Please ensure Javascript is enabled for purposes of website accessibility

Why IAMGOLD Stock Is Selling Off Today

By Matthew DiLallo - Aug 8, 2019 at 12:38PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The gold mining company disappointed investors.

What happened

Shares of IAMGOLD (IAG 0.44%) slumped more than 16% by 12:15 p.m. EDT on Thursday. Driving down the gold mining stock were its second-quarter results.

So what

IAMGOLD reported an adjusted net loss of $15.5 million, or $0.03 per share, which was $0.02 per share more than analysts expected. Driving the bigger-than-expected loss was a combination of lower production and higher costs. Overall, the company produced 198,000 ounces of gold, which was 4% below the prior-year period. Gold sales, meanwhile, were lower than production at 187,000 ounces due to inventory timing issues at its Rosebel mine. As a result, the company's all-in sustaining costs (AISC) rose 5% to $1,132 an ounce. That cut into the company's margins, since it only realized $1,314 per ounce of gold sold during the quarter.

A stock chart with gold nuggets in the background.

Image source: Getty Images.

The gold miner also said that a temporary suspension of its Rosebel mine would negatively impact its 2019 forecast. As a result, IAMGOLD lowered its gold production guidance range to between 765,000 and 810,000 ounces. Based on that, it also increased its AISC projection to $1,090 to $1,130 an ounce, since it must now spread its expenses across the lower volume.

Now what

IAMGOLD's production issues are coming at the wrong time, since gold prices have been on the upswing in recent months and are up double digits for the year. However, instead of delivering strong production results to capture these higher prices, the company's output will come in below expectations, which will weigh on its margins. IAMGOLD's lack of execution is why it's not an ideal gold stock to consider buying, even if it is cheaper after today's sell-off.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

IAMGOLD Corporation Stock Quote
IAMGOLD Corporation
$2.30 (0.44%) $0.01

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.