CASH FLOW JUMPS FOR THIS CANADIAN GOLD STOCK MINING STOCKS
June 5, 2018 | Scott Clayton | |
Even with gold prices down from recent highs, this Canadian gold stock has had strong results.
Its cash flow surged in the most recent quarter, while revenues and production were also higher. Its shares are up over the past month.
The company has several promising projects on the way that are due to push its annual gold production over 1 million ounces within the next few years.
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IAMGOLD (Toronto symbol IMG; www.iamgold.com) owns 41% of the Sadiola mine in Mali; 90% of the Essakane mine in Burkina Faso; 100% of the Westwood mine in Quebec; and 95% of the Rosebel mine in Suriname. It also owns 92.5% of the Cote gold project in Ontario. Production at Cote could begin in 2021. In addition, the company has a 51% interest in the Eastern Borosi project in Nicaragua.
In the quarter ended March 31, 2018, IAMGold’s revenue rose 21.0%, to $314.5 million from $260.5 million a year earlier. (All figures in U.S. dollars.) Cash flow jumped 41.7%, to $119.6 million, or $0.26 a share, from $84.4 million, or $0.19.
The company’s gold production increased 7.0% in the latest quarter, to 229,000 ounces from 214,000 a year earlier.
In August 2017 IAMGold paid $2.5 million (Canadian) for a 19.98% stake in TomaGold Corp., (symbol LOT on the TSX Venture Exchange). TomaGold holds interests in several gold projects, mainly in northern Quebec. Those include a 50/50 joint venture with IAMGold to develop the Monster Lake field, 50 km southwest of Chibougamau, Quebec.
IAMGold can increase its stake in Monster Lake to 75% provided it spends a further $10 million on the project by the start of 2022. The company’s decision to purchase a stake in TomaGold suggests that Monster Lake has strong potential. In March 2018, the company reported the first mineral resource estimate for the project, 1.1 million tonnes of inferred resources, including 433,300 ounces of contained gold.
In April 2018 a new estimate for the Eastern Borosi project indicated 4.4 million tonnes of inferred resources, including 700,500 ounces of contained gold and 11,359,000 ounces of contained silver.
Mining Stocks: New mine due to push annual output over one million ounces Earlier, the company reached an agreement with Japan’s Sumitomo Metal Mining to help build a mine at IAMGold’s Ct gold property near Timmins, Ontario.
Sumitomo will pay $100 million U.S. when the deal closes. A final $95 million U.S. is due within 18 months, or when IAMGold provides authorities with its final feasibility study on the economics of building the mine.
The Ct deposit holds as much as 5.93 million ounces of gold. The partners hope to start construction in 2019. Production is scheduled to begin in 2021 at a rate of 320,000 ounces per year.
IAMGold now produces around 850,000 ounces of gold per year, so the Ct mine will push it well over the million-ounce mark.
Although gold is down from its earlier 2018 highs, the shares of IAMGold have risen by 13% in the past month. The company’s long-term production outlook is positive. Meantime, the company holds a high $856.3 million in cash.
Those reserves put it in a strong position to pay down its long-term debt of $391.6 million. It could also expand its existing gold projects, pay dividends, buy back shares or make timely acquisitions from distressed sellers at low prices.
Recommendation in Stock Pickers Digest: IAMGold is a buy.
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Thanks to Scott Clayton (Stock Pickers Digest) (Pat McKeough) for permission to post the above article.
in the SPD section “Canadian Gold Mining Stocks”, four stocks have a BUY recommendation….with IAMGOLD being one of them.