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Management Presentation
Results for the Third Quarter 2014
ended September 30, 2014
Webcast Presentation for
November 4, 2014
GOLD PRODUCER
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WEST AFRICA
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CASH FLOW
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 respect
to Endeavour’s plans and operating performance, the estimation
of mineral reserves and resources, the timing and amount of
estimated future production, costs of future production, future
capital expenditures, and the success of exploration activities.
Generally, these forward-looking statements can be identified by
the use of forward-looking terminology such as “expects”,
“expected”, “budgeted”, “forecasts” and “anticipates”. Forwardlooking statements, while based on management’s best estimates
and assumptions, are subject to risks and uncertainties that may
cause actual results to be materially different from those
expressed or implied by such forward-looking statements,
including but not limited to: risks related to the successful
integration of acquisitions; risks related to international
operations; risks related to general economic conditions and credit
availability, actual results of current exploration activities,
unanticipated reclamation expenses; changes in project
parameters as plans continue to be refined; fluctuations in prices
of metals including gold; fluctuations in foreign currency exchange
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rates, increases in market prices of mining consumables, possible
variations in ore reserves, grade or recovery rates; failure of
plant, equipment or processes to operate as anticipated;
accidents, labour disputes, title disputes, claims and limitations on
insurance coverage and other risks of the mining industry; delays
in the completion of development or construction activities,
changes in national and local government regulation of mining
operations, tax rules and regulations, and political and economic
developments in countries in which Endeavour operates.
Although Endeavour has attempted to identify important factors
that could cause actual results to differ materially from those
contained in forward-looking statements, there may be other
factors that cause results not to be as anticipated, estimated or
intended. There can be no assurance that such statements will
prove to be accurate, as actual results and future events could
differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on forwardlooking statements. Please refer to Endeavour’s most recent
Annual Information Form filed under its profile at www.sedar.com
for further information respecting the risks affecting Endeavour
and its business.
2
Introduction
Neil Woodyer
CEO
Attie Roux
Christian Milau
COO
CFO
Amounts expressed in US$, unless otherwise indicated
GOLD PRODUCER
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WEST AFRICA
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CASH FLOW
3
Q3 2014 Highlights
• Strong gold production:
− Produced 117,612 ounces in Q3 and 346,041 YTD
− 3 of 4 mines exceeding guidance mid-point
• Achieved stated goal of AISC/oz below $1,000 in Q3
− Adjusted EBITDA of $37.6 million
− AISC of $991/oz1
− All-in sustaining margin of $32.1 million
• Agbaou continues to be strongest performer
− 9-month production already exceeds original guidance
for the year
• Investments in Tabakoto’s optimization nearing completion
and set for improved margins in Q4 2014
− Segala ramped up to 1,500 tonnes per day milestone in
September
− Good progress on road construction to Kofi C deposit
with pre-stripping to begin in December and production
in January 2015
• Transitioning out of capital investment programs and
into free cash flow generation
1 Includes
Underground Mining at Tabakoto
mine level cash costs, royalties, corporate costs and sustaining capital
GOLD PRODUCER
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4
Q3 2014 Highlights
Q3 2014
Agbaou
Nzema
Tabakoto
Youga
Total / Avg
43,428
24,886
30,866
18,432
117,612
Cash cost / oz sold
$467
$917
$1,277
$729
$814
AISC / oz
$590
$1,043
$1,451
$794
$9911
Production (oz)
1 Includes
corporate costs and sustaining exploration
GOLD PRODUCER
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WEST AFRICA
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CASH FLOW
5
Tabakoto YTD Operations Review
•
•
Tonnes of ore mined has steadily increased,
especially U/G ore with Segala ramp up
Contract mining
•
•

•
No stockpiles processed in Q3
Cash costs and sustaining capital on downward
trend, despite increased volumes mined & milled
Owner mining
Conversion to owner U/G mining has been a key
driver of cost improvements
GOLD PRODUCER
Tonnes processed has progressively increased with
plant optimizations
WEST AFRICA
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•
•
Segala mining flexibility limited to two stopes in
•
Q3 affecting average milled grade
•
Grade to improve in Q4
CASH FLOW
•
Low Q3 milled grade resulted in high cash cost/oz
If Q3 milled grade was 3.25 g/t and all else equal,
AISC would have been $1,144/oz
Kofi C ore coming in January 2015
6
Operating Summary – Tabakoto Gold Mine, Mali
Q3 2014
3 months
Q2 2014
3 months
Q1 2014
3 months
9 months
ended
‘000s
391
373
350
1,114
Average gold grade milled
g/t
2.55
3.21
3.25
3.00
Gold ounces sold
oz
29,434
34,916
35,407
99,757
Cash cost
$/oz
$1,277
$1,133
$1,157
$1,184
Royalties
$/oz
$76
$77
$78
$77
Sustaining capital
$/oz
$98
$73
$85
$85
Mine-level AISC
$/oz
$1,451
$1,283
$1,320
$1,346
Tonnes of ore milled
• Segala has ramped up to 1,500 ore tonnes per day in September, with development increasing
from 386 metres per month in April to 508 metres achieved in September
• Cost improvements are expected as Segala moves to full production during Q4 and milled
grades return to scheduled levels
GOLD PRODUCER
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WEST AFRICA
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7
Operating Summary – Agbaou Gold Mine, Côte d’Ivoire
Q3 2014
3 months
Q2 2014
3 months
Q1 2014
3 months
9 months
ended
‘000s
603
520
489
1,612
Average gold grade milled
g/t
2.23
1.78
1.77
1.94
Gold ounces sold
oz
41,919
29,499
21,888
93,306
Cash cost
$/oz
$467
$671
$594
$561
Royalties
$/oz
$44
$47
$51
$47
Sustaining capital
$/oz
$79
$10
$2
$39
Mine-level AISC
$/oz
$590
$728
$647
$647
Tonnes of ore milled
• Agbaou has already exceeded the original guidance of 85,000 to 95,000 ounces for the year with
gold production of 99,392 ounces for the 9 months ended September 30, 2014
• Results to date from exploration to extend mine life (highlights of results in October 9, 2014 news
release) have demonstrated a continuity of grades and widths, with several mineralized zones
remaining open on strike and at depth
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8
Operating Summary – Nzema Gold Mine, Ghana
Q3 2014
3 months
Q2 2014
3 months
Q1 2014
3 months
9 months
ended
‘000s
401
391
395
1,187
Average gold grade milled
g/t
1.88
3.13
2.75
2.58
Gold ounces sold
oz
24,231
35,878
28,533
88,642
Cash cost
$/oz
$917
$758
$890
$844
Royalties
$/oz
$70
$71
$73
$72
Sustaining capital
$/oz
$56
$86
$83
$77
Mine-level AISC
$/oz
$1,043
$916
$1,046
$993
Tonnes of ore milled
• Mine production declined compared to Q2 2014 due to:
− Hardness of some of the ore feed from the Adamus Pits decreased mill throughput
− Heavy rainfall also impacted mining in the Aliva pit
GOLD PRODUCER
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9
Operating Summary – Youga Gold Mine, Burkina Faso
Q3 2014
3 months
Q2 2014
3 months
Q1 2014
3 months
9 months
ended
‘000s
237
242
251
730
Average gold grade milled
g/t
2.65
2.55
2.78
2.66
Gold ounces sold
oz
18,498
18,360
19,838
56,696
Cash cost
$/oz
$729
$803
$680
$736
Royalties
$/oz
$54
$57
$62
$58
Sustaining capital
$/oz
$11
$28
$16
$18
Mine-level AISC
$/oz
$794
$888
$758
$812
Tonnes of ore milled
• Continues to generate positive cash flow with low sustaining capital expenditure
GOLD PRODUCER
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WEST AFRICA
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CASH FLOW
10
Q3 2014 All-in Sustaining Margin and AISC
3 Months Ended
Sept 30, 2014
US$ M
In Gold Ozs
$ / oz
Gold revenue
$145.2
114,082
6.8
5,355
92.9
72,956
45.5
35,771
Less: Corporate G&A
4.1
3,237
Less: Sustaining capital
7.8
$435.8
338,401
$60
21.7
16,810
$64
814
287.0
222,841
848
127.2
98,749
36
14.2
11,041
42
6,102
68
20.0
15,528
59
1.5
1,189
13
3.3
2,534
10
$32.1
25,243
$991
$89.7
69,646
Less: Royalties
Less: Cash costs for ounces sold
Mine cash margin
Less: Sustaining exploration
All-in sustaining margin / cost per ounce
9 Months Ended
Sept 30, 2014
US$ M In Gold Ozs*
$ / oz
$1,023
Numbers may not add due to rounding
*Gold ozs sold excludes 6,132 ozs from Agbaou prior to commercial production
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WEST AFRICA
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Q3 2014 Reconciliation of Cash Position
US$ M
Cash - Opening Balance (June 30, 2014)
$57.1
All-in sustaining margin
•
•
As of September 30, 2014, cash
balance of $55.4 million
During Q3/2014 $15.2 million
was spent on non-sustaining
investments
Non-sustaining investments
Tabakoto, mostly mining equipment
Houndé, mostly exploration & permitting
Nzema
Agbaou, mostly exploration
Cash - Ending Balance (Sept 30, 2014)
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WEST AFRICA
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8.5
3.5
1.9
1.3
-15.2
Proceeds from promissory note repayment
Proceeds from sale of Hotopo manganese property
Financing costs and lease payments
Income and other taxes paid
Gold hedge settlement
Change in non-cash working capital and other
GOLD PRODUCER
32.1
CASH FLOW
3.4
1.0
-6.5
-1.4
-2.6
-12.5
$55.4
12
Houndé Update
•
2014 exploration program focused on strike extensions of known zones such as Vindaloo
and Madras as well as targets considered to have potential for delineation of additional
resources, including Bouéré and Dohoun (both within 14 km of proposed plant)
•
The drilling program began in June 2014 and is nearing completion
•
Assay results are currently being tabulated and updated mineral resources and reserves will
be completed for the year end and reported in Q1 2015
GOLD PRODUCER
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WEST AFRICA
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CASH FLOW
13
Update on Regional Events
Ebola
•
For the past several months, Endeavour has conducted education programs at our
mine sites and in the host communities
•
An Ebola Management Steering Group is coordinating and managing Endeavour’s
efforts across all sites
•
An Ebola Preparedness Plan is in place at each of the mines that includes temperature
screening for all employees and visitors and liaising with local, regional and national
medical authorities
Unrest in Burkina Faso
•
Protests against President Blaise Compaore started on October 28
•
Burkina Faso's military dissolved parliament and announced a plan for an election
within 90 days
•
Youga, located 180 km from Ouagadougou, has not been impacted
These events have not impacted our operations
GOLD PRODUCER
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WEST AFRICA
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CASH FLOW
14
Concluding Comments
•
Strong production in Q3 and YTD
•
Achieved below $1,000 AISC/oz in Q3; approx.
1 year after goal was set
•
Tabakoto optimization plan on track with
increase in volumes mined & milled and
decrease in operating costs – milled grade to
improve as Segala u/g mining flexibility
expands and we access Kofi C open pit ore in
January
•
Transitioning out of capital investment
programs and into free cash flow
generation
•
Anticipate using a portion of free cash flow
to reduce outstanding debt balances
GOLD PRODUCER
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WEST AFRICA
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CASH FLOW
Mining at Agbaou
15
Questions?
Neil Woodyer
CEO
Attie Roux
Christian Milau
COO
CFO
Doug Reddy
SVP Business Development
For additional information, please contact:
Doug Reddy on +1 604 609 6114
dreddy@endeavourmining.com
GOLD PRODUCER
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WEST AFRICA
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16
Appendix: Q3 2014 Cash Cost Detail by Mine
Agbaou
Mining Physicals
Total tonnes mined - Open pit
Total ore tonnes - Open pit
Total ore tonnes - Underground
Total tonnes milled
Gold sold
000t
000t
000t
000t
ozs
Unit cost analysis
Mining costs - Open pit1
Mining costs - Underground1
Processing and maintenance
Site G&A
$/t mined
$/t ore
$/t milled
$/t milled
Cash cost details
Mining costs - Open pit
Mining costs - Underground
Processing and maintenance
Site G&A
Purchased ore at Nzema
Inventory adjustments
Cash costs for ounces sold
GOLD PRODUCER
Tabakoto
Youga
Total
5,481
669
603
41,919
2,243
342
401
24,231
1,826
164
230
390
29,434
1,349
239
236
18,498
2.96
7.74
3.70
4.30
18.89
7.63
4.56
57.36
28.84
15.41
4.06
25.58
9.87
$000s
$000s
$000s
$000s
$000s
$000s
$000s
$13,182
4,666
2,227
-507
$19,567
$9,199
7,571
3,059
3,457
-1,077
$22,209
$8,323
11,526
11,251
6,013
470
$37,583
$5,478
6,047
2,333
-369
$13,490
$36,181
$11,526
$29,536
$13,633
$3,457
-$1,483
$92,849
Royalties
Sustaining capital
$000s
$000s
$1,856
$3,330
$1,706
$1,368
$2,254
$2,871
$1,002
$199
$6,817
$7,768
Cash cost per ounce sold
Mine-level AISC per ounce sold
$/oz
$/oz
$467
$590
$917
$1,043
$1,277
$1,451
$729
$794
$814
$942
$3,055
$439
$1,665
Other costs used to derive unit mining cost
Capitalized mining costs
$000s
1
Nzema
114,082
Numbers may not add due to rounding
Includes capitalized mining costs
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WEST AFRICA
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CASH FLOW
17