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Goldfields buys iamgold { August 12 2004 } Original Source Link: (May no longer be active)
http://www.nytimes.com/2004/08/12/business/worldbusiness/12gold.htmlhttp://www.nytimes.com/2004/08/12/business/worldbusiness/12gold.html
August 12, 2004
Gold Fields to Buy Iamgold, Fending Off Bidder From U.S.
By BLOOMBERG NEWS
JOHANNESBURG, Aug. 11 - Gold Fields, the large gold producer based in Johannesburg, agreed Wednesday to buy the Iamgold Corporation, based in Toronto, in a stock swap valued at about $2.1 billion, fending off a competing bid from Golden Star Resources.
Iamgold will issue 351.7 million shares and become part of a new, publicly traded Gold Fields unit led by Gordon R. Parker, 68, the former chairman of the Newmont Mining Corporation.
Shareholders of Gold Fields will own 70 percent of the enlarged company, Ian D. Cockerill, the chief executive, said in a conference call.
"It makes sense," said Caesar Bryan, manager of Gabelli Asset Management's $250 million gold fund in Rye, N.Y., which owns shares of both companies. "It gives Iamgold stronger management and operating assets, and it gives Gold Fields a valuation for their non-South African assets."
The purchase will help Gold Fields grow outside of South Africa, where the rand's 94 percent gain against the dollar since 2001 has been costly because it pays expenses in rand and sells gold in dollars. Gold Fields posted a net loss of 186 million rand ($30 million) in the three months ended in June, in part because it had to write off a tax break.
Peter J. Bradford, chief executive of Golden Star, based in Littleton, Colo., said his company would not raise its bid. The latest offer, worth about $870 million, is to expire on Sunday.
The deal will allow increased output at Iamgold, whose shareholders rejected a proposal last month to buy Wheaton River Minerals. Joseph F. Conway, chief executive of Iamgold, said last month that as many as seven companies had expressed interest in a deal.
Shares of Gold Fields rose 0.31 rand, to 66.01 rand. They have fallen 31 percent this year.
Shares of Iamgold rose 81 cents, to 7.80 Canadian dollars, in Toronto.
Iamgold and Gold Fields' assets outside of southern Africa will be put into a new company, Gold Fields International. It is expected to produce 2 million ounces next year, rising to 2.4 million in 2007, and to have proven and probable reserves of 14.6 million ounces, Gold Fields said.
"What this provides for them is the stepping stone to growth," said Patrice Rassou, head of mining at Old Mutual Asset Management in Cape Town, which oversees the equivalent of $45 billion, including Gold Fields shares. "It's quite positive."
Chris Thompson, the chairman of Gold Fields, will be president and chief executive of Gold Fields International, whose shares will trade in Toronto. It may be based in Denver and produce as much as 3.5 million ounces of gold a year within three years, he said in the conference call.
Copyright 2004 The New York Times Company
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