HomeNewsEndeavour Mining to acquire True Gold to maintain 5 producing mines portfolio

Endeavour Mining to acquire True Gold to maintain 5 producing mines portfolio

The deal will see Endeavour Mining acquire all of the issued and outstanding common shares of True Gold via a court-approved plan of arrangement.

In conjunction with the acquisition, Endeavour Mining is pleased to announce that La Mancha Holding S.àr.l., its largest shareholder with 30% ownership, intends to exercise an anti-dilution right that will result in an approximate C$82.6 million (US$61.5 million) new equity placement in Endeavour Mining.

Neil Woodyer, CEO of Endeavour Mining, states: “The production profile and low cost of True Gold’s Karma mine in Burkina Faso is a very attractive fit with our West African operating portfolio. Karma is nearing production, and Endeavour Mining has both the financial strength and an experienced operations team to ensure Karma’s value is maximised during this important stage.”

[quote]“While True Gold shareholders are receiving an attractive premium and an opportunity to participate in a larger diversified West African producer, Endeavour Mining shareholders are gaining a new, low-cost mine that boosts group production while reducing group AISC/oz in a value accretive transaction.”

“In the long term, the Karma mine has extensive exploration potential to extend its mine life. Endeavour Mining’s enhanced ability to finance an expanded exploration strategy at Karma, and at our own mines, is expected to generate significant value.”

With the expected closing of this acquisition in April 2016, Endeavour Mining intends to see Karma complete its production ramp-up and then commence construction of the Houndé project.

This transaction also demonstrates the strength of Endeavour Mining’s strategic relationship with La Mancha and Naguib Sawiris as a long-term partner with the shared vision of building a leading, Africa-focused gold producer.”

Terms of the Endeavour Mining arrangement agreement

Under the arrangement agreement, each True Gold shareholder will receive 0.044 of an Endeavour Mining common share in exchange for each True Gold common share.

Also under the arrangement agreement, True Gold stock options will become exercisable for Endeavour Mining Shares using the same 0.044 exchange ratio subject to a maximum term of 180 days from closing, or one year from closing if so provided under the relevant optionee’s employment agreement.

True Gold shareholders will represent 20.9% of Endeavour Mining capital after the exercise of the La Mancha anti-dilution right.

Completion of the arrangement will be subject to, among other things, approval by 66 2/3% of the True Gold shareholder votes cast, approval by 50% of the Endeavour Mining shareholder votes cast, and other customary conditions including court approvals.

Highlights of the acquisition

The Karma mine provides a material upgrade to the recently divested Youga mine and emphasizes management’s dedication to proactive portfolio management and cash flow maximisation.

On a pro forma basis, Endeavour Mining will have five producing mines; the Houndé project, a long-life and low-cost development project that is construction ready; and an attractive pipeline of development and exploration properties.

Endeavour Mining’s cash balance and available amount from its revolving credit facility totalled US$220 million, as of 31 December 2015. Including the $20 million proceeds received from the sale of the Youga mine on 29 February 2016 and the La Mancha antidilution investment of $61.5 million increases, the available liquidity to approximately $301.5 million.

Endeavour Mining production profile

For 2016, Endeavour Mining has production guidance range of 535 000 – 560 000 oz (updated to exclude the recently sold Youga mine) at an AISC/oz range of $870 to $920.

Adding the Karma mine potentially lowers the AISC range by approximately $25/oz (assuming Karma achieves $700 AISC/oz in 2016).

The Karma mine, due to move into production in this quarter, has been designed to deliver 97 000 ozpa of gold for 8.5 years.