Endeavour Mining — Pre-positioning ahead of rains

Endeavour Mining (LSE: EDV)

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Research: Metals & Mining

Endeavour Mining — Pre-positioning ahead of rains

Endeavour’s Q222 results are scheduled for release on 3 August. As at the quarter’s end, we have revised our financial forecasts for the company for FY22 to reflect a slightly higher gold price for the quarter (US$1,873/oz cf US$1,866/oz previously), a slightly lower gold price for the remainder of the year (US$1,812/oz cf US$1,823/oz previously), and a slightly higher proportion of material processed from lower-grade stockpiles in Q2 as operations have focused on waste stripping ahead of the rainy season in Q3 at Boungou, Sabodala-Massawa and Wahgnion, in particular. In the meantime, Endeavour is trading at a 27% discount to the average multiples of its peers, which imply a share price of US$28.66 (C$36.97 or £23.70).

Lord Ashbourne

Written by

Lord Ashbourne

Director, Energy & Resources

Metals & Mining

Endeavour Mining

Pre-positioning ahead of rains

Q222 results preview

Metals and mining

4 July 2022

Price

1,706p

Market cap

£4,241m

C$1.2899/US$, US$1.2095/£

Net cash (US$m) at end-March 2022, excludes lease liabilities, option premium and restricted cash

182.4

Shares in issue

248.4m

Free float

75.2%

Code

EDV

Primary exchange

LSE

Secondary exchange

TSX, USOTC

Share price performance

%

1m

3m

12m

Abs

(9.2)

(14.5)

3.4

Rel (local)

4.0

(8.8)

6.6

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

Lafigue DFS

Mid-2022

Sabodala-Massawa Phase 2 construction launch

Mid-2022

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 Q222 results are scheduled for release on 3 August. As at the quarter’s end, we have revised our financial forecasts for the company for FY22 to reflect a slightly higher gold price for the quarter (US$1,873/oz cf US$1,866/oz previously), a slightly lower gold price for the remainder of the year (US$1,812/oz cf US$1,823/oz previously), and a slightly higher proportion of material processed from lower-grade stockpiles in Q2 as operations have focused on waste stripping ahead of the rainy season in Q3 at Boungou, Sabodala-Massawa and Wahgnion, in particular. In the meantime, Endeavour is trading at a 27% discount to the average multiples of its peers, which imply a share price of US$28.66 (C$36.97 or £23.70).

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

1.8

12/21

2,903.8

1,517.3

756.5

4.83

56

2.7

12/22e

2,492.1

1,347.5

689.3

4.86

62

3.0

12/23e

2,219.0

1,223.2

762.7

3.86

70

3.4

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

Changes to financial forecasts immaterial

As a result of the changes to our assumptions, we have reduced our production forecasts for Q222 by 9.3koz at Boungou, 10.5koz at Sabodala-Massawa and 5.3koz at Wahgnion and by 25.1koz (or 7.3%) for the group as a whole in Q222. For the full year, this equates to a 1.3% reduction in our production forecast to 1,358.8koz, which is close to the middle of the company’s range of guidance for FY22 of 1,315–1,400koz, at an all-in sustaining cost in the range US$880–930/oz. However, this translates into only a very modest 1.3% reduction in our forecast for net adjusted EPS from continuing operations for the year (full details of our updated forecasts are available overleaf).

Valuation: Little changed at upwards of US$28.66

Given that our financial forecasts for FY22 are not much changed, neither is our valuation of Endeavour. Using an absolute valuation methodology, whereby we discount back five years of cash flows and then apply an ex-growth, ad infinitum multiple to steady-state terminal cash flows in FY26, implies a present valuation for the company of US$35.88 (C$46.28 or £29.67) per share if performed using a 10% discount rate (cf US$35.96 previously) or US$57.64 (C$74.31 or £47.66) per share if performed using a CAPM-derived (real) discount rate of 6.57% (based on sharply reduced inflation expectations of 2.28% derived from US 30-year break-even rates cf 2.53% 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). Otherwise, Endeavour is trading at a discount to the average multiples of its peers on at least 68% of common valuation measures, regardless of whether Edison or consensus forecasts are used, despite its being the largest premium LSE-listed pure gold producer in the FTSE 100 Index.

Updated FY22 forecasts

In the wake of the aforementioned changes, our updated forecasts for Endeavour are as follows:

Exhibit 1: Endeavour Mining FY22e forecasts, by quarter

US$000s (unless otherwise indicated)

Q122a

Q222e
(prior)

Q222e

Q322e
(prior)

Q322e

Q422e
(prior)

Q422e

FY22e

FY22e
(prior)

Houndé production (koz)

73.1

76.4

76.4

68.8

68.8

57.3

57.3

275.5

275.5

Agbaou production (koz)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Karma production (koz)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Ity production (koz)

72.4

67.8

67.8

63.2

63.2

63.2

63.2

266.5

266.5

Boungou production (koz)

33.8

35.3

26.0

29.9

29.9

30.4

30.4

120.1

129.4

Mana production (koz)

52.6

49.3

49.3

40.6

40.6

43.1

43.1

185.6

185.6

Sabodala-Massawa

96.3

85.9

75.4

98.2

98.2

98.2

98.2

368.0

378.5

Wahgnion

28.9

32.8

27.5

33.4

33.4

43.1

43.1

132.9

138.2

Total gold produced (koz)

357.1

347.5

322.3

334.0

334.0

335.1

335.1

**1,358.8

**1,384.0

Total gold sold (koz)

359.1

347.5

322.3

334.0

334.0

335.1

335.1

**1,360.6

**1,385.8

Gold price (US$/oz)

1,911

1,866

1,873

1,823

1,812

1,823

1,812

1,844

1,848

Mine level cash costs (US$/oz)*

609

713

722

688

643

699

655

661

681

Mine level AISC (US$/oz)

809

973

995

933

888

900

855

889

907

Revenue

– Gold revenue

686,200

645,167

600,831

605,278

601,626

607,151

603,488

2,492,144

2,543,796

Cost of sales

– Operating expenses

217,500

247,732

232,879

229,786

214,932

234,301

219,448

884,759

929,320

– Royalties

41,000

39,306

36,657

36,641

36,420

36,656

36,434

150,511

153,603

Gross profit

427,700

358,129

331,295

338,851

350,273

336,194

347,605

1,456,874

1,460,874

Depreciation

(152,000)

(151,311)

(136,452)

(152,389)

(152,725)

(160,581)

(160,934)

(602,111)

(616,281)

Expenses

– Corporate costs

(14,000)

(13,000)

(15,000)

(12,000)

(15,000)

(11,000)

(15,000)

(59,000)

(50,000)

– Impairments

0

0

0

– Acquisition etc costs

(200)

(200)

(200)

– Share based compensation

(7,700)

(6,777)

(6,607)

(6,999)

(6,999)

(6,999)

(6,999)

(28,304)

(28,474)

– Exploration costs

(7,100)

(5,000)

(5,000)

(5,000)

(5,000)

(5,000)

(5,000)

(22,100)

(22,100)

Total expenses

(29,000)

(24,777)

(26,607)

(23,999)

(26,999)

(22,999)

(26,999)

(109,604)

(100,774)

Earnings from operations

246,700

182,041

168,237

162,463

170,550

152,614

159,673

745,159

743,818

Interest income

0

0

Interest expense

(15,200)

(14,373)

(14,373)

(12,726)

(13,036)

(11,156)

(11,411)

(54,019)

(53,455)

Net interest

(15,200)

(14,373)

(14,373)

(12,726)

(13,036)

(11,156)

(11,411)

(54,019)

(53,455)

Loss on financial instruments

(178,800)

(178,800)

(178,800)

Other expenses

(2,000)

(2,000)

(2,000)

Profit before tax

50,700

167,668

153,864

149,737

157,514

141,458

148,262

510,340

509,563

Current income tax

74,700

44,173

42,260

40,387

43,296

38,175

41,079

201,335

197,435

Deferred income tax

11,200

0

0

0

0

0

0

11,200

11,200

Total tax

85,900

44,173

42,260

40,387

43,296

38,175

41,079

212,535

208,635

Effective tax rate (%)

(169.4)

26.3

27.5

27.0

27.5

27.0

27.7

41.6

40.9

Profit after tax

(35,200)

123,495

111,604

109,350

114,218

103,283

107,183

297,805

300,928

Net profit from discontinued ops.

14,800

0

0

0

0

0

0

14,800

14,800

Total net and comprehensive income

(20,400)

123,495

111,604

109,350

114,218

103,283

107,183

312,605

315,728

Minority interest

21,800

18,046

17,580

15,996

17,347

15,086

16,435

73,162

70,928

Minority interest (%)

(106.9)

14.6

15.8

14.6

15.2

14.6

15.3

23.4

22.5

Profit attributable to shareholders

(42,200)

105,449

94,023

93,355

96,872

88,196

90,748

239,443

244,800

Basic EPS from continuing ops (US$)

(0.23)

0.424

0.378

0.376

0.390

0.355

0.365

0.904

0.926

Diluted EPS from continuing ops (US$)

(0.23)

0.422

0.376

0.374

0.388

0.353

0.363

0.899

0.921

Basic EPS (US$)

(0.17)

0.424

0.378

0.376

0.390

0.355

0.365

0.964

0.985

Diluted EPS (US$)

(0.17)

0.422

0.376

0.374

0.388

0.353

0.363

0.959

0.980

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

0.49

0.424

0.378

0.376

0.390

0.355

0.365

1.625

1.646

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

0.49

0.422

0.376

0.374

0.388

0.353

0.363

1.616

1.638

Adj net earnings attributable (US$000s)

122,300

105,449

94,023

93,355

96,872

88,196

90,748

403,943

409,300

Adj net EPS from continuing ops (US$)

0.49

0.424

0.378

0.376

0.390

0.355

0.365

1.626

1.648

Source: Endeavour Mining, Edison Investment Research. Note: *Excludes royalty costs. **Includes 10.2koz produced and 10.1koz sold from Karma in Q122.

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 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 in 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 discreet item distinct from operating expenses), we are continuing to show total cash costs excluding royalties.

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 cf consensus FY22 by quarter

(US$/share)

Q122a

Q222e

Q322e

Q422e

Sum Q1–Q422

FY22e

Edison

0.493

0.378

0.390

0.365

1.626

1.626

Mean consensus forecast

0.49

0.48

0.49

0.53

1.99

1.71

High consensus forecast

0.49

0.92

0.93

0.87

3.21

2.17

Low consensus forecast

0.49

0.33

0.24

0.36

1.42

1.10

Source: Refinitiv, Edison Investment Research. Note: Consensus at 30 June 2022.

Of particular note, within 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. Mining activities are expected to continue at the Massawa Central Zone for the remainder of the year along with additional mining at the Sofia North and Sofia Main pits, while mining at the Massawa North Zone is expected to commence mid-year, with non-refractory ore available for immediate treatment in the carbon-in-leach (CIL) plant, while refractory and transitional material is stockpiled. Mined and processed grades are therefore expected to increase materially in H222 compared to Q222.

Self-evidently, one of the principal presumptions behind our forecasts is that there are no major deleterious effects to ongoing operations as a result of the COVID-19 pandemic. We also assume no collateral escalation of war between Russia and Ukraine 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, all other things being equal, 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 in the event of unanticipated future disruptions.

Exhibit 3: Financial summary

US$'000s

2019

2020

2021

2022e

2023e

2024e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

1,362,121

1,847,894

2,903,756

2,492,144

2,218,986

2,235,703

Cost of Sales

(884,869)

(1,061,891)

(1,675,393)

(1,144,874)

(995,810)

(1,007,684)

Gross Profit

477,252

786,003

1,228,363

1,347,270

1,223,175

1,228,019

EBITDA

 

 

618,443

910,295

1,517,263

1,347,470

1,223,175

1,228,019

Operating Profit (before amort. and except.)

 

281,400

546,072

859,409

745,359

758,879

703,822

Exceptionals

(199,159)

(201,532)

(266,000)

(179,000)

0

0

Other

(9,392)

8,886

(32,263)

(2,000)

0

0

Operating Profit

72,849

353,426

561,146

564,359

758,879

703,822

Net Interest

(51,607)

(53,774)

(70,623)

(54,019)

3,839

5,512

Profit Before Tax (norm)

 

 

220,401

501,184

756,523

689,340

762,719

709,334

Profit Before Tax (FRS 3)

 

 

21,242

299,652

490,523

510,340

762,719

709,334

Tax

(97,253)

(158,466)

(178,253)

(212,535)

(215,584)

(149,307)

Profit After Tax (norm)

123,148

342,718

578,270

476,805

547,135

560,028

Profit After Tax (FRS 3)

(76,011)

141,186

312,270

297,805

547,135

560,028

Net loss from discontinued operations

(4,394)

0

0

14,800

0

0

Minority interests

33,126

44,719

64,486

73,162

89,538

88,053

Net profit

(80,405)

141,186

312,270

312,605

547,135

560,028

Net attrib. to shareholders contg. businesses (norm)

90,022

297,998

513,784

403,643

457,597

471,975

Net attrib.to shareholders contg. businesses

(109,137)

96,466

247,784

224,643

457,597

471,975

Average Number of Shares Outstanding (m)

157.4

160.8

250.7

248.4

248.4

248.4

EPS - normalised (c)

 

 

57.20

185.34

204.95

162.48

184.19

189.98

EPS - normalised fully diluted (c)

 

 

56.95

181.51

203.21

161.61

183.21

188.97

EPS - (IFRS) ($)

 

 

(0.72)

0.60

0.99

0.96

1.84

1.90

Dividend per share (c)

0

37

56

62

70

82

Gross Margin (%)

35.0

42.5

42.3

54.1

55.1

54.9

EBITDA Margin (%)

45.4

49.3

52.3

54.1

55.1

54.9

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

20.7

29.6

29.6

29.9

34.2

31.5

BALANCE SHEET

Fixed Assets

 

 

2,330,033

5,093,409

5,404,900

5,315,768

5,443,316

5,537,796

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

4,891,068

5,018,616

5,113,096

Investments

70,059

1,099,812

414,700

414,700

414,700

414,700

Current Assets

 

 

652,871

1,168,382

1,366,000

1,589,917

1,768,883

2,000,024

Stocks

266,451

305,075

311,300

311,518

277,373

279,463

Debtors

83,836

104,545

139,900

171,656

217,482

218,856

Cash

288,186

751,563

906,200

1,276,943

1,444,227

1,671,905

Other

14,398

7,199

8,600

(170,200)

(170,200)

(170,200)

Current Liabilities

 

 

(354,931)

(661,171)

(567,100)

(629,684)

(591,931)

(598,161)

Creditors

(312,427)

(612,862)

(552,700)

(615,284)

(577,531)

(583,761)

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

4,457,901

4,802,169

5,121,559

CASH FLOW

Operating Cash Flow

 

 

628,617

1,046,370

1,415,306

1,407,784

1,173,741

1,230,786

Net Interest

(35,413)

(53,774)

(26,900)

(54,019)

3,839

5,512

Tax

(109,494)

(186,332)

(205,573)

(201,335)

(215,584)

(149,307)

Capex

(401,227)

(335,599)

(587,496)

(512,979)

(591,844)

(618,678)

Acquisitions/disposals

3,654

(19,000)

(4,700)

15,000

5,000

0

Financing

2,402

100,000

(89,400)

(83,773)

0

0

Dividends

(6,154)

(88,288)

(159,800)

(199,934)

(207,867)

(240,637)

Net Cash Flow

82,385

463,377

341,437

370,743

167,284

227,677

Opening net debt/(cash)

 

 

518,607

525,220

323,083

(13,200)

(383,943)

(551,227)

Other

(88,998)

(261,240)

(5,154)

0

(0)

0

Closing net debt/(cash)

 

 

525,220

323,083

(13,200)

(383,943)

(551,227)

(778,905)

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.


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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

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