• One of the top 15 global gold producers and member of the World Gold Council
  • On track to achieve full year output guidance of 995,000 to 1.095 million ounces
  • Aims to discover 10 to 15Moz of indicated resources by 2021, representing over double the reserve depletion during the period

What Endeavour Mining Corp does:

Endeavour Mining Corporation (TSE:EDV) (OTCMKTS:EDVMF) is a leading global gold producer focused on West Africa.

Endeavour’s strategy is focused on increasing the quality of its portfolio to establish a leading West African gold producer with long life mines and low all-in sustaining cost (AISC) through a focus on operational excellence, developing projects on time and on budget, unlocking value through exploration and maintaining a healthy balance sheet.

The company has 23 million ounces of measured and indicated resources and aims to have discovered between 10 and 15 million ounces by 2021, with 8.3 million ounces already achieved.

Its 2020 target is to produce between 995,000 and 1,095,000 ounces at an all-in-sustaining-cost (AISC) of US$865-915 per ounce on a pro forma basis.

In July this year, the company successfully completed its acquisition with SEMAFO Inc and integrated SEMAFO’s two assets Mana and Boungou in Burkina Faso into its portfolio.

Endeavour now operates six producing mines across Côte d’Ivoire, and Burkina Faso. It also has four potential development projects and a strong portfolio of exploration assets on the highly prospective Birimian Greenstone Belt across Burkina Faso, Côte d’Ivoire, Mali and Guinea.

How is it doing:

In its third quarter results, to end September 30, 2020, group production increased by 64% compared to the previous quarter this year to 244,000 ounce, a positive result considering the challenges of the coronavirus (COVID-19) pandemic.

Adjusted net earnings for the quarter totaled US$72 million, up from US$33 million in the same period in 2019, on revenue of US$482 million, versus US$267 million a year earlier.

There was also strong operating cash flow generation at a record US$223 million or US$1.37 per share for the quarter, following the accelerated integration of the SEMAFO Inc assets, after the merger completed in July.

Given the strong balance sheet and expected robust free cash flow generation, the firm also announced a maiden dividend of US$60 million, or US$0.37 a share for the 2020 fiscal year, representing a yield of 1.6%.

It is now eyeing a record-breaking fourth quarter, and expects an even stronger performance given the restart at Boungou, higher grades at Houndé and the end of the rainy season, it said.

The group also unveiled an extension to the mine-life at its two flagship operations – at the Hounde and Ity mine, to allow for the 2 million additional ounces, which have been discovered at Kari Pump, Kari West and Le Plaque. Combined annual production at the two mines is now expected to average around 500,000 ounces over the next five years from 2021 to 2025.

Elsewhere, the Fetekro development project in Ivory Coast is being fast-tracked to pre-feasibility stage for the first quarter of 2021 and could be another of the firm’s key assets.

In October this year,  Endeavour announced that mining operations had recommenced at the Boungou mine in Burkina Faso, following the mobilization of a West Africa mining contractor and completion of infrastructure and operating improvements.

And on November 11, the group confirmed that it was in discussions with Canada-based Teranga Gold Corp (TSE:TGZ) regarding a potential ‘merger of equals’. Reuters reported on Tuesday that a merger, if it proceeds, would mark the latest in a series of deals involving the gold-rich region.

Inflection points:

  • Fourth quarter results
  • Exploration and production updates
  • Outcome of merger talks

What the boss says:

In a statement accompanying the group’s third quarter results posted in November this year, Endeavour’s CEO Sébastien de Montessus said he was pleased with the third quarter performance,  which “positions us to achieve our annual guidance set at the beginning of the year despite the ongoing challenges presented by the global COVID-19 pandemic” and that he  was looking forward to “delivering a record-breaking fourth quarter..”

He added: “Given our strong balance sheet and expected robust free cash flow generation, we are pleased to announce our first dividend at an attractive yield as part of our capital allocation framework and strategy of maximizing shareholder value. Our goal is to maintain a similar dividend yield until we have reached a targeted net cash position of $250 million.”

de Montessus added: “We see potential to continue to optimize and extend the mine lives at both Ity and Houndé and are now deploying the same strategy at the recently acquired, and swiftly integrated, Boungou and Mana mines. We are also continuing to build optionality within our portfolio by aggressively advancing our attractive pipeline of projects, where efforts are currently being prioritized on fast tracking our Fetekro project to a pre-feasibility study in Q1-2021.”

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