TORONTO: Canadian mid-tier gold miner Iamgold Corp. said on Friday its war chest for expansion has grown to more than $1 billion with the sale of stakes in two West African mines.
Iamgold agreed to sell its 18.9 percent stake in the Tarkwa and Damang gold mines in Ghana to Gold Fields Limited, world's fourth-largest gold producer, giving it $667 million once the transaction is complete.
That is in addition to a $350 million undrawn credit facility. "Upon completion of this transaction, we will have more than one billion dollars in cash, cash equivalents and gold bullion," Iamgold Chief Executive Steve Letwin said in announcing the deal.
"This sale is the first of several strategic initiatives to create value for our shareholders," he said.
Iamgold is bolstering its financial strength at a time of aggressive merger and acquisition activity in the global gold sector, driven by safe-haven buying that has driven the price of the precious metal to record levels.
Letwin did not indicate how the funds would be used to drive the Toronto-based company's growth but said that the minority stakes did not fit with Iamgold's strategy of being the operator of the mines it invests in.
The company said in a statement to announce the stake sale that it continued to assess acquisition opportunities that will add value.
Iamgold, which expects to produce more than 1 million ounces of gold in 2011, has invested aggressively to expand existing operations and to explore for new gold properties.
In January, the company forecast 2011 capital expenditures of $460 million, mainly for expansion of its Rosebel mine in Suriname, Essakane mine in Burkina Faso and the development of its Westwood gold project in Canada.
"Our strong liquidity position gives us considerable financial flexibility to continue growing our business," Letwin said on Friday.
Iamgold's growth plans focus on West Africa, South America and regions of Canada.
The company's shares fell 3.55 percent in early trade in Toronto on Friday to C$20.30 per share.