Endeavour Mining Reports 2012 All-In Margin of $130 Million and Updates 2013 Outlook

VANCOUVER, March 27, 2013 /CNW/ - Endeavour Mining Corporation ("Endeavour" or the "Corporation") (TSX:EDV, ASX:EVR, OTCQX:EDVMF) announces strong financial and operational results for 2012 with production of 310,778 ounces of gold, including full 2012 production from the Tabakoto Mine.  Endeavour acquired the Tabakoto Mine (and the Houndé and Kofi projects) on October 18, 2012, which requires Endeavour's audited financial results to include only the 75 day operating period from October 18 to December 31, 2012 for Tabakoto.  For 2012, Endeavour's all-in sustaining cash cost per ounce produced was $1,077 leading to an all-in sustaining margin of $130 million.  The guidance range for 2013 all-in sustaining cash cost per ounce is $1,055 to $1,155 which includes revised cash cost guidance ranges for the Nzema and Tabakoto mines.

(All amounts in US dollars unless otherwise indicated)

2012 Financial and Operating Highlights

• 2012 gold production, adjusted for the partial year inclusion of Tabakoto, was 220,462 ounces
  
  
• 2012 gold sold, adjusted for the partial year inclusion of Tabakoto, was 218,887 ounces, which generated a mine cash margin of $179 million (equivalent to 107,366 ounces of gold), and after corporate costs, sustaining capital and near-mine exploration expenses generated an all-in sustaining margin of $130 million (equivalent to 78,038 ounces of gold)
  
  
• Total cash cost per ounce produced was $767
  
  
• Including royalties, corporate costs, sustaining capital and near-mine exploration, the all-in sustaining cash cost per ounce produced in 2012 was $1,077.  See Table 2 for calculation details
  
  
• The all-in sustaining margin was 36%
  
  
• During 2012, Endeavour invested $106 million in new mine construction, development and exploration, as detailed in Table 1, leading to free cash flow of $24.7 million after all operating and development activities
  
  
• Adjusted net earnings were $35.8 million or $0.13 per share for the year
  
  
• As of December 31, 2012, Endeavour had cash and cash equivalents of $105.9 million and 27,000 ounces of gold ($45.2 million) with long-term debt of $200 million drawn from a corporate facility
  
  
• Endeavour's attributable proven and probable mineral reserves have increased to a total of 2.5 million ounces and attributable measured and indicated resources (inclusive of reserves) totaled 6.4 million ounces, plus 2.6 million ounces inferred.  See Tables 6 and 7 for mineral reserve and resource details.

Financial Statements and related MD&A will be available on SEDAR, the ASX website, OTC Markets website, and in the Investor Relations section of Endeavour's website www.endeavourmining.com.

In order to access the Corporation's MD&A and financial statements directly, please click the following URL: http://files.newswire.ca/910/EDV_March_27.pdf

Neil Woodyer, CEO, stated

"2012 was another successful year of delivering on operational guidance while also achieving significant growth for our company.  Our Nzema and Youga mines produced 200,476 ounces exceeding our guidance range of 180,000 to 192,000 ounces at a cash cost per ounce of $701 compared to a guidance range of $670 to $690. 

In October 2012, we acquired our third operating mine - Tabakoto in Mali, and two attractive projects - Houndé in Burkina Faso and Kofi in Mali.  In our view, Tabakoto was underperforming due to a lack of working capital, poor management structures, overuse of contractors, and excessive site staffing levels.  We closed the Avion corporate office in Toronto in November and redirected Tabakoto mine management to report to Endeavour's COO and senior operations team in Accra.  In December, we started a major restructuring initiative which has included a 20% reduction in site staff levels during Q1 2013, the termination of the open pit mining contractor in January 2013, and the implementation of cost budgeting and mine reporting systems which were inadequate under previous management.  During the 75 day post-acquisition stub period, Tabakoto produced 19,985 ounces at a cash cost per ounce of $1,250, and with the restructuring now underway, cash costs at Tabakoto have started to improve significantly during January and February 2013. 

During 2013 we expect to increase gold production from our three mines to between 310,000 and 345,000 ounces with growth coming from the nearly-complete mill expansion at Tabakoto, while focusing on managing our costs.  As a result of slower than expected access to the higher grade ore at Nzema's Adamus pits, we have revised our 2013 cash cost guidance at Nzema to $850 to $900 per ounce.  In addition, we are increasing our 2013 cash cost guidance for Tabakoto to $880 to $920 per ounce due to the time lag for implementing and realizing the benefit of the cost savings measures.  Overall, our gold production guidance remains unchanged.

Based on mid-guidance production and revised cash costs and assuming a $1,600 gold price, during 2013 we expect to generate approximately $160 million of all-in sustaining margin, after all operating costs, royalties, sustaining capital, corporate and near-mine exploration expenses.

Agbaou construction is on schedule with all major construction contracts and the mining contract awarded in line with the budget.  Approximately 65% of the total construction cost has been committed with production on schedule for Q1 2014. 

The Houndé project, in Burkina Faso, is in feasibility study and has the potential to add to our production in 2016, and Kofi has exciting exploration potential to round off our future growth profile.

Endeavour is pleased to improve the transparency and understanding of financial performance for our shareholders as well as for our government partners by reporting all-in sustaining cash costs and margins.  During 2012, we sold 218,887 ounces of gold and after all operating costs, royalties, sustaining capital, corporate and near-mine exploration expenses we had $130 million remaining for a 36% margin.  We then invested $106 million in new mine development and exploration, for free cash flow of $25 million in the year.  Endeavour is in a rapid internal growth period with high quality development projects - it's important we focus on managing costs and optimizing our current operations and development projects."

Table 1: 2012 Margin Generation and Investments in New Mine Development and Exploration

Table 2: 2012 All-in sustaining cash cost per ounce, and estimate for 2013

2012 Full Year Operational Results and Outlook

Nzema Gold Mine, Ghana

• Gold production of 109,447 ounces (including 10,253 ounces from purchased ore) at a cash cost of $722 per ounce produced (excluding purchased ore) compared to guidance of $680-$700 per ounce
  
  
• Cash costs were higher than expected for FY 2012 mainly due to higher costs in Q4 2012 from processing lower grade ore as Nzema transitioned into the Adamus pits (previously known as Anwia and Teleku-Bokazo), which has taken longer than expected
  
  
• Mining and processing of lower grade material from the upper portion of the Adamus pits continued into Q1 2013. Accordingly, production has been below budget and cash costs are expected to be elevated in Q1 2013 before improving as higher grade portions of the Adamus pits are accessed
  
  
• 2013 guidance is for production of 100,000 - 110,000 ounces at a revised cash cost of $850 to $900 per ounce (previous cost guidance was $780 to $820 per ounce) due to slower than expected transition to full production at the Adamus pits, which contain higher grade ore reserves

Youga Gold Mine, Burkina Faso

• 2012 gold production of 91,030 ounces at a cash cost of $678 per ounce produced compared to guidance of $655-$675 per ounce
  
  
• Youga had another year of strong performance and generated $85.7 million of operating cash flow from mine operations compared to $59.7 million for the year ended December 31, 2011
  
  
• The 2013 guidance reflects the decreased ore grade as compared to 2012 as scheduled in the Youga mine plan and remains unchanged at 75,000 - 85,000 ounces at a cash cost of $740 to $780 per ounce.

Tabakoto Gold Mine, Mali

• Full year gold production was 110,301 ounces.  Gold production for the 75 day operating period from October 18 to December 31, 2012 was 19,985 ounces at a cash cost of $1,250 per ounce produced.
• In-line with standard industry practice Endeavour has applied more prudent accounting judgments that resulted in including certain expenditures, previously included in capitalized amounts in Avion's presentation of Tabakoto performance, to now be included as operating costs
• The Tabakoto mine is undergoing a significant re-structuring and re-orientation, including:
• Avion corporate office closed in November 2012, eliminating all corporate management roles
  
  
• Tabakoto mine management reporting directly to Endeavour's COO and operations management team in Accra, Ghana
  
  
• Prioritization of underground resource development along with rigorous mining planning, as well as renegotiation with the underground contract miner regarding a longer term, more cost effective contract
  
  
• Terminated open pit mining contractor in January 2013, and initiated use of rented owner fleet
  
  
• The total workforce has been reduced from approximately 1,950 in November 2012 to less than 1,575 at the end of February 2013.  Once the mill expansion is complete and the construction contractors leave the site the workforce will be below 1,450
  
  
• A major business systems upgrade has been started to ensure that mine operations have timely access to production and cost information
• 2013 guidance is for production of 135,000 - 150,000 ounces, and due to the significant changes and the time lag for implementing and realizing the benefit of the cost savings measures, the 2013 cash cost guidance has been revised to $880 to $920 per ounce (previous cost guidance was $830 to $870 per ounce)
  
  
• Increased production will be driven by expansion of the Tabakoto mill, which is nearing completion on schedule.  Currently, hot commissioning of the mill is ongoing and ramp-up of throughput is scheduled to occur during April such that second half production is expected to be higher than in the first half
  
  
• The benefits of the expansion are expected to lower cash costs per ounce in the second half of the year.  We also expect to see lower costs as a result of cost-cutting measures started late last year, including staff reductions
  
  
• Underground development at Segala re-started during Q4 2012 and successfully overcame the difficult ground encountered in March 2012.  Ramp development rates have improved significantly into Q1 2013, with the ramp now extending over 350 metres from the portal

Agbaou Gold Mine Construction

• Construction remains on schedule to achieve gold production during Q1 2014. Costs are also on-target as all major contracts have been finalized within the cost estimates of the feasibility study and over 65% of capital costs are now committed
  
  
• Recent months have seen significant progress in the physical build at the mine (now over 50% finished) including completion of major concrete pours for the mill, initial deliveries of structural steel, camp construction nearing completion, access road finished and tailings storage facility and water storage dam construction well-advanced
  
  
• Key operations personnel, including the General Manager have been recruited
  
  
• A five-year mining contract was awarded to BCM International Limited, within the cost estimates of the feasibility study
  
  
• The project continues to enjoy strong community support, with crop compensation 100% complete, and relocation construction for 250 residents nearing conclusion

2013 Production Guidance and All-in Margin Forecast

• Total 2013 gold production guidance of between 310,000 to 345,000 ounces at an average cash cost of $840 to $880 per ounce, including the revised cost guidance for Nzema and Tabakoto
  
  
• Using mid-guidance production and cash costs and assuming $1,600 gold price, the 2013 forecast mine cash margin is approximately $213 million (equivalent to 133,047 ounces of gold), and after corporate costs, sustaining capital and near-mine exploration expenses the forecast all-in sustaining margin is approximately $166 million (equivalent to 103,672 ounces of gold).  See Table 3 for forecast details.
  
  
• The 2013 estimate for all-in sustaining cash cost per ounce produced is $1,055 to $1,155.  See Table 2 for estimate details.
  
  
• During 2013, Endeavour plans to invest approximately $200 million in new mine construction, development and exploration, as detailed in Table 3, leading to a forecast negative free cash flow of approximately $34 million after all operating and development activities
  
  
• Endeavour is in a strong financial position to fund its internal growth, with $151 million of cash and gold bullion on hand as of December 31, 2012

Table 3: Forecast 2013 All-in Sustaining Margin and Investments in New Mine and Exploration

2012 Financing Activities and Reconciliation of Cash Position

• The Corporation has accumulated a holding of 27,000 ounces of gold bullion with a cost of $46.2 million (fair value of $45.2 million) at December 31, 2012, in order to partially offset long-term gold hedging while maintaining financial flexibility
  
  
• In December 2012, the Corporation reduced its gold hedge program by closing out the 2013 gold hedge positions at Tabakoto (12,132 ounces at an average of $800 per ounce) and Nzema (10,000 ounces at $1,061.75 per ounce) for a total cash settlement of $17.3 million.  The close out of the 2013 hedge deliveries means that all of Endeavour's 2013 gold production will be sold into the spot market
  
  
• In December 2012, the Corporation repaid the $28 million outstanding balance under the credit facility with Banque Atlantique Mali, which had been used by Avion to advance the Tabakoto mill expansion in 2011 and 2012
  
  
• In December 2012, the Corporation drew down the remaining $100 million of its $200 million four year revolving corporate loan facility to maintain a high level of cash liquidity after funding the gold bullion position, buying back the 2013 hedges, and repaying the Banque Atlantique Mali credit facility

Table 4: 2012 Financing Activities and Reconciliation of Cash Position

2012 Adjusted Earnings

Net earnings / (loss) from continuing operations (attributable to Endeavour shareholders) have been adjusted for the impact of the fair value change of certain financial instruments, including the gold hedge liability and Endeavour's warrants that are denominated in Canadian dollars.  Other adjustments include once off corporate and acquisition costs associated with the acquisition of Avion, settlement of the Gold Reserve claim, deferred income tax expense, which relates to an increase in losses from a realized hedge loss, adjustments for settlement of 2013 gold hedges at Nzema and Tabakoto, and a one-time Ghanaian tax audit assessment related to years prior to 2012.

Table 5: Adjusted Net Earnings Reconciliation for the year ended December 31, 2012

¹ The deferred income tax recovery is a non-cash item and is primarily from an increase in losses arising from a realized hedge loss.
² One-off expenses of $4.7 million related primarily to withholding taxes from the Ghanaian Tax Authority audit for its taxation years June 2007 to June 2011

Conference Call Details

Management will host a conference call to discuss the 2012 results on March 28, 2013 as detailed below. The call will feature presentations from Neil Woodyer, Chief Executive Officer, Attie Roux, Chief Operating Officer, and Christian Milau, Chief Financial Officer.

Analysts and interested investors are invited to participate using the dial in numbers below.

The conference call can also be accessed through the following link:

http://www.endeavourmining.com/s/Webcasts.asp

The conference call will be held and webcast by V-Call on Thursday March 28, 2013 at:

The call will be archived for later playback on Endeavour's website until March 28, 2014.

Qualified Persons

Adriaan "Attie" Roux, Pr. Sci.Nat, Endeavour's Chief Operating Officer, is a Qualified Person under NI 43-101, and has reviewed and approved the technical information related to mining operations in this news release.

Gérard de Hert, EurGeol, Endeavour's VP Exploration is a Qualified Person under NI 43-101 and has reviewed and approved the mineral reserve and resource information contained in this news release.

About Endeavour Mining Corporation

Endeavour is a gold producer delivering growth. Endeavour owns three gold mines producing more than 300,000 ounces per year in Mali, Ghana and Burkina Faso that are generating significant operating cash flows to fund further expansion. Endeavour's gold production is forecast to be over 550,000 ounces per year in 2016, including the Tabakoto mill expansion in 2013, completion of construction of Agbaou Gold Mine in Côte d'Ivoire scheduled for Q1 2014 and a January 2013 PEA that shows potential for 160,000 ozs per year from the Houndé Project in Burkina Faso in 2016.

Endeavour Mining Corporation is listed on the TSX (symbol EDV) and ASX (symbol EVR), and also trades on the OTCQX (symbol EDVMF).

On behalf of Endeavour Mining Corporation

Neil Woodyer

Chief Executive Officer

Cash cost per ounce and All-in sustaining cash cost per ounce are non-GAAP performance measures with no standard meaning under IFRS.

This news release contains "forward-looking statements" including but not limited to, statements with respect to Endeavour's plans and operating performance, the estimation of mineral reserves and resources, the timing and amount of estimated future production, costs of future production, future capital expenditures, and the success of exploration activities. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "expects", "expected", "budgeted", "forecasts" and "anticipates". Forward-looking statements, while based on management's best estimates and assumptions, are subject to risks and uncertainties that may cause actual results to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks related to the successful integration of acquisitions; risks related to international operations; risks related to general economic conditions and credit availability, actual results of current exploration activities, unanticipated reclamation expenses; changes in project parameters as plans continue to be refined; fluctuations in prices of metals including gold; fluctuations in foreign currency exchange rates, increases in market prices of mining consumables, possible variations in ore reserves, grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes, title disputes, claims and limitations on insurance coverage and other risks of the mining industry; delays in the completion of development or construction activities, changes in national and local government regulation of mining operations, tax rules and regulations, and political and economic developments in countries in which Endeavour operates. Although Endeavour has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Please refer to Endeavour's most recent Annual Information Form filed under its profile at www.sedar.com for further information respecting the risks affecting Endeavour and its business.

Table 6 Mineral Reserves as of December 31, 2012

Table 7 Mineral Resources as of December 31, 2012

Totals in Tables 6 and 7 may not add due to rounding

Notes to Mineral Reserves and Mineral Resources

¹ Nzema Mine "Technical Report and Mineral Resource and Reserve Update for the Nzema Gold Mine, Ghana, West Africa" effective December 31, 2012.  Prepared by N. Johnson MAIG (MPR Geological Consultants), Q. de Klerk FAusIMM (CP) (Cube Consulting), W. Yeo MAIG and A. Roux Pr.Sci.Nat. (Endeavour).
² Youga Mine - Main, East and West Pits "Technical Report and Update of Mineral Resources and Mineral Reserves for the Youga Gold Mine, Burkina Faso, West Africa" effective December 31, 2011 and updated to December 31, 2012 through depletion of Internal Resource and Reserve Estimates prepared internally under supervision of K. Woodman (Endeavour) for resources and A. de Freitas (Endeavour) for reserves.
³ Youga Mine - Zergoré, NTV and A2NE deposits, Internal Resource Estimates prepared by AMEC under supervision of K. Woodman (Endeavour).  Internal Reserve Estimates prepared by Kwadwo Opoku Ansah, reviewed by SEMS under supervision of A. de Freitas (Endeavour).
⁴ Ouaré Deposit - Resource Estimate 2012, project 171880, dated December 31, 2012, Prepared by AMEC under supervision of K. Woodman (Endeavour).
⁵ "Agbaou Gold Mine, Côte d'Ivoire, NI 43-101 Technical Report" effective May 25, 2012.  Prepared by Mark Wanless Pr.Sci.Nat, Hendrik Theart Pr.Sci.Nat, and Mark Sturgeon Pr.Eng (SRK Consulting, South Africa), Neil Senior FSAIMM (SENET, South Africa) and Duncan Grant-Stuart Pr.Eng, Angus Rowland Pr.Sci.Nat (Knight Piésold, South Africa).
⁶ "Tabakoroni Feasibility Study Report, Tabakoroni Gold Deposit, Mali, West Africa" effective June 10, 2010.  Prepared by S. Stein and K. Woodman (Endeavour).
^7,8 Tabakoto Mine "Mineral Resource Summary Report" effective December 31, 2012.  Internal Resources Estimate prepared by Kevin Harris, under supervision of Richard Allan (Endeavour).
⁷ Tabakoto Mine "Internal Underground Reserves Estimate, Tabakoto and Segala Underground Reserves" effective December 31, 2012.  Prepared by Exupery Lyimo under supervision of Richard Allan (Endeavour).
⁸ Tabakoto Mine "Internal Open Ppit and Stockpiles Reserve Estimate, Djambaye & Darsalam Open Pit Reserves" effective December 31, 2012.  Prepared by Patrick Mkonyi  under supervision of Richard Allan (Endeavour).
⁹ Kofi "Technical Report and Update Resource Estimate on the Kofi Project, Mali, Africa" effective December 21, 2011.  Prepared by P&E Mining Consultants Inc, Reports 235.
¹⁰ Houndé "Technical Report and Preliminary Economic Assessment of the Houndé Gold Project, Burkina Faso, West Africa" effective December 31, 2012. Prepared by SRK Consulting (Canada) Inc.

SOURCE Endeavour Mining Corporation

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