Endeavour sells 85% interest of its non-core Agbaou mine in Côte d’Ivoire
Endeavour Mining has entered into an agreement to sell its 85% interest in its non-core Agbaou mine in Côte d’Ivoire to Allied Gold Corp for a consideration of up to $80 million with further upside through its equity exposure and a Net Smelter Return (NSR) royalty.
Sébastien de Montessus, President and CEO of Endeavour, commented: “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. 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.”
Allied Gold is a private African operator which notably owns the nearby Bonikro mine. Following the transaction close, the Bonikro-Agbaou operation will be comprised of multiple open pits, two processing plants with a total milling capacity of over 5Mtpa, and will have the potential to produce over 285,000 ounces annually. Endeavour expects to capture the benefits of local synergies and exploration upside through its equity stake in Allied Gold and its NSR royalty.
Under the terms of the Agreement, the total consideration consists of:
- $20 million in cash payable in the first quarter of 2021;
- $40 million in Allied Gold shares. Endeavour has an option to sell the shares back to Allied Gold at the issue price which expires on December 31, 2022 or earlier if Allied Gold conducts an IPO before then;
- A contingent payment of up to $20 million, comprised of $5 million for each quarter of 2021 where the average gold price exceeds $1,900/oz; and
- A NSR royalty on ounces produced in excess of the Agbaou reserves estimated as at December 31, 2019. The NSR royalty will be based on a sliding scale, linked to the average spot gold price as follows: 2.5% if the gold price is at least $1,400/oz, 2% if the gold price is at least $1,200/oz and less than $1,400/oz, 1% if the gold price is at least $1,000/oz and less than $1,200/oz, and 0% if gold price is below $1,000/oz.
The transaction is expected to close on March 1, 2021.