Newsletter Reviews

Financial Strength Delivers Growth for Endeavour Mining

SOURCE:[Prospecting Journal] - Cash flow, producing mines and fully funded: Endeavour Mining (TSX: EDV) is in an enviable position compared to many junior gold producers. Endeavour, who we’ve covered for some time now, has continued to dig deeper and impress us with their operational and financial results. This August and September was no exception, when the company had several exciting announcements including an acquisition and a strong earnings update, solidifying itself as one of Western Africa’s leading miners.

Beginning with their August 7th news release, Endeavour provided their operational and financial results for Q2. In the quarter, the company produced 50,728 ounces of gold from their two operating mines, Nzema in Ghana and Youga in Burkina Faso, increasing total production to 102,691ozs for the first six months of the year.  Specific highlights included a cash cost of $618/oz produced, an adjusted operating cash flow of $47.6 million and adjusted net earnings of $21.4 million, or $0.09 per share.

Looking forward, Endeavour is focused on long-term growth and is making significant investments in exploration and development at Nzema, Youga and Agbaou for future production. Their Agbaou Gold Project in Cote d’Ivoire was granted a mining permit on August 15th and is expected to enter production in 2014. Construction is underway now and the mine has a forecast 8 year mine life producing an average of 103,000 ounces/yr. Recent drilling has demonstrated potential for pit expansion and the possibility to increase the expected mine life.

Continuing with its growth philosophy, Endeavour announced that it had entered into an agreement to purchase Avion Gold Corp. (TSX: AVR). The deal saw Endeavor purchase Avion for 88 cents a share or $389 million, using August 7, 2012 closing prices on the TSX. The purchase price represented a 56.4% premium on Avion’s prior closing price. Post transaction, Avion’s shareholders hold almost 40% of Endeavour’s outstanding shares.  Endeavour shareholders have approved the transaction which closed on October 18. Under the arrangement, Endeavour also agreed to immediately loan Avion $20 million to resume the ongoing mill expansion on its Tabakoto property.

The acquisition of Avion adds further diversification to Endeavor’s portfolio of West African assets. The Tabakoto mine in Southwestern Mali will be Endeavour’s third producing mine and is expected to produce 95,000-102,000 ounces in 2012.

Full Article