BURKINA FASO – Endeavour Mining Corporation and Teranga Gold Corporation have entered into a definitive agreement, whereby Endeavour will acquire all of the issued and outstanding securities of Teranga by way of a Plan of Arrangement under the Canada Business Corporations Act.
The merger, in which existing Endeavour and Teranga shareholders will own approximately 66% and 34%, respectively, of the combined company on a fully diluted in-the-money basis, will create a new top 10 senior gold producer with average annual production of more than 1.5 Moz with industry-leading low production costs, synergies and diversification across three countries.
La Mancha, the vehicle which Egyptian billionaire Naguib Sawiris holds his stake in Endeavour, will invest a further US$200 million into the combined miner, leaving it with a 19% stake.
“The combined entity will become a new senior gold producer and enjoy an improved capital markets profile, underpinned by a healthy balance sheet and strong cash flow capabilities to support a sustainable dividend.”Sébastien de Montessus – President and CEO, Endeavour Mining Corporation
“By combining our complementary assets, we will enhance our strategic position on West Africa’s highly prospective Birimian Greenstone Belt and we will have the ability to deliver material synergies,” Endeavour Mining Corporation President and CEO Sébastien de Montessus.
“The combined entity will become a new senior gold producer and enjoy an improved capital markets profile, underpinned by a healthy balance sheet and strong cash flow capabilities to support a sustainable dividend.”
Endeavour’s acquisition of Teranga adds another operating asset — Wahgnion — to its four existing mines in Burkina Faso. It also gives it exposure to Senegal through the Massawa project, which Teranga bought from Barrick Gold (TSX:ABX) (NYSE:GOLD) last year.
A successful deal would consolidate Endeavour’s growth, which completed the acquisition of smaller rival Semafo in July, bringing together six mines with strong cash flows into one portfolio.
The combined miner, which aims to list in London next year, will produce about 1.5 million ounces of gold a year from six core operating mines in three countries — Senegal, Burkina Faso and Côte d’Ivoire.
With a pro-forma market capitalization of C$7.6 billion (US$5.8bn), it would also be among the most valuable precious metals companies currently listed on the London Stock Exchange. These include Russian duo Polyus (LON: PLZL) and Polymetal International (LON: POLY), Mexico-focused Fresnillo (LON: FRES) and Canadian Yamana Gold (LON: AUY).
The deal is expected to close in the first quarter of 2021.