In a May 7 research note, CIBC analyst David Haughton reported that IAMGOLD Corp. (IMG:TSX; IAG:NYSE) "continued the recent positive operating momentum with strong Q1/18 results, and these good results should be well received."
The miner's adjusted earnings per share for the quarter were $0.09, higher than CIBC's estimate of $0.05 and "well ahead of consensus" at $0.03, Haughton indicated.
During Q1/18, IAMGOLD generated about $41 million ($41M) in free cash flow "with net cash balance increasing to $312M from $272M at year-end, plus $126M in short-term investment," relayed Haughton.
The company produced 229 thousand ounces (229 Koz) of gold, more than CIBC's estimated 219 Koz. Gold sales during Q1/18 totaled 235 Koz. Westwood had a record quarter in terms of production with higher grades and throughput. Essakane, also with a strong operating performance during the quarter, produced higher grades, too. Essakane and Westwood offset numbers out of Rosebel. That mine, in contrast, did not meet expected production due to "lower grades (mining sequencing) and throughput (more hard rock processed)," Haughton explained.
IAMGOLD's costs during Q1/18 were a beat. Cash costs were $737 an ounce ($737/oz), lower than CIBC's $776/oz estimate. All-in sustaining costs were $953/oz, under CIBC's predicted $960/oz.
As for catalysts anticipated this year, a heap-leach prefeasibility study for Essakane is due out this quarter, Q2/18. Expected in H2/18 are an initial reserve estimate for Saramacca and a feasibility study for Boto.
About IAMGOLD overall, Haughton concluded that it "presents reasonable value with improving operations and near-term production growth."
CIBC has an Outperformer rating and a US$7.50 per share target price on IAMGOLD, whose stock is currently trading at US$6.18 per share.
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Disclosures from CIBC, IAMGOLD Corp., May 7, 2018
Analyst Certification:
Each CIBC World Markets Corp./Inc. research analyst named on the front page of this research report, or at the beginning of any subsection hereof, hereby certifies that (i) the recommendations and opinions expressed herein accurately reflect such research analyst's personal views about the company and securities that are the subject of this report and all other companies and securities mentioned in this report that are covered by such research analyst and (ii) no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report.
Analysts employed outside the U.S. are not registered as research analysts with FINRA. These analysts may not be associated persons of CIBC World Markets Corp. and therefore may not be subject to FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.
Potential Conflicts of Interest:
Equity research analysts employed by CIBC World Markets Corp./Inc. are compensated from revenues generated by various CIBC World Markets Corp./Inc. businesses, including the CIBC World Markets Investment Banking Department. Research analysts do not receive compensation based upon revenues from specific investment banking transactions. CIBC World Markets Corp./Inc. generally prohibits any research analyst and any member of his or her household from executing trades in the securities of a company that such research analyst covers.
Additionally, CIBC World Markets Corp./Inc. generally prohibits any research analyst from serving as an officer, director or advisory board member of a company that such analyst covers.
In addition to 1% ownership positions in covered companies that are required to be specifically disclosed in this report, CIBC World Markets Corp./Inc. may have a long position of less than 1% or a short position or deal as principal in the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon.
Recipients of this report are advised that any or all of the foregoing arrangements, as well as more specific disclosures set forth below, may at times give rise to potential conflicts of interest.
Important Disclosure Footnotes for IAMGOLD Corporation (IAG)
· CIBC World Markets Inc. expects to receive or intends to seek compensation for investment banking services from IAMGOLD Corporation in the next 3 months.
