During a conference presentation in February, Steve Letwin, Iamgold’s chief executive officer, stated that he believed the market wasn’t ascribing enough value to his company’s minority stakes in West African mines.
He also said that he wanted to operate 90 per cent of his gold production, a big jump from the then current level of 65 per cent.
So it comes as no surprise that Iamgold has divested of its stakes in Ghana’s Tarkwa and Damang gold mines, selling them to Gold Fields Ltd. for $667-million in cash. Once the sale is complete, Bank of America Merrill Lynch analyst Michael Jalonen notes that Iamgold will have interests in six producing gold mines and will operate 83 per cent of its output.
“Combined with a $350-million undrawn credit facility, the company will have ample liquidity to pursue new growth opportunities (acquisitions),” he noted.
If the deal closes mid-summer, following Gold Fields’ shareholders approve, Iamgold’s gold output will drop by about 70,000 ounces to between 1.03 and 1.13 million ounces in 2011.
Mr. Jalonen also noted that Iamgold has hinted that it would consider spinning out its Niobec project in an initial public offering because Mr. Letwin also believes that investors aren’t ascribing enough value to that project.Report Typo/Error