Endeavour, Centamin agree to explore possible merger

Centamin has agreed to explore a potential merger with rival Endeavour Mining Corporation, just days after it dismissed an initial £1.5bn bid from the Africa-focused gold miner.

On 3 December, Centamin rejected a £1.47bn all-stock offer from Endeavour, claiming it was skewered in favour of Endeavour shareholders and that it failed to reflect the contribution Centamin would make to a merged company.

At the time, however, Endeavour refused to rule out a higher offer, and on Monday announced that chief executive Sébastian de Montessus and Centamin’s chairman Josef El-Raghy had met in Perth, Australia, on Saturday "to discuss the merits of the proposed transaction and proposed next steps".

Both sides have agreed to carry out reciprocal due diligence. Endeavour said of the process: "The objective would be to understand each other’s assets and would be a critical precursor to allowing parties to determine whether the financial terms of a transaction could be agreed that was in the best interests of both companies’ shareholders."

It added: "Endeavour remains convinced of the strategic rationale of combining both companies to create a diversified gold producer with a high-quality portfolio of assets, and continues to believe that the proposed merger represents a significant value creation opportunity for both sets of shareholders."

Centamin is listed in both London and on the Toronto Stock Exchange. Its principal asset is the Sukari gold mine in Egypt’s Eastern Desert. Endeavour, which is also listed in Toronto, operates four mines in Cote d’Ivoire and Burkina Faso.

Should the two agree a deal, it will be one of a number seen across the sector, as producers - especially those with single assets - look to address low returns and diversify portfolios.

Under City takeover rules known as ‘put up or shut up’, Endeavour has until 1700 GMT on 31 December to either announce a firm intention to make an offer or to withdraw from the process.