Homestake and Corona to Merge Into Gold Giant : * Mining: Weak metals prices have hurt the San Francisco and Canadian firms. The new entity will tie for No. 2 in the world.

In a combination that would create one of the world’s biggest gold producers, San Francisco-based Homestake Mining Co. said Friday that it will acquire Canada’s International Corona Corp. in a stock swap valued at $432 million.

Homestake said Dundee Bancorp Inc., Corona’s largest stockholder, agreed to the offer, which is subject to approval by regulators and the boards of both companies.

The merger, which will be accomplished through an exchange of 0.35 Homestake share for each Corona share, comes at a time when producers are struggling to cope with depressed gold prices. On New York’s Commodity Exchange on Friday, gold closed at a 4 1/2-year low of $346.70 an ounce.

The merged company will take Homestake’s name. Homestake Treasurer Jonathan Williams said the combination will create a stronger company that will be better able to hold costs down and “be more efficient during these tough times of low gold prices.”

Most analysts agreed. “This merger will create a lot of synergy by giving them increased production capabilities,” said Vahid Fathi, a metals analyst at Kemper Securities Group in Cleveland. Fathi said Homestake’s $35-million cash surplus will reduce the debt of the combined company to $220 million. He described that figure as “not a real burden for a company this size.”

The merger will make San Francisco-based Homestake, which has 2,000 employees, one of the world’s leading gold producers. Company officials forecast 1992 production of 1.8 million ounces and gold reserves of 20 million ounces.

The merger will also give Vancouver-based Corona, which produced 716,835 ounces of gold in 1991, the financial muscle to develop its Eskay Creek deposit in northern British Columbia. Corona needs a million-ounce producer like Homestake to help it develop one of North America’s most promising gold discoveries, analysts say.

Widespread rumors of the merger, which was announced after markets closed Friday, have been greeted unenthusiastically by U.S. investors.

Corona’s stock rose 71 cents on the Toronto Stock Exchange Friday to close at $4.32, but Homestake Mining closed down $1.50 at $13.50 on the New York Stock Exchange.

Nonetheless, Amy P. Gassman, an analyst at Goldman Sachs in New York, said, “longer term, (the merger) will turn out to be a good deal for the company” because of operating efficiencies.

Homestake’s and Corona’s combined production will equal that of the No. 2 producer, South Africa’s Driefontein Consolidated Ltd. It will be slightly behind that of Anglo American Corp.’s Freegold mine. The South African company produces 3.7 million ounces a year.

Last year, Corona stockholders overwhelmingly approved a restructuring plan, spinning off its non-gold assets into a separate company, but the company’s stock continued to tumble. Homestake blamed low gold prices, operating problems and writedowns last year for its first loss since 1945.