Iamgold Sells Quebec Mine to Group Led by Ex-Barrick CEOLiezel Hill
Iamgold Corp. agreed to sell a niobium mine and rare-earth deposit in Quebec for as much as $530 million to a group led by Magris Resources Inc., a company established by the former head of Barrick Gold Corp.
Iamgold will get $500 million in cash and $30 million when the rare-earth deposit goes into production, the Toronto-based company said today in a statement. Proceeds from the sale will allow Iamgold to invest in the expansion of its gold business or to reduce debt.
The miner had previously considered spinning off the Niobec mine or finding a partner to expand the project, which it acquired in 2006 when it bought Cambior Inc. for $1.08 billion. Gold companies have been under pressure to lower costs as the price of the precious metal has declined.
“This sale unlocks the value of Niobec for our shareholders, positions Iamgold as a pure gold play and significantly improves our liquidity,” Iamgold Chief Executive Officer Steve Letwin said in the statement.
The sale, which is expected to close in the fourth quarter, was announced before the start of regular trading in New York. Iamgold fell 3.9 percent to C$2.92 in Toronto.
Today’s deal is the first for closely held Magris, which has been seeking mining assets in the Americas. The company, formed by the ex-CEO of the world’s biggest gold producer, is making the acquisition today with Temasek Holdings Pte, Singapore’s sovereign wealth fund, and Hong Kong-based CEF Holdings Ltd., in which the Canadian Imperial Bank of Commerce has a 50 percent stake.
The Niobec mine has “strong market fundamentals for its core product, substantial operating margins, and a long mine life in an attractive jurisdiction,” Magris Chairman and CEO Aaron Regent said in a separate statement. Niobium is used to strengthen steel. Rare earths are used in batteries and magnets.
National Bank of Canada and Bank of Nova Scotia have committed and underwritten a $250 million loan and a $25 million revolving credit facility to help finance the deal, Magris said.
TD Securities Inc. provided a fairness opinion to Iamgold’s board on the deal.