Endeavour Mining Delivers 324k oz in 2013, Forecasts 400k to 440k oz in 2014. All in costs: $985-$1070
Today, after the Canadian markets closed, Endeavour Mining (EDV:TSX) released their 2013 fiscal year end numbers as well as an official outlook for fiscal 2014. The company produced a total of 324,275 ounces of gold in 2013 which was on the higher end of their guidance range of between 315,000 to 330,000 ounces. Average all-in sustaining costs were within their guidance at less than $1,100 per ounce (guidance was $1,055-$1,155 per ounce). The company is guiding production of between 400,000 and 440,000 ounces this year with their recently commissioned Agbaou mine now producing at commerical levels. They are expecting all-in sustaining costs to average $985-$1,070 per ounce in 2014.
The company’s production profile puts them in the same category as market darling, B2Gold (BTO:TSX) which is guiding production of 360,000-380,000 ounces in 2013 and growing that to 395,000-420,000 in 2014. B2Gold’s all-in sustaining cost guidance for 2014 is higher than Endeavour’s at $1,025-$1,125 per ounce. B2Gold has an enterprise value of $1.67 billion whereas Endeavour’s enterprise value is roughly a quarter of B2Gold’s at $450 million. The disconnect is too large to remain (IMO), especially now that construction and commissioning at Agbaou are complete.
Endeavour produced 125,231 ounces from their Tabakoto open-pit and underground operations in Mali, 103,464 ounces from their Nzeme open-pit mine in Ghana and another 89,448 ounces at the company’s Youga open-pit mine in Burkina Faso. Agbaou, which poured its first gold bar at the beginning of December, ended up producing a total of 6,132 ounces of gold in December and is now producing at 125% of design throughput.
Endeavour’s Hounde project (post-feasibility stage) has the potential to add an additional 180,000 ounces per year at an average all-in sustaining cost well below ($775 per ounce) their current levels. The company is determining whether it is better to spend the +$300 million to build the mine or whether there are opportunties to acquire a mine for cheaper. There are no plans to construct a mine in 2014.
Neil Woodyer, CEO, stated: “2013 was a successful year with production of over 324,000 ounces from our three mines and our newly constructed Agbaou mine that poured its first gold in November. Agbaou achieved commercial production during January 2014 and we are very pleased to report it was constructed for less than our $160 million budget. Our 2014 AISC cost definition includes all underground development expenses as “sustaining capital” at Tabakoto and at Segala from mid-2014 once commercial stoping ore production is achieved. Our 2014 guidance range represents an approximate 10% improvement as compared to 2013, using the 2014 AISC definition.
In 2013, the Tabakoto mill expansion was completed on schedule and significant progress was made with access and ramp development for the Segala deposit. Endeavour’s non-sustaining investments in 2014 will be focused on completing the optimization of Tabakoto. This includes $20 million for completion of the Segala ramp and pre-stoping development by mid-2014 and ancillary investments of $13 million for a CRF plant, TSF expansion and other items. In addition, the Segala and Tabakoto underground operations are transitioning to 100% owner mining this year to significantly reduce mining costs in 2014 and in the future. This transition started in December 2013, after the first gold pour at Agbaou, with the purchase of $7 million of mining equipment.
During 2014, we expect equipment purchases of approximately $10 to $15 million to complete the mining fleet at Segala and approximately $10 million at Tabakoto to replace equipment currently provided by the mining contractor. A significant portion of the equipment purchases is expected to be leased.Beyond Tabakoto, Endeavour’s non-sustaining investments in 2014 are expected to include $7 million at Nzema for a new pebble crushing circuit and pit development work and less than $2 million at Agbaou. The 2014 exploration budget will be similar to 2013 with $10 million invested in programs to extend mine life.”
Management has now proven it can beat/deliver on guidance and that they can successfully build and operate mines; the market can’t ignore them forever.
Shares in Endeavour are up nearly 30% in the month of January and closed today flat at $0.68 on 5.56 million shares in Toronto.
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