Gold Fields, IAMGold Join to Create New Company

Engineering and Mining Journal, Sep 2004

The boards of directors of South Africa-based Gold Fields Ltd. and Canada's IAMGold agreed in early August to pursue a merger of Gold Fields' assets outside the Southern African Development Community with all IAMGold assets to form a new company called Gold Fields International. IAMGold will issue stock to Gold Fields sufficient to give Gold Fields 70% ownership of Gold Fields International. IAMGo;d shareholders will receive a special dividend of $C0.50 per share. The new company will retain IAMGold's listings on the Toronto and American stock exchanges.

A majority of the shareholders of each company must approve the transaction, which is also subject to regulatory approvals and third party consents. Gold Fields has already received approval for the transaction from the South African Reserve Bank, with the proviso that Gold Fields at all times maintains a shareholding of at least 50.1% in Gold Fields International. Gold Fields and IAMGold anticipate that the merger will close before year-end 2004.

For IAMGold, the agreement ended a five-month saga during which IAMGold shareholders voted down a management-approved merger with Wheaton River Minerals and also during which the company received an unwanted buyout bid from Golden Star Resources. The Golden Star bid was still open when Gold Fields and IAMGold announced their agreement. However, shortly thereafter, Golden Star said it would allow its offer to expire and that it did not expect to take up any shares tendered.

For Gold Fields, the new company opens a path to higher valuations of its international assets, which have been hampered by the lower rating that stock markets give South African companies. Gold Fields International, with its North American listings, will have a separate management team that will focus on growth. Gold Fields Ltd. will focus on managing of its good-quality, long-life mines in South Africa in light of their huge upside potential to the gold price and the political considerations that are unique to that country.

Assuming completion of the transaction, Gold Fields International will hold 100% interests in two mines each in Mali and Australia and minority interest in two mines in Ghana. Attributable production will total 2 million oz/yr in 2005, increasing to 2.4 million oz in 2007. Reserves will total 14.6 million oz, and resources will total 25.9 million oz. Operating cash flow in fiscal 2005, assuming a $400/oz gold price, will total $251 million.

Development projects will include the Arctic Platinum Project (APP) in Finland and the Cerro Corona gold project in Peru. At the APP, feasibility studies slated for completion by yearend 2004 suggest annual production could reach 450,000 oz/yr of platinum group metals, 15,000 mtpy of copper, and 7,000 mtpy of nickel. At Cerro Corona, production is projected at 280,000 oz/yr of gold equivalent, and a final investment decision is expected by mid-year 2005.

Top management of Gold Fields International will include Gordon R. Parker, who will resign from the current Gold Fields board to become chairman of the new company. Chris Thompson will resign from his post as chairman of Gold Fields to become president and CEO. William Pugliese, current chairman of IAMGOLD, will become deputy chairman. John Munro, current head of Gold Fields' international operations will become executive VP and chief operating officer.

Alan Wright, currently deputy chairman of Gold Fields, will succeed Thompson as chairman of that company.