(Reuters) - Endeavour Mining Corp (EDV.TO) said it will buy Avion Gold Corp AVR.TO for C$389 million in an all-stock deal as it looks to expand in West Africa.
The deal value of 88 Canadian cents per share, based on Tuesday’s close of Endeavour’s stock, represents a premium of 57 percent to Avion’s Tuesday close.
Endeavour said the deal will immediately boost its 2012 gold output by about 50 percent. It now expects to produce 282,000 ounces to 304,000 ounces of gold this year.
The company said it will also provide Avion, which has a market value of about C$233.5 million, with a $20 million bridge loan to expand its mill at the Tabakoto operation in western Mali.
Avion Chief Executive John Begeman will join Endeavour’s board of directors.
Endeavour, which is valued at about C$573.9 million, said it expects the deal to close in October.
The company also posted a higher second-quarter profit on higher gold prices and output.
Endeavour’s shares, which have risen 38 percent in last ten months, closed at C$2.40 on the Toronto Stock Exchange.
Reporting by Ankur Banerjee in Bangalore; Editing by Joyjeet Das