Starting as it means to go on

Endeavour Mining 3 May 2019 Update
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Endeavour Mining

Starting as it means to go on

Q1 results

Metals & mining

3 May 2019

Price

C$19.02

Market cap

C$2,076m

C$1.3389/US$

Net debt (US$m) at end March 2019

615.3

Shares in issue (thousands)

109,154

Free float

70.1%

Code

EDV

Primary exchange

TSX

Secondary exchange

US OTC

Share price performance

%

1m

3m

12m

Abs

(6.9)

(16.2)

(15.9)

Rel (local)

(9.7)

(22.0)

(20.6)

52-week high/low

C$24.20

C$16.36

Business description

Endeavour Mining is an intermediate gold producer, with four mines in Côte d’Ivoire (Agbaou and Ity) and Burkina Faso (Houndé and Karma) and two major development projects (Ity CIL and Kalana) in the highly prospective west African Birimian greenstone belt.

Next events

La Plaque resource update

Late Q219

Kari West & Centre drill results

Late Q219

Kari West & Centre maiden resource

Q419

Kalana feasibility study

Q120

Analyst

Charles Gibson

+44 (0)20 3077 5724

Endeavour Mining is a research client of Edison Investment Research Limited

For the third time in succession, Endeavour’s (EDV) quarterly results were materially ahead of our expectations in Q119, driven by universally higher production and lower all-in sustaining costs (AISC) at each of its operating assets (with the exception of the Ity heap leach operation). Output was further augmented by 8.8koz of pre-commercial production from the Ity CIL plant. While production and sales were both c 31% below Q418’s record level, therefore – as a result of c 30% of total mill feed being derived from low-grade stockpiles – they were nevertheless c 22% above our expectations at 121koz apiece.

Year
end

Revenue (US$m)

EBITDA (US$m)

PBT*
(US$m)

Operating cash flow
per share (US$)

Capex (US$m)

Net debt**
(US$m)

12/17

652.1

201.2

49.3

2.25

441.4

216.8

12/18

752.0

264.8

70.5

2.33

486.5

517.5

12/19e

785.1

317.3

61.2

2.29

206.4

531.9

12/20e

979.2

513.0

256.6

3.63

185.9

375.1

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **Includes restricted cash.

Q1 positions EDV to meet full-year guidance

In the wake of its Q119 results, we have increased our FY19 production forecast for Endeavour, from 619.7koz to 634.1koz, and reduced our forecast for all-in sustaining costs, from US$802/oz to US$788/oz cf the official FY19 production and AISC cost guidance ranges of 615–695koz and US$760–810/oz, respectively.

Small positive change to FY19 earnings expectations

Notwithstanding our production and cost forecast changes, when incorporated into our full-year estimates, the resulting changes are essentially immaterial on an annual basis. Nevertheless, FY19 is a transition year for Endeavour as capex reduces to almost exclusively sustaining capex in H2 at the same time as process grades at Houndé and Karma rise and the Ity CIL project makes its first positive contribution to cash flows. All other things being equal, we estimate that net debt should decline rapidly from H219 onwards such that we estimate Endeavour will be net debt-free in early FY22 (notwithstanding capex related to the Kalana project) – a timetable that may be accelerated further given management’s stated intention to increase the Ity CIL plant nameplate capacity by 25%, from 4Mtpa to 5Mtpa during the remainder of FY19 at a minimal cost of c US$10–15m.

Valuation: Homing in on US$32.58/share

In valuing Endeavour, we have opted to discount potential cash flows back over four years from end-FY18 then to apply an ex-growth, ad infinitum terminal multiple of 10x (consistent with a discount rate of 10%) to forecast cash flows in that year (FY22). For Endeavour, our estimate of cash flow in FY22 is US$3.26 per share (including exploration expenditure), in which case our terminal valuation of the company at end-FY22 is US$32.58/share (cf US$32.93/share previously), which (in conjunction with forecast intervening cash flows) discounts back to a value of US$27.58/share at the start of FY19.

Q119 results

In general, Endeavour’s Q119 results were worse than Q418 (which was expected given the effective cessation of activities at its Ity heap leach operation), although they were better than our expectations (see Exhibit 1). Gold sales exceeded production at each of EDV’s operations. In addition, production was augmented by 8.8koz of pre-commercial production output from the Ity CIL plant. While production and sales were both c 31% below Q418’s record level, therefore, they were nevertheless c 22% above our expectations. As a result, there was a positive variance of US$28.9m in actual revenue relative to our forecast, which was partially offset by a negative US$10.8m variance in operating expenses and a negative US$2.5m variance in royalties paid. However, depreciation was US$8.6m below our expectations, such that earnings from operations were US$23.3m higher. A summary of Endeavour’s financial and operational performance, relative to both the previous quarter and our prior expectations (as set out in our note, Ity CIL project pours first gold, published on 1 April 2019) is as follows:

Exhibit 1: Endeavour Mining FY18 earnings, by quarter (US$000s unless otherwise indicated)

Q1/Q4

Q1 vs Q1e

Q118*

Q218

Q318

Q418

Q119e

Q119a

Change
(%)

Variance
(%)

Variance (units)

Houndé production (koz)

73.8

66.9

60.7

75.8

46.6

55.4

-26.9

18.9

8.8

Agbaou production (koz)

32.1

33.7

31.2

44.4

24.7

31.8

-28.4

28.7

7.1

Karma production (koz)

28.2

21.0

26.1

33.5

23.0

22.1

-34.0

-3.9

-0.9

Ity heap leach production (koz)

18.3

25.0

21.0

20.6

5.0

11.5

-44.2

130.0

6.5

Tabakoto production (koz)

32.4

26.8

26.5

29.6

N/A

N/A

N/A

N/A

N/A

Total gold produced (koz)

152

147

139

174.2

99.4

120.8

-30.7

21.5

21.4

Total gold sold (koz)

154

151

134

173.4

99.4

120.9

-30.3

21.6

21.5

Gold price (US$/oz)

1,328

1,306

1,161

1,198

1,304

1,304

8.8

0.0

0.0

Cash costs (US$/oz)

524

608

643

555

781

659**

18.7

-15.6

-122.0

AISC (US$/oz)

669

768

820

707

1,007

877

24.0

-12.9

-130.0

Revenue

 

 

 

- Gold revenue

198,894

189,515

155,764

207,784

122,405

151,310

-27.2

23.6

28,905

Cost of sales

 

 

 

- Operating expenses

83,276

92,646

86,238

124,832

77,565

88,363

-29.2

13.9

10,798

- Royalties

12,183

10,254

8,293

10,338

6,492

8,989

-13.0

38.5

2,497

Gross profit

103,435

86,615

61,233

72,614

38,348

53,958

-25.7

40.7

15,610

Depreciation

(39,504)

(43,538)

(35,911)

(50,116)

(44,764)

(36,132)

-27.9

-19.3

8,632

Expenses

 

 

 

- Corporate costs

(6,488)

(6,130)

(5,888)

(8,001)

(5,957)

(6,061)

-24.2

1.7

-104

- Impairments

0

0

0

0

0

0

N/A

N/A

0

- Acquisition etc costs

0

0

0

0

0

0

N/A

N/A

0

- Share based compensation

(2,668)

(10,109)

(4,007)

(8,147)

(5,333)

(2,600)

-68.1

-51.2

2,733

- Exploration costs

(2,754)

(2,284)

(2,583)

0

(821)

(4,361)

N/A

431.2

-3,540

Total expenses

(11,910)

(18,523)

(12,478)

(16,148)

(12,111)

(13,022)

-19.4

7.5

-911

Earnings from operations

52,021

24,554

12,844

6,350

(18,528)

4,804

-24.3

-125.9

23,332

Interest income

0

0

N/A

N/A

0

Interest expense

(7,496)

(4,549)

(6,679)

(4,947)

(12,938)

(4,919)

-0.6

-62.0

8,019

Net interest

(7,496)

(4,549)

(6,679)

(4,947)

(12,938)

(4,919)

-0.6

-62.0

8,019

Loss on financial instruments

(11,403)

10,922

24,755

(16,239)

1,123

-106.9

N/A

1,123

Other expenses

(165)

(818)

(173)

(402)

1,033

(197)

-51.0

-119.1

-1,230

Profit before tax

32,957

30,109

30,747

(15,238)

(30,433)

811

-105.3

-102.7

31,244

Current income tax

10,772

17,095

17,443

21,212

2,671

13,478

-36.5

404.6

10,807

Deferred income tax

(4,881)

4,432

(2,007)

(2,551)

0

(1,224)

-52.0

N/A

-1,224

Total tax

5,891

21,527

15,436

18,661

2,671

12,254

-34.3

358.8

9,583

Marginal tax rate

17.9

71.5

50.2

(122.5)

(8.8)

1,511.0

-1,333.5

-17,270.5

1,519.8

Profit after tax

27,066

8,582

15,311

(33,899)

(33,104)

(11,443)

-66.2

-65.4

21,661

Net profit from discontinued ops.

593

(24,025)

(35,705)

(95,658)

0

0

-100.0

N/A

0

Total net and comprehensive loss

27,659

(15,443)

(20,394)

(129,557)

(33,104)

(11,443)

-91.2

-65.4

21,661

Minority interest

14,567

(132)

(3,619)

(3,695)

(1,092)

3,224

-187.3

-395.2

4,316

Minority interest (%)

52.7

0.9

17.7

2.9

3.3

(28.2)

-1,072.4

-954.5

-31.5

Profit attributable to shareholders

13,092

(15,311)

(16,775)

(125,862)

(32,013)

(14,667)

-88.3

-54.2

17,346

 

 

 

Basic EPS from continuing ops. (US$)

0.116

0.037

0.136

(0.292)

(0.296)

(0.136)

-53.4

-54.1

0.160

Diluted EPS from continuing ops. (US$)

0.116

0.037

0.136

(0.292)

(0.285)

(0.131)

-55.1

-54.0

0.154

Basic EPS (US$)

0.122

(0.142)

(0.156)

(1.167)

(0.296)

(0.136)

-88.3

-54.1

0.160

Diluted EPS (US$)

0.121

(0.142)

(0.155)

(1.165)

(0.285)

(0.131)

-88.8

-54.0

0.154

Norm. basic EPS from continuing ops (US$)

0.222

(0.064)

(0.094)

(0.142)

(0.296)

(0.146)

2.8

-50.7

0.150

Norm. diluted EPS from continuing ops (US$)

0.221

(0.064)

(0.094)

(0.141)

(0.285)

(0.141)

0.0

-50.5

0.144

Adj net earnings attributable (US$000s)

24,411

9,189

(1,408)

16,271

(27,854)

(5,000)

-130.7

-82.0

22,854

Adj net EPS from continuing ops. (US$)

0.227

0.085

(0.013)

0.151

(0.258)

(0.046)

-130.6

-82.1

0.212

Source: Endeavour Mining, Edison Investment Research. Note: *Q118 restated to reflect Tabakoto as a ‘discontinued operation’. Company reported basis. **Edison estimate.

The positive variance in the interest expense relative to our prior expectation could be principally attributed to the capitalisation of interest associated with the financing of the Ity CIL project ahead of commercial production (which was declared on 8 April – approximately one quarter ahead of schedule). Otherwise, it should be apparent that both the tax charge and the minority interest charge during the quarter were anomalous and not reflective of the commercial realities of Endeavour’s commercial environment.

In general, Q119 was characterised by the use of low-grade stockpiles to temporarily supplement plant feed at the same time as mining focused on waste capitalisation activities at each of Endeavour’s three remaining continuing operations. In addition, mining was temporarily constrained to low-grade areas of the North Pit and West Pit 3 at Agbaou while, at Houndé, unit processing costs increased by 4.0%, quarter-on-quarter, owing to a higher proportion of fresh ore milled as the mine plan shifted to focus on the Vindaloo Main and Central pits. Mining unit costs similarly rose, by 34.1%, quarter-on-quarter, at Karma, owing to the mining of deeper and more transitional material in the Kao pit.

FY19 cost and production guidance and Edison forecasts

Historically, Endeavour has a good record of meeting its production and cost guidance targets. For FY19, these are as follows (cf Edison’s updated forecasts):

Exhibit 2: Current Endeavour production and AISC cost guidance, by mine, FY19 vs FY18 and Edison forecast

Production

All-in sustaining costs (AISC)

Mine

FY19e guidance (koz)

Edison FY19e forecast (koz)

Previous FY19 forecast (koz)

FY19e guidance (US$/oz)

Edison FY19e forecast (US$/oz)

Previous FY19 forecast (US$/oz)

Houndé

230–250

239.1

230.4

720–790

739

768

Agbaou

120–130

120.0

120.0

850–900

849

900

Karma

105–115

108.4

109.3

860–910

872

890

Ity

160–200

166.5

160.0

525–590

566

547

Group total

615–695

634.1

619.7

760–810*

788*

802*

Source: Endeavour Mining, Edison Investment Research. Note: *Includes corporate general & administrative costs and sustaining exploration costs.

To all intents and purposes, the Ity CIL project has now reached full capacity and will make a full contribution to earnings in Q219. During the remainder of the year, the high-grade Bouéré deposit is expected to be commissioned at Houndé. While the proportion of fresh ore processed at Houndé is thus anticipated to rise to in excess of 30% (from c 20%) in the interim, it will reduce in Q4, before increasing once again in 2020 as mining at both Vindaloo and Bouéré transition to deeper levels. Given exploration success at Houndé and its increasing reserve and resource profile, management has confirmed that a review of the plant will be conducted during Q319 with a view to increasing its capacity. Otherwise, pre-stripping is expected to be completed at Karma in Q219, after which the operation will benefit from the stacking of oxide ore once again from the North Kao pit.

Compared with our previous forecasts, the only noteworthy changes to our operating forecasts for Q2–Q419 relate to the assumed gold price in Q2 (now US$1,283/oz cf US$1,318/oz previously) and the grade of ore processed at Agbaou (now 1.67g/t cf 1.80g/t previously). Within this context, our financial forecasts for Endeavour for FY19, by quarter, are as follows:

Exhibit 3: Endeavour Mining FY19 earnings forecasts, by quarter (US$000s unless otherwise indicated)

FY18

Q119

Q219e

Q319e

Q419e

FY19e

Houndé production (koz)

277.2

55.4

46.6

68.6

68.6

239.1

Agbaou production (koz)

141.3

31.8

29.4

29.4

29.4

120.0

Karma production (koz)

108.7

22.1

23.0

28.3

35.0

108.4

Ity production (koz)

84.8

11.5

44.4

55.3

55.3

166.5

Tabakoto production (koz)

115.2

N/A

N/A

N/A

N/A

N/A

Total gold produced (koz)

612.1

120.8

143.5

181.5

188.3

634.1

Total gold sold (koz)

612.1

120.9

143.5

181.5

188.3

634.1

Gold price (US$/oz)

1,199

1,304

1,283

1,263

1,263

1,237*

Cash costs (US$/oz)

579

659**

657

540

521

584

Mine level AISC (US$/oz)

744

877

827

689

667

740

Revenue

- Gold revenue

751,957

151,310

176,993

224,165

232,662

785,130

Cost of sales

- Operating expenses

386,926

88,363

94,248

98,110

98,110

378,831

- Royalties

41,068

8,989

8,366

10,888

11,398

39,640

Gross profit

323,963

53,958

74,379

115,167

123,155

366,659

Depreciation

(169,069)

(36,132)

(47,706)

(58,143)

(62,137)

(204,118)

Expenses

- Corporate costs

(26,573)

(6,061)

(5,957)

(5,957)

(5,957)

(23,932)

- Impairments

0

0

0

0

0

0

- Acquisition etc costs

0

0

0

0

0

0

- Share based compensation

(24,931)

(2,600)

(5,333)

(5,333)

(5,333)

(18,599)

- Exploration costs

(7,621)

(4,361)

(821)

(821)

(821)

(6,825)

Total expenses

(59,125)

(13,022)

(12,111)

(12,111)

(12,111)

(49,356)

Earnings from operations

95,769

4,804

14,562

44,913

48,907

113,185

Interest income

0

0

Interest expense

(23,671)

(4,919)

(15,611)

(15,611)

(15,611)

(51,753)

Net interest

(23,671)

(4,919)

(15,611)

(15,611)

(15,611)

(51,753)

Loss on financial instruments

8,035

1,123

1,123

Other expenses

(1,558)

(197)

0

0

0

(197)

Profit before tax

78,575

811

(1,050)

29,301

33,295

62,358

Current income tax

66,522

13,478

8,980

14,042

13,981

50,481

Deferred income tax

(5,007)

(1,224)

0

0

0

(1,224)

Total tax

61,515

12,254

8,980

14,042

13,981

49,257

Marginal tax rate

78.3

1,511.0

(855.5)

47.9

42.0

79.0

Profit after tax

17,060

(11,443)

(10,030)

15,259

19,315

13,101

Net profit from discontinued ops.

(154,795)

0

0

0

0

0

Total net and comprehensive loss

(137,735)

(11,443)

(10,030)

15,259

19,315

13,101

Minority interest

7,121

3,224

2,860

5,679

6,076

17,839

Minority interest (%)

(5.2)

(28.2)

(28.5)

37.2

31.5

136.2

Profit attributable to shareholders

(144,856)

(14,667)

(12,890)

9,580

13,239

(4,739)

Basic EPS from continuing ops. (US$)

(0.001)

(0.136)

(0.118)

0.088

0.121

(0.043)

Diluted EPS from continuing ops. (US$)

(0.001)

(0.131)

(0.114)

0.085

0.117

(0.042)

Basic EPS (US$)

(1.344)

(0.136)

(0.118)

0.088

0.121

(0.043)

Diluted EPS (US$)

(1.342)

(0.131)

(0.114)

0.085

0.117

(0.042)

Norm. basic EPS from continuing ops (US$)

(0.075)

(0.146)

(0.118)

0.088

0.121

(0.054)

Norm. diluted EPS from continuing ops (US$)

(0.075)

(0.141)

(0.114)

0.085

0.117

(0.052)

Adj net earnings attributable (US$000s)

53,132

(5,000)

(6,036)

12,928

16,895

18,786

Adj net EPS from continuing ops. (US$)

0.493

(0.046)

(0.055)

0.118

0.155

0.172

Source: Endeavour Mining, Edison Investment Research. Note: Company reported basis. *Includes adjustment for Karma stream. **Edison estimate.

Readers are cautioned that forecasting on a quarterly basis is prone to large variations between actual and forecast numbers (as demonstrated, not least, by the variances observed between Q1a and Q1e in Exhibit 1). To this end, it is worth noting that the top end of Endeavour’s production guidance is 60.9koz gold above our forecast for the year, which is worth a material US$78.1m in additional revenue to the company (at the current spot price of gold of US$1,282/oz) for a potentially negligible incremental cost and therefore has the ability to more than double Endeavour’s profit before tax in the year relative to our forecasts above. In addition, as in FY18, a degree of seasonality may be expected between Q319 and Q419, which has not been taken into consideration at this stage. As such, the exhibit above should be regarded as more indicative than prescriptive with respect to the individual quarters. Within that context, however, the table above nevertheless demonstrates the effects of a number of anticipated operating developments over the course of the year, including:

the processing of low-grade stockpiles at Karma in H1;

production from the higher-grade Bouéré pit at Houndé in H2; and

the start of commercial production from the Ity CIL project in Q2.

By contrast, to date, we have given no credit to Endeavour’s plan to increase the Ity CIL plant nameplate capacity by 1Mtpa to 5Mtpa (which is a major factor in the difference between the maximum and minimum levels within its production guidance range). These plant upgrades are expected to be completed during scheduled maintenance shut-downs over the next six months. However, should the process be completed by the end of Q3, then we estimate that it would have the potential to increase quarterly Ity CIL production from 55.3koz to 69.1koz in Q4 and group adjusted net earnings attributable (see Exhibit 3, above) from 15.6c per share to 22.9c per share.

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 and Tabakoto in FY18). Rather than our customary method of discounting maximum potential dividends over the life of operations back to FY19, therefore, we have opted to discount potential cash flows back over four years from end-FY18 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 FY22). In the normal course of events, exploration expenditure would be excluded from such a calculation on the basis that it is an investment. In the case of Endeavour, however, we have included it in our estimate of FY22 cash flows on the grounds that it may be a critical component of ongoing business performance in its ability to continually expand and extend the lives of the company’s assets.

In the wake of its Q119 results, however, our estimate of Endeavour’s cash flow in FY22 remains effectively unchanged, at US$3.26 per share (cf US$3.29/share previously – but only on account of the increase in the number of shares in early 2019), on which basis our terminal valuation of the company at end-FY22 is US$32.58/share (cf US$32.93/share previously), which (in conjunction with forecast intervening cash flows) discounts back to a value of US$27.58/share at the start of FY19 (cf US$27.91/share previously).

Exhibit 4: Endeavour forecast valuation and cash flow per share, FY19–22e (US$/share)

Source: Edison Investment Research

Financials

Endeavour had US$615.3m in net debt (including restricted cash) on its balance sheet at end-Q119 (vs US$517.5m at end-Q4, US$509.2m at end-Q3 and US$399.9m at end-Q218), after US$103.9m in capex during the quarter (vs US$87m in Q4 and US$110.8m in capex in Q318). This level of net debt equates to a gearing (net debt/equity) ratio of 72.4% (vs 60.3% at end-Q4 and 52.1% at end-Q3) and leverage (net debt/[net debt + equity]) ratio of 42.0% (vs 37.6% at end-Q4 and 34.3% at end-Q3). Note that US$615.3m accords with Endeavour’s Q119 financial statements; it differs from the figure of US$635m quoted in some of the company’s other materials because the formal accounting treatment of the finance leases on the balance sheet in particular requires future cash flows to be discounted back to present value – whereas the higher figure is quoted on an undiscounted basis. In addition, the higher figure does not include restricted cash.

With capital expenditure relating to the Ity CIL project now having been, to all intents and purposes, completed, Endeavour has no major capex commitments in the future until the development of Kalana. After one further quarter of outflows in Q219, therefore, we estimate that cash flows will revert to the strongly positive in H219, such that, overall in FY19, they will be close to break-even, such that we are forecasting that Endeavour will have net debt of c US$531.9m as at end-FY19 (cf US$528.7m previously), which will equate to a gearing ratio of 61.0% (cf 60.6% previously) and a leverage ratio of 37.9% (cf 37.7% previously). Thereafter, net debt should decline rapidly such that we estimate the company will be net debt-free in early FY22 (notwithstanding capex related to the Kalana project), at which point it will potentially be able to make dividend distributions to shareholders.

Exhibit 5: Financial summary

US$'000s

2016

2017

2018

2019e

2020e

December

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

566,486

652,079

751,957

785,130

979,241

Cost of Sales

(376,794)

(597,528)

(487,119)

(467,827)

(466,225)

Gross Profit

189,692

54,551

264,838

317,303

513,016

EBITDA

 

 

213,916

201,166

264,838

317,303

513,016

Operating Profit (before amort. and except.)

127,981

70,379

95,769

113,185

309,798

Intangible Amortisation

0

0

0

0

0

Exceptionals

(36,272)

(149,942)

8,035

1,123

0

Other

(1,989)

(2,242)

(1,558)

(197)

0

Operating Profit

89,720

(81,805)

102,246

114,111

309,798

Net Interest

(24,593)

(18,789)

(23,671)

(51,753)

(53,189)

Profit Before Tax (norm)

 

 

101,399

49,348

70,540

61,235

256,609

Profit Before Tax (FRS 3)

 

 

65,127

(100,594)

78,575

62,358

256,609

Tax

(27,643)

(32,945)

(61,515)

(49,257)

(79,953)

Profit After Tax (norm)

73,756

16,403

9,025

11,978

176,656

Profit After Tax (FRS 3)

37,484

(133,539)

17,060

13,101

176,656

Net loss from discontinued operations

(154,795)

0

0

Minority interests

7,121

17,839

36,504

Net profit

(137,735)

13,101

176,656

Net attrib. to shareholders contg. businesses (norm)

(8,100)

(5,862)

140,152

Net attrib.to shareholders contg. businesses

(65)

(4,739)

140,152

Average Number of Shares Outstanding (m)

80.6

98.5

107.7

108.6

109.1

EPS - normalised ($)

 

 

(0.38)

(0.06)

(0.08)

(0.05)

1.28

EPS - normalised and fully diluted ($)

 

(0.38)

(0.06)

(0.08)

(0.05)

1.24

EPS - (IFRS) ($)

 

 

(0.83)

(1.59)

(1.34)

(0.04)

1.28

Dividend per share (p)

0.0

0.0

0.0

0.0

0.0

Gross Margin (%)

33.5

8.4

35.2

40.4

52.4

EBITDA Margin (%)

37.8

30.8

35.2

40.4

52.4

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

22.6

10.8

12.7

14.4

31.6

BALANCE SHEET

Fixed Assets

 

 

1,073,562

1,331,745

1,594,202

1,601,495

1,584,211

Intangible Assets

29,978

6,267

4,186

4,186

4,186

Tangible Assets

1,039,529

1,317,952

1,543,842

1,551,135

1,533,851

Investments

4,055

7,526

46,174

46,174

46,174

Current Assets

 

 

283,536

361,766

327,841

347,215

557,254

Stocks

110,404

141,898

126,353

150,987

188,316

Debtors

36,572

95,212

74,757

81,506

97,461

Cash

124,294

122,702

124,022

109,667

266,422

Other

12,266

1,954

2,709

5,056

5,056

Current Liabilities

 

 

(149,626)

(241,185)

(248,420)

(243,388)

(238,154)

Creditors

(145,311)

(223,527)

(224,386)

(219,354)

(214,120)

Short term borrowings

(4,315)

(17,658)

(24,034)

(24,034)

(24,034)

Long Term Liabilities

 

 

(246,811)

(451,705)

(729,290)

(729,290)

(729,290)

Long term borrowings

(146,651)

(323,184)

(618,595)

(618,595)

(618,595)

Other long-term liabilities

(100,160)

(128,521)

(110,695)

(110,695)

(110,695)

Net Assets

 

 

960,661

1,000,621

944,333

976,033

1,174,021

CASH FLOW

Operating Cash Flow

 

 

164,522

244,092

274,938

299,290

475,831

Net Interest

(19,626)

(15,212)

(26,734)

(51,753)

(53,189)

Tax

(10,625)

(22,301)

(24,018)

(50,481)

(79,953)

Capex

(212,275)

(441,396)

(486,498)

(206,411)

(185,934)

Acquisitions/disposals

32,098

(37,332)

33,179

(5,000)

0

Financing

174,702

116,536

(6,231)

0

0

Dividends

(2,612)

(5,177)

(1,956)

0

0

Net Cash Flow

126,184

(160,790)

(237,320)

(14,355)

156,755

Opening net debt/(cash)

 

 

152,856

26,672

218,140

518,607

532,962

HP finance leases initiated

0

0

0

0

0

Other

0

(30,678)

(63,147)

(0)

0

Closing net debt/(cash)

 

 

26,672

218,140

518,607

532,962

376,207

Source: Company sources, Edison Investment Research. Note: *Excludes restricted cash. EPS normalised from 2018 reflect continuing business only.2017 is shown as previously reported (ie not restated).

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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 £49,500 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 Edison analyst 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.

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New York +1 646 653 7026

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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

1,185 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 £49,500 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 Edison analyst 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 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

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Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). 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

Neither this document and associated email (together, the "Communication") constitutes or form part of any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Any decision to purchase shares in the Company in the proposed placing should be made solely on the basis of the information to be contained in the admission document to be published in connection therewith.

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 (nor will such persons be able to purchase shares in the placing).

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

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. 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

1,185 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

1,185 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

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