eResearch | London-based Endeavour Mining (TSX:EDV) plans to buy Teranga Gold Corporation (TSX:TGZ) in an all-stock deal worth about $2.44 billion.
Teranga shareholders will receive 0.47 of an Endeavour share for each Teranga share, representing a premium of only 5.1% based on the closing price of Endeavour and Teranga’s shares on the TSX on November 13 but a 9.4% premium based on the 20-day volume weighted average price of both companies.
With 12.8 million ounces of gold resources, the transaction values Teranga at over US$191 per resource ounce or over US $383 per reserve ounce.
After the transaction closes, existing Endeavour and Teranga shareholders will own approximately 66% and 34%, respectively, of the combined company.
Egyptian billionaire Naguib Sawiris backs Endeavour through his company La Mancha Holding, a private company based in Luxembourg, and has agreed to inject $200 million into the combined entity.
Leading West African Gold Producer
Teranga is a mid-tier gold producer with two producing gold mines in Senegal and Burkina Faso, West Africa. Teranga is expected to produce 533,000 ounces of gold per year at average all-in-sustaining costs of $785 per ounce over the next five years.
Endeavour is a gold producer with six mines across Burkina Faso and Côte d’Ivoire, West Africa and is expected to produce over 1 million ounces of gold this year, at a cash cost below $900 per ounce.
The combined entity could produce 1.5 million ounces of gold next year, across eight mines in three countries, and should be one of the largest producers in West Africa.
Earlier this year, Endeavour acquired SEMAFO for $845 million and Teranga bought the Massawa Project in Senegal from Barrick Gold (TSX:ABX) for $438 million.
After the deal closes, Endeavour plans a secondary listing for the combined company on the London Stock Exchange.
FIGURE 1: 2021 Gold Production for Senior Gold Producers
