Iamgold Corp (NYSE:IAG) (TSE:IMG) shares were down more than 3% premarket in New York on Thursday after the gold miner said it has suspended future dividend payments until further notice, citing the weak gold price as the chief reason for the decision.
"While our outlook for gold over the long term is optimistic, in light of the current gold price we are suspending the dividend to preserve our balance sheet," said president and CEO Steve Letwin in a statement late Wednesday.
"We are on target to reduce costs by $100 million this year and will continue to look for further reductions next year. This decision to suspend the dividend allows us to conserve cash and ensure we maintain the flexibility we need to take advantage of opportunities when they arise."
Precious metals miners across the industry have engaged in aggressive cost-cutting programs this year to survive the current gold price environment, which has seen the price of the yellow metal tumble about 25% year-to-date.
Miners - ranging from large to small - have cut operational and administrative costs so as to conserve cash, with many mines becoming uneconomical to run under a price of $1,250 an ounce. These measures have included cutting mining contractors, reducing staff, renegotiating contracts and halting dividends.
Gold futures for February delivery on the Comex are currently trading around $1,234 an ounce amid tapering fears, with the Federal Reserve set to soon start to scale back its support for the U.S. economy. The $85-billion-a-month Fed program has boosted the price of gold in the past years and sustained its bull run, with gold now set to post its first annual loss since 2000.
Iamgold, which has a portfolio of assets in Canada, South America and Africa, has six operating gold mines, including one of the world's top three niobium mines. The company noted that it continues to maintain $750 million in undrawn, unsecured credit facilities.
Shares of Iamgold were down 2.8% just minutes before the opening bell, at $3.73. So far this year, the stock has tumbled nearly 67%. The S&P/TSX Global Mining Index has shed over 24% year-to-date.
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