Endeavour confident of reaching FY production, cost targets; Houndé construction on track

JOHANNESBURG (miningweekly.com) – West Africa-focused Endeavour Mining produced 310 923 oz of gold in the first six months of this year, a 19% year-on-year increase, mainly as a result of increased output at the Karma mine, in Burkina Faso, and asset optimisation work undertaken at the Tabakoto mine, in Mali, and the Nzema mine in Ghana.

The Karma mine produced 56 000 oz of gold in the first half of this year, compared with 12 000 oz in the prior comparable period, while the Tabakoto mine’s output increased to 84 000 oz from 78 000 oz in the prior comparable period.

The Nzema mine lifted output to 53 000 oz, from 40 000 oz in the first half of 2016.

Production at the Ity mine, in Côte d'Ivoire, however, decreased to 30 000 oz, from 43 000 oz in the first half of 2016. Output at the Agbaou mine, also in Côte d'Ivoire was marginally down at 87 000 oz.

Endeavour has maintained its full-year production guidance at 600 000 oz to 640 000 oz of gold.

It is also confident of meeting its full-year guidance for all-in sustaining costs (AISC) of $860/oz to $905/oz.

Group AISC for the first half of this year was $901/oz, slightly above the $896/oz achieved in the first half of the prior year.

Endeavour sold 315 000 oz of gold in the first half of the year, compared with 248 000 oz in the first half of 2016, while also realising net earnings of $15-million, compared with a loss of $8-million in the first half of last year.

Its net debt, however, increased to $183-million as at June 30, compared with $26-million as at December 31, 2016, mainly owing to $127-million having been spent on growth projects and $59-million on acquisitions.

Nevertheless, the company said it remains well positioned to fund its growth.

“On the operational front, our key priorities include the continued focus on cost optimisation, efficient procurement and improved synergies across the organisation while continuing to operate to the highest safety standards.

“On the development front, our Houndé project remains on time and on budget with first gold pour still on track for the fourth quarter. At Ity, we are finalising an optimisation study to take advantage of the increased resource base, which should support a material increase to the plant size,” Endeavour president and CEO Sébastien de Montessus said on Tuesday.

Construction on the Houndé project, in Burkina Faso, which is expected to increase Endeavour’s production to above 900 000 oz/y by 2018, is on track, with 90% of the project complete.

Endeavour has already spent $198-million on the project, with a further $83-million still to be spent.

Meanwhile, Endeavour expects to publish a formal investment decision and an updated reserve estimate as part of an optimisation study for its Ity mine in September. The optimisation study will likely be based on a four-million-ton-a-year carbon-in-leach (CIL) plant.

The company was previously considering the construction of a three-million-ton-a-year CIL plant.

Endeavour is also acquiring mining, exploration and development company Avnel Gold, which owns 80% of the Kalana gold project, in Mali, for $122-million in shares.

The project will include a 1.2-million-tonne-a-year CIL plant and a single openpit. A feasibility study has estimated an 18-year mine life, with production of 148 000 oz/y at an AISC of $561/oz over the first five years.