Iamgold (IMG.T) has closed the sale of the Niobec mine for proceeds of $500 million in cash after tax. The company now has a very strong financial position and with current cash, cash equivalents, and gold bullion the balance is approximately $800 million. Management has indicated that they are looking for acquisition opportunities.
The last acquisition Iamgold made was in June 2012 when they purchased Trelawney for $3.30 in cash per share. Trelawney was an Ontario gold play with 0.93 million ounces of indicated resources and 5.94 million ounces of inferred resources. The deposit has since grown to over 8 million ounces with additional drilling and has a grade of 0.80 -0.90 grams per tonne. It appears the project has since been placed on the back burner with very little news out since the revised resource update.
Management has made a check-list of what they are looking for in a new acquisition;
- producing or near producing mine
- predominately gold
- higher grades
- lower costs
- good mining jurisdiction
- potential to produce 100k oz/year
It’s a tough checklist, however, one producing asset that fits the bill is Lake Shore Gold (LSG.T) with a market cap of $483 million.
Iamgold has been a difficult ride for shareholders in the last 3 years, coming off a high of $17 in 2013.
The main driver behind the decline in stock value has been the gold price drop, which hit Iamgold hard as they produce low grade ore and therefore have higher costs than peers.
Iamgold is expecting all in sustaining cash costs of between $1,075 and $1,175 per ounce in 2015 which should lead to healthy margins at $1300+ gold.
Note: $650 million of debt is on the books but it is not due until October 2020.
It appears that Iamgold is well on the way to turning the story around.
Share price: $3.94
Shares outstanding: 376.92 M
Market cap: $1.2B
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I have no position in any of the stocks mentioned. This is not investment advice. All facts are to be verified by reader.As always please do your own due diligence