Endeavour Mining Announces Strategic, Long-Term African Gold Partnership with Naguib Sawiris and La Mancha

Endeavour Mining Announces Strategic, Long-Term African Gold Partnership with Naguib Sawiris and La Mancha

VANCOUVER, Canada, 21 September 2015/ --  Endeavour Mining Corporation (“Endeavour” or the “Corporation”) (TSX:EDV) (ASX:EVR) (OTCQX:EDVMF) (http://www.endeavourmining.com) is pleased to announce that it has entered into a long term strategic partnership with La Mancha Holding S.àr.l., a privately-held gold investment company controlled by the Sawiris Family (“La Mancha”). As part of the transaction, Endeavour will acquire La Mancha’s indirect 55% interest in Société des Mines d’Ity S.A. (“SMI”), which operates the Ity Gold Mine in Côte d’Ivoire, plus various regional exploration properties, and La Mancha will contribute US$63 million cash(1) into the acquired businesses. La Mancha has also expressed an in-principle commitment to invest up to US$75 million in additional funds to support Endeavour’s growth. Upon completion of the transaction, La Mancha will be issued approximately 177.1 million Endeavour ordinary shares representing 30.0% of the enlarged share capital.  On a pro forma basis, Endeavour will have an annual gold production rate of 580,000 ounces from five operations across West Africa, a strengthened balance sheet and further growth opportunities in Africa. Among other conditions, this transaction is subject to approval from Endeavour’s current shareholders. Neil Woodyer, CEO of Endeavour, stated “We are pleased to welcome La Mancha and Naguib Sawiris as our long term strategic partner with the shared vision of building a leading, Africa-focused gold producer.  This transaction will immediately add to Endeavour’s operating cash flow, increase our attributable Mineral reserve and resource base by 22% and 23%, respectively, while also strengthening our balance sheet and funding position to pursue further growth. The Ity Mine and resource base has grown significantly under the leadership of La Mancha.  An aggressive exploration program at Ity has increased M&I resources since 2011 from 0.2Moz to 2.9Moz.  With our successful track record in building and operating mines, together we will have the expertise and the funding to grow across Africa.  By adding the brownfield Ity CIL development project alongside our Houndé project, we will have strengthened our pipeline for near term growth.  With the additional exploration properties, we will become the mining company with the largest exploration package in Côte d’Ivoire, which is one of the most prospective greenstone belts in the world. I am delighted to announce that Sebastien de Montessus will be joining Endeavour as President where he adds his proven management skills as former CEO of Areva Mining and current CEO of La Mancha, and experience in African mining operations. Most importantly, the transaction is value accretive to shareholders and the in-principle commitment of up to US$75 million in additional funding puts Endeavour in a stronger positon to continue its growth strategy at a low point in this gold price cycle. The industry has seen the successful role La Mancha has played in the growth of Evolution Mining Limited in Australia, including the A$112 million equity capital support for the Cowal acquisition – in excess of the A$100 million in-principle commitment made, and we see similar opportunities across Africa.” Naguib Sawiris, Chairman of the La Mancha Group, stated “I am committed to the future of Africa and the gold mining industry. My strategic goal is to create value with a long-term approach. The Endeavour board and management shares this objective and has a successful track record of building and acquiring assets in Africa.  I have been particularly impressed by the success of the Endeavour team in building new mines. By combining our African assets and management skills we will grasp future opportunities to create a leading African gold producer.” Sebastien de Montessus, CEO of the La Mancha Group, stated  “Following the success of our strategic partnership with Evolution Mining in Australia, which quickly created a leading Australian gold producer, we are now excited to partner with Endeavour and support their growth in Africa in order to create a leading African-focused gold producer. Given the tremendous opportunities in Africa, I’m very pleased to be joining, with some of my team, the talented leadership team of Endeavour and look forward to working with Neil and his team to create value for all shareholders through the execution of our extremely attractive organic growth pipeline including the Houndé and Ity CIL Projects and by taking advantage of the current market conditions to seize external growth opportunities in the region with the support of La Mancha and the Sawiris family as a new shareholder.” Transaction Highlights •    Creation of a strategic, long term partnership with La Mancha, a gold industry investment vehicle controlled by the Sawiris Family committed to supporting Endeavour's growth as a premier African gold producer •    The long-term partnership is demonstrated by o    Investment of US$63 million cash, which is inclusive of attributable cash held in SMI o    In-principle commitment of up to US$75 million in additional funding to support growth beyond immediate priorities o    Agreement to a two year equity lock-up on the Endeavour shares issued following completion •    Strengthening the balance sheet, funding position and investing for the future o    Capital injection reduces Endeavour's net debt from US$242M to US$159M2 o    Net debt : EBITDA(2) multiple significantly improves from 1.3 times to 0.7 times o    Ability to fund Houndé Project following a construction decision in early 2016 •    Acquisition of low cost production with expansion and exploration potential o    Bolt on acquisition of a 55% interest in the Ity Gold Mine adds operating cash flow, increases the group production rate from 500koz per year to 580koz per year, and decreases group AISC/oz (see Table 1) o    Pro forma attributable Proven and Probable Reserves increase by 22% to 4.8 million gold ounces and Measured and Indicated Resources increase by 23% to 8.5 million gold ounces(3) o    Large development potential at Ity (based on M&I resources of 2.9Moz) with the construction of a CIL processing facility to increase annual production and extend mine life o    Exploration land holdings in Côte d’Ivoire in excess of 3,500 square km •    Transaction is value accretive for Endeavour’s shareholders o    At Endeavour’s market value of C$0.58 per share(4), the value of the approximate 177.1 million new shares issued to La Mancha is approximately US$77.9 million, which includes US$63 million cash portion o    This implied value for the mineral interests is equivalent to: $17 per attributable 2P reserve ounce, $9 per attributable M&I resource ounce, 0.5 EV / Attributable EBITDA2 multiple Multimedia content here: Table 1: Historic Ity Mine Performance and Contribution to Endeavour Transaction Details This transaction secures the platform for Endeavour’s growth by strengthening the balance sheet and funding position, the complementary addition of low cost production, and the expected benefits of having Endeavour’s Construction Services team to contribute to the completion of CIL Plant feasibility study and construction plan.  The Endeavour Board has unanimously determined that the transaction is in the best interests of Endeavour. Endeavour is acquiring La Mancha’s indirect 55% interest in SMI, the remaining ownership of which is held by Sodemi (30%), the Ivorian State (10%) and the Didier Drogba group (5%). The US$63 million cash investment by La Mancha is inclusive of an expected US$25 million of attributable cash held in SMI (representing 55% of an expected US$45 million cash balance at closing).  La Mancha will have the right to participate in any new issues of shares in Endeavour (subject to certain exceptions) on the same terms as other participants in that share issue, up to such additional number of equity securities as is sufficient to enable it to maintain its ownership percentage in Endeavour (subject to compliance with any shareholder or regulatory approvals that may be required for any such issue).  La Mancha will also have a right to nominate two representatives to the Endeavour Board of Directors following completion of the transaction.  The current seven member board will expand to nine members.  If La Mancha’s shareholding in Endeavour falls below 20% (but remains above 10%) after the transaction, it will be entitled to nominate one representative to the Endeavour Board.  The new director nominees are Naguib Sawiris, Chairman of La Mancha and Sebastien de Montessus, President and CEO of La Mancha. At closing, Sebastien de Montessus will join Endeavour in the newly created position of President and he will resign from his position as President and CEO at La Mancha.  Attie Roux, Endeavour’s COO, will continue to report to Neil Woodyer, Endeavour’s CEO.  Within 24 months, it is envisioned that Sebastien de Montessus will transition to Endeavour’s CEO position and Neil Woodyer will transition to an Executive Chairman role. Post transaction, Endeavour anticipates its issued and outstanding shares to total approximately 590 million shares.  Endeavour plans to seek approval from shareholders to consolidate its issued shares on a one ‘new’ for ten ‘old’ basis. Timetable and Next Steps The issuance of approximately 177.1 million Endeavour shares and proposed share consolidation are subject to certain conditions, including among others, approval of Endeavour’s current shareholders, approval of the Toronto Stock Exchange (“TSX”) and approval of Endeavour’s senior secured revolving corporate loan facility banks.  An information circular is being prepared and is expected to be distributed to Endeavour’s shareholders in October 2015 in advance of a special meeting anticipated for early November 2015.   The Ity Gold Mine The Ity Gold Mine is located 480 km northwest of Abidjan with open pit mining and heap leaching ore treatment.  As of July 31, 2015, the heap leach Proven and Probable Reserves totalled 2.3 million tonnes at 2.4 g/t containing 173koz. The Ity Gold Mine produced 81koz of gold during 2014 and 45koz ounces during the first half of 2015 (see Table 1).  Endeavour intends to continue the studies undertaken by La Mancha that envision construction of a 2.0 to 3.0 Mtpa CIL processing facility that could significantly increase annual gold production to over 120,000 ounces for over 10 years with average AISC/oz of less than $725.  In addition to La Mancha’s operating assets, Endeavour is acquiring the relatively under-explored Côte d’Ivoire exploration land package covering an area of over 3,500 km2. Delisting from the Australian Stock Exchange Endeavour intends to request approval from ASX Limited for its removal from the official list of the Australian Securities Exchange (“ASX”).  Endeavour’s decision is based on the low volume of trading of its CHESS Depositary Interests (“CDIs”) on the ASX compared to the shares on the TSX and the decreasing number of CDIs held on the Australian register.  Since listing on the ASX in December 2011, the CDIs held on the Australian register have declined from approximately 53% of Endeavour’s issued share capital to less than 10.4% and are expected to be less than 7.3% on a post-transaction basis.  A news release detailing the ASX delisting process will be published separately. Advisors Endeavour is being advised by UBS Investment Bank and Stikeman Elliott LLP. La Mancha is being advised by Credit Suisse and Norton Rose Fulbright. Conference Call and Live Audio Stream Endeavour's CEO, Neil Woodyer will host a conference call to discuss this announcement at 10:00 am (Toronto time) today. Access details are provided below. Analysts and interested investors are invited to participate using the dial in numbers below.