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Endeavour Mining to Buy Gold Junior Avnel for $122 Million
Jun. 29, 2017 04:30PM PST
Precious Metals Investing
Avnel, which owns the Kalana gold project in Mali, saw its share price shoot up over 40 percent after the news was announced.
Canadian gold miner Endeavour Mining (TSX:EDV) will buy junior Avnel Gold Mining (TSX:AVK) for $122 million to further strengthen its pipeline of high-quality projects, the company said in a statement on Thursday (June 29).
Avnel, which has an 80-percent interest in the Kalana gold project in Mali, will sell its shares to Endeavour at a 48-percent premium to the company’s share price at close of day on June 29. If Avnel’s shareholders approve the scheme, the transaction will close in September.
“Avnel’s shareholders will receive an immediate premium and benefit from the Kalana project being part of a diversified West African gold producer with significant growth potential and an experienced operational team,” Howard Miller, chairman and CEO of Avnel, said.
Kalana is a fully permitted feasibility-stage project with the potential to produce more than 150,000 ounces of gold per year. It could operate for longer than 10 years, and has “significant further exploration potential,” Avnel says.
“[Kalana] expands our footprint in Mali and reinforces our project pipeline, which will allow us to continue to leverage our in-house construction expertise,” Sebastien de Montessus, Endeavour president and CEO, commented.
Endeavour already has one producing mine in Mali, Africa’s third-largest gold-producing country, plus another four across West Africa in the Ivory Coast, Burkina Faso and Ghana.
The company expects to develop Kalana after its Hounde and Ity carbon-in-leach projects. Those two projects are expected to push the group’s production to around 900,000 ounces of gold annually by 2019, up from its current 600,000 ounces of gold per year.
Once the transaction is completed, former Avnel shareholders will hold about 6.8 percent of Endeavour’s pro forma share capital. “On face value the transaction price seems reasonably attractive and only marginally dilutive,” Raymond James analyst Chris Thompson said in a note.
After the takeover bid announcement, Avnel’s share price jumped more than 40 percent; at close of day Thursday it was trading at $0.415.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
