Iamgold to Pay $525 Million for Half of Côté Royalty

Iamgold (NYSE:IAG) will spend approximately $525 million to repurchase half of Franco-Nevada's gross margin royalty on the Côté mine, a transaction it expects will cut cash costs at the Ontario operation by about $150 per ounce starting in 2027. The company announced the deal alongside third-quarter results showing 186,900 attributable ounces of gold produced, keeping full-year guidance on track with a stronger finish expected from Côté.

CEO Renaud Adams said Iamgold had produced 558,600 attributable ounces through the first nine months and needed about 161,000 ounces in the fourth quarter to reach the low end of its full-year guidance. He expects the fourth quarter to be the company's strongest of the year.

What do the Q3 numbers show?

Third-quarter revenue reached $856.5 million, generated from sales of 199,900 ounces at an average realized gold price of $4,277 per ounce. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) came in at $503.9 million, while adjusted net earnings attributable to equity holders were $237 million, or $0.42 per share, compared with $170.9 million, or $0.30 per share, in the prior period.

CFO Maarten Theunissen said mine-site free cash flow was $404.3 million in the quarter and approximately $1.3 billion for the first nine months. Iamgold ended September with $766.6 million in cash and an undrawn $850 million credit facility, giving it roughly $1.6 billion in liquidity. Remaining debt consists of $450 million in senior notes due in October 2028, and Theunissen said management continues to evaluate how best to use its balance sheet in relation to those notes.

The company repurchased and canceled approximately 7.6 million shares for $134.7 million during the quarter. Since the buyback program began in December 2025, it has repurchased 32.1 million shares for $592.6 million. The board has authorized Iamgold to seek Toronto Stock Exchange approval for a new 12-month buyback covering up to approximately 10% of outstanding shares.

How does the royalty buyout work?

Under the transaction, Iamgold will pay the full purchase price after its Côté partner, Sumitomo, elected not to participate. Theunissen said the deal should close in December and take economic effect on Jan. 1, 2027. It would reduce the royalty on the asset to 3.75%, with Iamgold's effective rate falling to 2.14% because it would retain the full benefit of the purchase.

The company expects to fund the transaction with balance-sheet cash, although it could briefly draw on its credit facility if needed. Theunissen also said Iamgold is considering initiating a dividend in 2027.

Can Côté deliver a stronger fourth quarter?

Côté produced 92,000 ounces on a 100% basis in the third quarter, or 64,400 ounces attributable to Iamgold. COO Bruno Lemelin said the operation completed its first full quarter without contractor crushing, and the mill averaged 37,100 tons per day in September, above its 36,000-ton-per-day nameplate capacity.

September milling costs fell to $15.36 per ton, compared with $18.92 per ton for the full quarter. Lemelin said Iamgold aims to sustain nameplate throughput and approximately $15-per-ton milling costs in the fourth quarter.

Côté should finish at the lower end of its full-year production guidance of 390,000 to 440,000 ounces on a 100% basis. Full-year cash costs excluding royalties at the mine are expected to exceed the top of the $900 to $1,050 per-ounce guidance range, although fourth-quarter costs should decline.

Iamgold plans to release an updated Côté mine plan and mineral reserve estimate during the fourth quarter. The plan will combine Côté and the neighboring Gosselin deposit into one pit for the first time and outline a path toward processing 40,000 tons per day. Adams said the study will use a gold price of $2,100 per ounce for its reserve calculation.

What about Essakane and Westwood?

Essakane in Burkina Faso produced 94,000 attributable ounces and generated $271.1 million in mine-site free cash flow on a 100% basis. The mine remains on track for annual guidance of 340,000 to 380,000 attributable ounces, Lemelin said.

Iamgold has received a temporary exemption, with no specified end date, from a Burkina Faso requirement to use local refiners. Theunissen said a slower refining process could affect working capital and potentially delay cash repatriation, but would not prevent it.

At Westwood in Quebec, third-quarter production was 28,500 ounces, with the mine expected to finish near the upper end of its 110,000 to 130,000-ounce guidance range. Lemelin also addressed gold-bearing material found in a Westwood processing tank: an illustrative calculation suggested it could contain approximately 30,000 ounces, but he cautioned the company lacks a representative sample and the figure is not a reliable estimate of recoverable gold. The material is being processed by an external refinery and is excluded from 2026 production guidance.

What studies are coming in 2027?

Iamgold expects to publish a preliminary economic assessment for its Nelligan Mining Complex in Quebec in mid-2027, bringing the Nelligan, Monster Lake and Philibert deposits into a single development concept, Adams said. Updated technical reports are planned for Essakane in mid-2027, examining a potential mine-life extension to 2035, and for Westwood in the second half of 2027, assessing bulk-mining options.