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A worker logs chip samples at Avnel Gold’s Kalana gold project in West Africa. Credit: Avnel Gold[/caption]
Endeavour Mining is acquiring Avnel Gold Mining, which owns the Kalana gold project in Mali, in all-share transaction valuing Avnel at US$122 million.
The friendly transaction has been approved by boards of both companies and offers a 52% premium to Avnel's 20-day volume-weighted average price on June 28.
Avnel owns 80% of Kalana, a fully permitted feasibility-level project. The open-pit project has proven and probable reserves of 2 million oz. gold at a grade of 2.8 grams per tonne.
A feasibility study based on a 1.2 million tonne per year CIL (carbon-in-leach) plant and a single open pit projected that Kalana has an 18-year mine life with expected production of 101,000 oz. per year. With initial capital costs of US$196.3 million, the project has an after-tax net present value of US$257 million (at a 5% discount rate) and an after-tax internal rate of return of 38%.
All-in-sustaining costs (AISC) are pegged at US$784 per oz. and payback would be achieved in 1.2 years, based on a gold price of US$1,200 per oz.
Avnel has pursued optimization scenarios that, if adopted, could provide Kalana with an after-tax NPV of US$321 million and an after-tax IRR of 50%. There's also potential to reduce average AISC to US$730 per oz. over the 18-year mine life.
“We believe that Kalana fits well within our strategy of building a high-quality portfolio of long-life, low-AISC assets with exploration upside,” said Endeavour president and CEO Sébastien de Montessus.
“Furthermore, this acquisition expands our footprint in and reinforces our project pipeline, which will allow us to continue to leverage our in-house construction expertise. Kalana adds a third high-quality project to our portfolio, which we intend to develop following the completion of our Hounde and Ity CIL projects. In the interim, we look forward to optimizing the current feasibility study which should unlock further value for both Endeavour and Avnel shareholders, as well as benefiting our partners, the and the local communities around Kalana."
Under the transaction, Avnel shareholders will receive 0.0187 of an Endeavour share for each Avnel share held, which represents a value of $0.42 per share based on Endeavour's average share price over the five days before the deal was announced.
For more information, visit:
www.endavourmining.com or
www.avnelgold.com.
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