Iamgold Corp. (IAG, Financial) disclosed fourth-quarter and full-year results for 2018 on Wednesday after the closing bell.
The Canadian mid-tier gold producer closed the final trimester missing consensus on non-GAAP and GAAP earnings, with a non-GAAP loss of 3 cents per share and GAAP loss of 7 cents per share. Forecasters were looking for non-GAAP and GAAP loss of 1 cent.
Revenue was $274.3 million in the final quarter of 2018, a 5.8% decline year-over-year, but the miner managed to beat consensus on revenue by $1.84 million.
Iamgold Corp. also reported figures for the entire year of 2018.
Due to higher energy, maintenance and contractor costs, it recorded a 10.5% year-over-year decline in gross profit to $136.9 million. Higher royalties and a stronger euro-to-U.S. dollar conversion also hit the gross profit. Revenues were nonetheless 1.5% higher at $1.11 billion on slightly higher gold sales volume of 872,000 ounces and average realized gold price of $1,270 per ounce.
In 2018 Iamgold Corp. produced 882,000 ounces of attributable gold, flat from the previous year, at a 5% higher all-in sustain cost of $1,270 per ounce of metal.
The AISC increased because in 2018 the company laid the foundation for a stronger future production profile through the sustainment of higher exploration and evaluation costs.
In fact, while remaining focused on reaching production and cost targets, the mining company sustained higher expenses for enhancing reserves and making the Côté Gold project in Ontario and the Boto Gold project in Mali feasible for production. The main result of higher spending was that proven and probable reserves of gold increased 23% to 17.9 million ounces in 2018 from 13.78 million ounces in 2017.
As a result, the gold margin declined 5.7% to $477 per ounce of gold, while helped by higher sales volume, the adjusted net profit was stable at $29.8 million or 6 cents per share in 2018. Instead, the GAAP net income switched to a loss of $28.2 million or a loss of 6 cents per share in 2018 due to charges of $524.1 million for impairments at the Côté Gold Project and the Rosebel mine in Suriname.
As of Dec. 31, the balance sheet of Iamgold Corp. was characterized by: $734.1 million in cash and short-term investments and $398.5 million in long-term debt. The equity was worth about $2.79 billion, translating to a debt-equity ratio of 14.3% versus an industry median of 34%.
Iamgold Corp. has assets of the Essakane mine in Burkina Faso, the Rosebel mine in Suriname, the Westwood mine in Canada and from its Sadiola joint venture in Mali. For full-year 2019, it guided for total attributable gold production of 810,000 to 870,000 ounces at an all-in sustain cost of $1,030 to $1,080 per ounce of gold sold.
The stock traded around $3.73 per share on Wednesday for a market capitalization of roughly $1.74 billion. After 30% depreciation for the year through Feb. 20, the share price is far below the 200-day simple moving average line but still slightly above the 100- and 50-day SMA lines.
The share price at close Wednesday is 35.6% above the 52-week low of $2.75 and 69.7% off the 52-week high of $6.33.
The 14-day Relative Strength Indicator is 59.51, which suggests the stock is neither overbought nor oversold.
Wall Street has issued an overweight recommendation rating on Iamgold Corp., meaning that the stock is thought to outperform in 2019. The forecasters have also issued a target price of $5.36 per share, reflecting 52.3% upside from Wednesday's closing share price.
Disclosure: I have no positions in any security mentioned.
