Gold Fields to merge with Driefontein

Shareholders of both Driefontein Consolidated (DRFNY-Q) and Gold Fields (GLDFY-O) have given the nod to a proposed merger of the companies into a larger and more diversified Gold Fields.

Driefontein operates its namesake mine in South Africa’s Gauteng province, which produces about 1 million oz. annually. Production has been declining at the aging mine in recent years, prompting its owner to seek growth in a larger, more diversified organization.

Driefontein offered 155 shares for every 100 shares of parent company Gold Fields, which represents a 17% premium on the recent share price. The complex transaction had Gold Fields distribute its 60% interest in Driefontein to its shareholders (T.N.M., March 1/99).

In a separate but related deal, Gold Fields swapped 2 million shares of Anglogold (au-n) in exchange for 10.8 million of its own shares held by the major producer. Gold Fields also purchased Anglo’s 44 million shares of Driefontein, which it ultimately distributed to its shareholders.

The High Court of South Africa is expected to approve the proposed merger in early May.

The new Gold Fields will have a market capitalization of US$2 billion and 447 million shares outstanding. With operations in South Africa and Ghana, the company expects to produce 4 million oz. gold in 1999 at a cash cost of below US$190 per oz. It also has reserves of more than 96 million oz.