Dallas, Texas 04/08/2014 (FINANCIALSTRENDS) – IAMGOLD Corp (USA)(NYSE:IAG) overall outlook was changed to a negative form its previous recommendation of stable by Moody’s Investors Service on 19th March. The rating agency retained the Ba3 rating for the corporate entity, while the much watched default rating of the firm has been reaffirmed at Ba3-PD. The senior notes issues by the firm have attracted a B1 rating, while its liquidity rating has been pegged at SGL-2.
Moody’s Investors Service vice president and senior credit officer Darren Kirk has been quoted to have explained the rationale behind the current set of recommendations about IAMGOLD Corp (USA)(NYSE:IAG) by saying that, “Execution risks to ramping up production at its Westwood underground operations in Canada have persisted longer than we previously expected, and any further delays would have adverse implications on IAMGOLD’s cost position and business profile”.
He went on to explain that the high costs of ore extraction and cost per ounce of gold produced has increased in the past few quarters sequentially, and is expected to further increase over the next few years, due to the hard nature of ore that it will encounter in its mining properties.
IAMGOLD Corp (USA)(NYSE:IAG) corporate profile has been reaffirmed at Ba3 CFR by Moody’s. The reason for this has been explained by Moody’s. The rating agency avers that the mining firm’s huge exposure to the sudden dip in demand for gold and consequent volatility that the price of gold has experienced at the international market as one of key reasons for the downcast expectations. It also cites the unsettled political situation in the region it operates its production as other key reasons for the rating.
The other contributing factors to the current outlook, include the higher cost of cash and an increasingly negative cash flow from operations at a time when it has to sink in more investments to increase its production spectrum are the other reasons for the moving down of the outlook from stable to negative.