Iamgold inflates its financial resources

Iamgold inflates its financial resources

September 11th, 2020

Toronto-based Iamgold is well positioned to develop and expand production at its US$1.3 billion Gold Rated mine in Northern Ontario with debt financing announced this week, healthy cash balances and record high gold prices, analysts say.

The groundbreaking ceremony for the project was scheduled for Friday, with Canadian Prime Minister Justin Trudeau and Ontario Premier Doug Ford in attendance, at the site located approximately 130 kilometers southwest of Timmins.

Earlier this week, Iamgold announced that it would raise US$450 million by issuing bills maturing in 2028, using the proceeds to repurchase US$400 million of bills maturing in 2025 and the remainder for general corporate purposes.

The financing, US$832 million in cash assets at the end of the second quarter and manageable debt levels provide ample room for the project to reach its potential,” said National Bank analyst Mike Parkin in a report.

Gold prices, meanwhile, declined from record highs above US$2,000 per ounce in August, but remain strong.

The National Bank has raised its long-term forecast for gold prices from US$1450 to US$1475 per ounce to reflect recent inflationary pressures in the sector.

“Gold is likely to continue to be seen as a safe haven and a store of value, and, particularly in this period of the U.S. election cycle, we see reasons to continue to make room for gold, if only for risk recovery positions,” Royal Bank analyst Christopher Louney said in a report released Thursday.

“Not all quarters are equal, but we believe the fourth and first quarters will be good for gold.”

The net present value of Cote Gold with a gold price of US$1700 per ounce is in excess of US$2 billion, said Iamgold CEO Gordon Stothart when he announced the project’s launch in July, adding that it would generate an internal rate of return of 22.4%.

The project’s reserves are estimated at over seven million ounces, not including potential discoveries made through exploration.

Japan’s Sumitomo Metal Mining holds a 30% interest in the project.

Iamgold owns three operating gold mines on three continents, including the Essakane mine in Burkina Faso, the Rosebel mine in Suriname and the Westwood mine in southwestern Quebec.

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