Golden Star Resources (GSC-T) will not extend its bid for Iamgold (img-t), in the face of a competing, US$2.1-billion deal to merge with South Africa’s Gold Fields (GFI-N).
The company also says it does not expect to take up any shares tendered to its offer, which expired Aug. 16.
Golden Star CEO Peter Bradford says the market would need several months to evaluate and digest the Gold Fields plan and that extending the bid that long would not be in the interests of shareholders.
Gold Fields recently agreed to bundle its foreign assets together with Iamgold to create Gold Fields International. Gold Fields would own about 70% of the new Gold Fields International; Iamgold shareholders would hold the remaining 30%.
The new company would rank seventh among the world’s top gold producers, with six mines churning out a total of about 2 million oz. gold per year; operating costs are forecast at around US$250 per oz. The market cap would come to US$350 million, and operating cash flow for 2005 is pegged at about US$265 million, based on a gold price of US$400 per oz.
Gold Fields has already obtained all required regulatory approvals in South Africa; the scheme requires the approval of a simple majority of each company’s shareholders. The deal is slated to close before year-end.
Meanwhile, Golden Star has agreed to cap some US$16.7 million in debt owed by
The agreement will also see US$6 million payable by Golden Star to Guyanor for its regional exploration data applied to the debt. Repayment of the remaining, interest-free US$10 million will be deferred until Guyanor returns to a “sound financial situation.”
Also under the deal, Golden Star will be granted an option to earn up to a 70% stake in the Paul Isnard property in French Guiana by paying US$7 million and completing a feasibility study within three years. Golden Star’s payments will be credited against Guyanor’s remaining debt.
Paul Isnard is home to an inferred resource of 8.2 million tonnes grading 1.8 grams gold per tonne.
If Golden Star decides to build a mine at Paul Isnard within five years, it would buy out Guyanor’s subsidiary at the project for US$5 million plus a net smelter return royalty (capped at 2 million oz.). The royalty varies from 0.5% to 2%, increasing in US$50 increments over gold prices ranging from US$325 to US$400 per oz.
Golden Star owns 52.8% of Guyanor.
Be the first to comment on "Golden Star throws in the towel (August 30, 2004)"