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More on proposed Iamgold -- Gold Fields deal

Gold Fields to take control of Canada's Iamgold
By Eric Onstad

JOHANNESBURG, Aug 11 (Reuters) - Gold Fields Ltd (GFIJ.J) unveiled plans on Wednesday to take control of Canada's Iamgold Corp (Toronto:IMG.TO - News) in a $2.1 billion deal to create the world's seventh-biggest gold miner, sending Iamgold's shares surging.

Gold Fields, the world's fourth-largest gold producer, would merge its international operations with Iamgold to create a new company to be named Gold Fields International.

South Africa's Gold Fields, which will receive 351.7 million Iamgold shares worth $2.1 billion in exchange for injecting its assets, would own 70 percent of the new firm.

Iamgold, subject of a bidding battle and being stalked by small U.S. gold producer Golden Star Resources Corp. (Toronto:GSC.TO - News), advised its shareholders to reject Golden Star's offer and approve the Gold Fields deal instead.

Iamgold shares, which have fallen 19 percent this year, jumped to a high of C$7.67, up 9.7 percent, and were trading up 6.6 percent at C$7.45 by 1505 GMT.

Gold Fields shares closed up 0.5 percent at 65.76 rand.

"(On the face of it), it looks to be a good deal," said Patrick Chidley, an analyst at Barnard Jacobs Mellett in New York, who said he was still looking at the valuation of Gold Fields International's assets.

HIGHER VALUATIONS

The new company will be listed in Canada and the United States, where gold companies have higher valuations than in South Africa.

"We see the opportunity for both companies to win in this transaction," Iamgold Chief Executive Joseph Conway said in a conference call.

"For Gold Fields they get an international multiple on their international operations and, for us, ours get an exposure to a much larger reserve base and production base."

But Hugo Nelson, fund manager at Coronation Fund Managers in Cape Town, was wary of any re-rating.

"It's not something I'm betting the farm on. I'm just not sure whether the Iamgold investor base is going to grant this entity those kind of ratings," he said.

Iamgold shareholders will own the remaining 30 percent of the new company and receive a special dividend of 50 Canadian cents.

The new firm will be the world's seventh-biggest gold producer, with production at six mines in Ghana, Mali and Australia of 2.0 million ounces in 2005.

Gold Fields already has a partnership with Iamgold in the Tarrkwa and Damang mines of Ghana.

Output is expected to rise to 3.5 million ounces by 2008, said Chris Thompson, chairman of Gold Fields and due to become president and chief executive of the new group.

The new company, to be headquartered in North America, probably in Denver, will be able to raise money at better rates and better compete for acquisitions, said Gold Fields Chief Executive Ian Cockerill.

"We will be able to access capital markets at a lower cost... We will be able to compete with the big juggernauts," he said on the conference call.

Iamgold had been the subject of a bidding battle after its plan to merge with Wheaton River Minerals Ltd. (Toronto:WRM.TO - News) failed last month.

Golden Star made a hostile offer in May worth $900 million at the time, but it slumped in value as share prices fell. (Additional reporting by Nicole Mordant in Vancouver and Marius Bosch in Johannesburg)