Iamgold's Côté Gold Project Anticipated To Boost Production Amid Rising Gold Price Predictions: Analyst

Author: Nabaparna Bhattacharya | September 12, 2023 03:05pm

RBC Capital Markets analyst Wayne Lam upgraded Iamgold Corporation (NYSE:IAG) to Sector Perform from Underperform, raising the price target to $2.75 from $1.75.

The analyst raised the price target to reflect improved near-term SCF and increased gold price forecasts via a recent deck update.

Lam thinks construction risks at the Côté Gold project are better managed given recent (high-cost) financing with visibility to first gold in early 2024, which could provide a re-rating opportunity.

Impending output at Côté is expected to transform the production profile for Iamgold Corporation, providing lower-cost output in Ontario, which is estimated at 393 Koz/yr annually (100% basis) at mine-site AISC of $1,163/oz, notes the analyst.

Lam estimates this to provide IAG 30%+ production growth into 2024 at ~15% lower AISC, helping to offset rising geopolitical risk at Essakane and higher-cost output at Westwood.

Also Read: Golden Opportunity: Iamgold Stock Upgraded By BMO Capital After Stellar Recovery

Looking ahead, the analyst anticipates emphasizing the ramp-up of Côté following the first gold in early 2024, with the balance sheet able to support the project through advancement to steady-state capacity. 

With visibility to first gold ahead and steps taken to manage the balance sheet, the analyst is constructive on the near-term outlook but remains cautious given the execution risks ahead.

On the negative side, the analyst remains cautious about ramp-up risk amidst elevated financial leverage and higher-cost operations from existing assets.

For FY23, the analyst expects adjusted EPS of $0.08, higher than the previous $(0.02) expectation.

For FY24, the analyst forecasts adjusted EPS of $0.14, compared with the prior view of $(0.17).

Price Action: IAG shares are trading higher by 4.48% to $2.33 on the last check Tuesday.

Posted In: IAG