Merger lifts Endeavour Mining to 300,000oz ranks
AUG 9 – Canada’s Endeavour Mining has taken another big step towards its target of becoming a leader in African mining with agreement on a $C389M takeover of fellow Canadian Avion Gold.
The all-shares deal will lift Endeavour to a pro-forma market capitalisation of $977M and double its gold production guidance to 282,000-304,000oz.
Endeavour will gain greater operating and geographical diversification from the addition of Avion’s Tabakoto & Segala and Kofi projects in Mali and Hounde project in Burkina Faso.
They join Endeavour’s Nzema project in Ghana (itself acquired as part of last year’s takeover of Adamus Resources), Youga in Burkina Faso and the under-construction Agbaou project in Cote d’Ivoire, giving the company three operating mines in three countries plus the fourth on the way.
As part of the deal, Endeavour will advance $US20M exchangeable debt financing that will enable Avion to get the planned doubling of Tabakoto mill capacity to 4,000tpd back on track.
CEO Neil Woodyer says the Tabakoto mill expansion and completion of Endeavour’s Agbaou development in Ghana in 2014 will lift gold production to about 450,000oz pa.
A statutory plan of arrangement will see Endeavour issue 0.365 shares for each Avion share held, representing a 56% premium on Avion’s August 7 closing price. The former Avion shareholders will end up with about 39.8% of Endeavour.
Avion president/CEO John Begeman says the deal his shareholders offers a substantial premium and meaningful ownership in a stronger combined company with resources to withstand a protracted market lull.
The deal is subject to approval of 66.6% of the Avion shareholders and 50% of Endeavour shareholders at meetings expected to be held about October 12.
Endeavour has invited Begeman and another Avion director to join a board that will expand from seven to eight, with one current member to step down.
Endeavour has named Attie Roux, currently its senior vice president, as new chief operating officer following the resignation of Mark Connelly.
Connelly, the former Adamus Resources boss, will remain a board member.
Vancouver-based Endeavour heads into its takeover deal with Avion boosted by strong financial and operations results for the first half of 2012.
Endeavour’s two African mines, Nzema in Ghana and Youga in Burkina Faso, produced 102,691oz for the 6 months to June 30, significantly above previous guidance, and has now lifted its full year forecast to 187,000-202,000oz (prev 170,000-190,000oz).
H1 2012 revenue rose 152% to $US156.6M ($62.1M) for net earnings of $8.7M ($1.5M).
Woodyer says the company’s increased cash position net of debt of $US36M ($11M) gives it financial strength as it continues to expand in West Africa.
The company is awaiting the official permit for construction of its third mine, Agbaou in Cote d’Ivoire, where it expects to add about 100,000oz pa from early 2014.
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