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Iamgold (IAG) Closes Sale of Quimsacocha Project in Ecuador

 November 14, 2012 12:27 PM

(By Balaseshan) Iamgold Corp. (NYSE: IAG) said it has completed a transaction with INV Metals Inc. to sell Iamgold Ecuador S.A., which includes the Quimsacocha project in Ecuador.

Iamgold indirectly received an aggregate of 221.28 million INV Metals' common shares as consideration for the sale. In addition, as part of INV Metals' private placement that was required as part of the transaction, Iamgold acquired an additional 10 million INV shares for $0.10 per INV share.

The total number of INV shares received by Iamgold or its affiliates pursuant to the transaction combined with the INV shares Iamgold acquired in the related private placement is 231.28 million INV shares, which represents about 47 percent of all INV shares issued and outstanding.

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Based on the closing price of the INV shares on the Toronto Stock Exchange on November 6, the INV shares acquired by Iamgold or its affiliates pursuant to the transaction have a deemed value of $0.13 per INV share, giving the transaction a total value of about $30 million.

Pursuant to the transaction, Iamgold will also be entitled to receive two milestone payments. The first milestone payment of 50 million INV shares will be paid when INV Metals signs an exploitation contract with the government of Ecuador. The second milestone payment of 25 million INV shares will be paid upon achieving commercial production.

"Our strategy has been to focus on expanding our core long-life assets that can provide the greatest rate of return for Iamgold. Structuring the sale of Quimsacocha in this way allows Iamgold to participate in the future success of this project," said Steve Letwin, president and CEO of Iamgold.

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Iamgold currently has no intention of acquiring ownership of, or control over, additional securities of INV Metals other than additional INV shares that may be issued to Iamgold through the milestone payments.

In addition to the share purchase agreement, Iamgold entered into: a registration rights agreement with INV Metals, an equity rights agreement, and a nomination agreement.

IAG is trading down 16.62 percent at $12.39 on Wednesday. The stock has been trading between $9.20 and $21.54 for the past 52 weeks.



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