Endeavour Mining (EDV) is selling 85 per cent interest in its non-core Agbaou gold mine in Côte d'Ivoire.
The sale to Allied Gold Corp is for up to C$80 million with the possibility for further upside through equity exposure and a net smelter return (NSR) royalty.
Under terms of the agreement, a cash payment of $20 million will be made in the first quarter of 2021, in addition, to $40 million worth of Allied Gold shares.
Endeavour will retain the option to sell the shares back to Allied Gold at the issue price which expires on December 31, 2022 or earlier if Allied Gold conducts an IPO before then.
Allied will also be responsible for a contingent payment of up to $20 million, comprised of $5 million for each quarter of 2021 where the average gold price exceeds $1,900 per ounce.
The NSR royalty will be based on a sliding scale, linked to the average spot gold price.
“The sale of our interest in the Agbaou mine to Allied Gold is in line with our strategy of actively managing our portfolio to focus management efforts on high margin, long-life core assets," said Endeavour President and CEO Sébastien de Montessus.
"Agbaou has been a highly cash generative asset which facilitated the organic development of Houndé and Ity, and given that it has now become non-core to Endeavour, we firmly believe that this transaction is in the best interests of all of Agbaou’s stakeholders, including the Government of Cote d’Ivoire, local communities and the employees themselves," Montessus said.
Shares of Endeavour Mining are down 0.69% on the day, and are trading at $26.52 (CAD) at 6:30am PST.