Endeavour Mining completes sale of Boungou and Wahgnion Mines in Burkina Faso for over $300 million
Endeavour Mining plc has successfully finalized the sale of its 90% interests in the Boungou and Wahgnion non-core mines in Burkina Faso to Lilium Mining, a subsidiary of Lilium Capital. The transaction, valued at over $300 million, includes upfront and deferred cash considerations, as well as net smelter return royalties.
Sébastien de Montessus, President and CEO of Endeavour Mining, expressed satisfaction with the strategic move, aligning with the company’s portfolio management strategy to focus on higher-quality assets. Montessus commended Lilium Mining, emphasizing their ability to unlock value at the Boungou and Wahgnion mines for the benefit of all stakeholders. He also highlighted Lilium’s commitment to operating the mines in the best interests of employees and local stakeholders.
The sale agreement entails multiple components. Endeavour will receive $130 million by the end of July 2023 as a reimbursement of historical shareholder loans, strengthening the company’s balance sheet as it progresses with its growth projects. An additional $25 million in deferred cash consideration will be paid in two installments by the end of Q4-2023 and Q1-2024. The deferred cash consideration will be based on 50% of the net free cashflow generated by the Boungou mine until $55 million has been paid, expected to occur by Q4-2024.
Furthermore, the agreement includes a net smelter return (NSR) on gold sold from both the Boungou and Wahgnion mines, with each mine subject to a 4.0% NSR. Endeavour estimates that the NSR on Boungou will generate approximately $52 million in cash over the mine’s life, based on current reserves and a gold price of $1,850/oz. The NSR on Wahgnion is expected to generate approximately $41 million in cash over its life, under similar assumptions.
As a class 2 transaction under the UK Financial Conduct Authority’s Listing Rules, the sale does not require shareholder approval. The purchase price adjustments by Endeavour will take effect from May 1, 2023.
Following the divestment of the Boungou and Wahgnion mines, Endeavour has adjusted its 2023 full-year production and all-in sustaining cost (AISC) guidance. Production guidance for continuing operations has decreased to 1,060 – 1,135koz, while AISC guidance has improved to $895 – 950/oz. These adjustments are offset by Endeavour’s ongoing construction activities, as the Sabodala-Massawa brownfield expansion in Senegal and the Lafigué greenfield project in Côte d’Ivoire remain on track for commissioning in Q2-2024 and Q3-2024, respectively.
The Boungou mine, acquired by Endeavour in 2020, is located approximately 323 km east-southeast of Ouagadougou. It operates as an open-pit operation on the Birimian Greenstone Belt, with a 1.3Mtpa CIP processing plant. As of December 31, 2022, the mine had proven and probable reserves of 0.83Moz of gold. For the full year 2022, Boungou produced 116koz at an AISC of $1,064/oz.
The Wahgnion mine, acquired by Endeavour in 2021, is situated around 510 km southwest of Ouagadougou. It consists of multiple open-pit operations on the Birimian Greenstone Belt, with a 2.5Mtpa CIL plant. As of December 31, 2022, the mine had proven and probable reserves of 0.72Moz of gold. For the full year 2022, Wahgnion produced 124koz at an AISC of $1,525/oz.
The sale of these assets marks another step in Endeavour Mining’s strategic direction, as it aims to optimize its portfolio and focus on projects with high potential for growth and value creation.
