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Bullboard - Stock Discussion Forum Vanstar Mining Resources Inc. V.VSR

Vanstar Mining’s Nelligan gold project joint venture with IAMGOLD (25% VSR/75% IMG), located 60 kilometres SW of Chibougamau, Quebec. Vanstar retains 25% undivided non-contributory carried interest until commercial production. Nelligan is one of Quebec’s largest gold projects containing approximately 5.6 Moz of gold. Vanstar has signed an LOI with IAMGOLD to acquire a 75% interest in their... see more

TSXV:VSR - Post Discussion

Vanstar Mining Resources Inc. > Stockwatch take on Iamgold
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Post by EZY1955 on Dec 21, 2022 11:26am

Stockwatch take on Iamgold

Here's the main problem for VSR. IT'S IAMGOLD

Today's biggest gainer among Canadian gold miners was indisputably Maryse Belanger's Iamgold Corp. (IMG), which surged 61 cents to $3.11 on 7.2 million shares. Iamgold did have news, as it closed what analysts have called a "funding gap" regarding construction of the massively over budget Cote mine in Ontario. Cote was a $1.15-billion (U.S.) project when it cleared feasibility in 2018. The budget has been bumped several times since then and with construction continuing, the latest estimate puts the full cost at about $3-billion (U.S.).

So, late yesterday, Ms. Belanger, chairman and interim president and chief executive officer, revealed that the company is trading a 10-per-cent interest in the Cote joint venture to Sumitomo Metal Mining Inc. in exchange for Sumitomo covering an estimated $340-million in cash calls next year from the joint venture company, owned by Iamgold and its 30-per-cent co-venturer, which of course is Sumitomo.

The good news is that this is not an irrevocable transfer. Iamgold will have several opportunities to buy back its interest over the next three years -- essentially repaying what it receives from Sumitomo and covering all cash calls pertaining to the transferred 10-per-cent portion of Cote, plus -- naturally -- a significant amount of interest.

Ms. Belanger says that it is the intent of both Iamgold and Sumitomo "for Iamgold to return to a 70-per-cent interest in the project," adding that she and her crew are also working concurrently on other possible financing alternatives to "strengthen its business, improve its liquidity and reduce amounts drawn on [its] credit facility." These new alternatives would place the company in a strong position to return to a 70-per-cent interest in Cote, she says.

Just hours later -- also before the open -- Ms. Belanger dropped her other shoe. Iamgold is selling its interest in exploration and development projects in Senegal, Mali and Guinea, known collectively as the Bambouk assets. In return, the company will receive $282-million (U.S.) -- providing Iamgold with enough cash, Ms. Belanger cheers, to cover Iamgold's remaining capital expenses to complete Cote.

And why is Iamgold so doggedly pursuing Cote, you ask? Well, in August, Ms. Belanger applauded a new life-of-mine plan for Cote that she described as "transformational for Iamgold." She was right, but so far at least, not in a good way -- just take a glance at Iamgold's stock chart for the past two years. The study credits Cote with a discounted net present value of $1.1-billion (U.S.) after taxes and an internal rate of return of 13.5 per cent -- not counting all the sunk costs so far.

When complete, and Cote is about 70 per cent complete, the mine is projected to run for 18 years, averaging nearly 500,000 ounces of gold per year, purportedly with all-in sustaining costs of about $850 (U.S.) per ounce. And when will this start? Ms. Belanger cheers that the mine is "on track for production in early 2024," leaving plenty of time for further cost overruns.

Comment by Ballsmeep on Dec 21, 2022 11:33am
I'm not seeing the problem 
Comment by SPACEDOC on Dec 21, 2022 12:42pm
Since IAG is diverting it's interest from Nelligan for Cote obviously why would we not expect a buyout of Nelligan i.e. VSR+ IAG share by a third party. It's a win-win. IAG  gets more cash. WE get bought out and the third party probably gets a good deal all around
Comment by Ballsmeep on Dec 21, 2022 12:51pm
Yeap. And JVs are trending could see a third party with cash to advance nelligan.
Comment by blueskies on Dec 21, 2022 3:50pm
I'm not certain IMG is diverting its interest to cote, I don't recall the nelligan ever being a focus for IMG. Cote is clearly IMG's focus and has been for quite a while now. The recent asset sale would seem to leave IMG better equipped to begin focusing on the Nelligan as it seems a better jurisdictional fit than the assets just sold. I'm hopeful the upcoming resource update ...more  
Comment by willyk3 on Dec 21, 2022 4:10pm
Gotta agree with your view of things ,blue.  Looking forward to the New Year and hopefully some fireworks on the price of bullion and also the size of this deposit when the resource update is released. Maybe some kinda hookup with SUP cud be in the cards.  Lots going on over there. GLTA bagholders here! This could be our year
Comment by Ballsmeep on Dec 21, 2022 4:31pm
I hope updates soon. Would make a lot of sense to keep the momentum going for I am gold. If they can get back up in the $4 to $6 usd range they could rain cash on Vanstar with just a touch of dilution 
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