Continue to bleed cash ! If gold prices go back to $1,900 per ounce, which is where they were in 2011, perhaps no company will benefit more than Iamgold (TSX: IMG)(NYSE: IAG). This is because the company is one of Canada’s highest cost gold producers. The company doesn’t admit this easily, but the numbers tell the story.
In 2013, the company reported “cash costs” of $801/oz for the year. But all-in sustaining costs at its gold mines were north of $1,200, and that does not include “development/expansion” costs of $485 per ounce of production. Worst of all, Iamgold’s reserves actually decreased during the year, making one wonder whether those expansion costs really should be classified as such.
In fact the company’s free cash flow in 2013 was negative $371 million, in a year when gold prices averaged $1,400. So unless gold prices recover dramatically, Iamgold will continue to bleed cash.