Acacia Mining, Endeavour call off merger talks

Acacia Mining said late on Tuesday that it has ended preliminary discussions with Canada's Endeavour Mining, as announced in January, and has decided not to progress towards a merger of the two businesses.

Chief executive officer Brad Gordon said: "We are focused on creating value for our shareholders, as has been demonstrated by the successful and ongoing transformation of the business over the last three years together with our disciplined approach to M&A.

"We believe we will continue to unlock significant value at our operations in Tanzania, which are the foundations of our business, and are excited by the potential of the recently announced high-grade discovery in Kenya as we continue our journey towards creating a pan-African mining company.”

Earlier this month, shares in Acacia tanked after Tazania banned exports of gold/copper concentrate, from which the company generates around 30% of its revenues.

RBC Capital Markets said the announcement that talks with Endeavour Mining have ended will likely see a focus re-emerge on the 64% stake held by Barrick Gold.

"Acacia has traded at a circa 25–35% discount to peers over the past 12 months although this has tightened recently. Our analysis suggests this is due to multiple factors including the majority shareholder overhang, the relative lack of liquidity, and the single-country Tanzania risk. These are all factors that would have been ameliorated had the merger progressed."

Investec said: "This is unfortunate as it appeared a sensible African-focused fit, while a merger ensured less chance of overpaying. While there were likely to be issues in terms of future leadership of MergeCo, recent problems in Tanzania regarding export of copper concentrates will not have helped. There has been no new news in terms of a lift in this ban, which impacts 30% of ACA’s revenue."

At 0942 GMT, the shares were down 4% to 457.80p.