Endeavour Reports Q3-2022 Results Well Positioned to Achieve Top-End Production Guidance, Within AISC Guidance Operational and Financial Highlights (for Continuing Operations)
NEWS RELEASE – LSE & TSX: EDV All amounts in US$
ENDEAVOUR REPORTS Q3-2022 RESULTS WELL POSITIONED TO ACHIEVE TOP-END PRODUCTION GUIDANCE, WITHIN AISC GUIDANCE
OPERATIONAL AND FINANCIAL HIGHLIGHTS (for continuing operations)
- Q3-2022 production of 343koz at an AISC of $960/oz; year-to-date production of 1,045koz at an AISC of $920/oz
- Group is well positioned to achieve top-end of FY-2022 production guidance of 1,315-1,400koz at an AISC within the guided $880-930/oz range
- Net Earnings of $58m (or $0.23/sh) for Q3-2022 and $190m (or $0.77/sh) year-to-date.
- Operating Cash Flow before changes in WC of $195m (or $0.79/sh) for Q3-2022 and $828m (or $3.34/sh) year-to-date
- Strong financial position with $833m cash position at quarter-end, well positioned to reimburse the $330m convertible bond, due Feb 2023, in cash to limit shareholder dilution, in addition to $500m in available sources of financing
ROBUST SHAREHOLDER RETURNS
- H1-2022 dividend of $100m paid in Q3-2022, totalling $170m paid year-to-date
- Share buyback programme continued with $37m worth of shares repurchased in Q3-2022, totalling $75m year-to-date
ORGANIC GROWTH
- Sabodala-Massawa expansion on track; 46% of the capital committed with pricing inline with expectations and construction of the Lafigué greenfield project launched with 12% of the capital committed
- Strong exploration effort with $23m spent in Q3-2022, totalling $68m year to date; maiden resource for Tanda-Iguela greenfield discovery expected to be published in Q4-2022
London, 10 November 2022 – Endeavour Mining plc (LSE:EDV, TSX:EDV, OTCQX:EDVMF) (“Endeavour”, the “Group” or the “Company”) is pleased to announce its operating and financial results for Q3-2022 and year to date, with highlights provided in Table 1 below.
Table 1: Highlights for Continuing Operations1 THREE MONTHS ENDED NINE MONTHS ENDED
| All amounts in US$ million unless otherwise specified | 30 September 2022 | 30 June 2022 | 30 September 2021 | 30 September 2022 | 30 September 2021 | Δ YTD-2022 vs. YTD-2021 |
|---|---|---|---|---|---|---|
| OPERATING DATA Gold Production, koz All-in Sustaining Cost2, $/oz Realised Gold Price, $/oz | 345 362 954 885 1,832 1,768 | 1,058 854 1,776 | ||||
| 343 | 1,045 | (1)% +8% +2% | ||||
| 960 | 920 | |||||
| 1,679 | 1,810 | |||||
| CASH FLOW Operating Cash Flow before Changes in WC Operating Cash Flow before Changes in WC2, $/sh Operating Cash Flow Operating Cash Flow2, $/sh | 253 317 1.02 1.27 253 309 1.02 1.24 | 816 3.44 797 3.37 | +1% (3)% (11)% (15)% | |||
| 195 | 828 | |||||
| 0.79 | 3.34 | |||||
| 154 | 706 | |||||
| 0.62 | 2.85 | |||||
| PROFITABILITY Net Earnings/(Loss) Attributable to Shareholders Net Earnings/(Loss), $/sh Adj. Net Earnings Attributable to Shareholders2 Adj. Net Earnings2, $/sh EBITDA2 Adj. EBITDA2 | 189 122 0.76 0.49 111 168 0.45 0.67 417 339 329 370 | 332 1.40 449 1.90 985 1,090 | ||||
| 58 | 190 | (43)% (45)% (37)% (41)% (5)% | ||||
| 0.23 | 0.77 | |||||
| 37 | 281 | |||||
| 0.15 | 1.13 | |||||
| 302 | 937 | |||||
| 256 | 982 | (10)% | ||||
| SHAREHOLDER RETURNS Shareholder dividends paid Share buybacks | — 70 7 35 | 130 94 | +31% | |||
| 100 | 170 | |||||
| 37 | 75 | (20)% | ||||
| ORGANIC GROWTH Growth capital spend | (34) (11) | (51) | ||||
| (30) | (72) | +41% | ||||
| FINANCIAL POSITION HIGHLIGHTS Cash Principal debt Net Cash, (Net Debt)2 | 1,097 760 (880) (830) 217 (70) | 760 (830) (70) | ||||
| 833 | 833 | +10% | ||||
| (830) | (830) | —% | ||||
| 3 | 3 | (104)% |
1From Continuing Operations excludes the Karma mine which was divested on 10 March 2022 and the Agbaou mine which was divested on 1 March 2021. 2This is a non-GAAP measure. Refer to the non-GAAP measure section in this press release and in the Management Report.
Management will host a conference call and webcast today, Thursday 10 November, at 8:30 am EST / 1:30 pm GMT. 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: “Our strong operating performance for the first nine months of the year positions us well to deliver full year production at the top end of our guided range and costs within the guided range. This will mark our 10th consecutive year of achieving or exceeding our guidance; a record that we are extremely proud of, and a strong reflection of the resilience of our business.
As we enter our next growth phase, our high-margin production, sustained free cash flow generation, and strong financial position leave us well placed to continue to deliver strong shareholder returns. This year we have already increased our minimum dividend commitment by $50 million to $200 million and we have completed an additional $75 million in share buybacks. Moreover, in order to limit shareholder dilution, we have upstreamed sufficient cash in order to provide the financial flexibility to reimburse our $330 million convertible bond due Q1-2023 in cash.
Our growth projects are progressing well with the expansion of our flagship Sabodala-Massawa mine on schedule and on budget as work starts to ramp up. Furthermore, we recently launched the construction of our next cornerstone asset, the Lafigué project on the Fetekro property, where early works are gathering pace. Our growth projects will increase gold production by approximately 30% from 2024 and further enhance our geographic diversification, whilst solidifying our position as a leading high-margin and low cost producer.
Over recent years, our exploration programme has discovered the Lafigué project for a modest investment of $31 million at an industry leading discovery cost of $12/oz, and it continues to deliver new low-cost ounces, notably through our greenfield success at the Tanda-Iguela property in Côte d’Ivoire, where we expect to publish a maiden resource in the coming weeks. In addition, we are enjoying significant near mine exploration success at several other cornerstone assets, with resource additions expected by year-end. As such, we are pleased to be on track to achieve our previously disclosed target of discovering 15-20 million ounces of Indicated resources over the 2021 to 2025 timeframe.
In summary, we are very pleased with the progress made so far this year and with the wet season over, we expect the final quarter to be strong as we remain focused on continuing to deliver strong operating results which underpin our ability to fund our growth and shareholder return programme.”
UPCOMING CATALYSTS
The key upcoming expected catalysts are summarised in the table below.
Table 2: Key Upcoming Catalysts
TIMING CATALYST
Q4-2022 Mana Wona underground first stope production Q4-2022 Tanda-Iguela Maiden resource Resource update Q4-2022 Ity Sabodala-Massawa Expansion project progress update Q4-2022 Q1-2023 Shareholder Returns Payment of H2-2022 dividend Q1-2023 Exploration Year-end resource update following exploration success
OPERATING SUMMARY
- As published in the press release dated 28 October 2022, regrettably, a fatal accident occurred at the Ity mine in Côte d’Ivoire on 27 October 2022. A contractor passed away as a result of injuries sustained in an incident that occurred during blasting activities. Endeavour is conducting a comprehensive internal investigation into the incident and is working closely with the relevant local authorities.
- While the Group’s Lost Time Injury Frequency Rate (“LTIFR”) for continuing operations improved from 0.13 to 0.07 for the trailing twelve months ending 30 September 2022, compared to equivalent period ending 30 June 2022, Endeavour will continue to prioritise safety in accordance with its Zero-harm target.
- Strong Q3-2022 performance, despite the seasonal impact of the wet season, as production and all-in sustaining cost (“AISC”) remained stable over Q2-2022.
- Q3-2022 production from continuing operations amounted to 343koz, stable over Q2-2022 as the scheduled lower production at Houndé and Mana was offset by higher production at Ity, Sabodala-Massawa, Wahgnion and Boungou.
- Q3-2022 AISC amounted to $960 per ounce sold, stable over Q2-2022 due to a higher volume of gold produced compared to gold sold and cost increases at Boungou and Mana, which were offset by cost decreases at Houndé and Ity.
- The Group is well positioned to achieve the top-end of FY-2022 group production guidance of 1,315-1,400koz at an AISC guidance of $880-930 per ounce for continuing operations.
- YTD-2022 production amounted to 1,045koz, roughly in-line with the prior year, due to stronger production from Houndé (due to improved mining flexibility and mill throughput with the addition of the Kari mining areas), Ity (due to improved processed grades and recoveries with the addition of increased ore from Le Plaque), and Sabodala-Massawa (due to a full nine months of consolidated production following its acquisition in February 2021) while Mana remained stable (where throughput was inline with the prior year, despite the transition of the Wona deposit from an open pit to an underground operation). This offset lower production from Boungou (due to less high grade ore availability in the East pit coupled with supply chain delays) and Wahgnion (due to mining lower grade zones of the Nogbele and Fourkoura pits).
- YTD-2022 AISC from continuing operations amounted to $920 per ounce, within the full year guided $880-930 per ounce range, albeit an increase of $66 per ounce over YTD-2021 with higher AISC at Boungou, Wahgnion and Sabodala- Massawa, which have been partially offset by lower AISC at Houndé and Ity while Mana was stable.
Table 3: Group Production and FY-2022 Guidance THREE MONTHS ENDED NINE MONTHS ENDED
| All amounts in koz, on a 100% basis | 30 September 2022 | 30 June 2022 | 30 September 2021 | 30 September 2022 | 30 September 2021 | 2022 FULL-YEAR GUIDANCE | ||
|---|---|---|---|---|---|---|---|---|
| Boungou Houndé Ity Mana Sabodala-Massawa1 Wahgnion1 | 29 | 27 87 77 | 41 | 90 | 139 | 130 260 255 170 360 140 | — — — — — — | 140 275 270 190 375 150 |
| 72 81 | 70 | 232 | 216 | |||||
| 61 | 230 | 212 | ||||||
| 42 | 55 49 | 149 | 151 241 100 | |||||
| 86 32 | 73 27 | 106 | 256 | |||||
| 34 | 88 | |||||||
| PRODUCTION FROM CONTINUING OPERATIONS | 343 | 345 | 362 | 1,045 | 1,058 | 1,315 | — | 1,400 |
| Karma2 Agbaou3 | — | — | 21 | 10 | 67 | |||
| — | — — | — | 13 | |||||
| GROUP PRODUCTION | 343 | 345 | 382 | 1,055 | 1,138 |
1Included for the post acquisition period commencing 10 February 2021. 2Divested on 10 March 2022. 3Divested on 1 March 2021.
Table 4: Group All-In Sustaining Costs and FY-2022 Guidance THREE MONTHS ENDED NINE MONTHS ENDED
| All amounts in US$/oz | 30 September 2022 | 30 June 2022 | 30 September 2021 | 30 September 2022 | 30 September 2021 | 2022 FULL-YEAR GUIDANCE | ||
|---|---|---|---|---|---|---|---|---|
| Boungou Houndé Ity Mana Sabodala-Massawa1 Wahgnion1 Corporate G&A | 1,219 | 1,062 800 | 1,051 767 | 795 833 | 900 875 850 | — — — | 1,000 925 900 | |
| 716 | 807 921 | |||||||
| 773 | 895 915 | 799 | 830 | |||||
| 1,098 | 905 779 1,788 | 1,029 | 993 | 996 667 964 | 1,000 675 1,050 | — — — | 1,100 725 1,150 | |
| 779 | 655 | 703 1,590 | ||||||
| 1,647 | 1,097 | |||||||
| 37 | 20 24 | 32 | 28 | 30 | ||||
| AISC FROM CONTINUING OPERATIONS | 960 | 954 885 | 920 | 854 | 880 | — | 930 | |
| Karma2 Agbaou3 | — | — 1,256 | 1,504 | 1,162 | ||||
| — | — — | — | 1,131 | |||||
| GROUP AISC | 960 | 954 | 904 | 925 | 875 |
1Included for the post acquisition period commencing 10 February 2021. 2Divested on 10 March 2022. 3Divested on 1 March 2021.
- The Group sustaining capital expenditure for FY-2022 is expected to be below the guidance of $169.0 million, of which $97.6 million has been incurred year to date and $28.8 million was incurred in Q3-2022. Mining activities prioritised non-sustaining pre-stripping activities to accelerate the opening of new deposits and mining areas, in order to provide more mining flexibility to sustain a better than forecasted production profile in Q4-2022 and into 2023, in addition to improvements in fleet maintenance condition monitoring which reduced mining equipment capital requirements. Further information by mine is provided in the section below.
- The Group non-sustaining capital expenditure for FY-2022 is expected to be above the guidance of $204.0 million, with $174.6 million incurred year to date and $79.5 million incurred in Q3-2022, due to higher non-sustaining capital at Boungou, Houndé, Mana, Sabodala-Massawa and Wahgnion mainly due to accelerated pre-stripping and mining infrastructure activities at certain pits this year, which will be slightly offset by lower non-sustaining capital at Ity due to less pre-stripping
requirements and the timing of payments related to the Recyanidation project. Further information by mine is provided in the section below.
- The Group growth capital expenditure outlook for FY-2022 has been updated following the launch of construction at the Lafigué development project. The growth capital expenditure guidance for FY-2022 is $181.0 million, of which $71.9 million has been incurred year to date. During Q3-2022, $29.7 million was incurred, mainly related to the Sabodala-Massawa expansion project and the Lafigué project Definitive Feasibility Study (“DFS”) and its associated establishment works.
SHAREHOLDER RETURNS PROGRAMME
- Endeavour paid its H1-2022 dividend of $100.0 million, or $0.40 per share, on 28 September 2022, to shareholders of record on 2 September 2022. The H1-2022 dividend represents a 43% increase over the H1-2021 dividend.
- In line with its strong commitment to shareholder returns, as previously disclosed, Endeavour increased its dividend commitment for FY-2022 by $50.0 million to $200.0 million, which is to be supplemented with additional dividends and/or share buybacks provided the gold price remains above $1,500 per ounce and the Group’s leverage remains below 0.5x Net Debt/adjusted EBITDA.
- A total of $74.5 million or 3.4 million shares were repurchased in the first nine months of the year, of which $36.7 million or 1.7 million shares were repurchased in Q3-2022. Since the commencement of the buyback programme on 9 April 2021, a total of $212.7 million, or 9.4 million shares have been repurchased.
- As shown in the table below, Endeavour will have returned more than $613.0 million to shareholders in the form of dividends and buybacks since its shareholder returns programme began in late 2020, inclusive of the H2-2022 dividend commitment of $100.0 million, which represents approximately $278.0 million more than its minimum commitment for the period.
Table 5: Actual Shareholder Returns vs. Minimum Commitment
| All amounts in US$ million | MINIMUM DIVIDEND COMMITMENT | ACTUAL SHAREHOLDER RETURNS DIVIDENDS BUYBACKS TOTAL DECLARED COMPLETED RETURNS | SUPPLEMENTAL SHAREHOLDER RETURNS | ||
|---|---|---|---|---|---|
| FY-2020 FY-2021 FY-2022 | 60 125 150 | 60 — 60 140 138 278 200 75 275 | — | ||
| +153 | |||||
| +125 | |||||
| H1-2022 H2-20221 | 75 75 | 100 38 138 100 37 137 | +63 | ||
| +62 | |||||
| TOTAL | 335 | 400 | 213 | 613 | +278 |
1 $100 million dividend for H2-2022 represents the committed amount that is expected to be paid to shareholders in Q1-2023, while the $37 million of buybacks represents amount completed in Q3-2022.
CASH FLOW AND LIQUIDITY SUMMARY
The table below presents the cash flow and net cash position for Endeavour for the three month periods ended 30 September
Table 6: Cash Flow and Net Cash THREE MONTHS ENDED NINE MONTHS ENDED
| All amounts in US$ million unless otherwise specified | 30 September 2022 | 30 June 2022 | 30 September 2021 | 30 September 2022 | 30 September 2021 | |
|---|---|---|---|---|---|---|
| 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 | 253 317 1 (8) — 3 | 816 (18) 13 | ||||
| 195 | 828 | |||||
| (41) | (122) | |||||
| — | 5 | |||||
| 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 | 154 | 253 312 (145) (137) (26) (233) (33) (15) | 711 | 810 (379) (360) (25) | ||
| (111) | (349) | |||||
| (256) | (332) | |||||
| (52) | (104) | |||||
| (DECREASE)/INCREASE IN CASH | (264) 50 (73) | (74) | 46 | |||
| Cash position at beginning of period | 1,097 | 1,047 833 | 906 | 715 | ||
| CASH POSITION AT END OF PERIOD | [4] | 833 1,097 | 760 | 833 | 760 | |
| Principal amount of Senior Notes Principal amount of Convertible Notes Drawn portion of Revolving Credit Facility Drawn portion of Corporate Loan Facility | (500) | (500) (500) (330) (330) (50) — — — | (500) (330) | (500) (330) — — | ||
| (330) | ||||||
| — | — | |||||
| — | — | |||||
| NET CASH/(NET DEBT) | [5] | 3 | 217 | (70) | 3 | (70) |
| Net cash, (Net debt) / Adjusted EBITDA (LTM) ratio1 [5] | 0.00 x | 0.14 x (0.05) x | 0.00 x | (0.05) x |
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 $99.5 million from $253.2 million (or $1.02 per share) in Q2-2022 to $153.7 million (or $0.62 per share) in Q3-2022 largely due to a decrease in the realised gold price, an increase in the working capital outflow, a slight decrease in gold sales and higher income taxes paid.
| Operating cash flows | decreased | by | $99.1 million | from | $810.3 million | (or | $3.42 | per share) in | YTD-2021 | to | $711.2 million | ||||
| (or | $2.87 | per share) in | YTD-2022 | largely due to higher working capital outflows and higher operating costs compared to | |||||||||||
| the prior period. |
Notable variances are summarised below:
- Working capital was an outflow of $41.4 million in Q3-2022, an increase of $42.1 million over Q2-2022, largely due to an increase in outflows from prepayments and trade and other payables, partially offset by a decrease in outflows from inventories. Trade and other payables were an outflow of $29.8 million in Q3-2022 and primarily related to social development fund and royalty payments at Ity, Houndé and Mana as well as the timing of supplier payments. Prepaid expenses and other were an outflow of $12.7 million in Q3-2022 and primarily related to security prepayments at Mana and Boungou. Trade and other receivables were an outflow of $8.1 million for Q3-2022, mainly driven by quarterly movements in VAT and other receivables across the portfolio. Inventories were an inflow of $9.2 million in Q3-2022 related to a decrease in stockpiles at Mana, Boungou, Wahgnion and Sabodala-Massawa used to supplement process feed.
Working capital was an outflow of $121.6 million in YTD-2022, an increase of $103.5 million over YTD-2021. Trade and other payables was an outflow of $43.1 million in YTD-2022 compared to an outflow of $77.2 million in YTD-2021 largely due to the prior period including payments related to the Teranga acquisition. Inventories were an outflow of $41.2 million in YTD-2022 compared to an inflow of $72.2 million in YTD-2021, mainly due to an increase in short-term stockpiles at Houndé, Ity and Wahgnion and an increase in consumables, partially offset by a decrease in gold-in circuit across the Group. Prepaid expenses and other was an outflow of $14.9 million in YTD-2022 compared to an outflow of $7.6 million in YTD-2021 mainly related to advance payments made in YTD-2022 compared to the prior period. Trade and other receivables was an outflow of $22.4 million in YTD-2022 compared to an outflow of $5.5 million in YTD-2021, mainly due to an increase in trade receivables at Sabodala-Massawa as VAT receivable increased following the expiry of the mines’ VAT exemption status in May 2022, as well as increased advanced royalties at Houndé and Boungou, which was slightly offset by a decrease in receivables at Houndé and Boungou as a result of VAT received during YTD-2022.
- Gold sales from continuing operations decreased slightly from 344koz in Q2-2022 to 338koz in Q3-2022 due primarily to decreases in sales at Houndé and Mana as a result of reduced production, and was below the quarter’s production of 343koz due to gold sale timing. The realised gold price from continuing operations for Q3-2022 was $1,679 per ounce compared to $1,832 per ounce for Q2-2022. Total cash cost per ounce increased slightly from $824 per ounce in Q2-2022 to $839 per ounce in Q3-2022, primarily related to lower gold sales.
Gold sales from continuing operations decreased from 1,108koz in YTD-2021 to 1,041koz in YTD-2022 primarily due to lower sales at Boungou, Mana, Wahgnion, and Sabodala-Massawa, partially offset by higher sales at Ity and Houndé. The realised gold price from continuing operations for YTD-2022 was $1,810 per ounce compared to $1,776 per ounce for YTD-2021. Total cash cost per ounce increased from $715 per ounce in YTD-2021 to $794 per ounce in YTD-2022 largely due to the expected increases in fuel and explosive costs compared to the prior period.
- Income taxes paid increased by $17.3 million from $64.2 million in Q2-2022 to $81.5 million in Q3-2022, largely due to withholding taxes paid on cash dividends distributed from the operating entities to the corporate entity, which was partially offset by the impact of lower gold sales on taxable income.
Income taxes paid decreased by $9.4 million from $183.8 million in YTD-2021 to $174.4 million in YTD-2022 largely due to higher taxes paid at Boungou in YTD-2021 due to the timing of payments, which is partially offset by the higher withholding taxes paid in the YTD-2022 period.
2) Cashflows used in investing activities decreased by $33.8 million from $144.6 million in Q2-2022 to $110.8 million in Q3-2022 largely due to lower sustaining capital, the timing of growth capital and an inflow of $10.7 million in proceeds from NSR properties sold to Auramet Trading (“Auramet”). The lower YTD-2022 outflow was driven primarily by the timing of growth capital payments.
- Sustaining capital from continuing operations decreased from $38.0 million in Q2-2022 to $28.8 million in Q3-2022 primarily due to decreased capitalised waste stripping activity at Houndé and Wahgnion.
Sustaining capital from continuing operations decreased from $123.1 million in YTD-2021 to $97.6 million in YTD-2022, driven largely by decreased sustaining capital at Boungou, Houndé, Ity, and Sabodala-Massawa, largely related to reduced capitalised waste stripping compared to the prior period and the haul road construction to Le Plaque at Ity that was incurred in the prior period.
- Non-sustaining capital from continuing operations increased from $53.2 million in Q2-2022 to $79.5 million in Q3-2022, due to increased spending on the Recyanidation project at Ity, underground development at Mana, and TSF raise activities at Mana, Ity and Wahgnion, which were partially offset by decreased spending at Houndé and Boungou.
Non-sustaining capital from continuing operations increased from $153.5 million in YTD-2021 to $174.6 million in YTD-2022, driven largely by increased spending at Boungou, Houndé, and Sabodala-Massawa largely related to prestripping activities and TSF raises.
- Growth capital decreased modestly from $34.3 million in Q2-2022 to $29.7 million in Q3-2022, largely due to the timing of payments, and primarily relates to construction activities at the Sabodala-Massawa Expansion project and early works at the Lafigué project.
Growth capital increased from $51.4 million in YTD-2021 to $71.9 million in YTD-2022 due to increased spending on the the Sabodala-Massawa Expansion project and the Lafigué project.
3) Cash flows used in financing activities increased by $229.6 million from $25.9 million in Q2-2022 to $255.5 million in Q3-2022. Financing activities for Q3-2022 primarily consisted of dividends paid to shareholders of $97.3 million, dividends paid to minority shareholders of $57.2 million, repayment of the outstanding balance on the Company’s revolving credit facility of $50.0 million, payments for the acquisition of the Company’s own shares of $36.7 million, payments of financing and other fees of $10.9 million and repayment of finance and lease obligations of $3.4 million.
Cash flows used in financing activities decreased by $28.5 million from $360.0 million in YTD-2021 to $331.5 million in YTD-2022 largely due to slightly higher shareholder returns in YTD-2021, compared to YTD-2022. In YTD-2021, a larger proportion of shareholder returns were paid through shareholder buybacks, compared to a higher proportion of shareholder returns paid through dividends in YTD-2022. In addition higher cash flows used for financing activities in YTD-2021 were associated with the inclusion of costs associated with the refinancing of debt from the Teranga acquisition and the settlement of the off-take liability in the YTD-2021 period.
4) At period-end, Endeavour’s liquidity remained strong with $832.5 million of cash on hand and $500.0 million undrawn under its revolving credit facility. During Q3-2022, in order to provide flexibility to redeem its outstanding convertible notes in cash, which mature in Q1-2023, Endeavour paid dividends from its operating entities to itself and its minority shareholders (governments), to facilitate the upstreaming of its cash. This resulted in a minority interest dividend payments of $57.2 million and approximately $48.2 million in withholding tax payments, associated with dividends declared to the Company.
5) Endeavour’s net cash position has decreased by $73.7 million YTD-2022, or $214.3 million during Q3-2022 to $2.5 million. The change in Q3-2022 is largely due to a remeasurement of the cash balance of $51.7 million due to changes in the foreign exchange rates between the Euro and Unite States dollar reporting currency, and $105.4 million related to the minority interest dividends and withholding taxes associated with cash upstreaming in order to provide flexibility to redeem outstanding convertible notes in cash, as mentioned in Note 4.
EARNINGS FROM CONTINUING OPERATIONS
The table below presents the earnings and adjusted earnings for Endeavour for the three month periods ended 30 September
Table 7: Earnings from Continuing Operations
THREE MONTHS ENDED NINE MONTHS ENDED
| All amounts in US$ million unless otherwise specified | 30 September 2022 | 30 June 2022 | 30 September 2021 | 30 September 2022 | 30 September 2021 | |
|---|---|---|---|---|---|---|
| Revenue [6] Operating expenses [7] Depreciation and depletion [7] Royalties [8] | 568 (254) (151) (35) | 630 657 (251) (234) (140) (147) (38) (39) | 1,883 | 1,968 (744) (409) (121) | ||
| (722) (443) (114) | ||||||
| Earnings from mine operations | 128 | 201 | 237 | 604 | 694 | |
| Corporate costs [9] Acquisition and restructuring costs Share-based compensation Other expense Exploration costs | (12) (1) (4) | (7) (12) (1) (2) (3) (7) (11) (2) (8) (3) | (33) (3) | (42) (29) (25) (13) (19) | ||
| (15) | ||||||
| (7) | (20) | |||||
| (12) | (27) | |||||
| Earnings from operations | 91 | 171 | 211 | 506 | 567 | |
| Gain/(loss) on financial instruments [10] Finance costs | 60 | 107 (20) (17) (15) | (12) | 9 (40) | ||
| (19) | (50) | |||||
| Earnings before taxes | 132 261 | 177 | 444 | 536 | ||
| Current income tax expense [11] Deferred income tax recovery [12] | (77) 12 | (65) (41) 8 4 | (216) | (157) 18 | ||
| 9 | ||||||
| Net comprehensive earnings from continuing operations | [13] | 67 | 205 | 141 | 236 | 397 |
| Add-back adjustments [14] | (15) | (70) 51 | 108 | 140 | ||
| Adjusted net earnings from continuing operations | 52 | 134 192 | 344 | 537 | ||
| Portion attributable to non-controlling interests [15] | 16 | 23 24 | 63 | 88 | ||
| Adjusted net earnings from continuing operations attributable to shareholders of the Company | [16] | 36 | 111 | 168 | 281 | 449 |
| Earnings per share from continuing operations Adjusted net earnings per share from continuing operations | 0.23 | 0.76 0.49 0.45 0.67 | 0.77 | 1.40 1.90 | ||
| 0.15 | 1.13 |
NOTES:
6) Revenue decreased by $62.0 million from $629.6 million in Q2-2022 to $567.6 million in Q3-2022 mainly due to a lower realised gold price in Q3-2022 of $1,679 per ounce compared to $1,832 per ounce for Q2-2022 and lower production and sales from Houndé and Mana. Gold sales from continuing operations decreased slightly from 344koz in Q2-2022 to 338koz in Q3-2022.
Revenue decreased by $84.1 million from $1,967.5 million in YTD-2021 to $1,883.4 million in YTD-2022 due to the lower gold sales compared to the prior period, partially offset by the higher realised gold price of $1,810 per ounce in YTD-2022, compared to $1,776 per ounce in YTD-2021. Gold sales from continuing operations decreased from 1,108koz in YTD-2021 to 1,041 in YTD-2022.
7) Operating expenses were relatively flat at $253.6 million in Q3-2022 compared to the prior period as the expected higher fuel and consumable costs were offset by favourable exchange rate movements. Depreciation and depletion increased by $11.4 million from $139.8 million in Q2-2022 to $151.2 million in Q3-2022 mainly due to increased depletion at Houndé and Sabodala-Massawa, partially offset by decreased depreciation at Mana.
Operating expenses decreased by $21.7 million from $744.0 million in YTD-2021 to $722.3 million in YTD-2022 largely due to an expense incurred in YTD-2021 related to the reversal of fair value adjustments to inventory at Sabodala-Massawa in addition to the inventory charge associated with gold sold in excess of gold produced in YTD-2021 following the Teranga acquisition. These items were partially offset by increased operating costs at Sabodala-Massawa and Wahgnion mines due to the comparable cost base for YTD-2021 including costs from only the post-acquisition period in addition to slightly higher consumable and energy costs compared to the prior period. Depreciation and depletion for YTD-2022 increased by $34.4 million from $408.6 million in YTD-2021 to $443.0 million in YTD-2022 largely due to increased depreciation at the Houndé, Mana and Sabodala-Massawa mines due to an increased capital base being depreciated, partially offset by lower depreciation at Boungou due to the lower carrying value.
8) Royalties slightly decreased from $38.1 million in Q2-2022 to $35.3 million in Q3-2022 due largely to the lower gold sales at a lower realised gold price in Q3-2022. Royalties decreased from $120.5 million in YTD-2021 to $114.4 million in YTD-2022 due to lower gold sales, despite the higher realised gold price.
9) Corporate costs increased from $6.8 million in Q2-2022 to $12.4 million in Q3-2022 due to higher corporate expenses as well as higher employee compensation due to the timing of costs being incurred and the impact of the reversal of certain bonus accruals in the prior quarter. Corporate costs decreased from $42.2 million in YTD-2021 to $33.2 million in YTD-2022 due to the cessation of costs associated with corporate integration and the LSE listing.
10)The gain on financial instruments of $106.8 million in Q2-2022 decreased to a gain of $60.1 million in Q3-2022. The decrease relative to the prior quarter relates to the decrease in the realised and unrealised gains on the gold collars and forward sales of $32.2 million, and a decrease in the unrealised gain on the revaluation of the conversion option of $19.1 million. In Q3-2022, the gain on financial instruments consists of a realised gain on the gold collars and forwards of $19.7 million and an unrealised gain of $55.8 million, reflecting the lower spot gold prices in the quarter. In addition, there was an unrealised gain on the revaluation of the conversion option on the convertible senior notes (the “Convertible Notes”) of $12.6 million due to the impact of the lower share price assumption per the bond valuation model. Q3-2022 also included a gain of $4.5 million relating to the sale of certain net smelter royalties held by the Group, and a gain of $5.5 million related to the revaluation of other financial assets in the quarter. The gain was partly offset by foreign exchange losses of $31.6 million, primarily on outstanding cash balances, driven by the weakening of the Euro against the Dollar and the realised and unrealised loss on foreign currency contracts of $0.4 million and $6.0 million, respectively.
The gain on financial instruments of $9.4 million million in YTD-2021 decreased to a loss of $11.9 million in YTD-2022. The loss in YTD-2022 is primarily due to the net impact of foreign exchange losses of $89.6 million due to the impact of the Euro weakening against the USD and the realised and unrealised loss on foreign currency contracts of $0.4 million and $6.0 million, respectively. This was in part offset by the gold collars and forward contracts which amounted to realised and unrealised gains of $14.1 million and $39.1 million, respectively, driven by the lower gold prices. Also included is an unrealised gain on the conversion option on the Convertible Notes of $26.3 million driven by assumption changes per the bond valuation model since the start of the year, and a gain on the disposal of certain net smelter royalties of $4.5 million.
As previously disclosed, Endeavour entered into a revenue protection programme for a portion of its production across FY-2022 and FY-2023, to provide greater cash flow visibility during its investment phase. This was structured as an upfront low premium collar with a put price of $1,750 per ounce and a call price of $2,100 per ounce for 75koz of production per quarter, from Q1-2022 until Q4-2023. In addition, the Company entered into forward sales contracts for FY-2022 and FY-2023, for which 95koz at an average gold price of $1,834 per ounce were financially delivered in Q3-2022. Forward contracts scheduled to be settled in Q4-2022 amount to 90koz at an average gold price of $1,842. For FY-2023, forward sales contracts amount to 120koz, or 30koz ounces per quarter at an average gold price of $1,828 per ounce. Endeavour has entered into a growth capital protection programme designed to enhance cost certainty for a portion of its upcoming 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 the next two years. The total notional forward contracted quantum is approximately €148.4 million at a blended rate of 0.98 EUR:USD split over 2022, 2023 and 2024 at approximately 39%, 53% and 9% respectively and approximately AU$58.9 million at a blended rate of 0.69 AUD:USD split approximately 28%, 62% and 10% respectively over the same period. During Q3-2022, the Group incurred a realised loss on foreign exchange contracts of $0.4 million and an unrealised loss on foreign exchange contracts of $6.0 million.
11)Current income tax expense increased by $12.3 million from $64.7 million in Q2-2022 to $77.0 million in Q3-2022 largely due to a higher weighted average domestic tax rate as a result of lower proportional production from assets with lower tax rates including Houndé and Mana, in addition to the withholding tax expense recognised on the dividend declared by Sabodala-Massawa during the quarter.
Current income taxes increased by $59.4 million from $157.0 million in YTD-2021 to $216.4 million in YTD-2022 due to an increase in tax expense at Sabodala-Massawa as a result of the start-up of mining at the Massawa pits as well as an increase in taxable profit at Ity due to earnings generated at Floleu, which includes the Le Plaque pit, which was partially offset by a decrease in tax expense at Boungou associated with lower levels of production.
12)Deferred income tax recovery increased by $3.7 million from $8.2 million in Q2-2022 to $11.9 million in Q3-2022, mainly due to the reversal of deferred tax liabilities previously recognised on estimated distribution of earnings, partially offset by the impact of changes in the foreign exchange rates on the deferred tax calculations. In YTD-2022, a deferred income tax recovery of $8.9 million compared to a deferred tax recovery of $17.7 million in YTD-2021, mainly due to the higher impact of changes in the foreign exchange rates on the deferred tax calculations and the deferred tax impact of the unwinding of the fair value adjustment to inventory at Sabodala-Massawa recognised in YTD-2021. The absence of these recoveries in YTD-2022 contributed to the lowered deferred tax recovery for YTD-2022.
13)Net comprehensive earnings from continuing operations decreased by $137.4 million from $204.5 million in Q2-2022 to $67.1 million in Q3-2022. The decreased earnings are attributed to lower gold sales, higher depreciation, higher taxes, and a lower gain on financial instruments compared to the prior period. For YTD-2022, net comprehensive earnings of $236.4 million was recognised, a decrease on the earnings of $397.0 million recognised in YTD-2021 due largely to lower gold sales, higher depreciation, and higher taxes.
14)For Q3-2022, adjustments included a gain on financial instruments of $60.1 million largely related to the unrealised gain on forward sales and collars, non-cash, tax and other adjustments of $36.9 million that mainly relate to the impact of the foreign exchange remeasurement of deferred tax balances and a write-down of inventory at Wahgnion to net realisable value, other expenses of $7.4 million, and acquisition and restructuring costs of $1.0 million. For YTD-2022, adjustments mainly included non-cash, tax and other adjustments of $73.2 million that mainly relate to the impact of the foreign exchange remeasurement of deferred tax balances and non-cash fair value adjustments to inventory associated with the acquisition of Teranga, other expenses of $20.0 million, a loss on financial instruments of $11.9 million largely related to the unrealised loss on forward sales and acquisition and restructuring costs of $2.5 million.
15)Adjusted net earnings from continuing operations attributable to non-controlling interests decreased to $15.8 million in Q3-2022 from $23.1 million in Q2-2022 due to lower earnings from mine operations during Q3-2022.
16)Adjusted net earnings attributable to shareholders for continuing operations decreased by $74.8 million to $36.5 million (or $0.15 per share) in Q3-2022 compared to $111.3 million (or $0.45 per share) in Q2-2022 due largely to lower earnings from mining operations as a result of lower group production at a lower realised gold price, higher depreciation and higher taxes. In YTD-2022 adjusted net earnings attributable to shareholders for continuing operations decreased to $281.2 million (or $1.13 per share) from $449.3 million (or $1.90 per share) in YTD-2021 due to higher income tax expense due largely to lower gold sales, higher depreciation, and higher taxes.
OPERATING ACTIVITIES BY MINE
Boungou Gold Mine, Burkina Faso
Table 8: Boungou Performance Indicators
| For The Period Ended | Q3-2022 | Q2-2022 | Q3-2021 | YTD-2022 | YTD-2021 |
|---|---|---|---|---|---|
| Tonnes ore mined, kt Total tonnes mined, kt Strip ratio (incl. waste cap) Tonnes milled, kt Grade, g/t Recovery rate, % PRODUCTION, KOZ | 210 3,559 | 272 5,115 17.81 366 2.47 93 27 | 539 7,126 | 734 15,008 | 1,136 22,145 18.50 1,000 4.34 95 139 |
| 15.95 | 12.22 | 19.45 | |||
| 338 | 349 | 1,053 | |||
| 2.84 | 3.76 | 2.78 | |||
| 94 | 95 | 94 | |||
| 29 | 41 | 90 | |||
| Total cash cost/oz AISC/OZ | 1,172 | 996 1,062 | 717 | 996 | 675 795 |
| 1,219 | 800 | 1,051 |
Q3-2022 vs Q2-2022 Insights
- Production increased from 27koz in Q2-2022 to 29koz in Q3-2022, due to higher processed grade, which was partially offset by lower mill throughput.
- Total tonnes mined and tonnes of ore mined decreased as mining activities were reduced in order to manage production through supply chain delays. Ore mining was focussed on the higher grade areas of the West pit while waste development was focussed on the West pit flank.
- Tonnes milled decreased due to slightly lower mill availability and utilisation, which was partially offset by improved milling rates benefiting from improvements in blasting fragmentation.
- Processed grade increased as ore was sourced from higher grade areas of the West pit, in line with the mine sequence.
- Recovery rates increased slightly due to an increased proportion of ore from the West pit being processed, which has higher associated recovery rates.
- AISC increased from $1,062 per ounce in Q2-2022 to $1,219 per ounce in Q3-2022 due to the increase in unit costs resulting from supply chain delays, which were slightly offset by lower sustaining capital.
- Sustaining capital expenditure decreased from $1.8 million in Q2-2022 to $1.4 million in Q3-2022 and primarily related to mining infrastructure and capital spares.
- Non-sustaining capital expenditure decreased from $8.3 million in Q2-2022 to $4.0 million in Q3-2022 and primarily related to pre-stripping activity at the West pit flank.
YTD-2022 vs YTD-2021 Insights
•
| Production decreased from | 139 | koz | YTD-2021 | to | 90 | koz | YTD-2022 | primarily due to lower processed grades and supply chain | |||
| delays in | YTD-202 | 2, while higher grade stockpiles were used to supplement the | higher grade ore sourced from the West pit | ||||||||
| in 2021. |
•
| AISC increased from $ | 795 | per ounce | YTD-2021 | to $ | 1,051 | per ounce | YTD-2022 | as a result of the decrease in gold volumes |
| sold, higher unit mining costs and use of lower grade stockpiles, which were partially offset by lower sustaining capital | ||||||||
| spend. |
2022 Outlook
- Boungou’s FY-2022 production is expected to be below the guided 130—140koz range and its FY-2022 AISC is expected to be above its $900 - $1,000 per ounce range, given supply chain delays which are limiting mining activities and causing production interruptions.
- In Q4-2022, waste extraction is expected to continue in the West pit and West pit flank, while ore is expected to continue to be sourced mainly from the West pit. Mill throughput is expected to be significantly lower during the quarter as a result of supply chain delays which has resulted in several plant downtimes during the quarter to date, while grades are expected to remain flat as the higher grade ore from the West pit is expected to be blended with lower grade stockpiles.
•
| The sustaining capital expenditure for FY-2022 is expected to be below the guidance of $15.0 million, of which | $5.1 | million | |||
| has been incurred | YTD-2022 | as a result of lower than planned waste tonnes mined from the East pit in H1-2022 resulting in | |||
| lower capitalised waste. In Q4-2022, sustaining capital expenditure is expected to mainly | relate to borehole installations and | ||||
| processing infrastructure. |
•
| The non-sustaining capital expenditure for FY-2022 will amount to more than the guidance of $19.0 million, with | $21.5 | ||||
| million | already incurred | YTD-2022 | , as more capital was dedicated to the West pit stage 3 push back in H1-2022 and West pit | ||
| flank pre-strip in H2-2022. In Q4-2022, | non-sustaining capital expenditure is expected to mainly relate to the West pit flank | ||||
| pre-stripping activity. |
Houndé Gold Mine, Burkina Faso
Table 9: Houndé Performance Indicators
| For The Period Ended | Q3-2022 | Q2-2022 | Q3-2021 | YTD-2022 | YTD-2021 |
|---|---|---|---|---|---|
| Tonnes ore mined, kt Total tonnes mined, kt Strip ratio (incl. waste cap) Tonnes milled, kt Grade, g/t Recovery rate, % PRODUCTION, KOZ | 1,174 9,178 | 1,330 10,725 7.06 1,217 2.42 94 87 | 596 11,966 | 3,842 32,589 | 3,620 37,620 9.39 3,396 2.15 92 216 |
| 6.82 | 19.07 | 7.48 | |||
| 1,234 | 1,142 | 3,684 | |||
| 1.83 | 2.11 | 2.06 | |||
| 92 | 92 | 93 | |||
| 72 | 70 | 232 | |||
| Total cash cost/oz AISC/OZ | 631 | 699 807 | 631 | 676 | 672 833 |
| 716 | 921 | 767 |
- Production decreased from 87koz in Q2-2022 to 72koz in Q3-2022 due to lower grade ore processed and lower gold recoveries.
- Total tonnes mined and tonnes of ore mined decreased slightly compared to the prior quarter due to increased rainfall impacting mining at the Vindaloo Main and Kari West pits. Ore mining was focussed on the Kari Pump pit with supplemental ore from the Vindaloo Main and Kari West pits.
- Tonnes milled increased slightly due to higher mill availability, despite a slightly higher proportion of transitional and fresh ore being introduced into the ore blend.
- Average processed grades decreased due to mining in lower grade areas of the Kari Pump pit as well as lower grades from the Vindaloo Main and Kari West pits.
- Recovery rates decreased slightly due to the slightly higher proportion of transitional and fresh ore in the ore blend.
- AISC decreased from $807 per ounce in Q2-2022 to $716 per ounce in Q3-2022 due to lower processing unit cost, lower sustaining capital and the lower strip ratio during the quarter, which was partially offset by lower gold sales in the period.
- Sustaining capital expenditure decreased from $9.3 million in Q2-2022 to $6.4 million in Q3-2022 due to lower waste capitalisation at the Vindaloo Main pit as well as mining fleet re-builds.
- Non-sustaining capital expenditure increased from $3.4 million in Q2-2022 to $18.4 million in Q3-2022, mainly related to the acceleration of pre-stripping at the next stage of the Kari Pump pit, as well as the ongoing TSF raise and infrastructure in the Kari area.
YTD-2022 vs YTD-2021 Insights •
| Production increased from 2 | 16koz | YTD-2021 | to | 232koz | YTD-2022 | as a result of increased mill throughput and recoveries |
| due to increased mining flexibility and availability of a higher proportion of soft oxide ore from the Kari West pit. The | ||||||
| average grade in the mill feed decreased slightly, due to lower grade areas mined at the Kari Pump pit and the use of lower | ||||||
| grade stockpiles. |
•
| AISC decreased from $833 per ounce YTD-2021 to $ | 767 | per ounce | YTD-2022 | due to the greater volume of | ounces sold and |
| lower sustaining capital, which was partially offset by higher operating costs. |
2022 Outlook
- Houndé is expected to beat its FY-2022 production guidance of 260—275koz and also beat its AISC guidance of $875—925 per ounce as YTD-2022 performance was stronger than forecast due to the benefit of high-grade oxide ore from the Kari Pump pit.
- In Q4-2022, ore is expected to be mainly sourced from the Vindaloo Main and Kari West pits, while stripping activities continue at the Kari Pump pit stage 3. Slightly lower ore tonnes mined, ore tonnes processed, processed grades and recovery rates are expected in Q4-2022 due to the increased focus on stripping activity and lower quantities of high grade oxide ore available from the Kari Pump pit.
•
| The sustaining capital expenditure for FY-2022 is expected to be below the guidance of $44.0 million, of which | $21.1 | million | |||
| has been incurred | YTD-2022 | , primarily due to timing of Vindaloo waste development. In Q4-2022, sustaining capital is | |||
| expected to relate to | spare parts and fleet re-builds as well as waste capitalisation at the Vindaloo Main pit. |
•
| The non-sustaining capital expenditure for FY-2022 will amount to more than the guidance of $18.0 million, with | $25.6 | ||||
| million already incurred | YTD-2022 | , primarily due to the acceleration of pre-stripping activity at the Kari Pump stage 3 pit, in | |||
| support of the strong YTD-2022 production outperformance. In Q4-2022 | , non-sustaining capital expenditure is expected to | ||||
| relate to pre-stripping activities at the Kari Pump stage 3 pit, resettlement, mine infrastructure in the Kari West area and | |||||
| completion of a TSF wall raise | . |
Ity Gold Mine, Côte d’Ivoire
Table 10: Ity Performance Indicators
| For The Period Ended | Q3-2022 | Q2-2022 | Q3-2021 | YTD-2022 | YTD-2021 |
|---|---|---|---|---|---|
| Tonnes ore mined, kt Total tonnes mined, kt Strip ratio (incl. waste cap) Tonnes milled, kt Grade, g/t Recovery rate, % PRODUCTION, KOZ | 1,180 | 1,668 6,027 2.61 1,597 1.77 86 77 | 1,690 | 5,382 | 5,672 18,326 2.23 4,624 1.74 81 212 |
| 4,925 | 5,576 | 17,902 | |||
| 3.17 | 2.30 | 2.33 | |||
| 1,375 | 1,530 | 4,641 | |||
| 2.04 | 1.50 | 1.82 | |||
| 87 | 83 | 84 | |||
| 81 | 61 | 230 | |||
| Total cash cost/oz AISC/OZ | 741 | 804 895 | 828 | 751 | 749 830 |
| 773 | 915 | 799 |
- Production increased from 77koz in Q2-2022 to 81koz in Q3-2022 due to a higher average grade processed and improved recoveries, which was slightly offset by lower plant throughput.
- Total tonnes mined and tonnes of ore mined decreased due to the impact of the wet season and to a greater focus on waste stripping activity at the Bakatouo and Le Plaque pits, which resulted in an increased strip ratio during the quarter.
- Tonnes milled decreased due to the higher proportion of fresh and transitional ore processed which resulted in lower throughput rates.
- Average grade milled increased slightly as an increased proportion of high grade ore from Le Plaque was processed.
- Recovery rates increased slightly due to the higher proportion of fresh ore blended into the feed during the wet season to reduce plant blockages, which has higher associated recoveries in the mill feed.
- AISC decreased from $895 per ounce in Q2-2022 to $773 per ounce in Q3-2022 primarily due to lower sustaining capital as a result of less waste stripping during the quarter, which was partially offset by higher unit mining costs due to the higher haulage costs associated with the increased proportion of ore feed from the Le Plaque pit.
- Sustaining capital expenditure decreased from $6.9 million in Q2-2022 to $2.5 million in Q3-2022 and related primarily to spare parts, mine infrastructure and mining fleet upgrades.
- Non-sustaining capital expenditure increased from $5.6 million in Q2-2022 to $15.4 million in Q3-2022 and related primarily to the ongoing Recyanidation project, the TSF stage 4 compensation and waste capitalisation associated with the Ity pit cut back.
- The Recyanidation project remains on track to be commissioned in mid-2023, with approximately 30% of the project completed to date. Detailed design and engineering has been completed and procurement is now 50% complete. Early works, including bulk earthworks and civil works are underway and 52% of the capital has now been committed. The circuit aims to optimise costs by reducing leaching and detox reagent consumption, improving the quality of the discharge water, and increasing production through higher recovery rates. The project is expected to result in 87koz of additional gold production and $63 million in cost savings over Ity’s current reserve life for an upfront capital cost of $41 million, of which $15 million is expected to be incurred in FY-2022.
YTD-2022 vs YTD-2021 Insights •
| Production increased from | 212 | koz | YTD-2021 | to | 230 | koz | YTD-2022 | due to an increase in a | verage grade milled and recoveries |
| due to increased contributions from higher grade areas of the Le Plaque pit and a lower proportion of ore processed from | |||||||||
| the Daapleu pit, which has lower associated recoveries. Mill throughput remained consistent with the prior period. |
•
| AISC decreased from $ | 830 | per ounce | YTD-2021 | to $ | 799 | per ounce | YTD-2022 | due to | an increase in gold ounces sold and a |
| decrease in sustaining capital, which was partially offset by higher mining and processing unit costs. |
2022 Outlook
- Ity is expected to beat its FY-2022 production guidance of 255—270koz and also beat its AISC guidance of $850—900 per ounce due to the benefit of processing more high grade oxide ore from the Le Plaque pit and less fresh ore from the Dapleau pit, compared to forecast.
•
| In Q4-2022, the mill feed is expected to be sourced primarily from the Le Plaque, Ity and Walter pits and supplemented by | |
| historic stockpiles. Recovery rates are expected to remain stable, while the average grade is expected to be slightly lower | as |
| feed from lower grade historical heaps is increasingly blended into the mill feed. |
•
| The sustaining capital expenditure for FY-2022 is expected to be below the guidance of $20.0 million, of which | $10.9 | million | ||
| has been incurred YTD | -2022, due to [lower than planned capitalised waste mining at Ity and Bakatouo pits in the year.] | In | ||
| Q4-2022, sustaining capital expenditure is expected to mainly relate to mining and processing infrastructure. |