IAMGOLD Corporation (IAG) announced that it has completed the sale of its Niobec mine to a group of companies led by Magris Resources Inc. for cash proceeds of $500 million (post-tax). The proceeds will also include additional $30 million when the adjacent rare earth element ("REE") deposit goes into commercial 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 has increased its liquid assets to around $800 million, exceeding the value of its $650 million unsecured notes due in Oct 2020. The company also has $500 million in unused credit facilities.
Moreover, the sale will enable the company to invest in its existing business and consider acquisitions. The company is aiming to improve its cost structure and generate positive cash flow.
IAMGOLD, which is among the prominent Canada-based gold miners along with Barrick Gold (ABX), Goldcorp (GG) and Agnico Eagle (AEM), has a solid base of strategic assets in Canada, South America and Africa, complemented by development and exploration projects and sustained assessment of accretive acquisition opportunities.
Recently, the company released its preliminary operating results for 2014 and guidance for 2015. For the fourth quarter of 2014, the company reported attributable gold production of 241,000 ounces as a result of improved grades at Rosebel and Essakane. For 2014, attributable production was 844,000 ounces, within the company’s guidance range of 835,000 to 850,000 ounces.
For the fourth quarter of 2014, total cash costs – gold mines and owner-operator are expected to be at or below the bottom end of IAMGOLD’s guidance. For 2014, total cash costs – gold mines are expected to be between $845 and $865 per ounce, with total cash costs for IAMGOLD owner-operator sites expected to be at the top end of the guidance.
IAMGOLD produced 5.6 million kilograms of niobium last year at an average operating margin of around $20 per kilogram.
For 2015, the company expects production to be in the range of 820,000 and 860,000 ounces of gold. IAMGOLD expects a ramp-up in production at the Westwood mine in its first year of commercial production. The company trimmed its all-in sustaining cost guidance by $75 an ounce from what it had guided in 2014 to a band of $1,075 to $1,175 an ounce for 2015.
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