$690M Gold Mining Company Takeover Could Create West Africa’s Largest Gold Miner

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Written by Peter Pedroncelli
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A $690M gold mining company takeover could create West Africa’s largest gold miner in a region benefiting from easy access and low-cost mining operations. Image: Bullion Vault/Flickr

Producers are investing in West Africa’s gold mining sector as South Africa’s mining industry continues to decline. Gold deposits in West Africa tend to be shallow, making for easy access and relatively low-cost mining operations.

A takeover deal worth an estimated $690.7 million could create a gold mining behemoth that would be the largest in West Africa, capable of producing more than 1 million ounces of gold per year, according to GlobalAfricanNetwork.

Cayman Islands-based gold miner Endeavour Mining Corporation, which is focused on operations in West Africa, is expected to acquire Canadian firm Semafo in a deal that will create a portfolio of six mines in four West African countries.

The Toronto Stock Exchange-listed Endeavour Mining operates four mines in Burkina Faso, Ivory Coast, and Ghana. Semafo operates two mines in Burkina Faso.

Endeavour Mining’s takeover deal would make the company larger than regional competitors Newmont Goldcorp (U.S.), Barrick (Canada), and Goldfields (South Africa). 

The deal would allow Endeavour to produce more than 1 million ounces of gold annually, VenturesAfrica reports.

The deal comes at a time when mining shares have fallen sharply due to the coronavirus outbreak, making such deals more attractive.

David Morgan, the publisher of the Morgan Report, believes that “opportunities will come” for investors to buy gold- and silver-mining stocks again as the coronavirus pandemic subsides.

While mining shares have plummetted, the gold price was trading at around $1,730 on April 15 and is forecast to extend its rally toward the $1,800 price zone.

Seen as a safe-haven in times of volatility and market uncertainty, investor interest in gold is also attributed to the coronavirus pandemic, Forbes reports. Global markets have struggled since the global health crisis began. 

The coronavirus pandemic has had a devastating effect on the global economy and the U.S. stock market has not been spared. Market-wide circuit breakers that attempt to prevent panic-trading were triggered four times in March.

The S&P 500 is down 13.85 percent this year as of April 15, on pace for its worst year since 2008 when the S&P 500 lost 38.49 percent, according to CNBC.

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Goldman Sachs believes that the price of gold will reach $1,800 an ounce over the next 12 months, while Fawad Razaqzada, a technical analyst at City Index, expects the metal to hit a new all-time high of $2,000 an ounce in 2020.

More loose monetary policy will push bond yields further into negative territory, thereby “boosting the appeal of noninterest-bearing precious metals,” Razaqzada said.

“I think gold has everything going for it in 2020,” he added. “So long as gold holds the breakout above $1,350, the long-term technical bias would remain bullish.”