Source: Streetwise Reports 01/02/2020
The transaction is briefly reviewed and assessed in a BMO Capital Markets report.
In a Dec. 23 research note, BMO Capital Markets analyst Jackie Przybylowski reported that IAMGOLD Corp. (IMG:TSX; IAG:NYSE) agreed to sell its 41% interest in the Sadiola gold project in Mali to Allied Gold for $31.15–33.65 million plus payments for two future sulphides-related milestones there. The deal is expected to close in April 2020.
“This is a fair price as the transaction is in line with (or slightly better than) our $30.5 million net asset value for the asset,” Przybylowski commented and summarized the deal.
IAMGOLD’s co-owner of Sadiola, Ashanti Gold, also agreed to sell its 41% interest, for an equal amount. (The Mali government owns the other 18%.)
The total consideration going to IAMGOLD for Sadiola, its founding asset, will consist of $25 million, up to $2.5 million in cash to account for the cash balance at the asset and $6.15 million in a cash dividend. The two milestone payments are $12.5 million on production of the first 250,000 ounces and $12.5 million on subsequent production of the same amount, all from the Sadiola sulphides project.
Przybylowski noted that IAMGOLD intends to use the proceeds to fund future growth projects that include Saramacca at Rosebel, slated to commence production in 2021, as well as Côté Lake and Boto.
BMO has a Market Perform rating and a US$3.75 per share target price on IAMGOLD, whose stock is currently trading at around US$3.77 per share.
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Disclosures from BMO Capital Markets, IAMGOLD, December 23, 2019
IMPORTANT DISCLOSURES
Analyst’s Certification
I, Jackie Przybylowski, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients.
Company Specific Disclosures
Disclosure 9B: BMO Capital Markets makes a market in IAMGOLD and AngloGold Ashanti in United States.
For Important Disclosures on the stocks discussed in this report, please click here.
( Companies Mentioned: IMG:TSX; IAG:NYSE,
)