IAMGOLD Corp (USA)(NYSE:IAG) has entered into an investment deal with Sumitomo Metal Mining Co., Ltd., a Japan-based mining firm and an international leader in the mining and development of non-ferrous metals, and a subsidiary unit of Sumitomo whereby IAMGOLD will establish a joint venture with Sumitomo. The latter will pay $195 million to IAMGOLD for a 30% participating interest in IAMGOLD’s ownership stake in the Côté Gold Project in Ontario.
As per the Investment Agreement, on completion, Sumitomo will buy a 30% undivided participating JV stake in IAMGOLD’s ownership stake in the Côté Gold Project for $195 million, of which as much as $100 million is to be paid upon closing. The remaining amount has to be paid on, whichever is earlier, 18 months following closing or the date of public submission of a feasibility study pertaining to the Côté Gold Project. Completion of the deal is anticipated to occur before the close of the month.
The company will be the operator of this project during development and also in operation. Each firm will be accountable for funding its proportionate part of expenditures, comprising preliminary and sustaining capital expenditures for the project.
Steve Letwin, the CEO and President of IMGOLD, said that this deal is vital for company as it confirms the intrinsic value of the mentioned project. It will allow them to move the Project into advancement and to considerably diversify their production profile as an outcome of future production from their Canadian operations.
After due diligence by both firms, what solidified the association was the respect and mutual trust and the arrangement around strategic priorities. Besides providing IMGOLD with the financial capacity to advance the Côté Gold Project, they are gaining an associate with technical and business development expertise who they can work with in the coming period to explore new possibilities.