Iamgold Corp. (IAG, Financial) announced the company's 2016 preliminary results for production and costs and provided the production and cost guidance for 2017 on Monday.
For 2016, Iamgold produced 813,000 ounces of gold at a cash cost between $740 per ounce and $770 per ounce and at an all-in sustaining cost (AISC) between $1,050 per ounce and $1,100 per ounce.
Gold production for 2016 was 1.6% higher than the upper limit of the latest guidance. The miner expected to produce between 770,000 and 800,000 ounces of gold.
In the last quarter of 2016, Iamgold produced 215,000 ounces of gold.
Total cash costs and AISCs for full-year 2016 were in line with expectations.
Conforming to the guidance for 2016, Iamgold went slightly over its budget to upgrade its asset base during the year. The miner spent approximately $280 million for capital expenditures versus an expected amount of approximately $275 million.
As of the fourth quarter of 2016, Iamgold had approximately $750 million in cash on hand and securities that can be readily converted into cash.
For 2017, the miner expects to almost duplicate its 2016 attributable gold production at Westwood as a result of underground developments. The miner produced 65,000 ounces of gold in 2016 and expects to produce 115,000 to 125,000 ounces of gold in 2017.
At Rosebel, the miner will increase gold production despite a higher percentage of hard rock expected to be encountered as excavation proceeds. Higher grade of ore processed at Rosebel will lead the company to produce more gold in 2017.
The company expects to mine the precious metal at lower grades at Essakane and to produce approximately 70,000 ounces of gold from its joint ventures.
Concerning capital expenditures, Iamgold expects to spend between $237.5 million and $262.5 million for maintenance costs at its own mines (Essakane, Rosebel and Westwood) and for its joint venture, Sadiola mine. Approximately $55 million will be spent to expand operations at each of these mines as well. Another $10 million is allocated for corporate purposes and to develop the projects at Côté Gold and Boto Gold.
For 2017, Iamgold plans to reintegrate its reserves and resources with the “discovery of new ounces through its wholly-owned and joint venture projects in South and Central America, West Africa and Canada” and the “targeting of soft rock resources near the existing mines.” The company budgeted approximately $47 million in exploration activities.
Iamgold closed at $4.44 per share Monday, down two cents or -0.45% from the previous trading day, with 7,905,608 shares traded on the New York Stock Exchange.
The market capitalization is $2 billion and the enterprise value is $1.86 billion. The gold stock is trading at 0.90 times the book value and 8.14 times the Ebitda.
Over the 12 trailing months, the mid-tier gold producer generated cash flow of $199.6 million from operations.
During the third quarter of 2016, Donald Smith (Trades, Portfolio) increased his position in Iamgold by 279.64%, while First Eagle Investment (Trades, Portfolio) decreased its position by 36.26%.
Disclosure: I have no position in Iamgold Corp.
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