Scotia Capital has cut its stock price target for
Iamgold Corp. (
TSX: T.IMG,
Stock Forum) after considering the company’s 2013 operational results and guidance for 2014.
The new one-year target is US$4, down from US$4.50 a share, according to a research report by Scotia Capital analyst Tanya Jakusconek.
Iamgold is a mid-tier gold producer with six operating gold mines in South America, West Africa and Quebec. The company also has a Niobium mine in Quebec.
According to its production guidance for 2014, Iamgold expects to produce between 835,000 ounces and 900,000 ounces of gold this year at a cash cost of between $825 and $875 an ounce.
But with forecast all-in sustaining costs in the US$1,150 and US$1,250 per ounce range this year, Iamgold does not have much room to manoeuvre, with spot gold prices trading at US$1,262.05 this week.
The production guidance reflects the planned ramp-up of production at the Westwood project in the second half of 2014 and post-expansion ramp-up at the Essakane gold mine in Burkina Faso, West Africa,
Iamgold said in a press release.
The Westwood project is located about 2.5 kilometres east of the Doyon Gold mine near Rouyn-Noranda, Que.
Iamgold’s 2014 production guidance compares to the Scotia Capital estimate of 896,000 ounces at a cash cost of $807 per ounce.
In 2013, the company produced 835,000 ounces at a cash cost of $800 an ounce, below earlier guidance of between 875,000 and 950,000 ounces at a cash cost of $790-$840 an ounce.
“We were modeling attributable production of 907,000 ounces at a cash cost of $793 an ounce,’’ wrote Jakusconek in the report.
“Q4 was a weak quarter. We expect the stock to be weaker today (Thursday) on this release,’’ she said.
Iamgold shares fell 3% to $4.13 Thursday on the TSX, leaving a market cap of $1.6 billion, based on 376.6 million shares outstanding. The 52-week range is $10.15 and $3.33.
That adds up to a drop of nearly 14% in the last couple of trading sessions as investors reacted to production results that were released on Wednesday.
The Scotia Capital analyst said Iamgold’s production of 195,000 ounces in the fourth quarter of 2013 was 27% below Scotia estimates, a shortfall that was primarily due to grade variation and pit sequencing at Rosebel, and lower production form Essakane, Scotia said.