February 25, 2009 / 7:22 AM / in 9 years

WRAPUP 1-Iamgold, North American Palladium post Q4 losses

* Iamgold Q4 adjusted EPS $0.06 Vs Wall St view $0.07

* N American Palladium Q4 net loss per shr C$1.31 Vs C$0.19

By Euan Rocha

NEW YORK, Feb 25 (Reuters) - Canadian precious metal miners Iamgold (IMG.TO) and North American Palladium (PDL.TO) posted fourth-quarter losses on Tuesday and showed sharply contrasting prospects after gold prices recovered while palladium plunged.

North American Palladium’s results were hurt as it wrote down it’s investment in mining interests and temporarily cut production at its Lac Des Iles mine. The global economic slowdown has crushed the price of palladium -- a metal used in catalytic converters, jewellery and electronics.

In contrast, despite posting a quarterly loss due to the costs of developing a project in Tanzania, Iamgold’s outlook is positive as gold prices have soared back to near-record levels, driven by investors fearful of the turmoil in equity, debt and currency markets flocking to the metal as a safe haven.

The mid-tier Canadian gold producer lost $96.4 million, or 33 cents a share, in the quarter ended Dec. 31. That compared with a profit of $8.5 million, or 3 cents a share, in the year-before quarter. [ID:nN24440203]

Excluding a $113 million charge for higher capital costs to develop its Buckreef project in Tanzania, Iamgold earned 6 cents a share. On that basis, analysts polled by Thomson Reuters had expected, on average, a profit of 7 cents a share.

Revenue rose 8 percent to $209.6 million, primarily driven by higher gold production. Realized gold prices in the quarter were $793 an ounce, up from $787 an ounce a year ago.

In a note to clients, RBC Capital Markets analyst Michael Curran noted that Iamgold’s cash costs of $408 per ounce were significantly lower than he had expected.

Toronto-based Iamgold operates gold mines in Canada, South America and Africa, and is in the process of completing a takeover of Orezone Resources OZN.TO, which will give it control of the Essakane gold project in Burkina Faso.

It also has other development projects and produces Niobium, a key component in specialty high strength steels, at a mine in Quebec.

The company said it expects to produce 880,000 ounces of gold in 2009 at an average cash cost of $470 to $480 an ounce. It is targeting 1.8 million ounces of annual output by 2012.

The company ended 2008 with $219 million in cash and cash equivalents. Iamgold said it is actively reviewing funding sources to support its current acquisition activities and potential new opportunities.

Iamgold’s total proven and probable reserves increased by 20 percent or 1.6 million ounces to 9.6 million ounces as of year end 2008, compared with a year earlier.

The company said it plans to invest significantly in mine development and exploration in 2009. It also sees cash costs per ounce in 2009, marginally higher than 2008 levels due to lower production.

NORTH AMERICAN PALLADIUM

The palladium and platinum producer posted a quarterly net loss of C$112.4 million, or C$1.31 a share, compared with year-ago loss of C$11.1 million, or 19 Canadian cents a share. [ID:nWEN5061]

The fourth-quarter 2008 results included a non-cash impairment charge of C$90.0 million, or C$1.05 per share, to write down it’s investment in mining interests, due to market conditions.

Palladium production for the quarter ended Dec. 31, was 21,373 ounces down 70 percent from a year-ago, mainly due to the temporary closure of the Lac des Iles mine in Thunder Bay, Ontario, on Oct. 29.

Palladium sales that were settled during the fourth quarter, realized an average of $207 per ounce, a decrease of 41 percent compared with $348 per ounce in the same period last year.

In mid-2008 palladium and platinum traded at about $475 per ounce and $2,103 per ounce respectively. Whereas, on Feb. 23, the spot price of palladium was $204 per ounce and platinum was $1,074 per ounce.

The company said the temporary closing of the Lac des Iles mine will reduce expenses and help maintain its cash position.

Lac des Iles is the company’s only mine and has historically produced about 4 percent of global palladium supply, according to the Toronto-based company. (Reporting by Euan Rocha; Editing by Erica Billingham)

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