June 6, 2017 / 4:19 AM / 2 years ago

Japan's Sumitomo Metal to buy stake in Canada gold project for $195 million

TOKYO (Reuters) - Japan’s Sumitomo Metal Mining Co (5713.T) on Tuesday said it had agreed to take a 27.75-percent interest in a Canadian gold mining project from Toronto-based IAMGOLD Corp (IMG.TO) for $195 million.

The purchase of the stake in the Cote Gold Project in Ontario comes as Japan’s biggest gold miner looks to boost its output through acquisitions and exploration.

IAMGOLD owns 92.5 percent of the project, currently in its so-called pre-feasibility study phase. Production is slated to begin in 2021, with the development expected to churn out 168 tonnes of gold over a 17-year life.

“With this deal, we will make progress toward our long-term goal of boosting gold output from our equity holdings to 30 tonnes a year,” Naoyuki Tsuchida, Sumitomo Metals senior managing executive officer, told a news conference. The deal is expected to complete by the end of September.

The company said the project would boost its annual gold output to nearly 18 tonnes from 15 tonnes now.

“Since this project is located in the Abitibi gold belt in eastern Canada, which is one of the world’s largest gold-producing areas, there may be additional reserves, depending on future exploration,” Tsuchida said.

Yoshiaki Nakazato, president of Sumitomo Metal, which is also miner and smelter of copper and nickel, said last month that the firm was still willing to invest in gold mines despite the record loss it booked in the fiscal year to March 2017.

Reporting by Yuka Obayashi and Chang-Ran Kim; Editing by Michael Perry and Joseph Radford

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