ENDEAVOUR Mining unveiled maiden indicated resources at its Kari West and Kari Centre exploration sites of one million ounces taking the total measured and indicated resources at the Houndé mine in Burkina Faso a quarter higher.
Including a previous discovery, the mine has found enough new resources in order to sustain production at some 250,000 ounces a year for the next 10 years.
“The resources at Kari West and Kari Centre were both discovered at an industry-leading low cost of $15/oz, underscoring why investment in exploration continues to be a key strategic priority for Endeavour as we build a sustainable business and deliver long-term value for our shareholders,” said Endeavour president and CEO, Sébastien de Montessus.
The maiden reserves would be published with Endeavour’s fourth quarter and final results in the early part of next year. Favourable mining conditions on both deposits suggest open pit extraction. Metallurgical testing was underway.
Endeavour Mining has said it would increasingly focus on exploration of organic growth prospects as well as greenfields projects following a period of heavy investment in merger and acquisition activity.
“From a broader perspective, while our immediate focus is on cash flow generation, we are very excited with the internal growth optionality being generated in parallel through our exploration success as it leaves us well poised for future growth,” said De Montessus earlier this year.
In September, the company announced it had discovered 1.2 million ounces in gold resources at its Côte d’Ivoire prospect Fetekro after spending $10m in exploration – a find as large as the firm’s former property Agbaou when it started production in 2014.
Endeavour is on the up at the current time.
With a quarter left, it said earlier this month that full year gold production had been adjusted to a maximum of 695,000 ounces at an all-in sustaining cost (AISC) of $795 to $845/oz. It had also moved into net cash flow generation. “Our net, net, net, net cash flow is finally positive,” De Montessus told analysts following its third quarter results. Now was the time to “harvest cash”, as well as the gold price, he said.
Operating cash flow before non-cash working capital doubled to $115m, equal to $1.05/share quarter-on-quarter. And the number that most pleased De Montessus – free cash flow before debt and lease repayments – came in at $52m.
As a result, net debt was reduced $52m to $608m or 1.9x adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) – a ratio improved from the 2.8x position in the previous quarter and in touching distance (at the current margin) to Endeavour’s 1.5x net debt to EBITDA target.
