Iamgold Corporation Ordinary Shares (IAG) fair value

ACCE thesis

IAMGOLD is a Toronto-listed gold miner whose main operations are the Essakane mine in Burkina Faso, the Westwood mine in Quebec, and the Côté project in Ontario, which it expects to bring into production. The attraction is the operating leverage: a 45.0% operating margin and 50.3% gross margin on a business trading at 9.0 times trailing earnings and 9.6 times forward earnings is an unusual pairing for a producer at this scale. Revenue grew 47.5% over the period, which reflects gold prices and volumes together, so the question for a PM is how much of that is repeatable at current spot levels. The bear case is jurisdiction and execution, since Burkina Faso carries political and operating risk that a 9x multiple only partly discounts, and Côté's ramp is the main thing that could change the earnings base. At a 32.3% return on equity and a $10.1B market cap, it's worth a closer look at the Essakane cash flows and the Côté capex schedule before deciding whether the discount is justified.