Bloomberg News

Iamgold Seeks Acquisitions in Americas, May Spend $1 Billion

October 14, 2011

(Updates with closing share price in last paragraph.)

Oct. 14 (Bloomberg) -- Iamgold Corp., a Canadian gold and niobium producer, is looking for acquisitions and may spend as much as $1 billion to add gold assets.

The miner will focus its search in the Americas, and will also consider deals in West Africa, spokesman Bob Tait said in an interview yesterday at Iamgold’s Toronto headquarters.

“Ideally we’d like to find something in areas where we already have an established presence,” Tait said. Iamgold operates mines in Canada, Suriname and Burkina Faso, and owns 41 percent of two gold mines in Mali that are operated by AngloGold Ashanti Ltd.

Iamgold is targeting transactions in a $300 million to $500 million range, but could spend as much as $1 billion on an attractive asset, Tait said.

Iamgold completed the sale of its 19 percent stakes in the Tarkwa and Damang mines in Ghana to majority partner Gold Fields Ltd. in June. The company wants to use the proceeds for acquisitions, Tait said. Iamgold reported a net gain of $402.6 million on the sale. The company also sold its Mupane mine in Botswana for $34.2 million in August.

Chief Executive Officer Steve Letwin, who joined Iamgold in November after leaving Enbridge Inc., is looking for assets with a minimum annual production of 150,000 ounces and reserves of at least 2 million ounces of gold, Tait said.

The company will consider acquiring development projects or producing assets, but would prefer something it can build itself, he said.

‘Lot of Work’

“If you look at the criteria they have set, there are so many to pick and choose that I’m sure the Iamgold corporate- development guys have a lot of work on their plate,” Paul Burchell, a Toronto-based analyst at Dundee Securities Corp., said in a telephone interview. He rates Iamgold shares a “buy.”

African assets will account for around 58 percent of the company’s operating cash flow this year, mainly from Iamgold’s Essakane mine in Burkina Faso, which started commercial production in August 2010, Tait said.

The split will shift to 40 percent from Africa, 36 percent North America and 24 percent South America in 2014, after the company starts production at its Westwood project in Quebec.

Iamgold acquired Essakane after agreeing to buy Orezone Resources Inc. for $139 million in shares in December 2008.

Iamgold will also consider raising its dividend payments again. The company announced dividend increases in December 2010 and June this year.

The miner plans to sell 10 percent to 20 percent in its Niobec niobium mine in Quebec to help fund a planned expansion. Niobec could be spun out and listed in Toronto or Hong Kong in the future, Tait said. Niobium is used to strengthen steel.

Iamgold has hired Goldman Sachs Group Inc. to help “explore options” for the sale of the Niobec stake, Laura Young, a company spokeswoman, said by phone.

Iamgold rose 1.6 percent to C$20.95 at the close in Toronto. The shares have gained 18 percent this year.

--Editors: Steven Frank, Charles Siler.

To contact the reporter on this story: Liezel Hill in Toronto at lhill30@bloomberg.net.

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net.


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