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Gold’s slide is a marked turnaround for a commodity that had surged by more than 30% in the year leading up to the US vote.
Endeavour Mining (TSX: EDV) on Tuesday announced its financial and operating results for the third quarter of 2019, highlighted by strong operating cash flow and increased output from its West African mines.
During the quarter, operating cash flow doubled to $115 million or $1.05 per share compared to Q2 2019. Adjusted net earnings increased by 267% to $33 million or $0.30 per share, compared to $9 million or $0.08 per share in the previous quarter.
Shares of Endeavour Mining jumped more than 7% at market open Tuesday. The West Africa-focused gold producer has a market capitalization of C$2.75 billion.
“The strong net free cash flow generated this quarter marks an important milestone for Endeavour as it demonstrates that we have de-risked and repositioned the group as a cash-generating business, after nearly four years of intensive growth-capital spend,” president and CEO Sébastien de Montessus stated in a press release.
Endeavour’s output increased by 6% quarter-on-quarter to 181,000 oz owing to increases at Ity, Karma in Burkina Faso and Agbaou in Côte d’Ivoire
As a result, the company is now “strategically diversified” across multiple assets with stronger long-term planning capabilities, he added, noting that this “provides greater comfort in [Endeavour’s] ability to generate stable cash flows.”
Having successfully built its Ity and Houndé mines in Côte d’Ivoire and Burkina Faso respectively with minimal equity dilution, Endeavour’s priority would now shift to deleveraging the business, underpinned by its short investment payback periods.
During this debt reduction phase, the company expects to benefit from low capital-intensive growth with Ity’s 25% volumetric upgrade nearly complete and the expected upcoming integration of recently discovered higher-grade deposits at both Ity and Houndé.
Meanwhile, Endeavour’s output increased by 6% quarter-on-quarter to 181,000 oz owing to increases at Ity, Karma (in Burkina Faso) and Agbaou (in Côte d’Ivoire), which the company said “more than offset” the slight decrease in output at Houndé. The impact of the severe rainy season was mitigated by the mining of higher-grade ore across the group and the use of stockpiles, the company said.
Total production for the year to date decreased from 524,000 oz to 473,000 oz owing to the sale of the non-core Tabakoto mine in Mali, while AISC decreased by $36/oz to $817/oz over the same period due to the Tabakoto divestment and lower costs at Ity and Agbaou, which more than compensated for higher costs at Houndé and Karma.
Accordingly, Endeavour has adjusted its full-year production guidance to between 650,000 oz and 695,000 oz at an AISC of between $795/oz and $845/oz. A wide range was provided to take into consideration the Ity carbon-in-leach plant that was still under construction when guidances were set.
