But that assumes IAG trading at $2.26 a few months ago was a correct and valid price. I would argue based on IAG's current book value of near $5, that IAG trading at $2.26 a few months ago was a gift and trading at the current, $3.41, is still a gift.
Whether one likes book value or not, the fact is that 3/4 of the sector trades over book value and IAG is part of the 1/4 that doesn't. Boto being announced as a multi-million ounce deposit or Letwin getting his #$%$ sent home, is enough, IMO, to get IAG to near book value even if POG stays in the current range ($1225-1300).
I would go IAG, AUY, NGD in that order.
IAG is cheaper and more undervalued by any metric, has the best balance sheet of the three BY FAR, and does have some long-term potential if:
1. Westwood works out
2. Sadiola can be expanded cheaply
3. Boto (news forthcoming here) and Merrex JV turn into something big
4. Essakane's LOM is expanded.
Operationally, IAG is clearly the worst of the 3. And the CEO is the worst in the industry. But at the end of the day, all I care about is return and IAG has basically performed in line with AUY in 2016 and both have outperformed NGD significantly, and that's WITH a loser CEO in place. Imagine if they trade him in for a competent replacement!
IAG has much more upside than the other 2 and with a few proper moves (including CEO tossed in the garbage can) can actually become the darling of the sector because it has a great combination of high production, lots of cash, and million+ ounce deposits that can produce within the next 3-5 years.
their niobium mine for $1.5 BILLION last month? The niobium and phosphate business included in the price generated EBITDA of $146M in 2015.
Our POS CEO sold a larger niobium mine for 1/3 the price. Many on this board were outraged at the time for the ridiculously low price fetched for IAG's best asset. Imagine if our CEO wasn't a complete moron and was able to get the extra billion for Niobec? Instead we get annual dilutions to make up for the shortcomings, no debt reduction whatsoever, and the continued refusal to remove the worst CEO in the history of business.
From $4.05 On May 19th to $3.36 today. POG is now below the Q2 average (~$1255) and headed the wrong way, but that can easily change. I expect Boto news within the next month - whether that has any effect on share price remains to be seen.
If one is bullish long-term on gold, it was an absolute no-brainer to add more shares this morning.
The math is fine, but it doesn't paint the entire picture. That AISC number is likely to go way down over time with success at Westwood (800's AISC, 200k ounce annual production) and further gains at Essakane when solar is added there. If that is accompanied by a rise in POG, it becomes very obvious that IAG is laughably undervalued here.
Also keep in mind the market is currently valuing Boto, Merrex JV, Monster Lake, Sadiola expansion, Cote Lake, and every other development project at ZERO. Cote may very well be worth zero, but the others have the chance to become very prolific producers at very favorable prices.
I am shocked at the number of long-time shareholders that are missing out on this run because they fear it has run too much too quickly. The stock is still trading UNDER book value. Find me another miner with this level of production, this liquidity, and this potential. You won't be able to, which is why a major would be smart to scoop IAG up now!
ATW and WLL are great movers, regularly delivering 10% or more on an intraday basis, both long and short. I've made more trading them than IAG this year. The volatility in those stocks make IAG look like GE.
Remember when this bad boy was trading in the 500M range, yet had over 600M cash?
Westwood alone could be worth 1.5B+ if it really can produce 200k ounces a year for 20 years at AISC in the $800's.
What's not to like about the deal? $540 million in one shot is like 90% of the revenue they would have realized if the contract stayed in place through 2017. Plus they are saving $100 million in cost. No brainer.
NE has been taken out to the shed and beaten lately, which is why I have been loading up the past few days. This company goes the way of crude prices. Nothing more complex than that. if oil recovers to the 50-55 range, NE is conservatively back to 15+. If crude drops to 30, NE is back to the 6-7 range.
Yes, this was the biggest message I took away from the conference call. At some point, they will announce that their largest producing mine of 350,000+ ounces will have an extended life by years and that will indeed be a very material event. With Essakane's life extended and Westwood in full production by 2019 and perhaps Boto/Diakha/Sadiola operational within the next couple of years, the map to 1 million ounces of annual production becomes pretty clear.
Your father has done a wonderful job of causing gold to rally to $1300. LOL.
But seriously, after losing shareholders $100,000,000.00 in dumb, idiotic, and downright stupid hedges, I am glad to see his power has been completely taken away. A castrated CEO means no more mistakes, which means the stock can finally rally.
Now if they would have just fired him after he sold Niobec for half price, we'd have that $100 million back and wouldn't need to be diluted on an annual basis.
And it is still trading under book value at $4.20.
I don't understand many on this board's tempered expectations of IAG's share prices vs the rest of the sector. 95% of the sector is trading above book value, so why can't IAG?
IAG has plenty of upside without doing a thing.
There is a solar plant at Rosebel currently, but a new one will be constructed at Essakane that will "materially" extend its mine life.
From conference call:
At our Essakane mine, throughput was up 9% year-over-year as productivity and operating efficiency continue to improve. All-in sustaining costs are expected to move lower in the second half of the year. And we’re looking at moving ahead with a 15-megawatt solar power plant that will help reduce energy costs in the future. And just a reminder that the building and construction of that solar power plant will require no capital on our behalf.
It's not sniffing $2.60 unless POG tanks or Westwood blows up again. It's fairly obvious that Letwin is now a castrated CEO, so I don't expect any more poor, 9 figure-losing decisions out of him. The company should produce a profit in Q2, and continue through the rest of the year as production picks up in Q3 and Q4, again ASSUMING gold doesn't tank.
Letwin is itching to do something with Sadiola. There is also pending news on Boto and Merrex JV. All three could help the stock run. Considering IAG is one of the few miners still trading under book value, I see a pop to $5 as being more realistic than a drop to $2.60, but would surely welcome such a chance to back up the bus.
It’s a fantastic project, Dan. I can’t tell you how I excited I’m about it. Our 5-megawatt down in Suriname is working extremely well. And usually you have to pay as you probably know, about $2 million a megawatt. So, this is basically $30 million program that we do not have to fund. And the all-in costs are below our diesel costs, even at the lower crude price. So, it is a fantastic project for us. Obviously it has great environmental application and upside. And from a cost standpoint, it is a significant improvement for us. And I think as we go forward and you are seeing the change in technology occurring at a rapid rate, once we get the installation in place, and we’re looking at these new batteries that are being developed to store power off solar grid, this will change the game for Essakane and extends its mine life, I would say materially.
Unless the POG falls apart, I can't see any way IAG drops to $2.50. If it did, I'd buy as many trading shares as humanly possible to complement my core position. POG has risen enough that even Letwin's ineptitude can't stop IAG from being profitable in Q2.
I agree with eye4, if POG would have rallied to 1300 today, IAG might have touched $3.50. It is one POG rally away from a new 52 week high, then I expect the useless analysts to wake up and start revising earnings upward.
From 500k ounces a year by 2017 to a $400 million write-off. What a joke that this guy still has a job here.
Iamgold acquires Trelawney Mining in $608-million deal Published Friday, Apr. 27, 2012 1:33PM EDT
For Iamgold Corp. , the $608-million acquisition of a little-known Ontario gold explorer is a step toward two key company goals – offsetting an Africa-heavy portfolio and propelling it toward a goal of doubling production in five years.
Toronto-based Iamgold is offering $3.30 a share for Trelawney Mining and Exploration Inc. , which gives it control of a large gold deposit practically in its backyard, thousands of kilometres from Iamgold’s key producing assets in South America and Africa.
“The acquisition of Trelawney creates a larger and more geographically balanced portfolio of long-life gold assets for Iamgold,” Steve Letwin, the company’s chief executive officer, said Friday.
Mr. Letwin said it could be a mine in five years, adding substantial production to Iamgold’s portfolio at the same time as its $1.5-billion expansion program at its other mines.
“[Côté Lake]will produce from 400,000 ounces to 500,000 ounces a year and will move us to the 1.5 million ounce to 1.6 million ounce range,” Mr. Letwin said. Iamgold’s current production is about 850,000 ounces per year.
Mr. Letwin would not say how much it would cost to develop the project, but analysts say it would be in the $1-billion range. Iamgold will finance the Trelawney purchase with its $1.4-billion cash position before the acquisition was announced.
It's a Q2 story now. If they lose 2 cents with average POG at $1188 and AISC at 1084, then the math dictates they should return to profitability with average POG at $1250 now and an AISC hopefully lower than $1084, with a predicted improvement as Essakane.
I know that heavily relies on Letwin putting together a solid quarter with zero problems, which may be very naive, considering his history of failure. But the ingredients are there for IAG to make some dough in Q2. If analysts are going to be truthful, they will start upping estimates and dare I say, upgrade the stock?
Lee - Average gold price for Q2 is now running at ~$1249, so significantly higher than Q1.
I very briefly went through the numbers, but Q1 looks like another lost opportunity for IAG. Rosebel came in at a respectable $955 AISC, Westwood came in at $890, but the most consistent mine, Essakane, pulled an $1,116 quarter, bringing the total AISC to an unacceptable $1084. This could have been a blowout quarter if Essakane performed better.
I suggested a few days ago that Rosebel and Essakane could both realistically pull in low $900 AISC numbers, but unfortunately, the CEO choked once again. He simply cannot put together one decent quarter. Not a single one! There is no rhyme or reason as to which mines will suck quarter to quarter, but take it to the bank, they can never all run on all cylinders at the same time.
Letwin hasn't delivered a good quarter EVER, so I don't expect Q1 to be anything special. In my mind, whether IAG loses 5 cents or makes 2 cents, it makes no difference - it's still peanuts that really doesn't even justify this company's existence.
I'm looking to Q2 because there is absolutely no excuse not to deliver halfway decent results now. He's been on his high horse for a year telling us about how wonderful they have been in cutting costs. Great. Now show me the damn money! With POG near 1300, most will not accept this company still being unprofitable in Q2.
"...we would see irrational exuberance to the upside when the gold market turns."
I agree with this, but we have not seen this behavior out of IAG yet. KGC yes, but not IAG. Only BAA, KGJI, and PPP are trading cheaper than IAG with regard to book value in the entire sector and they are pretty much garbage companies. EGO, HMY, AUY, and AGI are the only other gold stocks currently trading under book value.
IAG will only get to irrational trading ($6-7+) if Letwin actually delivers some earnings. Q1 might come in anywhere from the 0-7 cent range, but I'm looking ahead to Q2, where he better deliver at least a dime. There is no excuse now with POG near 1300. If he continues to show losses in this environment while everyone else at least shows some profit, he will FINALLY get the boot.
Essakane and Rosebel have come in under $1000 AISC at times in recent quarters. With the layoffs in Rosebel taking effect at some point and Essakane being at least decent, I think both mines can realistically get down to the low $900s and Wall Street will love that, especially with rising POG.