Endeavour Mining PLC (EDVMF) Q2 2024 Earnings Call Highlights: Strong Production Growth Amid ...
Production: Increased to 251,000 ounces in Q2, up 15% from Q1.
All-in Sustaining Cost (AISC): Increased by 9%, with higher costs due to power and royalty expenses.
Operating Cash Flow: Increased to $258 million, driven by higher production and gold prices.
Net Debt: Stable, with a $70 million reduction in gross debt.
Dividends and Share Buybacks: $100 million dividend declared for H1 2024, with $20 million in share buybacks.
EBITDA: Increased to $249 million, with a stable margin of 45%.
Exploration Budget: Increased from $65 million to $77 million.
Shareholder Returns Program: Commitment to return at least $435 million in dividends over 2024 and 2025.
Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Endeavour Mining PLC (EDVMF) remains on track to achieve its production guidance for the 12th consecutive year.
The company announced a new shareholder returns policy, pledging to return at least $435 million in dividends over 2024 and 2025.
Endeavour Mining PLC (EDVMF) successfully delivered first gold at the Sabodala-Massawa BIOX expansion and Lafigue mine on budget and on schedule.
The company has made significant progress in its exploration program, advancing resource to reserve conversion at key mines.
Endeavour Mining PLC (EDVMF) received an improved Sustainalytics score, ranking it as the highest gold producer in the sector for ESG performance.
Negative Points
All-in sustaining costs are expected to be near the top end of the range due to lower-than-expected power availability and higher royalty costs.
Production at Sabodala-Massawa is expected to be below the low end of the guidance range, with costs above the top end due to lower-than-expected grade non-refractory ore.
The company faced higher tax expenses, impacting net earnings and adjusted net earnings.
Endeavour Mining PLC (EDVMF) experienced lower grid power availability in Cote d'Ivoire and Burkina Faso, leading to increased self-generated power costs.
The departure of key executives, including the COO and EVP Exploration, may pose challenges in maintaining operational continuity.
Q & A Highlights
Q: Are you concerned about the ramp-ups at Sabodala and Lafigue occurring during the rainy season in Q3? A: Ian Cockerill, Non-Executive Independent Director, explained that while the rainy season can be challenging, Lafigue has sufficient material stockpiled to continue operations, and Sabodala is in a drier environment, reducing concerns. The main issue at Sabodala was access to fresh ore, which has been resolved following the eviction of artisanal miners.
Q: Will the newly identified targets at Tanda-Iguela be included in the Assafou PFS expected in Q4? A: Ian Cockerill clarified that while the Assafou deposit is sufficient for the PFS, the new targets like Pala Trend #3 and Koume-Nangare will not be included as they are not fully defined yet. These will be considered for future optionality beyond the current PFS.
Q: Are there any updates on potential changes to mining codes in Burkina Faso and Ivory Coast, and is Endeavour being consulted? A: Ian Cockerill noted that while Burkina Faso is aligning its mining codes with the rest of West Africa, existing conventions will be respected, meaning current agreements for Mana and Hounde will remain until 2027 and 2029, respectively.
Q: What is the current status of the ramp-ups at Lafigue and Sabodala-Massawa in terms of nameplate capacity? A: Mark Morcombe, COO, stated that Lafigue is operating at about 90% of nameplate capacity, while Sabodala-Massawa's BIOX circuit is at 50%. The flotation underflow is being redirected to the CIL plant to improve recovery rates.
Q: What is the company's approach to de-leveraging and shareholder returns, considering the current leverage ratio? A: Ian Cockerill mentioned that the goal is to maintain leverage around 0.5% through the cycle. The company plans to balance debt repayment with shareholder returns, including dividends and opportunistic buybacks, depending on financial performance and market conditions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.