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Endeavour significantly increases Free Cash Flow on record production and lower AISC

03.03.2016  |  Globenewswire Europe

 

Endeavour significantly increases Free Cash Flow on record production and lower AISC

View News Release in PDF Format

 
2015 Full Year Highlights:
 

> Gold production up 11% to 517koz, exceeding production guidance of 475-500koz

> All-in Sustaining Cost down 9% to $922/oz, below guidance of $930-980/oz

> All-in sustaining margin up 4% to $122m, despite an 8% decline in realized gold price

> Free Cash Flow before tax, working capital & financing costs more than doubled to $85m, exceeding guidance of $80m[1] 

> Free Cash Flow of $34m, turning positive with increased production and lower AISC/oz

> Cash balance increased to $110m and net debt reduced to $144m after debt repayment of $60m in 2015

> Adjusted net earnings attributable to shareholders tripled to $42m, or $0.99 per share

George Town, March 3, 2016 - Endeavour Mining (TSX:EDV) (OTCQX:EDVMF) is pleased to announce its financial and operating results for the fourth quarter and full year 2015, with highlights provided in the table below.

Table 1: Key Operational and Financial Highlights

All amuonts in US$ Three months ended December 31,   Year ended December 31,
2015 2014 Var   2015 2014 Var
Gold Production, oz 136,844 119,729 14%   516,646 465,770 +11%
Realized Gold Price, $/oz 1,102 1,198 (8%)   1,157 1,264 (8%)
AISC , $/oz 934 995 (6%)   922 1,010 (9%)
All-in Sustaining Margin, $/oz 168 203 (17%)   235 254 (7%)
All-in Sustaining Margin, $m 24 25 (7%)   122 117 +4%
Free Cash Flow, $m (before WC, tax & financing costs) 12 (4) n.a   85 35 +143%
Free Cash Flow, $m 25 7 257%   34 (11) n.a
Net Debt At Period End, $m 144 254 (43%)   144 254 (43%)
Adjusted Net Earnings, $m (attributable to shareholders) (6) (2) (200%)   42 14 +200%
Adjusted Earnings Per Share, $/share (0.12) (0.06) (100%)   0.99 0.34 +191%

Neil Woodyer, CEO of Endeavour, stated: "The strong 2015 financial results are the culmination of several years of asset development and optimization. We are now ideally positioned as the major pure West-African multi-operation gold mining company, with a demonstrated capacity to generate significant cash flows even at lower gold prices, as witnessed last year. 

In addition, our strengthened balance sheet and significant liquidity sources give us the needed financial flexibility to continue our growth strategy."

Production increased by 11% to 516,646 ounces

  • Endeavour produced a total of 516,646 ounces of gold in 2015, inclusive of Ity's post-acquisition production of 5,689 ounces. Excluding the Ity mine, Endeavour's production amounted to 510,957 ounces, exceeding the 2015 production guidance of 475,000 to 500,000 ounces, as the strong performance from Agbaou and Tabakoto more than offset the slight declines at Nzema and Youga.  

Table 2: Gold Production by mine, oz

(on a 100% basis) 2015 Guidance   2015 Actual 2014 Actual Var
Agbaou 150,000 -  155,000   181,365 146,757 +24%
Tabakoto 155,000 -  165,000   151,067 127,323 +19%
Nzema 110,000 -  115,000   110,302 115,129 (4%)
Youga 60,000 -  65,000   68,223 76,561 (11%)
Subtotal 475,000 -  500,000   510,957 465,770 +10%
Ity     5,689 - -
Total     516,646 465,770 +11%
  • Agbaou achieved record production in 2015, up 24% over the previous year, mainly due to a 20% increase in mill throughput and the continued benefit of mining free-dig oxide ore
  • Tabakoto increased production by 19% over the previous year as the mine benefited from the start of mining of the Kofi C open pit and the full ramp-up of the Segala underground mine.
  • Nzema's production declined only slightly compared with the previous year as the mine strategically increased purchased ore to improve the mine's operating margins, and to preserve reserves in-situ.
  • The Ity Mine is included for the post-acquisition period of November 28 to December 31, 2015. During 2015, the Ity Mine produced a total of 80,807 ounces.
  • Subsequent to the year ended December 31, 2015, on February 29, 2016, Endeavour announced that it had sold the Youga Gold Mine in Burkina Faso for $25.3 million.

All-In Sustaining Cost decreased by 9% to $922/oz

  • Endeavour's Group All-in Sustaining Cost ("AISC") decreased by 9% over the previous year to $922/oz mainly due to lower operating costs, specifically at Agbaou and Tabakoto, as well as the benefit of the decline in crude oil prices and favorable exchange rates against the US$.
  • Agbaou reduced its mine-level AISC by 7% over the previous year to $576/oz, primarily due to a lower strip ratio and a decrease in milling cost per tonne driven by larger volumes.  
  • Tabakoto reduced its mine-level AISC by 20% over the previous year to $1,067/oz, as lower fuel prices and switching to owner mining led to a decrease in mining costs (open pit reduced from $4.6 to $2.6/t, and underground reduced from $51 to $40/t).
  • Sustaining capital increased from $31 million to $48 million, up $27/oz, mainly due to increased underground development at the Tabakoto mine and capitalized waste at Agbaou.
  • Corporate costs and sustaining exploration costs remained fairly constant on a total dollar spent basis.

Table 3: Group All-In Sustaining costs, $/oz

  2015 Guidance   2015 Actual 2014 Actual Var
Agbaou 690  -  740   576 621 (7%)
Tabakoto 950  -  1,000   1,067 1,335 (20%)
Nzema 1,000  -  1,050   1,064 1,036 +3%
Youga 975  -  1,025   913 824 +11%
Ity*     683 - -
Mine-level AISC/oz 883  -  933   868 954 (9%)
  Corporate  G&A 37   41 47 (13%)
  Sustaining exploration 10   13 9 44%
Group AISC/oz 930 - 980   922 1,010 (9%)

*Ity Mine is included for the post-acquisition period of November 28 to December 31, 2015.


Increased Cash Flow generation despite lower realized gold price

  • All-in sustaining margin increased by 4% to $122 million as the increased production and lower AISC/oz more than compensated for the lower realized gold price.
  • Free cash flow (before working capital, tax & financing costs) increased by 143% to $85 million as non-sustaining capital returned to normalized levels. In 2014, non-sustaining capital included $46 million for Tabakoto (Kofi C open pit and Segala underground development, Cement Rock Fill plant, and equipment purchase). In 2015, the $37 million non-sustaining capital consisted of $19 million for Tabakoto underground development, $8 million in non-sustaining exploration, $7 million at the Houndé project, $2 million for Ity, and $1 million at Nzema.
  • Free cash flow shifted from an outflow of $11 million to a positive $34 million generated in 2015, as a result of reduced non-sustaining capital.

Table 4: Simplified Cash Flow Statement

  Year Ended December 31 Var
In US$ million 2015 2014
Gold Sales, oz 519,812 467,887 +11%
   Realized gold price, $/oz 1,157 1,264 (8%)
Revenue 601 584 +3%
  Cash cost for ounces sold (374) (382) (2%)
  Royalties (29) (28) +4%
  Corporate G&A (21) (22) (5%)
  Sustaining capital (48) (31) +55%
  Sustaining exploration (7) (4) +75%
AISC Margin 122 117 +4%
   Non-sustaining exploration (9) (20) (55%)
   Non-sustaining capital (28) (62) (55%)
Free cash flow (before working capital, tax & financing costs) 85 35 +143%
   Working capital 6 21 (71%)
   Taxes paid (7) (12) (42%)
   Interest paid (16) (13) (23%)
  Other items* (34) (42) (24%)
Free Cash Flow 34 (11) n.a
  Cash received from La Mancha acquisition** 73 - -
   Revolving credit facility payments (60) - -
Year over year change in cash 47 (11) n.a

*Includes financial fees, lease repayments, hedge settlements, realized loss on derivative financial instruments, unrealized foreign exchange loss on cash, and other non-operating cash adjustments. **Includes $63m of cash received from La Mancha and minority cash interest in Ity operating entity, net of transaction fees
                                                                                                                                                                   

Decreased Net Debt by 43%, improving debt ratio to 0.9x

  • Endeavour voluntarily repaid $60 million of its drawn down debt against the revolving credit facility ("RCF") during the year, reducing its net debt by 43% to $144 million.
  • The net debt to operating EBITDA ratio has improved to 0.9 times, a 50% decrease from the prior year's position.
  • Endeavour finished the year with a sound balance sheet with strong liquidity sources including its cash position of $110 million undrawn RCF capacity of $110 million, and its 2016 cash flow generation. The group also has a $75 million in-principle commitment from La Mancha (Naguib Sawiris) to help finance its growth strategy.

Table 5: Net Debt Reduction

In US$ million Year ended December 31 Var
2015 2014
Cash 110 62 +77%
  Less: Equipment finance lease 13 16 (19%)
  Less: Drawn portion of $350 million RCF 240 300 (20%)
Net Debt 144 254 (43%)
Operating EBITDA 164 143 +15%
Net Debt to Operating EBITDA ratio 0.9x 1.8x (50%)

Adjusted Net Earnings per Share increased by 191%

  • Earnings from mine operations were $107 million in 2015 compared with $76 million for the previous year, further illustrating Endeavour's improvement in both operating and cost management areas.
  • Net earnings attributable to shareholders were $18 million, or $0.42 per share, compared with net losses of $274 million, or ($6.62) per share, in the same period in 2014. For the year ended December 31, 2014 the company incurred an impairment expense on mining interests and related assets of $366 million, while no such expenses were incurred in the year ended December 31, 2015.
  • Adjusted earnings attributable to shareholders were $42 million, or $0.99 per share, in 2015, an increase of 191% compared with $14 million, or $0.34 per share, in the previous year.

Table 6:  Net Earnings

($  in millions except per share amounts) Year Ended December 31,
2015 2014
Earnings from mine operations 107 76
Net earnings (loss) and total comprehensive earnings (loss) 36 (328)
  Portion attributable to shareholders 18 (274)
   Basic loss per share, US$/share 0.42 (6.62)
Adjusted net earnings (loss) attributable to shareholders* 42 14
  Adjusted earnings per share, $/share 0.99 0.34

*Mainly adjusted for impairment charges, transaction fees, FX gain and losses. For more details, see Company MD&A.

2016 Guidance - Updated following the Youga Sale

  • Subsequent to the Youga mine sale on February 29, 2016, Endeavour has updated its 2016 production guidance to 535,000 to 560,000 ounces at an AISC of $870 to $920/oz.
  • At a gold price of $1,150/oz and using the mid-point of 2016 production and AISC/oz guidance ranges, Endeavour is projecting an AISC margin of approximately $140 million in 2016, or $255/oz. 
  • In 2016, non-sustaining project capital is expected to be $48 million, up from $37 million in 2015, with details by mine provided in the Table 8 below.
  • Free cash flow (before working capital movement, tax and financing costs) is projected to be $90 million, representing $175 per ounce, with approximately $30 million sensitivity per $50 per ounce gold price movement.
  • Exploration costs of $20 million have been allocated towards programs focused on reserve replacement and mine life extensions, with $6 million toward sustaining exploration programs and $14 million toward non-sustaining exploration programs. 

Table 7: 2016 Production and AISC/oz Guidance by mine

 Production Guidance1, ounces   AISC Guidance, $/oz
Agbaou 165,000 - 175,000   Agbaou 650 - 700
Tabakoto 155,000 - 175,000   Tabakoto 920 - 970
Nzema 110,000 - 130,000   Nzema 970 - 1,020
Ity 65,000 - 75,000   Ity 800 - 850
Youga (pre-disposal²) 7,000 - 8,000   Youga (pre-disposal²) 980 - 1,030
Total 502,000 - 563,000   Mine-level AISC/oz 820 - 870
Group Guidance Range 535,000 - 560,000     Corporate G&A 38
            Sustaining exploration 11
          Group All-In Sustaining costs 870 - 920

1Gold production is on a 100% consolidated basis. Actual mine ownership is Agbaou - 85%, Nzema - 90%, Tabakoto - 80%, Youga - 90%, Ity - 55%.   ²Estimate for the pre-sale period ended February 29, 2016.

Table 8: 2016 Free Cash Flow before Working Capital, Tax and Financing Costs
assuming a gold price of 1,150 $/oz 2016

  $ million $/ounce
Revenue (based on production guidance range mid-point) 630 1,150
  AISC costs (based on AISC guidance range mid-point) (492) 895
All-in sustaining margin 138 255
   Non-sustaining capital: (48) 80
Agbaou  secondary crusher: 12
Nzema pit wall push-back: 12
Non-sustaining exploration: 14
Houndé and the Ity CIL projects: 10
Free cash flow (before working capital movement, tax and financing costs) 90 175

Project and Exploration Update

  • The Houndé project construction decision is scheduled for the second quarter of 2016
  • The Ity CIL feasibility study is expected to be completed in the third quarter of 2016
  • A strategic review of our exploration portfolio is underway to establish our long-term exploration strategy and to prioritize targets

Conference call and live webcast

Management will host a conference call and live webcast on Friday, March 4, 2016, at 9:00 am Toronto time (EST), 2.00pm London time (GMT); 3.00pm Paris time (CET), to discuss the Company's financial results. 

The live webcast can be accessed through the following link:
http://edge.media-server.com/m/p/p944mzru

Analysts and interested investors are also invited to participate and ask questions using the dial-in numbers below:
International:                                       +1 212 444 0412
North American toll-free:                     1 877 280 2342
UK toll-free:                                         0800 279 5004
Australian toll-free:                               1 800 027 830

Confirmation code:                               4692288

A replay of the conference call and webcast will be available on Endeavour's website.

Contact Information

Vincent Benoit

EVP - Strategy & Business Development
+33 (0)1 70 38 36 96
vbenoit@endeavourmining.com

Martino De Ciccio

VP - Strategy & Investor Relations
+33 (0)1 70 38 36 95
mdeciccio@endeavourmining.com

Brunswick Group LLP

Carole Cable, Partner
+44 7974 982 458
ccable@brunswickgroup.com

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.

About Endeavour Mining Corporation

Endeavour Mining is a TSX-listed intermediate gold mining company which operates 4 West African mines in Côte d'Ivoire, Mali, and Ghana. In 2016, it expects to produce between 535,000 and 560,000 ounces at an all-in sustaining cost of US$870 to US$920 per ounce, after adjustment of the recent Youga sale. Endeavour Mining is focused on effectively managing its existing assets to maximize cash flow as well as pursuing organic and strategic growth opportunities that benefit from its management and operational expertise.

Endeavour Mining |  Executive Office | Bureau 76, 7 Boulevard des Moulins, Monaco 98000

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. AISC, all-in sustaining costs at the mine level, cash costs, operating EBITDA, all-in sustaining margin, free cash flow, net free cash flow, free cash flow per share, net debt, and adjusted earnings are non-GAAP financial performance measures with no standard meaning under IFRS, further discussed in the section Non-GAAP Measures in the most recently filed Management Discussion and Analysis for the year ended December 31, 2015.


Appendix 1: Production and Cost Details by Mine    
 For the year ended December 31, 2015 Unit Agbaou Nzema Tabakoto Youga Ity Total
Mining Physicals              
Total tonnes mined - Open pit 000t 20,447 8,144 9,333 8,026 368 0
Total ore tonnes - Open pit 000t 2,818 1,310 520 1,335 63 0
Total ore tonnes - Underground 000t 0 0 1,009 0 0 0
Total tonnes milled 000t 2,665 1,783 1,588 1,064 102 0
Gold sold oz 182,219 110,404 151,345 67,927 7,917 519,812
Unit cost analysis              
Mining costs - Open pit $/t mined   2.63 4.73   2.59   3.86   2.38  
Mining costs - Underground $/t ore   -    -    40.02   -    -   
Processing and maintenance $/t milled   6.88   14.28   22.90   20.10   16.26  
Site G&A $/t milled   5.39   7.14   20.21   8.95   11.86  
Cash cost details              
Mining costs - Open pit $000s 48,685 31,125 17,651 31,013 892 129,366
Mining costs -Underground $000s 0 0 40,366 0 0 40,366
Processing and maintenance $000s 18,330 25,454 36,357 21,388 1,653 103,182
Site G&A $000s 14,372 12,727 32,095 9,519 1,205 69,918
Purchased ore at Nzema $000s   29,447       29,447
Inventory adjustments $000s 2,785 594 1,572 (3,793) 602 1,760
Cash costs for ounces sold $000s 84,172 99,347 128,041 58,127 4,352 374,039
Royalties $000s 7,575 7,234 10,438 3,038 535 28,820
Sustaining capital $000s 13,191 10,839 23,048 854 519 48,451
Cash cost per ounce sold $/oz 462 900 846 856 550 720
Mine-level AISC per ounce sold $/oz 576 1,064 1,067 913 683 868

For the year ended December 31, 2014 Unit Agbaou Nzema Tabakoto Youga Ity Total
Mining Physicals              
Total tonnes mined - Open pit 000t 19,560 8,769 7,046 4,993    
Total ore tonnes - Open pit 000t 2,741 1,366 638 1,161    
Total ore tonnes - Underground 000t 0 0 807 0    
Total tonnes milled 000t 2,241 1,587 1,485 991    
Gold sold oz 143,772 114,044 127,357 76,582   461,755
Unit cost analysis              
Mining costs - Open pit $/t mined 2.61 4.56 4.55 4.98    
Mining costs - Underground $/t ore 50.77    
Processing and maintenance $/t milled 7.66 17.90 30.11 24.24    
Site  G&A $/t milled 3.84 7.87 17.62 10.88    
Cash cost details              
Mining costs - Open pit $000s 46,395 34,821 32,035 24,887   138,138
Mining costs -Underground $000s 0 0 40,956 0   40,956
Processing and maintenance $000s 17,175 28,410 44,696 24,022   114,303
Site G&A $000s 8,601 12,491 26,164 10,783   58,039
Purchased ore at Nzema $000s 0 24,409 0 0   24,409
Inventory adjustments $000s 2,999 231 5,376 -2,882   5,725
Cash costs for ounces sold $000s 75,170 100,362 149,227 56,810   381,570
Royalties $000s 6,399 8,014 9,665 4,229   28,307
Sustaining capital $000s 7,650 9,795 11,078 2,057   30,580
Cash cost per ounce sold $/oz 523 880 1,172 742   826
Mine-level AISC per ounce sold $/oz 621 1,036 1,335 824   954



[1] Rebased with realized gold price of $1,157/oz, using mid-point production guidance

View News Release in PDF Format



This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Endeavour Mining Corporation via Globenewswire
HUG#1991774

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