ENDEAVOUR REPORTS STRONG Q4 RESULTS
Beat upper-end of full-year production guidance and bottom-end
of AISC guidance
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Highlights
- Q4-2018 production up 25% over Q3-2018 to 174koz and AISC
down 13% to ~$715/oz
- FY-2018 production up 52% over the prior year to 612koz,
beating the top end of the 555-590koz guidance
- FY-2018 AISC down ~$30/oz over the prior year to
~$745/oz, well below the guidance range of $760 -
810/oz
- FY-2019 production expected to increase to 615 - 695koz and
AISC expected to remain low at $760 - 810/oz
- Ity CIL construction progressing on-budget and ahead
of schedule with the dry plant commissioning completed, and first
gold pour expected in early Q2-2019
- Following the strong success achieved in 2018, exploration
will continue to be a strong focus in 2019 with a company-wide
exploration program of $45-50m
George Town, January 24,
2019 - Endeavour Mining (TSX:EDV) (OTCQX:EDVMF) is pleased to
announce its preliminary financial and operating results for the
fourth quarter and full year 2018, with highlights provided in the
table below.
Table 1: Preliminary Key
Operational and Financial Highlights
| (for continuing operations) |
QUARTER ENDED |
YEAR ENDED |
|
| Dec.
31, |
Sep.
30, |
Dec.
31, |
Dec.
31, |
Dec.
31, |
FY-18 |
|
2018 |
2018 |
2017 |
2018 |
2017 |
vs. FY-17 |
| Gold Production,
koz |
174 |
139 |
151 |
612 |
403 |
+52% |
| All-in
Sustaining Cost1, $/oz |
~715 |
820 |
674 |
~745 |
774 |
(4%) |
1This is a non-GAAP measure.
Sébastien de Montessus, President & CEO,
stated: "Our strong performance across all of our mines in Q4
capped a successful year for Endeavour during which we beat our
production guidance and ended with AISC lower than the guided range
while maintaining a strong safety record. The first full-year
contribution from Houndé, coupled with the successful management of
our portfolio, have sustainably decreased our all-in sustaining
costs to below our strategic target of $800/oz.
2019 is expected to be another strong year as we
look forward to the first gold pour at the Ity CIL plant in early
Q2, where construction continues to progress ahead of schedule and
on budget. Meanwhile, we will maintain an aggressive exploration
program to build on the significant success achieved thus far.
Over the past two years, we have diligently
worked to transform our portfolio, investing nearly $1 billion into
the business. Once Ity CIL commences production, we expect to enter
a period of sustained strong free cash flow generation with a
continued focus on return on capital employed. In line with this
approach, we have optimized our business plans with a greater
emphasis on free cash flow metrics and intend to release working
capital from the available low-grade stockpiles.
2019 is a pivotal year as the efforts we have
made thus far are expected to generate significant growth in 2020
and beyond - Ity CIL will benefit from a full-year's production and
Houndé from the newly discovered high-grade Kari Pump deposit."
STRONG Q4-2018 PERFORMANCE; BEATING FULL-YEAR
GUIDANCE
Continued strong safety record in 2018 with a low Lost Time
Injury Frequency Rate ("LTIFR") of 0.16 across the
group. Q4-2018 group production from continuing operations
increased by 25% over the previous quarter to 174koz and AISC
declined by 13% to circa $715/oz due to a strong quarter at all
mines.Full-year 2018 production from continuing operations
increased by 52% over the prior year to 612koz, beating the top end
of the 555 - 590koz guidance, while AISC from continuing operations
decreased by circa $30/oz from prior year to circa $745/oz, well
below the guidance range of $760 - 810/oz. 2018 benefited from a
full-year of production at Houndé, and a better production and AISC
performance at Ity and Karma, which more than compensated for the
expected lower performance at Agbaou. The Tabakoto sale closed on
December 24, 2018, and will be deconsolidated in the year-end
financial statements.
Table 2: Group
Production, koz
| (All amounts in koz, on a 100% basis) |
THREE MONTHS ENDED |
|
YEAR ENDED |
|
|
|
| Dec.
31, |
Sep.
30, |
Dec.
31, |
|
Dec.
31, |
Dec.
31, |
2018 FULL-YEAR GUIDANCE |
|
2018 |
2018 |
2017 |
|
2018 |
2017 |
| Agbaou |
44 |
31 |
43 |
|
141 |
177 |
140 |
- |
150 |
| Ity |
21 |
21 |
17 |
|
85 |
59 |
60 |
- |
65 |
| Karma |
33 |
26 |
21 |
|
109 |
98 |
105 |
- |
115 |
|
Houndé |
76 |
61 |
69 |
|
277 |
69 |
250 |
- |
260 |
| PRODUCTION FROM
CONTINUING OPERATIONS |
174 |
139 |
151 |
|
612 |
403 |
555 |
- |
590 |
| Tabakoto (divested in
December 2018) |
30 |
26 |
28 |
|
115 |
144 |
115 |
- |
130 |
| Nzema (divested in
December 2017) |
- |
- |
24 |
|
- |
116 |
n.a. |
- |
n.a. |
|
TOTAL PRODUCTION |
203 |
165 |
203 |
|
727 |
663 |
670 |
- |
720 |
Table 3: Preliminary
Group All-In Sustaining Costs, US$/oz
| (All amounts in US$/oz) |
THREE MONTHS ENDED |
|
YEAR ENDED |
|
|
|
| Dec.
31, |
Sep.
30, |
Dec.
31, |
|
Dec.
31, |
Dec.
31, |
2018 FULL-YEAR GUIDANCE |
|
2018 |
2018 |
2017 |
|
2018 |
2017 |
| Agbaou |
~775 |
954 |
690 |
|
~820 |
647 |
860 |
- |
900 |
| Ity |
~625 |
730 |
869 |
|
~720 |
906 |
790 |
- |
850 |
| Karma |
~750 |
841 |
918 |
|
~830 |
834 |
780 |
- |
830 |
| Houndé |
~580 |
638 |
335 |
|
~565 |
335 |
580 |
- |
630 |
| Corporate G&A |
~35 |
44 |
35 |
|
~35 |
34 |
30 |
- |
30 |
|
Sustaining Exploration |
~5 |
14 |
13 |
|
~10 |
16 |
10 |
- |
10 |
| GROUP AISC FROM
CONTINUING OPERATIONS |
~715 |
820 |
674 |
|
~745 |
774 |
760 |
- |
810 |
| Tabakoto (divested in
December 2018) |
~1,315 |
1,420 |
1,411 |
|
~1,330 |
1,148 |
1,200 |
- |
1,250 |
| Nzema (divested in
December 2017) |
- |
- |
855 |
|
- |
859 |
n.a. |
- |
n.a |
|
GROUP AISC |
~800 |
917 |
776 |
|
~840 |
869 |
840 |
- |
890 |
The realized gold price from continuing operations (net of the
Karma stream) amounted to $1,199/oz and $1,229/oz for respectively
Q4-2018 and the full year ended December 31, 2018
HOUNDÉ MINE
Q4 vs Q3-2018 Insights A record quarter was achieved as
production increased, mainly due to significantly higher grades
following the end of the rainy season.
- Tonnes of ore mined increased as mining activities ramped up
following the end of the rainy season. Mining continued to focus on
the Vindaloo Main and Vindaloo Central pits. The strip ratio was
lower than initially planned due to a shift in the mine plan which
delayed stripping to 2019.
- Tonnes milled increased slightly, continuing to perform nearly
30% above nameplate capacity. The ore blend continued to be mainly
transitional/fresh ore. Oxide ore represented 34% of the mill feed,
up from 32% in Q3-2018.
- Processed grades markedly improved as higher-grade areas of
both the Vindaloo Main and Vindaloo Central pits became accessible
following the end of the rainy season. In addition, the
higher-grade ore mined was selectively processed while the
lower-grade ore was stockpiled.
- Recovery rates decreased slightly, however remaining at the
level assumed in the Optimized Study.
AISC decreased due to higher production, lower unit mining costs
associated with reduced water pumping requirements following the
end of the rainy season, as well as the reduction in sustaining
capital expenditures.
Table 4: Houndé Quarterly
Performance Indicators
| For
The Quarter Ended |
Q4-2018 |
Q3-2018 |
Q4-2017 |
| Tonnes ore mined,
kt |
1,736 |
1,413 |
663 |
| Strip ratio (incl.
waste cap) |
5.9 |
6.0 |
13.8 |
| Tonnes milled, kt |
1,063 |
1,006 |
813 |
| Grade, g/t |
2.38 |
2.02 |
2.75 |
| Recovery rate, % |
93% |
94% |
95% |
|
PRODUCTION, KOZ |
76 |
61 |
69 |
| Cash cost/oz |
~510 |
519 |
194 |
|
AISC/OZ (preliminary) |
~580 |
638 |
335 |
FY-2018 vs FY-2017 InsightsProduction increased
significantly as 2018 benefited from a full year of production
since commercial production began in Q4-2017. As guided, AISC
increased as last year's production benefited from processing
primarily high-grade oxide material. Stockpiles grew in 2018,
amounting to 2.0Mt at 1.1g/t containing 70koz at year-end.
2018 Performance vs GuidanceProduction totalled 277koz,
significantly exceeding full-year guidance of 250-260koz due mainly
to both the mining activities and the process plant performing
above their nameplate capacities.AISC amounted to circa $565/oz,
well below the guided $580-630/oz range due to the outperformance
of the operation and a lower than planned strip ratio in the second
of half the year following a shift in the mine plan which delayed
higher stripping to 2019.
Table 5: Houndé Yearly
Performance Indicator
| For The Year Ended |
Dec. 31, |
Dec. 31, |
|
2018 |
2017 |
| Tonnes ore mined,
kt |
5,822 |
1,222 |
| Strip ratio (incl.
waste cap) |
6.1 |
13.1 |
| Tonnes milled, kt |
3,948 |
813 |
| Grade, g/t |
2.29 |
2.75 |
| Recovery rate, % |
94% |
95% |
|
PRODUCTION, KOZ |
277 |
69 |
| Cash cost/oz |
~460 |
194 |
|
AISC/OZ (preliminary) |
~565 |
335 |
2019 OutlookHoundé is expected to produce between
230-250koz in 2019, continuing to out-perform its feasibility study
estimates, at an AISC of $720-790/oz.
- Mining is expected to continue in the Vindaloo deposit, while
ore extraction at the Bouere deposit is expected to start in late
H1-2019. The strip ratio is expected to increase in 2019, due to
both the mine plan sequence and to the carry-over of stripping
delayed from 2018.
- Throughput is expected to remain above nameplate capacity while
the ore blend is expected to shift from the current mix of ~30%
oxide ore and ~70 % transitional/fresh ore feed to mainly fresh ore
by year-end, resulting in higher operating costs.
- Despite the expected higher grades mined, the average processed
grade is expected to decline due to the use of lower-grade
stockpiles. This marks a change compared to the previous mine plan
due to the company's strategic focus on reducing working
capital.
- Sustaining costs are expected to increase from $6 million to
circa $35 million mainly due to the increased strip ratio, a TSF
raise and components to be purchased for fleet maintenance.
Approximately $7 million of non-sustaining expenditure is
planned for 2019, mainly for the Bouéré pre-strip, road, and
resettlement.
AGBAOU MINE
Q4 vs Q3-2018 InsightsProduction increased as expected
mainly due to a significant increase in milled grade following the
waste extraction efforts over the course of the year which gave
access to higher grade areas.
- Ore mined increased due to greater extraction at the South Pit
as less stripping was necessary. Waste extraction efforts continued
in the West pit, resulting in an increase in the overall strip
ratio.
- Mill throughput increased as the proportion of fresh ore
processed decreased from 15% to 12%.
- Processed grades increased due to the change in mining sequence
giving access to higher grade ore.
- Recovery rates improved slightly due to a lower proportion of
fresh ore processed.
All-in sustaining costs decreased, mainly due to increased gold
sales, which were offset slightly by higher sustaining costs driven
by increased waste capitalisation activity.Table
6: Agbaou Quarterly Performance Indicators
| For
The Quarter Ended |
Q4-2018 |
Q3-2018 |
Q4-2017 |
| Tonnes ore mined,
kt |
481 |
625 |
826 |
| Strip ratio (incl.
waste cap) |
13.6 |
10.1 |
7.7 |
| Tonnes milled, kt |
708 |
669 |
760 |
| Grade, g/t |
2.21 |
1.54 |
1.85 |
| Recovery rate, % |
95% |
94% |
93% |
|
PRODUCTION, KOZ |
44 |
31 |
43 |
| Cash cost/oz |
~600 |
791 |
608 |
|
AISC/OZ (preliminary) |
~775 |
954 |
690 |
FY-2018 vs FY-2017 InsightsProduction decreased as
guided, as low-grade stockpile feed supplemented the mine feed to
allow waste capitalization activity to progress quicker in 2018. In
addition, mining was constrained to lower grade areas. AISC
increased, as guided, due to the higher sustaining costs associated
with the waste capitalisation activity, the impact of lower
production, and higher operating costs related to mining and
processing a greater volume of fresh and transitional ore.
Stockpiles declined in 2018, amounting to 1.6Mt at 0.6g/t
containing 32koz at year-end.
2018 Performance vs GuidanceProduction totalled 141koz,
achieving the lower end of the guided 140-150koz range. AISC
amounted to circa $820/oz, well below the guided $860-900/oz range
as a portion of the planned waste capitalization was shifted to
2019 and more oxide material was processed compared to the initial
plan.
Table 7: Agbaou Yearly
Performance Indicators
| For
The Year Ended |
Dec. 31,2018 |
Dec. 31,2017 |
| Tonnes ore mined,
kt |
2,399 |
2,983 |
| Strip ratio (incl.
waste cap) |
11.4 |
8.4 |
| Tonnes milled, kt |
2,830 |
2,906 |
| Grade, g/t |
1.70 |
2.02 |
| Recovery rate, % |
94% |
94% |
|
PRODUCTION, KOZ |
141 |
177 |
| Cash cost/oz |
~680 |
557 |
|
AISC/OZ (preliminary) |
~820 |
647 |
2019 OutlookAgbaou is expected to produce between
120-130koz in 2019 at an AISC of $850-900/oz.
- Mining is expected to focus mainly in the West pit, with some
contribution from the North and South pits. The strip ratio is
expected to remain at a high-level as a portion of the planned 2018
waste capitalization was shifted to 2019.
- The plant throughput is expected to decline as the oxide ore
blend is expected to reduce from approximately 80% in 2018 to 60%,
with the remainder of the feed comprised of fresh and transitional
ore.
- Despite expecting to mine higher grade ore, the average
processed grade is expected to remain fairly flat over 2018 due to
the use of lower-grade stockpiles. This marks a change compared to
the previous mine plan due to the company's strategic focus on
maximizing free cash flow generation and reducing working
capital.
- Sustaining costs are expected to increase from $13 million to
circa $24 million mainly due to increased waste
capitalization.
Approximately $8 million of non-sustaining expenditure is
planned for 2019, mainly for a TSF raise.
KARMA MINE
Q4 vs Q3-2018 Insights Production increased due to a
significant increase in ore stacked following the end of the rainy
season.
- Tonnes of ore mined increased as mining activities ramped up
following the end of the rainy season. Activities focused
exclusively on mining oxide ore from the Kao pit.
- Mill throughput increased as operating conditions improved,
with increased stacker utilization.
- Recovery rates remained high due to the improved leach
characteristics of the oxide ore stacked.
AISC improved as the overall operating costs decreased,
following the end of the rainy season, and due to an increase in
ounces sold.
Table 8: Karma Quarterly
Performance Indicators
| For
The Quarter Ended |
Q4-2018 |
Q3-2018 |
Q4-2017 |
| Tonnes ore mined,
kt |
788 |
755 |
1,184 |
| Strip ratio (incl.
waste cap) |
5.5 |
3.0 |
2.1 |
| Tonnes stacked, kt |
1,037 |
981 |
1,026 |
| Grade, g/t |
0.98 |
1.02 |
1.06 |
| Recovery rate, % |
88% |
89% |
77% |
|
PRODUCTION, KOZ |
33 |
26 |
21 |
| Cash cost/oz |
~640 |
729 |
798 |
|
AISC/OZ (preliminary) |
~750 |
841 |
918 |
FY-2018 vs FY-2017 InsightsProduction increased as
guided, despite a lower processed grade, as the plant optimisation
work done in 2017 increased stacking capacity. AISC slightly
decreased, specifically in the second half of the year when most of
ore stacked was oxide ore while transitional ore from the GG2 pit
impacted costs in the first half of the year.Stockpiles grew in
2018, amounting to 0.7Mt at 0.6g/t containing 13koz at
year-end.
2018 Performance vs GuidanceProduction totalled 109koz,
achieving the middle of the guided 105-115koz range. AISC amounted
to circa $830/oz, achieving the upper end of the guided $780-830
range.
Table 9: Karma Yearly
Performance Indicators
| For
The Year Ended |
Dec. 31,2018 |
Dec. 31,2017 |
| Tonnes ore mined,
kt |
4,715 |
3,862 |
| Strip ratio (incl.
waste cap) |
2.6 |
3.0 |
| Tonnes stacked, kt |
4,097 |
3,552 |
| Grade, g/t |
0.95 |
1.07 |
| Recovery rate, % |
82% |
83% |
|
PRODUCTION, KOZ |
109 |
98 |
| Cash cost/oz |
~720 |
716 |
|
AISC/OZ (preliminary) |
~830 |
834 |
2019 OutlookKarma is expected to produce between
105-115koz in 2019 at an AISC of $860-910/oz.
- Mining is expected to focus mainly on oxide and transitional
ore from the Kao pit, which is expected to be mined out by
mid-year, and on oxide ore from the North Kao pit where
pre-stripping will begin in Q1-2019 and ore extraction in Q2-2019.
The strip ratio is expected to increase in 2019 due to North
Kao.
- Tonnes stacked and recovery rates are expected to remain fairly
flat over 2018.
- The mine's performance is expected to be better in the second
of the year as the first half is expected to be impacted by the Kao
pit transitional ore.
- Sustaining costs are expected to decrease from $7 million to
circa $5 million with the main spending related to the waste
capitalization at North Kao pit.
Non-sustaining expenditures are expected to be relatively flat
at ~$24 million, comprised mainly of stacking line extension and
lift preparation and lining, and pre-stripping for the North Kao
deposit.
ITY MINE: HEAP LEACH OPERATION
Q4 vs Q3-2018 Insights2018 was guided to be a transition
year for the heap leach operation with greater priority given to
the CIL construction activities, particularly in the second half of
the year for which the main goal was to stack ore from lower grade
stockpiles. However, Ity's heap leach operation performed above
expectations, particularly in Q4-2018 as mining was
opportunistically conducted based on equipment availability and the
good progress made on Ity CIL construction.
- Production remained flat as a decrease in stacked grade was
offset by a higher recovery rate.
- Tonnes of ore mined decreased, in line with the plan, as mining
activity for the heap leach decreased to prioritize the
construction of the CIL plant. Mining for the heap leach operation
ceased mid-December.
- Ore stacked decreased as the quantity of ore mined decreased
with lower-grade stockpiles supplementing the stacked feed.
Stacking at the heap leach operation ceased mid-December.
- The stacked grade decreased as mining activity at the
high-grade Bakatouo pit ceased for heap leach operations and low
grade ore stockpiles were used.
- Recovery rates increased due to improved leach characteristics
associated with the ore stacked from the Bakatouo pit.
AISC decreased due to lower unit mining costs associated with
reduced water pumping requirements, as well as a lower strip ratio,
processing and G&A costs, and increased ounces of gold sold in
the period.
Table 10: Ity Quarterly Performance
Indicators
| For
The Quarter Ended |
Q4-2018 |
Q3-2018 |
Q4-2017 |
| Tonnes ore mined,
kt |
200 |
253 |
402 |
| Strip ratio (incl.
waste cap) |
1.5 |
2.4 |
3.2 |
| Tonnes stacked, kt |
316 |
326 |
372 |
| Grade, g/t |
2.37 |
2.64 |
1.86 |
| Recovery rate, % |
87% |
78% |
78% |
|
PRODUCTION, KOZ |
21 |
21 |
17 |
| Cash cost/oz |
~570 |
667 |
657 |
|
AISC/OZ (preliminary) |
~625 |
730 |
869 |
FY-2018 vs FY-2017 InsightsRecord production was achieved
due to significantly higher grades stacked from the Bakatouo
deposit and increased stacking. AISC decreased due to increased
production and lower sustaining costs.
2018 Performance vs GuidanceProduction totalled 85koz,
significantly exceeding its full-year guidance of 60-65koz as
opportunistic mining was carried-out in the second half of the
year.mAISC amounted to circa $720/oz, well below the guided
$790-850/oz range, due to the above-mentioned opportunistic
mining.
Table 11: Ity Yearly Performance
Indicators
| For The Year Ended |
Dec. 31, |
Dec. 31, |
|
2018 |
2017 |
| Tonnes ore mined,
kt |
1,127 |
1,410 |
| Strip ratio (incl.
waste cap) |
2.6 |
3.7 |
| Tonnes stacked, kt |
1,307 |
1,194 |
| Grade, g/t |
2.49 |
1.85 |
| Recovery rate, % |
81% |
83% |
|
PRODUCTION, KOZ |
85 |
59 |
| Cash cost/oz |
~650 |
733 |
|
AISC/OZ (preliminary) |
~720 |
906 |
2019 OutlookMining and stacking activities for the heap
leach operation ceased mid-December. Residual gold from the heaps,
of up to 5koz, is expected to be recovered in Q1-2019.Transition
preparation and training efforts are underway to shift to CIL
production in early Q2-2019.
TABAKOTO MINE (DISCONTINUED OPERATION)
Tabakoto Sale InsightsOn December 24, 2018, Endeavour
completed the sale of its interest in the non-core Tabakoto mine to
Algom Resources Limited, a subsidiary of BCM International Ltd
("BCM"), as previously announced on September 4, 2018.
Endeavour received upfront cash consideration of US$35 million
on December 24, 2018, with a deferred cash consideration of US$10
million expected in 2019, subject to certain conditions, and a 10%
net smelter royalty on the Dar Salaam deposit, capped at a maximum
of 200,000 ounces of gold.
Q4 vs Q3-2018 InsightsProduction increased mainly due to
higher average head grades, despite a decrease in milled
tonnage.
- Open pit production significantly decreased as the Tabakoto
North pit neared its end of life.
- Underground tonnes mined increased due to the end of the rainy
season, allowing for improved stope access and
productivity.
- Despite a decrease in total milled tonnage, processing
activities continued to perform well with throughput rates
remaining flat.
- The overall average grade processed increased as per the mine
sequence.
- The recovery rate remained flat.
AISC improved due to lower mining, process, and G&A unit
costs, as well as an increase in gold sold.
Table 12: Tabakoto Quarterly
Performance Indicators
| For
The Quarter Ended |
Q4-2018 |
Q3-2018 |
Q4-2017 |
| OP Tonnes ore mined,
kt |
108 |
146 |
165 |
| OP Strip ratio (incl.
waste cap) |
3.8 |
5.3 |
10.3 |
| UG tonnes ore mined,
kt |
165 |
143 |
207 |
| Tonnes milled, kt |
417 |
433 |
436 |
| Grade, g/t |
2.41 |
2.08 |
2.20 |
| Recovery rate, % |
92% |
92% |
92% |
|
PRODUCTION, KOZ |
30 |
26 |
28 |
| Cash cost/oz |
~1,035 |
1,058 |
1,170 |
|
AISC/OZ (preliminary) |
~1,315 |
1,420 |
1,411 |
FY-2018 vs FY-2017 Insights Production decreased and AISC
increased mainly due to a decrease in processed grades following
the completion of the high-grade Kofi C pit in 2017 and Kofi B pit
in H1-2018.
2018 Performance vs GuidanceProduction totalled 115koz,
achieving the bottom-end of the guided 115-130koz range, while the
AISC amounted to circa $1,330/oz, missing the top-end of the guided
$1,200-1,250/oz range.
The lower than expected performance is mainly attributable to
sub-optimal underground equipment availability and associated
maintenance costs.
Table 13: Tabakoto Yearly
Performance Indicators
| For
The Year Ended |
Dec. 31,2018 |
Dec. 31,2017 |
| OP Tonnes ore mined,
kt |
572 |
647 |
| OP Strip ratio (incl.
waste cap) |
7.0 |
8.9 |
| UG tonnes ore mined,
kt |
601 |
756 |
| Tonnes milled, kt |
1,714 |
1,640 |
| Grade, g/t |
2.28 |
2.90 |
| Recovery rate, % |
92% |
94% |
|
PRODUCTION, KOZ |
115 |
144 |
| Cash cost/oz |
~1,020 |
929 |
|
AISC/OZ (preliminary) |
~1,330 |
1,148 |
ITY CIL PROJECT CONSTRUCTION: AHEAD OF SCHEDULE and
on-budgeT
Construction is progressing on-budget and two months ahead of
schedule with the first gold pour expected in early Q2-2019.
Ity is expected to produce 160 - 200koz in 2019 at an AISC of
$525 - 590/oz, with the bottom-end production guidance
corresponding to the nameplate capacity while the top-end factors
possible upsides such as an earlier start date, a quicker than
expected ramp-up and the plant producing above its nameplate.
The major milestones achieved to date include:
- More than 7 million man-hours worked with zero lost-time
injuries.
- Overall project completion stands at more than 95%, tracking
approximately 2 months ahead of schedule.
- The project remains on-budget with the remaining cash outflow
for 2019 amounting to $50 - $60 million.
- The dry commissioning of the SAG and Ball mills was recently
completed, and the wet plant mechanical, piping and electrical
works are progressing well.
- Pre-stripping commenced at the Bakatouo and Ity Flat
deposits.
- Tailings storage facility earthworks are progressing well
against schedule with over 90% completed.
- The 91kv transmission line is 98% complete and the 29MW power
station commissioning commenced with four gensets already available
for operation.
- The employee permanent camp construction was completed, with
all 312 rooms available for occupation.
- The resettlement of Daapleu was completed and the official
ceremony of handing over the houses took place on December 10,
2018.
- A portion of the construction team has already started to
demobilize.
Picture 1: Ball and SAG mills
KALANA PROJECT UPDATEAn exploration program consisting of
48,000 meters of drilling was finalized in 2018 on the Kalana and
Kalanako deposits and an updated resource estimate is expected to
be published in Q1-2019. At the Kalana deposit, drilling
confirmed the overall geological model and in-fill drilling is
expected to convert a portion of the previously classified inferred
resources in the northeastern part of the deposit, which will form
the basis of the updated feasibility study. At the Kalanako
deposit, drilling has confirmed the continuation of the
mineralization and is expected to convert a portion of the
previously classified inferred resources. A growth capital spend of
$9 million has been allocated for 2019 mainly for studies and
maintenance.
BALANCE SHEET, FINANCING & LIQUIDITY SOURCES Net debt
marginally increased from $535 million to $540 million since
September 30, 2018 mainly due to:
- Capital spend on the Ity CIL growth project which progressed
ahead of schedule.
- Increase in equipment financing relating to the backup CAT
power generators and the commissioning of the second batch of
Komatsu mine fleet at Ity.
- Net cash impact from the Tabakoto disposal and the cash
generated from the operating assets.
Despite the significant growth capital spend incurred in 2018,
at year-end Endeavour's available sources of financing and
liquidity remained strong at $239 million, which included $119
million from its current cash position and $120 million in undrawn
funds from its RCF.
Table 14: Net Debt
Position
| |
Dec.
31, 2018 |
Sep.
30, |
Dec.
31, |
| (in US$
million unless stated otherwise) |
(PRELIMINARY) |
2018 |
2017 |
| Cash |
119 |
33 |
123 |
| Equipment
financing |
(99) |
(69) |
(54) |
| Convertible senior
bond |
(330) |
(330) |
- |
| Drawn portion of
revolving credit facility |
(230) |
(170) |
(300) |
|
NET DEBT POSITION |
(540) |
(535) |
(232) |
2019 OUTLOOKGroup production from continuing operations
is expected to increase to 615-695koz in 2019 and AISC is expected
to be between $760-810/oz due to the benefit of the Ity CIL project
coming online in early Q2-2019. More details on individual mine
guidance have been provided in the above sections.
Table 15: Production Guidance
from Continuing Operations, koz
| |
2018 ACTUALS |
2019 FULL-YEAR GUIDANCE |
| (All
amounts in koz, on a 100% basis) |
| Agbaou |
141 |
120 |
- |
130 |
| Ity |
85 |
160 |
- |
200 |
| Karma |
109 |
105 |
- |
115 |
|
Houndé |
277 |
230 |
- |
250 |
| GROUP
PRODUCTION |
612 |
615 |
- |
695 |
Table 16: AISC Guidance from
Continuing Operations, $/oz
| |
2018 ACTUALS (PRELIMINARY) |
2019 FULL-YEAR GUIDANCE |
| (All
amounts in US$/oz) |
| Agbaou |
~820 |
850 |
- |
900 |
| Ity |
~720 |
525 |
- |
590 |
| Karma |
~830 |
860 |
- |
910 |
| Houndé |
~565 |
720 |
- |
790 |
| Corporate G&A |
~35 |
35 |
- |
35 |
| Sustaining
exploration |
~10 |
5 |
- |
5 |
|
GROUP AISC |
~745 |
760 |
- |
810 |
As detailed in the table below, sustaining and non-sustaining
capital allocations for 2019 amount to $68 million and $83 million
respectively. Growth projects amount to $64 million, mainly for the
completion of the Ity CIL project construction. More details on
individual mine capital expenditures have been provided in the
above sections.
Table 17: Capital Expenditure
Guidance, $m
| |
SUSTAINING CAPITAL |
NON-SUSTAINING CAPITAL |
GROWTH PROJECTS |
| (All
amounts in US$m) |
| Agbaou |
24 |
8 |
|
| Ity |
1 |
2 |
55 |
| Karma |
5 |
24 |
|
| Houndé |
35 |
7 |
|
| Kalana |
0 |
0 |
9 |
| Exploration |
3 |
36 |
|
| Corporate (mainly
comprised IT systems across the Group) |
0 |
6 |
|
|
TOTAL |
68 |
83 |
64 |
Exploration will continue to be a strong focus in 2019 with a
company-wide exploration program of $45-50 million, with
approximately 20% expensed, 5% sustaining, and 75%
non-sustaining.
A short-term Gold Revenue Protection Strategy was entered into
in early 2018 to protect the company's cash generation during the
Ity CIL construction period, beginning on February, 1, 2018 and
ending on April 30, 2019. The program consists of a deferred
premium collar strategy using written call options and bought put
options with a floor price of $1,300/oz and a ceiling price of
$1,500/oz. The program initially covered a total of 400,000 ounces
and as at December 31, 2018, a total of 107,000 ounces remained.
Once these contracts expire, 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 5th at 8:30am Toronto time (EST) to
discuss the Company's financial results.
The conference call and live webcast are scheduled at: 5:30am in
Vancouver 8:30am in Toronto and New York 1:30pm in London 9:30pm in
Hong Kong and Perth
The live webcast can be accessed through the following
link: https://edge.media-server.com/m6/p/n759ggdv
Analysts and investors are also invited to participate and
ask questions using the dial-in numbers below: International:
+16315107495North American toll-free: + 18669661396 UK toll-free:
08003767922
Confirmation Code: 5693456
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 |
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 4 mines across Côte d'Ivoire
(Agbaou and Ity) and Burkina Faso (Houndé, Karma) which are
expected to produce 615-695koz in 2019 at an AISC of
$760-810/oz.
For more information, please visit
www.endeavourmining.com.
CAUTIONARY STATEMENTS REGARDING 2018
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 2018 results as of the date of this press release.
Actual reported fourth quarter and 2018 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 2018 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
- View News Release in PDF.pdf
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