Avnel Acquisition. June 2017

Transcription

1 Avnel Acquisition June 2017

2 TRANSACTION HIGHLIGHTS Endeavour to acquire Avnel, which owns the Kalana Gold project in Mali An all-share transaction values Avnel at US$122m (C$159m), representing a 48% premium to Avnel s closing price on 28 June 2017 Kalana is a high-quality project that fits Endeavour s strategic portfolio criteria Strengthens Endeavour s construction pipeline following the completion of the Hounde and Ity CIL projects and leverages its operational synergies in the region With robust project economics, the transaction will be value accretive on a Net Asset Value basis to Endeavour shareholders The Boards of Directors of both Endeavour and Avnel have unanimously approved the transaction FITS OUR STRATEGIC PORTOFLIO CRITERIA CORPORATE & OPERATING SYNERGIES FILLS OUR PROJECT PIPELINE VALUE ACCRETIVE 2

3 1 FITS OUR STRATEGIC PORTOFLIO CRITERIA Kalana is a high-quality project Feasibility-stage project 1.2Mtpa CIL plant Single open-pit reserve of 1.96Moz at 2.8 g/t 18-year mine life Low AISC cost operation with $730/oz over life of mine After-tax NPV 5% of $321m and after-tax IRR of 50% based on a gold price of $1,200/oz Endeavour intends to re-design the current feasibility study Significant exploration upside GENERAL INFORMATION Ownership M&I Resources (inclusive of reserves) Reserves Mine Type 80% Avnel; 20% Mali government 4.07g/t 2.80g/t Open Pit Processing Rate 1.2mtpa LIFE OF MINE PRODUCTION Strip ratio, w:o 9.9 Tonnes of ore processed, Mt 21.7 Grade processed, Au g/t 2.80 Gold content processed, Koz 1,964 Gold recovery, % 93% Gold production, Moz 1,821 Mine life, years 18 Average gold production, koz pa 101 koz AISC, $/oz CAPITAL COST Upfront capital cost, $m Sustaining capital cost, $m US$730/oz US$171m US$122m ECONOMIC RETURNS (US$1,200/oz) After-tax Project NPV 5%, $m US$321m After-tax Project IRR, % 50% Payback, years (undiscounted) 1.1 Numbers presented are Based on Anvel s the Optimised Feasibility Study dated Jan. 9,

4 1 FITS OUR STRATEGIC PORTOFLIO CRITERIA Kalana has potential to increase annual production to c.150kozpa Production profile based on the Optimised Feasibility Study: Average over first 5 years: 148koz at an AISC of $561/oz Average over mine life: 101koz at an AISC of $730/oz Endeavour intends to re-design and optimize the current feasibility study: Expanding the plant capacity Increase the average annual production and shorten the mine life Integrate synergies Integrating exploration upside Reserve life of mine plan Production AISC 203koz 170koz $598/oz 53koz $446/oz Potential for a +150kozpa operation 123koz 123koz 119koz $976/oz $865/oz 88koz $676/oz $689/oz $703/oz 66koz Preproduction Year 1 Year 2 Year 3 Year 4 Year 5 Avg. years 6-10 Avg. Years Numbers presented are Based on Anvel s the Optimised Feasibility Study dated Jan. 9,

5 1 FITS OUR STRATEGIC PORTOFLIO CRITERIA Kalana has significant exploration upside Kalana Main deposit still fully open at depth The high-grade Kalanako prospect, located 2.5km northeast of the Kalana Main Project, provides potential for a satellite deposit (already hosts an Indicated resource of 119koz at 3.34 g/t) Kalana concession covers 387km 2 and contains 27 exploration prospects with multiple geochemical anomalies Strong regional exploration potential with multiple prospects outside of Kalana Currently have a small unclassified resource at Djirlia 5

6 FITS OUR STRATEGIC PORTOFLIO CRITERIA 1 Kalana Fits Well in our Magic Box AISC, US$/oz $1,200/oz $1,150/oz $1,100/oz Youga SOLD Cut-back Tabakoto ( koz) Nzema ( koz) $1,050/oz $1,000/oz $950/oz $900/oz Ity HL (75-80koz) Agbaou ( koz) Houndé +250koz starting Q Karma ( koz) Kalana Potential ( koz) $850/oz $800/oz $750/oz $700/oz $650/oz $600/oz Bubble size represents production Ity CIL 165koz starting $550/oz $500/oz $450/oz Mine life, years Côte d Ivoire Burkina Faso Ghana Mali 6

7 STRENGHTENS ENDEAVOUR S PROJECT PIPELINE 2 Kalana will be developed after the Hounde and Ity CIL projects Project construction pipeline kina Faso Houndé - Construction period te d'ivoire Ity CIL, Côte d Ivoire - Construction period lana, Mali Kalana, Mali - Exploration and optimisation Kalana, Mali - Construction period 2010 Q Q Q Q Q Q Q Q Q Q Q Q Construction team expertise Core construction team has successfully developed projects together for +10 years 7 projects built, $2.4B in capex All projects delivered on time and within budget Agbaou Nzema Karma expansion Houndé (85% completed) 7

8 CORPORATE & OPERATING SYNERGIES 3 Second mine in the country and 6 th in West-Africa Endeavour s West African presence will benefit Kalana and provide opportunities to draw on operating synergies in a country where Endeavour already has a producing mine Synergies from operating the Kalana with the current team in Abidjan Removal of Avnel corporate costs 8

9 Cormark (2-May-16) Haywood (5-Jun-17) Mackie (10-Jan-17) Canaccord (9-May-17) Haywood (24-May-17) RBC (11-May-17) Clarus (30-May-17) Scotia (29-May-17) Raymond James (9-May-17) Peel Hunt (22-May-17) BMO (7-Mar-17) AVNEL TRANSACTION 3 VALUE ACCRETIVE Meets equity hurdle rates and is accretive on an NAV basis Due diligence demonstrates that the acquisition meets minimum hurdle rate returns when accounting for the acquisition cost, the initial construction costs, and the holding / integration costs prior to production Strong returns based on current feasibility study with further potential to optimize the study, unlock exploration, and benefit from synergies Strongly accretive on a NAV per share basis NAV per share accretion Avnel NAV Average NAV of US$253m (P/NAV of 0.33x) ,061 1,834 1,573 NAV Accretion to Endeavour Endeavour NAV NAV analysis at US$120m Acquisition Cost Average NAV of US$1,414m (P/NAV of 1.21x) 1,329 1,199 1,136 1,122 1,058 Equity offer US$m 122 Shares issued m 7.0 PF Endeavour shares m PF NAV US$m 1,667 Endeavour NAV / share US$ PF NAV / share US$ NAV per share accretion / (dilution) % 9.87% Source: Market data as per 28 June

10 TRANSACTION TERMS Transaction closing by 13 Sept 2017 Offer Implied premia New shareholders Shareholder approvals and support Endeavour shares for each Avnel share, implying a value of C$0.42 per Avnel share Implied aggregate consideration of US$122m Offer will be conducted through a Guernsey Scheme of Arrangement 75% present and voting, and a majority in number requirement 48% premium to spot 52% premium to 20 day VWAP Avnel shareholders will make up 6.8% of Endeavour register Major Avnel shareholder, Elliott, is expected to hold 4.3% of Endeavour Total irrevocable undertakings of 72.3% Irrevocable undertakings to support the transaction from Fern Trust (8.9% percent), from Elliott (63.4% percent) and from Avnel s Directors and Officers Indicative timeline Shareholder approval expected on 31 August 2017 Transaction closing by 13 Sept 2017 Source: Market data as per 28 June