GOLD: Iamgold buys Monarch’s Fayolle deposit for $11.5M

QUEBEC - Canada’s Monarch Gold is selling its Fayolle property in western Quebec to fellow miner Iamgold in a cash and share deal valued at $11.5 million. The Montreal-based company said the transaction will see Iamgold issuing $9.7 million in shares to Monarch and a $300,000 cash payment once ownership of the asset has been transferred. Iamgold will also give Monarch $1.5 million in cash 90 days after the initial transport of ore from the Fayolle deposit. Monarch president and chief executive, Jean-Marc Lacoste, said the move was a “profitable short-term transaction.” It would allow the company to strengthen its financial position without dilution, he said. He also highlighted the potential for appreciation of Iamgold shares. Funds from the transaction will allow the mine developer to advance its flagship Wasamac gold project, also in western Quebec, at a faster pace, Lacoste said. With proven and probable mineral reserves of 21.5 million tonnes at an average grade of 2.56 g/t of gold, the Wasamac project is expected to churn out between 100,000 oz. and 200,000 oz. of gold annually over an 11-year mine life. Monarch filed a project notice with Quebec’s Ministry of the Environment and the Fight Against Climate Change last November. That is the first step in the mining permit application process, which generally takes 18 months to 24 months. Eying Glencore's plant Last month, Monarch signed a memorandum of understanding (MOU) with Glencore Canada. The agreement could see the mine developer using the major’s plant near Timmins to process ore from Wasamac. “[The MOU] has raised the outlook of our 2.6-million-oz. gold flagship project, which includes 1.8 million oz. of reserves,”  Lacoste said. Monarch is evaluating an upgrade on part of Glencore’s concentrator as part of a plan that involves shipping ore by rail from the Wasamac property for processing into doré bars. The company is expected to finish the upgrading study by Dec. 31. If both parties agree the results of the study are in each other’s interests, Monarch and Glencore will then negotiate a toll milling agreement by Mar. 30, 2021. Monarch would also agree to fund upgrades to the concentrator and any related infrastructure by Jul. 2023. Potentially, the first shipments of ore from Wasamac could arrive by Dec. 2023. Glencore’s Metallurgical Site (Met Site), near Timmins in Ontario, was built in 1966 with numerous upgrades performed over the years. With a capacity to process 12,500 tonnes daily, the concentrator currently handles metal ore to produce copper and zinc concentrates.