Endeavour Mining's Agbauo mine, in Côte d'Ivoire
TSX-listed miners Endeavour Mining and Semafo have entered into a definitive agreement whereby Endeavour will acquire all of the issued and outstanding shares of Semafo for about C$1-billion.
The transaction will create a top 15 global gold producer and the largest in West Africa, with six operations and an attractive growth pipeline.
The boards of both companies have unanimously approved the transaction, which will result in Semafo shareholders receiving 0.1422 Endeavour shares for every Semafo common share owned.
Endeavour said in a statement on Monday that the companies could consolidate their respective two mines in the Houndé belt, in Burkina Faso, to create a world-class mining district.
The companies are also able to deliver synergies at the corporate, country and asset level through procurement and supply chain optimisation, centralised technical services and enhanced security measures.
The combined entity will benefit from four cornerstone mines, totalling production of more than 800 000 oz/y, and increased capital allocation efficiency.
On a pro-forma basis, the combined Endeavour and Semafo will produce more than one-million ounces of gold this year, at an all-in sustaining cost below $900/oz and with 10.5-million ounces of reserves – including 20.7-million ounces of measured and indicated resources and 6.3-million inferred resources.
“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 provide 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, which will invest $100-million into the combined entity and hold a 25% interest on a pro forma basis,” said Endeavour chairperson Michael Beckett.
Endeavour CEO Sébastien de Montessus added that the combination offered a rare opportunity to bring together two leading West African mine operators with a shared strategic vision, complementary assets, and management teams with a proven record.
“We believe this transaction represents a compelling value equation for both sets of shareholders with the potential for a meaningful re-rating, whilst providing increased asset diversification and enhancing our ability to manage risks within the business,” he said.
With both companies having recently completed build-out phases and mine ramp-ups, the combined business is well positioned for a sustained period of strong cash flows.
“Our enhanced capital markets profile should provide added trading liquidity, free float and size, characteristics that investors are seeking in today’s market environment, and we will continue to allocate capital in a disciplined and efficient manner with a focus on maximizing shareholder returns,” explained De Montessus.
Semafo CEO Benoit Desormeaux said the transaction had received strong support from key shareholders who recognise it as an exciting value-creating opportunity.
“We will leverage our expertise in Montreal to build a technical hub to release operational, technical and exploration synergies, while advancing studies on our enhanced project pipeline,” he said.