Endeavour, Acacia fail to strike deal on merger over shareholder value row

Thursday March 30 2017

Mining firm Endeavour Mining Corporation has withdrawn from merger talks with Acacia Mining Plc due to a dispute over shareholder value.

Sources say the merger would have created a firm with a market value of $4 billion.

Endeavour withdrew from the talks last week after both parties failed to agree on shareholder value.

The two firms declined to comment on the falling out, citing a confidentiality agreement.

Acacia, which is listed on the London Stock Exchange, mines gold in Tanzania and is preparing to mine in western Kenya.

READ: Acacia gold project in Kenya to kick off in 2022


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Toronto Stock Exchange-listed Endeavour has a footprint in West Africa. Its market value is about $1.66 billion and Acacia which is 63.9 per cent majority owned by Barrick Gold Corporation of Canada, is valued at about $2.1 billion.

A merger with Endeavour would have enabled Barrick to reduce its stake in Acacia to about 30 per cent, as the world’s leading gold producer does not consider the company a core asset.

Acacia’s chief executive Brad Gordon said the firm’s focus was on creating value for shareholders was demonstrated by successful transformation over the past three years with disciplined approach to mergers and acquisitions.

“We will continue to unlock value at our operations in Tanzania, which are foundations of our business, and excited by recent discovery in Kenya as we continue the journey towards creating a pan-African mining company,” he said.

Acacia’s Bulyanhulu, Buzwagi, and North Mara gold producing mines are located in north-west Tanzania. The company is the largest gold miner in Tanzania.

Acacia has discovered 1.3 million ounces of gold in Liranda corridor near Kakamega town, Western Kenya. It intends to invest $12 million in 2017 on exploration activities in western Kenya with the aim of starting commercial production in 2022.

The firm which has a secondary listing on Dar es Salaam Stock Exchange, early this month stopped exporting gold and copper concentrate from Tanzania after the government on March 2, banned export of unprocessed minerals.

Gold and copper concentrate in 2016, amounted to 30 per cent of Acacia’s revenues. Gold and copper concentrate in 2016 generated $316 million of the group’s revenue of $1.05 billion.

Acacia’s assets in Kenya and Tanzania would have complemented Endeavour’s properties in West Africa. Acacia has a portfolio of prospecting interests in Burkina Faso and Mali in West Africa.

Endeavour in January believed discussions would create shareholder value as Houndé project in Burkina Faso is billed to start gold production in the fourth quarter of this year. The firm’s mines are Agbaou and Ity in Côte d’Ivoire, Karma in Burkina Faso, Nzema in Ghana and Tabakoto in Mali.
Endeavour’s chief executive officer Sébastien de Montessus said focus is on long-term value by advancing organic growth in its portfolio including Houndé and Ity projects with ambitious five-year exploration plan.

“We will continue to maintain a disciplined approach to business development opportunities and only enter into transactions aligned with our long-term strategic objectives that create value for shareholders,” he said.