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Santa Fe Gold Announces Heads Of Agreement For Merger With International Goldfields Limited

Santa Fe Gold Corporation (OTCBB: SFEG) today announced that it has signed a Binding Heads of Agreement to pursue a business combination with International Goldfields Limited (ASX: IGS). Key terms of the transaction have been approved by the boards of directors of both companies, subject to satisfactory completion of due diligence, definitive agreements, regulatory and required consents and approvals. The companies are targeting prompt execution of definitive documents and a first quarter 2013 closing date, subject to shareholder approvals and other customary closing conditions. The contemplated transaction structure would be effected solely through an exchange of SFEG shares for IGS shares in connection with a merger transaction.

Key terms of the Heads of Agreement include, among others, that:

  • Existing SFEG and IGS shareholders will own 61.57% and 27.11%, respectively, of the outstanding shares of the combined company’s common stock, assuming completion of an A$5.0 million placement in connection with the merger;
  • The IGS board will be restructured to comprise four directors nominated by Santa Fe and one director nominated by International Goldfields;
  • The merged company will continue trading on the ASX and will apply for a listing to trade ADRs on a major US exchange; and
  • On completion of the merger, IGS must have (a) a minimum of A$10.0 million in available cash and liquid assets and (b) a maximum of A$100,000 in total indebtedness.

Pierce Carson, President and CEO of Santa Fe, commented, "This is an exciting opportunity for the shareholders of both companies as the proposed merged entity is anticipated to result in a diversified and well-capitalized gold-silver miner, explorer, and developer, with projects located in emerging mining districts of Brazil, West Africa, and the Southwestern United States. We believe that the proposed business combination will maximize collective shareholder value for numerous reasons, including:

  • A strengthened balance sheet, with significantly improved liquidity, is anticipated to reduce our project debt levels, and provide capital to further develop our new Mogollon project and advance our Ortiz project;
  • We will enjoy significant development and exploration upside across a diverse portfolio of precious metal properties, and support for our exploration programs, including potentially new gold discoveries in IGS’ exploration portfolio;
  • The merged entity will be managed by an expanded management team with complementary experience in exploration, development, operations, and financing; and
  • Anticipated trading on both the ASX and a major United States exchange should increase the combined company’s visibility as a diversified, well-capitalized, low-cost gold-silver miner, explorer, and developer.”

IGS has agreed to advance (a) A$2.0 million to SFEG within five business days of execution of the Heads of Agreement and (b) another A$2.0 million on or before October 31, 2012. The two advances will take place by way of a convertible note secured by SFEG’s interest in its rights to the Mogollon option.

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