Iamgold Corp. is studying plans to spin off its niobium mine into a separate company and do deals in Asia as it tries to bring its valuation in line with its pricier rivals.

Since taking over the chief executive job last November, Steve Letwin has been looking for ways to reduce that valuation gap. In an interview on Tuesday, he estimated Iamgold trades at around 1.1 times net asset value, while some competitors trade at 1.7 or 1.8 times.

The gap exists because of Iamgold's history: the company started out as a royalty play, and it still does not control about a third of its production. It gets less value for those non-operating assets. Iamgold also owns the Niobec niobium mine, a non-core project that is not valued as highly as the gold assets.

To unlock value from Niobec, Mr. Letwin may follow the lead of Goldcorp Inc., which spun off two non-core assets into new companies last year and immediately got more value out of them. "That's exactly what we're looking at," he said, adding that there are "splendid" opportunities to control the mine in a structure that better reflects its value.

While there have been rumours for years that Iamgold would do something with Niobec, Mr. Letwin appears determined to get it done.

He is not stopping there. He also wants to sell or swap Iamgold's minority stakes so that almost all of its production is in its own operating mines. There is interest in these assets from Asian companies, he said, including private equity firms and mining firms. He is also looking at forming a joint venture with Asian players to seek and develop gold prospects in Africa and South America, Iamgold's core regions. Those deep-pocketed partners could provide a portion of the financing for projects.

"We would drive the strategy, we would operate the mines and they would put up money," Mr. Letwin said.

"With our share price trading at such a significant discount, the last thing we want to do is issue any equity."

He recently returned from a trip to Asia and said that interest in Iamgold from places like Hong Kong, China, Japan and South Korea is "significant."

Mr. Letwin, who comes from an oil and gas background, took over as CEO after Joe Conway left in a surprise departure. Mr. Conway earned credit for transforming Iamgold from a royalty play into a mine operating company, but the board was looking for someone with more international experience to lead it in the future. Mr. Letwin said he has a lot of experience in Asian markets.

"I think strategically I can help the company move to the next level fairly quickly," he said.

pkoven@nationalpost.com

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