ENDEAVOUR REPORTS Q1-RESULTS FY-2023 production and AISC guidance on track
NEWS RELEASE – LSE & TSX: EDV All amounts in US$
ENDEAVOUR REPORTS Q1-RESULTS FY-2023 production and AISC guidance on track • Growth projects on budget and on schedule for 2024 OPERATIONAL AND FINANCIAL HIGHLIGHTS(for continuing operations)
- Q1-2023 production of 301koz at an AISC of $1,022/oz; On track to achieve full year 2023 guidance with performance weighted towards H2-2023
- EBITDA of $206m for Q1-2023; Adjusted EBITDA of $279m for Q1-2023, down 3% over Q4-2022
- Net Earnings of $4m for Q1-2023; Adjusted Net Earnings of $70m (or $0.28/sh) for Q1-2023, up 8% over Q4-2022
- Operating Cash Flow before changes in WC of $242m (or $0.98/sh) for Q1-2023, down 14% over Q4-2022
- Strong financial position at quarter end with $810m cash position in addition to $285m in available sources of financing
- Reimbursed in cash the $330m principal amount of its convertible bond in Q1-2023 to minimise shareholder dilution
ROBUST SHAREHOLDER RETURNS
- H2-2022 dividend of $100m was paid in Q1-2023, amounting to $400m paid since early 2021
- Share buybacks continue to supplement shareholder returns with $11m or 0.4 million shares repurchased in Q1-2023, amounting to $244m or 11.1 million shares repurchased since early 2021
ORGANIC GROWTH
- Sabodala-Massawa expansion and the Lafigué greenfield project are both on budget, with 70% and 46% of the initial capital committed respectively, and on schedule for Q2-2024 and Q3-2024 respectively
- Strong exploration effort with $22m spent in Q1-2023 out of FY-2023 exploration guidance of $70m; updated resource for Tanda-Iguela greenfield discovery expected to be published in H2-2023
London, 4 May 2023 – Endeavour Mining plc (LSE:EDV, TSX:EDV, OTCQX:EDVMF) (“Endeavour”, the “Group” or the “Company”) is pleased to announce its operating and financial results for Q1-2023, with highlights provided in Table 1 below.
Table 1: Highlights for Continuing Operations1 THREE MONTHS ENDED
| All amounts in US$ million unless otherwise specified | 31 March 2023 | 31 December 2022 | 31 March 2022 | Δ Q1-2023 vs. Q4-2022 |
|---|---|---|---|---|
| OPERATING DATA Gold Production, koz Gold sold, koz All-in Sustaining Cost2, $/oz Realised Gold Price, $/oz | 355 357 352 359 954 848 1,758 1,891 | |||
| 301 | (15)% (12)% +7% +7% | |||
| 309 | ||||
| 1,022 | ||||
| 1,886 | ||||
| CASH FLOW Operating Cash Flow before Changes in WC Operating Cash Flow before Changes in WC2, $/sh Operating Cash Flow Operating Cash Flow2, $/sh | 281 368 1.14 1.48 311 297 1.26 1.20 | |||
| 242 | (14)% (14)% (34)% (34)% | |||
| 0.98 | ||||
| 206 | ||||
| 0.83 | ||||
| PROFITABILITY Net Earnings/(Loss) Attributable to Shareholders Net Earnings/(Loss), $/sh Adj. Net Earnings Attributable to Shareholders2 Adj. Net Earnings2, $/sh EBITDA2 Adj. EBITDA2 | (256) (57) (1.04) (0.23) 65 126 0.26 0.51 (110) 218 288 391 | |||
| 4 | n.a. | |||
| 0.02 | n.a. | |||
| 70 | +8% +8% | |||
| 0.28 | ||||
| 206 | n.a. | |||
| 279 | (3)% | |||
| SHAREHOLDER RETURNS Shareholder dividends paid Share buybacks Total Shareholder Returns | — 70 24 31 24 101 | |||
| 100 | n.a. | |||
| 11 | (54)% | |||
| 111 | +363% | |||
| ORGANIC GROWTH Growth capital spend2 | 55 8 | |||
| 72 | +31% | |||
| FINANCIAL POSITION HIGHLIGHTS Cash Principal debt Net Cash, (Net Debt)2 | 951 1,047 (830) (880) 121 167 | |||
| 810 | (15)% +4% | |||
| (860) | ||||
| (50) | n.a. |
1 Continuing Operations excludes the Karma mine which was divested on 10 March 2022. 2This is a non-GAAP measure, see non-GAAP section of the Management Report.
Management will host a conference call and webcast today, 4 May 2023, at 8:30 am EST / 1:30 pm BST. For instructions on how to participate, please refer to the conference call and webcast section at the end of the news release.
Sebastien de Montessus, President and CEO, commented: “During the quarter, we continued to deliver in line with our expectations and we remain well positioned to unlock near-term value for all of our stakeholders.
We began the year with momentum and financial strength, positioning us to deliver against this year’s capital allocation priorities of funding growth while maintaining our attractive shareholder returns programme, which has already returned $644 million since its launch in 2021. Furthermore, to minimise shareholder dilution we settled the principal of our $330 million convertible notes, in cash during the quarter.
On the operational front, we are tracking in line with our guided trend, as we expect production weighted towards the second half of the year due to mine sequencing across the group.
On the growth front, we are pleased to report that the Sabodala-Massawa expansion and the Lafigué greenfield build are progressing well, with both projects on time and on budget with first production expected in Q2 and Q3 2024 respectively. Our goal is to then increase our shareholder returns once these organic growth projects are completed.
Our exploration programme continues to provide us with a strong platform for future growth. Further drilling at last year’s Tanda-Iguela discovery in Côte d’Ivoire continues to demonstrate its potential to become another cornerstone asset and we will provide a resource update later this year.
We look forward to progressing our strategy this year to further strengthen our business and benefit all our stakeholders.”
OPERATING SUMMARY
- Strong safety performance for the Group, with a Lost Time Injury Frequency Rate (“LTIFR”) of 0.02 for the trailing twelve months ending 31 March 2023.
- The Group remains on track to achieve its FY-2023 production guidance of 1,325 - 1,425koz at an AISC of $940 - 995/oz, with performance weighted towards H2-2023 as previously guided.
- Q1-2023 production from continuing operations amounted to 301koz, a decrease of 54koz or 15% over Q4-2022 due to FY-2023 production being weighted towards H2-2023. The decrease was mainly due to lower production at Sabodala- Massawa (down 42koz) due to the mine sequence as lower grades were processed from the Sabodala pit as the focus was on waste stripping to prepare for in-pit tailings deposition and development of the new Massawa North Zone satellite pit. Houndé and Boungou had lower production as a result of a focus on stripping activity to open up higher grade mining areas for later in the year. Mana had slightly lower production due to the focus on underground development to increase access to underground production stopes later in the year. This was partially offset by higher production at Ity and Wahgnion in line with the mine sequence.
- Q1-2023 AISC from continuing operations amounted to $1,022/oz, an increase of $68/oz or 7% over Q4-2022 due to lower gold sales volumes in addition to higher costs across several mines. Costs increased at Boungou and Houndé as a result of mining lower-grade zones at higher strip ratios as the mine plan focussed on stripping activity. Costs were higher at Sabodala-Massawa due to the above mentioned lower grades processed and higher strip ratio. At Mana, higher costs were the result of sequencing lower grade ore from the underground development to prioritise the advancement of the third decline into Wona underground. These AISC increases were partially offset by lower AISC at Ity and Wahgnion due to lower processing costs as a result of the benefit of softer oxide ore representing a larger proportion of the mill feed.
Table 2: Group Production THREE MONTHS ENDED
| All amounts in koz, on a 100% basis | 31 March 2023 | 31 December 2022 | 31 March 2022 | 2023 FULL-YEAR GUIDANCE |
|---|---|---|---|---|
| Boungou Houndé Ity Mana Sabodala-Massawa Wahgnion | 19 | 26 63 82 | 34 | 115 — 125 |
| 47 91 | 73 | 270 — 285 | ||
| 72 | 285 — 300 | |||
| 44 | 46 53 | 190 — 210 | ||
| 61 39 | 103 36 | 96 | 315 — 340 150 — 165 | |
| 29 | ||||
| PRODUCTION FROM CONTINUING OPERATIONS | 301 | 355 | 357 | 1,325 — 1,425 |
Table 3: Group All-In Sustaining Costs THREE MONTHS ENDED
| All amounts in US$/oz | 31 March 2023 | 31 December 2022 | 31 March 2022 | 2023 FULL-YEAR GUIDANCE | |
|---|---|---|---|---|---|
| Boungou Houndé Ity Mana Sabodala-Massawa Wahgnion Corporate G&A | 1,252 | 1,118 901 | 985 — 1,075 | ||
| 1,154 | 969 771 | 850 — 925 | |||
| 732 | 847 728 | 840 — 915 | |||
| 1,130 | 999 661 1,376 | 1,000 | 950 — 1,050 | ||
| 787 | 578 | 760 — 810 1,250 — 1,350 | |||
| 1,354 | 1,351 | ||||
| 46 | 43 40 | 35 | |||
| AISC FROM CONTINUING OPERATIONS | 1,022 | 954 848 | 940 — 995 |
- Sustaining capital expenditure outlook for FY-2023 remains unchanged at $165.0 million, of which $33.3 million has been incurred in Q1-2023. Likewise, non-sustaining capital expenditure outlook for FY-2023 remains unchanged at $205.0 million, of which $94.5 million has been incurred in Q1-2023.
- Growth capital expenditure outlook for FY-2023 remains unchanged at $400.0 million. In Q1-2023, $72.2 million was incurred, of which $26.4 million was incurred at Sabodala-Massawa, $43.0 million was incurred at Lafigué and $2.8 million was incurred at the Kalana project.
SHAREHOLDER RETURNS PROGRAMME
- Endeavour’s shareholder returns programme is composed of a minimum progressive dividend that may be supplemented with additional dividends and share buybacks, providing the prevailing gold price remains above $1,500/oz, and that Endeavour’s leverage remains below 0.5x Net Debt / adjusted EBITDA. The minimum dividend commitment for FY-2023 was set at $175.0 million.
- As previously announced, Endeavour’s FY-2022 dividend amounted to $200.0 million or approximately $0.81 per share, which represented $50.0 million or 33% more than the minimum dividend commitment for the year. Endeavour paid its H2-2022 dividend of $100.0 million or $0.40 per share on 28 March 2023.
- Shareholder returns continued to be supplemented with share buybacks, with $10.9 million or 0.4 million shares repurchased in Q1-2023. Since the commencement of the buyback programme on 9 April 2021, a total of $243.5 million, or 11.1 million shares have been repurchased as at 31 March 2023.
- Endeavour renewed its Normal Course Issuer Bid (“NCIB”) for its share buyback programme on 22 March 2023, and is entitled to repurchase up to 5% of its total issued and outstanding shares or 12,387,688 shares, during the 12 month period of the programme, and up to 25% of the average daily trading volume or 134,817 shares during each trading day, excluding purchases made in accordance with the block purchase exemptions under applicable TSX policies. All ordinary shares repurchased under the share repurchase programme will be cancelled.
- Since the launch of the Company’s shareholder returns programme in early 2021, a cumulative $643.5 million has been delivered to shareholders, comprised of $400.0 million in dividends and $243.5 million in share buybacks.
CASH FLOW AND LIQUIDITY SUMMARY
The table below presents the cash flow and net debt position for Endeavour for the three month periods ended 31 March 2023, 31 December 2022, and 31 March 2022, with accompanying explanations below.
Table 4: Cash Flow and Net Debt THREE MONTHS ENDED
| All amounts in US$ million unless otherwise specified | 31 March 2023 | 31 December 2022 | 31 March 2022 | |
|---|---|---|---|---|
| Net cash from/(used in), as per cash flow statement: Operating cash flows before changes in working capital from continuing operations Changes in working capital Cash generated from discontinued operations | 281 368 30 (70) — 5 | |||
| 242 | ||||
| (37) | ||||
| — | ||||
| Cash generated from operating activities [1] Cash used in investing activities [2] Cash used in financing activities [3] Effect of exchange rate changes on cash | 206 | 311 302 (172) (94) (54) (48) 34 (20) | ||
| (200) | ||||
| (156) | ||||
| 9 | ||||
| (DECREASE)/INCREASE IN CASH | (141) 119 141 | |||
| Cash position at beginning of period | 951 | 833 906 | ||
| CASH POSITION AT END OF PERIOD | [4] | 810 951 | 1,047 | |
| Principal amount of Senior Notes Principal amount of Convertible Notes Drawn portion of Revolving Credit Facility | (500) | (500) (500) (330) (330) — (50) | ||
| — | ||||
| (360) | ||||
| NET CASH/(NET DEBT) | [5] | (50) | 121 | 167 |
| Trailing twelve month adjusted EBITDA2 | 1,173 | 1,284 1,464 | ||
| (Net debt) / Adjusted EBITDA (LTM) ratio1 | [5] | (0.04)x | 0.09x | 0.11x |
1Net debt, Adjusted EBITDA, and cash flow per share are Non-GAAP measures. Refer to the non-GAAP measure section in this press release and in the Management Report.
NOTES:
1) Operating cash flows decreased by $105.2 million from $310.8 million (or $1.26 per share) in Q4-2022 to $205.6 million (or $0.83 per share) in Q1-2023 largely due to lower gold sales and an outflow in working capital, which compares to an inflow in the prior quarter.
Notable variances are summarised below:
- Working capital was an outflow of $36.6 million in Q1-2023, a decrease of $66.6 million over Q4-2022, largely due to increases in outflows across trade and other payables, inventories, trade and other receivables and prepaid expenses. Trade and other payables were an outflow of $6.7 million in Q1-2023 and primarily related to a decrease in bonus
accruals as well as a decrease in supplier payables at Boungou, Houndé and Ity. Inventories were an outflow of $9.1 million in Q1-2023 related to an increase in stockpiles at Sabodala-Massawa. Trade and other receivables were an outflow of $15.7 million for Q1-2023 driven by a $7.3 million gold sales receivable at Mana due to the outstanding balance pending from gold sales to the government of Burkina Faso. Payment of the outstanding balance has been delayed to Q2-2023 due to the redrafting of the sales contract to include the Ministry of Treasury as the counterparty. An increase in VAT receivables at Houndé and Mana also contributed to the outflow in trade and other receivables. Prepaid expenses and other were an outflow of $5.1 million in Q1-2023 following increased prepayments at Houndé.
- Gold sales from continuing operations decreased from 352koz in Q4-2022 to 309koz in Q1-2023 due primarily to decreases in gold sales at Houndé, Sabodala-Massawa and Boungou as a result of lower production, partially offset by an increase at Ity. Gold sales were slightly ahead of the quarter’s production of 301koz due to the timing of gold sales. The realised gold price from continuing operations for Q1-2023 was $1,904 per ounce compared to $1,742 per ounce for Q4-2022. Including the impact of the Group’s Revenue Protection Programme, the realised gold price for Q1-2023 was $1,886 per ounce compared to $1,758 per ounce for Q4-2022.
- Total cash cost per ounce increased from $829 per ounce in Q4-2022 to $871 per ounce in Q1-2023, primarily related to slightly higher operating expenses due to the focus on stripping activity at Boungou and Houndé, stockpiling refractory ore and processing lower grades at Sabodala-Massawa, and the focus on development at Mana.
- Income taxes paid increased by $24.9 million from $14.8 million in Q4-2022 to $39.7 million in Q1-2023, largely due to increased tax payments at Boungou and Sabodala-Massawa due to the timing of payments, which was partially offset by the impact of lower gold sales and higher unit operating costs at Boungou, Sabodala-Massawa, Mana and Wahgnion on taxable income.
2) Cashflows used in investing activities increased by $28.1 million from $172.2 million in Q4-2022 to $200.3 million in Q1-2023 largely due to increased growth capital spend at the Sabodala-Massawa expansion and the Lafigué development project.
- Sustaining capital from continuing operations increased from $29.6 million in Q4-2022 to $33.3 million in Q1-2023 primarily due to increased sustaining capital spend at Wahgnion and Sabodala-Massawa due to planned increased stripping activity and at Mana due to the increased focus on development, which were partially offset by decreased sustaining capital at Boungou, Ity and Houndé.
- Non-sustaining capital from continuing operations increased from $77.1 million in Q4-2022 to $94.5 million in Q1-2023, largely due to an increase at Ity related to the ongoing construction of the Recyn project and increased prestripping activities at Houndé and Sabodala-Massawa, which were partially offset by reduced spend at Wahgnion as the prior period had incurred set-up costs for the Samavogo deposit.
- Growth capital increased from $54.6 million in Q4-2022 to $72.2 million in Q1-2023, as construction activities at the Sabodala-Massawa expansion and the Lafigué project accelerated. Additionally, $2.8 million was incurred for the Kalana project.
3) Cash flows used in financing activities increased by $102.2 million from $53.5 million in Q4-2022 to $155.7 million in Q1-2023. Financing activities for Q1-2023 consisted of a repayment of long-term debt of $330.0 million, dividends paid to shareholders of $101.4 million, a $46.3 million payment made to Barrick Gold for Teranga Gold’s acquisition of Massawa which had a 3-year look-back gold price linked contingent payment component that amounted to $50.0 million (the remaining $3.7 million payment was made in April 2023), payments for the settlement of shares of $12.3 million, payments for the acquisition of the Company’s own shares through its share buyback programme of $10.9 million, payments of financing and other fees of $9.0 million, dividends paid to minority interests of $6.7 million and repayment of finance and lease obligations of $5.0 million. This was partially offset by proceeds from the drawdown of the Company’s revolving credit facility (“RCF”) of $360.0 million and proceeds from the exercise of options and warrants of $5.9 million.
- Endeavour settled its $330.0 million 3.00% Convertible Senior Notes (“Convertible Notes”) through a combination settlement, at maturity on 15 February 2023. In order to minimise dilution to equity holders the Company elected to settle the principal $330.0 million in cash and the in-the-money option in shares, for 835,254 shares (worth $19.2 million and equivalent to ~0.3% of shares outstanding at the time of issuance). The Convertible Notes were a low cost financing solution which had a 3.00% coupon and an implicit cost of capital of 4.11% over the life of the notes after taking into account the value of the in-the-money option.
- The Company upsized its RCF from $575.0 million to $645.0 million and drew down $360.0 million on the facility during the quarter to manage short-term offshore cash outflows including the settlement of its $330.0 million Convertible Notes, $101.4 million in shareholder dividends and $46.3 million payment to Barrick for Teranga Gold’s acquisition of Massawa as mentioned above.
4) At period-end, Endeavour’s liquidity remained strong with $809.7 million of cash on hand and $285.0 million undrawn under its RCF.
5) Endeavour’s net debt position has decreased by $171.4 million during Q1-2023, ending the period with $50.3 million of net debt, primarily due to the timing of payments for the companies two development projects, the H2-2022 dividend payment and the above mentioned $46.3 million contingent payment made to Barrick Gold.
EARNINGS FROM CONTINUING OPERATIONS
The table below presents the earnings and adjusted earnings for Endeavour for the three month periods ended 31 March 2023, 31 December 2022, and 31 March 2022 with accompanying explanations below.
Table 5: Earnings from Continuing Operations
THREE MONTHS ENDED
| All amounts in US$ million unless otherwise specified | 31 March 2023 | 31 December 2022 | 31 March 2022 | |
|---|---|---|---|---|
| Revenue [6] Operating expenses [7] Depreciation and depletion [7] Royalties [8] | 591 (234) (130) (37) | 617 689 (250) (220) (173) (152) (39) (41) | ||
| Earnings from mine operations | 189 | 156 | 276 | |
| Corporate costs [9] Impairment of mining interests and goodwill Share-based compensation Other expense Exploration costs | (14) — (8) | (15) (14) (360) — (18) (8) (29) (2) (7) (7) | ||
| (6) | ||||
| (13) | ||||
| Earnings from operations | 149 | (273) | 245 | |
| Loss on financial instruments [10] Finance costs | (73) | (10) (179) (16) (15) | ||
| (16) | ||||
| Earnings before taxes | 60 | (299) | 51 | |
| Current income tax expense [11] Deferred income tax recovery [12] | (50) | (57) (75) 89 (11) | ||
| 10 | ||||
| Net comprehensive earnings from continuing operations | [13] | 20 | (267) | (35) |
| Add-back adjustments [14] | 67 | 361 186 | ||
| Adjusted net earnings from continuing operations | 87 | 93 150 | ||
| Portion attributable to non-controlling interests [15] | 18 | 29 24 | ||
| Adjusted net earnings from continuing operations attributable to shareholders of the Company | [16] | 70 | 64 | 126 |
| Adjusted net earnings per share from continuing operations | 0.28 | 0.26 0.51 |
NOTES:
6) Revenue decreased by $26.4 million from $617.0 million in Q4-2022 to $590.6 million in Q1-2023 mainly due to a decrease in gold sales from 352koz in Q4-2023 to 309koz in Q1-2023, following lower production at Houndé, Sabodala- Massawa, Mana and Boungou in the quarter, partially offset by a higher realised gold price in Q1-2023 of $1,904 per ounce compared to $1,742 per ounce for Q4-2022, exclusive of the Company’s Revenue Protection Programme.
7) Operating expenses decreased by $15.2 million from $249.5 million in Q4-2022 to $234.3 million in Q1-2023 due to lower group production and lower operating costs at Boungou, Houndé, Ity, Sabodala-Massawa and Wahgnion, which was partially offset by higher operating costs at Mana due to the focus on development. Depreciation and depletion decreased by $42.6 million from $173.0 million in Q4-2023 to $130.4 million in Q1-2023 mainly due to decreased depletion at Sabodala-Massawa and Houndé as a result of lower production, and a lower depreciable asset base following the impairments recognised at Wahgnion and Boungou in Q4-2022.
8) Royalties slightly decreased from $38.5 million in Q4-2022 to $36.9 million in Q1-2023 due to the lower gold sales.
9) Corporate costs decreased from $14.5 million in Q4-2022 to $13.5 million in Q1-2023 as the prior quarter included increased professional fees and seasonally higher employee costs.
10)The loss on financial instruments increased from $10.4 million in Q4-2022 to $72.9 million in Q1-2023 due to the unrealised losses on the gold collars and forward sales of $40.6 million, the fair value loss on the conversion option of the Convertible Notes of $14.9 million which were settled on 15 February 2023, the realised losses on the gold collars and forward contracts of $5.8 million, foreign exchange losses of $5.8 million, a change in fair value of call rights of $4.3 million, an unrealised loss on foreign currency contracts of $1.1 million, other financial instrument losses of $1.1 million, and a loss on the change in fair value of contingent considerations of $0.6 million. These losses were partially offset by a realised gain on foreign currency contracts of $1.3 million.
As previously disclosed, in order to increase cash flow visibility during its construction phase, Endeavour extended its Revenue Protection Programme, using a combination of zero premium gold collars and forward sales contracts, to cover a portion of its 2024 production, in addition to the 2023 production for which the Company already had gold collars and forward sales contracts in place.
- During Q1-2023, 30koz were settled into forward sales contracts for an average gold price of $1,828/oz. For the remainder of FY-2023, approximately 225koz (75koz per quarter) are expected to be delivered into a collar with a call price of $2,100/oz and a put price of $1,750/oz. In addition, approximately 90koz (30koz per quarter) are scheduled to be settled in forward sales contracts at an average gold price of $1,828/oz.
- For FY-2024, approximately 450koz are expected to be delivered into a collar with a call price of $2,400/oz and a put price of $1,807/oz. In addition, during H1-2024, a total of approximately 70koz (approximately 35koz per quarter) are expected to be settled in forward sales contracts with an average gold price of $2,033/oz.
As previously disclosed, Endeavour entered into a Growth Capital Protection Programme designed to enhance cost certainty for a portion of its growth capital expenditure at its Sabodala-Massawa expansion and Lafigué growth projects. The Group has entered into various foreign exchange forward contracts across both the Euro and the Australian Dollar over 2023 and 2024.
- The total outstanding notional forward contracted quantum is approximately €90.9 million at a blended rate of 0.98 EUR:USD split over 2023 and 2024 at approximately 86% and 14% respectively and approximately AU$42.4 million at a blended rate of 0.69 AUD:USD split approximately 87% and 13% respectively over the same period.
- During Q1-2023, €23.2 million was delivered into forward contracts at a blended rate of 0.99 EUR:USD and AU$10.4 million was delivered into forward contracts at a blended rate of 0.69 AUD:USD
11)Current income tax expense decreased by $7.1 million from $56.9 million in Q4-2022 to $49.8 million in Q1-2023 largely due to a decrease in taxable profit.
12)Deferred income tax recovery decreased by $78.6 million from $88.8 million in Q4-2022 to $10.2 million in Q1-2023, as the higher deferred income tax recovery in Q4-2022 was mainly due to the reversal of deferred tax liabilities recognised at the Boungou and Wahgnion mines resulting from impairments recognised in Q4-2022. For Q1-2023 deferred income tax recoveries were recognised mainly due to a depreciation of the United States dollar against the Euro resulting in a lower deferred tax liability, and a true up reflecting increased deferred tax asset values at Ity resulting from the commencement of mining at the Le Plaque pit on the Floleu permit.
13)Net comprehensive earnings from continuing operations increased by $287.8 million from a loss of $267.4 million in Q4-2022 to earnings of $20.4 million in Q1-2023. The increase in earnings is largely driven by an impairment charge of $360.3 million incurred in the prior quarter related to impairments taken at the Boungou and Wahgnion mines, and higher earnings from mine operations, partially offset by higher unrealised losses on financial instruments in Q1-2023. 14)For Q1-2023, adjustments included a loss on financial instruments of $67.1 million largely related to the unrealised loss on forward sales and collars and a loss on other expenses of $5.7 million, which was partially offset by a gain on non-cash, tax and other adjustments of $5.8 million that mainly relate to the impact of the foreign exchange remeasurement of deferred tax balance.
15)Adjusted net earnings from continuing operations attributable to non-controlling interests decreased to $17.5 million in Q1-2023 from $28.8 million in Q4-2022 despite higher earnings from mining operations, due to the impairment add-back in the prior quarter resulting in higher earnings attributable to non-controlling interests.
16)Adjusted net earnings attributable to shareholders for continuing operations increased by $5.4 million to $69.9 million (or $0.28 per share) in Q1-2023 compared to $64.5 million (or $0.26 per share) in Q4-2022 due to higher earnings from mine operations, lower tax expenses and lower expenses attributable to minority interests, which was partially offset by higher exploration costs.
OPERATING ACTIVITIES BY MINE
Boungou Gold Mine, Burkina Faso
Table 6: Boungou Performance Indicators
| For The Period Ended | Q1-2023 | Q4-2022 | Q1-2022 |
|---|---|---|---|
| Tonnes ore mined, kt Total tonnes mined, kt Strip ratio (incl. waste cap) Tonnes milled, kt Grade, g/t Recovery rate, % PRODUCTION, KOZ | 196 3,059 | 256 3,497 12.66 295 2.85 93 26 | 252 6,334 |
| 14.61 | 24.13 | ||
| 265 | 349 | ||
| 2.55 | 3.03 | ||
| 92 | 95 | ||
| 19 | 34 | ||
| Total cash cost/oz AISC/OZ | 1,207 | 1,054 1,118 | 848 |
| 1,252 | 901 |
Q1-2023 vs Q4-2022 Insights
•
| Production decreased from | 26koz | in | Q4-2022 | to | 19koz | in | Q1-2023 | due to lower tonnes of ore milled at lower average |
| processed grades and lower recoveries |
–
| Total tonnes mined and tonnes of ore mined decreased as mining activities continued to be impacted by the previously | |
| disclosed supply chain delays in getting fuel and consumables to site. | Ore mining was primarily focused on the West pit |
| phase 3 while pre-stripping activities were undertaken in the West Flank pit. |
- Tonnes milled decreased in line with the lower mining performance
- Processed grades and recoveries decreased as lower grade stockpiles were used to supplement the mill feed.
•
| AISC increased from | $1,118/oz | in | Q4-2022 | to | $1,252/oz | in | Q1-2023 | largely due to the decrease in the volume of gold sold |
| and an increase in unit mining and processing costs due to operational downtime. |
•
| Sustaining capital expenditure amounted to | $0.9 million | in | Q1-202 | 3 primarily related to plant equipment and capitalised |
| mining fleet lease costs. |
•
| Non-sustaining capital expenditure | amounted to | $6.2 million | in | Q1-2023 | primarily related to pre-stripping activity at the |
| West Flank pit. |
Q1-2023 vs Q1-2022 Insights
•
| Q1-2023 | production decreased from | 34koz | in | Q1-2022 | to | 19koz | in | Q1-2023 | as a result of the reduced availability of high | |||||||
| grade ore due to the mine sequence and lower mined volumes as activities continued to be impacted by the previously | ||||||||||||||||
| disclosed supply chain delays. AISC increased from | $901/oz | in | Q1-2022 | to | $1,252/oz | in | Q1-2023 | due to lower gold sold with | ||||||||
| lower grades processed and an increase in unit mining and processing costs due to increases in fuel and consumable costs. |
2023 Outlook
- Boungou is expected to produce between 115 - 125koz in FY-2023 at an AISC of between $985 - 1,075/oz.
•
| In Q2-2023, mining activities are expected to focus on continued waste stripping at the West Flank pit and ore mining in the | |
|---|---|
| West pit phase 3. Grades are expected to improve progressively through the year as stripping activity is expected to improve | |
| access to higher grade ore in the West Flank pit. As previously guided, production is expected to be weighted to H2-2023 | |
| with increased volumes of higher-grade ore expected to be sourced from the West Flank pit and mill throughput expected to | |
| increase | . |
•
| Sustaining capital expenditure outlook for FY-2023 remains unchanged at approximately | $5.0 million | , of which | $0.9 million |
| has been incurred to date, and is mainly related to plant maintenance and upgrades to the fuel storage facilities. |
•
| Non-sustaining capital expenditure outlook for FY-2023 remains unchanged at approximately | $30.0 million | , | of which | $6.2 | |
| million | has been incurred to date, and is mainly related to waste stripping activity at the West Flank pit. |
Houndé Gold Mine, Burkina Faso
Table 7: Houndé Performance Indicators
| For The Period Ended | Q1-2023 | Q4-2022 | Q1-2022 |
|---|---|---|---|
| Tonnes ore mined, kt Total tonnes mined, kt Strip ratio (incl. waste cap) Tonnes milled, kt Grade, g/t Recovery rate, % PRODUCTION, KOZ | 1,233 13,247 | 1,912 12,901 5.75 1,359 1.55 92 63 | 1,338 12,686 |
| 9.74 | 8.48 | ||
| 1,370 | 1,233 | ||
| 1.18 | 1.94 | ||
| 93 | 95 | ||
| 47 | 73 | ||
| Total cash cost/oz AISC/OZ | 945 | 793 969 | 697 |
| 1,154 | 771 |
•
| Production decreased from | 63koz | in | Q4-2022 | to 4 | 7koz | in | Q1-2023 | due to lower grades processed, which were partially offset |
| by higher tonnes milled and increased recoveries. |
–
| Total tonnes mined increased as mining activities largely focussed on waste development at the Kari Pump pit stage-3 | |
| cutback and at the Vindaloo Main pit | Kari West pit was the principle source of |
| ore during the quarter |
- Tonnes milled increased slightly due to increased volumes of soft oxide ore from the Kari West pit in the feed, which was supplemented by ore from stockpiles.
- Average gold grade milled decreased, in line with the mine sequence, due to a higher proportion of ore sourced from the lower grade Kari West pit.
- Recoveries increased slightly due to the higher proportion of oxide ore from the Kari West pit with higher associated recoveries, in the ore blend.
•
| AISC increased from | $969/oz | in | Q4-2022 | to | $1,154/oz | in | Q1-2023 | primarily due to the lower volume of gold sold during the |
| quarter due to lower grade ore and higher strip ratio in addition to mining unit rates increasing, partially offset by lower | ||||||||
| processing unit costs due to changes in the ore blend requiring fewer reagents. |
•
| Sustaining capital expenditure amounted to | $10.2 million | in | Q1-2023 | mainly related to waste development at the Vindaloo | |
| Main pit, plant equipment and HME maintenance | . |
•
| Non-sustaining capital expenditure amounted to | $21.1 million | in | Q1-2023 | mainly related to the continuation of pre-stripping |
| activities at the Kari Pump pit and infrastructure around the Kari area including an overhead power line. |
•
| Production decreased from | 73koz | in | Q1-202 | 2 to | 47ko | z in | Q1-2023 | due to the lower grade ore from Kari West making up the | ||||
| majority of the mill feed, while pre-stripping activity in the Kari Pump pit stage-3 cutback continued during Q1-2023. AISC | ||||||||||||
| increased from | $771/oz | in | Q1-2022 | to | $1,154/o | z in | Q1-2023 | due to the lower grade and higher strip ratio ore mined and | ||||
| processed, at higher unit mining and processing costs due to fuel and consumable price increases, as well as increased | ||||||||||||
| sustaining capital due to waste development activities at the Vindaloo pits as well as equipment upgrades and maintenance. |
2023 Outlook
- Houndé is expected to produce between 270 - 285koz in FY-2023 at an AISC of $850 - 925/oz.
- In Q2-2023, ore is expected to continue to be mined primarily from the Kari West pit, while waste stripping activity continues at the high-grade Kari Pump and Vindaloo Main pits. Grades are expected to improve later in the quarter as waste stripping activity advances, providing access to some ore zones in the Kari Pump pit. In H2-2023, greater volumes of ore are expected to be mined from the Kari Pump and Vindaloo Main pits following the completion of waste stripping in H1-2023, with Kari West continuing to provide supplemental feed. As previously guided, production for the year is expected to be weighted towards H2-2023 as a result of the advance of stripping activities providing access to higher grade ore in the Kari Pump and Vindaloo Main pits. Throughput and recoveries are expected to be slightly lower in H2-2023 due to a greater proportion of harder, fresh, high-grade ore in the blend.
•
| Sustaining capital expenditure outlook for FY-2023 remains unchanged at approximately | $40.0 million | , of which | $10.2 million | |||
| has been incurred in | Q1-2023 | , and is mainly related to waste stripping activity, fleet re-builds and plant equipment | ||||
| replacements and upgrades | . |
•
| Non-sustaining capital expenditure outlook for FY-2023 remains unchanged at approximately | $35.0 million | , of which | ||||
| $21.1 million | has been incurred in | Q1-2023, | and is mainly related to Kari Pump pre-stripping activities and stage 8 and 9 of | |||
| the TSF 1 embankment | raise. |
Ity Gold Mine, Côte d’Ivoire
Table 8: Ity Performance Indicators
| For The Period Ended | Q1-2023 | Q4-2022 | Q1-2022 |
|---|---|---|---|
| Tonnes ore mined, kt Total tonnes mined, kt Strip ratio (incl. waste cap) Tonnes milled, kt Grade, g/t Recovery rate, % PRODUCTION, KOZ | 1,936 | 1,662 6,043 2.64 1,710 1.73 87 82 | 2,534 |
| 7,366 | 6,951 | ||
| 2.80 | 1.74 | ||
| 1,819 | 1,669 | ||
| 1.68 | 1.70 | ||
| 93 | 80 | ||
| 91 | 72 | ||
| Total cash cost/oz AISC/OZ | 712 | 816 847 | 707 |
| 732 | 728 |
•
| Production increased from | 82koz | in | Q4-2022 | to | 91koz | in | Q1-2023 | , due to higher tonnes of ore milled and improved recovery |
| rates, partially offset by a slight decrease in average grade milled. |
- Ore tonnes mined increased due to higher mining rates driven by increased fleet availability and utilisation at the Bakatouo and Walter pits, and at historical stockpiles.
- Tonnes milled increased due to a higher proportion of soft oxide material in the mill feed improving mill availability and supporting increased use of the surge bin.
- Average grade milled decreased due to less high-grade ore mined from the Bakatouo, Le Plaque and Ity pits as well as increased blending of lower grade historic stockpiles.
- Recovery rates increased as a result of the change in the ore blend along with the continued benefit of the pre-leach tanks which came online in mid-2022.
•
| AISC decreased from $847/oz in Q4-2022 to $732/oz in Q1-2023 due to | the increased volume of gold sold, lower mining unit | ||
|---|---|---|---|
| costs driven by shorter waste haulage distances at Bakatouo, Walter and Le Plaque pits in Q1-2023, and lower processing | |||
| unit costs as a result of less fresh ore in the fee | d | . |
- Sustaining capital expenditure amounted to $1.8 million in Q1-2023 mainly related to spare parts and capitalised lease costs for the HME fleet.
•
| Non-sustaining capital expenditure amounted to | $31.0 million | in | Q1-2023 | mainly related to the ongoing construction of the |
| Recyn project, the TSF 1 wall raise, TSF 2 construction and land compensation at the Le Plaque extension, in addition to pre- | ||||
| stripping activity at the Le Plaque pit. |
•
| Production increased from | 72koz | in | Q1-2022 | to | 91koz | in | Q1-2023 | due to an increase in throughput rates as a result of | |||
| improvements in plant performance, continued use of the surge bin to introduce supplemental ore into the mill feed and | |||||||||||
| higher recoveries following the commissioning of the pre-leach tank, partially offset by a decrease in average grade milled | |||||||||||
| due to the cessation of processing the high-grade material from Daapleu. AISC remained consistent at | $732/oz | in | Q1-2023, | ||||||||
| as increases in mining costs due to increased volumes and higher G&A costs due to timing of expenditure between quarters | |||||||||||
| were offset by slightly lower processing costs driven by higher oxide in the blend. |
2023 Outlook
- Ity is expected to produce between 285 - 300koz in FY-2023 at an AISC of $840 - 915/oz.
- In Q2-2023, ore is expected to be sourced from the Ity, Bakatouo, Le Plaque and Walter pits, supplemented by historical Verse Ouest stockpiles, while mining and milling rates are expected to reduce compared to the prior quarter due to the commencement of stripping activity at the Walter and Bakatouo pits as they are merged to form one larger pit in line with the mine sequence. For H2-2023, ore is expected to be sourced mainly from the Le Plaque, Ity and Bakatouo pits and mining and milling rates are expected to remain consistent with H1-2023.
•
| Sustaining capital expenditure outlook for FY-2023 remains unchanged at approximately | $25.0 million | , of which | $1.8 million | ||
| has been incurred in | Q1-2023 | , and is mainly related to drilling of de-watering boreholes and capital spares. |
- Non-sustaining capital expenditure outlook for FY-2023 remains unchanged at approximately $40.0 million, of which $31.0 million has been incurred in Q1-2023, and is mainly related to the completion of the Recyn project, which is expected to be commissioned in H2-2023. The stage 5 raise of TSF 1 and the construction of TSF 2 are currently underway and will continue throughout 2023, and the mineral sizer primary crushing optimisation initiative is expected to be launched in H2-2023, which will debottleneck the oxide feeding system.
Mana Gold Mine, Burkina Faso
Table 9: Mana Performance Indicators
| For The Period Ended | Q1-2023 | Q4-2022 | Q1-2022 |
|---|---|---|---|
| OP tonnes ore mined, kt OP total tonnes mined, kt OP strip ratio (incl. waste cap) UG tonnes ore mined, kt Tonnes milled, kt Grade, g/t Recovery rate, % PRODUCTION, KOZ | 423 | 338 1,057 2.13 299 643 2.33 93 46 | 470 |
| 1,783 | 1,644 | ||
| 3.22 | 2.50 | ||
| 253 | 199 | ||
| 614 | 622 | ||
| 2.34 | 2.94 | ||
| 94 | 92 | ||
| 44 | 53 | ||
| Total cash cost/oz AISC/OZ | 1,046 | 941 999 | 948 |
| 1,130 | 1,000 |
Q1-2023 vs Q4-2022 Insights
- Production decreased from 46koz in Q4-2022 to 44koz in Q1-2023 due to lower tonnes milled.
–
Total open pit tonnes mined increased as the quarter benefited from a full period of open pit mining at the Maoula open pit.
- Total underground tonnes of ore mined decreased due to an increased focus on underground development at Wona, where construction of a third portal has begun, deferring some stope mining to later in the year. Stope production at Siou underground remained largely consistent compared to the prior quarter. Across the Siou and Wona underground mines, 2,056 meters of development was completed during Q1-2023.
- Tonnes milled decreased due to lower mill utilisation as a result of planned maintenance during the quarter, partially offset by an increased proportion of softer oxide ore from the Maoula open pit in the mill feed.
- Average grades processed remained consistent with the prior period as higher grade ore from the Siou and Wona underground offset the increased proportion of relatively lower grade ore from the Maoula open pit.
- Recovery rates increased slightly due to the change in the ore blend and improvements resulting from planned maintenance.
- AISC increased from $999/oz in Q4-2022 to $1,130/oz in Q1-2023 due to the higher open pit strip ratio and increased sustaining capital related to the development of Wona underground.
- Sustaining capital expenditure amounted to $3.8 million in Q1-2023 mainly related to development at Siou underground and infrastructure at the Maoula open pit.
- Non-sustaining capital expenditure amounted to $15.9 million in Q1-2023 mainly related to underground development and infrastructure for the third portal at Wona underground and the stage 5 TSF raise.
Q1-2023 vs Q1-2022 Insights
- Production decreased from 53koz in Q1-2022 to 44koz in Q1-2023 largely due to lower grades milled as lower grade ore was sourced from the Wona underground, given the focus on development during the quarter, and supplemented by relatively low grade ore from the Maoula open pit in Q1-2023. AISC increased from $1,000/oz in Q1-2022 to $1,130/oz primarily due to higher underground mining unit costs due to the mining of ore at increased depth and increased fuel and consumable costs.
2023 Outlook
- Mana is expected to produce between 190 - 210koz in FY-2023 at an AISC of $950 - 1,050/oz.
- In Q2-2023, ore is expected to be sourced primarily from the Siou underground and Wona underground as development work will enable increased access to stopes later in the year, while the mill feed is expected to continue to be supplemented with ore from the Maoula open pit. Processed grades are expected to increase throughout the year as higher-grade underground ore is anticipated to progressively represent a larger portion of the mill feed, and as such FY-2023 production expected to be weighted to H2-2023.
- Sustaining capital expenditure outlook for FY-2023 remains unchanged at approximately $25.0 million, of which $3.8 million has been incurred in Q1-2023, and is mainly related to Siou capitalised underground development and plant maintenance.
- Non-Sustaining capital expenditure outlook for FY-2023 remains unchanged at approximately $45.0 million, of which $15.9 million has been incurred in Q1-2023, and is mainly related to Wona underground development and establishment of a new portal, and its associated infrastructure, and the stage 5 lift of the TSF.
Sabodala-Massawa Gold Mine, Senegal
Table 10: Sabodala-Massawa Performance Indicators
| For The Period Ended | Q1-2023 | Q4-2022 |
|---|---|---|
| Tonnes ore mined, kt Total tonnes mined, kt Strip ratio (incl. waste cap) Tonnes milled, kt Grade, g/t Recovery rate, % PRODUCTION, KOZ | 1,235 | |
| 11,207 | ||
| 8.08 | ||
| 1,124 | ||
| 2.04 | ||
| 87 | ||
| 61 | ||
| Total cash cost/oz AISC/OZ | 619 | |
| 787 |
Q1-2022
1,708 12,076 6.07 1,054 3.10
Q1-2023 vs Q4-2022 Insights
•
| Production decreased from | 103koz | in | Q4-2022 | to | 61koz | in | Q1-2023 | , mainly due to lower processed grades in addition to |
| slightly lower recovery rates and throughput, as a result of a greater focus on waste stripping activities and development of | ||||||||
| new non-refractory pits at Massawa. |
- Ore tonnes mined decreased due to increased waste development at the Sabodala pit, where mining focussed on waste stripping ahead of potential in-pit tailings deposition. Ore mining activities continued at the Massawa Central Zone, Bambaraya and Sofia North pits.
- Tonnes milled decreased slightly due to planned maintenance during the quarter, reducing mill availability.
- Average processed grades decreased as lower grade material was sourced from the Sabodala, Bambaraya and Sofia North pits, while stripping activity progressed at the new Massawa North Zone satellite pit.
- Recovery rates decreased slightly due to an increased proportion of oxides and transitional ore from the Massawa Central and North Zone pits processed during the quarter.
•
| AISC increased from | $661/o | z in | Q4-2022 | to | $787/oz | in | Q1-2023 | due to lower ounces of gold sold and a slightly higher | |
| sustaining capital spend in the quarter | . |
•
| Sustaining capital expenditure amounted to | $11.3 million | in | Q1-2023 | mainly related | to waste capitalisation, new mining |
| equipment, dewatering projects and plant and infrastructure upgrades. |
•
| Non-sustaining capital expenditure amounted to | $13.0 million | in | Q1-2023 | mainly related to infrastructure associated with |
| the Massawa mining area, capitalised drilling at the Delya deposit and capitalised waste development at the Sabodala pit. |
Q1-2023 vs Q1-2022 Insights
- Production decreased from 96koz in Q1-2022 to 61koz in Q1-2023 due to the lower grades milled as a result of lower high grade ore from the Sofia North, Bamabraya and Sabodala pits. AISC increased from $578/oz in Q1-2022 to $787/oz in Q1-2023 due to lower gold sales, an increase in unit processing costs due to increases in fuel and some consumable costs, partially offset by lower sustaining capital.
2023 Outlook
- Sabodala-Massawa is expected to produce between 315 - 340koz in FY-2023 at an AISC of $760 - 810/oz.
- In Q2-2023, ore is expected to be sourced primarily from the Bambaraya, Massawa Central Zone, Massawa North Zone and Sofia North pits. Grades are expected to improve as higher grade ore from Massawa Central Zone and Sofia North becomes
| available. In H2-2023, ore is expected to be sourced from Sabodala, Bambaraya, | Niakafiri and Delya deposits, supplemented |
| by ore from non-refractory oxide pits at Massawa North Zone. Tonnes milled are expected to decrease slightly in H2-2023 | |
| due to increased fresh ore in the mill feed, while grades and recoveries are expected to increase into H2-2023 with the | |
| introduction of higher grade ore from the Delya pit. |
•
| Sustaining capital expenditure of | $45.0 million | is expected in FY-2023, of which | $11.3 million | has been incurred in | Q1-2023, | |
| and is mainly related to capitalised waste stripping at the Bambarya and Massawa Central Zone and North Zone pits as well | ||||||
| as fleet re-builds and additional mining equipment purchases | . |
•
| Non-sustaining capital expenditure outlook for FY-2023 remains unchanged at approximately | $35.0 million | , of which | ||||
| $13.0 million | has been incurred in | Q1-2023 | , and is mainly related to the cutback at the Sabodala pit, in addition to | |||
| infrastructure related to the Massawa mining areas and community resettlement at the Niakafiri and Delya deposits | . |
•
| Growth capit $26.4 million | al | expenditure outlook for FY-2023 remains unchanged at approximately $170 million for FY-2023, of which | ||||
| was incurred in | Q1-2023 | related to the | roject. Further detail on the | project is provided in the | ||
| Plant Expansion section below. |