November 12, 2013
Endeavour Mining Reports Record Q3 Gold Production of 88,445 oz and All-In Sustaining Cost of $1,057/oz
November 12, 2013 - Endeavour Mining Corporation ("Endeavour" or the "Corporation") (TSX:EDV) (ASX: EVR) (OTCQX:EDVMF) announces record gold production of 88,445 ounces in Q3/2013, representing a 17% increase over Q2/2013, with the increase driven by the Tabakoto mill expansion. In addition to production growth, cost reduction measures continued to take effect with the all-in sustaining cost decreasing to $1,057 per ounce sold in Q3/2013 compared to $1,086 per ounce for the nine months ended September 30, 2013.
(All amounts in US dollars unless otherwise indicated)
Q3/2013 Financial and Operating Highlights
- Gold production was 88,445 ounces, which compares to 75,421 ounces in Q2/2013
- Gold sold was 90,997 ounces for a mine cash margin of $35.4 million, and after corporate costs, sustaining capital and near-mine exploration expenses the all-in sustaining margin was $25.0 million (21% margin). See Table 1 for details
- The all-in sustaining cost per ounce sold ("AISC") was $1,057, which is inclusive of cash costs per ounce sold of $869. See Table 1 for AISC details and Table 2 for detailed cash cost by mine
- Endeavour invested $43.1 million in new mine construction, development and exploration, as detailed in Table 3, which includes $31.5 million for Agbaou construction
- Agbaou continues on schedule with the completion of the 91 kV overhead power line installation and the start of mining activities. Endeavour's fourth mine is on-plan for commercial production in Q1/2014
- Adjusted net loss of $2.1 million or $0.00 per share
- As of September 30, 2013, Endeavour had cash and cash equivalents of $119.4 million with long-term debt of $300 million drawn from the corporate facility. In addition, cash proceeds of $17 million was received after quarter end from the completed Finkolo sale
- During the quarter, Endeavour increased its corporate facility to $300 million, with an additional $50 million available on completion of Agbaou
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/2013Q3-FS-MDA.pdf
Neil Woodyer, CEO, stated
"We are very pleased to have achieved record gold production of over 88,000 ounces as we had our first full quarter with the expanded Tabakoto mill. We have continued to make progress reducing our cost level with an all-in sustaining cost in Q3 of $1,057 per ounce. Our year to date production of 237,520 ounces and AISC of $1,086 per ounce puts us on track to deliver within our guidance ranges of 315,000 to 330,000 ounces and AISC of $1,055 to $1,155 per ounce.
We are focused on lowering our long term operating cost base to position Endeavour to succeed across a wide range of gold prices. On-going studies to increase owner mining at our operations are demonstrating the potential to improve our cost structure, and we are now evaluating potential equipment purchases in the context of the company-wide 2014 budgeting process.
In late October, we achieved a significant milestone with the start of mining activities at Agbaou. We are on track for commercial production in the first quarter of 2014. The increase of the corporate debt facility in July has ensured we have the resources required to complete Agbaou construction and other investments to lower operating costs.
As we near completion of Agbaou's construction, we are pleased with the completion of the Hound� feasibility study announced last week and its timely progression into the permitting phase. Hound� is an economically robust project requiring $315 million of upfront capital for average annual production of approximately 180,000 ounces over 8 years at all-in sustaining cost of less than $800 per ounce. At $1,300 gold price and without the benefit of leverage, the Hound� project generates an attractive after tax IRR of 22%. Based on these results, we are now evaluating how best to integrate Hound� into Endeavour's production growth plans."
Q3/2013 Operational Results
Tabakoto Gold Mine, Mali
- Production increased by 48% compared to Q2 due to higher throughput from the mill expansion
- Mined tonnes were lower than expected in September as heavy rains and availability of the open pit mining fleet impacted open pit mining
- As the mill operated above nameplate capacity of 4,000 tpd during Q3, some lower grade stockpiles (~1.5g/t) were also processed
- Segala decline progressing well and now extends over 900 metres from the portal, with over 219 metres completed in Q3. Segala underground development ore production scheduled to begin during Q4/2013 with stoping ore commencing to increase production during Q2/2014
Nzema Gold Mine, Ghana
- Improved gold production of 27,894 ounces at a cash cost of $853 per ounce produced
- During Q3, the mined grade of 1.31 g/t was similar to 1.30 g/t in H1/2013, however the grade of tonnes milled averaged 2.00 g/t as compared to 1.63 g/t in H1/2013. This improvement in milled grade is a result of increased volume of purchased ore
- In October, the mined grade was 1.67 g/t with increased higher grade ore from the Adamus pits. Including purchased ore, the milled grade was 2.40 g/t
Youga Gold Mine, Burkina Faso
- Gold production of 20,029 ounces at a cash cost of $869 per ounce produced
- Gold production was impacted by heavy rains in September which interrupted mining activities in the main pit
Table 1: Q3/2013 and 9 Months Margin Generation, All-in Sustaining Cost and Full Year Guidance
| |
|
3 Months Ended |
|
9 Months Ended |
|
|
|
|
| |
|
Sept 30/2013 |
|
Sept 30/2013 |
|
|
|
|
| |
|
US$ M |
|
In Gold Ozs |
|
US$ M |
|
In Gold Ozs |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Gold revenue |
|
$121.1 |
|
90,997 |
|
$339.1 |
|
235,927 |
|
|
|
|
| Less: Royalties |
|
$6.7 |
|
5,035 |
|
18.3 |
|
12,732 |
|
|
|
|
Less: Cash costs for
ounces sold |
|
$79.0 |
|
59,362 |
|
208.8 |
|
145,271 |
|
|
|
|
| Mine cash margin |
|
$35.4 |
|
26,600 |
|
112.0 |
|
77,923 |
|
|
|
|
Less: Corporate G&A
(attrib. to operations) |
$2.8 |
|
2,104 |
|
10.3 |
|
7,166 |
|
|
|
|
| Corporate EBITDA |
|
$32.6 |
|
24,496 |
|
101.7 |
|
70,757 |
|
|
|
|
Less: Sustaining
capital* |
|
$5.4 |
|
4,058 |
|
10.8 |
|
7,514 |
|
|
|
|
Less: Near-mine
exploration |
|
$2.2 |
|
1,653 |
|
8.0 |
|
5,566 |
|
|
|
|
All-in sustaining
margin |
|
$25.0 |
|
18,786 |
|
$82.9 |
|
57,677 |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
3 Months Ended |
|
9 Months Ended |
|
Full Year |
| |
|
Sept 30/2013 |
|
Sept 30/2013 |
|
2013 Guidance |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Gold sold (ozs) |
|
90,997 |
|
235,927 |
|
315,000 - 330,000 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
US$ M |
|
$/oz |
|
US$ M |
|
$/oz |
|
$/oz |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Royalties |
|
$6.7 |
|
$74 |
|
$18.3 |
|
$78 |
|
$85 |
- |
$95 |
| Cash costs for ounces sold (see Table 2 for Q3 details) |
|
79.0 |
|
869 |
|
208.8 |
|
885 |
|
840 |
- |
880 |
Corporate G&A
(attrib. to operations) |
|
2.8 |
|
31 |
|
10.3 |
|
44 |
|
45 |
- |
55 |
| Sustaining capital* |
|
5.4 |
|
59 |
|
10.8 |
|
46 |
|
45 |
- |
70 |
| Near-mine exploration |
|
2.2 |
|
24 |
|
8.0 |
|
34 |
|
40 |
- |
55 |
All-in sustaining cost
per ounce sold |
|
|
|
$1,057 |
|
|
|
$1,086 |
|
$1,055 |
- |
$1,155 | |
*Sustaining capital excludes underground infrastructure and investments in principal drives at Tabakoto and Segala as these amounts are included in new mine investment and development spending detailed in Table 3
Table 2: Q3/2013 Cash Costs by Mine
| |
|
Tabakoto |
Nzema |
Youga |
Total |
| Mining Physicals |
|
|
|
|
|
| Total tonnes mined - Open pit |
000t |
1,534 |
2,464 |
1,858 |
|
| Total tonnes mined - Underground |
000t |
264 |
- |
- |
|
| Total ore tonnes - Open pit |
000t |
116 |
462 |
256 |
|
| Total ore tonnes - Underground |
000t |
141 |
- |
- |
|
| Total tonnes milled |
000t |
406 |
496 |
239 |
|
| Recovery |
% |
89% |
89% |
92% |
|
| Gold produced1 |
ozs |
40,522 |
27,894 |
20,029 |
88,445 |
| Gold sold |
ozs |
41,027 |
27,640 |
22,330 |
90,997 |
| |
|
|
|
|
|
| Unit cost analysis |
|
|
|
|
|
| Mining costs - Open pit |
$/t mined |
4.24 |
3.26 |
3.82 |
|
| Mining costs - Underground |
$/t ore |
73.79 |
- |
- |
|
| Processing and maintenance |
$/t milled |
22.72 |
12.84 |
27.82 |
|
| G&A |
$/t milled |
11.44 |
5.97 |
9.93 |
|
| Purchased ore cost |
$/oz purchased |
- |
785 |
- |
|
| |
|
|
|
|
|
| Cash cost details |
|
|
|
|
|
| Mining costs - Open pit |
$000s |
$6,499 |
$8,034 |
$7,103 |
$21,636 |
| Mining costs - Underground |
$000s |
10,405 |
- |
- |
10,405 |
| Processing and maintenance |
$000s |
9,226 |
6,369 |
6,650 |
22,245 |
| G&A |
$000s |
4,645 |
2,963 |
2,373 |
9,981 |
| Purchased ore at Nzema |
$000s |
- |
6,549 |
- |
6,549 |
| Inventory Adjustments & Other Costs |
$000s |
4,652 |
372 |
3,200 |
8,224 |
| Cash costs for ounces sold |
$000s |
$35,427 |
$24,287 |
$19,326 |
$79,040 |
| |
|
|
|
|
|
| Cash cost per ounce sold |
$/oz |
$864 |
$879 |
$865 |
$869 | | 1 Gold produced at Nzema includes 8,343 ozs recovered from purchased ore
Agbaou Gold Mine Construction
- The Agbaou Gold Mine is in the final stages of construction and will be operational in early 2014
- Power line tower construction and stringing of the 15 km 91kV line is complete and the high voltage transformer has been installed and tested within the substation
- Delivery of mining equipment is on schedule including two D9 dozers, seven of the CAT 777 haul truck fleet, and both Liebherr 9350 excavators
- Mining of the South Pit began in mid-October and mining in the North Pit commenced in late October. Prior to initiation of mining, the ROM starter pad and Mine Services Area construction was completed
- Major reagents have arrived on-site and commissioning, operational and insurance spares are on-hand
- Recruitment of the workforce is progressing well and includes a focused effort towards hiring from local communities. All management positions have been secured
- Recent community projects include construction of a local primary school and teachers' quarters (completed in August) and rehabilitation of the maternity health center and midwife housing
Table 3: Investments in New Mine Development and Exploration
| |
|
|
3 Months Ended |
|
9 Months Ended |
| |
|
|
Sept 30/2013 |
|
Sept 30/2013 |
| |
|
|
US$ M |
|
US$ M |
| Investments in new mine development and exploration |
|
|
|
|
| |
Agbaou construction |
|
$31.5 |
|
$100.5 |
| |
Nzema development |
|
4.5 |
|
$10.5 |
| |
Tabakoto mill expansion
(completed Q2/2013) |
|
0.0 |
|
$8.0 |
| |
Tabakoto/Segala development |
|
2.0 |
|
$14.0 |
| |
Hound� FS |
|
2.3 |
|
$7.7 |
| |
Kofi, Ouar�, Regional exploration |
|
1.8 |
|
$6.0 |
| |
Corporate G&A (attrib. to new mines) |
|
0.9 |
|
$3.4 |
| |
|
|
$43.1 |
|
$150.1 | |
Table 4: Q3/2013 Financing Activities and Reconciliation of Cash Position
| |
|
|
|
|
|
US$ M |
| |
|
|
|
|
|
|
| Cash, equivalents - Opening Balance (June 30, 2013) |
|
$62.2 |
| |
|
|
|
|
|
|
| All-in sustaining margin (see Table 1) |
|
25.0 |
| Investments in new mine and development (see Table 3) |
|
-43.1 |
| Gross proceeds from Corporate Debt Facility |
|
100.0 |
| Payment of financing fees |
|
|
-7.0 |
| Payment of legal, consulting, registration, other fees |
|
-3.2 |
| Payment of advisory fees (net) |
|
-2.0 |
| Purchase of gold put options |
|
|
-3.5 |
| Interest paid |
|
|
|
-1.2 |
| Dividends paid from Youga to 10% Gov't Partner |
|
-1.2 |
| Income and other taxes |
|
|
-4.0 |
| Other |
|
|
|
|
-2.7 |
| |
|
|
|
|
|
|
| Cash, equivalents - Ending Balance (Sept 30, 2013) |
|
119.4 | |
Q3/2013 Adjusted Earnings
Net earnings / (loss) from continuing operations (attributable to Endeavour shareholders) have been adjusted for the impact of fair value change of certain financial instruments, including the gold price protection program and Endeavour's warrants that are denominated in Canadian dollars. Other adjustments include one-time gains on sales of the Finkolo joint venture and subsidiaries, deferred income tax expense, which relates to an increase in losses from a realized hedge loss, adjustments related to investments in associates, stock-based payments, foreign currency, bullion, and marketable securities. Endeavour has amended Q2/2013 earnings to record the previously reported impairment charge on a post-tax basis instead of on a pre-tax basis, which has no impact on current or previously reported adjusted earnings (for further details refer to Note 19 of the condensed consolidated financial statements for the three and nine months ended September 30, 2013).
Table 5: Adjusted Net Earnings Reconciliation for the Quarter Ended September 30, 2013
| |
3 Months Ended
Sept 30/2013 |
| |
US$ M |
| |
|
| Net loss attributable to shareholders of Endeavour |
($15.3) |
| Realized gain - gold price protection program |
(29.3) |
| Change in unrealized loss / (gain) - gold price protection program |
42.2 |
| Change in fair value of CAD currency share purchase warrants |
(0.2) |
| Change in unrealized loss - gold put option program |
2.2 |
| Loss on marketable securities |
0.1 |
| Imputed interest on promissory note |
(0.6) |
| Loss on foreign currency |
0.3 |
| Gain on sale of Finkolo joint venture |
(13.4) |
| Gain on sale of subsidiaries |
(2.1) |
| Stock-based payments |
0.8 |
| Amortized financing costs |
0.7 |
| Deferred income taxes (recovery) |
12.5 |
| Adjusted net loss after tax |
($2.1) |
| |
|
| Weighted average number of outstanding shares |
412,773,359 |
| Adjusted net loss per share (basic, US$ per share) |
($0.00) | |
Conference Call Details
Management will host two conference calls to discuss the Q3 results and the recently completed Feasibility Study for the Hound� Project on November 13 and November 14, 2013 as detailed below. Both conference calls will feature Neil Woodyer, Chief Executive Officer, Attie Roux, Chief Operating Officer, and Christian Milau, Chief Financial Officer.
Analysts and interested investors are invited to participate in the calls using the dial in numbers below. The same dial in numbers will be used for both conference calls.
| International: |
|
+1 201-689-8054 |
| North American toll-free: |
|
+1 877-407-9205 |
| Australian toll-free: |
|
+1-800-687-004 | 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 November 13, 2013 at:
| 8:00 am |
|
in Vancouver |
| 11:00 am |
|
in Toronto and New York |
| 4:00 pm |
|
in London |
| 12:00 am |
|
in Perth (November 14, 2013) |
| 3:00 am |
|
in Sydney (November 14, 2013) | To accommodate the Australian market, the second conference call will be held and webcast by V-Call on Thursday November 14, 2013 at:
| 7:00 am |
|
in Perth |
| 10:00 am |
|
in Sydney |
| 3:00 pm |
|
in Vancouver (November 13, 2013) |
| 6:00 pm |
|
in Toronto and New York (November 13, 2013) |
| 11:00 pm |
|
in London (November 13, 2013) | The calls will be archived for later playback on Endeavour's website until November 13, 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. 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 C�te d'Ivoire scheduled for Q1 2014. In addition, in November 2013 a Feasibility Study for the Hound� Project in Burkina Faso was completed showing potential for approximately 180,000 ounces per year over 8 years.
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:
Doug Reddy
SVP Business Development
+1 604 609 6114
dreddy@endeavourmining.com
UK/Europe: Bobby Morse
Buchanan
+44 20 7466 5000
bobbym@buchanan.uk.com
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