Endeavour Mining (EDV.TO/EDVMF) strikes again! I just caught hold of this press release and it looks like one of my top “takeover candidates”, Avnel Gold (AVK.TO/AVNZF), just got swallowed up!
Interestingly enough, just over a year ago, I owned shares of True Gold Mining (TGM.V), which was acquired by Endeavour Mining for a pretty hefty premium (one of my biggest wins ever).
Here’s where shares of AVK.TO closed at the end of today’s trading session.
At closing, the market cap of Avnel Gold was ~C$107 million. At a 48% premium, Endeavour Mining will be acquiring all Avnel shares at C$159 million ($122 million USD), as stated in the press release shown above.
Obviously, the gold market isn’t all that great right now, and the price Endeavour is paying isn’t really all that steep to gain hold of one of the better undeveloped gold projects out there.
Here are some more details about Avnel’s Kalana gold deposit:
Kalana is a fully permitted feasibility-stage project based on a 1.2Mtpa carbon- in-leach (“CIL”) plant and a single open-pit constrained reserve of approximately 2.0Moz grading 2.8 g/t. According to the feasibility study, it has an 18-year mine life and an expected production of 101,000 ounces per year at an average All-in Sustaining Cost (“AISC”) of $784/oz (with 148,000 ounces on average during the first 5 years at an average AISC of $589/oz). The initial capital cost is forecast at $196.3 million and Kalana demonstrates robust economics with an after-tax NPV5% of $257 million, an after-tax IRR of 38% and a payback of 1.2 years based on a gold price of $1,200/oz.
Nevertheless, right now, I’ll take what I can get! And a 48% premium isn’t too shabby at all.
Sometimes, you just gotta be grateful for the wins as they come in.
I need to spend some more time reading the press release, but at first glance, it looks pretty good, even if Avnel also has to give up its exploration targets (e.g. Kalanako) outside of Kalana… Endeavour Mining is one of the best mid-tier gold producers out there, and ironically enough, this will now be the second instance where I’ll be able to acquire shares of EDV.TO/EDVMF indirectly.
Funny how things work out sometimes…
I currently own 130,000 shares of Avnel Gold.
I first discussed Avnel Gold on this blog here.
It’s way too early in the process right now and I haven’t yet decided if I will hold onto the newly issued EDV.TO/EDVMF shares or if I will book profits and close out my AVK.TO/AVNZF position prior to the merger/acquisition settling.
Either way, this is a HUGE win… and perhaps the main reason why folks like myself dabble with the junior cap explorers/developers; the dream scenario (ultimate exit strategy) is usually to get taken out by a larger company at a premium to market.
C’mon Orezone Gold (ORE.V/ORZCF), you’re next!