In a research report released Thursday, Canaccord Genuity analyst Tony Lesiak reiterated a Sell rating on IAMGOLD Corp (USA) (NYSE:IAG) with a C$3.25 price target, as the company reported year-end financial results that were slightly better than expected and maintained its 2015 guidance.
Lesiak wrote, “The YE14 reserve statement was not as negatively impacted as we had expected partly given the utilization of a $1,300/oz reserve gold price versus peers near $1,150/oz. We suspect that IMG’s reserves would look much different using a 10% lower gold price. Nevertheless, the real concern, a major reserve write-down at Rosebel and a severely shortened mine life, did not materialize, yet. Management believes the current 3.0moz reserve is viable at prevailing gold prices even assuming the harder ore characteristics and unit cost impacts. While we have increased our mine life assumption at Rosebel from 5 to 10 years, our comfort level on the asset remains low.”
The analyst added, “Based on our target multiple of 0.5x (a justified +40% discount to its peers to reflect the lack of disclosure on long-term mine plans and early closure risk at Rosebel) we see some value re-emerging at IMG. However, unless IMG utilizes the cash to buy back its debt, any asset it buys is unlikely to be worth as much as the cash currently on the balance sheet. Also, high-quality producing assets remain expensive, and the purchase of a development stage asset could ignite balance sheet stress issues for IMG.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Tony Lesiak has a total average return of -10.8% and a 53.3% success rate. Lesiak is ranked #3253 out of 3479 analysts.