Gold Stocks Have Been On The Rise Due To Global Economic Uncertainty, How High Can IAMGOLD Corp Stock Price Go?
Despite the fall in stock price for most of the year, gold penny stock Iamgold Corp (IAG Stock Report) price rallied by 45% in June. This was after the firm announced that it was considering the sale of some of its assets. Therefore, it may be wise to have a look at the pros and cons of this gold penny stock before deciding to invest in IAG stock. But is it a gold penny stock to buy or sell?
Impressive Cash Balance For This Gold Penny Stock
One of the most important aspects of IAMGOLD as a gold mining company is its balance sheet. Unlike most gold mining companies, it’s not saddled with millions in debt. In fact, the company has a total cash balance of $281 million as of Q1 2019.
The gold mining company’s financial health is definitely robust and the management is determined to maintain that edge. Steve Lewin, Chairman and Chief Executive Officer of IAMGOLD, stated that the company is looking to reduce costs, boost margins and generate cash flows.
This is so that all future projects can be funded without debt. In addition to that, IAMGOLD has a range of projects in the works. That makes it possible for the company to take its production capabilities even higher.
Costs Of Mining Gold Are High
However, on the other hand, IAMGOLD’s costs of mining gold are quite high compared to its peers. That is likely to have an adverse effect on the margins. Last year, the all in sustaining cost per ounce of gold stood at $1057. That was a steep rise from $1007 back in 2017. In 2018, the company sold its gold at $1270 an ounce and at $1261 an ounce the year before.
According to the company’s projections, there isn’t going to be any drastic reduction in AISC this year. It’s expected to be in the $1030 to $1080 range. In addition to that, IAMGOLD does not pay any dividends. When compared to its rivals like Yamana Gold (AUY Stock Report) and Harmony Gold (HMY Stock Report), it seems like a significant handicap for the company when it comes to attracting value investors.
Last but not least, experts also believe that stock is currently overvalued. It is currently trading at a price to cash flow ratio of 16.3. That is significantly higher than its peers. Harmony Gold trades at 3.3, while Yamana Gold trades at 7.9.