GEORGE TOWN & ST. PETER PORT, Guernsey, June 29, 2017 (GLOBE NEWSWIRE) -- Endeavour Mining Corporation (EDV.TO) (EDVMF) ("Endeavour") and Avnel Gold Mining Limited (AVK.TO) ("Avnel") are pleased to announce that they have reached an agreement under which Endeavour will acquire Avnel in an all-share transaction for a total consideration of approximately US$ 122 million (CAD$ 159 million). The terms of the transaction have been unanimously approved by the Boards of Directors of both companies.
Avnel holds an 80% interest in the Kalana Gold project ("Kalana") in Mali and holds significant exploration permits in the surrounding area. Kalana is a fully permitted feasibility-stage project based on a 1.2Mtpa carbon-in-leach ("CIL") plant and a single open-pit constrained reserve of approximately 2.0Moz grading 2.8 g/t. According to the feasibility study, it has an 18-year mine life and an expected production of 101,000 ounces per year at an average All-in Sustaining Cost ("AISC") of $784/oz (with 148,000 ounces on average during the first 5 years at an average AISC of $589/oz). The initial capital cost is forecast at $196.3 million and Kalana demonstrates robust economics with an after-tax NPV5% of $257 million, an after-tax IRR of 38% and a payback of 1.2 years based on a gold price of $1,200/oz[1].
Avnel has pursued optimization scenarios that, if adopted, could provide Kalana with an after-tax NPV5% of US$321 million and an after-tax IRR of 50%. In addition, such optimization scenarios could reduce average AISC to US$730/oz over the 18-year mine life and to US$561/oz over the first five years. Endeavour expects to take advantage of its construction expertise, operating synergies and exploration experience to re-design and optimize the current feasibility study, which is expected to increase the annual production profile and improve the project economics.
Endeavour will acquire 100% of Avnel`s issued and outstanding common shares under a court-sanctioned scheme of arrangement under Part VIII of the Companies (Guernsey) Law, 2008 (the "Scheme").
Under the terms of the Scheme, Avnel shareholders will receive 0.0187 of an Endeavour share for each Avnel share held, which represents a value of C$0.42 per share based on Endeavour`s 5 days VWAP (C$ 22.58 per share) on the TSX on 29 June 2017 and a total transaction consideration of approximately C$159 million (US$122 million). This represents a premium of 48% to the closing price of Avnel`s ordinary shares on the TSX on 29 June 2017, and a 52% premium based on Avnel`s 20-day trailing VWAP on the TSX for the period ending on 29 June 2017.
The number of Endeavour shares to be issued under the Scheme will be approximately 7 million based on the issued and outstanding shares of Avnel as of the date of this announcement. Following the completion of the transaction, Endeavour will have approximately 103.6 million ordinary shares in issue, with former Avnel shareholders holding approximately 6.8% of Endeavour`s pro forma share capital.
BMO Capital Markets and Cormark Securities Inc. have provided opinions to the Avnel Board of Directors that as of the date of such opinions and subject to the assumptions, limitations, and qualifications stated in such opinions, the consideration to be received by the Avnel shareholders under the transaction is fair, from a financial point of view, to the Avnel shareholders (other than affiliates of Elliott Management Corporation (the "Elliott Group")).
The Scheme has been unanimously approved by the Boards of Directors of Avnel and Endeavour and will be subject to, among other things, the favourable vote by a majority in number of the Avnel shareholders voting at the Guernsey Court Meeting, either in person or by proxy, representing at least 75% in value of the Avnel shares voted.
Avnel`s Directors intend to recommend that Avnel shareholders vote in favour of the Scheme, and directors holding shares have irrevocably undertaken to Endeavour to do so in respect of their holdings of, in aggregate, 1,000 Avnel shares. Fern Trust has irrevocably undertaken to vote in favour of the Scheme in respect of its holdings of, in aggregate, 33,602,022 Avnel shares, representing 8.91% of the existing issued ordinary share capital of Avnel as at the date of this announcement.
In addition to the irrevocable undertakings from the Avnel Directors and Fern Trust, Endeavour has also received irrevocable undertakings from members of the Elliott Group (and their nominees), subject to certain exceptions, to vote in favour of the Scheme in respect of their holdings of, in aggregate 238,839,089 Avnel shares, representing 63.35% of the existing issued ordinary share capital of Avnel.
The total irrevocable undertakings represent 72.27% of the existing issued ordinary share capital of Avnel as at the date of this announcement.
A copy of the Arrangement Agreement, the Scheme circular (once published) and ancillary documents required to be filed with the Canadian securities regulatory authorities will be so filed and made available for viewing on the System for Electronic Documents Analysis and Retrieval ("SEDAR") website at www.sedar.com.
Closing of the transaction is subject to customary conditions, including shareholder approval, as well as sanction of the Scheme by the Guernsey Royal Court.
Subject to the satisfaction of various conditions, including the receipt of the requisite approval of Avnel shareholders and sanction by the Guernsey Royal Court, the transaction is expected to close in September 2017. Details concerning the review and approval process carried out by the Special Committee and the Board of Avnel, together with a copy of the fairness opinions prepared by BMO Capital Markets and Cormark Securities Inc., will be contained in a management information circular to be provided for the extraordinary general meeting of shareholders of Avnel. The Avnel management information circular is expected to be filed and mailed to Avnel shareholders in late July 2017 and will be available on Avnel`s website and on its SEDAR profile at www.sedar.com.
QUALIFIED PERSONS
Adriaan "Attie" Roux, Pr.Sci.Nat, Endeavour`s Chief Operating Officer, has reviewed and approved the technical information in this news release relating to Endeavour and Roy Meade, Avnel`s President, has reviewed and approved the technical information in this news release relating to Avnel, except where noted otherwise. Both are Qualified Persons under NI 43-101.
ADVISERS
Endeavour`s financial adviser is Gleacher Shacklock LLP and its legal advisers are Linklaters LLP, Stikeman Elliott LLP and Mourant Ozannes LP.
Avnel`s financial advisors are BMO Capital Markets and Cormark Securities Inc. and its legal advisors are Blake, Cassels & Graydon LLP, Berwin Leighton Paisner LLP and Carey Olsen.
ENDEAVOUR CONTACT INFORMATION
Martino De Ciccio
VP - Strategy & Investor Relations
+44 203 640 8665
mdeciccio@endeavourmining.com | DFH Public Affairs in Toronto
John Vincic, Senior Advisor
(416) 206-0118 x.224
jvincic@dfhpublicaffairs.com
Brunswick Group LLP in London
Carole Cable, Partner
+44 7974 982 458
ccable@brunswickgroup.com |
AVNEL CONTACT INFORMATION
Howard Miller
Chairman and CEO
+44 207 589 9082
howard@hbmiller.co.uk | Ian McDonald
Vice-President, Corporate Development
+1 647 407 2515
imcdonald@avnelgold.com |
ABOUT ENDEAVOUR
Endeavour Mining is a TSX-listed intermediate gold producer, focused on developing a portfolio of high quality mines in the prolific West-African region, where it has established a solid operational and construction track record.
Endeavour is ideally positioned as the major pure West-African multi-operation gold mining company, operating 5 mines across Côte d`Ivoire (Agbaou and Ity), Burkina Faso (Karma), Mali (Tabakoto), and Ghana (Nzema). In 2017, it expects to produce between 600koz and 640koz at an AISC of US$860 to US$905/oz. Endeavour is currently building its Houndé project in Burkina Faso, which is expected to commence production in Q4-2017 and to become its flagship low-cost mine with an average annual production of 190koz at an AISC of US$709/oz over an initial 10-year mine life, based on reserves. The development of the Houndé and Ity CIL projects are expected to lift Endeavour`s group production to +900kozpa and decrease its average AISC to circa $800/oz by 2019, while exploration aims to extend all mine lives to +10 years.
Corporate Office: 5 Young St, Kensington, London W8 5EH, UK
ABOUT AVNEL
Avnel Gold is a TSX-listed gold mining, exploration and development company with operations in southwestern Mali in West Africa. The Company`s focus is to develop its 80%-owned Kalana Main Project from a small underground mine into a low-cost, high-grade, open pit mining operation. The Company is also advancing exploration on several nearby satellite deposits on the 387 km² 30-year Kalana Exploitation Permit.
On January 9, 2017, the Company reported the results of an Optimized Feasibility Study ("OFS") prepared by Snowden Mining Industry Consultants. The OFS outlines an 18-year open-pit mine life at the Kalana Main Project recovering 1.82 million ozs of gold at an average "all-in sustaining cost" of $561/oz over the first five years of steady state production and $730/oz over the life of mine with an initial capital cost of $171 million. Utilising a gold price of $1,200/oz and a 5% discount rate, the OFS reported a net present value ("NPV") of $321 million after-tax and imputed interest, and an internal rate of return ("IRR") of 50% on a 100% project basis.
TECHNICAL INFORMATION
Except where indicated, the disclosure of an economic, scientific or technical nature relating to Kalana contained in this release has been summarized or extracted from the Feasibility Study (as defined below) and the National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101") compliant technical report titled "NI43-101 Technical Report on Kalana Main Project", dated effective 30 March 2016 (the "Kalana Technical Report"), prepared by Snowden Mining Industry Consultants (Pty) Ltd. ("Snowden"), Denny Jones Ltd ("Denny Jones"), DRA Projects SA (Pty) Ltd ("DRA") and Epoch Resources (Pty) Ltd ("Epoch Resources"). The feasibility study prepared by Snowden, Denny Jones, DRA, and Epoch Resources (the "Feasibility Study") and the Kalana Technical Report was prepared under the supervision of Mr. Allan Earl (Executive Consultant - Mining Engineering of Snowden), Mr. Ivor Jones (Executive Consultant - Applied Geosciences of Denny Jones), Mr. Glenn Bezuidenhout (Principal Process Engineer of DRA), Mr. Sybrand van der Spuy (Civil Engineer of DRA), Mr. Guy Wiid (Principal Consultant - Tailings and Waste Rock Facilities of Epoch Resources), and Mr. Stephanus (Fanie) Coetzee (Principal Consultant - Environmental and Social of Epoch Resources), all of whom are independent "Qualified Persons". Readers should consult the Kalana Technical Report to obtain further particulars regarding Kalana, which contains the Kalana Main Project, the underground Kalana Mine, plus a number of mineral exploration prospects. The Kalana Technical Report, which constitutes the current technical report for Kalana, was filed on SEDAR on May 6, 2016 and is available for review at www.SEDAR.com.
FORWARD-LOOKING INFORMATION
This news release includes certain "forward-looking statements". Forward-looking statement include, but are not limited to, Endeavour`s expectations regarding its ability to increase annual production profile and improve project economics of Kalana and the receipt of the required shareholder approval and court sanction of the Scheme. All statements, other than statements of historical fact, included in this release, including the future plans and objectives of Endeavour and Avnel, are forward-looking statements that involve various risks and uncertainties.
There can be no assurance that forward-looking statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from Endeavour`s or Avnel`s expectations include, among others, risks related to international operations, the actual results of current exploration activities, conclusions of economic evaluations and changes in project parameters as plans continue to be refined as well as future prices of gold and silver, as well as those factors discussed in the section entitled "Risk Factors" in Endeavour`s and Avnel`s most recently completed Annual Information Forms, which are available on SEDAR (www.sedar.com). Although Endeavour and Avnel have attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.
NON-IFRS FINANCIAL MEASURES
Avnel`s audited consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and the accounting policies adopted by Avnel in accordance with IFRS.
Management uses both IFRS and non-IFRS measures to monitor and assess the operating performance of Avnel`s operations. In this press release, certain non-IFRS performance measures are used to provide additional information, as Avnel believes that certain investors use these measures to assess the performance and prospectus of gold mining companies. These non-IFRS performance measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Non-IFRS performance measures do not have standardized definition under IFRS and therefore may not be comparable to similar measures presented by other organizations:
- "All-in Sustaining Cost" or "AISC" is defined in the feasibility study as mine site cash operating costs, which include costs such as mining, processing, administration, plus transport and refining of metals, stamp duty, and royalties, mine management fees to be earned by Avnel, plus sustaining capital costs, which includes community and environmental. These costs are then divided by the number of ounces of expected production to be sold to arrive at "On-site All-in Sustaining Cost per Ounce Sold".
[1] Readers should refer to Avnel`s press release dated Jan. 9, 2017, available on Avnel`s website.
Attachments:
http://www.globenewswire.com/NewsRoom/AttachmentNg/bbe2c674-a35d-4d3c-a06a-c8aef407948c
This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Avnel Gold Mining Limited via GlobeNewswire
HUG#2116620