IAMGOLD Corp (USA) (NYSE:IAG) handily beat consensus estimates in 3Q16, but the question that is now coming into sharp focus is whether the company can continue posting improved financial results.
A look at some of IAMGOLD’s projects could provide a glimpse into the future of the growth prospects of the gold miner.
Expanding Sadiola mine in Mali
IAMGOLD owns Sadiola mine in Mali jointly with AngloGold Ashanti Limited (ADR) (NYSE:AU) and the government of Mali. While IAMGOLD and AngloGold Ashanti own an equal stake of 41% each, the government of Mali owns an 8% stake in the mine. For IAMGOLD, Sadiola mine makes up about 9% of its production and it could account for more given that the mine is likely to be expanded as mining of hard rock is set to begin after the depletion of soft rock mining.
Expansion of the Sadiola mine would not only boost production at the mine, but also extend the mines life and unlock more economies of scale, thus allowing IAMGOLD and its partners to take greater advantage of the rising gold prices amid global economic uncertainty.
Sadiola mine produced 16,000 ounces of gold in 3Q16, down from 18,000 ounces in the prior quarter. Mining costs at the site also rose to $999 in 3Q16 from $941 in 2Q16. The output and cost challenges could be fixed by expanding the mine to support the handling of hard rock.
Cote Lake project
The Cote Lake project in Ontario, Canada is another promising asset in IAMGOLD’s portfolio. The company’s CEO Stephen Letwin recently termed it one of the largest undeveloped gold deposits in Canada, highlighting the projects potential to boost IAMGOLD’s production levels.
At the end of 2015, the measured and indicated (M&I) resources were cited at 8.4 million ounces, while inferred resources were cited at 1.2 million ounces.
3Q16 highlight
IAMGOLD posted EPS of $0.05 for 3Q16, easily beating the consensus estimate for $0.02. Revenue of $282.4 million rose from $207.6 million a year ago and beat the consensus estimate of $258.1 million.
IAMGOLD stock is up more than 160% YTD.
