Endeavour Mining plc has announced that it has closed the sale of its 90% interests in its Boungou and Wahgnion non-core mines in Burkina Faso to Lilium Mining, a subsidiary of Lilium Capital, an African and frontier markets-focused strategic investment vehicle led by West African entrepreneurs.
The total consideration Is expected to exceed $300 million and is comprised of upfront and deferred cash considerations and net smelter return royalties.
Sébastien de Montessus, President and CEO, commenting on the development, said it is in line with its strategy of actively managing its portfolio to focus management’s efforts on higher quality assets.
“We are pleased to announce the sale of our non-core Boungou and Wahgnion mines to Lilium Mining. We believe that Lilium Mining is well positioned to continue to unlock value at the Boungou and Wahgnion mines, for the benefit of all stakeholders.
“Moreover, Lilium is 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 employees and local stakeholders for their commitment, professionalism and contribution to Endeavour’s success over the past several years.”
Sébastien de Montessus
Under the terms of the Agreement, the total consideration consists of the following: $130 millions to be received by 31st July 2023 in the form of a reimbursement of historical shareholder loans, which will be used to further strengthen the Company’s balance sheet as it progresses the construction of its growth projects. $25million in deferred cash consideration payable in two instalments of $10 million and $15 million by end of Q4-2023 and end of Q1-2024, respectively.
Deferred cash consideration comprised of 50% of the net free cashflow generated by the Boungou mine until $55 million has been paid, which is expected to occur by Q4-2024 based on the current gold price environment and mine plan.
Endeavour expects the NSR on Boungou to generate approximately $52million of cash over its life of mine based 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 Wahgnion commencing immediately for 4.0% of gold sold.
Endeavour expects the NSR on Wahgnion to generate approximately $41million of cash over its life of mine based 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 Authority’s Listing Rules and, as such, does not require Endeavour shareholder approval. Based on the economic terms of the transaction, Endeavour performed its purchase price adjustments with effect from 1st May 2023.
Updated Group Guidance
Following the sale of the Boungou and Wahgnion mines, Endeavour has updated its 2023 full-year production and all-in sustaining cost (“AISC”) guidance to account for the removal of guided production from the Boungou mine of 115–125koz at an AISC of $985–1,075/oz and from the Wahgnion mine of 150–165koz at an AISC of $1,250–1,350/oz.
As a result, the full year 2023 production guidance for continuing operations has decreased from 1,325– 1,425koz to1,060–1,135koz, while AISC guidance from continuing operations has improved y $45/oz to $895–950/oz.
This asset sale is expected to be more than offset by Endeavour’s on going construction activities as the Group’s production and AISC are expected to significantly improve next year as the Sabodala-Massawa brownfield expansionin Senegal, and the Lafiguégreenfield project in Côte d’Ivoire remain on track to be commissioned in Q2-2024 and Q3-2024,respectively.
The Boungou mine was acquired by Endeavour in July 2020, as part of its acquisition of SEMAFO. Endeavour owned a 90% stake in the Boungou mine, with the remaining 10% owned by theState of Burkina Faso.
Located approximately 323 km east-southeast of Ouagadougou, the capital of Burkina Faso, the Boungou mine is an open pit operation on the highly prospective Birimian Greenstone Belt. Ore is treated at a1.3Mtpa CIP processing plant that achieved commercial production in September 2018.
As of 31 December 2022, Proven and Probable reserves totalled 8.9Mt at 2.91 g/t containing 0.83Moz of gold and Measured and Indicated resources (inclusive of reserves) totalled8.6Mt at 3.59 g/t containing 0.99Moz of gold.
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