Iamgold-Repadre merger goes through

Following a positive vote by its shareholders and an order in the Ontario Superior Court, gold royalty company Repadre Capital (RPD-T) has been merged into Iamgold (IMG-T).

The friendly merger, agreed upon in late October, brought together two of the largest non-operating companies in the gold business. Iamgold, whose principal interest is a minority holding in the Sadiola Hill gold mine in Mali, and Repadre, which has a minority interest in the Tarkwa and Damang mines in Ghana, will form a company with a market capitalization of around $1 billion.

At a meeting in Toronto, Repadre shareholders voted 96% in favour of the merger plan. Under the terms of the merger, Repadre shareholders will receive 1.6 shares of Iamgold for each Repadre share, and Repadre Capital becomes a wholly owned subsidiary of Iamgold.

Originally, the plan had specified that Iamgold President Todd Bruce would become chief operating officer of Iamgold, with Repadre’s Joseph Conway coming in as president and chief executive officer. Instead, Bruce is resigning from the company, as is John Ross, Iamgold’s chief financial officer.

New board

Three Repadre nominees — Conway, Donald Charter of Repadre shareholder Dundee Bancorp, and independent director Robert Quartermain — gain seats on Iamgold’s board, while Iamgold outside directors Rodney Stamler and Lord Armstrong of Ilminster step down. Iamgold’s Mark Nathanson and William Pugliese remain as co-chairmen of the new company.

The merger becomes final shortly after the resolution of one of Iamgold’s principal problems, a lawsuit brought by junior explorer Kinbauri Gold (YKB-V). The Ontario Superior Court brought down an award of $1.7 million plus pre-judgment interest and costs against Iamgold, which had earlier been found in breach of a 1990 merger agreement with Kinbauri (T.N.M., Jan. 6/03). Appeals to higher courts had failed.

Kinbauri had been asking for compensatory damages of $8.2 million, $2 million in punitive damages, and costs. The court turned down the claim for punitive damages, and the final amount of damages was all in compensation for the breach of contract. Kinbauri said interest and costs totalled $3.7 million.

Iamgold’s Sadiola Hill mine, operated by AngloGold (AU-N), produced 354,000 oz. gold in the first nine months of 2002 at a total cash cost of US$161 per oz. Iamgold and AngloGold each have a 38% share in the operation, with smaller interests held by the government of Mali and by a unit of the World Bank.

Iamgold and AngloGold are 40% shareholders in the nearby Yatela gold mine, where the government has the remaining 20%. Yatela, an open-pit and heap-leach operation, produced 197,000 oz. in the first nine months of 2002, at a total cash cost of US$176.

Repadre’s chief asset is an 18.9% shareholding in Gold Fields Ghana, with South African mining house Gold Fields (GFI-N) as the majority owner. Gold Fields Ghana operates the Tarkwa mine, which produced 398,000 oz. gold in the first nine months of 2002, at a cash cost of US$186 per oz., and the Damang mine, which produced 212,000 oz. at US$224 per oz. in the same period.

Repadre also brings in a 1% royalty on the Diavik diamond mine in the Northwest Territories, owned by Rio Tinto (RTP-N) and Aber Diamond (ABZ-T), and a portfolio of smaller royalty interests.

While the Toronto Stock Exchange remains the new company’s principal listing, Iamgold has been trading on the American Exchange since the beginning of December 2002, under the ticker code IAG. The new company has about 141 million shares outstanding.