IAMGOLD Corp. (IAMGOLD) has entered into a forward gold sale arrangement with financial institutions whereby the company will receive a prepayment amount of US$170 million in exchange for delivering 150 000 oz in 2022, with a gold floor price of US$1300/oz and a cap price of US$1500/oz.
This prepaid gold arrangement (Prepay) is supported by a syndicate of banks including Citibank N.A. and National Bank of Canada. Terms of the Prepay are provided below:
- Funding of US$170 million was provided to IAMGOLD in December 2019 in exchange for physical delivery of 150 000 oz of gold over the period of January 2022 to December 2022.
- Delivery can be made from the production of gold from any of IAMGOLD's operating mines.
- The cost of the Prepay arrangement is 5.38% per annum, which is based on the date the prepayment is advanced, quantity of ounces settled and timing of delivery.
- The collar on the prepay at the time of delivery of ounces occurs as follows:
- If the prevailing gold price equal to or less than US$1300/oz, there is no incremental payment to IAMGOLD or from IAMGOLD;
- If the prevailing gold price is greater than US$1300/oz but less than US$1500/oz, the syndicate pays IAMGOLD the difference between the prevailing gold price and US$1300;
- If the prevailing gold price is greater than US$1500 per ounce, the syndicate pays IAMGOLD the incremental difference between US$1300 and US$1500, or US$200/oz.
- The funding is expected to be accounted for under IFRS as deferred revenue.
"Entering into the gold prepay provides additional liquidity to IAMGOLD at attractive terms to support the execution of the company's growth strategy, while also mitigating any downside price risk below US$1300/oz on 150 000 oz of production," said Carol Banducci, EVP and Chief Financial Officer.