IAMGOLD (IAG, Financial) is focusing on cost reduction and has exceeded its targeted cost reduction of $100 million and achieved a $125 million reduction. In addition, the company sold off Niobec which was a loss making entity at a very attractive price.
IAMGOLD is aiming several vein systems within a vast region for the Eastern Borosi project in Nicaragua. The company’s Phase I drilling program for the quarter is focused on three diverse vein systems seizing high-grade mineralization.
Expansion plans
There’s an expansion in the drilling program from the initial 35 to present 45 hole program for successfully testing the supplementary vein systems and following the already received high-grade intercepts.
Considering the Siribaya project in Mali, IAMGOLD is constantly focused on the fresh discovery called the Diakha prospect.
Ultimately, IAMGOLD has the Caramanta project situated in Colombia’s prolific Mid-Cauca Belt. During the third quarter, it concluded almost half of the planned 4000 meter diamond drilling program for testing several gold/copper/silver porphyry targets. Going forward, it targets on expanding this drilling program to several other surrounding regions and thus driving significant revenue for the company, enhancing shareholder returns.
By September end, the gold major had achieved $72 million of savings, comprising of $62 million of savings achieved through the key cost cutting efforts implemented at its various operating sites.
Depending on the present situation, IAMGOLD estimates to close deals in the range of $50 million to $60 million. The documented liquidity on the company’s balance sheet amounts to $1.3 billion.
Again, these significant savings achieved by the company during the quarter are a result of continued and successful cost-cutting efforts of the gold major.
IAMGOLD plans to invest in the ongoing operations, in the lucrative expansion of its gold business, including the acquisition of a producing or the mine expected to be producing in the future fulfilling the company’s criteria.
The continued cost-cutting efforts of IAMGOLD has enabled it to save nearly $23 million year-till-date at Rosebel with this success expected to continue in the future as well.
IAMGOLD commissioned its innovative 5 megawatt solar power plant at Rosebel in the third quarter which started generating power somewhat above the designed capacity. The success of this solar power plant paves the way for the company to set up several others, going forward.
Conclusion
IAMGOLD has not provided any data for the trailing P/E ratio, representing historical loss to the company. However, the forward P/E looks comparatively healthier at 89.67 and indicates huge company costs. The PEG ratio of 11.48, above 1 signifies slower growth. The profit margin of -79.98% depicts no profit but loss. The revenue per share and diluted EPS of 3.07 and -2.46 respectively depicts loss in investor earnings.
However, the quarterly revenue growth of 16.40% is better than the industry’s average of 0.00% only. The current ratio of 2.77 suggests the robustness of the company’s balance sheet. Finally, the investors are advised to cautiously invest into the IAMGOLD Corp. looking at the nominal long-term growth prospects indicated by the CAGR for the next 5 years per annum of 3.00%, lower than the solid industry’s average of 21.57% and expect only satisfactory returns in a long run.
