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Tuesday, November 29, 2022

IAMGOLD Corp (USA) (NYSE:IAG) A CLose Look

IAMGOLD Corp (USA) (NYSE:IAG) has recently made a strong move up as Gold recovers after a drip below $1,150 an ounce. IAG currently trades for a fraction of the $20 + share price it commanded at its peak in 2011.

IAG has a number of positive catalysts at play here including positive investor sentiment on the Company’s whopping $860 million cash position If we add the $530 million in cash proceeds from the sale of the Niobec Niobium mining asset closing Q1 2015 and a $500 million credit line. Investors are speculating and rightly so that IAG could buy a lot of valuable gold mines with $1.3 billion in this depressed gold market.

IAG just reported revenues of $341.5 million, up from $293.5 million last year. Sales were up from gold production growth which was 40,000 oz better than last year. The bigger catalysts here though are IAG’s spectacular cash position of $860million on their balance sheet along with a $500 million credit line.

IAMGOLD Corp (USA) (NYSE:IAG) is a mid-tier mining company with five operating gold mines on three continents and one of the world’s top three niobium mines. A solid base of strategic assets in Canada, South America and Africa is complemented by development and exploration projects and continued assessment of accretive acquisition opportunities.

IAG mining operations consist of the Rosebel Gold Mine, Essakane Gold Mine, Doyon Division Gold Mines and Niobec Niobium Mine. IAMGOLD Corp development projects include Westwood Project, Quimsacocha Project and Camp Caiman Project.

Prior to the recent reversal and run up IAG fell for years along with the price of Gold and on negative investors sentiment concerning the Company’s high cost to produce gold of around $1,100/oz, concerning to say the least considering Gold is trading at less than $1,200/oz.

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The Company has recently embarked on a Company-wide cost cutting initiative in a continued effort to bring the down their high cost of production as well as widen operating margins and free cash flows at its gold assets.

On November 10 IAG announced it has transformed its corporate structure with the primary objective of creating a more efficient and effective organization that embeds agility and scalability through the adoption of leading practices.

Steve Letwin, CEO IAG, commented, “We are determined to make this Company a stronger competitor in the gold industry and to enrich the lives of all our stakeholders: investors, employees, business partners and the countries and communities in which we operate. As a first step we have now re-organized IAMGOLD’s corporate structure to drive the transformation of the Company. We have also taken steps to make our balance sheet stronger and improve our liquidity as a result of significant cost reductions, disciplined management of our capital and the sale of Niobec.”

As I said IAG’s biggest asset by far is the spectacular liquidity position; as of the last filing IAG had $170.5 million in cash + $169.9 million in Gold bullion at market + $530 million in cash proceeds from the sale of the Niobec Niobium mining asset expected to close in Q1 2015 + $500 million credit line: IAMGOLD has approximately $1.3 billion in liquidity.

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Conclusion: IAG is exploding skywards after hitting an all-time low of $1.42 per share. The stock is under heavy accumulation with general investor sentiment highly positive on IAG. $1.3 billion is a ton of liquidity especially in this depressed gold market and it gives IAG a massive advantage considering the Company has no debt obligations for the next 6 years out. IAG could go on a serious buying spree and they could get serious bang for their buck with Gold however under $1,200/oz.

A lot of Gold bears are turning positive and IAG was due for a massive reversal for a long time. The stock has fallen a long way since it was over $20 per share and investors view current prices a steal considering that IAG is trading at less than an $800 million total market valuation.

If Gold rises this week as many suggest it will then IAG is a stock to watch for continued significant upside.

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Disclosure: we hold no position in IAG either long or short and we have not been compensated for this article.

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1 COMMENT

  1. I hope you are right after all it sounds good, but when are these guys going to start making money.Some time it takes a long time for a response to prices. You may recall 1973 the oil embargo, 40 years later the US has figured out how to survive such a threat .We are now starting to pump our own. I dont understand IAG selling the niobium mine if prices are depressed. The price to get the metals out of the ground should be a lot less with fuel prices dropping. I should think that if they dont make money someday soon they probobly never will

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