Endeavour Reports Q1-2024 Results
*ENDEAVOUR REPORTS Q1-2024 RESULTS*
*On track for 2024 guidance • BIOX® Expansion first gold achieved • Lafigué dry commissioning underway
*
*OPERATIONAL AND FINANCIAL HIGHLIGHTS* (for continuing operations unless otherwise specified)
· *Q1-2024** production of **219**koz at an AISC of $**1,186**/oz; on track to achieve full year 2024 guidance with performance strongly weighted towards H2-2024*
· *Adjusted EBITDA of $**213**m for **Q1-2024**, down **27%** over **Q4-2023*
· *Adjusted Net Earnings of $**41**m (or $**0.17**/sh) for **Q1-2024**, flat over **Q4-2023*
· *Operating Cash Flow before changes in WC of $**137**m (or $**0.56**/sh) for **Q1-2024**, down **44%** over **Q4-2023*
· *Healthy financial position with a net debt position of $**831**m at end Q1-2024 with $**481**m in cash and available liquidity*
*ORGANIC GROWTH*
· *Sabodala-Massawa BIOX^® Expansion first gold pour completed on 18 April 2024, in only 2 years from construction launch, with project on budget and on schedule; expansion ramping up to nameplate capacity in Q3-2024*
· *Lafigué development project on budget and on schedule for first gold in late Q2-2024 with dry commissioning underway*
· *Strong exploration efforts with $**25**m spent in Q1-2024; mineralisation extended at the Assafou deposit*
*ATTRACTIVE SHAREHOLDER RETURNS*
· *$100m or $0.41/sh dividend paid in Q1-2024 bringing FY-2023 dividend to $200m, 14% above minimum commitment*
· *$**13**m or **0.7** million share buybacks completed during Q1-2024 continue to supplement shareholder returns*
· *Shareholder returns total $**917**m since Q1-2021, equivalent to $**211** for every ounce of gold produced over the period*
*London, 2 May 2024 *– Endeavour Mining plc (LSE:EDV, TSX:EDV, OTCQX:EDVMF) (“Endeavour”, the “Group” or the “Company”) announces its operating and financial results for Q1-2024, with highlights provided in Table 1 below.
*Table 1: Q1-2024 Highlights from continuing operations*^*1*
All amounts in US$ million unless otherwise specified
*THREE MONTHS ENDED*
31 March
2024
31 December
2023
31 March
2023
Δ Q1-2024 vs.
Q4-2023
*OPERATING DATA*
Gold Production, koz 219 280 243 (22)%
Gold sold, koz 225 285 252 (21)%
All-in Sustaining Cost^2, $/oz 1,186 947 955 +25%
Realised Gold Price^3, $/oz 2,041 1,945 1,879 +5%
*CASH FLOW*
Operating Cash Flow before changes in working capital 137 246 219 (44)%
Operating Cash Flow before changes in working capital^2, $/sh 0.56 1.00 0.89 (44)%
Operating Cash Flow 55 167 191 (67)%
Operating Cash Flow^2, $/sh 0.22 0.68 0.77 (68)%
*PROFITABILITY*
Net Earnings Attributable to Shareholders (20) (160) (1) n.a.
Net Earnings, $/sh (0.08) (0.65) 0.00 n.a.
Adj. Net Earnings Attributable to Shareholders^2 41 42 65 (2)%
Adj. Net Earnings^2, $/sh 0.17 0.17 0.26 —%
EBITDA^2 156 70 169 +123%
Adj. EBITDA^2 213 292 240 (27)%
*SHAREHOLDER RETURNS*^*2*
Shareholder dividends paid 100 — 100 n.a.
Share buybacks 13 26 11 (50)%
*ORGANIC GROWTH *
Growth capital spend^2 99 155 72 (36)%
Exploration spend 25 23 21 +9%
*FINANCIAL POSITION HIGHLIGHTS*
Net Debt^2 831 555 50 +50%
Net Debt / LTM Trailing adj. EBITDA^4 0.80x 0.50x 0.04x +60%
^1 Continuing Operations excludes the non-core Boungou and Wahgnion mines which were divested on 30 June 2023. ^2This is a non-GAAP measure, refer to the non-GAAP Measures section for further details. ^3Realised gold prices are inclusive of the Sabodala-Massawa stream and the realised gains/losses from the Group’s revenue protection programme.^ 4Last Twelve Months (“LTM”) Trailing EBITDA adj includes EBITDA generated by discontinued operations.
Management will host a conference call and webcast today, 2 May 2024, at 8:30 am EST / 1:30 pm BST. For instructions on how to participate, please refer to the conference call and webcast section at the end of the news release. A copy of the Management Report and Financial Statements have been submitted to the National Storage Mechanism and will be 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.
Ian Cockerill, Chief Executive Officer, commented: “Following my first quarter as Chief Executive Officer at Endeavour, I am pleased that we have continued to make progress against our strategic objectives.
Our operational performance is tracking in line with our Group guidance, as production and costs are expected to progressively improve throughout the year, with performance strongly weighted towards the second half, as our two organic growth projects ramp up, and we expect significantly stronger performance from our Houndé mine.
We were delighted to have achieved first gold at the Sabodala-Massawa Expansion project on 18 April, and at our second growth project, Lafigué, we have now started dry commissioning and are on track to deliver first gold in late Q2, a quarter ahead of schedule. Lafigué will be the fifth growth project that we have completed over the last 10 years, all of which have been built on budget and on schedule in two years or less. As we transition out of this phase of growth, we will renew our focus on optimising our existing assets and continue developing our talented projects team, ahead of the next phase of growth.
Exploration at the Assafou deposit on the Tanda-Iguela property continues to demonstrate the project’s potential to become another cornerstone asset for Endeavour. The aggressive drilling program has further extended the mineralised trend at the Assafou deposit by over 400 metres, while drilling at potential satellite targets, in close proximity to Assafou, has also yielded promising results.
During the quarter we paid our H2-2023 dividend of $100 million to shareholders and completed $13 million worth of share buybacks. Since our first dividend payment in Q1-2021, we have now returned $917 million to shareholders, equivalent to $211 for every ounce produced over the same period, demonstrating our commitment to paying supplemental returns. We have now finished our first shareholder returns programme, and expect to outline the next phase of the programme early in H2.
Despite investing over $235 million in organic growth, exploration and shareholder returns during the quarter, our leverage remains healthy at 0.80x net debt to adjusted EBITDA, and we are well positioned to quickly de-lever our balance sheet and increase our commitment to shareholder returns, to reflect our transition from a phase of growth to one focused on cash flow generation.
We look forward to advancing our strategy this year to further strengthen our business and benefit all our stakeholders.”
*OPERATING SUMMARY *
· Strong safety performance for the Group, with a Lost Time Injury Frequency Rate (“LTIFR”) from continuing operations of 0.11 for the trailing twelve months ending 31 March 2024.
· 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 remain our top priority and we are focussed on improvements to contractor management, front-line supervision and reviewing operational procedures.
· The Group remains on track to achieve its FY-2024 production guidance of 1,130 – 1,270koz at an AISC within the $955 – 1,035/oz range, with performance strongly weighted towards H2-2024, as previously guided.
· Q1-2024 production from continuing operations amounted to 219koz, a decrease of 61koz over Q4-2023, due to lower production at Houndé and Sabodala-Massawa, which was partially offset by higher production at Ity and Mana. Production decreased at Houndé as lower grade ore from the Kari West pit was mined and processed while waste stripping focused on the higher-grade Kari Pump and Vindaloo Main pits in order to access higher grade ore in H2-2024 in line with the mine sequence. In addition, mining and processing activities were temporarily stopped for 11-days due to the previously disclosed sub-contractor led strike. At Sabodala-Massawa, lower tonnage of high grade ore was sourced from the Sabodala pit as the pit approaches the end of its economic mine life. Production increased at Ity, in-line with the mine sequence due to higher grade ore from the Ity pit in the mill feed, and at Mana, as underground mining ramped up to deliver increased underground ore tonnage to the mill.
· Q1-2024 AISC from continuing operations amounted to $1,186/oz, an increase of $239/oz over Q4-2023 due largely to lower volumes of gold sold at Houndé and Sabodala-Massawa, in addition to higher processing costs at Houndé, Sabodala-Massawa and Ity as a result of increased power costs, a harder ore blend and commissioning costs associated with the Recyn optimisation initiative, respectively. The increases were partially offset by a decrease at Mana due to higher gold volumes sold and decreased unit rates as underground development activities continued to ramp-up.
*Table 2: Group Production*
*THREE MONTHS ENDED*
All amounts in koz, on a 100% basis 31 March
2024 31 December
2023 31 March
2023
Houndé 42 84 47
Ity 86 74 91
Mana 42 37 44
Sabodala-Massawa 49 85 61
*PRODUCTION FROM CONTINUING OPERATIONS* *219* *280* *243*
Boungou^1 — — 19
Wahgnion^1 — — 39
*GROUP PRODUCTION* *219* *280* *301*
^1The Boungou and Wahgnion mines were divested on 30 June 2023.
*Table 3: Group All-In Sustaining Costs*
All amounts in US$/oz
*THREE MONTHS ENDED*
31 March
2024 31 December
2023 31 March
2023
Houndé 1,572 901 1,154
Ity 884 865 732
Mana 1,453 1,482 1,130
Sabodala-Massawa 947 700 787
Corporate G&A 49 41 56
*AISC FROM CONTINUING OPERATIONS* *1,186* *947* *955*
Boungou^1 — — 1,252
Wahgnion^1 — — 1,354
*GROUP AISC*^*2* *1,186* *947* *1,022*
^1The Boungou and Wahgnion mines were divested on 30 June 2023. ^2This is a non-GAAP measure, refer to the non-GAAP Measures section for further details
· Sustaining capital expenditure outlook for FY-2024 remains unchanged at $125.0 million, of which $29.7 million was incurred in Q1-2024 primarily related to ongoing waste development activities at Houndé, Sabodala-Massawa and Ity, as well as underground development at Mana.
· Non-sustaining capital expenditure outlook for FY-2024 remains unchanged at $190.0 million, of which $41.3 million was incurred in Q1-2024 primarily related to Solar Power plant construction at Sabodala-Massawa, TSF construction and embankment raises at Houndé, Ity and Mana, pre-stripping activities at the Walter and Bakatouo pits and the ongoing Mineral Sizer optimisation initiative at Ity.
· Growth capital expenditure outlook for FY-2024 remains unchanged at $245.0 million, of which $98.7 million was incurred in Q1-2024 primarily related to construction activities at the BIOX® expansion project in Senegal ($39.8 million incurred in Q1-2024), the Lafigué development project in Cote d’Ivoire ($56.7 million incurred in Q1-2024) and additional spend related to the Kalana project.
*SHAREHOLDER RETURNS PROGRAMME*
· 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 its 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 strengthening its balance sheet, thereby ensuring that its efforts to unlock growth immediately benefit all stakeholders. The updated dividend framework for the next phase of Endeavour’s shareholder returns policy is expected to be announced in early H2-2024.
· As previously announced, the FY-2023 dividend amounted to $200.0 million, which represents $25.0 million or 14% more than the minimum dividend commitment of $175.0 million for the year, reiterating Endeavour's commitment to paying supplemental shareholder returns. The H2-2023 dividend of $100.0 million, or $0.41 per share, was paid on 25 March 2024 to shareholders of record on 23 February 2024.
· During Q1-2024, shareholder returns continued to be supplemented with share buybacks with $12.6 million or 0.7 million shares repurchased during the period. Since the commencement of the buyback program, $316.1 million or 14.4 million shares have been repurchased as at 31 March 2024.
· Since the first shareholder returns payment in Q1-2021, the Company has now returned $916.5 million to shareholders including $600.4 million of dividends and $316.1 million of share buybacks; equivalent to returning $211 per ounce of gold produced from all operations over the same period.
*CASH FLOW SUMMARY*
The table below presents the cash flow and net debt position for Endeavour for the three month period ended 31 March 2024, 31 December 2023, and 31 March 2023, with accompanying explanations below.
*Table 4: Cash Flow and Net Debt*
*THREE MONTHS ENDED*
All amounts in US$ million unless otherwise specified Notes 31 March
2024 31 December
2023 31 March
2023
*Net cash from/(used in), as per cash flow statement:*
Operating cash flows before changes in working capital^1 137 246 219
Changes in working capital^1 (82) (80) (28)
Cash generated from discontinued operations — — 15
Cash generated from operating activities [1] 55 167 206
Cash used in investing activities [2] (188) (211) (200)
Cash generated/(used) in financing activities [3] 88 (79) (156)
Effect of exchange rate changes on cash (12) 15 9
*DECREASE IN CASH* *(56)* *(108)* *(141)*
Cash and cash equivalent position at beginning of period 517 625 951
*CASH AND CASH EQUIVALENT POSITION AT END OF PERIOD* *[4]* *461* *517* *810*
Principal amount of $500m Senior Notes 500 500 500
Drawn portion of Lafigué Term Loan 147 107 —
Drawn portion of $645m Revolving Credit Facility 645 465 360
*NET DEBT*^*2* *[5]* *831* *555* *50*
Trailing twelve month adjusted EBITDA^2,3 1,034 1,101 1,173
*Net Debt / Adjusted EBITDA (LTM) ratio*^*2,3* *0.80x* *0.50x* *0.04x*
^1 Continuing operations excludes the Boungou and Wahgnion mines which were divested on 30 June 2023.
^2Net 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.
^3Last Twelve Months (“LTM”) Trailing EBITDA adj includes EBITDA generated by discontinued operations.
*NOTES:*
1) Operating cash flows decreased by $111.6 million from $166.7 million (or $0.68 per share) in Q4-2023 to $55.1 million (or $0.22 per share) in Q1-2024 due largely to lower volumes of gold sold and higher cash costs, partially offset by higher realised gold prices and lower taxes paid.Operating cash flows decreased by $150.5 million from $205.6 million (or $0.83 per share) in Q1-2023 to $55.1 million (or $0.22 per share) in Q1-2024 due to lower production, increased operating
costs, an increased working capital outflow, and higher tax payments, which was partially offset by the higher realised gold price.
Notable variances are summarised below:
· Working capital was an outflow of $82.3 million in Q1-2024, an increase of $2.8 million over the Q4-2023 outflow of $79.5 million. The outflow in Q1-2024 was largely driven by a trade and other payables outflow of $34.7 million related to supplier payments at Houndé and Ity, the timing of employee payables related to annual bonuses and settlement of an indirect tax claim at Sabodala-Massawa and , an outflow of inventories of $30.6 million mainly related to a build-up of stockpiles for the BIOX® Expansion at Sabodala-Massawa and the Lafigué project ahead of commercial operations, an outflow in trade and other receivables of $17.8 million related to a build-up of VAT receipts across Sabodala-Massawa, Houndé and Mana and the timing of payments for the last gold shipment conducted during the quarter, partially offset by a small prepaid expenses and other inflow of $0.8 million.
Working capital was an outflow of $82.3 million in Q1-2024, an increase of $54.1 million over the Q1-2023 outflow of $28.2 million, largely driven by an increase in inventory outflows related to a build-up of stockpiles ahead of the two project start-ups and an increase in trade and other receivables related to a build-up of VAT receipts across Sabodala-Massawa, Houndé and Mana related to the timing of reimbursements.· Gold sales from continuing operations decreased from 285koz in Q4-2023 to 225koz in Q1-2024 due to decreased production as FY-2024 production is weighted towards the second half of the year at Houndé where stripping activity was prioritised in Q1-2024, and at Sabodala-Massawa where lower tonnage of high grade ore was sourced from the Sabodala pit in Q1-2024. The realised gold price from continuing operations for Q1-2024 was $2,091 per ounce compared to $2,007 per ounce for Q4-2023. Inclusive of the Group’s Revenue Protection Programme, the realised gold price for Q1-2024 was $2,041 per ounce compared to $1,945 per ounce for Q4-2023.
Gold sales from continuing operations decreased from 252koz in Q1-2023 to 225koz in Q1-2024, following lower Group production in Q1-2024. The realised gold price from continuing operations for Q1-2024 was $2,091 per ounce compared to $1,902 per ounce for Q1-2023. Inclusive of the Group’s Revenue Protection Programme, the realised gold price for Q1-2024 was $2,041 per ounce compared to $1,879 per ounce for Q1-2023.
· Total cash cost per ounce increased from $837 per ounce in Q4-2023 to $1,007 per ounce in Q1-2024, primarily due to decreased gold sales and higher strip ratios at Houndé and Sabodala-Massawa as stripping activity was prioritised in Q1-2024, and increased processing costs across the Group due to a combination of harder ore blends and higher power costs in Burkina Faso due to the increased reliance on self generated power during the dry season, as contributions from hydropower to the national grid were lower during the quarter.
Total cash cost per ounce increased from $792 per ounce in Q1-2023 to $1,007 per ounce in Q1-2024 due to decreased gold sales, increased waste development and higher mining unit costs at Houndé and Sabodala-Massawa and higher processing unit costs across the Group.
· As shown in the table below, income taxes paid decreased by $19.6 million from $70.9 million in Q4-2023 to $51.3 million in Q1-2024 due to significantly less withholding taxes associated with the upstreaming of cash during Q1-2024, no taxes paid at Ity as the first provisional payment of the year is payable in Q2-2024 and lower taxes paid at Houndé and Mana largely due to the timing of payments, which was partially offset by an increase in taxes paid at Sabodala as the first provisional income tax payment of the year was payable in Q1-2024.
Income taxes paid increased by $26.9 million from $24.4 million in Q1-2023 to $51.3 million in Q1-2024 due largely to the increase in taxes paid at Sabodala-Massawa as provisional tax payments in the quarter were based on the FY-2023 tax base, which considers higher taxable earnings as FY-2022 benefited from a tax holiday on the Massawa licenses.
*Table 5: Tax Payments from continuing operations*
*THREE MONTHS ENDED*
All amounts in US$ million 31 March
2024 31 December
2023 31 March
2023
Houndé 11.0 16.5 10.9
Ity — 18.6 1.3
Mana 3.9 5.5 3.0
Sabodala-Massawa 30.6 — 5.6
Other^1 5.8 30.3 3.6
*Taxes paid by continuing operations* *51.3* *70.9* *24.4*
^1Included in the “Other” category is income and withholding taxes paid by Corporate and Exploration entities.
2) Cashflows used in investing activities decreased by $23.5 million from $211.0 million in Q4-2023 to $187.5 million in Q1-2024 due to a decrease in growth capital spend as the two growth projects advance towards completion, and a decrease in non-sustaining capital due to reduced pre-stripping activities, partially offset by an increase in sustaining capital due to increased stripping activities at Houndé and Sabodala-Massawa.
Cashflows used in investing activities decreased by $12.8 million from $200.3 million in Q1-2023 to $187.5 million in Q1-2024 largely due to a decrease in non-sustaining capital spend across the group related to reduced pre-stripping activities, reduced underground development at Mana and reduced spending on optimisation initiatives.
· Sustaining capital from continuing operations increased from $20.0 million in Q4-2023 to $29.7 million in Q1-2024, largely due to increased sustaining capital expenditure at Houndé (increased waste stripping activities across the Kari Pump and Vindaloo Main pits) and Sabodala-Massawa (increased waste stripping), partially offset by decreased sustaining capital expenditure at Mana (lower proportion of underground waste development being capitalised during the quarter) while sustaining capital spends at Ity were relatively stable.
Sustaining capital from continuing operations increased slightly from $27.7 million in Q4-2023 to $29.7 million in Q1-2024 as higher sustaining capital expenditure at Houndé was largely offset by lower sustaining capital expenditure at Sabodala-Massawa related to reduced waste stripping activities.
· Non-sustaining capital from continuing operations decreased from $52.5 million in Q4-2023 to $41.3 million in Q1-2024, largely due to a decrease in non-sustaining capital at Sabodala-Massawa (reduced infrastructure and pre-stripping of the Niakafiri East and Sofia North Extension pits), at Ity (reduced cutback activities at the Walter pit) and at Houndé (reduced pre-stripping activities in the Kari Pump pit) partially offset by increased non-sustaining capital at Mana (increased development of the underground).
Non-sustaining capital from continuing operations decreased from $83.9 million in Q1-2023 to $41.3 million in Q1-2024 due to decreased non-sustaining capital expenditure at Ity (reduced Recyn costs, TSF costs, and Le Plaque pre-stripping costs), at Sabodala-Massawa (reduced pre-stripping), at Houndé (reduced pre-stripping activities at Kari Pump), and at Mana (reduced underground waste development as development advanced into ore).
· Growth capital decreased from $155.0 million in Q4-2023 to $98.7 million in Q1-2024, as cash outflows associated with the BIOX® and Lafigué growth projects decreased as construction activities approached completion. Growth capital expenditure during the quarter also included $2.2 million for work related to the Kalana project.
Growth capital increased from $72.2 million in Q1-2023 to $98.7 million in Q1-2024 due to the timing 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 generated from financing activities increased by $166.7 million from an outflow of $79.0 million in Q4-2023 to an inflow of $87.7 million in Q1-2024 largely due to the drawdown on debt facilities, partially offset by the timing of dividend payments to shareholders. Financing cash inflows in Q1-2024 included $219.3 million in proceeds from long-term debt including $180.0 million drawn on the Company’s Revolving credit Facility (total amount of $645.0 million drawn as at Q1-2024) and $39.3 million drawn on the Lafigué Term loan (total amount of $146.5 million drawn as at Q1-2024) partially offset by financing cash outflows which included the payment of the H2-2023 dividend to shareholders of $100.0 million, acquisition of the Company’s own shares through its share buyback programme of $16.8 million, payment of finance and lease obligations of $5.7 million, payment of dividends to minorities of $4.9 million, payments of financing and other fees of $4.0 million, and payments for the settlement of tracker shares of $0.2 million.
Cash flows generated from financing activities increased by $243.4 million from an outflow of $155.7 million in Q1-2023 to an inflow of $87.7 million in Q1-2024 largely due to the draw down on the company’s long-term debt facilities during the current period.
4) At quarter end, Endeavour’s liquidity remained strong at $481.5 million, consisting of $461.0 million of cash and cash equivalents and $20.5 million available through the Lafigué Term Loan.
5) Endeavour’s net debt position has increased by $275.5 million, from $555.0 million at the end of Q4-2023 to $830.5 million at the end of Q1-2024 due to the Company’s ongoing investments in its organic growth projects, exploration and the timing of dividend payments. The Company’s net debt / Adjusted EBITDA (LTM) leverage ratio remains healthy, albeit above its long-term target of 0.50x, at 0.80x at the end of Q1-2024. Following the completion of the current growth phase, the Company’s leverage is expected to return to levels below the long-term target.
*EARNINGS FROM CONTINUING OPERATIONS*
The table below presents the earnings and adjusted earnings for Endeavour for the three month periods ended 31 March 2024, 31 December 2023, and 31 March 2023, with accompanying explanations below.
*Table 6: Earnings from Continuing Operations*
*THREE MONTHS ENDED*
All amounts in US$ million unless otherwise specified Notes 31 March
2024 31 December
2023 31 March
2023
Revenue [6] 473 579 481
Operating expenses [7] (200) (209) (171)
Depreciation and depletion [7] (109) (133) (102)
Royalties [8] (34) (40) (30)
*Earnings from mine operations* *130* *198* *178*
Corporate costs [9] (11) (11) (14)
Impairment of mining interests and goodwill — (108) —
Share-based compensation (4) (7) (8)
Other expense [10] (17) (45) (5)
Exploration costs [11] (5) (6) (13)
*Earnings from operations* *94* *21* *139*
Loss on financial instruments [12] (46) (84) (72)
Finance costs (23) (19) (15)
*Earnings before taxes* *24* *(82)* *52*
Current income tax expense [13] (41) (75) (48)
Deferred income tax (expense)/recovery 7 10 12
*Net comprehensive earnings from continuing operations* *[14]* *(9)* *(148)* *15*
Add-back adjustments [15] 66 205 66
*Adjusted net earnings from continuing operations* *57* *57* *82*
Portion attributable to non-controlling interests 16 15 17
*Adjusted net earnings from continuing operations attributable to shareholders of the Company* *[16]* *41* *42* *65*
*Adjusted net earnings per share from continuing operations* *0.17* *0.17* *0.26*
*NOTES:*
6) Revenue decreased by $106.6 million from $579.3 million in Q4-2023 to $472.7 million in Q1-2024 due to a decrease in gold sales from continuing operations as production decreased at Houndé and Sabodala-Massawa, which was partially offset by an $84 per ounce increase in the realised gold price from $2,007 per ounce in Q4-2023 to $2,091 per ounce in Q1-2024, exclusive of the Company’s Revenue Protection Programme.
Revenue decreased by $8.5 million from $481.2 million in Q1-2023 to $472.7 million in Q1-2024 due to a decrease in gold sales from continuing operations, partly offset by a higher realised gold price for Q1-2024 of $2,091 per ounce compared to $1,902 per ounce for Q1-2023, exclusive of the Company’s Revenue Protection Programme.
7) Operating expenses decreased by $8.8 million from $208.7 million in Q4-2023 to $199.9 million in Q1-2024 largely due to lower production volumes at Houndé and Sabodala-Massawa, which was partially offset by higher processing costs at Ity (increased throughput) and Mana (increased throughput and self-generated power costs). Depreciation and depletion decreased by $23.9 million from $132.6 million in Q4-2023 to $108.7 million in Q1-2024 mainly due to lower production at Houndé and Sabodala-Massawa.
Operating expenses increased by $28.5 million from $171.4 million in Q1-2023 to $199.9 million in Q1-2024 largely due to increased strip ratios at Sabodala-Massawa and Houndé, increased underground mining costs at Mana driven by higher volumes and increased processing costs at Houndé and Mana due to increased use of self generated power. Depreciation and depletion increased by $6.8 million from $101.9 million in Q1-2023 to $108.7 million in Q1-2024 due to higher depreciable costs at Mana which now has a higher capitalised cost base and at Sabodala-Massawa which has a lower depletable reserves base in Q1-2024 following the FY-2023 reserves and resource update.
8) Royalties decreased by $6.4 million from $40.3 million in Q4-2023 to $33.9 million in Q1-2024 due to lower production volumes compared to the prior quarter, partially offset by a higher realised gold price.
Royalties increased by $4.2 million from $29.7 million in Q1-2023 to $33.9 million in Q1-2024 due to a full quarter under the the royalty rate structure in Burkina Faso, partially offset by lower production volumes.
9) Corporate costs decreased from $11.1 million in Q4-2023 to $10.5 million in Q1-2024 due to lower professional service costs.
Corporate costs decreased from $13.5 million in Q1-2023 to $10.5 million in Q1-2024 due to lower professional service costs.
10) Other expenses decreased from $45.1 million in Q4-20233 to $16.6 million in Q1-2024. For Q1-2024, other expenses included $8.1 million in tax claims related to Sabodala-Massawa and a temporary voluntary tax payment of 2% of profits before tax and interest from the Houndé and Mana mines, $6.3 million in costs related to the investigation into the former Chief Executive Officer’s misconduct, $5.9 million in legal and other costs primarily related to the ongoing arbitration process around the non-core asset disposals, $0.7 million in restructuring costs, $0.5 million in community contributions and $0.2 million in disturbance cost, partially offset by a $4.5 million gain on the disposal of the Afema asset and a $0.6 million revaluation of receivables.
11) Exploration costs of $5.4 million in Q1-2024 were largely consistent with the prior quarter.
Exploration costs decreased from $12.5 million in Q1-2023 to $5.4 million in Q1-2024 largely due to a decrease in expensed exploration at the Tanda-Iguela property, following the commencement of the pre-feasiblity study.
12) The loss on financial instruments decreased from a loss of $84.3 million in Q4-2023 to a loss of $46.2 million in Q1-2024 largely due to a decrease in unrealised losses on gold collars and forwards. The loss on financial instruments during the quarter included unrealised losses on gold collars and forward sales of $22.8 million, realised losses on gold collars and forward contracts of $11.4 million including $5.9 million related to the Group’s Revenue Protection Programme and $5.5 million related to the Group’s London Bullion Market Association (“LBMA”) gold price averaging strategy, unrealised foreign exchange losses of $11.2 million, unrealised losses on Net Smelter Royalties (“NSRs”) and deferred compensation related to asset sales of $1.1 million, and unrealised losses on foreign currency contracts of $0.8 million, which was partially offset by an unrealised gain on the early redemption feature of senior notes of $0.6 million, an unrealised gain on marketable securities of $0.3 million, and realised gains on foreign currency contracts of $0.2 million.
The loss on financial instruments decreased from a loss of $72.0 million in Q1-2023 to a loss of $46.2 million in Q1-2024, due largely to mark-to-market adjustments in relation to gold hedges and exchange rate movements between the Euro and the US dollar.
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 Q1-2024, 35koz were settled into forward sales contracts for an average gold price of $2,024/oz. For the remainder of FY-2024, approximately 339koz (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, approximately 35koz are scheduled to be settled during Q2-2024 in forward sales contracts at an average gold price of $2,041/oz.
· For FY-2025, approximately 200koz 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 the BIOX® 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 Q1-2024, €7.5 million was delivered into forward contracts at a blended rate of 1.04 EUR:USD and AU$3.3 million was delivered into forward contracts at a blended rate of 0.69 AUD:USD.
· The total outstanding notional forward contracted quantum is approximately €5.5 million at a blended rate of 1.04 EUR:USD over 2024 and approximately AU$2.4 million at a blended rate of 0.69 AUD:USD.
Subsequent to the end of Q1-2024, on 26 April 2024 the Company entered into two separate gold prepayment agreements for a total consideration of $150.0 million in exchange for the delivery of approximately 76koz in Q4-2024. The gold prepayments secure $150.0 million of financing for a low cost of capital of approximately 5.3%, and support the Company’s offshore cash position during its peak investment phase. The prepayments are structured as follows:
· A $100.0 million agreement with the Bank of Montreal based on a floating arrangement for the delivery of approximately 54koz in reference to prevailing spot prices for the settlement of $105.1 million (inclusive of $5.1 million in financing costs) in Q4-2024, with the value of the 54koz above the contracted $105.1 million reimbursement at the time of delivery returned to Endeavour as cash.
· A $50.0 million agreement with ING Bank N.V. is based on a fixed arrangement for the delivery of ounces of approximately 22koz for the settlement of $50.0 million in Q4-2024. To mitigate the Group’s exposure to gold price associated with the delivery of ounces under the fixed arrangement prepayment agreement, Endeavour has entered into forward purchase contracts for 22koz at an average gold price of $2,408/oz due in Q4-2024 to lock in a finance cost of approximately $3.0 million.
13) Current income tax expense decreased by $34.3 million from $74.8 million in Q4-2023 to $40.5 million in Q1-2024 largely due to a decrease in recognised withholding tax expenses, which decreased by $25.6 million from $30.1 million in Q4-2023 to $4.5 million in Q1-2024 due to the timing of local board approvals for cash upstreaming in addition to a decrease in taxes due to lower earnings from mine operations.
Current income tax expense decreased by $7.7 million from $48.2 million in Q1-2023 to $40.5 million in Q1-2024 largely due to lower taxable earnings in Q1-2024 compared to Q1-2023.
14) Net comprehensive losses from continuing operations decreased by $138.2 million from a net comprehensive loss of $147.5 million in Q4-2023 to a net comprehensive loss of $9.3 million in Q1-2024. The decrease in losses is largely driven by the prior period recognising impairment charges related to exploration properties with no work planned and the Kalana project, lower other expenses as the prior period included an expected credit loss charge related to proceeds from asset disposals, lower income tax expenses and lower losses on financial instruments partially offset by lower operating margins due to lower production at higher unit operating expenses and higher unit royalty rates.
Net comprehensive earnings from continuing operations decreased by $24.7 million from net comprehensive earnings of $15.4 million in Q1-2023 to a net comprehensive loss of $9.3 million in Q1-2024. The decrease in earnings was largely driven by lower earnings from mine operations due to lower production, higher operating expenses, higher depreciation and higher royalties in addition to higher finance costs due to increased interest expenses reflecting higher borrowings.
15) For Q1-2024, adjustments included an unrealised loss on financial instruments of $34.8 million largely related to the unrealised loss on forward sales and collars, other expenses of $16.6 million largely related to costs associated with the CEO investigation, partially offset by a $4.5 million realised gain on the sale of the Afema property, and a loss on non-cash, tax and other adjustments of $14.6 million that mainly relate to the impact of foreign exchange remeasurements of deferred tax balances.
16) Adjusted net earnings attributable to shareholders for continuing operations increased by $1.3 million from $42.0 million (or $0.17 per share) in Q4-2023 to $40.7 million (or $0.17 per share) in Q1-2024, due to lower operating margins following lower gold volumes sold at higher unit operating expenses.
Adjusted net earnings attributable to shareholders for continuing operations decreased by $24.2 million from $64.9 million (or $0.26 per share) in Q1-2023 to $40.7 million (or $0.17 per share) in Q1-2024 due to lower operating margins, higher interest expenses, higher realised losses on gold forward sales and higher royalties.
*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.
· As previously disclosed, 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 ACTIVITIES BY MINE*
*Houndé Gold Mine, Burkina Faso*
*Table 7: Houndé Performance Indicators*
*For The Period Ended* *Q1-2024* *Q4-2023* *Q1-2023*
Tonnes ore mined, kt 724 1,499 1,233
Total tonnes mined, kt 11,097 11,993 13,247
Strip ratio (incl. waste cap) 14.33 7.00 9.74
Tonnes milled, kt 1,082 1,360 1,370
Grade, g/t 1.35 2.15 1.18
Recovery rate, % 89 90 93
*Production, koz* *42* *84* *47*
Total cash cost/oz 1,120 837 945
*AISC/oz* *1,572* *901* *1,154*
*Q1-2024** vs **Q4-2023** Insights*
· Production decreased from 84koz in Q4-2023 to 42koz in Q1-2024 due to lower average grades milled and lower tonnes milled, as well as the impact of the 11-day stoppage to mining and processing activities due to the previosuly disclosed sub-contractor led strike.
· Total tonnes mined and tonnes of ore mined decreased due largely to the previously disclosed 11-day strike which impacted mining and processing activities from 23 January 2024. Tonnes of ore mined also decreased as waste stripping was prioritised in the Kari Pump and Vindaloo Main pits in line with the mine sequence, with the Kari West pit providing the principal source of ore during the quarter.
· Tonnes milled decreased due to lower utilisation due to the strike, as well as planned maintenance downtime.
· Average processed grades decreased due to a higher proportion of lower grade ore sourced from the Kari West pit in the mill feed.
· Recovery rates remained largely consistent with the prior quarter despite changes in the ore blend.
· AISC increased from $901/oz in Q4-2023 to $1,572/oz in Q1-2024 due to the lower volume of gold sold following lower quarterly production, a higher strip ratio as mining focused on waste stripping during the quarter, and increased mining and processing unit costs that were impacted by the strike.
· Sustaining capital expenditure amounted to $19.4 million in Q1-2024 and related primarily to ongoing waste development across the Kari Pump, Kari West and Vindaloo Main pits as well as plant equipment upgrades and heavy mining equipment maintenance.
· Non-sustaining capital expenditure amounted to $2.0 million in Q1-2024 and primarily related to the ongoing TSF Stage 8 and 9 raise.
*Q1-2024 vs Q1-2023 Insights*
· Production decreased slightly from 47koz in Q1-2023 to 42koz in Q1-2024 primarily due to lower tonnes milled as a result of the mining and processing stoppage related to the strike, which was partially offset by higher processed grades due to relatively higher grade ore sourced from the Kari West pit compared to Q1-2023.
· AISC increased from $1,154/oz in Q1-2023 to $1,572/oz in Q1-2024 due to the lower volume of gold sold, higher strip ratio as stripping activity was prioritised in Kari Pump and Vindaloo Main, higher processing unit costs due to the increased use of higher cost self-generated power as the dry season impacted the contributions of hydropower to the national grid, as well as increased sustaining capital due to increased waste development activities at the Kari Pump pit.
*FY-2024 **Outlook*
· Houndé is on track to achieve its FY-2024 production guidance of 260koz - 290koz at an AISC of between $1,000/oz - $1,100/oz. As previously guided, production is expected to be H2-2024 weighted with AISC improving as greater volumes of higher grade ore are expected to be mined in H2-2024.
· In Q2-2024, ore is expected to continue to be mainly sourced from the Kari West pit while stripping activities focus on the Kari Pump and Vindaloo Main pits. In H2-2024, once the current phase of stripping is completed, increased volumes of higher grade ore are expected to be mined from the Kari Pump and Vindaloo Main pits increasing average grades processed through the year.
· Sustaining capital expenditure outlook for FY-2024 remains unchanged at $40.0 million, of which $19.4 million has been incurred in Q1-2024, and is mainly related to waste stripping activity, fleet re-builds and plant equipment upgrades.
· Non-sustaining capital expenditure outlook for FY-2024 remains unchanged at approximately $20.0 million, of which $2.0 million has been incurred in Q1-2024, and is mainly related to the ongoing TSF Stage 8 and 9 raise.
*Ity Gold Mine, Côte d’Ivoire*
*Table 8: Ity Performance Indicators*
*For The Period Ended* *Q1-2024* *Q4-2023* *Q1-2023*
Tonnes ore mined, kt 1,825 1,721 1,936
Total tonnes mined, kt 7,406 7,349 7,366
Strip ratio (incl. waste cap) 3.06 3.27 2.80
Tonnes milled, kt 1,775 1,593 1,819
Grade, g/t 1.68 1.63 1.68
Recovery rate, % 90 91 93
*Production, koz* *86* *74* *91*
Total cash cost/oz 858 829 712
*AISC/oz* *884* *865* *732*
*Q1-2024 vs Q4-2023 Insights*
· Production increased from 74koz in Q4-2023 to 86koz in Q1-2024 due to higher tonnes of ore milled and a slightly higher average grade processed, partially offset by a slight decrease in recovery rates.
· Total tonnes mined increased slightly due to higher contractor fleet availability. Mining activity focused on the Ity, Walter, Bakatouo, Verse Ouest and Le Plaque pits with supplemental contributions from the Daapleu pit and stockpiles. Ore tonnes mined increased due to a slight decrease in strip ratio and a lower proportion of waste mined across the complex in line with the mine sequence.
· Tonnes milled increased due to a higher proportion of softer oxide ore sourced from the Ity and Bakatouo pits in the mill feed.
· Average processed grades increased slightly due to an increased proportion of high grade ore from the Ity pit in the mill feed, partially offset by lower grade ore sourced from the Daapleu pit.
· Recovery rates decreased slightly due to an increase in ore from the Daapleu pit in the ore blend, which has slightly lower associated recoveries.
· AISC increased slightly from $865/oz in Q4-2023 to $884/oz in Q1-2024 due to an increase in processing unit costs driven by costs associated with the commissioning of the Recyn circuit, which is expected to reduce cyanide consumption, once fully commissioned.
· Sustaining capital expenditure amounted to $2.3 million in Q1-2024 and primarily related to waste stripping at the Bakatouo and Walter pits and dewatering borehole drilling.
· Non-sustaining capital expenditure amounted to $16.2 million in Q1-2024 and primarily related to the ongoing TSF 2 construction and development of the Mineral Sizer.
*Q1-2024 vs Q1-2023 Insights*
· Production decreased from 91koz in Q1-2023 to 86koz in Q1-2024 due to lower tonnes milled following planned maintenance activities and due to the inclusion of ore from the Daapleu pits which has lower associated recoveries.
· AISC increased from $732/oz in Q1-2023 to $884 per ounce in Q1-2024 due to an increase in processing unit costs driven by costs associated with the commissioning of the Recyn circuit, increased mining unit costs due to a higher proportion of ore sourced from the Le Plaque pit which has a longer haulage distance and a decrease in gold volumes sold.
*FY-2024 **Outlook*
· Ity is on track to achieve its FY-2024 production guidance of 270koz - 300koz at an AISC of between $850/oz - $925/oz. As previously guided, production is expected to be H1-2024 weighted, in line with the mine plan, due to greater availability of high grade ore from the Ity and Bakatouo pits in H1-2024 and the impact of the wet season in H2-2024 on mining and processing volumes.
· In Q2-2024, ore is expected to be sourced from the Le Plaque, Walter, Bakatouo and Ity pits with supplemental ore sourced from the Verse Ouest stockpiles. Mining, throughput rates and recoveries are expected to remain consistent with Q1-2024, while grades are expected to decrease, as previously guided, due to sequentially reduced proportions of high grade ore from the Ity and Bakatouo pits, through the remainder of the year.
· Sustaining capital expenditure outlook for FY-2024 remains unchanged at $10.0 million, of which $2.3 million has been incurred in Q1-2024, and is mainly related to waste-stripping, plant equipment upgrades and dewatering borehole drilling.
· Non-sustaining capital expenditure outlook for FY-2024 remains unchanged at $45.0 million, of which $16.2 million has been incurred in Q1-2024, and is mainly related to pre-stripping activities, TSF 2 earthworks and site infrastructure, in addition to the ongoing Mineral Sizer Primary Crusher optimisation initiative.
*Mana Gold Mine, Burkina Faso*
*Table 9: Mana Performance Indicators*
*For The Period Ended* *Q1-2024* *Q4-2023* *Q1-2023*
OP tonnes ore mined, kt 119 169 423
OP total tonnes mined, kt 711 805 1,783
OP strip ratio (incl. waste cap) 4.97 3.77 3.22
UG tonnes ore mined, kt 446 432 253
Tonnes milled, kt 621 515 614
Grade, g/t 2.31 2.59 2.34
Recovery rate, % 88 89 94
*Production, koz* *42* *37* *44*
Total cash cost/oz 1,345 1,207 1,046
*AISC/oz* *1,453* *1,482* *1,130*
*Q1-2024 vs Q4-2023 Insights*
· Production increased from 37koz in Q4-2023 to 42koz in Q1-2024 due to higher tonnes milled, which was partially offset by lower average grades processed.
· Total open pit tonnes mined decreased as mining rates at the Maoula open pit decreased as the pit approaches the end of its economic mine life, which is expected in Q2-2024.
· Total underground tonnes of ore mined increased as stoping production remained stable while ore development rates accelerated at the Wona and Siou Underground deposits. Underground development consisted of a total 3,169 metres completed across both Siou and Wona compared to 3,059 metres completed in the prior quarter.
· Tonnes milled increased due to higher plant utilisation as there was less scheduled plant maintenance downtime in the quarter.
· Average grades processed decreased due to lower grade ore sourced from the final stages of the Maoula open pit as well as lower grade stope production from the Wona underground deposit in line with the mine sequence.
· Recovery rates were consistent with the prior quarter.
· AISC slightly decreased from $1,482/oz in Q4-2023 to $1,453/oz in Q1-2024 due to higher gold volumes sold, decreased mining and processing unit costs as underground development activities continued to ramp-up in the Wona Underground deposit and decreased sustaining capital due to lower capitalised underground development, which was partially offset by a reduction in by-product revenues following the sale of carbon fines in the prior quarter.
· Sustaining capital expenditure amounted to $4.6 million in Q1-2024 and primarily related to capitalised underground development at Siou and plant improvements.
· Non-sustaining capital expenditure amounted to $14.1 million in Q1-2024 and primarily related to capitalised underground development at Wona, underground infrastructure and the stage 5 TSF embankment raise.
*Q1-2024 vs Q1-2023 Insights*
· Production decreased from 44koz in Q1-2023 to 42koz in Q1-2024 largely due to lower recoveries as the higher proportion of underground ore sourced from the Wona underground deposit in the mill feed has slightly lower associated recoveries compared to ore sourced from the Maoula open pit, which it displaced.
· AISC increased from $1,130/oz in Q1-2023 to $1,453/oz in Q1-2024 due to increased underground mining activities as a proportion of total mining activities, increased processing unit costs due to higher self-generated power costs, increased sustaining capital following higher development rates and lower volumes of gold sold.
*FY-2024 Outlook*
· Mana is on track to achieve its FY-2024 production guidance of 150koz - 170koz at an AISC of between $1,200 - $1,300/oz. As previously guided, production is expected to be H2-2024 weighted as stoping rates at the Wona underground are expected to continue to ramp-up sequentially through the year.
· In Q2-2024, production is expected to decrease slightly as lower grade stope production is expected, in-line with the mine sequence. Underground development rates are expected to continue to increase, enabling access to more stopes from the Wona underground deposit in H2-2024, supplemented by consistent stope production from the Siou underground deposit. The proportion of ore sourced from the Maoula open pit is expected to decrease considerably as the pit reaches the end of its mine life during Q2-2024.
· Sustaining capital expenditure outlook for FY-2024 remains unchanged at $15.0 million, of which $4.6 million has been incurred in Q1-2024, and is primarily related to capitalised underground development activities at the Wona underground deposit.
· Non-Sustaining capital expenditure outlook for FY-2024 remains unchanged at $30.0 million, of which $14.1 million has been incurred in Q1-2024, and is related primarily to underground development, underground infrastructure and the stage 5 TSF embankment raise.
*Sabodala-Massawa Gold Mine, Senegal*
*Table 10: Sabodala-Massawa Performance Indicators*
*For The Period Ended* *Q1-2024* *Q4-2023* *Q1-2023*
Tonnes ore mined, kt 1,346 1,884 1,235
Total tonnes mined, kt 10,447 11,319 11,207
Strip ratio (incl. waste cap) 6.76 5.01 8.08
Tonnes milled, kt 1,180 1,255 1,124
Grade, g/t 1.63 2.31 2.04
Recovery rate, % 83 89 87
*Production, koz* *49* *85* *61*
Total cash cost/oz 890 686 619
*AISC/oz* *947* *700* *787*
*Q1-2024 vs Q4-2023 Insights*
· Production decreased from 85koz in Q4-2023 to 49koz in Q1-2024 due to lower average grades processed, lower tonnes milled and decreased recovery rates.
· Total tonnes mined and tonnes of ore mined decreased due to lower availability of the mining fleet due to maintenance activities during the quarter. Tonnes of ore mined decreased as lower tonnage of ore was extracted from the Sabodala pit as mining rates decreased with the deeper elevations in the pit as it enters the final phase of mining, ahead of potential in-pit tailings deposition which is expected to start in 2025. Ore mining activities continued at the Niakafiri East, Sofia North extension and Massawa Central Zone pits.
· Tonnes milled decreased as the ore blend contained increased proportions of harder fresh ore from the Sabodala pit and stockpiles, which decreased throughput rates.
· Average processed grades decreased due to lower volumes of high grade ore mined from the Sabodala pit in the mill feed, as well as lower grade oxide ores sourced from the Niakafiri East and Sofia North Extension pits, in-line with mine sequencing.
· Recovery rates decreased due to the impact of transitional ore from the Massawa pits, a lower proportion of fresh ore from the Sabodala and Niakafiri East pits and an increased proportion of supplemental stockpiles in the mill feed, which have lower associated recoveries.
· AISC increased from $700/oz in Q4-2023 to $947/oz in Q1-2024 due to lower volumes of gold sold, slightly increased mining, processing and G&A costs and increased sustaining capital due to heavy mining equipment upgrades.
· Sustaining capital expenditure amounted to $2.9 million in Q1-2024 and primarily related to waste capitalisation and mining equipment rebuilds.
· Non-sustaining capital expenditure amounted to $8.1 million in Q1-2024, of which, $6.8 million was related to the construction of the solar power plant and the remainder was related to grade control drilling at the Kiesta deposit, purchases of drill rigs and waste development activities.
*Q1-2024 vs Q1-2023 Insights*
· Production decreased from 61koz in Q1-2023 to 49koz in Q1-2024 due to lower average grades milled as a result of increased volumes of lower-grade ore from the Sabodala, Niakafiri East and Sofia North extension pits in the mill feed, as well as reduced recoveries following the introduction of a higher proportion of transitional ore from the Massawa North Zone pits into the mill feed, which was partially offset by a slight increase in tonnes milled.
· AISC increased from $787/oz in Q1-2023 to $947/oz in Q1-2024 due to lower volumes of gold sales and an increase in mining unit costs due to increased waste haulage distances, increased heavy mining equipment maintenance costs and increased processing unit costs due to a higher proportion of harder fresh ore in the mill feed, which was partially offset by lower sustaining capital.
*FY-2024 Outlook*
· Sabodala-Massawa is on track to achieve its FY-2024 production guidance of 360koz - 400koz at an AISC between $750 - $850/oz. As previously guided, production is expected to be H2-2024 weighted following the ramp-up of the BIOX® expansion project through H2-2024.
· In Q2-2024, ore for the CIL processing plant is expected to be sourced from the Sabodala, Niakafiri East and Sofia North extension pits supplemented by high-grade ore from the Massawa Central Zone pit. In H2-2024, throughput is expected to remain consistent with higher processed grades expected due to higher grade ore sourced from the Sabodala and Kiesta C pits with continued inclusion of Massawa North Zone transitional and Niakafiri East fresh material in the mill feed
· Refractory ore for the BIOX® plant is expected to be primarily sourced from the Massawa Central and Massawa North Zone pits. Refractory ore mined in H1-2024 is expected to be largely stockpiled ahead of the ramp-up of the BIOX® Expansion project which is expected to achieve nameplate capacity in H2-2024, and will result in H2-2024 weighted production for Sabodala-Massawa.
· Sustaining capital expenditure outlook for FY-2024 remains unchanged at $35.0 million, of which $2.9 million has been incurred in Q1-2024, and is primarily related to capitalised waste striping, heavy mining equipment rebuilds.
· Non-sustaining capital expenditure outlook for FY-2024 remains unchanged at $40.0 million, of which $8.1 million has been incurred in Q1-2024, and is primarily related to infrastructure for the deposition of tailings in the Sabodala pit which is expected to commence in FY-2025, advanced grade control and infrastructure at the Kiesta deposit, the TSF 1 embankment raise and purchases of new mining equipment.
· Non-sustaining capital expenditure outlook for FY-2024 associated with the solar power plant remains unchanged at $45.0 million, of which $6.8 million has been incurred in Q1-2024, with additional details provided in the Solar Power Plant section below.
· Growth capital expenditure outlook for FY-2023 remains unchanged at $75.0 million, of which $37.8 million was incurred in Q1-2024 related to the BIOX® Expansion project. Further detail on the project is provided in the Plant Expansion section below.
*Plant Expansion*
· As previously announced, first gold at the BIOX® expansion project was achieved on 18 April 2024 from the gravity circuit and on 29 April 2024 from the BIOX® circuit, only 24 months after construction launch, transforming the Sabodala-Massawa Complex into a tier 1 mine. The project was delivered on budget and on schedule with an impressive safety record; achieving over 3.5 million man hours worked with zero lost-time injuries.
· Commercial production at the BIOX® Expansion project is expected in late Q2-2024, with the project ramping up to its nameplate capacity of 1.2Mtpa in Q3-2024.
· Growth capital expenditure for the expansion project is $290.0 million of which approximately $269.0 million or 93% of the total growth capital has now been committed, with pricing in line with expectations. $243.0 million, or 84%, of the growth capex has been incurred as at the end of Q1-2024, of which $37.8 million was incurred in Q1-2024 and $75.0 million is expected to be incurred in FY-2024.
*Solar Power Plant *
· As announced on 2 August 2023, Endeavour launched the construction of a 37MWp photovoltaic (“PV”) solar facility and a 16MW battery system at the Sabodala-Massawa mine, in order to significantly reduce fuel consumption and greenhouse gas emissions, and lower power costs.
· The capital cost for the solar project is $55.0 million of which approximately $32.5 million, or 59%, has been committed, with pricing in line with expectations. $12.4 million, or 23%, of the capital cost has been incurred as at the end of Q1-2024, of which $6.8 million was incurred in Q1-2024 and $45.0 million is expected to be incurred in FY-2024.
· The construction progress regarding critical path items is detailed below:
· Design work and manufacturing is in the final stages
· Site clearing and road construction is complete.
· Fencing of the land package is progressing on schedule.
· Mechanical installation, civil works, and building construction contractor mobilisation has commenced in mid-April.
*Lafigué Project, Côte d’Ivoire*
*Project Update*
· Construction of the Lafigué project in Côte d'Ivoire was launched in early Q4-2022, following the completion of a Definitive Feasibility Study (“DFS”) which confirmed Lafigué’s potential to be a cornerstone asset for Endeavour. First gold production is expected ahead of schedule in Q2-2024, rather than Q3-2024.
· Mining activities commenced in Q4-2023 and 900kt of ore have been mined and stockpiled to date. Dry commissioning of the processing plant is underway, with ore currently being fed to the crushing circuit. Wet commissioning is expected to start in the coming weeks.
· Growth capital expenditure for the project is approximately $448.0 million, of which approximately $421.2 million or 94% has been committed to the end of Q1-2024, with pricing in line with expectations. $343.6 million, or 77% of the growth capital has been incurred to date, of which $56.7 million was incurred in Q1-2024 with $170.0 million expected to be incurred in FY-2024, weighted towards H1-2024. The incurred spend is mainly related to ongoing construction activities at the process plant, site infrastructure and commissioning activities.
· The construction progress regarding critical path items is detailed below:
· Engineering and drafting is complete.
· Manufacturing, supply and delivery is complete.
· Mining equipment mobilisation has advanced and mining activities commenced during Q4-2023, with 8,832kt of material