July 24, 2013
Endeavour Mining Increases And Extends Debt Facility To Strengthen Financial Flexibility And Is On Track To Significantly Lower Operating Costs
Vancouver, July 24, 2013 - Endeavour Mining Corporation ("Endeavour" or the "Corporation") (TSX:EDV, ASX:EVR, OTCQX:EDVMF) announces it has implemented a number of steps to significantly lower its operating cost profile and to focus on EBITDA and cash flow generation. Endeavour has also enhanced its financial flexibility by increasing its revolving corporate loan facility from $200 million to $350 million, with the term extended to five years.
(All dollar amount in U.S. dollars unless otherwise indicated)
Highlights - Q2/2013 results and cost savings
- Based on operating results to June 30, 2013 Endeavour reiterates its full year 2013 production and cost guidance of between 310,000 and 345,000 ounces at a cash cost (excluding royalties) of between $840 to $880 per ounce
- During the six month period to June 30, 2013, Endeavour produced 149,075 ounces, and the second half of 2013 is forecast to produce between 165,000 and 180,000 ounces as a result of the recent completion of the mill expansion at Tabakoto and the scheduled processed grade improvement at Nzema
- Cash cost per ounce produced in Q1/2013 was $899. During Q2/2013, cash costs are expected to be in the same range as Q1 and during the second half of 2013 are forecast to be between $790 and $820 per ounce for an approximate 10% unit cost reduction during the year
- Endeavour's 2013 capital programs remain on time and on budget, with the Tabakoto mill expansion complete and now operating in excess of design capacity and Agbaou remaining on schedule for production in Q1/2014
- A comprehensive review of each operation's long-term plans with the goal of targeting significant and sustainable cost savings is on-going. These targets will be achieved by:
- Continued cost savings: Endeavour has reduced corporate overhead by 25% and exploration has been restricted to programs with potential to enhance the cash flow from its existing mines. Other optimizations include significant reductions in ex-pat and casual labour work force at the mine sites
- Reduced use of contractors and sub-contractors at all mines
- Successful conversion to owner-mining for the open pit at the Tabakoto mine has achieved the planned cost savings. Additional opportunities to convert contractor-mining into owner-mining in other areas of its operations are now being evaluated
- Working capital reductions: Endeavour is actively reducing working capital levels through supplier renegotiations; implementing group purchasing, inventory management and consignment stocks; and the run-down of non-essential stockpiles
Neil Woodyer, CEO, stated
"We are very pleased with the strong support for our operations and development projects which we have received from five of the top global mining banks; UniCredit Bank AG, BNP Paribas, ING Bank NV, Soci�t� G�n�rale and Deutsche Bank AG. Even in these volatile gold price and challenging capital markets we will be able to finance our current construction plans and also take advantage of additional capital projects to improve the cash generation and value of our current operations.
In parallel we have a sharp focus on improving the generation of cash flow and EBITDA from our current three mines. Agbaou, with its access to grid power and free-dig ore, is positioned to become a strong cash flow generating operation for us by producing gold at a target of less than $800 per ounce on an all-in sustaining cash cost basis in 2014.
The expansion of Tabakoto, the completion of Agbaou, our cost reduction programs and increased owner mining will help us achieve our 2014 planning targets which include (A) producing over 400,000 ounces, (B) cash costs in the range of $800 per ounce, and (C) all-in sustaining costs - including underground mine development of operating mines - in the range of $1,000 per ounce."
2013 Gold Production and Cash Cost Outlook
|
Mine |
|
Q1/2013
3 months
Actual |
Q2/2013
3 months
Actual |
H1/2013
6 months
Actual |
H2/2013
6 months
Forecast |
2013
12 month
Forecast |
|
Tabakoto |
ozs |
28,159 |
27,405 |
55,564 |
70-75,000 |
126-131,000 |
|
Nzema |
ozs |
22,456 |
24,053 |
46,509 |
55-60,000 |
102-107,000 |
|
Youga |
ozs |
23,039 |
23,963 |
47,002 |
40-45,000 |
87-92,000 |
|
Total Production |
ozs |
73,654 |
75,421 |
149,075 |
165-180,000 |
315-330,000 |
|
Cash cost per ounce |
$/oz |
Actual
$899 |
Forecast
Similar to Q1 |
|
Forecast
$790-820 |
Forecast
$840-880 |
- The approximate 15% increase in gold production in the second half of 2013, as compared to the first half of 2013, is primarily generated by:
- The expanded mill at the Tabakoto Gold mine, which achieved design capacity during June 2013 with throughput now in excess of name plate. The mill processing rate is scheduled to increase from approximately 2,200 tpd during Q1/2013 to 4,000 tpd during H2/2013.
- Improving processed grade at Nzema, which is scheduled to increase from 1.6 g/t during H1/2013 to 1.9 g/t during H2/2013
Endeavour will provide additional information regarding operating margins, cash costs, and all-in sustaining cash costs in the upcoming Q2/2013 financial report scheduled for release in mid-August 2013.
Increased and Extended Corporate Debt Facility
Endeavour has signed a $350 million Senior Secured Revolving Corporate Loan Facility. Up to $300 million of the facility can be used for general corporate purposes including working capital and capital expenditures. As Endeavour had previously drawn $200 million under the original facility provided by UniCredit, the new facility now provides $100 million of additional credit. The remaining $50 million of the facility will be available after the construction of the Agbaou Mine and can be used to fund expansions and other capital projects.
The key terms of the facility include:
- Maturity date is five years from signing or July 24, 2018, and the available facility amount declines with six equal semi-annual reductions of $58.3 million commencing January 1, 2016
- The facility requires standard corporate financial covenants, including
- Interest Cover shall not be less than 3 to 1, calculated on a rolling 12 month basis
- Net Debt to EBITDA shall not exceed 3.25 times, calculated on a rolling 12 month basis
- Minimum tangible net worth of $600 million
- The Facility is in US dollars, and interest is based on LIBOR plus a margin ranging between 3.75% and 5.5% per annum (sliding scale based on the actual Net Debt to EBITDA ratio)
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. Endeavour's annual gold production is forecast to exceed 400,000 ounces per year during 2014, including the start-up of production at the Agbaou Gold Mine in Cote d'Ivoire scheduled for Q1 2014. In addition, a January 2013 PEA shows potential for 160,000 ounces per year from the Hound� Project in Burkina Faso, which is being assessed by a feasibility study during 2013.
Endeavour Mining Corporation is listed on the TSX (symbol EDV) and ASX (symbol EVR), and also trades on the OTCQX (symbol EDVMF).trades on the OTCQX (symbol EDVMF).
On behalf of Endeavour Mining Corporation
Neil Woodyer
Chief Executive Officer
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.
For additional information, contact:
Marla Gale
Vice President - Investor Relations
+1 604 609 6117
mgale@endeavourmining.com
UK/Europe: Bobby Morse
Buchanan
+44 20 7466 5000
bobbym@buchanan.uk.com
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