IAMGOLD responds to asset sale reports

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IAMGOLD Corp. [IMG-TSX; IAG-NYSE] issued a press release Friday May 17 saying it does not comment on speculation and rumours. The company also said it is not aware of any material change that would account for recent trading activity in its stock.

The announcement follows reports in several news outlets that the company is exploring the possible sale of all or part of the company amid a wave of consolidation in the gold sector.

It went on to say in Friday’s press release that it regularly reviews strategic alternatives available to it and may engage in discussions regarding potential transactions.

IAMGOLD is an intermediate gold producer with four operating mines in Burkina Faso (Essakane), Suriname (Rosebel), and Canada (Westwood). The company is also engaged in a 41% joint venture in Mali (Sadiola).

When the company announced an adjusted loss of $2.2 million or $0.00 per share in the first quarter of 2019 it maintained its 2019 production guidance of 810,000-870,000 ounces. All-in sustaining costs per ounce gold sold is expected to be US$1,030 to US$1,080 per ounce this year. However, in a report, Scotiabank said operating results were poor at all three of the company’s main assets.

The company said it is maintaining its full-year guidance for cost of sales per ounce of US$790-US$815 an ounce. However, it noted that a number of cost and productivity improvements initiatives are underway to mitigate the risk that these two targets may not be achieved by the end of the year.

For example, the company recently said it was reducing the workforce at its Westwood Gold Mine in Quebec by 32%.

“Guidance will be reviewed in the second quarter 2019 and updated as necessary,” IAMGOLD said.

If IAMGOLD does find a buyer for some or all of its assets, the sale would follow recent gold industry consolidation that has seen Newmont Mining Corp. [NEM-NYSE] scooping up Goldcorp in a $10 billion deal and Barrick Gold Corp. [ABX-TSX, NYSE] merging with Randgold Resources Ltd.

Newmont’s decision to reject Barrick’s $18 billion hostile takeover bid in early March 2019 prompted the proposal of a Nevada joint venture with Barrick that will allow the two companies to capture an estimated $500 million in average annual pre-tax synergies in the first five full years of the combination.

Reports that IAMGOLD is exploring the sale of all or parts of the gold miner’s business sent the gold miner’s shares rising to $3.60 on May 16, 2019 from close to a 52-week low of $3.15. That’s down from $5.26 in early January. On Friday, the shares were down 0.86% or $0.03 to $3.47 on volume of almost 3.1 million. At current trading levels, IAMGOLD has a market cap of 1.6 billion, based on 466.8 million shares outstanding.

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