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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

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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.

Quick facts: IAMGOLD Corp

Price: 4.8 CAD

TSX:IMG
Market: TSX
Market Cap: $2.25 billion
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