Information on the target
Endeavour Mining Corporation has announced its intention to acquire Avnel Gold Mining Limited in an all-share transaction valued at approximately US$122 million (C$159 million). Avnel holds an 80% interest in the Kalana Gold project located in Mali, which is a fully permitted feasibility-stage project. The Kalana project is based on a 1.2Mtpa carbon-in-leach (CIL) plant and features a single open-pit constrained reserve of nearly 2.0 million ounces of gold grading 2.8 g/t. The project is projected to have an 18-year mine life with expected annual production of 101,000 ounces at an average All-in Sustaining Cost (AISC) of $784/oz.
The acquisition is expected to enhance Endeavour's construction pipeline, particularly following the completion of its Hounde and Ity CIL projects. The transaction has been unanimously approved by the Boards of Directors of both companies and is anticipated to close in September 2017. The acquisition of Kalana aligns with Endeavour's strategic portfolio criteria, which emphasizes high-quality projects with significant exploration potential.
Industry overview in the target’s specific country
The gold mining industry in Mali is one of the most significant sectors of the country's economy, contributing substantially to its GDP and export revenues. Mali is recognized as one of Africa's leading gold producers, with several large-scale mining operations and a favorable geological setting for gold exploration. The country has attracted significant foreign investment, particularly from companies focused on developing gold resources in the region.
In recent years, the Malian government has implemented policies to encourage investment in the mining sector, including tax incentives and streamlined permitting processes. This supportive regulatory environment, combined with Mali's rich mineral resources, has positioned the country as a prime destination for gold mining companies seeking to expand their operations in West Africa.
Despite facing challenges such as political instability and security concerns in certain regions, Mali's gold mining industry continues to thrive. The presence of established mining companies and the discovery of new gold deposits have bolstered investor confidence, leading to increased exploration and development activities. As a result, Mali is expected to maintain its status as a key player in the global gold market.
The rationale behind the deal The acquisition of Avnel and its Kalana Gold project is strategically aligned with Endeavour's objective of building a high-quality portfolio of long-life, low AISC assets. By integrating Kalana into its operations, Endeavour aims to leverage i…