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Endeavour Mining to combine with SEMAFO to create leading West African-based gold miner

The deal brings together six mines with strong cash flow into one portfolio, the opportunity to optimize assets, and a growth pipeline

Endeavour Mining Corp -
The implied equity value for SEMAFO is C$1 billion based on Endeavour’s closing price on March 20 this year

Endeavour Mining Corporation (TSE:EDV) (OTCMKTS:EDVMF) has revealed it is to combine with SEMAFO Inc (TSE:SMF) in a C$1 billion deal which will create a leading West Africa-based gold producer generating over 1 million ounces a year.

The merger brings together six mines with strong cash flow into one portfolio, the opportunity to optimize assets, and a growth pipeline. Both company's boards have unanimously approved the transaction.

Under the deal, each SEMAFO shareholder will receive 0.1422 Endeavour shares, representing a premium of 27.2% based on the 20-day volume-weighted average price of both companies for the period to March 20 this year.

READ: Endeavour Mining says production and operations running smoothly in West Africa despite coronavirus outbreak

The implied equity value for SEMAFO of C$1 billion based on Endeavour’s closing price on March 20 this year. The deal is immediately accretive on all key financial metrics, Endeavour said in a statement.

"Together, we will create a leading West African gold company with production of more than 1 million ounces of gold annually, supported by a robust pipeline of development projects and a significantly enhanced exploration portfolio focused on the highly prospective Birimian Greenstone Belt," Sébastien de Montessus, Endeavour's CEO added.

"With both companies having recently completed build-out phases and mine ramp-ups, the combined business is well positioned for a sustained period of strong cash flows."

Michael Beckett, Endeavour's chairman added: "We will also continue to benefit from having La Mancha as a cornerstone shareholder, who will invest $100 million into to the combined entity and hold a 25%t interest on a pro forma basis."

Endeavour and SEMAFO have worked as industry partners and early last year began a dialogue to evaluate the merits of a combination but then it was not possible to agree terms. Earlier this year, talks began again.

Intermediate producer SEMAFO operates two mines - the Mana and Boungou mines in Burkina Faso. Endeavour operates four mines across Côte d’Ivoire (Agbaou and Ity) and Burkina Faso (Houndé, Karma).

Endeavour shares slipped around 13.5% in Toronto to C$18.70 each.

Contact the author at [email protected]

Quick facts: Endeavour Mining Corp

Price: 32.86 CAD

TSX:EDV
Market: TSX
Market Cap: $3.65 billion
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