IAMGOLD posts loss for 2019, stock drops

The Rouyn gold project is located about 40km southwest of IAMGOLD’s operating Westwood mine and mill. (Image courtesy of Yorbeau Resources)

IAMGOLD (TSE: IMG) posted a net loss from continuing operations of C$373.3 million on revenues of $1.1 billion after recording a $395-million impairment charge related to its Westwood mine in Quebec.

Westwood experienced increased seismic activity in the fourth quarter and the company had to adjust mining methods and the mine plan at the operation, 40 km east of Rouyn-Noranda.

Across all its operations in 2019, IAMGOLD produced 762,000 ounces of gold at total cash costs of $907 per ounce or all-in sustaining costs (AISC) of $1,124 per ounce, down from the 882,000 ounces at total cash costs of $793 per ounce or AISC of $1,057 per ounce in 2018.

“2019 was a year of significant challenges for IAMGOLD,” said president and COO Gordon Stothart in a release.

The company expects the second half of 2020 to be stronger, as mill upgrades at its Essakane mine in Burkina Faso should be completed in the first half. Grades at its Rosebel mine in Suriname are also expected to rise with the ramp-up of the Saramacca open pit about 25 km to the southwest.

For 2020, IAMGOLD expects to produce 700,000 to 760,000 ounces of gold at AISC of $1,100-1,150 per ounce.

“Iamgold is currently swimming against the tide of current public opinion, but we expect that the advancing project pipeline will be attractive to investors seeking operating leverage to gold prices”

Jackie Przybylowski, mining analyst, BMO Capital Markets

In December, the company agreed to sell its 41% interest in the Sadiola gold mine in Mali.

Jackie Przybylowski, a mining analyst at BMO Capital Markets, said in a research note that moving forward with new greenfield projects, such as Côté in Ontario and the Boto gold project in Senegal, will improve Iamgold’s geographical diversification and could reduce overall average operating costs.

“Iamgold’s Q4 earnings release and yesterday’s reserve and resource update underscored that Iamgold is not only motivated to grow, but that growth is necessary for the company,” Przybylowski said in a note, adding that investors currently want to see higher dividends returned to shareholders rather than investment in production growth.

“Iamgold is currently swimming against the tide of current public opinion, but we expect that the advancing project pipeline will be attractive to investors seeking operating leverage to gold prices.”

BMO has a market perform rating on the stock and a one-year target of $4 per share.

At market close Thursday, Iamgold’s stock was down over 7%. The day’s trading volume reached over 10.9 million, more than twice the daily average. The company has a $1.37 billion market capitalization.

(A version of this article first appeared in the Canadian Mining Journal)

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