Prior to listing on the LSE in the premium segment in mid-June, gold producer Endeavour Mining reports that it has grown significantly over the past few years to become the most significant gold miner and explorer in West Africa.

With seven operating assets, six development projects and one of the largest land positions in the under-explored West African Birimian greenstone belt, president and CEO Sebastien de Montessus says the company’s listing on the LSE will be the culmination of several years of hard work and marks the full turnaround of the business.

“Our growth has elevated us to senior gold producer status, globally, but most importantly, it makes us the largest gold producer in West Africa, a region that has become the second largest global gold-producing region . . . This gives us unmatched competitive advantage.”

De Montessus adds that the company is particularly proud of its cost structure relative to its peers. “Our position on the cost curve ensures that we are resilient across cycles, with the ability to self-fund our organic growth, while maintaining a strong shareholder returns programme.”

The strong cash position means that Endeavour has been able to implement a minimum progressive dividend policy with a target of distributing at least $500-million to shareholders through to the 2023 financial year, thereby demonstrating the company's ability to pay “attractive dividends”, while also funding its organic growth, the company points out.

As such, minimum dividends are set at $125-million for the 2021 financial year, $150-million for the 2022 financial year and $175-million for the 2023 financial year.

This represents a return to shareholders of about $0.50 apiece, $0.60 apiece and $0.70 apiece, respectively, based on current shares outstanding.

Further, this is up from its inaugural 2020 financial year dividend of $60-million, or $0.37 apiece, which is payable semi-annually provided that the gold price remains above $1 500/oz.

However, to provide shareholders with added value from prevailing higher gold prices above $1 500/oz, Endeavour notes that the minimum dividend can be supplemented with both higher dividends and by continuing its share buyback programme, provided that the miner’s leverage remains below 0.5 times its net debt:adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda).

RESILIENCY
With a high-quality portfolio of assets, diversified across three countries and seven mines, De Montessus says Endeavour can sustain and grow yearly production above 1.5-million ounces, while also maintaining a competitive low all-inclusive sustaining cost of under $900/oz.

Further, a healthy balance sheet with a low net debt:adjusted Ebitda leverage ratio of 0.2 times, and with a net cash position of $250-million expected to be reached in the short-term, are enabling Endeavour to further enhance the resilience of the business through commodity cycles, providing financial flexibility to support organic growth and shareholder returns, the company states.

De Montessus explains that, following the significant transformation of the business in recent years, Endeavour is now well positioned within the senior gold producer peer group with a high-quality portfolio, a healthy balance sheet and trusted partnerships with local stakeholders.

Reflecting on its recent increase in size and scale to the largest West African gold producer, he says the company is augmenting and implementing a more integrated and comprehensive strategy around the environment, social and governance (ESG) principles.

De Montessus points out that Endeavour is focusing on building high-grade mines and discovering high-grade resources, enabling the company to increase its average reserve grade across its many mines.

In turn, this means Endeavour is mining at an average grade of 1.87 g/t gold, which he says is more than 30% higher than the global average reserve grade. “This enhances our profitability and makes us more competitive in low-price environments.”

Further, a higher-grade profile contributes to a lower environmental intensity, says De Montessus, who adds that the Endeavour business is underpinned by access to renewable energy sources and “relatively green” grid power sources and operational efficiency.

In this vein, Endeavour has started construction of a solar power plant at its Houndé mine, in Burkina Faso.

“We are also focused on improving our emissions intensity. Our operations already outperform many in the sector.

“We are currently exploring several alternatives for further reducing our environmental impact, including investment in solar power,” he says.

As part of Endeavour’s journey to net zero by 2050, the company is working on its roadmap to reduce its greenhouse-gas emissions intensity by 30% by 2030.

From an intensity perspective, based on carbon dioxide emissions on a per ounce of gold produced basis for Scope 1 and Scope 2, Endeavour already ranks among the lowest emitters within its senior gold peer group, the company states.