Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Why IAMGOLD Shares Dropped

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of gold and niobium miner IAMGOLD (NYSE: IAG  ) careened 10% lower Wednesday morning after the company reiterated 2013 production guidance for between 875,000 and 950,000 ounces, while revealing a substantial increase in projected total cash costs of between $850 and $925 per ounce (including royalties).

So what: Although industry analysts had prepared for some cost escalation after the miner revealed a range of operating challenges last November (see related article: "A Touch of Tarnish at IAMGOLD"), this cost escalation proved worse than expected. BMO Capital Markets had forecast 2013 costs of $730 per ounce, while Credit Suisse had anticipated costs of $652 per ounce. Given what we now know regarding prevailing cost dynamics after low-cost operators Goldcorp (NYSE: GG  ) and Yamana Gold (NYSE: AUY  ) began reporting an all-in cost metric, IAMGOLD's elevated cash costs are seen challenging the miner's ability to sustain positive cash flow for the year ahead.

Now what: While there can be no question that IAMGOLD faces a range of substantial near-term operating challenges at several key operations, with the shares now in single-digit territory I find the resulting value proposition for long-term investors extremely compelling. With the recently acquired Côté gold project already meaningfully enhanced with 7.6 million indicated ounces, a substantial treasury in cash and gold bullion, world-class niobium and rare-earth element assets, and a reiterated outlook for 80% production growth over the next five years, I view IAMGOLD shares beneath $10 per share as an unmistakable bargain

Goldcorp is one of the leading players in the gold mining market. For the last several years, investors have been the beneficiaries of several successful acquisitions and strong organic growth. Goldcorp's low-cost production profile continues to make them an attractive choice for long-term investors. Click here for our detailed Ticker Report to discover more about this high-quality gold producer.

Read/Post Comments (0) | Recommend This Article (19)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2211184, ~/Articles/ArticleHandler.aspx, 9/26/2016 7:06:48 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,094.83 -166.62 -0.91%
S&P 500 2,146.10 -18.59 -0.86%
NASD 5,257.49 -48.26 -0.91%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/26/2016 4:00 PM
IAG $4.16 Up +0.04 +0.97%
AUY $4.41 Down -0.08 -1.78%
Yamana Gold CAPS Rating: ***
GG $16.43 Down -0.23 -1.38%
Goldcorp CAPS Rating: ***