Entering text into the input field will update the search result below

Iamgold: An Organic Growth Story With Shaky Footing

Aug. 04, 2021 7:31 AM ETIAMGOLD Corporation (IAG), IMG:CA15 Comments
Taylor Dart profile picture
Taylor Dart


  • IAMGOLD released its preliminary Q2 results last month, reporting production of ~139,000 ounces, and a massive cut to FY2021 guidance.
  • The lower output has been driven by weaker than expected results from Rosebel and Westwood, which have produced only ~92,000 ounces combined year-to-date.
  • While IAMGOLD has the ingredients in place to be a huge winner, the team has been unable to even meet targets, which weighs on confidence around this growth story.
  • Given the continued misses on guidance and recent capex increase, I have lowered the fair value to US$3.75, translating to a low-risk buy zone of US$2.44 or lower.

Construction Workers Inspecting Site
SeventyFour/iStock via Getty Images

The Q2 Earnings Season for the Gold Miners Index (GDX) is finally underway, and one of the first companies to release its preliminary Q2 results was IAMGOLD (NYSE:IAG). Unfortunately, while most producers posted solid

This article was written by

Taylor Dart profile picture
"A bull market is when you check your stocks every day to see how much they went up. A bear market is when you don't bother to look anymore."- John Hammerslough You can access more in-depth research, my current portfolios, new positions I am entering/exiting, and proprietary sentiment indicators for gold miners in my newsletter below.  Returns Link: https://imgur.com/a/6fcWjD6Subscription Link: https://buy.stripe.com/3cseV37nl9Y7dUcaEI - Disclosure: I am not a financial advisor. All articles are my opinion - they are not suggestions to buy or sell any securities. Perform your own due diligence and consult a financial professional before trading or investing.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of GLD either through stock ownership, options, or other derivatives. 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.

Disclaimer: Taylor Dart is not a Registered Investment Advisor or Financial Planner. This writing is for informational purposes only. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Taylor Dart expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (15)

Deep Value Oracle profile picture
So we got net cash of 500 million so rest of the entire company is worth 700 million ... why hasn't someone taken a stab at them with all the mines reserves and production ... crazy valuation here and very crazy upside if it can be turned around, the cash flow is still very healthy could just be investors hate it and are unwilling to buy it until these guys show some competence for a few quarters ...
Deep Value Oracle profile picture
they should do a small buyback even to signal to market that they are willing to do something with the cash pile or a small dividend.... this is the ONLY way mining/oil stocks go up
Sold some puts for Jan'23 at 40 cents. Happy to pick some shares up at $1.60, but with the negative sentiment I do see further downside from todays prices.
@DDEF At strike 2
Deep Value Oracle profile picture
@DDEF you are gonna wait (and tie up that capital) 1.5 years to collect 40 cents lmao? I never understood the allure of selling LEAP Puts specifically... doesn't most of the time decay happen in the last 75 days accelerating in the last 45 days...
Joelg5 profile picture
Been long IAG a long time, and IAG has been a major disappointment, managing to lose money many quarters with high gold prices. IAG has had a nice cash hoard for a long time, a positive, and at these levels downside seems limited. So, I call it a hold. Could be dead money for more years, if past management is indicative. Cote could be transformative, but given rising cap-ex and management’s track record of not delivering, skepticism is indeed wise. Rosabel was a victim of very bad luck this year (rains, COVID, labor unrest), and is an underrated property which should get back to normal production figures. Westwood’s seismic issues may or may not be solvable, but it has some very high grade deposits. I may add shares, as there is good upside potential should Cote, Rosabel and Westwood resolve their issues. Sometimes stocks go nowhere for many years, and then right after you throw in the towel everything goes right. ☺️
Chancer profile picture
@Taylor Dart
Thanks for update on IAG, IMO the years of "misses" are due to bad CEO's-previous was the worst and new CEO not much better; and this BOD tolerates the incompetence.

I did add very little at $2.47 which reduced my average cost. If COTE production takes IAG over $4.30, I can sell my earliest (2013) shares to reduce my average cost further. That will get me down to $4.33. I may, or may not add a few more shares, if it drops under $2.30. At least, I now have options.

Thanks Taylor. Your suggestions gave me the ideas to recover.
markh profile picture
Some major could offer a low bid buy-out offer and I think shareholder's would be thrilled to see it and maybe they could finally turn the tide on this perennial under-performer.
Taylor Dart profile picture
Hi Mark,

I don't really see what's here for majors, to be honest. Rosebel and Westwood are not desirable assets, and Essakane is an alright asset if you're already in Tier-3 jurisdictions but has an NPV (5%) of closer to $700 million. If combine $600 million Cote Lake attributable and $700 million Essakane you've got $1.3 billion in NPV (5%), and we still don't know if Cote Lake can meet its desired operating metrics. I could see an offer come in if the stock dipped below $2.10 which could afford a small premium, but not sure it's likely at these levels.
Taylor Dart profile picture
To be clear, as of my last article, I was bullish on Cote Lake since the NPV (5%) was massive, but this huge capex increase just took a healthy bite out of it. I can't imagine a major would want to step in until it's fully built rather than take over mid-construction.
Honus profile picture
Some days you're the bug, some days you're the windshield. With this stock, I was the bug. It's only money. Jerome Powell will eventually send me some more.
Just when you think this company is turning the corner, they take 2 steps back. Look for a revalue of their Westwood mine and a write off in the near future. They can't to seem to get out of their own way. Another author on SA said they were "uninvestible". Just about any other gold producer is a better investment.
Taylor Dart profile picture
Hi Nomad,

It's unfortunate. I had labeled the stock an avoid for years but figured after a 50% haircut it was hard to screw up any further. After another brutal report and year, it just doesn't seem worth it to make that assumption. The stock is a trading vehicle at best.
bver88 profile picture
I have this one as an "avoid"

@Taylor Dart

but did appreciate your comprehensive write ups, TD - even handed -

'just the facts , m'am' as Joe Friday used to say.

thanx for sharing with SA readers
ffnorth profile picture
Painful but spot on analysis. As I have said for years, the only consistency with this "management" team is their ability to constantly disappoint. Clearly the board of directors is comprised of friends or they have incriminating pictures. Very sad.
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.