Endeavour Mining Delivers Strong First Quarter Results Including 49,531 ozs Gold Produced
NEWS–GEORGE TOWN, Cayman Islands – Endeavour Mining Corporation (“Endeavour” or the “Corporation”) (TSX: EDV) (ASX: EVR) (OTCQX: EDVMF) is pleased to report the financial and operational results for the first quarter of 2012. Endeavour’s two operating mines exceeded guidance by producing 49,531 ounces during the quarter at a cash cost (excluding royalties) of $664 per ounce produced.
Neil Woodyer, CEO, stated
“This was a very successful first full quarter as a merged company. Our mines produced over 49,000 ounces and delivered $38.9 million of cash margin. Recent exploration successes are demonstrating the upside potential at our operations. We are making steady progress advancing our construction-ready Agbaou project including discussions with the Côte d’Ivoire government to obtain our mining permit and, in parallel, we are finalizing the EPCM contractor selection. Endeavour is focused on continuing to deliver and achieve its growth objectives.”
(All amounts in US dollars unless otherwise indicated)
First Quarter 2012 Financial and Operational Highlights
Gold production totaled 49,531 ounces for the quarter, providing a strong start on delivering full year production within the 170,000 to 190,000 ounce guidance range
- Gold sales of 45,127 ounces, resulting in revenue of $72.6 million
Total cash cost1 (excluding royalties) of $659 per gold ounce sold, in line with our guidance range of $645 to $685 per ounce
Cash margin of $38.9 million, which is revenues from gold sales less cash costs and royalties
Endeavour is pleased to reiterate its guidance for 2012 with production of 170,000 to 190,000 ounces at a cash cost (excluding royalties) of $645 to $685 per ounce
First Quarter 2012 Financial and Operational Highlights (con’t)
For the first quarter of 2012, the operating cash flow from mine operations was $24.4 million, and adjusted for $8.5 million for March production with cash proceeds received in early April, it was $32.9 million.
Adjusted net earnings were $16.0 million or $0.07 per share.
During the first quarter of 2012, the Corporation invested $23.2 million from its operating cash flow into its operations and exploration programs. Of this, $20.5 million was capitalized and $2.7 million was expensed as exploration. These investments in operational improvements and growth include:
Sustaining capital at Nzema: $5.0 million
Sustaining capital at Youga: $0.4 million
Near-mine exploration: $9.7 million
Agbaou exploration and development: $3.7 million
Regional exploration: $1.2 million
Completion of Salman Village: $3.2 million
At March 31, 2012, the Corporation had cash & equivalents and marketable securities of $128.2 million and holds a 38.5% stake in Namibia Rare Earths Inc. (TSX:NRE) with a market value of $12.0 million. As at March 31, 2012, the Corporation had drawn $100 million of its $200 million corporate loan facility.
During the first quarter of 2012, the Corporation sold its 40% interest in the Finkolo Joint Venture for $20.0 million in cash. This transaction is expected to close during the second half of 2012.
Financial Statements and related MD&A will be available on SEDAR, the ASX website, OTC Markets website, and in the Investor Relations section of Endeavour’s website www.endeavourmining.com.
In order to access the Corporation’s financial statements directly, please click the following URL: http://files.newswire.ca/910/EDV_05082012.pdf
Mark Connelly, COO, stated
“The strong first quarter continues Endeavour’s +2 year successful performance track record, and gives us a great start to deliver our full year production guidance of 170,000 to 190,000 ozs at $645 to $685 cash cost per ounce. Beyond the solid performance at our two mines, we are focused on completing the final steps in preparation for building our next mine, the Agbaou Gold Project in Côte d’Ivoire. We are nearing completion of our Agbaou engineering optimization studies that take into account our improved mineral resources/reserves from the successful drilling campaigns of 2010 and 2011 as well as updated capital and operating costs. This NI 43-101 technical report is scheduled to be ready within the next few weeks.”
Table 1 Nzema Gold Mine, Ghana – Quarterly Production
1 Cash Cost per Ounce produced excluding royalties is a non-GAAP financial performance measure with no standard meaning under IFRS
2 Nzema declared commercial production on April 1, 2011
3 For the nine month period from April 1, 2011 to December 31, 2011
During Q1 2012, mining of Salman North 1A and 1B pits continued whilst Teberu 04 commenced in February 2012
Phase 2 of the tailings storage facility raise is in progress
During Q1 2012, the Nzema Mine contributed $22.7 million towards the total cash margin of $38.9 million
During Q1 2012, the Nzema Mine contributed $11.3 million towards earnings from mining operations and generated $11.8 million of operating cash flow from mine operations
Salman resettlement was completed and inauguration ceremony was held on March 17, 2012
Table 2 Youga Gold Mine, Burkina Faso – Quarterly Production
1 Cash Cost per Ounce produced excluding royalties is a non-GAAP financial performance measure with no standard meaning under IFRS
- Mill throughput increased to a record 255,000 tonnes
- Metallurgical recovery improved to 94.9%
Grid Power Project progress – Phase II to improve grid power supply quality and availability is scheduled for completion in Q3/2012
Further exploration progress yielding positive results on both current operating pits and proximal new deposits within the Youga mine exploitation permit
During Q1 2012, the Youga Mine contributed $16.1 million towards the total cash margin of $38.9 million
During Q1 2012, the Youga Mine contributed $15.1 million towards earnings from mining operations and generated $12.6 million of operating cash flow from mine operations
Work commenced in the first quarter on the construction of the $0.25 million Youga high school project which is scheduled for completion in the fourth quarter of 2012. In addition, a number of other corporate social responsibility initiatives relating to health, education and social interaction were progressed including donations of medicines and an ambulance to Zabre hospital, upgrading of a youth centre and the provision of maintenance services for the Youga medical clinic / maternity ward and primary school
Agbaou Project Development
Endeavour is nearing completion of the Agbaou engineering optimization studies which take into account the improved resources/reserves from the successful drilling campaigns of 2010 and 2011. The current project parameters include development costs in the range of $150 to $175 million, annual gold production of approximately 100,000 ounces per year, and cash costs (excluding royalties) in the range of $650 per ounce. The estimated development cost increase reflects a combination of an increase in the planned process plant throughput, anticipated to enhance project economics; and global inflationary pressure on mining project costs. A NI 43-101 technical report is scheduled to be ready within the next few weeks.
Furthermore, Endeavour has been engaged in discussions with the Côte d’Ivoire government to obtain a mining permit and, in parallel, Endeavour is finalizing the EPCM contractor selection.
Exploration is currently being conducted on authorized permits in Burkina Faso, Côte d’Ivoire, Ghana, Liberia and Mali. Endeavour’s land position is the third largest in West Africa and covers over 10,000 square kilometres. The Corporation has approved an exploration budget of $34.0 million for 2012 that is expected to include approximately 215,000 metres of drilling, of which approximately $20.0 million is directed towards increasing resources and reserves to extend mine lives at the Nzema and Youga operations, $6.0 million towards increasing resources and reserves at Agbaou, $6.4 million towards delineating resources and conducting further metallurgical testing of the Nzema sulphides in Ghana, and the balance towards regional programs.
During Q1 2012, $9.7 million of the approximate $20.0 million “near-mine” exploration program was completed. The positive results from the near mine exploration along the Brassiere Trend at Youga, which included YZRC-201: 42m of 3.4 g/t (including 1m at 14.5 g/t and 4m at 6.3 g/t) was disclosed in a news release on April 30, 2012.
On May 2, 2012, Endeavour announced the expansion of the sulphide drilling program at Nzema following review of the drilling results to date, the delivery of the Conceptual Trade-off Study by AMEC Minproc Limited and the initial metallurgical testwork completed at SGS Australia Minerals Services. The drilling results to date have confirmed the presence of several sulphide ore shoots below the principal oxide pits at the Salman Trend. This refractory gold mineralization represents a target that Endeavour believes has the potential to significantly increase production at Nzema.
Net earnings / (loss) from continuing operations have been adjusted for the impact of the fair value change of both the gold hedge liability, Endeavour’s warrants that are denominated in Canadian dollars, and other financial instruments, which are non-cash items. In addition, the non-cash impact of the increase in the Ghana corporate income tax rate, from 25% to 35%, on the deferred income tax liability was adjusted.
Table 3 Adjusted Net Earnings Reconciliation for the quarter ended March 31, 2012
Weighted Average Number of Outstanding Shares 244,848,261
Adjusted Net EPS (Basic) for Q1/2012 $0.07
* Adjusted for impact on deferred income tax liabilities of Ghana tax rate increase from 25% to 35% during Q1/2012.
Deferred income tax liability has increased to reflect the tax rate increase and is a non-cash item
Endeavour is pleased to announce that Michelle Borthwick has been appointed as Corporate Secretary.
Conference Call Details
Management will host two conference calls to discuss the Q1 results, at times convenient for the Australian and North American time zones. Both conference calls will feature Neil Woodyer, Chief Executive Officer, Mark Connelly, Chief Operating Officer, and Christian Milau, Chief Financial Officer.
Analysts and interested investors are invited to participate using the dial in numbers below. The same dial in numbers will be used for both conference calls.
- International: +1 201-689-8433
- North American toll-free: +1 877-407-0832
- Australian toll-free: 0011-800-2246-2666
The conference calls can also be accessed through the following link: http://www.endeavourmining.com/s/Webcasts.asp
To accommodate the Australian market, the first conference call will be held and webcast by V-Call on Wednesday May 9, 2012 at 3:00 PM Sydney time which is equivalent to:
- 1:00 PM in Perth
- 1:00 AM in Toronto
- 10:00 PM in Vancouver (May 8th)
To accommodate the North American market, the second conference call will be held and webcast by V-Call on Wednesday May 9, 2012 at 11:00 AM Toronto time which is equivalent to:
- 8:00 AM in Vancouver
- 1:00 AM in Sydney (May 10th)
- 11:00 PM in Perth
The calls will be archived for later playback on Endeavour’s website until May 9, 2013.
Adriaan “Attie” Roux, Pr. Sci.Nat, Endeavour’s Senior Vice President – Operations, is a Qualified Person under NI 43-101, and has reviewed and approved the technical information related to mining operations in this news release.
K. Kirk Woodman, P.Geo., Endeavour’s General Manager of Exploration, is the Qualified Person overseeing exploration projects in French West Africa and has reviewed and approved the technical information related to Mineral Resource Estimates at the Youga Mine contained in this news release.
Adrian de Freitas, MIMMM, C. Eng., Endeavour’s General Manager, Youga Mine is a Qualified Person under NI 43-101, and has reviewed and approved the technical information related to mining operations at the Youga Mine contained in this news release.
About Endeavour Mining Corporation
Endeavour is a gold producer delivering growth. Endeavour owns two gold mines producing approximately 180,000 ozs per year in Ghana and Burkina Faso that are generating significant operating cash flows to fund exploration and development growth. In addition to upside potential at its current operations, Endeavour’s gold project in Côte d’Ivoire is ready for construction (mining permit submitted; currently negotiating EPCM contract) for an additional 100,000 ozs per year. Endeavour’s strong financial base encourages investments in long-term operational growth, exploration to replace and increase reserves, and funding for acquisitions.
Endeavour Mining Corporation is listed on the TSX (symbol EDV) and ASX (symbol EVR), and also trades on the OTCQX (symbol EDVMF).
On behalf of Endeavour Mining Corporation
Chief Executive Officer
This news release contains “forward-looking statements” including but not limited to, statements with respect to Endeavour’s plans and operating performance, the estimation of mineral reserves and resources, the timing and amount of estimated future production, costs of future production, future capital expenditures, and the success of exploration activities. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “expects”, “expected”, “budgeted”, “forecasts” and “anticipates”. Forward-looking statements, while based on management’s best estimates and assumptions, are subject to risks and uncertainties that may cause actual results to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks related to the successful integration of acquisitions; risks related to international operations; risks related to general economic conditions and credit availability, actual results of current exploration activities, unanticipated reclamation expenses; changes in project parameters as plans continue to be refined; fluctuations in prices of metals including gold; fluctuations in foreign currency exchange rates, increases in market prices of mining consumables, possible variations in ore reserves, grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes, title disputes, claims and limitations on insurance coverage and other risks of the mining industry; delays in the completion of development or construction activities, changes in national and local government regulation of mining operations, tax rules and regulations, and political and economic developments in countries in which Endeavour operates. Although Endeavour has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Please refer to Endeavour’s most recent Annual Information Form filed under its profile at www.sedar.com for further information respecting the risks affecting Endeavour and its business.
PDF available at: http://stream1.newswire.ca/media/2012/05/08/20120508_C5531_DOC_EN_13388.pdf
For additional information, contact:
Vice President — Investor Relations
+1 (604) 609 6130