Endeavour Mining / SEMAFO Merger

George Town & Montreal:

“This combination will create one of the leading gold companies, with the largest portfolio of operating assets located entirely in West Africa. In addition to being immediately accretive on all key metrics, this transaction will enhance our scale as well as providing improved trading liquidity, greater asset diversification and a reduced risk profile for all shareholders. We will also continue to benefit from having La Mancha as a cornerstone shareholder, who will invest $100 million into the combined entity and hold a 25 percent interest on a pro forma basis.” Michael Beckett Chairman Endeavour Mining Corporation.

Michael E. Beckett-Chairman, Endeavour Mining (source: Endeavour Mining Corporation)

 

Endeavour Mining Corporation and SEMAFO Inc.have announced that they have entered into a definitive agreement whereby Endeavour will acquire all of the issued and outstanding securities of SEMAFO by way of a Plan of Arrangement under the Québec Business Corporations Act. The Transaction will create a top 15 global gold producer and the largest in West Africa with six operations and an attractive growth pipeline. Due to the strong strategic rationale for local consolidation, both sets of Board of Directors have unanimously approved the Transaction. 


TRANSACTION RATIONALE:

Creates a leading West African gold producer with enhanced strategic positioning and greater ability to manage risks while benefiting from significant synergies

  • Strategically positioned as the largest gold producer in both Cote d’Ivoire and Burkina Faso, which account for two-thirds of the highly prospective West African Birimian Greenstone Belt
  • Ability to leverage its size and established relationships in the region to become the partner of choice for governments and key stakeholders
  • Consolidates the Houndé belt in Burkina Faso to create a world class mining district with two mines, exploration upside and strong future development potential
  • Ability to deliver synergies at the corporate, country and asset level through procurement and supply chain optimization, centralized technical services, and enhanced security measures
  • Combines a pool of extensive management experience and complementary expertise in open pit and underground mining, heap leach and CIL processing plants, project development and exploration

The combined entity would benefit from four cornerstone mines, with combined production of over 800,000 ounces per year, and increased capital allocation efficiency due to its enhanced project and exploration pipeline

  • Brings together a diversified portfolio of six mines with strong cash flow capabilities, with the potential to further optimize the asset base
  • Attractive growth project pipeline with optionality across the Fetekro, Kalana, Bantou and Nabanga projects
  • Strong potential to unlock exploration value through control of highly prospective grounds along the Birimian Greenstone Belt with the ability to deploy a significant exploration budget

The combined entity would have an enhanced capital markets profile with greater ability to fund growth.

  • Strong cash flow profile and liquidity sources, together with a sound balance sheet underpinning the ability to pursue future organic growth while continuing to focus on shareholder returns
  • Enhanced capital markets profile with the ability to meet investment hurdles of larger funds
  • La Mancha will continue to be a highly supportive cornerstone shareholder, committing to invest $100 million, although decreasing its overall stake from approximately 31% in Endeavour to approximately 25% in the combined entity (calculated on a pro forma basis using current share prices), to provide for a larger free float and greater stock liquidity. On a pro-forma basis, a combined Endeavour and SEMAFO would have:
  • More than 1.0 Moz of gold production in 2020 (based on current company guidance), placing it among the top 15 gold producers globally
  •  All-In Sustaining Costs below $900/oz in 2020 (based on current company guidance), placing it within the bottom third of the industry cost curve

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