Endeavour Mining to acquire Teranga Gold in $2.4 B deal

Endeavour Mining Corp. [EDV-TSX; EDVMF-OTCQX] has entered into a definitive deal to acquire another West Africa-focused company Teranga Gold Corp. [TGZ-TSX], in an all share transaction worth $2.44 billion (US$1.86 billion).

In a joint news release, the companies said the combination creates a new top 10 senior gold producer with average annual production of more than 1.5 million ounces, low production costs and six core operating mines across three West African countries, Senegal, Cote d’Ivoire and Burkina Faso.

The combined company will also have a development pipeline of six greenfield projects and the largest exploration portfolio across the underexplored West African Birimian Greenstone Belt.

“This combination offers an attractive opportunity to both sets of shareholders,” said Endeavour President and CEO Sebastien de Montessus.

Endeavour is offering 0.470 of its own shares for each Teranga share, marking a 5.1% premium on the closing price ($13.84) of Teranga shares November 13, 2020.

On Monday, Teranga shares rose 3.7% or $0.52 to $14.36 on volume of 1.42 million. The shares are trading in a 52-week range of $16.80 and $3.86. Endeavour was largely unchanged, rising 0.84% or 26 cents to $31.20 on volume of 877,405. Endeavour trades in a 52-week range of $39.21 and $15.68.

Endeavour has two mines in Cote d’Ivoire, and four in Burkina Faso.  Prior to Monday’s announcement, the company was aiming to produce between 995,000 to 1.09 million ounces of gold in 2020.

Teranga is a mid-tier gold miner on track to produce between 375,000-400,000 ounces of gold this year from its Sabodala-Massawa, and Wahgnion operations, located in Senegal and Burkina Faso respectively.

Once the deal closes, existing Endeavour and Teranga shareholders will own approximately 66% and 34% of the combined company respectively. Luxembourg-based La Mancha Holding S.a.r.l., an entity controlled by Egyptian billionaire Naguib Sawiris, has pledged to invest $200 million to support the dealing, leaving it with a 19% interest.

The proposed Teranga takeover comes after Endeavour recently dropped a planned takeover of Centamin PLC [CEE-TSX; LON-CEY] Centamin Plc is a mineral exploration and development mining company with a dual listing on the London and Toronto stock exchanges. Its principal asset, the Sukari Gold Mine, began production in 2009 and is the first large scale modern mine in Egypt.