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Centamin’s Sukari mine is located aroudn 700 kilometres south of Cairo, Egypt.

Endeavour Mining Corp. has unveiled a $2.5-billion all-share proposal to buy Centamin PLC, after being repeatedly rebuffed in private advances.

The unsolicited offer for Jersey-based Centamin is the latest in what has been a frenzied period for mergers and acquisitions in the gold sector.

On Monday, China’s Zijin Mining Group Co. Ltd. announced it was buying Canada’s Continental Gold Inc. for $1.4-billion, and just more than a week ago, Toronto-based Kirkland Lake Gold Ltd. said it intended to snap up Detour Gold Corp., also of Toronto, for $4.9-billion.

London-based Endeavour, which is listed on the Toronto Stock Exchange, is offering 0.0846 of its shares for each Centamin share, a 13.1-per-cent premium to Tuesday’s closing price.

Endeavour argues that Centamin, which operates one large mine in Egypt, will benefit by being part of a larger, more diversified miner. Endeavour has four mines in West Africa. Endeavour also believes that it would be a better manager of Centamin’s Sukari mine, which has struggled to transition from open-pit mining to underground.

Endeavour first approached Centamin in October of last year and twice in November of this year, but to no avail. It was rebuffed again on Tuesday.

Hours after the proposal was made public, Centamin rejected it, arguing the deal would disproportionately benefit Endeavour, and doesn’t “adequately reflect the contribution that Centamin would make to the merged entity."

Endeavour chief executive officer Sébastien de Montessus said in an interview that the company is prepared to walk away if the deal doesn’t get a good reception from Centamin’s shareholders. But he was optimistic they will see value, and perhaps ultimately persuade Centamin’s board to change its mind.

"If Centamin shareholders believe that this is something worth investigating, then governance should apply, and they should request the board to engage with us,” he said.

Centamin’s shareholders will also have to consider whether they are willing to take on added geopolitical risk. Endeavour has two mines in Burkina Faso. The country has experienced a surge in terrorist attacks over the past five years, some of which have directly affected the gold industry.

Last month, 39 people were killed after assailants, believed to be jihadists, ambushed a bus carrying hundreds of employees of Montreal-based Semafo Inc. who were en route to the company’s Boungou mine in Burkina Faso. On Monday, Semafo said the mine will remain closed at least until the end of the year, as it is unable to guarantee the safety of its staff.

Mr. de Montessus said Endeavour is “comfortable” operating in Burkina Faso. Both of its mines are located near cities, so employees don’t have to travel hundreds of kilometres to get to work, he said. The company also has airstrips on site, and its own planes, allowing some employees to fly to the mines.

But Centamin’s shareholders aren’t the only stakeholders Endeavour will have to win over. Endeavour’s own shareholders haven’t greeted the deal with a lot of enthusiasm. Endeavour’s stock fell by 3.5 per cent on Tuesday on the TSX to $24.89 apiece.

Credit Suisse analyst Fahad Tariq questioned the thesis behind the deal in a note to clients, pointing out that Endeavour’s expertise is West Africa. Egypt presents “execution risk.” He also said the deal is contrary to recent messaging from the company. Endeavour had previously told investors that its own organic growth potential “precluded the need to do M&A,” Mr. Tariq said.

After being dormant for the better part of a decade, deal-making has come back with a bang over the past 15 months in the gold industry. Earlier this year, Barrick Gold Corp closed its US$6-billion takeover of Randgold Resources Ltd. Not long after, Newmont Mining Corp. bought Goldcorp Inc. for US$10-billion.

With gold miners often struggling to replace reserves, it is often cheaper to buy production through M&A than find new deposits. Companies are also trying to win back generalist investors, who by and large abandoned the sector post-2012, after the price of bullion tumbled.

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