Iamgold Corp

IAG stock could continue to gain traction due to its high operational leverage, at least as long as the upward trend in gold prices continues.

IAMGOLD’s (IAG) 2Q17 production was 223,000 ounces of gold—growth of 26,000 ounces or 13% year-over-year (or YoY).

Coeur Mining (CDE) repaid $109.3 million of its debt in 3Q16. After this, the company’s interest expenses fell 26% quarter-over-quarter and 35% year-over-year.

Mining stocks are often known to amplify the returns in precious metals. Small losses for metals can bring exponential losses to metal miners, and vice versa.

Compared to the substantial gains in precious metals on Tuesday, the gains yesterday were muted. How come?

India and China remain the top two consumers of gold (IAU) and silver (SLV).

Factors impacting gold in 1H17 are a weaker US dollar, geopolitical uncertainties, higher interest rates, and expectations for Trump’s agenda.

The rise in precious metals over the last few months has been due to insecurity among investors, given the political climate.

Janet Yellen, chair of the Federal Reserve, noted that the Fed is planning to change the annual stress tests it gives to US banks. The test results would reveal whether the banks can withstand a massive financial crisis.

Lower historical multiple Historically, IAMGOLD (IAG) has traded at a lower valuation as than its peers. But after the transformation it has shown so far in 2017, its discount has fallen. While the average five-year discount to its intermediate peers (GDXJ) is about 35%, its current discount is 20%. Reasons for contraction of discount IAG stock is now trading […]

Randgold Resources, AngloGold Ashanti, Hecla Mining, and IAMGOLD have risen 30.7%, 17.9%, 13%, and 31.4% YTD, respectively.

As per the U.S. Bureau of Labor Statistics, the US Consumer Price Index (or CPI) rose 0.2% in February, compared to a 0.5% rise in January 2018.

As of April 18, 2017, gold and silver have risen 12% and 14.8%, respectively, year-to-date.

IAG’s 1Q17 adjusted EPS (earnings per share) of $0.01 beat the market’s expectation of -$0.01.

While gold miners have been out of favor for a long time, that might be about to change. Since the uncertainty in the market is increasing, gold prices are poised to rise.

AngloGold Ashanti’s 1Q16 production fell by 7.2% YoY to 861,000 ounces, mainly due to planned reductions at its Obuasi, Tropicana, and Morila mines.

Intermediate gold miners’ (RING) (GDXJ) stock performances were better than those of senior gold miners in 1H17.

Gold price’s reversal this year has created opportunities in gold stocks. The SPDR Gold Shares ETF (GLD) had gained 11% year-to-date as of Friday.

Gold miners in 2017 seem to be driven more by company-specific factors than by the direction of gold prices.

The average cash balance is now 4.8%, which is higher than the ten-year average cash level of 4.5%.

About 45% of analysts covering AUY have given it a “buy” recommendation. About 45% of analysts have issued a “hold.” Only 9% have issued a “sell.”

Intermediate gold miners are smaller than senior gold miners in terms of production and market capitalization, but they’re still generally liquid, unlike their junior counterparts (GDXJ).

Yamana Gold’s (AUY) valuation multiple has varied widely between 5.1x and 15.1x. Yamana Gold is now trading at a forward EV-to-EBITDA multiple of 5.1x.

There are many factors that support higher gold prices in the medium- to long-term.

Gold prices remain under pressure as the demand for alternative investments, including equity stocks and bitcoin, remain strong in the risk-on environment.

Often, haven bids for gold outnumber bids for silver. But the recent surge of silver has proved differently.

It’s always important to watch what analysts are forecasting for gold prices for in short and long terms. This helps investors understand gold’s price outlook.

Currently, IAMGOLD (IAG) has the third-highest number of “buy” recommendations among analysts at 75%.

Valuation for capital-intensive industries The EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple is a good valuation measure for capital-intensive industries. It helps investors compare companies with varying capital structures. Higher multiples The chart above compares gold miners’ EV-to-forward EBITDA multiples and EBITDA margins for 2017. Among North American intermediate gold […]

Intermediate gold miners are smaller than senior gold miners in terms of production and market capitalization, but they’re still generally liquid, unlike their junior counterparts.

IAMGOLD’s (IAG) Westwood reported 106% higher production in 3Q17 on a YoY (year-over-year) basis, coming in at 33,000 ounces.

Barrick Gold has 46.0% “buy” ratings, 46.0% “hold” ratings, and 8.0% “sell” ratings. Its target price implies an upside of 29.0% based on its current price of $16.90.

After years of cutting back on sustained capital expenditures, gold miners have started to refocus on production growth as gold prices (GLD) remain buoyant in 2016.

Gold prices rose 23% in the first half of 2016, making gold one of the best-performing investments so far this year.

Among the senior and intermediate miners, Eldorado Gold (EGO) and New Gold (NGD) have the fewest “buy” ratings at 15% each.

On May 22, there was a sense of relief for Eldorado Gold stock. Eldorado Gold stock skyrocketed and closed 16.8% higher yesterday.

Bitcoin (ARKW) has seen its price plunge since the start of 2018 due to news that world leaders are planning to implement regulations on digital currencies.

IAMGOLD (IAG) was the best-performing gold stock of 2017, returning 51.4% for the year.

IAG is guiding for gold production of 850,000–900,000 ounces for 2018.

Gold prices have been on a roller coaster ride, given the on and off situation with North Korea. A missile test and gold’s safe-haven appeal have propelled prices higher, and then they’ve fallen back again.

Essakane produced 93,000 ounces of gold in 1Q17, which represents a YoY rise of 6%, mainly due to a 27% increase in throughput.

AngloGold’s 2Q16 production was 3% higher QoQ at 884,000 ounces. Its 1H16 production was 47% of the midpoint of its annual production guidance.

Intermediate gold miners are smaller than senior gold miners in terms of production and market capitalization, but they are still generally liquid.

In the wake of the stabilizing economy, we have seen a downfall in precious metals that has been especially painful for gold investors.

Newmont Mining is one of the world’s largest gold producers and is the only gold company included in the S&P 500 Index and Fortune 500.

Palladium has a greater industrial use, so it may closely associate with industrial sentiment rather than the sentiment for precious metals.

On November 6, 2016, the FBI cleared Hillary Clinton of criminal charges related to the handling of classified information on her private server.

Although gold fell on Friday, most gold miners saw an up day, following the other precious metals.

On Wednesday, November 18, 2015, gold fell to $1,062 per ounce, the lowest level in almost six years. Silver, platinum, and palladium fell 0.61%, 0.82%, and 2.6%, respectively that day.

As of April 5, 2017, the volatilities of Hecla Mining (HL), Kinross Gold (KGC), Eldorado Gold (EGO), and IAMGOLD (IAG) were 45.6%, 41.9%, 50.5%, and 47.8%, respectively.

Most mining companies reversed their 2015 losses during the first few months of 2016 and have posted substantial gains. There is a high correlation between mining stocks and precious metals.

Until the market settles down and the policies of the new administration are understood, uncertainty is likely to prevail in the market. This, in turn, should support precious metals such as gold, silver, platinum, and palladium.

Los Filos is located in the Nukay mining district in central Guerrero state in southern Mexico. Its estimated mine life is 14 years. It had 7.95 million ounces in gold reserves as of December 2013.

Eldorado Gold (EGO) is one of the few gold stocks that have seen rapidly deteriorating sentiments from analysts in the last year.

Among miners, Eldorado Gold (EGO), New Gold (NGD), IAMGOLD (IAG), and Barrick Gold (GOLD) have seen the highest gains of 50.6%, 44.4%, 40.3%, and 36.4%, respectively.

On May 16, Bloomberg reported that IAMGOLD (IAG) could be exploring the possible sale of all or parts of its business.

IAMGOLD’s (IAG) gold production for Q1 came in at 185,000 ounces, a decline of ~19% from Q1 2018.

Gold prices have fallen 3% YTD (year-to-date) as of April 26. Gold prices fell ~1.9% in 2018 and significantly underperformed broader markets.

Yamana Gold is scheduled to release its first-quarter results on May 1 after the market closes. The company will hold a conference call on May 2.

Newmont’s gold production rose by 2% YoY to 1.23 million ounces.

In the senior and intermediate gold miner space (GDX) (GDXJ), excluding royalty and streaming companies, analysts are most bullish on Agnico Eagle Mines (AEM), with ~78.0% recommending “buy” and 22.0% recommending “hold.”

Gold prices have fallen 3.6% this year after falling ~1.9% in 2018, significantly underperforming broader markets.

Analysts expect Newmont to report revenues of $1.83 billion for the first quarter. This estimate implies growth of 0.5% year-over-year.

Gold prices (GLD) have risen 0.5% YTD (year-to-date) until April 12—compared to the gain of 16.1% in the S&P 500 Index (SPY).

Among senior and intermediate gold miners (GDX) (GDXJ), analysts are most bullish on Agnico Eagle Mines (AEM).

Eldorado Gold (EGO) significantly outperformed its peers (JNUG) (GDXJ) as well as gold (GLD) in the first quarter with a gain of 60.8%.

Gold prices (GLD) gained just 0.6% in the first quarter compared to the gain of 13% in the S&P 500 Index (SPY).

IAMGOLD (IAG) comes third, after Wheaton Precious Metals (WPM) and Agnico Eagle Mines (AEM), as far as the most “buy” ratings for gold stocks are concerned.

Yamana Gold (AUY) stock has outperformed its peers (GDX) year-to-date.

In 2018, as gold prices (GLD) fell 1.9%, the VanEck Vectors Gold Miners ETF (GDX) multiplied that loss by falling 9.3%.

Credit Suisse (CS) is positive about gold prices (IAU) in 2019. The bank expects gold prices to average $1,275 per ounce in 2019 and $1,300 in 2020.

Among intermediate gold miners, Agnico Eagle Mines (AEM) has the highest forward EV-to-EBITDA (enterprise value-to-EBITDA) multiple of 10.6x.

Historically, IAMGOLD (IAG) has traded at a lower valuation than its peers.

CEO Steve Letwin stated during IAMGOLD’s third-quarter earnings call that it’s focused on becoming a low-cost producer.

IAMGOLD (IAG) reported its third-quarter earnings results after the market closed on November 6.

Yamana Gold is trading at a forward EV-to-EBITDA multiple of 5.3x. Yamana Gold is trading at a 17% discount to its last five-year average multiple.

New Gold plans to announce its third-quarter results after the market closes on October 24, followed by a conference call to discuss the results on October 25.

As of September 24, New Gold (NGD) has fallen 75%, significantly underperforming its peers.

IAG stock is currently trading at a forward EV-to-EBITDA multiple of 4.8x, a discount of 27% to its peers.

Iamgold (IAG) reported its Q2 2018 results after the market closed on August 8. Its EPS was $0.03, beating the consensus estimate.

The correlation between gold and the S&P 500 (SPX) is 0.18 on a year-to-date basis.

In this part of the series, we’ll look at miners’ RSI (relative strength index) scores and implied volatilities.

Before the Fed’s minutes were released on May 23, gold was trading lower due to the increased pressure from the surging US dollar.

Besides overall market volatility, the most important determinant of precious metal prices, especially gold’s (IAU) (SLV), is the US dollar.

After the massive slump in gold prices as US Treasury yields rose, the trading range for gold seems to have corrected lower.

On May 15, gold dropped about 2.1% and closed at $1,288.90 per ounce.

Markets were full of geopolitical tensions in April, boosting precious metals and miners’ stock prices.

Whereas palladium has been the strongest among the four precious metals over the last month, it has fallen 7.2% year-to-date, possibly due lower car demand in China.

Another crucial factor behind precious metals’ rise was the US dollar index, which fell 0.42% on May 10.

ABX, HL, EGO, and IAG have implied volatilities of 26.3%, 43.5%, 60.4%, and 40.1%, respectively.

Palladium has been the weakest among the four precious metals on a YTD (year-to-date) basis.

In addition to the US dollar playing on precious metals, US interest rates and the decisions by the Federal Reserve have also historically had a substantial impact on these safe havens.

Precious metals had another up day as gold futures for April expiration rose 0.48% on Friday, April 13, closing at $1,344.80 per ounce.

According to the US Bureau of Labor Statistics, the US consumer price index (or CPI) rose 2.4% year-over-year (or YoY) in March 2018.

In general, most mining companies rose on Friday, March 23, following gold and silver.

Out of all the silver miners (SIL) under discussion in this series, Hecla Mining (HL) has among the fewest “buy” ratings.

Besides interest rate hikes, some other crucial factors affecting gold are the fluctuations in the US dollar and equity movements.

With more interest rate hikes likely to come in 2018, analysts expect precious metals and miners to underperform.

All four precious metals saw a down day on Monday, March 5. Gold, silver, platinum, and palladium were down 0.23%, 0.33%, 0.31%, and 0.81%, respectively.

Bitcoin’s extremely volatile nature makes it difficult for it to serve as a store of value asset.