May 14, 2009 / 1:50 PM / in 8 years

UPDATE 1-Iamgold first-quarter net income climbs

* Q1 EPS $0.17 Vs $0.12 a yr-ago

* Q1 EPS excluding items $0.10 Vs $0.12 a yr-ago

(Adds CEO, CFO comments, details on results; All figures in

U.S. dollars, unless noted)

By Euan Rocha

NEW YORK, May 14 (Reuters) - Iamgold Corp (IMG.TO) said on Thursday its first-quarter profit rose more than 50 percent, as the Canadian precious metal miner sold a significant amount of gold bullion held on its balance sheet.

Net income in the quarter ended March 31 rose to $52.5 million, or 17 cents a share, up from a year-ago profit of $34.4 million, or 12 cents.

Toronto-based Iamgold, which held about 174,000 ounces of gold on its balance sheet at the end of 2008, monetized about 74,000 ounces of the holdings in the quarter and realized an after-tax gain of $29.4 million from the sale.

“We decided over the course of the last several years to hold gold, to provide our shareholders with additional leverage to gold,” said Chief Financial Officer Carol Banducci, in an interview with Reuters.

“When you take a look at our balance sheet, we were carrying that gold at cost, which was at around $400 per ounce, so when we sold it, we booked a significant gain,” said Banducci, adding that the gold bullion was sold at just over $900 an ounce.

Excluding the gain from the bullion sale, an after-tax foreign exchange loss of $5.3 million and an after-tax termination benefit expense of $1.5 million, the company posted earnings of 10 cents per share, down from 12 cents per share, a year earlier.

Analysts, on average, had forecast earnings of 9 cents a share, according to Reuters Estimates.

Quarterly revenue fell 9.3 percent to $188.6 million, as attributable gold sales and the gold price realized in the quarter were down from year-earlier levels.

“We will continue to focus on operational improvements to lower costs even further and increase production levels beyond our current guidance of 880,000 ounces for 2009,” Chief Executive Joseph Conway, said in a statement.

Iamgold said it has $550 million in available capital following an equity financing in March that raised gross proceeds of $281.5 million.

On March 26, Iamgold issued 39.4 million common shares at a price of C$8.75 per share.

The net proceeds of $269.6 million from the offering have been invested in short-term deposits and interest-bearing securities. Iamgold will use the proceeds to fund capital expenditures at various sites, and the construction and development of the Essakane project in Burkina Faso.

On Feb. 25, Iamgold completed the acquisition of Orezone Resources and its 90 percent-owned Essakane gold project. The Orezone exploration properties, not related to the Essakane project were spun out into the new exploration company Orezone Gold ORG.TO, in which Iamgold holds a 16.6 percent stake.

The Essakane project is one of West Africa’s largest undeveloped gold properties with production expected in the second half of 2010, Iamgold said in a statement.

The company reiterated its full year production forecast of 880,000 ounces of gold at an average cash cost of $470 to $480 per ounce.

Shares of Iamgold, which fell 9 Canadian cents to C$11.47 in early trade on Thursday, are up more than 50 percent year-to-date on the Toronto Stock Exchange, easily outpacing the 8 percent gain in the S&P/TSX composite index .GSPTSE over the same period. ($1= $1.17 Canadian) (Reporting by Euan Rocha)

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