Canadian bullion producer IAMGOLD Corp. (TSX IMG), (NYSE: IAG) said it wasn’t aware of any material change that would account for a sharp price rise in its stock on Thursday and into early trading on Friday, following reports that the miner was exploring a possible sale of all or parts of its business.
The Toronto-based firm, which doesn’t usually comment on speculation and rumours, didn’t openly deny it might be in talks with advisers and potential buyers.
“The company regularly reviews strategic alternatives available to it and may engage in discussions regarding potential transactions,” it said in a brief statement, adding it would inform the market of any development, if there was one, as required.
Shares of IAMGOLD closed up 9.4% in Toronto on Thursday, after climbing more than 10% in late afternoon, valuing the company at about C$1.6 billion.
On the New York Exchange, the stock rose from a close of $2.39 on Wednesday to a high of $2.75 Thursday, before finishing at $2.60. On Friday morning it was still reeling from yesterday news, up 1.53% at $2.64 in pre-market trading.
IAMGOLD, which has four operating mines, froze in January construction of its Côté gold project in Ontario. It added it would wait for improved market conditions before going ahead with the $1.15-billion investment.
Wave of M&A in the gold sector
Following the highly publicized multi-billion mergers of Barrick – Randgold and Newmont – Goldcorp, the global gold sector is going through an anticipated wave of consolidation that so far seems to be mostly focused on Canada.
“We can expect even more M&A activity in the near future,” Dean Braunsteiner, PwC Canada National Mining Leader said last month. “That creates a cascading effect of further deals as companies sell off non-core assets, which brings new opportunities for management teams to build the next big Canadian mining company.”
BMO Capital Markets analyst, Brian Quast, said earlier this week the announced acquisition of Atlantic Gold by St. Barbara highlighted the valuation gap between Australian and Canadian gold producers, creating an environment ripe for consolidation.
“Australian producers currently hold the upper hand in valuation, FCF generation, and market caché to purchase Canadian assets, many of which have struggled mightily of late,” Quast said in a note to investors. “We view the consolidation of Australian and Canadian mid-tier miners as inevitable.”