Endeavour Mining on track to beat full-year production guidance

Endeavour Mining reported a strong set of third quarter results on Thursday morning, as it told the market it was “well-positioned” to beat full-year production guidance.

The FTSE 250 company said production for the three months ended 30 September totalled 382,000 ounces at an all-in sustaining cost of $904 per ounce, with year-to-date production standing at 1,138,000 ounces at an all-in sustaining cost of $875 ounces.

It said it was “well-positioned” to beat 2021 production guidance of between 1,365,000 and 1,495,000 at an all-in sustaining cost within its $850 to $900 guidance per ounce.

Adjusted net earnings totalled $153m, or 61 US cents share, in the third quarter, and $429m, or $1.81 per share, for the year-to-date.

Operating cash flow before working capital came in at $326m, or $1.30 per share, for the three months through September, and $875m, or $3.69 a share, for the year so far.

Endeavour Mining said it had a “healthy” balance sheet at the end of the quarter, with net debt of $70m, despite having returned $105m to shareholders, and its net debt-to-adjusted EBITDA leverage ratio standing at 0.05x.

Looking at its shareholder returns programme, Endeavour noted the payment of its first half dividend of $70m on 28 September, adding that it was “well-positioned” to deliver more than the minimum committed dividend of $125m for the full year.

Share buybacks were continuing to supplement shareholder returns, with a total of $94m of shares repurchased since April, $35m of which were repurchased in the third quarter.

On the organic growth front, Endeavour said the construction of the Sabodala-Massawa phase one expansion was on schedule for completion by the end of the year, while the definitive feasibility study was underway for the Sabodala-Massawa phase two expansion, and the Fetekro and Kalana projects.

The group said it was on track to discover more than 2.5 million ounces of indicated resources in 2021, with resource updates expected to be published in the fourth quarter.

Endeavour Mining said it was targeting the discovery of between 15 million and 20 million ounces of indicated resources over the next five years.

“Following a strong third quarter performance, we are on track to achieve a record year,” said president and chief executive officer Sebastien de Montessus.

“We are now well positioned to beat the top end of our 1.5 million ounce full-year production guidance, at an all-in sustaining cost within the guided range.

“Given this strong performance, we expect to generate well in excess of $1bn in operating cash flow for the full year, which has already significantly improved our balance sheet strength and bolstered our ability to reward shareholders.”

Having already returned $224m in dividends and share buybacks this year, and considering the firm’s near-zero net debt-to-adjusted EBITDA leverage ratio, de Montessus said the company was planning to continue to supplement its shareholder return programme with further share buybacks, and deliver more than the guided minimum dividend of $125m for the full year.

“Our growth pipeline continues to develop with the Sabodala-Massawa phase one expansion on track for completion in the fourth quarter.

“Additionally, our definitive feasibility studies are progressing well for the Sabodala-Massawa phase two expansion, the Fetekro and Kalana projects.

“We continue to demonstrate exploration success, with the group on track to delineate over 2.5 million ounces of Indicated resources in 2021, significantly more than the expected annual depletion.”

Looking forward, Sebastien de Montessus said the board was expecting to unlock “significant additional value” by delivering on its recently-published five-year exploration strategy targeting the discovery of 15 to 20 million ounces of Indicated resources.

“Following our successful listing on the premium-segment of the London Stock Exchange in June, we were pleased to enter the FTSE indexes in September which positions us well to attract a wider investor pool.

“There is strong momentum across our business and we look forward to continuing to drive our strategy forward.”

At 0933 GMT, shares in Endeavour Mining were up 3.94% at 2,110p.