Page 69 - pd289-Dec20-mag-web_Neat

Endeavour voyage takes in Teranga

ndeavour Mining Corp’s buying spree Burkina Faso and its Sa-
Ehas continued with the company agree- bodala-Massawa gold
ing to acquire fellow West African-focused mine in Senegal as well
miner Teranga Gold Corp in a $2 billion all- the development assets
scrip deal in November. of both companies.
The merger will create a top 10 global The deal is Endeav-
gold company capable of producing 1.5 our’s second of 2020,
mozpa with a market cap of $US6 billion. having previously paid
And, coming soon after Northern Star Re- $US1 billion for Se-
sources Ltd and Saracen Mineral Holdings mafo and its Mana and
Ltd announced an even larger marriage in Bongou mines in Burki-
Australia, all eyes have turned to the ASX- na Faso. Last year, it
listed West African producers for the next had failed to reach terms
move. with Egyptian-focused
Argonaut Securities analyst John Mac- gold miner Centamin plc
donald told Paydirt that while ASX-listed over a merger proposal.
gold miners Perseus Mining Ltd, Resolute Endeavour will pay
Mining Ltd and West African Resources Ltd 0.47 of its own shares
were not directly affected by the Endeavour- for each Teranga share,
Teranga deal, there were repercussions. a 5.1% premium based Through operations such as Ity in Burkina Faso, Endeavour has
“They will all be aware of it and the effect on the November 13 established itself as a successor to Randgold in West Africa
on the collective market psyche,” Macdon- closing prices – valuing
ald said. “It will reinforce what the market Teranga, whose shares are up 97% this producer. Ironically, the move for Teranga is
expects of them.” year, at $US1.99 billion. designed to pave the way for Endeavour to
The Australian market has already been “We’re not trying to buy cheap we’re just fill the space.
exposed to West African M&A through the trying to make the right deal that satisfies The company believes the combined
Shandong Gold/Norgold battle over Cardi- both sets of shareholders and that ensures group has high potential for a re-rating if
nal Resources Ltd. Macdonald said while the maximum support and maximum return it can prove attractive to a gold equities-
Cardinal’s Namdini asset was unique, there going forward,” Endeavour chief execu- starved London market. It plans to pursues
could be more activity on its way. tive Sébastien de Montessus said in a tel- a second listing on the London Stock Ex-
“There are not many assets like Namdini, ephone interview. change (LSE) in 2021 which would make it
it is the largest asset still in independent Barrick Gold Corp, an 11.44% share- the largest gold producer on the LSE.
hands,” he said. “But if you look at the ASX- holder in Teranga is supporting the deal. De Montessus said he had no further
listed West African producers, they are not Barrick chief executive Mark Bristow has acquisition plans, “no intention” of growing
marked the same as the domestic produc- championed consolidation in the gold sec- beyond 2 moz gold production and that the
ers when it comes to cost structures, etc. I tor, having led the process which saw Bar- company has organic growth potential.
don’t know if that is justified.” rick acquire Randgold Resources, the West Analysts at Berenberg said in a note the
It will bring together Endeavour’s suite of African miner he launched 20 years ago. merger would help to balance Burkina Faso
six gold mines in Burkina Faso and Cote Randgold’s sale opened an enticing gap risk with “long-term production from a low-
d’Ivoire with Teranga’s Wahgnion asset in on London’s FTSE100 for a dedicated gold er-risk jurisdiction [Senegal]”.
Burkina Faso is battling an Islamist insur-
gency in its eastern borderlands with Mali
and Niger. A militant attack a year ago on
a convoy of mineworkers killed at least 37
civilians near the Boungou mine – part of
Endeavour’s portfolio following the Semafo
deal.
De Montessus, who has overseen
Boungou’s restart and a security overhaul,
said support from France’s Barkhane forc-
es has improved the security situation.
La Mancha, Egyptian billionaire Naguib
Sawiris’ gold mining holding company and
Endeavour’s top shareholder, pledged a
$US200 million cash injection into the new
entity.
Endeavour and Teranga also negotiated
debt refinancing as part of the deal, which
they said would save the group around
$US40 million a year over the next several
years.
– Dominic Piper
Bedding down production at Hounde, and then incorporating the new assets, will be key
to Endeavour’s post-Teranga success
aUSTRaLIa’S PaYDIRT DeCeMBeR 2020 - JaNUaRY 2021 Page 69