Endeavour Mining — Leaner and ready to grow

Endeavour Mining (LSE: EDV)

Last close As at 20/05/2024

1,415.00

3.00 (0.21%)

Market capitalisation

3,465m

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Research: Metals & Mining

Endeavour Mining — Leaner and ready to grow

In the wake of the release of Edison’s updated long-term gold price assumptions (Shades of the 1970s), we have amended our forecasts for Endeavour, prior to the release of its Q323 results on 9 November. On a like-for-like basis, this has resulted in a 13.7% increase in our absolute valuation of the company to US$33.52/share. On a headline basis, it compares with a valuation of US$36.73/share prior to the sales of Boungou and Wahgnion, a decline of only 8.7%. Following the sale of the two mines, Endeavour updated its FY23 guidance from 1,325–1,425koz (including Wahgnion and Boungou) to 1,060–1,135koz, while its AISC guidance has improved to US$895–950/oz (cf US$940–995/oz). As previously indicated, performance is expected to be weighted towards H223, predominantly Q423, driven largely by Hounde, Sabodala-Massawa and Mana as focus is shifted towards production from development. In the meantime, Endeavour has continued with its shareholder returns programme, declaring a US$100m (US$0.40/share) interim dividend for H123 and repurchasing US$20m worth of shares in Q323.

Tom Batho

Written by

Tom Batho

Analyst

Metals & Mining

Endeavour Mining

Leaner and ready to grow

Q323 preview and updated FY23 estimates

Metals and mining

25 October 2023

Price

1,553p

Market cap

£3,848m

C$1.3642/US$, US$1.1954/£

Net debt (US$m) at end-June 2023, excludes lease liabilities, option premium and restricted cash

171

Shares in issue

247.7m

Free float

81.45%

Code

EDV

Primary exchange

LSE

Secondary exchanges

TSX, US OTC

Share price performance

%

1m

3m

12m

Abs

9.3

25.9

18.8

Rel (local)

5.2

13.9

15.9

52-week high/low

2,090p

1,461p

Business description

Following its acquisitions of SEMAFO and Teranga, Endeavour Mining has become one of the top 10 major gold producers globally, with four 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

Q323 results

9 November 2023

Tanda-Iguela resource update

Q423

Sabodala-Massawa expansion first production

Q224

Lafigué first production

Q324

Analysts

Thomas Batho

+44 (0)20 3077 5700

Lord Ashbourne

+44 (0)20 3077 5700

Endeavour Mining is a research client of Edison Investment Research Limited

In the wake of the release of Edison’s updated long-term gold price assumptions (Shades of the 1970s), we have amended our forecasts for Endeavour, prior to the release of its Q323 results on 9 November. On a like-for-like basis, this has resulted in a 13.7% increase in our absolute valuation of the company to US$33.52/share. On a headline basis, it compares with a valuation of US$36.73/share prior to the sales of Boungou and Wahgnion, a decline of only 8.7%. Following the sale of the two mines, Endeavour updated its FY23 guidance from 1,325–1,425koz (including Wahgnion and Boungou) to 1,060–1,135koz, while its AISC guidance has improved to US$895–950/oz (cf US$940–995/oz). As previously indicated, performance is expected to be weighted towards H223, predominantly Q423, driven largely by Hounde, Sabodala-Massawa and Mana as focus is shifted towards production from development. In the meantime, Endeavour has continued with its shareholder returns programme, declaring a US$100m (US$0.40/share) interim dividend for H123 and repurchasing US$20m worth of shares in Q323.

Year end

Revenue (US$m)

EBITDA (US$m)

PBT*
(US$m)

Operating cash flow per share** (US$)

DPS
(c)

Yield
(%)

12/21

2,903.8

1,517.3

756.5

4.83

56

2.2

12/22

2,508.1

1,261.3

527.2

4.12

81

4.0

12/23e

2,103.0

1,088.2

562.8

3.32

81

4.3

12/24e

1,681.1

901.3

558.6

3.34

88

4.6

Note: *PBT is normalised, excluding amortisation of acquired intangibles and exceptional items. **Operating cash flow per share is calculated after cash tax paid.

Out with the old

In line with Endeavour’s strategy, the divestment of Boungou and Wahgnion supports the growth of larger, lower AISC and longer-life assets, such as the Lafigué greenfield project and the Sabodala-Massawa BIOX expansion, where 59% and 75% of the initial capital, respectively, has already been committed. At the same time, Endeavour has expanded its exploration budget from US$65m in FY23 previously to US$80m (of which c 60–70% will be expensed).

Valuation: Competitive despite asset sales

Using an absolute valuation methodology, whereby we discount back four years of cash flows and then apply a perpetual ex-growth multiple to steady-state terminal cash flows in FY26, our valuation of Endeavour is US$33.52 (C$45.69 or £27.45) per share, using a 10% discount rate. Using a capital asset pricing model (CAPM) derived using a (real) discount rate of 6.51% (based on inflation expectations of 2.4197% derived from US 30-year break-even rates) Endeavour is valued at US$55.79 (C$76.04 or £45.70) per share (cf US$58.15, previously). To these valuations a further US$4.30–7.45/share may be added to reflect the value of Endeavour’s five-year exploration programme (see The second five-year plan, published on 20 October 2021). In the meantime, we note that Endeavour is trading at a discount to its peers on at least 89% of common valuation measures when consensus forecasts are used and 80% if Edison forecasts are used. The average valuation measures of its peers imply a share price for Endeavour of US$25.50 (C$34.79 or £21.33).

FY23 updated forecasts

At the time of the sale of its 90% interests in the Boungou and Wahgnion mines, Endeavour revised its FY23 production guidance and now expects to achieve production of 1,060–1,135koz (cf 1,325–1,425koz) at an all-in sustaining cost (AISC) of US$895–950/oz (previously US$940–995/oz). As discussed in our last quarterly results update note and reaffirmed by its Q223 results, Endeavour still expects production from its remaining assets to be weighted towards H223 after the company focused on development over production in H123. This is owing to lower grades processed at Sabodala in preparation for in-pit tailings deposition and development of the new Massawa North Zone satellite pit, while Houndé focused on higher stripping activity in Q123, allowing access to higher-grade mining areas in H223. As a consequence, our forecasts for FY23 are for gold production of 1,098koz at an AISC of US$890/oz, with notably improved production from Sabodala-Massawa, Mana and Houndé in Q424. In the longer term, in line with Endeavour’s company strategy, the divestment of Boungou and Wahgnion actively supports the growth of larger, low AISC and longer-life assets such as the Lafigué greenfield project and the Sabodala-Massawa BIOX expansion. At the same time Endeavour continues to expand its exploration budget from US$65m in FY23 previously to US$80m (of which c 60–70% will be expensed). From this, the Tanda-Iguela asset is their primary exploration focus, which to date, has completed 123,514m if the planned 180,000m drilling program (cf 70,000m originally planned). The Company remains on track to publish an updated resource in Q423, which expects to convert inferred resources to indicated while substantially increasing the overall resource base. The drill results released on 11 October 2023 highlight the mineralisation zone increase, where the original Assafou deposit’s 2022 maiden Indicated resource now only covers approximately 18% of the extended 3.3km long mineralised envelope, which remains open along strike and at depth.

In the light of events over recent months, we have:

Restated Q123 and Q223 results (implied) to reflect Wahgnion and Boungou as discontinued operations.

Updated our gold price forecast for the remainder of the year, from US$2,003/oz previously to US$1,850/oz.

Updated our longer-term gold price forecasts on the back of Edison’s release of Shades of the 1970s.

Updated long-term gold price forecasts

Edison has updated its gold price forecasts, derived with respect to the gold price’s historical correlation with the total US monetary base, inflation and currency in circulation. In our latest gold report (Shades of the 1970s), we have added two further analyses compared with previous reports: one that looks at gold in the context of the absolute level of the US Consumer Price Index (CPI) and one that looks at the gold price in the context of real US interest rates (for these purposes, defined as the Fed funds rate minus the rate of US CPI inflation). Finally, we have brought the process all together with a series of multiple regression analyses that look at the price of gold in the context of these variables simultaneously.

We recognise that there is significant scope for upside in the price of gold relative to our scenarios listed above. However, in deference to the principle of conservatism, for the purposes of our gold equity valuations, we have decided to make our formal gold price forecasts the lowest number from each of our multiple regression analyses. Nevertheless, this remains a considerable increase relative to our prior forecasts (see A Golden Future published in June 2020) as shown below:

Exhibit 1: Edison gold price forecasts, nominal and real (US$/oz), current cf prior

Year

2024e

2025e

2026e

2027e

2028e

2029e

2030e

Current forecast (nominal US$/oz)

1,896

2,004

2,105

2,239

2,098

2,023

2,274

Current forecast (real, 2023 US$)

1,822

1,851

1,869

1,912

1,722

1,596

1,725

Prior (nominal US$/oz)*

1,892

1,892

1,892

1,892

1,892

1,892

1,892

Prior (real, 2023 US$)

1,819

1,749

1,681

1,617

1,555

1,495

1,437

Increase (nominal, US$/oz)

4

112

213

347

206

131

382

Increase (nominal, %)

0.2

5.9

11.2

18.3

10.9

6.9

20.2

Increase (real, US$/oz)

3

102

188

295

167

101

288

Increase (real, %)

0.2

5.9

11.2

18.2

10.7

6.8

20.0

Source: Edison Investment Research. Note: *See A Golden Future published in June 2020.

As a result, we estimate that Endeavour’s earnings from mining operations should improve throughout H223 in real terms accounting for the sale of non-core assets:

Exhibit 2: Endeavour Mining FY23 forecasts, by quarter

US$000s (unless otherwise indicated)

Implied Q123

Q223

Q323e
(prior)

Q323e

Q423e
(prior)

Q423e

FY23e

FY23e
(prior)

Houndé production (koz)

46.6

72.1

80.0

84.0

80.0

80.0

282.6

277.7

Karma production (koz)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Ity production (koz)

91.1

85.9

76.9

71.0

76.9

73.2

321.2

321.9

Boungou production (koz)

0.0

0.0

29.5

0.0

29.5

0.0

0.0

103.1

Mana production (koz)

44.1

31.1

53.0

32.0

53.0

70.4

177.5

195.4

Sabodala-Massawa

61.5

78.6

77.3

74.9

86.3

100.9

315.9

304.0

Wahgnion

0.0

0.0

41.7

0.0

43.3

0.0

0.0

162.0

Total gold produced (koz)

243.5

268.0

358.4

261.7

369.0

324.4

1,098

1,364

Total gold sold (koz)

252.1

269.0

358.4

261.7

369.0

324.4

1,107

1,372

Gold price (US$/oz)*

1,892

1,941

1,994

1,916

1,923

1,838

1,894

1,972

Mine level cash costs (US$/oz)**

681

757

733

726

681

562

675

747

Mine level AISC (US$/oz)

899

951

964

961

909

769

890

984

Revenue

– Gold revenue

481,200

524,100

714,648

501,409

735,446

596,316

2,103,025

2,709,706

Cost of sales

– Operating expenses

171,400

201,800

262,537

189,907

251,165

182,429

745,535

1,024,113

– Royalties

29,700

31,800

46,025

30,703

47,283

36,067

128,270

173,074

Gross profit

280,100

290,500

406,086

280,799

436,999

377,820

1,229,219

1,512,518

Depreciation

(101,900)

(99,500)

(170,896)

(107,783)

(182,157)

(147,209)

(456,393)

(641,038)

Expenses

– Corporate costs

(13,500)

(14,000)

(15,000)

(15,000)

(15,000)

(15,000)

(57,500)

(58,500)

– Impairments/loss on disposals

0

(14,800)

0

0

0

0

(14,800)

0

– Share based compensation

(8,400)

(8,200)

(7,315)

96,615)

(7,315)

(7,315)

(30,530)

(30,674)

– Exploration costs

(12,500)

(14,500)

(10,800)

(13,000)

(10,800)

(13,000)

(53,000)

(44,900)

Total expenses

(34,400)

(51,500)

(33,115)

(34,615)

(33,115)

(35,315)

(155,830)

(134,074)

Earnings from operations

143,800

139,500

202,076

138,401

221,726

195,296

616,997

737,407

Interest income

Interest expense

(14,900)

(17,800)

(15,512)

(17,094)

(15,440)

(17,883)

(67,677)

(63,030)

Net interest

(14,900)

(17,800)

(15,512)

(17,094)

(15,440)

(17,883)

(67,677)

(63,030)

Loss on financial instruments

(72,000)

31,100

(5,250)

(2,970)

(5,250)

(654)

(44,524)

(88,649)

Other expenses

(5,100)

2,600

(2,500)

(5,700)

Profit before tax

51,800

155,400

181,314

118,337

201,037

176,759

502,296

580,028

Current income tax

48,200

91,400

49,875

38,718

53,918

50,722

229,040

197,274

Deferred income tax

(11,800)

(37,200)

0

0

0

0

-49,000

(10,200)

Total tax

36,400

54,200

49,875

38,718

53,918

50,722

180,040

187,074

Effective tax rate (%)

70.3

34.9

27.5

32.7

26.8

28.7

35.8

32.3

Profit after tax

15,400

101,200

131,439

79,619

147,119

126,037

322,256

392,953

Net profit from discontinued ops.

5,100

(188,600)

0

0

0

0

(183,500)

0

Total net and comprehensive income

20,500

(87,400)

131,439

79,619

147,119

126,037

138,756

392,953

Minority interest

17,300

21,900

20,669

16,164

22,328

21,001

76,366

76,777

Minority interest (%)

84.4

(25.1)

15.7

20.3

15.2

16.7

55.0

19.5

Profit attributable to shareholders

3,200

(109,300)

110,770

63,455

124,791

105,036

62,391

316,176

Basic EPS from continuing ops (US$)

(0.008)

0.321

0.448

0.257

0.504

0.426

0.995

1.278

Diluted EPS from continuing ops (US$)

(0.008)

0.321

0.447

0.257

0.504

0.426

0.995

1.278

Basic EPS (US$)

0.013

(0.442)

0.448

0.257

0.504

0.426

0.253

1.278

Diluted EPS (US$)

0.013

(0.442)

0.447

0.257

0.504

0.426

0.253

1.278

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

0.284

0.255

0.469

0.269

0.525

0.428

1.236

1.636

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

0.284

0.255

0.469

0.269

0.525

0.428

1.236

1.636

Adj net earnings attributable (US$000s)

65,000

53,700

115,195

65,822

129,244

105,581

290,103

395,464

Adj net EPS from continuing ops (US$)

0.263

0.217

0.465

0.267

0.522

0.428

1.174

1.598

Source: Endeavour Mining, Edison Investment Research. Note: *Average realised price (including Sabodala-Massawa stream). **Excludes royalty costs.

Note that Endeavour changed its definition of cash costs in Q420 to include royalties. The decision was made so that Endeavour could be more consistent in reporting in the context of its peer group. For reasons of comparability with past results, however, as well as ease of forecasting (given royalties are reported as a standalone item distinct from operating expenses), we are continuing to present total cash costs in exhibits excluding royalties.

In the wake of the changes made to our forecasts, a comparison between our quarterly and full-year forecast and consensus forecasts for FY23 adjusted net EPS is as follows:

Exhibit 3: Edison-adjusted net EPS from continuing operations estimates versus consensus FY23 by quarter

(US$/share)

Q123

Q223

Q323e

Q423e

Sum Q1–Q423e

FY23e

Edison

0.263

0.217

0.267

0.428

1.175

1.174

Mean consensus forecast

0.263

0.217

0.360

0.471

1.311

1.217

High consensus forecast

0.263

0.217

0.510

0.660

1.650

1.560

Low consensus forecast

0.263

0.217

0.240

0.340

1.060

0.558

Source: Refinitiv, Edison Investment Research. Note: Consensus at 9 October 2023.

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, Karma in FY22 and Boungou and Wahgnion in FY23, 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 FY23, for Endeavour we have opted to discount four years of forecast cash flows in FY23–26 back to FY23, then 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). We would normally exclude exploration expenditure from such a calculation on the basis that it is an investment. In the case of Endeavour, however, we include it because it is a critical component of the company’s ability to continually expand and extend the lives of its mines.

Endeavour continues to enjoy organic growth, with management aiming to expand current projects and delineate further resources. This is shown across three key ventures. First, the BIOX expansion at Sabodala-Massawa, which remains on budget and is set for completion in Q224 with US$217.1m (or 75%) of the total growth capital committed to date. Second, the Lafigué greenfield project construction, with US$264.9m or 59% of the total budget committed following the results of a robust definitive feasibility study on schedule for Q324. Third, Endeavour will continue its company-wide exploration programme with an US$80m budget for FY23 (US$51m spent in H123), with a key focus on the new Tanda-Iguela discovery, of which 60–70% will be expensed. The company has recently committed to a 157% increase in its drilling programme at Tanda-Iguela to 180,000m where an updated resource estimate is expected in H223.

In the longer term, Endeavour’s ongoing development activities are poised to more than offset the reduction of sales from Boungou and Wahgnion. Significant improvements to both production and AISC are expected as the BIOX expansion comes online next year (Q224), with further increases expected in the near future as the Lafigué greenfield project progresses.

We have updated our FY26 cash flow estimate to US$4.08/share (cf US$4.25/share previously, prior to the sales of Boungou and Wahgnion), which implies a terminal valuation of Endeavour at end-FY26 of US$40.77/share, calculated using a discount rate of 10%. With forecast intervening cash flows, this terminal valuation then discounts back to a present valuation of US$33.52/share (cf US$36.73/share, previously) at the start of FY23, as shown in Exhibit 4. On a headline basis, it compares with the valuation of US$36.73 prior to the sales of Boungou and Wahgnion – a decline of only 8.7%.

Exhibit 4: Endeavour forecast valuation and cash flow per share, FY23–26e (US$/share)

Source: Edison Investment Research

Now that Endeavour is one of the world’s most important producers of gold, we believe it can increasingly attract lower-cost finance, which leads us to also consider a CAPM-derived valuation. Long-term nominal equity returns have been 9% and 30-year break-evens indicate an inflation rate of 2.4197 % (source Bloomberg, 9 October 2023) versus 2.2345% previously. These two measures imply an expected real equity return of 6.42% (1.09/1.024197) and applying this to our forecast cash flows would imply a terminal valuation for Endeavour of US$63.46/share (US$64.20/share previously) and a current valuation of US$55.79/share (US$58.15/share previously).

Endeavour peer 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 joined since its takeover of SEMAFO and Teranga) is as follows:

Exhibit 5: Endeavour’s 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

5.7

5.7

4.8

4.2

5.1

4.0

4.3

4.6

6.2

Endeavour (consensus)

EDV

4.8

4.4

4.1

4.6

4.2

4.4

4.4

4.4

5.3

Majors

Barrick

ABX

6.2

5.2

5.1

6.6

5.6

5.4

2.8

3.7

4.9

Newmont

NEM

8.1

6.3

6.2

7.1

5.5

5.5

4.3

4.1

4.2

Newcrest

NCM AU

8.4

8.1

7.2

7.2

6.6

5.8

1.5

1.4

2.4

Kinross

K

4.0

4.2

4.6

4.6

4.9

5.8

2.6

2.6

2.6

Agnico-Eagle

AEM

8.3

7.9

8.3

6.9

7.0

7.6

3.6

3.6

2.7

Eldorado

ELD

5.1

4.5

3.9

4.5

3.9

3.5

0.0

0.0

0.0

Average

 

6.7

6.0

5.9

6.2

5.6

5.6

2.5

2.6

2.8

Implied Endeavour share price (US$)

22.10

20.04

19.52

26.51

23.83

23.92

32.88

31.76

28.95

Implied Endeavour share price (C$)

30.15

27.34

26.63

36.16

32.51

32.64

44.86

43.33

39.49

Source: Edison Investment Research, Refinitiv. Note: Prices as at 10 October 2023.

Of note is that, without exception, Endeavour’s valuation is lower than the averages of all nine of the measures shown in Exhibit 5, regardless of whether Edison or consensus forecasts are used. On an individual basis, it is lower than its senior gold mining peers on at least 48 out of 54 (89%) valuation measures if Edison forecasts are used and 43 out of 54 (80%) 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$25.50 (C$34.79 or £21.33). The current London Stock Exchange share price is £15.53, equivalent to US$18.56 at an exchange rate of US$1.1954/£.

Exhibit 6: Financial summary

US$'000s

2019

2020

2021

2022

2023e

2024e

2025e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

1,362,121

1,847,894

2,903,756

2,508,100

2,103,025

1,681,132

2,080,093

Cost of Sales

(884,869)

(1,061,891)

(1,675,393)

(1,607,100)

(1,029,636)

(779,859)

(928,951)

Gross Profit

477,252

786,003

1,228,363

901,000

1,073,389

901,272

1,151,141

EBITDA

 

 

618,443

910,295

1,517,263

1,261,300

1,088,189

901,272

1,151,141

Operating Profit (before amort. and except.)

 

281,400

546,072

859,409

645,300

631,797

575,264

771,442

Exceptionals

(199,159)

(201,532)

(266,000)

(382,600)

(59,324)

0

0

Other

(9,392)

8,886

(32,263)

(51,900)

(2,500)

0

0

Operating Profit

72,849

353,426

561,146

210,800

569,973

575,264

771,442

Net Interest

(51,607)

(53,774)

(70,623)

(66,200)

(67,677)

(16,703)

(15,472)

Profit Before Tax (norm)

 

 

220,401

501,184

756,523

527,200

561,620

558,561

755,970

Profit Before Tax (FRS 3)

 

 

21,242

299,652

490,523

144,600

502,296

558,561

755,970

Tax

(97,253)

(158,466)

(178,253)

(175,600)

(180,040)

(108,607)

(141,736)

Profit After Tax (norm)

123,148

342,718

578,270

351,600

381,580

449,954

614,234

Profit After Tax (FRS 3)

(76,011)

141,186

312,270

(31,000)

322,256

449,954

614,234

Net loss from discontinued operations

(4,394)

0

0

9,100

(183,500)

0

0

Minority interests

33,126

44,719

64,486

35,400

76,366

63,913

102,316

Net profit

(80,405)

141,186

312,270

(21,900)

138,756

449,954

614,234

Net attrib. to shareholders contg. businesses (norm)

90,022

297,998

513,784

316,200

305,215

386,041

511,918

Net attrib.to shareholders contg. businesses

(109,137)

96,466

247,784

(66,400)

245,891

386,041

511,918

Average Number of Shares Outstanding (m)

157.4

160.8

250.7

247.8

247.0

247.3

247.3

EPS - normalised (c)

 

 

57.20

185.34

204.95

127.59

123.56

156.08

206.97

EPS - normalised fully diluted (c)

 

 

56.95

181.51

203.21

125.32

121.87

153.95

204.15

EPS - (IFRS) ($)

 

 

(0.72)

0.60

0.99

(0.23)

0.25

1.56

2.07

Dividend per share (c)

0

37

56

81

81

88

117

Gross Margin (%)

35.0

42.5

42.3

35.9

51.0

53.6

55.3

EBITDA Margin (%)

45.4

49.3

52.3

50.3

51.7

53.6

55.3

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

20.7

29.6

29.6

25.7

30.0

34.2

37.1

BALANCE SHEET

Fixed Assets

 

 

2,330,033

5,093,409

5,404,900

4,968,300

5,140,857

5,358,849

5,330,816

Intangible Assets

5,498

24,851

10,000

0

0

0

0

Tangible Assets

2,254,476

3,968,746

4,980,200

4,517,000

4,689,557

4,977,549

4,949,516

Other**

70,059

1,099,812

414,700

451,300

451,300

381,300

381,300

Current Assets

 

 

652,871

1,168,382

1,366,000

1,446,400

1,287,202

1,212,095

1,567,961

Stocks

266,451

305,075

311,300

320,700

262,878

210,141

260,012

Debtors

83,836

104,545

139,900

163,400

229,351

194,675

227,467

Cash

288,186

751,563

906,200

951,100

734,773

747,078

1,020,283

Other

14,398

7,199

8,600

11,200

60,200

60,200

60,200

Current Liabilities

 

 

(354,931)

(661,171)

(567,100)

(1,045,600)

(700,065)

(646,322)

(705,890)

Creditors

(312,427)

(612,862)

(552,700)

(690,800)

(675,265)

(621,522)

(681,090)

Short term borrowings

(42,504)

(48,309)

(14,400)

(354,800)

(24,800)

(24,800)

(24,800)

Long Term Liabilities

 

 

(963,736)

(1,647,799)

(1,818,100)

(1,281,800)

(1,595,500)

(1,595,500)

(1,595,500)

Long term borrowings

(770,902)

(1,026,337)

(878,600)

(517,000)

(877,000)

(877,000)

(877,000)

Other long term liabilities

(192,834)

(621,462)

(939,500)

(764,800)

(718,500)

(718,500)

(718,500)

Net Assets

 

 

1,664,237

3,952,821

4,385,700

4,087,300

4,132,494

4,329,121

4,597,387

CASH FLOW

Operating Cash Flow

 

 

628,617

1,046,370

1,415,306

1,211,200

1,048,031

934,942

1,128,047

Net Interest

(35,413)

(53,774)

(26,900)

(66,200)

(67,677)

(16,703)

(15,472)

Tax

(109,494)

(186,332)

(205,573)

(189,200)

(229,040)

(108,607)

(141,736)

Capex

(401,227)

(335,599)

(587,496)

(534,300)

(873,550)

(614,000)

(351,667)

Acquisitions/disposals

3,654

(19,000)

(4,700)

12,900

145,000

70,000

0

Financing

2,402

100,000

(89,400)

(101,200)

(19,938)

0

0

Dividends

(6,154)

(88,288)

(159,800)

(223,800)

(249,154)

(253,327)

(345,968)

Net Cash Flow

82,385

463,377

341,437

109,400

(246,327)

12,305

273,205

Opening net debt/(cash)*

 

 

518,607

525,220

323,083

(13,200)

(79,300)

167,027

154,722

Other

(88,998)

(261,240)

(5,154)

(43,300)

0

0

0

Closing net debt/(cash)*

 

 

525,220

323,083

(13,200)

(79,300)

167,027

154,722

(118,483)

Source: Company sources, Edison Investment Research. Note: Presented on a pro forma basis with SEMAFO fully consolidated (income statement, balance sheet and cash flow statement) from FY18 balance sheet and Teranga from FY20 balance sheet. EPS normalised from FY18 to reflect continuing business only. *Excludes restricted cash. **Includes restricted cash and investments.


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 2023 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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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 2023 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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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