Endeavour Mining PLC (TSX: EDV) (LSE: EDV) (OTCQX: EDVMF) has sold 90 per cent interest in the Boungou and Wahgnion mines in Burkina Faso for USD$300 million to a subsidiary of West African firm, Lilium Capital.
Endeavour announced the deal on Friday which includes a USD$130 million reimbursement of historical shareholder loans.
This money will be used to boost the company’s finances and help with building new projects. There’s also another USD$25 million that will be paid later, with USD$10 million due at the end of 2023, and the remaining USD$15 million due by early 2024.
Another part of the deal involves the Boungou mine. Half of the cash flow it generates will be given to the company until a total of USD$55 million is reached. This is expected to be completed by the end of 2024, depending on how well the mine is doing and the current price of gold.
The company also gets 4 per cent of the value of the gold sold from the Boungou and Wahgnion mines. Based on the amount of gold they have and a gold price of USD$1,850 per ounce, the company expects to get about USD$52 million from Boungou and USD$41 million from Wahgnion over the lifetime of the mines. The deal also includes the possibility for further exploration and a conversion of its resources to reserves.
“We believe that Lilium Mining is well positioned to continue to unlock value at the Boungou and Wahgnion mines, for the benefit of all stakeholders,” said Sebastien de Montessus, president and chief executive officer.
“Moreover, Lilium is a trusted Burkinabe-focused business that shares our commitment to operate the mines in the best interests of employees and local stakeholders.”
A grinder at the Boungou mine in Burkina Faso. Image via Endeavour Mining.
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Kinross rebuffs Endeavour’s takeover attempt
In recent months, Endeavour Mining offered a potential cash and stock deal to Kinross Gold Corp. (TSX: K) (NYSE: KGC) to take over the company, which Kinross denied.
Kinross is a senior gold mining company with operations and projects in the U.S., Brazil, Mauritania, Chile and Canada.
Endeavour is one of the world’s senior gold producers and the largest in West Africa, with operating assets across Senegal, Ivory Coast, and Burkina Faso and a strong portfolio of advanced development projects and exploration assets in the highly prospective Birimian greenstone belt across West Africa.
This acquisition attempt is part of the ongoing consolidation trend within the gold mining industry. Smaller firms have been either merging or purchasing assets in the wake of significant transactions carried out by the two largest producers in the field. These two are Newmont Corporation (TSX: NGT) (NYSE: NEM) which recently agreed to acquire its Australian competitor, Newcrest Mining Ltd. (TSX: NCM) (ASX: NCM), in a deal worth approximately US$19 billion.
The company recently announced that it’s well-positioned to achieve its 2023 production guidance, which is estimated at 2.1 million gold equivalent ounces (AuEq), with a margin of plus or minus 5 per cent. Furthermore, the company anticipates that its annual production will maintain stability for the next couple of years – projecting it at 2.1 million ounces in 2024 and slightly reducing to 2.0 million ounces in 2025.
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