merger of igs and santa fe gold corporation, page-4

Juniors to merge, creating U.S. silver-gold producer with African, South American assets.

An emerging silver-gold producer in the U.S. is taking the lead in a merger with an Australian junior explorer, giving it an international backbone.


Author: Kip Keen
Posted: Friday , 12 Oct 2012

HALIFAX, NS (MINEWEB) -

Two juniors, Santa Fe Gold (OTCBB: SFEG) and International Goldfields (ASX: IGS), struck an agreement to merge on Friday, bringing together the former's U.S. silver-gold mine and the latter's international exploration portfolio under one roof.

The plan sees existing Santa Fe and International Goldfields' shareholders ending up with about 62% and 24% of the post-merger company, respectively. Meantime, International Goldfields plans a private placement as part of terms of the merge.

While officially Santa Fe will come under the umbrella of ASX-listed International Goldfields, this merger very much puts Santa Fe in the driver's seat of the post-merger company.

According to terms of the merger agreement, Santa Fe will nominate four of five directors of the post-merger board. Further, Pierce Carson, Santa Fe's president and CEO, will take over as interim president and CEO, until the board of directors appoints a new president and CEO.

In broad strokes the merger creates a junior with gold-silver production in the U.S. and a portfolio including exploration properties in Mali and Brazil.

Santa Fe hit commercial production at its Summit silver-gold mine in New Mexico earlier this year and said it was near its 10,000 tons per month and annual 28,000 ounce gold equivalent production targets. At last count, indicated resources at Summit were 623,000 tons @ 370 g/t Ag and 4.9 g/t Au translating to 7.4 million ounces silver and 98,000 ounces gold in contained metal according to Santa Fe.

For Santa Fe, access to cash also appears to have been a prime motive in seeking a merger. Carson noted in a prepared statement: "The merger with IGS provides Santa Fe the working capital to achieve those goals, plus rounds out the exploration pipeline for continued growth of the company's resource base."

As part of the merger, International Goldfields is to raise A$2 million for Santa Fe within the next five days. Santa Fe, in turn, said it will use such proceeds "to secure Santa Fe's option to the Mogollon project and for general working capital purposes."

Mogollon is one of Santa Fe's projects in New Mexico, that it hopes will one day provide an additional source of feed to its Lordsburg mill, which process ore from the Summit mine.

As for International Goldfields, its focus has been on the Latin Gold project in Mato Grosso state, Brazil, where it reports drilling as much as 21 metres @ 5.9 g/t in early 2012.

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