Endeavour Financial Corporation

Published : May 15th, 2008

Reinhard Updates Endeavour Mining Capital

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Endeavour Mining Capital (EDV-TSX)


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Weekly chart, Semi-log Scale, High C$11.24, Low $2.93, Last Trade $6.85

We view Endeavour Mining Capital as a core asset for diversified exposure to the ongoing secular bull market in commodities. Most retail investors don't have the time, desire or expertise to select and follow a portfolio of small-cap resource stocks. Endeavour finances many companies at their initial formative and pre-growth stages, and has a compelling record of shepherding them to ultimate success � often by way of takeover or merger.

Endeavour�s publicly traded shares offer investors de facto access to these ground-floor junior mining companies without their need to be accredited investors, or making the connections necessary to access such timely opportunities. The corporation's board maintains a monthly dividend policy.

Last summer Endeavour Mining Corporation acquired 100% of sister company Endeavour Financial Corporation, a privately-held investment banking firm. The two businesses had already operated successfully in parallel for many years, but this merger simplifies the Endeavour brand, and provides the resource sector with one-stop integrated merchant banking services. It also ensures that the entire Endeavour team is committed to maximizing value for shareholders through their ownership of approximately 23% of the combined company (at least 31% and as high as 35% fully diluted).

Company Review
We have owned our share position in Endeavour Mining since May 2004, at an average price of $2.40 per share. Our initial report on Endeavour was issued May 8, 2004 just as the price of gold re-tested the US$378 technical support area. Endeavour had suffered a dramatic sell-off as many junior-sector resource stocks experienced lower liquidity, sporadic panic selling and apparent capitulation of latecomer investors suffering rapid and severe losses � not dissimilar to the current environment except that commodity prices are now significantly higher.

Despite the volatile nature of the sector, Endeavour has generated a 58-per-cent annualized return since its inception in 2002 through to the merger date. This largely reflects its early call on the resource secular bull market and pinpoint accuracy in the timing of its exposure to multiple specific-resource-focused vehicles.

The Endeavour team has been associated with some big success stories over the years, including Bema Gold, Bolivar Gold, Northern Orion, Oriel Resources, Peak Gold, Silver Wheaton, UrAsia Energy, Wheaton River Minerals, and of course Endeavour Mining itself. Endeavour Mining's reliance on Endeavour Financial's advisory services steadily increased as the resource market's growth accelerated.

Stronger Together

Last summer�s acquisition of Endeavour Financial integrates the merchant banking capital investment business with Endeavour Financial�s advisory services business. By fully integrating their capabilities within one publicly-listed entity, the new Endeavour has a strengthened operating platform for continued growth with a talented management team focused on creating value for shareholders, themselves included.

We originally invested in Endeavour Mining because it provides exposure to participate alongside the industry�s most successful and well-connected institutional investors. That advantage is now leveraged post-merger into an integrated operation with excellent potential to generate long-term shareholder value.

Endeavour Financial generates its revenue primarily from monthly retainers and transaction-oriented success fees. The acquisition provides further lift and greater predictability for Endeavour Mining�s revenues, which are largely influenced by their mark-to-market portfolio revaluations and realized capital gains. This new revenue also enjoys decent margins, since expenses are primarily salaries and performance-related bonuses.

Endeavour has an aggressive business strategy which, combined with the nature of the mining and energy equity market, does result in short-term earnings volatility. Because of the diversified nature of its portfolio of merchant banking investments, which includes a mix of resource commodities and a combination of debt and equity instruments, it provides a useful proxy for the junior resource market.

Proven leadership, market savvy
Endeavour benefits from having two Advisors � Frank Holmes� US Global Investors and Frank Giustra�s Fiore Capital � to identify, develop and implement investment opportunities. Endeavour�s Chairman, Frank Holmes, heads up the top performing US Global Investors (GROW- Q), website:

Former Endeavour chairman Frank Giustra continues to apply his golden touch to Endeavour�s deal-making through his Fiore Capital advisory services. Last June Mr. Giustra announced he�s giving away $100 million and one-half of his future mining earnings to the Clinton Giustra Sustainable Growth Initiative, earmarked to fight third world poverty through sustainable development. This venture bodes well for both the mining industry and the countries in which they�ll do business, and it should also benefit Endeavour�s shareholders. While Frank Giustra and his team have never needed any help putting together some of the industry�s biggest and most successful deals, it doesn�t hurt that countries targeted for resource acquisitions and concessions realize such deals come complete with potentially millions of dollars in development aid.

Endeavour�s investment strategy is focused on high quality assets with strong management teams, and with clear potential for high returns through their structured investments. When Endeavour finances mining companies to fund their project development, strategic initiatives and growth, we benefit from a management team that has done their homework for us and structured its investment exposure appropriately. This generally means a compelling and timely entry price (downside protection), and better than average upside potential.

Endeavour offers us the built-in advantages of diversification, cream-of-the-crop selection, sophisticated professional management, exceptional deal-flow and access to global institutional and industry contacts. Given this premise, we only need concern ourselves with the timeliness of such specific exposure to the resource and precious metals sectors to determine the appropriateness of owning Endeavour shares. It would be hard for investors to consistently match Endeavour�s ability to select winners and realize on their potential.

Latest Financial Results
Endeavour announced net income of $2.1 million for Q3 to March 31, and $3.4 million for the 9 months then ended, compared to $24.5 million and $41.0 million respectively in 2007. This performance requires some comment, as it was apparently a tough three quarters. In our view the numbers are actually pretty good considering the sub-debt freeze up and resulting crisis in confidence for both the resource sector and the junior markets, so let�s drill down to what the numbers say.

Endeavour�s quarterly results are largely influenced by the mark-to-market change in the value of its investment portfolio, a virtual stroke of the accounting pen. While Endeavour recorded $41.4 million investment value depreciation for the last 9 months, they had booked a $41.2 million appreciation over the same period in 2007.

When we look through such mark-to-market peaks and valleys what becomes clear is that Endeavour�s financial performance has been stellar over the long term but has high volatility, similar to the venture capital markets it has exposure to. However, since the merger Endeavour�s business model has changed. It now benefits from a steady stream of financial advisory fees, over $28 million in the 9 months to March 31. With such relatively independent revenue (from the inventory of its investments), these peaks and valleys in net earnings may be somewhat tamed going forward. And with the monthly dividend payout to shareholders, at least some of the share price volatility may also smooth out.

The bottom line is that Endeavour continues to offer significant leverage to the resource sector�s bull market, now barely in year 8 of the historically 18 to 23 year cycle. Endeavour�s overhead is well-covered and relatively fixed, and its investments have a record of significant appreciation over time, notwithstanding that market sentiment can and will affect their day-to-day market price until disposed of. Endeavour has only 32 million shares outstanding and management has a large stake in the company, so everyone�s on the same page with respect to their investment.

Current Price: C$6.85
52 Week Range: C$6.00 - C$10.60
Shares O/S: 30.95 million basic
Shares O/S: 37.55 million fully diluted (excluding out-of-the-money options representing 2.76 million shares)
Market Cap: C$212 million
Cash on hand: C$49.1 million (Mar 31, 2008)

By integrating these two entities, Endeavour becomes better structured to efficiently provide continuing and increasing investment opportunities, and is better able to attract, retain and motivate key members of their team through public-market equity ownership. The Endeavour team includes mining legends Frank Giustra and Neil Woodyer. Combined with Frank Holmes as the visionary front man of Endeavour Mining, the company will go forward as a powerhouse in the mining finance sector � an excellent proxy for investment exposure to the continuing secular bull market in commodities.

We believe that this merger will result in a gradual positive revaluation of Endeavour�s share price. The Endeavour team owns a significant percentage of the combined company and operations will be streamlined, with fees to Endeavour Financial eliminated. Endeavour Mining has always traded at a significant discount to its Net Asset Value (NAV) because it is viewed as a holding company. With revenues and fees from all its different business activities going to the one public entity, it should eventually command a higher multiple from the market.

Comparable companies on the TSX like Quest Capital (QC-TSX) or Pinetree Capital (PNP-TSX) trade at 1.5x book and 2x book respectively. If Endeavour trades like its peers at 1.5 - 2 times book, the stock would be trading significantly higher. In the U.S. merchant banking companies have recently traded up to 12 times book.

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Endeavour Mining Capital
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Endeavour Financial Corporation

ISIN : KYG3040R1092
CUSIP : G3040R109
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Endeavour Financial is a producing gold and cobalt company based in Cayman islands.

Its main exploration property is FYRE LAKE (KONA) in Canada.

Endeavour Financial is listed in Canada and in United States of America. Its market capitalisation is CA$ 2.4 billions as of today (US$ 1.9 billions, € 1.6 billions).

Its stock quote reached its lowest recent point on January 15, 1999 at CA$ 10.02, and its highest recent level on August 10, 2007 at CA$ 97.43.

Endeavour Financial has 96 450 000 shares outstanding.

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Corporate Presentations of Endeavour Financial Corporation
9/25/2008Winston Updates Endeavour Financial
5/15/2008 Reinhard Updates Endeavour Mining Capital
1/17/2008Winston says investing in Endeavour Mining Capital (EDV-TSXV...
In the News and Medias of Endeavour Financial Corporation
10/17/2009Endeavour Financial recognizes upside in Etruscan’s assets
Annual reports of Endeavour Financial Corporation
Annual Report 2007
Financings of Endeavour Financial Corporation
Nominations of Endeavour Financial Corporation
3/26/2015Mining Appointment of New CFO
9/17/2013Mining strengthens Board of Directors
6/5/2013Mining Reports Election of Directors
4/2/2013Mining Appoints Ian Henderson to Board of Directors
2/25/2008Announces Appointment of Director, Marketing & Business Deve...
Financials of Endeavour Financial Corporation
11/4/2009To release First quarter results on November 10, 2009
4/29/2008Release Third Quarter Results on May 5, 2008
2/6/2008Release Second Quarter Results on February 12, 2008
Project news of Endeavour Financial Corporation
3/24/2016Endeavour Mining Corporation Announces Special Meeting of Sh...
7/8/2015Mining reports gold production of 255,000 ozs and $20m debt ...
2/19/2015Endeavour Mining increases mineral reserves to 4.5 million o...
8/11/2014Mining reports record gold production in Q2 2014 at an AISC ...
7/15/2014Mining reports six-month gold production of 228,000 ozs
5/12/2014Mining Reports Record Gold Production in Q1 2014 at an AISC ...
1/27/2014Mining declares commercial production at Agbaou and signs co...
9/20/2012Mining Announces Full and Final Settlement with Gold Reserve
4/20/2006reports additional high grade intercepts from Guanacevi proj...
Corporate news of Endeavour Financial Corporation
7/26/2016Endeavour Mining to Announce its Q2 Results on Thursday July...
7/12/2016Endeavour Mining Announces C$125 million Bought Deal Financi...
7/12/2016Endeavour Mining Announces Board Change
7/12/2016Endeavour Mining Reports Fatality at its Tabakoto Mine in Ma...
6/30/2016Endeavour Holds Groundbreaking Ceremony to Mark the Start of...
6/13/2016Endeavour Mining Announces C$125 million Bought Deal Financi...
5/31/2016Endeavour Mining Announces Notice of Annual General Meeting
5/2/2016Endeavour Reports First Quarter 2016 Results; AISC Continue ...
4/26/2016Endeavour Completes Acquisition of True Gold
4/21/2016Endeavour and True Gold Shareholders Approve Acquisition Tra...
1/28/2016Endeavour Silver to cut output in Mexico on low prices
1/15/2016Endeavour Mining Exceeds 2015 Guidance With 518,000 Ounces
1/11/2016Endeavour Mining Confirms ASX Delisting And Corporate Update
1/1/2016Mali produces 50 T of gold in 2015, expects more in 2016
12/1/2015Endeavour Mining Reports Agbaou Gold Mine Fully Repaid Share...
12/1/2015Endeavour Mining Updates ASX Share Consolidation Timetable
11/30/2015Endeavour Mining Announces Details of Share Consolidation an...
11/27/2015Endeavour Mining Completes La Mancha Transaction
11/6/2015Endeavour Mining to Release Q3 Results on November 13, 2015
11/5/2015Endeavour Mining Shareholders Approve the La Mancha Transact...
10/7/2015Endeavour Mining Mails Information Circular in Connection wi...
8/14/2015Endeavour Mining Reports Successful Agbaou Exploration Drill...
7/30/2015Endeavour Mining Q2 2015 AISC/oz of $898, Profit of $33M and...
7/30/2015Mining Q2 2015 AISC/oz of $898, Profit of $33M And $20M Debt...
7/23/2015Endeavour Mining To Release Q2 Results On July 30, 2015
7/23/2015Endeavour Mining Reports Gold Production of 255,000 Ozs and ...
7/23/2015Mining to release Q2 results on July 30, 2015
6/18/2015Endeavour Mining Reports Results of AGM Voting
6/17/2015Edited Transcript of EDV.TO earnings conference call or pres...
4/9/2015Mining produced 124,000 oz in Q1 2015 at mid-point of AISC g...
3/27/2015Endeavour Mining Files Technical Reports for Agbaou and Youg...
3/26/2015Endeavour Mining Appointment of New CFO
3/15/2015Endeavour Mining Generates Record Operating Cash Flow in 201...
3/10/2015Endeavour Mining Extends Five Year Credit Facility To March ...
3/10/2015Endeavour Mining Extends Five Year Credit Facility to March ...
3/10/2015Mining Extends Five Year Credit Facility to March 31, 2020
2/26/2015Endeavour Mining Generates Record Operating Cash Flow in 201...
2/26/2015Endeavour Mining Files Early Warning Report Related to Share...
2/25/2015Endeavour Mining files Early Warning Report related to share...
2/24/2015Endeavour Mining to release 2014 year-end results on Februar...
2/23/2015Geodrill Secures Significant New Drilling Contracts for 2015
2/19/2015IIROC Trade Resumption - EDV
2/19/2015Endeavour Mining Updates Houndé Project Economics Following ...
2/19/2015Mining Updates Houndé Project Economics Following Increase I...
1/15/2015Mining delivers 466,000 oz in 2014 to exceed guidance and ge...
10/30/2014Mining to release Q3 results on November 3, 2014
9/15/2014Mining provides notice of a substantial holder
8/1/2014Mining to Release Q2 Results on August 11, 2014
6/25/2014Mining Reports Commencement of Production from Segala Underg...
6/19/2014Mining reports results of AGM voting
5/22/2014Mining files Early Warning Report related to shareholding in...
5/5/2014Mining to Release Q1 Results on May 12, 2014
4/28/2014Mining files Technical Report for Tabakoto Gold Mine
3/19/2014Mining Reports 2013 All-In Margin of $93 Million and AISC of...
3/6/2014Mining Updates Agbaou Gold Mine Performance
11/4/2013Mining to release Q3 results on November 12, 2013
10/15/2013Mining initiates mining at Agbaou and completes power line i...
8/14/2013Mining reports Q2 all-in sustaining cost of $1,038/oz
8/6/2013Mining Reports Delivery of Mining Equipment at Agbaou Gold M...
7/24/2013Mining increases and extends debt facility to strengthen fin...
7/24/2013Mining increases and extends debt facility to strengthen fin...
6/25/2013Mining reports Tabakoto Mill expansion achieves design capac...
5/14/2013Mining reports Q1 all-in sustaining margin of $39 million an...
5/6/2013Mining to release Q1 results on May 14, 2013
4/24/2013Mining reports Agbaou Gold Mine construction progress
4/11/2013Mining Announces Mali Humanitarian Donation In Cooperation W...
3/20/2013Mining to release 2012 year-end results on March 28, 2013
3/12/2013Mining files Houndé PEA, completes in-fill drilling and adva...
10/18/2012Avion Gold announces completion of acquisition by Endeavour ...
10/1/2012Mining announces ISS and Glass Lewis recommend in favour of ...
8/21/2011Mining and Adamus Resources to Merge and Create a New Growth...
9/29/2009Burkina Faso, Brazil, Ghana & H1N1
1/26/2009GSWeekly - smart money - Endeavour Financial
9/10/2008Reinhard Updates Endeavour Financial Corp.
6/9/2008Announces Proposed Name Change and New Website
4/1/2008 Renews normal course issuer bid
2/15/2008Declares Monthly Dividend for February 2008
2/12/2008 Announces Q2 Earnings
1/14/2008declares monthly dividend for January 2008
12/12/2007Declares Monthly Dividend
10/23/2007Announces 80% Increase in Dividend
5/19/2006reports record silver quaterly silver production, gross reve...
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