Iamgold's Euro Resources Deal Increase Net Asset Value

Iamgold Corp.'s (IAG) proposed acquisition of France-based Euro Ressources Inc. (EROFF.PK) and its Rosebel mine will help combat industry wide cost pressures affecting Iamgold, but it will also result in a jump in the company's net asset value, says Blackmont analyst Richard Gray. 

Shares in Iamgold were down almost 5% in early morning trading on Tuesday, to C$6.69.  

The deal for Euro Ressources Inc. announced last week, will total about C$131-million including the assumption of Euro debt and its mark-to-market hedge position. Importantly, Mr. Gray noted, the offer will eliminate Iamgold's current royalty obligation to Euro, reducing cash costs by about C$50 per ounce at Rosebel and C$15 per ounce overall.   

In a note to clients:

The Euro acquisition decreases our net asset value to C$5.90 (from C$6.10), but increases our 2009 cash flow estimate by 4¢ due to the lower cash costs. 

As a result, the analyst left his C$7.75 price target for Iamgold shares unchanged and maintained his "hold" rating.

Comments

[petpesie:]

Your title doesn't match the content re increase/decrease in NAV.

2008 Sep 03 12:38 PM