Albuquerque, N.M.-based Santa Fe Pacific Gold is planning an initial public offering of 18 million shares at US$13.50-$15.50 per share.
Santa Fe is a wholly owned subsidiary of Santa Fe Pacific (NYSE) which, on completion of the new issue, will own 112.2 million or 86.2% of the gold company.
Proceeds from the issue will be used mainly to repay bank debt related to the Twin Creeks and Lone Tree gold mines in Nevada. Excess funds will be used for working capital.
On completion of the offering, the parent company will decide whether to spin-off its remaining Santa Fe Pacific Gold shares to Santa Fe shareholders. The company has already received a ruling from the Internal Revenue Service stating that the distribution would not result in the recognition of income by the company or its shareholders.
For the three months ended March 31, Santa Fe Pacific reported net income of US$68.1 million (US36 cents per share) on revenues of US$722.1 million. Operating income from the gold segment was US$21.6 million on revenues of US$84.3 million.
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