Iamgold Corp. (IAG, Financial) announced Dec. 22 that it has inked an agreement according to which the worldwide gold mining company headquartered in Toronto will acquire approximately 153.43 million shares outstanding of Merrex Gold Inc. (MXI, Financial).
The purchase represents the part of the junior metallic exploration company’s total shares that Iamgold doesn’t own yet. About this transaction, Iamgold will offer to the shareholders of Merrex Gold approximately 6.9 million of newly issued shares. This volume of new shares will represent, once issued, about 1.5% of Iamgold’s total number of shares issued and outstanding.
Iamgold expects that the deal will be closed in first-quarter 2017.
Merrex Gold is a gold, lead and zinc exploration company headquartered in Canada. The company is currently developing the Siribaya Gold Project in Mali, which includes the Diakha Zone, a new gold discovery.
Merrex Gold is closely working together with Iamgold to develop the Diakha-Siribaya project in Mali where the two companies have determined “indicated resources of 2.1 million tonnes grading 1.90 g/t Au for 129,000 ounces and inferred resources of 19.8 million tonnes grading 1.71 g/t Au for 1.1 million ounces,” according to Iamgold’s news release.
Merrex Gold's portfolioalso includes the development of the Canadian lead and zinc deposit, the Jubilee project, which is located in Cape Breton Island (Nova Scotia). The exploration company has 100% ownership of the Jubilee project; however, it is obliged to pay to Teck Cominco a net smelter return of 2%.
Merrex Gold is listed on the TSX Venture Exchange, and the mineral exploration company closed at 19 cents in Canadian dollars (14 cents U.S.), up 3 cents or plus 18.75% with a volume of 5,012,157 shares traded on the stock market.
Merrex Gold has a market capitalization of 37.85 million Canadian dollars and approximately 141.06 million shares that can be traded on the Canadian stock market, which is approximately 70.8% of the total number of the company’s shares outstanding.
The Canadian mineral exploration company has 2.33 million Canadian dollars in cash on hand as of the most recent quarter.
Gabelli Gold Fund holds 1.4 million shares of Merrex Gold, or approximately 0.70% of the company’s total shares outstanding, valued 266,000 Canadian dollars as of Sept. 30.
About the Diakha-Siribaya project located in Mali, Iamgold says in its news release that “Mali is a prolific mining-friendly jurisdiction and is where Iamgold began nearly 25 years ago at the Sadiola project which, along with its neighboring Yatela mine, has already produced over 7.5 million ounces of gold."
More information about the Malian project can be found on Merrex Gold’s Web site and on Iamgold’s news release.
Iamgold closed at $3.25 per share on Dec. 22, down 8 cents (or 2.40%) from the previous trading day, with a volume of 9,440,615 shares traded on the New York Stock Exchange versus an average volume of 12.64 million shares traded over the last 10 trading days and an average volume of 8.94 million shares traded over the last three months.
The company has a market capitalization of $1.48 billion with a volume of 450.7 million of shares outstanding, of which 446.57 million can be traded on the New York Stock Exchange.
Iamgold had $627.6 million in cash on hand and securities that can be readily converted into cash as of the third quarter. The total debt amounted to $485.1 million.
The majority of analysts suggest holding this gold stock with a recommendation rating of 2.6 ranging between 1.0 (strong buy) and 5.0 (sell).
The analysts' average target price is $5.24 and ranges between a low target price of $3.56 per share and a high target price of $7.50 per share.
During the third quarter of 2016, Donald Smith (Trades, Portfolio) increased his position in Iamgold by 279.64% while First Eagle Investment (Trades, Portfolio) decreased its position by 36.26%.
Disclosure: I have no positions in any stock mentioned in this article.
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