Endeavour Reports Q2-2017 Results; On-Track to Meet Full Year Guidance
(Thomson Reuters ONE) -
ENDEAVOUR REPORTS Q2-2017 RESULTS; ON-TRACK TO MEET FULL YEAR GUIDANCE
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OPERATIONAL AND FINANCIAL Highlights
* Production of 152koz in Q2 and 311koz for H1, on track to meet FY-2017
guidance of 600-640koz
* AISC of $897/oz in Q2 and $901/oz for H1, on track to meet FY-2017 guidance
of $860-905/oz with costs expected to continue to trend lower in H2
* Stronger focus on exploration as expenditures increased from $12m in H1-
2016 to $28m in H1-2017
* Free Cash Flow Before Growth Projects (and before interest, WC, tax and
financing cost) of $65m in H1-2017, up 8% over H1-2016 despite greater
exploration expenditures; on track to meet FY-2017 guidance of $125m
* Adusted EBITDA of $111m in H1-2017, up 10% over H1-2016
* Net Debt increased to $183m from $62m at the end of Q1-2017 due to Houndé
construction spend
* Well positioned to fund growth with $215m in available sources of financing
and liquidity at quarter-end, compared to only $83m remaining to spend on
the Houndé construction
* Adjusted EPS of $0.11 for Q2, totaling $0.23 for H1-2017
Project Highlights
* Houndé construction remains on-time and on-budget; first gold pour expected
in Q4-2017
* Optimization Study and investment decision for the Ity CIL Project expected
in September; plant capacity increase from 3 Mtpa to 4 Mtpa under
consideration following 1.5Moz increase in Indicated Resources
George Town, August 1, 2017 - Endeavour Mining (TSX:EDV) (OTCQX:EDVMF) is
pleased to announce its financial and operating results for the quarter ended
June 30, 2017, with highlights provided in the table below.
Table 1: Key Operational and Financial Highlights
QUARTER ENDED(1) SIX MONTHS ENDED
Jun. 30, Mar. 31, Jun. 30, Jun. 30, Jun. 30, Q2-17
2017 2017 2016 2017 2016 vs. Q2-16
-------------------------------------------------------------------------------
Gold Production, oz 152,283 158,640 138,487 310,923 261,876 +19%
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Realized Gold Price,
$/oz 1,219 1,190 1,257 1,204 1,225 (2%)
AISC, $/oz 897 905 901 901 896 +1%
All-in Sustaining 321 285 356 303 330 (8%)
Margin, $/oz
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All-in Sustaining
Margin, $m 49 46 45 95 82 +16%
Free Cash Flow
Before Growth 33 32 29 65 61 +8%
Projects(2), $m
Adjusted EBITDA, $m 64 47 56 111 101 +10%
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Net Debt At Period (183) (62) (26) (183) (26) na
End, $m
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Earnings From Mine
Operations, $m 38 27 44 65 71 (8%)
Basic Net Earnings 0.14 (0.08) (0.27) 0.06 (0.25) na
(Loss), $/share
Adjusted Net 0.11 0.12 0.27 0.23 0.39 (41%)
Earnings, $/share
-------------------------------------------------------------------------------
Reference MD&A for complete for more details.
1) All figures exclude discontinued Youga operation
2) Free Cash Flow before Growth Projects stated before WC, tax & financing
costs, Houndé and Karma
Sébastien de Montessus, President & CEO, stated: "The momentum we injected into
our business in 2016 has carried over into the first half of 2017 and is
reflected in our results across our portfolio. Our team continues to make steady
progress against the four strategic pillars we outlined last year and we are on
track to meet the full year guidance.
On the operational front, our key priorities include the continued focus on cost
optimization, efficient procurement and improved synergies across the
organization while continuing to operate to the highest safety standards. On the
development front, our Houndé project remains on-time and on-budget with first
gold pour still on track for the fourth quarter of 2017. At Ity, we are
finalising an optimization study to take advantage of the increased resource
base, which should support a material increase to the plant size. Across our
portfolio, we are also continuing to see the benefits of our reinvigorated
exploration program which has begun to increase resources and confirmed new
discoveries in support of our five-year strategic plan and targets.
Our focus on active portfolio management resulted in the acquisition of Avnel
Mining, which added the Kalana Gold project in Mali to our project development
pipeline. Kalana is another high-quality project with exploration upside that
fits our strategic portfolio criteria and strengthens our construction pipeline
beyond the completion of the Houndé and Ity CIL projects.
2017 is an important transition year for Endeavour and we look forward to the
remainder of the year as we advance projects and other strategic initiatives in
pursuit of our longer term goal of becoming a leading African gold producer."
PRODUCTION & AISC ON TRACK TO MEET FULL YEAR GUIDANCE
* Group production totaled 152koz in Q2-2017 and 311koz for H1-2017, on track
to meet full year guidance of 600-640koz.
* The Group's production in Q2-2017 decreased by 7koz (-4%) compared to
Q1-2017, in line with projections, mainly due to an 8koz decrease at
Karma following its over-performance in Q1-2017.
* The Group's production from continuing operations in H1-2017 increased
by 49koz (+19%) compared to H1-2016, mainly due to the addition of Karma
and asset optimization work done at Tabakoto and Nzema which offset the
decreased Ity production, while Agbaou production remained fairly flat.
* Group AISC amounted to $897/oz in Q2 and $901/oz for H1, on track to meet
FY-2017 guidance of $860-905/oz with costs expected to continue to trend
lower throughout the year as a result of increased production from Karma and
Nzema, better grades at Ity.
* The Group's AISC in Q2-2017 decreased slightly compared to Q1-2017, as
reductions at Agbaou and Ity offset increases at Tabakoto and Nzema.
* The Group's AISC for H1-2017 remained fairly flat over H1-2016 despite a
$14/oz increase in sustaining exploration, in line with Endeavour's
reinvigorated exploration strategy.
Table 2: Group Production, koz
QUARTER ENDED SIX MONTHS ENDED 2017 FULL-
(All amounts in YEAR
koz, on a 100% Jun. 30, Mar. 31, Jun. 30, Jun. 30, Jun. 30, GUIDANCE
basis) 2017 2017 2016 2017 2016
-------------------------------------------------------------------------------
Agbaou 45 42 46 87 89 175 - 180
-------------------------------------------------------------------------------
Tabakoto 41 43 39 84 78 150 - 160
-------------------------------------------------------------------------------
Nzema 27 26 20 53 40 100 - 110
-------------------------------------------------------------------------------
Ity 14 16 21 30 43 75 - 80
-------------------------------------------------------------------------------
Karma 24 32 12 56 12 100 - 110
-------------------------------------------------------------------------------
PRODUCTION FROM 311 262
CONTINUING 152 159 138 600 - 640
OPERATIONS
-------------------------------------------------------------------------------
Youga (divested - - - - 8
in March 2016)
-------------------------------------------------------------------------------
TOTAL PRODUCTION 152 159 138 311 270 600 - 640
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Table 3: Group All-In Sustaining Costs, US$/oz
QUARTER ENDED SIX MONTHS ENDED 2017 FULL-
YEAR
(All amounts in Jun. 30, Mar. 31, Jun. 30, Jun. 30, Jun. 30, GUIDANCE
US$/oz) 2017 2017 2016 2017 2016
-------------------------------------------------------------------------------
Agbaou 606 660 525 631 525 660 - 700
-------------------------------------------------------------------------------
Tabakoto 1,054 975 1,061 1,013 1,066 950 - 990
-------------------------------------------------------------------------------
Nzema 985 951 1,266 967 1,212 895 - 940
-------------------------------------------------------------------------------
Ity 780 879 775 838 742 740 - 780
-------------------------------------------------------------------------------
Karma 755 748 - 751 - 750 - 800
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MINE-LEVEL AISC 832 840 845 836 842 800 - 850
-------------------------------------------------------------------------------
Corporate G&A 42 37 44 39 41 37 - 34
-------------------------------------------------------------------------------
Sustaining 23 29 12 26 12 23 - 22
Exploration
-------------------------------------------------------------------------------
GROUP AISC 897 905 901 901 896 860 - 905
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AGBAOU MINE
Q2 vs Q1-2017 Insights
* Production increased 8% due to more tonnes processed and better grades which
offset the slightly lower recovery rate.
* Mining activity has increased due to improved equipment availability.
* Mill throughput continues to perform well, slightly up over Q1, and
achieving an annualized throughput of 2.75 million tonnes with an oxide
to transitional/fresh ore blend of 21% for H1-2017.
* Head grade up 7% as the mining sequence moved from a lower grade oxide
ore area to a higher grade transitional ore area.
* Recovery rates slightly decreased due to processing more transitional
and fresh ore in Q2.
* All-in sustaining decreased by 8% due to higher grades, a lower strip ratio
and lower sustaining costs.
* The mining unit costs decreased due to improved equipment availability
which led to higher volumes mined.
* Processing unit costs increased due to the increase in harder, fresh,
ore put through the plant resulting in increased mill power, higher
reagent consumption, higher general wear and tear on crushing and
grinding equipment, and other maintenance costs.
* Lower sustaining capital costs associated to timing on capital
expenditures
H1-2017 vs H1-2016 Insights
* While production remained fairly flat, AISC increased as Agbaou moved from
processing only soft ore in H1-2016 to processing 21% hard ore in H1-2017,
as shown in Table 6
Table 4: Agbaou Performance Indicators
For The Quarter Ended Q2-2017 Q1-2017 Q2-2016
--------------------------------------------------------------
Tonnes ore mined, kt 709 624 656
Strip ratio (incl. waste cap) 8.81 9.19 8.02
Tonnes milled, kt 693 683 743
Grade, g/t 2.23 2.09 2.15
Recovery rate, % 94% 95% 97%
--------------------------------------------------------------
PRODUCTION, KOZ 45 42 46
Cash Cost/oz 528 549 436
AISC/OZ 606 660 525
--------------------------------------------------------------
Table 5: Agbaou Half Year Performance Indicators
For The Half Year Ended H1-2017 H1-2016
----------------------------------------------------
Tonnes ore mined, kt 1,333 1,474
Strip ratio (incl. waste cap) 8.98 7.13
Tonnes milled, kt 1,376 1,397
Grade, g/t 2.16 2.20
Recovery rate, % 94% 98%
----------------------------------------------------
PRODUCTION, KOZ 87 89
Cash Cost/oz 538 429
AISC/OZ 631 525
----------------------------------------------------
Table 6: Fresh Ore Break-down and Cost Impact
For The Quarter Ended H1-2017 H1-2016
------------------------------------------------
Impact on throughput
% of hard ore processed 21% 0
Tonnes milled, kt 1,376 1,397
Annualized throughput, Mt 2.75 2.79
------------------------------------------------
Impact on unit costs
Mining costs, $/t moved 2.42 2.11
Tonnes milled, $/t 7.25 6.51
------------------------------------------------
H2-2017 Outlook
* Agbaou remains on track to meet the FY-2017 guidance of 175,000-180,000
ounces at an AISC of $660-700/oz.
* Production is expected to slightly increase in H2-2017 as higher hard ore
grade is expected to compensate for lower mill throughput and recoveries as
the mine continues to progress toward a 50% oxide to fresh/transitional ore
blend.
* AISC are expected to remain within the guided range as sustaining capital
spending is expected to increase with greater waste capitalisation in H1-
2017.
TABAKOTO MINE
Q2 vs Q1-2017 Insights
* Production decreased in Q2-2017 mainly due to reduced open pit and
underground volumes which was offset by the use of stockpiles.
* Open pit production decreased due to lower activity level at Kofi C
which was partially offset by the ramping up of activities at the lower
grade Kofi B deposit.
* Underground production decreased, despite higher grades mined at both
Segala and Tabakoto underground, to due to less tonnage mined and
increased development, which is expected to give access to higher grade
ore zones in H2-12017.
* Processing activities continued to perform well, maintaining stable
throughput and recovery with the contribution from stockpiled ore
processed.
* All-in sustaining costs increased, mainly due to increased sustaining
capital spend.
* Open pit mining unit costs increased due to increased waste mined at
Kofi B and reduced volumes mined at Kofi C as it approaches the end of
its mine life.
* Underground mining unit costs increased due increased development which
impacted volumes mined.
* G&A unit costs decreased 17% in comparison to Q1 due to a focus on cost
reduction programs and timing of expenditures.
* Sustaining capital increased mainly as a result of increased underground
development meters.
H1-2017 vs H1-2016 Insights
* Production increased mainly as a result of higher grades at the Kofi C
deposit, as well as the inclusion of the Kofi B pit.
* AISC decreased due to the benefit of higher production and lower G&A costs
which offset higher mining costs.
Table 7: Tabakoto Performance Indicators
For The Quarter Ended Q2-2017 Q1-2017 Q2-2016
-----------------------------------------------------------------
OP tonnes ore mined, kt 157 217 147
OP strip ratio (incl. waste cap) 8.87 7.70 10.51
UG tonnes ore mined, kt 184 236 220
Tonnes milled, kt 407 405 399
Grade, g/t 3.32 3.50 3.31
Recovery rate, % 94% 94% 95%
-----------------------------------------------------------------
PRODUCTION, KOZ 41 43 39
Cash cost/oz 802 771 829
AISC/OZ 1,054 975 1,061
-----------------------------------------------------------------
Table 8: Tabakoto Half Year Performance Indicators
For The Half Year Ended H1-2017 H1-2016
-------------------------------------------------------
OP tonnes ore mined, kt 374 294
OP strip ratio (incl. waste cap) 8.19 12.39
UG tonnes ore mined, kt 420 453
Tonnes milled, kt 812 805
Grade, g/t 3.41 3.20
Recovery rate, % 94% 94%
-------------------------------------------------------
PRODUCTION, KOZ 84 78
Cash Cost/oz 786 818
AISC/OZ 1,013 1,066
-------------------------------------------------------
H2-2017 Outlook
* Tabakoto is on track to meet its FY-2017 production guidance of 150,000 -
160,000 ounces and the top end of its AISC guidance of $950-990/oz.
* Ongoing cost saving and optimisation programs are underway which include
overhead reduction, centralizing procurement, fleet replacement, and
improvement of equipment availability and mining efficiency.
* Production is expected to be lower in the second half of the year with the
end of Kofi C mining and the full transition to Kofi B and Takakoto North.
ITY MINE
Q2 vs Q1-2017 Insights
* Production decreased due to the recovery rate decline and less stacked
tonnage which was partially offset by better grades.
* Mining activities increased over the previous quarter due to higher
equipment availability, resulting in a 14% increase in ore tonnes mined.
* Stacking activities decreased by 9% due to unexpectedly high rainfall in
June which caused stoppages as the wet and sticky ore was processed.
* Grade increased due to changes in the mine sequence.
* Recovery rates returned to a normalized rate due to ore characteristics
which led to a longer leach cycle.
* All-in sustaining costs decreased due to changes in inventory adjustments
which offset higher mining costs.
* Mining unit costs increased due to improved grade control efforts, as
well as higher fuel consumption as increased haul road maintenance was
needed due to the rain.
* Processing costs per tonne have increased due to the lower stacking
volumes.
H1-2017 vs H1-2016 Insights
* Production decreased as mining shifted to lower grade deposits, stacking
activities were impacted by wet and sticky ore, and recovery rates returning
to normalized levels.
* While mining and processing costs per tonne decreased, the AISC increased as
fixed costs were allocated over reduced production.
Table 9: Ity Performance Indicators
For The Quarter Ended Q2-2017 Q1-2017 Q2-2016
--------------------------------------------------------------
Tonnes ore mined, kt 374 329 383
Strip ratio (incl. waste cap) 4.32 4.44 6.31
Tonnes stacked, kt 243 267 303
Grade, g/t 2.15 1.90 2.10
Recovery rate, % 84% 98% 101%
--------------------------------------------------------------
PRODUCTION, KOZ 14 16 21
Cash cost/oz 625 750 602
AISC/OZ 780 879 775
--------------------------------------------------------------
Table 10: Ity Half Year Performance Indicators
For The Half Year Ended H1-2017 H1-2016
----------------------------------------------------
Tonnes ore mined, kt 703 670
Strip ratio (incl. waste cap) 4.37 4.50
Tonnes stacked, kt 510 607
Grade, g/t 2.02 2.30
Recovery rate, % 91% 95%
----------------------------------------------------
PRODUCTION, KOZ 30 43
Cash cost/oz 697 606
AISC/OZ 838 742
----------------------------------------------------
H2-2017 Outlook
* Ity's production and cost profile is expected to improve over the remainder
of 2017 as the grade profile increases.
* FY-2017 guidance remains unchanged with 75,000 - 80,000 ounces production
expected at an AISC of $740-780/oz.
CIL Project
* On July 27, 2017, Endeavour announced that Indicated Resource has increased
by 1.0 million ounces since the beginning of the year, to reach 3.8 million
ounces. This marks a 1.5 million ounce increase in the Indicated Resource
base since the publication of the November 2016 Feasibility Study ("FS"),
representing a 65% increase.
* A formal investment decision and an updated reserve estimate is expected to
be published in September as part of an Optimization Study ("OS") which is
expected to be based on a circa 4.0Mtpa gravity circuit/Carbon-In-Leach
("CIL") plant, an increase from the previously contemplated 3.0Mtpa plant,
to better capture the value created from recent exploration success.
NZEMA MINE
Q2 vs Q1-2017 Insights
* Production increased due to improved recovery rates and higher grades, which
compensated for lower throughput.
* Mining activities were intentionally slowed in Q2 to match the
processing plant requirement and optimize working capital associated
with stockpiles.
* The completion of the Adamus push-back improved the grade by 19%.
* Quality control processes regarding purchased ore established in the
first quarter led to higher purchased ore grades and an increase in
total ore purchased, as well as an improvement in recovery rates.
* Total mill throughput decreased by 7% in comparison to the previous
quarter due to the increased proportion of fresh ore processed.
* All-in sustaining costs increased due to a decrease in the quantity of gold
sold and increased s sustaining capital spend.
* Mining unit costs were higher due to a decrease in material mined,
longer haul distances, higher drill and blast activity, and grade
control.
* Processing unit costs increased by 3% due to lower throughput and
increases in water treatment cost in the second quarter.
* Sustaining capital increased due to work on the tailings storage
facility lift.
H1-2017 vs H1-2016 Insights
* Production significantly increased and AISC significantly decreased as the
mine is benefiting from higher grade ore following the cutback and from high
quality purchased ore.
Table 11: Nzema Performance Indicators
For The Quarter Ended Q2-2017 Q1-2017 Q2-2016
--------------------------------------------------------------
Tonnes ore mined, kt 352 396 213
Mined ore grade, g/t 2.24 1.89 1.58
Strip ratio (incl. waste cap) 3.01 5.81 7.69
Purchased ore milled, kt 82 78 112
Purchased ore grade, g/t 3.20 3.04 2.97
Total Tonnes milled, kt 362 391 450
Grade, g/t 2.46 2.36 1.63
Recovery rate, % 92% 88% 85%
--------------------------------------------------------------
PRODUCTION, KOZ 27 26 20
Cash cost/oz 838 834 1,174
AISC/OZ 985 951 1,266
--------------------------------------------------------------
Table 12: Nzema Half Year Performance Indicators
For The Half Year Ended H1-2017 H1-2016
----------------------------------------------------
Tonnes ore mined, kt 748 490
Mined ore grade, g/t 2.21 1.35
Strip ratio (incl. waste cap) 4.49 6.27
Purchased ore milled, kt 160 191
Purchased ore grade, g/t 3.12 3.02
Total Tonnes milled, kt 753 909
Grade, g/t 2.41 1.58
Recovery rate, % 90% 86%
----------------------------------------------------
PRODUCTION, KOZ 53 40
Cash cost/oz 836 1,134
AISC/OZ 967 1,212
----------------------------------------------------
H2-2017 Outlook
* Nzema remains on track for the FY-2017 guidance of 100,000 - 110,000 ounces
of production at an AISC of $895-940/oz.
* AISC are expected to continue to decline throughout the year with the grade
profile continuing to improve.
KARMA MINE
Q2 vs Q1-2017 Insights
* Karma production decreased due to less tonnage stacked and lower recovery
rates, partially offset by higher stacked grades.
* Mining activity (waste + ore mined) decreased due to the lower strip
ratio of tonnes mined in the GG2 pit.
* Stacking decreased due to the introduction of harder transitional ore
onto the heap, which also reduced recovery by 5% due to the slow
percolation of the ore.
* All-in sustaining costs remained stable as a lower strip ratio was offset by
a higher unit cost, as well as inventory adjustments.
* Mining costs per tonne increased 7% due to less volume mined as well and
increased blasting activity as the GG2 pit moves into transitional ore.
* Processing costs per tonne increased by 31% due to increased cyanide and
cement consumption associated with the transitional ore, as well as
higher soft rock crusher maintenance costs.
H1-2017 vs H1-2016 Insights
* Karma had its first gold pour in Q2-2016. Its H1-2016 financial data is not
presented for the pre-commercial production period up to October 1, 2016.
Table 13: Karma Performance Indicators*
For The Quarter Ended Q2-2017 Q1-2017 Q1-2016
--------------------------------------------------------------
Tonnes ore mined, kt 1,035 1,050 1,690
Strip ratio (incl. waste cap) 2.49 3.14 2.79
Tonnes stacked, kt 852 954 356
Grade, g/t 1.24 1.07 1.18
Recovery rate, % 83% 87% 90%
--------------------------------------------------------------
PRODUCTION, KOZ 24 32 12
Cash cost/oz 657 661 -
AISC/OZ 755 748 -
--------------------------------------------------------------
Table 14: Karma Half-Year Performance Indicators*
For The Haf Year Ended H1-2017 H1-2016
----------------------------------------------------
Tonnes ore mined, kt 2,085 1,690
Strip ratio (incl. waste cap) 2.82 2.79
Total Tonnes milled, kt 1,806 356
Grade, g/t 1.15 1.18
Recovery rate, % 85% 90%
----------------------------------------------------
PRODUCTION, KOZ 56 12
Cash cost/oz 659 -
AISC/OZ 751 -
----------------------------------------------------
*AISC for the pre-commerical period before October 1, 2016, not available
Optimization Project Insights
* Plant optimization work is progressing well and is expected to lift stacking
capacity in H2-2017 as both the dry and wet plant are expected to be
commissioned in Q3-2017.
2017 Outlook
* FY-2017 guidance remains unchanged with 100,000 - 110,000 ounces planned at
an AISC of $750-800/oz.
* The higher-grade Rambo ore feed will compliment that of the GG2 pit, which
is expected to however cause lower recovery rates due to its higher
transitional and fresh ore content.
* Stacking capacity is expected to increase in the second half of the year
following the completion of the plant optimisation project, which is
progressing on-time.
* Sustaining capital is expected to increase later in the year due to
stripping activities related to the Rambo and GG2 pits.
HOUNDÉ CONSTRUCTION REMAINS ON-TIME AND ON-BUDGET
Construction Achievements To-Date
* Construction is progressing on-time with 90% of the total project complete,
with the first gold pour expected in the fourth quarter of 2017.
* 100% of capital has already been committed to date, reducing cost over-run
risk.
* $198 million has been incurred on the project to date, with the remaining
cash outlay spend amounting to $83 million, as shown in the table below.
Table 15: Remaining capital spend, in $m
-------------------------------------------
UPFRONT PROJECT CAPITAL 328
-------------------------------------------
Cash outlay to date (198)
-------------------------------------------
Mining fleet equipment financing (47)
-------------------------------------------
CASH OUTLAY REMAINING ~83
-------------------------------------------
* 5 million man-hours worked without a lost time injury.
* The 38km long, 90 kilovolt overhead power line construction is 99% complete,
and the system has been commissioned. Power from the national grid is
scheduled for August 2017.
* Open pit pre-strip mining at the main Vindaloo open pit, adjacent to the
processing facility, commenced in late December 2016.
* SAG and ball mill foundation concrete is complete, as well as the TSF (Cell
1) earthworks and rubber lining have been completed.
* The high speed power station is 87% complete with all 16 gensets delivered
and installed.
* The two million liter diesel fuel farm installation has been completed.
* The construction of the water harvest dam, including decant tower, is
complete, with water already being pumped to the water storage dam.
* Construction of the 300-person permanent accommodation village is
approaching completion with only minor works to finish.
* Over 2,000 personnel including contractors are currently employed on-site,
more than 94% of which are Burkinabe.
* The land compensation and relocation process has been successfully
completed. The resettlement site opening ceremony took place on July
29, 2017.
EXPLORATION ACTIVITIES
* In line with Endeavour's strategic exploration focus, the exploration
program increased from $12 million in H1-2016 to $28 million in H1-2017,
with $40 million budgeted for the year.
* In H1-2017, the near-mine exploration expenditures were mainly focused on
Ity and Tabakoto, in line with guidance.
* In addition, greenfield exploration efforts were also conduction on the
80km Greater Ity trend, Liguidi, and other regional exploration properties.
Agbaou
* Exploration progressed well in H1-2017, with a total of approximately
26,000 meters drilled out of the 45,000 meters planned for the year.
* The drill program is focused on the MPN extension, Agbaou south, Niafouta,
Beta extension targets, as well as on other exploration targets located
within 20km from the processing plant.
* A dedicated deeper drilling program will be initiated in H2-2017 targeting
Agbaou's at-depth potential.
* An update to the Reserves and Resources estimate will be made following the
completion of the program in H2-2017.
Table 16: Exploration Expenditure
(Includes expensed, sustaining and non-sustaining)
AREAS OF FOCUS H1-2017 FY-2017 GUIDANCE
-------------------------------------------------
Agbaou 3.1 7.0
Tabakoto 5.2 9.0
Nzema - -
Ity 5.9 10.0
Karma 1.7 4.0
Houndé 3.0 5.0
Other Greenfield 9.2 5.0
-------------------------------------------------
Total 28.0 40.0
-------------------------------------------------
Tabakoto
* As Tabakoto operations are characterized by a short-term mine life, a $9
million exploration program totaling approximately 86,000 meters of drilling
on Tabakoto and Kofi properties has been planned for 2017, of which 48,000
meters were drilled in H1-2017.
* During H1-2017, Tabakoto open pit program focused mainly on drilling the
Kreko and Fougala West targets, for which a maiden Resource is expected
during H2-2017, and on testing all identified exploration targets supported
by the ongoing auger program.
* During H1-2017, underground drilling focused on testing the eastern side
extensions at Segala and the north-east extensions at Tabakoto, with
encouraging preliminary results received.
* In Q2-2017 Endeavour acquired the Bluebird properties, located immediately
to the north and adjacent to Endeavour's Kofi exploration license in Mali,
for $5.2 million. This acquisition allows Endeavour to consolidate its
greenfield exploration portfolio on trend with some of the targets in the
northern part of the Kofi exploration tenement, where positive gold in soil
and auger anomalies were recently discovered. These tenements, located
between Tabakoto / Loulo and Sadiola are considered an underexplored area of
the prolific Senegalo-Malian shear corridor. As it is located 80km to the
north of the Tabakoto processing facility, it would be considered as a
standalone project should exploration be successful.
Ity
* For 2017, a $10 million exploration program totaling approximately 52,500
meters has been planned for the greater Ity area, of which roughly 42,000
meters was completed in H1-2017.
* In H1-2017 drilling focused on Bakatouo, Mont Ity Flat area, Daapleu, and
Colline Sud. Positive results were achieved as the Indicated Resource grew
by 1.0 million ounces since the beginning of the year, to reach 3.8 million
ounces (as announced on July 27, 2017).
* The Le Plaque discovery was announced and a maiden Inferred Resource is
expected by year end.
* A regional auger campaign is underway and drilling was initiated at
Yacetouo, Vavoua, Daapleu southwest, Bakatouo northeast, and on the
Toulepleu exploration license to the southwest of the Ity area.
Karma
* In 2017 a $4 million exploration program totaling approximately 38,000
meters has been planned of which approximately 28,000 meters was completed
in H1-2017.
* During H1-2017, drilling focused on testing the extensions of the Rambo,
Goulagou and North Kao deposits, as well as the Yabonsgo target (6,800
meters drilling completed, waiting on results).
* A maiden Resource is expected to be reached during H2-2017 with the aim of
further extending the mine life.
Houndé
* Following a two year period of no exploration drilling, activities resumed
in 2017 with a $5 million program.
* During H1-2017 a total of 6,400 meters diamond drilling, 2,700 meters of
reverse circulation drilling and 48,300 meters of air-core drilling were
conducted on:
* Bouere with the aim of increased the current resource.
* Kari Pump/Sia/Sianikoui (higher grade exploration targets) which
resulted in positive initial results.
* Grand Espoir, Bombi, Koho, Kari Fault, which initial exploration works.
* Work performed also included advanced soil geochemistry, ground geophysics
on selected targets, regolith and geological mapping.
* H2-2017 activity will concentrate on the most promising exploration targets
identified during the initial campaign.
NET FREE CASH FLOW FROM OPERATIONS
* Gold sales totaled 315koz in H1-2017, up from 248koz in the same period in
2016, mainly due to the addition of the Karma mine, as well as an increase
in production at Nzema and Tabakoto
* The realized gold price in H1-2017 was $1,204/oz (net of the impact of the
Karma stream) compared to $1,225/oz in the same period in 2016
* The All-in Sustaining Margin in H1-2017 increased by 16% over H1-2016 to $95
million
* Free cash flow (before working capital, tax, finance cost, and growth
projects) increased by $4 million in H1-2017 to $65 million, compared to H1-
2016, despite significantly increasing total exploration expenditures.
* Net free cash flow from current operations increased by $8 million in H1-
2017 to $23 million as greater taxes payments at Tabakoto and Ity were
offset by lower working capital variance and interest paid
* Growth projects capex of $127 million incurred in H1-2017 consists of $109
million for the Houndé construction, $16 million for the Karma optimization,
and $2 million for the Ity CIL project.
* Acquisition of mining interests of $59 million incurred in H1-2017 consists
of $54 million for the purchase of an additional 25% stake in the Ity mine
and $5 million for the acquisition of Malian Bluebird exploration tenements
* Net cash outflow in H1-2017 was $39 million as growth project capital and
acquisitions were partly offset by cash flow from operations, a $52 private
placement from La Mancha and debt drawdowns of $78 million.
Table 17: Simplified Cash Flow Statement
SIX MONTHS ENDED
(in US$ million) JUN 30, 2017 JUN 30, 2016
-------------------------------------------------------------------------------
GOLD SOLD, koz 315 248
Gold Price, $/oz 1,204 1,225
REVENUE 379 304
Total cash costs (219) (173)
Royalties (20) (14)
Corporate costs (12) (10)
Sustaining capex (25) (23)
Sustaining exploration (8) (3)
-------------------------------------------------------------------------------
ALL-IN SUSTAINING COSTS ("AISC") 283 222
-------------------------------------------------------------------------------
ALL-IN SUSTAINING MARGIN 95 82
Less: Non-sustaining capital (14) (15)
Less: Non-sustaining exploration (16) (7)
-------------------------------------------------------------------------------
FREE CASH FLOW BEFORE GROWTH PROJECTS
(and before interest, working capital, tax & 65 61
financing costs)
Working capital (23) (25)
Taxes paid (11) (9)
Interest paid (5) (7)
Cash settlements on hedge programs and gold collar (4) (4)
premiums
-------------------------------------------------------------------------------
NET FREE CASH FLOW FROM OPERATIONS 23 15
Growth projects (127) (17)
Exploration expense (4) (2)
Other (foreign exchange gains/losses and other) 2 (1)
Cash received from Youga mineral property interest - 22
Operating cash flow from Youga discontinued - 1
operation
Cash paid on settlement of share appreciation (1) (1)
rights, DSUs and PSUs
Bridge loan advanced to True Gold - (15)
True Gold cash acquired, less acquisition COC - 10
payments
Acquisition and restructuring costs (2) (18)
Acquisition of mining interests (59) -
Net equity proceeds 52 73
Proceeds (repayment) of long-term debt 78 (43)
-------------------------------------------------------------------------------
CASH INFLOW (OUTFLOW) FOR THE PERIOD (39) 24
-------------------------------------------------------------------------------
Notes: Youga has been deconsolidated from the Net Free Cash Flow From
Operations. Additional notes available in Endeavour's MD&A filed on Sedar.
BALANCE SHEET AND FINANCING & LIQUIDITY SOURCES
* As expected, the Net Debt position increased from $26 million as at the end
of December, to $183 million as at the end of June, 2017, mainly due to $127
million spent on growth project, $39 million added from Houndé financing
agreement, and $59 million of acquisitions made which were partially offset
by the $52 private placement from La Mancha Holding S.A.R.L..
* Endeavour remains well positioned to fund growth with $215 million as at
June 30, 2017, which includes its $85 million cash position and $130 million
undrawn on the Revolving Credit Facility ("RCF"), in addition to its strong
cash flow generation.
* Endeavour is currently re-negotiating its existing $350 million RCF and
received credit-approved commitments, indicating potential to upsize the
facility to above $500 million from top-tier mining banks received, subject
to legal documentation. This negotiation is expected to improve the current
terms, reflecting the improved credit story, and would provide a very high
margin of maneuver to fund Endeavour's upcoming growth projects.
Table 18: Net Debt Position, in US$m
JUN. 30, MAR. 31, DEC. 31,
(in US$ million) 2017 2017 2016
---------------------------------------------------------------------------
Cash 85 87 124
Less: Equipment finance lease (8) (9) (10)
Less: Houndé financing agreement (39) - -
Less: Drawn portion of $350 million RCF (220) (140) (140)
---------------------------------------------------------------------------
NET DEBT POSITION (183) (62) (26)
---------------------------------------------------------------------------
NET DEBT / ADJUSTED EBITDA (LTM) RATIO 0.75 0.27 0.11
---------------------------------------------------------------------------
ADJUSTED NET EARNINGS
* Net earnings of $15 million were realized in H1-2017 compared to a loss of
$8 million in H1-2016.
* In H1-2017, total adjustments of $16 million were made, mainly related to
unrealized loss on financial instruments, stock-based compensation,
acquisition and restructuring costs, non-cash inventory adjustments, and
deferred income tax expense.
* Adjusted net earnings attributable to shareholders amounted to $22 million
in H1-2017, representing an adjusted net earnings per share of $0.23.
Table 19: Net Earnings and Adjusted Earnings
Three months ended SIX MONTHS ENDED
($ in millions except per share JUN. 30, MAR 31, JUN. 30, Jun. 30, Jun. 30,
amounts) 2017 2017 2016 2017 2016
-------------------------------------------------------------------------------
TOTAL NET EARNINGS (LOSS) 17 (2) (15) 15 (8)
Less adjustments (see MD&A non- 2 18 42 16 47
GAAP section)
-------------------------------------------------------------------------------
ADJUSTED NET EARNINGS FROM 15 16 26 31 39
CONTINUING OPERATIONS
Less portion attributable to 4 5 6 9 12
non-controlling interests
-------------------------------------------------------------------------------
ATTRIBUTABLE TO SHAREHOLDERS 11 11 21 22 27
Divided by weighted average 96 94 78 96 64
number of O/S shares
-------------------------------------------------------------------------------
ADJUSTED NET EARNINGS PER SHARE
(BASIC) 0.11 0.12 0.27 0.23 0.39
FROM CONTINUING OPERATIONS*
-------------------------------------------------------------------------------
*Net non-cash inventory adjustments per the adjusted EBITDA have been added in
the current and comparative periods.
CONFERENCE CALL AND LIVE WEBCAST
Management will host a conference call and live webcast today at 8:00am Toronto
time (EST) to discuss the Company's financial results.
The conference call and live webcast are scheduled today at:
5:00am in Vancouver
8:00am in Toronto and New York
1:00pm in London
8:00pm in Hong Kong and Perth
The live webcast can be accessed through the following link:
http://edge.media-server.com/m/p/69jj4pip
Analysts and interested investors are also invited to participate and ask
questions using the dial-in numbers below:
International: +44(0)20 3427 1919
North American toll-free: 1877 280 2296
UK toll-free: 0800 279 4977
Confirmation code: 4152866
The conference call and webcast will be available for playback on Endeavour's
website.
Click here to add Webcast reminder to Outlook Calendar
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
+44 203 640 8665 (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 2017, it expects to
produce between 600koz and 640koz at an AISC of US$860 to US$905/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 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. AISC,
all-in sustaining costs at the mine level, cash costs, operating EBITDA, all-in
sustaining margin, free cash flow, net free cash flow, free cash flow per share,
net debt, and adjusted earnings are non-GAAP financial performance measures with
no standard meaning under IFRS, further discussed in the section Non-GAAP
Measures in the most recently filed Management Discussion and Analysis.
Houndé Project:
http://hugin.info/171882/R/2124584/810727.png
View Presentation in PDF Format:
http://hugin.info/171882/R/2124584/810775.pdf
View News Release in PDF Format:
http://hugin.info/171882/R/2124584/810728.pdf
This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Endeavour Mining Corporation via GlobeNewswire
Unternehmensinformation / Kurzprofil:
Datum: 01.08.2017 - 12:46 Uhr
Sprache: Deutsch
News-ID 554826
Anzahl Zeichen: 59256
contact information:
Town:
George Town, Grand Cayman
Kategorie:
Business News
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"Endeavour Reports Q2-2017 Results; On-Track to Meet Full Year Guidance"
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