IAMGOLD Corp (USA) (NYSE:IAG) might soon receive approval to expand the mining efforts in the Sadiola mine and there are various implications that might result from the decision.

The company owns 41% of the Sadiola mine which is in Mali. AngloGold Ashanti Limited (ADR) (NYSE:AU) owns another 41% of the mines while the government of Mali owns the remaining 18% of the mine. The Sadiola mine contributes 9% of IAMGOLD’s total gold production. Reports indicate that the mine is almost out of supply for soft rock and the plant that the company has set up at the site is not designed to handle the processing of hard rock.

It is, therefore, necessary to expand the plant so that it can continue mining oxides in the mine Sadolina mine into 2018. As far as the performance of the mine is concerned, the mine produced 18,000 ounces of gold in 2016 and 17,000 ounces in 2015. The cost of mining each ounce of gold at the mine was $941 and the all-in sustaining cost per ounce was $973. The costs have increased by 43% and 38% respectively regardless of lower consumables costs, lower fuel rates, lower contractor costs, and favorable exchange rates. The rising costs are the result of stockpile drawdown in the second quarter of 2016.

The expansion of the mine will allow more space for the processing of sulfides beneath the oxide pits. The expansion could potentially allow for more mining in the Sadolina mine over the next ten years. The firm’s management has however announced that the amount of money required for the expansion of the mine would be less than $379 million. The management announced during the firm’s Q2 earnings call that it can commence the Sulfide project by the end of 2016. The timing of the project will depend on the decision made by the government of Mali and AngloGold Ashanti regarding the renewal of the operating and construction permits. The firm will also need to handle issues such as fiscal terms and power agreements before it can start the project.