Avnel Acquisition June 2017 AVNEL TRANSACTION TRANSACTION - - PowerPoint PPT Presentation

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Dec 25, 2023 375 likes •483 views

Avnel Acquisition June 2017 AVNEL TRANSACTION TRANSACTION HIGHLIGHTS Endeavour to acquire Avnel, which owns the Kalana Gold project in Mali An all-share transaction values Avnel at 1 2 US$122m (C$159m), representing a 48% FITS OUR

SLIDE 1

Avnel Acquisition

› June 2017

SLIDE 2 2

TRANSACTION HIGHLIGHTS

Endeavour to acquire Avnel, which owns the Kalana Gold project in Mali

1

FITS OUR STRATEGIC PORTOFLIO CRITERIA

› 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

3 4 2

FILLS OUR PROJECT PIPELINE CORPORATE & OPERATING SYNERGIES VALUE ACCRETIVE

AVNEL TRANSACTION

SLIDE 3

› 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

ver life of mine

› After-tax NPV5% 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

FITS OUR STRATEGIC PORTOFLIO CRITERIA

Kalana is a high-quality project

AVNEL TRANSACTION GENERAL INFORMATION Ownership 80% Avnel; 20% Mali government M&I Resources (inclusive of reserves) 3.10Moz @ 4.07g/t Reserves 1.96Moz @ 2.80g/t Mine Type 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 US$730/oz CAPITAL COST Upfront capital cost, $m US$171m Sustaining capital cost, $m 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, 2017

SLIDE 4 Numbers presented are Based on Anvel’s the Optimised Feasibility Study dated Jan. 9, 2017 4

› 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

ptimize the current feasibility

study:

‒ Expanding the plant capacity ‒ Increase the average annual

production and shorten the mine life

‒ Integrate synergies ‒ Integrating exploration upside

FITS OUR STRATEGIC PORTOFLIO CRITERIA

Kalana has potential to increase annual production to c.150kozpa

AVNEL TRANSACTION 66koz 88koz 119koz 123koz 123koz 170koz 203koz 53koz $976/oz Pre- production $703/oz

Avg. Years

11-17 Year 5

Avg. years

6-10 $865/oz Year 2 $446/oz $676/oz Year 1 $598/oz Year 3 $689/oz Year 4 Production AISC Reserve life of mine plan Potential for a +150kozpa operation

SLIDE 5 5 AVNEL TRANSACTION

› Kalana Main deposit still fully

pen 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 387km2

and contains 27 exploration prospects with multiple geochemical anomalies

› Strong regional exploration

potential with multiple prospects

utside of Kalana

› Currently have a small

unclassified resource at Djirlia

FITS OUR STRATEGIC PORTOFLIO CRITERIA

Kalana has significant exploration upside

SLIDE 6 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 $900/oz $1,200/oz $950/oz $1,000/oz $1,050/oz $1,100/oz $1,150/oz $850/oz $750/oz $700/oz $650/oz $600/oz $550/oz $500/oz $450/oz $800/oz Mine life, years SOLD Agbaou (175-180koz) Nzema (100-110koz) Tabakoto (150-160koz) AISC, US$/oz Ity HL (75-80koz) Ity CIL 165koz starting 2019 Karma (100-110koz) Bubble size represents production Côte d’Ivoire Burkina Faso Ghana Mali Youga Houndé +250koz starting Q4-2017 Cut-back Kalana Potential (125-150koz)

FITS OUR STRATEGIC PORTOFLIO CRITERIA

1 Kalana Fits Well in our “Magic Box”

AVNEL TRANSACTION

SLIDE 7 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Kalana, Mali Côte d'Ivoire urkina Faso Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2017 2018 2019 7

STRENGHTENS ENDEAVOUR’S PROJECT PIPELINE

Ity CIL, Côte d’Ivoire - Construction period Co Cons nstructio ion team expertis ise Proj

ject con
nstructio

ion pi pipeli line › 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)

2 Kalana will be developed after the Hounde and Ity CIL projects

AVNEL TRANSACTION Houndé - Construction period Kalana, Mali - Construction period Kalana, Mali - Exploration and optimisation

SLIDE 8

› Endeavour’s West African

presence will benefit Kalana and provide

pportunities to draw on
perating 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 AVNEL TRANSACTION

CORPORATE & OPERATING SYNERGIES

3 Second mine in the country and 6th in West-Africa

SLIDE 9 Source: Market data as per 28 June 2017 9

VALUE ACCRETIVE

Meets equity hurdle rates and is accretive on an NAV basis

NA NAV pe per sha hare acc accretio ion End Endeavour r NAV AV 2,061 1,834 1,573 1,329 1,199 1,136 1,122 1,058 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) 272 263 223 Cormark (2-May-16) Haywood (5-Jun-17) Mackie (10-Jan-17) Av Avnel NAV AV Average NAV of US$253m (P/NAV of 0.33x) Average NAV of US$1,414m (P/NAV of 1.21x) NAV AV Ac Accr cretion to

Endeavour

AVNEL TRANSACTION

› 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 NA NAV V anal alysis at US US$120 $120m Acqu quisi sition

n Cost

st Equi uity off ffer US US$m 122 Shares issued m 7.0 PF Endea deavou

ur sha

hares es m m 103.5 PF NA NAV V US US$m 1,667 Endeavour NAV / share US$ 14.65 PF NAV / share US$ 16.10 NAV per share accretion / (dilution) % 9.87%

SLIDE 10 10

TRANSACTION TERMS

Transaction closing by 13 Sept 2017

Offer › 0.0187 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 Implied premia › 48% premium to spot › 52% premium to 20 day VWAP New shareholders › Avnel shareholders will make up 6.8% of Endeavour register › Major Avnel shareholder, Elliott, is expected to hold 4.3% of Endeavour Shareholder approvals and support › 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 AVNEL TRANSACTION Source: Market data as per 28 June 2017