Endeavour Mining Plc · TSX:EDV
Endeavour Mining — FY2017 Earnings Presentation
55 slides from Endeavour Mining's earnings presentation, Mar 13, 2018
Slide 1: Operational & Financial Results
Q1 OPERATIONAL Q2 & FINANCIAL RESULTS Q3 › March 13, 2018 Q4
Slide 2: Disclaimer & Forward Looking Statements
2017 FULL YEAR RESULTS DISCLAIMER & FORWARD LOOKING STATEMENTS Cash cost per ounce and all-in sustaining cash cost per ounce are non-GAAP performance measures with no standard meaning under IFRS. This presentation contains “forward-looking statements” including but not limited to, statements with re
Slide 3: Speakers and Table of Contents
SPEAKERS TABLE OF CONTENTS SÉBASTIEN DE MONTESSUS Chief Executive Officer, President & Director 1 FULL YEAR 2017 IN REVIEW JEREMY LANGFORD Chief Operating Officer 2 FINANCIAL SUMMARY DETAILS BY MINE AND VINCENT BENOIT 3 PROJECT EVP – CFO and Corporate Development 4 CONCLUSION PATRICK BOUISSET EVP –
Slide 4: 2017 Activities Recap
2017 FULL YEAR RESULTS 2017 ACTVITIES RECAP Strong Continued Achievements Across Our 4 Pillars 1 OPERATIONAL EXCELLENCE 2 PROJECT DEVELOPMENT 3 UNLOCKING EXPLORATION VALUE 4 PORTFOLIO & BALANCE SHEET MANAGEMENT Strong safety record Houndé construction Added 1.0Moz of Indicated Sold Nzema G
Slide 5: Operational Excellence: Safety Record
2017 FULL YEAR RESULTS OPERATIONAL EXCELLENCE 1 Continued to improve our safety record in 2017 Lost Time Injury Frequency Rate 0.80 0.29 2017 Lost Time Injury Frequency Rate 0.40 0.29 +7.0m 0.00 0.00 Man Hours with no Peer Group Average FY2016 FY2017 Houndé Agbaou LTI for Houndé build Operating trac
Slide 6: Houndé start-up lifted group performance in Q4
2017 FULL YEAR RESULTS 1 OPERATIONAL EXCELLENCE Houndé start-up lifted group performance metrics in Q4 Q4 INSIGHTS Production and AISC For discontinued operations For continuing operations AISC inclusive of discountinued operations › Record performance with production up 38% and AISC down 13% compar
Slide 7: Production lifted with full-year of Karma and Houndé
2017 FULL YEAR RESULTS OPERATIONAL EXCELLENCE 1 Production lifted with full-year of Karma and Houndé start-up Production, on a 100% basis in koz For discontinued operations For continuing operations 663koz 592koz (575-610koz guided) (600-640koz guided) 5th YEAR 517koz (475-500koz guided*) of
Slide 8: AISC continued to trend lower in 2017
2017 FULL YEAR RESULTS 1 OPERATIONAL EXCELLENCE AISC continued to trend lower in 2017 AISC including discontinued operations, in US$/oz (Guidance for the year) 5th YEAR of successfully $1,099/oz ($1,055-1,155/oz) meeting AISC $1,010/oz ($985-1,070/oz) guidance $922/oz ($930-980/oz) $886/oz (
Slide 9: Continued increase in All-in Margin
2017 FULL YEAR RESULTS OPERATIONAL EXCELLENCE 1 Continued increase in All-in Margin All-in Margin, in US$m Gold price $175-200m* $149m $162m +9% 2017 vs 2016 $85m $35m +20% Approximated $1,264/oz $1,157/oz $1,222/oz $1,219/oz $1,325/oz growth in 2018 2014 2015 2016 2017 2018 Guidance Gold prices sta
Slide 10: Completed Construction of Houndé and Launched Ity CIL
2017 FULL YEAR RESULTS 2 PROJECT DEVELOPMENT Completed Construction of Houndé and Launched the Construction of Ity CIL Houndé Completed Ity CIL Launched: First gold pour expected for mid-2019 2 MONTHS BELOW BUDGET 0 LTIs OVER +8M HIGHLIGHTS AHEAD OF TIME BY $15M MAN HOURS Long 14-year reserve mine
Slide 11: Unlocking Exploration Value
2017 FULL YEAR RESULTS 3 UNLOCKING EXPLORATION VALUE Ity was strongest focus in 2017, to size the plant ahead of construction launch INSIGHTS: › The strongest focus of the 2017 4.0-6.0Moz 4.0-6.0Moz exploration program was to increase Ity’s Indicated resources for inclusion in the Optimization Study
Slide 12: On-Track to Meet 5-Year Exploration Target
2017 FULL YEAR RESULTS 3 UNLOCKING EXPLORATION VALUE On-track to meet 5-year exploration target 10-15Moz target ~20% achieved 2.3Moz 1.5Moz added at Ity 0.4Moz 0.4Moz added at Tabakoto added at Karma Since Nov. 2016 2018 2019 2020 2021 to Dec 2017 12
Slide 13: Continued Reserve and Resource Expansion
2017 FULL YEAR RESULTS 3 UNLOCKING EXPLORATION VALUE Continued reserve and resource expansion P&P Reserve Evolution M&I Resource Evolution (Inclusive of reserves) +3.9Moz 14.9Moz 12.6Moz +3.1Moz 11.0Moz 9.0Moz 7.1Moz 5.9Moz Dec 31, 2015 Dec 31, 2016 Dec 31, 2017 Dec 31, 2015 Dec 31, 2016 Dec 31, 201
Slide 14: Nzema Mine Sold and Kalana Project Acquired
2017 FULL YEAR RESULTS PORTFOLIO & BALANCE SHEET MANAGEMENT 4 Nzema Mine Sold and Kalana Project Acquired SOLD NZEMA MINE KALANA DFS-STAGE PROJECT ACQUIRED For total cash consideration Acquired for approx. US$120m in shares of up to US$65 million Strategic Rationale: 50% $321m NPV LOW AISC COST LONG
Slide 15: 2018 Guidance Increased with Houndé
2018 GUIDANCE 2018 GUIDANCE INCREASED WITH HOUNDÉ Continued reduction in AISC expected INSIGHTS Production Guidance › Production from continuing operations (All amounts in koz, on a 100% basis) 2018 FULL-YEAR GUIDANCE is expected to increase to 670-720koz in Agbaou 140 - 150 Ity 60 - 65 2018 Karma 1
Slide 16: 2018 Capex Guidance
2018 GUIDANCE 2018 CAPEX GUIDANCE Ity CIL build and exploration are the main drivers INSIGHTS Capital Expenditure Guidance, $m SUSTAINING NON-SUSTAINING GROWTH › Growth projects amount to $200 million (in $m) CAPITAL CAPITAL PROJECTS of the sustaining and non-sustaining Agbaou 17 2 - capital allocat
Slide 17: Financial Summary and Project
FULL YEAR 2017 1 IN REVIEW 2 FINANCIAL SUMMARY DETAILS BY MINE 3 AND PROJECT 4 CONCLUSION 5 APPENDIX
Slide 18: Production Increased in 2017
2017 FULL YEAR RESULTS PRODUCTION INCREASED IN 2017 2017 benefitted from the addition of Houndé and full-year at Karma PRODUCTION VARIATION Full Year 2017 vs 2016 Bridge 663koz AISC of +69koz $869/oz 592koz +28koz (18koz) (8koz) (19koz) AISC of +36koz (17koz) $886/oz FY 2016 Youga Nzema Agbaou Tabak
Slide 19: All-In Margin Breakdown
FINANCIAL SUMMARY ALL-IN MARGIN BREAKDOWN All-in margin increased despite the planned increase in non-sustaining capital YEAR ENDED, INSIGHTS 1. Gold sales up mainly due to a full year of (in US$ million) 2017 2016 production at the Karma mine following its start in Q2-2016 and the successful start-
Slide 20: Growth Funding Sources
FINANCIAL SUMMARY GROWTH FUNDING SOURCES Cash from operations and RCF used to fund growth INSIGHTS YEAR ENDED, 1. Main 2017 Working capital drivers were: (in US$ million) 2017 2016 ‒ $20m in receivable from the sale of Nzema ALL-IN MARGIN FROM ALL OPERATIONS 162 149 ‒ $41.0m outflow of inventory due
Slide 21: Cash Variation Analysis
FINANCIAL SUMMARY CASH VARIATION ANALYSIS Operating activities covered nearly half of investment activities Net Cash Variation Analysis OPERATING ACTIVITIES › Up $68m over 2016 due to stronger production INVESTING ACTIVITIES › Outflows for 2017 include: ‒ $315m growth projects $222m ‒ $54m Ity 25% a
Slide 22: Net Debt Analysis
FINANCIAL SUMMARY NET DEBT ANALYSIS Healthy net debt position following Houndé build Net Cash Variation Analysis INSIGHTS Net Debt / Adj. EBITDA (LTM) Net Debt › The significant efforts done in Q4-2015 and in Q1-2016 to strengthen our balance sheet have $254m allowed us to successfully finance the H
Slide 23: Balance Sheet Management
FINANCIAL SUMMARY BALANCE SHEET MANAGEMENT Diversified debt sources with lower interest cost and increased maturity SITUATION AT END OF 2016 CURRENT SITUATION › DEBT SOURCE: › DEBT SOURCES: $350m RCF ($140m drawn) Diversified across a $350m RCF and $330m convertible notes › INTEREST RATE: › RCF TERM
Slide 24: Convertible Notes Advantages and Potential Dilution
FINANCIAL SUMMARY ADVANTAGES OF THE CONVERTIBLE NOTES 1 REDUCES ITS OVERALL FINANCING COSTS AND DE-RISKS LIBOR EXPOSURE Annual saving based on $330m convertible compared LIBOR curve to $330m drawn on RCF at various Libor rates $25m March 7 $21m 2.50% $18m 2.07% 2.00% January 30 - $15m 1.77% $11m 1.5
Slide 25: Significant Funding Sources to Fund Growth
FINANCIAL SUMMARY SIGNIFICANT FUNDING SOURCES TO FUND GROWTH Cash flow expected to fund a large portion of the Ity CIL construction Fully funded without mine cash flow Circa $60m $502m Up to $25m ~$400m Undrawn $322m $350m Ity capex RCF $200m Houndé Cash $152m remaining $122m capex Liquidity Sources
Slide 26: Net Earnings Breakdown
FINANCIAL SUMMARY NET EARNINGS BREAKDOWN Adjusted EPS 12 MONTHS ENDED A = Adjustments made DEC. 30, DEC. 30, INSIGHTS (in US$ million) 2017 2016 › Adjusted earnings from continuing operations GOLD REVENUE 652 566 Operating expenses (365) (284) attributable to shareholders amounted to $69 million Dep
Slide 27: Financial Summary and Project
FULL YEAR 2017 1 IN REVIEW 2 FINANCIAL SUMMARY DETAILS BY MINE 3 AND PROJECT 4 CONCLUSION 5 APPENDIX
Slide 28: Houndé Mine, Burkina Faso
DETAILS BY MINE & PROJECT HOUNDÉ MINE, BURKINA FASO Strong contribution to group performance due to quick ramp-up period Q4-17 INSIGHTS: Houndé aerial view › Production surpassed the upper end of the 30- 35koz guidance with better than expected mill availability, throughput, grades, recovery rates a
Slide 29: Houndé Mine: Exploration Focus
DETAILS BY MINE & PROJECT HOUNDÉ MINE, BURKINA FASO Strong exploration focus in 2018 on high-grade targets Houndé exploration targets and gold-in-soil anomalies map Priority 2 Priority 2 Priority 1 Priority 2 Priority 2 INSIGHTS › Following a two-year period of no exploration, activities resumed in
Slide 30: Agbaou Mine: Q4 Results
DETAILS BY MINE & PROJECT AGBAOU MINE, CÔTE D’IVOIRE Continued low AISC as mine transitioned into harder ore blend Q4-17 vs Q3-17 INSIGHTS: Production and AISC › Production slightly decreased in line Production, koz AISC, US$/oz with guidance, due to a lower grade 57koz and slightly lower tonnage mi
Slide 31: Agbaou Mine: Full Year Production and AISC
DETAILS BY MINE & PROJECT AGBAOU MINE, CÔTE D’IVOIRE Production and AISC in-line with increased proportion of fresh ore FULL YEAR 2017 INSIGHTS Production and AISC › Full year production achieved the mid-range of the 175-180koz guidance 195koz › AISC for 2017 was well below the guided $660- 700/oz r
Slide 32: Agbaou Mine: Exploration Program
DETAILS BY MINE & PROJECT AGBAOU MINE, CÔTE D’IVOIRE Exploration program continues to progress Agbaou Site Map INSIGHTS › Agbaou’s 2017 exploration program amounted to $6.2m with 31,400m of drilling › The primary objective for the 2017 program was to conduct in-pit drilling at the North pit and to t
Slide 33: Ity Heap Leach Mine: Q4 Production
DETAILS BY MINE & PROJECT ITY HEAP LEACH MINE, CÔTE D’IVOIRE Production increased following the rainy season Q4-17 vs Q3-17 INSIGHTS: Production and AISC › Following the rainy season, production Production, koz AISC, US$/oz increased due to higher stacking and mining rates, in addition to improved 1
Slide 34: Ity Heap Leach Mine: Transition Year in 2018
DETAILS BY MINE & PROJECT ITY HEAP LEACH MINE, CÔTE D’IVOIRE Transition year in 2018 as the CIL is built FULL YEAR 2017 INSIGHTS Production and AISC › Production decrease and AISC increased as lower 73koz grade ore was stacked to preserve higher grade 60-65koz $756/oz 60koz ore for the upcoming CIL
Slide 35: Ity CIL Construction On Time and On Budget
DETAILS BY MINE & PROJECT ITY HEAP LEACH MINE, CÔTE D’IVOIRE CIL construction is progressing on time and on budget ACHIEVEMENTS TO DATE CIL Ring Beams Poured › Construction was launched in September 2017 and remains on time and on budget with first gold pour expected in mid-2019 › No LTI with over 8
Slide 36: Ity CIL Project: TSF Earthworks
DETAILS BY MINE & PROJECT ITY CIL PROJECT MINE, CÔTE D’IVOIRE Construction is progressing on time and on budget TSF Earthworks 36
Slide 37: Ity CIL Construction Upcoming Milestones
DETAILS BY MINE & PROJECT ITY CIL PROJECT MINE, CÔTE D’IVOIRE Construction upcoming milestones 2017 2018 2019 Activity Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 EARTHWORKS & TSF Camp earthworks Bridge crossing TSF complete complete complete CAMP CONSTRUCTION Camp started Admin building starts DETAILED ENGINEERING
Slide 38: +1 Moz of Indicated Resources Added in 2017
DETAILS BY MINE & PROJECT ITY MINE, CÔTE D’IVOIRE +1 Moz of Indicated resources added in 2017 INSIGHTS Ity Mine Drilling Targets › Ity’s 2017 exploration program amounted to $14 million, totaling 58,500 meters of drilling focused on increasing the resource base for the CIL Optimization Study › More
Slide 39: Karma Mine: Q4 Production and AISC
DETAILS BY MINE & PROJECT KARMA MINE, BURKINA FASO Higher stacking capacity as the plant optimization was completed in Q4 Q4-17 vs Q3-17 INSIGHTS: Production and AISC › Production remained flat as compared with Q3-17 as Production, koz AISC, US$/oz higher stacking capacity and grades were offset by
Slide 40: Karma Mine: Optimization Program Completed
DETAILS BY MINE & PROJECT KARMA MINE, BURKINA FASO Optimization program completed and new front-end commissioned in Q4 ADR Area - Before ADR Area - After INSIGHTS › Plant optimization work was successfully carried out during 2017. The newly installed front- end and ADR plant are expected to boost st
Slide 41: Karma Mine: Uplift Expected in 2018
DETAILS BY MINE & PROJECT KARMA MINE, BURKINA FASO Uplift expected in 2018 following optimization of plant FULL YEAR 2017 INSIGHTS Production and AISC 105-115koz › Production totalled near the lower-end of 98koz $780-830/oz the 100-110koz guidance. The increased $834/oz compared to 2016 is due to 20
Slide 42: Karma Mine: Successful Near-Mine Drilling
DETAILS BY MINE & PROJECT KARMA MINE, BURKINA FASO Successful near-mine drilling Karma Site Map INSIGHTS › Karma’s 2017 exploration program amounted to $2.5m with 41,520m of drilling › Drilling at the North Kao deposit resulted in the delineation of 19koz of M&I resources and 51koz of Inferred resou
Slide 43: Tabakoto Mine: Q4 Production and AISC
DETAILS BY MINE & PROJECT TABAKOTO MINE, MALI AISC increased despite lower unit costs due to lower grades Q4-17 vs Q3-17 INSIGHTS: Production and AISC › Production decreased mainly due to lower average Production, koz AISC, US$/oz head grades, in spite of overall improved mining 48koz operations 43k
Slide 44: Tabakoto Mine: Strategic Assessment by Mid-2018
DETAILS BY MINE & PROJECT TABAKOTO MINE, MALI Strategic assessment expected by mid-2018 FULL YEAR 2017 INSIGHTS Production and AISC › Production was below the 150-160koz guidance 163koz range, mainly due to a lower open pit grade 144koz following the depletion of the high-grade Kofi C $1,027/oz depo
Slide 45: Tabakoto Mine: Exploration Potential
DETAILS BY MINE & PROJECT TABAKOTO MINE, MALI Exploration potential both near-mill and for greenfield targets INSIGHTS Tabakoto Site Map › Tabakoto’s 2017 exploration program amounted to $8m, totaling 56,200m focused on both underground resource delineation and testing near-mill open pit targets › N
Slide 46: Kalana Project: Intensive Exploration Program
DETAILS BY MINE & PROJECT KALANA PROJECT, MALI Intensive exploration program underway INSIGHTS › For 2018, a $5m exploration program is planned › The objective is to complete 45,000m in H1-2018 to provide by mid-year an updated resource expected to form the basis for the feasibility study › Explorat
Slide 47: Conclusion
FULL YEAR 2017 1 IN REVIEW 2 FINANCIAL SUMMARY DETAILS BY MINE 3 AND PROJECT 4 CONCLUSION 5 APPENDIX
Slide 48: Upcoming Catalysts
CONCLUSION UPCOMING CATALYSTS 2018 OUTLOOK: › Gold production guidance increased to 670-720koz with Houndé Immediate › AISC guidance to decrease to below $840-890/oz with Houndé Cashflow from Production › HOUNDÉ: Contribution to Group free cash flow generation started in Q4-2017 Near-Term › ITY CIL
Slide 49: Production and AISC Profile
CONCLUSION PRODUCTION AND AISC PROFILE Key objective is to reduce the group’s AISC and extend mine lives STRATEGIC OBJECTIVE $1,317/oz For 2019 +900koz +900koz 800-900koz $1,010/oz 800-900koz ≤800$/oz $922/oz $869/oz 663koz 670-720koz All-in Sustaining Cost 584koz $869/oz $840-890/oz 517koz 462koz +
Slide 50: Appendix
FULL YEAR 2017 1 IN REVIEW 2 FINANCIAL SUMMARY DETAILS BY MINE 3 AND PROJECT 4 CONCLUSION 5 APPENDIX
Slide 51: Gold Revenue Protection Program
APPENDIX GOLD REVENUE PROTECTION PROGRAM Increased certainty of the FCF during the construction period of the Ity CIL Gold Revenue Protection Program : Gold Option Collar Strategy › Gold Option Contracts aim to increase Gold price in US$/oz the certainty of the free cash flow 1,600 Upside on 60% of
Slide 52: Diversified Borrowing Sources
APPENDIX DIVERSIFIED BORROWING SOURCES Well funded to push forward our growth projects REVOLVING CREDIT FACILITY (RCF) CONVERTIBLE NOTES › PRINCIPLE AMOUNT: › PRINCIPLE AMOUNT: $500m with intent to decrease to $350m $330m › INTEREST RATE: › INTEREST RATE: ‒ LIBOR plus 2.95% to 3.95% on drawn portion
Slide 53: Production and Cost by Quarter
APPENDIX PRODUCTION AND COST DETAILS BY MINE BY QUARTER AGBAOU NZEMA TABAKOTO ITY KARMA HOUNDE (on a 100% basis) Unit Q4-2017 Q3-2017 Q4-2016 Q4-2017 Q3-2017 Q4-2016 Q4-2017 Q3-2017 Q4-2016 Q4-2017 Q3-2017 Q4-2016 Q4-2017 Q3-2017 Q4-2016 Q4-2017 Physicals Total tonnes mined – OP1 000t 7,216 7,576 6,
Slide 54: Production and Cost Year to Date
APPENDIX PRODUCTION AND COST DETAILS BY MINE YEAR TO DATE AGBAOU NZEMA TABAKOTO ITY KARMA HOUNDE (on a 100% basis) Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Unit 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 Physicals Total tonnes mined – OP1 00
Slide 55: Reserves and Resources
APPENDIX RESERVES AND RESOURCES As of December 31, 2017 Tabakoto Mine Group Consolidated Total Resources shown inclusive of Reserves. On a 100% basis Tonnage (Mt) Grade (Au g/t) Content (Au koz) On a 100% basis Proven Reserves 2.4 3.32 251 Resources shown Tonnage Grade Content Probable Reserves 2.4