) has recently completed the acquisition of Trelawney Mining and
Exploration Inc, a Canadian junior mining and exploration company,
focused on the development of a significant mineral deposit in
northern Ontario. As per the agreement, each Trelawney shareholder
will receive $3.30 in cash for each common share of Trelawney held.
In April 2012, IAMGOLD had announced its intent to acquire
The acquisition gives IAMGOLD control over Trelawney's Côté Lake
Project located near the Swayze Greenstone Belt in northern
Ontario, Canada. As per Trelawney's updated mineral resource
estimate, announced in February this year, Côté Lake comprised 35
million tonnes of gold at 0.82 grams per tonne for 0.93 million
ounces of indicated resources and 204 million tonnes at 0.91 grams
per tonne gold for 5.94 million ounces of inferred resources.
Mineralization at Côté Lake has been intersected over a strike
length of 1,200 meters, a horizontal width of 100-300 meters and a
depth extent of more than 500 meters.
The Côté Lake Project will add to IAMGOLD's mineral resources by
approximately 30%. The acquisition will significantly expand
IAMGOLD's operating footprint in Canada, considered a stable
jurisdiction. Canada will now account for 35% of the company's
It is expected that the Côté Lake deposit has the potential to
become a mine in five years. The deposit will produce between
400,000 ounces and 500,000 ounces a year and will catapult
IAMGOLD's production to 1.5 million ounces to 1.6 million ounces.
The targeted production of 1.6 million ounces doubles IAMGOLD's
current production of 850,000 ounces a year. This is expected to be
realized within the next five years.
The company ended its first quarter with cash and cash equivalents
of $1.3 billion. The cash transaction has been made possible by
IAMGOLD's strong liquidly position which was further strengthened
by the inflow of over $700 million in cash from divestiture of
non-core assets last year. The acquisition is expected to be
accretive to return on invested capital. The acquisition
syncs in with the company's strategy of investing in development
projects that it owns and operates so that the maximum benefit can
be derived from harnessing existing operational and development
IAMGOLD has a pipeline of development and exploration projects and
continues to tap accretive acquisition opportunities. The
company's growth plans are strategically limited to certain regions
in Canada, and select countries in South America and Africa. The
Trelawney acquisition will lower IAMGOLD's geographic risk profile.
However, the Côté Lake Project is currently at an early stage, and
runs the risk of high operating costs, and technical and permitting
Toronto-based IAMGOLD is a leading mid-tier gold mining company
with an annual production of approximately one million ounces from
five gold mines across three continents. In the Canadian province
of Québec, the company also operates Niobec Inc., which produces
more than 4.5 million kilograms of niobium annually, and owns a
rare earth element resource close to its niobium mine. It competes
with the likes of
Barrick Gold Corporation
Newmont Mining Corp
Randgold Resources Limited
). The stock retains a quantitative Zacks #3 Rank (short term Hold
rating) over the near term.
BARRICK GOLD CP (ABX): Free Stock Analysis
RANDGOLD RSRCS (GOLD): Free Stock Analysis
IAMGOLD CORP (IAG): Free Stock Analysis Report
NEWMONT MINING (NEM): Free Stock Analysis
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