IKN

Win us with honest trifles

IAMGOLD (IMG.to) (IAG): Quantity over Quality

If you don’t want to wade through all of this evening’s War&Peace-length IAMGOLD (IMG.to) (IAG) earnings NR and just want the bit that will move the share price tomorrow morning, it’s about the Coté capex. Here you go:

The Company’s previous estimate of its share of remaining costs to completion, net of leases, from January 1, 2022 onwards was approximately $710 to $760 million (estimated at a USDCAD exchange rate of 1.30). In the first quarter 2022, the Company expended $82 million.

Based on the ongoing analysis, assessment and preliminary information available to date, including provisions for certain commodities escalation, contingencies and other risk (“contingencies”), the Company currently estimates that its share of the remaining project costs to completion as of April 1, 2022 could be between approximately $1,200 to $1,300 million, net of leases (previous project costs estimate at USDCAD 1.30 and estimated increase at USDCAD 1.25). This range includes between approximately $100 million to $150 million in contingencies. Accordingly, the Company is withdrawing its 2022 and 2023 Côté Gold project costs guidance and cautions that this is a preliminary estimate.

Heavens to Murgatroyd! What’s half a billion dollars between friends, even? The full NR is here and if you’re going to read it, make yourself a coffee first. A refill on-hand might help the cause, as well. As for longs tomorrow morning, Exit Stage Left.

18 Comments

    Everyone building a mine has the same problem. At least they are half done.

    Reply

      I applaud your optimism, Jerry. For example, you assume they will be able to finish the build.

      Reply

      Equinox had a pretty upbeat update on their major build at the Greenstone project yesterday which, admittedly, kind of surprised me. So I guess it’s not *everyone*…

      Reply

    What’s your suggestion? Stop building mines because costs have gone up. What would happen then? They would get even worse. I’ll let you traverse the ocean in a dugout wood canoe.

    Reply

      My suggestion is not to invest in IMG, that’s all.

      Ok, I have another suggestion: Don’t believe these companies when they raise capital on optimized projections. The air of confidence when a FS is published doesn’t match the reality and it’s exactly why financiers demand mechanisms that ensure their own principle payback before any cash flows to equity. Too many mining companies light a candle and pray to the Money Gods to grant them safe passage on their build plans, this inflationary pulse has kicked plenty of them in the delicate parts. We’ve seen Argonaut and IMG on Capex, for another company whistling past the graveyard on another model check out the EQX results tonight who built critical mass by stakcing together high cash cost operations. Aurizona or not, they’ve just returned negative net mine cash flow at $1,900/oz gold, so help me.

      But really, my best suggestion is the first one, avoid IMG.

      Reply

        TRQ costs ballooned for its mine expansion in Mongolia, the stock tumbled. Then it recovered, then it doubled. Optimists make money, pessimists lose it.

        Reply

          I was trying to take you seriously, Jerry, that is no longer possible. Whipping out a Friedland gig as a fair comparison to these serial trainwreckers and then accompanying it with some wise saw doesn’t cut the mustard. I suggest you consider the history of Tasiast, including all the numbers, the equity destruction it caused and the executive-level casualties it took, before writing another word. With IMG we’re looking at a company that’s just brought in its third CEO in very recent history at the same time as a half billion dollar capex blowout. Or maybe you’re a “billion here, billion there, before you know it we’re talking real money” kinda guy, Jerry? It’s easy to swagger when it’s Somebody Else’s Money, so you need to consider what half a billion dollars can do in the hands of competent capitalists, in fact you need to consider exactly what half a billion dollars is, instead of it being a number with a few extra zeros. It’s exactly this profligate attitude toward major capital that brings embarrassments such as IMG’s NR this evening to the mining industry, these people seem to think it their right to be financed and you seem to be in the same camp. Stop the stupid, Jerry.

          Reply

            TRQ is riotinto, friedland has nothing to do with it anymore. Do some research.

            Buy a mirror. Now run along laddie, this isn’t Twitter, leave this to the adults. Run along, laddie.

    Jackie Przybylowski from BMO and Josh Wolfson from RBC were out with downgrades a couple weeks ago anticipating capex overruns at Cote. Jackie also anticipated the schedule being pushed back. They seem plugged in on this one. The share price has come down quite a bit from the recent peak already, falling with the downgrades and the price of gold simultaneously. I’d be surprised if the move doesn’t have more to go, however, as the miss is huge.

    Reply

    As for completing the project, they have a major partner in Sumitomo (approx 30%). How might that influence their search for liquidity? IAMGOLD carries little to no debt, for one thing. At face value, they seem to have levers to pull to access more liquidity, but I don’t pretend that those won’t have a negative impact on the equity. Long, and hedged (not enough).

    Reply

    Iamgold has debt and don’t be naive about being able to access the credit facility. The banks are not dumb and they will find any excuse to keep iamgold from borrowing on their revolver. The company has never successfully built a mine before and both Westwood and Rosebel are hemhoraging cash. This company has a very real chance of going below a dollar. The only ones making money are the banks that sold then their forward hedge and the service providers at Cote.

    Reply

      Thank you for the correction. I was confusing their net cash position, which until blowing through hundreds of millions on this project to date, was net positive. Looks like they have bitten off much more than they can chew. They could draw their full revolver at any time (have seen it done), but I imagine that would close the doors for any additional debt financing, at least from the banks.

      Reply

    Iamgold has debt and don’t be naive about being able to access the credit facility. The banks are not dumb and they will find any excuse to keep iamgold from borrowing on their revolver. The company has never successfully built a mine before and both Westwood and Rosebel are hemhoraging cash. This company has a very real chance of going below a dollar. The only ones making money are the banks that sold then their forward hedge and the service providers at Cote.

    Reply

    As a Canadian it’s quite sad really, the level of technical / managerial incompetence is stunning, this is why I stopped investing in Canadian mining companies except the few very large ones we have left..money better invested in the oil patch…keep up the good work Mark

    Reply

    If someone has time, go check out the past 15 years of financial statements and calculate how much money Iamgold has shoveled into the Westwood mine (1.2 billion) which can’t even produce 100k a year and bleeds cash. Saramacca at Rosebel is another disaster. Their only cash producing asset is Essakane which they didn’t even build. How or why anybody trusted them to build cote is bewildering. Fool me once shame on me, fool me ten times, I am never buying your stock again.

    Reply

    IAM happy that IAM not an owner and IAM watching from the bleachers.

    Reply

Leave a Reply

Your email address will not be published.

Hello, you are not in a chatroom, you are in my living room. Opposing views and criticisms welcome, insults or urinating on furniture unwelcome. Please refrain from swearing if possible, it is not needed.