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Gold producer Endeavour Mining sees further output growth and debt reduction in 2020

It achieved output guidance in 2019 for the seventh year in a row, at 651,000 ounces of gold, up 6% from 2018

Endeavour Mining Corp -
The group sees further strong growth for 2020, guiding for between 680,000 ounces and 740,000 ounces of the yellow metal

West Africa-focused gold miner Endeavour Mining Corporation (TSE:EDV) (OTCMKTS:EDVMF) is eyeing further growth in production and reduction in debt this year as it posted results for the fourth quarter and year to end December.

The firm achieved output guidance in 2019 for the seventh year in a row, at 651,000 ounces of gold (up 6% from 2018) at an all-in-sustaining cost (AISC) of US$813 per ounce. 

And it sees further strong growth for 2020, guiding for between 680,000 ounces and 740,000 ounces of the yellow metal at an AISC of between US$845 and US$895 per ounce. 

READ: Endeavour Mining calls off Centamin merger discussions over “lack of information”

Endeavour operates four mines, with two in the Ivory Coast (Côte d’Ivoire) - Agbaou and Ity, while it has the Houndé and Karma mines in Burkina Faso.

"2019 was a pivotal year for the company with the successful ramp-up of our Ity CIL project," said Sébastien de Montessus, the group's president and CEO.

"Following four years of significant investment and the development of both Ity and Houndé, we are starting to see the strong cash flow generation capability of our operating assets."

The company boss highlighted that net debt decreased by a further US$77 million in the fourth quarter, nearly 50% more than the previous quarter, which amounted to nearly US$130 million in the second half of 2019.

"We believe the business is well positioned to significantly decrease its net debt in the coming year.

Ity and Houndé are now the flagship assets for the producer and the aim is to achieve a combined annual production of at least half a million ounces for a minimum of 10 years, while continuing to optimize the group's broader portfolio.

"We expect to see continued momentum across our business in 2020 with further production growth and exploration activities. 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.”

Last year, the miner added a total of 2.1 million of indicated gold ounces and this year, it plans a company-wide exploration program worth between US$40 million and US$45 million.

For the three months to December 31, output was fairly flat compared to the third quarter, the miner said, generating 178,000 ounces at an AISC of US$820 per ounce.

Ity produced 60,000 ounces at an AISC of around US$698 per ounce. The Houndé mine generated 55,000 ounces of the precious metal at an AISC of around US$914 per ounce.

Key catalysts

Endeavour also outlined in today's statement, key upcoming catalysts. In the first quarter of 2020, these are maiden reserves for the Kari West and Kari Center discoveries at Houndé, and for the Le Plaque discovery at Ity.

In the second quarter, earmarked are updated technical reports with mine plans for Houndé and Ity and an exploration and resource estimate update for Fetekro.

The group's full-year 2019 production was at the bottom end of its 650,000 – 695,000 ounces guidance range due to the slower than expected ramp-up at the newly commissioned Bouéré higher-grade deposit at Houndé, caused by the severe rainy season in the third quarter

The realized gold price was US$1,448 per ounce for the fourth quarter and US$1,367 per ounce for the full year.

Shares in Toronto ticked up 0.98% to C$25.71 each. In New York, they gained 2.59% to US$19.60.

Contact the author at [email protected]

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Price: 24.87 CAD

TSX:EDV
Market: TSX
Market Cap: $2.73 billion
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