gold
TSX and OTCQX-listed Endeavour Mining and Avnel Gold Mining have agreed that Endeavour Mining will acquire Avnel in an all-share transaction.

Avnel Gold Mining holds an 80% interest in the Kalana gold project in Mali and holds significant exploration permits in the surrounding area.

Kalana is a fully permitted feasibility-stage project based on a 1.2 Mtpa carbon-in-leach plant and a single open-pit constrained reserve of approximately 2 Moz grading 2.8 g/t.

[quote]According to the feasibility study, it has an 18-year mine life and an expected production of 101 000 ozpa at an average all-in sustaining cost of $784/oz.

The initial capital cost is forecast at $196.3 million and Kalana demonstrates robust economics with an after-tax NPV of $257 million, an after-tax IRR of 38% and a payback of 1.2 years based on a gold price of $1,200/oz.

Avnel Gold Mining has pursued optimisation scenarios that, if adopted, could provide Kalana with an after-tax NPV of US$321 million and an after-tax IRR of 50%.

In addition, such optimisation scenarios could reduce average AISC to US$730/oz over the 18-year mine life and to US$561/oz over the first five years.

Endeavour Mining expects to take advantage of its construction expertise, operating synergies and exploration experience to re-design and optimise the current feasibility study, which is expected to increase the annual production profile and improve the project economics.

“We are delighted to have reached this agreement with Avnel Gold Mining,” says Endeavour Mining president and CEO, Sébastien de Montessus.

“We believe that Kalana fits well within our strategy of building a high quality portfolio of long-life, low AISC assets with exploration upside.

“Furthermore, this acquisition expands our footprint in Mali and reinforces our project pipeline, which will allow us to continue to leverage our in-house construction expertise.

“Kalana adds a third high-quality project to our portfolio, which we intend to develop following the completion of our Hounde and Ity CIL projects.

“In the interim, we look forward to optimizing the current feasibility study which should unlock further value for both Endeavour and Avnel shareholders, as well as benefiting our partners, the State of Mali and the local communities around Kalana.”

“This transaction with Endeavour Mining will deliver many benefits to all our stakeholders,” states Avnel Gold Mining chairman and CEO, Howard Miller.

“Avnel Gold Mining’s shareholders will receive an immediate premium and benefit from the Kalana project being part of a diversified West African gold producer with significant growth potential and an experienced operational team.

“With a strong track record of successfully building mines on time and on budget in West Africa, we are confident that Endeavour is the ideal partner to develop Kalana.

“As such, this transaction will benefit our shareholders, the local community and our partners in the Malian government,” concludes Miller.