The FTSE 100 gold miner at the centre of a payments scandal that led to the ousting of its former boss is set to take a hit of up to $120 million after settling a dispute over the sale of two of its west African mines.
Endeavour Mining had launched legal action against Lilium Capital, an investment company that specialises in frontier markets, after it failed to pay money owed for the acquisition of the Boungou and Wahgnion mines in Burkina Faso.
Lilium accused Endeavour of misrepresenting the financial and operational position of the two mines. Under a settlement agreement, the assets have now been transferred to the state of Burkina Faso and Endeavour will receive about $80 million in cash and production royalties, based upon current gold prices, $£119 million short of the $199 million carrying value at the end of June. Endeavour is due to take an impairment against the mines during the current quarter.
The impairment comes during a turbulent year for the miner, which dismissed its former chief executive in January after it uncovered a series of irregular payments made to a thirdparty offshore entity.
The scandal emerged when Endeavour found that Sebastien de Montessus allegedly instructed Allied Gold, which acquired Endeavour’s Agbaou mine in Ivory Coast in March 2021, to pay the $5.9 million owed to the company as part of the sale to a third-party company rather than to part of the Endeavour group.
After advisers at Linklaters, the law firm, and EY, the audit firm, were instructed to investigate the beneficiaries, the investigation uncovered two further payments totalling $15 million that had previously been made in August and November 2020. Ian Cockerill, a mining veteran, was hired as De Montessus’s replacement.
Endeavour mines gold in Senegal, Ivory Coast and Burkina Faso, producing 1.07 million tonnes last year. Revenue was boosted by a rise in the gold price, which has hit a fresh record of above $2,500 a tonne as traders have raised their bets of the Federal Reserve cutting interest rates next month.
The shares fell by 12p, or 0.7 per cent, to close at £16.38
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