Shares of Iamgold Corp (IAG, Financial) fell after a slight boost in early trading. By late Wednesday morning, shares stood at $6.09 a share, down 0.81%.
Just a day ago, the company announced an increase in mineral reserves at Essakane in Burkina Faso. The announcement was made this week on the company's website. The Canadian mid-tier gold producer increased mineral reserves by 39% at the Essakane Heap Leach Project in the western African country of Burkina Faso.after a pre-feasibility study showed positive drilling results. The miner drew 4.7 million ounces of gold from a previous volume of 1.3 million ounces of the yellow metal nestled in the area.
What's more, the exploration team has intercepted higher grades and increased its estimate of average gold output at Essakane for the future. Iamgold estimates an annual gold production of 480,000 ounces from a level of 380,000 to 395,000 ounces of attributable gold guided for full fiscal 2018.
With an annual peak of more than 500,000 ounces of gold. The estimate on the life of the mine has been extended by three years to 2026. The metal will be produced at a cash cost of $707 per ounce and at an all-in sustaining cost of $946 per ounce sold. According to the pre-feasibility study, the project will cost $155 million in capital expenditures.
CEO Steve Letwin said: “Essakane is pursuing all avenues for enhancing the value of this already high-performing operation, including targeting additional resources from Essakane's large, prospective land package. Stay tuned for an initial resource estimate for the Gossey prospect in the fourth quarter of this year. With these positive results and the future work we have planned, we are targeting a mine life beyond 2030 and AISC below $900 an ounce."
Therefore, more upsides in the market value of Iamgold are highly expected over the following days of trading.
We also must say that Iamgold is not trading cheaply because the share price is above the 200, 100 and 50-SMA lines. The current market value per share is nearly 30% off the 52-weeks low of $4.76 per share and only $1.11 far from the 52-week high of $7.25 per share.
However, Wall Street assigns a 2.2 recommendation rating out of a total of 5 and an average target price of $7.65 per share. More than 50% consensus suggests at least a Buy approach.
As of June, a total of 13 analysts have expressed an opinion about Iamgold Corp. A total of seven analysts recommend a Strong Buy to Buy. A total of six analysts recommend a Hold on the stock..
The average target price, which is a mean of 13 estimates ranging from $6.25 to $9.05, represent a 24.6% growth from the current share price.
The stock has a price-book ratio of 1 times versus an industry median of 2.06 times and an enterprise value to earnings before interest taxes depreciation and amortization (EV-to-EBITDA) ratio of 2.59 times versus an industry medina of 9.9 times. The stock in Iamgold currently has a market capitalization of $2.89 billion.
(Disclosure: I have no positions in the stock mentioned.)
