Endeavour Mining (ticker: EDV), a leading gold producer, showcased a robust financial and operational performance in its Third Quarter 2024 Results Webcast.
The company recorded a record production of 270,000 ounces, an increase from the previous quarter, and a free cash flow of approximately $100 million.
Endeavour Mining also achieved commercial production at its Lafigué and Sabodala-Massawa mines. Despite production being at the lower end of guidance, the company is on track to meet its long-term production target of 1.5 million ounces.
Endeavour Mining announced plans to return $435 million in dividends over 2024 and 2025, aiming for a total of $1.4 billion by 2025. Adjusted EBITDA rose by 27%, and adjusted net earnings reached $92 million, or $0.30 per share, in Q3.
Key Takeaways
- Record gold production of 270,000 ounces in Q3, up 19,000 ounces from the previous quarter.
- Free cash flow of approximately $100 million and a gross debt reduction of $160 million.
- Dividend return plan of $435 million over 2024 and 2025, totaling $1.4 billion by 2025.
- All-in sustaining costs (AISC) projected slightly above the top end due to operational challenges.
- $2.3 billion economic contribution to host countries, with a strong emphasis on ESG initiatives.
Company Outlook
- Endeavour Mining expects stronger production in Q4 to mitigate higher AISC experienced earlier in the year.
- The company remains committed to its long-term production target of 1.5 million ounces.
- Lafigué mine is on track for 200,000 ounces in annual production by 2025.
Bearish Highlights
- Production is expected to be at the low end of guidance.
- AISC to be slightly above the top end due to high gold prices and operational challenges.
- Year-to-date performance fell short of expectations, primarily due to lower-grade feed into the CIL plant.
Bullish Highlights
- The BIOX processing plant began commercial production on August 1 and is expected to exceed nameplate throughput in Q4.
- The solar plant installation at Sabodala-Massawa is nearing completion, promising significant reductions in emissions and costs.
Misses
- Sabodala-Massawa operation projected to miss production and cost guidance for the year.
- Lower-than-anticipated high-grade ore volumes impacted recoveries.
Q&A Highlights
- Assafou project's Pre-Feasibility Study (PFS) is nearing completion, with promising preliminary reviews.
- No further impairments anticipated, with a focus on securing a steady feed of non-refractory ore.
- Discussions with governments ongoing to navigate regulatory changes effectively.
Endeavour Mining's Q3 results reflect a company in a strong financial position, with significant progress in production and a clear strategy for future growth. The company's commitment to returning value to shareholders while maintaining a focus on sustainability and community contributions underscores its position as a leader in the gold mining industry. With the company's operational updates and strategic plans, Endeavour Mining is poised to continue its trajectory of growth and value creation.
InvestingPro Insights
Endeavour Mining's (EDV) third quarter results align with several key insights from InvestingPro. The company's record production of 270,000 ounces and robust free cash flow of approximately $100 million underscore its strong financial position. This is reflected in InvestingPro's data, which shows a significant market capitalization of $5.36 billion USD.
An InvestingPro Tip highlights that Endeavour Mining has raised its dividend for 4 consecutive years, which is consistent with the company's announcement to return $435 million in dividends over 2024 and 2025. This commitment to shareholder returns is further supported by the current dividend yield of 3.75%, as reported by InvestingPro.
Despite the company's production being at the lower end of guidance, InvestingPro Tips indicate that net income is expected to grow this year, and analysts predict the company will be profitable. This optimistic outlook aligns with Endeavour's expectation of stronger production in Q4 and its long-term production target of 1.5 million ounces.
The company's revenue growth of 13.32% over the last twelve months and a quarterly revenue growth of 33.19% in Q3 2024 reflect its operational improvements and the commercial production achieved at Lafigué and Sabodala-Massawa mines.
It's worth noting that while the company reported a robust adjusted EBITDA, InvestingPro data shows an EBITDA decline of 6.55% over the last twelve months. This could be attributed to the operational challenges and higher costs mentioned in the article.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips for Endeavour Mining, providing a deeper understanding of the company's financial health and market position.
Full transcript - Endeavour Mining Corp (EDVMF) Q3 2024:
Operator: Good day and thank you for standing by. Welcome to the Endeavour Mining’s Third Quarter 2024 Results Webcast. At this time, all participants are in listen-only mode. After management's presentation, there will be the question-and-answer session. So for those who wish to ask a question, please dial-in the phone line for questions. Please note that, due to time constraints, we will be prioritizing questions from covering analysts. Today's conference call is being recorded, and the transcript of the call will be available on the Endeavour’s website tomorrow. I would now like to hand the call over to Endeavour’s Vice President, Investor Relations, Jack Garman. Please go ahead.
Jack Garman: Hello everyone, and welcome to Endeavours Q3 2024 results webcast. Before we start, please note our usual disclaimer. On the call today, I'm joined by Ian Cockerill, our CEO; Guy Young, our CFO; and Djaria Traore, our Executive Vice President of Operations and ESG. Today's call will follow our usual format. Ian will first go through the highlights. Guy will present the financials, and Djaria will walk you through our operating results by mine, before handing back to Ian for his closing remarks. We will then open the line-up for questions. With that, I will now hand over to Ian.
Ian Cockerill: Thank you, Jack, and hello to everyone joining us on the call today. And today, I'm speaking to you from our office in Abidjan in Côte d’Ivoire, where I have Djaria with me, because as a team, we recently visited our new Lafigué mine, and we did a Board site visit. And it's really pleasing to report that Lafigué is performing very well and continues to be an excellent illustration of our ability to discover, develop and operate high quality mines in West Africa. For Q3, we certainly continue to deliver against our strategic objectives, as we bought both of our growth projects into commercial production, and that supported our strongest quarter of production so far this year. For the full year, we expect production to be at/or around the low-end of the guidance range, while our all-in sustaining cost is expected to be above the top end of the range, which Djaria will go into in a little bit more detail shortly. We're on-track to deliver a materially stronger H2 as we guided at the start of the year, and we anticipate a strong Q4 performance. As the projects deliver a full quarter at nameplate and our Mana and Houndé mines increased production at lower cost. As we complete -- as we completed this recent phase of growth, we started to generate positive free cash flow, with around $100 million generated during the quarter, which we're going to be building on in Q4 and beyond. Clearly, the inflection point that everyone has been looking for, and that's being delivered. As our earnings and cash flow generation increased, we were pleased to start delivering on our capital allocation priorities, substantially lowering our gross debt as we repaid $160 million of our revolving credit facility. Our leverage has also now turned the corner, and we are trending towards our 0.5 times target. And importantly, we are delivering returns to shareholders, because so far in 2024, we've returned $229 million, and we will return at least $435 million in dividends to shareholders for both, 2024, as well as 2025 which we're supplementing with additional dividends and opportunistic share buybacks. Our long-term growth is underpinned by the Assafou project, and our exciting exploration program, and we see opportunity to organically auction to our 1.5 million ounce portfolio objectives before the end of this decade. And we expect to do this whilst maintaining best-in-class margins. Finally, we're continuing to progress our ESG strategy and our 2023 tax and economic contribution report is a testament to those efforts highlighting a $2.3 billion economic contribution to our host countries. Over the next few slides, I'll touch upon our progress this quarter before handing over to the team for a more detailed update. As mentioned, we were delighted to achieve commercial production of both growth projects during the quarter, and I'm pleased to report that both projects are ramping up in line with their plans as we achieve nameplate capacity throughput at both operations late in Q3, and we're expecting that to continue through Q4. We delivered around $100 million of free cash flow for the quarter, which supported the improvement in our leverage I mentioned, as well as the payment of our H1 dividend. We are expecting to grow free cash flow generation going forward, and that will support our near-term capital allocation priorities, whilst positioning the business well for future growth. Turning to Slide 8, you can see our quarterly production and our all-in sustaining margin trend. Production has increased every quarter this year, as previously guided to 270,000 ounces in Q3 which is an increase of 19,000 ounces over the previous quarter, with increased production from Houndé and Lafigué, and a whole 51,000 ounce better than in Q1. Our all-in sustaining margin also increased by $55 per ounce, largely due to our stable all-in sustaining cost and improving gold price. On the safety side, our industry leading lost time injury frequency rate remained stable, and it's well below the industry average, which we're very proud of. Our production is expected to be at/or around the low end of guidance for the year, which is predicated on a significant increase in quality production in Q4 which comes from Houndé, Mana and Sabodala, largely due to expected higher grades, as well as lower rainfall which has been well above average so far this year, almost twice the normal annual average. The growth projects will also support higher production, given that they are on-track for a full quarter at nameplate in Q4. Our all-in sustaining cost is expected to be slightly above the top end of the range by the end of the year, due to high gold prices which increased our royalty costs, lower power availability in H1 increasing costs, and the underperformance of the Sabodala-Massawa CIL operation so far this year. However, our Q4 weighted production will support and improve all-in sustaining cost, bringing us closer to the royalty adjusted top end of the guidance range. On Slide 10, you can see how our cost profile compares with our peers. Importantly, we remain one of the lowest cost producers in the sector, certainly in the lowest cost quartile. And whether you compare all-in sustaining cost or all-in cost, we are still one of the sector leaders. We've been able to maintain this cost performance, largely because of our high-quality asset base, but also because of the availability of highly skilled people who want to come and work for us, stable consumer pricing, thanks to our large, long-term contracts, and the cost benefit of two-thirds of our cost being incurred in West pit in Assafou which is pegged to the euro, whilst we sell our gold in U.S. dollars. In other words, a very nice internal natural hedge. Given that we are well shielded from some of the cost pressures that our peers are facing, and that our projects are helping to progressively improve the quality of our portfolio, we expect to organically grow our production towards our 1.5 million portfolio objectives before the end of the decade, whilst we do maintain best-in-class margins. On Slide 11, you can see that we generated approximately $100 million of free cash flow during the quarter, a quarter-on-quarter increase of $166 million, excluding the impact of the prepayment in the prior quarter due to the increased levels of production, reduced growth capital and taxes, and the higher prevailing gold price. We generated $360 of free cash flow to every ounce produced in the quarter, moving -- and moving forward we expect to continue to grow this free cash flow as the growth projects continue to ramp up and our cost performance improves. On Slide 7, you can see our net debt was stable as we completed our growth phase, but stronger earnings supported an improvement in our leverage, and we're focused on reducing that leverage back towards a 0.5 [ph] target in the near-term. Given that we expect to grow free cash flow generation, we repaid $160 million on our revolving credit facility, which we're pleased to say that we also successfully refinanced after quarter-end, and Guy will provide some more details on that in his section. In this new cash flow generative phase, our capital allocation focus is on delivering attractive shoulder [ph] returns, as well as making sure that we improve our balance sheet. As you can see on Slide, 13, we've just paid our H1 2024 dividend of $100 million which brings our total return this year to $229 million. We're on track to return at least $1.4 billion to shareholders by the end of 2025, which is approximately a quarter of our market capitalization being returned over the 5-year period from 2020. But we don't intend to stop there, as we believe this business is well positioned to deliver significant supplemental returns and sustain an attractive return through the cycle. As I already mentioned, our growth projects achieved commercial production during the quarter, and are ramping up in line with expectations. And importantly, both projects exited Q3 at/or above 100% of design nameplates, which we expect to maintain for Q4 and beyond into 2025. Now that we've completed these projects, we're starting to look at ways to optimize, and as we have done with all of our other projects, we certainly expect the BIOX expansion and Lafigué plants to outperform their design nameplates as we systematically chip away and de-bottleneck any throttle points that we have in those operations. On Slide 15, our exploration program shows that we're on track to deliver against our 5-year target to discover between 12 million to 17 million ounces of M&I resource as the industry-leading discovery cost of less than $25 per ounce. So far this year, we spent $74 million focused on identifying new resource and converting resources to reserves at our cornerstone assets to support our near-term production targets. And that's with particular reference to Sabodala-Massawa, where we've identified the Kiesta C and Niakafiri East targets to support production in Q4, as well as going into 2025, also looking at Mamasoto, Sekoto and Koulqwinde targets. As well at Ity, we define mineralization between the existing deposits, which we referred to previously as the Ity donut [ph], and we expect to contribute -- this is going to contribute to a significant increase in endowment and support higher levels of production over the longer term. On the Greenfield side, looking at the Assafou project and the wider Tanda-Iguela property, which we're showing here on Slide 16. As the PFS’s work is well advanced, and we expect to publish the results later in the quarter. We've been exploring some of the satellite targets on the property in close proximity to the Assafou project. Drilling at the Pala Trend, number 3 target, which is less than one kilometer southwest of Assafou, we defined a shallow high-grade mineralization over approximately a one kilometer trend that is part of the same mineralized system as Assafou, as you can see in the right-hand picture there. Mineralization is hosted on the greenstone rocks at Pala, below the Assafou Basin, which has proven that both, tarquin [ph] and birimian style mineralization exists in the area, which increases the prospectivity of several proximal birimian style targets. While the PFS for Assafou will be based on last November's resources, with a large proportion expected to be converted to reserves, we will be well placed to incorporate the additional exploration upside that we're seeing into the reserves and resources ahead of our DFS, which we expect to launch once the PFS is completed. Finally, before I hand over to Guy, I just want to touch briefly on ESG. As we disclosed in our recent economic contribution report, we've made a $2.3 billion economic contribution to our host countries over the last year. We've increased our commitments on key initiatives that protect the people and places where we operate and support the long-term success of our business; this in addition to the social and economic environmental initiatives, some of which you can see detailed here. And with that, let me hand you over to Guy to talk through our financial results. Guy, over to you.
Guy Young: Thank you, Ian, and hello, everyone. In terms of the Q3 financial results on Slide 19, as Ian mentioned, we delivered our strongest quarter of production for the year which coupled with the higher realized gold prices, underpinned an increase in our adjusted EBITDA, net earnings, as well as operating and free cash flow, net of the prepayment from the prior period. I'd like to walk you through a couple of these details, starting with our production and all-in sustaining costs from Slide 20. Our production increased by 19,000 ounces to 270,000 ounces for the quarter due to the ramp-up of the Sabodala-Massawa, BIOX, and Lafigué operations, which achieved commercial production on August 1, as well as higher production at Houndé. This was partially offset by lower production at Ity, Mana and the Sabodala-Massawa CIL operation. Our all-in sustaining costs remain stable quarter-on-quarter at $1,287 per ounce. We expect operations to continue to improve in the fourth quarter, as we anticipate materially stronger production and significantly lower costs. If we turn to Slide 21, our year-to-date all-in sustaining cost is $1,256 per ounce, and it is trending above the top end of the full year guidance range, which was based on a $1,850 gold price. The year-to-date all-in sustaining cost has been impacted by a number of factors. Firstly, high realized gold prices, increasing our sliding scale royalty costs by some $34 per ounce. Secondly, the previously disclosed lower grid power availability, largely in the first half of the year which required the use of higher cost self-generated power, impacting year-to-date AISC by some $35 per ounce. And then thirdly, the lower-than-expected production from the Sabodala-Massawa CIL plant, impacting year-to-date AISC by around $80 per ounce. Combined these representing a $150 per ounce impact on our AISC. While year-to-date AISC is above the full year guided range, our strongly Q4 weighted production and the associated lower costs are expected to improve our full year AISCs significantly, although the prevailing higher gold prices will slightly offset this. Moving now to earnings. On Slide 22, our adjusted EBITDA increased by 27% quarter-on-quarter, supported by higher production at higher gold prices, while our strong EBITDA margin remains stable at 45% as we focused on preserving our margins in this higher gold price environment. The quarterly EBITDA led to a significant improvement in our operating cash flow, as seen on Slide 23. To illustrate the underlying quarter on quarter improvement, we are showing the underlying operating cash flow in Q2 of $108 million before the prepayment that we executed. On this basis, quarter-on-quarter, our operating cash flow increased by 133% to $252 million; thanks to the higher gold production, gold prices, and significantly lower taxes in Q3. On Slide 24, you can see a bridge of quarter-over-quarter variances in operating cash flow. You'll note the realized gold price for continuing operations increased by $55 per ounce, providing a positive impact of $15 million. Gold sold from continuing operations during the third quarter rose to 280,000 ounces, an increase of 42,000 ounces from Q2 2024, and a positive impact of $96 million. Income tax payments decreased by $99 million to $65 million due to decreased withholding tax payments and the timing of income tax payments at Ity, Sabodala-Massawa and Houndé. This was partially offset by increased cash operating expenses as gross mining and processing costs increased due to the project ramp ups, as well as a decrease in the working capital inflow due to an increase in trade receivables relating to VAT and gold sales. Turning to Slide 25. Our net debt was stable in Q3 as we completed our investment phase and started delivering. Cash generated from operating activities and the gain on foreign exchanges of $255 million and $9 million respectively offset our investing and financing activities outflows. The outflows related to our sustaining, non-sustaining and growth capital, as well as our gross debt repayments and shareholder return payments. Importantly, our leverage has now turned a corner, starting to decrease as we reduced our gross debt and increase our earnings simultaneously. Looking forward, we expect to continue improving our net debt and delevering our balance sheet towards our 0.5 times leverage targets. On Slide 26, we talk through our debt structure. After the end of the quarter, we successfully closed the oversubscribed refinancing of our revolving credit facility on the same terms as the existing RCF, and elected to upsize the facility, given a strong demand, to $700 million from $645 million. The facility also includes an additional accordion exercisable at our election. This has secured a long-term flexible financing solution that can support our offshore cash position over the next 5 years through our next growth phase. Moving lastly to Slide 27, and net earnings from continuing operations. Overall, our adjusted net earnings increased significantly to $92 million or $0.30 per share in Q3 due to higher earnings from mine operations and lower tax expenses. I would also highlight the select number of other key items; net earnings in the third quarter were impacted by the $112 million impairment from the write-down of expected proceeds from the disposal of Boungou and Wahgnion, following the settlement agreement with Lilium. Importantly, we have now received the first $30 million payment and $10 million of the second payment, with the remaining $20 million expecting -- expected during Q4. The loss on financial instruments during the quarter included an unrealized loss on gold hedges of $49 million, a realized loss on gold hedges of $46 million, and unrealized foreign exchange losses of $10 million; partially offset by an unrealized gain on marketable securities of $8 million among other items. Current income tax expenses decreased to $68 million in Q3, largely due to a decrease in recognized withholding tax expenses as a result of the timing of local board approvals for cash upstreaming. With that, I'd like to hand over to Djaria to take you through the details of our operations.
Djaria Traore: Thank you, Guy, and hello, everyone. Like Ian, I'm here today in our regional office in Abidjan, where I have been spending a lot of my time giving its proximity to all our operations. Before I jump into our mine by mine detail, I wanted to touch on our safety performance. On Slide 29 we have retained our industry-leading safety performance with zero last time injuries during the quarter. We are very proud of our safety performance, and we are looking to eliminate all serious injuries and incidents through improvement of our training for client supervision and operational and procedural reviews. Turning to the overall portfolio performance, we expect our full year production to be at/or around the lower end of the guidance range, with a materially stronger production in Q4 from both our project which are ramping up in line for a full quarter of nameplate production, as well as expecting stronger production from the Houndé and Mana mines. As discussed earlier, our all-in sustaining costs are expected to be above the top end of our guidance range. However, we expect a significant improvement in Q4 added by higher levels of production which should narrow the gap. For the year-to-date, we have produced 741,000 ounces of gold at our all-in sustaining cost of $1,256 per ounce. We have successfully increased production every quarter this year, with third quarter production of 270,000 ounces. Looking at how each operation is tracking against production guidance, we are on track at Houndé, Lafigué, Mana, while at Ity we expect production to be above the top end of the range; we shall partially offset the lower production expected from Sabodala-Massawa. On the cost side, we expect to be above the top end of the range at Sabodala-Massawa due to lower levels of production, and at Houndé and Mana, largely due to the lower power availability in the first half of the year. We expect production and cost improvement at each of these operations in Q4. I will now walk through each mine starting with Sabodala-Massawa from Slide 31. During the third quarter, production decreased slightly due to lower performance from the existing CIL plant, which was only partially offset by the ramp up of the BIOX plant. Lower throughput of the CIL plant during the quarter was in part due to the 5-day strike and maintenance activities. Additionally, the year-to-date, performance has been lower than anticipated due to lower grade feed into the CIL plant. The 2024 mine plan prioritized depleting the Sabodala pit so that it could be used in 2025 for the deposition of in-pit selling [ph]. As mining progressed deeper in the pit, lower volumes of high grade ore than expected were mined. So we use other high grade ore sources to improve grade, which had a negative impact on recoveries due to the semi-refractory nature. As we did during Q2, we have been working on pre-stripping the Kiesta deposit to introduce higher grade non-refractory oxide ore into the mill feed in Q4 to support higher levels of production at lower cost. On the other side, the BIOX processing plant has ramped up really well since we declared commercial production on August 1, and we expect Q4 to be slightly above nameplate from a throughput perspective, while we also feeding higher grades and recovering more gold as performance trends toward our life of mines expectations. Sabodala-Massawa is expected to miss its production and cost guidance for the year, but we expect a materially stronger performance in Q4, and stronger overall performance in 2025 compared to 2024. Moving on to Slide 32. I wanted to provide an update on the progress we are making at the BIOX plant. Now that we have largely completed the ramp up, we are focusing on delivering future enhancements. As we've mentioned in Q2, we've added addition telling [ph] on the floor line from the BIOX plant to the CIL plant to ensure that any transitional ore that does not float is immediately captured in the underflow. So far, we are extracting over 50% of the gold from this underflow through the CIL plant, which of course, has increased overall recovery by around 15% while we were mining through the transitional ore of Massawa central zone. We expected to heat fresh ore at the 140 RL, but the weathering horizon was 30 meters deeper than expected at the 110 RL, resulting in additional transition ore and the feed during the ramp up. Now we are mining approximately 70% of fresh ore, and we are realizing higher recoveries, higher grades and better flotation as a result. The next initiative we were looking at is throughput. As you may have seen with our Houndé and Ity plant, our projects have historically outperformed design nameplate. And with the BIOX working well, we see scope to improve flotation through the flotation circuit by increasing the throughput feed volume into BIOX and increase overall production. Moving on to Slide 33. This year the production from Sabodala-Massawa CIL plant has been largely responsible for Sabodala’s underperformance. As I've explained earlier, we need to introduce higher grid non-refractory ore into the CIL plant to improve the performance. And as a result, we have accelerated mining at the Niakafiri East, as well as Kiesta C deposit, to introduce more high grade non-refractory oxide into the mill feed, with Kiesta starting to contribute already. Accelerating Niakafiri and Kiesta has left a shortfall in the 2025 mine plan that we are working on filling through the exploration. As a result, we have identified three targets; Mamosato, Sekoto and Koulidwinde, all of which are high grade non-refractory oxide target near the Sabodala processing plant, and this could provide feed optionality for 2025 and support an improvement in the CIL output year-over-year. We have -- we also have the hybrid underground resources at Kerekounda and Golouma, containing M&I resources of around 500,000 ounces, at close to five gram per ton that were part of the DFS mine plan from 2028. So we are reviewing the possibility of accelerating the timeline to better define and incorporate these deposits into the mine plan. Before I move on to the rest of the assets on Slide 34, I wanted to provide a brief update on the solar plants constructions at Sabodala-Massawa. We have now completed the installation of over 65,000 solar panels, and the transmission towers, as well as the lines are in place with connection to the existing power infrastructure expected in Q4. The solar plant is a key pillar to our decarbonization strategy, and will reduce emission by over 30% as well as the cost by 20% at Sabodala-Massawa. At our mine site of Houndé on Slide 33, we are pleased to have delivered improvement in production levels and all-in sustaining costs through the years, and we expect our Q4 to be even a bigger step-up as we introduce a higher proportion of the higher grade at carry pump [ph] or into the feed which should improve production and lower the cost. Houndé is on track to achieve its full year production guidance, while all-in sustaining costs are expected to be above the top end of the range, largely due to the impact we referenced earlier. Slide 34 -- moving to Slide 34. I am pleased to report that it is expected to be the top end of it’s production guidance with the all-in sustaining cost within the guidance range. Strong performance this year is the result of continued higher levels of throughput at higher grades from expected -- than expected due to ore which was sourced from the Ity pit. At the same time, our exploration program has successfully defined a significantly larger mineral endowment around the Ity complex, which we expect will support high levels of productions at industry-leading costs for longer than the current mine life. As we've seen on Slide 36, Mana remains on track to achieve it’s production guidance, with costs expected to be above the top end of the range for reasons we spoke about earlier, but also as a result of slower than expected underground development, partly due to the increased focus on the watering during Q3, following higher than expected rainfall. In Q4, we expect stronger production at Mana. The development completed this year, as well as the reduced rent fall in Q4 has improved access to more higher grade stopes at the Wona underground deposit. This will be supplemented by consistent stope production from the CU underground deposit. We expect significant improvement, and importantly, we're seeing potential to improve the long-term production and cost profile at Mana through incorporations of additional M&I resource that are currently outside of the reserves. Finally, moving to our fifth and newest mine, Lafigué, on Slide 36, which I have just visited with with Ian, as mentioned earlier. We were delighted to deliver commercial production on August 1, 2024, and have been continuing to ramp up ever since. We achieved a nameplate capacity for several days during Q3, and in Q4 we expect to be our nameplate for the full quarter. Lafigué is on track to achieve it’s full year 2024 production and cost guidance, ramping up to a full year production at around 200,000 ounces next year. Overall, our operations are tracking in the right direction, and we expect to deliver a materially stronger production and our all-in sustaining cost performance in Q4, and to continue improving performance year-over-year. Longer term we are seeing attractive organic growth towards our long-term of 1.5 million ounces portfolio objective by the end of the decade, and we can deliver this while maintaining best-in-class margins. Once we have outlined our Assafou PFS later this year, we will be positioned to provide our new 5-year outlook next year. I will now hand back to Ian for his closing remarks.
Ian Cockerill: Thanks, Guy, and thanks, Djaria. Now as you can see, our operations performance is progressively improving, and production is expected to be near the low end of the full year range, with costs expected to be slightly above the top end of the guidance range, although they will remain firmly in the first cost quartile compared to our peers and stay there for the longer term. A strong Q4 performance following the successful completion of our growth phase is expected to drive even stronger free cash flow generation that will support our near-term capital allocation priorities of deleveraging the balance sheet and increasing shareholder returns. Given the attractive free cash flow outlook, we're well positioned to deliver against our capital allocation priorities, whilst positioning the business to continue growing through asset-level optimization initiatives and the Assafou project, so that we can achieve our portfolio objectives of producing 1.5 million ounces organically at best-in-class margins by the end of the decade. And with that introduction, thank you for listening. Now, I'll hand you back to the operator and open up for any Q&A.
Operator: Thank you. Ladies and gentlemen, we'll now begin the question-and-answer session. [Operator Instructions] Now we're going to take our first question, and it comes to Richard Hatch from Berenberg.
Richard Hatch: Just a few questions. First one is for Guy. Just -- Guy, on working capital; from what I can see quarter-on-quarter, you've built VAT receivables, there's been a slight build of inventory, payables release. Can you give us some clarity on what's going to go on with working capital in the fourth quarter? And then the second question is, I think perhaps feedback we've had today from the market is, impairment hedging losses, it just points to a sort of a slightly scrappy set of numbers even though the underlying free cash flow is very positive. So question is, as we go into Q4 and into 2025, should we expect to see sort of cleaner sets of financial statements and the all-important free cash flow generation that I think that you have really talked to? And then, the last question is just on Mana. Djaria, you kind of made the point that the mine is on the turn. And -- so, should we expect to see the mill run at about 2.2 million tons from Q4? And what kind of all-in sustaining cost should we look to see that mine get to? And if it's not getting to a decent kind of 1,200 [ph] or so level, does this mine really deserve to remain in the group? That's quite a few questions, but thanks very much.
Guy Young: There are a few questions in there. Hopefully, I'll catch them all. Just if we kick-off on the working capital. Yes, you're right, relatively small inflows this quarter. And what we have seen is some stockpile built, particularly at Ity, but then within the underlying working capital, we've seen quite an extension of our payables which include a variety of things, including minority shareholders, royalties payable, and payroll-related liabilities. The VAT build up is probably the biggest headwind that we've got at the moment and worth spending a second on. We've got the build-up, which is predominantly within Burkina Faso, and we still expect to be able to collect these balances in the next 12 months. But the ability for us to factor and/or get cash, particularly in Burkina Faso, has been a challenge. On top of that from a VAT perspective, you'll see a small build in Q3 which will continue into Q4 associated with Lafigué, which has got VAT where our returns have simply not been processed yet. So, an overall VAT build-up which is going against us at this point, but we do still see capability to claw that back over the next 12 months. Sabodala has, at least within Senegal, proven to be stable and in line with our expectations where we had another $15 million [ph] back from there. Overall, when we look at working capital into Q4, I think we should keep a number of things in mind. I mean, overall, the expected stockpiles will provide us a release of cash in Q4; this is as we're moving through depending on mine plans, but essentially coming down in a number of our key sites. Our metal inventories and gold receivables, which are two balances that we will be focused on reducing towards the year-end, offset again by the headwind of VAT, in particular in Q4. So if I stand back Q3 to Q4 from an overall working capital perspective, I would expect it to be largely flat. The one thing that I would just highlight is that in Q4, we will also see the repayments the prepaid which we shouldn't lose sight of. Richard, you touched on two other topics. The first is impairment. So, yes, we've got $112 million impairment charge in the accounts for this quarter. This is relatively simple in the sense that it relates, obviously, to the Boungou and Wahgnion. We de recognized and then put through an impairment to effectively bring down the balances that were expected from Lilium to the amounts that we are expecting from the Burkina Faso state. And I mentioned in the slide run through the cash flows that we've seen coming in, we have $20 million outstanding on that. But that single impairment significant in the quarter; no, we don't foresee further impairments on the balance sheet, we will be doing our reviews at Q4 with our new RNRs [ph] to be checking that, obviously. But at this point in time, hopefully that, from an impairment perspective, is out of the way. The third element that you touched on was associated with our hedging. And I probably -- I think the right way to try and think this through to, is to split the hedges. We have some hedges associated with Captain Collars [ph], which are relatively well disclosed in the accounts. We've eliminated some of those in the quarter, and we do have some in Q4, these are capped at 2,400 [ph]. So that is probably what you might have expected to have seen, arguably, something that you wouldn't have expected as much as our LBMA averaging. This is a program that we implemented just to try and reduce our exposure to gold price fluctuations at the end of the month, and then at the end of the quarter, because that differs from what are relatively lumpy gold sales during the same period. In essence, what we are seeking to do is ensure that the total sales, which we settle at an average spot selling price, are brought back to an LBMA average. And in the instance where the spot price is greater than the LBMA average, we record a loss. And if the spot price is below the LBMA average, we would have a gain. We've put specifically Table 13 in the MD&A recon [ph] just to show where we've come out. And when you look at the realized prices versus LBMA, you'll note that we were $9 below in Q3 but on a year-to-date basis, $15 above. So the program itself, we still think, is a good one to have in order for us to be able to try and be as close as possible to that LBMA average over the quarter and over the year. Hopefully that helped. I'll obviously take follow ups, but maybe to Djaria on the Mana question first.
Djaria Traore: Thanks, Guy. So just to refer to the Mana questions, I think what we've seen -- we've continued to expand the underground operations at Wona, with [indiscernible] development, that we've been doing for the past quarter, with the aim, of course, of gaining increased access to high grid stopes during Q4. It is expected that going forward, we will be above the 2.2 million tons annually to support the plants, as well as to drive the increased level of productions at lower cost. Obviously, during Q3, I think we've talked about the higher cost; they were really elevated largely due to the lower gold volume sold, the higher royalties due to the increase in gold pricing, as well as the development that we had to do for -- to ensure that we had access to the stopes at the underground. We are well witnessing for the past few weeks, we are very encouraged by the positive trends in mining and processing unit costs at Mana, as the ramp up of the underground continued to progress, which is also supported by higher fleet availability, which was partially offset by the increased watering activities during the wet season as I mentioned during the side by side explanation earlier. So we are optimistic and seeing both, the increase in throughput, as well as an improvement in unit cost.
Richard Hatch: Okay. That's all very comprehensive and very helpful. Thank you very much.
Operator: Now we're going to take our next question, and it comes from Land of Don DeMarco from National Bank Financial.
Don DeMarco: Couple of questions for me. I'll give you both questions. So at Lafigué, you're expected to exceed nameplate for Q4. Does this put you at the high end of the full year guidance range of 90 to 110? And my second question, at Sabodala-Massawa, by accelerating Kiesta and Niakafiri East in Q4, what are the implications on 2025 production? Thank you. I'll listen to your response.
Djaria Traore: Yes. So regarding Lafigué, I think, as we said, we have the commercial productions on August 1, and we're really very pleased with the ramp up of the commercial of the production at Lafigué. The site is on track to deliver within the guidance that was published. And of course, as we mentioned, with all the work that is on progress, we believe that we will be in the range of the 200,000 ounces into next year as well.
Operator: Now we're going to take our next question. And the question comes from the line of Amit Fletcher [ph] from Barclays (LON:BARC).
Unidentified Analyst: A couple of questions from me. And the first one, I guess, sort of -- sort of reiterating the one Don was just asking on Sabodala. Obviously you're pulling forward some production from 2025 into the 2024 mine plan. What should we assume as a baseline for 2025 production at this stage? And then the second question is on the oil and staining cost guidance for 2024. Just wondering if you could be a bit more precise on what we should expect for all-in sustaining costs for Q4 just given the guidance is relatively loosely worded? That would be great. Thank you very much.
Djaria Traore: I will -- I would say the questions on Sabodala-Massawa at Q4; as we've explained earlier, though we are taking some of the answers from 2024, we are actually filling the gap with near mine exploration. I've mentioned the three targets that we have; Koulqwinde, Mamasoto and Sekoto. We are currently working very closely with our exploration, so we believe -- we expect us to be able to fill those extra ounces that we're bringing in from 2025, fill them in with those exploration target.
Ian Cockerill: I think with regard to your question on all-in sustaining costs for Q4; as you can see from Q3, a large influence of the increasing cost in Q3 was driven by the poorer operational performance, and with the stronger operational performance that we're anticipating in Q4. We believe that there will be a very significant reduction in the Q4 all-in sustaining costs; as we’ve said, much closer to the top end of guidance that we're talking about in our release. So we're not going to be that specific as yet but we're certainly looking for an appreciable improvement over Q3.
Operator: Dear speakers, I believe you wanted to answer the second question for Don.
Jack Garman: We've done that. Thank you.
Operator: Okay, thank you. Now we're going to take our next question, then. And the question comes from the line of Andrew [ph] from Stifel Nicolaus, Europe.
Unidentified Analyst: I guess my first question is on the 1.5 million as per annum target that you've talked about. When you put that type of number out there, what timeframe do you need to see the portfolio maintain that level of production to consider it a sustainable level? And I assume Assafou comprises a significant portion of that incremental growth, but where else in the portfolio do you see opportunities to reach that target?
Ian Cockerill: Yes, thanks, Andrew. Interesting question. You're right. I mean, a lot of that will be coming from Assafou. I think we said previously that Assafou is not just growth, but it is also an element of replacement. If you're looking at our existing operations, we certainly do see some potential for modest increase at Ity, and assuming that the Ity donut [ph] allows us to have a more slightly higher volume, higher grades in the coming out but there is a lot of engineering work that is required for us to prove that up. Obviously Lafigué will be a key component of our current base. And obviously, we'll be looking to recapture some of the performance that has been lost this year coming out from Sabodala. And if I look at the more recent expiration that's been taking place on the mining permit at Sabodala, there is some very encouraging prospects for getting a much better mineral inventory out of that place which will help sustain the performance, but primarily the 1.5 million will come from Assafou. We will be talking about the results of the PFS, probably in the -- probably towards the middle of December. And then you can have a look at what we're going to be saying there. But so far, based upon the preliminary review that we've seen, it's looking very promising.
Unidentified Analyst: That's great. Thanks. And I guess my second question is more specific to Assafou. Some of the drilling that you talked about during the quarter in encountering mineralization in the greenstone rocks, has that changed your interpretation of the district or the mineralization there?
Ian Cockerill: No, not at all. In fact, if anything, it's confirmed our original suspicion that what we're seeing here is a project which is not a purely birimian type of project, which is more typical of what we tend to mine within Endeavour. But we're starting to see, and particularly in the Assafou pit itself, it does seem to be more tarquan [ph] in it’s style. And because of that you're seeing larger, thicker sequences; you're seeing that the mineralization contained within sort of massive sandstones and what have you -- so it actually is looking quite promising. And you can see from the slide that we put up in the presentation, you can see how -- even though it's a basin on -- should we call it on the western side of the basin, it's more birimian. And as we go to the eastern side of the basin, it's sort of a gradation towards more tarquan [ph] which is typically what you would see in Ghana which is literally just across the border; a little bit further east. So not surprising, but actually very, very promising and quite exciting in terms of decent, slightly longer life potential project which is what we really want to look for.
Operator: Now we're going to take our next question. And the question comes from the line of Ovais Habib from Scotiabank (TSX:BNS).
Ovais Habib: Glad to hear both projects are wrapping up well. And look forward to attending both sites mid-November, and also meeting Djaria in person as well. Couple of questions for me. At Sabodala, I mean, there's been a lot of questions on Sabodala in terms of the CIL. I mean, with the high grade oxide ore being mined at Kiesta C, the potential of exploration and development of oxide around Sabodala. Do you believe the majority of the risk, especially within the CIL plant is now behind us or do you see any additional risk going into 2025? Also, any additional plant shutdowns expected in Q4 as well? If you can comment on that.
Djaria Traore: Obviously, what we are currently doing is to make sure that we increase all near mine exploration to assure and guarantee that feed -- constant feed of non-refractory ore into our oxide plans [ph]; I think that's very important for us. I think the challenges that we've had is the acceleration of the ore into the 2024 mine plans. That means that we had to accelerate the exploration to backfill and define as well as 2025. We have identified really some exciting non-refractory ore, the two one that I mentioned earlier. And the beauty with those three ones are that pretty close to the Sabodala pit as well. Can you just clarify -- remind me again, what was the second part of your question, Habib?
Ovais Habib: Second part, Djaria, was just on any sort of planned shutdowns expected in Q4?
Djaria Traore: So we are not expecting or plan to have any shutdown. I think the some of the ones that we have in Q3, they were all addressed and primarily on the CIL plant. It was mainly due to some of the motor of the [indiscernible]. But fortunately, we had exactly what we needed on site. They were addressed, so we're not expecting any -- there's no unforeseen of shutdown in Q4 other than the regular maintenance that we all do on a mine site.
Ovais Habib: Perfect. Thanks Djaria for the color. And just moving on to Assafou, obviously Assafou seems to be growing in terms of exploration upside, looking pretty decent. And it looks like it's potentially larger than Lafigué and Houndé. So how should we be looking at the size of the operation at Assafou compared to your previous builds?
Ian Cockerill: Look, I mean, obviously Assafou, sorry, Lafigué, the 4 million ton operation; the PFS has looked at a variety of options in terms of sizing, and we specifically, in the PFS only looked at the resource contained within the Assafou pit. We have not included anything like from Parla or any of the other satellite deposits, Ovais. But because of that, it will be a very similar design concept to what we have at Lafigué. A lot of it's -- also it's hard material, so we'll probably be going with a HPGR [ph] configuration on the commination section. We've seen at Lafigué that has worked well in terms of quite significant reduction in power costs and power demand. And you know, as Côte d’Ivoire expands and grows, demands on the grid get stronger; so anything that we can do to cut back on power is important, and HPGR [ph] provides not only power saving, but also the ability to deal with hard rock. But in terms of sizing, it's going to be a larger -- likely to be a larger size than Lafigué, but all be revealed in December. But look at Lafigué, you know, think of something a little bit bigger than that, and that's the sort of ballpark that we'll be operating with it. And we're probably going to be looking at something which has got somewhere between -- sort of, anywhere between a 13 to 15-year mine life based upon Assafou. Our track record of our projects is that we have them at nameplate, and as we operate them we tend to do bottleneck, we tend to increase not only the size of throughput or the capacity of throughput, but also the size of the endowment that we're processing. And to be honest, I see no difference with Assafou. I think it's going to follow exactly the same process. We certainly wouldn't want to go too big upfront and have a risk, so we'll play it relatively conservatively, but with an eye to having the flexibility of growing sort of organically once we're up and running.
Ovais Habib: Thank you, and that's great color. And just my last question, you know, just moving on to in terms of the mining codes within the countries that you operate in. With Mali going forward with their new 2023 mining code, any additional discussions that you've had with Burkina Faso, Ivory Coast, Senegal for any proposed changes to their mining codes? And also, are these countries going to continuously consulting with Endeavour on these changes?
Ian Cockerill: Yes. I mean, look -- I think the recent increase in the mining codes in Burkina Faso have been well documented. We have previously spoken how there was the -- should we call it the initial declaration; as a the state, they wanted to increase the take of the state. There were representations by the Chamber of Mines in Burkina Faso to government, saying that we would hope that they would honor existing conventions. And in fairness, what came out of those discussions was the fact that there's a new mining code coming in, which is -- yes, it's an increase that really is just bringing it in line with the rest of West Africa. But more importantly, they did listen to the Chamber, and they accepted that existing conventions would be honored. And for us, the new mining code in Burkina Faso will not impact Mana mine until 2027 when that permit gets renewed, and Houndé, the permit gets renewed in 2029. So there will be no changes certainly in the medium-term on both of those operations. In Côte d’Ivoire, there was -- there has been some discussion about wanting to again increase the rates. We are in discussion with government, and just saying to look -- just be careful. You're now starting to push the outer edge of the envelope. It's all very well, we understand that you need taxes. But again, we invested in operations given certain criteria, be careful that you don't bring in criteria that discourages investment because the gold industry in Côte d’Ivoire is actually a very healthy portion of the GDP of Côte d’Ivoire, and there's some good long-term potential. And clearly, we don't want the Assafou to be unduly prejudiced by any deleterious increase. As far as Senegal is concerned, there hasn't been anything official. At the moment government have been focusing more on oil and gas. Would I suspect that they will come back at some stage and want to try and change things for the mining sector; I think the likelihood is that they will certainly want to try and do it. But there's been nothing specific as yet. What I would say in all three of the jurisdictions that we operate in, I think the quality and the access that our public affairs people have, and the -- I think the mutual respect which both parties are held in, means that we are a pretty good group when it comes to sort of sitting down with government privately behind the scenes and saying, “Look, we understand you want to do certain things, but this is not necessarily the right way to encourage longer term investment. It won't change what's there at the moment, but be careful that you don't prevent fresh investment coming in.” And that we've seen done in South Africa, for instance; basically when they bought in the new mining code in 2004, 20 years later we see what's happened; effectively being almost like an investment strike there. That's the last thing that I think West Africa needs. It needs this investment, it needs the tax flow, it needs the employment. I think we as business have a responsibility to sit down and have an open and honest dialog with the authorities to make sure that we get that balance right.
Ovais Habib: Perfect, Ian. That's a great color as well. That's it for me. And thanks for taking my questions.
Operator: Now we’re going to take our next question. And it comes from line of Daniel [ph] from UBS.
Unidentified Analyst: A few questions. The first one, just to clarify on the impairment, I think it was $300 million that your original headline sale price for Wahgnion and Boungou. Could you just remind us again, what -- how much you've received so far? You said you were going to receive $20 million in Q4. Is that all of the cash payment and just royalties left and how much? Just a reconciliation of where we are now related to $300 million announced.
Guy Young: Sure, Daniel. So if I just pick up kind of chronologically, we received $33 million initially from Lilium themselves. We then received a very small proportion, and following on from that, just over $1 million. And then that was it from the Lilium cash inflows. From the States we've received $40 million in total, thus far, and there's a further $20 million in Q4; that would bring us to the overall cash -- the upfront cash consideration. And then, we would still have the NSR over the 400,000 ounces.
Ian Cockerill: Daniel, if I can just add to that, and I think it's important to put a bit of perspective here. As Guy suggested, over $90 million in cash by the end of the year, and then the royalty -- the 3% royalty over 400,000 ounces. I think if you sort of net present value all of that, it's going to be somewhere in the order of about $115 million to $120 million depending on what discount rates you use. And that's for both, Wahgnion and Boungou. As things stand, Boungou is basically -- it's not operational, it's right in the heartland of some very sort of active -- cherished activity. So the original odd $300 million was split fairly evenly about $150 million each for Wahgnion and $150 million odds for Boungou. Today, Boungou arguably is worth nothing. So even though we've got less than we wanted, I think it's fair to say that what we have received is probably a reasonably fair reflection of what the actual value is today; and that's just a sad fact. If we could have sold it earlier, great, but we didn't. And -- but it's where we are.
Unidentified Analyst: That's helpful. Thank you. And then the next one, I'm just going to numbers again, slightly on the cash flow statement which I think I've done a few times before. But -- if I look at the cash tax that you've paid year-to-date, and then kind of extrapolate into Q4, it probably gets about $350 million of cash outflow. Is that a reasonable assessment for the full year?
Guy Young: Daniel, I think -- let me just start off Q4. Yes, we've got residual payments on our corporate income tax; so we're expecting a fairly minimal amount, around $20 million. And then withholding taxes down to zero because we obviously pay that up front before we start doing the upstreaming. So, a small proportion of cash out relating to our overall tax in Q4. I think that brings us more to $300 million but very happy to try and reconcile offline if your numbers are varying [ph].
Unidentified Analyst: Yes. So just to be clear, yes, it's quite hard for us to predict the variability of cash tax. So, about $300 million would be a sensible number based on how you could see the scheduling of those payments. Okay, that's helpful. Thanks. And then the same on the dividends to the minorities; I think you've paid out about $116 million year-to-date. It’s that a big expectation for Q4 or is that most of where you'd expect it to be?
Guy Young: Daniel, if we -- again, just work in sort of round-ish numbers and happy again to pick up offline, if necessary. But total declared for the year, roughly $750 million, of which roughly $600 million comes to us. So, I think the number that you were quoting was probably withholding tax and minority dividends together.
Unidentified Analyst: So just to be just to be clear, I'm just looking directly in the dividends and non-controlling interest in your cash flow statement, year-to-date payment is $116.6 million. What should we be expecting in that number for the full year?
Guy Young: Thank you. Sorry, I thought you said $160 million; so I was trying to work out where you got there.
Unidentified Analyst: Yes, $116 million. Sorry, yes.
Guy Young: So Daniel in Q4 in terms of minorities, we're not expecting any significant amounts in terms of outlets
Unidentified Analyst: And just on those two variables into next year. Can you give us any steer because over the last couple of years, I guess they’ve been pretty material items in terms of sort of the bridge between EBITDA and the cash flow. So, next year is it -- where should we be thinking that either the cash tax rate or and the dividend minority would be landing in this kind of price environment?
Guy Young: If you don't mind, I'm going to sort of fall back on -- let me give you something when we come to guidance. So given that we're in the middle of budget season, what we do now is we take a look forward on an assumed gold price and production level, and calculate what it is that we can afford in inverted commas [ph] to be able to distribute. As soon as we've got those numbers, we’re happy to talk you through that. In next year, we will be looking to publish a full looking effect of tax rates. We will also split out our deferred tax to make the corporate income tax line easier to understand and give you forecasted cash out or cash tax paid. So, we'll provide you with more numbers but I'll have to have to ask you to wait until we provide guidance early next year.
Unidentified Analyst: Okay, thanks. And then just final one on numbers again. You mentioned you got the reverses of the $150 million prepayment coming through in Q4. Just remind -- can you remind me where that will flow through the financial statements?
Guy Young: It'll be coming through our operating cash flow line.
Unidentified Analyst: So deduct $150 million from operating cash flow to adjust the prepayment?
Guy Young: Correct, Daniel. There will also be an interest charge. So I think it's $158 million, but yes.
Unidentified Analyst: Okay. Great. Thanks a lot.
Operator: Now we're going to take our last question for today. And it comes from the line of Felicity Robson [ph] from Bank of America.
Unidentified Analyst: There have been some issues with grid power availability this year, and you've seen some improvement in the quarter. Can you give us some color on what measures have been taken to mitigate some of this volatility? And how the solar plant project is progressing, please?
Djaria Traore: Your question around the grid power; so obviously as we mentioned, we've had few challenges with the grid availability, both in Burkina Faso and Côte d’Ivoire during the first two quarters of the year. Just want to be clear, this is not a structural problems, there were short-term problems. And immediately what we've seen is a good reaction from both authorities in Côte d’Ivoire and Burkina. The issues have been addressed, we've seen a significant improve starting in Q3, so much so that on some of our sites we are nearly back to our budget on planned availability. Of course, the issues that we've seen in Burkina and Côte d’Ivoire is not particular to those countries, and I believe as your population increase, the demand will increase. For sure, we've seen that few projects are already in line or coming to line in Côte d’Ivoire and in Burkina. So we do not expect such instability to continue. And if you will [indiscernible] to Côte d’Ivoire, what we've seen, as soon as those issues were being addressed, we've absolutely brought in additional gen-sets [ph], especially at Lafigué. So we're currently in a position to fully power our mine sites on those generators.
Operator: Excuse me, Felicity [ph], any further questions?
Unidentified Analyst: Great. Thank you.
Operator: Thank you. Dear speaker, there are no further questions for today. That does conclude our conference for today. Thank you for participating. You may now all disconnect. Have a nice day.
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