Alfio Manciagli


It’s extremely telling constructing an expose on West Africa’s premier gold miner within the wake of a crypto fall-out rocking the digital area. Kids chastised extra senior buyers, those serious about gold, as being out of contact and unaware of the digital revolution happening.

Okay, I do know – I’m a boomer. However crypto had been touted because the digital gold, the inflationary hedge, the brand new retailer of worth. Onerous to purchase that narrative following the implosion of FTX. The scandal now seems to embody mega leverage, abuse of buyer funds, woeful danger administration and a frat-party like company tradition.

Billions are prone to have gone up in smoke, dampening investor urge for food for crypto belongings. It seems Sam Bankman Fried – the digital messiah – will come crashing to earth, forcing buyers to scramble for brand spanking new funding automobiles.

Possibly Sam would have been higher served inserting cash into Endeavour Mining’s Sabodala challenge. Its rock star challenge financials, challenge life cycle, and economics are compelling sufficient to construct a small place within the miner alone. But the West Africa portfolio covers 6 belongings throughout Senegal, Ivory Coast, Guinea, Mali & Burkina Faso.

My outlook for the West African gold miner is bullish. You see, if Endeavour Mining had been an expert operating again, you’d be throwing it some skittles, given its observe document, challenge pedigree, price construction, and monetary efficiency. Let’s discover out extra.

Outlook for Gold

2022 have been something however strange for gold costs. Given the robust correlation with miner fortunes and value motion of the yellow steel, any funding must be backed by buoyant gold costs.

The battle in Ukraine initially did generate a flight to historically safer asset lessons. However momentum has slowly rolled over, with the complete results of financial tightening wreaking havoc with commodity costs.

Gold Price Action YTD

Buying and selling View

Yr thus far value motion for the valuable steel

Anticipate some adjustments into the brand new yr. Central banks are prone to gently step on the brakes when it comes to restrictive financial coverage. That is possible to supply renewed constructive sentiment for equities but additionally a reversal in greenback fortunes. The mix of the 2 are possible to supply buoyancy for commodity costs.

Project Overview

Endeavour Mining

Endeavour Mining is West Africa’s largest producer with 6 gold mines churning out greater than 1.3 million ounces yearly.

For these of you unfamiliar with prolific West African miners, Endeavour Mining (OTCQX:EDVMF) is a major proponent of regional gold manufacturing, posting ~1.3M ounces yearly.

The corporate showcases 6 working belongings together with Boungou, Hounde, Mana, Wahgnion (Burkina Faso), Ity (Ivory Coast) and Sabodala-Massawa (Senegal). The agency has actively began de-risking its dependence on Burkina Faso with exploration and growth works in Ivory Coast and Guinea.

Working Mannequin

Endeavour Mining’s price construction gives the gold mining enterprise with important aggressive benefit. Its websites are among the many most price aggressive in West Africa with AISC (all-in sustainable prices) printing simply South of $1,000/ oz.

That positions the agency not solely inside forecast steering, but additionally permits it monetary flexibility for capital deployment to exploration and even distributions to shareholders.

3Q investor presentation

Endeavour Mining

Endeavour Mining’s price construction is powerful, offering the agency with a discernible benefit in opposition to its opponents.

Mission Portfolio

Endeavour Mining additionally has a world class challenge portfolio. Its mine websites present good grades when it comes to gold per ton, bettering transformation and restoration prices. The corporate’s reserves have a comparatively even unfold with standouts from Sabodala-Massawa (Senegal), Ity (Ivory Coast) and Hounde (Burkina Faso)

Investor Presentation

Endeavour Mining

Mission overview Endeavour Mining

The truth that 2 of the corporate’s largest initiatives are exterior of Burkina Faso gives a pure hedge in opposition to latest home geo-political volatility. Even when most initiatives are in Burkina Faso, the largest reserves are luckily exterior of the nation’s notorious purple zone, reputed for Islamic terrorism and lawlessness.

The price of that violence and lawlessness is mirrored within the manufacturing costs, with Wahgnion (AISC ~$1,050) and Mana (~$1,000) being among the many portfolio’s highest.

A noteworthy portfolio standout is Sabodala. Not solely does it maintain the largest reserves, challenge life and produced volumes, however additionally it is essentially the most environment friendly producer among the many belongings (AISC ~$675). This right here is Endeavour Mining’s indeniable money cow.

Investor Presentation

Endeavour Mining

5 development builds have been just lately built-in into Endeavour Mining’s enterprise, a few of which had been legacy initiatives constructed by SEMAFO (Boungou) and Teranga Gold (Wahgnion).

Investor Presentation

Endeavour Mining

Not solely does Sabodala produce rock star volumes, but it surely additionally has a few of the best prices within the area and a lifetime of mine neighbouring 20 years!

Exploration Overview

Fixed renewal of belongings is at all times a essential problem to think about when appraising gold mining operations. Endeavour Mining’s aggressive price base, large volumes and strong reserves enable the corporate to pour a refund into exploration efforts. Such efforts have paid dividends with the corporate discovering roughly 11.5M ounces over the previous 5 years.

Investor Presentation

Endeavour Mining

Drilling spend has continued to be robust, with the agency investing $90M final yr within the hunt for brand spanking new deposits. The corporate has a variety of exploration targets it’s investing in, underscoring its dedication to the area.

Investor Presentation

Endeavour Mining

Endeavour Mining boasts enormous presence within the Hounde Belt (Burkina Faso) together with a large stretch alongside the Ity Birimian Belt (Ivory Coast)


Endeavour Mining’s financials have primarily matched its challenge profile, monitoring distinguishable phases. The group had invested closely in exploration and progress initiatives from 2016 – 2019. Capital deployment in these initiatives has allowed the enterprise to construct constructive money flows and begin a cycle of deleveraging in 2020.

Investor Presentation

Endeavour Mining

Mission cycle financials – Endeavour Mining

Following on from this, the gold mining enterprise has managed a gradual state in its challenge life cycle, deploying capital within the type of share purchase backs or distributions to the corporate’s backers.

Because the US greenback eases into 2024 and challenge life extensions come on-line, a interval of upside is almost certainly in retailer. A pause in financial tightening is prone to be bullish for not solely equities, but additionally gold, offering organizations like Endeavour Mining with sizable upside.

Endeavour Mining’s revenue assertion exhibits price self-discipline and constructive traits in income progress. From $694M (FY 2019) to $2,694M (LTM) revenues have grown prolifically. Price of revenues have remained properly managed whereas curiosity expense on debt obligations have continued to be manageable.

The gold miner has continued to put up robust EBIDTA numbers over the previous 3 years, from $252.9M (FY 2019) to $1,411.8M (FY 2021). Steerage continues to be constructive for the group total.

Present money available is roughly $832M with debt obligations within the $500M vary. Efforts have been made by the corporate to de-lever following a interval of restrictive financial coverage.

Goodwill of $134M is value keeping track of – whereas it doesn’t have the potential of being catastrophic for a agency with a $4.8B market cap, its final impairment will have an effect on the worth of fairness.

Investor Presentation

Endeavour Mining

With slightly below 2 months to go earlier than yr finish, the group appears set to hit steering of 1.3M ounces gold produced.

Key Takeaways

Contemplating all of the digital scandals going about, perhaps extra typical asset lessons is worth it. And what higher manner to take action than by contemplating Endeavour Mining. The 1.3M ounce West African gold pioneer has managed to carve out a distinct segment, permitting it to develop greatest in school mines with rock-bottom working prices and sizable returns.

The longer term stays shiny for the agency – life extension work into its Sabodala money cow is continuous its course. The agency has navigated a interval of deleveraging and budgetary self-discipline solely Sam Bankman Fried may have wished he had undertaken.

Macro-forces into the brand new yr, for each gold costs and for a weakening of the US greenback, are prone to be large positives for buyers staking cash, not crypto, within the agency.

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