Iamgold acquires participation royalty for $13M

Iamgold Corp., a Canadian gold mining company, said Wednesday it acquired the participation royalty on the Doyon/Westwood property in Quebec from Barrick Gold Corp. for $13 million in cash.

The deal eliminates the royalty obligation on the Doyon mine, which is 24.75 percent of the gold price above $375 per ounce. Based on current gold prices, the change immediately reduces cash costs at Doyon by $140 per ounce, Iamgold said.

For the Doyon division, which includes the Doyon and Mouska mines, the reduction in cash costs for the rest of the year is estimated at $80 per ounce at current gold prices, the company said.

The royalty also extends to the nearby Westwood development project and allows future production at Westwood to be free from royalty obligations, Iamgold said.

In midday trading, Iamgold shares fell 12 cents, or 2 percent, to $5.95, while Barrick shares fell $2.31, or 4.9 percent, to $45.32.