Endeavour Reports Record Q2-2021 Results; Well Positioned to Achieve Top-Half of Full Year Production Guidance Operational and Financial Highlights
NEWS RELEASE – LSE & TSX: EDV All amounts in US$
ENDEAVOUR REPORTS RECORD Q2-2021 RESULTS; WELL POSITIONED TO ACHIEVE TOP-HALF OF FULL YEAR PRODUCTION GUIDANCE OPERATIONAL AND FINANCIAL HIGHLIGHTS
- Q2-2021 production up 18% over Q1-2021 to 409koz, while AISC decreased by $15/oz to $853/oz
- Strong H1-2021 performance of 756koz at an AISC of $860/oz positions the Group well to meet the top half of its FY-2021
production guidance of 1,365-1,495koz at an AISC of $850-900/oz
- Adjusted Net Earnings (from cont. operations) of $183m or $0.73/share in Q2-2021; $276m or $1.20/share in H1-2021
- Operating Cash Flow before working capital (from cont. operations) of $286m or $1.13/share in Q2-2021; $549m or $2.39/share in H1-2021
- Healthy balance sheet at quarter-end with Net Debt to adjusted EBITDA leverage ratio of 0.07x; Net Debt decreased by $85m during the quarter to $77m and gross debt decreased by $120m
SHAREHOLDER RETURNS PROGRAMME
- First dividend of $60m paid on 5 February 2021 for the 2020 fiscal year
- Declaration of H1-2021 interim dividend of $70m, with record date set at 10 September 2021; well positioned to deliver more than the minimum committed dividend of $125m for the full year
- Share buybacks continue to supplement shareholder returns with a total of $70m of shares repurchased since April 2021, $59m of which were repurchased in Q2-2021
ORGANIC GROWTH
- Construction of Sabodala-Massawa Phase 1 expansion on schedule for completion by year-end; DFS underway for Sabodala-Massawa Phase 2 expansion, Fetekro, and Kalana projects
- Group on track to discover over 2.5Moz of Indicated resources in 2021; significant discoveries recently made at Ity, Houndé, Sabodala-Massawa and Fetekro
London, 4 August, 2021 – Endeavour Mining plc (LSE:EDV, TSX:EDV, OTCQX:EDVMF) ('Endeavour' or the 'Group' or the 'Company') is pleased to announce its financial and operating results for Q2-2021 and H1-2021, with highlights provided in Table 1 below. Management will host a conference call and webcast on Wednesday 4 August, at 8:30 am ET / 1:30 pm BST. For instructions on how to participate, please refer to the conference call and webcast section at the end of the news release.
Table 1: Consolidated Highlights1 THREE MONTHS ENDED SIX MONTHS ENDED
| All amounts in US$ million, unless otherwise stated | 30 June 2021 | 31 March 30 June 2021 2020 | 30 June 2021 | 30 June 2020 | Δ H1-2021 vs. H1-2020 |
|---|---|---|---|---|---|
| OPERATING DATA Gold Production, koz All-in Sustaining Cost2, $/oz Realised Gold Price, $/oz | 347 149 868 941 1,749 1,680 | 321 916 1,603 | |||
| 409 | 756 | +136% | |||
| 853 | 860 | (6)% | |||
| 1,791 | 1,771 | +10% | |||
| CASH FLOW FROM CONTINUING OPERATIONS3 Operating Cash Flow Before Changes in Working Capital Operating Cash Flow Before Changes in Working Capital2, $/share Operating Cash Flow Operating Cash Flow2, $/share | 263 75 1.27 0.67 207 53 0.99 0.48 | 170 1.54 153 1.38 | |||
| 286 | 549 | +223% +55% +231% +60% | |||
| 1.13 | 2.39 | ||||
| 300 | 507 | ||||
| 1.19 | 2.21 | ||||
| PROFITABILITY FROM CONTINUING OPERATIONS3 EBITDA2 Adjusted EBITDA2 Net Earnings/(loss) Attributable to Shareholders2 Net Earnings per Share, $/share Adjusted Net Earnings Attributable to Shareholders2 Adjusted Net Earnings per Share2, $/share | 333 23 306 99 87 (38) 0.42 (0.35) 93 49 0.45 0.44 | 124 206 (22) (0.20) 74 0.66 | |||
| 363 400 | 696 | +461% +243% (1068)% (565)% +273% +82% | |||
| 706 | |||||
| 127 | 213 | ||||
| 0.50 | 0.93 | ||||
| 183 | 276 | ||||
| 0.73 | 1.20 | ||||
| SHAREHOLDER RETURNS Dividends paid Share buyback (commenced in Q2-2021) | 60 — — — | — — | |||
| — | 60 | n.a. n.a. | |||
| 59 | 59 | ||||
| FINANCIAL POSITION HIGHLIGHTS Net Debt/(Net Cash)2 Net (Cash)/Debt / Adjusted EBITDA (LTM) ratio2,4 | 162 473 0.16 1.00 | 473 1.00 | |||
| 77 | 77 | (84)% (93)% | |||
| 0.07 | 0.07 |
1All amounts include Teranga assets from 10 February, 2021 2This is a non-GAAP measure. Refer to the non-GAAP measure section of the Management Report. 3From Continuing Operations excludes the Agbaou mine which was divested on 1 March, 2021. 4LTM means last twelve months.
Sebastien de Montessus, President and CEO, commented: “Our strong Q2 performance positions us well to achieve the top half of our production guidance for the full year, as all our mines are continuing to perform well and we have quickly integrated the Teranga assets within our business.
Our strong free cash flow generation has significantly improved our balance sheet strength and bolstered our ability to reward shareholders. We paid our first dividend of $60 million in Q1 for the 2020 fiscal year, and today we are declaring an interim dividend of $70 million for H1-2021, placing us on track to deliver more than the guided minimum dividend of $125 million for the full year. Given our near zero Net Debt to adjusted EBITDA leverage ratio, we have been supplementing our shareholder return programme with share buybacks, having repurchased $70 million of shares since April.
Our growth pipeline continues to develop with the Sabodala-Massawa phase 1 expansion on track to be completed in Q4-2021 while Definitive Feasibility Studies are progressing well for the Sabodala-Massawa Phase 2 expansion, Fetekro, and Kalana projects.
We have enjoyed further exploration success, with significant discoveries made at Ity, Houndé, Sabodala-Massawa and Fetekro, where updated resources are expected to be published later this year. Overall, the group is on track to delineate over 2.5 million ounces of Indicated resources in 2021, which represents significantly more than the expected annual depletion and contributes to our portfolio’s longevity.
We are also very pleased to have successfully completed our listing on the premium-segment of the London Stock Exchange in June and remain on track to be included into the UK and European indexes.
These achievements leave Endeavour well positioned for the remainder of the year and beyond.”
UPCOMING CATALYSTS
The key upcoming expected catalysts are summarized in the table below.
Table 2: Key Upcoming Catalysts
TIMING CATALYST
Q3-2021 Exploration 5-year exploration strategy Q4-2021 Sabodala-Massawa Completion of Phase 1 plant upgrades Q4-2021 Sabodala-Massawa Completion of Definitive Feasibility Study for Phase 2 Q4-2021 Fetekro Completion of Definitive Feasibility Study Q1-2022 Kalana Completion of Definitive Feasibility Study
LONDON STOCK EXCHANGE LISTING
- Endeavour’s premium listing on the London Stock Exchange (“LSE”) was successfully completed on 14 June 2021, positioning Endeavour as the largest pure-play gold producer listed on the premium segment of the LSE.
- Endeavour is well positioned to be included in the upcoming FTSE Russell index quarterly review based on its recent redomicile to the UK and subject to its trading liquidity being above the required threshold. Membership changes to the indices are expected to be communicated by FTSE Russell on 1 September 2021 with potential inclusion becoming effective on the 20 September 2021.
- In addition, Endeavour expects to be eligible for inclusion in the MSCI Europe index, with index rebalancing occurring on 30 November 2021 following the semi-annual review which is expected to be completed by mid-November.
SHAREHOLDER RETURNS PROGRAM
- As disclosed on 7 June 2021, Endeavour has implemented a shareholder returns programme that is composed of a minimum progressive dividend that may be supplemented with additional dividends and 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 progressive dividend policy has a target of distributing at least $500 million to shareholders over the next three years. Minimum dividends are set at $125 million, $150 million and $175 million for FY-2021, FY-2022, and FY-2023 respectively, payable semi-annually, significantly higher than our inaugural FY-2020 dividend of $60 million.
- Endeavour is pleased to declare its H1-2021 interim dividend of $70 million or $0.28 per share based on its current issued share capital, which represents 56% of the minimum dividend for FY-2021, highlighting its strong commitment to paying supplemental shareholder returns. The ex-dividend date for the interim dividend will be 9 September 2021 and the record date will be 10 September 2021. The dividend will be paid on or about 28 September 2021 (the “Payment Date”).
- Shareholders of shares traded on the Toronto Stock Exchange will receive dividends in Canadian Dollars (“CAD”), but can elect to receive United States Dollars (“USD”). Shareholders of shares traded on the London Stock Exchange will receive dividends in USD, but can elect to receive Pounds Sterling (“GBP”). Certificated shareholders will receive dividends in USD but
can elect to receive dividends in GBP or CAD. Currency elections must be made by shareholders prior to 17:00 GMT on 13 September 2021. Dividends will be paid in the default or elected currency on the Payment Date, at the prevailing USD:CAD and USD:GBP exchange rates on 15 September 2021. This dividend does not qualify as an “eligible dividend” for Canadian income tax purposes. The tax consequences of the dividend will be dependent on the particular circumstances of a shareholder.
- Shareholder returns are being supplemented through the Company’s share buyback programme. A total of $70 million of shares have been repurchased since the start of the buyback programme on 9 April 2021 until end of July 2021, of which $59 million or 2.7 million shares were repurchased in Q2-2021.
ON TRACK TO ACHIEVE FY-2021 GUIDANCE
- Strong H1-2021 performance of 756koz at an AISC of $860/oz positions the Group well to meet the top-half of its FY-2021 production guidance of 1,365-1,495koz at an AISC of $850-900/oz.
- H2-2021 will benefit from the full consolidation of the Sabodala-Massawa and Wahgnion mines, which have been consolidated starting from the closing date of the Teranga Gold acquisition of 10 February 2021.
- Group sustaining and non-sustaining capital expenditure outlook for FY-2021 remains in line with initial guidance of $173 million and $201 million, respectively.
Table 3: H1-2021 Performance vs. FY-2021 Guidance
| H1-2021 | 2021 FULL YEAR GUIDANCE | |
| Production, koz AISC, $/oz | 756 | 1,365 — 1,495 850 — 900 |
| 860 |
CASH FLOW AND LIQUIDITY SUMMARY
The table below presents the cash flow and Net Debt position for Endeavour for the three and six month period ending 30 June, 2021, with accompanying notes below.
Table 4: Cash Flow and Net Debt Position
THREE MONTHS ENDED SIX MONTHS ENDED
| In US$ million unless otherwise specified | 30 June 2021 | 31 March 30 June 2021 2020 | 30 June 2021 | 30 June 2020 | ||
|---|---|---|---|---|---|---|
| Net cash from (used in), as per cash flow statement: Operating cash flows before changes in working capital from cont. operations Changes in working capital Cash generated from/(used by) discontinued operations | 263 75 (57) (21) (9) 4 | 170 (17) 30 | ||||
| 286 15 0 | 549 (42) (9) | |||||
| Cash generated from operating activities (Note 1) Cash used by investing activities (Note 2) Cash (used in)/generated from financing activities (Note 3) Effect of exchange rate changes on cash | 300 | 198 57 (105) (48) 65 (16) (4) 1 | 498 | 183 (105) 84 0 | ||
| (137) | (243) | |||||
| (192) (7) | (127) (10) | |||||
| INCREASE/(DECREASE) IN CASH (35) 154 (6) 118 162 | ||||||
| Cash position at beginning of period | 868 | 715 357 | 715 | 190 | ||
| CASH POSITION AT END OF PERIOD | (Note 4) | 833 868 | 352 | 833 352 | ||
| Equipment financing Convertible senior bond Drawn portion of corporate loan facility (Note 5) | 0 (330) (580) | 0 (64) (330) (330) (700) (430) | 0 (330) (580) | (64) (330) (430) | ||
| NET DEBT/ (CASH) POSITION | (Note 6) | 77 162 | 473 | 77 | 473 | |
| Net Debt / Adjusted EBITDA (LTM) ratio1 (Note 7) | 0.07 x | 0.16 x 1.00 x | 0.07 x | 1.00 x |
1Net Debt and Adjusted EBITDA are Non-GAAP measures. Refer to the non-GAAP measure section of the Management Report.
NOTES:
1) Operating cash flows increased by $102.5 million from $197.9 million (or $0.99 per share) in Q1-2021 to $300.5 million (or $1.19 per share) in Q2-2021 mainly due to higher gold sales at a higher realised price as well as lower operating costs and a working capital inflow, which more than offset the higher income taxes paid and the foreign exchange losses incurred.
Operating cash flow before non-cash working capital from all operations increased by $22.2 million from $263.4 million (or $1.27 per share) in Q1-2021 to $285.7 million (or $1.13 per share) in Q2-2021. Notable variances are summarised below:
- Gold sales increased by 57koz over Q1-2021 to 421koz in Q2-2021 due to the benefit of a full quarter of production from the newly acquired Sabodala-Massawa and Wahgnion mines, together with strong performances at Houndé and Ity. The realised gold price for Q2-2021 was $1,791/oz compared to $1,749/oz for Q1-2021. Total cash cost per ounce decreased from $751/oz in Q1-2021 to $729/oz in Q2-2021 due to the inclusion of the lower cost Wahgnion and Sabodala-Massawa mines for the full quarter
- Income taxes paid increased by $82.9 million to $106.5 million in Q2-2021 reflective of the timing of provisional payments based on full year 2020 earnings
- Working capital was an inflow of $14.8 million in Q2-2021 due to the reduction in receivable balances and inventories. Specifically, VAT receivables at Houndé decreased and certain corporate receivables were received in Q2-2021. There was also a reduction in inventory stockpiles and finished gold inventories at Ity, Sabodala-Massawa and Wahgnion
- Acquisition and restructuring costs of $14.5 million in Q2-2021 related to the Teranga acquisition and integration as well as restructuring costs
2) Cash flows used by investing activities increased from Q1-2021 to $137.3 million in Q2-2021 due to increased expenditures on mining interest including sustaining capital and non-sustaining capital:
- Sustaining capital from continuing operations increased by $13.9 million from Q1-2021 to $41.5 million in Q2-2021 due to higher sustaining capital at Boungou, Houndé and Ity primarily due to planned waste capitalisation
- Non-sustaining capital from continuing operations increased slightly in Q2-2021 to $58.3 million, due to increases at Wahgnion and increases in non-mining capital expenditure which were mostly offset by decreases at Ity, Mana and Houndé
- Growth capital spend decreased by $15.4 million from Q1-2021 to $12.6 million in Q2-2021 and primarily relates to the Massawa expansion with the remainder for ongoing Definitive Feasibility Studies (“DFS”) studies
3) Cash flows used by financing activities increased by $256.4 million to $191.8 million in Q2-2021 mainly due to a higher net repayment of long-term debt in Q2-2021, which was $120.0 million and payments for the acquisition of own shares, as part of the ongoing share buyback programme, of $59.5 million, which started in Q2-2021.
4) At quarter-end, Endeavour’s liquidity remained strong with $832.9 million of cash on hand and $220.0 million undrawn of the RCF. The Company will seek to reduce its cash balance in the upcoming quarters by continuing to pay down its debt.
5) Endeavour's corporate loan facility was increased from $430.0 million to $800.0 million in Q1-2021 to retire Teranga’s various higher cost debt facilities. In Q2-2021 $120.0 million was repaid on the facility with $580.0 million drawn on the facility at quarter-end.
6) Net Debt amounted to $77.1 million at quarter-end, a decrease of $84.9 million during the quarter despite dividend payments of $60.0 million and $59.5 million of shares repurchased. In H1-2021, Net Debt increased by $152 million compared to the beginning of the year as approximately $332 million of Net Debt was absorbed from Teranga in Q1-2021.
7) The Net Debt / Adjusted EBITDA (LTM) leverage ratio ended the quarter at a healthy 0.07x, down from 0.16x in Q1-2021, and well below the Company’s long-term target of less than 0.50x, which provides flexibility to continue to supplement its shareholder return programme while maintaining headroom to fund its organic growth. The ratio has improved by 93% from the corresponding period last year when the ratio stood at 1.00x.
EARNINGS FROM CONTINUING OPERATIONS
The table below presents the earnings and adjusted earnings for Endeavour for the three and six month period ending 30 June, 2021, with accompanying notes below.
Table 5: Earnings from Continuing Operations
THREE MONTHS ENDED SIX MONTHS ENDED
| 30 June 2021 | 31 March 2021 | 30 June 2020 | 30 June 2021 | 30 June 2020 | ||
|---|---|---|---|---|---|---|
| Revenue (Note 8) Operating expenses (Note 9) Depreciation and depletion (Note 9) Royalties (Note 10) | 753 (278) (158) (44) | 636 210 (253) (83) (132) (35) (44) (15) | 1,389 (531) (290) (88) | 436 (179) (78) (30) | ||
| Earnings from mine operations | 273 207 76 480 148 | |||||
| Corporate costs (Note 11) Acquisition and restructuring costs (Note 12) Share-based compensation Exploration costs | (16) (15) (10) (6) | (11) (5) (12) (3) (8) (5) (10) (2) | (30) (27) (18) (16) | (10) (7) (7) (3) | ||
| Earnings from operations | 227 165 61 389 121 | |||||
| (Loss)/gain on financial instruments (Note 13) Finance costs Other (expense)/income | (15) (14) (7) | 42 (72) (12) (12) (6) (2) | 27 (26) (11) | (75) (23) — | ||
| Earnings before taxes | 191 189 (25) 380 23 | |||||
| Current income tax expense (Note 14) Deferred income tax recovery/(expense) | (44) 2 | (72) — (6) (6) | (117) (4) | (19) (7) | ||
| Net comprehensive earnings/(loss) from continuing operations | (Note 15) | 149 111 (31) 260 (3) | ||||
| Add-back adjustments (Note 16) | 59 | 14 89 | 71 | 97 | ||
| Adjusted net earnings from continuing operations | (Note 17) | 208 125 59 331 94 | ||||
| Portion attributable to non-controlling interests | 25 | 32 9 | 54 | 20 | ||
| Adjusted net earnings from continuing operations attributable to shareholders of the Company | (Note 17) | 183 93 | 49 276 74 | |||
| Earnings/(loss) per share from continuing operations Adjusted net earnings per share from continuing operations | 0.50 | 0.40 (0.35) 0.45 0.44 | 0.93 | (0.20) 0.66 | ||
| 0.73 | 1.20 |
NOTES:
8) Revenue for Q2-2021 was $753.4 million compared to $635.8 million for Q1-2021. The increase in revenue in Q2-2021 was mainly due to higher gold sales in Q2-2021 due to the benefit of a full quarter of production from the newly acquired Sabodala-Massawa and Wahgnion mines, together with strong performances at Houndé and Ity and a higher realised gold price for Q2-2021 of $1,791/oz compared to $1,749/oz for Q1-2021.
9) Operating expenses and depreciation and depletion increased for Q2-2021 compared to Q1-2021 due to the addition of the Wahgnion and Sabodala-Massawa mines, which were acquired on 10 February, 2021, for the full quarter.
10) Royalties were $43.9 million for Q2-2021, compared to $44.4 million in Q1-2021. Royalty expenses remained stable as the decrease in realised gold price was offset by increased production from the Wahgnion and Sabodala-Massawa mines acquired on 10 February, 2021.
11) Corporate costs were $15.9 million for Q2-2021 compared to $11.4 million for Q1-2021. The increase in corporate costs are primarily due to costs associated with listing on the LSE as well as additional corporate costs following the integration of Teranga.
12) Acquisition and restructuring costs were $14.5 million in Q2-2021 compared to $12.2 million in Q1-2021. Costs slightly increased in Q2-2021 compared to the comparative period due to the acquisition of Teranga on 10 February 2021 and the costs related to the integration of the entity into the Endeavour Group.
13) The loss on financial instruments was $14.8 million in Q2-2021 compared to a gain of $42.1 million in Q1-2021. The loss in Q2-2021 is mainly due to the net impact of a loss on change in fair value of the warrant liabilities and call rights of $5.3 million and $7.0 million respectively, and foreign exchange losses of $7.2 million. The gain in Q1-2021 is primarily due to the net impact of the unrealised gain/(loss) on convertible senior bond derivative of $30.0 million, loss on foreign exchange of $6.2 million, and a loss on change in fair value of warrant liabilities of $1.5 million.
14) Current income tax expense was $44.5 million in Q2-2021 compared to $72.1 million in Q1-2021. Current income tax expense for Q2-2021 decreased compared to Q1-2021, despite the inclusion of the Wahgnion and Sabodala-Massawa mines acquired in Q1-2021, due to an adjustment to the income tax accrual upon finalisation of the FY-2020 income tax filings. Income taxes paid of $106.5 million in Q2-2021 were materially higher than income taxes expensed reflecting higher provisional payments made at the end of the 2020/2021 tax year.
15) Net comprehensive earnings were $148.9 million for Q2-2021 compared to $110.9 million in Q1-2021. The increase in earnings was related to higher earnings from mine operations due to the addition of Wahgnion and Sabodola-Massawa, as well as a lower income tax expense, which contained one-off expenses related to the divestment of Agbaou in Q1-2021.
16) Adjustments relate mainly to loss/(gain) on financial instruments, loss on discontinued operations, deferred income tax, share based compensation, non-recurring items and acquisition and restructuring costs.
17) Adjusted Net Earnings attributable to shareholders for continuing operations were $183.1 million (or $0.73 per share) in Q2-2021 compared to $93.2 million (or $0.45 per share) in Q1-2021.
OPERATIONS REVIEW SUMMARY
- Continued strong safety record for the Group, with a Lost Time Injury Frequency Rate (“LTIFR”) of 0.16 for the trailing twelve months ending 30 June, 2021.
- The acquisition of Teranga Gold was completed on 10 February, 2021 and the Sabodala-Massawa and Wahgnion assets have been consolidated into the financial statements from this date. The sale of Endeavour's non-core Agbaou mine closed on 1 March, 2021, and has been classified as a discontinued operation.
- A stronger than guided performance was achieved in Q2-2021 due to outperformance at Houndé and Ity which benefited from less rainfall than usual.
- Production increased 18% in Q2-2021 over Q1-2021 to 409koz, while AISC decreased by $15/oz to $853/oz, due to the full benefit of consolidated production from Sabodala-Massawa and Wahgnion, and the strong operational performance as noted above.
Table 6: Consolidated Group Production THREE MONTHS ENDED SIX MONTHS ENDED
| (All amounts in koz, on a 100% basis) | 30 June 2021 | 31 March 2021 | 30 June 2020 | 30 June 2021 | 30 June 2020 |
|---|---|---|---|---|---|
| Boungou Houndé Ity Karma Mana Sabodala-Massawa1 Wahgnion1 | 39 | 60 — 66 57 71 47 22 20 52 — 39 — 25 — | 99 | — 113 108 48 — — — | |
| 80 | 146 | ||||
| 79 | 150 | ||||
| 25 | 47 | ||||
| 49 | 102 | ||||
| 96 | 135 | ||||
| 41 | 66 | ||||
| PRODUCTION FROM CONTINUING OPERATIONS | 409 | 334 125 | 743 | 269 | |
| Agbaou2 | — | 13 24 | 13 | 52 | |
| GROUP PRODUCTION | 409 | 347 | 149 | 756 | 321 |
1Included for the post acquisition period commencing 10 February, 2021. 2Divested on 1 March, 2021.
Table 7: Consolidated All-In Sustaining Costs1
THREE MONTHS ENDED SIX MONTHS ENDED
| (All amounts in US$/oz) | 30 June 2021 | 31 March 2021 | 30 June 2020 | 30 June 2021 | 30 June 2020 |
|---|---|---|---|---|---|
| Boungou Houndé Ity Karma Mana Sabodala-Massawa1 Wahgnion1 Corporate G&A Sustaining exploration | 950 | 690 — 839 965 786 789 1,179 951 954 — 749 — 780 — 31 34 — — | 793 | — 1,020 707 889 — — — 32 — | |
| 741 | 787 | ||||
| 806 1,070 1,016 637 980 | 796 1,120 982 | ||||
| 675 | |||||
| 903 | |||||
| 25 | 28 | ||||
| — | — | ||||
| AISC FROM CONTINUING OPERATIONS | 853 | 858 938 | 855 | 909 | |
| Agbaou2 | — | 1,131 955 | 1,131 | 953 | |
| GROUP AISC | 853 | 868 941 | 860 | 916 |
1Included for the post acquisition period commencing 10 February, 2021. 2Divested on 1 March 2021.
OPERATING ACTIVITIES BY MINE
Boungou Gold Mine, Burkina Faso
Table 8: Boungou Performance Indicators
| For The Period Ended | Q2-2021 | Q1-2021 | Q2-2020 | H1-2021 | H1-2020 |
|---|---|---|---|---|---|
| Tonnes ore mined, kt Total tonnes mined, kt Strip ratio (incl. waste cap) Tonnes milled, kt Grade, g/t Recovery rate, % PRODUCTION, KOZ | 350 | 246 6,672 26.11 315 5.52 96 60 | — | 596 | — — — — — — — |
| 8,347 | — | 15,018 | |||
| 22.82 | — | 24.18 | |||
| 336 | — | 651 | |||
| 3.84 | — | 4.65 | |||
| 95 | — | 95 | |||
| 39 | — | 99 | |||
| Total cash cost/oz AISC/OZ | 714 | 619 690 | — | 657 | — — |
| 950 | — | 793 |
Q2-2021 vs Q1-2021 Insights
- Gold production significantly decreased relative to Q1-2021, as greater throughput was offset by lower grades. Mining and mill feed was constrained to lower grade areas as the larger mining fleet was focused on waste extraction at the East pit.
- Total tonnes mined was higher following the commissioning of additional mining equipment during Q1-2021. Mining activities continued to focus on the West pit with total tonnes of ore mined increasing as a result of the lower strip ratio and the benefit of mining on the top benches. Pre-stripping activities at the East pit continued during Q2-2021.
- Tonnes milled increased in Q2-2021 relative to Q1-2021 as higher mill utilisation resulted from improved mining fragmentation of the ore, as well as the benefit of improvements made to the SAG mill, pebble crusher and vertical tower mill which started in Q4-2020 following the restart of mining.
- Average processed grade decreased during Q2-2021 as the mill feed was mainly sourced from the lower grade areas of the West Pit, as the higher grade areas were targeted during the restart of mining activities in Q4-2020 and Q1-2021.
- AISC per ounce increased during Q2-2021 compared to Q1-2021 due to the decrease in head grade and higher sustaining capital (an increase of $165 per ounce) due to waste stripping. Unit mining and unit processing costs decreased due to increased efficiencies as a result of additional mining equipment commissioned in Q1-2021 and improved mining fragmentation.
- Sustaining capital expenditures of $9.0 million during Q2-2021 mainly related to waste capitalisation at the West pit and the TSF lift.
- Non-sustaining capital expenditure of $3.9 million during Q2-2021 mainly related to pre-stripping at the East pit.
2021 Outlook
- Boungou is well positioned to meet its FY-2021 production guidance of 180 - 200koz, while AISC are expected to continue to trend above the guided $690 - 740 per ounce range as a result of higher fuel prices and increased security costs.
- Plant feed is expected to continue to be sourced from the West Pit with waste stripping activities continuing at the East Pit throughout the year. Mill throughput is expected to remain broadly consistent with H1-2021 performance, along with average processed grades, while recovery rates are expected to slightly decline due to the ore characteristics.
- The sustaining capital spend outlook for FY-2021 remains unchanged compared to the initial guidance of $19.0 million, of which $13.1 million has been incurred in H1-2021. The non-sustaining capital spend outlook for FY-2021 also remains unchanged compared to the initial guidance of $22.0 million, of which $8.4 million has been incurred in H1-2021.
Houndé Gold Mine, Burkina Faso
Table 9: Houndé Performance Indicators
| For The Period Ended | Q2-2021 | Q1-2021 | Q2-2020 | H1-2021 | H1-2020 |
|---|---|---|---|---|---|
| Tonnes ore mined, kt Total tonnes mined, kt Strip ratio (incl. waste cap) Tonnes milled, kt Grade, g/t Recovery rate, % PRODUCTION, KOZ | 1,399 | 1,625 13,937 7.58 1,147 1.89 91 66 | 1,072 | 3,024 | 1,972 22,820 10.57 2,101 1.83 91 113 |
| 11,717 | 11,509 | 25,654 | |||
| 7.38 | 9.73 | 7.48 | |||
| 1,108 | 1,035 | 2,254 | |||
| 2.47 | 1.91 | 2.17 | |||
| 92 | 92 | 92 | |||
| 80 | 57 | 146 | |||
| Total cash cost/oz AISC/OZ | 629 | 768 839 | 772 | 694 | 820 1,020 |
| 741 | 965 | 787 |
- Production significantly increased due to higher average processed grades, as the high grade Kari Pump ore contributed a higher proportion of the mill feed during the quarter
- Total tonnes mined decreased as a result of decreased availability of mining equipment, as scheduled maintenance and repairs were carried out, as well as mining progressing to deeper elevations. This contributed to the decrease in tonnes of ore mined as the strip ratio remained fairly constant over the previous quarter. Ore tonnes mined were primarily sourced from the Kari Pump and Vindaloo Centre deposits with mining at Vindaloo Main focusing on waste stripping.
- Tonnes milled slightly decreased despite the higher proportion of oxide ore from the Kari Pump pit, as a result of an increase in interruptions to the grid power supply and the increased reliance on generators.
- Average gold grade milled increased along with recoveries due to the increase in the proportion of high grade oxide ore sourced from Kari Pump and a localised nugget effect in the higher grade zones of Kari Pump.
- AISC decreased, despite higher unit costs and sustaining capital spend, due to the increase in production from the higher grade oxide ore sourced from Kari Pump which resulted in increased gold sales. Mining unit costs increased due to scheduled maintenance, higher haulage costs associated with Kari Pump, and increased blasting and grade control drilling carried out during the quarter. Unit processing costs increased, despite an increase in oxide ore processed, due to higher power costs, as generator utilisation increased due to interruptions to the grid power supply.
- Sustaining capital expenditure of $8.6 million during Q2-2021 mainly related to the waste capitalisation at Vindaloo Main.
- Non-sustaining capital expenditure of $3.0 million during Q2-2021 mainly related to costs associated with the development of the Kari West mining area.
2021 Outlook
- H1-2021 performance was stronger than scheduled due to good mining productivities achieved during the Kari Pump prestripping enabling, increased access to high grade oxide ore. As such, Houndé is on track to meet the top half of its FY-2021 production guidance of 240—260koz, with AISC expected to achieve the guided $855—905 per ounce range.
- Mining activities in H2-2021 will continue to focus on Kari Pump, supplemented by contributions from Bouéré and Vindaloo Centre pits. Mining is expected to focus on lower grade areas during the wet season and as a greater focus is placed on waste stripping activities, primarily related to Vindaloo Main pit and Kari West where the pre-strip is expected to be completed in late 2021. Throughput is expected to slightly decline in H2-2021, while recovery rates are expected to remain similar to H1-2021 and processed grade is expected to be lower following the higher grades brought forward in Q2-2021.
- The sustaining capital spend outlook for FY-2021 remains unchanged compared to the initial guidance of $39.0 million, of which $13.3 million has been incurred in H1-2021. The non-sustaining capital spend outlook for FY-2021 also remains unchanged compared to the initial guidance of $13.0 million, of which $9.7 million has been incurred in H1-2021.
Ity Gold Mine, Côte D’Ivoire
Table 10: Ity Performance Indicators
| For The Period Ended | Q2-2021 | Q1-2021 | Q2-2020 | H1-2021 | H1-2020 |
|---|---|---|---|---|---|
| Tonnes ore mined, kt Total tonnes mined, kt Strip ratio (incl. waste cap) Tonnes milled, kt Grade, g/t Recovery rate, % PRODUCTION, KOZ | 1,877 | 2,105 6,816 2.24 1,550 1.76 79 71 | 1,650 | 3,982 | 3,559 10,600 1.98 2,590 1.61 81 108 |
| 5,934 | 5,374 | 12,750 | |||
| 2.16 | 2.26 | 2.20 | |||
| 1,544 | 1,180 | 3,094 | |||
| 1.96 | 1.59 | 1.86 | |||
| 81 | 77 | 80 | |||
| 79 | 47 | 150 | |||
| Total cash cost/oz AISC/OZ | 720 | 715 786 | 740 | 718 | 676 707 |
| 806 | 789 | 796 |
- Production was ahead of expectation due to the increased average processed grade and gold recovery rate as higher grade ore was brought forward in the mine plan
- Total tonnes mined, together with total ore mined, decreased in Q2-2021, due to a decrease in mining equipment availability, as scheduled maintenance was carried out on the excavators. The strip ratio also remained relatively stable. Mining activity continued at the Ity, Bakatouo, Daapleu, Walter, Colline Sud and Flotouo pits with an increase in ore being sourced from the heap dumps.
- Tonnes milled continued to perform above nameplate capacity due to high plant uptime as well as a high proportion of oxide materials from the Daapleu, Bakatouo, Colline Sud pits and the heap dumps, with fresh ore sourced from Daapleu, Bakatouo and Ity pits.
- Average gold grade milled increased in Q2-2021 due to an increase in the grade of the ore sourced from the Daapleu and Bakatouo pits.
- Despite the higher proportion of transitional and fresh ore processed in Q2-2021, recovery rates increased, as higher quality material from Flotouo was treated preferentially displacing the more viscous Verse Ouest material.
- AISC per ounce increased due to higher unit mining costs as a result of longer hauling distance for ore mined from the newly commissioned Flotouo and Walter pits as well as the transition to contractor mining. In addition, unit processing costs increased due to the increase in the proportion of transitional and fresh material and the higher reagent consumption due to an increase in the proportion of Daapleu ore processed. Higher power costs impacted AISC by approximately $20/oz due to increased utilisation of generators as a result of temporarily reduced grid power availability. The cost increase was also impacted by higher sustaining capital expenditure.
- Sustaining capital expenditures of $7.1 million during Q2-2021 mainly relates to waste capitalisation at the Ity, Bakatouou and Daapleu pits.
- Non-sustaining capital expenditures of $8.4 million during Q2-2021 mainly relates to the TSF stage 3 lift, the Le Plaque haul road construction and river diversions as well as small processing plant upgrades.
- During Q2-2021, Ity transitioned from owner mining to contract mining with Societe de Forage et des Travaux Publics (“SFTP”), a local contractor who are already performing contract mining services at Endeavour’s Karma and Boungou mines. As a part of the transition, the mining fleet at Ity was sold to SFTP for approximately $24.2 million.
2021 Outlook
- H1-2021 performance was stronger than scheduled due to the benefit of a good processing performance with a combination of higher throughput, grade, and recovery. As such, Ity is on track to meet the top half of its FY-2021 production guidance of 230—250koz, with AISC expected to achieve the top-end of the guided $800—850 per ounce range
- Waste extraction activities are expected to ramp up at the Ity pit in H2-2021 as stripping which was deferred from H1-2021 is carried out. As a result, the proportion of ore mined from Bakatouo, Daapleu and Colline Sud is expected to decrease in H2-2021. Throughput is expected to be slightly lower in H2-2021 compared to H1-2021 due to the onset of the wet season, while the average processed grade is expected to be lower due to a higher proportion of feed from historical lower grade stockpiles.
- The sustaining capital spend outlook for FY-2021 remains unchanged compared to the initial guidance of $28.0 million, of which $12.3 million has been incurred in H1-2021. Non-sustaining capital spend for FY-2021 is expected to amount to approximately $40.0 million, of which $20.4 million has been incurred in H1-2021. This increase compared to the initial H1-2021 guidance of $27.0 million is due to initiation of new optimization initiatives, primarily associated with reducing reagent consumption and enhancing recoveries.
Karma Gold Mine, Burkina Faso
Table 11: Karma Performance Indicators
| For The Period Ended | Q2-2021 | Q1-2021 | Q2-2020 | H1-2021 | H1-2020 |
|---|---|---|---|---|---|
| Tonnes ore mined, kt Total tonnes mined, kt Strip ratio (incl. waste cap) Tonnes stacked, kt Grade, g/t Recovery rate, % PRODUCTION, KOZ | 1,253 | 1,242 5,146 3.14 1,380 0.71 66 22 | 1,288 | 2,496 | 2,517 9,755 2.87 2,352 0.91 81 48 |
| 6,212 | 4,802 | 11,358 | |||
| 3.96 | 2.73 | 3.55 | |||
| 1,267 | 1,238 | 2,647 | |||
| 0.91 | 0.81 | 0.81 | |||
| 68 | 80 | 67 | |||
| 25 | 20 | 47 | |||
| Total cash cost/oz AISC/OZ | 1,059 | 1,169 1,179 | 856 | 1,110 | 834 889 |
| 1,070 | 951 | 1,120 |
Q2-2021 vs Q1-2021 Insights
- Production increased due to the higher average grade stacked and the higher gold recovery rate, which offset a modest decrease in tonnes stacked.
- Total tonnes mined increased slightly due to an additional load and haul unit, with an increase in strip ratio at GG1 as a higher proportion of transitional ore tonnes were mined. Ore continued to be sourced from the GG1 and Kao North pits.
- Ore tonnes stacked decreased due to slightly lower stacking availability and utilisation. Ore tonnes from the GG1 and Kao North pit were mostly oxide material with a blend of transitional materials that were supplemented with stockpiles.
- The stacked ore grade increased mainly due to a higher average grade sourced from the North Kao pit while the average grade from the GG1 pit also increased slightly.
- The recovery rate increased due to the lower proportion of ore from the GG1 pit and the higher proportion of oxide material stacked, which has a higher associated recovery rate.
- AISC per ounce decreased due to the increased production and associated gold sales which offset the higher mining strip ratio and higher unit processing and G&A costs. Processing unit costs were higher as a result of increased cyanide consumption and the lower Q2-2021 stacking capacity, while G&A unit costs increased as operation management patents taxes were incurred during the quarter.
- Sustaining capital expenditure was $0.3 million during Q2-2021 and related to mining pit dewatering boreholes and other site equipment upgrades.
- Non-sustaining capital expenditure was $2.1 million during Q2-2021, which was related to construction of new cells within the heap leach pad.
2021 Outlook
- Given its strong H1-2021 performance, Karma is well positioned to meet its FY-2021 production guidance of 80—90koz at an AISC of $1,220—$1,300 per ounce
- Mining activity is expected to focus on the GG1 pit for the remainder of the year. As a result of the increase in transitional material mined from the GG1 pit, processed grades and recoveries are expected to be lower in H2-2021, while ore stacked is expected to decrease in Q3-2021 due to the wet season, before returning to normal levels in Q4-2021
- The sustaining capital outlook at Karma is expected to be significantly lower than the $11.0 million guided as a result of the waste development being included as an operating cost for 2021. The non-sustaining capital spend outlook for FY-2021 remains unchanged compared to the initial guidance of $5.0 million, of which $2.9 million has been incurred in H1-2021.
Mana Gold Mine, Burkina Faso
Table 12: Mana Performance Indicators
| For The Period Ended | Q2-2021 | Q1-2021 | Q2-2020 | H1-2021 | H1-2020 |
|---|---|---|---|---|---|
| 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 | 549 | 355 8,533 23.01 245 604 2.90 90 52 | — | 904 | — — — — — — — — |
| 7,187 | — | 15,720 | |||
| 12.09 | — — | 16.38 | |||
| 214 | 459 | ||||
| 670 | — | 1,275 | |||
| 2.49 | — | 2.68 | |||
| 92 | — | 91 | |||
| 49 | — | 102 | |||
| Total cash cost/oz AISC/OZ | 911 | 907 954 | — | 909 | — — |
| 1,016 | — | 982 |
Q2-2021 vs Q1-2021 Insights
- Production slightly decreased due to a reduction in the average processed grade which was partially offset by an increase in plant throughput and recoveries.
- Total open pit tonnes of ore mined was higher as a result of the lower strip ratio, following the planned waste development at the Wona South pit in Q1-2021, which provided access to a wider ore floor to be mined. In Q2-2021 ore was mainly sourced from Wona Main and Wona South Pits while mining at Wona North Stage 3 completed during Q1-2021.
- Total underground ore tonnes mined decreased as underground mining focused on development and backfilling.
- Tonnes milled increased due to an increase in mill availability and better mining fragmentation, which resulted in higher plant throughput. The ore processed in both Q1-2021 and Q2-2021 was mainly fresh material, sourced from both the open pit and underground mines.
- The average processed grade was lower during Q2-2021 due to a decrease in the proportion of ore sourced from the higher grade underground mine and from the open pit Wona Main deposit.
- AISC increased due to higher sustaining capital spend and increased open pit and underground unit mining costs. The open pit unit mining costs increased due to higher production drilling and blasting activities in the fresh ore areas of Wona South pit, as well as higher underground unit mining costs as a result of increased stope activity costs, which was partially offset by lower unit processing costs due to improved fragmentation.
- Sustaining capital expenditure of $5.2 million during Q2-2021 mainly relates to underground development and waste capitalisation.
- Non-sustaining capital of $21.1 million during Q2-2021 mainly relates to open pit waste development, the TSF raise and other infrastructure projects.
2021 Outlook
- Given its strong H1-2021 performance driven by strong mill throughput and grades, Mana is well positioned to meet its FY-2021 production guidance of 170 - 190koz at an AISC of $975 - 1,050 per ounce
- In H2-2021, ore will continue to be sourced from the Siou underground mine while open pit mining activities at Siou are expected to wind down. Following optimization studies completed in Q2-2021, Wona will be pursued as an underground operation rather than being continued as an open pit operation and eliminate the need for a large pit cut-back. Underground development at Wona will therefore be expedited, with decline development expected to commence in Q3-2021. Mill throughput and grades are expected to be slightly lower in H2-2021, compared to H1-2021, while recovery rates are expected to remain similar.
- The total sustaining and non-sustaining capital spend outlook for FY-2021 remains unchanged. As a result of the reduction in required stripping activities at Wona, following the decision to shift to underground mining, the FY-2021 sustaining capital outlook is expected to be significantly lower than the $27.0 million guided, of which $8.0 million has been incurred in H1-2021. Due to the reallocation of capital for the Wona underground development, the non-sustaining capital outlook for FY-2021 is expected to amount to slightly more the $62.0 million guided, of which $45.2 million has been incurred in H1-2021.