12/10/2012 - 10:34

International Goldfields enters US merger deal

12/10/2012 - 10:34

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International Goldfields enters US merger deal

Perth-based gold explorer International Goldfields has announced a cash and scrip merger agreement with United States-based Santa Fe Gold Corporation, to create a diversified gold and silver miner with a market capitalisation of around $70 million.

It will also have a production profile of 28,000 ounces of gold equivalent per annum, $10 million in cash reserves and assets include an operating mill, near-term development projects and a portfolio of advanced exploration tenements.

The flagship asset is the Summit gold-silver mine in New Mexico, which is forecast to increase production to 150,000 tonnes per annum with a grade of 7.8 grams of gold equivalent per tonne by 2014.

Under terms of the deal, Santa Fe shareholders will receive just over 1.4 billion IGS shares in exchange for their Santa Fe stock, while IGS will also pay $2 million within 5 days of formal agreement, which it plans to raise by way of placement, priced at 3 cents per share.

IGS will also attach one option for every two placement shares subscribed for.

A further $2 million will be payable to Santa Fe on or before October 31.

“The combination of International Goldfields’ exploration assets in emerging global mining districts with Santa Fe’s portfolio of low-cost mining and exploration assets in New Mexico, together with the combined skills of the two experienced management teams, will create a new merged company capable of adding significant value for its shareholders during a time of robust gold price,” IGS chief executive Travis Schwertfeger said.

The transaction remains subject to shareholder and foreign investment review board approval.

IGS shares were up 2.78 per cent at 10:30AM, WST, trading at 3.7 cents. 

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