Action Notes Equity Research...

April 21, 2008

Action Notes Equity Research

IAMGOLD Corp.

(IMG-T, IAG-N) C$7.13

Future of Quimsacocha Uncertain

Event

On Friday a new mining mandate was passed in Ecuador which appears to

effectively suspend all mining and exploration activity for 180 days and

revokes approximately 80% of the mining concessions currently outstanding.

While it isn’t clear what impact this new mandate will have on IAMGOLD’s

Quimsacocha development project, we have removed this asset from our

valuation reflecting the uncertainty. We don’t believe the market was giving

much value to this asset in IAMGOLD’s share price, however it is important

to IAMGOLD given their declining production profile.

The key clauses of the new mandate which we believe could impact

Quimsacocha are as follows:

Operations on all medium to large sized operations are to be

Quimsacocha property consists of 4 concessions, the main resource is

within one concession. The only negative impact here would likely be

reduced regional exploration potential.

mean the government will get a stake in mining projects (likely a free

carried stake) which would negatively impact valuation.

To reflect the Ecuador risk, we had been discounting Quimsacocha at 8% (above our normal 5%) and the

project represented approximately 10% of our NAV. We are now removing it from our valuation to reflect a

worst-case scenario. As a result, our NAV declines to $8.95 (down from $9.90).

We calculate a base case NAV for IAMGOLD of C$8.95. IAMGOLD currently trades at 0.8 times NAV and

7 times 2009E cash flow. This represents a discount to its mid-tier producing peer average of 1.1 times NAV

and 10 times cash flow.

We have arrived at our target price of $11.00 (down from $14.00) by using a 1.2x NAV multiple (down from

1.4x reflecting a declining production profile and lower sector multiples). We value IAMGOLD at the low end

of our 1.2 to 2.5 times P/NAV valuation range for gold producers to reflect the company's high operating cost

profile and lack of near-term production growth.

Commodity price, construction, operating and capital cost increases, technical, political, multiple contraction,

key management retention following Cambior merger, effect of exchange rate and interest rate changes on our

forecasts and commodity price assumptions, and permitting risks.

While it isn’t clear what impact this new mandate will have on Quimsacocha, we have removed this asset from

our valuation reflecting a worst case scenario. We don’t believe the market was giving much value to this

asset in IAMGOLD’s share price, however it is important to IAMGOLD given their declining production

profile. Given the extreme discount in IAMGOLD’s current valuation we continue believe this represents a

defensive way to gain exposure to gold, also the company does appear to have the financial flexibility to make

acquisitions to address their lack of a development pipeline. We are maintaining a BUY recommendation

however we are lowering our target price to $11.00 (down from $14.00).

Current Price $7.13

52-Wk Range $6.81-$10.25

Mkt Cap (f.d.)($mm) $2,116.9

Dividend per Share $0.06

Dividend Yield 0.8%

A vg. Daily Trading Vol. (3mths) 1,679,083

Fiscal Y-E December

Shares O/S (f.d.)(mm) 296.9

Shares O/S (basic)(mm) 293.7

Float Shares (mm) 296.9

Net Debt/Tot Cap 0.0%

N AVPS (current)(f.d.) $8.95

Year 2006A 2007A 2008E 2009E

EBITDA ($mm) 144.1 206.3 364.3 379.5

EPS (f.d.) 0.39 0.24 0.53 0.57

C FPS (f.d.) 0.48 0.47 0.89 1.03

Year 2006A 2007A 2008E 2009E

Q1 0.13 0.04 0.13 --

Q2 0.17 0.04 0.14 --

Q3 0.08 0.07 0.13 --

Q 4 0.04 0.09 0.12 --

Year 2006A 2007A 2008E 2009E

P/E (f.d.) 18.1x 29.4x 13.3x 12.4x

P /CFPS (f.d.) 14.7x 15.0x 7.9x 6.9x

All figures in US$, unless otherwise specified.