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IAMGold shines light on Trelawney

by Paul Whitfield  |  Published April 30, 2012 at 12:21 PM
gold227x128.jpgCanadian gold producer IAMGold Corp. has agreed to pay C$608 million ($618 million) in cash for Trelawney Mining and Exploration Inc. to increase its exposure to Canada's gold fields.

Toronto- and New York-listed IAMGold will pay $3.30 for each Trelawney share, a 42% premium to the target's closing price of C$2.32 on Thursday, the day before the bid. The offer values Toronto's Trelawney at an enterprise value of $505 million net of cash.

Buying Trelawney will boost IAMGold's Canadian resource base to about 35% from 18% by adding about 0.93 million ounces of indicated reserves and 5.94 million ounces of inferred resources at Trelawney's northern Ontario-based Côté Lake Deposit.

"This transaction provides an accretive return on invested capital as we are effectively redeploying the cash proceeds from the sale of noncore assets last year into a Canadian gold project that significantly strengthens our future gold production profile," IAMGold president and CEO Stephen Letwin said in a statement.

The deal comes just under a year after IAMGold sold an 18.9% stake in two Ghan-aian mining projects to Gold Fields Ltd. for $667 million in cash.

The offer has the backing of Trelawney's board and requires the support of two-thirds of Trelawney's shares voted at a special meeting to be held before the end of June. The agreement includes a $21 million breakup fee payable to IAMGold.

IAMGold produced 896,000 ounces of gold in 2011 from five mines, the largest of which are located in Suriname in South America and Burkina Faso in Africa, as well as in Canada. It also operates Niobec Inc., a Canadian producer of niobium, and owns a rare earth project also in Canada.

The deal will increase IAMGold's inferred resources by 95% and boost its indicated reserves by 5%.

IAMGold took financial advice on the deal from GMP Securities LP and took legal counsel from a Fasken Martineau DuMoulin LLP tream that included John Turner, Aaron Atkinson, Brad Freelan, Francesco Tallarico and Andrew Teehan. Trelawney took financial advice from RBC Capital Markets and legal counsel from a Stikeman Elliott LLP team that included Jay Kellerman, Michael Burkett, Mike Devereux and Warren Ng.
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Tags: Canada | gold | IAMGold | industrials | M&A | mergers and acquisitions | metals | Trelawney

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