Endeavour Reports Strong FY-2023 Results
*ENDEAVOUR REPORTS STRONG FY-2023 RESULTS*
*Production of 1.1Moz at AISC of $967/oz • Adj. EBITDA of $1.0bn • Shareholder returns of $266m*
*OPERATIONAL AND FINANCIAL HIGHLIGHTS* (for continuing operations)
· *Q4-2023 production of **280**koz at an industry-low AISC of $**947**/oz; totalling **1,072**koz at an AISC of $**967**/oz for FY-2023 *
· *11*^*th** consecutive year of achieving or beating production guidance at an industry-leading AISC*
· *Adjusted EBITDA of $**292**m for Q4-2023 and $**1,047**m for FY-2023*
· *Adjusted Net Earnings of $**42**m (or $**0.17**/sh) for Q4-2023 and $**230**m (or $**0.93**/sh) for FY-2023*
· *Operating Cash Flow before changes in WC of $**246**m (or $**1.00**/sh) for Q4-2023 and $**746**m (or $**3.02**/sh) for FY-2023*
· *Healthy financial position with net debt of $**555**m and leverage of **0.50**x Net Debt / Adj. EBITDA (LTM) despite investing $**548**m in organic growth and exploration and delivering $**266**m in shareholder returns during the year*
*ROBUST SHAREHOLDER RETURNS*
· *FY-2023 dividend of $200m and share buybacks of $66m; 52% more than the minimum commitment*
· *Shareholder returns total $**903**m since first payment in Q1-2021, 77% more than the minimum commitment *
*ATTRACTIVE ORGANIC GROWTH*
· *Sabodala-Massawa expansion and Lafigué project both on budget and on track for first gold in Q2-2024*
· *Group M&I resources increased by **1.4**Moz or **6%** year-on-year to **26.7**Moz as exploration prioritised the Tanda-Iguela project increasing its M&I resources by 303% to 4.5Moz, while P&P reserves decreased by **1.3**Moz or **9%** year-on-year to **13.9**Moz, largely due to depletion, with resource to reserve conversion a key focus in 2024 *
*London, 27 March 2024 *– Endeavour Mining plc (LSE:EDV, TSX:EDV, OTCQX:EDVMF) (“Endeavour”, the “Group” or the “Company”) is pleased to announce its FY-2023 operating and financial results, with highlights provided in Table 1 below.
*Table 1: Highlights from continuing operations*^*1
*
All amounts in US$ million unless otherwise specified *THREE MONTHS ENDED* *YEAR ENDED*
31 December 2023 30 September
2023 31 December 2022 31 December 2023 31 December 2022 Δ FY-2023 vs. FY-2022
*OPERATING DATA*
Gold Production, koz 280 281 294 1,072 1,161 (8)%
Gold Sold, koz 285 278 290 1,084 1,150 (6)%
All-in Sustaining Cost^2, $/oz 947 967 885 967 849 +14%
Realised Gold Price^3, $/oz 1,945 1,903 1,760 1,919 1,808 +6%
*CASH FLOW*
Operating Cash Flow before changes in working capital 246 121 244 746 982 (24)%
Operating Cash Flow before changes in working capital^2, $/sh 1.00 0.49 0.99 3.02 3.96 (24)%
Operating Cash Flow 167 115 288 619 910 (32)%
Operating Cash Flow^2, $/sh 0.68 0.47 1.17 2.51 3.67 (32)%
*PROFITABILITY*
Net Earnings Attributable to Shareholders (160) 60 (10) (23) 194 (112)%
Net Earnings, $/sh (0.65) 0.24 (0.04) (0.09) 0.78 (112)%
Adj. Net Earnings Attributable to Shareholders^2 42 70 14 230 293 (22)%
Adj. Net Earnings^2, $/sh 0.17 0.28 0.06 0.93 1.18 (21)%
EBITDA^2 70 262 205 773 1,044 (26)%
Adj. EBITDA^2 292 263 256 1,047 1,133 (8)%
*SHAREHOLDER RETURNS^2*
Shareholder dividends paid — 100 — 200 170 +18%
Share buybacks 26 20 24 66 99 (34)%
*ORGANIC GROWTH^2*
Growth capital spend 155 116 55 448 127 +253%
Exploration spend from continuing operations 23 27 14 101 71 +42%
*FINANCIAL POSITION HIGHLIGHTS*
Net Debt, (Net Cash)^2 555 445 (121) 555 (121) n.a.
Net Debt, (Net Cash) / LTM Trailing adj. EBITDA^4 0.50x 0.40x (0.09)x 0.50x (0.09)x n.a.
^1 Continuing operations excludes the Boungou and Wahgnion mines which were divested on 30 June 2023 and the Karma mine which was divested on 10 March 2022. ^2This is a non-GAAP measure, refer to the non-GAAP Measures section for further details. ^3Realised gold price are inclusive of the Sabodala-Massawa stream and the realised gains/losses from the Group’s revenue protection programme. ^4Last Twelve Months (“LTM”) Trailing Adj. EBITDA includes EBITDA generated by discontinued operations.
Management will host a conference call and webcast today, 27 March 2024, at 9:30 am EDT / 1:30 pm GMT. For instructions on how to participate, please refer to the conference call and webcast section at the end of the news release. Today the Management Discussion & Analysis, audited Financial Statements and Annual Report for the year ended 31 December 2023 have been submitted to the National Storage Mechanism and filed on SEDAR. The documents will shortly be available for inspection on the Company’s website and at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism. In addition, the Company has published its 2023 Sustainability Report, which will shortly be available on the Company’s website.
Ian Cockerill, Chief Executive Officer, commented: “I am delighted to have been appointed CEO of Endeavour at such a pivotal moment. As you can see from our 2023 results, Endeavour is well positioned with a high-quality portfolio and a resilient business model that is underpinned by a disciplined approach to capital allocation. During the year we delivered against our key objectives and produced 1.1Moz of gold, meeting our production guidance for the eleventh consecutive year, while achieving an all-in sustaining cost of $967 per ounce, maintaining our status as one of the lowest cost producers within the sector.
We continued to increase the quality of our portfolio as we advanced our two high-margin development projects, the Sabodala-Massawa expansion and the Lafigué development project, which are both on budget and slightly ahead of schedule with commissioning underway at both projects. We also divested our non-core Boungou and Wahgnion mines during the year, further strengthening the quality of the portfolio and increasing its geographic diversification.
Our exploration programme continues to support our robust project pipeline, with the addition of 3.4 million ounces of Indicated resources at our Tanda-Iguela discovery in Côte d’Ivoire. This 4.5 million ounce discovery is not only one of the most significant discoveries in West Africa in the last ten years, but a potential tier 1 deposit for Endeavour, that we discovered for an industry low cost of $11 per ounce.
In addition to investing over $548 million in organic growth and exploration during the year, we returned $266 million to our shareholders, through dividends and share buybacks. We returned $227 dollars for every ounce of gold that we produced, reiterating our commitment to delivering attractive shareholder returns.
The foundations are in place for 2024 to be a transformational year of delivery. I am focused on completing our growth projects and transitioning to a more cash generative phase, that will prioritise de-levering the balance sheet and delivering enhanced shareholder returns, ensuring that the growth that we unlock, immediately benefits all our stakeholders.”
*INVESTIGATION INTO CHIEF EXECUTIVE OFFICER’S MISCONDUCT COMPLETED*
· As previously announced on 4 January 2024, the contract with former President and Chief Executive Officer, Sébastien de Montessus, was terminated for serious misconduct following an investigation undertaken by the Board of Directors into an irregular payment instruction issued by him, related to the disposal of the Agbaou asset undertaken by the Company. As a result of his serious misconduct, the Remuneration Committee of the Board determined to claw back remuneration totalling $29.1 million as announced on 18 January 2024.
· The Board of Directors of Endeavour announced today, 27 March 2024, that the investigation is now complete and the key outcomes are:
· No restatement of historic financial statements and no material impact on 2023 annual financial results issued today, which are the subject of an unmodified audit opinion.
· Investigation found that Mr de Montessus, acting with certain others who are not employees of the Group:
· diverted a US$5.9 million payment to a third-party company in March 2021, and concealed his actions with repeated false representations to management, the Board and auditors;
· caused Endeavour to make two payments totalling US$15.0 million to the same third-party company in August and November 2020, deliberately disguising them as advance payments to a contractor through repeated false representations to management.
· No evidence of bribery, or of any payments being made to sanctioned persons or to terrorist groups.
· Ultimate beneficiaries of these payments have not been discovered, despite extensive investigation, as the recipient entity was liquidated immediately after the funds were transferred.
· Mr de Montessus provided implausible and untrue explanations of his conduct during the course of the Investigation.
· The Investigation is now complete.
· Summary of actions taken and proposed:
· Mr de Montessus was terminated as CEO and President on 4 January.
· Clawback of remuneration totalling US$29.1 million announced on 18 January.
· Noting that these payments involved deliberate circumvention of our existing controls framework, the Board has nonetheless accelerated its review of internal controls in line with the new UK Corporate Governance Code, and has made immediate adjustments to certain controls relating to M&A activity.
· For further information, please refer to the 2023 Annual Report at the following link.
· The Board appointed Ian Cockerill, formerly Deputy Chair of the Board, as permanent Chief Executive Officer and Executive Director on 4 January. Ian brings over four decades of experience in the global natural resources sector and has held senior operational, project and executive positions at major mining companies, including Chief Executive Officer of Gold Fields and Anglo Coal.
*SHAREHOLDER RETURNS PROGRAMME*
· Endeavour is pleased to continue to deliver attractive shareholder returns, in line with its capital allocation framework. As previously announced, the FY-2023 dividend amounts to $200.0 million, or $0.81 per share, which represents $25.0 million more than the minimum dividend commitment of $175.0 million for the year, reiterating Endeavour's strong commitment to paying supplemental shareholder returns. Endeavour’s H2-2023 dividend amounts to $100m or $0.41 per share and was paid on 25 March 2024 to shareholders of record on 23 February 2024.
· Shareholder returns are being supplemented through the Company’s share buyback programme. A total of $65.7 million, or 3.0 million shares were repurchased during FY-2023, of which $25.7 million or 1.3 million shares were repurchased in Q4-2023. Furthermore, a total of $12.6 million or 0.7 million shares have been repurchased in FY-2024 up until 22 March 2024.
· As shown in the table below, Endeavour has returned $266.4 million to shareholders for FY-2023 through dividends and share buybacks, 52% above the $175.0 million minimum dividend commitment for the year, and equivalent to $227 per ounce produced from all operations. Since the shareholder returns programme began to be paid in Q1-2021, Endeavour has returned over $903.0 million to shareholders in the form of dividends and buybacks, which represents $393.0 million or 77% more than its minimum commitment over the period.
*Table 2: Actual Shareholder Returns vs. Minimum Commitment*
*MINIMUM* *ACTUAL SHAREHOLDER RETURNS* *SUPPLEMENTAL*
(All amounts in US$m) *DIVIDEND COMMITMENT* DIVIDENDS BUYBACKS COMPLETED TOTAL RETURNS * SHAREHOLDER RETURNS*
FY-2020 60 60 — 60 —
FY-2021 125 140 138 278 +153
FY-2022 150 200 99 299 +149
FY-2023 175 200 66 266 +91
*TOTAL* *510* *600* *303* *903* *+393*
· As previously stated, Endeavour implemented a dividend policy in 2021, with the goal of supplementing its minimum dividend commitment with additional dividends and share buybacks provided that the prevailing gold price remained above $1,500/oz and Endeavour’s leverage remained below 0.5x Net Debt / Adj. EBITDA. Endeavour's goal is to increase its shareholder returns programme once its organic growth projects are completed, while simultaneously strengthening its balance sheet, thereby ensuring that its efforts to unlock growth immediately benefit all its stakeholders. Endeavour's next semi-annual dividend is expected to be announced in Q3-2024, along with its Q2 and H1-2024 financial results.
· As announced on 20 March 2024, Endeavour has received approval from the Toronto Stock Exchange (“TSX”) to renew its Normal Course Issuer Bid (“NCIB”) for its share buyback programme. Under the NCIB, Endeavour is entitled to repurchase up to 5% of its total issued and outstanding shares as of 13 March 2024, or 12,259,943 shares, during the 12 month period of the NCIB, and up to 25% of the average daily trading volume (“ADTV”) for the six months ended 29 February 2024, calculated in accordance with the rules of the TSX for purposes of the NCIB or 96,878 shares during each trading day, excluding purchases made in accordance with the block purchase exemptions under applicable TSX policies. All ordinary shares repurchased under the share repurchase programme will be cancelled. The renewed NCIB commenced on 22 March 2024 and ends on 21 March 2025, or such earlier date as Endeavour may complete its purchases pursuant to the notice of intention filed with the TSX.
· Endeavour’s previously announced automatic share purchase agreement with Stifel Nicolaus Europe Limited (“Stifel”) will continue to allow for the purchase of ordinary shares, subject to certain trading parameters, at times when Endeavour would not be active in the market due to regulatory close periods, its own internal trading black-out periods, insider trading rules or otherwise. Outside of these periods, ordinary shares may be repurchased in accordance with management’s discretion and in compliance with applicable law.
· Share purchases will be made by Stifel (or through its agent, Stifel Nicolaus Canada, Inc.) on the TSX and the London Stock Exchange, as well as through other designated exchanges and alternative trading systems in accordance with applicable regulatory requirements. The price paid for repurchased ordinary shares will be the market price of such ordinary shares at the time of acquisition or such other price as may be permitted in accordance with applicable regulatory requirements and Endeavour’s existing shareholder authority to conduct share repurchases. Endeavour intends to ask shareholders to renew that authority at its 2024 AGM.
*CASH FLOW SUMMARY*
The table below presents the cash flow for Endeavour for the three month period ended 31 December 2023, 30 September 2023, and 31 December 2022, and the twelve month period ended 31 December 2023 and 31 December 2022 with accompanying explanations below.
*Table 3: Cash Flow Summary*
*THREE MONTHS ENDED* *YEAR ENDED*
All amounts in US$ million unless otherwise specified Notes 31 December 2023 30 September
2023 31 December 2022 31 December 2023 31 December 2022
*Net cash from/(used in), as per cash flow statement:*
Operating cash flows before changes in working capital^1 246 121 244 746 982
Changes in working capital^1 (80) (5) 44 (127) (73)
Cash generated from discontinued operations — — 23 27 108
Cash generated from operating activities [1] 167 115 311 647 1,017
Cash used in investing activities [2] (211) (195) (172) (821) (521)
Cash used in financing activities [3] (79) (125) (53) (277) (380)
Effect of exchange rate changes on cash 15 (15) 34 17 (71)
*(DECREASE)/INCREASE IN CASH* *(108)* *(219)* *119* *(434)* *45*
Cash and cash equivalent position at beginning of period 625 845 833 951 906
*CASH AND CASH EQUIVALENT POSITION AT END OF PERIOD* *517* *625* *951* *517* *951*
^1Continuing Operations excludes the Boungou and Wahgnion mines which were divested on 30 June 2023 and the Karma mine which was divested on 10 March 2022.
*NOTES:*
1) Operating cash flows increased by $51.8 million from $114.9 million (or $0.47 per share) in Q3-2023 to $166.7 million (or $0.68 per share) in Q4-2023 due to a higher realised gold price, lower taxes paid related to the timing of withholding tax payments and tax payments at Sabodala-Massawa, and lower exploration costs, partially offset by an increased working capital outflow.
Operating cash flows decreased by $370.6 million from $1,017.1 million (or $4.10 per share) in FY-2022 to $646.5 million (or $2.62 per share) in FY-2023 due to higher operating expenses, exploration costs and the timing of tax payments compounded by a reduction in cashflows generated by discontinued operations following the disposal of the Boungou and Wahgnion mines on 30 June 2023.
Notable variances are summarised below:
· Working capital was an outflow of $79.5 million in Q4-2023, an increase of $74.3 million over the Q3-2023 outflow of $5.2 million. The outflow in Q4-2023 was largely driven by an outflow in trade and other receivables of $63.6 million related to the timing of VAT receipts, an outflow of inventories of $15.3 million mainly related to increased stockpiles at Sabodala-Massawa and Ity and a trade and other payables outflow of $3.0 million primarily related to the timing of supplier payments at Houndé and Ity. The working capital outflow in Q4-2023 was partially offset by an inflow in prepaid expenses and other items of $2.4 million related to decreased supplier prepayments at Houndé.
Working capital was an outflow of $126.9 million in FY-2023, an increase of $54.3 million over the FY-2022 outflow of $72.6 million, driven by an increase in outflows related to trade and other receivables due to the timing of VAT receipts and an increase in outflows related to increased stockpiles at Sabodala-Massawa and Ity.
· Gold sales from continuing operations increased from 278koz in Q3-2023 to 285koz in Q4-2023 largely due to the timing of gold sales. The realised gold price from continuing operations increased from $1,898 per ounce for Q3-2023 to $2,007 per ounce for Q4-2023. Inclusive of the Group’s Revenue Protection Programme, the realised gold price increased from $1,903 per ounce for Q3-2023 to $1,945 per ounce for Q4-2023.
Gold sales from continuing operations decreased from 1,150koz in FY-2022 to 1,084koz in FY-2023, due to lower Group production from continuing operations in FY-2023. The realised gold price from continuing operations increased from $1,791 per ounce for FY-2022 to $1,939 per ounce for FY-2023. Inclusive of the Group’s Revenue Protection Programme, the realised gold price increased from $1,808 per ounce for FY-2022 to $1,919 per ounce for FY-2023.
· Total cash cost per ounce decreased from $848 per ounce in Q3-2023 to $837 per ounce in Q4-2023, due to lower cash costs at Mana driven by lower open pit mining costs, higher by-product credits and an increase in capitalised waste, and lower cash costs at Sabodala-Massawa following increased gold production volumes, partially offset by higher cash costs at Houndé driven by higher royalties and G&A costs.
Total cash cost per ounce increased from $723 per ounce in FY-2022 to $837 per ounce in FY-2023 due to lower production and gold sold at Sabodala-Massawa and Mana, increases in fuel and consumable costs across the Group, higher royalty costs following a higher realised gold price and adverse impacts associated with the stronger EUR to USD foreign exchange rate in FY-2023.
· As shown in the table below, income taxes paid decreased by $71.1 million from $142.0 million in Q3-2023 to $70.9 million in Q4-2023 due largely to a decrease in taxes paid at Sabodala-Massawa, as the final tax payments related to the 2022 tax year were made in Q3-2023, and a decrease in other tax payments from $50.7 million in Q3-2023 to $30.3 million in Q4-2023 due to lower withholding tax payments linked to cash that was upstreamed from operating entities.
Income taxes paid increased by $182.6 million from $158.3 million in FY-2022 to $340.9 million in FY-2023 due to an increase in Sabodala-Massawa’s provisional year-end tax payments, which benefitted in the prior year from the lower 2021 tax base due to the tax holiday at the Massawa permit that expired in 2021. Taxes also increased due to withholding tax payments on cash upstreamed from the operating entities, higher taxes paid at Ity due to changes in taxation on the Floleu permit, and the timing of provisional tax payments at Houndé and Mana for 2023 which have a higher tax base.*Table 4: Tax Payments from continuing operations*
*THREE MONTHS ENDED* *YEAR ENDED*
All amounts in US$ million 31 December
2023 30 September
2023 31 December
2022 31 December
2023 31 December
2022
Houndé 16.5 11.3 9.8 51.7 46.8
Ity 18.6 9.3 — 61.5 30.5
Mana 5.5 5.4 2.7 26.8 12.9
Sabodala-Massawa — 65.3 — 116.4 16.8
Other^1 30.3 50.7 — 84.5 51.3
*Taxes paid by continuing operations* *70.9* *142.0* *12.5* *340.9* *158.3*
^1Included in the “Other” category is income and withholding taxes paid by corporate and exploration entities.
2) Cashflows used in investing activities increased by $15.9 million from $195.1 million in Q3-2023 to $211.0 million in Q4-2023 due to accelerated growth capital spend in Q4-2023 at the Sabodala-Massawa expansion and the Lafigué development project.
Cashflows used in investing activities increased by $299.4 million from $521.4 million in FY-2022 to $820.8 million in FY-2023 largely due to the increases in growth capital incurred at the Sabodala-Massawa expansion, which was launched in Q2-2022, and the Lafigué development project, which was launched in Q4-2022, as well as increases in non-sustaining capital at the Ity and Mana mines. This was partially offset by a decrease in sustaining capital at Sabodala-Massawa.
· Sustaining capital from continuing operations decreased from $22.5 million in Q3-2023 to $20.0 million in Q4-2023 due to lower sustaining capital expenditure at Houndé and Sabodala-Massawa following heavy mining equipment purchases made in the prior quarter.
Sustaining capital from continuing operations decreased from $97.5 million in FY-2022 to $91.8 million in FY-2023 due to decreased sustaining capital at Sabodala-Massawa related to decreased waste development activities, partially offset by an increase in sustaining capital at Mana related to increased underground development and stope production activity. Sustaining capital expenditure at Ity and Houndé were broadly consistent with the prior year.
· Non-sustaining capital from continuing operations increased from $49.5 million in Q3-2023 to $52.5 million in Q4-2023, largely due to an increase in non-sustaining capital expenditure at Houndé related to pre-stripping activities in the Kari Pump pit, and at Ity related to increased cutback activities at the Walter pit and increased spend on the Mineral Sizer optimisation initiative. This was partially offset by decreased non-sustaining capital at Sabodala-Massawa and Mana related to decreased non-sustaining waste development.
Non-sustaining capital from continuing operations increased from $192.6 million in FY-2022 to $245.3 million in FY-2023 due to increased non-sustaining capital expenditure at Ity related to the construction of the Recyn and Mineral Sizer optimisation initiatives, the embankment raise at TSF 1 and the construction of TSF 2, and at Sabodala-Massawa due to increased pre-stripping activities as new pits were opened. This was partially offset by decreased non-sustaining capital expenditure at Mana as underground mine development advanced to stope production incurring less non-sustaining capital underground waste development. Non-sustaining capital expenditure at Houndé was broadly consistent with the prior year.
· Growth capital increased from $116.2 million in Q3-2023 to $155.0 million in Q4-2023, as construction activities at the Sabodala-Massawa expansion and the Lafigué development project accelerated ahead of first gold production at both projects, expected in Q2-2024. Growth capital expenditure during the quarter also included $1.5 million for technical study work related to the Kalana project.
Growth capital increased from $126.5 million in FY-2022 to $447.5 million in FY-2023 largely due to the acceleration of construction activities at the Sabodala-Massawa expansion, which was launched in Q2-2022, and the Lafigué development project, which was launched in Q4-2022.
3) Cash flows used in financing activities decreased by $45.6 million from an outflow of $124.6 million in Q3-2023 to an outflow of $79.0 million in Q4-2023 largely due to the timing of dividend payments to shareholders and reduced dividend payments to minorities compared to the prior period. Cash flows used in financing activities in Q4-2023 included a $70.0 million repayment of the RCF during the quarter, payments of financing and other fees of $36.7 million related to the coupon payments for the senior notes and the RCF, payments for the acquisition of the Company’s own shares through its share buyback programme of $24.7 million, payment of dividends to minorities of $12.7 million, and repayment of finance and lease obligations of $7.0 million. Financing cash outflows were party offset by a $72.1 million drawdown of the Lafigué term loan.
Cash flows used in financing activities decreased by $103.5 million from an outflow of $380.1 million in FY-2022 to an outflow of $276.6 million in FY-2023 largely due to drawings on the Company’s RCF during the year offsetting the financing cash outflows from the settlement of the Company’s convertible notes. Cash flows used in financing activities in FY-2023 included the $330.0 million settlement of the Company’s convertible notes, dividends paid to shareholders of $200.4 million, payments of dividends to minorities of $74.7 million, repayment of the drawn portions of the Company’s RCF of $70.0 million, payments of financing and other fees of $68.6 million largely related to the coupon payments for the senior notes and the RCF, payments for the acquisition of the Company’s own shares through its share buyback programme of $61.5 million, settlement of contingent considerations of $50.0 million that was paid to Barrick Gold as part of the Massawa acquisition, cash settlement of call rights of $28.5 million related to outstanding call rights from Teranga, repayment of finance and lease obligations of $20.5 million and payments for the settlement of tracker shares of $18.4 million. Financing cash outflows were partly offset by a $642.2 million drawdown of long-term debt facilities (including $535.0 million drawn from the Company’s RCF and $107.2 million drawn from the Lafigué term loan) and receipts on exercise of options and warrants of $5.9 million.
*EARNINGS FROM CONTINUING OPERATIONS*
The table below presents the earnings and adjusted earnings for Endeavour for the three month periods ended 31 December 2023, 30 September 2023, and 31 December 2022 and the twelve month periods ended 31 December 2023 and 31 December 2022 with accompanying explanations below.
*Table 5: Earnings from Continuing Operations*^*1*
*THREE MONTHS ENDED* *YEAR ENDED*
All amounts in US$ million unless otherwise specified Notes 31 December
2023 30 September
2023 31 December
2022 31 December
2023 31 December
2022
Revenue [4] 579 530 508 2,115 2,069
Operating expenses [5] (209) (205) (186) (787) (720)
Depreciation and depletion [6] (133) (114) (137) (448) (476)
Royalties [7] (40) (32) (31) (134) (125)
*Earnings from mine operations* *198* *178* *154* *745* *749*
Corporate costs [8] (11) (10) (15) (49) (48)
Impairment of mining interests and goodwill [9] (108) — (3) (123) (3)
Share-based compensation (7) (5) (18) (29) (33)
Other expense [10] (45) (7) (28) (55) (44)
Exploration costs [11] (6) (15) (7) (48) (34)
*Earnings from operations* *21* *141* *83* *443* *587*
(Loss)/gain on financial instruments [12] (84) 7 (15) (118) (19)
Finance costs (19) (19) (15) (71) (61)
*Earnings before taxes* *(82)* *129* *54* *254* *507*
Current income tax expense [13] (75) (54) (48) (268) (258)
Deferred income tax (expense)/recovery [14] 10 (2) 1 57 8
*Net comprehensive earnings from continuing operations* *[15]* *(148)* *74* *7* *43* *257*
Add-back adjustments [16] 205 13 19 262 109
*Adjusted net earnings from continuing operations* *57* *87* *26* *305* *366*
Portion attributable to non-controlling interests 15 17 12 75 73
*Adjusted net earnings from continuing operations attributable to shareholders of the Company* *[17]* *42* *69* *14* *230* *293*
*Adjusted net earnings per share from continuing operations* *0.17* *0.28* *0.06* *0.93* *1.18*
^1 Continuing Operations excludes the Boungou and Wahgnion mines which were divested on 30 June 2023 and the Karma mine which was divested on 10 March 2022.
*NOTES:*
4) Revenue increased by $49.3 million from $530.0 million in Q3-2023 to $579.3 million in Q4-2023 due to a $109 per ounce increase in the realised gold price from $1,898 per ounce in Q3-2023 to $2,007 per ounce in Q4-2023, exclusive of the Company’s Revenue Protection Programme, further compounded by an increase in gold sales from continuing operations from 278koz in Q3-2023 to 285koz in Q4-2023 due to the timing of gold sales.
Revenue increased by $45.6 million from $2,069.0 million in FY-2022 to $2,114.6 million in FY-2023 due to a $148 per ounce increase in the realised gold price, exclusive of the Company’s Revenue Protection Programme, from $1,791 per ounce in FY-2022 to $1,939 per ounce in FY-2023, which was partially offset by a decrease in gold sales from continuing operations from 1,150koz in FY-2022 to 1,084koz in FY-2023 due to lower production at the Sabodala-Massawa and Mana mines.
5) Operating expenses increased by $3.4 million from $205.3 million in Q3-2023 to $208.7 million in Q4-2023 largely due to the matching of accrued expenses from Q3-2023 associated to ounces produced in Q3-2023 and subsequently sold in Q4-2023, particularly at Sabodala-Massawa where ounces sold exceeded quarterly production.
Operating expenses increased by $67.2 million from $720.0 million in FY-2022 to $787.2 million in FY-2023 due to increased mining volumes at Houndé and Mana, increased processing volumes at Houndé, Sabodala-Massawa and Ity, increased fuel and consumable costs, and the impact of the stronger EUR to USD foreign exchange rate increasing costs in FY-2023 compared to FY-2022.
6) Depreciation and depletion increased by $18.2 million from $114.4 million in Q3-2023 to $132.6 million in Q4-2023 mainly due to higher production volumes achieved at Sabodala-Massawa as mining in the Sabodala pit, which is approaching the end of its mine life, incorporated higher associated depreciation rates.
Depreciation and depletion decreased by $27.6 million from $476.0 million in FY-2022 to $448.4 million in FY-2023 due to lower production volumes in combination with the lower depreciable base following the 2022 reserves and resource update.
7) Royalties increased by $8.4 million from $31.9 million in Q3-2023 to $40.3 million in Q4-2023 due to an increase in the realised gold price as noted above, higher volumes of gold sold and the previously disclosed impact of the change in the sliding scale royalty rates in Burkina Faso, which came into effect in November 2023.
Royalties increased by $9.2 million from $124.5 million in FY-2022 to $133.7 million in FY-2023 due to an increase in the realised gold price as noted above and the previously disclosed impact of the change in the sliding scale royalty rates in Burkina Faso, which came into effect in November 2023, partially offset by lower volumes of gold sold.
8) Corporate costs increased slightly from $10.4 million in Q3-2023 to $11.1 million in Q4-2023 due to higher general corporate costs associated with bonus accruals, partially offset by a reduction in employee compensation due to a credit in remuneration tied to forfeited compensation from the Company’s former Chief Executive Officer.
Corporate costs increased slightly from $47.7 million in FY-2022 to $49.0 million in FY-2023 due to higher employee and professional service costs partially offset by a reduction in general corporate overhead.
9) The Group recognised a non-cash impairment of mining interest and goodwill of $122.6 million in FY-2023 consisting of $65.7 million recognised against exploration properties where there is no near term activities planned and $56.9 million recognised against the Kalana project based on updated assumptions from the ongoing technical studies. The recognition of impairments against exploration properties primarily related to a $32.5 million impairment of the Kamsongo license on the Nabanga property in Burkina Faso in Q4-2023, $16.9 million recognised against the Afema exploration properties in Côte d’Ivoire that are in the process of being sold (of which $14.8 million was recognised in Q2-2023 and a further $2.1 million recognised in Q4-2023), and $16.3 million related to other exploration properties where there are no intentions to renew the licenses. In addition, a $56.9 million impairment was recognised on the Kalana project in Q4-2023 in relation to the envisaged changes to capital expenditure assumptions within the ongoing technical study.
10) The Group recognised other expenses of $54.8 million in FY-2023 consisting of $24.9 million in tax settlements primarily related to indirect taxes at Sabodala-Massawa, $18.7 million in expected credit losses from cash receivables related to the Boungou and Wahgnion divestment (see additional details in the Non-Core Asset Divestment section below), $9.3 million in impairments of other receivables from Allied Gold ($5.9 million) and VAT ($3.4 million), a $4.3 million loss on the disposal of assets, $4.1 million in expected credit losses from other receivables, $1.8 million in acquisition and restructuring costs, and $0.8 million in community donations which were partly offset by $9.1 million in insurance proceeds received in relation to community disturbances.
11) Exploration costs decreased by $9.3 million from $14.9 million in Q3-2023 to $5.6 million in Q4-2023 as the Group’s exploration programmes largely focused on analysis and interpretation of drilling results following the conclusion of the years’ drilling programmes early in the quarter.
Exploration costs increased by $13.6 million from $33.9 million in FY-2022 to $47.5 million in FY-2023 largely due to the increased expense at the Tanda-Iguela greenfield property, where, as published on 29 November 2023, an extensive drilling programme consisting of 167,436 metres of drilling resulted in the delineation of a 4.5Moz Indicated resource, grading 1.97 g/t Au, which marked a 303% increase over the maiden Indicated resource estimate published in late 2022, thereby confirming its potential to be a Tier 1 asset.
12) The loss on financial instruments decreased by $91.5 million from a gain of $7.2 million in Q3-2023 to a loss of $84.3 million in Q4-2023 largely due to an increase in unrealised losses on gold collars and forward sales and the change in fair value of Net Smelter Return (“NSR”) royalties related to asset sales partially offset by gains on foreign exchange movements. The loss on financial instruments in Q4-2023 included unrealised losses on gold collars and forward sales of $38.9 million, unrealised losses on NSRs related to the Boungou and Wahgnion divestment of $24.3 million, realised losses on gold collars and forward contracts of $17.8 million, and unrealised losses on marketable securities of $11.7 million related to the $50.0 million investment in Allied Gold shares. Losses on financial instruments were partially offset by unrealised foreign exchange gains of $8.0 million, an unrealised gain on foreign currency contracts of $0.7 million and realised gains on foreign currency contracts of $0.4 million.
The loss on financial instruments increased by $98.9 million from a loss of $19.1 million in FY-2022 to a loss of $118.0 million in FY-2023 and comprised of unrealised losses on NSRs and deferred consideration related to asset sales of $24.1 million, realised losses on gold collars and forward contracts of $21.3 million, unrealised losses on gold collars and forward contracts of $21.2 million, an unrealised loss on marketable securities of $20.5 million, a fair value loss on the conversion option of convertible notes of $14.9 million, unrealised foreign exchange losses of $13.3 million, a loss on the fair value of call rights of $9.0 million, unrealised losses on foreign currency contracts of $4.2 million, and a loss on the change in fair value of contingent considerations of $0.6 million related to Teranga’s acquisition of the Massawa property. Losses on financial instruments were partially offset by an unrealised gain on the conversion of financial assets of $6.6 million related to the listing of Allied Shares and a realised gain on foreign currency contracts of $4.0 million and a gain on other financial instruments of $0.5 million.
As previously disclosed, in order to increase cash flow visibility during its construction and de-leveraging phases, Endeavour entered into a Revenue Protection Programme, using a combination of zero premium gold collars and forward sales contracts, to cover a portion of its 2023, 2024 and 2025 production.
· During Q4-2023, 30koz were settled into forward sales contracts for an average gold price of $1,828/oz.
· For FY-2024, approximately 450koz (approximately 113koz per quarter), are expected to be delivered into a collar with an average call price of $2,400/oz and an average put price of $1,807/oz. In addition, during H1-2024, a total of approximately 70koz (approximately 35koz per quarter) are expected to be settled in forward sales contracts with an average gold price of $2,033/oz.
· For FY-2025, approximately 200koz (approximately 50koz per quarter) are expected to be delivered into a collar with an average call price of $2,400/oz and an average put price of $1,992/oz.
As previously disclosed, Endeavour entered into a Growth Capital Protection Programme designed to enhance cost certainty for a portion of its growth capital expenditure at its Sabodala-Massawa expansion and Lafigué growth projects. The Group had entered into various foreign exchange forward contracts across both the Euro and the Australian Dollar over 2023 and 2024.
· During Q4-2023, €13.6 million was delivered into forward contracts at a blended rate of 1.03 EUR:USD and AU$6.5 million was delivered into forward contracts at a blended rate of 0.69 AUD:USD.
· The total outstanding notional forward contracted quantum is approximately €13.0 million at a blended rate of 1.04 EUR:USD and approximately AU$5.7 million at a blended rate of 0.69 AUD:USD for 2024.
13) Current income tax expense increased by $21.3 million from $53.5 million in Q3-2023 to $74.8 million in Q4-2023 largely due to the recognition of withholding tax expenses of $30.1 million following local Board approvals for cash upstreaming at Ity and increased corporate taxes following higher taxable earnings during the quarter.
Current income tax expense increased by $10.1 million from $257.8 million in FY-2022 to $267.9 million in FY-2023 due to higher withholding tax expenses following larger amounts of cash upstreamed this year, partially offset by lower taxable earnings in FY-2023.
14) Deferred income tax increased by $11.3 million from the deferred income tax expense of $1.6 million in Q3-2023 to a deferred income tax recovery of $9.7 million in Q4-2023 mainly due to the deferred tax impact of the impairment of the Kalana project, partially offset by the effect of foreign exchange remeasurements on deferred tax balances.
Deferred income tax recovery increased by $49.6 million from $7.5 million in FY-2022 to $57.1 million in FY-2023 largely due to the reversal of deferred tax liabilities that were previously recognised on mining interests. These liabilities arose from the difference between Sabodala-Massawa’s tax base and accounting base, which included fair value adjustments when it was initially acquired. In addition, the impairment of the Kalana project reduced its carrying value and the associated deferred tax liability, which also arose when the project was acquired.
15) Net comprehensive earnings from continuing operations decreased by $221.1 million from net comprehensive earnings of $73.6 million in Q3-2023 to a net comprehensive loss of $147.5 million in Q4-2023. The decrease in earnings is largely driven by the loss on financial instruments following the mark-to-market of gold collars, forward contracts and changes in foreign exchange rates in addition to the change in fair value of NSRs and marketable securities, the non-cash impairment charge on mineral interests, higher other expenses reflecting the impairment of deferred cash consideration from asset disposals and tax claims related to Sabodala-Massawa, higher tax expenses driven by the recognition of withholding taxes during the quarter and higher royalties.
Net comprehensive earnings from continuing operations decreased by $214.1 million from $256.8 million in FY-2022 to $42.7 million in FY-2023. The decrease in earnings is largely driven by the loss on financial instruments following the mark-to-market of gold collars, forward contracts and changes in foreign exchange rates, the non-cash impairment charge on mineral interests, higher tax expenses, higher exploration expense, and lower earnings from mine operations due to higher operating expenses and royalties.
16) For Q4-2023, adjustments included a non-cash impairment charge of $107.8 million as discussed above, a net loss on financial instruments of $66.5 million related to the unrealised loss on forward sales and collars and change in fair value of NSRs and marketable securities, other expenses of $45.1 million primarily related to the impairment of the deferred cash consideration mentioned above and a net loss from discontinued operations of $2.4 million related to a tax payment for the disposed Karma mine, partially offset by a gain on non-cash, tax and other adjustments of $14.8 million that mainly relate to the impact of foreign exchange remeasurements of deferred tax balances.
For FY-2023, adjustments included an impairment charge of $122.6 million related to the Group’s exploration permit portfolio and the Kalana project, a net loss on financial instruments of $96.7 million, related to the unrealised loss on forward sales and collars and a change in fair value of NSRs and marketable securities and the fair value loss on the convertible option of convertible notes and other expenses of $54.8 million, partly offset by a gain on non-cash, tax and other adjustments of $11.8 million that mainly relate to the impact of the foreign exchange remeasurement of deferred tax balance.
17) Adjusted net earnings attributable to shareholders for continuing operations decreased by $27.4 million from $69.5 million (or $0.28 per share) in Q3-2023 to $42.1 million (or $0.17 per share) in Q4-2023, due to higher tax expense, higher depreciation, higher realised losses on gold forwards and higher royalties.
Adjusted net earnings attributable to shareholders for continuing operations decreased by $62.4 million from $292.7 million (or $1.18 per share) in FY-2022 to $230.2 million (or $0.93 per share) in FY-2023 due to lower operating margins, higher exploration costs, higher taxes and higher realised losses on gold forwards.
*SUMMARISED STATEMENT OF FINANCIAL POSITION*
The table below presents the summarised statement of financial position and liquidity for the Group as at 31 December 2023, and 31 December 2022, with accompanying explanations below.
*Table 6: Summarised Statement of Financial Position*
All amounts in US$ million unless otherwise specified Note As at 31
December 2023 As at 31 December 2022
*ASSETS*
Cash and cash equivalents 517 951
Other current assets [18] 603 495
*Total current assets* *1,120* *1,446*
Mining interests [19] 4,157 4,517
Other long term assets [20] 581 451
*TOTAL ASSETS* *5,859* *6,415*
*LIABILITIES*
Other current liabilities [21] 439 462
Current portion of debt [22] 9 337
Income taxes payable [23] 166 247
*Total current liabilities* *613* *1,046*
Long-term debt [24] 1,060 488
Environmental rehabilitation provision 115 165
Other long-term liabilities 58 54
Deferred income taxes 464 575
*TOTAL LIABILITIES* *2,310* *2,327*
*TOTAL EQUITY* *3,548* *4,087*
*TOTAL EQUITY AND LIABILITIES * *5,859* *6,415*
*NOTES:*
18) Other current assets as at 31 December 2023 consisted of $224.9 million of inventories, $269.2 million of trade and other receivables, $39.2 million of prepaid expenses and other, and $69.7 million of other financial assets.
· Inventories decreased by $95.8 million from $326.3 million as at 31 December 2022 to $224.9 million as at 31 December 2023, primarily due to a reduction in spare parts and supplies as a result of the divestment of the Boungou and Wahgnion mines and reclassification of certain ore stockpiles to long-term at Sabodala-Massawa as they are not expected to be processed in the next twelve months.
· Trade and other receivables increased by $162.3 million from $118.4 million as at 31 December 2022 to $269.2 million as at 31 December 2023, primarily due to the consideration-related receivables following the divestment of the Boungou and Wahgnion mines of $111.4 million, an increase in gold sales receivables of $24.5 million due to timing of shipments, an increase in VAT receivables of $30.6 million and an increase in other receivables of $9.5 million related primarily to the residual working capital payment outstanding for the sale of the Boungou and Wahgnion mines. These factors were partly offset by the decrease in advance payments of $13.7 million following the divestment of Boungou and Wahgnion.
· Prepaid expenses and other decreased by $11.9 million from $58.9 million as at 31 December 2022 to $39.2 million as at 31 December 2023, primarily due to the reclassification of the investment in Allied shares after public listing from marketable securities to financial assets and the removal of Boungou and Wahgnion related prepayments. This was in part offset by an increase in insurance and security prepayments across the continuing Group.
· Other financial assets increased by $53.1 million from $3.7 million as at 31 December 2022 to $69.7 million as at 31 December 2023 primarily due to the addition of the current portion of the net smelter royalty (“NSR”) and deferred portion of the consideration for the sale of Boungou and Wahgnion.
19) Mining Interests decreased by $359.9 million from $4,517.0 million as at 31 December 2022 to $4,157.1 million as at 31 December 2023 due to the divestment of the Boungou and Wahgnion assets on 30 June 2023, the impairment on the Kalana project and the impairment of exploration properties, partly offset by $762.6 million of capital expenditure on mining interests during the year.
20) Other long-term assets increased by $129.9 million from $451.3 million as at 31 December 2022 to $581.2 million as at 31 December 2023 and consisted of $323.6 million of long-term stockpiles not expected to be processed in the next twelve months at the Houndé, Ity and Sabodala-Massawa mines, $134.4 million of goodwill allocated to the Sabodala-Massawa and Mana mines, other financial assets of $123.2 million that primarily comprise the deferred cash and NSR consideration elements of the sale of Boungou, Wahgnion and Karma mines, and $41.1 million of restricted cash mainly relating to reclamation bonds.
21) Other current liabilities decreased by $23.2 million from $461.9 million as at 31 December 2022 to $438.7 million as at 31 December 2023 and consisted of $406.9 million of trade and other payables, $17.5 million of other financial liabilities consisting of foreign currency, gold forward derivative contracts, PSU and DSU liabilities, and $14.3 million of lease liabilities. Trade and other payables increased by $52.3 million due to dividends payable to the minority shareholders at Ity and an increase in payables related to the BIOX® and Lafigué growth projects, in part offset by the de-recognition of the Boungou and Wahgnion associated payables following their disposal. Other financial liabilities decreased primarily due to the settlements of the Barrick contingent liability of $50.0 million and the call-rights liability of $28.5 million, in part offset by an increase in derivative financial liabilities.
22) The current portion of debt decreased by $328.1 million from $336.6 million as at 31 December 2022 to $8.5 million as at 31 December 2023 due to the settlement of the Convertible Notes and the associated conversion option during Q1-2023, of which the principal of $330.0 million was repaid in cash at the Company’s election and 835,254 shares were issued to holders of the Convertible Notes to settle the in the money option of $19.2 million as the share price was at a premium to the strike price at maturity.
23) Income taxes payable decreased by $80.9 million from $247.1 million as at 31 December 2022 to $166.2 million as at 31 December 2023 due largely to the de-recognition of Wahgnion and Boungou associated payables, the payment of tax assessments and the timing of 2023 provisional and 2022 true-up tax payments during FY-2023, partly offset by additional income tax expense accrued during FY-2023.
24) The non-current portion of long-term debt increased by $571.8 million from $488.1 million as at 31 December 2022 to $1,059.9 million as at 31 December 2023 due to the additional draw down on the RCF and the Lafigué Term Loan facility.
*Table 7: Summarised Statement of Financial Position*
*THREE MONTHS ENDED* *YEAR ENDED*
All amounts in US$ million unless otherwise specified 31 December
2023 30 September
2023 31 December
2022 31 December
2023 31 December
2022
Cash and cash equivalents [25] 517 625 951 517 951
Principal amount of $500m Senior Notes 500 500 500 500 500
Drawn portion of $645m Revolving Credit Facility 465 535 — 465 —
Local term loan financing 107 35 — 107 —
Principal amount of Convertible Notes — — 330 — 330
*Net Debt / (Net Cash)*^*1* *[26]* *555* *445* *(121)* *555* *(121)*
Trailing twelve month adjusted EBITDA^1,2 1,101 1,113 1,284 1,101 1,284
*Net Debt (Net Cash) / Adjusted EBITDA (LTM) ratio*^*1,2* *0.50x* *0.40x* *(0.09)x* *0.50x* *(0.09)x*
^1Net debt, Adjusted EBITDA, and cash flow per share are Non-GAAP measures. Refer to the non-GAAP measure section in this press release and in the Management Report. ^2Last Twelve Months (“LTM”) Trailing EBITDA adj. includes EBITDA generated by discontinued operations.
25) At quarter end, Endeavour’s liquidity remained strong at $757.1 million, consisting of $517.2 million of cash and cash equivalents, $180.0 million available through the Company’s revolving credit facility and $59.9 million available through the Lafigué term loan.
26) Endeavour’s net debt position has increased by $109.9 million, from $445.0 million at the end of Q3-2023 to $555.0 million at the end of Q4-2023. The net debt / Adjusted EBITDA (LTM) leverage ratio increased from 0.40x at the end of Q3-2023 to 0.50x at the end of Q4-2023.
*NON-CORE ASSET DIVESTMENT*
· On 30 June 2023, Endeavour closed the divestment of its 90% interests in its non-core Boungou and Wahgnion mines in Burkina Faso to Lilium Mining ("Lilium"), a subsidiary of Lilium Capital which is an African and frontier markets focused strategic investment vehicle led by West African entrepreneurs.
· The total consideration is comprised of:
· $130.0 million in the form of a reimbursement of historical shareholder loans, of which a total of $33.0 million has been received to date. The remaining $97.0 million is outstanding.
· $25.0 million in deferred cash consideration payable in two instalments of $10.0 million, which became payable in Q1-2024 and has not been received, and $15.0 million, which will become payable in Q2-2024.
· A deferred cash consideration comprised of 50% of the net free cashflow generated by the Boungou mine until $55.0 million has been paid. No payments have thus far been received for this deferred cash consideration as Lilium has not had any commercial production from Boungou since their acquisition given their election to place the mine on care and maintenance due to supply chain and security challenges.
· An NSR on Wahgnion commencing at closing of the transaction for 4.0% of gold sold, of which a total of approximately $2.6 million has been received as at 31 December 2023.
· An NSR on Boungou commencing at closing of the transaction for 4.0% of gold sold, of which a total of approximately $0.5 million has been received as at 31 December 2023.
· Endeavour recorded an $18.7 million expected credit loss on the outstanding upfront and deferred cash considerations expected to be received from the divestment of the Boungou and Wahgnion mines in Q4-2023. The expected credit loss was calculated using an International Financial Reporting Standard (“IFRS”) provision based on a probability of default (25%) and expected loss on default (60%) applied against the outstanding cash consideration.
· In Q4-2023, Endeavour also recorded a $24.3 million unrealised loss on financial instruments related to the fair value change of the Boungou and Wahgnion NSRs, based on the performance of the assets since the divestment to reflect reduced resource upside assumptions within the expected NSRs proceeds. The updated life-of-mine scenario assumes production is limited to Proven and Probable reserves only.
· Following the completion of the divestment on 30 June 2023, and owing to the significant delay in receipt of payment for the overdue proceeds of the total consideration, Endeavour has filed certain claims against Lilium and its financial institutions as detailed below:
· Endeavour Canada Holdings Corporation (“ECH”) and Endeavour Gold Corporation (“EGC”), wholly owned subsidiaries of the Company, have certain claims (“Claims”) under the terms of (i) a sale and purchase agreement between ECH and Lilium Gold (“LG”) and Lilium Holdings Ltd (“LH”, together with LG, “Lilium”) (the “SPA”) relating to the non-core asset divestment; and (ii) two stand-by letters of credit between related financial institutions in Burkina Faso (the “Financial Institutions”) and each of EGC and ECH (the “SBLCs”), which were established to reimburse historical shareholder loans to the Endeavour group.
· The SPA Claim concerns the failure of Lilium to fulfil certain payment obligations under the SPA in relation to the shareholder loans as well as deferred consideration. The SBLC Claim concerns the failure of the Financial Institutions to honour their parallel payment obligations in relation to the shareholder loans under the SBLCs. The Company has filed for arbitration proceedings against both Lilium (with the London Court of International Arbitration in London) and the Financial Institutions (with the International Chamber of Commerce in Paris) on 1 March, 2024 and 29 February, 2024, respectively. Claims against Lilium are approximately $125.0 million, and claims against the Financial Institutions are approximately $99.0 million (in each case excluding interests and costs).
*OPERATING SUMMARY *
· As previously disclosed, on 28 February 2024, we were saddened to report that a contractor colleague passed away on 27 February 2024, as a result of injuries sustained in an incident that occurred during maintenance activities at the Mana mine in Burkina Faso. The health, safety and welfare of our colleagues are our top priority and we extend our sincere sympathies and support to his family, colleagues and friends. Endeavour has conducted a comprehensive internal investigation into the incident and is focussed on improvements to training, front-line supervision and reviewing operational procedures.
· The Group demonstrated strong safety performance in FY-2023, with a Lost Time Injury Frequency Rate (“LTIFR”) from continuing operations of 0.05. Endeavour will continue to prioritise safety in accordance with its zero-harm target.
· Q4-2023 production from continuing operations amounted to 280koz and was flat over Q3-2023 as the anticipated decrease at Houndé was offset by increases at Sabodala-Massawa (albeit by less than anticipated due to the lower grades encountered in the Sabodala pit as it enters its final phase of mining) and Mana, while Ity remained flat. The all-in sustaining costs ("AISC") decreased by $20/oz or 2.1% over Q3-2023 to approximately $947/oz despite a $24/oz increase in royalty costs linked to the higher realised gold price and the impact of the change in the sliding scale royalty rates in Burkina Faso, which came into effect in November 2023. The AISC benefitted from reductions at Sabodala-Massawa and Mana, which was offset by the increase at Houndé while Ity remained flat.
· FY-2023 production from continuing operations amounted to 1,072koz, achieving the guided 1,060-1,135koz range and marking the 11^th consecutive year of achieving or beating production guidance. The AISC from continuing operations amounted to an industry-leading $967/oz for FY-2023. As shown in the table below, Endeavour achieved near the top-end of the guided $895-950/oz AISC range, albeit 1.8% (representing $17/oz) above due to royalties being $18/oz higher than anticipated due to a higher realised gold price ($1,939/oz compared to the guidance gold price of $1,750/oz) and the increase in the Burkina Faso royalty rate which came into effect in November 2023.
*Table 8: Group Production and All-In Sustaining Cost from Continuing Operations Compared to Guidance*
*2023 ACTUALS* *2023 GUIDANCE*
*PRODUCTION FROM CONTINUING OPERATIONS* *1,072* *1,060* *—* *1,135*
*AISC FROM CONTINUING OPERATIONS BEFORE ROYALTY COSTS, $/oz* *844* *790* *—* *845*
Royalty cost, $/oz^1 123 105
*AISC FROM CONTINUING OPERATIONS, $/oz* *967* *895* *—* *950*
^ 12023 AISC guidance was based on a gold price of $1,750/oz compared to the realised gold price of $1,952/oz
· FY-2023 production from continuing operations of 1,072koz, decreased by 89koz or 8% over the 1,161koz produced in FY-2022 due to lower production at Mana (due to the transition from an open-pit to an underground operation at the Wona deposit) and at Sabodala-Massawa (due to mining and processing of lower grade ore), while both Houndé and Ity achieved record annual production.
· FY-2023 AISC from continuing operations increased by $118/oz, from $849/oz in FY-2022 to approximately $967/oz in FY-2023, as AISC increased at Houndé, Mana, Sabodala-Massawa and at Corporate, in addition to a $15/oz increase in royalty costs (from $108/oz in FY-2022 to $123/oz in FY-2023), which was partially offset by a decrease in AISC at Ity. The FY-2023 AISC from continuing operations increased by $3/oz from the preliminary $964/oz published on 22 January 2024 due to a reclassification of underground development costs at Mana, which was partially offset by a reduction in corporate costs tied to the former Chief Executive Officer’s forfeited compensation.
*Table 9: Group Production*
*THREE MONTHS ENDED* *YEAR ENDED*
All amounts in koz, on a 100% basis 31 December
2023 30 September
2023 31 December
2022 31 December
2023 31 December
2022
Houndé 84 109 63 312 295
Ity 74 73 82 324 313
Mana 37 30 46 142 195
Sabodala-Massawa 85 69 103 294 358
*PRODUCTION FROM CONTINUING OPERATIONS* *280* *281* *294* *1,072* *1,161*
Boungou^1 — — 26 33 116
Wahgnion^1 — — 36 68 124
Karma^2 — — — — 10
*GROUP PRODUCTION* *280* *281* *355* *1,173* *1,410*
^1The Boungou and Wahgnion mines were divested on 30 June 2023. ^2The Karma mine was divested on 10 March 2022.
*Table 10: Group All-In Sustaining Costs*
All amounts in US$/oz
*THREE MONTHS ENDED* *YEAR ENDED*
31 December
2023 30 September
2023 31 December
2022 31 December
2023 31 December
2022
Houndé 901 787 969 943 809
Ity 865 864 847 809 812
Mana 1,482 1,734 999 1,427 994
Sabodala-Massawa 700 840 661 767 691
Corporate G&A 41 40 52 48 43
*AISC FROM CONTINUING OPERATIONS* *947* *967* *885* *967* *849*
Boungou^1 — — 1,118 1,639 1,064
Wahgnion^1 — — 1,376 1,566 1,525
Karma^2 — — — — 1,504
*GROUP AISC*^*3* *947* *967* *954* *1,021* *933*
^1The Boungou and Wahgnion mines were divested on 30 June 2023. ^2The Karma mine was divested on 10 March 2022. ^3This is a non-GAAP measure, refer to the non-GAAP Measures section for further details.
*2024 OUTLOOK*
· As published on 22 January 2023, the production guidance for FY-2024 amounts to 1,130-1,270koz, which marks an increase of up to nearly 200koz or 18.5% over the FY-2023 production from continuing operations of 1,072koz. This is largely due to the start-up of the Sabodala-Massawa BIOX® Expansion project, expected in early May and the Lafigué project, expected in Q2-2024. The AISC is expected to remain consistent with that achieved over recent quarters at an industry-low $955-1,035/oz.
· Group production is expected to be more heavily weighted towards H2-2024 while AISC is also expected to be lower in H2-2024 as the Group's organic growth projects are expected to significantly increase the quality of Endeavour's portfolio and performance at the Houndé mine is expected to be weighted towards H2-2024, due to the mine sequence and a temporary disruption to mining and processing activities due to a strike that occurred during Q1-2024. On 23 January 2024 a strike, led by a sub-contractor, at the Houndé mine resulted in a temporary stoppage of mining and processing activities that lasted for 11 days. The disruption is not expected to impact full year production and AISC guidance for the Houndé mine or the Group. More details on individual mine guidances have been provided in the below sections.
· Total mine capital expenditure for FY-2024, consisting of both sustaining and non-sustaining capital spend, is expected to be approximately $315.0 million, which marks a decrease of $19.2 million or 6% compared to the FY-2023 expenditure.
· Growth capital spend for FY-2024 is expected to amount to approximately $245.0 million, which marks a decrease of $202.5 million or 45% compared to the FY-2023 expenditure of $447.5 million. The FY-2024 expenditure is expected to consist of approximately $75.0 million of remaining growth capital for the Sabodala-Massawa BIOX® Expansion project and approximately $170.0 million of remaining growth capital for the Lafigué project.
· Exploration will continue to be a strong focus in F