Avion Gold Corp. (AVR.TO: Quote) Tuesday said it has entered into a definitive arrangement agreement with Endeavour Mining Corp. (EDV.TO: Quote) to be acquired by Endeavour for 0.365 of an ordinary share of Endeavour for each Avion share. The deal values Avion at C$0.88 per share or C$389 million as of Tuesday.
Based on the closing price of C$2.40 of the Endeavour shares on the Toronto Stock Exchange on August 7, the share consideration represents a 56.4 percent premium to the closing price of Avion shares.
On a pro-forma basis, Avion's shareholders are expected to hold around 39.8 percent of Endeavour on completion of the arrangement.
The deal will create one of the largest West African mining companies with three producing mines, a fourth mine in construction, and an attractive pipeline of exploration and resource development properties.
The acquisition will immediately increase Endeavour's gold production by around 50 percent to 282,000 - 304,000 ounces for 2012.
The arrangement agreement includes "right-to-match" provisions in favor of Endeavour if a superior proposal emerges and the payment of a termination fee of C$11.5 million by Avion to Endeavour if the agreement is terminated in some circumstances.
The Board of Directors of Avion has determined that the arrangement is in the best interests of Avion and its shareholders. The Board recommended that shareholders vote to approve the arrangement.
Avion's financial advisor for the arrangement is GMP Securities L.P. and its legal advisor is Cassels, Brock & Blackwell LLP.
Avion and Endeavour have also entered into a loan agreement for Endeavour to provide a $20 million exchangeable loan to Avion Resources (Mali) Ltd, a wholly-owned subsidiary of Avion. The loan is for an initial term of six months.
AVR.TO settled on Tuesday lower by 1.89 percent at C$0.52 on 787,359 shares.
EDV.TO settled higher by 1.69 percent at C$2.40.
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by RTT Staff Writer
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