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 $68m year to date; maiden resource for Tanda-Iguela
greenfield discovery expected to be published in Q4-2022
London, 10 November 2022 – Endeavour Mining plc (LSE:EDV, TSX:EDV, OTCQX:EDVMF) (“Endeavour”, the “Group” or the
“Company”) is pleased to announce its operating and financial results for Q3-2022 and year to date, with highlights provided in
Table 1 below.
Table 1: Highlights for Continuing Operations1
All amounts in US$ million unless otherwise specified
THREE MONTHS ENDED NINE MONTHS ENDED
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 343 345 362 1,045 1,058 (1)%
All-in Sustaining Cost2, $/oz 960 954 885 920 854 +8%
Realised Gold Price, $/oz 1,679 1,832 1,768 1,810 1,776 +2%
CASH FLOW
Operating Cash Flow before Changes in WC 195 253 317 828 816 +1%
Operating Cash Flow before Changes in WC2, $/sh 0.79 1.02 1.27 3.34 3.44 (3)%
Operating Cash Flow 154 253 309 706 797 (11)%
Operating Cash Flow2, $/sh 0.62 1.02 1.24 2.85 3.37 (15)%
PROFITABILITY
Net Earnings/(Loss) Attributable to Shareholders 58 189 122 190 332 (43)%
Net Earnings/(Loss), $/sh 0.23 0.76 0.49 0.77 1.40 (45)%
Adj. Net Earnings Attributable to Shareholders2 37 111 168 281 449 (37)%
Adj. Net Earnings2, $/sh 0.15 0.45 0.67 1.13 1.90 (41)%
EBITDA2 302 417 339 937 985 (5)%
Adj. EBITDA2 256 329 370 982 1,090 (10)%
SHAREHOLDER RETURNS
Shareholder dividends paid 100 — 70 170 130 +31%
Share buybacks 37 7 35 75 94 (20)%
ORGANIC GROWTH
Growth capital spend (30) (34) (11) (72) (51) +41%
FINANCIAL POSITION HIGHLIGHTS
Cash 833 1,097 760 833 760 +10%
Principal debt (830) (880) (830) (830) (830) —%
Net Cash, (Net Debt)2 3 217 (70) 3 (70) (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.
1
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
Q4-2022 Ity Resource update
Q4-2022 Sabodala-Massawa Expansion project progress update
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 con tinuing 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.
2
– 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 $66 per ounce over YTD-2021 with higher AISC at Boungou, Wahgnion and Sabodala-
Massawa, which have been partially offset by lower AISC at Houndé and Ity while Mana was stable.
Table 3: Group Production and FY-2022 Guidance
THREE MONTHS ENDED NINE MONTHS ENDED
All amounts in koz, on a 100% basis
30 September
2022
30 June
2022
30 September
2021
30 September
2022
30 September
2021
2022 FULL-YEAR
GUIDANCE
Boungou 29 27 41 90 139 130 — 140
Houndé 72 87 70 232 216 260 — 275
Ity 81 77 61 230 212 255 — 270
Mana 42 55 49 149 151 170 — 190
Sabodala-Massawa1 86 73 106 256 241 360 — 375
Wahgnion1 32 27 34 88 100 140 — 150
PRODUCTION FROM CONTINUING
OPERATIONS 343 345 362 1,045 1,058 1,315 — 1,400
Karma2 — — 21 10 67
Agbaou3 — — — — 13
GROUP PRODUCTION 343 345 382 1,055 1,138
1Included for the post acquisition period commencing 10 February 2021. 2Divested on 10 March 2022. 3Divested on 1 March 2021.
Table 4: Group All-In Sustaining Costs and FY-2022 Guidance
All amounts in US$/oz
THREE MONTHS ENDED NINE MONTHS ENDED
30 September
2022
30 June
2022
30 September
2021
30 September
2022
30 September
2021
2022 FULL-YEAR
GUIDANCE
Boungou 1,219 1,062 800 1,051 795 900 — 1,000
Houndé 716 807 921 767 833 875 — 925
Ity 773 895 915 799 830 850 — 900
Mana 1,098 905 1,029 993 996 1,000 — 1,100
Sabodala-Massawa1 779 779 655 703 667 675 — 725
Wahgnion1 1,647 1,788 1,097 1,590 964 1,050 — 1,150
Corporate G&A 37 20 24 32 28 30
AISC FROM CONTINUING OPERATIONS 960 954 885 920 854 880 — 930
Karma2 — — 1,256 1,504 1,162
Agbaou3 — — — — 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
3
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
MINIMUM ACTUAL SHAREHOLDER RETURNS SUPPLEMENTAL
All amounts in US$ million
DIVIDEND
COMMITMENT
DIVIDENDS
DECLARED
BUYBACKS
COMPLETED
TOTAL
RETURNS
SHAREHOLDER
RETURNS
FY-2020 60 60 — 60 —
FY-2021 125 140 138 278 +153
FY-2022 150 200 75 275 +125
H1-2022 75 100 38 138 +63
H2-20221 75 100 37 137 +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 $37 million of buybacks
represents amount completed in Q3-2022.
4
CASH FLOW AND LIQUIDITY SUMMARY
The table below presents the cash flow and net cash position for Endeavour for the three month periods ended 30 September
2022, 30 June 2022, and 30 September 2021 and the nine month periods ending 30 September 2022 and 30 September 2021,
with accompanying explanations below.
Table 6: Cash Flow and Net Cash
THREE MONTHS ENDED NINE MONTHS ENDED
All amounts in US$ 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 195 253 317 828 816
Changes in working capital (41) 1 (8) (122) (18)
Cash generated from discontinued operations — — 3 5 13
Cash generated from operating activities [1] 154 253 312 711 810
Cash used in investing activities [2] (111) (145) (137) (349) (379)
Cash used in financing activities [3] (256) (26) (233) (332) (360)
Effect of exchange rate changes on cash (52) (33) (15) (104) (25)
(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 (500) (500) (500) (500) (500)
Principal amount of Convertible Notes (330) (330) (330) (330) (330)
Drawn portion of Revolving Credit Facility — (50) — — —
Drawn portion of Corporate Loan Facility — — — — —
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 S abodala-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.
5
• 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 i ncreased spending at Boungou, Houndé, and Sabodala-Massawa largely related to pre-
stripping 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.
6
EARNINGS FROM CONTINUING OPERATIONS
The table below presents the earnings and adjusted earnings for Endeavour for the three month periods ended 30 September
2022, 30 June 2022, and 30 September 2021 and the nine month periods ending 30 September 2022 and 30 September 2021,
with accompanying explanations below.
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] 568 630 657 1,883 1,968
Operating expenses [7] (254) (251) (234) (722) (744)
Depreciation and depletion [7] (151) (140) (147) (443) (409)
Royalties [8] (35) (38) (39) (114) (121)
Earnings from mine operations 128 201 237 604 694
Corporate costs [9] (12) (7) (12) (33) (42)
Acquisition and restructuring costs (1) (1) (2) (3) (29)
Share-based compensation (4) (3) (7) (15) (25)
Other expense (7) (11) (2) (20) (13)
Exploration costs (12) (8) (3) (27) (19)
Earnings from operations 91 171 211 506 567
Gain/(loss) on financial instruments [10] 60 107 (20) (12) 9
Finance costs (19) (17) (15) (50) (40)
Earnings before taxes 132 261 177 444 536
Current income tax expense [11] (77) (65) (41) (216) (157)
Deferred income tax recovery [12] 12 8 4 9 18
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 0.23 0.76 0.49 0.77 1.40
Adjusted net earnings per share from continuing operations 0.15 0.45 0.67 1.13 1.90
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
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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 pri or 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 millio n, 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
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