Canadian miner Iamgold has announced the execution of a forward gold sale arrangement and a partial amendment to an existing gold prepay agreement to optimise its financial position.
The net result of these arrangements is the effective transition of current gold delivery obligations totalling 37 500 oz out of the second quarter, into the same period in the following year, increasing cash flow in the second quarter of 2024 by about C$73.6-million.
CFO Maarten Theunissen explains that the deferral arrangement allows Iamgold to sell 6 250 oz in the current gold price environment by deferring the physical delivery into the arrangement to the second quarter of 2025. The prepay enables the company to realise value on the sale of 31 250 oz at a floor price of $2 100/oz, while maintaining upside exposure on these ounces up to a gold price of $2 925/oz.
Theunissen adds that the arrangements were competitive on a cost-of-capital basis versus drawing on the credit facility during the ongoing pre-commercial ramp-up of operations at Côté, in Canada.
The deferral of the prior prepay arrangement for gold deliveries out of the second quarter provides additional liquidity during a period when the Côté mine is taking its first steps toward commercial production.
Initial ramp-up activities at Côté are progressing well, with a high degree of confidence in achieving commercial production in the third quarter towards its goal of Côté operations reaching 90% throughput exiting 2024.
“In the current strong gold price environment, we saw an opportunity to further strengthen our balance sheet against other risks, including potential further delays in the closing of the two remaining transactions for the West Africa exploration assets, which are still expected to close this year,” says president and CEO Renaud Adams.