Japanese firm Sumitomo Metal Mining has signed an agreement to acquire 30% stake in Canada’s Côté Gold project from Iamgold for around $195m.

Under the deal, Sumitomo will pay $100m to Iamgold upon closing of the deal, while the remaining $95m will be paid after 18 months of the deal closure or the the date of public filing of a feasibility study with respect to the project.

Iamgold will serve as operator for the project during development and operational stages.

Once the deal concludes, Iamgold and Sumitom will establish an unincorporated joint venture (JV) for the Côté Gold Project.

Later, the firms will sign a JV agreement, under which Iamgold will hold 70% stake in the project, while the remaining 30% will be owned by Sumitomo.

Situated 120km south-southwest of the city of Timmins in Ontario province, the Côté Gold project is said to be a high-tonnage gold development project for open pit mining.

The deal will also allow Sumitomo to acquire regional mining claims near to the Côté Gold project.

Currently, a pre-feasibility study (PFS) is underway at the project, which is expected to help in the commencing of construction in 2019 and production in 2021.

The deal is expected to complete by the first half of fiscal year 2017.

Iamgold president and CEO Steve Letwin said: "This transaction is significant for IAMGOLD as it validates the intrinsic value of the Côté Gold project. 

“It will enable us to move the Project into development and to significantly diversify our production profile as a result of future production from our Canadian operations.

"After extensive due diligence by both parties, what solidified the relationship was the mutual trust and respect and the alignment around strategic priorities.