Endeavour production up to 10K Oz in Q3
Endeavour Mining announces its financial and operating results for the third quarter (Q3) of 2019, with highlights that says, production increased by 10koz over Q2-2019 to 181koz of +6% and AISC remained flat at $803/oz was +2% despite the severe rainy season. FY-2019 Group guidance adjusted to 650-695koz, reflecting Ity’s stronger production performance, at an AISC of $795-845/oz.
Operating Cash Flow, before non-cash working capital, for Q3-2019 doubled to $115 million or $1.05/share compared to Q2-2019, Strong Net Free Cash Flow before debt and lease repayment of $52 million achieved for Q3-2019, following nearly four years of intensive growth-capital spend.
Net Debt was reduced from $660 million to $608 million over the previous quarter-end, resulting in the Net Debt/Adjusted EBITDA ratio decreasing sharply from 2.8x to 1.9x, Q3-2019 Adjusted Net Earnings increased by 267% to $33 million or $0.30/share compared to $9 million or $0.08/share in Q2-2019.
Sébastien de Montessus, President & CEO of Endeavour, commented: “The strong net free cash flow generated this quarter marks an important milestone for Endeavour as it demonstrates that we have de-risked and repositioned the group as a cash-generating business, after nearly four years of intensive growth-capital spend.
Our business is now strategically diversified across multiple assets with stronger long-term planning capabilities. This provides greater comfort in our ability to generate stable cash flows, as demonstrated by the strong third quarter results achieved despite the severe rainy season.
Having successfully built our Ity and Houndé mines with minimal equity dilution, our priority now is to quickly deleverage the business, underpinned by our short investment payback periods. During this debt reduction phase, we expect to benefit from low capital-intensive growth with Ity’s 25% volumetric upgrade nearly complete and the expected upcoming integration of recently discovered higher grade deposits at our flagship Ity and Houndé mines.
Looking ahead, we continue to focus on building optionality within the portfolio through our aggressive exploration program-a good example of this is the recently announced 1.2Moz Indicated resource at 2.5g/t at our Ivorian Greenfield Fetekro property, discovered for less than $9/oz.”
Looking at Q4 2019 their outlook says, Houndé is expected to finish slightly below the lower end of its full-year 2019 production guidance of 230-250koz and is expected to finish above the AISC guidance of $720-790/oz due to the slower than planned ramp-up of the high grade Bouéré deposit as a result of the impact of the severe rainy season in Q3-2019.
AISC are also impacted by higher royalties as the guidance was based on a lower assumed gold price of $1,250/oz. Sustaining capital spend is expected to increase in Q4-2019 as $15.0 million of the guided $35.0 million remain to be incurred, mainly relating to waste capitalization efforts. Non-sustaining capital spend is expected to be minimal in Q4-2019.
