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Alberto Abaterusso
Alberto Abaterusso
Articles (1293) 

Iamgold Corp. Increases Reserves

2018 is full of catalysts for Iamgold

February 14, 2018 | About:

On Tuesday, Iamgold Corp. (NYSE:IAG) jumped 1.26% to $5.61 per share on the New York Stock Exchange. The company has a market capitalization of $2.6 billion.

However, we will likely see more upsides in the market value of Iamgold because the Canadian gold producer has announced that it has increased its holdings in mineral reserves.

Proven and probable reserves of gold attributable to Iamgold Corp increased to 14.5 million ounces on Dec. 30, 2017. This reflect an 86% growth from the previous statement of Dec. 30, 2016 when the Canadian mid-tier gold producer was said to own approximately 7.79 million ounces of the yellow metal in proven and probable reserves.

This magnificent increase was possible, Iamgold Corp reported, after having moved the Côté Gold (Ontario, Canada) and Boto Gold (eastern Senegal, West Africa) projects’ resources up to the category of reserves. The increase in gold reserves at Rosebel gold mine (Suriname), which was previously announced by Iamgold, was also supportive.

2017 attributable gold output of 882,000 ounces could scratch the reserves estimation only marginally.

Apart from the increase in the resources, the massive increase in the upper category of reserves will undoubtedly have a positive impact on the miner’s outlook.

The average gold grade went a little bit down to 1.2 grams per ton of ore from the previous 1.4 g/t, however, this shouldn’t affect the cost to extract and process the metal since an increase in the volume of gold will likely lead to improved throughput levels.

Proven and probable reserves of attributable gold have been estimated by Iamgold based a price of $1,200 per ounce. This is the price level above which the Canadian mid-tier gold producer will start to mine the precious metal at profit. This price is unchanged from previous reserves estimation.

Despite the most recent upside, Iamgold is trading cheaply because the stock is below the 100 and 50-SMA lines, though still above the 200-SMA line. This is mainly the result of a downtrend in the U.S. equity markets in the last two weeks.

Source: Yahoo Finance

Therefore, if you want to either increase your holding of Iamgold Corp. or start a position, now is the time to step in.

Iamgold Corp. anticipates a meaningful year in terms of enhanced reserves and resources.

These catalysts include:

  • The declaration of an initial reserve estimate at Saramacca during the second part of 2018.
  • Improvement of the company’s confidence on existing reserves and the upgrade of additional resources to a higher category from drilling scheduled at Côté Gold as part of the feasibility study.
  • The completion in the second quarter of 2018 of the Heap Leach Prefeasibility Study at Essakane, where (at the Gossey satellite deposit, precisely) a maiden resource estimate declaration is expected by the end of 2018.
  • Expansion of Westwood’s reserves.
  • An updated resource estimate is planned for Diakha-Siribaya in Mali, West Africa, and maiden resource estimates are being initiated in 2018 for Monster Lake and Nelligan in Quebec, Canada, and Eastern Borosi in Nicaragua.

Today's price is 0.94 times the book value per share while the industry median is 2.05 times. The company's EV-to-Ebitda ratio of 2.49 times compared to the industry's 10.18 times.

The average target price is $7.75 per share. This is a mean of thirteen $6.25 to $9.15 ranging estimates and represent a 38.14% appreciation of the stock from the current market price.

(Disclosure: I have no positions in any stock mentioned in this article).

About the author:

Alberto Abaterusso
If somebody asks what being a Value Investor means, Alberto Abaterusso would answer: “the Value Investor is not the possessor of a security that represents the company, but he is the owner of that company. As an owner of the company the Value Investor is actively involved in the dynamics of that company and his first aim is how to have sales progressively growing.”

Alberto Abaterusso would add: “probably the Value Investor is one of the least patient persons in the world concerning sales.”

Alberto Abaterusso is a freelance writer based in The Netherlands. He primarily writes about gold, silver and precious metals mining stocks. His articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. Alberto holds an MBA from Università degli Studi di Bari (Italy), Aldo Moro.

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