Canadian bullion producer IAMGOLD Corp. (TSX IMG), (NYSE: IAG) is selling a 30% interest in its Côté Gold project, located in the Abitibi gold belt in Ontario, to Japan’s Sumitomo Metal Mining in a deal worth $195 million.
As part of the transaction, the Japanese miner — the Asian nation’s No. 1 gold producer — will become IAMGOLD’s partner in the project, which is currently in its pre-feasibility study phase.
The Toronto-based miner will be the project operator, the company said, and each party will be responsible for funding its share of expenditures, including initial and sustaining capital expenditures.
“This transaction is significant for IAMGOLD as it validates the intrinsic value of the Côté gold project,” Steve Letwin, the company’s chief executive officer said in a statement. “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."
In a separate statement, Sumitomo said Tuesday the project would boost its annual gold output to nearly 18 tonnes from 15 tonnes now, and perhaps even more. “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,” the company noted.
The agreement comes as Sumitomo, which also produces copper and nickel, is actively looking to increase total output through acquisitions and exploration.
Production at Côte Gold is scheduled to start in 2021, with an expected average annual output of 320,000 ounces of gold over its 17-year life.
The deal is expected to complete by the end of September.