International Goldfields Limited (IGS) and US-based, Santa Fe Gold Corporation have entered into a conditional Binding Heads of Agreement that will combine the companies and create a significant gold/silver company. The proposed merged entity will be a diversified, well-funded and low cost gold-silver explorer, developer and miner, listed on the ASX and also traded on a major US exchange or on the OTC Bulletin Board, with projects located in emerging mining districts including West Africa, Brazil and the south-west US. The combined entity will have an initial market capitalisation of approximately A$70 million, cash reserves of at least A$10 million, low cost gold & silver production of 28,000 oz pa, an operating mill, near term development assets and a portfolio of advanced exploration assets. Currently building to production of approximately 28,000 gold equivalent oz per annum with 2013 and 2014 production scheduled for 150,000 tpa at average head grade of 7.8 gpt (gold and gold equivalent) with average cash cost in the range of USD$400-$500 per gold and gold equivalent ounce. Potential exists to increase production rates with further development and exploration. The ore produced from the Summit Mine is processed at the SFEG owned Lordsburg Mill, which has a capacity of 300,000 tpa.
Commenting on the proposed merger, IGS chief executive officer Travis Schwertfeger said: “The combination of International Goldfields’ exploration assets in emerging global mining districts with Santa Fe’s portfolio of low-cost mining and exploration assets in New Mexico, together with the combined skills of the two experienced management teams, will create a new merged company capable of adding significant value for its shareholders during a time of robust gold price.” Santa Fe Chief Executive, Mr Pierce Carson, said of the proposed merger, “Santa Fe’s projects have had significant exploration and development, plus we successfully achieved commercial production For personal use only at our Summit mine in early 2012. Our focus is on increasing production at Summit and bringing the Mogollon and Ortiz projects on stream.”
IGS and Santa Fe have agreed to enter into a transaction whereby the entities will merge and Santa Fe will become a wholly-owned Delaware subsidiary of IGS. Santa Fe shareholders will receive a total of 1,449,469,462 fully paid ordinary shares in the capital of IGS (on a pre-consolidation basis) in exchange for their Santa Fe stock. IGS will advance A$2 million to Santa Fe within five (5) business days of the execution of the HoA to secure Santa Fe’s option to the Mogollon project and for general working capital purposes.
