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IAMGOLD: Q1 Report Brings More Disappointment And I'm No Longer Bullish

May 05, 2020 4:26 PM ETIAMGOLD Corporation (IAG), IMG:CA18 Comments
Vladimir Zernov profile picture
Vladimir Zernov


  • IAMGOLD reports Q1 2020 results, missing estimates on both earnings and revenue.
  • The company cuts its 2020 production guidance and increases its cost guidance.
  • Too many things have gone wrong in IAMGOLD, and I abandon my previous bullish stance as even the high gold price fails to cure the company's problems.

Back in March, I was bullish on IAMGOLD (NYSE:IAG) as I believed that the sell-off in the gold mining space was unjustified and that the company would benefit from higher gold prices which will lead to a re-pricing of its shares. After some adventures which included an excursion into the sub-$2.00 zone, IAMGOLD is trading at higher levels and is even close to the key $4.00 level. The company has just provided its first-quarter report, and it's high time to check the previous bullish thesis.

The company reported revenues of $274.5 million and a net loss of $0.07 per share, missing analyst estimates on both earnings and revenue. IAMGOLD produced 170,000 ounces at all-in sustaining costs (AISC) of $1,230 per ounce. The company blamed COVID-19 for high costs, but I’d note that only the Westwood mine was placed on care and maintenance due to the global pandemic, and this happened at the very end of the quarter on March 25. Operations at the Westwood mine were restarted on April 15.

Due to the negative impact of virus containment measures, the company has decreased its production guidance from 700,000–760,000 ounces to 685,000–740,000 ounces. The previous guidance was rather conservative, and I believed that it left some room for emergencies. However, the guidance was lowered, and that’s another negative catalyst for the company’s shares.

At the same time, IAMGOLD has increased the AISC guidance from $1,100-$1,150 per ounce to $1,195-$1,245 per ounce. Put simply, the company will produce less gold at higher costs in 2020, and the current quarterly results show that even a high gold price is unable to cure the company’s problems.

I am sure that many traders and investors wonder how it is possible to lose money in the current gold price environment. The problem is that IAMGOLD had just $31.9

This article was written by

Vladimir Zernov profile picture
I'm a trader who trades both short-term and long-term. I started my career as a day-trader for a trading firm, but then turned to longer time frames and went on my own to manage my portfolio. I use technical analysis as well as fundamental analysis in my research.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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