On the other hand, IAMGOLD (NYSE: IAG) is a company to avoid. The company's financial position is rapidly deteriorating. Net cash has fallen from $1 billion during the first quarter 2012 to only $10 million during the first quarter of this year. At the same time, the company has only achieved a modest improvement of shareholder equity of about 3.4% although liabilities have exploded 83% in the five-month period. The company has been hemorrhaging cash to the tune of $250 million a quarter for the last five quarters and at this current rate, cash will be wiped out by the end of this year and the company will have to increase borrowing.
Moreover, the company is highly geared on an operational basis. A 14% fall in the realized gold price during the first quarter led to a 91% decline in net attributable earnings (on an adjusted basis this was a 37% decline). This decline was based on an average realized cost of $1,631; further losses could be round the corner. Indeed, IAMGOLD's all-in cash costs are expected to be around $1,200 to $1,300 for this year, indicating that some of the company's production could already be cash-flow negative.