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IAMGOLD Corp fails to inspire Mackie Research

Mackie Research can't see any reason to own shares in gold miner IAMGOLD
IAMGOLD Corp fails to inspire Mackie Research
For 2015, the firm now guides for all-in sustaining costs to be between $1,075 and $1,175 from $1,050 to $1,150 per ounce...

Mackie Research can't see any reason to own shares in gold miner IAMGOLD (TSE:IAG, NYSE:IAG).

It has released a note on the firm, which operates four mines in three continents, following its third quarter report yesterday, which said the company was making "excellent progress" in further reducing all-in sustaining costs.

For 2015, the firm now guides for all-in sustaining costs to be between $1,075 and $1,175 from $1,050 to $1,150 per ounce.

For the third quarter, all in costs were $1,027 an ounce - compared to $1,076/oz in the second quarter and $1,115/oz in the third quarter of 2014.

Gold output in the quarter was 197,000 ounces, with record production from the Essakane mine in Burkina Faso - up 29% from Q3/14. Overall group sales were 186,000 ounces of the yellow metal.

Revenue was $207.6 million, down 28% from the same period last year, mainly due to lower sales volume at Westwood and Rosebel due to lower production, a lower realised gold price, the closure of Mouska in 2014, and lower royalties following the sale of the Diavik royalty asset.

The net loss was $85.0 million ($0.22 per share), up $0.5 million from the same period last year.

Mackie analysts had this to say on the statement: "An absence of any initiative other than to “protect” cash does not generate any excitement or potential for an equity re-rating.

"While there is much attention paid to a working capital position that is US$800 million, we also note there is US$930 million of debt and long-term provisions.

"With a high all-in-sustaining-cost (AISC) of US$1,027/oz, there is little working margin at current gold prices, and operations are slowly consuming the balance sheet."

It also reckons the financials were "messy".

EPS was a loss of US$0.22, and even if losses on oil hedges are thrown out, the EPS loss was still US$0.12, says analyst Barry Allan.

Mackie had expected a loss of US$0.03.

IAMGOLD shares are today down 6.52% in Toronto at C$2.15.

Mackie rates the shares 'hold' targeting C$2.40.

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