GOLD AND PRECIOUS METALS — Homestake, Plutonic merge

Homestake Mining (HM-N) has completed its acquisition of Australian gold producer Plutonic Resources.

In separate meetings, shareholders of both companies approved the combination, which makes Homestake the second-largest gold producer Down Under. Following the meetings, the Supreme Court of New South Wales gave its final approval.

Homestake will issue 64.4 million shares, worth about US$770 million, to Plutonic shareholders at a ratio of 34 shares of Homestake for every 100 Plutonic shares held. The transaction will leave Homestake with 211 million shares outstanding.

The deal is expected to boost Homestake’s production to 2.5 million oz. gold this year, keeping the San Francisco-based company among the top five North American producers. Homestake’s production from Australia is pegged at about 850,000 oz. gold for this year, rising to 1 million oz. by 1999. This would place it second behind Normandy Mining among producers of Australian gold.

Plutonic brings 2.5 million oz. of proven and probable gold reserves to Homestake, along with another 7 million oz. in mineralized material. It also has a large portfolio of exploration properties across Western Australia.