Endeavour bids for Avion
August 30, 2012 by Gold Editor
SOURCE: [Northern Miner] - Endeavour Mining (EDV-T) plans to buy Avion Gold (AVR-T) in a $389-million all-stock deal to increase its foothold in West Africa, and expand its annual production to over 450,000 oz. gold in 2015.
Endeavour will provide a US$20-million loan to Avion as part of the plan of arrangement, and the cash-strapped producer can use the loan to resume mill expansion at the Tabakoto property in Mali.
The acquisition values Avion at 88¢ per share, or a 56% premium to its Aug. 7 closing price and a 70% premium over its 20-day volume-weighted average price.
Under the agreement, Avion shareholders will receive 0.365 of an Endeavour share for each share held, and upon completion will own 40% of Endeavour.
Endeavour operates two gold mines: Youga in Burkina Faso and Nzema in Ghana. It is also building the Agbaou gold mine in Côte d’Ivoire, while Avion produces gold at the Tabakoto mine in southern Mali, and is advancing its Houndé project in Burkina Faso and Kofi exploration project in western Mali.
“The proposed acquisition by Endeavour Mining appears to offer reasonable value and would create an appealing mid-tier West African gold producer,” BMO analyst Andrew Breichmanas, who covers Avion, writes in a recent note.
In a joint conference call, Endeavour’s CEO Neil Woodyer explains the company has been looking at Avion for over a year as an acquisition opportunity, recognizing that it would strengthen its portfolio by adding a third producing mine, geographical diversification and exploration upside. As a result, it approached Avion three weeks prior to the deal being announced in early August.