Endeavour Mining plc has announced that it has closed the sale of its 90% interests in its Boungou and Wahgnionnon-coremines in Burkina FasotoLiliumMining, a subsidiary of Lilium Capital, an African and frontier markets-focused strategic investment vehicleled by West African entrepreneurs.
The total consideration is expected to exceed US$300 Million and is comprised of upfront and deferred cash considerations and net smelter return royalties.
Sébastien de Montessus, President and CEO, commented:“Inline with our strategy of actively managing our portfolio to focus management efforts on higher quality assets,we are pleased toannounce the sale ofournon-coreBoungou and Wahgnion minestoLiliumMining.
“We believe thatLiliumMiningiswell positioned tocontinue to unlock value at the Boungou and Wahgnion mines, for the benefit of all stakeholders.
Moreover, Liliumis a trusted Burkinabe-focused business that shares our commitment to operate the mines in the best interests of employees and local stakeholders”.
“We wish to thank our Boungou and Wahgnion employeesand local stakeholdersfor their commitment, professionalismand contribution to Endeavour’s success over the past several years.”
Under the terms of the Agreement, thetotal consideration consists of the following: $130 milliontobe receivedby31July 2023in the form of a reimbursement of historical shareholder loans, whichwillbe used tofurther strengthen the Company’s balance sheetas it progressesthe construction of its growth projects. $25million in deferred cash consideration payable intwo instalments of $10 million and $15 million by end of Q4-2023 and end of Q1-2024, respectively.
Deferredcash consideration comprised of50% of the net free cashflow generated by the Boungou mine until$55 million has been paid, whichis expected to occurby Q4-2024based on the current gold price environment andmineplan. An NSR onBoungoucommencingimmediatelyfor 4.0% of gold sold.Endeavour expects the NSR on Boungou to generate approximately US$52million of cash over its life of minebased on current reserves, assuming a gold price of $1,850/oz, with further exploration upside and potential to convert resources to reserves. An NSR on Wahgnioncommencingimmediatelyfor 4.0% of gold sold.Endeavour expects the NSR on Wahgnion to generate approximately $41million of cash over its life of minebased on current reserves, assuming a gold price of $1,850/oz, with further exploration upside and potential to convert resources to reserves.
The transaction constitutes a class 2 transaction for Endeavour for the purposes of the UK Financial Conduct Authorities Listing Rules and, as such, does not require Endeavour shareholder approval.Based on the economic terms of the transaction,Endeavourwillperformitspurchase price adjustmentswith effect from1 May 2023.
Following the sale of theBoungou and Wahgnionmines, Endeavour has updated its2023 full-year production and all-in sustaining cost (“AISC”) guidance to account for the removal of guided productionfrom the Boungou mineof115–125koz at anAISC of $985–1,075/ozandfromthe Wahgnion mine of150–165koz at anAISC of $1,250–1,350/oz.
Asaresult,thefull year2023production guidance for continuing operations has decreased from 1,325– 1,425koz to1,060–1,135koz, while AISC guidance from continuing operations hasimprovedby $45/oz to $895–950/oz.
This asset sale is expected to be more than offset by Endeavour’songoing construction activitiesasthe Group’s production and AISCareexpected to significantly improvenext year as the Sabodala-Massawa brownfield expansionin Senegal,andtheLafiguégreenfield project in Côte d’Ivoireremain on track to becommissioned in Q2-2024 and Q3-2024,respectively.
