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Endeavour and Detour exit 2015 with panache

We are pleased with the operational results of Endeavour Mining and Detour Gold in 2015. Both companies exit 2015 with excellent figures.

 

We have followed up Endeavour’s assets since more than 10 years. We visited assets in Burkina Faso and Mali before the Etruscan acquisition by Endeavour in 2010. Such analysis on a long term is plenty of benefits to better evaluate the company abilities to manage and to develop their projects. Once setting up, the risk perception is certainly much more refined and anticipation more efficient.

  

Changes

Endeavour Mining has recorded a great year in 2015. The company was part of the top share price performer.

Agbaou mine in Ivory Coast and Tabakoto Mine in Mali delivered their best results.

The company delivered more than 517Koz., up 11% over 2014.

The company completed the delisting from ASX on January, 11 due to the low trading volume compared to its TSX listing

 

 Our View

 Endeavour has five mines in operation in West Africa. Two in Ivory Coast, one in Ghana, one in West Mali and one in Burkina Faso. The 2015 AISC/oz is expected to be $980. The company is fully financed to reach its objectives in 2016 if the gold market remains stable. Any upside in the metal price would be of great benefit.

 

The net Debt has been reduced by 43% and the cash increased by 77% to reach $110M at the end of 2015. The working capital is estimated around $112M.

 The $350 million revolving credit facility (RCF) were reduced by $60 million.

The company has an undrawn RCF capacity of $110M and $75M coming from La Mancha commitment.

  

The geographical diversification is in West Africa. The region is very proactive to develop the mining sector, moreover mining codes have improved in some countries. Concerning the terrorist risks, we might suspect it will be concentrated in main agglomeration rather than targeting isolated mining assets. Political context in west Africa have shown its ability to better contain and manage crisis supported by organizations such as the CÉDÉAO, UA, and UN..

 

Upsides are the development of the Houndé Project, where the construction decision is expected in the first half of 2016, the upgrade of mineral resources into reserves and the production figures.

 

The company has a production capacity over 500Koz with a probable target of 600Koz. The exploration potential is very good along strike of know structures which provide the capacity to replace depleted mineral reserves

 

In 2016, Endeavour is focused on mine site and near mine exploration at Agbaou, Tabakoto, Ségala, Kofi and Ity. For 2016, the exploration budget amounts $20M dedicated to mineral reserves replacement and mine life extensions

 

Upsides

Endeavour has provided 2016 production guidance of 570Koz to 600Koz at an all-in sustaining cost per ounce of $875 to $925. Based on the 2015 deliveries, we might expect positive results for 2016. The company production guidance is based on a gold price at $1150/oz generating a possible free cash flow of $100M.

An additional 190Koz per year might come from the fully permitted Houndé project in Burkina Faso. Production decision is pending

  

Profil

Endeavour Mining owns five operating mines in West Africa that are producing gold at a rate of more than 500koz/year. The ramp up production aims to reach 600Koz Au per annum.

Endeavour prepares the Houndé Project for a construction decision, expected in the first half of 2016.

 

In November 2015 Endeavour Mining finalized a partnership with La Mancha Holding S.àr.l. and Naguib Sawiris. The 30% interest of La Mancha into Endeavour Mining share capital gave access to 55% interest in Société des Mines d’Ity S.A

 

In 2010 Endeavour Financial Corp made a first strategic investment with the acquisition of Etruscan Resources. Etruscan acquisition gave to Endeavour Mining (renamed)  the control of multiple gold assets through West Africa including Samira Hill (40%), Youga (90%) and Agbaou (85%). Etruscan was well established in West Africa covering over 24,000 km² in the prolific gold belts of Mali, Niger, Burkina Faso, Côte d’Ivoire and Ghana. In addition to the most established reserves, the regional geology was very prospective with good potential for sourcing additional reserve.

 

In August 2012 Endeavour made a second strategic acquisition with Avion Gold Corp. for CAD$389M.. Tabakoto and Segala Properties, were the Company’s flagship properties. Other properties included Kofi Project, located in Mali, and the Hounde Project, located in Burkina Faso.