Endeavour beats dividend target but impairs Burkina mine $246m following life of mine review

ENDEAVOUR Mining announced today it would pay a $140m dividend for its 2021 financial year, $15m more than its previously stated target following a 79% year-on-year increase in adjusted net earnings of $577m.

The final dividend of 70c/share would match the interim dividend announced last calendar year and follows the 60c/share maiden dividend unveiled in 2020.

The improvement in net earnings was less impressive; they increased 31% to $221m or 92 US cents per share as the company absorbed impairments of $259.4m. Of the impairments, some $246.3m related to Boungou, a mine in Burkina Faso.

Endeavour said in notes to its financial results that a revised life of mine plan resulted in an increase in forecast operating costs as well as lower than expected production and a decrease in reserves at Boungou. The balance of impairments related to the firm’s Karma mine which Endeavour announced earlier this month would be sold for up to $25m.

Total production for the year came out at 1.54 million ounces which was 69% more than in its 2020 financial year. Endeavour acquired the mines of SEMAFO (which owned Boungou) and Teranga Gold during last year propelling itself into the top rung of world gold producers by size. All in sustaining costs (AISC) were $885 per oz for the 2021 financial year compared to $873/oz in the previous year.

Earlier this month, the company was admitted to the FTSE100 index following the exit from the index of Evraz and Polymetal, the Russian companies that fell under some fierce selling by investors owing to that country’s invasion of Ukraine.

As per a previous announcement, Endeavour guided to gold production of between 1.3 to 1.4 million oz for the current year which would be produced at AISC of $880 to $930/oz.

The group said it intended to surprise shareholders with higher than stated dividends. In terms of its progressive dividend policy it has targeted a payout of $150m this year and $170m the year after whilst also keeping the door open to share buy-backs.

It renewed its share buy-back programme for another year having bought six million shares from March last year at a cost of $137.9m. Including its maiden dividend of 60 US cents in its 2020 financial year, Endeavour said it had returned $338m to shareholders.

“Our strong operating performance generated $1.2bn in operating cash flow which has allowed us to deliver robust shareholder returns while improving our net cash position,” said Sébastien de Montessus, CEO of Endeavour Mining.

Shares in the company opened just over 2% higher in London today taking gains year to date to nearly 18%.