Iamgold to raise $300 million in equity offering

Iamgold (IMG-T, IAG-n) plans to raise C$300 million in an equity offering to help pay for the development of its newly acquired Essakane gold project in Burkina Faso in West Africa.

The offering is priced at C$8.75 per share — a 7% discount to the stock’s closing price of C$9.43 per share on Monday Mar. 9, the day prior to the announcement.

Iamgold will issue 34.3 million shares but has given the underwriters, headed by Canaccord Capital Corp. and TD Securities, an over-allotment option to buy an additional 5.1 million shares. If that option is exercised, Iamgold could raise total proceeds of C$345.1 million.

The news drove down Iamgold’s share price on the Toronto Stock Exchange. Its shares fell 11.98% or $1.13 apiece to $8.30 per share, with 8.2 million shares changing hands. (Over the last year the company has traded within a range of $2.93-$11.38 per share.)

The Toronto-based company acquired the Essakane project on Feb. 25 when it completed its acquisition of Orezone Resources.

Essakane is fully permitted and under construction. The deposit has 58 million tonnes grading 1.67 grams gold per tonne for 3.1 million oz. of proven and probable reserves.

Orezone started building the mine last September but the global economic crisis intervened, making it difficult for Orezone to come up with the cash to finish the project.

A July 2008 feasibility studydemonstrated proven and probable reserves of 3.1 million ounces using a $600 per oz. gold price (reserves of 3.4 million ounces using a $700 per oz. gold price) and measured and indicated resources of 4.0 million ounces.

Average gold production is expected to be approximately 315,000 ounces over a minimum mine life of nine years at an average cash operating cost of US$358 per oz., using a US$600 per oz. gold price and a US$85 per barrel oil price.

Iamgold expects it will need to spend about $350 million on capital expenditures to bring Essakane into full production in late 2010.

Iamgold produces about one million ounces of gold each year from seven different mines on three different continents, but is focused on West Africa, the Guiana Shield of South America and Quebec.