Global Wrap: Endeavour, Vale and more

IN Global Wrap: Endeavour-Teranga seal the deal; more dam drama for Vale; copper capex goes up; and Newmont recognised for sustainability.
Global Wrap: Endeavour, Vale and more Global Wrap: Endeavour, Vale and more Global Wrap: Endeavour, Vale and more Global Wrap: Endeavour, Vale and more Global Wrap: Endeavour, Vale and more

Staff reporter

Endeavour Mining and Teranga Gold have confirmed plans to merge after first confirming talks last week.

The scrip deal, at a modest 5.1% premium, will create a leading West Africa-focused gold producer with a market capitalisation of C$7.6 billion.

Endeavour and Teranga shareholders will own 66% and 34% of the combined entity respectively, with a joint production profile of more than 1.5Moz at less than US$900/oz.

Endeavour, which has flagged a potential London listing for some time, pointed again to a future secondary listing on the LSE, with the company targeting inclusion in the FTSE in 2021.

The deal gives Endeavour, which operates mines in Burkina Faso, Cote d'Ivoire and Mali, exposure to Teranga's flagship Sabodala-Massawa mine in Senegal.

"This combination offers an attractive opportunity to both sets of shareholders. By combining our complementary assets, we will enhance our strategic position on West Africa's highly prospective Birimian Greenstone Belt and we will have the ability to deliver material synergies," Endeavour president and CEO Sebastien de Montessus said.

"The combined entity will become a new senior gold producer and enjoy an improved capital markets profile, underpinned by a healthy balance sheet and strong cashflow capabilities to support a sustainable dividend."

About 34 more people in Brazil's Minas Gerais state will be evacuated after Vale raised the emergency protocol for the Brucutu iron ore mine's Norte/Larangeiras dam to level two.

"The rise in the emergency level reflects a conservative approach by the company, although no relevant changes have been observed regarding the safety factors of the structure," Vale said.

It said the dam did not receive tailings and had not been part of the production plan since December 2019.

Residents within the dam's self-rescue zone (ZAS) would be removed in the coming days in collaboration with authorities.

About 150 families have been evacuated this year from the expanded ZAS around Vale's Doutor dam at its Mariana complex in Minas Gerais. 

The miner's structures have been under increased scrutiny following its Brumadinho tailings dam collapse in January 2019 which killed 270 people.

Meanwhile, Vale's proposed settlement of about BRL21 billion (US$3.9 billion) following the Brumadinho disaster has been described as too low by Minas Gerais' head of state, Reuters reported.

The Public Prosecutor's Office of Minas Gerais (MPMG), Public Defender's Office of Minas Gerais, Federal Public Prosecutor's Office, Public Defender's Office and Federal Attorney General's Office presented a new proposal for an agreement, which would be analysed by Vale within five days, as approved by the president of the Minas Gerais Court of Justice (TJMG) judge Gilson Lemes, MPMG said.

Attorney general Antonio Sergio Tonet said Vale's proposal "falls far short of the serious environmental and socioeconomic damage caused by the tragedy". 

Secretary general Mateus Simoes told journalists the state opposed both the amount and some of the terms offered by Vale and another hearing had been set for December 9.

Various legal action is continuing regarding the Corrego do Feijao dam collapse at Brumadinho, including homicide charges against former CEO Fabio Schvartsman.

Kaz Minerals has increased its estimated budget for the Baimskaya copper project in Russia's Far East by US$1 billion after it agreed to split the cost of new regional infrastructure with the Russian government.

The project is one of the world's largest undeveloped copper deposits.

The Russian government was previously said to be covering the infrastructure costs, but Kaz will now build part of a port at Cape Nagloynyn in Chaunskaya Bay and finance half of a 428km road leading from the port to the mine site.

Coupled with increased spending on its tailings storage facility, the budget for Baimskaya now stands at $8 billion, up from the $7 billion the company outlined in June and a full 45% higher than the $5.5 billion it estimated after acquiring the asset.

The cost blowout has also delayed publication of a bankable feasibility study for the project, which was expected to be completed by the end of 2020 but is now due to be released in the first half of 2021.

Finally, Newmont Corporation has again been named as the top-ranked gold miner in the Dow Jones Sustainability World Index for the sixth consecutive year.

The ranking is based on the company's performance in 2019.

"Newmont's commitment to ESG is fundamental, it is part of the company's fabric and history, and is essential to our license to operate," president and CEO Tom Palmer said.

S&P Dow Jones said the DJSI World comprised corporate leaders in global sustainability, and represented the top 10% of the largest 2500 companies in the S&P Global Broad Market Index based on long-term economic and ESG factors.

Meanwhile, Canada-based Teck was included in DJSI World for the 11th consecutive year and was also named the DJSI industry leader for metals and mining, based on its score of 90 which was well ahead of the industry average of 39.

"Operating with social and environmental responsibility is foundational to our success and an important part of who we are as a company," president and CEO Don Lindsay said.

"Our employees ensure that sustainability is at the heart of everything we do to provide the materials needed for the modern world and for the transition to a low-carbon economy."