George Town & Montreal , March 23, 2020 Endeavour Mining Corporation (TSX:EDV) (OTCQX:EDVMF) (Endeavour) and SEMAFO Inc. (TSX, OMX: SMF) (SEMAFO) are pleased to announce that they have entered into a definitive agreement (the Arrangement Agreement) whereby Endeavour will acquire all of the issued and outstanding securities of SEMAFO by way of a Plan of Arrangement under the Business Corporations Act ( Québec ) (the Transaction). The Transaction will create a top 15 global gold producer and the largest in West Africa with six operations and an attractive growth pipeline.
Due to the strong strategic rationale for local consolidation, both sets of Board of Directors have unanimously approved the Transaction. Management will host a joint conference call and webcast today, at 8:30am Toronto time, 12:30pm London time (information provided in the section below).
Transaction Rationale:
Creates a leading West African gold producer with enhanced strategic positioning and greater ability to manage risks while benefiting from significant synergies
Strategically positioned as the largest gold producer in both Cote dIvoire and Burkina Faso , which account for two-thirds of the highly prospective West African Birimian Greenstone Belt
Ability to leverage its size and established relationships in the region to become the partner of choice for governments and key stakeholders
Consolidates the Houndé belt in Burkina Faso to create a world class mining district with two mines, exploration upside and strong future development potential
Ability to deliver synergies at the corporate, country and asset level through procurement and supply chain optimization, centralized technical services, and enhanced security measures
Combines a pool of extensive management experience and complementary expertise in open pit and underground mining, heap leach and CIL processing plants, project development and exploration
The combined entity would benefit from four cornerstone mines, with combined production of over 800,000 ounces per year, and increased capital allocation efficiency due to its enhanced project and exploration pipeline
Brings together a diversified portfolio of six mines with strong cash flow capabilities, with the potential to further optimize the asset base
Attractive growth project pipeline with optionality across the Fetekro, Kalana, Bantou and Nabanga projects
Strong potential to unlock exploration value through control of highly prospective grounds along the Birimian Greenstone Belt with the ability to deploy a significant exploration budget
The combined entity would have an enhanced capital markets profile with greater ability to fund growth
Strong cash flow profile and liquidity sources, together with a sound balance sheet underpinning the ability to pursue future organic growth while continuing to focus on shareholder returns
Enhanced capital markets profile with the ability to meet investment hurdles of larger funds
La Mancha will continue to be a highly supportive cornerstone shareholder, committing to invest $100 million , although decreasing its overall stake from approximately 31% in Endeavour to approximately 25% in the combined entity (calculated on a pro forma basis using current share prices), to provide for a larger free float and greater stock liquidity
On a pro-forma basis, a combined Endeavour and SEMAFO would have:
More than 1.0 Moz of gold production in 2020 (based on current company guidance), placing it among the top 15 gold producers globally
All-In Sustaining Costs below $900 /oz in 2020 (based on current company guidance), placing it within the bottom third of the industry cost curve
10.5Moz of Reserves and 20.7Moz of M&I Resources (inclusive of reserves based on the most recently published figures from both companies), plus an additional 6.3Moz of Inferred resources
Net debt to LTM Adjusted EBITDA ratio of 0.68x and access to liquidity sources of $508 million , according to the most recent publicly available information, inclusive La Manchas $100 million commitment to invest in support of the Transaction |
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