IAMGOLD IAG delivered a stellar performance so far in 2024, with shares soaring 102%. The company’s shares have significantly surpassed the industry's 13.2% growth and the S&P 500’s climb of 27.6% in the same timeframe. Meanwhile, the broader Zacks Basic Materials sector has declined 11.2%.
This intermediate gold producer has outpaced leading gold producers like Newmont Corporation NEM, Barrick Gold Corporation GOLD and Agnico Eagle Mines Limited AEM. IAG’s solid run this year can be attributed to strong quarterly results, the commencement of production at the Côté Gold mine and higher gold prices.
IAG Stock’s Price Performance Vs Industry, Sector & S&P 500
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IAG’s Stock’s Price Performance Vs Top Gold Miners
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Factors Contributing to IAMGOLD’s Rally This Year
Upbeat Results in First Three Quarters of 2024: IAMGOLD delivered consistent improvements in its top and bottom lines in the first three quarters of 2024 year over year and sequentially. This is evident from the charts below.
IAG Stock’s Quarterly Revenue Trend
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IAG Stock’s Quarterly Earnings Trend
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The company’s revenues surged 69% to $1.16 billion in the nine months ended Sept. 30, 2024. This was attributed to higher sales volumes, the commencement of gold sales from the Côté Gold Mine and higher realized gold prices. Adjusted earnings per share of 45 cents for the nine months ended Sept. 30, 2024, marked a solid improvement from the 4 cents recorded in the prior-year period.
Essakane & Westwood Shine, Cote Gold Starts Production: IAG’s attributable total production in the nine months ended Sept. 30, 2024, was 490,000 ounces, marking a 49% year-over-year increase. This reflects strong performances at Essakane (up 25%) and Westwood (up 52%). The Côté Gold mine’s contribution to IAG’s production was 62,000 ounces for the period.
The Côté Gold Mine reached several milestones this year, with the first gold pour on March 31 and the commencing of commercial production on Aug. 1. IAMGOLD affirms that Côté Gold is on track to exit the year with 90% of the design throughput rate of 36,000 tons per day.
Upbeat Outlook for 2024: Essakane's 2024 attributable production is expected at the high end of 380,000-410,000 ounces. Westwood’s output is anticipated near the top end of 115,000-130,000 ounces.
Total production at Côté Gold is projected near the lower end of 220,000-290,000 ounces (at 100%). IAG has recently exercised its right to increase its stake from earlier 60.3% to 70%.
Rising Estimates Instill Confidence in IAG’s Earnings
The Zacks Consensus Estimate for IAMGOLD’s 2024 and 2025 earnings has moved up over the past 60 days.
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Find the latest earnings estimates and surprises on Zacks Earnings Calendar.
The consensus mark for 2024 and 2025 top and bottom lines suggests year-over-year improvements. This reflects analysts' upbeat expectations of the company’s production numbers and gold prices.
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
IAMGOLD Extends Westwood Life, Cuts Mineral Reserve Estimates
IAG recently updated the life of the Westwood mine from 2025 to 2032 and expects average gold production at an accelerated pace in the first three years, averaging 146,000 ounces. However, the company’s projection of overall average gold production at 925,000 ounces over the life of the mine was lower than market expectations.
Underground mineral reserves at Westwood are anticipated at 2.6 million tons (Mt), averaging 11.45 grams per ton of gold containing 955,400 ounces. This is lower than the previous expectation of 3.36 MT, averaging 10.62 grams per ton of gold containing 1,149,000 ounces. While total tonnage and contained gold have been lowered by 23% and 17%, respectively, the grade has slightly improved. Per the company, updated reserves highlighted its redesigned approach to mining, focusing on safety and efficiency following the seismic activity in 2020.
IAMGOLD Bets on Cote Gold Mine for Growth
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’s 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, ensuring efficiency and lower costs. The company is also exploring the adjacent Gosselin pit to improve returns from the Côté Gold project.
IAMGOLD’s Investment in Growth Projects to Bear Fruit
IAG’s significant operational projects planned for the next years include the Westwood ramp-up to safely access other mining areas affected by the seismic activity in 2020. It includes other multi-site infrastructure investments, mill and plant upgrades, fleet and utilization improvements, tailings and surface water management optimization, and additional pit developments at Essakane. These projects are expected to reduce costs and improve efficiency.
Exploration projects, such as Nelligan and Monster Lake in northern Quebec, are also expected to be developed together to make a quality gold mine complex with a low cost structure and a substantial mine life.
Solid Rally in Gold Prices Bodes Well for IAG
Gold prices have increased 27% year to date, and the commodity is set to be one of the top-performing assets this year. Prices this year have been driven by central bank purchases, geopolitical tensions and monetary easing by major central banks.
Analysts expect this momentum to continue and are projecting gold prices to scale to $3,000 an ounce by 2025, backed by rising geopolitical risks and solid demand amid limited supply prospects.
IAG Stock’s Valuation Seems Attractive
IAMGOLD is currently trading at a forward price/sales of 1.37X compared with the industry's 2.38X. The company is also less expensive than other gold miners like Newmont, Barrick Gold and Agnico Eagle Mines, which are trading at forward price/sales ratios of 2.35, 1.75 and 4.67, respectively.
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Final Thoughts on IAMGOLD Stock
IAG is poised for growth, supported by an upward trend in gold prices, the ongoing 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, you should stay invested in this Zacks Rank #3 (Hold) stock.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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