Endeavour Mining to acquire SEMAFO to create West Africa gold mining giant

Endeavour Mining, SEMAFO merger : Endeavour Mining, a Cayman Islands based intermediate gold producer, has signed a CAD1.0 billion ($690 million) all-stock deal to acquire Canadian miner SEMAFO in a move to create the largest gold mining company in West Africa.

The latest mining deal is also expected to make way for a top 15 global gold producer with more than a million ounces of gold production in 2020 coming from six operations. The enlarged gold mining company will also benefit from having an attractive growth pipeline.

The board of directors of the two gold mining companies have approved the merger deal unanimously.

The enlarged gold mining company in West Africa is expected to benefit from four cornerstone mines that put together have a production of more than 800,000 ounces per year, and an increased capital allocation efficiency owing to its enhanced project and exploration pipeline.

Listed on the Toronto Stock Exchange (TSX), Endeavour Mining has been engaged in project development and exploration in the Birimian greenstone belt in West Africa. The intermediate gold producer operates four mines – the Agbaou gold mine and Ity gold mine in Côte d’Ivoire and the Houndé gold mine and Karma gold mine in Burkina Faso.

SEMAFO, on the other hand, operates the Mana gold mine and Boungou gold mine in Burkina Faso.

Endeavour Mining acquisition of SEMAFO : SEMAFO Mana gold mine. Photo courtesy of SEMAFO Inc.

Commenting on Endeavour Mining acquisition of SEMAFO, Sébastien de Montessus – President and CEO of Endeavour Mining said: “This combination offers 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 track 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.”

The Endeavour Mining, SEMAFO merger is being supported by La Mancha, the former’s cornerstone shareholder which will invest $100 million in the combined gold mining company. However, the Luxembourg‐incorporated private gold investment company will cut down its overall stake of nearly 31% in Endeavour Mining to about 25% in the enlarged gold producer.

As per the terms of the mining deal, Endeavour Mining will issue 0.1422 of its shares to acquire each of the shares in SEMAFO. Existing shareholders of Endeavour Mining will own nearly 70% stake in the combined gold mining company, while the original SEMAFO shareholders will hold the remaining stake of about 30%.

Benoit Desormeaux – President and CEO of SEMAFO, commenting on Endeavour Mining, SEMAFO merger, said: “This transaction has received strong support from our key shareholders who recognize it as an exciting value creating opportunity to bring together two companies with common values and shared cultures built on decades of successful West African experience. For our shareholders, this transaction offers the benefits of both an upfront premium and a significant re-rating opportunity within a stronger merged company.

“Our team, and I, are thrilled to be joining forces with Endeavour and we look forward to the opportunity to leverage our combined skill sets to create value for all shareholders. We will leverage our expertise in Montreal to build a technical hub to realize operational, technical and exploration synergies, while advancing studies on our enhanced project pipeline.”

Endeavour Mining acquisition of SEMAFO, which is subject to approvals from shareholders of the two gold mining companies, applicable regulatory approvals which includes TSX approval, and the satisfaction of certain other closing conditions, is expected to be closed in Q2 2020.