Endeavour Mining busting out in West Africa

Frik Els | October 27, 2015 | 12:04 pm Precious Metals Africa Gold

The sun is shining on Agbaou

Endeavour Mining Corp (TSE:EDV) stock jumped in heavy volumes on Tuesday after releasing results from ongoing drilling at its Agbaou mine in Côte d’Ivoire.

By early afternoon the Vancouver-based company was trading at its highs for the day at $0.72, up 5.9% on the Toronto Stock Exchange with more than 1 million shares exchanging hands. The volatile counter is up an astonishing 69% year to date with a value of $308 million on the big board.

In a statement the company said drilling results confirm extensions of oxide mineralization and fresh rock resources in the West Pit area and surrounding targets at Agbaou with results including 14.8 metres at 3.24 g/t gold (including 1.6 metres at 11.46 g/t gold) at the Omega zone, 9.8 metres at 3.87 g/t gold (including 2.5 metres at 11.16 g/t gold) and 7.73 g/t over 7.4 metres at Gamma and 3.18 g/t over 6.8 metres at Sigma which is above the average reserve grade at the mine. Drilling included 157 reverse-circulation drill holes for a total of 15,601 metres.

Agbaou, with estimated open pit “free-dig” production this year of 150,000–155,000 at an eye-watering all-in costs of just $597 an ounce, is one of four mines Endeavour operates in Mali, Ghana, Burkina Faso, and Côte d’Ivoire. Total production for this year is targetted at 475,000–500,000 ounces at all-in guidance of $930 – $980 an ounce.

Endeavour, which started production in the region five years ago, is also close to adding a fifth mine in Burkina Faso. Targeted for production in 2017 the 90%-owned Hounde project would add another 190,000 ounces per year at all-in costs of less than $725 per ounce.

In September Endeavour inked a deal to sell a 30% stake to La Mancha, a private investment company headed by Egyptian businessman Naguib Sawiris, in exchange for a majority stake in the Ity gold mine in Cote d’Ivoire Africa, plus up to $138 million in financial commitments.

The Ity open pit, one of the oldest mines in the country which counts soccer star Didier Drogba as a shareholder, will immediately add more than 80,000 ounces to Endeavour’s production profile as a low-cost heap leach operation. A $200m–$300m carbon-in-leach expansion with the potential of an additional 120,000 ounces is also being considered at Ity which has been in production since 1991.

A shareholder vote on the La Mancha deal is scheduled for November and should both Hounde and the CIL project at Ity get the go-ahead Endeavour would become West Africa’s fourth largest producer behind Anglo-Gold Ashanti with peak production of nearly 800,000 ounces per year and some of the best margins in the business.