Iamgold (IMG-T, IAG-N) is following through on its plan to divest itself of one of its non-core assets, and the market applauded the move on Thursday.
The Toronto-based company announced will sell its copper and gold project, La Arena in Peru to Rio Alto Mining for US$47.55 million in cash and a 5.5% interest in Rio Alto.
In Toronto on May 8 Iamgold shares were up roughly 7% or 42 to $6.25 on 3.2 million shares traded.
Iamgold says it expects the deal to close within the next two months and added that it was confident that Rio Alto could bring the project into production.
As for where the cash injection would go, the company was vague in its release saying only that it would be used to help it reach its goal of doubling gold production over the next five years.
Iamgold was not immediately available for comment.
Iamgold finished an internal pre-feasibility study on the project in November 2006 and determined that the project contains measured and indicated resources of 1.1 billion lbs of copper and 2 million oz. of gold.
That estimate was based on 51,000 metres of drilling and considered an open pit mining operation.
Iamgold says Rio Alto is currently in the process of securing financing for the purchase and development of the project.
La Arena sits roughly 480 km northwest of Lima and has road and power infrastructure nearby.
The project consists of two deposits — a gold oxide deposit, and an adjacent gold-copper porphyry deposit. The latter consists of the shallow flat-lying North porphyry, undercut by a thrust fault, and the South porphyry, that extends more than 400 metres below surface.
Iamgold announced it was looking to divest La Arena in September of last year saying that “external interest expressed in the project, has shifted focus to other priorities and, as such, has prompted the company to take the decision to divest of this project.”
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