TSX-listed miner Semafo said on Tuesday that its merger with fellow-listed Endeavour Mining to form the largest gold miner in West Africa continued to receive strong shareholder support.
A vote regarding the proposed merger is set down for May 28 during a live audio webcast.
However, Semafo said that Endeavour had received a notice from the director of investments under the Investment Canada Act (ICA), indicating that the Innovation, Science and Economic Development Minister was considering whether to order a national security review of the transaction under the ICA.
Neither company was aware of any reasons for the notice, Semafo said in a statement, adding that Endeavour would work with the director to address any concerns.
Semafo pointed out that, while its head office was located in Quebec, it had no operating assets in Canada and its operations were confined to gold production and exploration in Burkina Faso.
The Minister has until June 25, to consider whether to order a review.
Should the Minister refrain from ordering a review and all other conditions to the transaction are satisfied or waived, the merger could close before the end of June, Semafo said.
In terms of the transaction, Semafo shareholders will receive 0.1422 Endeavour shares for every Semafo common share owned.
The merger would consolidate Semafo and Endeavour’s respective mines in the Houndé belt, in Burkina Faso, to create a world-class mining district. The combined entity will have four cornerstone mines, totalling production of more than 800 000 oz/y, and increased capital allocation efficiency.
On a pro-forma basis, the combined Endeavour and Semafo will produce more than one-million ounces of gold this year, at an all-in sustaining cost (AISC) below $900/oz and with 10.5-million ounces of reserves – as well as 20.7-million ounces of measured and indicated resources and 6.3-million inferred resources.
Meanwhile, Semafo also reported first-quarter results on Tuesday.
The company produced 81 900 oz of gold at an AISC of $888/oz, which is a 20% decrease on the 102 400 oz produced in the March 2019 quarter.
Semafo’s revenue decreased by 11% year-on-year to $123.2-million. The miner reported net income of $14.1-million, or $0.04 a share, and adjusted net income of $20.8-million, or $0.06 a share.
"Despite a four-week shutdown at Boungou and the implementation of preventive measures against the Covid-19 virus, we delivered a solid first quarter that included a smooth ramp-up of Siou underground to full production,” said president and CEO Benoit Desormeaux.