La Mancha sells down Endeavour Mining stake

[Ben Graham]

London-based La Mancha Resource Capital is reducing its stake in West Africa-focused gold producer Endeavour Mining (LSE, TSX: EDV) after its shares nearly tripled in value in a year.

The finance firm’s Luxembourg-based fund sold 3.5% of Endeavour in a bought deal at C$71.25 per share worth about C$605 million ($437 million), trimming its holding while remaining a major shareholder. The shares closed at C$77.61 apiece on Thursday, a 191% gain from a year earlier. The stock fell 6.1% on Friday morning to C$72.91, valuing the company at C$17.5 billion ($12.6 billion).

Shares in most major gold companies have more than doubled over the past 12 months as geopolitical tensions and central bank bullion buying has powered the yellow metal about 65% to successive record highs. The La Mancha fund, which had about $1.7 billion under management in November, held 35.3 million shares, or about 15% of Endeavour on a non-diluted basis before the sale. Now its stake stands at about 11%.

“This transaction forms part of La Mancha’s ongoing capital management strategy,” Vincent Benoit, CEO and managing partner of La Mancha, said in a statement. It’s “aimed at reducing leverage and rebalancing the portfolio following a significant increase in the fund’s exposure to Endeavour due to the strong performance of its share price,” he said.

Endeavour’s portfolio in West Africa includes main operations such as the Houndé mine in Burkina Faso and the Ity and Agbaou mines in Côte d’Ivoire with total annual attributable output from around the mid- to high-900,000-oz. range. It sold the non-core Boungou and Wahgnion properties in Burkina Faso in 2023.

‘Cornerstone’

“The La Mancha group has been a cornerstone shareholder of Endeavour for over a decade and this transaction does not reflect any change in our conviction in the company’s long-term potential,” Benoit said. “We remain a committed long-term shareholder, intend to retain a significant stake in excess of 10% of shares outstanding, together with board representation, and continue to fully support Endeavour’s strategy and management team.”

La Mancha said Egyptian businessman Naguib Sawiris will continue to represent the fund on Endeavour’s board of directors.

The group has been a key shareholder in Endeavour since 2015, when it sold its interest in Ity to the company in exchange for a significant position.

Government stakes

In Burkina Faso, the Ibrahim Traoré government has taken control of Endeavour’s former Boungou and Wahgnion gold mines following the collapse of their sale to Lilium Mining, a transaction that had been billed at more than $300 million including deferred payments and royalties. After a dispute over payments and ownership, the state moved in August 2024 to nationalize the assets and pay Endeavour about $80 million in cash and royalties.

Endeavour’s former Boungou and Wahgnion mines are now fully under state control, with the company no longer operating them but retaining a residual economic interest through the royalty structure. It’s a prime example of Burkina Faso’s recent push to expand state ownership in the gold sector.

Military governments across the Sahel region are pushing for greater stakes in mines operated by foreign majors as they seek revenue to counter Islamic extremists in the north and support some of the world’s poorest populations. Barrick Mining (TSX: ABX; NYSE: B) only recently settled a dispute with Mali for some $430 million, while 7th-largest uranium producer Niger is advancing projects with Global Atomic (TSX: GLO) and GoviEx Uranium (TSXV: GXU).