Endeavour back in the black as AISC drops and output rises

TORONTO (miningweekly.com) – Africa-focused Canadian gold producer Endeavour Mining has reported a $3-million, or $0.05 a share, headline profit for the three months ended March 31, as markedly lower all-in sustaining costs (AISC) and higher year-on-year sales boosted the miner's financial performance.

The TSX-listed miner, which moved its administrative and regional offices to Paris, France, and Abidjan, Cote d'Ivoire, reported that total net earnings attributable to shareholders dropped to $1-million, or $0.02 a share, from $9-million, or $0.22 a share, for the same period in 2015. Endeavour attributed this year-on-year net earnings drop to the additional acquisition costs for True Gold's Karma gold mine, in Burkina Faso, as well as increased operating and corporate costs for Ity mine, in Cote d'Ivoire, which saw its first full quarter of operating.

Revenue for the first quarter increased by $13.5-million to $144-million from $130.5-million in the same period a year earlier. Gold ounces sold increased from 124 850 oz in 2015 to 127 355 oz for the first quarter of 2016. The realised price was $1 192/oz, compared with $1 219/oz in the same period in 2015. The reported revenue excluded the Youga divesture, also in Burkina Faso, in both the current and prior-year periods, the company advised.

The company reported an all-in sustaining margin increase of 54% over the previous quarter to $37-million, lifted by lower AISC/oz and higher gold prices.

AISC decreased to $900/oz, down from $946/oz during the comparable quarter of 2015, notably owing to the addition of the low-cost Ity mine, and cost reductions at Agbaou, in Cote d'Ivoire, and Tabakoto, in Mali. Endeavour’s AISC for its continuing operations, which excluded the divested Youga mine, averaged $889/oz during the first quarter of 2016.

During the period, Endeavour had significantly improved its balance sheet, with net debt reduced to $136-million as of March 31, from $259-million a year earlier. Following the La Mancha $65-million anti-dilution cash injection received with the True Gold acquisition close on April 26, the company’s pro-forma net debt further decreased to $71-million.

Endeavour reported a strong cash position of $182-million at the end of March on a pro-forma basis, including the expected Houndé mine equipment financing, in Burkina Faso, and the undrawn portion of the revolving credit facility, in addition to its strong cash flow generation.

During the period, free cash flow, before working capital, tax and financing costs, increased by 133% quarter-on-quarter to $28-million.

Gold output for the period totalled 132 000 oz, putting the company on track to meet the full-year guidance of 535 000 oz to 560 000 oz, with higher production weighted towards the coming quarters. Endeavour planned to update its guidance when it announced its second-quarter results.