August 10, 2011 / 11:24 PM / in 7 years

UPDATE 1-Iamgold profit surges; trims production outlook

* Q2 Adj EPS $0.19 Vs $0.05 a year ago

* Q2 revenue up 75 pct to $345.7 mln

TORONTO, Aug 10 (Reuters) - Iamgold Corp (IMG.TO) said on Wednesday its second-quarter operating profit more than tripled, driven by a higher gold price and increased output.

However, the Toronto-based company trimmed its full year production outlook and raised its operating costs projections, as it battles to keep energy, labor and material cost in check.

“Operationally the quarter was a challenging one,” said Chief Executive Steve Letwin in a statement. “All eyes are on containing costs throughout our operations and we are working on several initiatives to drive them down in the ensuing quarters.”

While gold production in the quarter rose 47 percent to 188,000 ounces, average cash costs rose 17 percent to $697 per ounce, said the company, which owns mines spread across Africa and the Americas.

The company trimmed its production range to between 940,000 and 1 million ounces, down from a prior range of 950,000 to 1.05 million ounces. It now expects 2011 cash costs to range between $620 and $650 an ounce, both ends of this range are roughly 5 percent above Iamgold’s prior forecast.

Iamgold’s lower production forecast reflects the sale of its interest in two mines in Ghana and the second-quarter production shortfall at its Essakane mine in Burkina Faso, where output was hurt by repairs and a water shortage.


Excluding gains from the sale of certain assets and other one-time items, Iamgold’s profit in the period ended June 30 rose to $69.7 million, or 19 cents a share, up from a year-ago profit of $19.3 million, or 5 cents a share.

Iamgold said its increased output, along with a 26 percent jump in the average realized gold price, drove revenues up 75 percent to $345.7 million in the quarter.

Its profit margins on gold rose 35 percent to $818 per ounce in the period, as the surge in bullion prices more than offset the increases in costs. ($1= $0.99 Canadian) (Reporting by Euan Rocha; editing by Andre Grenon)

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