The Gold Report - Thu, Feb 15, 2018

Gold Miner Boosts Reserves by 86% Year Over Year

BMO Capital Markets analyst Andrew Kaip shared the highlights of this company's recently reported mineral reserves.

Drill cores

In a Feb. 12, 2018, research note titled "2017: A Year of Reserve Growth," Andrew Kaip, an analyst with BMO Capital Markets, reported that Canada-based IAMGOLD Corp. (IMG:TSX; IAG:NYSE) released a reserves update. The mining company's new numbers reflect an 86% year-over-year increase to 14.5 million ounces (14.5 Moz) of gold from 7.8 Moz of gold, assuming a price for the metal of $1,200 an ounce. The total encompasses an additional 3.8 Moz at Cote, 1.5 Moz at Rosebel and 1.4 Moz at Boto.

Measured and Indicated resources grew 6% to 24.7 Moz gold. Inferred resources expanded 44% to 8.8 Moz gold.

As for reserve grades, they generally were up at Sadiola but "down marginally" at Rosebel and Essakane," Kaip indicated. At Westwood specifically, reserve grade dropped 13% to 7.7 grams per ton gold, which is "more realistic given mine grades continue to be below reserve grade."

The analyst also noted the results of the recent prefeasibility study done on the Boto project. It shows an after-tax internal rate of return of 13.3% and a net present value 6% of $104 million ($104M). Based on a 1.4 Moz reserve, production is an estimated 100,000 ounces of gold per annum for 13.5 years. Capital costs are an estimated $249M. All-in-sustaining costs are expected to be $829 per ounce for the life of mine. Kaip added that these numbers "have yet to meet IAMGOLD's investment threshold."

To bolster project economics, the company is pursuing a feasibility study for Boto that will consider a 25% throughput increase.

BMO Capital has an Outperform rating and a $7 per share price target on IAMGOLD, whose stock is currently trading at around $6.02 per share.

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