Gold’s glittering run in 2025 has been impossible to ignore. With bullion recently soaring past US$3,400 an ounce, Canadian gold miners are minting cash and rewarding shareholders. IAMGOLD (TSX:IMG) stock has delivered a solid 37% total return so far this year. Yet, it’s trailing the broader gold mining industry’s impressive 56% average total gain. That underperformance raises a key question for July: Is IMG stock an undervalued golden opportunity or a value trap?
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The bull case for IAMGOLD stock: Ramping up in a roaring gold market
The core story for IAMGOLD in 2025 is all about its new flagship: the Côté Gold mine in Ontario. It finally hit commercial production in August 2024, and Côté Gold (70% owned by IMG, 30% by Sumitomo Metal Mining) is now hitting its stride and processing record ore volumes. This mine is a game-changer.
Management expects production across IAMGOLD’s three mines (Côté, Essakane in Burkina Faso, and Westwood in Quebec) to surge from 667,000 ounces in 2024 to between 735,000 and 820,000 ounces this year. The lion’s share of this growth comes from Côté. According to management guidance, output could leap from 199,000 ounces (100% basis) in 2024 to between 360,000 and 400,000 ounces in 2025. Crucially, this scale-up should significantly lower costs. Management forecasts All-In Sustaining Costs (AISC, the key industry metric covering all mining and overhead expenses) at Côté dropping to between US$1,350 and US$1,500 per ounce in 2025, down from US$1,716 in 2024.
With gold prices persistently high, this combination of rising production and falling costs is a powerful profit engine. Imagine selling more ounces for over $3,400 each while spending significantly less than $1,500 to produce them — that margin expansion is the dream for TSX gold stocks right now.
Why the lag? Addressing the drags on IMG stock
So, why isn’t IAMGOLD stock keeping pace with peers like Agnico Eagle Mine? Two main factors have been headwinds:
- The prepay hangover: IAMGOLD previously entered into agreements to deliver 150,000 ounces of gold at pre-set prices to raise capital. While these deals provided crucial funding, they mean some gold isn’t benefiting from today’s sky-high spot prices. The company expected to deliver 37,500 ounces last quarter under these deals. The good news? These agreements completed in June 2025, freeing up more production to capture current market prices. While IAMGOLD realized about US$2,731 per ounce during the first quarter (vs. Agnico’s US$2,891), this gap should narrow in July and going forward.
- The debt burden: Entering the second quarter, IAMGOLD carried a hefty US$1.2 billion in debt against US$317 million in cash. That’s significant leverage. While surging cash flow from Côté is the clear path to reducing this leverage, it remains an overhang compared to less indebted cash-rich peers. Management has emphasized deleveraging as a priority, which would strengthen the balance sheet and boost investor confidence.
Key risks to note
Investing in IAMGOLD stock isn’t without its challenges. Geopolitical jitters and increased government royalties in Burkina Faso, and ageing assets at Essakane (representing 23% of total reserves) and Westwood (1.4%) facing resource depletion by 2028 and 2032, respectively, are key concerns. Replacing depleting reserves through exploration (like projects in Chibougamau, Nelligan, and Monster Lake) or acquisition is essential for long-term growth but requires significant capital. Execution risks are also present as Côté Gold’s ramp-up could hurt the bullish thesis.
Valuation: The compelling discount
Here’s where IAMGOLD stock gets interesting. It looks cheap in July 2025. Its Enterprise Value-to-EBITDA multiple (where EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization) trades around 4. That’s a stark discount to the industry average near 10.6. This discount reflects the known risks (debt, geopolitics) but potentially overlooks the transformative cash flow surge underway from Côté.
Buy, Sell, or Hold?
So, is IAMGOLD stock a Buy, Sell, or Hold this July? I would rate the TSX gold stock a Buy for investors bullish on gold prices. The Côté Gold mine is finally delivering the growth shareholders waited years for. Côté’s ramp-up completed in June, costs are falling, and gold prices are cooperating magnificently. The end of prepay agreements is a near-term catalyst, while the valuation discount is significant.
That said, the debt burden is real, and operations in Burkina Faso carry some inherent risk. The company may use the incoming cash gush to aggressively pay down debt. Watch management commentary on debt reduction efforts as the company reports earnings next month.
