Vanstar shares up 38% on Iamgold takeover news

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Iamgold Corp [TSX-IMG, NYSE-IAG] has struck a definitive deal to acquire all of the issued and outstanding shares of Vanstar Mining Resources Inc. [TSXV-VSR, OTCQX-VMNGF], 1V8-FSE], a company with properties in Northern Quebec at different stages of development.

Vanstar shares advanced on the news, jumping 38.4% or 17.5 cents to 63 cents on volume of 1.25 million. The shares currently trade in a 52-week range of 47.5 cents and 28 cents.

Vanstar shareholders will receive 0.2008 of an Iamgold common share for each Vanstar share held, implying a total transaction value of $31.1 million.

Vanstar’s key asset is a 25% interest in the Nelligen joint venture project, held under an earn-in option agreement with Iamgold which holds 75%. Under the agreement, Iamgold can acquire an additional 5.0% by completing and delivering a feasibility study on the project.

Nelligen, which is located near Chibougamau, Que., received the “Discovery of the Year” award from the Quebec Mineral Exploration Association (AEMQ) in 2019. Nelligan is estimated to host an indicated resource of 1.99 million ounces at 0.84 g/t gold plus an inferred resource of 3.60 million ounces of 0.87 g/t using a 0.35 g/t cut-off.

However, summer drilling continues to demonstrate the growth potential of the project, the companies have said. The deposit remains open in all directions, especially at depth.

Iamgold is an intermediate gold producer and developer based in Canada with operating mines in North America and West Africa. The company is building the long- life Cote project in Quebec with partner Sumitomo Metal Mining Co. Ltd. of Japan. In October, 2022, the company said it had agreed to sell its interest 95% interest in Rosebel Gold Mines in Suriname to Zijin Mining Group Co. Ltd. for US$360 million.

The deal left Iamgold with the Essakane mine in Burkina Faso, West Africa and the Westwood mine in Canada in addition to the Cote gold project.

Iamgold has said its Cote Gold project is on track to commence production in early 2024. Since the commencement of construction, $2.54 billion of the planned $2.96 billion of project expenditures has been incurred. Iamgold is expected to fund $325 million during the remainder of construction based on its 60.3% ownership of Cote Gold joint venture

Meanwhile, Iamgold has said it is maintaining 2023 gold production guidance range of between 410,000 and 470,000 ounces at a cash cost of between US$1,250 and US$1,325 an ounce and an all in sustaining cost (AISC) of US$1,750 and US$1,825 an ounce.

Iamgold recently raised its cost guidance due to the impact of the security situation in Burkina Faso on the supply chain, combined with the continued elevated costs from the recent inflationary cycle in the industry.

Iamgold currently has $549 million in cash and $965 million in total debt as of September, 2023. On Tuesday the shares eased 4.99% to $3.24 on volume of 699,890.

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