Endeavour Mining — Rising gold prices begin to feed through

Endeavour Mining (LSE: EDV)

Last close As at 17/05/2024

1,415.00

3.00 (0.21%)

Market capitalisation

3,465m

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Research: Metals & Mining

Endeavour Mining — Rising gold prices begin to feed through

Endeavour’s Q123 results are to be published on 4 May 2023. Ahead of their release, we have refined our forecasts for Q123. Following a strong Q422 we are perhaps conservatively assuming a slower rate of production in Q123, albeit leaving our full year production forecast little changed. In addition, we have revised our gold prices for the quarter from US$1,849/oz previously to US$1,883/oz and our assumption for the full year from US$1,819/oz to US$1,937/oz.

Tom Batho

Written by

Tom Batho

Analyst

Metals & Mining

Endeavour Mining

Rising gold prices begin to feed through

Q123 preview

Metals and mining

18 April 2023

Price

2,140p

Market cap

£5,340m

C$1.3465/US$, US$1.2511/£

Net cash (US$m) at end-December 2022

121.1

Shares in issue

247.5m

Free float

60.67%

Code

EDV

Primary exchange

LSE

Secondary exchange

TSX, USOTC

Share price performance

%

1m

3m

12m

Abs

21.5

10.8

5.0

Rel (local)

13.7

11.1

3.8

52-week high/low

2,168p

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 six 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

Q1 results

4 May 2023

Sabodala-Massawa processing facility

Q224

Lafigué greenfield project construction

Q324

Analysts

Tom Batho

+44 (0)20 3077 5700

Lord Ashbourne

+44 (0)20 3077 5724

Endeavour Mining is a research client of Edison Investment Research Limited

Endeavour’s Q123 results are to be published on 4 May 2023. Ahead of their release, we have refined our forecasts for Q123. Following a strong Q422 we are perhaps conservatively assuming a slower rate of production in Q123, albeit leaving our full year production forecast little changed. In addition, we have revised our gold prices for the quarter from US$1,849/oz previously to US$1,883/oz and our assumption for the full year from US$1,819/oz to US$1,937/oz.

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

2,611.8

1,317.1

585.8

4.71

82

3.1

12/24e

2,235.7

1,228.0

708.5

4.34

100

3.8

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

Rallying gold prices boost EPS

For now, we have reduced our production estimates for Q123 at Houndé, Boungou, Mana and Sabodala-Massawa by c 33koz (or roughly 10.0%) for the group as a whole in Q123. For the full year, this equates to a 1.7% reduction in our overall production forecast to 1,348koz, which is nevertheless still comfortably within the company’s guidance range for FY23 of 1,325–1,425koz, at an all-in sustaining cost of US$940–995/oz. However, this reduction in production has been more than offset by a rallying gold price, such that our net adjusted EPS forecast for the full year has increased by 7.7%, from US$1.296/share previously to US$1.396/share currently (see below for full details).

Valuation: Trading at a discount to peers

Using our traditional 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, implies a present valuation for the company of US$35.59 (C$47.92 or £28.45) per share if performed using a 10% discount rate or US$57.02 (C$76.78 or £45.58) per share if performed using a CAPM-derived (real) discount rate of 6.61% (based on inflation expectations of 2.24% derived from US 30-year break-even rates). These compare to valuations of US$36.92 and US$58.99 at the time of our last note in March, respectively. 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 estimate that Endeavour is trading at a discount to its peers on at least 85.2% of common valuation measures, regardless of whether Edison or consensus forecasts are used. Reverse engineered, the average valuation measures of its peers imply an average share price for Endeavour of US$38.44 (C$51.76 or £30.73) per share.

Updated FY23 forecasts

In the wake of company guidance, our updated forecasts for Endeavour for FY23, by quarter, are as follows:

Exhibit 1: Endeavour Mining FY23e forecasts, by quarter

US$000s (unless otherwise indicated)

Q123e

(prior)

Q123e

Q223e
(prior)

Q223e

Q323e
(prior)

Q323e

Q423e
(prior)

Q423e

FY23e

FY23e
(prior)

Houndé production (koz)

55.1

42.6

55.1

71.1

79.3

80.0

87.9

80.0

277.2

277.5

Karma production (koz)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Ity production (koz)

73.2

83.6

71.0

74.4

65.4

74.4

75.4

74.4

306.9

285.0

Boungou production (koz)

28.0

22.1

28.0

25.2

29.5

29.5

29.5

29.5

106.2

114.9

Mana production (koz)

52.5

39.5

52.5

44.7

52.5

52.5

52.5

52.5

189.1

209.9

Sabodala-Massawa (koz)

78.8

63.5

78.8

78.8

77.3

77.3

86.3

86.3

306.0

321.3

Wahgnion (koz)

37.9

37.9

38.9

38.9

42.2

42.2

43.7

43.7

162.7

162.7

Total gold produced (koz)

325.5

292.8

324.2

333.1

346.2

355.8

375.3

366.4

1,348

1,371

Total gold sold (koz)

325.5

292.8

324.2

333.1

346.2

355.8

375.3

366.4

1,348

1,371

Gold price (US$/oz)

1,849

1,883

1,809

1,952

1,810

1,953

1,809

1,952

1,937

1,819

Mine level cash costs (US$/oz)*

725

828

773

791

718

702

650

651

738

714

Mine level AISC (US$/oz)

968

1,102

1,014

1,052

954

931

876

877

983

950

Revenue

– Gold revenue

601,720

551,230

586,486

650,330

626,457

694,938

679,137

715,344

2,611,842

2,493,800

Cost of sales

– Operating expenses

236,044

242,456

250,676

263,492

248,724

249,917

244,015

238,545

994,410

979,459

– Royalties

37,869

34,603

36,943

41,358

40,195

44,406

43,557

45,604

165,971

158,564

Gross profit

327,807

274,171

298,868

345,479

337,537

400,615

391,566

431,195

1,451,460

1,355,778

Depreciation

(140,624)

(153,872)

(144,597)

(159,994)

(158,508)

(173,287)

(172,724)

(185,239)

(672,392)

(616,454)

Expenses

– Corporate costs

(15,000)

(15,000)

(15,000)

(15,000)

(15,000)

(15,000)

(15,000)

(15,000)

(60,000)

(60,000)

– Impairments

0

0

0

0

0

0

0

0

0

0

– Acquisition etc costs

0

0

0

0

0

0

0

0

0

0

– Share based compensation

(6,453)

(8,584)

(6,453)

(7,957)

(6,453)

(7,315)

(6,453)

(7,315)

(31,171)

(25,814)

– Exploration costs

(8,750)

(10,800)

(8,750)

(10,800)

(8,750)

(10,800)

(8,750)

(10,800)

(43,200)

(35,000)

Total expenses

(30,203)

(34,384)

(30,203)

(33,757)

(30,203)

(33,115)

(30,203)

(33,115)

(134,371)

(120,814)

Earnings from operations

156,979

85,915

124,067

151,729

148,826

194,213

188,638

212,840

644,698

618,511

Interest income

0

Interest expense

(17,842)

(14,407)

(19,603)

(15,370)

(18,853)

(14,655)

(17,090)

(14,439)

(58,871)

(73,387)

Net interest

(17,842)

(14,407)

(19,603)

(15,370)

(18,853)

(14,655)

(17,090)

(14,439)

(58,871)

(73,387)

Loss on financial instruments

(901)

(1,890)

300

(4,020)

300

(4,020)

300

(4,020)

(13,950)

(1)

Other expenses

0

0

0

0

0

0

Profit before tax

138,236

69,618

104,790

132,339

130,326

175,538

171,926

194,382

571,876

545,277

Current income tax

40,896

26,803

34,138

41,687

37,611

47,618

46,031

51,376

167,484

158,676

Deferred income tax

0

0

0

0

0

0

0

0

0

0

Total tax

40,896

26,803

34,138

41,687

37,611

47,618

46,031

51,376

167,484

158,676

Effective tax rate (%)

29.6

38.5

32.6

31.5

28.9

27.1

26.8

26.4

29.3

29.1

Profit after tax

97,340

42,815

70,651

90,651

92,715

127,920

125,895

143,005

404,392

386,602

Net profit from discontinued ops.

0

0

0

0

0

0

0

0

0

0

Total net and comprehensive income

97,340

42,815

70,651

90,651

92,715

127,920

125,895

143,005

404,392

386,602

Minority interest

17,205

10,190

14,297

17,239

16,132

20,801

19,869

22,407

70,637

67,503

Minority interest (%)

17.7

23.8

20.2

19.0

17.4

16.3

15.8

15.7

17.5

17.5

Profit attributable to shareholders

80,135

32,625

56,355

73,412

76,583

107,119

106,027

120,599

333,755

319,099

Basic EPS from continuing ops (US$)

0.326

0.229

0.311

0.431

1.296

Diluted EPS from continuing ops (US$)

0.324

0.132

0.228

0.296

0.310

0.431

0.429

0.486

1.345

1.292

Basic EPS (US$)

0.326

0.132

0.229

0.297

0.311

0.433

0.431

0.487

1.349

1.296

Diluted EPS (US$)

0.324

0.132

0.228

0.296

0.310

0.431

0.429

0.486

1.345

1.292

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

0.329

0.140

0.228

0.313

0.310

0.449

0.430

0.504

1.406

1.296

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

0.328

0.139

0.227

0.312

0.309

0.448

0.428

0.502

1.401

1.292

Adj net earnings attributable (US$000s)

80,877

34,065

56,115

76,668

76,335

110,485

105,774

123,989

345,207

319,101

Adj net EPS from continuing ops (US$)

0.329

0.138

0.228

0.310

0.310

0.446

0.430

0.501

1.396

1.296

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

A number of features of our earnings forecasts are notable, including a 9.4% increase in our depreciation charge for Q1 (versus our prior estimate) following a number of changes in the method of depreciation calculation in late 2022. This in addition to our decreased production forecasts has resulted in a 16.4% decrease in our estimate for gross profit during Q123 and a 58.1% drop in adjusted net EPS compared to our prior forecast of US$0.329. Albeit we leave our full year production forecast little changed at 1348koz (cf 1371koz, previously), comfortably within the FY23 guided range (1,325–1,425koz). This, together with an assumed increase in the gold price for the remainder of the year, has resulted in an increase in our net adjusted EPS for FY23 overall. We believe that we remain relatively conservative with our gold price assumptions. If the prevailing gold price of US$2,005/oz (Bloomberg: 11 April 2023) continues for the remainder of the year (Q223–Q423), then our EPS forecast would be US$1.511/share.

A comparison between our quarterly and full-year forecasts and consensus forecasts for FY23 is as follows:

Exhibit 2: Edison adjusted net EPS from continuing operations estimates cf consensus FY23 by quarter

(US$/share)

Q123e

Q223e

Q323e

Q423e

Sum Q1–Q423

FY23e

Edison

0.138

0.310

0.446

0.501

1.395

1.396

Mean consensus forecast

0.43

0.38

0.54

0.61

1.96

2.10

High consensus forecast

0.54

0.61

0.93

1.20

3.28

3.28

Low consensus forecast

0.28

0.30

0.37

0.30

1.25

1.43

Source: Refinitiv, Edison Investment Research. Note: Consensus at 11 April 2023.

While we do not explicitly forecast cash flows on a quarterly basis, we believe that cash flows at Endeavour in Q1 will have been restrained by the payment of FY22’s final dividend during the quarter, an increase in cash taxes (after three assets deferred tax payments in Q4), share repurchases totalling some US$12.5m and Endeavour’s decision to redeem its US$330m convertible bond, rather than allowing it to convert into ordinary shares. Finally, we also assume Endeavour will have settled a US$50m payment in respect of a deferred payment to Barrick relating to the former’s acquisition of Teranga in Q121.

Valuation

Endeavour is a multi-asset company that has shown a willingness and desire to trade assets to maintain production, reduce costs and maximise returns to shareholders (eg the sale of Youga in FY16, Nzema in FY17, Tabakoto in FY18, Agbaou in FY20 and Karma in FY22, and the acquisition of SEMAFO in FY20 and Teranga in FY21). Historically, rather than our customary method of discounting maximum potential dividends over the life of operations back to 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 included it because it was a critical component of the company’s ability to continually expand and extend the lives of its mines.

Our estimate of cash flows remains consistent in FY26 at US$4.25/share (cf US$4.28/share previously), which implies a terminal valuation of Endeavour at end-FY26 of US$42.48/share, calculated using a discount rate of 10%. With our forecast intervening cash flows, this terminal valuation then discounts back to a present valuation of US$35.59/share at the start of FY23, as shown in Exhibit 3 below.

Exhibit 3: Endeavour forecast valuation and cash flow per share, FY23–26e (US$/share)

Source: Edison Investment Research

Given its elevation into the ranks of the world’s foremost producers of gold, however, we believe Endeavour can increasingly attract lower-cost finance and, as such, we may also consider a CAPM (capital asset pricing model) derived valuation. In this case, long-term nominal equity returns have been 9% and 30-year break-evens indicate an inflation rate of 2.2240% (source Bloomberg, 11 April 2023) versus 2.2853% previously. These two measures imply an expected real equity return of 6.61% (1.09/1.022399) and applying this to our forecast cash flows would imply a terminal valuation for Endeavour of US$64.25/share (US$65.18/share previously) and a current valuation of US$57.02/share (US$58.99/share previously).

Endeavour peer valuation

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

Exhibit 4: 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

5.6

6.1

5.5

4.9

5.2

4.8

3.1

3.8

5.5

Endeavour (consensus)

EDV

5.9

5.5

5.1

5.2

4.8

4.8

3.3

3.2

3.9

Majors

Barrick

ABX

8.4

7.9

7.3

8.1

7.0

6.9

2.1

2.9

3.4

Newmont

NEM

10.2

9.9

9.5

8.7

8.0

7.9

3.2

3.1

3.2

Newcrest

NCM AU

11.7

10.6

10.6

8.9

9.1

8.7

2.1

1.2

2.3

Kinross

K

5.2

5.1

5.4

6.1

6.1

6.0

2.4

2.4

2.4

Agnico-Eagle

AEM

11.5

10.9

12.0

9.9

9.2

8.9

3.0

3.1

3.2

Eldorado

ELD

6.0

5.4

4.4

5.5

4.8

3.8

0.0

0.0

0.0

Average

 

8.8

8.3

8.2

7.9

7.4

7.0

2.1

2.1

2.4

Implied EDV share price (US$)

36.43

39.07

35.57

40.60

39.88

35.98

38.03

38.81

41.60

Implied EDV share price (C$)

50.36

54.00

49.17

56.11

55.12

49.73

52.56

53.65

57.50

Source: Edison Investment Research, Refinitiv. Note: Consensus and peers priced at 11 April 2023.

Of note is that, without exception, Endeavour’s valuation is materially lower than the averages of all nine of the measures shown in Exhibit 4, 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 46 out of 54 (85%) valuation measures if Edison forecasts are used and 49 out of 54 (91%) 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$38.44 (C$51.76 or £30.73) per share.

Exhibit 5: 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

2,611,842

2,235,703

2,497,482

Cost of Sales

(884,869)

(1,061,891)

(1,675,393)

(1,607,100)

(1,294,752)

(1,007,684)

(1,154,374)

Gross Profit

477,252

786,003

1,228,363

901,000

1,317,089

1,228,019

1,343,107

EBITDA

 

 

618,443

910,295

1,517,263

1,261,300

1,317,089

1,228,019

1,343,107

Operating Profit (before amort. and except.)

 

281,400

546,072

859,409

645,300

644,698

707,316

766,293

Exceptionals

(199,159)

(201,532)

(266,000)

(382,600)

(13,950)

0

0

Other

(9,392)

8,886

(32,263)

(51,900)

0

0

0

Operating Profit

72,849

353,426

561,146

210,800

630,748

707,316

766,293

Net Interest

(51,607)

(53,774)

(70,623)

(66,200)

(58,871)

1,162

2,437

Profit Before Tax (norm)

 

 

220,401

501,184

756,523

527,200

585,826

708,479

768,731

Profit Before Tax (FRS 3)

 

 

21,242

299,652

490,523

144,600

571,876

708,479

768,731

Tax

(97,253)

(158,466)

(178,253)

(175,600)

(167,484)

(149,734)

(161,588)

Profit After Tax (norm)

123,148

342,718

578,270

351,600

418,342

558,745

607,142

Profit After Tax (FRS 3)

(76,011)

141,186

312,270

(31,000)

404,392

558,745

607,142

Net loss from discontinued operations

(4,394)

0

0

9,100

0

0

0

Minority interests

33,126

44,719

64,486

35,400

74,637

88,338

105,690

Net profit

(80,405)

141,186

312,270

(21,900)

404,392

558,745

607,142

Net attrib. to shareholders contg. businesses (norm)

90,022

297,998

513,784

316,200

347,705

470,407

501,453

Net attrib.to shareholders contg. businesses

(109,137)

96,466

247,784

(66,400)

333,755

470,407

501,453

Average Number of Shares Outstanding (m)

157.4

160.8

250.7

247.8

247.3

247.5

247.5

EPS - normalised (c)

 

 

57.20

185.34

204.95

127.59

140.59

190.07

202.62

EPS - normalised fully diluted (c)

 

 

56.95

181.51

203.21

125.32

138.08

186.69

199.01

EPS - (IFRS) ($)

 

 

(0.72)

0.60

0.99

(0.23)

1.35

1.90

2.03

Dividend per share (c)

0

37

56

81

82

100

144

Gross Margin (%)

35.0

42.5

42.3

35.9

50.4

54.9

53.8

EBITDA Margin (%)

45.4

49.3

52.3

50.3

50.4

54.9

53.8

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

20.7

29.6

29.6

25.7

24.7

31.6

30.7

BALANCE SHEET

Fixed Assets

 

 

2,330,033

5,093,409

5,404,900

4,968,300

5,060,908

5,194,383

5,008,413

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

4,609,608

4,743,083

4,557,113

Investments

70,059

1,099,812

414,700

451,300

451,300

451,300

451,300

Current Assets

 

 

652,871

1,168,382

1,366,000

1,446,400

1,252,933

1,302,514

1,725,307

Stocks

266,451

305,075

311,300

320,700

326,480

279,463

312,185

Debtors

83,836

104,545

139,900

163,400

271,172

240,256

261,772

Cash

288,186

751,563

906,200

951,100

658,031

785,544

1,154,099

Other

14,398

7,199

8,600

11,200

(2,750)

(2,750)

(2,750)

Current Liabilities

 

 

(354,931)

(661,171)

(567,100)

(1,045,600)

(813,252)

(731,861)

(793,917)

Creditors

(312,427)

(612,862)

(552,700)

(690,800)

(788,452)

(707,061)

(769,117)

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)

(1,231,800)

(1,231,800)

(1,231,800)

Long term borrowings

(770,902)

(1,026,337)

(878,600)

(517,000)

(517,000)

(517,000)

(517,000)

Other long term liabilities

(192,834)

(621,462)

(939,500)

(764,800)

(714,800)

(714,800)

(714,800)

Net Assets

 

 

1,664,237

3,952,821

4,385,700

4,087,300

4,268,789

4,533,235

4,708,003

CASH FLOW

Operating Cash Flow

 

 

628,617

1,046,370

1,415,306

1,211,200

1,332,360

1,224,561

1,350,924

Net Interest

(35,413)

(53,774)

(26,900)

(66,200)

(58,871)

1,162

2,437

Tax

(109,494)

(186,332)

(205,573)

(189,200)

(167,484)

(149,734)

(161,588)

Capex

(401,227)

(335,599)

(587,496)

(534,300)

(815,000)

(654,178)

(390,844)

Acquisitions/disposals

3,654

(19,000)

(4,700)

12,900

5,000

0

0

Financing

2,402

100,000

(89,400)

(101,200)

(12,547)

0

0

Dividends

(6,154)

(88,288)

(159,800)

(223,800)

(246,527)

(294,299)

(432,375)

Net Cash Flow

82,385

463,377

341,437

109,400

36,931

127,513

368,555

Opening net debt/(cash)

 

 

518,607

525,220

323,083

(13,200)

(79,300)

(116,231)

(243,744)

Other

(88,998)

(261,240)

(5,154)

(43,300)

0

0

0

Closing net debt/(cash)

 

 

525,220

323,083

(13,200)

(79,300)

(116,231)

(243,744)

(612,299)

Source: Company sources, Edison Investment Research

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.

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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

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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.

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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.

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

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.

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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Creo Medical — Albyn Medical stake acquired as wholly owned

Creo Medical has announced that it has acquired the remaining 5% stake in Albyn Medical (for €1.2m), a subsidiary that is Creo’s primary revenue contributor (c €20m in FY22 sales, per our estimates). The payout also included a previously agreed €1m earnout payment. Albyn Medical is a seller of own and third-party consumables and systems (primarily gastrointestinal (GI) endoscopy related) with core focus on the UK and European markets and complements Creo’s core portfolio of minimally invasive electrosurgical devices. Creo acquired a 90% stake in Albyn in July 2020 for an equity value of €24.8m and €2.7m in performance-related payments over two years. Creo then acquired another 5% stake in March 2022 (for €1.2m and an additional €1.7m as the first earnout tranche) followed by the balance in the latest announcement. We expect the franchise to contribute steadily to the top line, driven by ongoing expansion efforts into the US market.

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