IAMGOLD IAG yesterday provided a Mineral Resource and Mineral Reserve ("MRMR") estimates and updated life of mine ("LOM") plan for its Westwood Complex located in Quebec, Canada. The life of the mine has been updated from 2025 to 2032.
On Monday, IAMGOLD announced that it has exercised the right to repurchase the 9.7% interest of the Côté Gold Mine from Sumitomo Metal Mining Co., Ltd. This takes IAG’s interest in the promising Côté Gold mine to 70%.
Let's dig deeper to analyze the significance and impact of these current developments on IAMGOLD’s prospects.
IAG Extends Westwood Life, Cuts Mineral Reserve Estimate
The Westwood Project consists of two property areas, Doyon-Westwood and Fayolle. Doyon-Westwood includes the Westwood underground mine, and Grand Duc open pit. The Westwood mine has been operating since 2014, and Grand Duc since October 2019. Open pit operations at the Fayolle deposit commenced in February 2023 and the deposit was mined out in June 2024. Grand Duc mine life is expected to conclude in 2025.
IAMGOLD has updated the life of the mine from 2025 to 2032, projecting overall average gold production at 925,000 ounces over the life of the mine, which came in lower than market expectations. However, IAG expects average gold production at an accelerated pace in the first three years, averaging 146,000 ounces.
The average estimated operating costs over Westwood’s life of mine (2025-2032) is estimated at $239.91 per ton processed. Total sustaining capital expenditures over the life of mine will be around $260.7 million. The company expects average recoveries of 95% from the processing plant with an annual capacity of 1 Mt.
The MRMR statement shows underground mineral reserves at Westwood at 2.6 million tons (Mt), averaging 11.45 grams per ton of gold containing 955,400 ounces. This is lower than the previous estimate of 3.36 MT, averaging 10.62 grams per ton of gold containing 1,149,000 ounces. While total tonnage and contained gold have fallen by 23% and 17%, respectively, the grade has slightly improved. Per the company, the updated reserves highlighted its redesigned approach to mining focusing on safety and efficiency, following the seismic activity in 2020.
Cote Gold Mine to be a Growth Driver for IAMGOLD
The Côté Gold mine started commercial production on Aug. 2, 2024. A shutdown was implemented in September to deploy operating improvements. Despite this, IAG affirmed that it remains on track to achieve the target of 90% throughput by the end of the year.
Côté Gold is operated as a joint venture between IAMGOLD (as the operator) and Sumitomo Metal Mining Co. The total gold production from Côté Gold (at 100%) is expected to be 220,000-290,000 ounces as improvements to mill availability are made during the ramp-up of operations.
In the first six years of operation, Côté Gold’s expected gold output will likely be 495,000 ounces. Over the life of the mine, it will average 365,000 ounces per year. In terms of production, the mine is the third top gold mine in Canada, following Agnico Eagle Mine’s AEM Detour Lake and Malartic.
The Côté Gold mine is expected to lead in terms of technology and will be mined by a fleet of 23 autonomous haul trucks, six autonomous drills and other supporting equipment. This will ensure efficiency and safety and lower costs. The company is also exploring the adjacent Gosselin pit to improve returns from the Côté Gold project.
IAG’s Upbeat Production Guidance for 2024
Essakane's 2024 attributable production is expected at the high end of 380,000-410,000 ounces. Westwood’s production is anticipated near the top end of 115,000-130,000 ounces.
IAMGOLD earlier stated that it expects 2024 production from the Côté Gold mine to be near the lower end of 130,000-175,000 ounces. However, this was based on its previous 60.3% interest in the project. We expect Côté Gold’s contribution to be a bit higher, reflecting the increase in stake to 70%.
Rising Estimates Instill Confidence in IAG Earnings
The Zacks Consensus Estimate for IAMGOLD’s 2024 and 2025 earnings have moved up over the past 60 days.
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The consensus mark for 2024 and 2025 top and bottom lines suggests year-over-year improvements. This reflects analysts' upbeat expectations for the company’s production potential and gold prices.
IAG continues to invest in maximizing production, and increasing the life of its existing mines, advancing development and exploration projects.
IAG shares have surged 121% year to date compared with the gold mine industry's 22% growth.
IAG has gained on the back of solid results in all the three quarters of 2024, the Côté Gold mine commencing production earlier this year and the solid uptrend in gold prices. The bullion has gained 28% year to date and is set to be one of the top-performing assets this year.
IAG is currently trading at a roughly 12% discount to its 52-week high of $6.37, reached on Oct. 22, 2024.
IAG’s Stock Valuation Attractive
IAMGOLD is currently trading at a forward 12-month price-to-sales multiple of 1.5X, lower than the industry's 2.67X. The company is also less expensive than Newmont NEM, Barrick Gold GOLD and Agnico Eagle Mines, which are trading at forward price/sales of 2.54, 1.83 and 4.67, respectively.
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Final Thoughts on IAMGOLD Stock
IAMGOLD is poised for growth, supported by an upward trend in gold prices, the ramp-up at Côté Gold, and a solid portfolio of early-stage and advanced exploration projects in high-potential mining districts. While the extension in the Westwood mine life is promising, the lower-than-expected production over the life of the mine was a tad disappointing. Given its attractive valuation and upbeat earnings projections, investors can stay invested in this Zacks Rank #3 (Hold) stock.
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