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IAMGOLD (NYSE: IAG) (TSX: IMG) is acquiring Quebec-focused gold explorer Vanstar Mining Resources (TSXV: VSR) by way of a court-approved friendly takeover deal to consolidate its interest in the highly prospective Nelligan deposit.
Per the definitive agreement announced Tuesday, IAMGOLD will issue 0.2008 of a common stock for each Vanstar share acquired, for an implied value of C$0.69 per share basing off the five-day volume weighted average price of IAMGOLD as of December 1, 2023. The total consideration to Vanstar shareholders would amount to approximately C$31.1 million.
Shares of Vanstar Mining surged by 38.5% to C$0.63 apiece by 12:15 p.m. EDT on the news, giving the Canadian gold junior a market capitalization of C$36.3 million.
“This transaction provides a meaningful premium to our shareholders and the opportunity to continue to benefit as part of an established gold producer with a meaningful growth pipeline including participation in the ramp up of Côté Gold,” Vanstar’s CEO JC St-Amour said in a news release.
Vanstar currently holds various gold exploration projects at different stages of development. Its primary asset is a 25% interest in the Nelligan joint venture project, which is held under an earn-in option with IAMGOLD and located 60 km southwest of Chibougamau, Quebec.
An updated mineral resource estimate released January 2023 for Nelligan showed 72.2 million tonnes of averaging 0.85 gram per tonne (g/t) gold for 1.97 million oz. of gold in the indicated category, and 114.1 million tonnes averaging 0.88 g/t gold for 3.24 million oz. of gold in the inferred category.
Under the terms of the current JV agreement, IAMGOLD has the option to acquire an additional 5% interest by completing and delivering a feasibility study on the Nelligan project. Vanstar’s remaining 20% interest would be retained as an undivided non-contributory carried interest until the commencement of commercial production, after which the 20% interest becomes participating and Vanstar would be required to pay its attributable portion of the development and construction costs. Vanstar also holds a 1% NSR royalty on selected claims of the project.
“This transaction consolidates our interests in the highly prospective Nelligan deposit while building our exploration portfolio within Northern Quebec,” said Renaud Adams, chief executive of IAMGOLD. “Our exploration efforts at Nelligan to date, in partnership with Vanstar, have shown the potential for further resource expansion which we will continue to advance.”
Adams also noted that while this transaction bolsters his company’s Canadian exploration portfolio, the priority for IAMGOLD remains on the successful commissioning, ramp up and growth of the Côté gold project in Ontario. First pour is being targeted for early next year, with annual gold production of 495,000 oz. over an estimated 18-year project life.
