Tabakoto, Mali
Photo by: Endeavour Mining
VANCOUVER (miningweekly.com) – Intermediate Canadian gold producer Endeavour Mining has reported an adjusted loss for the three months ended March 31, as higher year-on-year output benefited from relatively strong realised prices and low, yet slightly higher, all-in sustaining costs (AISC).
The London, England-headquartered company reported a first-quarter adjusted profit attributable to shareholders of $9.34-million, or $0.10 a share, which is flat over the comparable period of 2016, but falls far short of analyst forecasts looking for earnings of $0.15 a share.
Net income fell into negative territory at $2.19-million, or $0.08 a share, which is $0.10 a share lower than a year earlier.
Endeavour derived revenues of $193.1-million from 162 308 oz of gold sold in the quarter, at an average realised gold price of $1 190/oz (including the Karma stream), which generated $27.1-million in earnings from mine operations. That is a 34% year-on-year improvement in revenue, boosted by gold sales also rising 34%.
AISC for the period totalled $905/oz sold, placing the company on track to meet the 2017 guidance of $860/oz to $905/oz, as AISC is expected to trend lower throughout the year with increased output from Agbaou (Côte d'Ivoire), better grades at Ity (Côte d'Ivoire), and lower sustaining exploration spend per ounce, the company advised on Tuesday.
Free cash flow (before working capital, tax, and growth projects) for the quarter was $32.1-million, continuing the trend from the fourth quarter of 2016 of healthy internal cash flow generation. Endeavour said it continues to be well positioned to finance growth projects in 2017 and beyond with $297-million available sources of financing and liquidity ($87-million in cash and $210-million in an undrawn revolving credit facility).
Quarterly gold output came in at 158 640 oz, which Endeavour said is in line with expectations after a record quarterly output of 175 411 oz achieved in the fourth quarter of 2016.
However, net debt increased to $61.9-million from $25.7-million in the previous quarter, as the company ramped up spending on growth projects.
Production is expected to increase to between 600 000 oz and 640 000 oz (excluding Houndé, in Burkina Faso) in 2017, as improvements at Karma (Burkina Faso) and Nzema (Ghana) are expected to more than compensate for Agbaou returning to a normalised production level after a record-breaking year. As was the case in 2016, production is expected to fluctuate throughout the year owing to mine plan sequencing and the rainy season, with a peak towards the middle of the year, the company advised.
Construction at Houndé is progressing on time and on budget, with the first gold pour on track for the fourth quarter of this year.
Endeavour has allocated more funds to its exploration budget this year, with an increased focus in 2017 on a company-wide exploration programme of about $40-million (up 21% over 2016 and more than double that of 2015), totalling 285 000 m of drilling.
Endeavour’s TSX-listed stock fell as much as 3.5% early on Tuesday morning, before trading at a slightly better price in the afternoon session at C$20.72 apiece (still down 2.5%).