TORONTO-listed gold producer Endeavour Mining has unveiled plans to bolster its balance sheet ahead of an acceleration in its West Africa organic growth ambitions, and the expansion of its Ity project in Côte d’Ivoire.
The company, which recently appointed a new CEO in Sébastien de Montessus, is to raise C$125m through a share placement at a price of $20 per common share. The offer is expected to close on or about July 11.
Shares in Endeavour Mining, which are currently trading at C$21.67/share, have shown an 184% return year-to-date valuing the company at C$1.83bn.
The share placement will be with a syndicate of underwriters led by BMO Capital Markets which had agreed to buy 6,25 million shares in the gold producer.
The company said in a presentation that it had net debt of $71m following a $60m cash injection by shareholder La Mancha which followed its rights after Endeavour bought True Gold’s 120,000 ounce per year Karma mine.
“The net proceeds of the offering are intended to be used to accelerate Endeavour’s organic growth potential by significantly expanding the current exploration programs in a long-term strategic exploration initiative leveraging Endeavour’s high-quality West-African exploration portfolio,” the company said.
Funds would also pay for Ity, the company’s fifth mine, which is ramping up production this year. The construction of a carbon-in-leach plant will enable Endeavour to extend Ity’s production to 2020.
Endeavour Mining operates four mines in Mali, Côte d’Ivoire, and Ghana which will produce up to 560,000 oz this year. However, the company has ambitious growth plans.
In a presentation published on its website this month, Endeavour outlined a strategic objective to reach 900,000 oz/year in gold production by 2020 at an all-in cash cost of less than $800/oz. This will be achieved partly through the development of its Houndé project. The life of mine of its core assets would exceed 10 years, it added.
Liquidity between now and 2017 is estimated to be between $500m to $550m, which includes cash of $182m, and some $160m to $200m of anticipate free cash flow, as well as debt facilities. However, total capital expenditure to end-2017 is estimated to be $328m, largely dedicated to bringing Houndé into production.
It said capital constraints since 2010 had limited the company’s exploration efforts as it focused on replenishing its mined ounces of gold instead. A strategic exploration review is currently underway to establish the long-term exploration strategy and prioritise targets which includes its Agbaou, Tabakoto and Ity mines.
