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Re: FL post# 2072

Monday, 08/22/2011 7:26:57 PM

Monday, August 22, 2011 7:26:57 PM

Post# of 2140
Adamus Resources in $US600m gold deal with Endeavour Mining P
Tuesday, 23 August 2011 00:00

Adamus_ResourcesShares in Perth gold junior Adamus Resources jumped today after it struck a deal with Canada's Endeavour Mining to form a $US600 million ($578m) West African focused gold play, in the latest round of consolidation in the gold sector.
Billed by both junior gold producers as a "merger of equals", Adamus shareholders will receive 0.285 Endeavour shares for each unit. Late in the day, Adamus shares were 7.69 per cent higher at 70 cents, after rising as high as 73c in a slightly negative broader market.

On a fully diluted basis, shareholders of Perth-based Adamus will hold 45 per cent of Endeavour. The Toronto-listed Endeavour would seek a dual listing in Sydney and have its operational management team based in Perth, under Adamus boss Mark Connelly, who will be chief operating officer.

Endeavour's Neil Woodyer would remain chief executive of the company, whose market value will be boosted to almost $US600m from $US281m. The company will also benefit from greater leverage to the soaring gold price and increased operating cashflow, the companies said.

The deal will also enable Adamus to resolve $US160 million of liabilities at its Nzema project in Ghana after it began production began in January, including a $US60m project loan.
UBS, which expects Adamus to next week unveil a $52m full-year loss, said the deal was positive for the company as it gave synergies and exploration acreage, while reducing the likelihood of a dilutive capital raising.

"It looks like a good deal," said analyst Jo Battershill.
Mr Connelly said the transaction delivered considerable value to Adamus shareholders through the combination of its proven mine development skills and "materially enhanced" financial flexibility from Endeavour, which has $US195m of cash compared to Adamus’s $US21m.

"This enables accelerated growth through the combined portfolio of development and exploration projects," he said.
All due diligence is completed and both boards have recommended shareholders vote in favour of the deal.

The acquisition would boost Endeavour's 2011 gold production from its Youga gold mine in Burkina Faso and Nzema to 172,000oz, from 84,000oz, at a cash cost per ounce of $US575 to $US625. By 2013, it intends to grow production from existing assets to 250,000oz and more than 500,000oz overall from an "acquisition growth strategy".

The deal is the latest in a string of gold activity since Newcrest Mining's $10 billion acquisition of Lihir Gold last year; it is similar to fellow Perth-based goldminer Avoca Resources' merger with Canada's Anatolia Minerals, which formed Alacer Gold.

Andean Resources, Catalpa Resources, Conquest Mining, Focus Minerals and Crescent Gold have also explored various deals.
Source: The Australian
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