Iamgold, Top Chinese Gold Mining Firms Fail To Seal Buyout Deal

Gold bullion is displayed at Hatton Garden Metals precious metal dealers in London, Britain July 21, 2015.
(Photo: REUTERS/Neil Hall/File Photo)

Iamgold Corporation will not be going to China, or be owned by any of its top companies. At least, unless a deal is reached between the top bosses and full ownership of the Canadian gold mining firm goes to the Chinese.

Souces with knowledge of the matter said big Chinese gold firms have been interested in acquiring Iamgold, unfortunately, negotiations hit a major stumbling block: pricing -- and the longstanding political friction between China and Canada.

Some of Iamgold's suitors include the China National Gold Group, Zijin Mining Group, and Shandong Gold Mining Company -- all big-name gold producers that represent China's influence in the global precious metals business.

Iamgold's stocks are currently valued at 465.51 million in the public float, with $1.77 billion dollars in total market capitalization. These are figures that really attract attention. But all is not lost. A buyer can still come up with a more decent proposition, sources said.

Sources disclosed that Iamgold could also choose other options, like selling shares in its Cote Project. Representatives of the company, including the three Chinese prospects, have yet to issue a formal statement regarding the stalled deal.

The yellow metal is hovering on a 6-year peak, and the vast deposit of gold still waiting to be mined has dipped by over 50 percent from 2011 high. Gold mining companies are searching for new grounds by snapping up competitors.

Acquisitions of gold mining firms have climbed $18.3 billion for 2019, the biggest level in 8 years, figures gathered by Bloomberg shows.

Iamgold owns four producing facilities, including Westwood Gold Mine in Canada and joint partnerships in Mali. The company produced 892,000 ounces of the precious commodity last year and keeps around 24,116,010 ounces of total reserves.

Meanwhile, China National Gold, the country's second-biggest gold producer, is considering a proposal for a share in Iamgold, Bloomberg News disclosed in June. According to Jerry Xie, China Gold International Resources vice president, they are looking for tie-ups to replenish their pipeline.

Given the company's most recent momentum, some strong points in terms of investing in Iamgold's stock have started to take shape, which is why market observers are projecting an estimated share price of $7.66. The expected price would call for a host of gains of around 40.25 percent, which is higher compared to the company's recent close, indicating that its stocks are headed for a bullish trend.

Stocks of the Canadian mid-tier gold producer settled at 2.5 percent lower at C$4.85 late Wednesday, after falling as much as 3.5 percent. Its shares have soared around 2.2 percent during the last four quarters, giving Iamgold a market value of C$2.27 billion.

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