Endeavour to Buy Adamus for West African Gold Mine
The booming commodities market has seen the price of gold skyrocket in a relatively short period of time, and mining companies are targeting gold to cash in on the market spike. Canada’s Endeavour Mining Corp. is among such companies and has agreed to buy Australia’s Adamus Resources to create a producer focused on West Africa’s gold resources.
Adamus has had a presence in West Africa’s gold sector since January of this year. Its Nzema project in Ghana has been preparing to ramp up output and bring its processing activities to full capacity. Ghana is the second-largest gold producer in Africa, and the country’s output increased an entire percent in 2010 amidst rising gold prices, pushing production to 2.97 million ounces that year.
Adamus shareholders will receive .285 of Endeavor stock for each Adamus share held. The deal is estimated to be worth a C$313.4 million, and Endeavor plans to pay a minimum of C$160 million to repay project debt on Adamus’ Nzema operation.
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The new gold producer to be formed out of the acquisition is expected to produce 172,000 ounces of gold in 2011 from Endeavor’s Youga mine in Burkina Faso and Adamus’ Nzema mine. Profit after production costs is estimated to range between $575 and $625 per ounce. By the end of 2013, the companies believe production could reach 250,000 ounces per year from existing assets.
"This (deal) enables accelerated growth through the combined portfolio of development and exploration projects," said Neil Woodyer, chief executive of Endeavour.
