The one billion Canadian dollar ($736m) deal between the two Toronto-listed firms creates West Africa’s largest gold mining company.

Endeavour

Combining the two West Africa-focused businesses creates a regional gold-mining operation with a 'sustained ability' to produce more than one million ounces of the precious metal annually (Credit: Endeavour)

Endeavour Mining has finalised its acquisition of rival Semafo, creating West Africa’s largest gold mining company.

The one billion Canadian dollar ($736m) deal between the Toronto-listed firms was announced in March, and in the past weeks, various administrative hurdles have been overcome – including a shareholder vote that garnered 99.8% support and regulatory approval within Canada.

Combining the two West Africa-focused businesses creates a regional gold-mining operation with a “sustained ability” to produce more than one million ounces of the precious metal annually, according to Endeavour, making it one of the industry’s top 15 firms globally.

In May, Endeavour’s executive director and CEO, Sebastien de Montessus, said: “The combined company will have improved strategic positioning, an enhanced ability to manage risks, a stronger capital market profile and sustained ability to produce over one million ounces of gold while improving the combined group’s ability to generate shareholder returns.”

 

What does the acquisition mean for Endeavour?

Several leadership changes have been announced as part of the acquisition, notably the appointment of Semafo’s former chief executive Benoit Desormeaux as Endeavour president.

Six key gold mining assets in the West African region will be consolidated under the agreement, notably in Burkina Faso and Cote d’Ivoire, which account for two-thirds of the highly prospective Birimian Greenstone Belt.

The combined reserves of the six sites stand at 10.5 million ounces, alongside 20.7 million in measured and indicated resources.

Semafo shares were exchanged at a ratio of 0.1422 Endeavour ordinary shares, which represented a 27.2% premium based on the 20-day volume-weighted average price of both companies for the period ended March 20.

Since Endeavour first announced its acquisition of Semafo, the miner’s share price has risen by about 60%.

The La Mancha investment vehicle, operated by the Egyptian Sawiris family, is lowering its 31% stake in Endeavour to 24.1% in the combined entity in to enable “a larger free float and greater stock liquidity”.

La Mancha is making an investment of $100m in the company, representing 4,507,720 common shares, which is expected to close today (3 July).

Moving forwards, Endeavour intends to update its Group 2020 production and cost guidance, incorporating the operations of Semafo, as part of its Q2-2020 financial and operating results scheduled for early August.