IAMGOLD Corporation IMG IAG ("IAMGOLD" or the "Company") is pleased to announce that it has reached an agreement ("Agreement") to amend the Côté Gold Joint Venture Agreement ("JVA") with Sumitomo Metal Mining Co., Ltd. and SMM Gold Cote Inc. ("Sumitomo" or "SMM").
Under the Agreement, commencing in January 2023, Sumitomo will contribute certain of IAMGOLD's funding amounts to the Côté Gold Project ("Côté" or "the project") that in aggregate are expected to total approximately $340 million over the course of 2023. As a result of Sumitomo funding such amounts, IAMGOLD will transfer, in aggregate, an approximate 10% interest in Côté to SMM (the "Transferred Interests") as funding is made by SMM, subject to the right for IAMGOLD to repurchase the Transferred Interests pursuant to the terms of the Agreement (the "Repurchase Option"). IAMGOLD will pay a repurchase option fee to SMM on the terms set forth in the Agreement, and IAMGOLD shall have the right to exercise the Repurchase Option on seven dates between November 30, 2023 and November 30, 2026, to return to its full 70% interest in the Côté Gold Project. IAMGOLD may exercise its option through the payment of the aggregate amounts advanced by Sumitomo in respect of the Transferred Interests, subject to certain adjustments as set out in the Agreement relating to the period between initial gold production and commercial production. Such terms are discussed further below and set out in detail in the Agreement.
IAMGOLD will remain the operator of the Côté Gold Project.
"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, Chair and interim President and CEO of IAMGOLD. "On behalf of the Board and IAMGOLD, I want to thank Sumitomo for their continued support and dedication as together we continue to build what will be Canada's third largest gold mine by production."
"The Côté Gold project remains on track for gold production in early 2024, in line with the updated schedule and cost to complete as outlined on our most recent project update at the end of last quarter. The successful construction and commissioning of the Côté Gold Project, together with our commitment to mine safely across all of our operations, is the most important strategic priority of IAMGOLD," continued Ms. Bélanger.
"It is Sumitomo's and IAMGOLD's intent for IAMGOLD to return to a 70% interest in the project, and the flexibility of the terms of the Agreement reflects that alignment. Notwithstanding the financing initiatives we have announced to date, we continue to advance further financing alternatives available to the company to strengthen its business, improve its liquidity and reduce amounts drawn under its credit facility, and in order to place the company in a strong position to return to a 70% interest in the Côté Gold Project at the appropriate time," concluded Ms. Bélanger.
Mr. Akira Nozaki, President and Representative Director of Sumitomo Metal Mining, added, "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". We believe that this transaction will further strengthen the friendly relationship between IAMGOLD and Sumitomo Metal Mining, while ensuring that the construction of this project will proceed without delay and secure the early start-up of operations."
Key Terms of the Agreement
- In addition to its proportionate monthly cash calls under the JVA, commencing with the January 2023 cash call, Sumitomo will contribute 100% of IAMGOLD's proportionate cash calls, up to a maximum of $250 million in aggregate of IAMGOLD's cash calls (the "Interim Participant Advances"). Based on the currently forecasted capital spending profile at the Côté Gold Project, it is expected that Sumitomo will provide this funding between January 2023 and April 2023. IAMGOLD has the right to re-start funding its own cash calls on ten days' advance notice to Sumitomo prior to the $250 million maximum being funded.
- Each IAMGOLD monthly cash call that is funded by Sumitomo up to the $250 million maximum of Interim Participant Advances will result in IAMGOLD transferring an interest in the Côté Gold Project to Sumitomo, based on the dilution calculations under the JVA.
- In aggregate, it is estimated that IAMGOLD will transfer an approximate 10% interest in the Côté Gold Project to Sumitomo based on the $250 million maximum of funding through the Interim Participant Advances, resulting in IAMGOLD holding an approximate 60% interest in the Côté Gold Project.
- After the $250 million funding limit with respect to Interim Participant Advances has been reached, going forward each of IAMGOLD and Sumitomo will fund joint venture expenditures in proportion to their revised joint venture interests. Based on the currently forecasted capital spending profile at the Côté Gold Project and revised joint venture interests, it is expected that this will result in Sumitomo contributing an additional $90 million of construction cost funding to the project in 2023 (the "Incremental Contributions by SMM").
- Upon commencement of production, each of IAMGOLD and Sumitomo will fund joint venture expenditures and receive gold in proportion to their revised joint venture interests.
- In connection with the Repurchase Option, IAMGOLD will pay Sumitomo a repurchase option fee ("Repurchase Option Fee") equal to 3 Month SOFR plus 4.00% on the amounts advanced during construction and up to achieving commercial production. This Repurchase Option Fee will be payable in cash quarterly from January 1, 2024. The amount of the fee accrued until January 1, 2024 will be payable upon the earlier of IAMGOLD's repurchase of the Transferred Interests, or November 30, 2026.
- The Repurchase Option provides the ability for IAMGOLD to return to its full 70% joint venture interest by repaying the $250 million of IAMGOLD's cash calls funded by Sumitomo Interim Participant Advances, in addition to the following in respect of the Transferred Interests:
- Incremental Contributions by SMM, with respect to the Transferred Interests relating to capital expenditures advanced during construction, are estimated to be approximately $90 million during 2023, plus
- Incremental joint venture expenditures incurred after completion of construction and up to achieving commercial production, plus
- The Repurchase Option Fee accrued and not paid in 2023 and any accrued and unpaid Repurchase Option Fees at the time of repurchasing the Transferred Interests, less
- The value of the incremental gold production received by Sumitomo up to commercial production.
- IAMGOLD can exercise the Repurchase Option to repurchase the Transferred Interests on any one of the following: November 30, 2023, May 31, 2024, November 30, 2024, May 31, 2025, November 30, 2025, May 31, 2026 and November 30, 2026, on 60 day's prior notice to Sumitomo.
- The Agreement includes certain amendments to the JVA, including, among other things, increasing the approval threshold of the Oversight Committee (as defined in the JVA) for annual budgets and unbudgeted expenditures above specified amounts. IAMGOLD's rights on the Oversight Committee are maintained.
- The Agreement is subject to the consent of IAMGOLD's senior lending syndicate.
Goodmans LLP is acting as legal advisor for IAMGOLD. McCarthy Tétrault LLP is acting as legal advisor and RCI Capital Group is the sole financial advisor to Sumitomo in this transaction.