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IAMGOLD Disappoints In Second Quarter, Reduces Guidance

With adjusted EPS of $0.196, which is lower than forecasts, IAMGOLD Corporation showed poor second quarter results. The difference was influenced by larger cash costs at Rosebel, as well as decreased production and larger costs at Essakane.
Production stayed at 187 ounces at cost of sales of $695 per ounce against a forecast of 206 thousand ounces at cost of sales of $575 per ounce. The production at Essakane was much lower than estimated, while costs were larger.
Repairs made on the crusher, which are now completely finished with the machinery operating normally, negatively influenced Essakane production. Water tanks are currently at capacity and IAMGOLD Corporation is currently constructing another bulk water storage resource to raise storage capacity by 50%, while doubling the pumping capacity simultaneously. The new reservoir is expected to be completed by the end of 2014.

IAMGOLD Corporation lowered its 2014 production expectations to 870 to 930 thousand ounces of gold at cash costs of $620 to $650 per ounce due to the poor production at Essakane in the second quarter. Outlooks for niobium have remained the same.

It is believed that the updated operating outlook will negatively influence the recent net asset value per share forecast of $17.85 at a rate of nearly 1% to 2%. The “Sector Outperform” rating for IAMGOLD Corporation remains intact with a price target of $26.

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