Japan's Sumitomo Obtains Stake In Iamgold's Côté Gold Project
(Kitco News) -Iamgold Corp. (NYSE: IAG; TSX: IMG) and Japan’s Sumitomo Metal Mining Co., Ltd. have entered into a joint venture to develop the Côté gold project in Ontario, the companies reported late Monday.
Iamgold also announced what it termed “positive results” from a prefeasibility study for the project, which clears the way to initiate a feasibility study and to support the permitting process.
Sumitomo will pay $195 million to Iamgold for a 30% interest in Côté, Iamgold reported, with $100 million payable upon closing. The remaining $95 million will be payable 18 months after closing or else the date of public filing of a feasibility study for Côté, whichever comes first. Closing of the transaction is expected to occur before the end of the month.
Iamgold will be operator of Côté, the company said. Each party will be responsible for funding its share of expenditures, including initial and sustaining capital expenditures.
"This transaction is significant for Iamgold as it validates the intrinsic value of the Côté gold project,” said Steve Letwin, chief executive officer of Iamgold. “It will enable us to move the project into development and to significantly diversify our production profile as a result of future production from our Canadian operations."
He later added: “In addition to providing us with the financial capacity to develop the Côté gold project, we are gaining a partner with business development and technical expertise who we can work with in the future to explore new possibilities."
Iamgold said it began discussions for a potential partnership with Sumitomo last August. Besides benefitting from one another’s expertise, Iamgold said it will benefit from Sumitomo's access to Japanese suppliers to the mining industry.
Meanwhile, Iamgold said highlights of the Côté prefeasibility show proven and probable reserves of 5.9 million ounces of gold, a mine with a life of 17 years, with mill throughput of 32,000 tonnes per day, and average annual production of 320,000 ounces. The prefeasibility study also came up with life-of-mine cash costs of $605 per ounce of gold and all-in sustaining costs of $689. Initial capital expenditures were put at a little over $1 billion.
"The robust project economics generated from the PFS further validates our view that Côté Gold is an exceptional organic growth project, particularly when our industry faces a shortage of undeveloped gold deposits in attractive mining jurisdictions with surrounding infrastructure,” Letwin said.
The CEO also said Côté has “significant exploration upside potential” with more than 500-square kilometers of exploration rights-held property surrounding the deposit.