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04.10.2004 Business & Finance

Iamgold reports major increase in gold reserves at Ghana mine

By Canadian Press

TORONTO (CP) - Iamgold Corp., which is being taken over by South African mining giant Gold Fields Ltd., is eyeing a big gain from expanded gold reserves at a mine complex in Ghana where the Canadian firm has an 18.9 per cent stake.

A total of 4.9 million ounces of proven and probable gold reserves were added to the Tarkwa-Damang mine and 926,000 ounces were added to Iamgold's account, CEO Joe Conway said Monday.

Gold Fields and the government of Ghana hold 71.1 per cent and 10 per cent interest, respectively, in the Tarkwa and Damang mines.

Toronto-based Iamgold, which was the target of two other merger bids this year, has endorsed a $2.1-billion-US takeover by Gold Fields. Gold Fields will own 70 per cent of a new company, combining Gold Field's assets outside South Africa with Iamgold's assets, mostly gold in West Africa and a royalty interest in a Canadian diamond mine.

Current Iamgold shareholders will own the remaining 30 per cent of the new company, to be called Gold Fields International Ltd. They will also receive a special cash dividend of 50 cents a share.

"We are very excited to see such significant increases in reserves and resources at Tarkwa," Conway said in a release. "The operation continues to illustrate its potential to support a further expanded production scenario or extension to the mine life."

On May 8, Toronto-based Iamgold announced the decision to expand the Tarkwa gold mine, including construction of a mill and leach plant at a cost of $85 million US and the purchase of a new mining fleet and equipment for $74 million US.

The mill is expected to be commissioned by the end of this year.

On the Toronto stock market Monday, Iamgold shares (TSX:IMG) rose four cents to $10.09.

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