ENDEAVOUR REPORTS STRONG Q4
RESULTS; FULL YEAR GUIDANCE ACHIEVED
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Q4 Highlights
- Successful Houndé mine start-up lifted group production by 38%
over Q3-2017 to 204koz and decreased group AISC by 13% to circa
$784/oz
- Group All-in Sustaining Margin increased by nearly 70% over
Q3-2017 to $83m and the All-in Margin also increased by nearly 70%
to $57m
FY-2017 Highlights
- Production up 14% over the prior year to 663koz, attaining the
top half of 630 - 675koz guidance
- AISC down $15/oz over the prior year to circa $869/oz, well
within guidance range of $850 - 895/oz
- Net Debt increased from $221m to $233m since the previous
quarter-end due to growth project spend
2018 OUTLOOK
- Production expected to increase to 670 - 720koz and AISC to
decline to $840 - 890/oz
- Continued strong focus on internal growth:
- Ity CIL construction progressing on-budget and on-time; first
gold pour expected in mid-2019
- Kalana intensive exploration program and updated feasibility
study underway to prepare for next project after Ity CIL
- Significant exploration investment of $40 - 45m, of which 40%
dedicated to greenfield opportunities
George Town, January 23, 2018 - Endeavour
Mining (TSX:EDV) (OTCQX:EDVMF) is pleased to announce its
preliminary financial and operating results for the fourth quarter
and full year 2017, with highlights provided in the table
below.
Table 1: Preliminary Key
Operational and Financial Highlights
|
QUARTER ENDED |
|
year ENDED |
Dec. 31, 2017 |
Sept 30,2017 |
Dec. 31, 2016 |
|
Dec. 31, 2017 |
Dec. 31,2016 |
Var. |
Gold
Production, oz |
204 |
148 |
175 |
|
663 |
584 |
+14% |
Realized Gold Price1,
$/oz |
1,222 |
1,235 |
1,205 |
|
1,221 |
1,240 |
(1%) |
All-in Sustaining Cost,
$/oz |
784 |
906 |
855 |
|
869 |
884 |
(2%) |
All-in
Sustaining Margin2, $/oz |
~438 |
329 |
350 |
|
~353 |
356 |
(1%) |
All-in Sustaining
Margin3, $m |
~83 |
49 |
55 |
|
~231 |
191 |
+21% |
All-in
Margin4, $m |
~57 |
34 |
42 |
|
~160 |
142 |
+13% |
Net Debt
At Period End, $m |
233 |
221 |
25 |
|
233 |
25 |
n.a. |
1Realized Gold Price inclusive of Karma
stream; 2Realized Gold Price less AISC per ounce; 3Net
revenue less All-in Sustaining Cost; 4Net revenue less All-in
Sustaining Costs and Non-Sustaining capital
Sébastien de Montessus, President & CEO,
stated: "Our strong performance in Q4 was driven by the successful
start-up of Houndé which decreased our all-in sustaining costs
below $800 for the first time in Endeavour's history. In 2017, we
continued to deliver against our broader objectives as our strong
operational performance helped us achieve key guidance metrics for
annual gold production, AISC and free cash flow generation.
Our project development team successfully
completed the Houndé mine on time and on budget, two months ahead
of schedule, allowing the team to seamlessly transition to the Ity
CIL project which remains on track for first gold pour in mid-2019.
Organic growth was further enhanced through our reinvigorated
exploration program which is on track to delivering the ambitious
5-year discovery target set in 2016.
Looking ahead, we expect the investment in
Houndé and optimization work at our Karma mine to position us well
to compensate for expected declines in production at Agbaou, which
is transitioning to harder ore, thereby enabling us to increase
guidance for 2018. We will also continue to invest for longer-term
growth and repositioning of the company. Our priorities will be the
continued construction of the Ity CIL project, and exploration work
to support an updated feasibility study at Kalana, with a project
investment decision expected in advance of Ity's first gold pour.
Exploration investment will remain a key focus with 40% of the
budget allocated to high-potential greenfield exploration
activities in support of our goal of generating our next large
scale project through organic investment. Finally, we will continue
to actively manage our portfolio of mines to focus management
efforts on high quality assets.
The hard work of our entire team, with the full
support of our board of directors, has positioned Endeavour well to
achieve its long term target of annual gold production of 800koz at
below $800/oz AISC in 2019."
STRONG Q4 PERFORMANCE; FULL YEAR GUIDANCE
ACHIEVED
- Q4-2017 group production increased by 38% over the previous
quarter to 204koz and AISC declined by 13% to circa $784/oz due to
the successful start-up and out-performance of Houndé while the
other mines performed in-line with expectations.
- Full-year 2017 group production increased by 14% over the prior
year to 663koz, attaining the top half of its 630 - 675koz guidance
while AISC decreased by $15/oz to circa $869/oz ending well within
the guidance range of $850 - 895/oz
- The Nzema sale closed on December 29, 2017, and will be
deconsolidated in the year-end financial statements.
Table 2: Group Production,
koz
(All amounts in koz, on a 100% basis) |
QUARTER ENDED |
|
|
YEAR ENDED |
|
2017 FULL-YEAR
GUIDANCE |
Dec. 31, 2017 |
Sept. 31, 2017 |
Dec. 31, 2016 |
|
|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Agbaou |
43 |
46 |
57 |
|
|
177 |
196 |
|
175 |
- |
180 |
Tabakoto |
28 |
32 |
48 |
|
|
144 |
163 |
|
150 |
- |
160 |
Ity |
17 |
12 |
17 |
|
|
59 |
76 |
|
75 |
- |
80 |
Karma |
21 |
21 |
29 |
|
|
98 |
62 |
|
100 |
- |
110 |
Houndé |
69 |
- |
- |
|
|
69 |
- |
|
30 |
- |
35 |
PRODUCTION FROM
CONTINUING OPERATIONS |
179 |
111 |
151 |
|
|
547 |
496 |
|
530 |
- |
565 |
Nzema (divested
in December 2017) |
25 |
37 |
24 |
|
|
116 |
88 |
|
100 |
- |
110 |
TOTAL PRODUCTION |
204 |
148 |
175 |
|
|
663 |
584* |
|
630 |
- |
675 |
*Excluding 8koz of Youga mine production which
was sold in March 2016
Table 3: Group All-In Sustaining
Costs, US$/oz
(All amounts in US$/oz) |
QUARTER ENDED |
|
YEAR ENDED |
|
2017 FULL-YEAR
GUIDANCE |
Dec. 31, 2017 |
Sept. 31, 2017 |
Dec. 31, 2016 |
|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Agbaou |
~665 |
638 |
532 |
|
~641 |
534 |
|
660 |
- |
700 |
Tabakoto |
~1,282 |
1,278 |
927 |
|
~1,127 |
1,027 |
|
950 |
- |
990 |
Ity |
~947 |
1,141 |
827 |
|
~927 |
756 |
|
740 |
- |
780 |
Karma |
~922 |
973 |
738 |
|
~835 |
738 |
|
750 |
- |
800 |
Houndé |
~373 |
- |
- |
|
~373 |
- |
|
550 |
- |
600 |
MINE-LEVEL AISC FOR
CONTINUING OPERATIONS |
~720 |
937 |
728 |
|
~808 |
755 |
|
780 |
- |
825 |
Corporate
G&A |
~40 |
28 |
59 |
|
~41 |
55 |
|
39 |
- |
39 |
Sustaining Exploration |
~15 |
11 |
29 |
|
~22 |
21 |
|
26 |
- |
26 |
GROUP AISC FOR
CONTINUING OPERATIONS |
~775 |
976 |
816 |
|
~872 |
831 |
|
845 |
- |
890 |
Nzema (divested
in December 2017) |
~850 |
705 |
1,118 |
|
~858 |
1,167 |
|
895 |
- |
940 |
GROUP AISC |
~784 |
906 |
855 |
|
~869 |
884 |
|
850 |
- |
895 |
HOUNDE MINE
Construction Insights
- No Lost-Time-Injury occurred over the 7-million man hours
worked during the construction period.
- Construction completed ahead of schedule and $15 million below
the initial capital budget of $328 million. As construction was
tracking ahead of schedule and below budget, Endeavour decided, in
addition to the initial planned works, to spend an additional circa
$21 million (mainly for the addition of a 26MW back up power
station & fuel farm and to build a second tailings storage
facility), bringing the total investment to circa $334 million.
- Houndé achieved its first gold pour on October 18, 2017.
- Nameplate capacity was achieved within weeks following the
introduction of ore, by the end of October.
- Following the rapid ramp-up period, commercial production was
declared on November 1, more than two months ahead of
schedule.
Q4 Insights
- Production totalled 69koz since the start of mining operations
(all considered commercial); significantly surpassing the upper end
of the 30-35koz guidance, due to better than expected mill
availability, throughput, grades, and recovery rates.
- AISC amounted to circa $373/oz, significantly below the lower
end of the $550-600/oz forecast due to the aforementioned greater
than expected production, and lower mining costs.
- Unit costs compare very favourably to metrics presented in the
optimized feasibility study.
Table 4: Houndé
Performance Indicators
For
The Quarter/Year Ended |
Q4-2017 |
FY-2017 |
Tonnes ore mined,
kt |
447 |
1,026 |
Strip ratio (incl.
waste cap) |
14.59 |
16.48 |
Tonnes milled, kt |
813 |
813 |
Grade, g/t |
2.75 |
2.75 |
Recovery rate, % |
95% |
95% |
PRODUCTION, KOZ |
69 |
69 |
AISC/OZ (Preliminary) |
~373 |
~373 |
2018 Outlook
- Houndé is expected to produce between 250 - 260koz in 2018 at
an AISC of $580-630/oz.
- Mining activities are expected to continue to ramp-up to
achieve a mining rate of 40Mtpa, up from 18Mtpa in 2017.
- Mining and processing of fresh ore began in the latter portion
of Q4-2017. Activities are expected to progressively transition
from mainly oxides in early 2018 to mainly fresh ore by the end of
2018.
- Nearly $23 million of non-sustaining expenditure is planned for
2018, mainly for waste capitalization and resettlement for the
Bouere and Dohoun deposits.
- Out of the initial total project spend of $334 million, $10
million (related mainly to billing timing and the second tailings
storage facility) is expected to be spent in 2018. As shown in
Table 18 of the guidance section below, this amount is classified
as Growth Capital.
AGBAOU MINE
Q4 vs Q3-2017 Insights
- Production decreased slightly, in line with guidance, mainly
due to a lower grade and slightly lower tonnage milled.
- Ore extraction continued to perform well, with tonnage flat
over the previous quarter.
- Mill throughput decreased slightly but remained at a high level
as the proportion of fresh ore processed increased from 15% to
25%.
- Processed grades decreased due to the mining sequence.
- Recovery rates remained constant despite a greater proportion
of fresh ore.
- All-in sustaining costs increased in line with guidance as
operations continued to transition towards mining and processing a
greater proportion of fresh ore.
Full Year 2017 Insights
- Total production in 2017 was 177koz, achieving the mid-range of
the 175-180koz guidance. As expected, production decreased over the
record 2016 performance of 196koz as the mine began to transition
to harder material.
- AISC for 2017 amounted to circa $641/oz, well below the guided
$660-700/oz, as less fresh and transitional ore was processed than
planned. In addition, lower than anticipated sustaining capital was
incurred as planned waste capitalization was pushed into 2018.
Table 5: Agbaou Quarterly
Performance Indicators
For
The Quarter Ended |
Q4-2017 |
Q3-2017 |
Q4-2016 |
Tonnes ore mined,
kt |
826 |
824 |
674 |
Strip ratio (incl.
waste cap) |
7.92 |
8.19 |
8.67 |
Tonnes milled, kt |
760 |
770 |
721 |
Grade, g/t |
1.85 |
1.96 |
2.46 |
Recovery rate, % |
93% |
93% |
97% |
PRODUCTION, KOZ |
43 |
46 |
57 |
AISC/OZ (Preliminary) |
~665 |
638 |
532 |
Table 6: Agbaou Yearly
Performance Indicators
For
The Year Ended |
Dec 31, 2017 |
Dec 31,2016 |
Tonnes ore mined,
kt |
2,983 |
2,797 |
Strip ratio (incl.
waste cap) |
8.47 |
8.07 |
Tonnes milled, kt |
2,906 |
2,827 |
Grade, g/t |
2.02 |
2.27 |
Recovery rate, % |
94% |
97% |
PRODUCTION, KOZ |
177 |
196 |
AISC/OZ (Preliminary) |
~641 |
534 |
2018 Outlook
- 2018 is expected to be a transition year for Agbaou with a
large focus on waste capitalization activities (including the
pre-strip on the West pit) which is expected to give access to
higher grade areas afterwards.
- Agbaou's 2018 production is therefore expected to decrease to
140 - 150koz as low-grade stockpile feed is expected to supplement
mine feed to allow waste capitalization activities to progress more
quickly.
- The ore process blend is expected to average 50% oxide and 50%
fresh and transitional ore throughout the year.
- AISC is expected to increase to $860 - $900/oz as a result of
increased mining costs (deeper pits, longer haul distances, and
increased drill and blast activities related to hard ore) and
higher processing costs (lower throughput and higher consumption
ratios linked to the mineralogy of the ore). In addition, the
sustaining cost is expected to increase due to the greater waste
capitalization.
KARMA MINE
Q4 vs Q3-2017 Insights
- Production remained flat as higher stacking capacity and grades
were offset by the anticipated lower recovery rate.
- Ore tonnage extraction significantly increased due to the end
of the rainy season, a lower strip ratio, and in response to
greater stacking capabilities.
- Stacking increased following the successful commissioning of
the new front-end and ADR plant, while Q3 was impacted by downtime
associated with commissioning the upgraded crushing circuit and
decommissioning the original circuit.
- Higher-grade transitional ore from Rambo was strategically
mined and stacked once the plant optimization was completed to
benefit from greater stacking capacity to offset its lower recovery
rate. The Rambo pit was mined out during the quarter.
- Stacked grade increased due to high-grade ore from the Rambo
deposit, while low grade stockpiles supplemented feed in Q3.
- Recovery rates decreased as anticipated due to the stacking of
greater amounts of transitional ore from the Rambo deposit.
- AISC decreased as a result of the aforementioned higher grades,
lower strip ratio, and lower stacking unit costs which offset the
higher mining unit costs associated with extracting Rambo
transitional ore and the impact of lower recovery rates. Following
the completion of the optimization project in November, AISC
decreased below $850/oz in December and are expected to trend
lower.
Full Year 2017 Insights
- Production totalled 98koz in 2017, near the lower-end of the
100-110koz guidance.
- Production increased over 2016, benefitting from a full year of
production.
- AISC for 2017 amounted to circa $835/oz, above the guided
$750-800/oz, mainly due to lower than expected production.
Table 7: Karma Quarterly
Performance Indicators
For
The Quarter Ended |
Q4-2017 |
Q3-2017 |
Q4-2016 |
Tonnes ore mined,
kt |
1,185 |
593 |
783 |
Strip ratio (incl.
waste cap) |
2.14 |
5.13 |
4.14 |
Tonnes stacked, kt |
1,026 |
720 |
853 |
Grade, g/t |
1.06 |
0.91 |
1.14 |
Recovery rate, % |
77% |
87% |
90% |
PRODUCTION, KOZ |
21 |
21 |
29 |
AISC/OZ (Preliminary) |
~922 |
973 |
738 |
Table 8: Karma Yearly
Performance Indicators
For
The Year Ended |
Dec 31, 2017 |
Dec 31, 2016 |
Tonnes ore mined,
kt |
3,862 |
1,879 |
Strip ratio (incl.
waste cap) |
2.96 |
3.66 |
Tonnes milled, kt |
3,552 |
2,089 |
Grade, g/t |
1.07 |
1.16 |
Recovery rate, % |
83% |
90% |
PRODUCTION, KOZ |
98 |
62 |
AISC/OZ (Preliminary) |
~835 |
738 |
2018 Outlook
- Plant optimization work was successfully carried out during
2017. The newly installed front-end and ADR plant are expected to
boost stacking capacity beyond the initial design capacity of
4Mtpa.
- Production in 2018 is expected to increase to 105-115koz and
AISC is expected to decrease to $780-830/oz as a result of the
plant optimization work done in 2017.
- Mining activities are expected to focus on the GG2 and Kao
deposits. The remaining ore from the GG2 deposit is mainly
transitional material as the deposit is expected to be mined out in
Q2 2018. Mining at the Kao deposit is scheduled to start in Q1 2018
with oxide ore mined throughout the year. In the latter portion of
the year, pre-stripping is expected to be done at the North Kao
deposit.
- In aggregate, roughly 15% of the 2018 ore feed is expected to
be transitional material from GG2. As such recovery rates are
expected to be lower in the first half and then increase in the
second half as mining activities are expected to be focus on mainly
oxide ore from the Kao deposit.
- Nearly $23 million of non-sustaining capital is planned for
2018, mainly for the Kao resettlement, pre-striping at Kao and
North Kao and a heap leach lift.
ITY MINE: HEAP LEACH OPERATION
Q4 vs Q3-2017 Insights
- Following the rainy season, production increased due to higher
stacking and mining rates, in addition to improved grades and
recovery rates.
- Tonnes of ore mined increased as mining activities ramped up
following the end of the rainy season. Mining continued on the Zia
and Ity Flat pits in Q4, following the decision to defer the
high-grade Bakatouo pit for the upcoming CIL project.
- Ore stacked increased due to the softer nature of the Ity Flat
laterite ore and the benefit of the dry season.
- The stacked grade increased as higher grade ore at the Ity Flat
pit became accessible.
- Recovery rates increased, but were still impacted by the
lag-time of the high soluble copper content Bakatouo ore stacked in
Q3.
- AISC decreased due to lower unit mining costs (associated with
reduced water pumping requirements) and lower unit processing costs
(due to higher stacking rates and reduced cyanide consumption
associated with the high soluble copper ore stacked in Q3). Despite
these unit cost reductions, AISC remained high due to sustaining
capital expenditures related to fleet upgrades.
Full Year 2017 Insights
- As previously indicated, full year production came in below the
guided 75-80koz range at 59koz and AISC exceeded the guided
$740-780/oz range at circa $927/oz due to the shift away from
mining the higher grade Bakatouo deposit planned in H2-2017.
- Production decreased and AISC increased over 2016 as mining
shifted to lower grade deposits and the recovery rates returned to
a more normalised level. In addition, the AISC was impacted by
higher sustaining costs on a per ounce basis.
Table 9: Ity Quarterly
Performance Indicators
For
The Quarter Ended |
Q4-2017 |
Q3-2017 |
Q4-2016 |
Tonnes ore mined,
kt |
403 |
305 |
316 |
Strip ratio (incl.
waste cap) |
3.17 |
2.90 |
3.66 |
Tonnes stacked, kt |
372 |
312 |
295 |
Grade, g/t |
1.86 |
1.58 |
2.00 |
Recovery rate, % |
78% |
74% |
90% |
PRODUCTION, KOZ |
17 |
12 |
17 |
AISC/OZ (Preliminary) |
~947 |
1,141 |
827 |
Table 10: Ity Yearly Performance
Indicators
For
The Year Ended |
Dec 31, 2017 |
Dec 31, 2016 |
Tonnes ore mined,
kt |
1,410 |
1,186 |
Strip ratio (incl.
waste cap) |
3.71 |
4.15 |
Tonnes stacked, kt |
1,194 |
1,173 |
Grade, g/t |
1.85 |
2.20 |
Recovery rate, % |
83% |
93% |
PRODUCTION, KOZ |
59 |
76 |
AISC/OZ (Preliminary) |
~927 |
756 |
2018 Outlook
- Production in 2018 is expected to increase slightly to 60-65koz
and AISC are expected to decrease to $790 - $850/oz as a result of
anticipated higher grades.
- 2018 is expected to be a transition year for the heap leach
operation with greater priority given to the CIL construction
activities and maximizing trade-off opportunities between immediate
heap leach production and better margins with the CIL plant with
planned lower costs and higher recovery rates in 2019.
- A specific mining strategy has been set to address both the
needs of the heap leach operation and the CIL project.
- Open pit mining activities for the heap leach operation are
expected to occur only during the first half of the year. The aim
is to intensify mining at the Zia and Mont Ity deposits to create a
stockpile sufficient to feed stacking requirements for the second
half of the year. During this time, some selected mined ore types
are expected to be stockpiled for the CIL operation.
- In the second half of the year, greater mining focus will be
given to the CIL project.
- As a result of this strategy, heap leach production is expected
to be lower in the second half of the year while AISC are expected
to be higher.
TABAKOTO MINE
Q4 vs Q3-2017 Insights
- Production decreased mainly due to lower average head grades,
in spite of overall improved mining operations.
- Open pit production at Kofi B and Tabakoto North was
significantly increased following the end of the rainy season;
however at a lower grade as the higher-grade Kofi C deposit was
depleted in Q3.
- Underground tonnes mined increased as the previous quarter was
impacted by heavy rains which limited stope access and due to the
national strike.
- Processing activities continued to perform well, with
throughput increased to partially offset lower grades.
- The overall average grade decreased mainly due to lower open
pit grades and the use of lower grade stockpiles.
- The recovery rate slightly decreased due to lower grades milled
and the compromise to increase the throughput rate.
- AISC remained stable despite decreases across all unit costs
per tonne (open pit and underground mining, processing, and
G&A), which were offset by higher sustaining costs and lower
grades.
Full-Year 2017 Insights
- Production totalled 144koz in 2017, below the lower-end of the
150-160koz guidance and, as previously guided, the AISC finished
above the $950-990/oz guidance at circa $1,127/oz. This
under-performance is mainly attributable to sub-optimal underground
equipment availability and several national strikes.
- Production decreased over 2016 mainly due to lower open pit
grade following the depletion of the high grade Kofi C
deposit.
Table 11: Tabakoto Quarterly
Performance Indicators
For
The Quarter Ended |
Q4-2017 |
Q3-2017 |
Q4-2016 |
OP tonnes ore mined,
kt |
165 |
108 |
195 |
OP strip ratio (incl.
waste cap) |
10.32 |
9.13 |
7.17 |
UG tonnes ore mined,
kt |
157 |
179 |
253 |
Tonnes milled, kt |
435 |
392 |
402 |
Grade, g/t |
2.20 |
2.64 |
3.93 |
Recovery rate, % |
92% |
93% |
95% |
PRODUCTION, KOZ |
28 |
32 |
48 |
AISC/OZ (Preliminary) |
~1,282 |
1,278 |
927 |
Table 12: Tabakoto Yearly
Performance Indicators
For
The Year Ended |
Dec 31, 2017 |
Dec 31, 2016 |
OP tonnes ore mined,
kt |
647 |
649 |
OP strip ratio (incl.
waste cap) |
8.89 |
9.94 |
UG tonnes ore mined,
kt |
756 |
944 |
Tonnes milled, kt |
1,640 |
1,588 |
Grade, g/t |
2.90 |
3.36 |
Recovery rate, % |
94% |
95% |
PRODUCTION, KOZ |
144 |
163 |
AISC/OZ (Preliminary) |
~1,127 |
1,027 |
2018 Outlook
- Tabakoto production is expected to decrease to 115 - 130koz
from both the underground mines (Segala and Tabakoto) and open pits
(Kofi B, Tabakoto North and Baboto) mainly due to a decline in
average grade.
- AISC are forecast to increase to $1,200-$1,250/oz due to the
aforementioned lower grade and a circa 75% increase in sustaining
capital expenditures to $35 million for the replacement of mining
equipment, plant maintenance and underground capital
development.
- In line with Endeavour's portfolio management strategy, a
strategic assessment is expected to be made on Tabakoto during the
course of the year.
NZEMA MINE
Nzema Sale Insights
- On December 29, 2017, Endeavour completed the sale of its 90%
interest in its non-core Nzema Mine in Ghana to BCM International
Ltd ("BCM").
- Endeavour received a payment of $38.5 million upon closing,
corresponding to the first two payments less adjustments.
Additional deferred payments of up to $25 million are expected to
be received over the course of 2018 and 2019, based upon the
attainment of certain agreed milestones related to mine free cash
flow generation.
Q4 vs Q3-2017 Insights
- Production decreased as expected due to lower processed grades
for both mined and purchased ore.
- As expected, tonnes of ore mined increased following the end of
the rainy season.
- Purchased ore grades decreased to a more normal level after a
peak in Q3.
- Mill throughput continued to increase as the first half of the
year was impacted by a higher proportion of fresh ore
processed.
- The head grade decreased for both Endeavour's own mined ore
(following a peak immediately after completing the cut-back in Q3)
and purchased ores.
- Recovery rates remained constant.
- AISC increased mainly due to lower grades and subsequent
decreased production, which was partially offset by decreased
mining and processing costs per tonne.
Full Year 2017 Insights
- Production totalled 116koz in 2017, surpassing the upper-end of
the 100-110koz guidance and AISC amounted to $858/oz finishing
lower than the bottom-end of the guided $895-940/oz range due to
strong efforts to reduce costs and better purchased ore
quality.
- As expected, the production and AISC profile significantly
improved over 2016 due to the benefit of completing the push-back
which gave access to higher-grade material ore. In addition, the
grades of purchased ore improved in 2017 following quality control
procedures implemented.
Table 13: Nzema Quarterly
Performance Indicators
For
The Quarter Ended |
Q4-2017 |
Q3-2017 |
Q4-2016 |
Tonnes ore mined,
kt |
369 |
310 |
288 |
Strip ratio (incl.
waste cap) |
2.88 |
3.30 |
9.02 |
Total Tonnes milled,
kt |
377 |
368 |
428 |
Grade, g/t |
2.13 |
3.39 |
2.20 |
Recovery rate, % |
92% |
92% |
82% |
PRODUCTION, KOZ |
25 |
37 |
24 |
AISC/OZ (Preliminary) |
~850 |
705 |
1,118 |
Table 14: Nzema Yearly
Performance Indicators
For
The Year Ended |
Dec 31, 2017 |
Dec 31, 2016 |
Tonnes ore mined,
kt |
1,427 |
1,000 |
Strip ratio (incl.
waste cap) |
3.81 |
8.30 |
Tonnes milled, kt |
1,499 |
1,761 |
Grade, g/t |
2.58 |
1.87 |
Recovery rate, % |
92% |
83% |
PRODUCTION, KOZ |
116 |
88 |
AISC/OZ (Preliminary) |
~858 |
1,167 |
ITY CIL PROJECT: CONSTRUCTION UPDATE
- Construction was launched in September 2017 and remains on time
and on budget with first gold pour expected in mid-2019.
- No LTI with nearly 400,000 man-hours already worked.
- Long-lead items have been ordered and nearly 50% of the total
capital cost of $412 million has already been committed.
- 6 CIL ring beams out of 8 have already been poured and SAG and
Ball mill foundation work has started.
- EPCM design is progressing well with more than 20% already
completed.
- Bulk earthworks, camp construction, and other activities are
also progressing according to schedule.
KALANA PROJECT UPDATE
- Following the close of the transaction in late Q3-2017,
Endeavour completed the integration of Avnel and initiated
pre-development activities to optimize the Kalana Project, which
include:
- Ceasing the current small-scale operations and clearing the
underground workings and existing infrastructure to allow for the
development of future open pits, as well as to establish access for
exploration.
- Resuming exploration activities on both the Kalana deposit and
nearby targets including Kalanako.
- Launching a revised Feasibility Study with the goal of
increasing the current plant design capacity to lift the average
annual production and shorten the mine life based on current
reserves, integrating the exploration results from the upcoming
drilling campaign, and leveraging Endeavour's construction
expertise and realized operating synergies.
- Dedicated Kalana Project Community Relations and HSE teams were
created to validate the census and stakeholder mapping, with the
aim of defining a resettlement action plan before relocation
activities commence.
BALANCE SHEET, FINANCING & LIQUIDITY SOURCES
- Net debt marginally increased from $221 million to $233 million
since September 31, 2017 mainly due to:
- Capital spending on growth projects (Hounde, Ity CIL, and
Kalana)
- Increase in equipment finance leasing related to the backup
power generators at Houndé
- Net cash impact from Nzema disposal ($38.5 million received on
closing less deconsolidation of $30 million Nzema cash
position)
- Net debt year over year increased from $26 million to $221
million mainly due to the drawdown of $160 million on the Revolving
Credit Facility ("RCF") for the construction of the Houndé
project.
- Endeavour is well positioned to fund its growth as its
available sources of financing and liquidity totaled $322 million
which include its $122 million cash position and $200 million
undrawn on the revolving credit facility, in addition to its strong
cash flow generation, upcoming equipment financing of approximately
$60 million for its Ity CIL Project, and remaining proceeds from
the Nzema sale.
Table 15: Net Debt
Position
(in
$m) |
DEC. 31, 2017 (PRELIMINARY) |
SEPT. 30, 2017 |
DEC. 31, 2016 |
Cash |
122 |
125 |
124 |
Less: Equipment finance
lease |
(55) |
(46) |
(10) |
Less:
Drawn portion of $500 million RCF |
(300) |
(300) |
(140) |
NET
DEBT POSITION |
(233) |
(221) |
(26) |
2018 OUTLOOK
- Production from continuing operations is expected to increase
to 670-720koz in 2018 and AISC is expected to decrease to
$840-890/oz due to the full year benefit of Houndé and improvements
at Karma and Ity which are expected to more than offset declines at
Agbaou and Tabakoto. More details on individual mine guidance have
been provided in the above sections.
- In line with Endeavour's portfolio management strategy, a
strategic assessment is expected to be made on Tabakoto during the
course of the year. As shown in the below tables, 2018 production
excluding Tabakoto is expected to range between 555-590koz at an
AISC of $760-810/oz.
Table 16: Production Guidance,
koz
(All
amounts in koz, on a 100% basis) |
2017 ACTUALS * |
2018 FULL-YEAR GUIDANCE |
Agbaou |
177 |
140 |
- |
150 |
Ity |
59 |
60 |
- |
65 |
Karma |
98 |
105 |
- |
115 |
Tabakoto |
144 |
115 |
- |
130 |
Houndé |
69 |
250 |
- |
260 |
PRODUCTION FROM
CONTINUING OPERATIONS |
547 |
670 |
- |
720 |
PRODUCTION FROM CONTINUING OPERATIONS EXCLUDING
TABAKOTO |
403 |
555 |
- |
590 |
* Nzema has been deconsolidated
Table 17: AISC Guidance,
$/oz
(All
amounts in koz, on a 100% basis) |
2017 ACTUALS * PRELIMINARY |
2018 FULL-YEAR GUIDANCE |
Agbaou |
~641 |
860 |
- |
900 |
Ity |
~927 |
790 |
- |
850 |
Karma |
~835 |
780 |
- |
830 |
Houndé |
~373 |
580 |
- |
630 |
Tabakoto |
~1,127 |
1,200 |
- |
1,250 |
Corporate G&A |
~56 |
30 |
- |
30 |
Sustaining exploration |
~31 |
10 |
- |
10 |
GROUP AISC FROM
CONTINUING OPERATIONS |
~872 |
840 |
- |
890 |
GROUP AISC FROM CONTINUING OPERATIONS EXCLUDING
TABAKOTO |
~777 |
760 |
- |
810 |
* Nzema has been deconsolidated
- As detailed in the table below, sustaining and non-sustaining
capital allocations for 2018 amount to $68 million and $84 million
respectively. Growth projects amount to $200 million, mainly for
the Ity CIL project construction.
Table 18: Capital Expenditure
Guidance, $m
(in
$m) |
SUSTAININGCAPITAL |
NON-SUSTAINING CAPITAL |
GROWTH PROJECTS |
Agbaou |
17 |
2 |
- |
Tabakoto |
37 |
- |
- |
Ity |
2 |
- |
180 |
Karma |
2 |
23 |
- |
Houndé |
3 |
23 |
10 |
Kalana |
- |
- |
10 |
Exploration |
7 |
29 |
- |
Corporate
(Group IT system) |
- |
7 |
- |
TOTAL |
68 |
84 |
200 |
- Exploration will continue to be a strong focus in 2018 with a
company-wide exploration program of between $40-45 million
(approximately 15% expensed, 15% sustaining, 70% non-sustaining),
compared to circa $44 million in 2017.
- Approximately 40% of the budget will be dedicated to greenfield
opportunities, in line with the overall strategy of sourcing
Endeavour's next mine organically.
- A strong focus will continue at Houndé to support the ramp-up
of mining operations and to follow-up on 2017 success.
- There will be a continued focus at the Ity mine and greenfield
targets along its 100km trend.
- An intensive Kalana exploration campaign is planned for H1-2018
with the aim of integrating the results into the updated
feasibility study.
Table 19: Exploration Guidance,
$m
(on a
100% basis) |
EXPLORATION SPEND ALLOCATION |
Agbaou |
8% |
Tabakoto and greenfield
Kofi areas |
15% |
Ity and greenfield
areas on the 100km Ity trend |
18% |
Karma |
4% |
Kalana |
13% |
Houndé |
21% |
Other
greenfield properties |
22% |
TOTAL
EXPLORATION EXPENDITURES* |
$40-45m |
*Includes expensed, sustaining, and
non-sustaining exploration expenditures
- Endeavour's objective is to fund as much as possible of the Ity
CIL construction costs using the free cash flow generated over the
construction period, rather than accessing its Revolving Credit
Facility ("RCF"). To support this funding approach it has put in
place a short-term Gold Revenue Protection Strategy consisting of
Gold Option Contracts, in line with the strategy employed during
the Houndé construction.
- A deferred premium collar strategy using written call options
and bought put options has been put in place beginning on February,
1, 2018 and ending on April 30, 2019 with a floor price of
$1,300/oz and a ceiling price of $1,500/oz. The program covers a
total of 400,000 ounces, representing approximately 40% of
Endeavour's total estimated gold production for the period. The
total premium payable for entering into this program was $8.7
million, which is deferred and settled as monthly contracts
mature.
- The advantages of the Gold Option Contacts during the
construction period include:
- ~40% of production will be protected if the gold price falls
below $1,300/oz
- 100% of production will benefit from gold price upswings
between $1,300 and $1,500/oz
- ~60% of production benefits from gold price upswings beyond
$1,500/oz
- Once the Gold Option Contracts program ends, Endeavour will
return to a position where its gold production is fully exposed to
spot gold prices.
CONFERENCE CALL AND LIVE WEBCAST
Management will host a conference call and live
webcast on Tuesday March 13th at 9:00am Toronto time (EST) to
discuss the Company's financial results.
The conference call and live webcast are scheduled today at:
6:00am in Vancouver 9:00am in Toronto and New York 1:00pm in London
9:00pm in Hong Kong and Perth
The live webcast can be accessed through the following
link: https://edge.media-server.com/m6/p/28mjqk9u
Analysts and interested investors are also invited to
participate and ask questions using the dial-in numbers below:
International: +1 646 828 8156North American toll-free: 800 281
7973UK toll-free: 0800 358 6377
Confirmation code: 5038363
The conference call and webcast will be available for
playback on Endeavour's website.
Click here to add Webcast reminder to Outlook Calendar
Access the live and On-Demand version of the webcast from mobile
devices running iOS and Android:
QUALIFIED PERSONS
Jeremy Langford, Endeavour's Chief Operating
Officer - Fellow of the Australasian Institute of Mining and
Metallurgy - FAusIMM, is a Qualified Person under NI 43-101, and
has reviewed and approved the technical information in this news
release.
CONTACT INFORMATION
Martino De Ciccio VP - Strategy & Investor Relations +44
203 640 8665 mdeciccio@endeavourmining.com |
DFH
Public Affairs in Toronto John Vincic, Senior Advisor (416)
206-0118 x.224 jvincic@dfhpublicaffairs.com Brunswick Group LLP
in London Carole Cable, Partner +44 7974 982 458
ccable@brunswickgroup.com |
ABOUT ENDEAVOUR MINING CORPORATION
Endeavour Mining is a TSX listed intermediate
African gold producer with a solid track record of operational
excellence, project development and exploration in the highly
prospective Birimian greenstone belt in West Africa. Endeavour is
focused on offering both near-term and long-term growth
opportunities with its project pipeline and its exploration
strategy, while generating immediate cash flow from its
operations.
Endeavour operates 5 mines across Côte d'Ivoire
(Agbaou and Ity), Burkina Faso (Houndé, Karma), and Mali (Tabakoto)
which are expected to produce 670-720koz in 2018 at an AISC of
$840-890/oz. Endeavour's high-quality development projects
(recently commissioned Houndé, Ity CIL and Kalana) have the
combined potential to deliver an additional 600koz per year at an
AISC well below $700/oz between 2018 and 2020. In addition, its
exploration program aims to discover 10-15Moz of gold by 2021 which
represents more than twice the reserve depletion during the
period.
For more information, please visit
www.endeavourmining.com.
CAUTIONARY STATEMENTS REGARDING 2017
PRODUCTION AND AISC
Endeavour cautions that, whether or not
expressly stated, all figures contained in this press release
including production and AISC levels are preliminary, and reflect
our expected 2017 results as of the date of this press release.
Actual reported fourth quarter and 2017 results are subject to
management's final review, as well as audit by the Company's
independent accounting firm, and may vary significantly from those
expectations because of a number of factors, including, without
limitation, additional or revised information, and changes in
accounting standards or policies, or in how those standards are
applied. Endeavour will provide additional discussion and analysis
and other important information about its 2017 production and AISC
levels when it reports actual results.
CAUTIONARY STATEMENT ON FORWARD-LOOKING
INFORMATION
This news release contains "forward-looking
statements" including but not limited to, statements with respect
to Endeavour's plans and operating performance, the estimation of
mineral reserves and resources, the timing and amount of estimated
future production, costs of future production, future capital
expenditures, and the success of exploration activities. Generally,
these forward-looking statements can be identified by the use of
forward-looking terminology such as "expects", "expected",
"budgeted", "forecasts", and "anticipates". Forward-looking
statements, while based on management's best estimates and
assumptions, are subject to risks and uncertainties that may cause
actual results to be materially different from those expressed or
implied by such forward-looking statements, including but not
limited to: risks related to the successful integration of
acquisitions; risks related to international operations; risks
related to general economic conditions and credit availability,
actual results of current exploration activities, unanticipated
reclamation expenses; changes in project parameters as plans
continue to be refined; fluctuations in prices of metals including
gold; fluctuations in foreign currency exchange rates, increases in
market prices of mining consumables, possible variations in ore
reserves, grade or recovery rates; failure of plant, equipment or
processes to operate as anticipated; accidents, labour disputes,
title disputes, claims and limitations on insurance coverage and
other risks of the mining industry; delays in the completion of
development or construction activities, changes in national and
local government regulation of mining operations, tax rules and
regulations, and political and economic developments in countries
in which Endeavour operates. Although Endeavour has attempted to
identify important factors that could cause actual results to
differ materially from those contained in forward-looking
statements, there may be other factors that cause results not to be
as anticipated, estimated or intended. There can be no assurance
that such statements will prove to be accurate, as actual results
and future events could differ materially from those anticipated in
such statements. Accordingly, readers should not place undue
reliance on forward-looking statements. Please refer to Endeavour's
most recent Annual Information Form filed under its profile at
www.sedar.com for further information respecting the risks
affecting Endeavour and its business. AISC, all-in sustaining costs
at the mine level, cash costs, operating EBITDA, all-in sustaining
margin, free cash flow, net free cash flow, free cash flow per
share, net debt, and adjusted earnings are non-GAAP financial
performance measures with no standard meaning under IFRS, further
discussed in the section Non-GAAP Measures in the most recently
filed Management Discussion and Analysis.
Corporate Office: 5 Young St, Kensington,
London W8 5EH, UK
Appendix 1: Production and AISC by Mine
Attachments:
http://www.globenewswire.com/NewsRoom/AttachmentNg/c290a900-21a5-4858-b525-c83687817e95
Attachments:
http://www.globenewswire.com/NewsRoom/AttachmentNg/5909b1a4-2d52-4d41-a94c-3a14141cc175
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