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.

The North American gold miners’ results season is slated to begin on October 25. In this series, we’ll see how analysts view their revenues, earnings, and free cash flows.

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.

Iamgold (IAG) generated revenues of $277.4 million in Q2 2018, which represents a YoY (year-over-year) growth of 1.1%.

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?

After the revival on Friday, June 29, Monday was another choppy day. Let’s look at the technicals for four miners.

New Gold (NGD) stock has had one of the poorest showings YTD (year-to-date).

IAMGOLD (IAG) generated revenue of $244.8 million in the third quarter, a YoY (year-over-year) fall of 9%.

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

Wheaton is above its 100-day moving average, while Coeur Mining and Eldorado are below their longer-term 100-day moving averages.

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.

Gold prices touched an almost four-month low in early December. After breaching $1,300 per ounce in September due to geopolitical tensions, gold prices have mostly been on a downtrend.

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.

Gold was trading moderately high on Wednesday, October 25, 2017. It rose a marginal 0.04% and closed at $1,276.30 per ounce. Silver and palladium, however, had a down day.

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.

The strong economic numbers from the US during 1Q17 have been casting a shadow over precious metals.

Gold prices dropped from its seven-week high level of $1,276.10 per ounce on August 1. Gold futures for September expiration fell 0.08% on August 2 and ended at $1,274.20 per ounce.

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.

IAG reported EPS (earnings per share) of $0.07 for 3Q17, beating the consensus estimate by $0.06. Its revenues missed the estimate by $4.1 million.

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.

Among the intermediate gold miners, Agnico Eagle Mines (AEM) has the highest EV-to-forward-EBITDA multiple of 12.9x.

Of the 13 analysts covering IAG stock, 54% recommend a “buy,” while 46% recommend a “hold.” IAG doesn’t have any “sell” ratings.

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%.

Yamana Gold (AUY) announced today that it has agreed to sell its Chapada mine to Lundin Gold (LUNMF) for $1 billion.

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).

Among intermediate gold miners, Agnico Eagle Mines has the highest forward EV-to-EBITDA (enterprise value-to-EBITDA) multiple of 12.0x.

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.

In the senior and intermediate gold miner space (GDX)(GDXJ), analysts are the most bullish on IAMGOLD (IAG), with 75.0% of analysts assigning it a “buy.”

In the absence of earnings growth to justify the current valuations of US equities, many investors may begin looking for trade that is less crowded.

Due to leverage, the performance of gold miners usually magnifies the direction of the gold prices, but the scenario in 2017 has been slightly different.

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.

On September 5, 2017, Iamgold (IAG) announced a significant gold discovery at its Saramacca site in Suriname.

The year-to-date stock performances of precious metal miners have been driven more by company-specific factors than by the direction of gold prices.

While the current rise in precious metal prices has provided a tailwind for miners, for some of them, the gains might be more self-sustained.

Intermediate gold miners aren’t far behind senior gold miners in terms of mimicking gold price trends.

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 […]

Gold prices rose ~3% year-to-date (or YTD) after rising ~13% in 2017. But what about the miners?

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.

Gold prices (GLD) rose ~13% in 2017. On top of that, January 2018 saw a ~3% rise in prices.

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 November 2, the stocks related to base metals and precious metal miners moved lower. DBB and XME fell 1.3% and 2%, while GLD rose 0.73%.

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.

Westwood’s all-in sustaining costs for the second quarter were $1,129 per ounce, which was 13% higher YoY.

Gold started 2018 on a strong note, in line with the new-year price rallies it has seen over the last few years.

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.

The best bet is to go for gold miners with healthy balance sheets, increasing production profiles, low costs, and good cash flows.

With a positive outlook for the US economy, there is little hope that precious metals will see a remarkable upward move. The strengthening US dollar is making gold investors jittery.

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.

Gold prices (GC) for COMEX futures August delivery were down by 0.38% after a period that was characterized by rising negative trading sessions.

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.

Precious metals and most mining stocks have risen over the past one-month period, thanks to recent geopolitical tensions and the risk element in the market. September 1 was an up day for gold, silver, platinum, and palladium.

While the Federal Reserve kept interest rates unchanged in its policy meeting in January 2018, it raised its outlook for inflation and flagged “further gradual” rate increases.

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.

Flight-to-quality amid Greek debt renegotiations and the Chinese equity market slump has led investors to safe-haven assets, including the US dollar (UUP) and the Japanese yen.

Iamgold’s (IAG) stock price has had a very strong performance in 2017 YTD, significantly outperforming peers and gaining 83% as of September 8, 2017.

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.

Gold lost most of its sheen as 2016 drew to a close, and its last trading day of the year closed on a sour note. Gold futures for February expiration were down almost $5.20 on December 30, 2016, compared to the previous trading day.

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.

While a weaker US dollar supported gold prices in January 2018, the picture could change going forward.

Analysts’ sentiments toward IAMGOLD (IAG) have been changing for the better in the past few months.

Gold prices have seen a reversal in the last month or so. The SPDR Gold Shares ETF (GLD) gained 8.0% in June alone.

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.

Kinross Gold stock has fallen 3.1% this year as of May 28.

The report from Bloomberg about the potential sale of all or parts of IAMGOLD’s business comes as the gold sector is going through a wave of consolidation.

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.

IAMGOLD (IAG) released its Q1 2019 results yesterday after markets closed.

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.