RBC Capital downgrades Endeavour Mining to ‘sector perform’

RBC Capital Markets downgraded Endeavour Mining on Tuesday to 'sector perform' from ‘outperform' given its cautious view around rising operational and geopolitical risk, which it noted comes amid significant management changes this year.

"While we remain constructive longer term, we note elevated near-term risk given technical complexity ramping up two new projects, with increasing investor aversion to West Africa given volatility of economic stability agreements," RBC said.

The bank cut its price target to CAD40 from CAD48 on a more conservative outlook and modestly lower target multiples reflecting increased risk.

"In our view, extensive management turnover within the EDV executive team this year comes amidst a key growth phase, placing emphasis around execution ahead," RBC said.

"We view the announced departures of Mark Morcombe (COO) and Jono Lawrence (EVP Exploration) as two major losses for the company.

"The former was key in overseeing the concurrent build of the Massawa BIOX and Lafigue projects, while the latter represented continuity of EDV’s successful exploration strategy the past decade following the retirement of Patrick Bouisset (2022) and departure of Silvia Bottero (2024).

"Coupled with fallout from the CEO termination earlier this year, we view heightened emphasis on execution in navigating a key period ahead."

RBC also said that cost pressures could once again weigh on guidance.

It said that given the impact of higher costs in the first half due to reduced grid power availability and focus on lower grade phases, it views Endeavour as being in a challenging position to achieve guidance this year.