Iamgold (IMG-T, IAG-N) has pruned the last of its non-core assets with the recent sale of the Mupane gold mine in Botswana to Galane Gold (GG-V).
On Aug. 31, it completed a US$34.2-million transaction with Galane Gold, formerly known as Carlaw Capital III. Under the sale, Iamgold pocketed US$12.5 million in cash, US$17.9 million Galane shares and a US$3.8-million promissory note, payable over three years at a 6% annual interest rate.
For the equity portion, Iamgold collected 21.87 million Galane shares representing 48.5% of the junior’s outstanding shares. It also received 1.26 million warrants in Galane. If Iamgold exercises the warrants within 18 months at $1.10 apiece, it would bring its stake in Galane to 49.9%.
Laura Young, Iamgold’s director of investor relations, says the main reason for handing off Mupane was because it didn’t fit in the company’s growth strategy.
“The company’s focus in terms of its strategy is on its long-life assets, where it believes it can provide the greatest potential for growth in the future. So if you look at it this way, if you were to take a mine, say our Rosebel mine, and if you were to focus on increasing production there 20%, versus increasing production in Mupane by 20%, there’s a big difference.”
Iamgold acquired Mupane in 2006 after buying out Gallery Gold. The deposit was discovered in 1998 and achieved full gold production in January 2005. Mupane, which produced 57,000 oz. gold in 2010, is expected to operate and process stockpiled ore until early 2013.
In comparison, the Rosebel mine in Suriname churned out 395,000 oz. gold last year, and should produce until at least 2022.
In late June, the company closed a US$667-million cash deal for its 18.9% stake in the Tarkwa and Damang gold projects in Ghana to Gold Fields (GFI-N).
From its core assets this year, Iamgold is estimated to have an attributable gold production of 870,000 to 930,000 oz., not including the 67 million oz. anticipated from Mupane, Tarkwa and Damang.
The Essakane gold mine in Burkina Faso and the Rosebel mine are expected to contribute 80% of those ounces. The rest will come from its Mali and Quebec operations.
On news of the Mupane sale, Iamgold shares closed down 8¢ to $20.23 on 1.59 million shares traded.
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