Shares of Iamgold Corp. fell 10 per cent on Wednesday after the miner announced lower gold production and said it would cost more to produce the precious metal.
Iamgold expects to spend between $1,150 and $1,250 to produce an ounce of gold this year, leaving the company with very little room to make a profit with gold trading near $1,250 an ounce.
“High-cost operations make it difficult to operate profitably now,” said Chris Mancini, analyst for the Gabelli Gold Fund.
Iamgold’s woes are emblematic of the gold industry, which has taken drastic steps to conserve cash amid a falling bullion price.
The Toronto-based company, which operates mines in Canada, South America and West Africa, has already cut jobs, suspended its dividend and reduced exploration.
Iamgold said capital expenditures have been reduced by 40 per cent and the company has deferred expanding three of its mines.
“We forecast liquidity to deteriorate in 2014 as a result of lower production and higher cost guidance,” Nicholas Jarmoszuk, credit analyst with RBC Dominion Securities, said in a note.
The company produced 835,000 ounces of gold last year, which was 5 per cent beneath expectations because of lower grades at its key Rosebel mine in Suriname.
Iamgold expects to produce between 835,000 and 900,000 ounces this year.
By late afternoon, Iamgold was down 10 per cent to $4.05 a share.
The company did not immediately respond to a request for comment.Report Typo/Error