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Iamgold Completes Acquisition of Merrex Gold

- By Alberto Abaterusso

Iamgold Corp. (IAG) announced on Feb. 28 the completion of its acquisition of Merrex Gold Inc. (MXI.V), a gold, lead and zinc exploration company headquartered in Canada that is currently developing the Siribaya Gold Project in Mali. The project also includes the Diakha Zone, a recent discovery.


The mid-tier gold producer headquartered in Toronto purchased Merrex Gold's remaining 153.33 million issued and outstanding ordinary shares it did not already own.

According to the terms of the deal, Iamgold issued approximately 6.9 million new shares. This volume of new shares represents about 1.5% of Iamgold's total issued and outstanding shares prior to the deal.

The company said the "shares were issued on the basis of 0.0433 of an Iamgold common share for each Merrex common share not already owned by Iamgold and 0.0043 of an Iamgold common share for each Merrex warrant."

The acquisition of Merrex is a very important milestone achieved by Iamgold in its strategy to hold a broader range of mineral resources in the prolific Kayes Region in Mali, West Africa.

Merrex's exploration team has been working in collaboration Iamgold. These teams have not yet determined how much precious metal can be mined from the Malian property.

Further surveys consisting of drilling are needed at Siribaya to upgrade the mineral resources to the category of mineral reserves.

Only then will it be possible to know how much ore will be processed for a profit from the mine and how much its production may increase.

Currently, Merrex estimates resources "of 4,055,000 tonnes grading 2.34 g/t Au (303,900 oz Au) and inferred resource of 4,316,000 tonnes grading 2.17 g/t Au (301,400 oz Au)."

Iamgold closed at $3.94 per share yesterday, up one cent or 0.25% from the previous trading day, with an average volume of 11,858,256 shares traded on the New York Stock Exchange.

The gold stock is currently trading 26.2% below the analysts' average target price per share of $5.34, which ranges between a low of $3.44 and a high of $7.64.

Analysts recommend to hold shares of Iamgold since they still see room for further upside in the share price. The recommendation rating is 2.8. The rating ranges between 1.0 (Strong Buy) and 5.0 (Sell).

Year to date, the gold stock has gained 2.34% and is trading at 0.80 times the book value and at 6.05 times the EBITDA.

Disclosure: I have no position in Iamgold Corp.

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