IAMGOLD Corporation (IAG) announced that it has secured regulatory approvals to close the sale of its Niobec mine to a group of companies led by Magris Resources Inc. for cash proceeds of $500 million (post-tax) upon completion. The sale is expected to be complete by the end of Jan 2015.
The sale of Niobec, located in Quebec, will include the adjacent rare earth element ("REE") deposit. The proceeds will also include additional $30 million when the adjacent REE deposit goes into commercial production. A 2% gross proceeds royalty will also be payable on any REE production.
With the sale of the mine, IAMGOLD’s liquidity position will increase, thereby making its financial position stronger than many of its competitors. The company’s cash and cash equivalents, proceeds from the sale as well as the market value of its gold holdings will strengthen IAMGOLD's liquid assets to over $800 million. The company also has $500 million in unused credit facilities.
Moreover, the sale will enable the company to make investments in its existing business and consider acquisitions. The company is aiming to improve its cost structure and generate positive cash flow.
IAMGOLD’s solid base of strategic assets in Canada, South America and Africa is complemented by development and exploration projects and sustained assessment of accretive acquisition opportunities.
IAMGOLD currently has a Zacks Rank #4 (Sell).
Other companies in the mining space worth considering include Golden Star Resources, Ltd. (GSS), Pretium Resources Inc. (PVG) and Rubicon Minerals Corp. (RBY). All of these stocks hold a Zacks Rank #2 (Buy).
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