Mr. Neil Woodyer reports
ENDEAVOUR MINING REPORTS RECORD Q3 GOLD PRODUCTION OF 88,445 OZ AND ALL-IN SUSTAINING COST OF $1,057/OZ
Endeavour Mining Corp. had record gold production of
88,445 ounces in third quarter 2013, representing a 17-per-cent increase over second quarter 2013,
with the increase driven by the Tabakoto mill expansion. In addition
to production growth, cost reduction measures continued to take effect
with the all-in sustaining cost decreasing to $1,057 per ounce sold in
third quarter 2013 compared with $1,086 per ounce for the nine months ended
Sept. 30, 2013.
(All amounts are in U.S. dollars unless otherwise indicated.)
Third quarter 2013 financial and operating highlights:
- Gold production was 88,445 ounces, which compares with 75,421 ounces in
second quarter 2013.
- Gold sold was 90,997 ounces for a mine cash margin of $35.4-million, and
after corporate costs, as well as sustaining capital and near-mine exploration
expenses, the all-in sustaining margin was $25.0-million (21-per-cent margin).
- The all-in sustaining cost per ounce sold was $1,057, which is
inclusive of cash costs per ounce sold of $869.
- Endeavour invested $43.1-million in new mine construction, development
and exploration, which includes $31.5-million
for Agbaou construction.
- Agbaou continues on schedule with the completion of the 91-kilovolt overhead
power line installation and the start of mining activities.
Endeavour's fourth mine is on plan for commercial production in first quarter 2014.
- Adjusted net loss was $2.1-million or nil per share.
- As of Sept. 30, 2013, Endeavour had cash and cash equivalents of
$119.4-million with long-term debt of $300-million drawn from the
corporate facility. In addition, cash proceeds of $17-million were
received after quarter-end from the completed Finkolo sale.
- During the quarter, Endeavour increased its corporate facility to $300-million, with an additional $50-million available on completion of
Agbaou.
Financial statements and related management's discussion and analysis will be available on SEDAR, the
Australian Securities Exchange website and the OTC Markets website and in the investor relations section
of Endeavour's website.
Neil Woodyer, chief executive officer, stated: "We are very pleased to have achieved record gold production of over
88,000 ounces as we had our first full quarter with the expanded
Tabakoto mill. We have continued to make progress reducing our cost
level with an all-in sustaining cost in Q3 of $1,057 per ounce. Our
year-to-date production of 237,520 ounces and AISC of $1,086 per ounce
puts us on track to deliver within our guidance ranges of 315,000 to
330,000 ounces and AISC of $1,055 to $1,155 per ounce. We are focused on lowering our long-term operating cost base to position
Endeavour to succeed across a wide range of gold prices. Ongoing
studies to increase owner mining at our operations are demonstrating
the potential to improve our cost structure, and we are now evaluating
potential equipment purchases in the context of the companywide 2014
budgeting process. In late October, we achieved a significant milestone with the start of
mining activities at Agbaou. We are on track for commercial production
in the first quarter of 2014. The increase of the corporate debt
facility in July has ensured we have the resources required to complete
Agbaou construction and other investments to lower operating costs. As we near completion of Agbaou's construction, we are pleased with the
completion of the Hounde feasibility study announced last week and its
timely progression into the permitting phase. Hounde is an
economically robust project requiring $315-million of upfront capital
for average annual production of approximately 180,000 ounces over eight
years at all-in sustaining cost of less than $800 per ounce. At $1,300
gold price and without the benefit of leverage, the Hounde project
generates an attractive after tax IRR of 22 per cent. Based on these results,
we are now evaluating how best to integrate Hounde into Endeavour's
production growth plans."
Third quarter 2013 operational results
Tabakoto gold mine
Mali
production increased by 48 per cent compared with second quarter due to higher throughput from
the mill expansion.
Mined tonnes were lower than expected in September as heavy rains and
availability of the open-pit mining fleet impacted open-pit mining.
As the mill operated above nameplate capacity of 4,000 tonnes per day during third quarter,
some lower-grade stockpiles (about 1.5 grams per tonne) were also processed.
Segala decline is progressing well and now extends over 900 metres from the
portal, with over 219 metres completed in third quarter. Segala underground
development ore production is scheduled to begin during fourth quarter 2013 with
stoping ore commencing to increase production during second quarter 2014.
Nzema gold mine, Ghana
Gold production of 27,894 ounces at a cash cost of $853 per
ounce produced was improved.
During third quarter, the mined grade of 1.31 g/t was similar to 1.30 g/t in
first-half 2013; however, the grade of tonnes milled averaged 2.00 g/t as
compared with 1.63 g/t in first-half 2013. This improvement in milled grade is a
result of increased volume of purchased ore.
In October, the mined grade was 1.67 g/t with increased higher-grade ore
from the Adamus pits. Including purchased ore, the milled grade was
2.40 g/t.
Youga gold mine, Burkina Faso
Gold production was 20,029 ounces at a cash cost of $869 per ounce
produced.
Gold production was impacted by heavy rains in September, which
interrupted mining activities in the main pit.
THIRD QUARTER 2013 AND NINE-MONTH MARGIN GENERATION, ALL-IN SUSTAINING COST
AND FULL-YEAR GUIDANCE
Three months ended Nine months ended
Sept. 30, 2013 Sept. 30, 2013
U.S.$M in gold oz U.S.$M in gold oz
Gold revenue $121.1 90,997 $339.1 235,927
Less: royalties $6.7 5,035 18.3 12,732
Less: cash costs for ounces sold $79.0 59,362 208.8 145,271
Mine cash margin $35.4 26,600 112.0 77,923
Less: corporate G&A (attrib. to operations) $2.8 2,104 10.3 7,166
Corporate EBITDA $32.6 24,496 101.7 70,757
Less: sustaining capital $5.4 4,058 10.8 7,514
Less: near-mine exploration $2.2 1,653 8.0 5,566
All-in sustaining margin $25.0 18,786 $82.9 57,677
Three months ended Nine months ended Full-year
Sept. 30, 2013 Sept. 30, 2013 2013 guidance
Gold sold (oz) 90,997 235,927 315,000-330,000
U.S.$M $/oz U.S.$M $/oz $/oz
Royalties $6.7 $74 $18.3 $78 $85-$95
Cash costs for ounces sold 79.0 869 208.8 885 840-880
Corporate G&A (attrib. to operations) 2.8 31 10.3 44 45-55
Sustaining capital 5.4 59 10.8 46 45-70
Near-mine exploration 2.2 24 8.0 34 40-55
All-in sustaining cost per ounce sold $1,057 $1,086 $1,055-$1,155
THIRD QUARTER 2013 CASH COSTS BY MINE
Tabakoto Nzema Youga Total
Mining physicals
Total tonnes mined -- open pit 000 t 1,534 2,464 1,858
Total tonnes mined -- underground 000 t 264 -- --
Total ore tonnes -- open pit 000 t 116 462 256
Total ore tonnes -- underground 000 t 141 -- --
Total tonnes milled 000 t 406 496 239
Recovery % 89% 89% 92%
Gold produced oz 40,522 27,894 20,029 88,445
Gold sold oz 41,027 27,640 22,330 90,997
Unit cost analysis
Mining costs -- open pit $/t mined $4.24 $3.26 $3.82
Mining costs -- underground $/t ore 73.79 -- --
Processing and maintenance $/t milled 22.72 12.84 27.82
G&A $/t milled 11.44 5.97 9.93
Purchased ore cost $/oz purchased -- 785 --
Cash cost details
Mining costs -- open pit $000s $6,499 $8,034 $7,103 $21,636
Mining costs -- underground $000s 10,405 -- -- 10,405
Processing and maintenance $000s 9,226 6,369 6,650 22,245
G&A $000s 4,645 2,963 2,373 9,981
Purchased ore at Nzema $000s -- 6,549 -- 6,549
Inventory adjustments and
other costs $000s 4,652 372 3,200 8,224
Cash costs for ounces sold $000s $35,427 $24,287 $19,326 $79,040
Cash cost per ounce sold $/oz $864 $879 $865 $869
Agbaou gold mine construction
The Agbaou gold mine is in the final stages of construction and will be
operational in early 2014.
Power line tower construction and stringing of the 15-kilometre 91-kilovolt line is
complete, and the high-voltage transformer has been installed and tested
within the substation.
Delivery of mining equipment is on schedule including two D9 dozers,
seven of the CAT 777 haul truck fleet and both Liebherr 9350
excavators.
Mining of the South pit began in mid-October, and mining in the North pit
commenced in late October. Prior to initiation of mining, the run-of-mine
starter pad and mine services area construction were completed.
Major reagents have arrived on site, and commissioning, operational and
insurance spares are on hand.
Recruitment of the work force is progressing well and includes a focused
effort toward hiring from local communities. All management positions
have been secured.
Recent community projects include construction of a local primary school
and teacher quarters (completed in August) and rehabilitation of the
maternity health centre and midwife housing.
INVESTMENTS IN NEW MINE DEVELOPMENT AND EXPLORATION
(in $000,000 (U.S.))
Three months ended Nine months ended
Sept. 30, 2013 Sept. 30, 2013
Investments in new mine development and exploration
Agbaou construction $31.5 $100.5
Nzema development 4.5 $10.5
Tabakoto mill expansion (completed second quarter 2013) 0.0 $8.0
Tabakoto/Segala development 2.0 14.0
Hounde FS 2.3 $7.7
Kofi, Ouare, regional exploration 1.8 $6.0
Corporate G&A (attrib. to new mines) 0.9 $3.4
Total $43.1 $150.1
Third quarter 2013 adjusted earnings
Net earnings/(loss) from continuing operations (attributable to
Endeavour shareholders) have been adjusted for the impact of fair value
change of certain financial instruments, including the gold price
protection program and Endeavour's warrants that are denominated in
Canadian dollars. Other adjustments include one-time gains on sales of
the Finkolo joint venture and subsidiaries, deferred income tax
expense, which relates to an increase in losses from a realized hedge
loss, adjustments related to investments in associates, stock-based
payments, foreign currency, bullion, and marketable securities.
Endeavour has amended second quarter 2013 earnings to record the previously
reported impairment charge on a posttax basis instead of on a pretax
basis, which has no impact on current or previously reported adjusted
earnings (for further details refer to Note 19 of the condensed
consolidated financial statements for the three and nine months ended
Sept. 30, 2013).
ADJUSTED NET EARNINGS RECONCILIATION FOR THE QUARTER ENDED SEPT. 30, 2013
(in $000,000 (U.S.))
Three months ended Sept. 30, 2013
Net (loss) attributable to shareholders of Endeavour ($15.3)
Realized gain -- gold price protection program (29.3)
Change in unrealized loss/(gain) -- gold price protection program 42.2
Change in fair value of Cdn currency share purchase warrants (0.2)
Change in unrealized loss -- gold put option program 2.2
Loss on marketable securities 0.1
Imputed interest on promissory note (0.6)
Loss on foreign currency 0.3
Gain on sale of Finkolo joint venture (13.4)
Gain on sale of subsidiaries (2.1)
Stock-based payments 0.8
Amortized financing costs 0.7
Deferred income taxes (recovery) 12.5
Adjusted net (loss) after tax ($2.1)
Adjusted net (loss) per share (basic, U.S.$ per share) ($0.00)
Conference call details
Management will host two conference calls to discuss the third quarter results and
the recently completed feasibility study for the Hounde project on
Nov. 13 and Nov. 14, 2013, as detailed herein. Both conference
calls will feature Mr. Woodyer, chief executive officer, Attie Roux,
chief operating officer, and Christian Milau, chief financial officer.
Analysts and interested investors are invited to participate in the
calls using the dial-in numbers herein. The same dial-in numbers will be
used for both conference calls.
DIAL-IN NUMBERS
International 1 201-689-8054
North American toll-free 1 877-407-9205
Australian toll-free 1-800-687-004
The conference call can also be accessed through the company's website.
To accommodate the North American/European market, the first conference call will be held and webcast on Nov. 13, 2013.
FIRST CONFERENCE CALL
In Vancouver 8 a.m.
In Toronto and New York 11 a.m.
In London 4 p.m.
In Perth (Nov. 14, 2013) 12 a.m.
In Sydney (Nov. 14, 2013) 3 a.m.
To accommodate the Australian market, the second conference call will be held and webcast on Nov. 14, 2013.
SECOND CONFERENCE CALL
In Perth 7 a.m.
In Sydney 10 a.m.
In Vancouver (Nov. 13, 2013) 3 p.m.
In Toronto and New York (Nov. 13, 2013) 6 p.m.
In London (Nov. 13, 2013) 11 p.m.
The calls will be archived for later playback on Endeavour's website
until Nov. 13, 2014.
Qualified persons
Mr. Roux, PrSciNat, Endeavour's chief operating officer,
is a qualified person under NI 43-101, and has reviewed and approved
the technical information related to mining operations in this news
release.
We seek Safe Harbor.
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