S.A. Goldfields looks to future

If a merger between South American Goldfields (TSE) and Golden Star Resources (TSE) proceeds as planned, the amalgamated company would expect to be “a medium-sized and rapidly growing” gold producer by 1997, president David Fagin told shareholders gathered for the South American Goldfields annual meeting.

Fagin, a former president of Homestake Mining (NYSE), was recently appointed as chairman and chief executive officer of both companies in order to oversee the merger.

Golden Star and South American each have extensive landholdings in the Guiana Shield of South America, but Fagin believes the juniors are too small to raise capital as separate companies.

“A larger entity is much better equipped to negotiate deals for new equity,” Fagin told shareholders.

South American is currently trading at 10 cents above its 52-week low of 35 cents, while Golden Star is valued at $1.30.

Subject to shareholder and regulatory approval, South American has agreed to a merger based on one common share of Golden Star for each 3.25 shares of South American Shareholders will vote on the amalgamation on May 12. Fagin said the new company, which will realize some revenue from its 35% interest in the Omai gold mine project in Guyana, will spend at least $15 million on exploration each year. While initially focusing on diamond and gold prospects in Guyana and Suriname, the company would also consider expanding into Venezuela and French Guiana, he said.