May 14, 2013
Endeavour Mining Reports Q1 All-In Sustaining Margin Of $39 Million And Cash Cost Improvement At Tabakoto
Vancouver, May 14, 2013 - Endeavour Mining Corporation ("Endeavour" or the "Corporation") (TSX:EDV, ASX:EVR, OTCQX:EDVMF) announces Q1/2013 gold production of 73,654 ounces and an all-in sustaining margin of $39 million. The three operating mines continue to fund investments in new mine development and growth, which totalled $55.6 million during Q1/2013. The all-in sustaining cash cost was $1,083 per ounce sold, and Endeavour is intensifying cost reduction efforts. The Tabakoto cost reduction program has decreased cash costs by 25% from $1,250 in late 2012 to $932 per ounce produced in Q1/2013, with further cost benefits expected from the program and the recently completed mill expansion.
(All amounts in US dollars unless otherwise indicated)
Q1/2013 Financial and Operating Highlights
- Gold production was 73,654 ounces
- Gold sold was 71,926 ounces for a mine cash margin of $46 million (equivalent to 28,400 ounces of gold), and after corporate costs, sustaining capital and near-mine exploration expenses generated an all-in sustaining margin of $39 million (equivalent to 23,994 ounces of gold or a 33% margin)
- Total cash cost per ounce sold was $897
- Including royalties, corporate costs, sustaining capital and near-mine exploration, the all-in sustaining cash cost per ounce sold was $1,083. See Table 4 for calculation details
- Endeavour invested $55.6 million in new mine construction, development and exploration, as detailed in Table 2, leading to negative free cash flow of $16.6 million after all operating and development activities
- Adjusted net earnings of $9.0 million or $0.02 per share
- As of March 31, 2013, Endeavour had cash, cash equivalents, and gold bullion of $128 million with long-term debt of $200 million drawn from a corporate facility
Financial Statements and related MD&A will be available on SEDAR, the ASX website, OTC Markets website, and in the Investor Relations section of Endeavour's website www.endeavourmining.com.
In order to access the Corporation's MD&A and financial statements directly, please click the following URL: http://www.endeavourmining.com/i/pdf/Financials/2013Q1-FS-MDA.pdf.
Neil Woodyer, CEO, stated
"We have had a significant impact in restructuring Tabakoto and appreciate the efforts of our management, employees and contractors in achieving a 25% decrease in cash cost per ounce from late 2012. The Tabakoto mill expansion has been completed and ramp-up is now underway. Further unit cost improvements are expected as contractors leave the site and the operation reaches full capacity. We are also pleased with the continued strong performance at Youga, which generated $19 million of our total $46 million mine cash margin during the quarter.
Nzema had a challenging quarter from a cost perspective due to processing the initial lower grade material at the Adamus pits and including some transitional material from the Salman deposits which is known to have low gold recoveries. Costs at Nzema should decrease in the second half of the year as we start accessing the higher grade portions of the Adamus pits along with higher volumes, which will allow us to reduce mining of the Salman transition material.
Endeavour is continually reviewing its capital and operating spending and in the current environment we are focussing on core operations and completing construction of Agbaou, and limiting cash spending in other areas. Assuming a gold price of $1,400 for the balance of the year, we expect to generate an all-in sustaining margin of approximately $127 million for 2013, which compares to our original forecast of $166 million at a $1,600 gold price. This operating cash flow, supplemented by our March 31 cash and bullion balance of $128 million, funds our planned 2013 investments. Our growth plans remain intact and Agbaou is a key asset in our future operating profile that will make a meaningful contribution to our cash flow in early 2014 while reducing our average cash costs."
Capital Cost Reduction and Cash Flow Optimization Program
Recent volatility in the gold price has prompted a thorough review of all planned expenditures for prudent cash management.
The following non-operations related cost reductions are being implemented:
- The 2013 full year exploration budget was reduced from $20 million to $15 million. The budget maintains $11 million at Tabakoto and Kofi, with planned underground exploration drilling untouched. This program emphasizes converting Inferred resources into the Measured and Indicated categories to extend mine life
- Endeavour is implementing a plan to reduce its +10,000 km2 land position by approximately 50%, eliminate spending commitments on non-core properties and reduce fixed land holding costs
- Corporate G&A has been trimmed from $20 million to $15 million
- Sale of non-core investment in Namibian Rare Earths generated $5.3 million
An extensive bottom up review of all operating costs and capital investments is underway and is expected to improve long term all-in sustaining cash cost at each mine.
Table 1: Revised Forecast 2013 All-in Sustaining Margin (Before Cash Cost Savings)
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Revised 2013 Forecast |
Original 2013 Forecast |
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US$Millions |
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US$Millions |
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Q1/2013 Actuals |
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At $1,600/oz |
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Q2-Q4 at $1,400/oz |
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| Net operating margin from Youga, Nzema & Tabakoto* |
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| Gold revenue |
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$475 |
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$524 |
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| Less: Royalties |
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27 |
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|
|
29 |
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| Less: Cash costs |
|
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282 |
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|
282 |
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| Mine cash margin |
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166 |
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|
213 |
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| Less: Corporate G&A (attributable to operations) |
11 |
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|
15 |
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| Corporate EBITDA |
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|
155 |
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|
198 |
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| Less: Sustaining capital |
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17 |
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17 |
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| Less: Near-mine exploration |
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11 |
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15 |
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| All-in sustaining margin** |
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127 |
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166 |
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*Net operating margin includes Q1 actual, Q2-Q4 based on mid-guidance range for production and cash costs for full year
**Before financing activities, tax, interest, and working capital movement |
Q1/2013 Operational Results
Tabakoto Gold Mine, Mali
- Gold production in the first quarter was 28,159 ounces at a cash cost of $932 per ounce produced
- The mill expansion was recently completed with ramp up underway
- Cost reduction programs previously announced such as staff reductions and the introduction of open pit owner mining have resulted in reduced cash costs during Q1/2013. Management will continue to focus on cost reduction initiatives during the remainder of 2013 and expects to see further improved costs in the second half of the year
- The Segala main decline is progressing well and now extends over 540 metres from the portal
Nzema Gold Mine, Ghana
- Gold production of 22,456 ounces at a cash cost of $1,079 per ounce produced
- Production was lower in the first quarter of 2013 due to slower than planned access to and development of the Adamus pits due to protracted negotiations in the resettlement process
- Gold grades and production should improve in the second half of 2013 as higher grade portions of the Adamus pits are accessed
Youga Gold Mine, Burkina Faso
- Gold production of 23,039 ounces at a cash cost of $668 per ounce produced
- Youga produced another quarter of strong operational performance and generated an mine cash margin (revenue less royalties and operating costs) of $18.9 million
Table 2: Q1 2013 Margin Generation and Investments in New Mine Development and Exploration
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US$ Million |
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In Gold Ounces* |
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| Net operating margin from Youga, Nzema & Tabakoto |
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Gold revenue |
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116.9 |
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71,926 |
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Less: Royalties |
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6.3 |
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3,857 |
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Less: Cash Costs for ounces sold |
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64.5 |
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39,669 |
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Mine cash margin |
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46.2 |
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28,400 |
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Less: Corporate G&A (attrib. to operations) |
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3.4 |
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2,068 |
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Corporate EBITDA |
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42.8 |
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26,332 |
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Less: Sustaining capital |
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3.0 |
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1,845 |
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Less: Near-mine exploration |
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0.8 |
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|
492 |
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All-in sustaining margin |
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39.0 |
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23,994 |
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| Investments in new mine development and exploration |
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Agbaou construction |
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28.6 |
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Nzema development |
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2.8 |
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Tabakoto development (incl mill expansion) |
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15.4 |
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Hound� feasibility study |
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2.1 |
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Kofi exploration |
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4.5 |
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Ouar� PEA |
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0.2 |
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Regional exploration |
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0.9 |
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Corporate G&A (attrib.to new mines) |
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1.1 |
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-55.6 |
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| Free cash flow after new mine investments** |
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-$16.6 |
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* US dollar amounts converted to gold ounces at $1,626 gold price (Q1 2013 realized gold revenue of $116.9 million and 71,926 ozs sold)
** Before financing activities, tax, interest, and working capital movement |
Table 3: Q1/2013 Cash Costs by Mine
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Tabakoto |
Nzema |
Youga |
Total |
| Total tonnes mined - Open pit |
000t |
2,053 |
2,696 |
1,575 |
6,324 |
| Total tonnes mined - Underground |
000t |
214 |
0 |
0 |
214 |
| Total ore tonnes - Open pit |
000t |
141 |
756 |
216 |
1,113 |
| Total ore tonnes - Underground |
000t |
92 |
0 |
0 |
92 |
| Total tonnes milled |
000t |
201 |
536 |
241 |
978 |
| Ounces sold |
ozs |
28,627 |
22,013 |
21,286 |
71,926 |
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| Royalties |
$000s |
$2,793 |
$1,796 |
$1,681 |
$6,270 |
| Mining costs - Open pit |
$000s |
$4,747 |
$10,287 |
$6,951 |
$21,985 |
| Mining costs - Underground |
$000s |
$9,740 |
$0 |
$0 |
$9,740 |
| Processing and maintenance costs |
$000s |
$6,790 |
$7,115 |
$6,191 |
$20,096 |
| G&A |
$000s |
$5,636 |
$6,218 |
$843 |
$12,696 |
| Total costs |
$000s |
$29,706 |
$25,416 |
$15,666 |
$70,788 |
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| Unit cost analysis |
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| Mining costs - Open pit |
$/t mined |
$2.31 |
$3.82 |
$4.41 |
$3.48 |
| Mining costs - Underground |
$/t ore |
$105.87 |
0 |
0 |
$105.87 |
| Processing and maintenance costs |
$/t milled |
$33.78 |
$13.27 |
$25.69 |
$20.55 |
| G&A |
$/t milled |
$28.04 |
$11.60 |
$3.50 |
$12.98 |
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| Cash cost per ounce sold (excl royalties) |
$/oz |
$940 |
$1,073 |
$657 |
$897 |
Table 4: Q1 2013 All-in sustaining cash cost per ounce
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Q1/2013 Actual |
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| Gold Sold (ozs) |
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71,926 |
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$ Million |
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$/oz |
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| Royalties |
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6.3 |
|
87 |
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| Cash costs for ounces sold |
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64.5 |
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897 |
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| Corporate G&A (attributable to operations) |
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3.4 |
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47 |
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| Sustaining capital |
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3.0 |
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42 |
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| Near-mine exploration |
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0.8 |
|
11 |
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| All-in sustaining cash cost per ounce sold |
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$1,083 |
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Agbaou Gold Mine Construction
- Construction remains on schedule to achieve gold production during Q1 2014. Costs are also on-target as all major contracts have been finalized within the cost estimates of the feasibility study and approximately 70% of capital costs are now committed
- Significant progress in the physical build has been made at the mine (now over 60% completed)
- The CIL tanks are fully constructed and hydro-testing is currently underway
- Construction of the 15 km overhead electrical transmission line is in progress
- Major components for the mills have been shipped and are on-schedule
- The Tailings Storage Facility (TSF) and Water Storage Dam (WSD) are nearing completion, with final earthworks and clean-up underway
- Clearing of the south pit areas have been completed with clearing of the north pit areas underway
- The new village and relocation of approximately 250 residents is complete; total relocation costs, including construction of new village, crop compensation and other items were in line with feasibility study estimate of $6 million
Table 5: Q1/2013 Financing Activities and Reconciliation of Cash Position
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US$ Million |
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| Cash, equivalents, bullion - Opening Balance (Dec 31, 2012) |
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$151.1 |
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| Free cash flow after new mine investments (see Table 2) |
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-16.6 |
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| Proceeds from sale of marketable securities |
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0.1 |
| Received from the issue of common shares |
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2.5 |
| Change in market value of gold bullion (unrealized) |
|
-2.1 |
| Change in working capital |
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-1.6 |
| Finance costs (e.g. interest) |
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-1.9 |
| Other |
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-3.5 |
| Cash, equivalents, bullion - Ending Balance (Mar 31, 2013) |
|
128.0 |
| Marketable securities |
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7.3 |
| Cash, equivalents, bullion and mkt securities (Mar 31, 2013) |
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$135.3 |
Q1/2013 Adjusted Earnings
Net earnings / (loss) from continuing operations (attributable to Endeavour shareholders) have been adjusted for the impact of the fair value change of certain financial instruments, including the gold hedge liability and Endeavour's warrants that are denominated in Canadian dollars. Other adjustments include deferred income tax expense, which relates to an increase in losses from a realized hedge loss, adjustments related to investments in associates, stock-based payments, foreign currency, bullion, and marketable securities.
Table 6: Adjusted Net Earnings Reconciliation for the quarter ended March 31, 2013
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Quarter ended
Mar 31, 2013 |
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US$ Million |
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|
| Net earnings attributable to shareholders of Endeavour |
$15.1 |
| Change in unrealized loss / (gain) - gold price protection program |
(7.8) |
| Change in fair value of CAD currency share purchase warrants |
(8.1) |
| Loss on marketable securities |
0.3 |
| Imputed interest on promissory note |
(0.6) |
| Loss on foreign currency |
0.5 |
| Write-down of gold bullion |
2.1 |
| Share of loss in associate, net of taxes (NREI) |
0.5 |
| Write-down of investment in associate (NREI) |
0.9 |
| Stock-based payments |
3.0 |
| Deferred income tax |
3.1 |
| Adjusted net earnings after tax |
$9.0 |
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|
| Weighted average number of outstanding shares |
412,232,485 |
| Adjusted net earnings per share (basic, US$ per share) |
$0.02 |
Conference Call Details
Management will host two conference calls to discuss the first quarter 2013 results on May 15 and May 16, 2013 as detailed below. The calls will feature presentations from Neil Woodyer, Chief Executive Officer, Attie Roux, Chief Operating Officer, and Christian Milau, Chief Financial Officer.
Analysts and interested investors are invited to participate using the dial in numbers below.
International: +1 201-689-8040
North American toll-free: +1 877-407-8133
Australian toll-free: 0011-800-2246-2666
The conference call can also be accessed through the following link:
http://www.endeavourmining.com/s/Webcasts.asp
To accommodate the North American/European market, the first conference call will be held and webcast by V-Call on Wednesday May 15, 2013 at:
| 8:00 am |
in Vancouver |
| 11:00 am |
in Toronto and New York |
| 4:00 pm |
in London |
| 11:00 pm |
in Perth |
| 1:00 am |
in Sydney (May 16, 2013) |
To accommodate the Australian market, the second conference call will be held and webcast by V-Call on Thursday May 16, 2013 at:
| 1:00 pm |
in Perth |
| 3:00 pm |
in Sydney |
| 10:00 pm |
in Vancouver (May 15, 2013) |
| 1:00 am |
in Toronto and New York |
| 6:00 am |
in London |
The call will be archived for later playback on Endeavour's website until May 14, 2014.
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 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 that are generating significant operating cash flows which, together with cash and bullion balances, are funding further expansion. Endeavour's annual gold production is forecast to reach 450,000 ounces per year during 2014, including the Tabakoto mill expansion in 2013 and completion of construction of Agbaou Gold Mine in C�te d'Ivoire scheduled for Q1 2014. In addition, a January 2013 PEA shows potential for 160,000 ozs 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).
On behalf of Endeavour Mining Corporation
Neil Woodyer
Chief Executive Officer
Cash cost per ounce and All-in sustaining cash cost per ounce are non-GAAP performance measures with no standard meaning under IFRS.
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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