Monarch Gold (MQR.TO) has signed an agreement with IAMgold (IMG.TO, IAG) whereby the later can acquire full ownership of the 1373 hectare Fayolle gold project in Québec. An initial C$9.7M has been settled by IAMgold issuing 1.85 million shares at a deemed price of C$5.24. As IAMgold’s share price is currently trading at around C$6/share, those shares are now worth over C$10M.

IAMgold will also receive C$0.3M in cash upon completing the transfer of ownership of a parcel of land and will receive an additional C$1.5M in cash within 90 days IAMgold transports the first ore from the Fayolle deposit (Monarch Gold calls it ‘ore’ in its press release but if IAMgold is planning to truck rock from Fayolle to a processing plant in the neighborhood it’d doubtful IAMgold will actually put an official NI43-101 compliant mine plan together, so we hope Monarch Gold’s lawyers have considered this when discussing the wording in the sale contract).

This transaction shows how serious IAMgold is about strengthening its position in Quebec as the company continues to add properties to its pipeline, and that’s positive news for Vanstar Mining (VSR.V) as IAMgold is earning an 80% stake in its 3.2Moz Nelligan gold project in the province.

Disclosure: The author has no position in Monarch Gold.

Leave a comment