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Gold producer Endeavour Mining has signed an agreement to divest its 85% stake in its non-core Agbaou gold mine in Côte d’Ivoire to Africa-focused gold company Allied Gold for up to $80m.

Located nearly 200km north of the port city of Abidjan, the Agbaou open-pit gold mine began commercial production in 2014.

The mine yielded 76,713 ounces of gold in the first nine months of 2020.

Under the terms of the deal, Endeavour Mining will receive $20m in cash in the first quarter of 2021,

It will also receive $40m worth shares in Allied Gold and a contingent payment of up to $20m, made up of $5m for each quarter of this year.

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By GlobalData

Endeavour will also be entitled to get a net smelter return (NSR) royalty on ounces produced in excess of the gold mine’s reserves estimated as of 31 December 2019.

Endeavour Mining president and CEO Sébastien de Montessus said: “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.

“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.

“This transaction will ensure mining activities can continue for many years to come through the creation of the Bonikro-Agbaou complex.”

The Agbaou gold mine is located near Allied Gold’s Bonikro gold mine.

Upon the completion of the transaction, the Bonikro-Agbaou operation will be made up of multiple open pits, two processing plants with a total milling capacity of more than five metric tonnes per annum (Mtpa) to potentially produce more than 285,000 ounces per year.

Endeavour currently owns 85% stake in the Agbaou mine while the Government of Côte d’Ivoire and Côte d’Ivoire’s state company for mining development, SODEMI, hold 10% and 5% stakes, respectively.

Allied Gold is considering extending the operational life of mine from the 2022 end, by undertaking continued regional exploration work in the near term. The deal is scheduled for completion in late March 2021.