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IAMGOLD Stock Rises 39% in 3 Months: How Should You Play the Stock?
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IAMGOLD (IAG - Free Report) shares have gained 39.1% over the past three months against the industry's 17.2% growth. This intermediate gold producer has also outpaced leading gold producers like Newmont Corporation (NEM - Free Report) , Barrick Gold Corporation (GOLD - Free Report) and Agnico Eagle Mines Limited (AEM - Free Report) .
IAG’s Share Price Performance Vs Industry & Few Top Miners
Image Source: Zacks Investment Research
The IAG stock has generally performed in line with the industry until the second-quarter 2024 results led to a notable 16% increase in a day. This jump, which was the stock's largest daily gain since the start of the year, was driven by the Côté Gold mine delivering the first full quarter of production.
The IAG stock has gained since. At the current price of $4.94, it is trading at a 7% discount to the 52-week high of $5.31 reached on Aug. 21, 2024. This presents a buying opportunity for investors looking to capitalize on future gains.
Technical Indicators Signal Bullish Trend for IAG
Image Source: Zacks Investment Research
The IAG stock is currently riding above both the 50-day simple moving average (SMA) and 200-day SMA, signaling a bullish trend. This technical strength highlights positive market perception and confidence in IAMGOLD’s growth prospects.
Factors That Have Contributed to IAMGOLD’s Rally
Solid Y/Y Improvement in Q2: IAMGOLD announced second-quarter adjusted earnings per share of 16 cents on Aug 8, a turnaround from the loss of 1 cent incurred in the year-ago quarter. Revenues surged 61.1% year over year to $385 million. The upside was driven by a 38% increase in gold sales and a 16% jump in realized gold prices.
Essakane & Westwood Shine, Cote Gold Starts Production: IAG’s attributable total production in the second quarter was 166,000 ounces, marking a 55.1% year-over-year increase. The Essakane mine’s attributable production of 111,000 ounces rose 26.1% year over year due to higher grades.
Westwood’s output grew 84% to 35,000 ounces, the highest quarterly production at Westwood since it restarted operations in June 2020.
The Côté Gold mine had its first full quarter of production, contributing 20,000 ounces of gold to IAMGOLD’s output in the second quarter.
Upbeat Outlook for 2024: IAMGOLD expects production from the Côté Gold mine in 2024 to be near the lower end of 130,000-175,000 ounces (on a 60.3% basis). IAG has the financing in place and is set to buy a 9.7% interest in Côté Gold on Nov. 30, 2024. This will take its stake in the project to 70%. We expect the contribution from the mine to IAG’s production in 2024 to be higher once this deal is completed.
Essakane's attributable production guidance was raised to 380,000-410,000 ounces due to the positive grade reconciliation and stable year-to-date operations. Westwood’s guidance was also revised to 115,000-130,000 ounces, reflecting higher production from the underground mine. Total production guidance for both the mines is at 495,000-540,000 ounces.
Image Source: IAMGOLD
Cash Cost Guidance Revised Downward: The cash cost guidance range for Essakane and Westwood has been revised downward from $1,280-$1,400 per ounce sold to $1,175-$1,275 per ounce sold. All-in-sustaining-cost guidance has also been revised downward from $1,780-$1,940 per ounce sold to $1,700-$1,825 per ounce sold. IAG stated while inflationary pressures have eased, pricing for certain consumables, including cyanide and grinding media, remain in line with the 2023 levels.
Rising Estimates Instill Confidence in IAG’s Earnings
The Zacks Consensus Estimate for IAMGOLD’s 2024 and 2025 earnings have moved up over the past 60 days.
Image Source: Zacks Investment Research
The consensus mark for 2024 and 2025 top and bottom lines suggests year-over-year improvements. This reflects analysts' upbeat expectations of the company’s production numbers and gold prices.
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
Côté Gold Mine to be a Key Catalyst for IAMGOLD
The Côté Gold mine is operated as a joint venture between IAG and Sumitomo Metal Mining Co., Ltd. The mine has delivered milestones this year so far — the first gold pour on March 31, 2024, delivering a full quarter of production in the second quarter, and started commercial production on Aug. 2, 2024.
The project continues to be on track to achieve the goal of 90% throughput by the end of the year and start 2025 on a solid footing. It will also lead in terms of technology and will be mined by a fleet of 23 autonomous haul trucks, six autonomous drills and other supporting equipment. This will ensure efficiency, safety and lower costs. The company is also exploring the adjacent Gosselin pit to improve returns from the Côté Gold project.
In the first six years of operation, Côté Gold’s expected gold output will likely be 4.95 million ounces and over the life of the mine, it will average 3.65 million ounces per year. In terms of production, the mine is the third top gold mine in Canada, following Agnico Eagle’s Detour Lake & Malartic.
Solid Rally in Gold Prices Bodes Well for IAG
Gold prices have increased 21.8% year to date and are currently at $2,516.92 an ounce. The bullion is being supported by expectations of a rate cut this month and geopolitical tensions.
Analysts expect this momentum to continue and are projecting gold prices to scale to around $3,000 an ounce by 2025, backed by solid demand amid limited supply prospects.
IAG’s Investment in Growth Projects to Bear Fruit
As of June 30, 2024, IAMGOLD had an available liquidity of $915.7 million, comprised of cash and cash equivalents of $511.4 million, and the available balance of the secured revolving credit facility of $403.3 million. IAG’s debt-to-capital ratio was at 0.23 as of June 30.
IAG continues to invest in maximizing production and increase the life of its existing mines, advancing development and exploration projects.
Significant operational projects planned for the next years include the Westwood ramp-up to safely access other mining areas that were affected by the seismic activity in 2020. It also includes other multi-site infrastructure investments, mill and plant upgrades, fleet and utilization improvements, tailings and surface water management optimization and additional pit developments at Essakane. These projects are expected to reduce or control the company’s cost structure and improve efficiency.
The company’s exploration projects, such as Nelligan and Monster Lake in northern Quebec, are also expected to be developed together to make a quality gold mine complex with a low cost structure and a substantial mine life.
IAG’s Valuation is Attractive
IAMGOLD is currently trading at a forward price/sales of 1.59X compared with the industry's 3.04X. The company is also less expensive than other gold miners like Newmont, Barrick Gold and Agnico Eagle Mines.
Image Source: Zacks Investment Research
Is it too Late to Buy the IAG Stock?
IAMGOLD is poised for growth, supported by an upward trend in gold prices, the ongoing ramp-up at Côté Gold, and the established portfolio of early-stage and advanced exploration projects within high-potential mining districts. Given its attractive valuation and upbeat prospects, investors can accumulate more shares.
Image: Bigstock
IAMGOLD Stock Rises 39% in 3 Months: How Should You Play the Stock?
IAMGOLD (IAG - Free Report) shares have gained 39.1% over the past three months against the industry's 17.2% growth. This intermediate gold producer has also outpaced leading gold producers like Newmont Corporation (NEM - Free Report) , Barrick Gold Corporation (GOLD - Free Report) and Agnico Eagle Mines Limited (AEM - Free Report) .
IAG’s Share Price Performance Vs Industry & Few Top Miners
Image Source: Zacks Investment Research
The IAG stock has generally performed in line with the industry until the second-quarter 2024 results led to a notable 16% increase in a day. This jump, which was the stock's largest daily gain since the start of the year, was driven by the Côté Gold mine delivering the first full quarter of production.
The IAG stock has gained since. At the current price of $4.94, it is trading at a 7% discount to the 52-week high of $5.31 reached on Aug. 21, 2024. This presents a buying opportunity for investors looking to capitalize on future gains.
Technical Indicators Signal Bullish Trend for IAG
Image Source: Zacks Investment Research
The IAG stock is currently riding above both the 50-day simple moving average (SMA) and 200-day SMA, signaling a bullish trend. This technical strength highlights positive market perception and confidence in IAMGOLD’s growth prospects.
Factors That Have Contributed to IAMGOLD’s Rally
Solid Y/Y Improvement in Q2: IAMGOLD announced second-quarter adjusted earnings per share of 16 cents on Aug 8, a turnaround from the loss of 1 cent incurred in the year-ago quarter. Revenues surged 61.1% year over year to $385 million. The upside was driven by a 38% increase in gold sales and a 16% jump in realized gold prices.
Essakane & Westwood Shine, Cote Gold Starts Production: IAG’s attributable total production in the second quarter was 166,000 ounces, marking a 55.1% year-over-year increase. The Essakane mine’s attributable production of 111,000 ounces rose 26.1% year over year due to higher grades.
Westwood’s output grew 84% to 35,000 ounces, the highest quarterly production at Westwood since it restarted operations in June 2020.
The Côté Gold mine had its first full quarter of production, contributing 20,000 ounces of gold to IAMGOLD’s output in the second quarter.
Upbeat Outlook for 2024: IAMGOLD expects production from the Côté Gold mine in 2024 to be near the lower end of 130,000-175,000 ounces (on a 60.3% basis). IAG has the financing in place and is set to buy a 9.7% interest in Côté Gold on Nov. 30, 2024. This will take its stake in the project to 70%. We expect the contribution from the mine to IAG’s production in 2024 to be higher once this deal is completed.
Essakane's attributable production guidance was raised to 380,000-410,000 ounces due to the positive grade reconciliation and stable year-to-date operations. Westwood’s guidance was also revised to 115,000-130,000 ounces, reflecting higher production from the underground mine. Total production guidance for both the mines is at 495,000-540,000 ounces.
Cash Cost Guidance Revised Downward: The cash cost guidance range for Essakane and Westwood has been revised downward from $1,280-$1,400 per ounce sold to $1,175-$1,275 per ounce sold. All-in-sustaining-cost guidance has also been revised downward from $1,780-$1,940 per ounce sold to $1,700-$1,825 per ounce sold. IAG stated while inflationary pressures have eased, pricing for certain consumables, including cyanide and grinding media, remain in line with the 2023 levels.
Rising Estimates Instill Confidence in IAG’s Earnings
The Zacks Consensus Estimate for IAMGOLD’s 2024 and 2025 earnings have moved up over the past 60 days.
Image Source: Zacks Investment Research
The consensus mark for 2024 and 2025 top and bottom lines suggests year-over-year improvements. This reflects analysts' upbeat expectations of the company’s production numbers and gold prices.
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
Côté Gold Mine to be a Key Catalyst for IAMGOLD
The Côté Gold mine is operated as a joint venture between IAG and Sumitomo Metal Mining Co., Ltd. The mine has delivered milestones this year so far — the first gold pour on March 31, 2024, delivering a full quarter of production in the second quarter, and started commercial production on Aug. 2, 2024.
The project continues to be on track to achieve the goal of 90% throughput by the end of the year and start 2025 on a solid footing. It will also lead in terms of technology and will be mined by a fleet of 23 autonomous haul trucks, six autonomous drills and other supporting equipment. This will ensure efficiency, safety and lower costs. The company is also exploring the adjacent Gosselin pit to improve returns from the Côté Gold project.
In the first six years of operation, Côté Gold’s expected gold output will likely be 4.95 million ounces and over the life of the mine, it will average 3.65 million ounces per year. In terms of production, the mine is the third top gold mine in Canada, following Agnico Eagle’s Detour Lake & Malartic.
Solid Rally in Gold Prices Bodes Well for IAG
Gold prices have increased 21.8% year to date and are currently at $2,516.92 an ounce. The bullion is being supported by expectations of a rate cut this month and geopolitical tensions.
Analysts expect this momentum to continue and are projecting gold prices to scale to around $3,000 an ounce by 2025, backed by solid demand amid limited supply prospects.
IAG’s Investment in Growth Projects to Bear Fruit
As of June 30, 2024, IAMGOLD had an available liquidity of $915.7 million, comprised of cash and cash equivalents of $511.4 million, and the available balance of the secured revolving credit facility of $403.3 million. IAG’s debt-to-capital ratio was at 0.23 as of June 30.
IAG continues to invest in maximizing production and increase the life of its existing mines, advancing development and exploration projects.
Significant operational projects planned for the next years include the Westwood ramp-up to safely access other mining areas that were affected by the seismic activity in 2020. It also includes other multi-site infrastructure investments, mill and plant upgrades, fleet and utilization improvements, tailings and surface water management optimization and additional pit developments at Essakane. These projects are expected to reduce or control the company’s cost structure and improve efficiency.
The company’s exploration projects, such as Nelligan and Monster Lake in northern Quebec, are also expected to be developed together to make a quality gold mine complex with a low cost structure and a substantial mine life.
IAG’s Valuation is Attractive
IAMGOLD is currently trading at a forward price/sales of 1.59X compared with the industry's 3.04X. The company is also less expensive than other gold miners like Newmont, Barrick Gold and Agnico Eagle Mines.
Image Source: Zacks Investment Research
Is it too Late to Buy the IAG Stock?
IAMGOLD is poised for growth, supported by an upward trend in gold prices, the ongoing ramp-up at Côté Gold, and the established portfolio of early-stage and advanced exploration projects within high-potential mining districts. Given its attractive valuation and upbeat prospects, investors can accumulate more shares.
IAG currently sports a Zacks Rank #1 (Strong Buy) and boasts a Value Score of B, making it an attractive investment option, according to Zacks' proprietary methodology. You can see the complete list of today’s Zacks #1 Rank stocks here.