TSX-listed Endeavour Mining Corporation said it is seeking to engage with the Centamin Board with the intention of reaching an agreement on the terms of a recommended all-share merger between Endeavour and Centamin.
Endeavour believes that this potential combination would strongly benefit both sets of shareholders due to the compelling long-term value creation opportunity.
After several unsuccessful attempts to engage with the Board of Directors of Centamin, initially in October 2018, and then again on 11 November 2019, regarding the prospects for a merger, Endeavour then submitted a formal proposal to Centamin on 25 November 2019.
As meaningful engagement has still not been forthcoming, Endeavour announced the terms set out in its proposal, on 3 December 2019, in an effort to encourage the Centamin Board to engage in discussions.
Commenting on the announcement, Michael Beckett, chairperson of the Board of Directors of Endeavour, said the company firmly believed that the proposed combination between Endeavour and Centamin provides a compelling value creation opportunity for both sets of shareholders, which is superior to what can be achieved by each company on a standalone basis.
“Despite repeated good faith attempts to engage with Centamin, our efforts have been frustrated by their refusal to entertain any discussions about a merger before entering into a standstill agreement. A standstill would have the effect of precluding us from taking the proposal to shareholders if the proposal was not seriously considered by Centamin.
“We have therefore decided that, due to the strong merits of the merger and its potential to create value, it is necessary to make public our proposal so that the voices of shareholders are heard. Our management team has demonstrated a disciplined approach to business development opportunities and the Endeavour Board will continue to be prudent allocators of capital to opportunities that it believes are aligned with its long-term strategic objectives, and that create value for shareholders.”
Sébastien de Montessus, President & CEO of Endeavour said that after having completed the turnaround of our asset portfolio, the company is well-positioned to focus management efforts on a new phase in its growth strategy.
“We believe that the Centamin’s shareholders are currently disadvantaged by the Sukari mine being managed within a single-asset portfolio, by the recent operational challenges and the ongoing leadership transition at Centamin.
“There would be immediate potential benefits from integrating Sukari into a multi-asset portfolio that is managed with a long-term value focus and with La Mancha as a key cornerstone shareholder. Building on our operational track record, we believe that with the combined management team, we would be ideally positioned to improve the efficiency of Sukari and deliver stronger value to both sets of shareholders.”
The strategic rationale for the merger is that an all-share merger would create a diversified gold producer with a high-quality portfolio of assets having benefits, which include diversified high-quality portfolio with potential for improved operating efficiencies; geographic diversification with three flagship assets (Sukari, Houndé, Ity) across three different countries in Africa; and operational diversification with increased optionality across the asset portfolio with high quality production, a pipeline of advanced stage projects and one of the largest exploration portfolios in Africa to deliver long-term sustainable production.
Other benefits include that the mine has recently suffered from being managed within a single-asset company focused too heavily on the short-term to the detriment of long-term value; improved operating efficiencies with the ability to realise meaningful synergies, which are expected to include reduced corporate G&A, procurement, logistics and supply chain management, mine planning capabilities based on multi-asset portfolio approach; and the combined Entity is expected to benefit from Endeavour’s proven expertise in delivering operational excellence.