gold flake

Refining forecasts ahead of results

Endeavour Mining 28 April 2022 Update
Download PDF

Endeavour Mining

Refining forecasts ahead of results

Q122 results preview

Metals & mining

28 April 2022

Price

1,934p

Market cap

£4,806m

C$1.2826/US$, US$1.2458/£

Net cash (US$m) at end-December 2021, excludes lease liabilities, option premium and restricted cash

98.9

Shares in issue

248.0m

Free float

75.2%

Code

EDV

Primary exchange

LSE

Secondary exchange

TSX, USOTC

Share price performance

%

1m

3m

12m

Abs

3.4

19.0

N/A

Rel (local)

4.5

22.2

N/A

52-week high/low

2,100p

1,510p

Business description

Following its acquisitions of SEMAFO and Teranga, Endeavour Mining has become one of the top 10 major gold producers globally, with seven mines in Côte d’Ivoire, Burkina Faso and Senegal plus a portfolio of development projects, all in the West African Birimian greenstone belt.

Next events

Q122 results

5 May

Lafigue DFS

Late Q122/early Q222

Sabodala-Massawa Phase 2 construction launch

Q222

Wona underground production

Q322

Analyst

Lord Ashbourne

+44 (0)20 3077 5724

Endeavour Mining is a research client of Edison Investment Research Limited

Endeavour’s Q122 results are scheduled for distribution to the market on 5 May. Prior to their release, we have refined our forecasts for both the quarter in question plus the remaining three quarters of the year to take into account recent changes to the gold price (US$1,890/oz at the time of writing cf US$1,926/oz previously) and some very minor operational considerations at its mines. The result has been a 1.6% increase in our forecast of adjusted net EPS from continuing operations for the quarter and a modest 2.6% reduction for the full year. Nevertheless, we remain close to the top of the range of analysts’ forecasts for the full year. On a like-for-like basis our valuation of EDV is barely changed. If the Sabodala-Massawa expansion project is added on a standalone basis, however, it increases by c 5.1–8.5%.

Year end

Revenue (US$m)

EBITDA (US$m)

PBT*
(US$m)

Operating cash flow per share (US$)

DPS
(c)

Yield
(%)

12/20

1,847.9

910.3

501.2

5.35

37

1.5

12/21

2,903.8

1,517.3

756.5

4.83

56

2.3

12/22e

2,571.2

1,427.4

881.9

5.08

63

2.6

12/23e

2,384.4

1,357.1

868.6

4.32

70

2.9

Note: *PBT is normalised, excluding amortisation of acquired intangibles and exceptional items.

Sabodala-Massawa expansion project

On 4 April, Endeavour announced that it had sanctioned the development of the Sabodala-Massawa expansion project. The project will supplement the current 4.2Mtpa carbon-in-leach plant with a 1.2Mtpa biological oxidation plant to process high-grade refractory ore from Massawa. Over its 10-year life, it will produce 1.35Moz at an all-in sustaining cost of US$576/oz for an initial capital outlay of US$290m (US$2,148 per average annual ounce of production). At a gold price of US$1,700/oz, the company estimates a project NPV5% of US$861m (US$3.46/share), a post-tax internal rate of return of 72% and a 1.4-year payback. Project development will commence in Q222, with first gold expected in early FY24.

Valuation: US$36.47 plus US$3.46 plus US$4.30–7.45

Based on the average multiples of its gold major peers, we estimate a value for Endeavour of US$36.62 (C$46.97 or £29.39) per share. By contrast, using an absolute valuation methodology, whereby we discount back five years of cash flow (excluding the Sabodala-Massawa expansion project) and then apply an ex-growth, ad infinitum multiple to steady state terminal cash flows in FY26, implies a valuation of US$36.47 (C$46.78 or £29.27) per share if performed using a standardised discount rate of 10% or US$59.48 (C$76.29 or £47.74) per share if performed using a CAPM-derived (real) discount rate of 6.30%. To these valuations a further c US$3.46/share for the Sabodala-Massawa expansion project may then be added plus a further US$4.30–7.45/share for the value of its most recent five-year exploration programme (see The second five-year plan, published on 20 October 2021). Otherwise, it is trading at a discount to the average multiples of its peers on at least 68% of common valuation measures despite its being the largest premium LSE-listed pure gold producer in the FTSE 100 Index (since 21 March).

Q122 results refinements

Ahead of its results on 5 May, we have refined our forecasts for Endeavour to take into account recent changes to the gold price and some very minor operational considerations at its mines:

Exhibit 1: Endeavour Mining FY22 forecasts, by quarter

US$000s (unless otherwise indicated)

Q122e
(prior)

Q222e
(prior)

Q322e
(prior)

Q422e
(prior)

FY22e
(prior)

Q121e

Q222e

Q322e

Q422

FY22e

Houndé production (koz)

59.2

76.4

68.8

57.3

261.6

59.2

76.4

68.8

57.3

261.6

Agbaou production (koz)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Karma production (koz)

10.3

0.0

0.0

0.0

10.3

10.3

0.0

0.0

0.0

10.3

Ity production (koz)

63.6

63.6

63.2

63.2

253.5

67.8

67.8

63.2

63.2

261.9

Boungou production (koz)

36.3

35.3

28.9

30.4

130.9

34.4

35.3

29.9

30.4

130.0

Mana production (koz)

51.5

49.3

40.6

43.1

184.6

51.5

49.3

40.6

43.1

184.6

Sabodala-Massawa

85.9

85.9

98.2

98.2

368.1

89.6

85.9

98.2

98.2

371.8

Wahgnion

34.8

32.8

33.4

43.1

144.1

30.7

32.8

33.4

43.1

140.0

Total gold produced (koz)

341.7

343.4

333.0

335.1

1,353.1

343.5

347.5

334.0

335.1

1,360.1

Total gold sold (koz)

341.7

343.4

333.0

335.1

1,353.1

343.5

347.5

334.0

335.1

1,360.1

Gold price (US$/oz)

1,877

1,926

1,926

1,926

1,914

1,878

1,903

1,890

1,890

1,890

Mine level cash costs (US$/oz)*

722

697

659

666

686

723

692

656

665

684

Mine level AISC (US$/oz)

975

955

908

877

929

958

959

908

874

925

Revenue

– Gold revenue

641,133

661,326

641,306

645,344

2,589,109

645,064

661,475

631,340

633,282

2,571,160

Cost of sales

– Operating expenses

246,616

239,384

219,450

223,223

928,673

248,320

240,605

219,069

222,841

930,835

– Royalties

40,364

41,305

39,632

39,845

161,146

40,441

41,263

39,017

39,100

159,821

Gross profit

354,153

380,637

382,224

382,277

1,499,291

356,303

379,606

373,254

371,340

1,480,504

Depreciation

(158,177)

(157,638)

(154,856)

(160,258)

(630,929)

(156,234)

(157,461)

(155,594)

(159,997)

(629,286)

Expenses

– Corporate costs

(8,276)

(8,276)

(8,276)

(8,276)

(33,104)

(8,276)

(8,276)

(8,276)

(8,276)

(33,104)

– Impairments

0

0

– Acquisition etc costs

0

0

– Share based compensation

0

0

– Exploration costs

(5,000)

(5,000)

(5,000)

(5,000)

(20,000)

(5,000)

(5,000)

(5,000)

(5,000)

(20,000)

Total expenses

(13,276)

(13,276)

(13,276)

(13,276)

(53,104)

(13,276)

(13,276)

(13,276)

(13,276)

(53,104)

Earnings from operations

182,700

209,723

214,093

208,742

815,258

186,793

208,869

204,384

198,067

798,114

Interest income

0

0

Interest expense

3,987

14,041

27,829

41,608

87,465

3,987

13,164

26,662

40,015

83,828

Net interest

3,987

14,041

27,829

41,608

87,465

3,987

13,164

26,662

40,015

83,828

Loss on financial instruments

0

0

Other expenses

0

0

Profit before tax

186,687

223,764

241,922

250,350

902,723

190,780

222,033

231,046

238,083

881,942

Current income tax

44,519

48,917

50,648

49,650

193,735

45,965

48,976

48,543

47,372

190,856

Deferred income tax

0

0

0

0

0

0

0

0

0

0

Total tax

44,519

48,917

50,648

49,650

193,735

45,965

48,976

48,543

47,372

190,856

Effective tax rate (%)

23.8

21.9

20.9

19.8

21.5

24.1

22.1

21.0

19.9

21.6

Profit after tax

142,168

174,847

191,273

200,700

708,988

144,815

173,057

182,503

190,711

691,086

Net profit from discontinued ops.

0

0

0

0

0

0

0

0

0

0

Total net and comprehensive income

142,168

174,847

191,273

200,700

708,988

144,815

173,057

182,503

190,711

691,086

Minority interest

17,607

19,944

20,134

19,675

77,361

18,078

20,012

19,295

18,754

76,139

Minority interest (%)

12.4

11.4

10.5

9.8

10.9

12.5

11.6

10.6

9.8

11.0

Profit attributable to shareholders

124,561

154,903

171,139

181,025

631,627

126,738

153,045

163,208

171,956

614,947

Basic EPS from continuing ops (US$)

0.502

0.623

0.688

0.728

2.541

0.510

0.616

0.657

0.692

2.475

Diluted EPS from continuing ops (US$)

0.497

0.618

0.682

0.722

2.519

0.506

0.611

0.651

0.686

2.454

Basic EPS (US$)

0.502

0.623

0.688

0.728

2.541

0.510

0.616

0.657

0.692

2.475

Diluted EPS (US$)

0.497

0.618

0.682

0.722

2.519

0.506

0.611

0.651

0.686

2.454

Norm. basic EPS from cont. ops (US$)

0.502

0.623

0.688

0.728

2.541

0.510

0.616

0.657

0.692

2.475

Norm. diluted EPS from cont. ops (US$)

0.497

0.618

0.682

0.722

2.519

0.506

0.611

0.651

0.686

2.454

Adj net earnings attributable (US$000s)

124,561

154,903

171,139

181,025

631,627

126,738

153,045

163,208

171,956

614,947

Adj net EPS from continuing ops (US$)

0.502

0.623

0.688

0.728

2.541

0.510

0.616

0.657

0.692

2.475

Source: Endeavour Mining, Edison Investment Research. Note: *Excludes royalty costs.

Items included in the reconciliation between adjusted net earnings attributable and total net and comprehensive earnings are losses from discontinued operations, gains/losses on financial instruments, other expenses and acquisition costs (all shown independently in the table above), plus the tax impact of adjusting items, non-cash and other adjustments and the minority interest attributable to the adjusting items (not shown independently). As noted previously, Endeavour has now changed its definition of adjusted net earnings attributable, such that deferred tax effects and share-based payments are no longer included in the adjustments to total net and comprehensive earnings, and this is now the manner in which our FY22 forecasts (above) are presented. Readers are also reminded that Endeavour changed its definition of cash costs in Q420 to include royalties. The decision was made so that Endeavour may be more consistent in reporting within the context of its peer group. For reasons of comparability with past results, however, as well as ease of forecasting (given that royalties are reported as a discrete item distinct from operating expenses), we are continuing to show total cash costs excluding royalties. Depending on the gold price and the valuation of its 2.5% net smelter royalty as part of the consideration for its sale, Endeavour may also record a small profit or loss relating to its sale of the Karma mine in Q122. This is not included in our estimates on the basis that it is (a) likely to be immaterial within the context of Endeavour’s broader accounts and (b) non-recurring.

Within this context, a comparison between our quarterly and full-year forecast and consensus forecasts for FY22 is as follows:

Exhibit 2: Edison adjusted net EPS from continuing operations estimates versus consensus FY22 by quarter

(US$/share)

Q122

Q222

Q322

Q422e

Sum Q1–Q422

FY22e

Edison

0.510

0.616

0.657

0.692

2.475

2.475

Mean consensus forecast

0.465

0.496

0.539

0.560

2.059

1.932

High consensus forecast

0.570

0.665

0.686

0.729

2.650

2.545

Low consensus forecast

0.422

0.317

0.475

0.444

1.658

1.394

Source: Refinitiv, Edison Investment Research. Note: Consensus at 28 April 2022.

Of particular note, in the context of our financial and operating forecasts for the individual quarters, is the absence of any material decline in either production or profitability in Q3 (being the quarter historically most susceptible to disruption from the seasonal rains in West Africa). In this case, however, we are expecting a material increase in production at Sabodala-Massawa in Q322 and H222. Ore at Sabodala-Massawa will be primarily sourced from the Sofia North pit, supplemented by lower-grade feed from the Sabodala pit, in H122, whereas it is intended to be sourced from the higher-grade Massawa Central and Massawa North in H222. Note that, in the case of FY22, we have not (yet) attempted to forecast any tax instalment payments, which typically inflate Endeavour’s tax charge in the second quarter of any particular financial year. It also typically declares local entity dividends in Q2, which will affect cash flows in Q322.

Self-evidently, one of the main assumptions behind our forecasts is there are no major deleterious effects to ongoing operations as a result of the COVID-19 pandemic. We also assume no collateral escalation of geopolitical tensions into West Africa. To date, the effect of COVID-19 on Endeavour’s operations in West Africa has been negligible and is expected to remain so, as the company has now been able to vaccinate more than 50% of its workforce in an ongoing programme of pandemic mitigation. In addition, Endeavour has further mitigated future risks as far as possible by setting itself up to operate under level 2 COVID-19 restrictions (see our note New senior gold major looking to join FTSE 100, published on 17 December 2020) and by preparing multiple different levels in its pits from which to produce, thereby affording it greater operational flexibility if there are disruptions.

Sabodala-Massawa expansion launch

On 4 April, Endeavour announced its decision to proceed with the development of its Sabodala-Massawa expansion project, based on the results of a recently completed definitive feasibility study (DFS). A summary of the salient features of the DFS’s results is as follows:

The Sabodala-Massawa expansion project will supplement the current 4.2Mtpa carbon-in-leach (CIL) plant with a 1.2Mtpa biological oxidation (BIOX) plant to process the high-grade refractory ore from the Massawa deposits.

Expansion is expected to increase production at the Sabodala-Massawa complex to c 373koz pa over the next five years at an average all-in sustaining cost (AISC) of US$745/oz; over its 10-year life, the expansion project will produce 1.35Moz at an AISC of US$576/oz.

Initial capex of US$290m equates to a capital intensity of US$2,148 per average annual ounce of production and will be self-funded by the existing Sabodala-Massawa operation.

At a gold price of US$1,700/oz, the project is estimated to generate US$200m in incremental annual free cash flow in its first five years of operation to result in an NPV5% of US$861m (company calculation) and to generate a post-tax internal rate of return of 72% with a quick 1.4-year payback period.

Construction on the project will commence in the current quarter, with the first gold pour from the BIOX plant expected in early FY24.

Edison has not yet incorporated the Sabodala-Massawa expansion project into its longer-term forecasts – and therefore valuation – below. We will do so at the time of the next substantial update note on the company. In the meantime, however, it is worth noting that we estimate the project will add US$3.46 in incremental value per Endeavour share. Readers should also note the project’s US$560 valuation per (project) ounce mined.

Valuation

Endeavour is a multi-asset company that has shown a willingness and desire to trade assets to maintain production, reduce costs and maximise returns to shareholders (eg the sale of Youga in FY16, Nzema in FY17, Tabakoto in FY18, Agbaou in FY20 and Karma in FY22, and the acquisition of SEMAFO in FY20 and Teranga in FY21). Historically, rather than our customary method of discounting maximum potential dividends over the life of operations back to FY22, in the case of Endeavour, we have instead opted to discount five years of forecast cash flows in FY22–26 (NB excluding the Sabodala-Massawa expansion project) back to the start of FY22 and then to apply an ex-growth terminal multiple of 10x (consistent with using a standardised discount rate of 10%) to forecast cash flows in that year (ie FY26). In the normal course of events, exploration expenditure would have been excluded from such a calculation on the basis that it is an investment. In the case of Endeavour, however, it was included on the grounds that it was a critical component of ongoing business performance in its ability to continually expand and extend the lives of its mines.

In this case, our estimate of cash flows in FY26 has remained, to all intents and purposes, unchanged at US$3.97/share (cf US$3.96/share previously), giving rise to a terminal valuation of the company at end-FY26 of US$39.67/share (cf US$39.65/share previously), which (in conjunction with forecast intervening cash flows) then discounts back to a valuation of US$36.47/share as at the start of FY22 (cf US$36.57/share previously):

Exhibit 3: Endeavour forecast valuation and cash flow per share, FY22–26e (US$/share)

Source: Edison Investment Research

Given its elevation into the ranks of the world’s foremost producers of gold, however, we believe Endeavour can increasingly attract lower-cost finance and, as such, a CAPM-derived WACC can also be considered (as discussed in our February 2021 initiation on Newmont Corporation). Long-term nominal equity returns have been 9% and 30-year break-evens are expecting an inflation rate of 2.5432% (source: Bloomberg, 28 April) compared to 2.5623% previously. These two measures imply an expected real equity return of 6.30% (1.09/1.025432) and applying this to our forecast cash flows would imply a terminal valuation for Endeavour of US$63.01/share (cf US$63.17/share previously) and a current valuation of US$59.48/share (cf US$59.78/share previously).

In the meantime, Endeavour’s valuation remains at a material discount to those of its peer group, as shown in Exhibit 4, below.

Relative Endeavour valuation

Endeavour’s valuation on a series of commonly used measures, relative to a selection of gold mining majors (the ranks of which it has now joined since its takeovers of SEMAFO and Teranga have been completed), is as follows:

Exhibit 4: Endeavour valuation relative to peers

Company

Ticker

Price/cash flow (x)

EV/EBITDA (x)

Yield (%)

Year 1

Year 2

Year 3

Year 1

Year 2

Year 3

Year 1

Year 2

Year 3

Endeavour (Edison)

EDV

4.8

5.4

5.6

4.2

4.4

4.9

2.6

2.9

3.3

Endeavour (consensus)

EDV

5.2

5.4

5.0

4.8

5.1

4.8

2.5

2.9

3.2

Majors

Barrick

ABX

8.4

7.8

8.0

7.7

7.0

7.2

2.8

4.2

4.4

Newmont

NEM

11.5

11.0

11.0

9.1

8.9

9.2

3.0

2.9

2.6

Newcrest

NCM AU

13.0

8.2

9.3

8.4

6.5

7.6

1.2

2.0

1.9

Kinross

K

4.4

4.2

4.8

4.2

3.9

4.3

2.4

2.4

2.4

Agnico-Eagle

AEM

9.3

9.2

9.7

8.5

8.2

8.8

2.6

2.6

2.7

Eldorado

ELD

5.2

4.4

4.3

4.6

4.1

3.9

0.0

0.0

0.0

Average

 

8.6

7.5

7.8

7.1

6.4

6.8

2.0

2.3

2.3

Implied EDV share price (US$)

43.76

32.25

33.81

43.62

40.04

39.98

31.52

29.95

34.61

Implied EDV share price (C$)

56.13

41.36

43.37

55.94

51.36

51.28

40.43

38.42

44.39

Source: Edison Investment Research, Refinitiv. Note: Consensus and peers priced at 28 April 2022.

Of note is that Endeavour’s valuation is materially cheaper than the averages of the majors on all of the measures shown in Exhibit 4 regardless of whether Edison or consensus forecasts are used. On an individual basis, it is cheaper than its senior gold mining peers on at least 38 out of 54 (70%) of valuation measures if Edison forecasts are used and 37 out of 54 (68%) valuation measures if consensus forecasts are used. Reverse engineered, the average valuation measures of its peers imply an average share price for Endeavour of US$36.62, or C$46.97 (or £29.39), per share.

Financials

According to its Q421/FY21 balance sheet, Endeavour had net cash of US$13.2m at end-December, despite making US$43.9m in share repurchases during the quarter. This compares with net debt of US$143.6m at end-Q321, US$147.6m at end-Q221, US$220.2m at end-Q121 (after the completion of the Teranga acquisition and the injection of US$200m by La Mancha) and US$43.3m at end-FY20 (before the Teranga acquisition). This figure of US$13.2m also includes lease liabilities of US$51.1m and an option premium of US$34.6m. Excluding these two items results in a net cash position of US$98.9m. This figure also excludes US$30.6m held in the form of ‘restricted cash’ and US$40.0m in shares of Allied Gold received as consideration for the sale of Agbaou, both held in ‘other financial assets’. It also differs slightly from the US$76.2m net cash figure calculated by Endeavour and quoted in its announcements owing to the discounting, variously, of certain committed future payments to present value.

Readers should note that inclusion of the Sabodala-Massawa expansion project into our forecasts in Exhibit 5, below, will increase capex in FY22 and FY23 by approximately US$116m and US$160m, or 29.1% and 42.0%, respectively. Even so, we expect the inclusion of this to do little to dent either Endeavour’s strong net cash generation or its net cash position at the end of these years.

Note that, for the purposes of our financial modelling in Exhibit 5 and for simplicity’s sake, we have assumed that the consolidation of Endeavour’s and Teranga’s balance sheets took place retrospectively on 31 December 2020. In this case, we estimate Endeavour would have consolidated c US$242.6m in net debt on its balance sheet and c US$349.2m in gross debt as a consequence of its Teranga acquisition (as at end-December). As such, on a pro forma basis, we estimate that Endeavour would have had US$323.1m in net debt on its balance sheet at end-FY20, which we calculate would have equated to a gearing (net debt/equity) ratio of just 8.8% and a leverage (net debt/[net debt+equity]) ratio of 8.1% on the group’s enlarged equity base.

Exhibit 5: Financial summary

US$'000s

2019

2020

2021

2022e

2023e

2024e

December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

1,362,121

1,847,894

2,903,756

2,571,160

2,384,441

2,223,575

Cost of Sales

(884,869)

(1,061,891)

(1,675,393)

(1,143,760)

(1,027,329)

(990,738)

Gross Profit

477,252

786,003

1,228,363

1,427,400

1,357,112

1,232,838

EBITDA

 

 

618,443

910,295

1,517,263

1,427,400

1,357,112

1,232,838

Operating Profit (before amort. and except.)

 

281,400

546,072

859,409

798,114

861,136

749,634

Intangible Amortisation

0

0

0

0

0

0

Exceptionals

(199,159)

(201,532)

(266,000)

0

0

0

Other

(9,392)

8,886

(32,263)

0

0

0

Operating Profit

72,849

353,426

561,146

798,114

861,136

749,634

Net Interest

(51,607)

(53,774)

(70,623)

83,828

7,460

12,460

Profit Before Tax (norm)

 

 

220,401

501,184

756,523

881,942

868,596

762,094

Profit Before Tax (FRS 3)

 

 

21,242

299,652

490,523

881,942

868,596

762,094

Tax

(97,253)

(158,466)

(178,253)

(190,856)

(203,596)

(180,659)

Profit After Tax (norm)

123,148

342,718

578,270

691,086

665,001

581,435

Profit After Tax (FRS 3)

(76,011)

141,186

312,270

691,086

665,001

581,435

Net loss from discontinued operations

(4,394)

0

0

0

0

0

Minority interests

33,126

44,719

64,486

76,139

99,670

86,568

Net profit

(80,405)

141,186

312,270

691,086

665,001

581,435

Net attrib. to shareholders contg. businesses (norm)

90,022

297,998

513,784

614,947

565,331

494,868

Net attrib.to shareholders contg. businesses

(109,137)

96,466

247,784

614,947

565,331

494,868

Average Number of Shares Outstanding (m)

157.4

160.8

250.7

248.5

248.5

248.5

EPS - normalised (c)

 

 

57.20

185.34

204.95

247.50

227.48

199.12

EPS - normalised fully diluted (c)

 

 

56.95

181.51

203.21

245.94

226.04

197.87

EPS - (IFRS) ($)

 

 

(0.72)

0.60

0.99

2.48

2.27

1.99

Dividend per share (c)

0

37

56

63

70

80

Gross Margin (%)

35.0

42.5

42.3

55.5

56.9

55.4

EBITDA Margin (%)

45.4

49.3

52.3

55.5

56.9

55.4

Operating Margin (before GW and except.) (%)

20.7

29.6

29.6

31.0

36.1

33.7

BALANCE SHEET

Fixed Assets

 

 

2,330,033

5,093,409

5,404,900

5,174,862

5,059,730

5,125,204

Intangible Assets

5,498

24,851

10,000

10,000

10,000

10,000

Tangible Assets

2,254,476

3,968,746

4,980,200

4,750,162

4,635,030

4,700,504

Investments

70,059

1,099,812

414,700

414,700

414,700

414,700

Current Assets

 

 

652,871

1,168,382

1,366,000

2,144,962

2,676,775

2,946,693

Stocks

266,451

305,075

311,300

321,395

298,055

277,947

Debtors

83,836

104,545

139,900

175,985

231,081

217,860

Cash

288,186

751,563

906,200

1,638,982

2,139,039

2,442,286

Other

14,398

7,199

8,600

8,600

8,600

8,600

Current Liabilities

 

 

(354,931)

(661,171)

(567,100)

(639,439)

(591,303)

(579,530)

Creditors

(312,427)

(612,862)

(552,700)

(625,039)

(576,903)

(565,130)

Short term borrowings

(42,504)

(48,309)

(14,400)

(14,400)

(14,400)

(14,400)

Long Term Liabilities

 

 

(963,736)

(1,647,799)

(1,818,100)

(1,818,100)

(1,818,100)

(1,818,100)

Long term borrowings

(770,902)

(1,026,337)

(878,600)

(878,600)

(878,600)

(878,600)

Other long term liabilities

(192,834)

(621,462)

(939,500)

(939,500)

(939,500)

(939,500)

Net Assets

 

 

1,664,237

3,952,821

4,385,700

4,862,285

5,327,103

5,674,267

CASH FLOW

Operating Cash Flow

 

 

628,617

1,046,370

1,415,306

1,453,558

1,277,220

1,254,395

Net Interest

(35,413)

(53,774)

(26,900)

83,828

7,460

12,460

Tax

(109,494)

(186,332)

(205,573)

(190,856)

(203,596)

(180,659)

Capex

(401,227)

(335,599)

(587,496)

(399,248)

(380,844)

(548,678)

Acquisitions/disposals

3,654

(19,000)

(4,700)

15,000

5,000

0

Financing

2,402

100,000

(89,400)

(52,974)

0

0

Dividends

(6,154)

(88,288)

(159,800)

(176,527)

(205,183)

(234,271)

Net Cash Flow

82,385

463,377

341,437

732,782

500,057

303,247

Opening net debt/(cash)

 

 

518,607

525,220

323,083

(13,200)

(745,982)

(1,246,039)

HP finance leases initiated

0

0

0

0

0

0

Other

(88,998)

(261,240)

(5,154)

0

(0)

(0)

Closing net debt/(cash)

 

 

525,220

323,083

(13,200)

(745,982)

(1,246,039)

(1,549,286)

Source: Company sources, Edison Investment Research. Note: Presented on a pro forma basis including SEMAFO from FY18 balance sheet and Teranga from FY20 balance sheet. EPS normalised from FY18 to reflect continuing business only. *Excludes restricted cash.


General disclaimer and copyright

This report has been commissioned by Endeavour Mining and prepared and issued by Edison, in consideration of a fee payable by Endeavour Mining. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2022 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Endeavour Mining and prepared and issued by Edison, in consideration of a fee payable by Endeavour Mining. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2022 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Share this with friends and colleagues