ENDEAVOUR ANNOUNCES COMPLETION OF
INVESTIGATION AND KEY FINDINGS
London, 27 March
2024 – The Board of Directors of Endeavour Mining plc
(LSE:EDV, TSX:EDV, OTCQX:EDVMF) (“Endeavour” or the “Company” and,
together with its subsidiaries, the “Group”) announces that the
investigation commissioned following the termination of Sébastien
de Montessus as President and Chief Executive Officer of the
Company (the “Investigation”) is now complete.
Summary of Key Outcomes
- No restatement
of historic financial statements and no material impact on 2023
annual financial results issued today, which are the subject of an
unmodified audit opinion.
- Investigation
found that Mr de Montessus, acting with certain others who are not
employees of the Group:
- diverted a
US$5.9 million payment to a third-party company, and concealed his
actions with repeated false representations to management, the
Board and auditors;
- caused Endeavour
to make two payments totalling US$15.0 million to the same
third-party company, deliberately disguising them as advance
payments to a contractor through repeated false representations to
management.
- No evidence of
bribery, or of any payments being made to sanctioned persons or to
terrorist groups.
- Ultimate
beneficiaries of these payments have not been discovered, despite
extensive investigation.
- Mr de Montessus
provided implausible and untrue explanations of his conduct during
the course of the Investigation.
- The
Investigation is now complete.
Summary of Actions Taken and
Proposed
- Mr de Montessus
was terminated as CEO and President on 4 January.
- Clawback of
remuneration totalling US$29.1 million announced on 18
January.
- Noting that
these payments involved deliberate circumvention of our existing
controls framework, the Board has nonetheless accelerated its
review of internal controls in line with the new UK Corporate
Governance Code, and has made immediate adjustments to certain
controls relating to M&A activity.
Srinivasan Venkatakrishnan (“Venkat”), Chairman
of Endeavour, commented: “The Board’s actions illustrate the high
importance we place on integrity, governance and transparency. We
will not waver from these values. The conclusion of the
Investigation enables us to put this matter behind us and focus on
delivery and creating value for all our stakeholders. Under the
highly experienced leadership of Ian Cockerill, we are confident we
will deliver on our two high-quality development projects and move
towards a period of free cash generation.”
Background and Scope of
InvestigationAs announced on 4 January 2024, the Board had
recently become aware of an irregular payment instruction issued in
March 2021 for an amount of US$5.9 million owed to Endeavour in
connection with the sale of the Agbaou mine. Mr de Montessus
instructed Allied Gold, the purchaser of the Agbaou mine, to pay
this amount to a third-party company rather than to a member of the
Group, thereby settling the debt from the purchaser’s perspective.
The payment was concealed from the Company by Mr de Montessus and
he made repeated and deliberate false representations to
management, the Board and the Company’s auditor that this amount
remained owing from the purchaser. As a result, a receivable
representing this amount was maintained on the Group’s balance
sheet until Q3 2023, when it was written off based on further
deliberate false representations by Mr de Montessus.
When challenged about these facts in an
interview on 4 January 2024, Mr de Montessus admitted to issuing
the irregular payment instruction, to concealing the fact of the
payment to the third-party company, and to knowingly
misrepresenting the receivable as outstanding over a period of more
than two years. As a result of his serious misconduct, the Board
terminated Mr de Montessus as CEO on 4 January 2024 and the
Remuneration Committee of the Board determined to claw back
remuneration totalling $29.1 million as announced on 18 January
2024.
The Board instructed its external advisers,
Linklaters LLP and Ernst & Young LLP, to investigate the US$5.9
million payment to determine the beneficiaries of the diverted
funds. The Investigation also uncovered evidence of two further
payments, with a total value of US$15.0 million, to the same
third-party recipient as the US$5.9 million payment. The scope of
the Investigation also included the circumstances of these
payments.
In order to provide additional comfort in
relation to the opening balance sheet position for the 2023
calendar year, the Investigation also examined receivables written
off by the Group on 31 December 2022 to ascertain whether any of
them had in fact been settled by way of payment to a third party,
in a similar manner to the US$5.9 million payment.
The external advisors conducting the
Investigation were authorised by the Board to access all relevant
documents, records and information of the Company and to conduct
interviews with any individual deemed appropriate.
Prior to the conclusion of the investigation
work, Mr de Montessus was interviewed for a second time in late
February.
Overview of Investigation
FindingsThe Investigation identified evidence that Mr de
Montessus, acting with certain others who are not (and were not at
any time) employees of the Group:
- diverted a
consideration payment with a value of US$5.9 million, relating to
the disposal of the Agbaou mine, to a third-party company in March
2021, and concealed this payment by subsequently making false
representations to management, the Board and the Group’s auditors
over a period of more than two years that the receivable was still
outstanding; and
- had previously,
in August and November 2020, caused Endeavour to make two payments
totalling US$15.0 million to the same third-party company as the
US$5.9 million payment, by deliberately disguising the US$15.0
million as advance payments to a contractor through repeated false
representations to management, causing an aggregate loss of that
amount to Endeavour and/or the contractor.
Despite extensive efforts, the Investigation was
not able to establish the ultimate beneficiaries of the payments to
this third-party entity. This entity was incorporated as an
offshore entity in Ras al Khaimah in the UAE and was liquidated on
the day after the payment of the US$5.9 million in March 2021.
Through searches by professional investigation agents, thorough
enquiries were made in the UAE, but the investigation work was
unable to ascertain the true beneficial ownership of this entity,
which was concealed from the Company by Mr de Montessus and those
with whom he acted.
Although Mr de Montessus attended two interviews
during the Investigation, he continued to attempt to conceal his
motives and actions relating to the events being investigated by
providing untrue and misleading explanations for his conduct.
Since 4 January 2024, Mr de Montessus has
publicly stated that the US$5.9 million payment which he
deliberately diverted in March 2021 was used to pay for security
equipment to protect the Group’s partners and employees in a
conflict zone. However, based on the information given by Mr de
Montessus in interviews and the other evidence available to the
Investigation (including the evidence that Mr de Montessus had
caused US$15.0 million to be paid by Endeavour to the same
third-party company in different circumstances in 2020), his
explanation was found to be implausible and untrue.
Although the Investigation did not ascertain the
ultimate beneficiaries of the payments to the third-party entity,
in the course of the extensive review of documentation and
interviews, no evidence was identified of bribery, or of any
payments to sanctioned persons or to terrorist groups.
The Investigation did not identify evidence that
any of the receivables written off on 31 December 2022 had in fact
already been settled by payments to third parties.
The findings of the Investigation do not trigger
any requirement to restate prior interim quarterly financial
statements, annual financial statements and associated management
discussion and analysis, nor do they materially affect the 2023
annual financial results.
For further information, please refer to the
2023 Annual Report at the following link.
Proposed Actions
The Investigation revealed strong evidence that
Mr de Montessus abused his position as CEO, actively misleading
both the Board and the senior executive team through repeated and
deliberate false representations and concealment of information
over a sustained period. His termination as CEO was therefore the
most important step in protecting the Group from further conduct of
this nature.
Whilst the circumstances clearly indicated
deliberate overriding of controls, active concealment and
misrepresentation by the former CEO, the Company is evaluating its
overall control environment, including the impact of “tone at the
top”. In the interim, the Company has added further mechanisms,
such as additional dual controls in committing the Company within
the context of M&A and subsequent renegotiations, so that the
risk of such events is further minimised in the future. The Audit
Committee of the Board has determined that there are no material
weaknesses in the Group’s Internal Controls over Financial
Reporting or Disclosure Controls & Procedures.
The Board has reserved its position regarding
the possibility of pursuing Mr de Montessus for recovery of amounts
lost by the Group as a result of his actions.
This announcement contains inside information
for the purposes of Article 7 of Regulation (EU) no 596/2014 (MAR)
as it forms part of UK Domestic Law by virtue of the European Union
(Withdrawal) Act 2018.
CONTACT INFORMATION
Jack GarmanVice President, Investor Relations+44
203 011 2723investor@endeavourmining.com |
Brunswick Group LLP in LondonCarole Cable,
Partner+44 7974 982 458ccable@brunswickgroup.com |
ABOUT ENDEAVOUR
MINING PLC
Endeavour Mining is one of the world’s senior
gold producers and the largest in West Africa, with operating
assets across Senegal, Cote d’Ivoire and Burkina Faso and a strong
portfolio of advanced development projects and exploration assets
in the highly prospective Birimian Greenstone Belt across West
Africa.
A member of the World Gold Council, Endeavour is
committed to the principles of responsible mining and delivering
sustainable value to its employees, stakeholders and the
communities where it operates. Endeavour is listed on the London
and Toronto Stock Exchanges, under the symbol EDV.
For more information, please visit
www.endeavourmining.com.
Neither Toronto Stock Exchange nor the
Investment Industry Regulatory Organization of Canada accepts
responsibility for the adequacy or accuracy of this release.
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING INFORMATION
This news release contains "forward-looking
statements" including but not limited to, statements with respect
to Endeavour's plans for further exploration of the Tanda-Iguela
property, the extent and timing of Endeavour’s drilling campaign,
the timing of the updated mineral resource estimate, the estimation
of mineral resources, and the success of exploration activities.
Generally, these forward-looking statements can be identified by
the use of forward-looking terminology such as "expects",
"expected", "budgeted", "forecasts", and "anticipates".
Forward-looking statements, while based on management's best
estimates and assumptions, are subject to risks and uncertainties
that may cause actual results to be materially different from those
expressed or implied by such forward-looking statements, including
but not limited to: risks related to the successful integration of
acquisitions; risks related to international operations; risks
related to general economic conditions and credit availability,
actual results of current exploration activities, unanticipated
reclamation expenses; changes in project parameters as plans
continue to be refined; fluctuations in prices of metals including
gold; fluctuations in foreign currency exchange rates, increases in
market prices of mining consumables, possible variations in ore
reserves, grade or recovery rates; failure of plant, equipment or
processes to operate as anticipated; accidents, labour disputes,
title disputes, claims and limitations on insurance coverage and
other risks of the mining industry; delays in the completion of
development or construction activities, changes in national and
local government regulation of mining operations, tax rules and
regulations, and political and economic developments in countries
in which Endeavour operates. Although Endeavour has attempted to
identify important factors that could cause actual results to
differ materially from those contained in forward-looking
statements, there may be other factors that cause results not to be
as anticipated, estimated or intended. There can be no assurance
that such statements will prove to be accurate, as actual results
and future events could differ materially from those anticipated in
such statements. Accordingly, readers should not place undue
reliance on forward-looking statements. Please refer to Endeavour's
most recent Annual Information Form filed under its profile at
www.sedar.com for further information respecting the risks
affecting Endeavour and its business.
- 240327 - NR - Completion of Investigation and Key Findings
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