TORONTO (Reuters) - First-quarter profit at Iamgold (IMG.TO) tripled, the company said on Tuesday, as soaring gold prices more than made up for higher-than-expected costs and the impact of a robust Canadian dollar.
The mid-tier Canadian gold producer earned $34.4 million, or 12 cents a share, in the three months ended March 31. This was up from $11.3 million, or 4 cents a share, in the same period a year earlier.
Analysts polled by Reuters had expected, on average, a profit of 13 cents a share, before exceptional items.
In early trading on the Toronto Stock Exchange, the company’s shares were up 2 Canadian cents at C$6.07.
Quarterly revenue grew 42 percent to $208 million, as average realized gold prices surged to $899 an ounce from $648 an ounce.
Gold production was 234,000 ounces during the quarter, up from 219,000 a year before.
Cash costs per ounce climbed 14 percent to $476, above the company’s expectations, due to higher oil prices, a strong Canadian dollar and royalties paid on higher gold prices.
However, Iamgold maintained its full-year 2008 cost expectations of $455 to $470 an ounces, and also reaffirmed its production outlook of 920,000 ounces of gold.
SELLING NON-CORE ASSETS
The company has been trying to raise cash by selling off non-core assets, such as the La Arena copper and gold property in Peru, which it agreed last week to sell to Rio Alto Mining for $47.6 million and a 5.5 percent interest in Rio Alto.
Iamgold also obtained a $140 million five-year revolving credit facility in April.
“This financial strength means we have almost $0.5 billion in cash available to expand our production and resource base beyond our existing portfolio and is a step towards achieving our long term growth objective of doubling production within five years,” Chief Executive Joseph Conway said in a release.
Iamgold’s shares have come under pressure recently, as a six-month freeze on mining activity in Ecuador has muddied the future of Iamgold’s Quimsacocha gold deposit, which contains an estimated 3.3 million ounces.
Iamgold said it will advance the work necessary to complete a prefeasibility study scheduled for July. It warned there could be an adverse impact if it is not able to reach an agreement on a revised mining concession, but said there was no reason to record an impairment on the property.
Reporting by Cameron French; Editing by Bernadette Baum