IAMGOLD Reports 223% Increase in Second Quarter Net Earnings

IAMGOLD Corporation today reported its unaudited consolidated financial and operating results for the second quarter ended June 30, 2011

Net earnings attributable to equity shareholders were $478.9 million ($1.28 per share) in the quarter, including the gain of $402.6 million from the sale of the Tarkwa and Damang mines. Adjusted net earnings from continuing operations attributable to equity shareholders(1), which excludes the Tarkwa and Damang mines as well as the Mupane mine reclassified as a discontinued operation, were $69.7 million ($0.19 per share) compared to $19.3 million ($0.05 per share) in the second quarter of 2010.

"Overall, our second quarter results demonstrate solid progress in executing our strategy to maximize the value of the mines we own and operate", said Steve Letwin, IAMGOLD's President and CEO. "In January, we said our plan was to divest our minority interest in the Tarkwa and Damang mines for proceeds in excess of $600 million and by the end of June we had closed the sale for gross proceeds of $667 million. During that period, we also confirmed a near 700% increase in mineral resources at our niobium mine and increased our dividend by 150%."

Mr. Letwin further commented, "In a rising gold price environment we were able to achieve, on a year-to-date basis, a 34% expansion in our gold margins(2), despite a 16% year-over-year increase in cash costs. Operationally the quarter was a challenging one. Cash costs(2) increased from the first quarter mainly due to lower production at Essakane, the result of a short term water shortage that has been permanently rectified. We also had higher labour, energy and raw material costs, which are rising across the industry, and higher royalties commensurate with increasing golyacimientos de bauxita en chiled prices. All eyes are on containing costs throughout our operations and we are working on several initiatives to drive them down in the ensuing quarters."

Second Quarter 2011 Highlights

- Revenues from continuing operations increased by 75% to $345.7 million
from $198.1 million in the second quarter of 2010.

- Net earnings from continuing operations attributable to equity
shareholders increased by 223% to $74.5 million ($0.20 per share) from
$23.1 million ($0.06 per share) in the second quarter of 2010.

- Adjusted net earnings from continuing operations attributable to equity
shareholders(1) (excluding Tarkwa, Damang and Mupane mines) increased by
261% to $69.7 million ($0.19 per share) from $19.3 million ($0.05 per
share) in the second quarter of 2010.

- Gold margin(2) increased by 35% from $607 per ounce during the second
quarter of 2010 compared to $818 per ounce during the second quarter of
2011 as price increases more than offset the increases in costs.

- Net earnings attributable to equity shareholders of $478.9 million
($1.28 per share) included a gain of $402.6 million from the sale of
Tarkwa and Damang.

- Adjusted operating cash flow(1) from continuing operations of $149.2
million ($0.40 per share(1)) increased by 81% compared to $82.6 million
($0.22 per share(1)) in the second quarter of 2010.

- Proceeds of $667.0 million cash from the sale of IAMGOLD's 18.9%
interest in the Tarkwa and Damang gold mines in Ghana, West Africa to
Gold Fields Limited.

- Financial position with cash, cash equivalents and gold bullion (at
market) increased by $0.6 billion during the second quarter of 2011 to
$1.2 billion at June 30, 2011. The increase was mainly driven by the
proceeds of $667.0 million received from the disposal of IAMGOLD's
investment in Tarkwa and Damang.

- Completion of an independent technical report confirming a near 700%
increase in Niobec's measured and indicated niobium resources to over
1.9 billion kilograms of contained niobium pentoxide, and an after-tax
net asset value in the range of up to $2.0 billion.

- Mupane mine reclassified as a discontinued operation and an agreement to
divest from the mine has been signed with a purchaser in early August.
The transaction is expected to close shortly.

- On June 21, 2011, IAMGOLD announced an increased semi-annual dividend
payment in the amount of $0.10 per share, representing a 150% increase
in the annual dividend. The $37.5 million dividend was paid on July 20,
2011.

Production, Cash Costs and Gold Margin

Gold Operations

- Attributable gold production of 188,000 ounces from continuing
operations was up 60,000 ounces, or 47%, from 128,000 ounces in the
second quarter of 2010. This was mainly due to Essakane which did not
commence production until the third quarter of 2010, and produced 62,000
attributable ounces in the second quarter of 2011. In addition,
production was slightly higher at Rosebel due to improved recoveries
resulting from the construction of additional CIL tanks in 2010. These
increases were partly offset by the mining of lower grade ore stacked at
Yatela in prior periods. Total attributable gold production including
discontinued operations was 198,000 ounces (190,000 ounces in the second
quarter of 2010).

- Weighted average cash cost from continuing operations(2) of $697 per
ounce compared to $593 per ounce in the second quarter of 2010 due to a
number of factors. As gold price increased, the sites maximized their
margins by mining lower grades which increased cash costs. In addition,
the industry continued to be impacted by the rising costs of fuel,
labour and raw materials. Higher oil prices led to higher haulage and
power generation costs. In addition, royalties increased by $22 per
ounce with the increase in gold prices.

- Gold margin per ounce(2) increased from $607 in the second quarter of
2010 to $818 in the second quarter of 2011 as price increases more than
offset the increases in costs.

Niobec Mine

- Niobium production of 1.1 million kilograms, similar to production in
the second quarter of 2010, and a $14 per kilogram operating margin(2)
compared to $19 per kilogram in the second quarter of 2010. Mainly due
to the inclusion of the paste backfill process, a stronger Canadian
dollar and higher prices and volumes of aluminum used in processing.

- Completion of an independent technical report confirming IAMGOLD's
niobium mine potential with a near 700% increase in measured and
indicated mineral resources and an estimated after-tax net asset value
of up to $2.0 billion.

Review of Second Quarter 2011 Results

Results from discontinued operations (Mupane, Tarkwa and Damang mines) and the gain on disposal of Tarkwa and Damang mines are presented separately as net earnings from discontinued operations in the consolidated statement of earnings, and comparative periods have been adjusted accordingly.

Financial Performance

Revenues from continuing operations in the second quarter of 2011 was $345.7 million, a 75% increase from $198.1 million in the second quarter of 2010, primarily due to the addition of production from the Essakane mine and higher gold prices. For IAMGOLD's continuing operations and joint ventures, the number of ounces of gold sold increased by 47% while the average realized gold price rose by 26% compared to the second quarter of 2010.

In the second quarter of 2011, net earnings from continuing operations attributable to equity shareholders increased by 223% to $74.5 million ($0.20 per share), compared to $23.1 million ($0.06 per share) in the second quarter of 2010.

Adjusted net earnings from continuing operations(1) attributable to equity shareholders of $69.7 million ($0.19 per share) increased by 261% compared to $19.3 million ($0.05 per share) in the second quarter of 2010.

Adjusted operating cash flow from continuing operations(1) of $149.2 million ($0.40 per share(1)) increased by 81% compared to $82.6 million ($0.22 per share(1)) in the second quarter of 2010. The increase is mainly due to the impact of higher production from continuing operations and higher per ounce gold margin.

Financial Position

Cash, cash equivalents and gold bullion (at market value) has improved with $1.2 billion as at June 30, 2011, compared to $0.4 billion at the end of 2010. During the second quarter of 2011, cash and cash equivalents increased mainly due to the proceeds received from the sale of the Company's minority interest in the Tarkwa and Damang mines ($667.0 million). In the first quarter of 2011, the Company issued 1.7 million flow-through shares at a price of C$25.48 per share with gross proceeds of $43.3 million to fund prescribed resource expenditures on the Westwood project. The Company also received $48.8 million in the first quarter of 2011 for the disposal of the La Arena project in Peru.

The above proceeds were partially offset by capital expenditures in mining assets and exploration, resulting in a $776.7 million increase in cash and cash equivalents during the first six months of 2011.

As at June 30, 2011, $350.0 million of unused credit remained available under the Company's credit facility. In addition, the Company had used $18.8 million from the $50.0 million revolving facility for the issuance of letters of credit.

Rosebel Mine, Suriname

Attributable gold production at the Rosebel mine was 87,000 ounces, up 7% from the second quarter of 2010. This was mainly due to improved gold recoveries resulting from the leaching circuit expanded in late 2010. However, lesser access to high grade materials during the rainy season resulted in production being lower than the previous three quarters. Compared to the first quarter of 2011, production declined 13% due to a change in mining sequence.

The site faced cost pressures during the quarter as higher oil prices increased the cost of hauling and thermal power. Labour costs were higher year-over-year due to inflationary factors in the Surinamese economy and royalties increased with rising gold prices, partly offset by the devaluation of the Surinamese dollar.

Expansion

At Rosebel, expansion is focused on optimization of the open pit mine. The feasibility study to expand plant capacity is progressing as planned. Without expansion, mill throughput would decline going forward as the ore mix trends to higher proportions of hard rock. The cost of the staged expansion is expected to total an additional $185 million over the next seven years versus the no-expansion case with sustaining and replacement capital only. Additional grinding capacity will allow mill throughput to be maintained between 12 and 14 million tonnes per year, even with the increased hard rock volumes. Coupled with additional mining equipment, this will increase annual mining capacity to 70 million tonnes to optimize mill feed grades. The expansion essentially brings gold production forward in time and reduces long-term fixed costs by reducing the currently planned mine life.

In May 2011, the Company reached a framework agreement with the Government of Suriname to support a substantial capacity increase at the Rosebel gold mine. The Framework is centered on IAMGOLD's increased investment in brownfield and other near plant resource development, infrastructure and energy.

Essakane Mine, Burkina Faso

Attributable production during the second quarter of 2011 was 62,000 ounces, compared to 95,000 ounces during the first quarter of 2011 mostly due to the impact of an extended crusher repair and a brief water shortage before the beginning of the rainy season. The crusher repair has been completed and has now ramped up to normal production levels. The arrival of the rainy season has filled the water reservoirs and the site is well into a capital program to build an additional bulk water storage facility to add approximately 50% more storage capacity for the coming year as well as doubling the pumping capacity between the water capture point and the water storage reservoirs. This expansion is expected to be completed this year and in time to fill with 2011 rainfall.

Cash costs(2) in the second quarter were higher compared to the first quarter of 2011 mainly due to lower production. In addition, cash costs increased due to higher energy prices, upward pressure on consumable prices and higher royalties due to higher gold prices.

Expansion

A feasibility study to expand the mine is currently in progress and is expected to be completed in the third quarter of 2011. The current mine plan includes processing soft rock for the first three years at a rate of 9.0 million tonnes per year starting in 2011, followed by approximately nine years of processing hard rock. The study is expected to demonstrate that the hard rock capacity of the mine could be expanded to process approximately 10.8 million tonnes per year, compared to the current estimate of 5.4 million tonnes per year. The expectation is for life-of-mine average annual gold production of between 450,000 and 470,000 ounces (on a 100% basis), compared to the current estimate of 315,000 ounces. Assuming a positive outcome of the study, construction could commence in the fourth quarter of 2011.

Doyon Division, Canada

As a cost savings initiative, the ore mined from Mouska has been stockpiled and will be batch processed later in 2011.

Sadiola mine, Mali

Attributable gold production of 33,000 ounces for the second quarter of 2011 was 14% higher than the second quarter of 2010 as a result of higher throughput.

Cash costs(2) rose during the second quarter by 11% year-over-year primarily due to higher costs of energy and consumables and higher labour costs attributed to a revised mining contract finalized in the fourth quarter of 2010. Royalties were up 23% due to higher realized gold prices.

Sadiola distributed a $12 million dividend to IAMGOLD during the quarter (2010 IAMGOLD's share $25.0 million).

Expansion

The feasibility study on the sulphide project to expand the processing facility to process hard rock in conjunction with soft rock was completed in 2010 and a construction decision is expected during 2011.

IAMGOLD took the lead in this work with an innovative approach to reduce cost and re-engineer the construction schedule. The potential to add more resources and reserves to the sulphide deposit as well as to the other satellite deposits remains encouraging and will be pursued in 2011.

Yatela mine, Mali

Attributable gold production of 6,000 ounces during the second quarter of 2011 was down from 15,000 ounces in the second quarter of 2010 due to the mining of lower gold stacked in prior periods. After the completion of mining the bottom of the main pit in early 2010, mine production has shifted to a longer-haul satellite pit, which resulted in lower grades and higher waste stripping.

Cash costs(2) during the current quarter were significantly higher than the same period in 2010 due to production being less than half of what it was in the prior year. In addition, the site faced similar cost pressures as Sadiola.

Yatela did not distribute a dividend during the second quarter of 2011 (2010 - $64.8 million, IAMGOLD's share $25.9 million).

Mupane mine, Botswana

At the end of the second quarter of 2011, IAMGOLD confirmed its plans to divest from the Mupane mine, located in Botswana. An agreement has been signed in early August to divest from the mine. Accordingly, the Mupane mine is presented as an asset held for sale and Mupane's financial results are now reported under net earnings from discontinued operations in the consolidated statement of earnings.

Attributable Gold Sales Volume and Realized Gold Price