IAMGOLD To Sell Niobec Mine For $530 Mln - Update

(RTTNews) - Canadian gold producer IAMGOLD Corp. (IAG, IMG.TO) Friday said it has agreed to sell its Niobec mine, one of the world's three niobium producers, to a group of companies led by Magris Resources Inc., for a total consideration of $530 million.

The consideration comprises a cash payment of $500 million payable on closing, as well as an additional $30 million when the adjacent REE deposit goes into commercial production. The company noted that 2 percent gross proceeds royalty will be payable on any REE production.

The sale of Niobec, which is located in Saint-Honoré-de-Chicoutimi in the Saguenay-Lac-Saint-Jean region, Quebec, is to include the adjacent rare earth element deposit. The transaction is expected to close in the fourth quarter of 2014.

The company noted that it had acquired Niobec as part of a larger transaction, and has been a steady contributor to its operating cash flow since 2006.

The group of companies includes Magris Resources, as well as CEF Holdings Ltd., which is a Hong Kong-based investment company, 50 percent owned by Cheung Kong (Holdings) Ltd., and 50 percent by the Canadian Imperial Bank of Commerce (CM.TO, CM), and Singapore-based investment company Temasek.

Based on current estimates, the company expects a gain of about $50 million to $60 million on the transaction.

President and CEO, Steve Letwin stated, "This sale unlocks the value of Niobec for our shareholders, positions IAMGOLD as a pure gold play and significantly improves our liquidity, which provides us with the opportunity to further improve the grade and cost structure of our portfolio of gold assets."

IAMGOLD noted that Niobec will be reclassified as 'held for sale' for the purposes of its fourth quarter results.

IAG closed Thursday's trading at $2.73, down 0.73 percent. In the pre-market activity on Friday, the shares rose 2.56 percent.

IMG.TO ended at C$3.04.