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Alberto Abaterusso
Alberto Abaterusso
Articles (1659) 

Iamgold Misses 1st-Quarter Earnings Expectations

Lower sales volumes and gold prices impact revenue, margins and cash flow

May 07, 2019 | About:

After the closing bell on Monday, Iamgold Corp. (NYSE:IAG) posted first-quarter results. Shares rose 0.34% to $2.92 in after-hours trading.

Revenue of $251 million missed expectations by $27.53 million. The Canadian miner also posted a GAAP loss of 9 cents per share and recorded adjusted earnings of 0 cents per share, lagging consensus estimates of 1 cent.

Hurt by lower sales volumes at each of its three core mines and a 1.7% drop in the realized gold price to $1,308 per ounce, revenue declined 20.2% year over year, costs increased and the operating net cash flow fell 91.7% to $8.8 million.

Due to an increase in the frequency of seismic phenomena at Westwood in Canada and lower head grades and throughput at Essakane in Burkina Faso, the total production of attributable gold decreased 19.2% to 185,000 ounces.

Lower sales and production volumes produced a 30% surge in the cost of sales to $962 per ounce sold and a 20% growth in total cash costs to $884 per ounce produced. Due to higher costs of sales, the all-in sustaining cost increased 14% to $1,086 per ounce sold.

The company said its financial position is strong with $697 million in cash available on hand and short-term securities as of March 31.

For full-year 2019, the company reaffirmed its production guidance of 810,000 to 870,000 ounces of attributable gold at an all-in sustaining cost between $1,030 and $1,080 per ounce sold. Further, the cost of sales was reiterated at $790 to $840 per ounce as well as total cash costs of $765 to $815 per ounce produced.

Gold futures were 0.21% lower at $1,281.15 per troy ounce on Tuesday. From the beginning of the second quarter through May 6, gold futures averaged $1,284 per troy ounce, 1.8% lower than the average price Iamgold realized in the first quarter from the sale of one ounce of gold.

Analysts expect Iamgold to outperform within 52 weeks. The average target price of $5.13 per share is an 85.2% upside from the closing price of $2.75 per share on Monday.

The stock declined 53% over the past year to below the 200-, 100- and 50-day simple moving average lines. The market capitalization is $1.35 billion.

The 52-week range is $2.75 to $6.33.

The 14-day relative strength index of 35 suggests the stock is approaching oversold levels.

Disclosure: I have no positions in any securities mentioned.

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About the author:

Alberto Abaterusso
If somebody asks what being a value investor means, Alberto Abaterusso would answer, “The value investor is not just the possessor of the 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 concern is how to have sales progressively growing. Also, the value investor is probably one of the most demanding persons in the world concerning sales.”

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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