Iamgold arranges $300 million financing to restore stake in Côté mine

Cote gold mine is expected to ramp up production. Credit: Iamgold

Iamgold (TSX:IMG; NYSE: IAG) and a syndicate of underwriters co-led by National Bank, BMO and RBC have entered into an agreement involving the sale of 72 million common shares of Iamgold at a price of C$5.70 for gross proceeds of C$410 million ($300 million).

The underwriters have been granted an option to purchase an additional 10.8 million shares to cover any possible overallotments, potentially raising another C$61.5 million.

Net proceeds of the offering will be used to repurchase the 9.7% interest in the Côté gold project near Gogama, Ontario, from Japan’s Sumitomo Metal Mining to return to a 70% interest in Côté, which poured its first gold this year.

The funds will be deposited in an interest-bearing account, or used to repay drawn amounts on its credit facility, until the completion of the repurchase, anticipated by the end of 2024.

Iamgold believes the ramp-up of Côté gold project, combined with the net proceeds of the offering, cash and cash equivalents, will be sufficient to repurchase the interest.

Iamgold and Sumitomo entered into a joint venture agreement in December 2022, which saw Iamgold retain a 60.3% ownership share in Côté and transfer an interest of 9.7% to Sumitomo.

The purchase price of the repurchase is equal to the C$341.7 million paid by Sumitomo for the transferred interest plus incremental contributions made, minus gold production received, by Sumitomo, as well as any accrued and unpaid amounts for the option fee.

Iamgold, which operates two other mines (Essakane in Burkina Faso and Westwood in Quebec), produced 465,000 oz. by the end of 2023, near the top end of its annual guidance of 410,000-470,000 oz.