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A ''Merger of Equals'': Producing Junior Gold Mines Combined in West Africa
ANALYSIS -- ProspectingJournal.com -- Global markets have become increasingly volatile due to th...
About this update from Endeavour Mining Plc
[{"type":"text","content":"\nA ''Merger of Equals'': Producing Junior Gold Mines Combined in West Africa\n\nANALYSIS -- ProspectingJournal.com -- Global markets have become increasingly volatile due to the deepening financial crisis, while gold bugs are gripping their seats. For investors, this means that gold stocks are a bargain, considering their current detachment from the bullion’s spot price. And for the miners, now is the best time to look for acquisitions, as the value of producing junior and mid-tier gold companies is considerably lagged the price of the underlying physical commodity.\n\n \nNot surprisingly, Australian and Canadian companies are leading the charge. Canada’s Endeavour Mining [EDV: TSX], which we covered recently in an article on its West African gold properties, has announced a merger with Australia’s Adamus Resources Ltd. [ASX: ADU]. The merger will add ADU’s Nzema gold mine in Ghana to EDV’s Youga gold mine in Burkina Faso and Agbaou gold project in Cote D’Ivoire. The newly merged company will operate under the leadership of Mr. Neil Woodyer, current CEO of Endeavour. \n \nThe merger will see an estimated production of 172,000 oz of gold in 2011, growing to 250,000 oz by year end 2013. The new company constitutes an all-stock transaction that allows shareholders to fully participate in future growth and value creation, with all shareholders of ADU to receive 0.285 shares of EDV for every share of ADU held. After the deal closes, shareholders of Endeavour will own 55 per cent of the merged company, while shareholders of Adamus will own 45 per cent, with 288 million shares fully diluted. \n \nThe deal, according to Woodyer, is a “merger of equals.” Endeavour will bring its sound financial backing and management to the table, while Adamus brings its project mine building expertise and a newly producing gold mine. ADU’s Nzema mine contains an estimated JORC compliant gold reserves of 1,068,000 oz’s and an additional 2,118,000 oz of measured, indicated and inferred gold resources. The mine is estimated to deliver 80,000 - 100,000 oz of gold per year. As well, the mine is expected to develop into higher-grade ore by 2013, which should improve the average grade. \n \nEndeavour will spend at least $160 million in cash to reduce Adamus’ loan and gold hedge for i...