Endeavour Mining to Acquire Cassels Brock Client, Avion Gold

Published: 08/16/2012

By Suhuyini Abudulai, Andre Boivin, Paul Carenza, Jonathan Fleisher, Chris Hersh, Shaun Khullar, Jeffrey P. Roy, John P. Vettese, Nicole Washington

On August 7, 2012, Avion Gold Corporation (“Avion”) and Endeavour Mining (“Endeavour”) announced that they have signed a definitive arrangement agreement whereby Endeavour will acquire all issued and outstanding shares of Endeavour via a court-approved plan of arrangement in a share for share exchange.  Each shareholder of Avion will be entitled to exchange shares of Avion for 0.365 share of Endeavour.  Each shareholder of Avion that is a Canadian resident may elect for tax purposes to receive 0.365 of an Avion Exchangeable Preferred Shares (“Exchangeable Shares”).  Each Exchangeable Share will be exchangeable for one ordinary share of Endeavour at the option of the holder (the “Arrangement”).  The total value of the transaction at based on the closing price of Endeavour shares on August 7, 2012, is CDN $389,000,000.

The acquisition, which will create one of the largest West African mining companies, will immediate increase Endeavour’s forecast gold production by approximately 50%.

The transaction is expected to close in October of 2012.

Avion and Endeavour have also entered into a loan agreement (the “Loan Agreement”) whereby Endeavour is providing a US$20,000,000 exchangeable loan to Avion Resources (Mali) Ltd (the “Borrower”), a wholly-owned subsidiary of Avion.  Avion has agreed to guarantee the Loan, which is secured against the common shares in the capital of the Borrower and Avion Mali Limited, another wholly-owned subsidiary of Avion.

The Loan is exchangeable at the option of Endeavour, at any time subsequent to the advance of the Loan, into Avion Shares at an exchange price of US$0.4323 per Avion Share. In certain circumstances Avion will have the option to exchange the Loan for Avion Shares on the Initial Maturity Date at the lower of the agreed conversion price of US$0.4323 per Avion Share and the five day VWAP of the Avion Shares on the TSX as at the close of trading on the date immediately preceding the Initial Maturity Date.

Cassels Brock acted as counsel to Avion with a team that included John Vettese, Jeffrey Roy and André Boivin (Securities, Mining & M&A), Paul Carenza (Corporate Tax, Nicole Washington (Securities & Mining), Shaun Khullar (Securities), Chris Hersh (Competition) and Jonathan Fleisher and Suhuyini Abudulai (Financial Services).