Sometimes I think I can smell the rain a day before it arrives, but often a sunny tomorrow will prove me quite wrong. Although I have been right about this multi-year bull market in gold and silver since 2006, many quality mining equities have lagged the underlying price increases in precious metals to a degree that I could scarcely have imagined.

Of course, this is not how mining equities are supposed to perform in a bull market. Expanding profit margins are supposed to produce leverage to price gains in a miner's product over time … especially as persistently heightened demand prompts greater investments in exploration and production growth. However, a deadly combination of rising production costs, a monster liquidity crisis, and panic-driven equity liquidation resulted in a mining sector that has underperformed the price of gold over the past five years.

Remarkably, the Market Vectors Gold Miners ETF (NYSE:GDX) has declined by roughly 15% since its inception in mid-2006, while the ever-popular SPDR Gold Shares (NYSE:GLD) physical gold ETF has appreciated some 60% over the same time period. Gold's detractors might be quick to cite such dastardly underperformance as yet more reason to avoid the sector altogether, but I view this underperformance of gold mining shares as a neon billboard over Wall Street flashing one simple word: opportunity.

During the recent sell-off in gold mining shares, I have been vocal in my assertion that low-cost producers like Goldcorp (NYSE:GG) are particularly well-positioned to deliver the kind of cash flow that has thus far eluded the sector. I upped the ante from my successful 2008 recommendation of Yamana Gold (NYSE:AUY) -- arguing that the stock remains dramatically undervalued -- and I urged Fools not to give up on my beleaguered top pick from 2009: Agnico Eagle Mines (NYSE:AEM).

Following a precipitous 34% retreat from its December 2009 peak at $21 per share, however, I am keen on IAMGOLD (NYSE:IAG).

Mid-tier producer IAMGOLD last week announced a 17% expansion of its proven and probable gold reserves, net of 2009 production, to a healthy 14.5 million ounces. Although the company's measured and indicated resources declined by 2.9 million ounces as more stringent measures of economic viability were applied, the bottom line is that IAMGOLD continues to outpace nearly 1-million-ounce annual production volumes through effective exploration of its various ore bodies.

Also weighing on shares recently is the revelation that IAMGOLD will incur a non-cash impairment charge of $85 million to $100 million to write down its investment in the Camp Caiman development project in French Guiana. After a protracted period of uncertainty regarding regulatory approval from the French authorities, the company is throwing in the towel. Fools never like to see a project scrapped after being ushered through the feasibility stage, but one can take some solace in the fact the project was slated to produce a rather modest 875,000 ounces over the life of the mine. Meanwhile, although the carrying value of the project will be removed from the books, the company can sit on the project in hopes of encountering a friendlier regulatory environment down the road.

With commercial production slated to commence in August 2010, IAMGOLD is preparing to launch its new Essakane Mine in Burkina Faso. The mine is expected to average 315,000 ounces of annual gold production for an eight-year mine life, at a competitive production cost of about $400 per ounce. With the flagship Rosebel mine entering its sixth year of production, Essakane represents an important milestone in IAMGOLD's bid to achieve 1.8 million ounces of gold production by 2012. Importantly, production from Essakane will help to absorb the temporary cost increases anticipated at Rosebel as that mine encounters harder ores during 2010. All told, IAMGOLD expects 2010 production of 940,000 to 1 million ounces at a cost of about $500 per ounce.

Not to be overlooked, IAMGOLD possesses a stable cash flow generator in Quebec that has nothing to do with gold. The Niobec mine produces 7.5% of the world's supply of a rare compound called niobium, which is used in high-strength specialty steels. Eighty percent of 2010 production is already committed, and the mine's 4.2 million to 4.4 million kilograms of production are expected to yield a hefty operating margin of about $18 per kilogram. During 2009, exploration drilling increased total niobium reserves at Niobec by 32% to 181.3 million kilograms.

Peering further down the development pipeline, IAMGOLD issued a preliminary assessment of the Westwood project in Quebec in December, and foresees a 16-year mine life with 186,000 ounces of annual production at a very competitive cost of $358 per ounce. In Ecuador, Quimsacocha awaits with the promise of low-cost gold by virtue of rich byproducts of copper and silver.

With all of these remaining growth prospects, a strong existing production platform with eight producing mines, and unique assets like the Niobec mine, IAMGOLD continues to stand out to this Fool as a strong contender to eventually graduate from mid-tier status and take its place among the elite group of gold titans like Newmont Mining (NYSE:NEM).

I'll let you, and time, be the judge of that one. All I can do is point to my track record. I selected IAMGOLD for my Motley Fool CAPS portfolio back in late 2006, and the still-open pick has thus far outperformed the S&P 500 by nearly 87%. Since I highlighted IAMGOLD in August 2008, the shares have appreciated 115%. I listed the miner as one of my top five mid-tier miners in October 2009, and shares appreciated more than 22% before I indicated that I had sold some shares on Dec. 4. Since that date, the stock is down 24%, and I consider the shares a bargain once again.

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