IAMGOLD Corp has entered into an Investment Agreement with Sumitomo Metal Mining Co, a Tokyo, Japan-based mining company and a global leader in the development and mining of non-ferrous metals, and a wholly-owned subsidiary of Sumitomo, whereby IAMGOLD will form a joint venture with Sumitomo. Sumitomo will pay an aggregate $195 million to IAMGOLD for a 30% undivided participating interest in IAMGOLD’s ownership interest in the Côté gold project in Ontario.
Under the terms of the Investment Agreement, on closing, Sumitomo will acquire a 30% undivided participating joint venture interest in IAMGOLD’s ownership interest in the Côté gold project for an aggregate $195 million, of which $100 million is payable upon closing. The remaining $95 million is payable on the earlier of: (i)18 months following closing, or (ii) the date of public filing of a feasibility study with respect to the Côté project. Closing of the transaction is expected to occur before the end of the month.
IAMGOLD will be the operator of the Côté project during development and once in operation. Each party will be responsible for funding its proportionate share of expenditures, including initial and sustaining capital expenditures for the Côté gold project.
“This transaction is significant for IAMGOLD as it validates the intrinsic value of the Côté gold project. It will enable us to move the project into development and to significantly diversify our production profile as a result of future production from our Canadian operations,” said IAMGOLD’s President and CEO Steve Letwin. “After extensive due diligence by both parties, what solidified the relationship was the mutual trust and respect and the alignment around strategic priorities. In addition to providing us with the financial capacity to develop the Côté project, we are gaining a partner with business development and technical expertise who we can work with in the future to explore new possibilities.”
IAMGOLD began discussions concerning a potential strategic partnership with Sumitomo in August 2016. Since then, there has been extensive interaction between the two companies, with multiple site visits to Côté involving Sumitomo’s senior management and technical teams. During the due diligence period, IAMGOLD visited the Hishikari gold mine in Isa, Kagoshima, and Steve Letwin and Don Charter, Chairman of IAMGOLD, spent time with Sumitomo’s President, Yoshiaki Nakazato, in Tokyo.
Sumitomo’s in-depth expertise in building and operating mines will complement IAMGOLD’s proven track record as a successful mine builder and operator. Additionally, IAMGOLD will benefit from Sumitomo’s access to Japanese suppliers to the mining industry, which will complement, where needed, existing supplier networks within Ontario. Both companies have strong business development capabilities and reach and a common interest in seeking opportunities beyond Côté gold, which will support IAMGOLD’s objective to grow its production pipeline.
On Closing of the transaction, IAMGOLD and Sumitomo will form an unincorporated joint venture with respect to the Côté gold project, and will enter into a definitive joint venture agreement. Immediately following Closing, IAMGOLD will own 70% and Sumitomo 30% of the total outstanding participating interests under the joint venture agreement.
IAMGOLD and Sumitomo will have oversight of Côté gold project activities through an Oversight Committee, which will comprise six representatives consisting of four from IAMGOLD and two from Sumitomo, with decision making based on the proportionate participating interest.
IAMGOLD is assessing the potential to construct and operate a new open pit gold mine on the property. Open pit mining operations are estimated to have a throughput rate of approximately 60,000 t/d. The preliminary site layout proposes to install the necessary mine-related facilities in close proximity to the open pit. The major project components are expected to include:
- An open pit and an ore processing plant
- A maintenance garage, fuel and lube facility, warehouse and administration complex
- Construction and operations accommodations complex
- Explosives manufacturing and storage facility (emulsion plant)
- Various stockpiles (low-grade ore, overburden and mine rock (MRA))
- Aggregate extraction with crushing and screening plants
- A tailings management facility (TMF)
- On-site access roads and pipelines, power infrastructure and fuel storage facilities
- Potable and process water treatment facilities
- Domestic and industrial solid waste handling facilities (landfill)
- Water management facilities and drainage works, including watercourse realignments
- A transmission line and related infrastructure.
The Côté gold project is located in the Chester and Neville Townships, District of Sudbury, in northeast Ontario. It is approximately 20 km southwest of Gogama, 130 km southwest of Timmins, and 200 km northwest of Sudbury, roughly 5 km west of Highway 144.
The project area is characterized by gentle hills, forests, lakes and rivers. The area is located on two subwatersheds, the Mollie River system and the Mesomikenda River system. Additionally, the continental watershed divide is located south of the Project property, with the nearest boundary located southwest and more than 3.5 km from the proposed open pit location. Land use in the area consists of recreational activities by locals and tourists, including fishing, camping and hunting. It is also extensively used for sustainable harvesting of timber.