IAMGOLD’s joint venture partner at the cash-strapped Côté gold mine construction project is riding to the rescue.
Sumitomo Metal Mining Company of Japan, a 30 per cent partner with Côté, is providing some badly needed financing in the form of a US$340-million ($463.5 million) loan to get the open-pit gold mine and mill project across the construction finish line and ready to pour gold by 2024.
After enduring an agonizing year that blew up the construction budget, IAMGOLD made that clear last month it was looking for money to complete the project.
In a Dec. 19 news release, IAMGOLD said it willl remain the operator of the Côté project.
The project is located just off Highway 144, about halfway between Sudbury and Timmins and is 25 kilometres southwest of Gogama.
The company's most recent newsletter said the project is at the 64 per cent completion mark. There are 1,500 workers at the site as the job nears peak capacity.
Together with a satellite deposit known as the Gosselin Zone, Côté contains 13.5 million ounces of gold in the measured and indicated category, exceeding the 18-year mine life predicted when construction at Côté started in 2020.
Under the agreement, starting in January, Sumitomo will be metering out funds over the course of 2023. In exchange, Sumitomo‘s interest in Côté will increase from 30 per cent to 40 per cent. IAMGOLD will have the opportunity to buy back that transferred interest through a repurchase option fee over specified dates between November 2023 and November 2026 to return to a 70 per cent position.
"The financial support of Sumitomo demonstrates to all of our stakeholders the strong validation of the Côté Gold Project from our partner and our alignment to complete construction and commence production," said Maryse Bélanger, IAMGOLD’s chair and interim president-CEO, in a statement.
With the project costs firmed up, she said construction remains on schedule for gold production in early 2024.
Bélanger said the company continues to look at other sources of financing to improve its cash position, strengthen the business, and reduce the amounts drawn from its loan arrangement.
Akira Nozaki, president and representative director of Sumitomo, said the transaction will “strengthen” the companies’ relationship while ensuring construction can proceed without delay.
"The Côté Gold Project has the potential to become a world-class, low-cost, long-life gold mine, and is one of the major pillars of Sumitomo Metal Mining's growth strategy outlined in our 2021 3-Year Business Plan.”