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Endeavour Reports Record Q4-2020 Preliminary Results and 2021 Guidance

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Endeavour Reports Record Q4-2020 Preliminary Results and 2021 Guidance

 

 

 

 

 

HIGHLIGHTS 

  • Record Q4-2020 production of 344koz, a 41% increase over Q3-2020 while AISC decreased by 15% to ~$770/oz
  • Record consolidated FY-2020 production of 908koz, a 39% increase over FY-2019, while AISC increased by 5% to ~$860/oz
  • Eighth consecutive year of achieving annual guidance, reaching the top end of production and low end of AISC guidance, in spite of the global COVID-19 pandemic
  • Net Cash position of ~$70m achieved at year-end, marking a Net Debt reduction of ~$245m during Q4-2020 and ~$600m during FY-2020
  • First dividend announced, payment on February 5, 2021, with shareholder return program expected to be augmented once a Net Cash position of $250m is reached
  • 2021 annual production guidance of 915-1,010koz at AISC of $900-950/oz, which factors in the recently announced Agbaou sale and will be updated following the completion of the Teranga transaction
  • Strong focus in 2021 on free cash flow generation and on building optionality by progressing our organic growth pipeline with PFS on Fetekro and Kalana due in Q1-2021 and targeting DFS for the Sabodala-Massawa plant expansion in Q4-2021 
  • Continued strong focus on exploration with 2021 exploration budget of $55-60m

 

 

Endeavour Mining (TSX:EDV) (OTCQX:EDVMF) is pleased to announce its preliminary financial and operating results for the fourth quarter and full year 2020, with highlights provided in the table below.

 

Table 1: Preliminary Consolidated Highlights

 

in US$ million unless otherwise specified. THREE MONTHS ENDED TWELVE MONTHS ENDED    
December 31, 2020 September 30, 2020 December 31, 2019 December 31, 2020 December 31, 2019 Δ FY-2020 vs. FY-2019  
 
PRODUCTION AND AISC HIGHLIGHTS              
Gold Production, koz 344 244 178 908 651 +39%  
Gold Sold, koz 328 262 172 914 649 +41%  
All-in Sustaining Cost1, $/oz ~770 906 819 ~860 818 +5%  
FINANCIAL POSITION HIGHLIGHT1              
Net Cash (Net Debt) ~70 (175) (528) ~70 (528) n.a.  

 

1This is a non-GAAP measure. All Q4-2020 and FY-2020 numbers are preliminary and reflect Endeavour’s expected results as of the date of this press release.

 

Sebastien de Montessus, President and CEO, commented: “2020 was a transformational year for Endeavour as we consolidated our position in West Africa and this is reflected in the strong operational and financial performance across our portfolio, particularly in the record fourth quarter which saw the full benefits from the integration of the SEMAFO assets and the ramp-up of the high grade Kari Pump deposit at Houndé.

 

In spite of the challenges presented by the global pandemic, we are proud to have achieved our annual production and AISC guidance for the eighth consecutive year. Looking ahead to 2021, our focus will be the integration of the Teranga assets and progressing our organic growth pipeline. 

 

Having reached a Net Cash position by year-end, marking a reduction in net debt by nearly $600 million over the course of 2020, we are pleased to be paying our first dividend in the coming days. As our balance sheet strengthens further, we will be reviewing our capital return program with a view to augmenting shareholder returns. We are also excited to continue working towards obtaining a premium listing on the Premium London Stock Exchange as we seek to broaden our appeal to a wider group of potential investors.”

 

UPCOMING CATALYSTS

 

The key upcoming expected catalysts are summarized in the table below.

 

 

Table 2: Key Upcoming Catalysts

 

TIMING CATALYST  
February 5 Corporate Payment of first dividend
Mid February Corporate Closing of Teranga acquisition
March 1 Corporate Closing of Agbaou sale transaction
Mid March Houndé Maiden reserve estimates for Kari Center and Kari Gap
Late Q1 Fetekro Pre-Feasibility Study
Late Q1 Kalana Pre-Feasibility Study
Late Q2 Corporate Premium LSE Listing

 

Q4-2020 AND FULL YEAR 2020 SUMMARY

 

  • Continued strong safety record for the Group, with a low Lost Time Injury Frequency Rate of 0.12 for FY-2020.
  • As announced on August 19, 2020, Joanna Pearson assumed the role of Executive Vice President and Chief Financial Officer effective January 4, 2021.
  • Q4-2020 consolidated production amounted to a record 344koz, an increase of 100koz or 41% over Q3-2020, as a result of stronger performance across all mine sites, specifically at Houndé (due to ramp-up of higher grade Kari Pump deposit), Ity (higher throughput and grades) and Boungou (ramp-up of mining activities).  All-in Sustaining Costs (“AISC”) decreased by $136/oz or 15% to ~$770/oz as lower costs at Houndé, Agbaou and Boungou more than offset increased costs at Ity, Mana and Karma.
  • FY-2020 consolidated production amounted to a record 908koz, an increase of 258koz or 40% over FY-2019 as the addition of Mana and Boungou in the second half of the year, the ramp-up of Kari Pump at Houndé, and the benefit of a full year’s production from Ity more than offset the expected decline in production at Agbaou. Over the same period, consolidated AISC increased by only 5% or $42/oz due primarily to the higher gold prices, which increased royalties by ∼$40/oz, which was offset by lower aggregate mine-level costs. The increased production at lower costs mines (Houndé and Ity) and the addition of the low cost profile of the Boungou mine more than offset the higher costs at Agbaou, Karma and Mana.
  • The Group’s realized gold price was $1,843/oz and $1,760/oz for Q4-2020 and FY-2020 respectively, inclusive of the Karma stream.

 

 

Table 3: Consolidated Group Production

 

  THREE MONTHS ENDED TWELVE MONTHS ENDED
  December 31, 2020 September 30, 2020 December 31, 2019 December 31, 2020 December 31, 2019
(All amounts in koz, on a 100% basis)
Houndé 101 62 55 277 223
Ity CIL 61 44 60 213 190
Mana 61 60 121
Agbaou 28 25 35 105 138
Karma 28 22 27 98 97
Boungou 64 30 94
Ity Heap Leach 3
GROUP PRODUCTION 344 244 178 908 651

 

 

 

 

Table 4: Consolidated All-In Sustaining Costs1

 

(All amounts in US$/oz) THREE MONTHS ENDED TWELVE MONTHS ENDED  
December 31, 2020 September 30, 2020 December 31, 2019 December 31, 2020 December 31, 2019  
 
Houndé ~640 865 878 ~850 862  
Ity CIL ~860 774 697 ~760 616  
Mana ~815 896 ~980  
Agbaou ~1,070 1,139 846 ~1,030 796  
Karma ~1,135 1,073 755 ~1,010 903  
Boungou ~550 752 ~620  
Ity Heap Leach 1,086  
Corporate  G&A ~25 20 19 ~28 32  
GROUP AISC ~770 906 819 ~860 818  

1This is a non-GAAP measure. All Q4-2020 and FY-2020 numbers are preliminary and reflect our expected results as of the date of this press release.

 

2020 PRO FORMA GUIDANCE ACHIEVED

 

  • Production and AISC guidance was achieved for the eighth consecutive year, in spite of the challenges presented by the global COVID-19 pandemic. The FY-2020 Pro Forma production (inclusive of SEMAFO for the full year) amounted to 1,066koz, achieving the higher end of the guidance range due to the out-performance at Houndé, Boungou and Mana. The FY-2020 Pro Forma AISC amounted to ~$871/oz, achieving the lower end of the Pro Forma guidance range despite the impact of higher royalties.

 

 

Table 5: Preliminary Pro Forma Group Production and AISC1

 

  FY-2020 FULL YEAR GUIDANCE
Gold Production, koz 1,066 995 1,095
All-in Sustaining Cost1, $/oz ~871 865 915

 

1This is a non-GAAP measure. Refer to the non-GAAP measure section of the latest available MD&A. Endeavour believes that operating and financial figures for SEMAFO are representative of the period ended June 30, 2020 as the Transaction closed on July 1, 2020. Figures presented and disclosed relating to SEMAFO operations represent classifications and calculations performed using consistent historical SEMAFO methodologies. Potential differences may include, but not limited to, classification of corporate costs and operating expenses, classification of mining, processing, and site G&A costs, classification of capitalized waste as sustaining and non-sustaining, valuation of stockpiles and gold in circuit. Pro forma information has not been adjusted and is comprised of the simple sum of information provided for each of Endeavour and SEMAFO. All Q4-2020 and FY-2020 numbers are preliminary and reflect Endeavour’s expected results as at the date of this press release.

 

2021 OUTLOOK

 

  • 2021 production is expected to amount to 915-1,010koz at AISC of $900-950/oz, as presented in the tables below. Production is expected to be higher and AISC lower during the second half of the year, due to higher grades anticipated in the second half of the year and capex weighted towards the first half of the year. More details on individual mine guidance have been provided in the above sections.

 

 

Table 6: Production Guidance1

 

(All amounts in koz, on a 100% basis) 2020 PRO FORMA ACTUALS 2021 FULL-YEAR GUIDANCE
Ity 213 230 250
Karma 98 80 90
Houndé 277 240 260
Mana 219 170 190
Boungou 155 180 200
PRODUCTION FROM CONTINUING OPERATIONS 962 900 990
Agbaou 105 15 20
TOTAL PRODUCTION 1,066 915 1,010

1 Pro Forma FY-2020 production for Mana and Boungou

 

 

Table 7: AISC Guidance1

 

(All amounts in US$/oz) 2020 PRO FORMA ACTUALS (PRELIMINARY) 2021 FULL-YEAR GUIDANCE
Ity CIL ~760 800 850
Karma ~1,010 1,220 1,300
Houndé ~850 855 905
Mana ~980 975 1,050
Boungou ~625 690 740
Corporate G&A ~33   30  
Sustaining exploration   5  
AISC FROM CONTINUING OPERATIONS ~840 880 930
Agbaou ~1,030 1,050 1,125
TOTAL AISC 871 900   950

1This is a non-GAAP measure. Refer to the non-GAAP measure section of the most recent  MD&A for Endeavour and refer to the non-IFRS measures note in this press release for SEMAFO. 2Endeavour believes that operating and financial figures for SEMAFO are representative of the period ended June 30, 2020 as the Transaction closed on July 1, 2020. Figures presented and disclosed relating to SEMAFO operations represent classifications and calculations performed using consistent historical SEMAFO methodologies. Potential variances to existing Endeavour classifications and calculation methodologies may result in adjustments affecting results. Potential differences may include, but not limited to, classification of corporate costs and operating expenses, classification of mining, processing, and site G&A costs, classification of capitalized waste as sustaining and non-sustaining, valuation of stockpiles and gold in circuit. Accounting treatments and classifications will be aligned with Endeavour methodologies and policies. Pro forma information has not been adjusted and is comprised of the simple weighted average of information provided for each of Endeavour and SEMAFO.

  • As detailed in the table below, sustaining and non-sustaining capital allocations for 2021 amount to $125 million and $129 million respectively. More details on individual mine capital expenditures have been provided in the above sections.

 

 

Table 8: Mine Capital Expenditure Guidance

 

(All amounts in US$m) SUSTAINING CAPITAL NON-SUSTAINING CAPITAL
Ity 28 27
Karma 11 5
Houndé 39 13
Mana 27 62
Boungou 19 22
MINE CAPITAL EXPENDITURES FROM CONTINUING OPERATIONS 124 129
Agbaou 1 0
TOTAL MINE CAPITAL EXPENDITURES 125 129
  • Growth capital spend is expected to amount to approximately $13 million, mainly for studies and holding costs at Kalana and Fetekro, while corporate non-sustaining capital is expected to amount to approximately $5 million, mainly for IT and integration projects.
  • As detailed in the table below, exploration will continue to be a strong focus in 2021 with a company-wide exploration budget of $55-60 million, with approximately 25% expected to be classified as expensed, 10% as sustaining capital and 65% as non-sustaining capital.

 

 

Table 9: Exploration Guidance

 

  2021 GUIDANCE 2021 ALLOCATION
Other greenfield 11 19%
Ity mine 9 16%
Mana mine 8 14%
Hounde mine 7 13%
Fetekro project 7 13%
Bantou project 7 13%
Boungou mine 7 12%
Karma mine 0 —%
Agbaou  mine 0 —%
Total $55-60 million 100%

 

FINANCIAL POSITION & LIQUIDITY

 

  • A Net Cash position of ~$70 million was achieved at year-end, marking a Net Debt reduction of ~$245 million during Q4-2020 and ~$600 million during FY-2020, reflecting the completion of the Company’s construction phase in 2019 and a strong operating performance in 2020.
  • At year-end, Endeavour’s available sources of financing and liquidity remained strong at circa $838 million, which included circa $718 million from its current cash position and circa $120 million in undrawn funds from its revolving credit facility. Endeavour anticipates to utilize its lower cost financing to retire Teranga’s higher cost debt instruments following the Transaction close.

 

 

Table 10: Net Debt Position

 

In US$ million unless otherwise specified. December 31, 2020
(PRELIMINARY)
September 30, 2020 December 31, 2019
Cash and cash equivalents ~718 523 190
Equipment financing ~(8) (58) (78)
Convertible senior bond ~(330) (330) (330)
Drawn portion of revolving credit facility ~(310) (310) (310)
NET CASH / (NET DEBT) POSITION ~70 (175) (528)

 

 

SHAREHOLDER RETURNS PROGRAM

 

  • On November 12, 2020, Endeavour announced its first dividend of $60 million for the 2020 fiscal year, which equates to $0.37 per ordinary share, payable to shareholders of record at the close of business on January 22, 2021.
  • The dividend will be paid to holders of ordinary shares in Canadian Dollars based on the prevailing USD:CAD exchange rate at the time of payment. This dividend does not qualify as an ‘eligible dividend’ for Canadian income tax purposes. The tax consequences of the dividend will be dependent on the particular circumstances of a shareholder. Shareholders are encouraged to consult with their own tax advisors in this regard.
  • Endeavour’s first dividend sets the path to a sustainable dividend policy, based on its capital allocation framework and its strategy of maximizing long term shareholder value. Following the payment of this first dividend, the Board of Directors expects to declare future dividends on a semi-annual basis. The Company will be well positioned to re-assess its capital allocation priorities, which may include augmenting its shareholder return program via a higher dividend and/or a buyback once it has reached a targeted net cash position of $250 million.

 

 

OPERATIONAL DETAILS BY MINE

 

HOUNDÉ MINE

 

Q4 2020 vs Q3 2020 Insights

  • Production increased significantly due to the higher processed grades and recovery rates as well as the increased throughput rate.
    • Tonnes of ore mined significantly increased following the end of the rainy season with ore mainly sourced from the high grade Kari Pump deposit, supplemented with ore from the Vindaloo Main and Vindaloo Centre pits as well as the Bouéré pit.
    • The strip ratio decreased due to the planned mining sequence during the quarter in Vindaloo Main and Centre and the lower strip ratio starter pit at Kari Pump.
    • Tonnes milled increased slightly due to the oxide ore from Kari Pump offsetting the impact of greater volumes of fresh ore from Vindaloo.
    • Average processed grades increased due to the benefit of higher grade oxide ore from Kari Pump which was supplemented by fresh ore from Vindaloo Main and Vindaloo Centre.
    • Recovery rates increased due to the higher throughput of oxide ore from Kari Pump.
  • AISC decreased due to a reduction in the strip ratio, an increase in the processed grade, which offset higher unit costs and sustaining capital.

 

FY-2020 vs  FY-2019 Insights

  • Production increased due to 20% higher grades and slightly higher processed tonnes while recovery rates remaining flat. AISC decreased following an increase in gold sold and lower G&A unit costs, which more than offset the higher royalties, mining and processing unit costs and increased sustaining capital spend.

 

2020 Performance vs Guidance

  • Production totaled 277koz, beating the upper end of the guided 230-250koz range due to better than expected grade, which was the result of the quick ramp up of mining at Kari Pump.
  • The AISC amounted to circa $850/oz, well below the guided $865—$895/oz, as the benefit of higher production offset higher royalty costs driven by a higher gold price.

 

 

Table 11: Houndé Quarterly Performance Indicators

 

For The Quarter Ended Q4-2020 Q3-2020 Q4-2019
Tonnes ore mined, kt 2,120 1,231 622
Total tonnes mined, kt 10,741 9,933 9,298
Strip ratio (incl. waste cap) 4.07 7.07 13.94
Tonnes milled, kt 1,117 1,010 1,052
Grade, g/t 3.06 2.06 1.78
Recovery rate, % 94 92 92
PRODUCTION, KOZ 101 62 55
Cash cost/oz (preliminary) ~445 600 719
AISC/OZ (preliminary) ~640 865 878

 

Table 12: Houndé Yearly Performance Indicator

 

For The Year FY-2020 FY-2019
Tonnes ore mined, kt 5,324 2,969
Total tonnes mined, kt 43,495 38,194
Strip ratio (incl. waste cap) 7.17 11.87
Tonnes milled, kt 4,228 4,144
Grade, g/t 2.21 1.83
Recovery rate, % 93 93
PRODUCTION, KOZ 277 223
Cash cost/oz (preliminary) ~580 666
AISC/OZ (preliminary) ~850 862

 

2021 Outlook

  • Houndé is expected to produce between 240-260koz in 2021 at AISC of $855-905/oz.
  • In line with Endeavour’s strategic objective of maintaining the Houndé production profile of 250koz/yr over at least 10 years, as outlined in the mine plan published in late 2020. Ore from the higher grade Kari Pump pit will be blended with ore from predominantly Bouere and Vindaloo Centre in the first half of the year until mining in these pits is completed.  During this period, mining at Vindaloo Main will focus on waste stripping, whilst waste stripping will also commence at Kari West. This will then switch over to blending with ore from Vindaloo Main and Kari West in the second half of the year. As a result, process grades are expected to be higher in the latter portion of the year once stripping is complete.
  • Plant throughput and the gold recovery rate are expected to remain similar to the prior year as greater volumes of oxide ore from Kari Pump are expected to be blended with more fresh ore from other pits.
  • Sustaining capital expenditures are expected to remain fairly flat from $37 million in 2020 to $39 million in 2021, mainly related to waste extraction, fleet re-builds, and borehole drilling on the Kari area.
  • Following the commissioning of the Kari Pump deposit in 2020, the non-sustaining capital expenditures are expected to decrease from $19 million in 2020 to approximately $13 million in 2021, which are mainly related to the Kari West compensation, resettlement and associated mine infrastructure.

 

ITY MINE

 

Q4 2020 vs Q3 2020 Insights

  • Production significantly increased due to the higher processed grades and throughput rate, which was offset by the lower plant recovery rate.
    • Tonnes of ore mined increased due to the opening up of the Bakatouo Pit stage 2 following the waste stripping activities conducted in prior periods. Ore was mainly mined from the Daapleu and Bakatouo pits and the old heap leach pads.
    • Tonnes milled increased due to the supplemental processing of oxide ore through the surge bin despite the higher proportion of high grade fresh sulfide ore from the Daapleu pit.
    • Processed grades increased as guided due to the benefit of the higher grade sulfide ore from the Daapleu pit, which was supplemented with ore from the Bakatouo pit and the heap leach pads.
    • The gold recovery rate decreased as expected due to the lower recovery rates associated with the higher grade fresh sulfide ore from the Daapleu pit.
  • Despite the increase in production, AISC increased, primarily due to mining and processing an increased proportion of fresh material from Daapleu, resulting in higher mining and processing costs together with the guided increase in sustaining capital.

 

FY-2020 vs  FY-2019 Insights

  • Production increased as the Ity CIL plant operated for the full twelve month period ended December 31, 2020 compared to only three quarters in 2019 with commercial production declared on April 8, 2019. AISC increased due to lower processed grades and recovery rates, increased sustaining capital related to the component change-out associated with heavy mining equipment and plant upgrades, and the higher royalties associated with the higher gold price.

 

2020 Performance vs Guidance

  • FY-2020 production totaled 213koz at AISC of circa $760/oz.
  • This performance is in line with the revised outlook provided in Q3-2020, which stated that production was expected below the lower end of the 235-255koz guided range while AISC was expected to finish above the AISC guidance of $630-675/oz. This discrepancy is a result of the decision in Q2-2020 to prioritize operational flexibility ahead of the wet season through cut-backs in the higher grade Ity and Bakatouo deposits in order to further improve operational flexibility.  The AISC includes higher than budgeted royalty costs and greater sustaining capital as previously announced.

 

 

Table 13: Ity CIL Quarterly Performance Indicators

 

For The Quarter Ended Q4-2020 Q3-2020 Q4-2019
Tonnes ore mined, kt 2,660 2,352 1,571
Total tonnes mined, kt 6,546 6,322 3,606
Strip ratio (incl. waste cap) 1.46 1.69 1.30
Tonnes milled, kt 1,456 1,307 1,318
Grade, g/t 1.72 1.34 1.69
Recovery rate, % 76 81 80
PRODUCTION, KOZ 61 44 60
Cash cost/oz (preliminary) ~690 616 637
AISC/OZ (preliminary) ~860 774 697

 

Table 14: Ity CIL Yearly Performance Indicators

 

For The Year FY-2020 FY-2019
Tonnes ore mined, kt 8,571 5,733
Total tonnes mined, kt 23,469 14,053
Strip ratio (incl. waste cap) 1.74 1.45
Tonnes milled, kt 5,353 3,693
Grade, g/t 1.57 1.88
Recovery rate, % 79 86
PRODUCTION, KOZ 213 190
Cash cost/oz (preliminary) ~625 557
AISC/OZ (preliminary) ~760 616

 

2021 Outlook

  • Ity is expected to produce between 230-250koz in 2021 at AISC of $800-850/oz.
  • Around 70% of the plant feed is expected to be sourced from pits, slightly higher than 2020, with the remainder coming from historic dumps or stockpiles. The main pit sources are Daapleu and Bakatouo, supplemented by ore from the Ity, Walter and Colline Sud pits following waste stripping activities. Mining is expected to commence at the Le Plaque deposit during the fourth quarter.
  • Total tonnes processed and recovery are expected to remain similar to the prior year. Recovery rates are expected to steadily increase throughout the year as some Daapleu fresh ore is displaced with greater quantities of oxide ore from the Ity and Le Plaque pits. Higher process grades are expected in the latter part of the year, following the completion of stripping activities at the Ity pit.
  • Sustaining capital expenditures are expected to increase from $9 million in 2020 to approximately $28 million in 2021, mainly related to the Ity and Bakatouo pit cut backs.
  • Non-sustaining capital is expected to decrease from $37 million in 2020 to approximately $27 million in 2021, mainly related to operating enhancements to the processing plant, TSF raise, and infrastructure projects (including the Le Plaque haul road and Cavally river diversion).

 

BOUNGOU MINE

 

Q4 2020 vs Q3 2020 Insights

  • Production increased due to a significant increase in processed grade following the restart of mining operations as well as an increase in recovery and throughput.
    • Total tonnes mined increased following the restart and ramp up of mining activities by the newly appointed contractor. Ore was sourced from the high grade West pit.
    • Tonnes milled increased due to a number of debottlenecking enhancements between the SAG mill, pebble crusher and vertical tower mill and focus on blast fragmentation following the restart of mining.
    • Processed grade increased as a result of access to higher grade ore mined from the West Pit.
    • Gold recovery rate slightly increased to 96%.

  • AISC decreased to circa $550/oz due to the higher grade and recovery associated with the ore sourced from the West pit, and the doubling of volumes sold, which offset the increased G&A unit costs and higher sustaining capital and royalties.

 

2020 Performance vs Guidance

  • Consolidated 2020 production (which represents the period commencing on July 1, 2020) amounted to 94koz at AISC of  circa $620/oz.
  • FY-2020 Pro Forma production totaled 155koz, beating the upper end of the guided 130-150koz as a result of the better than expected performance in Q4-2020 due to the faster than scheduled restart and ramp-up of mining activities.
  • FY-2020 Pro Forma AISC amounted to circa $625/oz, below the lower end of the guided $680-725/oz range as a result of the strong production described above.

 

 

Table 15: Boungou Quarterly Performance Indicators

 

For The Quarter Ended Q4-2020 Q3-2020
Tonnes ore mined, kt 335 124
Total tonnes mined, kt 2,240 294
Strip ratio (incl. waste cap) 5.69 1.38
Tonnes milled, kt 333 308
Grade, g/t 6.92 3.15
Recovery rate, % 96 95
PRODUCTION, KOZ 64 30
Cash cost/oz (preliminary) ~410 622
AISC/OZ (preliminary) ~550 752

 

Table 16: Boungou Pro Forma Yearly Performance Indicators

 

For The Year FY-2020
Tonnes ore mined, kt 459
Total tonnes mined, kt 2,534
Strip ratio (incl. waste cap) 4.53
Tonnes milled, kt 1,111
Grade, g/t 4.79
Recovery rate, % 95
PRODUCTION, KOZ 155
Cash cost/oz (preliminary) ~495
AISC/OZ (preliminary) ~625

 

2021 Outlook

  • Boungou is expected to produce between 180 – 200koz in 2021 at AISC of $690-740/oz.
  • Mining activity is expected to focus on the West pit with the strip ratio increasing significantly to around the LOM average for the deposit, as production ramps up following the commissioning of two large excavators and additional production drills early in the year resulting in a higher strip ratio during the first half of the year.
  • Mill throughput is expected to be similar to the 2020 run-rate while recovery rates are expected to be slight lower; both are expected to be relatively stable throughout the year. The process grade is expected to vary over the course of the year in line with the waste stripping sequence.
  • Sustaining capital expenditure is expected to increase from $3 million in 2020 to approximately $19 million in 2021 due to increased mining activities.
  • Non-sustaining capital expenditure is expected to increase from $3 million in 2020 to approximately $22 million in 2021, which relates mainly to waste stripping and infrastructure upgrades.

 

MANA MINE

 

Q4 2020 vs Q3 2020 Insights

  • Production slightly increased due to increased plant throughput, which was offset by marginal decreases in plant recovery rates and processed grade.
    • Total open pit tonnes mined increased as mining activities at the Wona South stage 2 & 3 focused on waste stripping in order to provide access to ore in 2021. Open pit ore was mainly sourced from the Wona North stage 3 pit.
    • The underground operations continued to deliver a strong performance with a higher proportion of ore mined from stopes.
    • Tonnes milled increased due to increased availability following planned relines in Q3.
    • The average processed grade decreased slightly following the completion of the Siou Pit mining with lower average open pit grades mined from Wona.
    • Recovery rates decreased due to lower recovery rates associated with ore from the Wona North stage 3 pit.
  • The AISC decreased due to lower open pit mining unit costs and lower sustaining capital spend which were partially offset by higher processing, G&A and underground mining unit costs.

 

2020 Performance vs Guidance

  • Consolidated 2020 production (which represents the period commencing on July 1, 2020) amounted to 121koz at AISC of circa $815/oz.
  • FY-2020 Pro Forma production totaled 219koz, beating the upper end of the guided 185-205koz, due to the strong performance from the underground operation.
  • FY-2020 Pro Forma AISC amounted to circa $980/oz, well below the guided $1,050-1,120/oz range, despite higher royalty costs, as a result of a higher proportion of production from the underground operation and lower than guided sustaining capex.

 

 

Table 17: Mana Quarterly Performance Indicators

 

For The Quarter Ended Q4-2020 Q3-2020
OP tonnes ore mined, kt 435 465
OP total tonnes mined, kt 9,227 6,416
OP strip ratio (incl. waste cap) 20.21 12.80
UG tonnes ore mined, kt 215 197
Tonnes milled, kt 629 593
Grade, g/t 3.33 3.43
Recovery rate, % 90 95
PRODUCTION, KOZ 61 60
Cash cost/oz (preliminary) ~630 711
AISC/OZ (preliminary) ~815 896

 

Table 18: Mana Pro Forma  Yearly Performance Indicators

 

For The Year FY-2020
OP tonnes ore mined, kt 1,502
OP total tonnes mined, kt 24,502
OP strip ratio (incl. waste cap) 15.32
UG tonnes ore mined, kt 714
Tonnes milled, kt 2,433
Grade, g/t 3.02
Recovery rate, % 93
PRODUCTION, KOZ 219
Cash cost/oz (preliminary) ~705
AISC/OZ (preliminary) ~980

2021 Outlook

  • Mana is expected to produce between 170-190koz in 2021 at AISC of $975-1,050/oz.
  • Open pit mining activity is expected to focus on the waste development of the Wona pit following the completion of mining at Siou pit in 2020, resulting in a higher strip ratio compared to the prior year. Underground ore extraction is expected to remain fairly constant throughout the year while grades are expected to steadily increase.
  • Ore tonnes processed and recovery rates are expected to remain fairly constant throughout the year, albeit at slightly lower levels than the prior year due to the ore blend. The average processed grade is also expected to be lower than the previous year, due to lower open pit grades, with grades expected to be higher in Q4-2021 due to higher underground grades.
  • Sustaining capital expenditure is expected to decrease from $36 million in 2020 to approximately $27 million in 2021, mainly related to underground development and equipment re-builds.
  • Non-sustaining capital expenditure is expected to increase from $29 million in 2020 to approximately $62 million in 2021, related mainly to open pit waste development at Wona, TSF wall raise and other infrastructure projects.

 

AGBAOU MINE

 

Q4 2020 vs Q3 2020 Insights

  • Production increased due to higher throughput rate and higher processed grade despite a slight decrease in recovery rates.
    • Tonnes of ore mined decreased as mining focused on the deeper elevation of the North Pit and South Pit with greater volumes of fresh material mined.
    • Tonnes milled increased due to increased mill throughput rate following the end of the rainy season.
    • Processed grades increased as a result of higher grade ore from North Pit and West Pit which were partially offset by lower grade stockpiles used to supplement the plant feed.
    • Recovery rates decreased slightly as a result of the higher proportion of fresh ore.
  • The AISC decreased due to the lower sustaining capital and higher volume of gold sales which more than offset higher mining, processing and G&A unit costs.

 

FY-2020 vs  FY-2019 Insights

  • As guided, production decreased due to lower grades and a slightly lower gold recovery rate.
  • AISC increased as a result of mining and processing an increased proportion of fresh material (which resulted in higher unit costs), higher royalties and lower ounces sold, which were partially offset by lower sustaining capital spend.

 

2020 Performance vs Guidance

  • Production totaled 105koz at AISC of circa $1,030/oz.
  • Production finished below the 2020 production guidance of 115-125koz due to lower than expected higher grade material mined and processed in Q4-2020 due to lower excavator availabilities.
  • AISC finished above the guidance range of $940—$990/oz due to greater volumes of fresh ore mined and processed in Q4-2020 as well as higher royalties associated with the increased realized gold price.

 

 

Table 19: Agbaou Quarterly Performance Indicators

 

For The Quarter Ended Q4-2020 Q3-2020 Q4-2019
Tonnes ore mined, kt 433 527 580
Total tonnes mined, kt 4,383 6,095 6,341
Strip ratio (incl. waste cap) 9.13 10.56 9.94
Tonnes milled, kt 691 641 662
Grade, g/t 1.37 1.29 1.55
Recovery rate, % 93 94 96
PRODUCTION, KOZ 28 25 35
Cash cost/oz (preliminary) ~900 879 699
AISC/OZ (preliminary) ~1,070 1,139 846

Table 20: Agbaou Yearly Performance Indicators

 

For The Year FY-2020 FY-2019
Tonnes ore mined, kt 2,376 2,183
Total tonnes mined, kt 22,159 25,349
Strip ratio (incl. waste cap) 8.33 10.60
Tonnes milled, kt 2,739 2,699
Grade, g/t 1.28 1.62
Recovery rate, % 94 95
PRODUCTION, KOZ 105 138
Cash cost/oz (preliminary) ~810 622
AISC/OZ (preliminary) ~1,030 796

2021 Outlook

  • As announced on January 22, 2021, Endeavour entered into an agreement to sell its 85% interest in the non-core Agbaou mine in Côte d’Ivoire to Allied Gold Corp for a consideration of up to $80 million with further upside through its equity exposure and a Net Smelter Return royalty.
  • The transaction is expected to close on March 1, 2021. During January-February, Agbaou is expected to produce between 15-20koz at AISC of $1,050-1,125/oz.

 

KARMA MINE

 

Q4 2020 vs Q3 2020 Insights

  • Production increased as a result of increased stacking following the end of the rainy season, with stacked grades and recovery rates remaining flat.
    • Total tonnes mined increased with the onset of the dry season. Ore tonnes mined increased following the  stripping campaign in Q3-2020, which provided access to higher grades at both the Kao North and GG1 pits.
    • Ore tonnes stacked increased slightly following the end of the rainy season.
    • The stacked grade remained flat as higher grade ore from the Kao North pit was offset by a higher proportion of ore stacked from the lower grade GG1 pit and supplemented by  low grade stockpiles. .
    • Gold recovery rate remained flat.
  • AISC increased due to higher royalties, mining unit costs and inventory adjustments which were partially offset by the increased volume of sales, and lower processing and G&A unit costs.

 

FY-2020 vs  FY-2019 Insights

  • Production remained flat as higher stacked tonnage, associated with the upgrades to the stacking system, was offset by lower grades and gold recovery rate.
  • AISC decreased as a result of lower unit processing and G&A costs, a lower strip ratio which were slightly offset by higher sustaining capital and royalties.

 

2020 Performance vs Guidance

  • FY-2020 production totaled 98koz at AISC of circa $1,010/oz.
  • This performance is in line with the revised outlook provided in Q3-2020, which stated that production was expected to finish slightly below the lower end of the 100-110koz guided range while AISC were expected to achieve the mid-range of the FY-2020 guidance of $980-1,050/oz, despite higher royalty costs.

 

 

Table 21: Karma Quarterly Performance Indicators

 

For The Quarter Ended Q4-2020 Q3-2020 Q4-2019
Tonnes ore mined, kt 1,253 1,011 907
Total tonnes mined, kt 5,012 4,392 4,648
Strip ratio (incl. waste cap) 3.00 3.35 4.13
Tonnes stacked, kt 1,327 1,192 1,134
Grade, g/t 0.78 0.76 0.96
Recovery rate, % 72 72 84
PRODUCTION, KOZ 28 22 27
Cash cost/oz (preliminary) ~960 861 657
AISC/OZ (preliminary) ~1,135 1,073 755

 

Table 22: Karma  Yearly Performance Indicators

 

For The Year FY-2020 FY-2019
Tonnes ore mined, kt 4,781 3,745
Total tonnes mined, kt 19,158 19,435
Strip ratio (incl. waste cap) 3.01 4.19
Tonnes milled, kt 4,871 4,196
Grade, g/t 0.84 0.91
Recovery rate, % 77 82
PRODUCTION, KOZ 98 97
Cash cost/oz (preliminary) ~820 783
AISC/OZ (preliminary) ~1,010 903

2021 Outlook

  • Karma is expected to produce between 80-90koz in 2021 at AISC of $1,220-1,300/oz.
  • Mining activity is expected to occur at the Kao North and GG1 pits throughout the year. The overall strip ratio is expected to increase slightly over the prior year.
  • Ore tonnes stacked and gold recovery rate are expected to decrease slightly over the previous year due to the variability of the ore from GG1 pit, whilst grades are expected to remain constant year on year. Production is expected to be higher in the second half of the year due to higher grades and gold recovery rate.
  • Sustaining capital expenditure is expected to increase from $5 million in 2020 to approximately $11 million in 2021, comprised almost entirely of waste extraction.
  • Non-sustaining capital expenditure is expected decrease from $10 million in 2020 to approximately $5 million in 2021, mainly for the construction of a heap leach pad.

 

QUALIFIED PERSONS

 

Clinton Bennett, Endeavour’s VP Metallurgy and Process Improvement – a Fellow of the Australasian Institute of Mining and Metallurgy, is a “Qualified Person” as defined by National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) and has reviewed and approved the technical information in this news release.

 

 

ABOUT ENDEAVOUR MINING CORPORATION

 

Endeavour Mining is a multi-asset gold producer focused on West Africa, with two mines (Ity and Agbaou) in Côte d’Ivoire, four mines (Houndé, Mana, Karma and Boungou) in Burkina Faso, four potential development projects (Fetekro, Kalana, Bantou and Nabanga) and a strong portfolio of exploration assets on the highly prospective Birimian Greenstone Belt across Burkina Faso, Côte d’Ivoire, Mali and Guinea. 

 

As a leading gold producer, Endeavour Mining is committed to principles of responsible mining and delivering sustainable value to its employees, stakeholders and the communities where it operates. 

 

Posted January 25, 2021

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