Iamgold (TSX:IMG; NYSE: IAG) and a syndicate of underwriters co-led by National Bank Financial Markets, BMO Capital Markets and RBC Capital Markets, have entered into an agreement involving the sale of 72 million common shares of Iamgold at a price of $5.70 for gross proceeds of about $410 million (US$300 million).
The underwriters have been granted an option to purchase an additional 10.8 million shares to cover any possible over-allotments, raising an additional $61.5 million.
The net proceeds of the offering will be used to repurchase the 9.7% interest in the Côté gold project near Gogama, Ont., from Sumitomo Metal Mining (TSE: 5713) to return to a 70% interest in the Côté project.
The net proceeds will be deposited in an interest-bearing account, or used to repay drawn amounts on its credit facility, until the completion of the repurchase anticipated by the end of 2024.
Iamgold believes the ramp-up of Côté gold project, combined with the net proceeds of the offering, cash and cash equivalents will be sufficient to repurchase the interest.
Iamgold and Sumitomo entered into a joint venture agreement in December 2022, which saw Iamgold retain a 60.3% ownership share in Côté and a transferred interest of 9.7% held by Sumitomo.
The purchase price of the repurchase is equal to the $341.7 million paid by Sumitomo for the transferred interest plus incremental contributions made, minus gold production received, by Sumitomo, as well as any accrued and unpaid amounts for the option fee.
The Côté gold project produced 465,000 oz. by the end of 2023, at the top end of annual production guidance of 410,000 to 470,000 ounces.
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