Iamgold Corp. (IAG, Financial) announced June 20 it had completed the sale of a 30% interest stake in the Cote Gold Project to Sumitomo Metal Mining Co. (TSE:5713, Financial).
According to the terms of the deal, the joint venture was valued at $195 million. The Canadian miner has already cashed in $100 million, bringing its liquidity to over $1 billion. The Japanese company will pay the remaining $95 million either after 18 months or once a feasibility study has been completed.
Steve Letwin, Iamgold’s president and CEO, expressed his excitement for the deal's closing.
"In Sumitomo, we have a partner with a common interest in both advancing the development of Cote and in potentially pursuing future opportunities," he said.
In a previous article, more details regarding the deal were discussed as well as why it is important. In short, Iamgold has a lot of cash to invest in developing its pipeline. In addition, a partnership with Sumitomo will open up furture opportunities in Asia. Â
With more than $1 billion in cash and securities, Iamgold is one of the best positioned mid-tier gold producers in terms of financial flexibility. The recent extinguishment of an old corporate loan gives Iamgold more freedom in allocating its operating cash flows to the development of its various projects.
In my opinion, with this agreement, Iamgold is proving to be a forward-looking company in the gold mining industry since it is gradually increasing its operations outside of North America.
Iamgold is trading around $5 per share on the New York Stock Exchange with a price-sales (P/S) ratio of 2.22 and a price-book (P/B) ratio of 1.03. The miner has a market capitalization of $2.28 billion and an enterprise value of $2.21 billion, for an EV/EBITDA ratio of 7.07.
Disclosure: I have no positions in Iamgold.
