Toronto-based international gold producing company IAMGOLD Corp. (TSX:$IMG), (NYSE:$IAG) has decided to sell a 30% interest in its Côté Gold project to Japan’s Sumitomo Metal Mining (TYO:$5713) in an agreement that is worth $195 million. The Côté Gold project is located in Ontario’s Abitibi gold belt and under the terms of the agreement, Sumitomo Metal Mining, which is Japan’s number one gold producer, will become partners with IAMGOLD for the project. It’s important to note that this project is still within the study phase.
IAMGOLD Corp has stated that they will take on the role of project operator and each party will be in charge of funding for its share of payment, such as initial and sustaining capital expenditures.
IAMGOLD’s chief executive officer, Steve Letwin, stated in a press release that the transaction “is significant for IAMGOLD as it validates the intrinsic value of the Côté gold project.” Letwin adds that this deal will “enable us to move the project into development and to significantly diversify our projection profile as a result of future production from our Canadian operations.”
Sumitomo also issued a press release on Tuesday which stated that the project could increase their annual gold production to 18 tonnes. Currently, their gold output is at 15 tonnes. Sumitomo further noted that “since this project is located in the Abitibi gold belt in eastern Canada, which is one of the world’s largest gold-producing areas, there may be additional reserves, depending on future exploration.”
It looks as if Sumitomo initiated this agreement as they are actively seeking to increase total production through exploration and acquisitions.
As of right now, the agreement between IAMGOLD and Sumitomo is expected to be completed by the end of September.
As long as all goes as planned, Côté Gold could start production in 2021. The predicted average annual output is 320,000 ounces of gold over a 17-year life period.
Featured Image: twitter
