Sumitomo will acquire a 30% undivided participating interest in IAMGOLD's ownership interest in the Côté Gold Project in Ontario in exchange for a payment of $195m.
Under the agreement, Sumitomo will pay $100m upon completion of the deal, while the remaining $95m will be paid within 18 months after closure, or the date of public filing of a feasibility study of the gold project.
The deal is expected to close before the end of this month.
IAMGOLD will operate the Côté Gold Project during development and operational stages.
The two firms will have to fund their proportionate share of expenditures, which includes initial and sustaining capital expenditures for the project.
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IAMGOLD president and CEO Steve Letwin said: "This transaction is significant for IAMGOLD as it validates the intrinsic value of the Côté Gold Project. It will enable us to move the project into development and to significantly diversify our production profile as a result of future production from our Canadian operations.
"After extensive due diligence by both parties, what solidified the relationship was the mutual trust and respect and the alignment around strategic priorities. In addition to providing us with the financial capacity to develop the Côté Gold Project, we are gaining a partner with business development and technical expertise who we can work with in the future to explore new possibilities."
Last August, IAMGOLD initiated talks for a strategic partnership with Sumitomo and since then, there have been extensive negotiations, in addition to multiple site visits to Côté Gold by Sumitomo's executives.
During the due diligence period, IAMGOLD visited the Hishikari Gold Mine in Isa, Kagoshima.
IAMGOLD expects to benefit from Sumitomo's access to Japanese suppliers to the mining industry..
On completion of the deal, IAMGOLD and Sumitomo will form an unincorporated joint venture for the Côté Gold Project. The firms will then enter a definitive joint venture agreement.
IAMGOLD will own 70% and Sumitomo 30% of the participating interests under the joint venture agreement.
Completion of the transaction is subject to customary closing conditions, though not subject to any financing condition or regulatory approvals.
RCI Capital Group served as financial advisor and Fasken Martineau as legal counsel to IAMGOLD, while DLA Piper (Canada) acted as legal counsel to Sumitomo.