Lower production and higher costs have taken their toll on Iamgold’s (TSX: IMG; NYSE: IAG) share price, after the gold miner released disappointing fourth-quarter and year-end results.
For the fourth quarter the company produced 195,000 oz. gold, and it expects total cash costs to be US$830 per oz.
Those numbers failed to impress Scotiabank analyst Tanya Jakusconek, who was looking for 267,000 oz. gold production at total cash costs of US$807 per oz.
For the full year Iamgold produced 835,000 oz. gold, which missed its own guidance range of 875,000 to 950,000 oz.
Despite taking severe cost-cutting measures — such as cutting jobs, capex and exploration, plus suspending its dividend — the Toronto-based gold miner’s expected costs for the coming year still failed to impress the market.
For 2014, Iamgold has offered production guidance of 835,000 to 900,000 oz. at total cash costs between US$825 and US$875 per oz., while at its owner-operator mines it expects cash costs between US$790 and $830 per oz.
Jakusconek is concerned by those numbers — especially the expected cash costs. She had been modelling production of 896,000 oz. at total cash costs of US$807 per oz.
As for last year’s lower-than-expected production numbers, the company blamed the miss on grade variation and pit sequencing at the Rosebel mine in Suriname and lower production from its Essakane mine in Burkina Faso.
Iamgold maintains a solid balance sheet, however, as it finished the year with US$380 million in cash and bullion, and $750 million in undrawn credit facilities.
Good news could also be on the way for investors in the second half, when the Westwood gold mine in Quebec is slated to ramp up and enter commercial production.
Essakane is also expected to boost its production by 25% over last year’s totals, thanks to the recent mill expansion.
On Jan. 22 — the day after the results were released — the company’s stock was off 11%, or 49¢ to $4.01, on 5.5 million shares traded.
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