Endeavour Posts Record 2016 Results
(Thomson Reuters ONE) -
ENDEAVOUR POSTS RECORD 2016 RESULTS
Production up 13% · AISC down to record low $884/oz · Cash flow generation up
55%
Q4 AND FY-2016 HIGHLIGHTS
* Record Q4-2016 performance with production of 175koz, up 20% over previous
quarter, and AISC of $855/oz, down 5%
* FY-2016 guidance achieved with record production of 584koz, up 13% on prior
year, and record low AISC of $884/oz, down 4%
* FY-2016 Free Cash Flow Before Growth Projects (and before WC, tax and
financing cost) increased by 55% to $142m, beating guidance
* Year-end Net Debt decreased from $144m in 2015 to $26m in 2016
* Well positioned to finance growth projects with $334m in available sources
of financing and liquidity
* Earnings from mine operations increased by 70% in FY-2016 to $168m
* Adjusted net earnings increased by 145% in FY-2016 to $1.15 per share vs
$0.47 in FY-2015
* Houndé construction remains on-time and on-budget; first gold pour expected
in Q4
* Group reserves up 330koz over the previous year to 7.1 Moz on a 100% basis
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George Town, March 7, 2017 - Endeavour Mining (TSX:EDV) (OTCQX:EDVMF) is pleased
to announce its financial and operating results for the fourth quarter and full
year ended December 31, 2016, with highlights provided in the table below.
Table 1: Key Operational and Financial Highlights
QUARTER ENDED(1,2) year ENDED(1)
Dec. 31, Sept 30, Dec. 31, Dec. 31, Dec. 31, Change
2016 2016 2015 2016 2015
-------------------------------------------------------------------------------
Gold Production, oz 175, 411 146,425 136,844 583,712 516,646 +13%
-------------------------------------------------------------------------------
Realized Gold Price,
$/oz 1,177 1,328 1,102 1,234 1,157 +7%
AISC, $/oz 855 898 912 884 922 (16%)
All-in Sustaining 322 430 167 351 235 +53%
Margin, $/oz
-------------------------------------------------------------------------------
Cash Generated From
Operating Activities, $m 72 23 39 154 144 +7%
Cash Used (Generated) in 79 57 (61) 180 7 n.a
Investing Activities, $m
Free Cash Flow Before 42 41 13 142 92 +55%
Growth Projects(3), $m
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Net Debt At Period End, 26 14 144 26 144 (77%)
$m
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Earnings From Mine 45 52 16 168 99 +70%
Operations, $m
Net Earnings (Loss), (0.57) 0.16 0.08 (0.83) 0.42 n.a.
$/share
Adjusted Earnings 0.44 0.25 (0.18) 1.15 0.47 +145%
(Loss), $/share
-------------------------------------------------------------------------------
1. All financials exclude discontinued Youga operation, except for 2015
production and AISC/oz.
2. Includes Karma's pre-commercial production which started in April 2016.
Financial numbers for the pre-commercial production period ending September
30, 2016 don't include Karma's revenue, costs, and operating cash flow is
netted against its capital costs.
3. Free Cash Flow Growth Projects stated before WC, tax & financing costs,
Houndé and Karma)
Sébastien de Montessus, President & CEO, stated: "We are proud to have met all
of our guidance for the year, achieving record production of 584koz with a
significant increase in Q4 compared to Q3, particularly at Agbaou and Tabakoto
which increased by 16% and 30% respectively. We are pleased with the continued
ramp up at Karma, which has increased production by 43% over the previous
quarter to 29koz, while the reserve conversion at the North Kao deposit has
extended its mine life beyond 10 years. This strong group performance has
allowed us to lower our All-In Sustaining Costs below $900/oz for the first
time, and we are on track to continue that momentum in 2017. We have also
significantly deleveraged our balance sheet this year, providing strong
liquidity and financing sources to fund our organic growth.
Last year's strong performance, which continued in the first quarter, leaves us
in a solid position to continue to increase production to 600-640koz and further
lower the group's AISC to $860-905/oz in 2017, without the contribution of
Houndé for which the construction is progressing on-budget and on-schedule for a
first gold pour for Q4.
Looking ahead, we remain focused on unlocking further organic growth potential,
with an upcoming investment decision at our Ity CIL development project and
through our reinvigorated exploration program."
RECORD HIGH PRODUCTION & RECORD LOW AISC FOR BOTH Q4 AND FY-2016
* As expected, Q4 was Endeavour's strongest quarter with production up 20%
over the previous quarter to a record 175koz, and AISC down 5% to record low
of $855/oz, as a result of strong increases at Agbaou, Ity and Tabakoto
which benefited from the end of the rainy season, and the continued ramp-up
at Karma.
* For the full year 2016, Endeavour produced a total of 584koz at a low AISC
of $884/oz, achieving both its ambitious production guidance of 575-610koz
and its AISC guidance of $870-920/oz.
* Full year 2016 production increased by 13% over 2015, with Agbaou setting
another record year and strong contributions from Tabakoto, Ity and Karma,
which either met or exceeded their respective guidance while Nzema was
impacted by lower than expected purchased ore.
* AISC continued to decrease in 2016 with strong performance at Agbaou and an
improved asset portfolio, including a full year's contribution from Ity, the
purchase and ramp-up of Karma and the divestment of the higher-cost Youga
mine.
Table 2: Group Production, koz
QUARTER ENDED, YEAR ENDED DECEMBER
31,
(All amounts in koz, on a 100% ------------------------- ---------------------
basis) Q4-2016 Q3-2016 Q4-2015 2016 2015 Change
-------------------------------------------------------------------------------
Agbaou 57 49 52 196 181 +8%
-------------------------------------------------------------------------------
Tabakoto 48 37 42 163 151 +8%
-------------------------------------------------------------------------------
Nzema 24 24 23 88 110 (20%)
-------------------------------------------------------------------------------
Ity (post-acquisition period 17 15 6 76 6 n/a
for 2015)
-------------------------------------------------------------------------------
Karma (including pre-commercial 29 20 - 62 - n/a
production)
-------------------------------------------------------------------------------
PRODUCTION FROM CONTINUING 175 145 123 585 448 +30%
OPERATIONS
-------------------------------------------------------------------------------
Youga (divested in March - - 15 Excluded 68 n/a
2016)
-------------------------------------------------------------------------------
TOTAL PRODUCTION 175 145 138 585 516 +13%
-------------------------------------------------------------------------------
Table 3: Group All-In Sustaining Costs, US$/oz
QUARTER ENDED, YEAR ENDED DECEMBER
31,
------------------------- ----------------------
(All amounts in US$/oz) Q4-2016 Q3-2016 Q4-2015 2016 2015 Change
-------------------------------------------------------------------------------
Agbaou 532 550 537 534 576 (7%)
-------------------------------------------------------------------------------
Tabakoto 927 1,071 1,119 1,027 1,067 (4%)
-------------------------------------------------------------------------------
Nzema 1,118 1,136 1,133 1,167 1,064 +10%
-------------------------------------------------------------------------------
Ity (post-acquisition period 827 724 683 756 683 +16%
for 2015)
-------------------------------------------------------------------------------
Karma (commercial production) 738 n/a - 738 - n/a
-------------------------------------------------------------------------------
Youga (divested in March 2016) - - 985 Excluded 913 n/a
-------------------------------------------------------------------------------
MINE-LEVEL AISC 779 831 862 820 868 (4%)
-------------------------------------------------------------------------------
Corporate G&A 52 47 56 46 41 +12%
-------------------------------------------------------------------------------
Sustaining Exploration 25 20 15 18 13 +38%
-------------------------------------------------------------------------------
GROUP AISC 855 898 934 884 922 (3%)
-------------------------------------------------------------------------------
AGBAOU MINE
Q4 Insights
* Agbaou achieved a record performance in Q4 as the mine benefitted from the
continued high ratio of oxide ore, high recovery rates and the introduction
of higher grade transitional ore, which represented 8% of total ore
processed during the quarter. AISC decreased mainly due to lower processing
costs from the benefit of higher volumes.
Table 4: Agbaou Performance Indicators
For The Quarter Ended Q4-2016 Q3-2016 Change
-------------------------------------------------------------
Tonnes ore mined, kt 674 651 +4%
Strip ratio (incl. waste cap) 8.67 9.56 (9%)
Tonnes milled, kt 721 709 +2%
Grade, g/t 2.46 2.21 +11%
Recovery rate, % 97% 96% +1%
-------------------------------------------------------------
PRODUCTION, KOZ 57 49 +16%
-------------------------------------------------------------
AISC/OZ 532 550 (3)
-------------------------------------------------------------
Full Year 2016 Insights
* Full-year 2016 production benefited from higher grades and volumes and
continued mill over-performance.
Table 5: Agbaou Performance Indicators
For The Year Ended 2016 2015 Change
---------------------------------------------------------
Tonnes ore mined, kt 2,797 2,818 (1%)
Strip ratio (incl. waste cap) 8.07 6.26 +29%
Tonnes milled, kt 2,827 2,665 +6%
Grade, g/t 2.27 2.15 +6%
Recovery rate, % 97% 97% -
---------------------------------------------------------
PRODUCTION, KOZ 196 181 +8%
---------------------------------------------------------
AISC/OZ 534 576 (7%)
---------------------------------------------------------
* The secondary crusher (commissioned in mid-2016 on-time and on budget)
provides the flexibility to process higher grade transitional ore while
maintaining a fairly constant ore blend and throughput over the remaining
life of mine.
2017 Outlook
* After achieving an exceptional year, Agbaou is expected to return to a more
normalized and sustainable production rate of 175-180koz in 2017 with fresh
ore representing up to 50% of tonnes processed.
* AISC are expected to remain competitive, at $660-700/oz, as higher grade
transitional ore is expected to compensate for increased unit costs and
lower throughput.
Exploration Activities
* The drill program commenced later than expected in 2016 due to delays
related to land compensation and is therefore now scheduled to be completed
in H2-2017.
* The exploration campaign is based on previous geophysics and soil
geochemistry results, focusing on the North pit and South pit extensions,
the Agbaou South target, Niafouta target, and on generating targets beyond
the current resource boundaries.
* More than 12,900 meters had been drilled by year-end 2016, representing
approximately 25% of the exploration program. Results received confirmed
mineralization at the Agbaou South and along the Agabou pit extensions.
* An exploration budget of $7 million has been planned for 2017, totaling
approximately 45,000 meters of drilling.
Reserve & Resource Evolution
* As the exploration campaign is still on-going, the change in reserves and
resources over the previous year (both down ~175koz) corresponds to
depletion and positive reconciliation.
* An update to the reserves and resources will be made following the
completion of the exploration program in H2-2017.
TABAKOTO MINE
Q4 Insights
* Tabakoto achieved a record quarter with production increasing 30% over the
previous quarter and AISC falling below $1,000/oz for the first time, due
primarily to cost improvement programs, anticipated higher grades from Kofi
C and Segala and increased mill throughput following the end of the rainy
season.
Table 6: Tabakoto Performance Indicators
For The Quarter Ended Q4-2016 Q3-2016 Change
----------------------------------------------------------------
OP tonnes ore mined, kt 195 160 +22%
OP strip ratio (incl. waste cap) 7.17 8.81 (19%)
UG tonnes ore mined, kt 253 238 +6%
Tonnes milled, kt 402 381 +6%
Grade, g/t 3.93 3.11 +26%
Recovery rate, % 95% 95% -
----------------------------------------------------------------
PRODUCTION, KOZ 48 37 +30%
----------------------------------------------------------------
AISC/OZ 927 1,071 (13%)
----------------------------------------------------------------
Full-Year 2016 Insights
* Full-year 2016 production benefited from increased overall grade and
recovery rates.
Table 7: Tabakoto Performance Indicators
For The Year Ended 2016 2015 Change
------------------------------------------------------------
OP tonnes ore mined, kt 649 511 +27%
OP strip ratio (incl. waste cap) 9.94 17.20 (42%)
UG tonnes ore mined, kt 944 860 +10%
Tonnes milled, kt 1,588 1,588 -
Grade, g/t 3.36 3.17 +6%
Recovery rate, % 95% 93% +2%
------------------------------------------------------------
PRODUCTION, KOZ 163 151 +8%
------------------------------------------------------------
AISC/OZ 1,027 1,067 (4%)
------------------------------------------------------------
* An overall improvement of open pit ore tonnes mined was achieved compared to
2015 with an increase of 27% mainly due to opening up and accessing the
deeper benches of ore.
* The underground operations delivered more ore tonnes in 2016 (up roughly
10%) mostly due to an improvement of the reef development and fleet
availability.
* Ongoing cost reduction and optimization programs, which include overhead
reductions and a shift to a more local workforce, centralizing procurement,
fleet replacement, and improving equipment availability and mining
efficiency, have already started to drive costs down further.
* Significant G&A costs per tonne reduction of 18% was achieved due to on-
going cost reduction program.
2017 Outlook
* Cost reduction will continue to be the main focus in 2017, with AISC
expected to decrease to $950-990/oz.
* Tabakoto production is expected to decrease slightly in 2017 to 150-160koz
as grades are expected to slightly decline due to open pit mining
transitioning from Kofi C to Kofi B in the second half of the year, and
underground mining sequencing.
Exploration Activities
* Successful exploration grew underground M&I resources by 76koz (inclusive of
depletion) and most of the depleted reserves were replaced (down 8koz
inclusive of depletion). In addition, underground exploration programs
confirmed the discovery of new vein sets that will be delineated in 2017.
* Exploration of the Tabakoto North Open Pit area confirmed the continuation
between Tabakoto and Dar Salam, and already added circa 50koz of M&I
resources in 2016 with additional drilling to start in Q1-2017 around Kofi
C.
* In 2016 the Company discovered the Fougala and Kreko open-pit targets,
located less than 7km away from Tabakoto facilities, where delineation is
planned in early Q1 2017 with the goal of delivering a new maiden resources
by mid-2017.
* As set out in Endeavour's 5-year exploration strategy published in November
2016, Tabakoto is a top exploration priority in 2017 given its relatively
short mine life and significant potential. As such, a $9 million exploration
program totaling approximately 72,000 meters of drilling has been planned
for 2017.
* The 2017 program will focus on both surface exploration, with the aim of
delineating resources within trucking distance at discoveries made in 2016
and on new targets, and underground drilling.
Reserve & Resource Evolution
* Total reserves decreased by 110koz over the previous year, net of depletion,
while several new discoveries have been made in 2016, replacing all M&I
resources depleted.
ITY MINE
Q4 Insights
* As expected, production increased in Q4 following the end of the rainy
season which allowed for increased throughput. In addition, pre-stripping at
the Zia pit, positively contributed to Ity's quarter over quarter production
increase. The AISC/oz increase over the previous quarter is mainly due to
increased G&A seasonal higher spend and higher operating strip ratio.
Table 8: Ity Performance Indicators
For The Quarter Ended Q4-2016 Q3-2016 Change
-------------------------------------------------------------
Tonnes ore mined, kt 316 200 +58%
Strip ratio (incl. waste cap) 3.66 3.74 (2%)
Tonnes stacked, kt 295 271 +9%
Grade, g/t 2.0 1.9 +5%
Recovery rate, % 90% 91% (1%)
-------------------------------------------------------------
PRODUCTION, KOZ 17 15 +13%
-------------------------------------------------------------
AISC/OZ 827 724 +14%
-------------------------------------------------------------
Full-Year 2016 Insights
* Full-year 2016 production remained relatively flat over the previous year as
lower grades were offset by increased ore stacked thanks to the availability
of new pit material.
Table 9: Ity Performance Indicators
For The Year Ended 2016 2015*
------------------------------------------------
Tonnes ore mined, kt 1,186 64
Strip ratio (incl. waste cap) 4.15 4.86
Tonnes stacked, kt 1,173 71
Grade, g/t 2.20 2.39
Recovery rate, % 93% 81%
------------------------------------------------
PRODUCTION, KOZ 76 6
------------------------------------------------
AISC/OZ 756 683
------------------------------------------------
*For the post Acquisition Period
* Despite the rainy season AISC decreased over the previous quarter due to a
lower operating strip ratio and cost reduction programs.
* During the quarter, pre-strip mining began at the Zia pit which began
contributing to production in Q4-2016.
2017 Outlook
* Production and AISC are expected to remain stable in 2017 between 75,000 -
80,000 ounces produced with an AISC between $740-780 per ounce.
* The possibility of running the CIL and heap leaching operations in parallel
for the first few years is also currently under analysis.
Exploration and Resource/Reserve Evolution
* In 2016 the exploration program was focused on drilling previously
identified oxide targets to prolong the life of the heap leach operation,
and the drilling of new targets with the aim of delineating additional
resources for the CIL project.
* Bakatouo and Colline Sud discoveries were announced in 2016 (515koz of M&I
resources) with additional infill and extension drilling initiated in Q4-
2016. These resources have extended the heap leach mine life by two years
(2016 depletion fully replaced + added 78koz) while the remainder is
intended for the CIL Project (pending analysis to run both operations in
parallel).
* In addition, mineralization was confirmed at several other targets
confirmed.
* Drilling started on the Le Plaque target (100% Endeavour owned) in November
2016, with a maiden resource expected in H2-2017.
* The largest portion of Endeavour's 2017 exploration budget has been
allocated to the Ity area in light of its strong prospectivity. A $10
million exploration program totaling approximately 50,000 meters is planned
for 2017.
* In 2017, exploration will be primarily focused on infill drilling at the
Daapleu and Mount Ity deposits, as well as infill drilling and extension
drilling at the new Bakatouo and Colline Sud discoveries, on the Le Plaque
target and on conducting initial drilling campaigns on strong auger
anomalies such as the Yacetouo and Vavoua targets.
* In 2017, an auger drilling program will also be conducted on the 80 km
underexplored portion of the Birimian corridor along the Ity trend which was
consolidated in September 2016.
Reserve & Resource Evolution
* Reserves increased by 510koz, net of depletion, due to the publication of
the Ity CIL Feasibility Study and conversion of 74koz of Bakatouo and
Colline Sud resources to heap leach reserves.
* Despite the addition of 515Koz from the Bakatouo and Colline Sud
discoveries, M&I resources decreased by 327koz (net of depletion). This
decrease is mainly due to the post-acquisition re-estimation of resources to
have a more conservative and robust basis for the Feasibility Study. This
re-estimation resulted in a decrease of 0.8Moz of M&I resources, mainly due
to the reclassification of 0.6Moz to the Inferred category due to drill
spacing confidence. Infill drilling is underway with the goal of
reclassifying a large portion of these resources to the M&I category in
2017, providing additional upside potential for the CIL project.
NZEMA MINE
Q4 Insights
* Production remained flat over the previous quarter as the higher grades
mined was offset by lower purchased ore grades.
* The Adamus push-back progressed well over the quarter and is expected to be
completed in the first quarter of 2017.
Table 10: Nzema Performance Indicators
For The Quarter Ended Q4-2016 Q3-2016 Change
-------------------------------------------------------------
Tonnes ore mined, kt 288 222 +30%
Strip ratio (incl. waste cap) 9.02 11.83 (24%)
Total Tonnes milled, kt 428 424 +1%
Grade, g/t 2.20 2.40 (8%)
Recovery rate, % 82% 82% +5%
-------------------------------------------------------------
PRODUCTION, KOZ 24 24 0%
-------------------------------------------------------------
AISC/OZ 1,118 1,136 (2%)
-------------------------------------------------------------
Full-Year 2016 Insights
* 2016 was a transitional year for Nzema as ore feed was constrained to low
grade ore mined and stockpiles, supplemented by purchased ore feed.
Table 11: Nzema Performance Indicators
For The Year Ended 2016 2015 Change
---------------------------------------------------------
Tonnes ore mined, kt 1,000 1,310 (24%)
Strip ratio (incl. waste cap) 8.30 5.22 +60%
Tonnes milled, kt 1,761 1,783 (1%)
Grade, g/t 1.87 2.21 (15%)
Recovery rate, % 83% 87% (5%)
---------------------------------------------------------
PRODUCTION, KOZ 88 110 (25%)
---------------------------------------------------------
AISC/OZ 1,167 1,064 +10%
---------------------------------------------------------
* The 19% decrease in purchased ore grade and 7% decrease in purchased ore
throughput were the key factors contributing to the 20% reduction in gold
production compared to the previous year.
2017 Outlook
* Following the cutback, Nzema is expected to generate healthy cash flows for
the coming years.
* As a result of the higher expected grades from the Adamus pit following the
cut-back, production is expected to increase to 100-110koz in 2017 while
AISC are expected to decrease to $895-940/oz.
* To complement production from the Adamus pit, pre-stripping at the Bokrobo
deposit is expected to start in the second half of the year.
Exploration Activities
* No significant exploration activity is underway.
Reserve & Resource Evolution
* Reserves and M&I resources decreased by respectively 65koz and 59koz, due to
mine depletion and no exploration activity.
KARMA MINE
Full-Year 2016 Insights
* Commercial production was declared on October 1, 2016. Pre-commercial
production revenue and costs have been offset against the mineral interest
on the balance sheet.
Table 12: Karma Performance Indicators
For The Quarter Ended Q4-2016 Q3-2016 Change
-------------------------------------------------------------
Tonnes ore mined, kt 783 650 +20%
Strip ratio (incl. waste cap) 4.14 3.68 +13%
Tonnes stacked, kt 853 880 (3%)
Grade, g/t 1.14 1.21 (6%)
Recovery rate, % 90% 90% 0%
-------------------------------------------------------------
PRODUCTION, KOZ 29 20 +45%
-------------------------------------------------------------
AISC/OZ 738 n.a. n.a.
-------------------------------------------------------------
Q4 2016 Insights
* Production continued to ramp up in Q4 to achieve an annualized run-rate of
approximately 115koz as the higher grade Rambo pit complemented ore feed
from the GG2 pit and stacking capacity continued to improve.
Table 13: Karma Performance Indicators
For The Year Ended 2016
----------------------------------------
Tonnes ore mined, kt 1,879
Strip ratio (incl. waste cap) 3.66
Tonnes stacked, kt 2,089
Grade, g/t 1.16
Recovery rate, % 90
----------------------------------------
PRODUCTION, KOZ 62
----------------------------------------
AISC/OZ 738
----------------------------------------
* The low AISC of circa $750/oz achieved in Q4-2016, confirms Karma's
potential to have low AISC, in line with Endeavour's acquisition case.
2017 Outlook
* Production in 2017 is expected to increase to 100-110koz as higher grade
Rambo ore feed will complement that of the GG2 pit with contribution from
the Kao pit in the later portion of the year. In addition, stacking capacity
is expected to increase in the second half of the year following the
completion of the plant optimization efforts.
* AISC are expected to range between $750-800/oz with higher grades and
volumes offsetting higher mining cost related to the increased drilling and
blasting requirements.
* Capacity at the processing facility is expected to further increase in the
second half of the year following changes to the ROM layout, the replacement
of the crushing circuit, and other plant optimization activities, which are
expected to amount to $27 million. In addition, $8m is being spent to build
a 200-Man accommodation facility.
Exploration Activities
* In 2016, the exploration program focused on Kao North infill drilling which
confirmed the continuity of the previous inferred resource, and outlined
314koz of M&I resources amenable to heap leach processing (out of a total
456koz added). Subsequently, 262koz were converted to reserves.
* In 2017, a $4 million exploration program totaling approximately 30,000
meters has been planned to drill near-mill targets such as Rambo West and
Yabonsgo.
Reserve & Resource Evolution
* Reserves and M&I resources increased by 167koz and 360koz respectively, net
of depletion, as the addition of North Kao extended Karma's mine life to
beyond 10 years.
HOUNDE CONSTRUCTION REMAINS ON-TIME AND ON-BUDGET
Construction Achievement To-Date
* Construction is progressing as planned, and is more than 65% complete.
* In 2016, a total of approximately $102 million was spent and a $47 million
mining fleet equipment financing agreement with Komatsu was signed. The
remaining spend, to be incurred in 2017, is expected to be up to $180
million, as shown below.
Table 14: Remaining capital spend, in $m
-------------------------------------------
UPFRONT PROJECT CAPITAL 328
-------------------------------------------
Capital spent in 2016 (102)
-------------------------------------------
Mining fleet equipment financing (47)
-------------------------------------------
REMAINING CAPITAL SPEND ~180
-------------------------------------------
* Over 2.7 million man-hours have been worked without a lost-time incident.
* Construction of the 38km long, 91kv overhead power line is more than 60%
complete. First power from Sonabel is scheduled for August 2017.
* Open pit pre-strip mining at the Main Vindaloo open pit, adjacent the
processing facility, commenced in late 2016.
* Detailed engineering of the processing facility along with the design HAZOP
was complete ahead of schedule in November 2016.
* The tailings storage facility is also progressing ahead of schedule and is
nearly 60% complete.
* CIL ring beam concrete pour was achieved in early August 2016, and the SAG
and Ball Mill first lift on both plinths was completed by year-end.
* The construction of the water harvest dam decant tower is complete, with
water already being pumped to the water storage dam two months ahead of
schedule.
* Construction of the 300-person permanent accommodation village is nearing
completion.
* Over 2,000 personnel including contractors are currently employed on-site,
and more than 94% are Burkinabe.
* Construction of the 26Mw backup power station has been awarded. This is on
schedule to be operational in Q3-2017.
* The land compensation process has been successfully completed and
resettlement commenced in early 2017.
Exploration Activities
* Following a two year period of no drilling exploration, activities will
resume in 2017 with a $5 million program totaling approximately 45,000
meters.
* 2017 exploration efforts will leverage the 2016 data analysis, and
structural geology and ground geophysical analytical work. The focus will be
on delineating high-grade targets such as Bouere and Kari Pump, in addition
to preforming reconnaissance drilling.
GROUP RESERVES AND RESOURCES
* Proven and Probable Reserves at year-end 2016 were 7.1Moz on a 100% basis,
which increased by 1.2Moz (+19%) compared to 5.9Moz at the end of 2015
mainly due the purchase of Karma and the reserve conversion at its north Kao
deposit, the additional reserves at the Ity following the publication of the
CIL Feasibility Study and extension of its heap leach operation.
* On a Pro-Forma basis, taking into account for sale of Youga mine and
purchase of Karma in 2016, reserves increased by approximately 6% from
6.7Moz to 7.1Moz. Total additions of approximately 0.9Moz offset depletion
from mining of approximately 0.6Moz.
* While new discoveries made in 2016 added 1.2Moz of Measured and Indicated
Resources ("M&I"), year-end M&I Resources slightly decreased on a Pro-Forma
basis from 12.8Moz to 12.6Moz, mainly due to mine depletion and the post-
acquisition re-estimation and reclassification of Ity resources (done to
have a more conservative basis for the CIL Feasibility Study - infill
drilling is currently in progress to reconvert a portion of the resources
declassified to inferred status).
Table 15: Reserve and Resource Evolution
In Moz on a 100% December 31, December December 31, Change Dec
basis 2016 31, 2015 2015 31, 2016
Pro-Forma(1) vs. Dec 31, 2015
-------------------------------------------------------------------------------
P&P Reserves 7.1 Moz 6.7 Moz 5.9 Moz +1.2 Moz +19%
M&I Resources 12.6 Moz 12.8 Moz 11.0 Moz +1.6 Moz
(inclusive of +15%
Reserves)
Inferred Resources 3.7 Moz 4.7 Moz 2.4 moz +1.3 Moz +51%
-------------------------------------------------------------------------------
(1)Pro-Forma for sale of Youga mine and purchase of Karma. Notes available in
Apendix 2 for the 2016 Mineral Reserves and Resources. For 2015 Reserves and
Resource notes, please consult Company's press release dated March 4, 2016,
entitled "Endeavour Mining to acquire True Gold to grow its low-cost gold
production" available on the Company's website.
INCREASED CASH FLOW GENERATION
* Endeavour generated Free Cash Flow Before Growth Projects (and before
working capital, tax and financing costs) of $142 million in 2016, an
increase of 55%, which exceeded 2016 guidance.
* Contributing to the increase in free cash flow were higher sales in 2016.
This was due to the contribution from Karma effective October 1, 2016, a
full year of production from Ity and production improvements at Agbaou and
Tabakoto. Stronger production at lower all-in sustaining costs and higher
average gold prices in 2016 also had a positive impact on free cash flow.
* Net Free Cash Flow From Operations remained fairly stable over the previous
year, at $70 million, as the increase in Free Cash Flow Before Growth
Projects was mainly offset by a negative change in working capital, and
increased cash settlement and set-up costs of hedging programs.
* Working Capital movements in 2016 was negative $27 million mainly due to
inventory, gold-in-circuit and VAT build-up at Karma related to its
commissioning phase.
* Cash settlements on hedge programs (related to the legacy gold hedging
program for Nzema which was closed out in 2016) amounted to $10 million in
2016 while $5 million cash expense was incurred for the gold collar premium.
The remaining gold collar program covers ~187,000 ounces.
* Growth capital of $110 million incurred in 2016 comprised of Houndé
construction capital and Ity CIL studies.
* Restructuring and acquisition costs totaling $24 million was incurred in
2016, comprised of $6 million of acquisition and restructuring costs related
to the True Gold transaction, and $18 million of restructuring costs related
to ex-CEO and other executive severance packages, and office consolidation.
Table 16: Simplified Cash Flow Statement
12 MONTHS ENDED
DECEMBER,
(in US$ million) 2016 2015
-------------------------------------------------------------------------------
GOLD SOLD, koz 546 520
Gold Price, $/oz 1,234 1,157
REVENUE 673 522
Total cash costs (371) (316)
Royalties (32) (26)
Corporate costs (25) (22)
Sustaining capex (44) (48)
Sustaining exploration (10) (7)
-------------------------------------------------------------------------------
AISC COSTS (482) (419)
-------------------------------------------------------------------------------
AISC MARGIN 191 103
Less: Non-sustaining capital (26) (24)
Less: Non-sustaining exploration (23) (7)
Operating cash flow from Youga discontinued operation - 20
-------------------------------------------------------------------------------
FREE CASH FLOW BEFORE GROWTH PROJECTS 142 92
(and before working capital, tax & financing costs)
Working capital (27) 6
Taxes paid (11) (7)
Interest paid (20) (25)
Cash settlements on hedge programs and gold collar (14) (3)
premiums
-------------------------------------------------------------------------------
NET FREE CASH FLOW FROM OPERATIONS 70 62
Growth Project (110) (7)
Change in growth project working capital (6) -
Cash received for Youga mineral property interests (net) 22 -
Cash received for Ity mineral property interests (net) - 86
True Gold (Bridge loan, cash acquired, less change of (11) -
control payments)
Restructuring and acquisition costs (24) -
Other (1) (30)
Net equity proceeds 185 -
-------------------------------------------------------------------------------
NET CASH/(NET DEBT) VARIATION 125 110
Reduction of debt obligations (110) (63)
-------------------------------------------------------------------------------
CASH INFLOW (OUTFLOW) FOR THE PERIOD 15 47
-------------------------------------------------------------------------------
SOUND BALANCE SHEET AND STRONG FINANCING & LIQUIDITY SOURCES
* Endeavour significantly improved its balance sheet in 2016, with net debt
reduced to $26 million as of December 31, 2016 compared to $144 million at
the same date last year, despite roughly $100 million spent on the Houndé
project construction. This was due to:
* $185 million of net equity proceeds received since the beginning of the
year, which include the La Mancha anti-dilution proceeds related to the True
Gold acquisition and the bought deal proceeds.
* $100 million voluntary repayment made under the $350 million revolving
corporate facility, resulting in a net drawn amount of $140 million. In
addition, the $6 million Auramet loan, previously drawn by True Gold, was
also repaid in 2016.
* Endeavour has strong financing and liquidity sources of $334 million which
include its $124 million cash position and $210 million undrawn on the
revolving credit facility, in addition to its strong cash flow generation.
Table 17: Net Debt Reduction, in US$m
(in US$ million) December 31, 2016 September 30, 2016 December 31, 2015
-------------------------------------------------------------------------------
Cash 124 137 110
Less: Equipment (10) (11) (13)
finance lease
Less: Drawn portion of (140) (140) (240)
$350 million RCF
-------------------------------------------------------------------------------
NET DEBT/(CASH) 26 14 144
POSITION
-------------------------------------------------------------------------------
NET DEBT / EBITDA 0.11x 0.08x 1.02x
(LTM) RATIO
-------------------------------------------------------------------------------
ADJUSTED NET EARNINGS PER SHARE INCREASED BY 143%
* Adjusted earnings attributable to shareholders were $93 million, or $1.15
per share, a 145% increase compared to $0.47 per share in 2015, further
illustrating Endeavour's improvement in portfolio quality.
* In 2016, total adjustments of $166 million were made, mainly related to
Nzema, as detailed below:
o $71 million adjustment for an Nzema impairment charge due to the removal of
sulfide material from the valuation model as the Company has no plans to invest
in its related sulfide mill expansion, in line with management's strategy of
focusing efforts on long-life low AISC assets.
o $45 million add-back of non-cash deferred tax expense, mainly comprised of
the de-recognition of historical carry-forward losses at Nzema (shorter life due
to removal of sulfide material), the Tabakoto new tax structure decided between
Segala and Kofi subsidiaries with the Government, and Accelerated depreciation
at Karma utilized in 2016 resulting in a reduced tax base.
o $24 million of acquisition and restructuring costs, as detailed above.
o $12 million loss on financial instruments relates primarily to realized and
unrealized losses in 2016 on FCFA denominated currency due to the Euro
devaluation against the US dollar, while in 2015 the Company realized a gain due
to the Euro appreciation.
o Adjustment for the removal of discontinued Youga operation, as it was sold
in 2016.
Table 18: Net Earnings and adjusted earnings
Three months ended YEAR ended
($ in millions except per share Dec 31, Sept.30, Dec 31, Dec 31, Dec 31,
amounts) 2016 2016 2015 2016 2015
-------------------------------------------------------------------------------
TOTAL NET EARNINGS (69) 24 (21) (52) 36
Less adjustments (see MD&A) 110 9 16 166 2
-------------------------------------------------------------------------------
ADJUSTED NET EARNINGS FROM 40 33 (5) 114 38
CONTINUING OPERATIONS
Less portion attributable to non- (1) 10 4 21 18
controlling interests
-------------------------------------------------------------------------------
ATTRIBUTABLE TO SHAREHOLDERS 43 23 (9) 93 20
Divided by weighted average number 93 92 48 81 43
of O/S shares
-------------------------------------------------------------------------------
ADJUSTED NET EARNINGS PER SHARE
(BASIC) $0.44 $0.25 ($0.18) $1.15 $0.47
FROM CONTINUING OPERATIONS
-------------------------------------------------------------------------------
2017 OUTLOOK: FURTHER PRODUCTION GROWTH AND AISC REDUCTION
* Production is expected to increase to 600,000 - 640,000 ounces (excluding
Houndé) in 2017 as improvements at Karma and Nzema are expected to more than
compensate for Agbaou returning to a normalized production level after a
record-breaking year. As was the case in 2016, production is expected to
fluctuate throughout the year due to mine plan sequences, with a peak
towards the middle of the year.
Table 19: Production Guidance, koz
+-----------------------+
on a 100% basis 2016 ACTUAL | 2017 GUIDANCE |
--------------------------------------+-----------------------+
Agbaou 195,505 | 175,000 - 180,000 |
| |
Tabakoto 162,817 | 150,000 - 160,000 |
| |
Nzema 87,710 | 100,000 - 110,000 |
| |
Ity 75,867 | 75,000 - 80,000 |
| |
Karma 61,813 | 100,000 - 110,000 |
--------------------------------------+-----------------------+
GROUP-WIDE PRODUCTION 583,712 | 600,000 - 640,000 |
--------------------------------------+-----------------------+
* Group AISC is expected to continue to decrease to $860-905/oz due to the
full year benefit of Karma, optimizations at Nzema and Tabakoto, and cost
reduction programs. As with production, AISC are expected to fluctuate
throughout the year with lower costs expected in the second half.
Table 20: AISC Guidance, $/oz
+---------------+
In $/oz 2016 ACTUAL | 2017 GUIDANCE |
---------------------------------------+---------------+
Agbaou 534 | 660 - 700 |
| |
Tabakoto 1,027 | 950 - 990 |
| |
Nzema 1,167 | 895 - 940 |
| |
Ity 756 | 740 - 780 |
| |
Karma 738 | 750 - 800 |
---------------------------------------+---------------+
MINE-LEVEL AISC 820 | 800 - 850 |
| |
Corporate G&A 46 | 37 - 34 |
| |
Sustaining exploration 18 | 23 - 22 |
---------------------------------------+---------------+
GROUP AISC 884 | 860 - 905 |
---------------------------------------+---------------+
* Exploration will continue to be an increased focus in 2017 with a company-
wide exploration program of roughly $40 million (up approximately 20% over
2016 and more than double that of 2015), totaling 285,000 meters of
drilling. Mine related exploration is expected to total $35 million and in
addition approximately $5 million has been allocated for grassroots
exploration programs.
Table 21: Exploration Guidance, $m
On a 100% basis 2017 GUIDANCE
-----------------------------------------------------
Agbaou 7
Tabakoto 9
Ity 10
Karma 4
Houndé 5
-----------------------------------------------------
EXPLORATION EXPENDITURES FOR MINES 35
Grassroots exploration expense 5
-----------------------------------------------------
TOTAL EXPLORATION EXPENDITURES 40
-----------------------------------------------------
* As detailed in the above mine sections, sustaining and non-sustaining
capital allocations for 2017 amount to $65 million and $35 million
respectively, in total up approximately $25 million over 2016 due to the
addition of Karma. Growth projects amount to $225 million for the Houndé
construction, Karma optimization and Ity CIL project.
Table 22: Capital Expenditure Guidance, $m
SUSTAINING NON-SUSTAINING GROWTH
In $m CAPITAL CAPITAL PROJECTS
----------------------------------------------------
Agbaou 20 - -
Tabakoto 20 - -
Nzema 5 12 -
Ity 10 4 10
Karma 10 19 35
Houndé - - 180
----------------------------------------------------
TOTAL 65 35 225
----------------------------------------------------
* Due to the expected increased production and lower AISC, the Free Cash Flow
before growth projects (and before working capital movement, tax and
financing costs) is projected to increase to circa $150 million, based on
the 2016 realized gold price of circa $1,240/oz, and using the mid-point of
2017 production and AISC/oz guidance ranges.
* Based on a more conservative gold price of $1,200/oz, the Free Cash Flow
before growth projects (and before working capital movement, tax and
financing costs) is projected to be $125 million, with the gold price
sensitivity as shown in Table 10 below.
Table 23: Free Cash Flow Guidance based on Production and AISC Guidance Mid-
points, $m
In $m $1,100/oz $1,200/oz $1,300/oz
-------------------------------------------------------------------------------
NET REVENUE (based on production guidance mid- 685 725 785
point)
Mine level AISC costs (based on AISC guidance (510) (510) (510)
mid-point)
Corporate G&A (21) (21) (21)
Sustaining exploration (14) (14) (14)
-------------------------------------------------------------------------------
GROUP AISC MARGIN 140 180 240
Non-sustaining mine exploration (20) (20) (20)
Non-sustaining capital (35) (35) (35)
-------------------------------------------------------------------------------
FREE CASH FLOW BEFORE GROWTH PROJECTS 85 125 185
(and before WC, tax and financing cost)
-------------------------------------------------------------------------------
* The short-term Gold Revenue Protection Strategy put in place when the Houndé
construction was launched in April 2016 will end in June 2017. The remaining
gold collar program covers a total of approximately 187,000 ounces,
representing approximately 60% of Endeavour's total estimated gold
production for the period, with a floor price of $1,200/oz and ceiling price
of $1,400/oz.
* As shown in Table 10, within our collar gold price boundaries of $1,200/oz
to $1,400/oz, the Free Cash Flow variation to each $100/oz fluctuation is
roughly $60 million. Thanks to the Gold Revenue Protection program, if the
gold price were to drop below $1,200/oz in 2017, this fluctuation is reduced
to roughly $40 million per $100/oz change.
CONFERENCE CALL AND LIVE WEBCAST
The 2016 Fourth Quarter and Year End Financials will be released before-market
open on March 7, 2017. Management will host a conference call and live webcast
on Tuesday, March 7, 2017, at 10:00am Toronto time (EST), 3:00pm London time
(GMT), 4:00pm Paris time (CET), to discuss the Company's financial results.
The live webcast can be accessed through the following link:
http://edge.media-server.com/m/p/ei9msxtz
Analysts and interested investors are also invited to participate and ask
questions using the dial-in numbers below:
International: +1646 254 3361
North American toll-free: 1877 280 2342
UK toll-free: 0800 279 4992
Australian toll-free: 1800 027 830
Confirmation code: 8720003
Click here to add Webcast reminder to Outlook Calendar
Webcast Access for mobile devices - QR code:
Access the live and On-Demand version of the webcast from mobile devices running
iOS and Android.
A replay of the conference call and webcast will be available on Endeavour's
website.
QUALIFIED PERSONS
Adriaan "Attie" Roux, Pr.Sci.Nat, Endeavour's Chief Operating Officer, is a
Qualified Person under NI 43-101, and has reviewed and approved the technical
information related to mining operations in this news release.
CONTACT INFORMATION
Martino De Ciccio DFH Public Affairs in Toronto
VP - Strategy & Investor Relations John Vincic, Senior Advisor
+33 (0)1 70 38 36 95 (416) 206-0118 x.224
mdeciccio(at)endeavourmining.com jvincic(at)dfhpublicaffairs.com
Brunswick Group LLP in London
Carole Cable, Partner
+44 7974 982 458
ccable(at)brunswickgroup.com
ABOUT ENDEAVOUR MINING CORPORATION
Endeavour Mining is a TSX-listed intermediate gold producer, focused on
developing a portfolio of high quality mines in the prolific West-African
region, where it has established a solid operational and construction track
record.
Endeavour is ideally positioned as the major pure West-African multi-operation
gold mining company, operating 5 mines in Côte d'Ivoire (Agbaou and Ity),
Burkina Faso (Karma), Mali (Tabakoto), and Ghana (Nzema). In 2016, it expects to
produce between 575koz and 610koz at an AISC of US$870 to US$920/oz. Endeavour
is currently building its Houndé project in Burkina Faso, which is expected to
commence production in Q4-2017 and to become its flagship low-cost mine with an
average annual production of 190koz at an AISC of US$709/oz over an initial 10-
year mine life based on reserves. The development of the Houndé project is
expected to lift Endeavour's group production +900kozpa and decrease its average
AISC to circa $800/oz by 2018, while exploration aims to extend all mine lives
to +10 years.
Corporate Office: 5 Young St, Kensington, London W8 5EH, UK
This news release contains "forward-looking statements" including but not
limited to, statements with respect to Endeavour's plans and operating
performance, the estimation of mineral reserves and resources, the timing and
amount of estimated future production, costs of future production, future
capital expenditures, 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
Unternehmensinformation / Kurzprofil:
Datum: 07.03.2017 - 14:12 Uhr
Sprache: Deutsch
News-ID 528688
Anzahl Zeichen: 65579
contact information:
Town:
George Town, Grand Cayman
Kategorie:
Business News
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