Endeavour Mining and Adamus Resources have entered into an all-stock merger agreement that would create a gold production and exploration company focused on West Africa. Endeavour is headquartered in Georgetown, Grand Cayman, and is listed on the Toronto Stock Exchange; Adamus is headquartered in West Perth, Western Australia, and is listed on the Australian Stock Exchange. The merged company would be listed on both exchanges. At the time of the merger announcement, the companies had a combined market capitalization of about $600 million.
Endeavour’s 90%-owned Youga mine in Burkina Faso is expected to produce 84,000 oz of gold in 2011; Adamus’ 90%-owned Nzema mine in Ghana achieved commercial production in April 2011 and is forecast to produce 88,000 oz by year-end. Ongoing production at Nzema is planned at 100,000 to 105,000 oz/y. Current cash costs for combined production at the two mines is in the range of $575 to $626/oz.
Endeavour anticipates a construction decision for its advanced-stage, 85%-owned Agbaou project in Côte d’Ivoire in the first quarter of 2012, with gold production starting in late 2013. The project is being planned to produce 73,100 oz/y of gold.
The two companies also have exploration properties totaling 10,411 km2 in Mali, Côte d’Ivoire, Burkina Faso, Ghana, and Liberia.
The proposed merger requires shareholder approvals at meetings planned for November 2011. Assuming completion of the merger, Neil Woodyer from Endeavour will be CEO and Mark Connelly from Adamus will be COO Operating management will be based in West Perth.
The Youga open-pit gold mine near the Ghana border in Burkina Faso has been in production since mid-2008. Ore is processed through a 1-million-mt/y gravity/CIL plant, with 93% gold recovery. Mine life based on current reserves is four years, but an aggressive exploration campaign is targeting 12 targets within 3 km of the Youga mill and is expected to make near-term additions to resources and reserves.
The Nzema mine in southwest Ghana is an open-pit operation, with 1.6 million to 2.2 million mt/y of processing capacity through a gravity/CIL plant. Expected mine life from current reserves is 10 years. Near-mine opportunities include satellite deposits and sulphides at depth.
