (28,000 ounces), mainly the result of harder ore and lower grades.
• Net earnings attributable to equity shareholders were $119.2 million ($0.32 per share) during the first quarter of 2012, compared to $153.4 million ($0.41 per share) in the first quarter of 2011.  The gold margin per ounce2 increased from $854 during the first quarter of 2011 to $1,023 in the current quarter as price increases more than offset the increases in costs. Net earnings for the comparative quarter included the positive impact of earnings from discontinued operations of $20.2 million.
  
  
• Adjusted net earnings from continuing operations attributable to equity shareholders1 of $92.4 million ($0.25 per share1) in the first quarter of 2012 decreased by 22% compared to $117.8 million ($0.32 per share) in the first quarter of 2011.
  
  
• The operating cash flow from continuing operations in the first quarter of 2012 was $170.3 million compared to $199.0 million in the first quarter of 2011.  Operating cash flow from continuing operations before changes in working capital1 in the first quarter of 2012 was $185.7 million ($0.49 per share1), a decrease of 13% compared to $214.5 million ($0.57 per share) in the first quarter of 2011.  The decrease is mainly due to the impact of lower production partially offset by higher per ounce gold margin.

Financial Position

• The Company's cash, cash equivalents and gold bullion (at market value) position was $1.3 billion at March 31, 2012, consistent with the end of 2011.
  
  
• As at March 31, 2012, no funds were drawn against the Company's $750.0 million total unsecured revolving credit facilities.

SUMMARIZED FINANCIAL RESULTS

KEY OPERATING STATISTICS