TORONTO – Iamgold Corp. (TSX:IMG) is suspending its dividend effective immediately, citing the need to preserve cash in the face of falling prices for bullion.
“While our outlook for gold over the long term is optimistic, in light of the current gold price we are suspending the dividend to preserve our balance sheet,” president and CEO Steve Letwin said in announcing the move after markets closed on Wednesday.
“We are on target to reduce costs by $100 million this year and will continue to look for further reductions next year. This decision to suspend the dividend allows us to conserve cash and ensure we maintain the flexibility we need to take advantage of opportunities when they arise.”
Meanwhile, the company has $750 million in undrawn unsecured credit facilities, Letwin said.
Prior to the announcement, Iamgold paid a semi-annual dividend of 12.5 cents US per share.
That would have produced an annual yield of just under six per cent, based on Wednesday’s closing price of $4.07 per share, which was down 25 cents or 5.79 per cent.
The battered gold component led decliners on the TSX on Wednesday, sliding about 3.7 per cent as February bullion dipped $3.90 to US$1,257.20 an ounce. The component has skidded 50 per cent this year while the price of gold has fallen 25 per cent.
Iamgold is a mid-tier mining company with six operating gold mines. including joint ventures in Canada, South America and Africa.