Endeavour to sell Tabakoto mine in Mali to Algom Resources for $60m

Tabakoto Mine, Mali

ENDEAVOUR Mining made short work of its desire to sell Tabakoto, a gold mine in Mali which the Toronto-listed group said at its second quarter results presentation was non-core given its high cost base, agreeing to sell the operation for $60m to Algom Resources.

Algom is a subsidiary of BCM Investments which earlier successfully bid for another of Endeavour’s non-core assets, the Nzema mine in Ghana for $65m.

Tabakoto reported all-in sustaining costs (AISC) in the second quarter of $1,397/oz which compared to the $1,208/oz it produced in the first quarter of the financial year.

Sébastien de Montessus, president and CEO of Endeavour Mining said at the time the firm would attempt to operate the mine as well as it could, although significant investment in much-needed fleet replacement was unlikely.

AISC for Endeavour’s continuing operations for the 2018 financial year was forecast to be between $760 and $810/oz which compares well to the $732/oz half-year AISC number, and demonstrates the extent to which Tabakoto is out of kilter with the firm’s cost profile.

The sale of Tabakoto would “… increase our overall portfolio quality and allow management to focus on high cash generating assets with low AISC and long mine lives,” said De Montessus, in a statement today. “Tabakoto has been sold following a comprehensive review which determined that the capital investments required to reduce its AISC did not meet our capital allocation criteria,” he added.

Payment for the mine would be paid upon closing of the transaction which is expected to occur during the fourth quarter of 2018, Endeavour said in its announcement.

Peter Spivey, COO of Algom, said Tabakoto was a “well established” open pit and that is possessed “… excellent geological potential to continue operating well into the future”. He added the group would continue to invest in the pipeline of the open pit and underground ore reserve targets already identified by Endeavour.

“The underground operations at Segala and Tabakoto are well understood, and we look forward to working closely with our business partners in making improvements to the efficiency and operating costs of the operations,” Algom’s Spivey said of existing operations at the Tabakoto mine.

Endeavour Mining produced 147,000 ounces of gold from continuing operations for the second quarter which it reported on August 1. This takes half-year output to 299,000 oz which De Montessus said was on course for the 555,000 oz to 590,000 oz full year target guided at the beginning of the year.