IAMGold: Canada to Africa

09/23/2015 8:00 am EST


Patrick McKeough

Editor, Successful Investor

Our latest featured recommendation is a Canadian gold miner, which we consider a buy for more aggressive investors, suggests Pat McKeough, editor of TSI Network.
IAMGold (TSX: IMG) is a Toronto-based mining company with four operating gold mines on three continents, with properties in North and South America and Africa.

Earlier this year, IAMGold sold its 1% revenue royalty on the Diavik diamond mine in the Northwest Territories to Sandstorm Gold Ltd. (TSX: SSL).

This deal, as well as the January 2015 sale of its Niobec niobium mine in Quebec, leaves IAMGold focused purely on its gold mines.

With $800 million US in cash, IAMGold is in a good position to invest more in its current mines or make further acquisitions.

IAMGold is in talks with South Africa-based AngloGold Ashanti (AU) to buy that company’s stakes in two gold mines in Mali in which they are partners.

IAMGold and AngloGold each own 41% of the Sadiola mine in southwestern Mali. The companies also each own 40% of the nearby Yatela mine. The government of Mali owns the remaining stakes in each project.

AngloGold is facing pressure to cut its debt through asset sales. As well, the Sadiola mine is expanding into a new hard-rock zone and will require additional investment.

With its reserves of cash and gold, IAMGold is in a strong position to buy out AngloGold’s interests in Sadiola and Yatela or make other acquisitions.

Elsewhere in the same region, IAMGold believes Burkina Faso’s upcoming parliamentary vote on an updated mining code will have no effect on the company’s Essakane mine’s profits.

As well, the new code should also end uncertainty surrounding the current 12-year-old mining regulations.

IAMGold holds over $800 million US of cash and gold. That puts it in a strong position to pay down its long-term debt of $642 million US. It could also invest in its current mines or make acquisitions.

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