IAMGOLD (IAG) Q4 2012 earnings summary

Executive summary

• 2012 gold output was 830,000 attributable oz, below the 840,000–910,000 oz target; total cash cost rose 12% YoY to $715/oz amid lower grades, harder ore and inflation.

• Revenue held near prior-year levels, while net earnings and operating cash flow declined; growth plans shifted toward controlled spending and projects meeting return thresholds.

Financial highlights

• FY revenue was $1.670B, essentially flat YoY; cost of sales rose 6% to $948.0M and gross earnings from mining operations fell 8% to $722.0M.

• Net earnings attributable to equity holders were $334.7M, down 14% YoY; adjusted net earnings were $316.9M, down 22%, or $0.84/share.

• Q4 revenue was $468.4M, down 3% YoY; adjusted net earnings were $90.3M, down 16%, or $0.24/share.

• Operating cash flow was $441.0M, down 26% YoY; before working-capital changes it was $504.0M, down 23%.

Outlook and guidance

• 2013 attributable gold production guidance: 875,000–950,000 oz; consolidated cash costs, including royalties, $850–$925/oz, reflecting lower grades, harder ore and Westwood ramp-up costs.

• 2013 niobium guidance: 4.7–5.1M kg at a $15–$17/kg operating margin; effective tax-rate assumption is 38%.

• 2013 cost-reduction program targets $100M in annualized savings; free cash flow was expected in 2014, barring Rosebel and Sadiola expansions.

• Essakane expansion was expected to finish by end-2013; Rosebel, Sadiola and Niobec expansion decisions remained subject to feasibility, partner, permitting or return conditions.