Homestake targets Aussie subsidiary

In a stock swap valued at about US$162 million, Homestake Mining (NYSE) plans to assume sole ownership of its Australian subsidiary.

The company will exchange 9.8 million shares of its common stock for the 109.6 million shares of Homestake Gold of Australia (HGAL). The 109.6 million shares represent the 18.5% it does not already own.

From the transaction, Homestake will be able to report 100% of the net income from its half interest in the Kalgoorlie operations, and pick up almost 1.1 million oz. of reserves and 750,000 oz. of resource.

Homestake is obligated to make the offer within the next 60 days; it will remain open for a minimum of 30 days.

The company will offer HGAL shareholders A$2 per share if they choose the share exchange, or A$1.90 per share in cash.

HGAL owns 50% of the Mt. Charlotte mine, the largest underground gold mine in Australia. The other half is owned by Gold Mines of Kalgoorlie, an Australian public company. The Kalgoorlie operations yield 675,000 oz. gold per year.