A week ago Toronto-based IAMGOLD and Montreal's CAMBIOR agreed to combine the two companies, creating a new IamGold with a market capitalization of $3.0 billion.
Cambior shareholders will receive 0.42 of an IamGold common share for each of their Cambior shares. That puts the value of a Cambior share at $4.83, a premium of 31% based on Cambior's closing price on Sept. 13, 2006.
IamGold will become a 1.1-million oz per year gold producer. Reserves will jump to 9.7 million oz of gold, measured and indicated resources will be close to 21.0 million oz, and inferred resources will total another 8.0 million oz. Controlling 38.7 million oz of gold is a feather in IamGold's cap.
A week after the deal was announced, no other suitor has come forward to challenge it.
The combination looks good so far, but note that it is the smaller company, IamGold, swallowing a larger company, Cambior. Consider the following figures for the end of 2005 (US dollars):
- Assets: Cambior $621.4 million, IamGold $469.0 million
- Revenues: Cambior $368.5 million, IamGold $129.8 million
- Net earnings: Cambior $20.2 million, IamGold $20.5 million
- Net earnings per share: Cambior $0.07, IamGold $0.14
Cambior produced 638,400 oz of gold in 2005 from four 100%-owned mines (Rosebel in Suriname, Omai in Guyana, and Doyon and Sleeping Giant in Canada). The company has an advanced exploration project in French Guiana (Camp Caiman), and other gold projects in Peru (La Arena) and Canada (Westwood, Comptoir and Eastmain). The total contained gold at these mines and projects is 10.8 million oz in all categories. Cambior also mines niobium in Quebec (100% interest in the Niobec mine) and bauxite in Guyana (a 70% interest)
IamGold produced 447,000 oz of gold in 2005 from four mines (Yatela and Sadiola in Mali, and Damang and Tarkwa in Ghana) in which it holds minority interests. The company's important exploration projects include Quimsacocha in Ecuador, Buckreef in Tanzania, Los Menucos in Argentina, Bambadji in Senegal, and Rio Grande do Sul and Tocantins in Brazil. IamGold's share of gold reserves at all mines and projects adds up to approximately 18.8 million oz in all categories.
If IamGold is the winner in this deal, Cambior must be the loser. A respected name among Canadian gold miners is about to disappear. Cambior interests will be represented by only two of the 12 seats on the new IamGold board of directors. Cambior's president/CEO Louis Gignac will be retained to provide advisory services, while Joseph Conway, IamGold's president and CEO will retain his position. However, Conway reassured Cambior employees: "We very much look forward to welcoming Cambior employees into the IAMGOLD group as we move forward..."
IamGold's interests in gold producers will no longer be relegated to minority stakes. With the takeover of Cambior, IamGold becomes sole-owner of four gold mines and more than doubles its projected 2006 gold output. It will also own the Niobec mine (IamNiobium?), but whether it keeps or sells that and Cambior's bauxite interest, only time will tell.
Good-bye Cambior, and good luck IamGold.