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Endeavour Mining smashes broker consensus on key metrics


FTSE 100 West African gold miner Endeavour Mining [LSE:EDV] released a solid set of results today, beating the Q2 broker consensus across all key metrics. This includes production, all-in sustaining cost and indeed cash flow per share.

Endeavour Mining reported gold production was 345,000 oz versus a consensus estimate of 329,000 oz. The consensus EPS was around 0.38-0.39 but Endeavour achieved 0.45.

The miner, which runs a portfolio of gold mining assets across West Africa, said it saw robust first half production of 702,000 oz at an AISC of $900/oz. Over 90% of the AISC increase has been due to scheduled operational factors ahead of the rainy season. Inflationary factors were mitigated with favourable EUR/USD currency variation, long term supply contracts, and ongoing production and cost-optimisation initiatives, the company said today.

Well-positioned low-cost gold producer

The miner remains one of the best-positioned low-cost gold producers in both the senior and mid-tier gold mining space going into Q3.

Endeavour reported strong operational cash flow of $630m in 1H of 2022 and paid out $108m in shareholder returns in terms of both dividends and buybacks. It reported a total of $376m has been paid out to shareholders over the last six quarters. It declared a 1H dividend of $100m, which is an increase of 43% over the same period last year.

The minimum FY-2022 dividend commitment has been increased by $50m to $200m, in line with the company’s announced minimum progressive dividend policy which is to be supplemented with additional dividends and share buybacks provided the gold price remains above $1,500 per ounce and Endeavour Mining’s leverage remains below 0.5x Net Debt/adjusted EBITDA.

H1-2022 shareholder returns (comprised of $100m dividend and $38m buybacks) represent $197/oz of gold produced, 10% of revenue, 25% of operating cash flow, 57% of adjusted net earnings for the period or an implied annualised yield of 4.9% based on yesterday’s TSX close share price.

Expansion projects are on track

Obviously of interest to investors is the company’s organic growth pipeline. In our previous coverage of Endeavour Mining, which did note the importance of new exploration activities and the considerable portfolio of land parcels the company controls.

It reported that its Sabodala-Massawa expansion project on track; EPCM and powerhouse contracts signed, earthworks and platework are underway and approximately 40% of the capital is now committed with no surprise on costs.

The DFS for the Lafigué greenfield project is expected in Q3 2022 and $44m has been spent in H1-2022 on exploration with over 250,000 meters drilled. Multiple resource updates are expected later this year.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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