Endeavour Mining
Nzema mine in Ghana
TSX-listed Endeavour Mining has agreed to the sale of its 90% stake in the non-core Nzema mine to BCM International for a cash consideration of up to US$65 million.

“The sale of Nzema fits into our stated strategic objective of actively managing our asset portfolio to improve its overall quality,” says Endeavour Mining president and CEO, Sebastien de Montessus.

“The sale also enables us to further streamline our efforts on long-life low-cost operations, with two in Mali, two in Burkina Faso and two in Ivory Coast.

“BCM International has extensive experience in Ghana, where it is headquartered, and we believe it has the right set of skills and capabilities to take Nzema beyond its current three-year mine life, for the benefit of all its stakeholders, including employees, the government of Ghana, and local communities,” explains de Montessus.

Under the sale agreement, BCM International will pay Endeavour Mining US$20 million upon closing of the transaction, with an additional $45 million in deferred payments to be made over the remaining current mine life to 2019 based upon reaching certain agreed upon milestones related to mine free cash flow generation.

The transaction is expected to close at the end of September following the approval from the Ghanaian government.

The Nzema sale effective date for economic purposes is July 1, 2017. To follow reporting standards, Endeavour Mining has de-consolidated Nzema from its full year 2017 guidance.

Following the sale of Nzema, Endeavour Mining’s production guidance for 2017 has been reduced from 600 000 – 640 000 oz to 500 000 – 530 000 oz.

Endeavour Mining’s AISC is expected to decrease from $860-905/oz to $855-900/oz, as the benefit of removing the higher-cost Nzema mine was partially offset by corporate and sustaining exploration costs being allocated over a smaller number of ounces at group level.

The corresponding guidance for the group free cash flow before growth projects has also been updated. Assuming a gold price of $1,200/oz, the free cash flow for the full year is now expected to be $100 million, a decrease from the original guidance of $125 million.

Feature image credit: Endeavour Mining