Formation Chemicals Inc. becomes corporate sponsor of GATA

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TORONTO, Oct. 28 (Reuters) - Canadian gold
miners Iamgold Corp. (IMG.TO) and Repadre
Capital Corp. (RPD.TO) said on Monday they
agreed to an all-stock merger that builds on
a spate of consolidation in the Canadian
small-cap gold sector.

Iamgold said it will pay about C$340 million
($218 million) worth of its shares for
Repadre, a union that analysts said saved on
costs, and combined well-respected managers
that include Repadre's Joseph Conway as new
president and chief executive, and Iamgold's
Todd Bruce as chief operating officer.

The deal follows the recent hostile takeover
of Australia's Auriongold by Canada's Placer
Dome Inc. and the three-way combination of
mid-tier miners Kinross Gold Corp., Echo Bay
Mines Ltd., and TVX Gold Inc. in June.

Canada's juniors are seeking to expand into
mid-size producers to bulk up their gold
production amid a rising gold price and to
attract the interests of U.S. fund managers.

The companies said Repadre shareholders would
receive 1.6 Iamgold shares for each Repadre
share, with Iamgold as the continuing
company. Based on closing prices on Oct. 25,
that implies a price of C$8.48 for each
Repadre share.

The new Iamgold would have an annual gold
output of 450,000 ounces from four
operations, combined cash costs of $180 an
ounce, reserves in excess of 3.4 million
ounces, and a market capitalization of about
C$800 million.

"They are both pretty similar companies in
that they both have minority stakes in
quality gold projects run by majors," said
George Topping, an analyst for Sprott
Securities.

"So, in essence, what they're doing here is
saving on general and administrative expenses
that they carry on their own," he added,
estimating savings of between $9 million to
$10 million annually.

Iamgold's principle assets are the Sadiota
and Yatela gold mines in Mali, West Africa,
both joint venture projects with South
African mining giant AngloGold Ltd.

It is also active in exploration projects in
Mali, Senegal, South Africa, Argentina,
Brazil, and Ecuador.

Repadre has interests in gold and diamond
mines in North and South America and Africa.
In Ghana it has an 18.9 percent interest in
the Tarkwa/Damang mining complex, which
comprises two separate mining operations in
three districts, with joint-venture partner
Gold Fields of South Africa.

"The combined management team will possess
the strength and technical skills to continue
making sound acquisitions in order to
maintain the company's strategy for growth
and to be effective partners in mining
operations," said Bill Pugliese, chief
executive and co-chairman of Iamgold.

The deal is contingent on approval by
shareholders and due diligence, and is
expected to be finalized by the end of
February. The agreement includes a reciprocal
break fee of C$5 million.

Iamgold shares closed down 14 Canadian cents
at C$5.16 on the Toronto Stock Exchange on
Monday, after being halted prior to the news.
Repadre shares finished up 70 Canadian cents
at C$8.