Endeavour Reports Record Operating Cash Flow in Q1-2020
ENDEAVOUR REPORTS RECORD
OPERATING CASH FLOW IN Q1-2020
Net Debt down $55m in Q1-2020 · Well positioned to meet FY-2020 production and AISC guidance HighlightsStrong Q1-2020 performance with production of 172koz at an AISC of $899/oz; well positioned to meet
FY- 2020 guidanceQ1-2020 production increased by 42% over Q1-2019, driven by the start-up of the Ity CIL operation, while AISC increased by 3% to $899/ozRecord Operating Cash Flow of $126m in Q1-2020, a fivefold increase over Q1-2019Net debt was reduced by $55m in Q1-2020 to $473m, marking a reduction of $187m over the past three quarters, following nearly four years of intensive growth-capital investmentHealthy Net Debt / Adjusted EBITDA (LTM) of 1.06x at quarter-end, a reduction of 64% from 2.96x at the end of Q1-2019Cash reserves of $357m at quarter-end, providing significant headroom to operate within the COVID-19 environmentAdjusted Net Earnings of $34m or $0.30/share in Q1-2020, a $39m increase compared to Q1-2019Continued exploration focus with $17m spent in Q1-2020, representing nearly 40% of the full-year budgetSEMAFO transaction Extraordinary General Shareholder Meeting on May 28 and AGM now scheduled for the first half of Q3-2020George Town, May 13, 2020 – Endeavour Mining (TSX:EDV) (OTCQX:EDVMF) is pleased to announce its financial and operating results for the first quarter of 2020, with highlights provided in the table below.Table 1: Key Operational and Financial Highlights1This is a non-GAAP measure. Refer to the non-GAAP measure section of the MD&A. 2Realized Gold Price inclusive of Karma stream; 3Realized Gold Price less AISC per ounce; 4Net revenue less All-in Sustaining Costs; 5Net revenue less All-in Sustaining Costs and Non-Sustaining capital. Sébastien de Montessus, President & CEO, commented: “We have started 2020 well with continued momentum across the business, as production and costs from all our mines track in line with our full-year guidance.To date, our operations have not been significantly impacted by COVID-19. We have implemented a business continuity plan and are working very closely with host governments to support a coordinated response in the communities where we operate. In the few instances where we had positive cases, those individuals are fully recovered and have returned to work.This quarter we are particularly pleased to have achieved a record in operating cash flow, which has enabled us to further reduce our net debt by $55 million. The additional cash will help to ensure the resilience of our balance sheet as we respond to the current operating environment and will provide us with capital allocation flexibility going forward as we place an increased focus on return on capital employed.Exploration remains a core strategic pillar and during the quarter we invested nearly 40% of our annual budget across the portfolio. Over the coming months, we expect to see the fruits of this activity as we announce resource increases for the Kari area at Houndé, the Le Plaque area at Ity, and at Fetekro. In addition, we aim to demonstrate the value created by publishing increased reserves and updated mine plans at both Houndé and Ity along with a PEA for Fetekro.As we look ahead, we are well advanced in our planning to integrate our operations with SEMAFO. We remain excited about this combination and the value that it will create for all our stakeholders.”UPCOMING CATALYSTSThe key upcoming expected catalysts are summarized in the table below.Table 2: Key Upcoming CatalystsCOVID-19 RESPONSESince the outbreak of the global COVID-19 pandemic, Endeavour has been focused on ensuring the well-being of its employees, contractors and local communities, while ensuring business continuity. In addition, host governments have taken strict and pro-active measures to minimize overall exposure.Our primary focus is protecting the well-being of employees, contractors and local communitiesEndeavour is working in close coordination with the national health authorities to implement and augment government protocols in surrounding communities.Endeavour implemented a range of preventative measures across all its sites, including social distancing, health screening, augmented hygiene and restricted access to sites.Endeavour leveraged its global supply chain, health and safety systems, community relations and communication teams to provide financial, operational and logistical support to the national, regional and local health response. Endeavour sourced and delivered key medical equipment and supplies to regional, community and on-site medical centers.Endeavour is pleased to report that its few employees who tested positive for COVID-19 in March have successfully recovered, and it has not had any new reported cases.Endeavour has developed an epidemiological surveillance system across the three countries of operations to assist with the monitoring and tracking of the pandemic in these countries.Endeavour hosted a visit by the World Health Organization in Abidjan in April to share insights.To date, Endeavour has made approximately $6 million in contributions to national and local efforts in Cote d’Ivoire, Burkina Faso and Mali, including salary donations from Endeavour’s Board and leadership team, which will mainly be incurred in Q2-2020. Business continuity response plan A business continuity program was put in place in early March 2020 to mitigate risks from the outbreak of the global COVID-19 pandemic with the following measures taken:Key expatriates returned to site before suspension of commercial airline flights and closure of borders, with shift rosters modified to ensure continuity of staffing for several months.Business operations have been reviewed and stress tested for different scenarios based on various escalations of protective measures, ranging from normal course of business (albeit with enhanced preventative measures) to care and maintenance. Intermediate strategies have been identified that would allow for production to continue, at full or reduced capacity, if a site lockdown were to become necessary.The supply chain has been assessed with measures put in place in the event that suppliers are unable to deliver. In addition, Endeavour’s shift to national suppliers over the past 12 months has mitigated the impact of closed borders.Supply inventories have been assessed with critical supplies topped up on site with available inventory through July in most cases.The ability to ship and sell gold was identified as a key risk and mitigation measures were put in place. This has enabled gold sales to continue, despite the closure of borders and suspension of commercial airline flights.As a precaution to ensure that Endeavour would have substantial liquidity and financial flexibility to operate under various stress-test scenarios, Endeavour drew down the entirety of its available revolving credit facility.Each of Endeavour’s operations are continuing to operate at normal levels with gold shipments and sales continuing, albeit with increased health and safety measures. PRODUCTION AND AISC ON TRACK TO MEET FULL-YEAR GUIDANCE
