Double Upgrade For Iamgold After Rosebel Sale: These Assets Could Be Next, Analyst Says

Iamgold Corp. (NYSE: IAG) sold a 95% interest in Rosebel Gold Mines N.V. to Zijin Mining of China at a price that is “well above" the carrying value of $177 million.

The deal represents a significant move in addressing the funding gap for the development of the Côté Gold mine, according to Bank of America Securities.

The Analyst: Lawson Winder upgraded the rating for Iamgold from Underperform to Buy, while raising the price target from $1.20 to $1.65.

The Thesis: The sale adds $360 million of cash to the company’s liquidity of $453 million in cash and $349 million available on credit facility, Winder said in the upgrade note.

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“As of 1-Jul-22, there was $1.2-$1.3bn of remaining spend at Côté. Including start-up working capital (BofAe $50mn) and a minimum cash balance (BofAe $200mn) we estimate the remaining funding gap to be $288-388mn,” the analyst wrote.

“IAG could divest its Boto project in Senegal (BofAe $173mn), sell its West African exploration projects (BofAe $50mn), or sell a stream on Côté,” he said.

“We see limited risk to the transaction getting regulatory approvals given China and Suriname have good bilateral cooperation,” Winder added.

IAG Price Action: Shares of Iamgold had declined by 0.79% to $1.26 in premarket trading on Wednesday.