IAMGOLD defers more gold prepay deliveries

Having just announced the first gold pour from its Côté mine in Ontario, Canada, IAMGOLD has entered into a forward gold sale arrangement and amended an existing gold prepay arrangement to provide additional liquidity during the ramp-up phase towards commercial production.

It said the net result is that the obligation to deliver 37,500oz during the June quarter will transfer into the June quarter of next year, increasing this year's June quarter cashflow by an estimated US$73.6 million at current gold prices.

"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," IAMGOLD chief executive Renaud Adams said.

Côté, whose capital cost blew out to $2.965 billion, is due to produce 365,000ozpa over its life with operations due to reaching 90% of design throughput by year-end.

The new agreements allow IAMGOLD to defer the delivery of 6,250oz to take advantage of a record gold price of around $2300/oz. This gold is worth about  $14.2 million at current spot prices. The new prepay for 31,250oz will see the company receive $59.4 million at an effective gold price of $1900/oz. IAMGOLD will receive an additional payment if the gold price is within the collar range of $2100-2925/oz in the month of delivery.

The deferral ounces were previously funded at a price of $1753/oz. IAMGOLD will pay $600,000 at the time of delivery in consideration of the deferral.

In 2021, IAMGOLD entered into the 2022 prepay arrangements for 150,000oz at an average pre-funded price of $1753/oz on 50,000oz and $1700-2100/oz on the other 100,000oz for $236 million. Delivery was due in equal monthly increments of 12,500oz over 2024. The company previously deferred the gold deliveries due in the March quarter of 2024 into the March quarter of 2025.

IAMGOLD ended 2023 with cash of $367.1 million and debt of $825.8 million.

The price of IAMGOLD shares has increased 56% so far in 2024. They are trading at C$4.98, valuing the company at C$2.5 billion.