Growing West African Gold Producer Endeavour Mining Delivers Strong 2022 Results and Growth Outlook

• Endeavour Mining (EDV) is a listed company operating in West Africa, the largest gold producer in the region, with a strong balance sheet and low production costs.
• The company reported its Q4 and full-year 2022 results, marking 10 consecutive years of meeting or exceeding guidance despite a challenging year.
• Endeavour produced 1.4 million ounces of gold, sustained low production costs below $930 per ounce, generating over $1 billion in operating cash flow.
• They ended the financial year with a net cash position of $20 million and distributed $300 million to shareholders through dividends and buybacks, offering a 6% indicative yield.
• The company launched two major growth projects, expanded an existing mine, and discovered a significant new deposit, positioning them for continued growth over the next few years.

About Endeavour Mining

Endeavour Mining is a leading West African gold producer, operating four mines across Cote d'Ivoire, Burkina Faso, Ghana and Senegal. With over 10 years of consistent track record in meeting or exceeding guidance, Endeavour has cemented its position as one of the top 10 global gold mining companies. The company boasts strong cash flow generation, a healthy balance sheet and an attractive shareholder returns policy.

Interview with President & CEO, Sebastian de Montessus

2022 Performance Highlights Sustained Track Record of Operational Excellence

In 2022, Endeavour Mining produced 1.4 million ounces of gold, meeting the upper end of its guidance range for the 10th consecutive year. This milestone production resulted from solid performances across its diversified portfolio of assets, with all-in sustaining costs coming in below $930 per ounce. The company generated over $1 billion in operating cash flow while maintaining a net cash position of $20 million by year-end. These results were achieved despite inflationary pressures, underscoring Endeavour's resilience.

Endeavour also continued to reward shareholders, distributing $300 million through dividends and buybacks - amounting to an attractive 6% yield. The successful execution of its key growth projects at Sabodala-Massawa in Senegal and Ity in Côte d’Ivoire also positioned the company for its next phase of growth.

Growth Projects to Increase Production by 20%

With its low-cost operating model and successful track record, Endeavour Mining is poised to grow production by at least 20% over the next two years as it brings two key expansion projects into production.

The $290 million Sabodala-Massawa expansion will increase annual production by 290,000 ounces from 2024 at an attractive all-in sustaining cost of under $900 per ounce. Meanwhile, the new $450 million Ity CIL project in Côte d’Ivoire will add 250,000 ounces per year starting in late 2023 at similarly low costs.

These projects have progressed smoothly, with over 60% of the capital expenditure already committed. Despite investing significantly in this growth, Endeavour maintained its strong balance sheet with minimal debt. With a diversified portfolio and proven execution capabilities, investors can feel confident in Endeavour’s ability to deliver on these growth plans.

Promising Exploration Provides Pipeline of Future Growth

In addition to its near-term growth projects, Endeavour Mining boasts an extensive exploration program that continues to yield promising results and discover new mines. Over the past 5 years, the company added 11.5 million ounces of indicated resources, including a major greenfield discovery at Fetekro in Côte d’Ivoire.

With some of the world’s most prospective gold belts in West Africa left to explore, Endeavour recently launched a new 5-year exploration program to uncover its next wave of mines. This exploration provides a crucial pipeline of long-term growth opportunities to continue expanding production and extending mine lives.

Resilient Financial and Operating Model in Challenging Times

Despite turbulence in the global economy, inflationary pressures, and rising interest rates, Endeavour Mining remains well positioned thanks to its low-cost production, geographic diversification and strong balance sheet. Strategic contracting and supply chain management also helped shield the company from inflationary impacts.

As CEO Sebastian de Montessus notes, Endeavour’s resilient business model allows it to successfully navigate economic cycles. While periods of recession may persist in the near term, the eventual recovery should provide further tailwinds for gold producers like Endeavour. With gold likely to surge past $2,000/oz as rates decline, quality low-cost producers stand to see their margins expand even further.

Risks & Opportunities

Risks

• Operating in West Africa exposes the company to higher political risks than in more stable jurisdictions. Changes in regulations, taxes, or government policies could impact operations.
• Construction delays or cost overruns on growth projects could negatively impact production and financials.
• Exploration efforts may not continue to replace depleted reserves and find new discoveries. This could limit long-term growth potential.
• Rising input costs like energy, labor, materials could squeeze profit margins if gold prices decline from current levels.

Opportunities

• Further exploration success could uncover new high-grade deposits and extend existing mine lives.
• The company's strong balance sheet allows it to fund growth and continue shareholder returns even if gold prices fall.
• Once new projects come online, increased production and declining capital spending could boost free cash flow significantly.
• Asset diversification provides production stability and mitigates single mine risk.
• Potential weakness in the global economy and equity markets could spur renewed investment demand for gold.

Conclusion

With its sector-leading operational track record, low costs, exciting growth plans and promising exploration pipeline, Endeavour Mining represents an attractive investment opportunity, especially amid volatile markets. The company’s diversified production base, strong balance sheet and disciplined capital allocation provide resilience against economic headwinds while allowing investors to capture significant upside as gold prices rise. For investors seeking a high-quality gold mining vehicle with near and long-term growth potential, Endeavour Mining warrants close consideration.

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