Endeavour acquires SEMAFO to create major gold producer

Endeavour Mining Corporation has announced its shareholders voted overwhelmingly in favour of Endeavour acquiring all of the SEMAFO Inc. common shares to create a leading West African gold producer with six operations and an attractive growth pipeline.

The Transaction will create a top 15 global gold producer with +1 million ounces of gold production per year. Due to the strong strategic rationale for local consolidation, both sets of Board of Directors have unanimously approved the Transaction.

Sebastien de Montessus, Endeavour President & CEO, commented: “We are pleased to have the strong support of the shareholders of Endeavour as we take this important step to create a leading West African gold producer.  The combined company will have improved strategic positioning, an enhanced ability to manage risks, a stronger capital market profile and sustained ability to produce over 1 million ounces of gold while improving the combined group’s ability to generate shareholder returns. We look forward to working closely with the SEMAFO team to close the transaction and integrate our teams.”

The combined entity will benefit from four cornerstone mines, with combined production of over 800,000 ounces per year, and increased capital allocation efficiency due to its enhanced project and exploration pipeline

• Brings together a diversified portfolio of six mines with strong cash flow capabilities, with the potential to further optimize the asset base
• Attractive growth project pipeline with optionality across the Fetekro, Kalana, Bantou and Nabanga projects
• Strong potential to unlock exploration value through control of highly prospective grounds along the Birimian Greenstone Belt with the ability to deploy a significant exploration budget

On a pro-forma basis, a combined Endeavour and SEMAFO would have:

• More than 1.0 Moz of gold production in 2020 (based on current company guidance), placing it among the top 15 gold producers globally
• All-In Sustaining Costs below $900/oz in 2020 (based on current company guidance), placing it within the bottom third of the industry cost curve
• 10.5Moz of Reserves and 20.7Moz of M&I Resources (inclusive of reserves based on the most recently published figures from both companies), plus an additional 6.3Moz of Inferred resources
• Net debt to LTM Adjusted EBITDA ratio of 0.68x and access to liquidity sources of $508 million, according to the most recent publicly available information, inclusive La Mancha’s $100 million commitment to invest in support of the Transaction

The implied equity value for SEMAFO is equal to C$1.0 billion based on Endeavour’s closing price on March 20, 2020. Existing Endeavour and SEMAFO shareholders will own approximately 70% and 30%, respectively, of the combined company on a fully-diluted in-the-money basis.