Endeavour Mining Plc · TSX:EDV
Endeavour Mining — Q1 2020 Earnings Presentation
46 slides from Endeavour Mining's earnings presentation, May 13, 2020
Slide 1: Q1 Operational & Financial Results
Q1 OPERATIONAL & FINANCIAL RESULTS May 13, 2020 TSX:EDV
Slide 2: Disclaimer & Forward Looking Statements
DISCLAIMER & FORWARD LOOKING STATEMENTS Cash cost per ounce and all in sustaining cash cost per ounce are non GAAP regulations, and political and economic developments in countries in which performance measures with no standard meaning under IFRS This Endeavour operates Although Endeavour has attemp
Slide 3: Speakers
SPEAKERS SÉBASTIEN DE LOUIS MARK PATRICK MONTESSUS IRVINE MORCOMBE BOUISSET President & Chief CFO COO EVP – Exploration Executive Officer and Growth
Slide 4: Table of Contents
TABLE OF CONTENTS 1 Q1-2020 IN REVIEW 2 FINANCIAL SUMMARY 3 DETAILS BY MINE AND PROJECT 4 ENDEAVOUR & SEMAFO PRO FORMA Q1 SNAPSHOT 5 CONCLUSION 6 APPENDIX Note : All amounts are in US$, except where indicated, and may differ from MD&A due to rounding
Slide 5: Q1-2020 in Review
01 SECTION 1 Q1-2020 IN REVIEW
Slide 6: COVID-19 Update
Q1-2020 RESULTS COVID-19 UPDATE West African Context INSIGHTS Geographic distribution COVID-19 cases › West African governments were quick to respond ‒ Implemented strong, pro- active measures to minimize overall exposures: borders closed, banning large groups, civil lockdown › So far, successful co
Slide 7: Our COVID-19 Response
Q1-2020 RESULTS OUR COVID-19 RESPONSE Developed epidemiological surveillance system to support our efforts 7
Slide 8: Our COVID-19 Response: Health and Safety
Q1-2020 RESULTS OUR COVID-19 RESPONSE: HEALTH AND SAFETY Primary focus is protecting the well-being of employees, contractors and local communities INSIGHTS › Working closely with national health authorities to implement & augment government protocols in our host communities. › Implemented range of
Slide 9: Our COVID-19 Response: Business Continuity Plan
Q1-2020 RESULTS OUR COVID-19 RESPONSE: BUSINESS CONTINUITY PLAN Endeavour’s operations are continuing to operate at near-normal levels KEY ACTIONS CURRENTLY OPERATING IN A LEVEL 1 ENVIRONMENT ✓ Key expatriates returned to site before suspension of commercial airline flights and shift rosters modifie
Slide 10: Q1 Performance on Track to Meet Guidance
Q1-2020 RESULTS Q1 PERFORMANCE ON TRACK TO MEET GUIDANCE Strong performance with record operating cash flow GROUP LTM BELOW LTIFR1 INDUSTRY 0.26 0.66 Industry Average2 GROUP Q1 ON-TRACK PRODUCTION 172koz 680-740koz Guidance GROUP $845/oz $895/oz AISC Q1 ON-TRACK $899/oz Guidance (1) Lost Time Injury
Slide 11: Operational Excellence: Safety
Q1-2020 RESULTS OPERATIONAL EXCELLENCE Safety is our top priority Lost Time Injury Frequency Rate(1) (on a rolling 12-months basis) 0.66 0.26 LTM Lost Time Injury Frequency Rate 0.40 Regrettably, a fatal accident occurred at the Karma mine in February 0.29 0.26 0.16 0.12 2 LTI Over the past 12 month
Slide 12: Production
Q1-2020 RESULTS PRODUCTION Strong production over last 4 quarters following Ity CIL start-up Group Production and AISC AISC from all operations 171koz 181koz 178koz 172koz +42% Production Start of Ity Q1-2020 vs. Q1-2019 CIL 121koz $899/oz +3% $877/oz $819/oz $790/oz $803/oz AISC Q1-2020 vs. Q1-2019
Slide 13: All-in Sustaining Margin
Q1-2020 RESULTS ALL-IN SUSTAINING MARGIN Strong increase due to higher gold price and start-up at Ity All-in Sustaining Margin Realized gold price $118m $108m $113m +$ 68m Q1-2020 vs. Q1-2019 $84m $45m + 149% Q1-2020 vs. Q1-2019 $1,252/oz $1,285/oz $1,443/oz $1,445/oz $1,546/oz Q1-2019 Q2-2019 Q3-20
Slide 14: Operating Cash Flow
Q1-2020 RESULTS OPERATING CASH FLOW Record quarter achieved in Q1-2020 Operating Cash Flow $120m $126m +$103m Q1-2020 vs. Q1-2019 $96m $62m $23m +450% Q1-2020 vs. Q1-2019 Q1-2019 Q2-2019 Q3-2019 Q4-2019 Q1-2020 14
Slide 15: Net Free Cash Flow
Q1-2020 RESULTS NET FREE CASH FLOW Continued strong cash flow following completion of investment phase Net Cash Flow Net cash flow before repayment/proceeds of long-term debt, convertible bond and equipment finance obligation Net Cashflow Cummulative Cashflow ITY CIL CONSTRUCTION ITY CIL PRODUCTION
Slide 16: Net Debt Reduction
Q1-2020 RESULTS NET DEBT REDUCTION Significant improvement in leverage ratio Net Debt Reduction Net Debt Net Debt / Adj. EBITDA (LTM) INVESTMENT PHASE DEBT REDUCTION PHASE $ 187m $660m Net Debt reduction $635m $608m over past 3 quarters $528m 2.96x 2.75x $473m 1.94x -64% 1.48x 1.06x Net Debt / Adj.
Slide 17: Financial Summary
02 SECTION 2 FINANCIAL SUMMARY
Slide 18: Financial Overview
FINANCIAL SUMMARY FINANCIAL OVERVIEW Benefitted from the higher gold price and Ity CIL production QUARTER ENDED Mar. 31, Dec. 31, Mar. 31, Δ Q1-2020 +217% (in US$ million unless otherwise stated) 2020 2019 2019 vs. Q1-2019 GOLD SALES AND AISC HIGHLIGHTS Gold Sales, koz 175 172 121 44% All-in Sustain
Slide 19: All-in Margin Breakdown
FINANCIAL SUMMARY ALL-IN MARGIN BREAKDOWN Benefit of higher production and higher gold price QUARTER ENDED INSIGHTS Q1-2020 VS. Q1-2019 IN US$M 1. Increased due to both higher gold sold (due to Ity CIL coming online) and the higher Mar. 31, Dec. 31, Mar. 31, Δ Q1-2020 realized gold price. 2020 2020
Slide 20: Net Free Cash Flow
FINANCIAL SUMMARY NET FREE CASH FLOW Strong increase due to completion of investment phase in 2019 QUARTER ENDED INSIGHTS Q1-2020 VS. Q1-2019 Mar. 31, Dec. 31, Mar. 31, Δ Q1-2020 1. Working capital variances: (in US$ million) 2020 2019 2019 vs. Q1-2019 Q1-2020 Q4-2019 Q1-2019 ALL-IN MARGIN 80 85 22
Slide 21: Cash Flow per Share
FINANCIAL SUMMARY CASH FLOW PER SHARE Increasing over the last 5 quarters Operating Cash Flow per Share (OCFPS) Operating Cash Flow before non-cash WC $1.14 Operating Cash Flow $1.14 $1.05 $1.10 $1.08 Q1-2020 Operating Cash Flow per Share $0.88 $0.57 $0.67 $0.44 +$0.93 $0.52 $0.21 OCFPS increase Q1-
Slide 22: Net Debt and Liquidity Analysis
FINANCIAL SUMMARY NET DEBT AND LIQUIDITY ANALYSIS Financial position significantly improved Net Debt evolution INSIGHTS › As a precaution to ensure that Endeavour would have Net Debt Net Debt / Adj. EBITDA (LTM) substantial liquidity and financial flexibility to operate under various stress-test sce
Slide 23: Net Earnings Breakdown
FINANCIAL SUMMARY NET EARNINGS BREAKDOWN Adjusted EPS of $0.30 for Q1-2020 QUARTER ENDED INSIGHTS Mar. 31, Dec. 31, Mar. 31, 1. Mainly relates to M&A activity related to the (in US$ million) A = Adjustments made for Adjusted Net Earnings 2020 2019 2019 announced combination with SEMAFO. EARNINGS FRO
Slide 24: Adjusted Earnings Per Share
FINANCIAL SUMMARY ADJUSTED EARNINGS PER SHARE Strong EPS over last 3 quarters Adjusted earnings per share (EPS) Adjusted EPS, in $/share $0.30 $0.34/share $0.30/share $0.30/share Q1-2020 EPS $0.08/share ($0.04/share) +$0.34 EPS increase Q1-2020 vs. Q1-2019 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 24
Slide 25: Details by Mine and Project
03 SECTION 3 DETAILS BY MINE AND PROJECT
Slide 26: Production Bridge
DETAILS BY MINE & PROJECT PRODUCTION BRIDGE Increase due to the start-up of the flagship Ity CIL mine Production Bridge Q1-2019 to Q1-2020 INSIGHTS Change in AISC (1koz) 172koz › Production increased compared to Q1- 2019, mainly due: (4koz) 5koz +$295/oz +$22/oz ‒ The start-up of the flagship Ity CI
Slide 27: Ity Mine, Côte d'Ivoire
DETAILS BY MINE & PROJECT ITY MINE, CÔTE D’IVOIRE Production remained flat while AISC improved Q1-2020 vs Q4-2019 INSIGHTS Production and AISC › Production remained flat as higher throughput and Production, koz AISC, US$/oz recoveries compensated for the slight decrease in processed grade. 64koz 58k
Slide 28: Houndé Mine, Burkina Faso
DETAILS BY MINE & PROJECT HOUNDÉ MINE, BURKINA FASO Stable production with higher grades from Kari Pump expected in H2-2020 Q1-2020 vs Q4-2019 INSIGHTS Production and AISC › Production remained flat as slightly higher Production, koz AISC, US$/oz throughput offset slightly lower recovery rates, whil
Slide 29: Agbaou Mine, Côte d'Ivoire
DETAILS BY MINE & PROJECT AGBAOU MINE, CÔTE D’IVOIRE Production decreased in line with expectations Q1-2020 vs Q4-2019 INSIGHTS Production and AISC › Production decreased in line with Production, koz AISC, US$/oz expectations due to lower grade ore processed, as well as slightly lower plant recoveri
Slide 30: Karma Mine, Burkina Faso
DETAILS BY MINE & PROJECT KARMA MINE, BURKINA FASO Stable production with better than guided AISC Q1-2020 vs Q4-2019 INSIGHTS Production and AISC › Production remained flat as the increase in grade Production, koz AISC, US$/oz stacked compensated for the marginal decreases 27koz 28koz in stacked ton
Slide 31: Project Development Activities
DETAILS BY MINE & PROJECT PROJECT DEVELOPMENT ACTIVITIES Studies are underway on Kalana and Fetekro INSIGHTS V Endeavour SEMAFO › While the main focus for 2020 is cash NAME Kalana Fetekro Bantou Nabanga flow generation, Endeavour is also continuing to build optionality within its portfolio by advanc
Slide 32: Strong Exploration Efforts
DETAILS BY MINE & PROJECT STRONG EXPLORATION EFFORTS 40% of the full-year budget spent in Q1 INSIGHTS Exploration expenditure for Q1-2020 › During Q1-2020, exploration continued to be a strong focus, with a company-wide exploration spend of $17m Houndé › Over 108,000m drilled across the group in Q1-
Slide 33: Endeavour & SEMAFO Pro Forma Q1 Snapshot
04 SECTION 4 ENDEAVOUR & SEMAFO PRO FORMA Q1 SNAPSHOT
Slide 34: Q1 Pro Forma Results for the Combined Entity
Q1-2020 RESULTS Q1 PRO FORMA RESULTS FOR THE COMBINED ENTITY Strong cash flow generated Endeavour SEMAFO COMBINED GROUP QUARTER ENDED MAR. 31,2020 PRODUCTION AND AISC HIGHLIGHTS Gold production, koz Gold Sales, koz All-in Sustaining Cost, $/oz 172 175 899 82 77 888 254 251 896 $ 187m Q1-2020 Pro For
Slide 35: Pro Forma Group Metrics
Q1-2020 RESULTS PRO FORMA GROUP METRICS Creation of a +1Moz, low AISC producer with strong balance sheet Q1-2020 Q1-ANNUALIZED PRODUCTION 254koz +1.0Moz ALL-IN SUSTAINING $896/oz <$900/oz COST OPERATING Approx. $187m CASH FLOW $750m NET DEBT / LTM ADJ. Close to 0x 0.5x EBITDA by year-end Notes: Pro
Slide 36: Strong Re-rating Potential
Q1-2020 RESULTS STRONG RE-RATING POTENTIAL Creation of a top 15 gold producer Industry Top Producers (Moz) Based on latest reported fiscal year gold production, unless otherwise stated 1 Top 15 6.5 6.0 5.5 Global gold producer 2.5 2.0 1.5 1.0 0.5 0.0 1.0Moz 3 Sibanye Endeavour Resolute SEMAFO Newcre
Slide 37: Strong Re-rating Potential
Q1-2020 RESULTS STRONG RE-RATING POTENTIAL Based on cash flow generation 16% FCF Yield 2020E CONSENSUS FCF Yield realized for Q1- 2020 annualized Represents CAD 51/share vs. CAD 26/share currently 12% 11% 11% 10% 7% 8% 7% 7% 6% 6% 6% 6% 6% 6% 5% 6% 6% 4% 2% 2% 1% 0% 0% (1%) (8%) (21%) St Barbara New
Slide 38: Conclusion
SECTION 5 CONCLUSION ® ENDEAVOUR MINING
Slide 39: Significant Upcoming Catalysts
CONCLUSION SIGNIFICANT UPCOMING CATALYSTS TIMING CATALYST Q2-2020 SEMAFO Acquisition Shareholder meeting on May 28, 2020 Immediate Cashflow Q2-2020 Ity Updated Le Plaque resource estimate from Production Updated Le Plaque reserve estimate followed by new Mid-2020 Ity Ity mine plan Near-Term Updated
Slide 40: Appendix
SECTION 6 APPENDIX ENDEAVOUR MINING
Slide 41: Ity Mine, Côte d'Ivoire
APPENDIX ITY MINE, CÔTE D’IVOIRE Updated Le Plaque resource is expected to be announced mid-year Ity Site Map INSIGHTS › An exploration program of up to $14 million totaling approximately 100,000 meters has been planned for 2020, with the aim of growing the Le Plaque, Bakatouo, and Daapleu deposits,
Slide 42: Exploration at the Houndé Mine, Burkina Faso
APPENDIX EXPLORATION AT THE HOUNDÉ MINE, BURKINA FASO Updated resource for entire Kari area is expected to be announced mid-year INSIGHTS Houndé Site Map › An exploration program of up to $11 million totaling approximately 94,000 meters has been planned for 2020, with the aim of delineating addition
Slide 43: Agbaou Mine, Côte d'Ivoire
APPENDIX AGBAOU MINE, CÔTE D’IVOIRE Exploration program of up to $2 million has been planned for 2020 Agbaou Site Map INSIGHTS › An exploration program of up to $2 million has been planned for 2020 with the aim of continuing to test targets located along extensions of known deposits and on parallel
Slide 44: Karma Mine, Burkina Faso
APPENDIX KARMA MINE, BURKINA FASO Exploration program of up to $2 million has been planned for 2020 INSIGHTS Karma Site Map › An exploration program of up to $2 million has been planned for 2020 with the aim of in- fill drilling and testing extensions of known deposits. › Minimal work has been done
Slide 45: Fetekro Greenfield Exploration
APPENDIX FETEKRO GREENFIELD EXPLORATION Updated Lafigué resource estimate planned to be published mid-2020 INSIGHTS Simplified Map of the Fetekro Property Showing Lafigué › M&I resource: 1.2Moz at 2.54g/t › High quality resource: ‒ Amenable to open pit mining ‒ Preliminary metallurgical tests indica
Slide 46: Production and Cost Details by Mine
APPENDIX PRODUCTION AND COST DETAILS BY MINE On a quarterly basis AGBAOU ITY CIL ITY HL KARMA HOUNDÉ (on a 100% basis) Unit Q1-2020 Q4-2019 Q1-2019 Q1-2020 Q4-2019 Q1-2019 Q1-2020 Q4-2019 Q1-2019 Q1-2020 Q4-2019 Q1-2019 Q1-2020 Q4-2019 Q1-2019 Physicals Total tonnes mined – OP1 000t 6,432 6,341 6,21