Endeavour to take the rest of Etruscan Resources

Shares of Etruscan Resources (EET-T) leapt 15.4% to 45¢ on news that Endeavour Financial (EDV-T) plans to acquire the remaining shares it doesn’t already own in the West Africa-focused junior.

Currently Endeavour owns 55% of Etruscan and its cash and share offer for the remaining 45% will be undertaken through a court-approved plan of arrangement for a total consideration of 48¢ per share.

The offer consists of 26¢ in cash and 0.0932 of an Endeavour share for each Etruscan share, or a 33% premium to the 20-day volume weighted average prices of Endeavour and Etruscan on the Toronto Stock Exchange for the period ended June 25.

The boards of both companies have approved the transaction and Endeavour, which has been an active shareholder in Etruscan since October 2009, will use about $43 million of a US$100 million revolving acquisition facility to conclude the deal. The acquisition facility, provided by Unicredit AG on June 25, is for new gold acquisitions or capital investments.

Endeavour Financial, a gold investment company, also owns 43.21% of Crew Gold (CRU-T), and is advised by Frank Giustra. The mining entrepreneur joined Endeavour Financial in 2001 and while chairman of the merchant bank oversaw transactions involving US$3.3 billion in equity finance, US$1.8 billion in debt finance and US$27 billion in mergers and acquisitions, according to Michael Barnes in his book, Fortunes Found: Canadian Mining Success. After leaving Endeavour Giustra set up a boutique investment firm, Fiore Financial Corp., but remains an exclusive advisor to Endeavour.

Endeavour targets listed gold producing companies with “quality assets but with financial or strategic issues and deploys specialized skills and financial resources to create growth plans and improve share values,” the company states on its website.

Etruscan has operated in Africa for more than fifteen years and has three gold properties: Youga in Burkina Faso, Agbaou in Côte d’Ivoire and Finkolo in Mali. The company also holds strategic land packages on a number of known gold belts in West Africa covering over 9,000 sq km in four countries.

The boards of Etruscan and Endeavour believe the acquisition will benefit Etruscan shareholders by giving them 13.6% ownership of Endeavour and exposure to Crew Gold’s unhedged gold production at its Lefa mine in Guinea, and its restarted exploration program. Etruscan shareholders also get exposure to “significantly increased share liquidity” (over the last six months, Endeavour has had fourteen times more daily-value traded than Etruscan); and improved financial strength and access to finance.

If the acquisition is completed, Endeavour will have combined annual gold production from the Youga and Lefa mines of 350,000 oz. gold, with about 189,000 oz. gold attributable to Endeavour. (About 270,000 oz. gold from Crew Gold’s Lefa mine and 80,000 oz. gold from Etruscan’s Youga mine.)

News of the acquisition sent Etruscan’s shares up 15.4% or 6¢ to 45¢ with 6.6 million shares changing hands.

Over the last year the junior has traded in a range of 17.5¢ to 61¢ per share and has 367.2 million shares outstanding.