Iamgold Corp. (IAG, Financial) has reported that reserves at the Rosebel Gold Mine have grown 51% following the declaration of mineral resources at the satellite deposit of Saramacca in Suriname. The Rosebel Gold Mine is one of the three main producing assets of the Canadian mid-tier gold producer.
The mineral deposit of Rosebel now hosts about 4.7 million ounces of gold in proven and probable reserves. The increase of 51% equals 1.6 million ounces.
These data are very important to investors of Iamgold Corp. because they mean fresh nourishment for the operations of the company. Following the declaration of increased resources, Iamgold can extend the life of the mine for another five years to 2033. Over these 15 years of production, the mill facility will be supplied with an annual average throughput of 10.9 million tonnes of mineral to process.
The production will average 281,000 ounces of attributable gold every year over the span of 15 years according to the capacity rate of the plant. The miner forecasts a peak of 362,000 ounces in the annual production of attributable metal.
Once the satellite deposit of Saramacca has reached full production, the average annual production of attributable gold is expected to stand at 295,000 ounces. Saramacca should start mining gold in the second part of 2019.
Another important piece of information that usually is neglected by readers is that the increase in the mineral reserves was made without changing the assumption on gold price per ounce. The company still assumes a gold price of $1,200 per ounce of metal mined. It means that mining from those 1.6 million ounces of gold will not impinge the gold margin at least on the cost side.
Rosebel is a significant contributor to the total production of Iamgold Corp. The Surinamese mine is expected to end 2018 with 295,000 to 310,000 ounces of attributable gold, which is a 35% of total production including joint ventures. The other two main assets are in Canada and Burkina Faso.
Steve Letwin, president and CEO of Iamgold, congratulated the exploration and engineering teams of the company for having moved the Saramacca satellite project rapidly towards the production stage.
The CEO highlighted the importance of the accomplishment considering that the replacement of mineral reserves is no longer easy to achieve in the gold mining industry nowadays.
The release is likely to produce a positive impact on the market value. Iamgold Corp. was $3.90 per share at close Friday, with a market capitalization of $1.81 billion on the New York Stock Exchange.
The stock is trading according to interesting valuations. After a 40% decline for the 52 weeks through Sept. 21, the share price is below the 200-, 100- and 50-days simple moving average lines.
The share price at close Sept. 21 was a few cents above the 52-week low of $3.57. The 52-week high is $6.73.
The price-book ratio is 0.64 versus an industry median of 1.74 and the EV-to-Ebitda ratio is 4.2 versus an industry median of 9.3.
Wall Street is for a buy. The recommendation rating is 2.2 out of 5. The average target price is $7.65 per share.
Iamgold Corp. has outperformed most of its peers in terms of trailing 12-month Ebitda margin with 31% of total revenues versus an industry median of 23%.
GuruFocus assigns a financial strength rating of 7 out of 10 to Iamgold Corp.
Disclosure: I have no positions in any security mentioned in this article.
