Endeavour Mining Corp. on the Way Up with 3 Mines and 3 Triangles
March 26, 2012
Yesterday, Chris Devauld from the Prospecting Journal wrote a readworthy article ("Goals Met, New Targets Set: Endeavour Mining Earns an A+ For 2011 Results") on Endeavour Mining Corp. (TSX: EDV; market cap.: $563 million).
In the article, it was noted that the 2 West-African mines, Youga and Nzema, produced around 177,000 oz gold in 2011 generating an operating cash-flow of $91 million. The mill grade from the Nzema deposit in Ghana, which produced 90,026 oz, averaged 1.7 g/t gold with cash-costs of $585/oz, whereas the Youga deposit in Burkina Faso averaged a mill grade of 3.1 g/t gold with cash-costs of $644/oz.
It was highlighted that both mines are set to increase their production in 2012 and beyond - also thanks to ongoing aggressive exploration programs that are continueing to increase both resources. For 2012, the company has budgeted $19 million for the exploration of Youga and Nzema, whereas an additional $11 million is directed towards the exploration of its other deposits in C�te d'Ivoire ($8 million), Mali ($2 million) and Liberia ($1 million). Around 80% of this $30 million budget is dedicated for near-mine projects and the remaining 20% for regional exploration. In total, more than 200,000 m of drilling is planned for 2012 alone.
In 2010, some 82,400 oz were produced generating a cash-flow of $36 million. At a gold price of $1,600/oz, the 2012 cash-flow is forecasted to be increased by around 50% from the $91 million of 2011. This remarkable increase comes solely from the Youga and Nzema mines. The completion of the Agbaou mine in C�te d'Ivoire is expected to produce around 100,000 oz per year generating additional cash-flows of around $160 million per year at a gold price of $1,600.
Based on these prospective fundamentals, we value the company as undervalued considering its current market valuation of solely $563 million and its stock having traded 4-times higher some 4 years ago.
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