Despite production drop, Iamgold maintains 2012 guidance
In spite of declines in both net and adjusted net earnings for the first half of this year, Iamgold CEO Steve Letwin said second quarter results were solid.
Posted: Tuesday , 14 Aug 2012
RENO (MINEWEB) -
Despite a 19% increase in revenues, expected higher costs took a bite out of Iamgold's second-quarter profits, which dropped 29%.
Nevertheless, Iamgold CEO Steve Letwin said, "Our second quarter results were solid and in line with our expectations."
"As we stated in our outlook for the second quarter, the higher costs were expected and we maintain our guidance for the year," said Letwin.
"Our annual production and capital expenditure guidance remains unchanged, and we continue to have a strong balance sheet," he stressed. Guidance is for 840,000 to 910,000 attributable ounces of gold production and 4.6 million to 5.1 million kilograms of niobium production this year.
For the first half of this year, Iamgold reported attributable gold production of 411,000 ounces, down 2% from the 421,000 attributable gold ounces reported during the same period of last year. Total cash costs increased 15% from $613/oz during the first six months of 2011 to $708/oz.
For the second quarter of the year, Iamgold reported attributable gold production of 204,000 ounces, up 9% from the 188,000 ounces of attributable gold production reported during the second-quarter 2011.
Niobium production for the first half of the year was reported at 2.3 million kilograms, up 5% from the 2.2 million kilograms of production for the first half of last year. For the second quarter of 2012, Iamgold reported 1.2 million kilograms of production, up 9% from the 1.1 million kilograms of niobium production reported during the same period of last year.
Adjusted net earnings during the second quarter of the year were up 9% to $74 million or 20-cents per share, compared to $67.7 million or 18-cents per share in adjusted net earnings for the second-quarter 2011. Net earnings were $52.9 million or 14-cent per share in the second-quarter 2011, down from $74.5 million or 20-cents per share in the second quarter of 2011.
Higher operating costs, inventory movements, mostly from sales exceeding production, and higher depreciation, depletion and amortization increased mining costs 25% during the period.
For the first half of the year, Iamgold reported a 10% decline in adjusted net earnings from $185.5 million or 50-cents per share for the first six months of 2011 to $166.4 million or 44-cents per share. Net earnings declined 17% during the first half of this year from $207.7 million or 56-cents per share for the first six months of last year to $172.1 million or 46-cents per share.
For the second quarter of 2012, adjusted net earnings were reported at $74 million or 20-cents per share, up 9% from the adjusted second-quarter 2011 net earnings of $67.7 million or 18-cents per share. Net earnings for the second quarter of this year were reported at $52.9 million or 14-cents per share, down 29% from the net earnings of $74.5 million or 20-cents per share reporting during the same period of 2011.
On June 21, 2012, Iamgold completed the acquisition of Trelawney Mining and Exploration, whose main asset is the Côté Gold project in Ontario. On June 20, 2012, the company entered into a definitive arrangement to sell the Quimsacocha project in Ecuador to INV Metals. The acquisition is subject to INV raising C$20 million in financing for a total deal value of C$30 million.
The exploration budget for 2012 has increased to $157.3 million, which now includes $19.4 million for ongoing exploration at the Côté Gold project.