Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Endeavour pivots to exploration to shake 'M&A junkie' image after deal spree

Stock MarketsMar 01, 2021 09:25AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
3/3 © Reuters. FILE PHOTO: A view of tanks containing mud from which gold will be extracted at the gold mine site, operated by Endeavour Mining Corporation in Hounde, 2/3

By Helen Reid and Jeff Lewis

JOHANNESBURG/TORONTO (Reuters) - Canadian gold firm Endeavour Mining, which is preparing for a London listing late next quarter, is switching its focus to integrating new mines after a $2.7 billion acquisition spree in West Africa last year spooked some investors.

The group, whose share price has underperformed a wider index of gold mining stocks to slide nearly 30% since mid-2020, is hitting the brakes on new purchases after buying mining firms Semafo and Teranga Gold (OTC:TGCDF) in the last year.

Chief Executive Sebastien de Montessus said his priority now is to show shareholders he is committed to organic growth in six core gold mines across Ivory Coast, Senegal, and Burkina Faso.

"Some people say, 'he did two M&A deals, this is an M&A junkie'. No. I'm just trying to do the right thing for our shareholders," de Montessus, who took over the CEO role in 2016, told Reuters.

While Endeavour's deal to buy Semafo created the biggest gold producer in Burkina Faso, the company's overall valuation on a 12-month forward price-to-earnings basis has fallen since the acquisition closed last July, Datastream I/B/E/S estimates show.

Its later purchase of Teranga, which added a large mine in Senegal and a bigger footprint in Ivory Coast, came partly from a desire to boost its valuation ahead of its London listing by diversifying its portfolio into other countries.

But Endeavour shares fell in the months after the Teranga deal was announced, partly reflecting investor unease about an acquisition at a time high gold prices were inflating valuations across the sector.

The deal was "a step too far for a lot of shareholders", said portfolio manager Jon Case at Sentry Investments in Toronto, adding investors had wanted Endeavour to integrate Semafo first. "For a lot of people, it was too soon."

Karim Nasr, CEO of top Endeavour investor La Mancha, which will hold a 19% stake in the company after a new $200 million investment closes this quarter, said there is "no need" for more M&A at the group.

"As shareholders we would like to see the company delivering on cashflows and starting to produce good capital returns."


De Montessus said that growth from here will be driven by assets the company already owns, with management targeting output of 1.4 million-1.5 million ounces this year - more than double 2019's level.

Endeavour has forecast exploration spending will climb 40% to $70 million-$90 million this year, and remain at that level. It aims for one major discovery this year, the CEO said, and hopes to launch a new mine in Mali or Ivory Coast in 2022.

The company will shed some non-core operations as it pushes to consolidate its assets. It has previously received informal approaches for its Karma mine in Burkina Faso, de Montessus said, though no official sales process is underway.

Security in Burkina Faso - where 39 workers were killed in a 2019 ambush of a Semafo transport convoy, and where a conflict between government forces and Islamist insurgents is worsening - is a priority for the group.

De Montessus said Endeavour has increased spending on security "significantly", investing $6 million to $10 million across its Burkina Faso mines.

The group has a dedicated security unit led by ex-French military personnel, and has drones above each site watching for potential threats. Endeavour is also building an airstrip at the Wahgnion mine it acquired from Teranga in Burkina Faso, de Montessus said, as part of its policy of avoiding employees travelling on roads.

Vincent Rouget, analyst at Control Risks, said attacks on the mining industry have tended to occur in transit, as it is easier to stage a roadside ambush than an assault on a mine site.

"The challenge is how to protect your operations from external threats while at the same time not shutting yourself off from the community completely," said Rouget.

Endeavour has set itself apart from peers in West Africa by having most of its technical team in Abidjan and executives spending more time on-site, a banker who declined to be named said.

"There's a lot of lifestyle gold companies in West Africa," he said, referring to well-paid executives based far from operations. "Companies like Endeavour are shaking that up."

With mining executives working on the ground in "sometimes very difficult environments", de Montessus said complaints from some investors that executives in the sector are overpaid were "nonsense".

Shareholders have consistently approved his pay, which is reviewed against the peer group and decided by the board, he said.

Endeavour pivots to exploration to shake 'M&A junkie' image after deal spree

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email