Endeavour pondering Teranga Gold deal

Gold producers are benefiting from recent rebounds in prices

Endeavour Mining Corp., the acquisitive gold miner backed by Egyptian billionaire Naguib Sawiris, is exploring a purchase of Teranga Gold Corp. as it seeks to build scale, people with knowledge of the matter said.

Endeavour has held preliminary talks about an all-stock combination with Teranga, which would help it expand further in West Africa, according to the people. It is considering offering a low premium for the Toronto-listed company and aims to reach a friendly deal, one of the people said, asking not to be identified because the information is private.

Gold producers are benefiting from a rebound in the price of the metal, which hit a record high in recent months. Shares of Teranga have gained 87 per cent this year, giving the company a market capitalization of about $2.2 billion. Endeavour is valued at about $5.2 billion in Toronto.

Deliberations are at an early stage, and there’s no certainty they will come to an agreement, the people said. A representative for Endeavour declined to comment. A spokesperson for Teranga couldn’t immediately comment. The gold industry has seen a flurry of dealmaking in the past few years, as smaller companies seek to combine or snap up assets following large transactions by the two biggest producers. The spree was started when Barrick Gold Corp. agreed to buy Randgold Resources Ltd. in 2018, an allstock acquisition that set the tone for low or zero premiums in precious-metal transactions.

A successful deal would extend a years-long transformation by Endeavour, which has replaced high-cost mines with two new flagship projects that produce more gold and will operate for much longer. Teranga has assets in Senegal, Burkina Faso and Ivory Coast.