Endeavour Mining on track after solid first quarter

Endeavour Mining said in a first-quarter update on Thursday that it was on track to meet its production and all-in sustaining costs (AISC) guidance for the year.

The FTSE 100 company said it produced 301,000 ounces in the first quarter, at an AISC of $1,022 per ounce, with its performance expected to be weighted towards the second half of 2023.

Its EBITDA for the quarter was $206m, with adjusted EBITDA at $279m, down 3% from the fourth quarter of 2022.

Net earnings for the quarter came in at $4m, with adjusted net earnings at $70m, or 28 cents per share, up 8% over the final three months of the 2022 period.

Endeavour also reported a strong financial position at the end of the quarter, with a cash position of $810m in addition to $285m in available sources of financing.

The firm reimbursed the $330m principal amount of its convertible bond in the first quarter, in a bid to minimise shareholder dilution.

It said it also continued to provide robust shareholder returns, with a 2022 second-half dividend of $100m paid in the first quarter, amounting to $400m paid since early 2021.

Share buybacks also continued, with $11m, or 0.4 million shares, repurchased in the first quarter, amounting to $244m or 11.1 million shares repurchased since early 2021.

In terms of organic growth, the Sabodala-Massawa expansion and the Lafigué greenfield project were both on budget, with 70% and 46% of the initial capital committed, respectively, and on schedule for the second and third quarters of 2024, respectively.

Endeavour said it also made a strong exploration effort, with $22m spent in the first quarter out of its 2023 full-year exploration guidance of $70m.

The company said it expected to publish an updated resource for Tanda-Iguela greenfield discovery in the second half.

“During the quarter, we continued to deliver in line with our expectations and we remain well positioned to unlock near-term value for all of our stakeholders,” said president and chief executive officer Sebastien de Montessus.

“We began the year with momentum and financial strength, positioning us to deliver against this year’s capital allocation priorities of funding growth while maintaining our attractive shareholder returns programme, which has already returned $644m since its launch in 2021.

“Furthermore, to minimise shareholder dilution we settled the principal of our $330m convertible notes, in cash during the quarter.”

On the operational front, de Montessus said the company was tracking in line with its guided trend, as it expected production to be weighted towards the second half due to mine sequencing across the group.

“On the growth front, we are pleased to report that the Sabodala-Massawa expansion and the Lafigué greenfield build are progressing well, with both projects on time and on budget with first production expected in the second and third quarters of 2024, respectively.

“Our goal is to then increase our shareholder returns once these organic growth projects are completed.”

Endeavour’s exploration programme was meanwhile continuing to provide the company with a strong platform for future growth, Sebastien de Montessus added.

“Further drilling at last year’s Tanda-Iguela discovery in Côte d’Ivoire continues to demonstrate its potential to become another cornerstone asset and we will provide a resource update later this year.”

At 1043 BST, shares in Endeavour Mining were up 1.25% at 2,108p.

Reporting by Josh White for Sharecast.com.