Endeavour Financial focuses its gold strategy on the Greenstone Belts of West Africa
resourceinvestor.com
by Charles Wyatt
Published 2/23/2010
The name Endeavour Financial crops up in plenty of deals, but it was not until it took a big slug of shares in Crew Gold that it occurred to Minews that Endeavour might be a bit out of the ordinary as an integrated natural resource merchant banking company. Sure, it offers all the usual services on a project and company: advising on equity financings, debt, mergers and acquisitions, and strategic business development, but one senses that the emphasis is on originating merchant banking investments and developing long-term client relationships. The clue comes in the company's claim that its success is derived from its ability to integrate financial advisory services with timely capital investments. In other words Neil Woodyer, founder and chief executive of Endeavour, is prepared to put his money where his mouth is.
It is no spring chicken. Since 2002, Endeavour has advised on M&A transactions valued at over US$28 billion, and has helped arrange US$3.5 billion of equity finance and US$2.2 billion of debt finance. It has also dedicated around US$150 million to a gold-focused investment strategy, and seeks maximum returns by identifying, investing in, and consolidating junior gold mining companies. Endeavour's flexibility, means it can be retained to provide advice on project debt financing and also provide assistance in raising the equity contribution required. And, if appropriate, it can also provide a bridge financing or similar mezzanine instrument to enable a client to accelerate project development. Now that is the good old merchant banking spiel trotted out, but the secret weapon behind the gold strategy is the exclusive strategic alliance with Frank Giustra of Fiore Financial Corporation. As president and later chairman and chief executive of Yorkton Securities in the 1990s, Frank built an amazing reputation as a deal maker in junior resource stocks. He cleared out just before Bre-X and is now the eminence grise behind Endeavour.
He deliberately avoids the limelight, though this can be a bit difficult for the man who launched the Clinton Giustra Sustainable Growth Initiative with former US President Bill Clinton in 2007, and who is also a member of the Board of Trustees of the William J Clinton Foundation. It did not go unnoticed when he decided in 2001 that the price of gold had bottomed out thanks to the efforts of Gordon Brown and he was back in the resources game again. The series of deals that signaled he was in earnest at Endeavour involved Wheaton River Minerals which, under his guidance, embarked on a series of acquisitions. In 2002 Wheaton bought Minas Luismin, one of Mexico's largest gold and silver producers, and the following year it paid US$180 million for BHP Billiton's stake in Argentine copper mine La Alumbrera. The enlarged Silver Wheaton now has operations in Argentina, Chile, Guatemala, Honduras and Mexico and is unrecognizable from the junior with which Giustra first got involved.
When the chips are going down it is really gold that appeals most to Frank Giustra, although he is also confident of the longer term potential of uranium and was a key figure in engineering the C$3.8 billion merger between Urasia Energy and SXR Uranium One. At the end of last year Endeavour carried out its first strategic investment in the gold space by buying 55 per cent of the equity of Etruscan Resources for US$71.1 million. The last time Minews wrote about Etruscan was in March of 2009 when a man called Maxim Finskiiy, who was said to own a gold business in Russia, came on the scene and injected some money into it via a private placement. That was at a time when the company did not even have enough money to assemble a prospectus, with all the attendant expense of lawyers and auditors. A few years earlier, Etruscan had lost the faith of investors when it failed with its foray into diamonds. The rating had suffered ever since. Nevertheless, things hadn't entirely ground to a halt. There was production from the Youga mine in Burkina Faso, an 85 per cent stake in the Agbaou project in Cote D'Ivoire, the prospect of earning a 60 per cent stake in the Finkolo mine near Syama in Mali.
Now it is very much an Endeavour vehicle. Until recently there were four Endeavour men on the board including Frank Giustra and Neil Woodyer. Now Sally Eyre, director of marketing and business development at Endeavour, has taken over as chief executive, and C$10 million is being raised to accelerate exploration in West Africa, including Ghana. The latest news is that production of 80,000 ounces is forecast from Youga at a cash cost of between US$550 and US$650 per ounce. The company has a strategic landholding on some of the most prolific gold belts in these countries, so other juniors in the area are bound to be in its sights before long.
The second company to come into the Endeavour stable is Crew Gold. Endeavour announced that it had acquired a 37.88 per cent holding in Crew at the end of January. Interestingly the Russian company Severstal, through its affiliate Bluecone, subsequently said that it had upped its stake in Crew Gold to 19.79 per cent as reported here, so it clearly appreciated the presence of Endeavour on the register. The attraction for both must be the LEFA Corridor gold project in Guinea which is expected to produce 200,000 ounces of gold this year. Guinea abuts Cote D'Ivoire and Mali. The politics of Guinea may also have been a bit of a problem for a non-mining man from Norway when he was running Crew Gold, but Endeavour and Severstal are a different matter altogether. Endeavour has already put three of its people on Crew's board including Frank Giustra.
It is still early days, but the overall plan for Endeavour's gold-focused strategy is to build a powerful position along the greenstone belts of West Africa, many of which are underexplored. Once things gave settled down we hope to have an interview with Sally Eyre to put more flesh on the overall strategy for the area, but another deal could have materialized before then. When Frank Giustra gets moving the deals come thick and fast as a look at the history of Silver Wheaton will confirm. |
