IAMGOLD Pays $525 Million to Buy Back Half of Côté Mine Royalty, Cut Costs
Key Facts
IAMGOLD notified Franco-Nevada on November 5 that it was exercising its contractual right to buy back half of the royalty on Côté Gold, equal to 7.5% of gross margin, for about $525 million. The Canadian company will fund the full transaction, a significant cash payment in exchange for a sustained reduction in the burden tied to the mine’s production. Once completed, the royalty payable to Franco-Nevada will fall to 3.75%. Under arrangements related to the deal, IAMGOLD expects the effective royalty burden on its interest in the mine to decline to 2.14%. The company said closing is expected in December 2026, with the economic impact beginning on January 1, 2027.
Sumitomo Metal Mining, through its SMM Gold Cote subsidiary, elected not to participate in the buyback, leaving IAMGOLD to bear the full price and retain the deal’s economic benefit. IAMGOLD owns a 70% interest in Côté Gold, where the nominal royalty on its share will fall from 7.5% to 3.75% after the option is exercised. With related arrangements, the company estimates the effective burden on its interest will be 2.14%. The company links the deal to lower cash operating costs at the mine, rather than simply to a change in its contractual terms with Franco-Nevada. According to coverage of the company’s results, the transaction is expected to reduce Côté’s cash costs, including royalties, by about $150 per ounce starting in 2027.
The deal comes as the Côté mine increases throughput. The mill averaged 37,100 metric tons per day in September, exceeding its design capacity of 36,000 tons per day. Total ore processed during the month reached 1.1 million tons. IAMGOLD said September milling costs were $15.36 per ton, and unit costs improved as operations and maintenance adapted to the company operating the crushing circuit entirely in-house. September was the first full operating month after the transition to this model, according to the third-quarter results statement. Exceeding design capacity provides operating context for the expected savings from the royalty reduction, as the financial burden is reduced while throughput rises.
IAMGOLD reported attributable production of 186,900 ounces in the third quarter and said it remained on track to meet its full-year guidance of between 720,000 and 820,000 ounces. Attributable production from Côté alone was 64,400 ounces during the quarter, compared with 74,600 ounces in the same period of 2025. In the first nine months of 2026, the company’s attributable production rose to 558,600 ounces from 523,500 ounces a year earlier. Chief Executive Renaud Adams said Côté is positioned to post its strongest quarter of the year in the fourth quarter, supported by higher throughput and ore grades. The company also expected mine production to rise in the final quarter as the mining sequence brings higher grades and throughput increases.
IAMGOLD had $1,613.4 million in available liquidity on September 30, including $766.6 million in cash and cash equivalents and $845.8 million available under its credit facility. In the third quarter, the company said it generated $404 million in free cash flow from its mine sites and returned $135 million to shareholders through share buybacks. From the start of the buyback program in December 2025 through the end of the third quarter, it repurchased 32.1 million shares for $592.6 million, according to coverage of its results. These figures provide financial context for the decision to fund the royalty buyback while continuing to return capital to shareholders. IAMGOLD had estimated that royalties added an average of about $325 to cash costs per ounce sold, based on an assumed gold price of $4,000 per ounce in its 2026 guidance.
On November 6, IAMGOLD shares, trading under the symbol IAG, closed at $18.76, according to EL7 data. The company is expected to unveil an updated plan for the Côté mine and a new mineral reserve estimate in the fourth quarter of 2026. It said the study will examine near-term opportunities to reach sustainable throughput of about 40,000 tons per day. This follows the mill’s September throughput of 37,100 tons per day, above its current design capacity. Closing the deal in December and the start of its economic impact in early 2027 are the next milestones in implementing the royalty reduction.