(Toronto symbol IMG; TSINetwork Rating: Speculative) (1-888-464-9999; www.iamgold- .com; Shares outstanding: 376.6 million; Market cap: $1.7 billion; Dividend yield: 5.5%) owns 38% of the Sadiola mine and 40% of the Yatela mine, both located in Mali; 90% of its new Essakane gold mine in Burkina Faso; 100% of the Doyon mine in Quebec; and 95% of the Rosebel mine in Suriname, South America.
In addition, IAMGold has a 1% royalty interest in the Diavik diamond mine in the Northwest Territories. It also owns the Niobec niobium mine in Quebec. When used as an additive, niobium makes steel stronger, more heat-resistant and easier to weld.
In the three months ended June 30, 2013, IAMGold’s revenue fell 17.4%, to $301.1 million from $364.5 million a year earlier. Cash flow per share fell 10.0%, to $0.18 from $0.20. The declines were mostly due to lower gold prices, partly offset by a 10% production increase.
IAMGold’s production outlook is positive, and it’s cutting its risk by diversifying away from Africa. Last year, it acquired the Côté Lake gold project, located between Timmins and Sudbury, when it bought Trelawney Mining and Exploration for $608 million. Côté Lake holds an estimated 8.2 million ounces of gold, and there’s lots of room for more drilling to further expand the project’s reserves.
The company holds cash and gold bullion of $544.2 million, so it has the funds to develop Côté Lake and add to its other mines’ reserves. It’s also successfully cutting costs to keep its cash flow high. Meanwhile, its semi-annual dividend of $0.125 a share, which gives the stock a high 5.6% yield, appears safe.
IAMGold is a buy.
