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Iamgold cheers as Ecuador approves new constitution
The official results of the constitutional referendum were released on October 16 by the Supreme Electoral Tribunal of Ecuador. The results show strong support with 63.9% in favour of the new constitution, consistent with the initial results provided in a news release by Iamgold September 29, 2008. The new constitution legally took effect on October 20, 2008.
"We are very encouraged by the results of the referendum and are optimistic that Ecuador will proceed quickly towards a new mining law that will allow responsible mining to the benefit of all stakeholders," commented Joseph Conway, President and CEO.
Iamgold is advancing its 100% owned, 3.5 million ounce Quimsacocha Gold Project, located in Ecuador and is on schedule to complete a final Feasibility Study by the end of 2009. Currently negotiations with a drilling contractor are being finalized to ensure that groundwork can progress rapidly once the legislative process is complete and permits are granted. Iamgold has been an active contributor to the economic development of the region since 1995 with exploration, employment, community and environmental programs and is committed to responsible mining.
The Company considers the referendum results an important next step in fulfilling President Correa's commitment to develop a modern, responsible mining industry, which will provide an equitable sharing of benefits amongst all stakeholders. The referendum included the mandate to form a new policy for mining that has been made available in draft form. A newly appointed legislative body is expected to convene this week to consider the new policies that formed part of the referendum, and the government has stated its intention to get passage of a new mining law by the end of this year.
Iamgold has a team of key people in Ecuador that are working pro-actively with the government of Ecuador, providing submissions and supporting the government's stated intention to introduce a reasonable and transparent mining law as soon as possible. A number of key issues such as royalty levels, taxation and community benefits remain outstanding and will impact all mining projects' economics.
The Company is seeking clarification regarding the 180 suspension of mining activity, which was scheduled to expire on October 18.
Iamgold Corp. has learned the French Autorite des marches financiers (AMF), disclosed the final calendar of the tender offer to acquire all the outstanding shares of Euro Ressources S.A. in an all-cash offer representing 1.20 euros per share. The public offer opened on Oct. 6, 2008, and will close on Nov. 21, 2008.
Joseph Conway, Iamgold's president and chief executive officer, said: "Since the opening of the offer the gold price has declined by 14 per cent and the key gold equity benchmark, the S&P/TSX Gold Index, has declined 45 per cent. In today's volatile market conditions our all-cash offer, more than ever, provides maximum liquidity through a significant premium to Euro shareholders. I am confident that Euro shareholders will seize upon this opportunity."
Euro shareholders will receive from their depositary bank the necessary documentation allowing them to tender to the offer.
Terms of the offer:
• The offer opened on Oct. 6, 2008, and will close on Nov. 21, 2008.
• Shareholders of Euro are to receive 1.20 euros per share in cash which represents a premium of 30 per cent based on the closing price of Euro shares on Euronext on Aug. 28, 2008, which is the last trading day of Euro prior to the filing of the draft tender offer in France with the AMF.
• The offer is for all outstanding Euro shares and for any shares issuable upon the exercise of subscription options. Based on publicly available information, Euro's capital structure currently consists of approximately 60.6 million shares and up to 1.9 million shares issuable upon the exercise of granted options.
• The offer is conditional upon Iamgold holding a minimum of 50 per cent plus one share of Euro's capital and voting rights, calculated on a diluted basis upon closure of the offer. Iamgold indirectly holds 4.9 per cent of Euro and combined with the 2.4-per-cent lock-up agreement as reported in Stockwatch Oct. 8, 2008, Iamgold controls approximately 7.3 per cent of Euro's common shares outstanding.
The arbitrator has rendered a decision in the arbitration for Euro Ressources S.A. against Iamgold Corp., arising from Iamgold's decision to deduct certain excess royalty amounts from the Rosebel royalty payments. The decision at this time deals with the almost $1-million deducted by Iamgold which must now be paid.
James H. Dunnett, Directeur-General of Euro said: "Euro is pleased by the favourable result of the arbitration. Management has always considered that Iamgold's actions were without any basis under the Rosebel royalty participation right agreement. The arbitrator has found entirely for Euro."
The results of this award will not impact the financial results of Euro since the full amount of the deductions has been included in income at the time such amounts were due.
Iamgold Corp. and Orezone Resources Inc. have entered into a definitive arrangement agreement whereby Iamgold would acquire, via a plan of arrangement, all of the outstanding common shares of Orezone in a supported, all-share transaction. Total consideration is valued at approximately US$139 million.
"This business combination with Orezone is consistent with our strategy and takes Iamgold to the next level. This transaction represents excellent value and takes us a large step towards our stated goal of 1.8 million ounces annual gold production by 2012, while lowering our average cash cost by $40 to $50 per ounce. Iamgold is uniquely positioned in the current markets with a solid cash position, low debt, record cash flow and the financial capacity to finance the construction of Essakane, a second flagship gold mine for Iamgold," said Joseph Conway, President and CEO of Iamgold.
Highlights of the Combination
- Iamgold to acquire and finance development of the Essakane project, one of West Africa's largest undeveloped gold reserves
- All-stock transaction with value of approximately US$139 million
- Orezone exploration assets, including Bombore, to be distributed pro rata to Orezone shareholders to create "New Orezone"
- Each Orezone shareholder to receive 0.08 of an Iamgold share and a pro rata share of New Orezone for each Orezone share held
- Orezone Board of Directors unanimously recommends that Orezone shareholders vote in favour of the transaction
- Shareholder voting agreements in place representing approximately 5.1% of the outstanding shares of Orezone
- Iamgold to provide Orezone an immediate Cdn$20 million equity financing at Cdn$0.28/share, subject to regulatory approvals
- Iamgold to create a Corporate African operations office based in Dakar, Senegal
- Transaction is very accretive to Iamgold shareholders on a NAV and Reserves per share basis, as well as an Earnings and Cash Flow per share basis when Essakane is in production
- Iamgold will become a 16.6% shareholder of New Orezone adding further value to both Iamgold and Orezone shareholders.
As per the terms of the agreement, Orezone shareholders will receive 0.08 common shares of Iamgold plus a pro rata share of a new exploration company ("New Orezone") for each Orezone share. This represents a value of approximately Cdn$0.49 per Orezone share based on the closing price of Iamgold on the TSX on December 10, 2008, representing a 91% premium using 30-day volume weighted average share prices.
Merrex Gold Inc. and Iamgold Corp. have executed the definitive option agreement for 50 per cent of Merrex's Siribaya gold project in West Mali, Africa.
Iamgold has concluded its due diligence review and Merrex and Iamgold have executed final documents for the option of Merrex's Siribaya gold project and the concurrent private placement (see news in Stockwatch Oct. 21, 2008).
The required filings have been made with the TSX Venture Exchange. Closing will follow receipt of regulatory approvals at which time Merrex will issue a comprehensive news release.
Iamgold Corp. has completed the previously disclosed sale of the Sleeping Giant mine, related milling facilities and the Flordin property claims to Cadiscor Resources Inc. as of Oct. 31, 2008. As a result of the sale to Cadiscor, Iamgold holds:
1. 5,185,715 common shares of Cadiscor, representing approximately 12 per cent of Cadiscor's issued and outstanding common shares;
2. One million common share purchase warrants exercisable at 47 cents per common share, expiring Dec. 31, 2010;
3. A $3.5-million debenture, convertible into common shares of Cadiscor in the first, second and third years at prices per share of 47 cents, 51 cents and 56 cents, respectively.
If Iamgold were to exercise all warrants and fully convert the debenture, Iamgold would control an aggregate of 13,632,524 common shares of Cadiscor, representing approximately 26.3 per cent of the resulting outstanding common shares (on a partially diluted basis).
The securities were acquired for investment purposes only.
The Sleeping Giant Mine commenced production in 1993 and produced over 960,000 ounces of gold and 1.3 million ounces of silver from 2.63 million tonnes grading 11.44 g/t Au.
Gold production from Sleeping Giant in 2008 up until the sale in Q3 reached 63,000 ounces at an average cash operating cost of $320 per ounce, higher production and lower costs than anticipated. Iamgold acknowledges the exemplary operating achievements of the Sleeping Giant team and thank them for their dedication and commitment. The team was recently honoured with the top regional prize in innovation in health and safety by the CSST (Commission de la sante et de la securite du travail du Quebec) for the development of a system to reduce dust pollution. We are also pleased to report that the Sleeping Giant Mine achieved two years without a lost time accident.
Orezone Resources Inc. shareholders have overwhelmingly approved the plan of arrangement transaction with Iamgold Corp.
At a meeting of Orezone shareholders held earlier today, the arrangement was approved by 99.94 per cent of the votes cast representing 78.10 per cent of Orezone's outstanding shares.
Under the terms of the arrangement, Orezone shareholders will receive 0.08 of a common share of Iamgold plus 0.125 of a share of the new exploration company, Orezone Gold Corporation, for each Orezone share held. The Toronto Stock Exchange has conditionally approved the listing of Orezone Gold which will commence trading the day after Orezone Resources ceases to trade.
Orezone's application to the Ontario Superior Court of Justice to obtain the final court order approving the arrangement is scheduled for Feb. 20, 2009. If approved, and all other conditions to the arrangement are satisfied, the arrangement is expected to close on Feb. 25, 2009.
"We are very pleased to see the approval of this transaction which provides Iamgold with a second major flagship gold property and is a significant addition to Iamgold's production pipeline," said Joseph Conway, Iamgold's president and chief executive officer. "Our strong balance sheet during the global credit meltdown allowed us to take advantage of a unique market opportunity, making the deal accretive on all key metrics. The Essakane gold project in Burkina Faso is a strong strategic fit with Iamgold, it adds more than 30 per cent to our reserves and provides near-term production in excess of 300,000 ounces of gold per year in West Africa, one of our key focus areas. This asset will solidly launch Iamgold as a greater than one-million-ounce producer."
Ron Little, CEO of Orezone, comments: "Our shareholders have already capitalized on a significant value creation in Iamgold during difficult markets for junior companies. Orezone shareholders will also participate in the creation of Orezone Gold Corp., a new gold exploration company that will retain Orezone's management and exploration team. Orezone Gold will be well financed through this transaction and host three advanced gold projects in Burkina Faso including Bombore with 926,000 ounces of measured and indicated resources and 1.78 million of inferred resources. Equally important, this transaction results in a very positive outcome for those dedicated to the development of the Essakane project including the people of Burkina Faso, especially those of the Essakane community who will have the opportunity to continue with the project under Iamgold."
Denis Miville-Deschenes, Iamgold's senior vice-president, project development, commented: "Our Iamgold construction and development team have prepared for the integration of the Essakane project and employees into the Iamgold team. We have been on-site and have been communicating regularly with the Essakane team in anticipation of the closing of the transaction. There is considerable momentum on the project as it is fully permitted with construction under way. We are committed to bringing the Essakane mine into production on schedule and on budget."
Canadian precious metals miner Iamgold Corp (IMG.TO) said it received an approval to proceed with the $9 million feasibility study at Sadiola Gold mine in Mali, West Africa.
Iamgold said it received approval from Societe D'Exploitation Des Mines D'Or De Sadiola (Semos), owner of the mine.
Iamgold also said it signed a tentative deal to buy International Finance Corp's (IFC) 6% stake in Sadiola for $12 million.
The pre-feasibility study projects gold production at Sadiola of between 400,000 and 500,000 ounces per year with an end of mine life in 2019, increasing the total production by about 2.2 million ounces beyond the current mine plan.
Iamgold Corp. has released positive results from an updated preliminary assessment study on its 100-per-cent-owned Westwood development project located two kilometres from the company's Doyon gold mine in the Abitibi region of Northern Quebec. The study was completed by Iamgold's project development group. The results of the study provide further confidence to move forward on Westwood with production targeted in early 2013. Capital expenditures of $102-million are expected in 2010. All figures are shown in U.S. dollars, unless otherwise specified.
"Westwood is an important component of IAMGOLD's growth strategy," said Joseph F. Conway President & CEO. "Building on earlier work, this Study further confirms that Westwood will produce around 180,000 to 200,000 ounces of gold per year at well under industry average cash costs, in one of the lowest political risk jurisdictions in the world. The strength and experience of our team in the region and our established infrastructure continues to be an advantage and has driven the project forward on schedule and on budget."
HIGHLIGHTS
- Estimated Capital of $315 million to complete development, with production commencing in 2013
- First 5-years of production:
-- Average annual gold production of 191,000 ounces at an average diluted grade of 7.3 g/t;
-- Average cash costs of $352 per ounce;
-- Pre-tax cash flow of $230 million;
- Total capital expenditures estimated at $401 million, including amounts already invested;
- Pre-tax IRR of 11.3% calculated at January 1, 2009 using a gold price of $850 per ounce and Canadian/US dollar exchange rate of 1.15;
- 2009 development work on budget and on schedule:
-- Capital expenditures forecast to total $86 million;
-- Exploration and development drilling to total 84,000 metres;
- 2010 capital expenditures are expected to be $102 million.
Merrex Gold Inc. has released the second resource estimate for Merrex's Siribaya gold project in west Mali. This estimate, completed by ACA Howe International Ltd., resulted in a marked increase in the average grade and established an indicated resource continuous over 800 metres, open to the north, south and at depth.
RESOURCE ESTIMATE -- 0.5 G/T CUT-OFF
Tonnes
(block cut-
Material Rock off at 0.5 Au Au
domain density g/t)(ii) (g/t) Grams (ozs)
Indicated
Zone IB 2.20 3,921,000 2.40 9,410,400 302,600
Zone IA 1.82 94,000 1.85 173,900 5,600
--------- ---- --------- -------
Total 4,015,000 2.39 9,584,300 308,200
Inferred
Zone IB 2.34 941,000 2.29 2,151,060 69,200
Zone IA 1.82 5,000 2.13 10,645 300
--------- ---- --------- -------
Total 946,000 2.29 2,161,705 69,500
(i) The resource estimate is compliant with the Canadian
Institute of Mining, Metallurgy and Petroleum Standards on
Mineral Resources and Reserves (CIM Standards) and with
disclosure requirements of National Instrument 43-101.
(ii) The cut-off grade of 0.5 gram per tonne was used in the
January, 2009, resource estimate.
Merrex Gold president, Greg Isenor, stated: "Pursuant to NI 43-101, Merrex is pleased to disclose the updated January, 2010, mineral resource estimate (see attached table) for its Siribaya gold project. The objectives of the 2009 drilling program at Zone 1B were to increase the grade, elevate the resource classification, extend and confirm the continuity of Zone 1B and to refine the geological model ... and we were successful on all counts. Future exploration at Siribaya can now be based upon this refined geological model.
About the Siribaya gold project
Merrex controls 100 per cent of the Siribaya gold project which comprises over 800 square kilometres of exploration permits in West Mali including the Siribaya megastructure. Within the Siribaya megastructure, Zone 1B, the primary subject of the current resource estimate is a 100-metre-wide by 800-metre mineralized zone within the 500-metre-wide by 10.5-kilometre-long 1B substructure, and Zone 1A is part of the twin 500-metre-wide by 9.5-kilometre-long 1A substructure. The Siribaya megastructure has yielded ore-grade drill intercepts in a number of selected targets along its entire length. Since 2005 Merrex and Iamgold Corp. have invested over $11-million in exploration at Siribaya.
In December, 2008, Merrex closed an option agreement with Iamgold pursuant to which Iamgold may incur up to $10.5-million in exploration expenditures over four years, to earn a 50-per-cent interest in the Siribaya gold project, of which $3.0-million has been spent to date. Merrex will be the project operator for two years or until exploration expenditures of $5.5-million, after which Iamgold can elect to be the operator. Iamgold has committed to a $2.5-million exploration program for 2010. Planning of this program is well advanced.
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