Photographer: Simon Dawson/Bloomberg

Endeavour Explores Combination With Gold Miner Acacia

  • Discussions between gold producers are at an early stage
  • Acacia owner Barrick said to weigh options to lower stake

Endeavour Mining Corp., a gold miner backed by Egyptian billionaire Naguib Sawiris, is exploring a merger with Acacia Mining Plc in a deal that would create one of the largest precious-metal mining companies in Africa.

Discussions are preliminary and may not result in a transaction, the companies said in separate statements Friday after Bloomberg reported the talks. The gold producers have a combined market value of about $3.8 billion.

“Acacia confirms that it is in preliminary discussions regarding a possible combination with Endeavour,” the company said in the statement. “A further announcement will be made when appropriate.”

A merger would allow Barrick Gold Corp. to reduce its 64 percent stake in London-listed Acacia, people familiar with the discussions said, asking not to be identified as the information is private.

A deal could enable Barrick to reduce its stake in Acacia to about 30 percent, one of the people said. It could be structured as a reverse takeover with Acacia buying Endeavour, and the combined company keeping its listing in London, the person said. The plans are not concrete and the structure may change, the person added.

Barrick, which is looking at various options for its stake, would also consider selling its holding to another bidder, the people said.

Barrick President Kelvin Dushnisky has said that Acacia isn’t a core business for the company and would be sold “if we see full value” from bidders. Endeavour said the talks were part of “regular discussions with peer group mining companies.”

Endeavour shares rose 0.6 percent to C$23.51 at 3:00 p.m. in Toronto trading after they were halted earlier. Acacia shares fell 0.6 percent to close at 418.20 pence in London Friday.

Gold Rising

Gold producers are benefiting from a rebound in the price of the metal, which has helped push Acacia’s shares up more than 130 percent in the last 12 months, giving it a market value of about $2.1 billion. Endeavour, which counts Sawiris as its largest shareholder, has gained more than 230 percent in that period, valuing the Toronto-listed company at about $1.7 billion.

Combined, the companies would be among the top five African gold miners by market value and ounces produced, according to data compiled by Bloomberg. Acacia, which produces gold from mines in Tanzania, has been looking to expand into new areas in Africa, with Chief Executive Officer Brad Gordon naming West Africa as one of the most attractive regions. The company was initially spun off from Barrick to support growth in Africa. Endeavour has operations in Mali, Burkina Faso, Ghana and the Ivory Coast.

Gold prices have surged in the past year and may rally about 13 percent in 2017, according to a Bloomberg survey of 26 analysts last month. The value of the precious metal, hoarded in times of uncertainty as a hedge against volatile markets, is likely to increase amid the U.K.’s complicated exit from the European Union and the potential for the U.S.’s relationship with China to fray under a Trump presidency, the analysts said.

Sibanye Gold Ltd. in December agreed to pay more than its market value for Stillwater Mining Co. in a $2.2 billion deal that would see the South African miner take charge of the world’s highest-grade deposit of platinum-group metals.

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