Already very active in West Africa (Côte d’Ivoire, Burkina Faso and Mali), the gold group Endeavour Mining will further strengthen its presence in the region with the takeover of the Canadian company Semafo. Announced on Tuesday, March 24, the merger-acquisition transaction, supported by the management of the two mining companies, will be carried out entirely through an exchange of shares, for a total amount estimated at 1 billion Canadian dollars ($680 million).
Presenting the transaction in a conference call, Endeavour CEO Sébastien de Montessus justified the transaction by the fact that « in today’s changing world, gold producers need a large footprint, medium-term growth prospects and a business model that can generate cash. Under the terms of the agreement, Semafo shares will trade on the basis of 0.142 2 Endeavour shares for each Semafo share, representing a 54.7% premium to Semafo’s last closing price prior to the announcement of the transaction. If the transaction closes, the new group, which is expected to retain the Endeavour name and produce one million ounces of gold in 2020, would become the largest gold producer in West Africa (see illustration below) and would follow the continental giants Barrick and AngloGold. Existing Endeavour shareholders would own approximately 70% of the combined entity, while Semafo’s shareholders would own 30%. The mining holding company Mancha, controlled by Egyptian billionaire Naguib Sawiris, which has a 31% stake in Endeavour, has already agreed to inject USD 100 million into the new entity to help it develop its projects in West Africa.
If the M&A deal is completed, the new group would become the leading West African gold producer .
With production costs per ounce hovering around $800 per ounce and an increasing number of new deposits discovered in recent years, extraction conditions in the region are, on paper, ideal. It remains to be seen whether the reality will live up to expectations.