Endeavour Mining has agreed to acquire True Gold Mining in a friendly, all-share transaction that values True Gold at about C$226 million. Endeavour is listed on the Toronto Stock Exchange and operates four gold mines in West Africa, one each in Cote d’Ivoire, Mali, Burkina Faso and Ghana. True Gold has a 90% interest in the Karma gold mine in Burkina Faso, which was nearing production startup as of late March.
True Gold has a 90% interest in the Karma gold mine in Burkina Faso, which was nearing production start-up as of late March 2016. (Photo: True Gold)

Endeavour forecasts its 2016 gold production at between 535,000 and 560,000 ounces (oz) at an all-in sustaining cost of $870 to $920/oz, not counting production from Karma. Acquisition of Karma will add 110,000 to 120,000 oz per year (oz/y) to Endeavour production over a projected mine life of 8.5 years based on current reserves. Karma’s all-in sustaining cost of production is forecast at about $700/oz of gold during its first five years of operation.

Endeavour Mining CEO Neil Woodyer said, “The production profile and low cost of True Gold’s Karma mine is a very attractive fit with our West African operating portfolio. Karma is nearing production, and Endeavour Mining has both the financial strength and an experienced operations team to ensure Karma’s value is maximized during this important stage.

“True Gold shareholders are receiving an attractive premium and an opportunity to participate in a larger diversified West African producer, while Endeavour Mining shareholders are gaining a new, low-cost mine that boosts group production and reduces group all-in sustaining cost/oz.

“In the long term, the Karma mine has extensive exploration potential. Endeavour Mining’s enhanced ability to finance an expanded exploration strategy at Karma and at our own mines is expected to generate significant value.”

The Karma acquisition will increase Endeavour’s attributable proven and probable gold reserves by 19% to 5.4 million oz; its measured and indicated gold resources by 39% to 10.2 million oz; and its inferred gold resources by 123% to 3.9 million oz.

In other news, from Endeavour, the company is nearing a construction start at its Houndé open-pit gold project in Burkina Faso. Production is forecast at 190,000 oz/y of gold over a 10-year mine life, including 248,000 oz/y during the first two years. Reserves currently stand at 29.7 million mt grading 2.15 g/mt gold. Initial startup capital is forecast at $325 million. Life-of-mine all-in sustaining cost of production is forecast at $717/oz, including royalties, rehabilitation and closure costs.