Iamgold bolsters its financial resources while building US$1.3 billion gold mine
(CP) TORONTO – Analysts say Iamgold Corp. is well positioned to build and ramp up production at its US$1.3-billion Cote Gold mine in northern Ontario thanks to a debt financing announced this week, a healthy cash balance and near-record gold prices.
The project groundbreaking ceremony goes today with Prime Minister Justin Trudeau and Ontario Premier Doug Ford in attendance at the site about 130 kilometres southwest of Timmins.
Earlier this week, Toronto-based Iamgold announced it would raise US$450 million by issuing notes due in 2028, using the cash to repurchase US$400 million in notes due in 2025, with the rest for general corporate purposes.
National Bank analyst Mike Parkin says the financing, along with its holdings of US$832 million in cash at the end of the second quarter and manageable debt levels, provide plenty of room for the project to be constructed, start producing in 2023 and grow its output to design levels.
Gold prices, meanwhile, have fallen back from record levels above US$2,000 per ounce in August but remain strong.
In announcing the project go-ahead in July, Iamgold CEO Gordon Stothart said Cote Gold’s net present value at a gold price of US$1,700 per ounce is over US$2 billion and it would generate an internal rate of return of 22.4 per cent. Its reserves are estimated at over seven million ounces.
The project is 30 per cent owned by Sumitomo Metal Mining Co.
Iamgold has three operating gold mines on three continents, including the Essakane mine in Burkino Faso, the Rosebel mine in Suriname and the Westwood mine in southwestern Quebec.