IAG has $2 billion to invest.....
IAMGOLD CFO: Has About $2 Billion In Liquidity to Invest
4:54 AM ET 2/1/13 | Dow Jones
By Alex MacDonald
HERMANUS, South Africa--North America-listed IAM Gold Corp (IAG) has about $2 billion in liquidity that it could use to buy and develop projects but potential acquisitions need to meet stringent criteria, said the company's chief financial officer Friday.
IAMGOLD has "the liquidity to be able to opportunistically take advantage of the opportunities that we see in the market place," said said Carol Banducci, CFO of IAM Gold at the GMP Mining Jamboree conference in Hermanus, South Africa.
She said: "We're looking at digestable acquisitions, not transformational acquisitions." The company won't risk its balance sheet on an acquisition and prefers to pay cash, while keeping its ratio of debt to earnings before interest, taxes and depreciation, or debt to ebitda ratio, below 1.5, she added.
From an acquisition perspective, the company is only interested in looking at assets that have minimum reserves of 2 million troy ounces of gold or more and the ability to produce 100,000oz to 250,000oz of gold a year over a life of mine of around 10 years or more.
IAMGOLD operates five mines in West Africa, South America and North America and is developing a sixth one in North America at present. The company is keen to continue diversifying its portfolio of assets geographically in those regions although it recently sold out of an investment in Ecuador because it didn't feel comfortable with the investment prospect and the political environment.
Ms. Banducci said the company looks at about 40 to 80 projects a year. "The pool that comes through this filter is quite small." She said that the company is looking for a return that exceeds a weighted average cost of capital -- a key metric used to gauge investment returns -- of around 9%.
The investment hurdle in North America is about 10% to 15% while in South America it's 10% to 15%. In West Africa projects must exceed returns of more than 20%.
The company is willing to invest in assets that are in various stages of development from exploration all the way up to assets that are already in operation, Ms Banducci said.