Replies to post #913 on IAMGOLD Corp (IAG)

[JohnCM]

Update: IAMGOLD Reports High-Grade Drill Results At Boto Project

Hard Asset Investments

Feb. 4, 2015 12:37 AM ET

IAMGOLD just reported some pretty great infill drilling results from its Boto project in Senegal.

The purpose of infill drilling is to convert lower confidence resources (indicated and inferred) into higher confidence categories, or reserves.
The results could mean a much more high-quality and high-grade resource base at Boto when the company updates its resource estimate later this month.

Boto is an exciting project, and IAMGOLD is a buy here.
IAMGOLD (NYSE:IAG) has announced assay results from a further 16 infill diamond drill holes totaling 5,085 metres, as part of the company's 15,824 metre program completed during the 2014 exploration program. The results were quite good - IAMGOLD intersected high-grades over significant thickness from the Boto project's Malikoundi deposit. Results included: 44 metres grading 4.46 g/t gold, 30 metres grading 3.82 g/t gold, 40 metres grading 3.24 g/t gold, and 5 metres grading 17.55 g/t gold.

All of these grades are higher than the grades reported in the company's resource estimate. The Boto project currently hosts an indicated resource of 22 million tonnes averaging 1.62 grams of gold per tonne for 1.14 million ounces and an inferred resource of 1.9 million tonnes averaging 1.35 grams of gold per tonne for 81,000 ounces. So these drill results likely mean a higher grade resource base once the estimate is updated at the end of this month.

Readers will remember that in my previous article on IAMGOLD, I argued that shares of the stock are a buy after the company reached an agreement to sell its Niobec mine for total considerations of $530 million. With the sale of this asset, IAMGOLD has more than $830 million in cash, equivalents and gold bullion at spot, plus total liquidity of $1.3 billion which is higher than its current market cap, compared to $641 million in debt.

So with a revamped balance sheet and liquidity, the company could make acquisitions to grow its gold production and lower its all-in sustaining cost profile. But IAMGOLD has a number of attractive development projects already, like Boto, which could increase its production organically without having to go out and make an acquisition.

Previous solid exploration results at Boto increased my confidence in the project, as many of the reported drills returned grades higher than the grade of the current resource, currently 1.6 g/t gold. These new results are even more positive because continued drilling success shows the resource base at Boto is likely far bigger and higher grade than the current resource estimate. And with $830 million in cash and equivalents, IAMGOLD has more than enough capital to continue advancing the project, while also going out and making an acquisition if it wants to. With a solid balance sheet and exciting development projects, I think IAMGOLD shares hold considerable long-term upside potential, and I plan on adding to my position next month.