ENDEAVOUR Mining forecast production of between 680,000 and 740,000 ounces for its 2020 financial year after registering slightly disappointing output last year.
Production for 2019 came in at 651,000 oz which was at the lower end of the guided 650,000 to 695,000 oz range owing to the hampering effects of heavy rainfall at Bouéré which is part of Houndé, a project in Burkina Faso.
Full year all-in sustaining costs (AISC) were about $813/oz which was within the lower half of the $794 to 845/oz guidance range. AISC are estimated to be between $845 and 895/oz in the 2020 financial year.
Endeavour CEO, Sébastien de Montessus, put a positive spin on the 2019 financial year, saying it had been “pivotal”. The firm generated its first free cash flow following a period of sustained capital investment in Houndé and Ity CIL, (carbon-in-leach) in Côte d’Ivoire.
The two mines form the basis of Endeavour’s future production. De Montessus said he hoped production of 500,000 oz/year from the two mines could be locked in for the next 10 years.
It also made public a proposal for an all-share merger with Centamin, a UK-listed company that operates the Sukari mine in Egypt. However, Centamin was not in favour of the proposal which resulted in Endeavour withdrawing its interest. De Montessus cited a lack of information from Centamin for his board’s decision to stand down.
Commenting on fourth quarter numbers, De Montessus said the company had made in-roads into net debt which was reduced by $77m – nearly 50% lower than in the previous quarter – amounting to $130m in the second half of 2019.
“We believe the business is well positioned to significantly decrease its net debt in the coming year,” said De Montessus in comments to the fourth quarter results. He made no mention of dividend payments although in previous results announcements the company has suggested payouts to shareholders would be discussed with the board.
The prospect of a dividend is encouraged by a strong gold price. Bullion is expected to remain robust during 2020 owing to geo-political and economic uncertainty. Endeavour’s realised gold price was $1,448/oz and $1,367/oz for the fourth quarter and the 2019 financial year respectively.
Whilst a maiden dividend is expected of Endeavour it may be tempered by investment in green- and brownfields development. The company has set aside a “company-wide” exploration program of between $40m and $45m for the 2020 financial year. Some 2.1 million oz indicated resources was discovered last year.
“We expect to see continued momentum across our business in 2020 with further production growth and exploration activities,” he said.
“We also expect to demonstrate additional value creation from our exploration program with the upcoming publication of maiden reserves for the Kari West and Kari Center discoveries at Houndé and the Le Plaque discovery at Ity.” Endeavour is due to present its full 2019 financial year results on March 9.
