The Endeavour Mining Corporation has announced that it is looking to agree to a merger with Centamin due to the latter’s “compelling long-term value creation opportunity.”
The company has outlined three critical reasons it has proposed the merger, which it values at just under £1.5bn. The first is that it would enable a “diversified high quality portfolio” with Centamin’s mines including Sukhari in Egypt, Houndé in Burkina Faso and Ity in the Ivory Coast.
Secondly, Endeavour stated that the combined management team would benefit from its expertise in operations, new projects and explorations, having boosted the company’s share price by 320% since late 2015. Finally, Endeavour hopes that the combined entity would offer a “stable, diversified and sustained cash flow profile” which would underpin the company’s balance sheet strength.
The merger proposal was sent to Centamin on the 25 November, with Endeavour offering an exchange ratio of 0.0846 shares for each Centamin share. As such, Endeavour shareholders would own 52.9% of the combined group and Centamin 47.1%.
If the merger were to take place it is estimated that the combination of Endeavour and Centamin would own 15.9 million ounces (Moz) of gold in reserves and be able to produce 1.2 Moz of gold per year, production that would put it among the top 15 gold producers in the world.
Endeavour chairman Michael Beckett said: “We firmly believe that the proposed combination between Endeavour and Centamin provides a compelling value creation opportunity for both sets of shareholders which is superior to what can be achieved by each company on a standalone basis.
“Despite repeated good faith attempts to engage with Centamin, our efforts have been frustrated by their refusal to entertain any discussions about a Merger before entering into a standstill agreement.
“Our management team has demonstrated a disciplined approach to business development opportunities and the Endeavour board will continue to be prudent allocators of capital to opportunities that it believes are aligned with its long-term strategic objectives, and that create value for shareholders.”
Centamin has been approached for comment but has yet to respond.
Endeavour’s share price rose by over 1.5% from CAD$25.37 to CAD$25.79 on the Toronto Stock Exchange, giving the company a market cap value of CAD$2.83bn.
