Endeavour Mining Management Presentation

Transcription

1 Endeavour Mining Management Presentation April 2015 INTERMEDIATE GOLD PRODUCER DELIVERING PROFITABILTY

2 Disclaimer & Forward Looking Statements 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. Forward-looking 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 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 for further information respecting the risks affecting Endeavour and its business. 2

3 Company Overview A Canadian-based intermediate gold producer 4 producing mines across 4 West African countries Fully permitted Houndé project Leading West African producer 2015E production of ~500,000 ozs AISC/oz in mid-$900 range Focused on Increasing operating cash flow and profits Replacing and adding reserves & resources Using cash flow to repay debt Running a successful low-cost business EDV EVR EDVMF 3

4 Investment Case AISC/oz has declined from $1,137 in 2013 to under $1,000 in Q3+Q Track record of reducing costs and generating cash flow at current gold prices Demonstrated exploration successes that have increased reserves and extended mine lives 2P Reserves increased to 4.5Mozs (Dec 2014) from 3.0Mozs (Dec 2012) Exceeded 2014 production guidance and achieved AISC/oz cost guidance Extended credit facility to March 2020, ~3.5 years to first required repayment Built Agbaou Mine under-budget and ahead of schedule Experienced management team with successful operating and project delivery Attractive valuation compared to fundamental value and peers Market Cap: US$200M Enterprise Value: US$417M Significant growth potential from attractive low-cost Houndé project Valuation gap from peers created during 2013 gold price decline market yet to recognize Endeavour s growth and accomplishments 2014 Exploration additions of 870,000 ozs at low cost of $33/oz at mines and $13/oz at Houndé Updated Houndé Feb % reserves to 2.1 Mozs IRR of 31% at $1,250 4

5 Leading Intermediate Producer in West Africa Seniors Intermediates & Junior Producers Based on Company reports. AngloGold Ashanti and IAMGOLD presented on an attributable ounce basis for JV interests. West African gold production only. 5

6 With Near-term Production Growth +700,000 ozs Houndé: FS in 2013, fully permitted, potential mid-2017 production Expect to finance from cash flow, corporate credit facility, and leasing of mining fleet Agbaou: FS in 2012, construction and start up in 2013, low-cost operations Tabakoto: 3 rd acquisition, mill expanded, converted to owner mining, improved mill feed 80,000 ozs Nzema: 2 nd acquisition, recapitalized Youga: 1 st acquisition, great performer, now a mature mine 6

7 Growing Mineral Reserves Reserve additions of 2.3Mozs over 2013 & 2014 During 2014: $2.1M at Agbaou, exploration additions almost all oxides $9.2M at Tabakoto, drilling below development is successfully upgrading Inferred $6.7M at Houndé, 34% increase in reserves at only $13 per discovered ounce MINERAL RESERVES & RESOURCES 1 As of: 2P Reserves Resources (M&I) Dec 31, Mozs at 2.3 g/t 7.9Mozs at 2.0 g/t Dec 31, Mozs at 2.3 g/t 7.2Mozs at 1.9 g/t Dec 31, Mozs at 2.5 g/t 7.8Mozs at 1.9 g/t MINERAL RESERVES Mining Depletion & Reserve Additions 2015 program: $15M focused at Agbaou and Tabakoto 1 Mineral Resources and Reserves available at 7

8 2015 AISC Guidance and Margin at $1,200/oz 2015 guidance of 475,000 to 500,000 ozs at AISC/oz of $930 to $980 At $1,200 gold, approx. $100 million of free cash flow Significant declines in fuel costs and FX rates lead to savings Fuel cost saving of ~$60/oz at Tabakoto FX savings of ~$50/oz (all production) Combined 2015 cost savings of $30 to $35 million 2015 AISC Margin and Free Cashflow (US$ million, forecast) Revenue $585 Less: AISC Costs ($930-$980/oz) 465 All-in sustaining margin (mid-guidance) 120 Add: 2015 fuel and FX cost savings 30 to 35 All-in sustaining margin (adjusted) 150 to 155 Non-sustaining capital: Projects include completion of Kofi C open pit access (Q1 2015) and Cement Rock Fill (CRF) plant for Segala (Q1 2015) Non-sustaining exploration 15 Free cash flow (before tax & financing) $130 to 135 Less: Interest costs -22 Less: Tax Free cash flow Approx. $100 8

9 Low Operating and Corporate Costs AISC/ounce Cost trend versus Medium Producer AISC CORPORATE EFFICIENCY RATIO 2 Peer 2014 G&A and share-based compensation (US$ million) % of 2014 gross revenue $ per 2014 ounce sold ($/Au-eq oz) Centamin $12 2.5% $31 Endeavour $23 3.9% $49 Acacia $41 4.4% $58 New Gold $33 4.5% $56 Centerra $35 4.6% $56 Golden Star $16 5.0% $63 $ E Guidance $930 Oceanagold $35 6.1% $79 Teranga $17 6.3% $80 SEMAFO $21 7.1% $90 Aurico $26 8.9% $114 Alamos $16 9.6% $122 Dundee Prec. $ % $136 Running a low cost business by reducing AISC/oz and efficient Corporate G&A cost structures Perseus $ % $122 B2Gold $ % $140 Primero $ % $167 * Mid-point of 2015 AISC/oz guidance of $930-$980, including potential FX and fuel cost savings estimated at $30-$35 million 1 Source: BMO Capital Markets Gold Pages, 30 March 2015 Medium Producers (production in 2014 >200kozs) 2 Based on company reports; 12 months ended December 31,

10 Commitment to Strong Capitalization $300 million drawn on $350 million credit facility ( RCF ) Maintained significant covenant headroom, even during Agbaou construction The RCF with cash flow from operations and mining fleet equipment leasing, provides expectation to internally fund construction of Houndé with a start date in early 2016 Agbaou construction period Potential Houndé construction period The leverage ratio forecast continues to improve at $1,100 gold price, if we delay Houndé construction Debt maturity is long-dated to March 2020 with no repayment for ~3.5 years Regardless of strong debt position, we will reduce debt during 2015 from free cash flow Without Houndé and $1,100/oz Incl. Houndé and $1,250/oz (Q1/2016 construction) Note: Actual Leverage Ratio based on bank compliance certificate values, which include adjustments such that they may not agree with ratios calculated from Financial Statement values. Forecast Leverage Ratio based on Management projections. 10

11 Agbaou Mine A construction and operating success story Demonstrated strong, sustained performance in 2014 Produced 146,757 ozs Cash cost of $523/oz AISC of $621/oz Strong cash flow generator Successful resource definition program 2014 replaced mined ounces and extended life Expanded West pit and identified opportunity to southwest Easy-milling oxides now 50% of reserves Successful 2014 exploration continues in

12 Tabakoto Mine Investment phase completed Three sources of lower cost ore New Kofi C open pit commenced production in January 2015 Tabakoto plant at sustainable levels above 4,000 tonnes per day Demonstrating potential for steady replacement of reserves 2014 net gain in 2P reserves Drilling below development upgrading Inferred 12

13 Project IRR Developing the Houndé Project 70% 34% increase in reserves in Dec 2014 Received mining permit in Feb 2015 Updated mine plan and economics: 2P Reserve 1 of 2.1 million ozs at 2.1 g/t 240,000 ozs/yr for first 3 years with 10 year mine life Upfront capital of $325M including owner mining fleet ($55 million) At $1,250/oz gold price: AISC/oz of $714 IRR 31.4% (after tax) NPV 5% $359 million (after tax) Houndé ranks in the top tier of West African projects 1 See Appendix for details on Houndé Reserves 60% 50% 40% 30% 20% 10% 0% Bombore (Orezone) Kiaka 2 (B2Gold) Mako 3 (Toro) Esaase (Asanko) PEA/PFS Yanfolila (Hummingbird) Houndé FS Houndé PEA Feasibility Study Peer Projects Fekola (B2Gold) Yaramoko (Roxgold) Houndé Updated 2014 Mine Plan Permitted Karma (True Gold) Asanko Phase 1 (Asanko) In Construction New Liberty (Aureus) Otjikoto 1 (B2Gold) Reserves Resources Production Sourced from Company reports with Project IRRs at $1,300 and after-tax as most commonly disclosed with exceptions noted as: 1 Otjikoto IRR at $1,350/oz and pre-tax 2 Kiaka IRR $1,372/oz and pre-tax 3 Toro IRR is pre-tax 13

14 Current Valuation and Analyst Views Enterprise Value Share price (April 1, 2015) C$0.61 Shares outstanding Market capitalization 1 (US$M) 200 Less: Cash 2 62 Plus: Long-term debt Plus: Minority interest 2 (21) Enterprise value (US$M) EBITDA 2 (US$M) AISC Margin 2 (US$M) 117 EV / 2014 EBITDA 2.9 times Peer average times EV / 2P reserve ounce $93 Peer average 3 $152 EV / resource ounce (M&I) $53 Peer average 3 $131 Analyst Coverage (March 31, 2015) BMO Capital Markets Andrew Breichmanas C$0.75 Canaccord Genuity Rahul Paul C$1.50 CIBC World Markets Leon Esterhuizen C$1.70 Clarus Securities Nana Sangmuah C$1.75 GMP Securities Brock Salier C$1.30 Haywood Securities Tara Hassan C$1.30 Pareto Securities John McClintock C$1.19 Patersons Securities Matthew Trivett A$0.88 Peel Hunt Michael Stoner C$0.87 Raymond James Chris Thompson C$1.00 UBS Jo Battershill A$1.10 CONSENSUS PRICE OBJECTIVE Potential for +100% investment gains C$1.21 Analyst coverage sourced from Bloomberg. Peel Hunt sourced by author. This list is provided for informational purposes only. The opinions, estimates, forecasts or any analysis do not represent opinions, forecasts or analyses of Endeavour Mining Corporation or its Management. Endeavour Mining Corporation does not by its reference above imply any endorsement of or concurrence with such opinions, estimates or forecasts. AUD/CAD conversion rate of CAD-USD exchange rate of Cash, long-term debt, minority interest and adjusted EBITDA based on FY December 31, 2014 financial statements 3 Source: BMO Capital Markets Gold Pages, 30 March 2015 Medium Producers (production in 2014 >200kozs) 14

15 Summary 5 key objectives for 2015 Produce 475,000 to 500,000 ounces Maintain AISC/oz below $1,000 To be profitable Use free cash flow to reduce debt To extend mine life through exploration success Positioned for a value re-rating 15

16 Appendices 2015 Production and AISC/oz Guidance by Mine Share Price Since 2013 and Subsequent Accomplishments Board of Directors Management Endeavour s Operating Mines Summary Table FY 2014 Cash Cost Detail by Mine Resources and Reserves Company Profile 16

17 2015 Production and AISC/oz Guidance by Mine Production Guidance Range (ozs) AISC/oz Guidance Range ($/oz) Agbaou 150, ,000 $690 - $740 Nzema 110, ,000 $1,000 - $1,050 Tabakoto 155, ,000 $950 - $1,000 Youga 60,000-65,000 $975 - $1, , ,000 $833 - $933 Plus: Corporate G&A (~$18 million) $37 Plus: Exploration (sustaining) & Other (~$5 million) $10 $930 - $980 17

18 Share Price Since 2013 and Subsequent Accomplishments 2013 Today Gold price $1,700/oz $1,183/oz $1,140/oz EDV share price $2.05 Near-term objective $1.07 # of mines Houndé project 3 and building Agbaou mine FS in progress, unpermitted 4 Fully permitted; 2P reserve 2.1 Mozs; 10 year mine life Production 324,275 ozs ,000 ozs AISC/oz (US$) $1,137 < $1,000 in Q3+Q P Reserves 3.0Mozs at 2.5 g/t 1 4.5Mozs at 2.3 g/t 2 M&I Resources 7.8Mozs at 1.9 g/t 1 7.9Mozs at 2.0 g/t 2 $0.58 Long-term debt $300M drawn, July 2018 maturity, first repay Jan 2016 $300M drawn, March 2020 maturity, first repay Sept 2018 $0.38 Cash flow Funding major capex programs 2015 non-sustaining capex only $20m; free cash to reduce debt Share price $0.56 (June ) $0.58 Issued shares million million Market data sourced from Bloomberg LP, last data point: March 31, 2015 Significant valuation gap created during 2013 gold price decline Since June 2013, Endeavour s share price highly correlated to the market (S&P TSX Global Gold Index shown) Market yet to recognize Endeavour s growth and accomplishments 1 As of Dec 31, 2012, M&I resources include 2P reserves 2 As of Dec 31, 2014, M&I resources include 2P reserves 18

19 Board of Directors Michael Beckett, Chairman Former Chairman, Ashanti Goldfields and former MD, Consolidated Gold Fields Ian Cockerill Extensive African mining experience, Former CEO, Gold Fields Frank Giustra Founder: Wheaton River, Silver Wheaton and Pacific Rubiales; Former CEO, Yorkton Securities Ian Henderson Former Managing Director and natural resources fund manager, JP Morgan Wayne McManus Accounting professor: CPA, CFA, LLM in taxation Miguel Rodriguez Former President Venezuela Central Bank; former Governor of IMF, World Bank and IADB Neil Woodyer, CEO Founded Endeavour in 1988; former mining banker/advisor 19

20 Management Neil Woodyer, CEO Founder of Endeavour, 30+ years experience in natural resources Project financed and advised on the acquisition of over 30 mines Attie Roux, COO Built / commissioned Nzema processing plant 34 years as metallurgist at AngloGold Ota Hally, CFO Chartered Accountant and Chartered Financial Analyst Previous experience with Pan American Silver Doug Bowlby, EVP Corporate Development Chartered Financial Analyst with corporate finance and M&A background 19 years experience with mining transactions & growth plans Jeremy Langford, EVP Construction Services Mechanical engineer with 10+ years experience Built Agbaou, Nzema and Sabodala gold mines Richard Thomas, EVP Technical Services 20+ years experience in open pit and underground mining Previously VP Mining for Continental Africa for AngloGold Doug Reddy, SVP Business Development Geologist with 30+ years exploration and mining experience Manages relationships with analysts and institutional investors 20

21 Endeavour s Operating Mines Summary Table Resources (incl. Reserves, 100%) Agbaou Gold Mine (85% Endeavour, 10% Côte d Ivoire, 5% SODEMI) M&I: 2.5 g/t for 1.109Moz Inferred: 2.3 g/t for 0.154Moz Nzema Gold Mine (90% Endeavour, 10% Ghana) M&I: 1.3 g/t for 1.590Moz Inferred: 1.3 g/t for 0.311Moz Reserves (100%) 2.5 g/t for 0.926Moz 2.1 g/t for 0.496Moz Strip Ratio 8 to 1 (2015); 11 to 1 LOM 6.2 to 1 (2015); 5.6 to 1 LOM Tabakoto Gold Mine (80% Endeavour, 20% Mali) (Kofi: 90% Endeavour, 10% Mali) M&I: 3.0 g/t for 1.839Moz Inferred: 2.8 g/t for 1.582Moz 3.7 g/t for 0.807Moz (~65% 3.9 g/t) Tabakoto & Segala U/G: N/A Kofi B: 6 to 1 LOM Kofi C: 10 to 1 LOM Youga Gold Mine (90% Endeavour; 10% Burkina Faso) Youga & Ouaré M&I: 1.5g/t for 0.812Moz Inferred: 1.6g/t for 0.141Moz 1.8g/t for 0.202Moz 4.0 to 1 (2015); 4.2 to 1 LOM Processing Rate Met. Recovery Production Cash Costs ($/oz) Up to 2.2 Mtpa Gravity/CIL plant - oxides; 1.6 Mtpa fresh ore Achieving 97% at present; 92.5% design ,757 ozs 2015e 150,000 to 155,000 ozs 2014 $ to 2.1 Mtpa Gravity/CIL plant 1.4 Mtpa Gravity/CIL plant 1.0 Mtpa Gravity/CIL plant 91% to 75% depending on ore type 92% - 95% 94% ,464 ozs ,129 ozs 2015e 110,000 to 115,000 ozs $ $ ,301 ozs ,231 ozs ,323 ozs 2015e 155,000 to 165,000 ozs $ $1, ,448 ozs ,561 ozs 2015e 60,000 to 65,000 ozs $ $742 All-in Sustaining Costs (Mine Level) 2014 $621/oz 2015e $690 - $740/oz $1,036/oz 2015e $1,000 - $1,050/oz 2014 $1,335/oz 2015e $950 - $1,000/oz $824/oz 2015e $975 - $1,025/oz Expected Mine Life 7 years from current Reserves 5 years from current Reserves 5 years from current Reserves 2 years at current grade (potential for 5 years with satellite deposits and Ouaré) Royalty 3% - 5% sliding scale 5% (+1% 3 rd party at Adamus pits) 6% 3% - 5% sliding scale Corporate Tax 25% (5 year corporate tax holiday) 35% 25% 17.5% 21

22 FY 2014 Cash Cost Detail by Mine Agbaou Nzema Tabakoto Youga Total Mining Physicals Total tonnes mined - Open pit 000t 19,560 8,769 7,046 4,993 Total ore tonnes - Open pit 000t 2,741 1, ,161 Total ore tonnes - Underground 000t Total tonnes milled 000t 2,241 1,587 1, Gold sold ozs 143, , ,357 76, ,757 Unit cost analysis Mining costs - Open pit 1 $/t mined Mining costs - Underground 1 $/t ore Processing and maintenance $/t milled Site G&A $/t milled Cash cost details Mining costs - Open pit $000s $46,395 $34,821 $32,035 $24,887 $138,138 Mining costs - Underground $000s ,956-40,956 Processing and maintenance $000s 17,175 28,410 44,696 24, ,303 Site G&A $000s 8,601 12,491 26,164 10,783 58,039 Purchased ore at Nzema $000s - 24, ,409 Inventory adjustments $000s 2, ,376 (2,882) 5,725 Cash costs for ounces sold $000s $75,170 $100,362 $149,227 $56,810 $381,570 Royalties $000s $6,399 $8,014 $9,665 $4,229 $28,307 Sustaining capital $000s $7,650 $9,795 $11,078 $2,057 $30,580 Cash cost per ounce sold $/oz $523 $880 $1,172 $742 $826 Mine-level AISC per ounce sold $/oz $621 $1,036 $1,335 $824 $954 Other costs used to derive unit mining cost Capitalized mining costs $000s $4,609 $5,147 $5,759 - Numbers may not add due to rounding 1 Includes capitalized mining costs and partial year of lower cost owner-mining 2 Excludes pre-commercial production 22

23 Mineral Reserves as at December 31, 2014 Reserves Mine / Project Proven Probable Proven & Probable Gold Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces Price Mt g/t k Ozs Mt g/t k Ozs Mt g/t k Ozs US$/oz Nzema 1 - Total US$ 1,350 Attributable - 90% Youga 2 - Total US$ 1,250 Attributable - 90% Agbaou 3 - Total US$ 1,350 Attributable - 85% Tabakoto 4 Total US$ 1,350 Attributable 80%-90% Houndé 5 Total , ,073 US$ 1,300 Attributable - 90% 266 1,602 1,866 Total 1,258 3,247 4,503 Total Attributable 1,098 2,856 3,952 Note: Percent attributable at Tabakoto Kofi is weighted by contribution to reserves. Notes to Mineral Resources and Reserves available at 23

24 Mineral Resources as at December 31, 2014 Mine / Project Resources (including reserves) Measured Indicated Measured & Indicated Inferred Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces Mt Au g/t koz Mt Au g/t koz Mt Au g/t koz Mt Au g/t koz Au g/t Nzema 1 - Total , , Attributable - 90% , Youga 2 - Total Attributable - 90% Agbaou 3 - Total , Attributable - 85% Tabakoto 4 - Total , , , to 1.5 Attributable 80%-90% 433 1,110 1,543 1,315 Houndé 5 - Total , , Attributable - 90% 274 2,017 2, Lower cutoff Total 2,446 5,449 7,896 2,462 Total Attributable 2,146 4,792 6,938 2,099 Note: Percent attributable at Tabakoto Kofi is weighted by contribution to resources. Notes to Mineral Resources and Reserves available at 24

25 Company Profile Share Price (March 31, 2015) Balance Sheet (December 31, 2014) Recent Share Price Market Cap CDN$0.58 AUD$0.60 CDN$240 million Cash position Drawn down from $350 million debt facility $62 million $300 million Av. daily shares in March 2015 Canada TSX:EDV Australia ASX:EVR USA OTCQX:EDVMF Capitalization Summary (March 31, 2015) 2.9 million 0.3 million 0.1 million Shares in Issue 413,143,668 Options 30,796,868 Top Shareholders (million of shares) 1 Van Eck Associates 31.9 Ruffer Investment Management 18.4 Fidelity Management 8.3 Sprott Asset Management 7.5 Frank Giustra, Non-executive Director Warrants none JP Morgan Asset Management 5.3 Fully Diluted 443,940,536 Shareholder Base Institutions 60-65% Retail 25-35% Insiders/Management 3% Dimensional Fund Advisors 1.9 Wells Fargo Management 1.1 AGF Precious Metals Fund 1.1 Neil Woodyer, CEO and Director Source from Bloomberg LP, as of March 31, Includes 1,500,000 Endeavour shares held by Radcliffe Foundation, a charitable foundation 3 Ashdell Ltd., a company beneficially owned by a Woodyer family trust holds 2.8 million Endeavour shares 25

26 Neil Woodyer, CEO Doug Reddy, SVP Business Development