S&P Places IAMGOLD Corp. (IAG) on CreditWatch Negative

Standard & Poor's Ratings Services today said it placed its ratings on IAMGOLD Corp. (NYSE: IAG), including its 'BB-' long-term corporate credit rating on the company, on CreditWatch with negative implications, following IAMGOLD's announced plan to sell its wholly owned Niobec Inc. subsidiary, which owns and operates a niobium mine in Quebec. The company will receive US$500 million in cash, with an additional US$30 million when the rare earth element deposit adjacent to the niobium mine goes into commercial production.

"The CreditWatch follows the company's announced intention to sell its Niobec niobium mine, which is a stable and meaningful contributor to IAMGOLD's operating results," said Standard & Poor's credit analyst Jarrett Bilous.

The CreditWatch reflects our uncertainty regarding the extent of the impact on IAMGOLD's financial and business risk profiles from the planned sale of its niobium business. We expect the sale will weaken the company's business risk profile notably from a reduction in operating diversity. In our view, the stability of IAMGOLD's niobium business helped to mitigate the company's high reliance on comparatively volatile gold market conditions. In addition, the loss of EBITDA and cash flow from Niobec will likely result in core credit measures that weaken beyond our threshold for the current rating -- with adjusted debt-to-EBITDA above 3x and funds from operations-to-debt below 30% -- in the absence of significant debt repayment. Finally, the CreditWatch on the senior unsecured notes rating reflects our uncertainty of the sale's impact on our recovery analysis, including the amount of debt outstanding, the estimated enterprise value of IAMGOLD excluding Niobec, and resulting recovery prospects for senior unsecured note holders.

We will resolve the CreditWatch following our review of the business and financial risk impact of this sale on IAMGOLD, which will include discussions with management. Our review will focus on the planned use of cash proceeds from the sale, which we expect will be directed toward investments in IAMGOLD's existing gold properties and potentially gold-focused acquisitions. We believe that a downgrade on the company is likely, and expect to complete our review within 90 days.

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