Canadian gold mining company Iamgold has reached an all-stock deal, valued at around $31.1m (C$42.25m), to acquire compatriot Vanstar Mining Resources.

The swap ratio includes 0.2008 of an Iamgold share for every Vanstar share, issued to the latter’s shareholders.

Vanstar’s directors and officers have agreed to vote in favour of the transaction.

The deal, which awaits regulatory approvals, is due to complete in the first quarter of next year.

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By GlobalData

Iamgold president and CEO Renaud Adams said: “This transaction consolidates our interests in the highly prospective Nelligan deposit while building our exploration portfolio within Northern Quebec.

‘Our exploration efforts at Nelligan to date, in partnership with Vanstar, have shown the potential for further resource expansion, which we will continue to advance. While this transaction bolsters our Canadian exploration portfolio, the priority for Iamgold today remains focused on the successful commissioning, ramp up and growth of Côté Gold in Ontario.

“Côté is a project that is critical for the repositioning of this company, as once online, Iamgold will have a significantly higher production base and lower cost profile, providing a strong foundation of cash flow and growth opportunities in Canada.”

Vanstar owns a 25% stake in the Nelligan joint venture project, in which the remaining 75% interest is held by Iamgold. The project is situated 60km from Chibougamau, Quebec, Canada.

Under the present terms of the joint venture, Iamgold has an option to buy a further 5% stake upon delivering a feasibility study on the project.

The remaining 20% stake held by Vanstar will be retained as an undivided non-contributory carried interest until commercial production begins at the project.

Following start of production, the 20% stake becomes participating and Vanstar will need to pay its attributable portion of the overall development and construction expenses. It will also retain a 1% net smelter royalty (NSR) on selected claims of the project.

This January, Iamgold announced an updated mineral resource estimate for the Nelligan project.

This revealed 72.2 million tonnes (mt) of indicated mineral resources averaging at 0.85 grams per tonne of gold (g/t Au) for 1.97 million ounces of gold, and 114.1 million tonnes of inferred mineral resources averaging 0.88g/t Au for 3.24 million ounces of gold.

In February 2023, China’s Zijin Mining Group acquired Iamgold’s 95% stake in Rosebel Gold Mines for $360m (2.57bn yuan) in cash and also took on $41m of the company’s equipment lease liabilities.

The balance stake in the mine (5%) is owned by the Suriname Government.