BUSINESS

Iamgold falls to second-quarter net loss on impairment charges, lower revenue

08/12/2013 06:41 EDT | Updated 10/12/2013 05:12 EDT
TORONTO - Iamgold (TSX:IMG) fell to a second-quarter loss of US$28.4 million from a profit a year earlier as the company took impairment charges related to its investments.

The Toronto-based gold miner, which reports in U.S. dollars, reported a loss of eight cents per share, compared to a profit of $52.9 million or 14 cents per share during the same quarter last year.

Revenue was $301.1 million, down 17 per cent from $364.5 million a year ago due to lower gold prices and lower volume of gold sales, offset partially by higher sales of a grey metal called niobium.

Analysts had been expecting net income of US$29.7 million, or 14 cents per share, on revenue of $317.1 million, according to Thomson Reuters.

Iamgold gold said it took a $16.1 million charge related to a drop in the market value of its investments, and an additional $23.2 million charge related to its investments in Galane Gold Ltd. and INV Metals Inc.

Total gold production was 224,000 ounces in the quarter, up 10 per cent or 20,000 ounces from the same quarter last year.

The company said it made good progress during the quarter on its plan to trim $100 million from its costs.

"We are reviewing our mine plans in light of lower gold prices," said president and chief executive Steve Letwin in a statement.

"Our most important priorities continue to be cost reduction, preservation of liquidity and disciplined capital allocation."

Gold prices declined sharply in late May after the U.S. Federal Reserve said the central bank could start tapering its monthly US$85 billion of bond purchases if economic conditions improved. The precious metal has recovered some of its losses in recent weeks.

For the quarter ended June 30, Iamgold was still facing weaker gold prices which weakened results. The company reported a sharp drop in profits and announced it would only move forward with expansion and development projects that meet its criteria for delivering attractive returns.

Iamgold has operations in West Africa, South America and Canada.

The company's two largest operations are the Rosebel mine in Suriname and the Essakane mine in Burkina Faso.