Endeavour Mining Corp. (TSX:EDV,OTCQX:EDVMF) announced that it’s entered into a definitive arrangement agreement under which it will acquire all the issued and outstanding shares of True Gold Mining Inc. (TSXV:TGM).

Endeavour Mining Corp. (TSX:EDV,OTCQX:EDVMF) announced that it’s entered into a definitive arrangement agreement under which it will acquire all the issued and outstanding shares of True Gold Mining Inc. (TSXV:TGM).

The company also said that La Mancha Holding, which is its largest shareholder, plans to exercise an anti-dilution right that will allow it to maintain its 30-percent stake in Endeavour. It will do so via a US$61.5-million new equity placement in Endeavour.

Highlights of the deal are as follows:

  • Acquisition of True Gold in an all share transaction with each True Gold common share exchanged for 0.044 of an Endeavour Mining common share valuing True Gold at approximately CDN$0.57 per share or CDN$226 million, using closing prices on the TSX and TSX-V as of March 3, 2016. Using Endeavour Mining’s 20-day volume weighted average price (“VWAP”), the acquisition is valued at CDN$191 million.
  • The offer represents a 43.4% premium for the True Gold shareholders using closing prices as of March 3, 2016 and a 32.7% premium using 20-day VWAPs, on the TSX and TSX-V, respectively.
  • True Gold has a 90% interest in the Karma gold mine in Burkina Faso, which is nearing production start-up with first gold pour anticipated in late March / early April 2016. The acquisition will increase Endeavour Mining’s forecast gold production rate by approximately 110,000 – 120,000 ounces per year at a low AISC of approximately US$700/oz in years 1 to 5, with a mine life of 8.5 years based on current reserves.
  • Endeavour Mining’s attributable Proven and Probable gold reserves will increase by 19% to 5.4 million ounces and Measured and Indicated gold resources will increase by 39% to 10.2 million ounces, and Inferred gold resources will increase by 123% to 3.9 million ounces (see Appendix 2).
  • Under the transaction, Endeavour Mining is providing a US$15 million convertible bridge loan to True Gold (the “Bridge Loan”) to ensure True Gold remains well funded as it completes construction of the Karma Mine. Currently, True Gold has drawn US$105 million of its US$120 million gold streaming facility with Franco-Nevada Corporation and Sandstorm Gold Ltd. Endeavour Mining is providing the Bridge Loan as a financing alternative that allows True Gold to maintain its current liquidity without additional gold streaming.

Neil Woodyer, CEO of Endeavour Mining, commented:

The production profile and low cost of True Gold’s Karma Mine is a very attractive fit with our West African operating portfolio. Karma is nearing production, and Endeavour Mining has both the financial strength and an experienced operations team to ensure Karma’s value is maximized during this important stage. While True Gold shareholders are receiving an attractive premium and an opportunity to participate in a larger diversified West African producer, Endeavour Mining shareholders are gaining a new, low-cost mine that boosts group production while reducing group AISC/oz in a value accretive transaction. In the long term, the Karma Mine has extensive exploration potential to extend its mine life. Endeavour Mining’s enhanced ability to finance an expanded exploration strategy at Karma, and at our own mines, is expected to generate significant value.

With the expected closing of this acquisition in April 2016, we intend to see Karma complete its production ramp-up and then commence construction of the Houndé Project.

Click here to read the full Endeavour Mining Corp. (TSX:EDV,OTCQX:EDVMF) press release.



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