Endeavour Mining (TSX: EDV), already聽West Africa鈥檚 top gold producer,聽has agreed to buy Teranga Gold (TSX: TGZ) in , which would create a top 10 gold producer.
The miner is offering 0.470 of its own shares for each Teranga share, a 5.1% premium to Teranga鈥檚 closing price on Friday.
The combined company will produce about 1.5 million ounces of gold a year across West Africa, making it one of the 10 largest producers
Endeavour shareholders will end up with 66% of the combined entity, with Teranga shareholders holding the remaining 34%. Teranga will get three seats on the board to Endeavour鈥檚 seven.
La Mancha, the vehicle which Egyptian billionaire Naguib Sawiris holds his stake in Endeavour, will invest a further $200 million into the combined miner, leaving it with a 19% stake.聽
Endeavour鈥檚 acquisition of Teranga adds another operating asset 鈥� Wahgnion 鈥� to its four existing mines in Burkina Faso. It also gives it exposure to Senegal through the Massawa project, which Teranga bought from Barrick Gold (TSX:ABX) (NYSE:GOLD) last year.
A successful deal would consolidate Endeavour鈥檚 growth, which completed the acquisition of smaller rival Semafo in July, bringing together six mines with strong cash flows into one portfolio.
The company鈥檚 had previously tried to buy Egypt-focused Centamin (LON:CEY) (TSX:CEE), but talks failed to deliver a deal.
Among top dogs
The combined miner, which aims to list in London next year, will produce about 1.5 million ounces of gold a year from six core operating mines in three countries 鈥� Senegal, Burkina Faso and C么te d鈥橧voire.
With a pro-forma market capitalization of C$7.6 billion ($5.8bn), it would also be among the most valuable precious metals companies currently listed on the London Stock Exchange. These include Russian duo Polyus (LON: PLZL) and Polymetal International (LON: POLY), Mexico-focused Fresnillo (LON: FRES) and聽Canadian Yamana Gold聽(LON: AUY).
鈥淲e like the strategic rationale for the combination with respect to asset quality, diversification and potential synergies in West Africa, larger production profile and potentially improved share liquidity,鈥� BMO Metals & Mining analyst Raj Ray wrote on Monday.
The deal is expected to close in the first quarter of 2021.