Endeavour Mining reports that it has signed an agreement to sell its 85% interest in its non-core Agbaou mine in Côte d’Ivoire to Allied Gold Corp.
The sale will be for a consideration of up to $80 million with additional benefits via a Net Smelter Return (NSR) royalty and its equity exposure.
The sale of our interest in the Agbaou mine to Allied Gold is in line with our strategy of actively managing our portfolio to focus management efforts on high margin, long-life core assets.
Sébastien de Montessus, President and CEO, Endeavour Mining Corporation
Montessus continued, “Agbaou has been a highly cash generative asset which facilitated the organic development of Houndé and Ity, and given that it has now become non-core to Endeavour, we firmly believe that this transaction is in the best interests of all of Agbaou’s stakeholders, including the Government of Cote d’Ivoire, local communities and the employees themselves. This transaction will ensure mining activities can continue for many years to come through the creation of the Bonikro-Agbaou complex.”
“We are very proud of what we have accomplished at Agbaou as we have installed a strong and capable team, which is now led by an Ivorian General Manager, supported by a number of local employees in leadership positions, ensuring we leave behind a strong legacy. I want to thank our Agbaou employees for their huge commitment, professionalism and contribution to Endeavour’s evolution over the past years,” added Montessus.
Allied Gold is a private African operator that significantly owns the Bonikro mine in the vicinity. As soon as the transaction is sealed, the Bonikro-Agbaou operation will include several open pits, two processing plants including a total milling capacity of more than 5 Mtpa, and will have the capacity to generate more than 285,000 ounces per year.
Endeavour anticipates that it can acquire the advantages of local synergies and exploration benefits via its NSR royalty and equity stake in Allied Gold.
Listed below are the terms and conditions of the agreement included in the entire consideration:
- $20 million in cash should be paid in Q1 of 2021
- $40 million in Allied Gold shares. Endeavour has a choice to sell back the shares to Allied Gold at the issue price, expiring on December 31st, 2022, or earlier if Allied Gold performs an IPO earlier
- A contingent payment of nearly $20 million, inclusive of $5 million for each quarter of 2021 where the average gold cost goes beyond $1,900/oz
- An NSR royalty that has been generated on ounces surplus of the Agbaou reserves approximated as of December 31st, 2019. The NSR royalty will be dependent on a sliding scale, that is associated with the average spot gold cost as follows: 2.5% if the gold cost is at a minimum of $1,400/oz, 2% if the gold cost is at least $1,200/oz and less than $1,400/oz, 1% if the gold cost is at least $1,000/oz and less than $1,200/oz, and 0% if the gold cost is below $1,000/oz.
The transaction is anticipated to close on March 1st, 2021.