'The Real Need', For The Final Financing! If anyone took the time to read the Sedar, March 31, Management Discussion and Analysis report, on page 3 it states this information:
"...The Company has available liquidity of $789.4 million comprised of cash and cash equivalents of $532.1 million and the available balance of the Credit Facility of $257.3 million as at March 31, 2023. Following the closing of the remaining strategic asset sales described above, the Company believes that it has sufficient liquidity to fund the remaining $460 to$535 million required for the completion of construction of the Ct Gold Project based on the current schedule and estimate. The Company continues to advance additional financing initiatives to strengthen its balance sheet and improve its liquidity in order to place the Company in a strong position to return to a 70% interest in the Ct Gold Project. See “Liquidity and Capital Resources - Liquidity Outlook...” The need for the last 400 million dollar funding was not some hidden agenda that management chose to not to disclose earlier. Everyone who read this report, knew it was coming and there was an especially good use for this extra, available cash.
Certainly, the added security provided by having this additional available capital, would give shareholders the confidence that IamGold was well funded to finish the final construction at Cote, without any further delay.
An additional setback would not impress shareholders, if such an issue happened to arise.
(But so far, it hasn't!)
So the company got the additional funding in place, as early as possible. And it was fairly easy to obtain, because of the fantastic money making opportunity that the Cote mine, now represents to IMG.
However, most significantly, it was important for both parties involved in this project to get back to the original 70/30 split in the joint venture, as soon as possible!
Funding flexibility with sound financial joint venture partners is always the best option to have!
Sumotomo upfronted some additional preliminary needed capital through incremental contributions, to make sure that the initial phases of the project's construction, were properly funded.
In return they temporarily received an increased 10% proportion of the project's worth.
IamGold and Sumotomo want to return the joint venture to the original split, by returning to Sumotomo their additional added investment amount of dollars, plus a small interest payment of 4% for the amount of that loan.
This is an extremely reasonable amount for IMG to have to repay!
See page 19 of IMG's latest investor presentation May 18, 2023:
https://www.iamgold.com/English/investors/presentations/default.aspx Certainly everyone easily understands that owning 70% of a project is better than having only a 60% position.
For both parties, letting IMG gain the additional revenue, as soon as possible, is in everyone's best interest!
Just like IMG, Sumotomo has its own financing issues to resolve. They would prefer to get their money back, sooner than later! It was meant to be a temporary loan.
They would prefer not to wait for five long years to pass, until after the mine pay back period, has finally ended! Without that additional $400 million loan, Sumotomo would have to wait!
Who knows, maybe Sumotomo or some other corporate entity may be interested in making similar deals in the future?
Iamgold is now proving to market that many such successful deals are possible with any partner with some sound, financial backing!
IMG is moving more of its focus to its Canadian operations. In this world of rapidly changing political uncertainty, at least Canada remains regarded as a nation where, in the mining sector, fundamental laws and rules, still do apply!
Vanstar's Nelligan multi-million ounce deposit is still growing in size. At some point in the future, perhaps even prior to the 5 year payback period for the Cote mine, it seems logical that Nelligan, may well become IamGold's, next high value mine!
The ultimate gold price remains the wild card in the timing of any such deal.
Vanstar's shareholders may need to be patient in this regard. However, it does seem probable that IMG will eventually buy them out, for all of their 20% interest!
Or if their share price appreciates too much in the interim from IMG's point of view, then Vanstar's shareholders will simply share in the 20% profit potential of that mine. IMG remains committed to pay all of the remaining exploration and construction costs of that mine.
IamGold has no problem with sharing their wealth! For both parties involved, joint ventures remain, a pretty sweet deal!
For the patient investor with a longer term horizon, Vanstar Resources remains a sound investment, especially when its share price, still remains, a very reasonable, 36 cents per share!
I would expect that shareholders invested in this company with a share float of only 56.6 million, should at least, double the size of their original investment!
That's a pretty good rate of return!
For those with the patience to wait during the interim, it might be a sound move to accumulate as many shares of Vanstar Resources, as cheaply, as they possibly can!
Vanstar no longer needs to dilute their shareholder base, any further.
IMG will do the rest of the work to explore and build that mine!
IMG is a gold company that is moving, strongly ahead!
It's going places!
I've taken the plunge!
Get in on the action!
All the best! Java