Iamgold Corp. (IAG, Financial) plummeted 5.7% to $3.79 per share in after-hours trading on Wednesday after missing consensus estimates on second-quarter earnings by 2 cents. The Canadian mid-tier gold producer also missed revenue forecasts by $26.44 million.
The miner reported a loss of 3 cents per share on revenue of $246.5 million for the quarter.
Revenue declined 11.1% year over year on the back of a lower gold sales volume of 187,000 ounces, which was down from 215,000 ounces a year ago. The decrease more than offset the 1.2% hike in the average realized price to $1,314 per ounce of gold marketed.
The company sold fewer ounces of gold because production fell 7.5% to 198,000 ounces due to lower grades of ore processed at operations in Burkina Faso and Canada as well as lower throughput and gold recovery rates reported in Mali.
The company operates the Essakane mine in Burkina Faso, the Westwood mine in Canada and the Sadiola mine in Mali. Iamgold also mines the precious metal from reserves situated at Rosebel in Suriname, where, in contrast with the other assets, activities recorded higher gold recovery rates.
The impact the lower throughput had in terms of increased operating cost per ounce was so strong that Iamgold incurred 5% higher all-in sustaining costs of $1,132 per ounce of metal sold.
Iamgold cut its full-year 2019 total attributable production guidance to 765,000 to 810,000 ounces of gold and raised its guidance for cost of sales to between $910 and $960 per ounce of gold sold and all-in sustaining costs of $1,090 to $1,130 per ounce of gold sold.
The lackluster guidance is the result of several operating issues the miner reported in Suriname earlier this year and from others the company anticipated for the second part of 2019.
Further, as a result of spend timing, lower capitalized stripping and deferral of non-critical infrastructure, Iamgold has reduced its capital expenditures by $80 million to a range of $261.3 million to $288.8 million for the year.
As of June 30, the balance sheet had $688.5 million in cash on hand and short-term investments. In addition, Iamgold can withdraw up to $499.6 million from an available line of credit.
The stock declined 20% over the past year through Aug. 7. The closing share price of $4.02 on Wednesday bounced back from the May 29 low of $2.30 and is now trading above the 200-, 100- and 50-day simple moving average lines. The market capitalization is $1.89 billion.
The 52-week range is $2.28 to $5.29.
The 14-day relative strength index of 65.64 suggests the stock is neither overbought nor oversold.
Wall Street gave the stock a overweight recommendation rating and an average target price of $4.24.
Disclosure: I have no positions in any securities mentioned.
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