Endeavour Mining unveils all-share tilt for Semafo

Sebastien de Montessus, president and CEO, Endeavour Mining

ENDEAVOUR breathed fresh life into its expansion plans unveiling today a proposal for an all-share merger with Semafo, a Toronto-listed firm with operations in West Africa’s Burkina Faso.

Endeabour’s ambitions for a combination with Centamin, a UK-listed firm that mines in Egypt, came to nought in January, but Semafo’s special committee formed to assess Endeavour’s approach said it had given approval to the offer that values the Montreal company at C$1bn.

The offer – in which 0.1422 Endeavour shares will be exchange for each one Semafo common share – represents a 27.2% premium to Semafo’s 20-day volume weighted average share price. Benoit Desormeaux, president and CEO of Semafo, said shareholders were in support of the offer which had been under discussion since the beginning of 2019.

If approved by shareholders of Endeavour and Semafo – the transaction has been pencilled in for conclusion before the end of the second quarter of this year – the combined company will have one million ounces a year in gold production and become one of the 15 largest gold producers globally.

“With both companies have recently completed build-out phases and mine ramp-ups, the combined business is well positioned for a sustained period of strong cash flows,” said Sébastien de Montessus, CEO of Endeavour.

Shares in Endeavour Mining closed some 8% lower in Toronto on March 20 as a result of global sell-offs in the wake of the COVID-19 pandemic. Nonetheless, today’s news injects some welcome distraction from the litany of depressing headlines about mine closures as a consequence of the pandemic.

Endeavour said in a statement that the new company would be headed by De Montessus and would be headquartered in Semafo’s home town of Montreal, Canada.

Endeavour’s 31% shareholder, La Mancha which is controlled by Egyptian telecoms mogul, Naguib Sawiris, had promised to invest $100m into the combined company in order to maintain a 25% stake, down from 31% in Endeavour currently. Some 31.8% of Endeavour’s shareholders including management, supported the proposal. The transaction requires the two-thirds support of Semafo shareholders.

The merger will raise eyebrows insofar as Endeavour may be exposing itself to increased geopolitical risk. Although Endeavour already operates in Burkina Faso, it was at Semafo’s Boungou mine in the eastern part of the country that some 37 of its employees were ambushed and killed in an attack during November last year by an Islamic extremist group. The employees had been travelling to the mine in a convoy. A further 60 people were wounded.


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