Golden Star merges with South American Goldfields

The planned merger of Golden Star Resources with South American Goldfields into a new company known as Golden Star Resources Ltd. (TSE) was approved by shareholders of both companies recently.

About 11.1 million shares of the combined entity have begun trading on the Montreal and Toronto stock exchanges as management prepares to focus on looking for diamonds and gold in Guyana and Suriname.

Under the merger, shareholders of the former Golden Star Resources consolidated their shares on a 1-for-2 basis while South American Goldfields shareholders exchanged six of their shares for one share of the merged company.

About 16.6% of the new entity is held by Ivanhoe Capital, a company controlled by Vancouver promoter Robert Friedland. A management team led by Chairman David Fagin and President David Fennell owns 13.5% of Golden Star. At a recent meeting in Toronto, Fagin said the company will realize some revenue from its 35% interest in the Omai gold project in Guyana. He predicted that the new company would also spend at least $15 million annually on exploration.

In March, Golden Star received permission from the government of Suriname to explore for gold and other minerals on a 781-square-mile property known as the Headley’s Reef Reconnaissance Right. Situated on the northeast coast of South America on what was previously Dutch Guiana, the Headley’s Reef Right covers about two-thirds of Suriname’s principal greenstone belt.

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