TIDMEDV
EAVOUR REPORTS STRONG Q3-2021 RESULTS
WELL POSITIONED TO BEAT FULL YEAR PRODUCTION GUIDANCE
OPERATIONAL AND FINANCIAL HIGHLIGHTS
-- Q3-2021 production of 382koz at an AISC of $904/oz;
YTD production of 1,138koz at an AISC of $875/oz
-- Group is well positioned to beat FY-2021 production
guidance of 1,365-1,495koz at AISC within $850-900/oz
guidance
-- Adjusted Net Earnings of $153m or $0.61/share in
Q3-2021; $429m or $1.81/share year to date
-- Operating Cash Flow before working capital of $326m
or $1.30/share in Q3-2021; $875m or $3.69/share year
to date
-- Healthy balance sheet at quarter-end with Net Debt of
$70m, despite having returned $105m to shareholders,
and Net Debt to adjusted EBITDA leverage ratio of
0.05x
SHAREHOLDER RETURNS PROGRAMME
-- Payment of H1-2021 interim dividend of $70m on 28
September 2021; well positioned to deliver more than
the minimum committed dividend of $125m for the full
year
-- Share buybacks continue to supplement shareholder
returns with a total of $94m of shares repurchased
since April 2021, $35m of which were repurchased in
Q3-2021
ORGANIC GROWTH
-- Construction of Sabodala-Massawa Phase 1 expansion on
schedule for completion by year-end; DFS underway for
Sabodala-Massawa Phase 2 expansion, Fetekro and
Kalana projects
-- Group on track to discover over 2.5Moz of Indicated
resources in 2021 with resource updates expected to
be published in in Q4-2021; Group is targeting to
discover 15-20Moz of Indicated resources over next 5
years
London, 11 November 2021 -- Endeavour Mining plc (LSE:EDV,
TSX:EDV, OTCQX:EDVMF) ('Endeavour' or the 'Group' or the 'Company')
is pleased to announce its operating and financial results for
Q3-2021, with highlights provided in Table 1 below. Management will
host a conference call and webcast on Thursday 11 November, at 8:30
am ET / 1:30 pm GMT. For instructions on how to participate, please
refer to the conference call and webcast section at the end of the
news release.
Table 1: Consolidated Highlights(1)
All amounts in US$
million, unless
otherwise stated THREE MONTHSED NINE MONTHSED
<DELTA>
30 30 30 30 30 YTD-2021
September June September September September vs.
2021 2021 2020 2021 2020 YTD-2020
OPERATING DATA
Gold Production,
koz 382 409 244 1,138 565 +101%
All-in Sustaining
Cost(2) , $/oz 904 853 906 875 911 (4)%
Realised Gold
Price, $/oz 1,763 1,791 1,841 1,769 1,714 +3%
--------- ----- --------- --------- --------- --------
CASH FLOW FROM
CONTINUING
OPERATIONS(3)
Operating Cash Flow
before Changes in
WC 326 286 195 875 366 +139%
Operating Cash Flow
before Changes in
WC(2) , $/sh 1.30 1.13 1.20 3.69 2.85 +29%
Operating Cash Flow 312 300 182 819 335 +144%
Operating Cash
Flow(2) , $/sh 1.25 1.19 1.12 3.46 2.61 +33%
PROFITABILITY FROM
CONTINUING
OPERATIONS(3)
Net Earnings
Attributable to
Shareholders(2) 114 127 52 327 30 +990%
Net Earnings per
Share, $/sh 0.45 0.50 0.32 1.38 0.24 +475%
Adjusted Net
Earnings
Attributable to
Shareholders(2) 153 183 81 429 154 +179%
Adjusted Net
Earnings per
Share(2) , $/sh 0.61 0.73 0.49 1.81 1.20 +51%
EBITDA(2) 344 363 203 1,041 327 +218%
Adjusted EBITDA(2) 370 400 225 1,076 432 +149%
--------- ----- --------- --------- --------- --------
SHAREHOLDER RETURNS
Shareholder
dividends paid 70 -- -- 130 -- n.a.
Share buyback
(commenced in
Q2-2021) 35 59 -- 94 -- n.a.
--------- ----- --------- --------- --------- --------
FINANCIAL POSITION
HIGHLIGHTS
Net Debt/(Net
Cash)(2) 70 77 175 70 175 (60)%
Net (Cash)/Debt /
Adjusted EBITDA
(LTM) ratio(2,4) 0.05 0.07 0.29 0.05 0.29 (83)%
--------- ----- --------- --------- --------- --------
(1) All amounts include Teranga assets from 10 February
2021 and SEMAFO assets from 1 July 2020. (2) This
is a non-GAAP measure. Refer to the non-GAAP measure
section of the Management Report. (3) From Continuing
Operations excludes the Agbaou mine which was divested
on 1 March 2021. (4) LTM means last twelve months.
Sebastien de Montessus, President and CEO, commented: "Following
a strong third quarter performance, we are on track to achieve a
record year. We are now well positioned to beat the top end of our
1.5Moz full year production guidance at an AISC within the guided
range.
Given this strong performance we expect to generate well in
excess of $1 billion in operating cash flow for the full year,
which has already significantly improved our balance sheet strength
and bolstered our ability to reward shareholders.
Having already returned $224 million in dividends and share
buybacks this year, and considering our near zero Net Debt to
adjusted EBITDA leverage ratio, we expect to continue to supplement
our shareholder return programme with further share buybacks and
deliver more than the guided minimum dividend of $125 million for
the full year.
Our growth pipeline continues to develop with the
Sabodala-Massawa phase 1 expansion on track for completion in
Q4-2021. Additionally, our Definitive Feasibility Studies are
progressing well for the Sabodala-Massawa Phase 2 expansion, the
Fetekro and Kalana projects.
We continue to demonstrate exploration success, with the Group
on track to delineate over 2.5 million ounces of Indicated
resources in 2021, significantly more than the expected annual
depletion. Looking forward, we expect to unlock significant
additional value by delivering on our recently published 5-year
exploration strategy targeting the discovery of 15 to 20 million
ounces of Indicated resources.
Following our successful listing on the premium-segment of the
London Stock Exchange in June, we were pleased to enter the FTSE
indexes in September which positions us well to attract a wider
investor pool.
There is strong momentum across our business and we look forward
to continuing to drive our strategy forward."
ON TRACK TO BEAT FY-2021 PRODUCTION GUIDANCE
-- Strong year to date production of 1,138koz at an AISC of $875/oz
positions the Group well to beat the top end of its FY-2021 production
guidance of 1,365-1,495koz at an AISC within its guidance of $850-900/oz.
-- Group outperformance is led by the Houndé, Ity, Sabodala-Massawa and
Mana mines where full year production is expected to be near or above the
top end of their respective guidances, while the other mines are tracking
within guidance. In addition, the Company is benefiting from the
successful rapid integration of the Teranga Gold assets and associated
synergies.
Table 2: YTD-2021 Performance vs. FY-2021 Guidance
YTD-2021 2021 FULL YEAR GUIDANCE
--------
Production, koz 1,138 1,365 -- 1,495
AISC, $/oz 875 850 -- 900
-------- ---------- ---- ---------
UPCOMING CATALYSTS
The key upcoming expected catalysts are summarised in the table
below.
Table 3: Key Upcoming Catalysts
TIMING CATALYST
Q4-2021 Exploration Resource updates at Sabodala-Massawa, Houndé,
Ity and Fetekro
Q4-2021 Sabodala-Massawa Completion of Phase 1 plant upgrades
Q1-2022 Sabodala-Massawa Completion of Definitive Feasibility Study for Phase
2
Q1-2022 Fetekro Completion of Definitive Feasibility Study
Q1-2022 Shareholder H2-2021 dividend
Returns
Q1-2022 Kalana Completion of Definitive Feasibility Study
--------- ------------------
SHAREHOLDER RETURNS PROGRAMME
-- As disclosed on 7 June 2021, Endeavour has implemented a shareholder
returns programme that is composed of a minimum progressive dividend that
may be supplemented with additional dividends and buybacks, provided the
prevailing gold price remains above $1,500/oz and that Endeavour's
leverage remains below 0.5x Net Debt / adjusted EBITDA.
-- Endeavour paid its previously announced H1-2021 interim dividend of $70
million on 28 September 2021, highlighting its strong commitment to
paying supplemental shareholder returns.
-- Shareholder returns have also been supplemented through the Company's
share buyback programme. A total of $94 million or 4.15 million of shares
have been repurchased since the start of the buyback programme on 9 April
2021, of which $35 million or 1.48 million shares were repurchased in
Q3-2021.
FTSE RUSSELL INDEXATION
-- Following the completion of Endeavour's premium listing on the London
Stock Exchange ("LSE") on 14 June 2021, positioning the Company as the
largest pure-play gold producer listed on the premium segment of the LSE,
Endeavour was assigned UK nationality status on 9 August 2021 by the FTSE
Russell group for indexation purposes.
-- Subsequent to the successful nationality and liquidity review period,
Endeavour was included in the FTSE All Share, FTSE 250, FTSE 350 and FTSE
350 Lower Yield indexes as part of the FTSE Q3-2021 rebalancing, which
became effective on 20 September 2021.
CASH FLOW AND LIQUIDITY SUMMARY
The table below presents the cash flow and Net Debt position for
Endeavour for the three and nine month period ending 30 September
2021, with accompanying notes below.
Table 4: Cash Flow and Net Debt Position
THREE MONTHSED NINE MONTHSED
30 30 30 30
September 30 June, September September September
In US$ million unless otherwise specified 2021 2021 2020 2021 2020
----------- ---------- ----------- ----------- -----------
Net cash from (used in), as per cash flow statement:
Operating cash flows before changes in working capital
from continuing operations 326 286 195 875 366
Changes in working capital (14) 15 (13) (56) (30)
Cash generated from/(used by) discontinued operations -- -- 19 (9) 49
------ ------ ------ ------ ------
Cash generated from operating activities [1] 312 300 201 810 385
Cash (used in)/generated from investing activities [2] (137) (137) 42 (379) (64)
Cash (used in)/generated from financing activities [3] (233) (192) (74) (360) 10
Effect of exchange rate changes on cash (15) (7) 3 (25) 3
------ ------ ------ ------ ------
(DECREASE)/INCREASE IN CASH (73) (35) 172 46 333
------ ------ ------ ------ ------
Cash position at beginning of period 833 868 352 715 190
------ ------ ------ ------ ------
CASH POSITION AT OF PERIOD [4] 760 833 523 760 523
---- ------ ------ ------ ------ ------
Equipment financing -- -- (58) -- (58)
Convertible senior bond (330) (330) (330) (330) (330)
Drawn portion of corporate loan facility [5] (500) (580) (310) (500) (310)
---- ------ ------ ------ ------ ------
NET DEBT POSITION [6] 70 77 175 70 175
---- ------ ------ ------ ------ ------
Net Debt / Adjusted EBITDA (LTM) ratio(1) [7] 0.05 x 0.07 x 0.29 x 0.05 x 0.29 x
---- ------ --- ------ ------ --- ------ --- ------ ---
(1) Net Debt and Adjusted EBITDA are Non-GAAP measures. Refer to
the non-GAAP measure section of the Management Report.
NOTES:
1) Operating cash flows increased by $11.4 million from $300.5
million (or $1.19 per share) in Q2-2021 to $311.9 million (or $1.25
per share) in Q3-2021 mainly due to less income taxes paid and less
foreign exchange losses incurred, which was offset slightly by
lower gold sales at a lower realised gold price and a decrease in
working capital. Operating cash flow before working capital
increased by $40.2 million from $285.7 million (or $1.13 per share)
in Q2-2021 to $325.9 million (or $1.30 per share) in Q3-2021.
Notable variances are summarised below:
-- Income taxes paid decreased by $51.0 million over Q2-2021 to $55.5
million in Q3-2021, as higher income taxes paid in Q2-2021 were
reflective of the timing of provisional payments for 2021 based on full
year 2020 earnings and the tax payments upon filing of the 2020 tax
returns.
-- Gold sales decreased by 28koz over Q2-2021 to 392koz in Q3-2021 due to
lower ounces produced and sold at the Ity, Wahgnion and Karma mines. The
realised gold price for Q3-2021 was $1,763/oz compared to $1,791/oz for
Q2-2021. Total cash cost per ounce increased from $729/oz in Q2-2021 to
$743/oz in Q3-2021 due to higher costs at the Ity, Mana, Wahgnion and
Karma mines.
-- Working capital decreased by $14.0 million in Q3-2021 mainly due to a
decrease in accounts payable at Boungou, Ity and Mana, which was
partially offset by a decrease in inventories resulting from the
unwinding of the fair value adjustment to stockpiles at the
Sabodala-Massawa and Wahgnion mines recognised upon acquisition. There
was also a decrease in inventory stockpiles and finished good balances at
Houndé, Ity, Sabodala-Massawa and Wahgnion.
-- Acquisition and restructuring costs decreased by $12.7 million to $1.8
million in Q3-2021 from $14.5 million in Q2-2021, related to the Teranga
acquisition and integration as well as restructuring costs
2) Cash flows used by investing activities of $136.8 million in
Q3-2021 remained consistent with the prior quarter. Sustaining and
growth capital expenditures increased while non-sustaining capital
expenditure decreased slightly, as described below:
-- Sustaining capital from continuing operations increased by $13.0 million
from $41.5 million in Q2-2021 to $54.5 million in Q3-2021 due to higher
sustaining capital at Houndé, Sabodala-Massawa and Wahgnion
primarily due to planned waste capitalisation.
-- Non-sustaining capital from continuing operations decreased from $58.3
million in Q2-2021 to $41.5 million in Q3-2021, due to decreases at
Houndé, Ity, Karma, Mana and Wahgnion mainly due to a reduction in
TSF raise construction and reduced pre-stripping activities, which were
partially offset by increases at Boungou due to pre-stripping and at
Sabodala-Massawa due to relocation activities and infrastructure
developments.
-- Growth capital spend decreased by $1.7 million from Q2-2021 to $10.9
million in Q3-2021 and primarily relates to the Sabodala-Massawa Phase 1
expansion with the remainder for ongoing Definitive Feasibility Studies
("DFS") studies
3) Cash flows used by financing activities increased by $41.1 million from $191.8 million in Q2-2021 to $232.9 million in Q3-2021, mainly due to minority and shareholder dividends paid of $99.8 million, and higher interest payments of $12.6 million, offset by a lower net repayment of long-term debt of $80.0 million than the previous quarter and a lower amount paid towards the buyback of the Company's own shares of $34.6 million for the quarter.
4) At quarter-end, Endeavour's liquidity remained strong with $760.4 million of cash on hand and $300.0 million undrawn of the revolving credit facility.
5) Endeavour's corporate loan facilities were increased from $430.0 million to $800.0 million in Q1-2021 to retire Teranga's various higher cost debt facilities. In Q3-2021, $80.0 million was repaid on the facility with $500.0 million drawn on the facility at quarter-end. Following the quarter-end, Endeavour restructured its debt, as described in the below "Debt Refinancing Activity" section.
6) Net Debt amounted to $69.6 million at quarter-end, a decrease of $7.5 million during the quarter despite shareholder dividend payments of $70.0 million and $34.6 million of shares repurchased. Net Debt increased by $144.3 million compared to the beginning of the year as approximately $332.0 million of Net Debt was absorbed from Teranga in Q1-2021.
7) The Net Debt / Adjusted EBITDA (LTM) leverage ratio ended the quarter at a healthy 0.05x, down from 0.07x in Q2-2021, and well below the Company's long-term target of less than 0.50x, which provides flexibility to continue to supplement its shareholder return programme while maintaining headroom to fund its organic growth. The ratio has improved by 83% from the corresponding period last year when the ratio stood at 0.29x.
DEBT REFINANCING ACTIVITY
-- On 14 October 2021, the Company completed an offering of $500.0 million
fixed rate senior notes (the "Notes") due in 2026 with a 5.00% annual
coupon paid semi-annually. The Company also entered into a new $500.0
million unsecured RCF agreement due in 2025 with an interest rate between
2.40 - 3.40% plus LIBOR depending on leverage (the "New RCF") with a
syndicate of international banks. The proceeds of the Notes, together
with the Group's available cash, were used to repay all amounts
outstanding under the Company's existing loan facilities and to pay fees
and expenses in connection with the offering of the Notes. The New RCF
will replace the bridge facility and existing RCF, which was cancelled
upon completion of the Notes offering.
-- The New RCF and Notes will extend the maturities of the Company's
existing debt structure, while providing enhanced financial flexibility
and ample liquidity headroom.
-- As part of the bond issuance process, Endeavour received issuer and bond
ratings from S&P and Fitch of BB- stable and BB stable, respectively.
EARNINGS FROM CONTINUING OPERATIONS
The table below presents the earnings and adjusted earnings for
Endeavour for the three and nine month period ending 30 September
2021, with accompanying notes below.
Table 5: Earnings from Continuing Operations
THREE MONTHSED NINE MONTHSED
30 September 30 June 30 September 30 September 30 September
2021 2021 2020 2021 2020
------------ ------- ------------ ------------ --------------
Revenue [8] 692 753 435 2,081 871
Operating expenses [9] (257) (278) (166) (789) (346)
Depreciation and depletion [9] (157) (158) (115) (447) (194)
Royalties [10] (43) (44) (30) (131) (60)
----- ------------ ------- ------------ ------------ ------------
Earnings from mine operations 235 273 123 715 271
------------ ------- ------------ ------------ ------------
Corporate costs [11] (12) (16) (5) (42) (15)
Acquisition and restructuring costs [12] (2) (15) (19) (29) (26)
Share-based compensation (7) (10) (7) (25) (14)
Exploration costs (3) (6) (1) (19) (4)
------------ ------- ------------ ------------ ------------
Earnings from operations 211 227 91 600 212
------------ ------- ------------ ------------ ------------
(Loss)/gain on financial instruments [13] (20) (15) (26) 7 (101)
Finance costs (15) (14) (12) (41) (36)
Other (expense)/income (3) (7) 23 (14) 23
------------ ------- ------------ ------------ ------------
Earnings before taxes 173 191 75 553 98
------------ ------- ------------ ------------ ------------
Current income tax expense [14] (40) (44) (53) (157) (72)
Deferred income tax (expense)/recovery -- 2 41 (4) 34
Net comprehensive earnings/(loss) from continuing
operations [15] 133 149 64 392 61
-------------------------------------------------------------- ----- ------------ ------- ------------ ------------ ------------
Add-back adjustments [16] 41 59 24 112 120
----- ------------ ------- ------------ ------------ ------------
Adjusted net earnings from continuing operations [17] 174 208 87 505 181
----- ------------ ------- ------------ ------------ ------------
Portion attributable to non-controlling interests 21 25 7 75 27
------------ ------- ------------ ------------ ------------
Adjusted net earnings from continuing operations attributable
to shareholders of the Company [17] 153 183 81 429 154
----- ------------ ------- ------------ ------------ ------------
Earnings/(loss) per share from continuing operations 0.45 0.50 0.32 1.38 0.24
Adjusted net earnings per share from continuing operations 0.61 0.73 0.49 1.81 1.20
------------ ------- ------------ ------------ ------------
NOTES:
8) Revenue decreased by $61.7 million in Q3-2021 over Q2-2021
mainly due to lower gold sales at Ity, Karma and Wahgnion, together
with a lower realised gold price for Q3-2021 of $1,763/oz compared
to $1,791/oz for Q2-2021.
9) Operating expenses and depreciation and depletion decreased
for Q3-2021 compared to Q2-2021 due to decreased levels of
production at the Houndé, Ity, Karma and Wahgnion mines as well as
due to a decrease in the value of the depreciation of inventory
associated with the fair value adjustment on purchase price
allocation of Teranga and Semafo.
10) Royalties remained flat in Q3-2021 at $42.5 million.
11) Corporate costs were $12.0 million for Q3-2021 compared to
$15.9 million for Q2-2021. The decrease in corporate costs are
primarily due to decreased costs associated with listing on the LSE
incurred during Q2-2021.
12) Acquisition and restructuring costs were $1.8 million in
Q3-2021 compared to $14.5 million in Q2-2021. Costs decreased in
Q3-2021 compared to the prior period due to the completion of
several integration projects in Q2-2021, after the acquisition of
Teranga on 10 February 2021.
13) The loss on financial instruments was $20.0 million in
Q3-2021 compared to a loss of $14.8 million in Q2-2021. The loss in
Q3-2021 is mainly due to foreign exchange losses of $23.3 million
that were offset slightly by a realized gain on forward contracts
of $5.0 million and a gain on other financial instruments of $2.7
million. The loss in Q2-2021 was mainly due to the net impact of a
loss on change in fair value of the warrant liabilities and call
rights of $5.3 million and $7.0 million respectively, and foreign
exchange losses of $7.2 million.
14) Current income tax expense was $40.4 million in Q3-2021
compared to $44.5 million in Q2-2021. Current income tax expense
for Q3-2021 decreased slightly compared to Q2-2021 due to lower
earnings before taxes as a result of lower ounces sold in Q3-2021
compared to Q2-2021.
15) Net comprehensive earnings were $132.5 million for Q3-2021
compared to $148.9 million in Q2-2021. The decrease in earnings was
related to lower earnings from mine operations due lower gold sales
at Ity, Karma and Wahgnion, together with a lower realised gold
price for Q3-2021 of $1,763/oz compared to $1,791/oz for
Q2-2021.
16) For Q3-2021, adjustments mainly included a loss on financial
instruments of $20.0 million, share based compensation of $7.3
million, non-cash expense of inventory associated with the fair
value adjustment on purchase price allocation of Teranga of $8.6
million, acquisition and restructuring costs of $1.8 million,
deferred income tax expense of $0.2 million and other non-recurring
expenses of $3.4 million. In Q2-2021, adjustments were primarily
made up of a loss on financial instruments of $14.8 million, share
based compensation of $9.8 million, non-cash expense of inventory
associated with the fair value adjustment on purchase price
allocation of SEMAFO and Teranga of $15.3 million, acquisition and
restructuring costs of $14.5 million, deferred income tax
recoveries of $2.2 million and other non-recurring expenses of $7.1
million.
17) Adjusted net earnings attributable to shareholders for
continuing operations were $153.0 million (or $0.61 per share) in
Q3-2021 compared to $183.1 million (or $0.73 per share) in
Q2-2021.
OPERATIONS REVIEW SUMMARY
-- Continued strong safety record for the Group, with a Lost Time Injury
Frequency Rate ("LTIFR") of 0.21 for the trailing twelve months ending 30
September 2021.
-- The acquisition of Teranga Gold was completed on 10 February 2021 and the
Sabodala-Massawa and Wahgnion assets have been consolidated into the
financial statements from this date. The sale of Endeavour's non-core
Agbaou mine closed on 1 March 2021, and has been classified as a
discontinued operation.
-- A better than expected performance was achieved in Q3-2021 due to
outperformance notably at the Houndé and Sabodala-Massawa mines.
Production decreased by 7% in Q3-2021 over Q2-2021 to 382koz mainly due
to the rainy season, while AISC increased by $50/oz to $904/oz due to the
rainy season and scheduled higher sustaining capital spend.
-- Production increased by 57% in Q3-2021 over Q3-2020, due to the full
benefit of consolidated production from Sabodala-Massawa and Wahgnion and
the strong operational performance notably at Ity, Houndé and
Boungou, while Group AISC remained fairly flat.
Table 6: Consolidated Group Production
THREE MONTHSED NINE MONTHSED
(All amounts in koz, 30 September 30 June 30 September 30 September 30 September
on a 100% basis) 2021 2021 2020 2021 2020
------------ ------- ------------ ------------ --------------
Boungou(1) 41 39 30 139 30
Houndé 70 80 62 216 175
Ity 61 79 44 212 152
Karma 21 25 22 67 70
Mana(1) 49 49 60 151 60
Sabodala-Massawa(2) 106 96 -- 241 --
Wahgnion(2) 34 41 -- 100 --
------------ ------- ------------ ------------ ------------
PRODUCTION FROM
CONTINUING
OPERATIONS 382 409 219 1,126 488
------------ ------- ------------ ------------ ------------
Agbaou(2) -- -- 25 13 77
------------ ------- ------------ ------------ ------------
GROUP PRODUCTION 382 409 244 1,138 565
------------ ------- ------------ ------------ ------------
(1) Included for the post acquisition period commencing 1 July
2020.(2) Included for the post acquisition period commencing 10
February 2021. (3) Divested on 1 March 2021.
Table 7: Consolidated All-In Sustaining Costs(1)
THREE MONTHSED NINE MONTHSED
(All amounts in 30 September 30 June 30 September 30 September 30 September
US$/oz) 2021 2021 2020 2021 2020
------------ ------- ------------ ------------ --------------
Boungou(1) 800 950 752 795 752
Houndé 921 741 865 833 966
Ity 915 806 775 830 728
Karma 1,259 1,070 1,073 1,162 949
Mana(1) 1,029 1,016 896 996 896
Sabodala-Massawa(2) 655 637 -- 667 --
Wahgnion(2) 1,097 980 -- 964 --
Corporate G&A 23 25 22 26 30
AISC FROM CONTINUING
OPERATIONS 904 858 881 872 896
-------------------- ------------ ------- ------------ ------------ ------------
Agbaou(2) -- -- 1,139 1,131 1,013
------------ ------- ------------ ------------ ------------
GROUP AISC 904 853 906 875 911
------------ ------- ------------ ------------ ------------
(1) Included for the post acquisition period commencing 1 July
2020.(2) Included for the post acquisition period commencing 10
February 2021. (3) Divested on 1 March 2021.
OPERATING ACTIVITIES BY MINE
Boungou Gold Mine, Burkina Faso
Table 8: Boungou Performance Indicators (for the post
acquisition period)
For The Period
Ended Q3-2021 Q2-2021 Q3-2020 YTD-2021 YTD-2020
------- ------- ------- -------- ----------
Tonnes ore mined,
kt 539 350 124 1,136 124
Total tonnes mined,
kt 7,126 8,346 294 22,144 294
Strip ratio (incl.
waste cap) 12.22 22.82 1.38 18.50 1.38
Tonnes milled, kt 349 336 308 1,000 308
Grade, g/t 3.76 3.84 3.15 4.34 3.15
Recovery rate, % 95 93 94 95 94
PRODUCTION, KOZ 41 39 30 139 30
------- ------- ------- -------- --------
Total cash cost/oz 717 714 737 675 737
AISC/OZ 800 950 752 795 752
------- ------- ------- -------- --------
Q3-2021 vs Q2-2021 Insights
-- Production remained consistent with Q2-2021 as the greater throughput and
recovery rate were offset by lower grades.
-- Total tonnes mined decreased in Q3-2021 following the accelerated
mining activity in the first half of the year, due to the
scheduled reduction in mining during the wet season and a lower
strip ratio, as the focus was on ore mining in Phase 2 of the West
Pit and waste stripping in the Phase 3 of the West and East pits.
Ore mining was constrained to lower grade areas as the larger
mining fleet was focused on waste extraction at the East pit.
Mining activities continued to focus on the West pit Phase 2 and 3
with total tonnes of ore mined increasing as a result of the lower
strip ratio and the benefit of mining on the top benches.
Pre-stripping activities at the East pit continued during Q3-2021.
-- Tonnes milled increased in Q3-2021 relative to Q2-2021 as higher
mill utilisation resulted from improved mining fragmentation of
the ore, as well as the benefit of improvements made to the SAG
mill, pebble crusher and vertical tower mill.
-- Average processed grades decreased in Q3-2021 as the mill feed
continued to be sourced from the lower grade areas of the West Pit
Phase 2, as the higher grade areas were targeted during the
restart of mining activities in Q4-2020 and Q1-2021.
-- AISC per ounce decreased in Q3-2021 compared to Q2-2021 due to the
decrease in sustaining capital resulting from less stripping at the West
pit and a decrease in unit mining and processing costs due to improved
mining fragmentation and shorter hauls associated with the near surface
Phase 3 expansion.
-- Sustaining capital of $3.4 million mainly related to waste capitalisation
at the West Pit and the third TSF wall raise.
-- Non-sustaining capital of $5.4 million related to pre-stripping at the
East pit.
2021 Outlook
-- Boungou is expected to achieve the bottom half of the FY-2021 production
guidance of 180 - 200koz, while AISC are expected to continue to trend
above the guided $690 - 740 per ounce range as a result of higher fuel
prices and increased security costs.
-- Plant feed is expected to continue to be sourced from the West Pit with
waste stripping activities continuing at the East Pit through to the end
of the year. Mill throughput and average processed grades are expected to
remain broadly consistent with year to date performance in Q4-2021.
-- The sustaining capital spend outlook for FY-2021 remains unchanged
compared to the initial guidance of $19.0 million, of which $16.5 million
has been incurred year to date. The non-sustaining capital spend outlook
for FY-2021 also remains unchanged compared to the initial guidance of
$22.0 million, of which $13.9 million has been incurred year to date.
Houndé Gold Mine, Burkina Faso
Table 9: Houndé Performance Indicators
For The Period
Ended Q3-2021 Q2-2021 Q3-2020 YTD-2021 YTD-2020
------- ------- ------- -------- ----------
Tonnes ore mined,
kt 596 1,399 1,231 3,620 3,204
Total tonnes mined,
kt 11,966 11,718 9,933 37,620 32,754
Strip ratio (incl.
waste cap) 19.07 7.38 7.07 9.39 9.22
Tonnes milled, kt 1,142 1,108 1,010 3,396 3,111
Grade, g/t 2.11 2.47 2.06 2.15 1.91
Recovery rate, % 92 92 92 92 92
PRODUCTION, KOZ 70 80 62 216 175
------- ------- ------- -------- --------
Total cash cost/oz 631 629 753 672 796
AISC/OZ 921 741 865 833 966
------- ------- ------- -------- --------
Q3-2021 vs Q2-2021 Insights
-- As guided, production decreased in Q3-2021 due to lower average processed
grades as mining activities focused on waste stripping.
-- Tonnes of ore mined significantly decreased as a result of the
scheduled increased focus on waste stripping at the Vindaloo Main
and Kari Pump Phase 2 pits and pre-stripping at the Kari West pit.
Ore tonnes mined were primarily sourced from the Kari Pump pit
with supplemental ore being sourced from Vindaloo Centre and
Bouéré as well as Kari West, where mining started during
the quarter.
-- Tonnes milled slightly increased due to the higher throughput rate
that resulted from a higher proportion of oxide ore being
processed.
-- Average gold grade milled decreased, as guided, due to the
increased focus on lower grade ore during the wet season, this was
partially offset by higher grade ore sourced from the Kari Pump
and Vindaloo Main pits.
-- AISC increased due to higher sustaining capital as well as higher unit
processing cost due to an increased use of on-site generated power and
drawdown of stockpiles. Higher costs were partially offset by lower unit
mining costs as a result of mining more oxide material with lower
associated drill and blast costs.
-- Sustaining capital of $21.9 million related to waste capitalisation at
the Vindaloo Main and Kari Pump pits and component replacements within
the mining fleet.
-- Non-sustaining capital of $0.6 million related to the costs associated
with the development of the Kari West pit.
2021 Outlook
-- FY-2021 production at Houndé is expected to be near the top end of
its guidance of 240 - 260koz as year to date performance was stronger
than scheduled due to the better-than-expected mining productivity
achieved during the pre-stripping of Kari Pump which enabled access to
greater volumes of high grade oxide ore. AISC is expected to be near the
bottom end of its guided range of $855 - 905 per ounce.
-- In Q4-2021, mining activities will continue to focus on Kari Pump,
supplemented by contributions from Vindaloo Main and Kari West. Mining is
expected to increase at Vindaloo Main and Kari West after completion of
the pre-strip. Throughput is expected to decline slightly, compared to
year to date throughput, and processed grade is expected to be lower as
the contribution from the high grade Kari Pump deposit will be reduced as
Vindaloo Main and Kari West provide an increased proportion of the feed.
-- Due to a stronger than guided production outlook, the sustaining capital
spend for FY-2021 is expected to be above initial guidance of $39.0
million, of which $35.2 million has been incurred year to date.
-- Non-sustaining capital spend outlook for FY-2021 remains unchanged
compared to the initial guidance of $13.0 million, of which $10.3 million
has been incurred year to date.
Ity Gold Mine, Côte d'Ivoire
Table 10: Ity Performance Indicators
For The Period
Ended Q3-2021 Q2-2021 Q3-2020 YTD-2021 YTD-2020
------- ------- ------- -------- ----------
Tonnes ore mined,
kt 1,690 1,877 2,352 5,672 5,911
Total tonnes mined,
kt 5,576 5,934 6,322 18,326 16,923
Strip ratio (incl.
waste cap) 2.30 2.16 1.69 2.23 1.86
Tonnes milled, kt 1,530 1,544 1,307 4,624 3,897
Grade, g/t 1.50 1.96 1.34 1.74 1.52
Recovery rate, % 83 81 81 81 81
PRODUCTION, KOZ 61 79 44 212 152
------- ------- ------- -------- --------
Total cash cost/oz 828 720 728 749 692
AISC/OZ 915 806 775 830 728
------- ------- ------- -------- --------
Q3-2021 vs Q2-2021 Insights
-- Production decreased, as guided, due to the lower average processed grade
as a result of the greater emphasis on stripping activities at Bakatouo,
which reduced the grade of ore mined.
-- Tonnes of ore mined decreased due to a greater focus on waste
stripping at the Ity, Bakatouo, Walter and Colline Sud pits. Ore
was mainly sourced from the Bakatouo and Daapleu pits as well as
the heap stockpile, supplemented by ore from the Ity, Colline Sud,
Walter, Flotouo and Le Plaque pits.
-- Tonnes milled decreased slightly due to a higher proportion of
transitional and fresh ore being processed, however throughput
continued to perform above nameplate capacity due to the
improvements in plant maintenance strategies and continued use of
the surge bin feeder that provides supplemental oxide ore.
-- Average gold grade milled decreased in Q3-2021 due to an increase
in the proportion of feed from lower grade stockpiles.
-- Despite the higher proportion of transitional and fresh ore
processed in Q3-2021, recovery rates increased, as a higher
proportion of Bakatouo fresh ore, with associated higher
recoveries, displaced some fresh and transitional ore from
Daapleu.
-- AISC per ounce increased due to higher unit mining costs as a result of
longer hauling distance for ore mined from the Flotouo and Walter pits.
In addition, unit processing costs increased due to the increase in the
proportion of transitional and fresh material and the resultant higher
reagent consumption.
-- Sustaining capital of $5.5 million related primarily to waste stripping
at the Ity, Bakatouo, Walter and Colline Sud pit as well as mining
geotechnical monitoring equipment, additional dewatering boreholes and
strategic heavy vehicle spare parts.
-- Non-sustaining capital of $3.9 million mainly related to the construction
of the pre-leach and tank spargers as well as Le Plaque waste dump
sterilisation drilling.
2021 Outlook
-- FY-2021 production at Ity is on track to be near the top end of its
guidance of 230 - 250koz with AISC expected to be near the top end of its
$800 - 850 per ounce guided range. Year to date performance was stronger
than anticipated due to the benefit of a combination of higher throughput,
grade, and higher recoveries
-- Mining activity is expected to increase at the higher grade Le Plaque pit
in Q4-2021. Stripping activity, which was partially deferred due to low
equipment availability earlier in the year, is expected to continue in
Q4-2021 at the Ity pit. Throughput is expected to be slightly lower in
Q4-2021 compared to previous quarters due to an increased proportion of
fresh ore sourced from Daapleau.
-- The sustaining capital spend outlook for FY-2021 remains unchanged
compared to the initial guidance of $28.0 million, of which $17.9 million
has been incurred year to date. As previously reported, non-sustaining
capital spend for FY-2021 is expected to amount to approximately $40.0
million, of which $24.4 million has been incurred year to date.
Karma Gold Mine, Burkina Faso
Table 11: Karma Performance Indicators
For The Period
Ended Q3-2021 Q2-2021 Q3-2020 YTD-2021 YTD-2020
------- ------- ------- -------- ----------
Tonnes ore mined,
kt 1,393 1,253 1,011 3,889 3,528
Total tonnes mined,
kt 4,972 6,212 4,392 16,330 14,146
Strip ratio (incl.
waste cap) 2.57 3.96 3.35 3.20 3.01
Tonnes stacked, kt 1,264 1,267 1,192 3,911 3,544
Grade, g/t 0.70 0.91 0.76 0.77 0.86
Recovery rate, % 64 68 72 66 79
PRODUCTION, KOZ 21 25 22 67 70
------- ------- ------- -------- --------
Total cash cost/oz 1,258 1,059 1,007 1,155 890
AISC/OZ 1,259 1,070 1,073 1,162 949
------- ------- ------- -------- --------
Q3-2021 vs Q2-2021 Insights
-- Production decreased due to the lower average grade as well as the
expected lower recovery rates which resulted from a higher proportion of
transitional ore stacked from the GG1 pits.
-- Total tonnes mined decreased due to the lower strip ratio at the
GG1 pits during the quarter.
-- Tonnes of ore mined increased slightly due to the improved strip
ratio as some of the smaller higher strip ratio GG1 pits were
depleted.
-- The stacked ore grade decreased as expected due to the lower grade
ore sourced from the GG1 pits.
-- The recovery rate decreased as expected due to the increased
proportion of transitional ore from the GG1 pit, which has a lower
associated recovery rate owing to the copper and carbon content
found locally in the ore.
-- AISC per ounce increased due to the lower recovery rate and slightly
higher unit mining and processing costs associated with the transitional
ore from the GG1 pits.
-- Sustaining capital was negligible during Q3-2021.
-- Non-sustaining capital was $0.2 million, which was related to
construction of new heap leach cells.
2021 Outlook
-- Karma is well positioned to meet its FY-2021 production guidance of 80 -
90koz and achieve AISC near the bottom end of the guided $1,220 - $1,300
per ounce range.
-- In Q4-2021, mining activity is expected to focus on the GG1 pits,
supplemented by ore from the Rambo Pit. As a result of the increase in
transitional material mined from the GG1 pits, processed grades and
recoveries are expected to be lower, while mill throughput is expected to
slightly increase compared to Q3-2021
-- The sustaining capital outlook at Karma is expected to be significantly
lower than the $11.0 million guided as a result of the waste development
being included as an operating cost for 2021 due to the short mine life
remaining at Karma.
-- The non-sustaining capital spend outlook for FY-2021 remains unchanged
compared to the initial guidance of $5.0 million, of which $3.1 million
has been incurred year to date.
Mana Gold Mine, Burkina Faso
Table 12: Mana Performance Indicators (for the post acquisition
period)
For The Period
Ended Q3-2021 Q2-2021 Q3-2020 YTD-2021 YTD-2020
------- ------- ------- -------- ----------
OP tonnes ore
mined, kt 592 549 465 1,496 465
OP total tonnes
mined, kt 5,114 7,187 6,416 20,834 6,416
OP strip ratio
(incl. waste cap) 7.64 12.09 12.80 12.93 12.80
UG tonnes ore
mined, kt 199 214 197 658 197
Tonnes milled, kt 667 670 593 1,942 593
Grade, g/t 2.50 2.49 3.43 2.62 3.43
Recovery rate, % 91 92 95 91 95
PRODUCTION, KOZ 49 49 60 151 60
------- ------- ------- -------- --------
Total cash cost/oz 986 911 826 932 826
AISC/OZ 1,029 1,016 896 996 896
------- ------- ------- -------- --------
Q3-2021 vs Q2-2021 Insights
-- Production remained flat over Q2-2021 as plant throughput, average grade
milled and recoveries remained fairly stable.
-- Total open pit tonnes of ore mined was higher as a result of the
lower strip ratio at the Wona South stage 2 and 3 pits, as they
merged into a single pit at depth.
-- Total underground tonnes of ore mined decreased as a result of the
wet season due to additional dewatering activities required at
Siou as well as lower contributions from development mining, as
the development is now largely completed..
-- Tonnes milled in Q3-2021 was consistent with Q2-2021, benefiting
from increased mill availability and utilisation due to better
mining fragmentation, leading to higher plant throughput. The ore
processed was mainly fresh material, sourced from both the Wona
open pit and the Siou underground.
-- The average processed grade adn recovery was consistent with
Q2-2021 due to the feed remaining similar.
-- AISC slightly increased due to higher processing and related maintenance
costs as well as higher open pit unit mining costs due to an increase in
blasting and drilling activities during the period. This was offset by
lower loading and hauling costs due to a decrease in total tonnes mined.
-- Sustaining capital of $2.1 million is related to underground development
to create new stopping levels.
-- Non-sustaining capital of $11.2 million was mainly related to waste
capitalisation, activities related to the preparation of the Wona
underground portals and the TSF raise.
2021 Outlook
-- FY-2021 production at Mana is well positioned to be near the top end of
its guidance of 170 - 190koz and near the top end of its AISC guidance of
$975 - 1,050 per ounce, due to its strong performance driven by improved
mill availability, and increased underground tonnes mined.
-- Ore in Q4-2021 is expected to continue to be sourced from the Siou
underground mine while open pit mining activities at Wona Stage 2 and 3
pits are expected to wind down in H1-2022. Following optimisation studies
completed in Q2-2021, Wona is being pursued as an underground operation
with underground development being expedited as the portal development
has commenced. Grades are expected to be slightly lower, compared to
Q3-2021, while recovery rates and throughput are expected to remain
similar.
-- The total sustaining and non-sustaining capital spend outlook for FY-2021
remains unchanged. As previously reported, in light of the reduction in
required stripping activities at Wona, following the decision to shift to
underground mining, the FY-2021 sustaining capital outlook is expected to
be significantly lower than the $27.0 million guided, of which $10.2
million has been incurred. Due to the reallocation of capital to the Wona
underground development, the non-sustaining capital outlook for FY-2021
is expected to amount to slightly more than the $62.0 million guided, of
which $56.4 million has been incurred.
Sabodala-Massawa Gold Mine, Senegal
Table 13: Sabodala-Massawa Performance Indicators (for the post
acquisition period)
For The Period Ended Q3-2021 Q2-2021 Q3-2020 YTD-2021 YTD-2020
------- ------- ------- -------- --------
Tonnes ore mined, kt 1,717 2,111 n/a 4,884 n/a
Total tonnes mined, kt 11,515 10,798 n/a 28,144 n/a
Strip ratio (incl.
waste cap) 5.71 4.11 n/a 4.76 n/a
Tonnes milled, kt 1,079 1,067 n/a 2,696 n/a
Grade, g/t 3.32 3.20 n/a 3.11 n/a
Recovery rate, % 90 89 n/a 90 n/a
PRODUCTION, KOZ 106 96 n/a 241 n/a
------- ------- ------- -------- --------
Total cash cost/oz 492 548 n/a 528 n/a
AISC/OZ 655 637 n/a 667 n/a
------- ------- ------- -------- --------
Q3-2021 vs Q2-2021 Insights
-- Production increased in Q3-2021 compared to Q2-2021 mainly due to higher
average processed grades and slightly higher tonnes milled and recovery
rate.
-- Total tonnes mined increased, reflecting the combination of
favourable mining conditions, a high proportion of oxide material
mined in Sofia North and good productivity of shovels and
excavators. More waste extraction than scheduled was conducted at
the Sofia North pit which provided access to better grades and
offers increased mining optionality. Ore tonnes mined comprised of
mainly fresh ore from the Sofia Main pit, supplemented by oxide
material from Sofia North pit, the Sabodala pit and high-grade
stockpiles.
-- Tonnes milled were slightly higher due to continued high mill
availability and improvements in our mill feed blending strategy
which reduced mill chute blockages.
-- Average processed grades were higher due to processing high grade
fresh ore sourced from the Sofia Main pit, which were supplemented
with oxide ore from the Sofia North pit.
-- AISC per ounce slightly increased in Q3-2021 compared to Q2-2021 due to
an increase in the strip ratio associated with waste stripping at Sofia
North and a higher sustaining capital spend, which was slightly offset by
lower mining and processing unit costs due to improved mining conditions.
-- Sustaining capital of $17.5 million was related to purchases of
additional dump trucks, bulldozers, water tankers, slope radar system and
planned waste capitalisation.
-- Non-sustaining capital of $10.1 million mostly was related to the
relocation activities of the Sabodala village, the Massawa haul road and
other infrastructure developments at Massawa.
Plant Expansion
-- The Massawa deposit is being integrated into the Sabodala mine through a
two-phased approach, as outlined in the 2020 pre-feasibility study
("PFS").
-- Phase 1 of the plant expansion, which is on schedule for completion in
Q4-2021, will facilitate processing of an increased proportion of high
grade, free-milling Massawa ore through the Sabodala processing plant.
-- Installation of Packages 1 to 5, which include the electrowinning cell,
carbon regeneration kiln, acid wash and elution circuit, and new leach
tank are all now largely complete. Commissioning of these packages is
underway with completion expected ahead of schedule in early Q4-2021.
Installation of Package 6, the Gravity Circuit, is well underway with
civil and structural works completed and expected commissioning during
Q4-2021.
-- A total of $11.6 million was incurred year to date for the Phase 1 plant
expansion and classified as growth capital, of which $0.3 million was
incurred prior to its acquisition on 10 February 2021.
-- Phase 2 of the expansion will add an additional processing circuit to
process the high grade refractory ore from the Massawa deposit. The
definitive feasibility study ("DFS") for Phase 2 is underway. Following
successful exploration drilling, resource updates are expected to be
published in Q4-2021 and will be incorporated into the DFS which is now
scheduled to be published in early 2022.
2021 Outlook
-- Given its strong performance year to date, FY-2021 production at
Sabodala-Massawa is well positioned to be near the top end of its
guidance of 310 - 330koz with an AISC near the bottom end of the $690 -
740 per ounce guidance, for the post acquisition period commencing on 10
February 2021.
-- The Sofia Main and Sofia North pits will continue to contribute the
majority of the ore mined for Q4-2021, while waste extraction at Sofia
North and Sabodala pits is expected to continue. Mill throughput and
processed grades are expected to remain similar to year to date average
grades.
-- As previously reported, the sustaining capital spend for FY-2021 is
expected to be above the initially guided $35.0 million, with $36.0
million already incurred, due to investments in additional mining fleet
and equipment.
-- As also previously reported, non-sustaining capital spend for FY-2021 is
expected to be below the initial guided $47.0 million, with $19.9 million
already incurred, due to the deferral of spend on the Sabodala relocation
construction costs as a greater focus was placed on mining the Sofia
pits.
Wahgnion Gold Mine, Burkina Faso
Table 14: Wahgnion Performance Indicators (for the post
acquisition period)
For The Period Ended Q3-2021 Q2-2021 Q3-2020 YTD-2021 YTD-2020
------- ------- ------- -------- --------
Tonnes ore mined, kt 917 1,187 n/a 2,753 n/a
Total tonnes mined, kt 6,154 7,615 n/a 18,220 n/a
Strip ratio (incl.
waste cap) 5.71 5.42 n/a 5.62 n/a
Tonnes milled, kt 809 1,016 n/a 2,363 n/a
Grade, g/t 1.40 1.31 n/a 1.35 n/a
Recovery rate, % 93 95 n/a 94 n/a
PRODUCTION, KOZ 34 41 n/a 100 n/a
------- ------- ------- -------- --------
Total cash cost/oz 983 928 n/a 897 n/a
AISC/OZ 1,097 980 n/a 964 n/a
------- ------- ------- -------- --------
Q3-2021 vs Q2-2021 Insights
-- Production decreased in Q3-2021 due to lower mill throughput and lower
recovery rates, reflecting the high proportion of fresh material
processed.
-- Both the total tonnes mined and tonnes of ore mined decreased in
Q3-2021 due to the impact of the wet season and the increased
focus on waste stripping. Ore mined was sourced mainly from the
Nogbele North, Nogbele South and Fourkoura pits.
-- Tonnes milled decreased as a result of the higher proportion of
fresh ore being processed.
-- Average grade milled increased slightly as the proportion of
higher grade ore sourced from the Nogbele South deposit increased
during the quarter.
-- AISC per ounce increased in Q3-2021 compared to Q2-2021 due to increased
sustaining capital per ounce sold and higher unit mining and processing
costs. Both mining and processing unit costs were higher as a result of
increased fuel costs, with increased drilling and blasting and haulage
costs also contributing to the higher unit mining cost.
-- Sustaining capital expenditure of $4.1 million was related to waste
capitalisation.
-- Non-sustaining capital expenditure of $7.5 million related to the TSF
stage 2 raise, construction of the airstrip and Foukoura resettlement
costs.
2021 Outlook
-- Wahgnion is positioned to achieve the bottom half its FY-2021 production
guidance of 140 - 155koz at an AISC of $940 - 990 per ounce, for the post
acquisition period commencing on 10 February 2021.
-- In Q4-2021, mining is expected to continue at Nogbele North, Nogbele
South, and Fourkoura pits with significant waste capitalisation
continuing. Plant throughput is expected to decrease compared to year to
date due to a higher proportion of fresh ore being processed, while
process grades are expected to increase.
-- The sustaining capital spend outlook for FY-2021 remains unchanged
compared to the initial guidance of $14.0 million, of which $7.5 million
has been incurred, with the remaining spend mainly related to waste
extraction at Fourkoura and Nogbele North pits.
-- The non-sustaining capital spend outlook for FY-2021 also remains
unchanged compared to the initial guidance of $26.0 million, of which
$20.3 million has been incurred. The Q4-2021 non-sustaining spend mainly
relates to construction of a second TSF cell.
EXPLORATION AND DEVELOPMENT ACTIVITIES
-- On 30 September 2021, Endeavour published a new exploration strategy with
a discovery target of 15-20Moz of Indicated resources over the next five
years at an average discovery cost of less than $25/oz. Near-mine
exploration aims to continue to extend the mine lives of core assets to
beyond the 10 years while greenfield exploration targets the discovery of
at least one new standalone project over the next five years.
-- Exploration efforts remain on track to discover more than 2.5 million
ounces of Indicated resources in 2021, with updated resource estimates
expected to be published in Q4-2021, most notably for Ity, Houndé,
Sabodala-Massawa and Fetekro.
-- More than 421,000 meters have been drilled across the Group year to date,
of which 109,000 meters were drilled in Q3-2021. Total exploration spend
of $82 million has been incurred year to date, of which $28 million was
spent during Q3-2021.
Table 15: Consolidated Exploration Expenditures(1)
(All amounts in US$m) YTD-2021 2021 GUIDANCE
-------- -------------
Sabodala-Massawa 9 13
Wahgnion 8 12
Ity 10 9
Mana 9 8
Houndé 14 7
Boungou 5 7
Karma 0 0
-------- -------------
MINE SUBTOTAL 55 56
Greenfield and development projects 27 14 - 34
-------- -------------
TOTAL 82 $70 - 90
-------- -------------
(1) Consolidated exploration expenditures include expensed,
sustaining, and non-sustaining exploration expenditures. Amounts
may differ from Management Report due to rounding.
Boungou mine
-- An exploration programme of up to $7 million was planned for 2021, of
which $5 million has been spent year to date consisting of 25,700 meters
of drilling across 280 drillholes. During Q3-2021, $1 million was spent
on exploration, consisting of 1,300 meters of drilling. The exploration
efforts were focused on delineating near mine targets including Natougou
Northeast, Boungou Northwest and Boungou North.
-- At Natougou Northwest, drilling continues to delineate the zone of
higher-grade mineralisation trending North-Northwest that remains open to
the north. Throughout Q4-2021 and into 2022, drilling will focus on both
delineating this trend, and at Natougou Southeast and Natougou Southwest
targeting the extension of existing mineralised trends and on the
evaluation of inferred resources.
-- At Boungou Northwest, year to date drilling demonstrated promising
initial results, identifying the continuation of the Boungou shear down
plunge. Follow-up drilling in Q4-2021 and 2022 will continue to evaluate
this shear zone.
-- During Q4-2021 and in 2022 further drilling will focus on expanding the
footprints and defining resources at Natougou Northwest, Boungou North
and Boungou Northwest.
-- Reconnaissance drilling to the north of Boungou following up on
geochemical anomalies, at the Osaanpalo and Tawori targets, identified
shallow oxide mineralization. Follow up drilling in 2022 will focus on
delineating these early-stage targets, as well as the Dangou target.
Houndé mine
-- An exploration programme of up to $7 million was initially planned for
2021, however given our exploration success here early in the year, $14
million has now been spent year to date, consisting of 74,800 meters of
drilling across 667 drillholes. During Q3-2021, $7 million was spent on
exploration consisting of 6,000 meters of drilling. The exploration
efforts were focused on Mambo, Vindaloo South and the intersection
between Kari Gap and Kari Center.
-- Drilling at the Mambo target, a recent discovery located 12km from the
Houndé plant, has continued to extend mineralisation to over 1,000
meters in length and it remains open to the Southwest, Northeast, and at
depth. A maiden resource at Mambo is expected to be published in Q4-2021.
-- During Q3-2021, at Vindaloo South and the intersection between Kari Gap
and Kari Center drilling continued to target extensions to the currently
defined mineralisations.
-- During Q4-2021 and into 2022, exploration will continue to focus on
expanding Mambo, Vindaloo South and the intersection between Kari Gap and
Kari Center. In addition, Endeavour will advance higher grade targets
such as Sia Sianikoui and Dohoum through additional drilling.
Ity mine
-- An exploration programme of $9 million was initially planned for 2021,
however given the success, $10 million has already been spent year to
date consisting of 69,500 meters of drilling across 538 drillholes.
During Q3-2021, $4 million was spent on exploration consisting of more
than 24,400 meters of drilling. The exploration efforts were focused on
Le Plaque South (Delta Extension), West Flotouo (Verse Ouest), Daapleu
Deep, Yopleu-Legaleu and the junction between Bakatouo and Walter.
-- During Q3-2021, drilling on the West Flotouo target led to the discovery
of further high grade mineralised lenses immediately below the former
Flotouo dump, located in proximity to the plant. West Flotouo is open to
the north, south and at depth. As such, during Q4-2021 further
delineation of this discovery is expected and a maiden resource is
expected to be published in late 2021.
-- Drilling in the Le Plaque area focused on extending mineralisation at Le
Plaque South, Delta Extension and Yopleu-Legaleu. An updated Le Plaque
resource is expected to be published in Q4-2021.
-- Drilling conducted at Daapleu Deep continued to extend mineralisation to
over 300 meters downdip of the current pit design. Daapleau Deep will be
delineated further in Q4-2021 and in 2022.
-- Drilling at the junction between the Bakatouo and Walter deposits
confirmed that the skarn style mineralisation is continuous between the
two deposits and that it remains open at depth. Exploration will continue
to delineate this target in Q4-2021 and in 2022.
Karma mine
-- During Q3-2021, limited exploration work continued as part of the
advanced grade control drilling programme, targeting near mine extensions
to be added into the current mine plan. The focus was on Kao Main, Kao
North, Kao North Southeast, Rambo, GG1, GG2, Anomaly B and Kanongo, which
will be pursued in Q4-2021 and in 2022.
Mana mine
-- An exploration programme of $8 million was planned for 2021 of which $9
million has already been spent year to date consisting of 59,600 meters
of drilling across 459 drillholes. During Q3-2021, $2 million was spent
on exploration focussed on the Maoula open pit oxide target, and on
evaluating underground targets at Siou, Wona and Nyafe.
-- At Maoula, exploration work focused on defining Indicated resources in
the western and eastern lenses of the deposit and to the southwest, where
the deposit remains open.
-- At Siou South and Nyafe, exploration work focused on interpreting
drilling completed earlier this year to plan further delineation drilling
in Q4-2021 and in 2022.
Sabodala-Massawa mine
-- An exploration programme of up to $13 million was planned for 2021, of
which $9 million has already been spent year to date consisting of 72,300
meters of drilling across 680 drillholes. During Q3-2021 alone, $5
million was spent on exploration consisting of more than 25,900 meters of
drilling. The exploration efforts were focused on Samina, Tina, Sofia
North Extension and Bambaraya. Following the exploration success year to
date, an updated resource is expected to be published in Q4-2021.
-- During Q3-2021, drilling conducted at Samina, Tina and Sofia North
Extension deposit was focused on extending mineralization along strike
and downdip.
-- Drilling at Bambaraya has been prioritised as Bambaraya is a prime target
located just 13 kilometres away from the Sabodala mill. During Q3-2021
mineralisation was extended to 800 meters in strike length in the
north-south direction. In addition, higher grade zones have been
identified and will be followed up in Q4-2021 and in 2022.
-- During Q4-2021, exploration work will be focused on defining resources at
Samina, Tina and the Sofia North Extension with a resource update
expected in Q4-2021.
Wahgnion mine
-- An exploration programme of up to $12 million was planned for 2021, of
which $8 million was spent year to date consisting of 41,100 meters of
drilling across 330 drillholes. During Q3-2021, $5 million was spent on
exploration consisting of 31,500 meters of drilling. The exploration
efforts continued to focus on Nogbele North and Nogbele South deposits,
targeting the continuation of mineralised structures beneath and between
the Nogbele pits.
-- Exploration efforts ramped up in Q3-2021, with continued focus on the
extension and expansion of the Nogbele mineralization and this will
continue in Q4-2021 and in 2022.
-- Delineation drilling at Fourkoura and Hillside targets, as well as
reconnaissance drilling at Ouahiri South, Kassira and Bozogo will
continue in Q4-2021 and in 2022.
Fetekro project
-- Fetekro has been the largest greenfield exploration focus year to date
with $9 million incurred on exploration work. During Q3-2021, $3 million
was spent on exploration consisting of more than 14,800 meters of
drilling. In total, 58,100 meters of drilling were completed year to date
and 69,100 meters have been completed since the last resource update,
published in August 2020.
-- At Lafigué North, a portion of the remaining Inferred resources has
been converted into Indicated resources, which will be included in the
upcoming resource update. At the area between Lafigué Center and
Lafigué North, infill drilling focused on delineating shallow,
subparallel, stacked mineralised lenses located outside of the current
resource. These stacked lenses will also be included in the upcoming
resource update.
-- An updated resource estimate is expected to be published in Q4-2021
following the successful drilling programme which extended the existing
resource. In order to include these new resources within the DFS, the
study is now expected to be published in early Q1-2022.
-- The mining permit for the Lafigué deposit was granted to Endeavour
on 22 September 2021.
Kalana project
-- During Q3-2021, metallurgical testwork continued with samples from Kalana
and Kalanako submitted for metallurgical testing and the permit for the
village resettlement received.
-- In Q4-2021, the DFS flow sheets will be finalized incorporating the
results of the recent metallurgical testwork. The DFS is expected to be
published in Q1-2022.
Greenfield exploration projects
-- At the Woulo Woulo target on the Afema property, Endeavour completed the
initial exploration programme started by Teranga, drilling 8,347 meters
since the acquisition of Teranga was completed in February 2021. Further
work in Q4-2021 and in 2022 will be focused on expanding the mineralised
trend at Woulo Woulo Main.
-- At Bantou, year to date exploration work on the Karankasso JV permits
focused on completing soil geochemical surveys and ground geophysical
surveys to help advance high priority targets. The Dynikongolo permit
hosts both the Bantou and Bantou North deposits. Activities have focused
on mapping and relogging of existing core and drill chips to refine the
geologic model. Resource conversion drilling is expected to commence in
late Q4-2021 and continue into H1-2022.
-- At Siguiri, a program of 4,500 meters of drilling will commence in
Q4-2021, focusing on two promising targets which were selected based on
the analysis conducted in H1-2021.
CONFERENCE CALL AND LIVE WEBCAST
Management will host a conference call and webcast on Thursday
11 November, at 8:30 am ET / 1:30 pm GMT to discuss the Company's
financial results.
The conference call and webcast are scheduled at:
5:30am in Vancouver
8:30am in Toronto and New York
1:30pm in London
9:30pm in Hong Kong and Perth
The webcast can be accessed through the following link:
https://edge.media-server.com/mmc/p/wc2s3hwk
Analysts and investors are also invited to participate and ask
questions using the dial-in numbers below:
International: +44 (0) 207 192 8338
North American toll-free: +1 877 870 9135
UK toll-free: +44 (0) 800 279 6619
Confirmation Code: 3980665
The conference call and webcast will be available for playback
on Endeavour's website.
QUALIFIED PERSONS
Clinton Bennett, Endeavour's VP Metallurgy and Process
Improvement - a Fellow of the Australasian Institute of Mining and
Metallurgy, is a "Qualified Person" as defined by National
Instrument 43-101 - Standards of Disclosure for Mineral Projects
("NI 43-101") and has reviewed and approved the technical
information in this news release.
CONTACT INFORMATION
Martino De Ciccio Brunswick Group LLP in London
VP -- Strategy & Investor Relations Carole Cable, Partner
+44 203 640 8665 +44 7974 982 458
mdeciccio@endeavourmining.com ccable@brunswickgroup.com
Vincic Advisors in Toronto
John Vincic, Principal
+1 (647) 402 6375
john@vincicadvisors.com
ABOUTEAVOUR MINING CORPORATION
Endeavour Mining is one of the world's senior gold producers and
the largest in West Africa, with operating assets across Senegal,
Cote d'Ivoire and Burkina Faso and a strong portfolio of advanced
development projects and exploration assets in the highly
prospective Birimian Greenstone Belt across West Africa.
A member of the World Gold Council, Endeavour is committed to
the principles of responsible mining and delivering sustainable
value to its employees, stakeholders and the communities where it
operates. Endeavour is admitted to listing and to trading on the
London Stock Exchange and the Toronto Stock Exchange, under the
symbol EDV.
For more information, please visit www.endeavourmining.com.
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
This document contains "forward-looking statements" within the
meaning of applicable securities laws. All statements, other than
statements of historical fact, are "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, the success of exploration activities, the
anticipated timing for the payment of a shareholder dividend and
statements with respect to future dividends payable to the
Company's shareholders, the completion of studies, mine life and
any potential extensions, the future price of gold and the share
buyback programme. Generally, these forward-looking statements can
be identified by the use of forward-looking terminology such as
"expects", "expected", "budgeted", "forecasts", "anticipates",
believes", "plan", "target", "opportunities", "objective",
"assume", "intention", "goal", "continue", "estimate", "potential",
"strategy", "future", "aim", "may", "will", "can", "could", "would"
and similar expressions .
Forward-looking statements, while based on management's
reasonable estimates, projections and assumptions at the date the
statements are made, 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 or completion of divestitures; risks related to
international operations; risks related to general economic
conditions and the impact of credit availability on the timing of
cash flows and the values of assets and liabilities based on
projected future cash flows; Endeavour's financial results, cash
flows and future prospects being consistent with Endeavour
expectations in amounts sufficient to permit sustained dividend
payments; the completion of studies on the timelines currently
expected, and the results of those studies being consistent with
Endeavour's current expectations; actual results of current
exploration activities; production and cost of sales forecasts for
Endeavour meeting expectations; 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; extreme weather events, natural disasters, supply
disruptions, power disruptions, accidents, pit wall slides, 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 legislation, regulation of mining
operations, tax rules and regulations and changes in the
administration of laws, policies and practices in the jurisdictions
in which Endeavour operates; disputes, litigation, regulatory
proceedings and audits; adverse political and economic developments
in countries in which Endeavour operates, including but not limited
to acts of war, terrorism, sabotage, civil disturbances,
non-renewal of key licenses by government authorities, or the
expropriation or nationalization of any of Endeavour's property;
risks associated with illegal and artisanal mining; environmental
hazards; and risks associated with new diseases, epidemics and
pandemics, including the effects and potential effects of the
global Covid-19 pandemic.
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 forward-looking
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.
The declaration and payment of future dividends and the amount
of any such dividends will be subject to the determination of the
Board of Directors, in its sole and absolute discretion, taking
into account, among other things, economic conditions, business
performance, financial condition, growth plans, expected capital
requirements, compliance with the Company's constating documents,
all applicable laws, including the rules and policies of any
applicable stock exchange, as well as any contractual restrictions
on such dividends, including any agreements entered into with
lenders to the Company, and any other factors that the Board of
Directors deems appropriate at the relevant time. There can be no
assurance that any dividends will be paid at the intended rate or
at all in the future.
NON-GAAP MEASURES
Some of the indicators used by Endeavour in this press release
represent non-IFRS financial measures, including "all-in margin",
"all-in sustaining cost", "net debt", "EBITDA", "adjusted EBITDA",
"net debt to adjusted EBITDA ratio", "cash flow from continuing
operations", "total cash cost per ounce", "sustaining and
non-sustaining capital", "net earnings", "adjusted net earnings",
"operating cash flow per share", and "return on capital employed".
These measures are presented as they can provide useful information
to assist investors with their evaluation of the pro forma
performance. Since the non-IFRS performance measures listed herein
do not have any standardized definition prescribed by IFRS, they
may not be comparable to similar measures presented by other
companies. Accordingly, they are intended to provide additional
information and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
IFRS. Please refer to the non-GAAP measures section of the
Company's most recently filed Management Report for a
reconciliation of the non-IFRS financial measures used in this
press release.
Corporate Office: 5 Young St, Kensington, London W8 5EH, UK
Table of Contents
MANAGEMENT REPORT
1. BUSINESS OVERVIEW 3
1.1. OPERATIONS DESCRIPTION 3
2. HIGHLIGHTS FOR THE THREE AND NINE MONTHSED
30 SEPTEMBER 2021 4
3. ENVIRONMENTAL, SOCIAL AND GOVERNANCE 5
3.1. HEALTH AND SAFETY 5
3.2. COVID-19 RESPONSE 6
4. OPERATIONS REVIEW 8
4.1. OPERATIONAL REVIEW SUMMARY 8
4.2. BOUNGOU GOLD MINE 9
4.3. HOUNDE GOLD MINE 11
4.4. ITY GOLD MINE 13
4.5. KARMA GOLD MINE 15
4.6. MANA GOLD MINE 17
4.7. SABODALA-MASSAWA GOLD MINE 19
4.8. WAHGNION GOLD MINE 21
4.9. DISCONTINUED OPERATIONS 23
5. FINANCIAL REVIEW 24
5.1. STATEMENT OF COMPREHENSIVE EARNINGS 24
5.2. SUMMARISED CASH FLOWS 26
5.3. SUMMARISED BALANCE SHEET 28
5.4. LIQUIDITY AND FINANCIAL CONDITION 29
5.5. RELATED PARTY TRANSACTIONS 30
5.6. ACCOUNTING POLICIES AND CRITICAL JUDGEMENTS 30
6. USE OF PROCEEDS 30
7. NON-GAAP MEASURES 31
7.1. ALL-IN MARGIN 31
7.2. ADJUSTED EBITDA 32
7.3. CASH AND ALL-IN SUSTAINING COST PER OUNCE OF
GOLD SOLD 32
7.4. ADJUSTED NET EARNINGS AND ADJUSTED NET EARNINGS
PER SHARE 35
7.5. OPERATING CASH FLOW PER SHARE 35
7.6. NET DEBT, NET CASH/ADJUSTED EBITDA RATIO 35
7.7. RETURN ON CAPITAL EMPLOYED 36
8. QUARTERLY AND ANNUAL FINANCIAL AND OPERATING RESULTS 37
9. PRINCIPAL RISKS AND UNCERTAINTIES 39
10. CONTROLS AND PROCEDURES 42
10.1. DISCLOSURE CONTROLS AND PROCEDURES 42
10.2. INTERNAL CONTROLS OVER FINANCIAL REPORTING 42
10.3. LIMITATIONS OF CONTROLS AND PROCEDURES 42
11. RESPONSIBILITY STATEMENTS 43
UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
INDEPENT REVIEW REPORT TOEAVOUR MINING PLC 44
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME 46
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT
OF CASH FLOWS 47
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT
OF FINANCIAL POSITION 48
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY 49
NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL
STATEMENTS 50
This Management Report should be read in conjunction with
Endeavour Mining plc's ("Endeavour", the "Company", or the "Group")
condensed interim consolidated financial statements for the three
and nine months ended 30 September 2021 which has been prepared in
accordance with UK adopted International Accounting Standard
34-Interim Financial Reporting using accounting policies consistent
with International Financial Reporting Standards ("IFRS") or
("GAAP") and are included in section 2.1 of the unaudited interim
condensed financial statements for the three and nine months ended
30 September 2021, as well as Endeavour Mining Corporation's
audited consolidated financial statements for the years ended 31
December 2020 and 2019 and notes thereto which has been prepared in
accordance with IFRS. This Management Report is prepared as an
equivalence to the Company's Management Discussions & Analysis
("MD&A") which is the Canadian filing requirement in accordance
with National Instrument 51-102, Continuous Disclosure Obligations
("NI 51-102"), and includes all of the disclosures as required by
NI 51-102.
This Management Report contains "forward-looking statements"
that are subject to risk factors set out in a cautionary note
contained herein. The reader is cautioned not to place undue
reliance on forward-looking statements. All figures are in United
States Dollars, unless otherwise indicated. Tabular amounts are in
thousands of United States Dollars, except per share amounts and
where otherwise indicated. This Management Report is prepared as of
10 November 2021. Additional information relating to the Company is
available, including the Company's prospectus (available on the
Company's website at www.endeavourmining.com) and the Company's
Annual Information Form (available on SEDAR at www.sedar.com.
1. BUSINESS OVERVIEW
1.1. OPERATIONS DESCRIPTION
Endeavour is a multi-asset gold producer focused on West Africa
and dual-listed on the Toronto Stock Exchange ("TSX") and the
London Stock Exchange ("LSE") under the symbol EDV on both
exchanges. The Company's assets include five mines (Houndé, Mana,
Boungou, Wahgnion and Karma) in Burkina Faso, the Ity mine in Côte
d'Ivoire, the Sabodala-Massawa mine in Senegal, six development
projects (Fetekro, Kalana, Bantou, Nabanga, Golden Hill and Afema)
and a strong portfolio of exploration assets on the highly
prospective Birimian Greenstone Belt across Burkina Faso, Côte
d'Ivoire, Mali, Senegal, and Guinea. On 10 February 2021, Endeavour
completed the acquisition of Teranga Gold Corporation ("Teranga"),
a TSX-listed gold company which owned the Sabodala-Massawa and
Wahgnion mines, as well as certain development and exploration
assets. On 1 March 2021, the Company completed the disposition of
its Agbaou mine in Côte d'Ivoire.
As a leading global gold producer and the largest in West
Africa, Endeavour is committed to principles of responsible mining
and delivering sustainable value to its employees, stakeholders,
and the communities where it operates.
2. HIGHLIGHTS FOR THE THREE AND NINE MONTHSED 30 SEPTEMBER
2021
Table 16: Consolidated Highlights
THREE MONTHSED NINE MONTHSED
30 September 30 September 30 September 30 September
($'000s) Unit 2021 2020 2021 2020
---------------- ------- ------------ ------------ ------------ --------------
Operating data
from continuing
operations
Gold produced oz 382,273 218,801 1,125,527 487,795
Gold sold oz 392,432 236,292 1,176,711 508,184
Realised gold
price(1) $/oz 1,763 1,840 1,768 1,713
All-in
sustaining
costs ("AISC")
per ounce sold
(2) $/oz 904 881 872 896
Cash flow data
from continuing
operations
Operating cash
flows before
working
capital $ 325,880 195,348 874,948 365,586
Operating cash
flows before
working capital
per share(2) $/share 1.30 1.20 3.69 2.85
Operating cash
flows $ 311,906 181,996 819,124 335,392
Operating cash
flows per
share(2) $/share 1.25 1.12 3.46 2.61
Profit and loss
data from
continuing
operations
Revenue(1) $ 691,707 434,839 2,080,926 870,741
Earnings from
mine
operations $ 235,114 123,231 714,704 270,994
Net
comprehensive
earnings
attributable to
shareholders $ 113,587 52,160 327,030 30,343
Basic earnings
per share
attributable to
shareholders $/share 0.45 0.32 1.38 0.24
EBITDA(2,3) $ 344,406 202,995 1,040,659 327,446
Adjusted
EBITDA(2,3) $ 369,602 225,427 1,075,799 431,609
Adjusted net
earnings
attributable to
shareholders(2) $ 152,964 80,547 429,285 154,214
Adjusted net
earnings per
share
attributable to
shareholders(2) $/share 0.61 0.49 1.81 1.20
Balance Sheet
Data
Cash $ 760,368 523,324 760,368 523,324
Net Debt(2) $ 69,632 175,172 69,632 175,172
Net
Debt/Adjusted
EBITDA (LTM)
ratio(2,3) : 0.05 0.29 0.05 0.29
---------------- ------- ------------ ------------ ------------ ------------
(1) Revenue and realised gold price are inclusive of the
Sabodala-Massawa and Karma streams.
(2) This is a non-GAAP measure. Refer to the non-GAAP measure
section of this Management Report.
(3) EBITDA is defined as Earnings before interest, taxes,
depreciation and depletion; LTM is defined as last twelve
months.
3. ENVIRONMENT, SOCIAL AND GOVERNANCE
Endeavour is committed to being a responsible gold miner,
creating long-term value and sharing the benefits of its operations
among all its stakeholders, including employees, host communities
and shareholders. As the largest gold miner in West Africa and a
trusted partner, Endeavour's operations have the potential to
provide a significant positive impact on the economies and social
development of its local communities and host countries, while
minimising their impact on the environment.
Environment, social and governance ("ESG") policies, systems and
practices are embedded throughout the business and the Company
reports annually on its ESG performance via its Sustainability
Report. A dedicated sustainability governance structure has been
established with an Environment, Sustainability and Governance
Committee at board level, which the management of the ESG Committee
reports into.
The Responsible Gold Mining Principles ("RGMPs")
The RGMPs were launched by the World Gold Council, the industry
body responsible for stimulating and sustaining demand for gold, to
reflect the commitment of the world's leading gold producers to
responsible mining. The RGMPs provide a comprehensive ESG reporting
framework that sets out clear expectations as to what constitutes
responsible gold mining to help provide confidence to investors,
supply chain participants and ultimately, consumers.
The RGMPs consist of ten umbrella principles and fifty-one
detailed principles that cover key ESG themes. Member companies
have three years to comply with the RGMPs and are required to
obtain external assurance on their conformance to the RGMPs.
During 2020, Endeavour received external assurance on its first
RGMP, 1.7 Accountabilities and Reporting and continued to progress
on the implementation of the other RGMPs, including commissioning
an independent external readiness assessment to confirm Endeavour's
internal gap assessment (conducted in 2019) and to provide
additional recommendations in preparation for external assurance.
For the year ended 31 December 2020, Endeavour received external
assurance on seven RGMPs, the details of which are included in the
Company's 2020 Sustainability Report, available at
www.endeavourmining.com.
Responding to Climate Change
Being responsible stewards of the environment is critical to the
Group's long-term success. The Group has been reporting on its
Scope 1 and Scope 2 greenhouse gas emissions since 2017 and Scope 3
emissions since 2019.
In Q2-2021, Endeavour launched an augmented ESG strategy to
reflect the Company's increased size. Central to the strategy is
protecting the environment, with a core focus on tackling climate
change, water stewardship, conserving biodiversity as well as
plastic waste, a material issue in its host countries.
As part of Endeavour's journey to net zero by 2050, the Company
is working on its roadmap to reduce its greenhouse gas emissions
intensity by 30% by 2030. Among the eight levers identified to
reduce emissions, the Company has identified that switching to
renewable power has the most potential. Solar power is expected to
form a core part of the Group's energy mix going forward, starting
with the solar power plant project at the Houndé mine.
To support this commitment, 25% of the 2021 long-term executive
compensation award (vesting in 2023) is tied to the successful
implementation of a carbon reduction strategy and the commissioning
of at least one significant renewable energy power plant.
Sustainability Update
During Q2-2021, Endeavour published its 2020 Sustainability
Report. This Report marks a new milestone in the Company's
disclosure with the continued enhancement of transparency and the
adoption of standards set by the Task Force on Climate-related
Financial Disclosures ("TCFD") and the Sustainability Accounting
Standards Board ("SASB"). In addition, external assurance was
obtained for the first time on key ESG indicators.
To increase transparency on local procurement, Endeavour has
also adopted the Local Procurement Reporting Mechanism ("LPRM"), a
framework created by Mining Shared Value to support transparency
within the supply chain and standardize information on mine site
procurement.
Endeavour's 2020 sustainability highlights include:
-- 95% of the Group's workforce is from host countries and 66% of senior
management is from West Africa
-- 74% of total procurement, amounting to approximately $622.0 million,
spent on in-country suppliers, supporting over 2,000 national and local
businesses
-- Distribution of $894.0 million in economic value to host countries,
including $262.0 million in taxes and royalties
-- Invested $24.0 million, equivalent to $27 per ounce of gold produced, in
local communities and host countries, including $6 million to support the
fight against COVID-19
-- Successful decrease in malaria cases by 19% and the Group's malaria
incidence rate by 38%
-- Fourth consecutive year of no significant environmental incidents, since
annual sustainability reporting began
-- Greenhouse gas emission intensity (CO2-equivalent per oz gold produced)
reduced by 13% compared to 2018
-- Significantly improved CDP Climate Change score from D- to C and achieved
a C for Water Security performance
Launch of an augmented ESG Strategy
In Q2-21, Endeavour announced an updated ESG strategy to reflect
its increased size and scale. Endeavour's ESG strategy is centered
around two key pillars: investing in host countries and protecting
the environment (as detailed above). These two pillars are
underpinned by a strong governance framework and linked to clear,
measurable ESG-related executive compensation targets (as outlined
in the 2021 Management Information Circular).
The Company has also created the Endeavour Foundation, which
will be its primary vehicle to implement its social investments and
sustainability projects at the regional and national levels. The
Endeavour Foundation's focus areas are health, particularly
malaria, education, access to water and energy, and economic
development. The Endeavour Foundation will supplement the efforts
being undertaken by ECODEV, an economic development fund
established by Endeavour to support local economic growth by
promoting and investing in the creation of long-term, sustainable,
small and medium enterprises.
3.1. HEALTH AND SAFETY
Endeavour puts the highest priority on safe work practices and
systems. The Company's ultimate aim is to achieve "zero harm"
performance. The following table shows the safety statistics for
the trailing twelve months ended 30 September 2021. The Group's
lost time injury frequency rate ("LTIFR") continues to be well
below the industry benchmark.
Table 17: LTIFR(1) and TRIFR(2) Statistics for the Trailing
Twelve Months ended 30 September 2021 (4)
Incident Category
Lost Total
Time People
Fatality Injury Hours LTIFR(1) TRIFR(2)
Boungou -- 1 3,030,655 0.33 2.31
Houndé -- -- 4,974,300 -- 1.01
Ity -- 1 6,325,846 0.16 1.26
Karma -- -- 3,146,415 -- --
Mana -- -- 5,140,283 -- 2.92
Non Operations(3) -- 1 2,308,261 0.43 1.73
Sabodala-Massawa(4) -- 2 3,611,419 0.55 2.77
Wahgnion(4) -- 2 4,111,630 0.49 1.95
-------------------- ---------- ------ ---------- -------- ----------
Total -- 7 32,648,809 0.21 1.75
-------------------- ---------- ------ ---------- -------- --------
(1) LTIFR = Number of LTIs in the Period x 1,000,000 / Total
people hours worked for the period.
(2) Total Recordable Injury Frequency Rate ("TRIFR") = Number of
(LTI+Fatalities+Restricted Work Injury+Medical Treated Injury+First
Aid Injury) in the period x 1,000,000 / Total people hours worked
for the period.
(3) "Non Operations" includes Corporate, Kalana and
Exploration.
(4) Data relating to the acquired Teranga entities have been
included from their acquisition date.
3.2. COVID-19 RESPONSE
Since the outbreak of the global COVID-19 pandemic, Endeavour
has focused on the well-being of its employees, contractors and
local communities, while ensuring business continuity. In addition,
host governments in Côte d'Ivoire, Burkina Faso, Senegal and Mali
have taken strict and pro-active measures to minimise overall
exposure in their countries.
Protecting the well-being of employees, contractors, and local
communities
-- Endeavour has implemented a range of preventative measures at all its
sites, including social distancing, health screening, augmented hygiene
and restricted access to sites. Commencing in Q2-21, this has included
vaccination awareness campaigns across sites and offices and to date
nearly 50% of the entire workforce have been vaccinated.
-- Endeavour has donated key medical equipment and supplies to regional,
community and on-site medical centres across all four countries of its
projects and operations and continues to monitor the needs of its
communities.
-- A range of community programmes have been implemented during the pandemic,
including micro-credit programmes, which have helped to support people in
host communities whose livelihoods were impacted by the pandemic, and
e-learning programmes in Burkina Faso to facilitate access to distance
learning for students.
Business continuity response plan
-- In early March 2020, Endeavour put in place a business continuity plan to
mitigate the risks and potential impact of the global COVID-19 pandemic,
which has three levels of response:
-- Level 1, which the Group is currently operating under, involves a
range of preventative measures including temperature checks,
restricted access to sites, social distancing, increased hygiene
standards and mandatory quarantine periods for employees arriving
in-country, while otherwise continuing operations as normal.
-- Level 2 is designed to be initiated should COVID-19 become more
prevalent in the countries in which the Group operates and
involves comprehensive restrictions on movement into and out of
the mines. Under these circumstances, Endeavour's mines would be
isolated, but mining operations and the shipment of gold would
continue.
-- Level 3 involves the full or partial suspension of mining and
processing operations.
-- The Company's cloud-based strategy ensures that employees who need to
work from home are able to access all the relevant applications, systems
and collaboration tools needed to perform their duties. In addition, the
Company's cyber security response has been updated and is constantly
tracked in light of the increased cyber security risk generally observed
during the pandemic.
4. OPERATIONS REVIEW
The following tables summarises operating results for the three
and nine months ended 30 September 2021 and 30 September 2020.
4.1. Operational Review Summary
-- Q3-2021 consolidated production from continuing operations amounted to
382,273 ounces, an increase of 163,472 ounces or 75% compared to Q3-2020.
Group production increased due to higher production at Ity, Houndé,
and Boungou as well as the addition of the Sabodala-Massawa and Wahgnion
mines which were acquired on 10 February 2021. These increases were
offset by decreased production at Mana due to the expected lower grades
from the open pit. Group AISC from continuing operations increased by 3%
or $23 per ounce due to expected higher capital expenditure and scheduled
higher operating cost at all operations which was offset by the inclusion
of the lower cost Sabodala-Massawa mine due to more ounces sold.
-- YTD-2021 consolidated production from continuing operations increased by
637,732 ounces or 131% which was more than double that of YTD-2020, as a
result of the acquisition of Teranga Gold Corporation ("Teranga"), a
TSX-listed gold mining company which owned the Sabodala-Massawa and
Wahgnion mines on 10 February 2021, as well as the benefit of the full
nine months of operations of ex-SEMAFO Inc ("SEMAFO") which owned the
Mana and Boungou mines and which was acquired on 1 July 2020. AISC for
all operations decreased by $36 per ounce or 4% to $875 per ounce due to
the inclusion of the lower cost Sabodala-Massawa mine during the quarter,
lower AISC at Houndé due to lower sustaining capital, as well as
more than double the amount of ounces sold compared to YTD-2020.
Table 18: Group Production
THREE MONTHSED NINE MONTHSED
30
(All amounts in oz, September 30 September
on a 100% basis) 30 September 2021 30 September 2020 2021 2020
--------------------
Boungou(1) 40,844 30,226 139,393 30,226
Houndé 70,209 62,038 215,895 175,342
Ity 61,494 44,470 211,863 152,265
Karma 20,567 22,389 67,197 70,284
Mana(1) 49,101 59,678 150,667 59,678
Sabodala-Massawa(2) 105,913 -- 240,717 --
Wahgnion(2) 34,145 -- 99,795 --
-------------------- ----------------- ----------------- ----------- -----------
PRODUCTION FROM
CONTINUING
OPERATIONS 382,273 218,801 1,125,527 487,795
-------------------- ----------------- ----------------- ----------- -----------
Agbaou(3) -- 24,816 12,575 76,713
-------------------- ----------------- ----------------- ----------- -----------
GROUP PRODUCTION 382,273 243,617 1,138,102 564,508
-------------------- ----------------- ----------------- ----------- -----------
(1) Included for the post acquisition period commencing 1 July
2020.
(2) Included for the post acquisition period commencing 10
February 2021.
(3) Divested on 1 March, 2021.
Table 19: Group All-In Sustaining Costs(1)
THREE MONTHSED NINE MONTHSED
---------------------------------------------------------
30 30 30 30
September September September September
(All amounts in US$/oz) 2021 2020 2021 2020
---------------------------------------------------------
Boungou(2) 800 752 795 752
Corporate G&A 23 22 26 30
Houndé 921 865 833 966
Ity 915 775 830 728
Karma 1,259 1,073 1,162 949
Mana(2) 1,029 896 996 896
Sabodala-Massawa(3) 655 -- 667 --
Wahgnion(3) 1,097 -- 964 --
--------------------------------------------------------- --------- --------- --------- ---------
AISC(1) FROM CONTINUING OPERATIONS 904 881 872 896
--------------------------------------------------------- --------- --------- --------- ---------
Agbaou(4) -- 1,139 1,131 1,013
--------------------------------------------------------- --------- --------- --------- ---------
GROUP AISC(1) 904 906 875 911
(1) This is a non-GAAP measure.
(2) Included for the post acquisition period commencing
1 July 2020.
3 Included for the post acquisition period commencing
10 February 2021.
(4) Divested on 1 March 2021.
4.2. Boungou Gold Mine, Burkina Faso
Table 20: Boungou Key Performance Indicators(1)
THREE MONTHSED NINE MONTHSED
30 30 30
September September September 30 September
Unit 2021 2020 2021 2020
--------------- ---- ---------- ---------- ---------- -------------
Operating Data
Tonnes ore
mined kt 539 124 1,136 124
Tonnes of waste
mined kt 6,587 170 21,009 170
Tonnes of ore
milled kt 349 308 1,000 308
Average gold
grade milled g/t 3.76 3.15 4.34 3.15
Recovery rate % 95 94 95 94
Gold produced oz 40,844 30,226 139,393 30,226
Gold sold oz 41,286 35,411 137,119 35,411
Realised gold
price $/oz 1,774 1,877 1,780 1,877
--------------- ---- ---------- ---------- ---------- -------------
Financial Data
($'000)
Revenue $ 73,242 66,450 244,093 66,450
Operating
expenses $ (25,248) (26,836) (82,172) (26,836)
Royalties $ (4,365) (4,106) (14,706) (4,106)
Non-cash
operating
expenses(2) $ -- 4,830 4,330 4,830
Total Cash
Cost(3) $ (29,613) (26,112) (92,548) (26,112)
Sustaining
capital(3) $ (3,403) (505) (16,468) (505)
--------------- ---- ---------- ---------- ---------- -----------
Total All-in
Sustaining
Costs(3) $ (33,016) (26,617) (109,016) (26,617)
Non-sustaining
capital(3) $ (5,449) (848) (13,874) (848)
--------------- ---- ---------- ---------- ---------- -----------
Total All-in
Costs(3) $ (38,465) (27,465) (122,890) (27,465)
--------------- ---- ---------- ---------- ---------- -----------
All-In
Margin(3, 4) $ 34,777 38,985 121,203 38,985
Cash cost per
ounce sold(3) $/oz 717 737 675 737
--------------- ---- ---------- ---------- ---------- -----------
Mine All-In
Sustaining
Costs per
ounce sold(3) $/oz 800 752 795 752
--------------- ---- ---------- ---------- ---------- -----------
(1) Analysis of operations is only for the period after its
acquisition by Endeavour on 1 July 2020.
(2) Non-cash operating expenses relates to the reversal in the
period of the fair value adjustment of inventory on hand at the
acquisition date.
(3) Non-GAAP measure. Refer to the non-GAAP Measures section for
further details.
(4) All-In Margin is calculated as revenue less all-in costs for
the period.
Q3-2021 vs Q3-2020 insights
-- Production increased due to higher throughput and higher average grade
processed as ore was sourced from the West Pit relative to Q3-2020 where
the plant feed was mainly sourced from stockpiles as the Boungou mine had
been on care and maintenance.
-- Tonnes mined increased significantly due to increased contractor
mining fleet availability and utilisation compared to Q3-2020
where mining was limited to easily accessible ore as mining
activities were restarting. In Q3-2021, ore mined was mainly
sourced from the West Pit Phase 2 and 3 while pre-stripping
continued in the East Pit.
-- Tonnes milled increased due to higher throughput resulting from
good fragmentation of mined ore as well as operational
improvements to optimise the feed to the SAG mill, pebble crusher
and vertical tower mill.
-- Processed grade increased due to higher grade ore sourced from the
West Pit Phase 2 and 3 compared to the prior period where plant
feed was mainly from stockpiles.
-- AISC increased due to expected sustaining capital expenditures, which
were partially offset by lower unit mining and processing costs due to
increased efficiencies as a result of additional mining equipment
commissioned in Q1-2021, improved mining fragmentation and shorter hauls
associated with the near surface Phase 3 expansion.
-- Sustaining capital expenditure of $3.4 million mainly related to waste
capitalisation at the West Pit and the third TSF wall raise.
-- Non-sustaining capital expenditure of $5.4 million related to
pre-stripping at the East pit.
YTD-2021 Insights
-- Production of 139,393 ounces benefited from high tonnes mined and milled
at a high average grade benefiting from the full nine months of
operations, while the equivalent period in 2020 only had one quarter of
operations in which there were limited mining activities as mill feed was
mainly sourced from the lower grade stockpiles prior to Q3-2020.
-- Total tonnes mined is attributable to the full nine months of
production following the restart of full mining activities in
early Q4-2020, the commissioning of additional mining equipment
during Q1-2021 and the benefit of mining on the top benches, which
include a shorter haul and improved efficiencies. Pre-stripping
activities at the East pit have been ongoing since Q1-2021 and its
expected to expose ore for mining in Q1-2022. Tonnes of ore mined
was mainly sourced from the West pit during the nine months ended
30 September 2021.
-- Tonnes milled is high due to better mining fragmentation which
increased mill utilisation, as well as the benefit of operational
improvements to optimise the feed to the SAG mill, pebble crusher
and vertical tower mill.
-- Average processed grade is high as better grades were increasingly
sourced from the West Pit following the restart of mining
activities in Q4-2020.
-- AISC per ounce is high due to the planned increase in sustaining waste
capital, high unit mining cost due to the high strip ratios as well as
high unit processing cost due to high power generation cost driven by
high fuel prices.
-- Sustaining capital expenditures of $16.5 million during the year to date
related to waste capitalisation at West pit and the commencement of the
third TSF wall raise.
-- Non-sustaining capital expenditure of $13.9 million related to
pre-stripping at the East pit.
-- There have been no interruptions in operations and supply procurement
during YTD-2021 as management continues to focus on security enhancements
at the Boungou mine following the restart of operations in Q4-2020.
2021 Outlook
-- Boungou is expected to achieve the bottom half of the FY-2021 production
guidance of 180 - 200koz, while AISC are expected to continue to trend
above the guided $690 - 740 per ounce range as a result of higher fuel
prices and increased security costs.
-- Plant feed is expected to continue to be sourced from the West Pit with
waste stripping activities continuing at the East Pit through to the end
of the year. Mill throughput and average processed grades are expected to
remain broadly consistent with year to date performance in Q4-2021.
-- The sustaining capital spend outlook for FY-2021 remains unchanged
compared to the initial guidance of $19.0 million, of which $16.5 million
has been incurred year to date. The non-sustaining capital spend outlook
for FY-2021 also remains unchanged compared to the initial guidance of
$22.0 million, of which $13.9 million has been incurred year to date.
2021 Exploration Programme
-- An exploration programme of up to $7 million was planned for 2021, of
which $5 million has been spent year to date consisting of 25,700 meters
of drilling across 280 drillholes. During Q3-2021, $1 million was spent
on exploration, consisting of 1,300 meters of drilling. The exploration
efforts were focused on delineating near mine targets including Natougou
Northeast, Boungou Northwest and Boungou North.
-- At Natougou Northwest, drilling continues to delineate the zone of
higher-grade mineralisation trending North-Northwest that remains open to
the north. Throughout Q4-2021 and into 2022, drilling will focus on both
delineating this trend, and at Natougou Southeast and Natougou Southwest
targeting the extension of existing mineralised trends and on the
evaluation of inferred resources.
-- At Boungou Northwest, year to date drilling demonstrated promising
initial results, identifying the continuation of the Boungou shear down
plunge. Follow-up drilling in Q4-2021 and 2022 will continue to evaluate
this shear zone.
-- During Q4-2021 and in 2022 further drilling will focus on expanding the
footprints and defining resources at Natougou Northwest, Boungou North
and Boungou Northwest.
-- Reconnaissance drilling to the north of Boungou following up on
geochemical anomalies, at the Osaanpalo and Tawori targets, identified
shallow oxide mineralization. Follow up drilling in 2022 will focus on
delineating these early-stage targets, as well as the Dangou target.
4.3. Houndé Gold Mine, Burkina Faso
Table 21: Houndé Key Performance Indicators
THREE MONTHSED NINE MONTHSED
30 September 30 September 30 September 30 September
Unit 2021 2020 2021 2020
--------------- ---- ------------ ------------ ------------ --------------
Operating Data
Tonnes ore
mined kt 596 1,231 3,620 3,204
Tonnes of waste
mined kt 11,370 8,702 34,000 29,550
Tonnes milled kt 1,142 1,010 3,396 3,111
Average gold
grade milled g/t 2.11 2.06 2.15 1.91
Recovery rate % 92 92 92 92
Gold produced oz 70,209 62,038 215,895 175,342
Gold sold oz 75,381 62,273 219,239 176,375
Realised gold
price $/oz 1,783 1,858 1,781 1,728
--------------- ---- ------------ ------------ ------------ --------------
Financial Data
($'000)
Revenue $ 134,401 115,721 390,471 304,746
--------------- ---- ------------ ------------ ------------ ------------
Operating
expenses $ (39,158) (37,352) (121,209) (115,759)
Royalties $ (8,390) (9,516) (26,205) (24,646)
Total Cash
Cost(1) $ (47,548) (46,868) (147,414) (140,405)
Sustaining
capital(1) $ (21,858) (6,999) (35,162) (29,890)
--------------- ---- ------------ ------------ ------------ ------------
Total All-In
Sustaining
Costs(1) $ (69,406) (53,867) (182,576) (170,295)
Non-sustaining
capital(1) $ (619) (7,327) (10,300) (14,892)
--------------- ---- ------------ ------------ ------------ ------------
Total All-in
Costs(1) $ (70,025) (61,194) (192,876) (185,187)
--------------- ---- ------------ ------------ ------------ ------------
All-In
Margin(1, 2) $ 64,376 54,527 197,595 119,559
Cash cost per
ounce sold(1) $/oz 631 753 672 796
--------------- ---- ------------ ------------ ------------ ------------
Mine All-In
Sustaining
Costs per
ounce sold(1) $/oz 921 865 833 966
--------------- ---- ------------ ------------ ------------ ------------
(1) Non-GAAP measure. Refer to the non-GAAP Measures section for
further details.
(2) All-In Margin is calculated as revenue less all-in costs for
the period.
Q3-2021 vs Q3-2020 insights
-- Production increased, despite lower tonnes of ore mined compared to
Q3-2020, due to the higher plant throughput at higher grade, as ore was
source from the high grade oxide material from the Kari Pump area.
-- Tonnes of ore mined decreased due to the focus on waste stripping
at the Vindaloo Main pit as well as pre-stripping activities at
the high grade Kari West. Ore was sourced from the high grade
oxide Kari Pump deposit and supplemented by fresh ore from the
Vindaloo Center, stockpiles and limited mining at Bouéré
pits.
-- Tonnes milled increased due to the higher throughput rate that
resulted from higher proportion of oxide ore in the blend.
-- Average gold grade milled increased in Q3-2021 due to higher grade
ore from the Kari-Pump and Vindaloo Main pits, compared to lower
grade ore from Vindaloo Center and lower grade stockpiles in
Q3-2020.
-- AISC increased due to higher sustaining capital as well as higher unit
processing cost due to increased use of on-site generated power. Higher
costs were partially offset by lower unit mining costs as a result of
mining more oxide material with lower associated drill and blast costs.
-- Sustaining capital of $21.9 million is related to waste capitalisation at
the Vindaloo Main and Kari Pump pits.
-- Non-sustaining capital of $0.6 million is related to the costs associated
with the development of the Kari West pit.
YTD-2021 vs YTD-2020 Insights
-- Production increased significantly due to increased throughput and higher
average processed grades, mainly as a result of the ramp-up of the high
grade Kari Pump deposit.
-- Tonnes of ore mined increased mainly due to the ramp up at the
Kari Pump pit and increased ore tonnes mined from the Vindaloo
Center pit, which allowed further optionality in the mine plan
compared to prior periods when Kari Pump was at the pre-stripping
stage.
-- Tonnes milled increased as mill throughput improved due to the
higher proportion of oxide ore from the Kari Pump pit, offsetting
the higher volumes of fresh ore from the Vindaloo Center, Vindaloo
Main and Bouéré pits.
-- Average gold grade milled increased due to ore sourced from the
high grade Kari Pump ore, which was supplemented by ore from the
Vindaloo Center, Vindaloo Main and the Bouéré pits.
-- AISC decreased due to lower unit mining costs as a result of lower drill
and blast requirements for the oxide ore from the Kari Pump pit as well
as lower unit sustaining capital costs per ounce, which was slightly
offset by higher unit processing cost associated with scheduled
maintenance and higher unit G&A costs associated with the Kari Pump
permitting process.
2021 Outlook
-- FY-2021 production at Houndé is expected to be near the top end of
its guidance of 240 - 260koz as year to date performance was stronger
than scheduled due to the better-than-expected mining productivity
achieved during the pre-stripping of Kari Pump which enabled access to
greater volumes of high grade oxide ore. AISC is expected to be near the
bottom end of its guided range of $855 - 905 per ounce.
-- In Q4-2021, mining activities will continue to focus on Kari Pump,
supplemented by contributions from Vindaloo Main and Kari West. Mining is
expected to increase at Vindaloo Main and Kari West after completion of
the pre-strip. Throughput is expected to decline slightly, compared to
year to date throughput, and processed grade is expected to be lower as
the contribution from the high grade Kari Pump deposit will be reduced as
Vindaloo Main and Kari West provide an increased proportion of the feed.
-- Due to a stronger than guided production outlook, the sustaining capital
spend for FY-2021 is expected to be above initial guidance of $39.0
million, of which $35.2 million has been incurred year to date.
-- Non-sustaining capital spend outlook for FY-2021 remains unchanged
compared to the initial guidance of $13.0 million, of which $10.3 million
has been incurred year to date.
2021 Exploration Programme
-- An exploration programme of up to $7 million was initially planned for
2021, however given our exploration success here early in the year, $14
million has now been spent year to date, consisting of 74,800 meters of
drilling across 667 drillholes. During Q3-2021, $7 million was spent on
exploration consisting of 6,000 meters of drilling. The exploration
efforts were focused on Mambo, Vindaloo South and the intersection
between Kari Gap and Kari Center.
-- Drilling at the Mambo target, a recent discovery located 12km from the
Houndé plant, has continued to extend mineralisation to over 1,000
meters in length and it remains open to the Southwest, Northeast, and at
depth. A maiden resource at Mambo is expected to be published in Q4-2021.
-- During Q3-2021, at Vindaloo South and the intersection between Kari Gap
and Kari Center drilling continued to target extensions to the currently
defined mineralisations.
-- During Q4-2021 and into 2022, exploration will continue to focus on
expanding Mambo, Vindaloo South and the intersection between Kari Gap and
Kari Center. In addition, Endeavour will advance higher grade targets
such as Sia Sianikoui and Dohoum through additional drilling.
4.4. Ity Gold Mine, Côte d'Ivoire
Table 22: Ity CIL Key Performance Indicators
THREE MONTHSED NINE MONTHSED
30 September 30 September 30 September 30 September
Unit 2021 2020 2021 2020
--------------- ---- ------------ ------------ ------------ --------------
Operating Data
Tonnes ore
mined kt 1,690 2,352 5,672 5,911
Tonnes of waste
mined kt 3,886 3,970 12,654 11,012
Tonnes milled kt 1,530 1,307 4,624 3,897
Average gold
grade milled g/t 1.50 1.34 1.74 1.52
Recovery rate % 83 81 81 81
Gold produced oz 61,494 44,470 211,863 152,265
Gold sold oz 63,403 47,478 221,263 157,138
Realised gold
price $/oz 1,778 1,869 1,786 1,711
--------------- ---- ------------ ------------ ------------ ------------
Financial Data
($'000)
Revenue $ 112,731 88,755 395,224 268,897
--------------- ---- ------------ ------------ ------------ ------------
Operating
expenses $ (46,325) (29,331) (144,165) (94,263)
Royalties $ (6,171) (5,239) (21,670) (14,455)
Total Cash
Cost(1) $ (52,496) (34,570) (165,835) (108,718)
Sustaining
capital(1) $ (5,526) (2,249) (17,866) (5,625)
--------------- ---- ------------ ------------ ------------ ------------
Total All-in
Sustaining
Costs(1) $ (58,022) (36,819) (183,701) (114,343)
Non-sustaining
capital(1) $ (3,944) (3,697) (24,367) (25,390)
--------------- ---- ------------ ------------ ------------ ------------
Total All-in
Costs(1) $ (61,966) (40,516) (208,068) (139,733)
--------------- ---- ------------ ------------ ------------ ------------
All-In
Margin(1, 2) $ 50,765 48,239 187,156 129,164
Cash cost per
ounce sold(1) $/oz 828 728 749 692
--------------- ---- ------------ ------------ ------------ ------------
Mine All-In
Sustaining
Costs per
ounce sold(1) $/oz 915 775 830 728
--------------- ---- ------------ ------------ ------------ ------------
(1) Non-GAAP measure. Refer to the non-GAAP Measures section for
further details.
(2) All-In Margin is calculated as revenue less all-in costs for
the period.
Q3-2021 vs Q3-2020 insights
-- Production increased significantly due to higher throughput, higher
average processed grade, as well as improved recovery rates .
-- Tonnes ore mined decreased due to the greater focus on waste
stripping. Ore was mainly sourced from the Bakatouo, the historic
heap leach waste dumps and Daapleu, supplemented by ore from the
Ity and Colline Sud pits. In Q3-2020 supplemental ore was sourced
from the Aires and Verse Ouest stockpiles, whereas in Q3-2021
supplemental ore was from the Walter and the newly commissioned Le
Plaque and Flotouo pits providing greater operational flexibility.
-- Tonnes milled increased and continued to perform above nameplate
due to improvements in plant maintenance strategies and continued
use of the surge bin feeder, despite a higher proportion of
transitional and fresh ore being processed.
-- Processed grade increased due to the benefit of the higher grade
ore from the Bakatouo and Daapleu pits, which was supplemented
with ore from the historic heap leach waste dumps and Ity.
-- Recovery rates increased due to a higher proportion Bakatouo fresh
ore in the blend compared to Daapleu fresh ore in Q3-2020, which
has associated lower recoveries due to its refractory nature.
-- AISC per ounce increased due to higher sustaining capital related to
waste stripping and mining equipment as well as higher unit processing
costs due to the increase in the proportion of transitional and fresh
material and the resulting increase in reagent consumption.
-- Sustaining capital expenditure of $5.5 million related primarily to waste
stripping at the Ity, Bakatouo, Walter and Colline Sud pits as well as
the acquisition of mining geotechnical monitoring equipment and strategic
heavy vehicle spare parts.
-- Non-sustaining capital expenditure of $3.9 million mainly related to the
construction of the TSF stage 3 raise, pre-leach and tank spargers as
well as Le Plaque waste dump sterilisation drilling.
-- During Q2-2021, Ity transitioned from owner mining to contract mining
with Societe de Forage et des Travaux Publics ("SFTP"), a local
contractor who is already performing contract mining services at our
Karma and Boungou mines. As a part of the transition, the mining fleet at
Ity was sold to SFTP for a consideration of approximately $24.2 million
which is expected to be received during Q4-2021.
YTD-2021 vs YTD-2020 Insights
-- Production increased significantly due to higher throughput and higher
processed grades.
-- Tonnes of ore mined decreased due to the higher strip ratio, which
was partially offset by the higher mining fleet availability and
and the commencement of mining at the Walter, Le Plaque and
Flotouo pits, which provided greater operational flexibility.
-- Tonnes milled increased due to higher mill utilisation and the
supplemental processing of oxide ore through the surge bin.
-- Average gold grade milled increased due to the higher grade ore
sourced from the Bakatouo and Daapleu.
-- AISC per ounce increased due to higher unit processing costs related to
higher proportion of fresh ore being processed and increased sustaining
capital as a result of higher capitalised waste.
2021 Outlook
-- FY-2021 production at Ity is on track to be near the top end of its
guidance of 230 - 250koz with AISC expected to be near the top end of its
$800 - 850 per ounce guided range. Year to date performance was stronger
than anticipated due to the benefit of a combination of higher throughput,
grade, and higher recoveries.
-- Mining activity is expected to increase at the higher grade Le Plaque pit
in Q4-2021. Stripping activity, which was partially deferred due to low
equipment availability earlier in the year, is expected to continue in
Q4-2021 at the Ity pit. Throughput is expected to be slightly lower in
Q4-2021 compared to previous quarters due to an increased proportion of
fresh ore sourced from Daapleau.
-- The sustaining capital spend outlook for FY-2021 remains unchanged
compared to the initial guidance of $28.0 million, of which $17.9 million
has been incurred year to date. As previously reported, non-sustaining
capital spend for FY-2021 is expected to amount to approximately $40.0
million, of which $24.4 million has been incurred year to date.
2021 Exploration Programme
-- An exploration programme of $9 million was initially planned for 2021,
however given the success, $10 million has already been spent year to
date consisting of 69,500 meters of drilling across 538 drillholes.
During Q3-2021, $4 million was spent on exploration consisting of more
than 24,400 meters of drilling. The exploration efforts were focused on
Le Plaque South (Delta Extension), West Flotouo (Verse Ouest), Daapleu
Deep, Yopleu-Legaleu and the junction between Bakatouo and Walter.
-- During Q3-2021, drilling on the West Flotouo target led to the discovery
of further high grade mineralised lenses immediately below the former
Flotouo dump, located in proximity to the plant. West Flotouo is open to
the north, south and at depth. As such, during Q4-2021 further
delineation of this discovery is expected and a maiden resource is
expected to be published in late 2021.
-- Drilling in the Le Plaque area focused on extending mineralisation at Le
Plaque South, Delta Extension and Yopleu-Legaleu. An updated Le Plaque
resource is expected to be published in Q4-2021.
-- Drilling conducted at Daapleu Deep continued to extend mineralisation to
over 300 meters downdip of the current pit design. Daapleau Deep will be
delineated further in Q4-2021 and in 2022.
-- Drilling at the junction between the Bakatouo and Walter deposits
confirmed that the skarn style mineralisation is continuous between the
two deposits and that it remains open at depth. Exploration will continue
to delineate this target in Q4-2021 and in 2022.
4.5. Karma Gold Mine, Burkina Fas
Table 23: Karma Key Performance Indicators
THREE MONTHSED NINE MONTHSED
30 September 30 September 30 September 30 September
Unit 2021 2020 2021 2020
--------------- ---- ------------ ------------ ------------ --------------
Operating Data
Tonnes ore
mined kt 1,393 1,011 3,889 3,528
Tonnes of waste
mined kt 3,579 3,381 12,441 10,618
Tonnes of ore
stacked kt 1,264 1,192 3,911 3,544
Average gold
grade stacked g/t 0.70 0.76 0.77 0.86
Recovery rate % 64 72 66 79
Gold produced oz 20,567 22,389 67,197 70,284
Gold sold oz 20,693 23,324 68,704 71,454
Realised gold
price(1) $/oz 1,659 1,537 1,651 1,436
--------------- ---- ------------ ------------ ------------ --------------
Financial Data
($'000)
Revenue(1) $ 34,333 35,844 113,416 102,579
--------------- ---- ------------ ------------ ------------ ------------
Operating
expenses $ (22,890) (20,077) (69,042) (54,132)
Royalties $ (3,136) (3,410) (10,294) (9,489)
Total Cash
Cost(2) $ (26,026) (23,487) (79,336) (63,621)
Sustaining
capital(2) $ (17) (1,535) (499) (4,202)
--------------- ---- ------------ ------------ ------------ ------------
Total All-In
Sustaining
Costs(2) $ (26,043) (25,022) (79,835) (67,823)
Non-sustaining
capital(2) $ (239) (1,706) (3,134) (7,618)
--------------- ---- ------------ ------------ ------------ ------------
Total All-in
Costs(2) $ (26,282) (26,728) (82,969) (75,441)
--------------- ---- ------------ ------------ ------------ ------------
All-In
Margin(2, 3) $ 8,051 9,116 30,447 27,138
Cash cost per
ounce sold(2) $/oz 1,258 1,007 1,155 890
--------------- ---- ------------ ------------ ------------ ------------
Mine All-In
Sustaining
Costs per
ounce sold(2) $/oz 1,259 1,073 1,162 949
--------------- ---- ------------ ------------ ------------ ------------
(1) Revenue and realised gold price are inclusive of the Karma
stream.
(2) Non-GAAP measure. Refer to the non-GAAP Measures section for
further details.
(3) All-In Margin is calculated as revenue less all-in costs for
the period.
Q3-2021 vs Q3-2020 insights
-- Production decreased despite the increased stacking rate due to the
expected lower average grade and recovery rates on account of a higher
proportion of transitional GG1 ore stacked.
-- Total ore tonnes mined, which were mainly sourced from the GG1 pit,
increased slightly due to the decrease in strip ratio.
-- The stacked ore grade decreased due to the lower grade from the
GG1 pit compared to a combination of Kao North and GG1 pit
materials stacked during the same period in prior year.
-- Recovery rate decreased as expected due to the increased
proportion of transitional ore from the GG1 pit which has a lower
associated recovery rate.
-- AISC per ounce increased due to the lower recovery rates which was
partially offset by slightly lower unit processing cost. The lower unit
processing costs were due to lower cement consumption per tonne for ore
from the GG1 pit compared to higher cement consumption for Kao North
materials in the prior period as well as lower cyanide consumption
compared to prior period where extra cyanide was used to increase
recovery.
-- Sustaining capital expenditure was negligible during Q3-2021.
-- Non-sustaining capital expenditure was $0.2 million, which was related to
construction of new heap leach cells.
YTD-2021 vs YTD-2020 Insights
-- Production decreased despite the higher ore tonnes stacked due to lower
grade material being stacked and lower recovery rates.
-- Ore tonnes mined decreased due to increased strip ratio and
reduced mining at the Kao North pit which was partially offset by
increased mining at the GG1 pit. The mine sequencing for H2-2021
has been modified to reduce the planned ore tonnes to be mined
from the Kao North pit as management works to obtain the
appropriate permits and approvals for the grave settlement
relocation for the Kao North pit, which they expect to receive in
Q4-2021.
-- Ore tonnes stacked increased due to higher stacker utilisation and
the use of stockpiles to supplement the mill feed.
-- The average stacked grade decreased due to a higher proportion of
the low grade GG1 and stockpile ore stacked during the YTD-2021
compared to YTD-2020 where a higher proportion of the higher grade
Kao North ore was stacked.
-- Recovery rate decreased due to the higher proportion of the more
transitional GG1 ore being stacked, which has a lower associated
recovery rate.
-- AISC per ounce increased due to the higher strip ratio, higher royalties
as well as lower recovery rates.
-- Sustaining capital expenditure was $0.5 million and related to dewatering
boreholes and other site equipment upgrades.
-- Non-sustaining capital expenditure was $3.1 million and related to
construction of new cells within the heap leach pad compared to
non-sustaining costs in year to date prior year which related to the
completion of the stacking system upgrades, leachate pump and power
upgrade.
2021 Outlook
-- Karma is well positioned to meet its FY-2021 production guidance of 80 -
90koz and achieve AISC near the bottom end of the guided $1,220 - $1,300
per ounce range.
-- In Q4-2021, mining activity is expected to focus on the GG1 pits,
supplemented by ore from the Rambo Pit. As a result of the increase in
transitional material mined from the GG1 pits, processed grades and
recoveries are expected to be lower, while mill throughput is expected to
slightly increase compared to Q3-2021.
-- The sustaining capital outlook at Karma is expected to be significantly
lower than the $11.0 million guided as a result of the waste development
being included as an operating cost for 2021 due to the short mine life
remaining at Karma.
-- The non-sustaining capital spend outlook for FY-2021 remains unchanged
compared to the initial guidance of $5.0 million, of which $3.1 million
has been incurred year to date.
2021 Exploration Programme
-- During Q3-2021, limited exploration work continued as part of the
advanced grade control drilling programme, targeting near mine extensions
to be added into the current mine plan. The focus was on Kao Main, Kao
North, Kao North Southeast, Rambo, GG1, GG2, Anomaly B and Kanongo, which
will be pursued in Q4-2021 and in 2022.
4.6. Mana Gold Mine, Burkina Faso
Table 24: Mana Key Performance Indicators(1)
THREE MONTHSED NINE MONTHSED
30 30 30
September September September 30 September
Unit 2021 2020 2021 2020
--------------- ---- ---------- ---------- ---------- -------------
Operating Data
Tonnes ore
mined - open
pit kt 592 465 1,496 465
Tonnes of waste
mined - open
pit kt 4,522 5,951 19,338 5,951
Tonnes ore
mined -
underground kt 199 197 658 197
Tonnes of waste
mined -
underground kt 47 116 212 116
Tonnes of ore
milled kt 667 593 1,942 593
Average gold
grade milled g/t 2.50 3.43 2.62 3.43
Recovery rate % 91 95 91 95
Gold produced oz 49,101 59,678 150,667 59,678
Gold sold oz 48,762 67,806 159,085 67,806
Realised gold
price $/oz 1,780 1,889 1,786 1,889
--------------- ---- ---------- ---------- ---------- -------------
Financial Data
($'000)
Revenue $ 86,776 128,069 284,174 128,069
Operating
expenses $ (42,320) (51,799) (129,940) (51,799)
Royalties $ (5,745) (7,754) (18,782) (7,754)
Non-cash
operating
expenses(2) $ -- 3,560 379 3,560
Total Cash
Cost(3) $ (48,065) (55,993) (148,343) (55,993)
Sustaining
capital(3) $ (2,130) (4,781) (10,150) (4,781)
--------------- ---- ---------- ---------- ---------- -------------
Total All-in
Sustaining
Costs(3) $ (50,195) (60,774) (158,493) (60,774)
Non-sustaining
capital(3) $ (11,222) (9,953) (56,387) (9,953)
--------------- ---- ---------- ---------- ---------- -------------
Total All-in
Costs(3) $ (61,417) (70,727) (214,880) (70,727)
--------------- ---- ---------- ---------- ---------- -------------
All-In
Margin(3, 4) $ 25,359 57,342 69,294 57,342
Cash cost per
ounce sold(3) $/oz 986 826 932 826
--------------- ---- ---------- ---------- ---------- -------------
Mine All-In
Sustaining
Costs per
ounce sold(3) $/oz 1,029 896 996 896
--------------- ---- ---------- ---------- ---------- -------------
(1) Analysis of operations is only for the period after its
acquisition by Endeavour on 1 July 2020.
(2) Non-cash operating expenses relates to the reversal in the
period of the fair value adjustment of inventory on hand at the
acquisition date.
(3) Non-GAAP measure. Refer to the non-GAAP Measures section for
further details.
(4) All-In Margin is calculated as revenue less all-in costs for
the period.
Q3-2021 vs Q3-2020 insights
-- Production decreased despite the increase in tonnes of ore mined due to
the expected lower grades from the Wona South Stage 2 and 3 pit as well
as lower grade from the Siou underground.
-- Open pit tonnes of ore mined increased due to overall lower strip
ratio at the Wona South stage 2 and 3 pit compared to Q3-2020,
where ore was sourced from Wona North stage 3 with a goodbye cut
in Q1-2021 in favour of the underground mining option.
-- Total underground ore tonnes mined was consistent with the prior
quarter, however in Q3-2021 less underground waste was mined as
the mining focus shifted to a higher proportion of production
stopes, compared to a higher proportion of development stopes in
Q3-2020.
-- Tonnes milled increased due to an increase in mill availability
and utilisation on account of improved mining fragmentation and
softer ore characteristics in the Wona South pit compared to the
Wona North pit.
-- The average processed grade decreased as expected due to lower
open pit grades mined from the Wona South pit.
-- Recovery rates decreased due to the higher viscosity of the ore
from the Wona South pit in the blend.
-- AISC was higher due to higher processing and related maintenance costs as
the proportion of fresh ore tonnes milled increased as well as higher
open pit unit mining costs due to an increase in blasting and drilling
activities during the period. This was offset by lower loading and
hauling costs due to a decrease in total tonnes mined.
-- Sustaining capital of $2.1 million is related to underground development
to create new stoping levels.
-- Non-sustaining capital expenditure of $11.2 million was mainly related to
waste capitalisation, activities related to the preparation of the Wona
underground portals and the TSF raise.
YTD-2021 Insights
-- Production of 150,667 ounces represents the first full nine month year to
date operations since its acquisition on 1 July 2020 compared to prior
year where it operated for three month subsequent to its integration into
the Group.
-- Total open pit tonnes of ore mined during the year were mainly
sourced from the Wona South stage 2 and 3 while there was a
goodbye cut at the North stage 3 during Q1-2021.
-- The underground operations achieved strong performance year to
date delivering 658 thousand tonnes of ore mainly from longhole
stopes.
-- Tonnes milled was high due to an increased average throughput per
hour on account of the softer ore characteristics of Wona South
pit which resulted in the higher plant throughput.
-- The average processed grade was lower due to viscosity of the ore
from the Wona South pit.
-- AISC was higher but remains within guidance due to higher processing
costs along with increased underground unit mining costs attributable to
increased stoping activity and additional ground support development.
-- Sustaining capital expenditures of $10.2 million are related to
underground development, as well as heavy mobile equipment.
-- Non-sustaining capital of $56.4 million driven by underground development
and the TSF raise.
2021 Outlook
-- FY-2021 production at Mana is well positioned to be near the top end of
its guidance of 170 - 190koz and near the top end of its AISC guidance of
$975 - 1,050 per ounce, due to its strong performance driven by improved
mill availability, and increased underground tonnes mined.
-- Ore in Q4-2021 is expected to continue to be sourced from the Siou
underground mine while open pit mining activities at Wona Stage 2 and 3
pits are expected to wind down in H1-2022. Following optimisation studies
completed in Q2-2021, Wona is being pursued as an underground operation
with underground development being expedited as the portal development
has commenced. Grades are expected to be slightly lower, compared to
Q3-2021, while recovery rates and throughput are expected to remain
similar.
-- The total sustaining and non-sustaining capital spend outlook for FY-2021
remains unchanged. As previously reported, in light of the reduction in
required stripping activities at Wona, following the decision to shift to
underground mining, the FY-2021 sustaining capital outlook is expected to
be significantly lower than the $27.0 million guided, of which $10.2
million has been incurred. Due to the reallocation of capital to the Wona
underground development, the non-sustaining capital outlook for FY-2021
is expected to amount to slightly more than the $62.0 million guided, of
which $56.4 million has been incurred.
2021 Exploration Programme
-- An exploration programme of $8 million was planned for 2021 of which $9
million has already been spent year to date consisting of 59,600 meters
of drilling across 459 drillholes. During Q3-2021, $2 million was spent
on exploration focussed on the Maoula open pit oxide target, and on
evaluating underground targets at Siou, Wona and Nyafe.
-- At Maoula, exploration work focused on defining Indicated resources in
the western and eastern lenses of the deposit and to the southwest, where
the deposit remains open.
-- At Siou South and Nyafe, exploration work focused on interpreting
drilling completed earlier this year to plan further delineation drilling
in Q4-2021 and in 2022.
--
4.7. Sabodala-Massawa Gold Mine, Senegal
Table 25: Sabodala-Massawa Key Performance Indicators(1)
THREE MONTHSED NINE MONTHSED
30 30 30
September September September 30 September
Unit 2021 2020 2021 2020
--------------- ---- ---------- ---------- ---------- -------------
Operating Data
Tonnes ore
mined kt 1,717 -- 4,884 --
Tonnes of waste
mined kt 9,798 -- 23,260 --
Tonnes milled kt 1,079 -- 2,696 --
Average gold
grade milled g/t 3.32 -- 3.11 --
Recovery rate % 90 -- 90 --
Gold produced oz 105,913 -- 240,717 --
Gold sold oz 107,547 -- 258,563 --
Realised gold
price(2) $/oz 1,748 -- 1,750 --
--------------- ---- ---------- ---------- ---------- -------------
Financial Data
($'000)
Revenue(2) $ 187,995 -- 452,529 --
---- ---------- ---------- ---------- -----------
Operating
expenses $ (49,431) -- (143,761) --
Royalties $ (10,541) -- (25,395) --
Non-cash
operating
expenses(3) $ 7,059 -- 32,699 --
--------------- ---- ---------- ---------- ---------- -----------
Total Cash
Cost(4) $ (52,913) -- (136,457) --
Sustaining
capital(4) $ (17,519) -- (35,965) --
--------------- ---- ---------- ---------- ---------- -----------
Total All-In
Sustaining
Costs(4) $ (70,432) -- (172,422) --
Non-sustaining
capital(4) $ (10,150) -- (19,891) --
--------------- ---- ---------- ---------- ---------- -----------
Total All-in
Costs(4) $ (80,582) -- (192,313) --
--------------- ---- ---------- ---------- ---------- -----------
All-In
Margin(4, 5) $ 107,413 -- 260,216 --
-----------
Cash cost per
ounce sold(4) $/oz 492 -- 528 --
--------------- ---- ---------- ---------- ---------- -----------
Mine All-In
Sustaining
Costs per
ounce sold(4) $/oz 655 -- 667 --
--------------- ---- ---------- ---------- ---------- -----------
(1) Analysis of operations is only for the period after its
acquisition by Endeavour on 10 February 2021.
(2) Revenue and realised gold price are inclusive of the
Sabodala-Massawa stream.
(3) Non-cash operating expenses relates to the reversal in the
period of the fair value adjustment of inventory on hand at the
acquisition date.
(4) Non-GAAP measure. Refer to the non-GAAP Measures section for
further details.
(5) All-In Margin is calculated as revenue less all-in costs for
the period.
Q3-2021 Insights
-- Strong production of 105,913 ounces due to a higher throughput and higher
average gold grade milled as well as stable recovery rate.
-- Total tonnes mined were high reflecting the combination of
favourable mining conditions, a high proportion of oxide material
mined and good productivity of shovels and excavators.
Additionally, there was high waste stripping at the Sofia North
pit to provide access to good grades to offer more optionality in
future mining.
-- Ore was sourced from the Sofia Main and Sofia North pits on the
Massawa lease and the Sabodala pit, following the completion of
mining at the Golouma West and Kourouloulou pits on the Sabodala
lease in Q1-2021.
-- Tonnes milled were higher due to high mill availability as a high
proportion of fresh ore was introduced to the mill preventing mill
chutes and screens becoming blocked. Ore tonnes milled comprised
mainly fresh ore from the Sofia Main pit, supplemented by oxide
material from Sofia North pit.
-- Average processed grades were high due to processing high grade
fresh material sourced from Sofia Main, supplemented by oxide ore
from the Sofia North pit.
-- AISC of $655 per ounce was low and tracking below the lower end of the
guidance due to lower unit mining and processing cost due to improved
conditions as tonnes mined and processed were higher than anticipated.
-- Sustaining capital expenditure of $17.5 million was related to purchases
of additional dump trucks, bulldozers, water tankers, slope radar system
and planned waste capitalisation.
-- Non-sustaining capital expenditure of $10.1 million mostly was related to
the relocation activities of the Sabodala village, the Massawa haul road
and other infrastructure developments at Massawa.
YTD-2021 Insights
-- Strong production of 240,717 ounces represents operations following the
acquisition on 10 February 2021.
-- Ore was mainly sourced from the Sofia Main and Sofia North pits
during the nine month period, supplemented by ore from Golouma and
Kourouloulou which was completed in Q1-2021.
-- Tonnes milled were mainly fresh materials from the Sofia Main pit
while the oxide blend was sourced from the Sofia North pit during
and supplemented by oxide from Golouma West during Q1-2021.
-- The average processed grade for the period benefited from the
processing of fresh high grade ore from the Sofia Main pit.
-- AISC of $672 per ounce is below the lower end of the guided range due to
low mining and processing unit costs, in addition to higher than expected
ounces sold.
-- Sustaining capital expenditure of $36.0 million was related to purchases
of additional mining equipment, a TSF raise and planned waste
capitalisation.
-- Non-sustaining capital expenditure of $19.9 million mostly related to the
relocation activities of the Sabodala village, the new haul road and
infrastructure developments at the Massawa permit mining areas.
2021 Outlook
-- Given its strong performance year to date, FY-2021 production at
Sabodala-Massawa is well positioned to be near the top end of its
guidance of 310 - 330koz with an AISC near the bottom end of the $690 -
740 per ounce guidance, for the post acquisition period commencing on 10
February 2021.
-- The Sofia Main and Sofia North pits will continue to contribute the
majority of the ore mined for Q4-2021, while waste extraction at Sofia
North and Sabodala pits is expected to continue. Mill throughput and
processed grades are expected to remain similar to year to date average
grades.
-- As previously reported, the sustaining capital spend for FY-2021 is
expected to be above the initially guided $35.0 million, with $36.0
million already incurred, due to investments in additional mining fleet
and equipment. As also previously reported, the non-sustaining capital
spend for FY-2021 is expected to be below the initial guided $47.0
million, with $19.9 million already incurred, due to the deferral of
spend on the Sabodala relocation construction costs as a greater focus
was placed on mining the Sofia pits.
Plant Expansion
-- The Massawa deposit is being integrated into the Sabodala mine through a
two-phased approach, as outlined in the 2020 pre-feasibility study
("PFS").
-- Phase 1 of the plant expansion, which is on schedule for completion in
Q4-2021, will facilitate processing of an increased proportion of high
grade, free-milling Massawa ore through the Sabodala processing plant.
-- Installation of Packages 1 to 5, which include the electrowinning cell,
carbon regeneration kiln, acid wash and elution circuit, and a new leach
tank are all now largely complete. Commissioning of these packages is
underway with completion expected ahead of schedule in early Q4-2021.
Installation of Package 6, the Gravity Circuit, is well underway with
civil and structural works completed and expected commissioning during
Q4-2021.
-- A total of $11.6 million was incurred year to date for the Phase 1 plant
expansion and classified as growth capital, of which $0.3 million was
incurred prior to its acquisition on 10 February 2021.
-- Phase 2 of the expansion will add an additional processing circuit to
process the high grade refractory ore from the Massawa deposit. The
definitive feasibility study ("DFS") for Phase 2 is underway. Following
successful exploration drilling, resource updates are expected to be
published in Q4-2021 and will be incorporated into the DFS which is now
scheduled to be published in early 2022.
2021 Exploration Programme
-- An exploration programme of up to $13 million was planned for 2021, of
which $9 million has already been spent year to date consisting of 72,300
meters of drilling across 680 drillholes. During Q3-2021 alone, $5
million was spent on exploration consisting of more than 25,900 meters of
drilling. The exploration efforts were focused on Samina, Tina, Sofia
North Extension and Bambaraya. Following the exploration success year to
date, an updated resource is expected to be published in Q4-2021.
-- During Q3-2021, drilling conducted at Samina, Tina and Sofia North
Extension deposit was focused on extending mineralization along strike
and downdip.
-- Drilling at Bambaraya has been prioritised as Bambaraya is a prime target
located just 13 kilometres away from the Sabodala mill. During Q3-2021
mineralisation was extended to 800 meters in strike length in the
north-south direction. In addition, higher grade zones have been
identified and will be followed up in Q4-2021 and in 2022.
-- During Q4-2021, exploration work will be focused on defining resources at
Samina, Tina and the Sofia North Extension with a resource update
expected in Q4-2021
4.8. Wahgnion Gold Mine, Burkina Faso
Table 26: Wahgnion Key Performance Indicators(1)
THREE MONTHSED NINE MONTHSED
30 30 30
September September September 30 September
Unit 2021 2020 2021 2020
--------------- ---- ---------- ---------- ---------- -------------
Operating Data
Tonnes ore
mined kt 917 -- 2,753 --
Tonnes of waste
mined kt 5,237 -- 15,467 --
Tonnes milled kt 809 -- 2,363 --
Average gold
grade milled g/t 1.40 -- 1.35 --
Recovery rate % 93 -- 94 --
Gold produced oz 34,145 -- 99,795 --
Gold sold oz 35,360 -- 112,738 --
Realised gold
price $/oz 1,760 -- 1,783 --
--------------- ---- ---------- ---------- ---------- -------------
Financial Data
($'000)
Revenue $ 62,221 -- 201,009 --
---- ---------- ---------- ---------- -----------
Operating
expenses $ (32,089) -- (98,281) --
Royalties $ (4,162) -- (13,731) --
Non-cash
operating
expenses(2) $ 1,496 -- 10,840 --
--------------- ---- ---------- ---------- ---------- -----------
Total Cash
Cost(3) $ (34,755) -- (101,172) --
Sustaining
capital(3) $ (4,052) -- (7,501) --
--------------- ---- ---------- ---------- ---------- -----------
Total All-In
Sustaining
Costs(3) $ (38,807) -- (108,673) --
Non-sustaining
capital(3) $ (7,536) -- (20,294) --
Total All-in
Costs(3) $ (46,343) -- (128,967) --
--------------- ---- ---------- ---------- ---------- -----------
All-In
Margin(3, 4) $ 15,878 -- 72,042 --
--------------- ---- ---------- ---------- -----------
Cash cost per
ounce sold(3) $/oz 983 -- 897 --
--------------- ---- ---------- ---------- ---------- -----------
Mine All-In
Sustaining
Costs per
ounce sold(3) $/oz 1,097 -- 964 --
--------------- ---- ---------- ---------- ---------- -----------
(1) Analysis of operations is only for the period after its
acquisition by Endeavour on 10 February 2021.
(2) Non-cash operating expenses relates to the reversal in the
period of the fair value adjustment of inventory on hand at the
acquisition date.
(3) Non-GAAP measure. Refer to the non-GAAP Measures section for
further details.
(4) All-In Margin is calculated as revenue less all-in costs for
the period.
Q3-2021 Insights
-- Production of 34,145 ounces was lower than the previous quarter due to
lower mill throughput and lower recovery rates, reflecting the high
proportion of fresh material processed.
-- Tonnes of ore mined were largely fresh materials from the Nogbele
North pit supplemented by oxide materials from the Nogbele South
and Fourkoura pits.
-- Tonnes milled was a blend of greater quantities of fresh materials
sourced from the Nogbele North and the Fourkoura pits and smaller
oxide quantities from the Nogbele South, Nogbele North and
Fourkoura pits.
-- Average gold grade milled reflects blend of materials from the
Nogbele North, Nogbele South and Fourkoura in the blend.
-- AISC per ounce is higher than expected due to the expected high strip
ratio as well as high unit mining and unit processing cost due to mining
and milling mostly fresh materials.
-- Sustaining capital expenditure of $4.1 million was related to waste
capitalisation.
-- Non-sustaining capital expenditure of $7.5 million related to the TSF
stage 2 raise, construction of the airstrip and Foukoura resettlement
costs.
YTD-2021 Insights
-- Production of 99,795 ounces represents operations following the
acquisition on 10 February 2021.
-- Total tonnes mined decreased in the third quarter due to the
planned waste stripping program offset by increase in the second
quarter. Ore mined was mainly sourced from the Nogbele North and
Nogbele South pits, supplemented with ore from the Fourkoura pit
where mining commenced earlier this year.
-- Tonnes milled were an equal mix of oxide and fresh materials on a
year to date basis. During the second quarter, feed blend was
mainly oxide materials sourced from the Nogbele North and Nogbele
South pits while during the third quarter the feed blend contained
a higher proportion of fresh materials sourced from the Nogbele
North and Fourkoura pits.
-- Average gold grade milled was impacted by mining in low ore zones
of the Nogbele South, the Nogbele North and Fourkoura pits due to
focus on waste stripping during the period.
-- AISC per ounce is in line with guidance as sustaining capital expenditure,
unit mining cost and unit processing cost were as expected.
-- Sustaining capital expenditure of $7.5 million was related to waste
capitalisation, mining equipment and IT infrastructure upgrades.
-- Non-sustaining capital expenditure of $20.3 million related to the TSF
stage 2 raise, construction of the airstrip and Foukoura resettlement
costs.
2021 Outlook
-- Wahgnion is positioned to achieve the bottom half its FY-2021 production
guidance of 140 - 155koz at an AISC of $940 - 990 per ounce, for the post
acquisition period commencing on 10 February 2021.
-- In Q4-2021, mining is expected to continue at Nogbele North, Nogbele
South, and Fourkoura pits with significant waste capitalisation
continuing. Plant throughput is expected to decrease compared to year to
date due to a higher proportion of fresh ore being processed, while
process grades are expected to increase.
-- The sustaining capital spend outlook for FY-2021 remains unchanged
compared to the initial guidance of $14.0 million, of which $7.5 million
has been incurred, with the remaining spend mainly related to waste
extraction at Fourkoura and Nogbele North pits. The non-sustaining
capital spend outlook for FY-2021 also remains unchanged compared to the
initial guidance of $26.0 million, of which $20.3 million has been
incurred. The Q4-2021 non-sustaining spend mainly relates to construction
of a second TSF cell.
2021 Exploration Programme
-- An exploration programme of up to $12 million was planned for 2021, of
which $8 million was spent year to date consisting of 41,100 meters of
drilling across 330 drillholes. During Q3-2021, $5 million was spent on
exploration consisting of 31,500 meters of drilling. The exploration
efforts continued to focus on Nogbele North and Nogbele South deposits,
targeting the continuation of mineralised structures beneath and between
the Nogbele pits.
-- Exploration efforts ramped up in Q3-2021, with continued focus on the
extension and expansion of the Nogbele mineralization and this will
continue in Q4-2021 and in 2022.
-- Delineation drilling at Fourkoura and Hillside targets, as well as
reconnaissance drilling at Ouahiri South, Kassira and Bozogo will
continue in Q4-2021 and in 2022.
4.9. DISCONTINUED OPERATIONS
Agbaou Gold Mine, Côte d'Ivoire
Table 27: Agbaou Key Performance Indicators(3)
THREE MONTHSED NINE MONTHSED
30 September 30 September 30 September 30 September
Unit 2021 2020 2021 2020
--------------- ----- -------------- ------------ ------------ --------------
Operating Data
Tonnes ore
mined kt -- 527 353 1,943
Tonnes of waste
mined kt -- 5,568 2,102 15,833
Tonnes milled kt -- 641 348 2,048
Average gold
grade milled g/t -- 1.29 1.09 1.25
Recovery rate % -- 94 95 94
Gold produced oz -- 24,816 12,575 76,713
Gold sold oz -- 25,279 14,045 77,769
Realised gold
price $/oz -- 1,848 1,810 1,721
--------------- ----- -------------- ------------ ------------ --------------
Financial Data
($'000)
Revenue $ -- 46,722 25,426 133,806
----- -------------- ------------ ------------ ------------
Operating
expenses $ -- (22,210) (14,250) (60,601)
Royalties $ -- (2,689) (1,418) (7,486)
Total Cash
Cost(1) $ -- (24,899) (15,668) (68,087)
Sustaining
capital(1) $ -- (3,893) (223) (10,715)
--------------- ----- -------------- ------------ ------------ ------------
Total All-in
Sustaining
Costs(1) $ -- (28,792) (15,891) (78,802)
Non-sustaining
capital(1) $ -- (436) (25) (886)
All-In
Margin(1, 2) $ -- 17,494 9,510 54,118
Cash cost per
ounce sold(1) $/oz -- 985 1,116 876
--------------- ----- -------------- ------------ ------------ ------------
Mine All-In
Sustaining
Costs per
ounce sold(1) $/oz -- 1,139 1,131 1,013
--------------- ----- -------------- ------------ ------------ ------------
(1) Non-GAAP measure. Refer to the non-GAAP Measures section for
further details.
(2) All-In Margin is calculated as revenue less all-in costs for
the period.
(3) Analysis of operations is only for the period up to its
disposal by Endeavour on 1 March 2021.
On 1 March 2021, the Company completed the sale of its 85%
interest in the Agbaou mine cash generating unit to Allied Gold
Corp Limited ("Allied"). The consideration upon sale of the Agbaou
mine included (i) a cash payment of $16.4 million (net of working
capital adjustments of $3.6 million upon closing), of which $10.5
million was received in the first quarter of 2021; (ii) $40.0
million in Allied shares of which Endeavour has the option to sell
the shares back to Allied at the issue price which expires on 31
December 2022 or earlier if Allied conducts an IPO before then;
(iii) contingent consideration of up to $20.0 million comprised of
$5.0 million payments for each quarter where the average gold price
exceeds $1,900 per ounce; and (iv) a net smelter royalty ("NSR") on
ounces produced in excess of the Agbaou reserves estimated as at 31
December 2019. The NSR royalty is based on a sliding scale, linked
to the average spot gold price as follows: 2.5% if the gold price
is at least $1,400 per ounce, 2% if the gold price is at least
$1,200 per ounce and less than $1,400 per ounce, 1% if the gold
price is at least $1,000 per ounce and less than $1,200 per ounce,
and 0% if the gold price is below $1,000 per ounce.
YTD-2021 vs YTD-2020 Insights
-- Production decreased compared to same period in prior year due to
operating the mine for a shorter period as the operations was
discontinued through a sale. Average grade decreased due to lower grade
at the deeper elevation of the North, West and South pits mined. Recovery
rate remained flat.
-- AISC increased in line with expectation as a result of lower ounces sold
as well as higher mining cost and higher processing cost. This was
partially offset by lower sustaining capital spend.
5. FINANCIAL REVIEW
5.1. STATEMENT OF COMPREHENSIVE EARNINGS
Table 28: Statement of Comprehensive Earnings
THREE MONTHSED NINE MONTHSED
30 September 30 September 30 September 30 September
($'000s) Notes 2021 2020 2021 2020
------------------- ------ ------------ ------------ ------------ --------------
Revenue [1] 691,707 434,839 2,080,926 870,741
Operating expenses [2] (257,470) (166,270) (788,579) (345,590)
Depreciation and
depletion [3] (156,614) (115,314) (446,860) (193,707)
Royalties [4] (42,509) (30,024) (130,783) (60,450)
------------------- ------ ------------ ------------ ------------ ------------
Earnings from mine
operations 235,114 123,231 714,704 270,994
--------------------------- ------------ ------------ ------------ ------------
Corporate costs [5] (11,990) (5,101) (42,151) (15,381)
Acquisition and
restructuring
costs [6] (1,804) (19,336) (28,508) (26,255)
Share-based
compensation [7] (7,281) (7,117) (25,075) (13,682)
Exploration costs [8] (2,855) (900) (18,539) (4,029)
------------------- ------ ------------ ------------ ------------ ------------
Earnings from operations 211,184 90,777 600,431 211,647
--------------------------- ------------ ------------ ------------ ------------
(Loss)/gain on
financial
instruments [9] (20,012) (26,185) 7,258 (101,141)
Finance costs [10] (14,696) (12,213) (40,708) (35,534)
Other
(expense)/income [11] (3,380) 23,089 (13,890) 23,233
------------------- ------ ------------ ------------ ------------ ------------
Earnings before taxes 173,096 75,468 553,091 98,205
--------------------------- ------------ ------------ ------------ ------------
Current income tax
expense [12] (40,395) (52,648) (157,006) (71,917)
Deferred income tax
(expense)/recovery [12] (158) 40,764 (3,662) 34,260
Net earnings/(loss) from
discontinued operations -- 6,580 (3,702) 22,463
--------------------------- ------------ ------------ ------------ ------------
Net comprehensive earnings 132,543 70,164 388,721 83,011
--------------------------- ------------ ------------ ------------ ------------
Review of results for the three and nine months ended 30
September 2021:
1. Revenue for Q3-2021 was $691.7 million compared to $434.8 million for
Q3-2020. The increase in revenue in Q3-2021 compared to Q3-2020 is
primarily due to the acquisition of the Wahgnion and Sabodala-Massawa
mines on 10 February 2021. During Q3-2021, the Wahgnion and
Sabodala-Massawa mines contributed 142,907 ounces amounting to $250.2
million of the consolidated revenue while the remaining mines contributed
249,525 ounces amounting to $441.5 million. With respect to these five
operations, an increase in total ounces sold favourably impacted revenue
by $25.1 million while a decrease in average realised gold price
negatively impacted revenue by $18.5 million.Revenue for YTD-2021
increased by 139% compared to YTD-2020 due to the acquired Wahgnion and
Sabodala-Massawa mines on 10 February 2021, which contributed a total of
$653.5 million to revenue YTD-2021, and the inclusion of the Boungou and
Mana mines for the full YTD-2021 compared to the period after their
acquisition on 1 July 2020, which contributed a total of $528.3 million
to revenue for YTD-2021. The realised gold price increased from $1,713
per ounce in YTD-2020 to $1,768 per ounce in YTD-2021 which accounted for
an increase in revenue of approximately $43.0 million for the Company's
three legacy continuing operations. In addition, 297,226 more ounces sold
in YTD-2021 compared to YTD-2020 from the Company's three legacy mines
favourably impacted revenue by $179.8 million.
2. Operating expenses for Q3-2021 were $257.5 million compared to $166.3
million in Q3-2020. The increase in operating expenses is due primarily
to the addition of the Wahgnion and Sabodala-Massawa mines, with
attributable operating expenses of $81.5 million for the current quarter.
Additionally, operating expenses at Ity increased by $17.0 million due to
increased unit processing costs due to the increase in the proportion
transitional and fresh material and the resulting higher reagent
consumption.The significant increase in operating expenses in YTD-2021
compared to the same period in the prior year was due to the addition of
the Mana and Boungou mines, which were acquired on 1 July 2020, as well
as the acquisition of the Wahgnion and Sabodala-Massawa mines, which were
acquired on 10 February 2021. The total operating expenses for these four
mines was $454.2 million. Ity, Karma and Houndé mine's operating
expenses were higher in YTD-2021 compared to same period in 2020 due to
increased mining costs as well as increased production at Ity and
Houndé.
3. Depreciation and depletion in Q3-2021 was $156.6 million compared to
$115.3 million in Q3-2020 with the increase mainly attributable to the
acquisition of the Wahgnion and Sabodala-Massawa mines. Depreciation and
depletion increased in YTD-2021 by $253.2 million compared to YTD-2020
with the inclusion of Mana and Boungou for the full YTD-2021, and with
the acquisition of the Wahgnion and Sabodala-Massawa mines from 10
February 2021. The depletion charge also reflects the higher carrying
values for the mining interests upon determination of the fair values of
these four mines upon acquisition.
4. Royalties were $42.5 million for Q3-2021, compared to $30.0 million in
Q3-2020, and $130.8 million in YTD-2021 compared to $60.5 million in
YTD-2020. The increase in royalty expense in the quarter to date is due
to the inclusion of the Wahgnion and Sabodala-Massawa mines acquired on
10 February 2021. The increase in year to date royalty expense is due to
the inclusion of Wahgnion and Sabodala-Massawa mines, as well as the
inclusion of the Mana and Boungou mines for the full YTD-2021 period.
Royalties were further impacted by the increase in the realised gold
price. The underlying royalty rates based on the sliding scale were 5%
for both Burkina Faso, and Côte d'Ivoire for Q3-2021 and YTD-2021,
as well as Q3-2020 and YTD-2020. The gold royalty rate in Senegal is a
flat 5%.
5. Corporate costs were $12.0 million for Q3-2021 compared to $5.1 million
for Q3-2020, and $42.2 million for YTD-2021 compared to $15.4 million for
YTD-2020. The increase in corporate costs are primarily due to costs
associated with listing on the LSE, which were $3.0 million and $11.2
million in Q3-2021 and YTD-2021 respectively. There were also additional
corporate costs following the integration of SEMAFO and Teranga head
office costs, which has increased the overall corporate administrative
costs of the Group.
6. Acquisition and restructuring costs were $1.8 million in Q3-2021 compared
to $19.3 million in Q3-2020, and $28.5 million in YTD-2021 compared to
$26.3 million in YTD-2020. The Q3-2021 and YTD-2021 costs relate to
ongoing restructuring and other legal costs related to the Teranga assets
which were acquired on 11 February 2021 while the prior period cost
mainly consisted of costs related to the integration of the SEMAFO assets
after their acquisition on 1 July 2020.
7. Share based compensation was $7.3 million in Q3-2021 compared to $7.1
million for Q3-2020, and $25.1 million in YTD-2021 compared to $13.7
million in YTD-2020. The increase is mainly due to the increase in fair
value of performance share units ("PSUs") granted. The fair value of the
PSUs is determined based on total shareholder return relative to peer
companies and achieving certain operational performance measures.
8. Exploration costs in Q3-2021 were $2.9 million compared to $0.9 million
in Q3-2020, and $18.5 million in YTD-2021 compared to $4.0 million in
YTD-2020. The increase in exploration cost is related to a larger
exploration portfolio and increased greenfield exploration activities
mainly at the newly acquired Teranga exploration properties.
9. The loss on financial instruments was $20.0 million in Q3-2021 compared
to a loss of $26.2 million in Q3-2020. The loss in Q3-2021 is mainly due
to the net impact of a loss on change in fair value of the warrant
liabilities, call rights and contingent consideration of $0.6 million,
$1.9 million and $3.1 million respectively, a realised gain on forward
contracts of $5.0 million, a gain on other financial instruments of $2.7
million and foreign exchange losses of $23.3 million. In YTD-2021, there
was a gain on financial instruments of $7.3 million compared to a loss in
the comparative prior period of $101.1 million. The gain in YTD-2021 is
primarily due to the net impact of the unrealised gain on the convertible
senior bond derivative of $31.3 million, a loss on foreign exchange of
$29.5 million, a realised gain on forward contracts of $7.8 million, and
a loss on change in fair value of warrant liabilities and contingent
consideration of $2.2 million and $2.4 million, respectively.
10. Finance costs were $14.7 million for Q3-2021 compared to $12.2 million in
Q3-2020, and $40.7 million in YTD-2021 compared to $35.5 million in
YTD-2020. Finance costs are primarily associated with interest expense on
the revolving credit facility ("RCF") and bridge facility, convertible
debt, finance obligations, and lease liabilities.
11. Other expenses was $3.4 million for Q3-2021 compared to an income of
$23.1 million in Q3-2020. Other expenses in Q3-2021 consist mainly of a
write down of assets at Ity. Other expenses for YTD-2021 was $13.9
million compared to an income of $23.2 million in YTD-2020. Other
expenses for YTD-2021 mainly relates to the loss on disposal of assets at
Ity of $12.3 million as well as donations and covid related expenses at
Corporate of $1.6 million.
12. Current income tax expense was $40.4 million and $157.0 million in
Q3-2021 and YTD-2021 respectively compared to $52.6 million and $71.9
million in Q3-2020 and YTD-2020, respectively. Current income tax expense
for Q3-2021 increased in comparison to Q3-2020 primarily due to the
inclusion of the current tax expense at the Wahgnion and Sabodala-Massawa
mines acquired on 10 February 2021. Current income tax expense for
YTD-2021 increased when compared to YTD-2020 due to the inclusion of the
Wahgnion and Sabodala-Massawa mines acquired on 10 February 2021 and due
to the inclusion of the Mana and Boungou mines for the full YTD-2021
period compared to the prior year, which was for the three months after
their acquisition on 1 July 2020.
5.2. CASH FLOWS
Table 29: Summarised cash flows
THREE MONTHSED NINE MONTHSED
30 September 30 September 30 September 30 September
($'000s) Note 2021 2020 2021 2020
-------------------- ----- ------------ ------------ ------------ --------------
Operating cash flows
before changes in
working capital [1] 325,880 195,348 874,948 365,586
Changes in working
capital [2] (13,974) (13,352) (55,824) (30,194)
Cash generated from/(used
by) discontinued
operations -- 19,197 (8,808) 49,172
--------------------------- ------------ ------------ ------------ ------------
Cash generated from
operating
activities [3] 311,906 201,193 810,316 384,564
Cash (used
in)/generated from
investing
activities [4] (136,807) 41,753 (379,391) (63,572)
Cash (used
in)/generated from
financing
activities [5] (232,859) (74,041) (360,018) 9,691
Effect of exchange rate
changes on cash (14,748) 2,602 (25,214) 2,752
--------------------------- ------------ ------------ ------------ ------------
(Decrease)/increase in cash (72,508) 171,507 45,693 333,435
--------------------------- ------------ ------------ ------------ ------------
1. Operating cash flows before changes in working capital for
Q3-2021 and YTD-2021 were $325.9 million and $874.9 million
respectively compared to $195.3 million in Q3-2020 and $365.6
million in YTD-2020. The increase in the Q3 comparative periods is
attributable to the acquisition of the Wahgnion and
Sabodala-Massawa operating mines on 10 February 2021, while the
acquisition of the Mana and Boungou mines on 1 July 2020 also
contributed to the increase in the YTD operating cash flows.
-- Income taxes paid were $55.5 million in Q3-2021 and $185.6 million in
YTD-2021 compared to $32.4 million and $49.2 million in Q3-2020 and
YTD-2020, respectively. These higher cash payments relative to the
comparative periods are reflective of the increase in the Company's
earnings and higher provisional payments in 2021 based on 2020 earnings,
as well as higher withholding tax payments on dividends declared at mine
sites based on 2020 earnings. Taxes paid for the three and nine months
ended 30 September 2021 and 30 September 2020 for each of the Group's
mine sites are summarised in the table below:
Table 30: Tax payments
THREE MONTHSED NINE MONTHSED
30 September 30 September 30 September 30 September
($'000s) 2021 2020 2021 2020
----------------- ------------ ------------ ------------ --------------
Boungou 9,837 1,351 43,648 1,351
Houndé 10,694 7,183 37,203 13,963
Ity 9,675 17,228 37,272 24,737
Karma 287 -- 1,459 --
Mana 4,329 -- 9,334 --
Sabodala-Massawa -- n.a. 19,364 n.a.
Wahgnion 1,992 n.a. 9,843 n.a.
Other(1) 18,689 6,661 27,444 9,129
----------------- ------------ ------------ ------------ ------------
Taxes from
continuing
operations 55,503 32,423 185,567 49,180
----------------- ------------ ------------ ------------ ------------
Agbaou -- 1,190 19,918 13,105
----------------- ------------ ------------ ------------ ------------
Consolidated
taxes paid 55,503 33,613 205,485 62,285
----------------- ------------ ------------ ------------ ------------
(1) Included in the "Other" category is taxes paid by corporate
and exploration entities.
2. The Q3-2021 and YTD-2021 changes in working capital is an
outflow of $14.0 million and an outflow of $55.8 million
respectively, which is broken down as follows:
-- Receivables were an outflow of $3.8 million for Q3-2021 and an outflow of
$9.2 million for YTD-2021. The outflow in Q3-2021 is mainly due to an
increase in VAT receivables at the Boungou and Mana mines offset by a
decrease in VAT receivables at the Houndé and Ity mines, based on
timing differences of VAT paid in the period relative to reimbursements.
The FY-2021 outflow is mainly due to the increase in VAT receivable at
Mana and Boungou mines, offset by a decrease in amounts receivable from a
third party at corporate of $8.0 million.
-- Inventories were an inflow of $23.9 million for Q3-2021 and an inflow of
$48.7 million in YTD-2021. The inflow in Q3-2021 is due primarily to the
unwinding of the PPA fair value adjustment to stockpiles at the
Sabodala-Massawa and Wahgnion mines, and due to a decrease in inventory
stockpiles and finished good balances at Houndé which was slightly
offset by an increase in stockpiles at Karma and Ity. The inflow in
YTD-2021 is mainly due to the unwinding of the PPA fair value adjustment
to inventory at the Boungou, Mana, Sabodala-Massawa and Wahgnion mines as
well as a decrease in finished goods and Gold-in-Circuit ("GIC") at the
Ity and Karma mines.
-- Prepaid expenses and other was an outflow of $3.9 million for Q3-2021 and
an outflow of $7.8 million for YTD-2021. The outflow in Q3-2021 was
mainly due to an increase in prepayments of $3.3 million at Hounde and
$1.4 million at Corporate. The outflow for YTD-2021 was mainly due to an
increase in prepaid capital at Corporate of $1.3 million, at Houndé
of $3.9 million, Ity of $1.9 million and Wahgnion of $1.4m offset by a
decrease in prepayments at Boungou of $2.9 million.
-- Accounts payable was an outflow of $30.2 million in Q3-2021 and
$87.6 million in YTD-2021. The outflow in Q3-2021 mainly relates to
payments made at Boungou, Ity and Mana while acquisition related costs
paid in relation to the Teranga acquisition also contributed to the
outflow in YTD-2021.
3. Operating cash flows after changes in working capital in
Q3-2021 and YTD-2021 were $311.9 million and $810.3 million
respectively compared to $201.2 million and $384.6 million in
Q3-2020 and YTD-2020 respectively. Q3-2021 increased by $110.7
million compared to Q3-2020 mainly due to an increase in earnings
before taxes due to the addition of the Sabodala-Massawa and
Wahgnion mines on 10 February 2021. YTD-2021 operating expenses has
increased by $425.8 million relative to YTD-2020 due to increased
production for the year from the Company's legacy mines, as well as
from the addition of Wahgnion, Sabodala-Massawa, Mana and Boungou
mines.
4. Cash flows used by investing activities were $136.8 million
and $379.4 million in Q3-2021 and YTD-2021 respectively compared to
an inflow of $41.8 million and a $63.6 million outflow in Q3-2020
and YTD-2020 respectively. The Q3-2021 and the YTD-2021 amount was
a larger outflow compared to prior year comparative periods mainly
due to expenditure on mining interests of $132.5 million for
Q3-2021 and $390.2 million for YTD-2021 given the increase in the
size of the Group's operations. Q3-2021 did not benefit from cash
of $93.0 million acquired on the acquisition of SEMAFO during
Q3-2020 which resulted in the inflow in the comparative period. The
YTD-2021 amount included cash acquired on acquisition of Teranga of
$27.0 million which is less than the $93.0 million acquired from
Semafo in YTD-2020.
5. Cash flows used in financing activities were $232.9 million
and $360.0 million in Q3-2021 and YTD-2021 respectively compared to
a cash outflow of $74.0 million and a cash inflow of $9.7 million
in Q3-2020 and YTD-2020 respectively. A dividend payment of $99.8
million, a repayment of long-term debt of $80.0 million and
payments for the acquisition of the Company's own shares of $34.6
million contributed to the outflow in Q3-2021. The outflow in
YTD-2021 was due to a net repayment of long-term debt of $153.0
million, a payment of dividends amounting to $159.8 million,
payments for the acquisition of the Company's own shares of $94.1
million, the settlement of the gold offtake agreement which was
acquired from Teranga amounting to $49.7 million, repayments of
lease obligations of $23.9 million offset by proceeds received from
the issue of common shares of $200.0 million.
5.3. SUMMARISED STATEMENT OF FINANCIAL POSITION
Table 31: Summarised Statement of Financial Position
As at As at 31
30 September December
($'000s) 2021 2020
--------------------------------------------------- ------------- -----------
ASSETS
Cash 760,368 644,970
Other current assets 525,726 272,059
Current assets excluding assets held for sale 1,286,094 917,029
Assets held for sale -- 180,808
--------------------------------------------------- ------------- ---------
Total current assets 1,286,094 1,097,837
Mining interests 5,001,462 2,577,844
Deferred income taxes 10,263 19,774
Other long term assets 495,901 173,740
TOTAL ASSETS 6,793,720 3,869,195
--------------------------------------------------- ------------- ---------
LIABILITIES
Other current liabilities 374,416 275,935
Income taxes payable 203,042 134,205
--------------------------------------------------- ------------- ---------
Current liabilities excluding liabilities held for
sale 577,458 410,140
Liabilities held for sale -- 112,796
--------------------------------------------------- ------------- ---------
Total current liabilities 577,458 522,936
Long-term debt 850,434 688,266
Environmental rehabilitation provision 128,510 78,011
Other long-term liabilities 139,592 26,463
Deferred income taxes 621,595 305,101
TOTAL LIABILITIES 2,317,589 1,620,777
TOTAL EQUITY 4,476,131 2,248,418
--------------------------------------------------- ------------- ---------
TOTAL EQUITY AND LIABILITIES 6,793,720 3,869,195
--------------------------------------------------- ------------- ---------
-- Other current assets as at 30 September 2021 consists of $126.9 million
of trade and other receivables, $355.2 million of inventories and $43.6
million of prepaid expenses and other.
-- Trade and other receivables increased by $71.7 million compared to
31 December 2020 mainly due to the inclusion of VAT receivable
acquired at Wahgnion mine, increases in VAT at Mana and Boungou in
the period, and an increase in other amounts receivable at Ity
relating to the sale of mining equipment to the mining contractor.
VAT received during the nine months ended 30 September 2021 was
$68.2 million consisting of proceeds from the Group's mines in
Burkina Faso, while the VAT amounts receivable for assets located
in Cote d'Ivoire and Senegal are nominal.
-- Inventories increased by $164.6 million primarily due to the
inclusion of the inventories at the Wahgnion and Sabodala-Masawa
mines from acquisition, offset by a decrease in doré bars at
all the Company's remaining operating mines other than Boungou.
-- Prepaid expenses and other increased by $17.3 million primarily
due to the prepayments acquired from the Sabodala-Massawa and
Wahgnion mines.
-- Mining interests increased by $2.4 billion primarily due to the
acquisition of mineral property of the Teranga assets.
-- Other long-term assets are made up of $262.2 million of goodwill related
to the Semafo and Teranga acquisitions, $156.0 million of long-term
stockpiles not expected to be used in the next twelve months at the
Houndé, Ity, Sabodala-Massawa and Wahgnion mines, $46.0 million
long-term assets related to the sale of Agbaou, as well as $30.5 million
of restricted cash relating to reclamation bonds. Other long-term assets
increased by $322.2 million in 2021 compared to Q4-2020 mainly due to the
recognition of goodwill arising from the transaction with Teranga, as
well as the long-term assets of $46.0 million consisting of shares and an
NSR recognised as consideration upon the sale of Agbaou.
-- Other current liabilities are made up of $323.4 million of trade and
other payables, $35.2 million of derivatives related to warrants and
call-rights, and $15.8 million of lease obligations. Trade and other
payables increased by $61.1 million mainly due to the inclusion of the
Teranga assets accounting for an additional $110.9 million compared to
prior year.
-- Income taxes payable increased by $68.8 million compared to the prior
year and is due to the inclusion of the Sabodala-Massawa and Wahgnion
mines acquired during the year.
5.4. LIQUIDITY AND FINANCIAL CONDITION
Net Debt Position
The following table summarises the Company's net debt position
as at 30 September 2021 and 31 December 2020.
Table 32: Net Debt Position
30 September
($'000s) 2021 31 December 2020
------------------------------------------ ------------ ------------------
Cash and cash equivalents 760,368 644,970
Cash included in assets held for sale -- 69,705
Less: Principal amount of convertible
senior bond (330,000) (330,000)
Less: Drawn portion of corporate loan
facilities(1) (500,000) (310,000)
------------------------------------------ ------------ ----------------
Net (Debt)/Cash (69,632) 74,675
------------------------------------------ ------------ ----------------
Net Debt/(Cash) / Adjusted EBITDA LTM
ratio(2) 0.05 (0.09)
------------------------------------------ ------------ ----------------
(1) Corporate loan facilities are presented at face value.
(2) Adjusted EBITDA is per table 35 and is calculated using the
trailing twelve months Adjusted EBITDA.
Equity and Capital
On 14 June 2021, the Company announced its entire issued
ordinary share capital consisting of 250,491,775 shares had been
admitted to the premium listing segment of the LSE. The Company no
longer has authorised share capital. On 29 September 2021, as part
of the Company's capital reduction strategy to create distributable
reserves, the Company capitalised $4.5 billion of its merger
reserve and applied the amount in full to allot $4.5 billion to new
deferred shares with a par value of $1.00 each. The deferred shares
do not carry any dividend or voting rights, with no meaningful
economic value and were issued solely to enable a reduction of
capital to be effected. The deferred shares were cancelled
subsequent to 30 September 2021. The table below summarises
Endeavour's share structure at 30 September 2021.
Table 33: Outstanding Shares
30 September
2021 31 December 2020
------------------------------ ------------- ------------------
Shares issued and outstanding
Ordinary voting shares 249,128,987 163,036,473
Deferred shares 4,450,000,000 --
Stock options 1,906,189 --
------------------------------ ------------- ----------------
As at 10 November 2021, the Company had 249,296,462 shares
issued and outstanding, and 1,703,720 outstanding stock options. On
5 October 2021, the Company cancelled all 4,450,000,000 deferred
shares at a par value of $1,00 each.
As part of the Company's share buyback programme, subsequent to
30 September 2021 and up to 10 November 2021, the Company has
repurchased a total of 39,100 shares at an average price of $22.73,
for total cash outflows of $0.9 million.
Going Concern
The directors have performed an assessment of whether the
Company would be able to continue as a going concern for at least
the next twelve-month period. In their assessment, the Company has
taken into account its financial position, expected future trading
performance, its debt and other available credit facilities, future
debt servicing requirements, its working capital and capital
expenditure commitments and forecasts.
At 30 September 2021, the Company's net debt was $69.6 million
with gross debt of $830.0 million and cash and cash equivalents of
$760.4 million. Subsequent to 30 September 2021, the Company
completed an offering of $500.0 million in fixed senior notes (the
"Notes") and entered a new $500.0 million unsecured revolving
credit facility (the "New RCF"), which will be used to repay the
existing loan facilities.
Based on a detailed cash flow forecast prepared by management,
in which it included any reasonably possible change in the key
assumptions on which the cash flow forecast is based, and taking
into account possible changes in performance due to the COVID-19
pandemic impact, the Directors have a reasonable expectation that
the Group will have adequate resources to continue in operational
existence for twelve months from 10 November 2021 and that at this
point in time there are no material uncertainties regarding going
concern. Key assumptions underpinning this forecast include a gold
price of $1,500 per ounce and production volumes in line with
annual guidance.
The Board is satisfied that the going concern basis of
accounting is an appropriate assumption to adopt in the preparation
of the interim report for the period ended 30 September 2021.
5.5. RELATED PARTY TRANSACTIONS
A related party is considered to include shareholders,
affiliates, associates and entities under common control with the
Company and members of key management personnel.
Key management compensation
During the nine months ended 30 September 2021, an amount of
$13.5 million was paid to key management personnel as incentive
awards for the completion of the Teranga and SEMAFO acquisitions
and the successful listing on the LSE, as well as for termination
benefits following the acquisition of SEMAFO and Teranga.
Other related party transactions
During the nine-month period ended 30 September 2021, the
Company entered into a transaction with La Mancha Holding S.àr.l.
("La Mancha") when La Mancha exercised its anti-dilution right to
maintain its interest in the Company and completed a $200.0 million
private placement for 8,910,592 shares of Endeavour. La Mancha's
future anti-dilution rights have now been extinguished and La
Mancha's ownership interest in Endeavour was 19.4% at 30 September
2021 (31 December 2021 - 24.1%).
During the nine-month period ended 30 September 2021, and prior
to the Company listing on the London Stock Exchange, the Company
established an Employee Benefits Trust ("EBT") in connection with
the Company's employee share incentive plans, which may hold
repurchased shares on trust to settle future employee share
incentive obligations. During the three months ended 30 June 2021,
the EBT acquired 576,308 outstanding common shares from certain
employees of the Group, which remain held in the EBT at 30
September 2021. In exchange for the shares, the Group is obligated
to repay the employees cash for the fair value of the underlying
shares of the Company now held in the EBT. The amount of this
liability is $14.4 million at 30 September 2021 and is included in
current financial liabilities.
5.6. ACCOUNTING POLICIES AND CRITICAL JUDGEMENTS
Critical judgements and key sources of estimation
uncertainty
The Company's management has made critical judgments and
estimates in the process of applying the Company's accounting
policies to the consolidated financial statements that have
significant effects on the amounts recognised in the Company's
consolidated financial statements. These judgements and estimations
include commencement of commercial production, determination of
economic viability, functional currency, indicators of impairment
and impairment of mining interests, assets held for sale and
discontinued operations, value added tax, estimated recoverable
ounces, mineral reserves, environmental rehabilitation costs,
share-based payments, net realisable value and obsolete stock
provisions of inventories, current income tax provisions, business
combinations, capitalisation of waste stripping, the Purchase Price
Allocation ("PPA") of the SEMAFO acquisition and the PPA of the
Teranga acquisition, which is still provisional. The judgements
applied in the period ended 30 September 2021 are consistent with
those in the consolidated financial statements for the year ended
31 December 2020, except for the judgements and estimates made
relating to the acquisition of Teranga in the quarter ended 31
March 2021.
6. USE OF PROCEEDS
On 14 October 2021, the Company completed an offering of fixed
rate senior notes due in 2026 as well as entered into the New RCF.
The Company used the proceeds of $500.0 million from the issuance
of the Notes, together with cash on the Group's balance sheet, to
repay all amounts outstanding under the Group's $370.0 million
bridge term loan facility, which was used to retire higher cost
debt facilities acquired upon the acquisition of Teranga Gold
Corporation, to repay the $130 million drawn under the Group's
existing revolving credit facility, and to pay fees and expenses in
connection with the offering of the Notes. The Company intends to
use the proceeds of the $500.0 million New RCF for general
corporate purposes as required, but there is no amount currently
drawn on the New RCF. The New RCF replaces the Bridge Facility and
the existing RCF which was cancelled upon completion of the Notes
offering.
In the Company's prospectus supplement dated 29 March 2021 to
the short form base shelf prospectus dated 17 June 2020, the
Company disclosed that they intended to use the proceeds of $200.0
million from the issuance of approximately 8.9 million common
shares to partially repay outstanding indebtedness under the
refinancing of the debt upon the acquisition of Teranga and for
general corporate purposes. The Company repaid $120.0 million of
the outstanding balance of the revolving credit facility in
Q2-2021. The remainder of the proceeds are being used for general
working capital purposes, including fees related to the acquisition
and integration of Teranga, expenses related to the London listing,
as well as general corporate costs. There has been no change on how
the remaining proceeds are expected to be used.
In the Company's prospectus supplement dated 2 July 2020 to the
short form base shelf prospectus dated 17 June 2020, the Company
disclosed that they intended to use the proceeds of $100.0 million
from the issuance of approximately 4.5 million common shares for
general corporate purposes. As disclosed in the prospectus
supplement, the Company has used the proceeds from that financing
for general corporate purposes over the past twelve months,
including for costs related to the acquisition and integration of
SEMAFO, as well as general corporate costs.
7. NON-GAAP MEASURES
This Management Report as well as the Company's other
disclosures contain multiple non-GAAP measures, which the Company
believes that, in addition to conventional measures prepared in
accordance with GAAP, certain investors use to assess the
performance of the Company. These do not have a standard meaning
and are intended to provide additional information which are not
necessarily comparable with similar measures used by other
companies and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
GAAP. The definitions of these measures, and the reconciliation to
the amounts presented in the condensed interim consolidated
financial statements, and the reasons for these measures are
included below. The non-GAAP measures are consistent with those
presented previously and there have been no changes to the bases of
calculation, except with respect to the determination of free cash
flows, the definition of which has been changed to be more
consistent with our peers and reflective of how management
evaluates the free cash flows of the Company.
7.1. ALL-IN MARGIN
The Company believes that, in addition to conventional measures
prepared in accordance with GAAP, certain investors use the all-in
margin and adjusted earnings before interest, tax, depreciation and
amortisation ("Adjusted EBITDA") to evaluate the Company's
performance and ability to generate cash flows and service debt.
These do not have a standard meaning and are intended to provide
additional information which are not necessarily comparable with
similar measures used by other companies and should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with GAAP. The following tables
provide the illustration of the calculation of this margin, for the
three and nine months ended 30 September 2021 and 30 September
2020.
Table 34: All-In Sustaining Margin and All-In Margin
THREE MONTHSED NINE MONTHSED
30 September 30 September 30 September 30 September
($'000s except ounces sold) 2021 2020 2021 2020
Revenue 691,707 434,839 2,080,926 870,741
Less: Total cash costs (291,423) (187,029) (871,114) (394,849)
Less: Corporate G&A(1) (8,979) (5,101) (30,927) (15,381)
Less: Sustaining capital (54,505) (16,069) (123,611) (45,003)
-------------------------------------------------------- ------------ ------------ ------------ ------------
All-in sustaining margin from continuing operations 336,800 226,640 1,055,274 415,508
-------------------------------------------------------- ------------ ------------ ------------ ------------
Gold ounces sold 392,432 236,292 1,176,711 508,184
-------------------------------------------------------- ------------ ------------ ------------ ------------
All-in sustaining margin per ounce sold from continuing
operations 858 959 897 818
-------------------------------------------------------- ------------ ------------ ------------ ------------
Less: Non-Sustaining capital (41,458) (25,497) (156,547) (64,876)
Less: Non-Sustaining exploration (25,650) (7,670) (58,686) (40,163)
All-in margin from continuing operations 269,692 193,473 840,041 310,469
-------------------------------------------------------- ------------ ------------ ------------ ------------
(1) Corporate G&A costs included in the calculation for
all-in sustaining margin and all-in margin has been adjusted to
exclude expenses associated to listing on the LSE of $3.0 million
for the three months and $11.2 million for the nine months ended 30
September 2021.
7.2. EBITDA AND ADJUSTED EBITDA
The Company believes that, in addition to conventional measures
prepared in accordance with GAAP, certain investors use the
earnings before interest, tax, depreciation and amortisation
("EBITDA") and the adjusted earnings before interest, tax,
depreciation and amortisation ("Adjusted EBITDA") to evaluate the
Company's performance and ability to generate cash flows and
service debt. The following tables provide the illustration of the
calculation of this margin, for the three and nine months ended 30
September 2021 and 30 September 2020.
Table 35: EBITDA and Adjusted EBITDA
THREE MONTHSED NINE MONTHSED
30 September 30 September 30 September 30 September
($'000s) 2021 2020 2021 2020
Earnings before
taxes 173,096 75,468 553,091 98,205
Add back:
Depreciation and
depletion 156,614 115,314 446,860 193,707
Add back: Finance
costs 14,696 12,213 40,708 35,534
----------------- ------------ ------------ ------------ ------------
EBITDA from
continuing
operations 344,406 202,995 1,040,659 327,446
----------------- ------------ ------------ ------------ ------------
Add back:
Acquisition and
restructuring
costs 1,804 19,336 28,508 26,255
Add back: Other
expense/(income) 3,380 (23,089) 13,890 (23,233)
Add back:
Loss/(gain) on
financial
instruments 20,012 26,185 (7,258) 101,141
----------------- ------------ ------------ ------------ ------------
Adjusted EBITDA
from continuing
operations 369,602 225,427 1,075,799 431,609
----------------- ------------ ------------ ------------ ------------
7.3. CASH AND ALL-IN SUSTAINING COST PER OUNCE OF GOLD SOLD
The Company reports cash costs and all-in sustaining costs based
on ounces of gold sold. The Company believes that, in addition to
conventional measures prepared in accordance with GAAP, certain
investors may find this information useful to evaluate the costs of
production per ounce. The following table provides a reconciliation
of cash costs per ounce of gold sold, for the three and nine months
ended 30 September 2021 and 30 September 2020.
Table 36: Cash Costs
THREE MONTHSED NINE MONTHSED
30 September 30 September 30 September 30 September
($'000s except ounces sold) 2021 2020 2021 2020
------------------------------------------------------- ------------ ------------ ------------ --------------
Operating expenses from mine operations (257,470) (166,270) (788,579) (345,590)
Royalties (42,509) (30,024) (130,783) (60,450)
Non-cash and other adjustments 8,556 9,265 48,248 11,191
------------------------------------------------------- ------------ ------------ ------------ ------------
Cash costs from continuing operations (291,423) (187,029) (871,114) (394,849)
------------------------------------------------------- ------------ ------------ ------------ ------------
Gold ounces sold 392,432 236,292 1,176,711 508,184
------------------------------------------------------- ------------ ------------ ------------ ------------
Total cash cost per ounce of gold sold from continuing
operations 743 792 740 777
------------------------------------------------------- ------------ ------------ ------------ ------------
Cash costs from discontinued operations -- (24,899) (15,668) (68,087)
Total cash costs (291,423) (211,928) (886,782) (462,936)
------------------------------------------------------- ------------ ------------ ------------ ------------
Gold ounces sold 392,432 261,571 1,190,756 585,953
------------------------------------------------------- ------------ ------------ ------------ ------------
Total cash cost per ounce of gold sold 743 810 745 790
------------------------------------------------------- ------------ ------------ ------------ ------------
The Company is reporting all--in sustaining costs per ounce
sold. This non--GAAP measure provides investors with transparency
regarding the total cash cost of producing an ounce of gold in each
period, including those capital expenditures that are required for
sustaining the on-going operation of the mines.
Table 37: All-In Sustaining Costs
THREE MONTHSED NINE MONTHSED
30 30 30 30
September September September September
($'000s except ounces sold) 2021 2020 2021 2020
------------------------------------------------------- --------- --------- ----------- -----------
Total cash costs for ounces sold from continuing
operations (291,423) (187,029) (871,114) (394,849)
Corporate G&A(1) (8,979) (5,101) (30,927) (15,381)
Sustaining Capital (54,505) (16,069) (123,611) (45,003)
All-in sustaining costs from continuing operations (354,907) (208,199) (1,025,652) (455,233)
------------------------------------------------------- --------- --------- ----------- ---------
Gold ounces sold 392,432 236,292 1,176,711 508,184
------------------------------------------------------- --------- --------- ----------- ---------
All-in sustaining costs per ounce sold from continuing
operations 904 881 872 896
------------------------------------------------------- --------- --------- ----------- ---------
Including discontinued operations
All in sustaining costs from Agbaou -- (28,792) (15,891) (78,802)
------------------------------------------------------- --------- --------- ----------- ---------
All-in sustaining costs from all operations (354,907) (236,991) (1,041,543) (534,035)
------------------------------------------------------- --------- --------- ----------- ---------
Gold ounces sold 392,432 261,571 1,190,756 585,953
------------------------------------------------------- --------- --------- ----------- ---------
All-in sustaining cost per ounce sold 904 906 875 911
------------------------------------------------------- --------- --------- ----------- ---------
(1) Corporate G&A costs included in the calculation for
all-in sustaining costs has been adjusted to exclude expenses
associated to listing on the LSE of $3.0 million for the three
months and $11.2 million for the nine months ended 30 September
2021.
The Company presents its sustaining capital expenditures in its
all-in sustaining costs to reflect the capital expenditures related
to producing and selling gold from its on-going mine operations.
The distinction between sustaining and non-sustaining capital
reflects the definition set out by the World Gold Council.
Non-sustaining capital is capital expenditure incurred at new
projects and costs related to major projects or expansions at
existing operations where these projects will materially benefit
the operations. This non--GAAP measure provides investors with
transparency regarding the capital costs required to support the
on-going operations at its mines, relative to its total capital
expenditures. Readers should be aware that these measures do not
have a standardised meaning. It is intended to provide additional
information and should not be considered in isolation, or as a
substitute for measures of performance prepared in accordance with
IFRS.
Table 38: Sustaining and Non-Sustaining Capital
THREE MONTHSED NINE MONTHSED
30 September 30 September 30 September 30 September
($'000s) 2021 2020 2021 2020
---------------- ------------ ------------ ------------ --------------
Expenditures on
mining
interests 132,469 53,565 390,451 165,842
Non-sustaining
capital
expenditures(1) (41,458) (25,933) (156,572) (65,762)
Non-sustaining
exploration (25,650) (7,670) (58,686) (40,163)
Growth projects (10,856) -- (51,359) (4,199)
---------------- ------------ ------------ ------------ ------------
Sustaining
Capital(1) 54,505 19,962 123,834 55,718
---------------- ------------ ------------ ------------ ------------
(1) Non-sustaining and sustaining capital expenditures include
amounts incurred at the Agbaou mine.
Table 39: Consolidated Sustaining Capital
THREE MONTHSED NINE MONTHSED
30 September 30 September 30 September 30 September
($'000s) 2021 2020 2021 2020
----------------- ------------ ------------ ------------ --------------
Boungou 3,403 505 16,468 505
Houndé 21,858 6,999 35,162 29,890
Ity 5,526 2,249 17,866 5,625
Karma 17 1,535 499 4,202
Mana 2,130 4,781 10,150 4,781
Sabodala-Massawa 17,519 -- 35,965 --
Wahgnion 4,052 -- 7,501 --
----------------- ------------ ------------ ------------ ------------
Sustaining
capital from
continuing
operations 54,505 16,069 123,611 45,003
----------------- ------------ ------------ ------------ ------------
Agbaou -- 3,893 223 10,715
----------------- ------------ ------------ ------------ ------------
Total sustaining
capital from all
operations 54,505 19,962 123,834 55,718
----------------- ------------ ------------ ------------ ------------
Table 40: Consolidated Non-Sustaining Capital
THREE MONTHSED NINE MONTHSED
30 September 30 September 30 September 30 September
($'000s) 2021 2020 2021 2020
----------------- ------------ ------------ ------------ --------------
Boungou 5,449 848 13,874 848
Houndé 619 7,327 10,300 14,892
Ity 3,944 3,697 24,367 25,390
Karma 239 1,706 3,134 7,618
Mana 11,222 9,953 56,387 9,953
Sabodala-Massawa 10,150 -- 19,891 --
Wahgnion 7,536 -- 20,294 --
Non-mining 2,299 1,966 8,300 6,175
----------------- ------------ ------------ ------------ ------------
Consolidated
non-sustaining
capital 41,458 25,497 156,547 64,876
----------------- ------------ ------------ ------------ ------------
Agbaou -- 436 25 886
----------------- ------------ ------------ ------------ ------------
Total
non-sustaining
capital from all
operations 41,458 25,933 156,572 65,762
----------------- ------------ ------------ ------------ ------------
7.4. ADJUSTED NET EARNINGS AND ADJUSTED NET EARNINGS PER SHARE
Net earnings have been adjusted for items considered exceptional
in nature and not related to Endeavour's core operation of mining
assets. The presentation of adjusted net earnings may assist
investors and analysts to understand the underlying operating
performance of our core mining business. However, adjusted net
earnings and adjusted net earnings per share do not have a standard
meaning under IFRS. They should not be considered in isolation, or
as a substitute for measures of performance prepared in accordance
with IFRS and are not necessarily indicative of operating profit or
cash flow from operations as determined under IFRS.
The following table reconciles these non--GAAP measures to the
most directly comparable IFRS measure.
Table 41: Adjusted Net Earnings
THREE MONTHSED NINE MONTHSED
30 September 30 September 30 September 30 September
($'000s except per share amounts) 2021 2020 2021 2020
----------------------------------------------------- ------------ ------------ ------------ --------------
Total net and comprehensive earnings 132,543 70,164 388,721 83,011
Net (loss)/earnings from discontinued operations -- (6,580) 3,702 (22,463)
Deferred income tax expense/(recovery) 158 (40,764) 3,662 (34,260)
Loss/(gain) on financial instruments 20,012 26,185 (7,258) 101,141
Other expenses/(income) 3,380 (23,089) 13,890 (23,233)
Share-based compensation 7,281 7,117 25,075 13,682
Acquisition and restructuring costs 1,804 19,336 28,508 26,255
Non-cash and other adjustments(1) 8,556 34,750 48,248 36,676
Adjusted net earnings 173,734 87,119 504,548 180,809
----------------------------------------------------- ------------ ------------ ------------ ------------
Attributable to non-controlling interests 20,770 6,572 75,263 26,595
----------------------------------------------------- ------------ ------------ ------------ ------------
Attributable to shareholders of the Corporation 152,964 80,547 429,285 154,214
----------------------------------------------------- ------------ ------------ ------------ ------------
Weighted average number of shares issued and
outstanding 249,982,123 162,986,253 236,866,722 128,314,951
----------------------------------------------------- ------------ ------------ ------------ ------------
Adjusted net earnings from continuing operations per
basic share 0.61 0.49 1.81 1.20
----------------------------------------------------- ------------ ------------ ------------ ------------
(1) Non-cash and other adjustments mainly relate to non-cash
fair value adjustments to inventory associated with the purchase
price allocation of SEMAFO and Teranga.
7.5. OPERATING CASH FLOW PER SHARE
The Company believes that, in addition to conventional measures
prepared in accordance with GAAP, certain investors use free cash
flow to assess the Company's ability to generate and manage liquid
resources. These terms do not have a standard meaning and are
intended to provide additional information. They should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with GAAP.
Table 42: Operating Cash Flow (OCF) and Operating Cash Flow
(OCF) per share
THREE MONTHSED NINE MONTHSED
30 September 30 September 30 September 30 September
($'000s except per share amounts) 2021 2020 2021 2020
------------------------------------------------------------ -------------- -------------- -------------- ----------------
Operating cash flow
Cash generated from operating activities by continuing
operations 311,906 181,996 819,124 335,392
Changes in working capital from continuing operations 13,974 13,352 55,824 30,194
Operating cash flows before working capital from continuing
operations 325,880 195,348 874,948 365,586
Divided by weighted average number of outstanding
shares, in thousands 249,982 162,986 236,867 128,315
------------------------------------------------------------ -------------- -------------- -------------- --------------
Operating cash flow per share from continuing operations $ 1.25 $ 1.12 $ 3.46 $ 2.61
------------------------------------------------------------ --- --------- --- --------- --- --------- --- ---------
Operating cash flow per share before working capital
from continuing operations $ 1.30 $ 1.20 $ 3.69 $ 2.85
------------------------------------------------------------ --- --------- --- --------- --- --------- --- ---------
7.6. NET DEBT, NET CASH/ADJUSTED EBITDA RATIO
The Company is reporting Net Debt/ Cash and Net Debt/
Cash/Adjusted EBITDA LTM ratio. This non--GAAP measure provides
investors with transparency regarding the liquidity position of the
Company. It is intended to provide additional information and
should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with GAAP. The
calculation of net debt and net cash is shown in table 32. The
following table explains the calculation of net debt, net
cash/Adjusted EBITDA LTM ratio using the last twelve months of
Adjusted EBITDA.
Table 43: Net Debt, Net Cash/ Adjusted EBITDA LTM ratio
30 September
($'000s) 2021 31 December 2020
------------------------------------------ ------------ ------------------
Net Debt/(Cash) 69,632 (74,675)
Trailing twelve month Adjusted EBITDA(1) 1,347,336 802,773
------------------------------------------ ------------ ----------------
Net Debt/(Cash) / Adjusted EBITDA LTM
ratio 0.05 (0.09)
------------------------------------------ ------------ ----------------
(1) Trailing twelve month Adjusted EBITDA is calculated using
Adjusted EBITDA as reported in prior periods for each quarter prior
to Q3-2021 adjusted to exclude results of discontinued operations
and for the effects of retrospective PPA adjustments.
7.7. RETURN ON CAPITAL EMPLOYED
The Company uses Return on Capital Employed ("ROCE") as a
measure of long-term operating performance to measure how
effectively management utilises the capital it has been provided.
The calculation of ROCE, expressed as a percentage, is Adjusted
EBIT (based on Adjusted EBITDA as per table 35 adjusted to include
Adjusted EBITDA from discontinued operations) divided by the
average of the opening and closing capital employed for the twelve
months preceding the period end. Capital employed is the total
assets less current liabilities.
Table 44: Return on Capital Employed
TRAILING TWELVE MONTHS
30 September 30 September
($'000s unless otherwise stated) 2021 2020
------------------------------------- ------------- --------------
Adjusted EBITDA 1,347,336 603,735
Depreciation and amortisation (515,500) (296,629)
------------------------------------- ------------- ------------
Adjusted EBIT (A) 831,836 307,106
------------------------------------- -------------
Opening Capital employed (B) 3,422,953 1,753,314
Total Assets 6,793,720 3,854,799
Current Liabilities (577,458) (431,846)
------------------------------------- ------------- ------------
Closing Capital employed (C) 6,216,262 3,422,953
------------------------------------- -------------
Average Capital Employed (D)=(B+C)/2 4,819,608 2,588,134
------------------------------------- -------------
ROCE (A)/(D) 17% 12%
------------------------------------- ------------- --------------
8. QUARTERLY AND ANNUAL FINANCIAL AND OPERATING RESULTS
The following tables summarise the Company's financial and
operational information for the last eight quarters and three
fiscal years.
Table 45: 2021 - 2020 Quarterly Key Performance Indicators
FOR THE THREE MONTHSED
31 31
30 September 30 June March December
($'000s except ounces sold) 2021 2021 2021 2020
----------------------------------------------------- ------------ ------- ------- ----------
Gold ounces sold 392,432 420,761 363,518 300,622
Revenue 691,707 753,427 635,792 553,370
Operating cash flows from continuing operations 311,906 300,476 206,743 374,481
Earnings from continuing mine operations 235,114 272,975 206,615 218,372
Net comprehensive earnings 132,543 148,951 107,229 29,271
Net comprehensive loss from discontinued operations -- -- (3,702) (44,266)
Net earnings from continuing operations attributable
to shareholders 113,587 126,780 86,664 64,642
Net loss from discontinued operations attributable
to shareholders -- -- (5,168) (42,359)
Basic earnings per share from continuing operations 0.45 0.50 0.42 0.40
Diluted earnings per share from continuing operations 0.45 0.50 0.41 0.40
Basic earnings per share from all operations 0.45 0.50 0.39 0.14
Diluted earnings per share from all operations 0.45 0.50 0.39 0.14
----------------------------------------------------- ------------ ------- ------- --------
Table 46: 2020 - 2019 Quarterly Key Performance Indicators
FOR THE THREE MONTHSED
30 31
September 30 June March 31 December
($'000s except ounces sold) 2020 2020 2020 2019
-------------------------------------------------------------- --------- -------- ------- -------------
Gold ounces sold 236,292 124,761 147,131 139,058
Revenue 434,839 209,581 226,321 199,406
Operating cash flows from continuing operations 182,686 53,495 99,901 92,005
Earnings from continuing mine operations 123,229 75,582 72,182 44,757
Net comprehensive earnings/(loss) 70,163 (22,616) 35,463 (113,076)
Net comprehensive earnings/(loss) from discontinued
operations 6,581 7,904 7,978 (1,604)
Net earnings/(loss) from continuing operations attributable
to shareholders 52,393 (41,181) 19,366 (111,662)
Net earnings/(loss) from discontinued operations attributable
to shareholders 8,968 3,952 6,632 (5,901)
Basic earnings/(loss) per share from continuing operations 0.32 (0.37) 0.18 (1.02)
Diluted earnings/(loss) per share from continuing
operations 0.32 (0.37) 0.18 (1.02)
Basic earnings/(loss) per share from all operations 0.38 (0.34) 0.24 (1.07)
Diluted earnings/(loss) per share from all operations 0.38 (0.34) 0.24 (1.07)
-------------------------------------------------------------- --------- -------- ------- -----------
Table 47: Annual Key Performance Indicators(1)
FOR THE YEARED
31 31
December December 31 December
($'000s except per share amounts) 2020 2019 2018
Gold ounces sold 808,806 511,749 469,544
Revenue 1,424,111 694,848 571,701
Operating cash flows from continuing operations 710,563 205,531 196,371
Operating cash flows from discontinued operations 38,365 96,354 54,549
Earnings/(Loss) from continuing mine operations 337,564 (27,502) 53,568
Net and comprehensive earnings/(loss) from continuing
operations 134,085 (159,974) 127,609
Net and comprehensive (loss)/earnings from discontinued
operations (21,803) 18,814 (110,549)
Net earnings/(loss) from continuing operations attributable
to shareholders 95,243 (174,506) (37,675)
Net earnings/(loss) attributable to shareholders 72,528 (163,718) (144,856)
Basic earnings/(loss) per share from continuing operations 0.69 (1.59) (0.35)
Diluted earnings/(loss) per share from continuing
operations 0.69 (1.59) (0.35)
Basic earnings/(loss) per share 0.53 (1.49) (1.00)
Diluted earnings/(loss) per share 0.53 (1.49) (1.00)
Total assets 3,881,718 1,872,791 1,922,043
Total long term liabilities (excluding deferred taxes) 792,740 738,294 660,472
Total attributable shareholders' equity 2,057,015 717,867 858,006
Adjusted net earnings per share(2) 2.28 0.33 0.49
------------------------------------------------------------ --------- --------- ---------
(1) Prior year figures for continuing operations have been
adjusted to exclude Agbaou.
(2) The adjusted net earnings per share is inclusive of the
prior period tax adjustment included in the 31 December 2018
adjusted earnings per share.
9. PRINCIPAL RISKS AND UNCERTAINTIES
Readers of this Management Report should consider the
information included in the Company's condensed interim
consolidated financial statements and related notes for the three
and nine months ended 30 September 2021. The nature of the
Company's activities and the locations in which it works mean that
the Company's business generally is exposed to significant risk
factors, many of which are beyond its control. The Company examines
the various risks to which it is exposed and assesses any impact
and likelihood of those risks. For discussion on all the risk
factors that affect the Company's business generally, please refer
to the prospectus prepared as part of the admission to the premium
listing segment of the Official List and to trading on the Main
Market of the London Stock Exchange (the "Prospectus") and which is
available on its website, www.endeavourmining.com, Endeavour Mining
Corporation's most recent Annual Information Form filed on SEDAR at
www.sedar.com, and Endeavour Mining Corporations's consolidated
financial statements for the year ended 31 December 2020. The risks
that affect the financial statements specifically, and the risks
that are reasonably likely to affect them in the future which are
incorporated by reference in this Management Report, are set out
below.
There have been no significant changes to the principal risks
and uncertainties of the Company from those disclosed in the
Prospectus. The principal risks that affect the Company's business
are listed below:
External risks
-- Gold price
-- Exchange rates
-- Inability to compete successfully with other mining companies
-- Global economic conditions
-- Effect of COVID-19 on the business
-- Climate change
-- Fixed and floating gold delivery obligations
Operational risks
-- Mining, development and exploration activities are subject to operational
risks and hazards inherent in the mining industry, such as geological
problems, seismic activity, flooding, metallurgical and other processing
problems, etc.
-- Risks and potential liabilities related to our tailings storage
facilities.
-- Risks and expenses related to reclamation costs and related liabilities.
-- The Company's ability to maintain or increase the present level of gold
production is dependent in part on the Company's development projects,
which are subject to numerous known and unknown risks.
-- No assurance can be given that the current or future mineral production
estimates will be achieved.
-- Future exploration and development projects may not results in
economically viable mining operations or yield new reserves.
-- Risks associated with illegal or artisanal mining, which may, among other
things, create environmental, health and safety risks.
-- Surrounding communities may affect mining operations through restriction
of access of supplies and workforce to mine site or through legal
challenges asserting ownership rights.
-- The Company depends on management and skilled personnel and may not be
able to attract and retain qualified personnel in the future.
-- French officials are conducting a judicial inquiry into certain past
employees of Areva S.A. ("Areva"), including into our CEO Sébastien
de Montessus in relation to his time as an employee of Areva, which could
lead to negative publicity and/or reputational damage for the Group, and
which could have an adverse impact on his ability to continue in his
role.
-- The Company is dependent on its workforce, and the workforce of its
third-party contractors, to extract and process minerals containing gold,
and are therefore sensitive to any labour disruption at its properties.
-- Risks associated with use of third-party contractors.
-- The Company may require further licences and encounter title claims to
develop and realise certain gold reserves or to process the ore of third
parties and may encounter title claims to any of its properties which may
result in future losses or additional expenditures.
-- The Company may be adversely affected by the availability and costs of
key inputs.
Legal and regulatory risks
-- The Company is subject to a number of laws and regulations and may not be
able to enforce our legal rights.
-- The Company's activities are extensively regulated in respect of
environmental, health and safety standards which are likely to become
more stringent over time and may be subject to unforeseen changes.
-- The Company's business is subject to evolving climate change initiatives
and legislation that may increase both compliance costs and the risk of
non-compliance.
-- Government regulation may have an adverse effect on the Company's
exploration, development and mining operations.
-- The Company may be adversely affected by violations of applicable
anti-corruption laws, as well as export control regulations and related
laws and economic sanctions programmes.
-- The Company may face the risk of litigation in connection with its
business and other activities.
Other risks
-- The Company may fail to successfully integrate acquired properties,
including those acquired from SEMAFO and Teranga.
-- The Company may face IT and cyber security threats.
-- The Company's business requires substantial capital expenditure and there
can be no assurance that such funding will be available on a timely basis,
or at all
-- The Company's use of derivative instruments involves certain inherent
risks, including credit risk, market liquidity risk, and unrealised
mark-to-market risk.
-- The Company's insurance coverage does not cover all of our potential
losses, liabilities and damage related to our business, and certain risks
are uninsured or uninsurable
Risks related to operations in West Africa
-- The Company is subject to geopolitical and other risks associated with
operating in West Africa.
-- The location of the Company's assets subjects the Company to safety and
security risks.
-- The Company's continued operations depend on adequate infrastructure,
which is underdeveloped in certain parts of West Africa, and the
uninterrupted flow of power, materials, supplies and services.
-- The Company's mining properties are subject to various government equity
interests and royalty payments payable to the respective governments of
the countries in which we operate.
-- There are health risks associated with the mining work force in Africa.
Risks related to shares
-- Shares in the Company may be subject to market price volatility and the
market price of the Shares in the Company may decline disproportionately
in response to developments that are unrelated to the Company's operating
performance.
-- The current value of Old Endeavour Shares cannot be taken as indicative
of the likely development of the market and future demand for the Shares.
-- Future sales of Shares by major shareholders could depress the price of
the Shares.
-- The issuance of additional Shares in the Company in connection with
future acquisitions, any share incentive or share option plan or
otherwise may dilute all other shareholdings.
-- The Company's ability to pay dividends in the future depends, among other
things, on the Group's financial performance and capital requirements.
-- The Company is a holding Company with no business operations of its own
and depends on its subsidiaries for cash, including in order to pay
dividends.
-- Shareholders may become subject to foreign exchange rate risk as a result
of an investment in the Shares.
-- Shareholders in the United States and other jurisdictions outside of the
United Kingdom may not be able to participate in future equity offerings.
-- The rights afforded to Shareholders are governed by English law. Not all
rights available to shareholders under US law will be available to
holders of the Shares.
The Company's activities expose it to a variety of risks that
may include credit risk, liquidity risk, currency risk, interest
rate risk and other price risks, including equity price risk. The
Company examines the various financial instrument risks to which it
is exposed and assesses any impact and likelihood of those
risks.
Credit risk
Credit risk is the risk that the counterparty to a financial
instrument will cause a financial loss for the Company by failing
to discharge its obligations. Credit risk arises from cash,
restricted cash, marketable securities, trade and other
receivables, long-term receivable and other assets.
The Company manages the credit risk associated with cash by
investing these funds with highly rated financial institutions, and
by monitoring its concentration of cash held in any one
institution. As such, the Company deems the credit risk on its cash
to be low.
The Company closely monitors its financial assets and does not
have any significant concentration of credit risk other than
receivable balances owed from the governments in the countries the
Company operates in and its other receivables of $14.6 million due
from third parties. The Company monitors the amounts outstanding
from its third parties regularly and does not believe that there is
a significant level of credit risk associated with these
receivables given the current nature of the amounts outstanding and
the on-going customer/supplier relationships with those
companies.
The Corporation sells its gold to large international
organizations with strong credit ratings, and the historical level
of customer defaults is minimal. As a result, the credit risk
associated with gold trade receivables at 30 September 2021 is
considered to be negligible. The Company does not rely on ratings
issued by credit rating agencies in evaluating counterparties'
related credit risk.
Liquidity risk
Liquidity risk is the risk that the Company will encounter
difficulty in meeting obligations associated with its financial
liabilities that are settled by delivering cash, physical gold or
another financial asset. The Company has a planning and budgeting
process in place to help determine the funds required to support
the Company's normal operating requirements. The Company ensures
that it has sufficient cash and cash equivalents and loan
facilities available to meet its short term obligations.
Currency risk
Currency risk relates to the risk that the fair values or future
cash flows of the Company's financial instruments will fluctuate
because of changes in foreign exchange rates. Exchange rate
fluctuations may affect the costs that the Company incurs in its
operations. There has been no change in the Company's objectives
and policies for managing this risk during the period ended 30
September 2021.
The Company has not hedged its exposure to foreign currency
exchange risk.
Interest rate risk
Interest rate risk is the risk that future cash flows from, or
the fair values of, the Company's financial instruments will
fluctuate because of changes in market interest rates. The Company
is exposed to interest rate risk primarily on its long-term debt.
Since marketable securities and government treasury securities held
as loans are short term in nature and are usually held to maturity,
there is minimal fair value sensitivity to changes in interest
rates. The Company continually monitors its exposure to interest
rates and is comfortable with its exposure given the relatively low
short-term US interest rates and LIBOR.
10. CONTROLS AND PROCEDURES
10.1. DISCLOSURE CONTROLS AND PROCEDURES
Disclosure controls and procedures are designed to provide
reasonable assurance that all relevant information is gathered and
reported on a timely basis to senior management, including the
Chief Executive Officer (CEO) and the Chief Financial Officer
(CFO). Additionally, these controls and procedures provide
reasonable assurance that information required to be disclosed in
the Company's annual and interim filings (as such terms are defined
under National Instrument 52-109 Certification of Disclosure in
Issuers' Annual and Interim Filings) and other reports filed or
submitted under Canadian securities law is recorded, processed,
summarised and reported within the time periods specified by those
laws, and that material information is accumulated and communicated
to management including the CEO and CFO as appropriate to allow
timely decisions regarding required disclosure.
Management evaluated the design and operating effectiveness of
the Company's disclosure controls and procedures as required by
Canadian Securities Law. Based on that evaluation, the CEO and CFO
concluded that as of 31 December 2020, the disclosure controls and
procedures were effective.
10.2. INTERNAL CONTROLS OVER FINANCIAL REPORTING
The Company's management, including the CEO and CFO, is
responsible for establishing and maintaining adequate internal
controls over financial reporting. Under the supervision of the
CFO, the Company's internal controls over financial reporting are
designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements
for external purposes in accordance with IFRS.
There have been no material changes in the Company's internal
controls over financial reporting since the year ended 31 December
2020 that have materially affected or are reasonably likely to
materially affect the Company's internal controls over financial
reporting.
The Company assessed the SEMAFO and Teranga mines' disclosure
controls and procedures and internal control over financial
reporting; however, in accordance with National Instrument 52-109 -
Certification of Disclosure in Issuer's Annual and Interim Filings,
because the SEMAFO operations were acquired not more than 365 days
before the end of 31 December 2020, the Company has limited the
scope of its design of disclosure controls and procedures and
internal controls over financial reporting to exclude the controls,
policies and procedures of SEMAFO.
10.3. LIMITATIONS OF CONTROLS AND PROCEDURES
The Company's management, including the CEO and CFO believe that
any disclosure controls and procedures or internal control over
financial reporting, can provide only reasonable, but not absolute,
assurance that the objectives of the control system are met. These
inherent limitations include the realities that judgments in
decision making can be faulty, and that breakdowns can occur
because of simple error or mistake. Additionally, controls can be
circumvented by the actions of one individual, by collusion of two
or more people, or by unauthorised override of the control.
Accordingly, because of the inherent limitations in a control
system, misstatements due to error or fraud may occur and not be
detected.
11. DIRECTORS' RESPONSIBILITY STATEMENT
The directors of Endeavour Mining plc confirm that to the best
of their knowledge:
-- the condensed interim consolidated financial statements for the nine
months ended 30 September 2021 has been prepared in accordance with UK
adopted International Accounting Standard 34, "Interim Financial
Reporting", and International Accounting Standard 34, "Interim Financial
Reporting" as issued by the International Accounting Standards Board
(IASB), and that it gives a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company and the undertakings
included in the consolidation taken as a whole; and
-- the interim management report includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8
The Directors of Endeavour Mining plc are listed on the
Company's website at www.endeavourmining.com
By order of the Board
/s/ Sebastien de Montessus
Chief Executive Officer
Sebastien de Montessus
10 November 2021
INDEPENT REVIEW REPORT TOEAVOUR MINING PLC
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the interim financial report for the
three and nine months ended 30 September 2021 which comprises the
condensed interim consolidated statement of comprehensive earnings,
the condensed interim consolidated statement of cash flows, the
condensed interim consolidated statement of financial position, the
condensed interim consolidated statement of changes in equity and
related notes.
We have read the other information contained in the interim
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Directors' responsibilities
The interim financial report is the responsibility of and has
been approved by the directors. The directors are responsible for
preparing the interim financial report in accordance with the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the
group will be prepared in accordance with UK adopted international
accounting standards and International Financial Reporting
Standards as issued by the International Accounting Standards Board
("IASB"). The condensed set of financial statements included in
this interim financial report has been prepared in accordance with
UK adopted International Accounting Standard 34, "Interim Financial
Reporting".
As explained in note 2 to the condensed set of financial
statements included in this interim financial report, the group, in
addition to preparing condensed interim consolidated financial
statements in accordance with UK adopted International Accounting
Standard 34, "Interim Financial Reporting", has also applied
International Accounting Standard 34, "Interim Financial Reporting"
as issued by the IASB.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the interim financial
report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity", issued by the Financial Reporting Council for use
in the United Kingdom and International Standard on Review
Engagements 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
IAASB. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK) and consequently does not enable us to obtain assurance that
we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the interim financial report for the three and nine months ended
30 September 2021 is not prepared, in all material respects, in
accordance with UK adopted International Accounting Standard 34 and
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
In addition, based on our review, nothing has come to our
attention that causes us to believe that the condensed set of
financial statements in the interim financial report for the three
and nine months ended 30 September 2021 is not prepared, in all
material respects, in accordance with International Accounting
Standard 34 Interim Financial Reporting as issued by the
International Accounting Standards Board.
Use of our report
Our report has been prepared in accordance with the terms of our
engagement to assist the Company in meeting its responsibilities in
respect of interim financial reporting in accordance with the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority and for no other purpose. No person is
entitled to rely on this report unless such a person is a person
entitled to rely upon this report by virtue of and for the purpose
of our terms of engagement or has been expressly authorised to do
so by our prior written consent. Save as above, we do not accept
responsibility for this report to any other person or for any other
purpose and we hereby expressly disclaim any and all such
liability.
BDO LLP
Chartered Accountants
London
10 November 2021
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
Condensed Interim Consolidated Statement of Comprehensive
Earnings
(Expressed in Thousands of United States Dollars, except per
share amounts) (Unaudited)
THREE MONTHSED NINE MONTHSED
30 September 30 September 30 September 30 September
Note 2021 2020 2021 2020
----------------------------------------------------- ---- -------------- -------------- -------------- ----------------
Revenues
Revenue 691,707 434,839 2,080,926 870,741
----------------------------------------------------- ---- -------------- -------------- -------------- --------------
Cost of sales
Operating expenses (257,470) (166,270) (788,579) (345,590)
Depreciation and depletion (156,614) (115,314) (446,860) (193,707)
Royalties (42,509) (30,024) (130,783) (60,450)
----------------------------------------------------- ---- -------------- -------------- -------------- --------------
Earnings from mine operations 235,114 123,231 714,704 270,994
----------------------------------------------------- ---- -------------- -------------- -------------- --------------
Corporate costs 3 (11,990) (5,101) (42,151) (15,381)
Acquisition and restructuring costs 4 (1,804) (19,336) (28,508) (26,255)
Share-based compensation 5 (7,281) (7,117) (25,075) (13,682)
Exploration costs (2,855) (900) (18,539) (4,029)
----------------------------------------------------- ---- -------------- -------------- -------------- --------------
Earnings from operations 211,184 90,777 600,431 211,647
----------------------------------------------------- ---- -------------- -------------- -------------- --------------
Other income/(expense)
(Loss)/gain on financial instruments 6 (20,012) (26,185) 7,258 (101,141)
Finance costs 7 (14,696) (12,213) (40,708) (35,534)
Other (expense)/income (3,380) 23,089 (13,890) 23,233
----------------------------------------------------- ---- -------------- -------------- -------------- --------------
Earnings before taxes 173,096 75,468 553,091 98,205
----------------------------------------------------- ---- -------------- -------------- -------------- --------------
Current income tax expense 16 (40,395) (52,648) (157,006) (71,917)
Deferred income tax (expense)/recovery 16 (158) 40,764 (3,662) 34,260
----------------------------------------------------- ---- -------------- -------------- -------------- --------------
Net comprehensive earnings from continuing operations 132,543 63,584 392,423 60,548
----------------------------------------------------- ---- -------------- -------------- -------------- --------------
Net comprehensive earnings/(loss) from discontinued
operations 4 -- 6,580 (3,702) 22,463
----------------------------------------------------- ---- -------------- -------------- -------------- --------------
Net comprehensive earnings $ 132,543 $ 70,164 $ 388,721 $ 83,011
----------------------------------------------------- ---- --- --------- --- --------- ---------- --- ---------
Net earnings from continuing operations attributable
to:
Shareholders of Endeavour Mining plc 113,587 52,160 327,030 30,343
Non-controlling interests 14 18,956 11,424 65,393 30,205
----------------------------------------------------- ---- -------------- -------------- -------------- --------------
$ 132,543 $ 63,584 $ 392,423 $ 60,548
----------------------------------------------------- ---- --- --------- --- --------- ---------- --- ---------
Total net earnings attributable to:
Shareholders of Endeavour Mining plc 113,587 61,126 321,862 49,895
Non-controlling interests 14 18,956 9,038 66,859 33,116
----------------------------------------------------- ---- -------------- -------------- -------------- --------------
$ 132,543 $ 70,164 $ 388,721 $ 83,011
----------------------------------------------------- ---- --- --------- --- --------- ---------- --- ---------
Earnings per share from continuing operations
Basic earnings per share 5 $ 0.45 $ 0.32 $ 1.38 $ 0.24
Diluted earnings per share 5 $ 0.45 $ 0.32 $ 1.37 $ 0.24
----------------------------------------------------- ---- --- --------- --- --------- ---------- --- ---------
Earnings per share
Basic earnings per share 5 $ 0.45 $ 0.38 $ 1.36 $ 0.39
Diluted earnings per share 5 $ 0.45 $ 0.38 $ 1.35 $ 0.39
----------------------------------------------------- ---- --- --------- --- --------- ---------- --- ---------
The accompanying notes are an integral part of these condensed
interim consolidated financial statements
Condensed Interim Consolidated Statement of Cash Flows
(Expressed in Thousands of United States Dollars)
(Unaudited)
THREE MONTHSED NINE MONTHSED
30 September 30 September 30 September 30 September
Note 2021 2020 2021 2020
----------------------------------------------------------- ---- -------------- -------------- -------------- ----------------
Operating Activities
Earnings before taxes 173,096 75,468 553,091 98,205
Non-cash items 15 200,686 160,305 509,910 345,052
Cash paid on settlement of DSUs, PSUs and options 5 (202) (1,660) (12,164) (1,881)
Cash received/(paid) on settlement of other financial
assets and liabilities 5,003 (7,566) 7,791 (24,817)
Income taxes paid 16 (55,503) (32,423) (185,567) (49,180)
Foreign exchange gain/(loss) 2,800 1,224 1,887 (1,793)
----------------------------------------------------------- ---- -------------- -------------- -------------- --------------
Operating cash flows before changes in working capital 325,880 195,348 874,948 365,586
Changes in working capital 15 (13,974) (13,352) (55,824) (30,194)
Operating cash flows generated from continuing operations 311,906 181,996 819,124 335,392
Operating cash flows generated from/(used by) discontinued
operations 4 -- 19,197 (8,808) 49,172
----------------------------------------------------------- ---- -------------- -------------- -------------- --------------
Cash generated from operating activities $ 311,906 $ 201,193 $ 810,316 $ 384,564
----------------------------------------------------------- ---- ---------- ---------- ---------- ----------
Investing Activities
Expenditures on mining interests 10 (132,469) (49,236) (390,202) (154,241)
Cash paid for additional interest of Ity mine -- -- -- (5,430)
Cash acquired on acquisition of subsidiaries 4 -- 92,981 27,036 92,981
Changes in other assets (4,338) 2,337 (11,262) 4,502
Proceeds from sale of assets 10 -- -- -- 10,292
Net proceeds from sale of Agbaou 4 -- -- (4,714) --
----------------------------------------------------------- ---- -------------- -------------- -------------- --------------
Investing cash flows (used by)/generated from continuing
operations (136,807) 46,082 (379,142) (51,896)
Investing cash flows used by discontinued operations 4 -- (4,329) (249) (11,676)
----------------------------------------------------------- ---- -------------- -------------- -------------- --------------
Cash (used in)/generated from investing activities $ (136,807) $ 41,753 $ (379,391) $ (63,572)
Financing Activities
Proceeds received from the issue of common shares 5 -- 100,000 199,988 100,000
Dividends paid 5 (99,809) -- (159,809) --
Payment of financing fees and other (694) (2,126) (8,216) (2,567)
Interest paid (12,550) (11,018) (25,780) (27,746)
Proceeds of long-term debt 7 -- -- 490,000 120,000
Repayment of long-term debt 7 (80,000) (150,000) (643,042) (150,000)
Acquisition of shares in share buyback 5 (34,615) -- (94,069) --
Repayment of finance and lease obligation (5,191) (10,562) (23,921) (28,992)
Settlement of gold offtake liability 4 -- -- (49,735) --
Financing cash flows (used by)/generated from continuing
operations (232,859) (73,706) (314,584) 10,695
Financing cash flows used by discontinued operations 4 -- (335) (45,434) (1,004)
----------------------------------------------------------- ---- -------------- -------------- -------------- --------------
Cash (used in)/generated from financing activities $ (232,859) $ (74,041) $ (360,018) $ 9,691
Effect of exchange rate changes on cash (14,748) 2,602 (25,214) 2,752
(Decrease)/Increase in cash and cash equivalents (72,508) 171,507 45,693 333,435
Cash and cash equivalents, beginning of period 832,876 351,817 644,970 189,889
Cash relating to assets held for sale, beginning of
period -- -- 69,705 --
----------------------------------------------------------- ---- -------------- -------------- -------------- --------------
Cash and cash equivalents, end of period $ 760,368 $ 523,324 $ 760,368 $ 523,324
----------------------------------------------------------- ---- ---------- ---------- ---------- ----------
The accompanying notes are an integral part of these condensed
interim consolidated financial statements
Condensed Interim Consolidated Statement of Financial
Position
(Expressed in Thousands of United States Dollars)
(Unaudited)
As at
30 September As at
Note 2021 31 December 2020
--------------------------------------------------- ---- --------------- ---------------------
ASSETS (Note 4b)
Current
Cash and cash equivalents 760,368 644,970
Trade and other receivables 8 126,858 55,136
Inventories 9 355,240 190,601
Prepaid expenses and other 43,628 26,322
--------------------------------------------------- ---- --------------- -------------------
Current assets excluding assets held for sale 1,286,094 917,029
Assets held for sale 4 -- 180,808
--------------------------------------------------- ---- --------------- -------------------
Non-current 1,286,094 1,097,837
Mining interests 10 5,001,462 2,577,844
Deferred tax assets 10,263 19,774
Other financial assets 11 77,686 25,202
Other long term assets 9 156,023 77,010
Goodwill 4 262,192 71,528
--------------------------------------------------- ---- --------------- -------------------
Total assets $ 6,793,720 $ 3,869,195
--------------------------------------------------- ---- ----------- ----- ------------
LIABILITIES
Current
Trade and other payables 12 323,397 262,274
Finance and lease obligations 15,774 13,661
Other financial liabilities 13 35,245 --
Income taxes payable 16 203,042 134,205
--------------------------------------------------- ---- --------------- -------------------
Current liabilities excluding liabilities held for
sale 577,458 410,140
Liabilities held for sale 4 -- 112,796
--------------------------------------------------- ---- --------------- -------------------
Non-current 577,458 522,936
Finance and lease obligations 37,755 23,544
Long-term debt 7 850,434 688,266
Other financial liabilities 13 101,837 2,919
Environmental rehabilitation provision 128,510 78,011
Deferred tax liabilities 621,595 305,101
--------------------------------------------------- ---- --------------- -------------------
Total liabilities $ 2,317,589 $ 1,620,777
--------------------------------------------------- ---- ----------- ----- ------------
EQUITY
Share capital 5 4,452,491 16,299
Share premium 5 4,586 3,027,467
Share based payment reserve 5 85,688 70,390
Capital redemption reserve 5 243 --
Merger reserve 5 496,766 --
Deficit (975,380) (1,056,948)
--------------------------------------------------- ---- --------------- -------------------
Equity attributable to shareholders of the
Corporation $ 4,064,394 $ 2,057,208
--------------------------------------------------- ---- ----------- ----- ------------
Non-controlling interests 14 411,737 191,210
--------------------------------------------------- ---- --------------- -------------------
Total equity $ 4,476,131 $ 2,248,418
--------------------------------------------------- ---- ----------- ----- ------------
Total equity and liabilities $ 6,793,720 $ 3,869,195
--------------------------------------------------- ---- ----------- ----- ------------
COMMITMENTS AND CONTINGENCIES (NOTE 19)
SUBSEQUENT EVENTS (NOTE 20)
Approved by the Board: 10 November 2021
"Sebastien de Montessus" Director "Alison Baker" Director
The accompanying notes are an integral part of these condensed interim
consolidated financial statements
Condensed Interim Consolidated Statement of Changes in
Equity
(Expressed in Thousands of United States Dollars, except per
share amounts) (Unaudited)
SHARE CAPITAL
Share Total
Capital Based Attributable
Share Share Premium Redemption Payment Merger to Non-Controlling
Note Capital Reserve Reserve Reserve Reserve Deficit Shareholders Interests Total
---- ---------- ------------- ------------ ---------- ------------- ------------ -------------- ----------------- ------------
At 1 January 2020 10,988 1,763,184 -- 72,487 -- (1,128,792) 717,867 98,630 816,497
Consideration on
the acquisition
of SEMAFO 4 4,756 1,146,572 -- -- -- -- 1,151,328 116,194 1,267,522
Shares issued on
private
placement 5 451 99,549 -- -- -- -- 100,000 -- 100,000
Shares issued on
exercise of
options and
PSU's 110 19,345 -- (19,332) -- -- 123 -- 123
Share based
compensation 5 -- -- -- 12,073 -- -- 12,073 -- 12,073
Dividends to
non-controlling
interests 14 -- -- -- -- -- -- -- (9,017) (9,017)
Cancellation of
treasury shares 5 (6) (1,183) -- -- -- (340) (1,529) -- (1,529)
Change in
non-controlling
interests 14 -- -- -- -- -- (231) (231) (199) (430)
Total net and
comprehensive
earnings -- -- -- -- -- 49,895 49,895 33,116 83,011
----------------- ---- ---------- ------------- ------------ ---------- ------------- ------------ -------------- ----------------- ------------
At 30 September
2020 $ 16,299 $ 3,027,467 $ -- $ 65,228 $ -- $(1,079,468) $ 2,029,526 $ 238,724 $2,268,250
----------------- ---- --------- --------- ---- ------ ------ --- -------- ----------- --- --------- ---- ----------- ---------
At 1 January 2021 16,299 3,027,467 -- 70,390 -- (1,056,948) 2,057,208 191,210 2,248,418
Consideration on
the acquisition
of Teranga 4 7,877 1,670,408 -- 30,361 -- -- 1,708,646 186,583 1,895,229
Shares issued on
private
placement 5 891 199,088 -- -- -- -- 199,979 -- 199,979
Purchase and
cancellation of
own shares 5 (243) -- 243 -- -- (110,514) (110,514) -- (110,514)
Shares issued on
exercise of
options and
PSU's 206 31,850 -- (24,934) -- -- 7,122 -- 7,122
Share based
compensation 5 -- -- -- 24,253 -- -- 24,253 -- 24,253
Dividends paid 5 -- -- -- -- -- (129,780) (129,780) -- (129,780)
Dividends to
non-controlling
interests 14 -- -- -- -- -- -- -- (29,922) (29,922)
Disposal of the
Agbaou mine 4 -- -- -- -- -- -- -- (2,993) (2,993)
Reorganisation 1, 4 (22,539) (4,924,227) -- -- 4,946,766 -- -- -- --
Deferred shares
issued upon
capitalisation 5 4,450,000 -- -- -- (4,450,000) -- -- --
Reclassification
of PSU's to
liabilities 5 -- -- -- (14,382) -- -- (14,382) -- (14,382)
Total net and
comprehensive
earnings -- -- -- -- -- 321,862 321,862 66,859 388,721
----------------- ---- ---------- ------------- ------------ ---------- ------------- ------------ -------------- ----------------- ----------
At 30 September
2021 $4,452,491 $ 4,586 $ 243 $ 85,688 $ 496,766 $ (975,380) $ 4,064,394 $ 411,737 $4,476,131
----------------- ---- --------- --------- ---- ------ ------ --- -------- ----------- --- --------- ---- ----------- ---------
The accompanying notes are an integral part of these condensed
interim consolidated financial statements
1 DESCRIPTION OF BUSINESS AND NATURE OF OPERATIONS
Endeavour Mining plc, together with its subsidiaries
(collectively, "Endeavour", the "Group", or the "Company"), is a
publicly listed gold mining Company that operates seven mines in
West Africa in addition to having project development and
exploration assets. Endeavour is focused on effectively managing
its existing assets to maximise cash flows as well as pursuing
organic and strategic growth opportunities that benefit from its
management and operational expertise.
Endeavour's corporate office is in London, England, and its
shares are listed on the London Stock Exchange ("LSE") (symbol
EDV), and on the Toronto Stock Exchange ("TSX") (symbol EDV) and
quoted in the United States on the OTCQX International (symbol
EDVMF). The Company is incorporated in the United Kingdom and its
registered office is located at 5 Young Street, London, United
Kingdom, W8 5EH.
Prior to its listing on the London Stock Exchange on 14 June
2021, Endeavour Mining Corporation ("EMC") was the parent Company
of the Group for which consolidated financial statements were
produced. On 11 June 2021, the shareholders of EMC transferred all
of their shares in EMC to Endeavour Mining plc in exchange for
ordinary shares of equal value in Endeavour Mining plc (the
"Reorganisation"). This resulted in Endeavour Mining plc, which was
incorporated on 21 March 2021, becoming the new parent Company for
the Group. As a result of the Reorganisation, there was no change
in the legal ownership of any of the assets of EMC or Endeavour
Mining plc, nor any change in the ownership of existing shares or
securities of EMC or Endeavour Mining plc. The financial
information as at 30 September 2021 and for the three and nine
months ended 30 September 2021 (and comparative information) is
presented as a continuation of EMC.
2 BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
2.1. STATEMENT OF COMPLIANCE
The annual financial statements of the group will be prepared in
accordance with UK adopted international accounting standards and
International Financial Reporting Standards as issued by the
International Accounting Standards Board ("IASB"). These condensed
interim consolidated financial statements have been prepared in
accordance with UK adopted International Accounting Standard
("IAS") 34, Interim Financial Reporting. In addition to preparing
condensed interim consolidated financial statements in accordance
with UK adopted International Accounting Standard 34, "Interim
Financial Reporting", the Company has also applied International
Accounting Standard 34, "Interim Financial Reporting" as issued by
the IASB. These condensed interim financial statements have been
prepared using accounting policies consistent with International
Financial Reporting Standards ("IFRS") and UK adopted international
accounting standards in conformity with the requirements of the
Companies Act 2006, and do not include all of the information
required for full annual financial statements prepared using IFRS,
and are also in accordance with the requirements of the Disclosure
Guidance and Transparency Rules ("DTR") in the United Kingdom as
applicable to interim financial reporting. These condensed
consolidated financial statements represent a 'condensed set of
financial statements' as referred to in the DTR.
These condensed consolidated financial statements for the three
and nine months ended 30 September 2021 were authorised for issue
in accordance with a resolution of the Board on 8 November 2021.
The condensed consolidated financial statements are unaudited and
do not constitute statutory accounts as defined in Section 434 of
the Companies Act 2006. These condensed consolidated financial
statements should be read in conjunction with the annual
consolidated financial statements of the Company for the year ended
31 December 2020, which include information necessary or useful to
understanding the Company's operations, financial performance, and
financial statement presentation. In particular, the Company's
significant accounting policies were presented as Note 2 to the
consolidated financial statements for the year ended 31 December
2020 and have been consistently applied in the preparation of these
condensed interim consolidated financial statements.
None of the new standards or amendments to standards and
interpretations applicable during the period has had a material
impact on the financial position or performance of the Group. The
Group has not early adopted any standard, interpretation or
amendment that was issued but is not yet effective.
During the period ended 30 September 2021, the Company has
applied the following accounting policies which were not applied in
the annual consolidated financial statements for the year ended 31
December 2020:
Merger accounting
Group reorganisations, including transfer of assets and
liabilities and acquisition of companies within the Endeavour
Mining plc group are accounted for using merger accounting. As a
result, any assets and liabilities are transferred at carrying
value rather than fair value. The difference between the carrying
value of assets and liabilities transferred and the consideration
paid has been recognised in the merger reserve.
Employee Benefit Trust
The Employee Benefit Trust ("EBT") is considered to be a Special
Purpose Entity and is accounted for under IFRS 10 and consolidated
on the basis that the Company has control, thus the assets and
liabilities of the EBT are included in the financial position and
results of operations of the Group and the shares held by the EBT
are presented as a deduction from equity.
Treasury shares
When the Company purchases its own share capital ("treasury
shares"), the consideration paid, including any directly
attributable incremental costs, net of income taxes, is deducted
from retained earnings/(deficit). If treasury shares are
subsequently cancelled, the par value of the cancelled shares is
credited to the capital redemption reserve. If treasury shares are
subsequently re-issued, any consideration received, net of
transaction costs, up to the amount paid to re-purchase the shares
is treated as a realised profit reinstating the retained earnings
used when the shares were repurchased. Any excess is included in
share premium.
2.2. BASIS OF PREPARATION
These condensed interim consolidated financial statements have
been prepared on the historical cost basis, except for the
acquisition of SEMAFO Inc. ("SEMAFO") and Teranga Gold Corporation
("Teranga") (Note 4) and certain financial instruments that are
measured at fair value at the end of each reporting period. The
Company's accounting policies have been applied consistently to all
periods in the preparation of these condensed interim consolidated
financial statements. In preparing the Company's condensed interim
consolidated financial statements for the three and nine months
ended 30 September 2021, the Company applied the critical judgments
and estimates disclosed in note 3 of its consolidated financial
statements for the year ended 31 December 2020.
These condensed interim consolidated financial statements
include the accounts of the Company and its subsidiaries.
Subsidiaries are entities controlled by the Company, which is
defined as having the power over the entity, rights to variable
returns from its involvement with the entity, and the ability to
use its power to affect the amount of returns. All intercompany
transactions and balances are eliminated on consolidation. The
Company's material subsidiaries at 30 September 2021 are consistent
with the consolidated financial statements for the year ended 31
December 2020, except for the sale of Agbaou Gold Operations on 1
March 2021, and for the following subsidiaries which were acquired
on 10 February 2021 with the completion of the acquisition of
Teranga (Note 4):
Place of
Principal incorporation Proportion of ownership interest and voting power
Entities activity and operation held
30 September 2021
Sabodala
Gold
Operations Gold
SA Operations Senegal 90%
Wahgnion
Gold
Operations Gold
SA Operations Burkina Faso 90%
Teranga Gold
Corporation Holding Canada 100%
Teranga Gold
(Senegal)
Corporation Holding Canada 100%
Sabodala
Mining
Company
Sarl Exploration Senegal 100%
------------ ------------ -------------- -------------------------------------------------
2.3. GOING CONCERN
The directors have performed an assessment of whether the
Company would be able to continue as a going concern for at least
the next twelve month period. In their assessment, the Company has
taken into account its financial position, expected future trading
performance, its debt and other available credit facilities, future
debt servicing requirements, its working capital and capital
expenditure commitments and forecasts.
At 30 September 2021, the Company's net debt was $69.6 million,
calculated as the difference between long-term debt with a
principal outstanding of $830.0 million and cash of $760.4 million.
The Company had current assets of $1,286.1 million and current
liabilities of $577.5 million representing a total working capital
balance (current assets less current liabilities) of $708.6 million
as at 30 September 2021. Cash flow from operations for the three
and nine months ended 30 September 2021 was $311.9 million and
$810.3 million respectively. Subsequent to 30 September 2021, the
Company completed an offering of $500.0 million in fixed senior
notes and entered a new $500.0 million unsecured revolving credit
facility, which will be used to repay the existing loan facilities
(Note 20).
Based on a detailed cash flow forecast prepared by management,
in which it included any reasonably possible change in the key
assumptions on which the cash flow forecast is based, and taking
into account possible changes in performance due to the COVID-19
pandemic impact, the directors have a reasonable expectation that
the Group will have adequate resources to continue in operational
existence for twelve months from 10 November 2021 and that at this
point in time there are no material uncertainties regarding going
concern. Key assumptions underpinning this forecast include a gold
price of $1,500/oz and production volumes in line with annual
guidance.
The Board is satisfied that the going concern basis of
accounting is an appropriate assumption to adopt in the preparation
of the condensed interim consolidated financial statement as at and
for the period ended 30 September 2021.
COVID-19 PANDEMIC RISKS
On 11 March 2020, the World Health Organization declared the
outbreak of a respiratory disease caused by a new novel coronavirus
("COVID-19") as a pandemic. In response to health risks associated
with the spread of COVID-19, the Company implemented a number of
health and safety measures designed to protect employees at its
operations around the world.
As of the date of issuance of these condensed interim
consolidated financial statements, the Company's operations have
not been significantly impacted, however, the Company continues to
monitor the situation. While the Company's financial position,
performance and cash flows could be further negatively impacted,
the extent of the impact cannot be reasonably estimated at this
time. Management continues to monitor and assess the short and
medium-term impacts of the COVID-19 virus, including for example
supply chain, mobility, workforce, market and trade flow impacts,
as well as the resilience of Canadian, West African, British, and
other global financial markets to support recovery. Any longer term
impacts are also being considered and monitored, as appropriate.
However, this pandemic continues to evolve rapidly and its effects
on our own operations are uncertain. It is possible that in the
future operations may be temporarily shut down or suspended for
indeterminate amounts of time, any of which may, individually or in
the aggregate, have a material and adverse impact on our business,
results of operations and financial performance. The extent to
which COVID-19 may impact the Company's business and operations
will depend on future developments that are highly uncertain and
cannot be accurately predicted, including new information which may
emerge concerning the severity of and the actions required to
contain COVID-19 or remedy its impact.
The global response to the COVID-19 pandemic has resulted in,
among other things, border closures, severe travel restrictions, as
well as quarantine, self-isolation and other emergency measures
imposed by various governments. Additional government or regulatory
actions or inaction around the world in jurisdictions where the
Company operates may also have potentially significant economic and
social impacts. The COVID-19 virus and efforts to contain it may
have a significant effect on commodity prices, and the possibility
of a prolonged global economic downturn may further impact
commodity demand and prices. If the business operations of the
Company are disrupted or suspended as a result of these or other
measures, it may have a material adverse effect on the Company's
business, results of operations and financial performance.
The global pandemic caused by COVID-19 may affect Endeavour's
ability to operate at one or more of its mines for an indeterminate
period of time, may affect the health of its employees or
contractors resulting in diminished expertise or capacity, may mean
that key expat or contract resources cannot access West Africa, may
result in delays or disruption in its supply chain leading to
unavailability of critical spares and inventory (or increased
costs), may lead to restrictions on transferability of currency,
may cause business continuity issues at global gold refineries (and
therefore its ability to generate revenue), may mean it cannot
transport gold from its sites to refineries, may result in failures
of various local administration, logistics and critical
infrastructure, may cause social instability in West African
countries which in turn could disrupt business continuity, and may
result in additional and currently unknown liabilities.
3 CORPORATE COSTS
The following table summarises the components of corporate
costs:
THREE MONTHSED NINE MONTHSED
30 September 30 September 30 September 30 September
2021 2020 2021 2020
-------------- -------------- -------------- ----------------
London Stock
Exchange
listing
expenses 3,011 -- 11,224 --
Employee
compensation 2,930 3,081 14,327 8,570
Professional
services 1,025 493 6,068 2,855
Other
corporate
expenses 5,024 1,527 10,532 3,956
Total
corporate
costs $ 11,990 $ 5,101 $ 42,151 $ 15,381
------------- --- --------- --- --------- --- --------- --- ---------
4 ACQUISITIONS AND DIVESTITURES
In the three and nine months ended 30 September 2021, the
Company incurred $1.8 million and $28.5 million respectively (for
the three and nine months ended 30 September 2020 - $19.3 million
and $26.3 million respectively) of acquisition and restructuring
related costs relating to advisory, legal, valuation and other
professional fees, primarily with respect to the acquisition of
Teranga, the disposal of the Agbaou cash generating unit ('CGU')
and the acquisition of SEMAFO. These costs are expensed as
acquisition and restructuring costs within the condensed interim
consolidated statement of comprehensive earnings .
a. Acquisition of Teranga
On 10 February 2021, the Company completed the acquisition of
Teranga. Teranga was a Canadian-based gold mining company listed on
the TSX and in the United States on the OTCQX market with two
operating mines in West Africa: the Sabodala-Massawa Gold Complex
("Sabodala-Massawa") in Senegal and the Wahgnion Gold Mine
("Wahgnion") in Burkina Faso. In addition, Teranga had a number of
early to advanced stage exploration properties in Burkina Faso,
Côte d'Ivoire and Senegal. The acquisition of Teranga supports the
Company's growth strategy and enhances the Company's production
profile.
Under the terms of the agreement, the Company acquired 100% of
the issued and outstanding shares of Teranga at an exchange rate of
0.47 of an Endeavour share for each Teranga share held which
resulted in a total of 78,766,690 shares issued upon closing of the
acquisition. Given the issuance of Endeavour common shares as a
result of the transaction and the relative voting rights of the
Endeavour and Teranga shareholders subsequent to the transaction
being completed, Endeavour has been identified as the acquirer and
has accounted for the transaction as a business combination.
Following the acquisition of Teranga, La Mancha Holding S.àr.l.
("La Mancha") exercised its anti-dilution right to maintain its
interest in the Company and completed a $200.0 million private
placement for 8,910,592 shares of Endeavour (Note 5).
As of the date of these condensed interim consolidated financial
statements, the determination of the fair value of assets acquired
and liabilities assumed is based on preliminary estimates at the
date of acquisition and has not been finalised. The Company
retained an independent appraiser to determine the fair value of
the assets acquired and liabilities assumed, using income, market
and cost valuation methods. The excess of total consideration over
the estimated fair value of the amounts initially assigned to the
identifiable assets acquired and liabilities assumed has been
recorded as goodwill, which is not deductible for tax purposes. The
goodwill balance is attributable to the recognition of a deferred
tax liability from the difference between the assigned fair values
and the tax bases of assets acquired and liabilities assumed at
amounts that do not reflect fair value. The non-controlling
interest is measured at its proportionate share of the fair value
of net assets.
The Company is still in the process of finalising the fair
values of the mining interests acquired, which are estimated using
discounted cash flow models, where the expected future cash flows
are based on estimates of future gold prices, estimated quantities
of ore reserves and mineral resources, expected future production
costs and capital expenditures based on the life of mine plans at
the acquisition date. In addition to the fair value of the mining
interests, the evaluation of the inventories on hand at the
acquisition date, the evaluation of the liabilities and tax
contingencies assumed, and the resulting determination of the
deferred taxes, are all subject to change at 30 September 2021 if
information arises which would impact management's assessment of
the fair value at the acquisition date. The actual fair values of
the assets and liabilities may differ materially from the amounts
disclosed in the preliminary fair value below, and the amount
recognised as goodwill may change. Any adjustments to the
allocation of the purchase consideration will be recognised
retrospectively and comparative information will be revised.
Adjustments to the purchase price allocation can be made throughout
the measurement period, which is not to exceed one year from the
acquisition date.
The consideration and preliminary allocation to the value of
assets acquired and liabilities assumed are as follows and are
unchanged since the quarter ended 31 March 2021:
Fair value
Notes at acquisition
----- -------------------
Purchase price:
Fair value of 78.8 million Endeavour common shares
issued 1,678,285
Fair value of Endeavour options issued 30,361
Fair value of Endeavour warrants and call-rights
issued 41,554
-----------------
$ 1,750,200
-------------------------------------------------- ----- -------------
Net assets/(liabilities) acquired
Cash 27,036
Net working capital (excluding inventory) (125,545)
Inventory 239,000
Mining interests 2,528,474
Other long-term assets 2,000
Goodwill 190,664
Debt (358,856)
Income taxes payable (100,000)
Offtake liability (49,735)
Contingent consideration 13 (45,600)
Reclamation liability (38,064)
Other liabilities acquired (9,599)
Deferred taxes (322,992)
Non-controlling interest (186,583)
Net Assets $ 1,750,200
-------------------------------------------------- ----- -------------
The significant assumptions used in the determination of the
fair value of the mining interests were as follows:
Assumption Sabodala-Massawa Wahgnion
---------------------- ----------------------
$1,900 to $1,750 per $1,900 to $1,750 per
Gold price - 2021 to 2024 ounce ounce
Long-term gold price $1,600 per ounce $1,600 per ounce
Discount rate 6.3% 7.0%
Mine life 14 years 10 years
Average grade over life of
mine 1.97 g/t 1.57 g/t
Average recovery rate 89% 92%
On 31 March 2021, the Company settled the full amount
outstanding under the gold off-take liability which resulted in a
cash outflow of $49.7 million.
Consolidated revenue for the nine months ended 30 September 2021
includes revenue from the date of acquisition from the assets
acquired in the acquisition of Teranga of $653.5 million. The
consolidated earnings for the nine months ended 30 September 2021
includes net earnings before tax from the date of acquisition from
the assets acquired in the acquisition of Teranga of $195.8
million. Had the transaction occurred on 1 January 2021, the pro
forma unaudited consolidated revenue and net earnings before taxes
for the nine months ended 30 September 2021 would have been
approximately $2,143.7 million and $454.2 million,
respectively.
b. Acquisition of SEMAFO
On 1 July 2020, the Company completed the acquisition of SEMAFO.
SEMAFO was a gold mining company listed on the TSX with two
operating mines in West Africa: the Mana and Boungou mines in
Burkina Faso as well as certain exploration stage assets. The
acquisition of SEMAFO supported the Company's growth strategy and
enhanced the Company's production profile.
Under the terms of the transaction, the Company acquired 100% of
the issued and outstanding shares of SEMAFO at an exchange rate of
0.1422 Endeavour share for each outstanding SEMAFO share, which
resulted in the issuance of 47,561,205 common shares of Endeavour.
Given the issuance of Endeavour common shares as a result of the
transaction, the relative voting rights of the Endeavour and SEMAFO
shareholders subsequent to the transaction being completed,
Endeavour has been identified as the acquirer and has accounted for
the transaction as a business combination.
Following the acquisition of SEMAFO, La Mancha exercised its
anti-dilution right to maintain its interest in the Company and
completed a $100.0 million private placement for 4,507,720 shares
of Endeavour (Note 5).
The Company retained an independent appraiser to determine the
fair value of the assets acquired and liabilities assumed, using
income, market and cost valuation methods. The excess of total
consideration over the estimated fair value of the amounts assigned
to the identifiable assets acquired and liabilities assumed has
been recorded as goodwill, which is not deductible for tax
purposes. The goodwill balance is attributable to the recognition
of a deferred tax liability from the difference between the
assigned fair values and the tax bases of assets acquired and
liabilities assumed at amounts that do not reflect fair value. The
non-controlling interest is measured at its proportionate share of
the fair value of net assets.
The fair values of the mining interests acquired were estimated
using discounted cash flow models, where the expected future cash
flows are based on estimates of future gold prices, estimated
quantities of ore reserves and mineral resources, expected future
production costs and capital expenditures based on the life of mine
plans at the acquisition date. Adjustments to the allocation of the
purchase consideration has been recognised retrospectively and
comparative information has been revised.
The consideration and allocation to the value of assets acquired
and liabilities assumed are as follows:
Preliminary
purchase price
allocation
at
31 December Final purchase
2020 Adjustments price allocation
----------------- ------------- ---------------------
Purchase price:
Fair value of 47.6 million Endeavour
common shares issued 1,151,328 -- 1,151,328
----------------- ------------- -------------------
$ 1,151,328 $ -- $ 1,151,328
---------------------------------------- --- ------------ ---- ------- ---- -------------
Net assets/(liabilities) acquired
Cash 92,981 -- 92,981
Net working capital acquired (excluding
cash) 107,987 564 108,551
Mining interests 1,319,587 12,999 1,332,586
Goodwill 98,704 (27,176) 71,528
Restricted cash 24,000 -- 24,000
Other long-term assets 7,505 -- 7,505
Current portion of long-term debt (29,758) -- (29,758)
Lease liabilities (24,044) -- (24,044)
Income taxes payable (36,093) 16,254 (19,839)
Other long-term liabilities (40,661) 9,220 (31,441)
Deferred tax (262,678) (9,612) (272,290)
Non-controlling interest (106,202) (2,249) (108,451)
----------------- ------------- -------------------
Net Assets $ 1,151,328 $ -- $ 1,151,328
---------------------------------------- --- ------------ ---- ------- ---- -------------
During the second quarter of 2021, the Company finalised the
fair values of certain assets acquired and liabilities assumed in
the acquisition, in particular as it relates to mining interests,
and liabilities with respect to certain income tax positions.
Management re-evaluated its life of mine plans for the Mana and
Boungou mines, and the expected ounces to be produced over the life
of mine, which resulted in a change in their fair values. As a
result of the above adjustments, the deferred tax liabilities were
also adjusted to reflect the tax impact of these changes. The
significant assumptions used in the determination of the fair value
of the mining interests were as follows:
Assumption Mana Boungou
---------------------- ---------------------
$1,550 to $1,883 per $1,550 - $1,865 per
Gold price -- 2020 to 2025 ounce ounce
Long-term gold price $1,485 per ounce $1,485 per ounce
Discount rate 6.00% 6.50%
Mine life 9.5 years 14 years
Average grade over life of mine 3.25 g/t 3.58 g/t
Average recovery rate 88% 94%
As a result of the change in the fair values of the mining
interests, depletion expense for the three months ended 31 March
2021 was increased retrospectively by $9.3 million. For the three
months ended 30 September 2020, the depletion expense was decreased
retrospectively by $10.1 million, and for the six months ended 31
December 2020, the depletion expense was decreased retrospectively
by $8.3 million to reflect the change in the value of the mining
interests upon determination of the final purchase price
allocation.
c. Discontinued operations
On 1 March 2021, the Company completed the sale of its 85%
interest in the Agbaou mine CGU to Allied Gold Corp Limited
("Allied"). The consideration upon sale of the Agbaou mine included
(i) a cash payment of $16.4 million (net of working capital
adjustments of $3.6 million upon closing), of which $10.5 million
was received in the first quarter of 2021; (ii) $40.0 million in
Allied shares of which Endeavour has the option to sell the shares
back to Allied at the issue price which expires on 31 December 2022
or earlier if Allied conducts an IPO before then; (iii) contingent
consideration of up to $20.0 million comprised of $5.0 million
payments for each quarter where the average gold price exceeds
$1,900 per ounce; and (iv) a net smelter royalty ("NSR") on ounces
produced in excess of the Agbaou reserves estimated as at 31
December 2019. The NSR royalty is based on a sliding scale, linked
to the average spot gold price as follows: 2.5% if the gold price
is at least $1,400 per ounce, 2% if the gold price is at least
$1,200 per ounce and less than $1,400 per ounce, 1% if the gold
price is at least $1,000 per ounce and less than $1,200 per ounce,
and 0% if the gold price is below $1,000 per ounce.
The fair value of the various aspects of the consideration at
the closing date were as follows (all of which, except for the
cash, are classified as Level 3 fair value measurements):
-- The cash was determined to have a fair value of $16.4 million, which is
the agreed upon $20.0 million, net of working capital adjustments on
closing;
-- The fair value of the Allied shares was determined to be $40.0 million
based on the value of the option to sell back the shares, as well as the
most recent share issuances of Allied shares with other arm's length
parties;
-- The fair value of the contingent consideration based on the gold price
was estimated using a Monte Carlo simulation model using the following
key inputs: spot price of gold of $1,723 per ounce, annualised gold price
volatility of 18.36%, for each of the quarters in 2021, which resulted in
a fair value of $0.5 million; and
-- The fair value of the NSR was estimated using probability-weighted
scenarios with respect to discounted cash flow models for future
production that might exceed the Agbaou reserves at 31 December 2019.
Based on the various scenarios considered, the fair value of the NSR was
$5.5 million.
The results of operations have been restated for the comparative
periods to reclassify the earnings/(loss) relating to Agbaou as
earnings/(loss) from discontinued operations. During the nine
months ended 30 September 2021, the financing cash flows from
discontinued operations include the payment of dividends to
minority shareholders of $45.2 million which had been declared in
December 2020. As at 31 December 2020 the net assets of the Agbaou
CGU were classified as held for sale.
At 30 September 2021, the fair value of the Allied shares had
not changed, the NSR was revalued to $6.0 million and the fair
value of the contingent consideration was $nil, resulting in a gain
of $0.1 million and $nil respectively being recognised in other
expense in the three months ended 30 September 2021, and a gain of
$0.5 million and a loss of $3.7 million for the nine months ended
30 September 2021 respectively.
The Corporation recognised a loss on disposal of $13.5 million,
net of tax, calculated as follows:
1 March 2021
----------------
Cash proceeds 16,350
Shares in Allied Gold 40,000
Contingent consideration 517
Net smelter royalty 5,548
Transaction costs (471)
--------------
Total proceeds $ 61,944
------------------------------------- ----------
Cash and cash equivalents 15,214
Restricted cash 6,292
Trade and other receivables 257
Prepaid expenses and other 2,018
Inventories 29,439
Mining interests 64,951
Other long term assets 8,837
--------------
Total assets $ 127,008
Trade and other payables (22,113)
Other liabilities (26,420)
--------------
Total liabilities $ (48,533)
------------------------------------- ----------
Net assets $ 78,475
------------------------------------- ----------
Non-controlling interests (2,991)
------------------------------------- --------------
Net assets attributable to Endeavour $ 75,484
------------------------------------- ----------
Loss on disposition $ (13,540)
------------------------------------- ----------
The earnings and loss for the CGU was as follows:
THREE MONTHSED NINE MONTHSED
30 September 30 September 30 September 30 September
2021 2020 2021 2020
-------------- -------------- -------------- ----------------
Revenue -- 46,722 25,426 133,806
Operating costs -- (22,210) (14,250) (60,601)
Depreciation and depletion -- (9,370) -- (27,266)
Royalties -- (2,689) (1,418) (7,486)
Other income -- 1,987 80 1,197
Loss on disposition -- -- (13,540) --
-------------- -------------- -------------- --------------
Earnings/(loss) before taxes $ -- $ 14,440 $ (3,702) $ 39,650
------------------------------------------------ ---- -------- ---- -------- --- --------- --- ---------
Deferred and current income tax expense -- (7,860) -- (17,187)
------------------------------------------------ -------------- -------------- -------------- --------------
Net comprehensive earnings/(loss) from
discontinued operations $ -- $ 6,580 $ (3,702) $ 22,463
------------------------------------------------ ---- -------- ---- -------- --- --------- --- ---------
Attributable to:
Shareholders of Endeavour Mining Corporation -- 8,966 (5,168) 19,552
Non-controlling interest -- (2,386) 1,466 2,911
-------------- -------------- -------------- --------------
Total comprehensive earnings/(loss) from
discontinued operations $ -- $ 6,580 $ (3,702) $ 22,463
------------------------------------------------ ---- -------- ---- -------- --- --------- --- ---------
Net earnings/(loss) per share from discontinued
operations
Basic $ 0.00 $ 0.06 $ (0.02) $ 0.15
Diluted $ 0.00 $ 0.06 $ (0.02) $ 1.15
-------- -------- --------- ---------
5 SHARE CAPITAL
i. Share capital
2021 2020
Number Amount Number Amount
Ordinary share capital
Opening balance 163,036,473 16,299 109,927,097 10,988
Consideration on the acquisition
of subsidiary 78,766,690 7,877 47,561,205 4,756
Shares issued on private placement 8,910,592 891 4,507,720 451
Shares issued on exercise of options
and PSU's 2,420,594 206 1,104,182 110
Cancellation of treasury shares (4,005,362) (243) (63,731) (6)
Reorganisation -- (22,539) -- --
------------- ---------- ----------- -------
Balance as at 30 September 249,128,987 $ 2,491 163,036,473 $16,299
------------------------------------- ------------- --------- ----------- ------
Deferred share capital
Opening balance -- -- -- --
Shares issued upon capitalisation
of the merger reserve 4,450,000,000 4,450,000 -- --
------------- ---------- ----------- -------
Balance as at 30 September(1) 4,450,000,000 $4,450,000 -- $ --
------------------------------------- ------------- --------- ----------- ------
Total share capital $4,452,491 $16,299
------------------------------------- ------------- --------- ----------- ------
(1) The deferred shares were cancelled on 5 October 2021 and the
full amount of the deferred share capital was reclassified to
deficit.
Issued share capital as at 30 September 2021
-- 249,128,987 ordinary voting shares of $0.01 par value
-- 4,450,000,000 deferred shares of $1.00 par value
During the nine months ended 30 September 2021, the Company
announced its dividend for the first half of the 2021 fiscal year
of $0.28 per share totalling $70.0 million. The dividend was paid
during the three months ended 30 September 2021 to shareholders on
record at the close of business on 10 September 2021. In February
2021, the Company paid a dividend of $60.0 million ($0.37 per
share) to shareholders on record on the close of business of 22
January 2021.
During the nine months ended September 2021 the Boungou, Houndé,
Ity, Mana and Sabodala-Massawa mines declared dividends to their
shareholders. Dividends to minority shareholders to the value of
$29.9 million were paid during the three months ended 30 September
2021 and is included in cash flows from financing activities (2020
- during the nine months ended 30 September 2020 minority dividends
to the value of $9.0 million were declared by the Agbaou, Ity and
Karma mines and were included in trade and other payables as at 30
September 2020).
On 29 September 2021, the Company capitalised $4.5 billion of
its merger reserve and applied the amount in full to allot 4.5
billion new deferred shares with a par value of $1.00 each. There
was no movement in the number of deferred shares during the three
and nine months ended 30 September 2021 after their allotment. The
deferred shares do not carry any voting rights or economic rights,
other than a right to a return of capital on a winding-up subject
to a maximum of the paid up capital on the deferred shares.
On 11 June 2021, the Company completed its reorganisation,
whereby it issued 250.5 million common shares with a par value of
$0.01 per share in exchange for 100% of the issued and outstanding
shares of EMC. As part of the reorganisation, the various
management incentive plans (including PSUs, DSUs, and options), as
well as the outstanding share warrants and call-rights were also
transferred to Endeavour Mining plc. As part of the group
reorganisation, a merger reserve was created equal to a value of
$4.9 billion which represents the difference between the nominal
value of shares in the new parent Company, Endeavour Mining plc,
and the aggregate of the share capital, share premium account and
equity reserve of the prior parent Company, EMC.
On 22 March 2021, the Company commenced a share buyback
programme under which the Company is able to acquire up to 12.2
million of its outstanding ordinary shares, which represents up to
5% of the total issued and outstanding ordinary shares as of 16
March 2021 for a period of one year. During the three and nine
months ended 30 September 2021, the Company had repurchased a total
of 1,483,819 at an average price of $23.07 for a total amount of
$34.2 million, and 4,150,356 shares at an average price of $23.22
for a total amount of $96.4 million respectively. 144,994 shares
were repurchased but not yet cancelled as at 30 September 2021. The
shares were subsequently cancelled in October 2021.
During the nine months ended 30 September 2021, the Company
acquired 576,308 outstanding common shares from certain employees
of the Group through an employee benefit trust (note 13). An amount
of $14.2 million has been included in the statement of changes in
equity as a reduction in equity attributable to the shareholders
together with other purchases and cancellations of the Company's
own shares.
On 30 March 2021, La Mancha exercised its anti-dilution right to
maintain its interest in the Company and completed a $200.0 million
private placement for 8,910,592 shares of Endeavour (Note 4). Upon
completion of the investment, La Mancha's future anti-dilution
rights were extinguished. La Mancha's ownership of Endeavour was
19.0% at 31 March 2021 (31 December 2020 -- 24.1%).
On 10 February 2021, the Company completed the acquisition of
Teranga. Under the terms of the transaction, the Company acquired
100% of the issued and outstanding shares of Teranga at an exchange
rate of 0.47 Endeavour shares for each outstanding Teranga share,
which resulted in the issuance of 78,766,690 common shares of
Endeavour at a total fair value of $1,678.3 million.
On 1 July 2020, the Company completed the acquisition of SEMAFO.
Under the terms of the transaction, the Company acquired 100% of
the issued and outstanding shares of SEMAFO at an exchange rate of
0.1422 Endeavour share for each outstanding SEMAFO share, which
resulted in the issuance of 47,561,205 common shares of Endeavour
at a total fair value of $1,151.3 million.
On 3 July 2020, La Mancha exercised its anti-dilution right to
maintain its interest in the Company and completed a $100.0 million
private placement for 4,507,720 shares of Endeavour (note 4).
On 30 June 2020, the Company held 448,181 shares in SEMAFO which
were converted into 63,731 common shares of Endeavour on 1 July
2020. On 22 September 2020, the Company cancelled these treasury
shares which resulted in a reduction of $1.2 million in share
capital.
ii. Share-based compensation
The following table summarises the share-based compensation
expense:
THREE MONTHSED NINE MONTHSED
30 September 30 September 30 September 30 September
2021 2020 2021 2020
-------------- -------------- -------------- ----------------
Amortisation and change in fair value
of DSUs 471 229 822 1,389
Amortisation and change in fair value
of PSUs 6,810 6,888 24,253 12,293
Total share-based compensation $ 7,281 $ 7,117 $ 25,075 $ 13,682
-------------------------------------- ---- -------- ---- -------- --- --------- --- ---------
iii. Options
Weighted average
Options exercise price
outstanding (C$)
Added upon acquisition of Teranga 3,517,187 16.27
Exercised (987,778) 9.06
Expired (623,220) 31.92
------------------------------------ ------------ ----------------
At 30 September 2021 1,906,189 14.89
------------------------------------ ------------ ----------------
Upon acquisition of Teranga, all outstanding Teranga stock
options, whether previously vested or unvested, became fully vested
and exchanged for replacement options to purchase common shares of
Endeavour at a ratio of 0.47 Endeavour share options for each
Teranga share option at an adjusted exercise price, with an expiry
date of the earlier of (i) the original expiry date of each Teranga
stock option, and (ii) the second year anniversary of the closing
date of the acquisition transaction. The fair values at the
acquisition date were calculated using the Black-Scholes valuation
model using a volatility of 42.64% - 60.05%, a dividend yield of
2.6% and a risk free rate of 0.1%. The options carry neither rights
to dividends nor voting rights. Options may be exercised at any
time to the date of their expiry.
As at 30 September 2021, the weighted average remaining
contractual term of outstanding stock options exercisable was 1.19
years. The share options are exercisable at prices ranging from
C$6.60 to C$31.92.
iv. Share unit plans
A summary of the changes in share unit plans is presented
below:
Weighted Weighted
average average
DSUs grant price PSUs grant price
outstanding (C$) outstanding (C$)
------------ ------------ ------------ --------------
At 31 December
2019 178,684 13.67 3,298,377 19.05
Granted 20,455 28.62 2,072,183 21.55
Exercised (73,978) 16.88 (1,089,232) 19.08
Forfeited -- -- (1,152,986) 19.50
Added by
performance
factor -- -- 85,463 18.57
-------------- ------------ ------------ ------------ ------------
At 31 December
2020 125,161 14.22 3,213,805 20.48
Granted 33,786 26.84 2,285,431 28.67
Exercised (1,858) 31.33 (1,552,719) 22.26
Forfeited (689) 25.33 (70,759) 22.34
Reinvested 3,923 18.83 120,793 23.59
Added by
performance
factor -- -- 292,922 22.54
-------------- ------------ ------------ ------------ ------------
At 30
September
2021 160,323 16.75 4,289,473 24.40
-------------- ------------ ------------ ------------ ------------
v. Deferred share units
The Company established a deferred share unit plan ("DSU") for
the purposes of strengthening the alignment of interests between
non-executive directors of the Company and shareholders by linking
a portion of the annual director compensation to the future value
of the Company's common shares. Upon establishing the DSU plan for
non-executive directors, the Company no longer grants options to
non-executive directors.
The DSU plan allows each non-executive director to choose to
receive, in the form of DSUs, all or a percentage of their
director's fees, which would otherwise be payable in cash.
Compensation for serving on committees must be paid in the form of
DSUs. The plan also provides for discretionary grants of additional
DSUs by the Board. Each DSU vests upon award but is distributed
only when the director has ceased to be a member of the Board.
Vested units are settled in cash based on the common share price at
the date of settlement.
The fair value of the DSUs is determined based on multiplying
the 5 day volume weighted average share price of the Company by the
number of DSUs at the end of the reporting period.
The total fair value of DSUs at 30 September 2021 was $3.7
million (31 December 2020 -- $2.9 million). The total DSU
share-based compensation recognised in the condensed interim
consolidated statement of comprehensive earnings was an expense of
$0.5 million and $0.8 million for the three and nine months ended
30 September 2021 respectively (for the three and nine months ended
30 September 2020 -- expense of $0.2 million and $1.4 million
respectively).
vi. Performance share units
The Company's long-term incentive plan ("LTI Plan") includes a
portion of performance-linked share unit awards ("PSUs"), intended
to increase the pay mix in favor of long-term equity-based
compensation with three-year cliff-vesting to serve as an employee
retention mechanism.
The fair value of the PSUs is determined based on Total
Shareholder Return ("TSR") relative to peer companies for 50% of
the value of the PSU's, while the remaining 50% of the value of the
PSU's granted is based on achieving certain operational performance
measures. The vesting conditions related to the achievement of
operational performance measures noted above are determined at the
grant date and the number of units that are expected to vest is
reassessed at each subsequent reporting period based on the
estimated probability of reaching the operational targets.
-- Key future operational targets in 2023 for 2021 PSU grants are gold
production targets (25%), capital project targets (12.5%), and carbon
reduction and renewable energy targets (12.5%);
-- Key future operational targets in 2022 for 2020 PSU grants are net debt /
earnings before interest, tax, depreciation and amortisation ("EBITDA")
(25%), gold production targets (12.5%), and Environmental, Social and
Governance ("ESG") targets (12.5%);
-- Key future operational targets in 2021 for 2019 PSU grants were resource
discovery (25%), gold production relative to guidance (12.5%), and net
debt / EBITDA (12.5%).
The fair value related to the TSR portion is determined using a
multi-asset Monte Carlo simulation model using a dividend yield of
2.5% (2019 -- 0%), as well as historical TSR levels and historical
volatility of the constituents of the S&P TSX Global Gold Index
(2019 -- same).
During the nine months ended 30 September 2021, the Company
determined certain PSU's whereby they will be settled in cash upon
exercise. The fair value of these PSU's have been reclassified from
equity to liabilities as these PSU's will be settled in cash upon
exercise. The fair value of the PSUs on date of reclassification
was determined to be $14.4 million and was transferred from equity
reserve to liabilities. Subsequent measurement of the liability to
fair value is recognised in profit or loss.
vii. Basic and diluted earnings per share
Diluted net earnings per share was calculated based on the
following:
THREE MONTHSED NINE MONTHSED
30 September 30 September 30 September 30 September
2021 2020 2021 2020
------------ ------------ ------------ --------------
Basic weighted average number of shares
outstanding 249,982,123 162,986,253 236,866,722 128,314,951
Effect of dilutive securities(1)
Stock options and warrants 2,142,679 -- 1,879,969 --
Diluted weighted average number of
shares outstanding 252,124,802 162,986,253 238,746,691 128,314,951
Total common shares outstanding 249,128,987 163,036,473 249,128,987 163,036,473
---------------------------------------- ------------ ------------ ------------ ------------
Total potential diluted common shares 257,063,649 166,428,604 257,063,649 166,428,604
---------------------------------------- ------------ ------------ ------------ ------------
At 30 September 2021, a total of 4,289,473 PSU's (3,392,131 at
30 September 2020) could potentially dilute basic earnings per
share in future, but were not included in diluted earnings per
share as all vesting conditions have not been satisfied at the end
of the reporting period. 278,710 stock options were anti-dilutive
as at 30 September 2021 and were excluded from the determination of
the diluted weighted average number of shares outstanding 30
September 2020 -- nil). The potentially dilutive impact of the
convertible senior notes are anti-dilutive for the period and were
not included in the diluted earnings per share.
6 FINANCIAL INSTRUMENTS AND RELATED RISKS
i. Financial assets and liabilities
The Company's financial instruments are classified as
follows:
Financial assets/liabilities Financial instruments
at amortised at fair value
cost through profit
and loss ('FVTPL')
---------------------------- ---------------------
Cash X
Trade and other X
receivables
Restricted cash X
Marketable securities X
Other long-term X
receivable
Other financial assets X
Trade and other payables X
Share warrant liabilities X
Call-rights X
Contingent consideration X
Corporate loan facilities X
Convertible senior notes X
Conversion option on X
convertible senior notes
---------------------
The fair value of these financial instruments approximates their
carrying value, unless otherwise noted below, except for the
convertible note, which has a fair value of approximately $377.0
million (31 December 2020 -- $398.6 million).
As noted above, the Company has certain financial assets and
liabilities that are held at fair value. The fair value hierarchy
establishes three levels to classify the inputs to valuation
techniques to measure fair value:
Classification of financial assets and liabilities
Level 1 -- quoted prices (unadjusted) in active markets for
identical assets or liabilities;
Level 2 -- inputs other than quoted prices included within level
1 that are observable for the asset or liability, either directly
(that is, as prices) or indirectly (that is, derived from prices);
and
Level 3 -- inputs for the asset or liability that are not based
on observable market data (that is, unobservable inputs).
As at each of 30 September 2021 and 31 December 2020, the levels
in the fair value hierarchy into which the Company's financial
assets and liabilities measured and recognised in the condensed
interim consolidated statement of financial position at fair value
are categorised as follows:
AS AT 30 SEPTEMBER 2021
Level 1 Level 2 Level 3 Aggregate
Note Input Input Input Fair Value
---- -------- ---------- --------- ---------------
Assets:
Cash 760,368 -- -- 760,368
Cash -
restricted 11 30,539 -- -- 30,539
Other long
term
receivable 11 -- 439 5,254 5,693
Other
financial
assets 11 521 40,000 933 41,454
Marketable
securities 2,689 -- -- 2,689
---------------- -------- ---------- --------- -------------
Total $794,117 $ 40,439 $ 6,187 $ 840,743
---------------- ---- ------- --------- ----- ---------
Liabilities:
Conversion
option on
Notes 7 -- (43,395) -- (43,395)
Share warrant
liabilities 13 -- (24,390) -- (24,390)
Call-rights 13 -- (20,862) -- (20,862)
Contingent
consideration 13 -- (47,343) -- (47,343)
Total $ -- $(135,990) $ -- $ (135,990)
---------------- ---- ------- --------- ----- ---------
AS AT 31 DECEMBER 2020
Level 1 Level 2 Level 3 Aggregate
Note Input Input Input Fair Value
---- ----------- --------- --------- ---------------
Assets:
Cash 644,970 -- -- 644,970
Cash -
restricted 11 24,398 -- -- 24,398
Other long
term
receivable 11 -- -- 804 804
Marketable
securities 778 -- -- 778
-------------- ----------- --------- --------- -------------
Total $ 670,146 $ -- $ 804 $ 670,950
-------------- ---- ------- -------- --- ---- --- --------
Liabilities:
Conversion
option on
Notes 7 -- (74,646) -- (74,646)
Derivative
financial
instruments 17 -- -- -- --
-------------- ---- ----------- --------- --------- -------------
Total $ -- $(74,646) $ -- $ (74,646)
-------------- ---- ------- -------- --- ---- --- --------
There were no transfers between level 1 and 2 during the period.
The fair value of level 3 financial assets were determined using a
Monte Carlo or discounted cash flow valuation models, taking into
account assumptions with respect to gold prices and discount rates
as well as estimates with respect to production and operating
results at the disposed mine.
ii. (Loss)/gain on financial instruments
THREE MONTHSED NINE MONTHSED
30 September 30 September 30 September 30 September
Note 2021 2020 2021 2020
---- -------------- -------------- -------------- ----------------
Gain/(loss) on other financial
instruments 2,739 (226) 2,906 364
Change in value of receivable at
FVTPL (69) -- 821 (307)
Unrealised gain/(loss) on conversion
option on Notes 7 1,231 (15,286) 31,251 (76,504)
Loss on change in fair value of
warrant liabilities 13 (626) -- (2,157) --
Loss on change in fair value of
call rights 13 (1,879) -- (1,541) --
Loss on change in fair value of
contingent consideration 13 (3,115) -- (2,351) --
Loss on foreign exchange (23,293) (10,673) (29,460) (10,224)
Realised gain on forward contract(1) 5,000 -- 7,789 6,686
Loss on gold revenue protection
program(2) -- -- -- (21,156)
-------------- -------------- -------------- --------------
Total (loss)/gain on financial
instruments $ (20,012) $ (26,185) $ 7,258 $ (101,141)
------------------------------------- ---- ---------- ---------- ----- ------- ----------
(1) During the three and nine months ended 30 September 2021,
the Company entered into various gold forward contracts to manage
the risk of changes in the market price of gold within a quarter.
During the three months ended 30 September 2021, the Company agreed
to sell 100,000 ounces of gold at an average price of $1,751 per
ounce; during the three months ended 30 June 2021, the Company
agreed to sell 115,000 ounces of gold at an average price of $1,809
per ounce. Upon settlement of the gold forward contracts for cash,
the Company recognised gains in the three and nine months ended 30
September 2021 of $5.0 million and $7.8 million, respectively.
During the nine months ended 30 September 2020, the Company agreed
to sell 73,919 ounces at an average gold price of $1,590 per ounce,
and recognised a gain of $6.7 million upon settlement of the
contracts.
(2) In the year ended 31 December 2019, the Company implemented
a deferred premium collar strategy ("Collar") using written call
options and bought put options for the 12-month period from July
2019 to June 2020. The program covered a total of 360,000 ounces,
representing approximately 50% of Endeavour's total estimated gold
production for the period, with an average floor price of $1,358
and a ceiling price of $1,500. The Collar was accounted for at
FVTPL and the Company realised a loss of $35.9 million over the
life of the Collar of which $21.2 million was recognised in the
nine months ended 30 September 2020.
Financial instrument risk exposure
The Company's activities expose it to a variety of risks that
may include credit risk, liquidity risk, currency risk, interest
rate risk and other price risks, including equity price risk. The
Company examines the various financial instrument risks to which it
is exposed and assesses any impact and likelihood of those risks.
There has been no significant changes to the financial instrument
risk exposure as disclosed in note 7 of its consolidated financial
statements for the year ended 31 December 2020.
7 LONG-TERM DEBT
30 September 31 December
2021 2020
-------------- ---------------
Corporate loan facilities (i)(ii) 500,000 310,000
Deferred financing costs (9,727) (8,305)
-------------- -------------
Revolving credit facility $ 490,273 $ 301,695
---------------------------------- ---------- ---------
Convertible senior notes (iii) 316,766 311,925
Conversion option (iv) 43,395 74,646
Convertible senior bond $ 360,161 $ 386,571
Total long-term debt $ 850,434 $ 688,266
---------------------------------- ---------- ---------
The Company incurred the following finance costs in the
period:
THREE MONTHSED NINE MONTHSED
30 September 30 September 30 September 30 September
2021 2020 2021 2020
-------------- -------------- -------------- ----------------
Interest
expense 12,143 10,137 32,380 31,149
Amortisation
of deferred
facility
fees 1,818 913 5,485 2,410
Commitment,
structuring
and other
fees 735 1,163 2,843 1,975
Total finance
costs $ 14,696 $ 12,213 $ 40,708 $ 35,534
------------- --- --------- --- --------- --- --------- --- ---------
i. Corporate Loan Facility
On 24 December 2020, the Company entered into an amendment
agreement to its $430.0 million revolving credit facility ("RCF")
with a syndicate of leading international banks, extending its
maturity to 15 January 2023 which became effective on 10 February
2021.
The key terms of the RCF include:
-- Principal amount of $430.0 million.
-- Interest accrues on a sliding scale of between LIBOR plus 2.95% to 3.95%
based on the Company's leverage ratio.
-- Commitment fees for the undrawn portion of the RCF of 1.03%.
-- The RCF matures on 15 January 2023.
-- The principal outstanding on the RCF is repayable as a single bullet
payment on the maturity date.
-- Banking syndicate includes Société Générale, ING,
Citibank N.A., Investec Bank plc, Macquarie Bank Ltd, Barclays Bank, HSBC
and BMO.
-- The RCF can be repaid at any time without penalty.
Covenants on the RCF include:
-- Interest cover ratio as measured by ratio of earnings before interest,
tax, depreciation and amortisation ("EBITDA") to finance cost for the
trailing 12 months to the end of a quarter shall not be less than 3.0:1.0
-- Leverage as measured by the ratio of net debt to trailing twelve months
EBITDA at the end of each quarter must not exceed 3.5:1.0
ii. Corporate Bridge Facility
On 24 December 2020, the Company entered into an agreement for a
new facility agreement ("Bridge Facility") with a syndicate of
international banks which came into effect on 10 February 2021.
The key terms of the Bridge Facility include:
-- Principal amount of $370.0 million.
-- Interest accrues on LIBOR plus 2.25% for the first six months after first
utilisation and increases by 50 basis points each subsequent six month
period.
-- The principal outstanding on the Bridge Facility is repayable as a single
bullet payment on the maturity date of 15 January 2023.
-- The Bridge Facility can be repaid at any time without penalty but may not
be redrawn.
Covenants on the Bridge Facility include:
-- Interest cover ratio as measured by ratio of EBITDA to finance cost for
the trailing 12 months to the end of a quarter shall not be less than
3.0:1.0
-- Leverage as measured by the ratio of net debt to trailing twelve months
EBITDA at the end of each quarter must not exceed 3.5:1.0
iii. Convertible Senior Notes
On 8 February 2018, the Company completed a private placement of
convertible senior notes with a total principal amount of $330.0
million due in 2023 (the "Notes"). The initial conversion rate was
41.84 of the Company's common shares ("Shares") per $1,000 Note, or
an initial conversion price of approximately $23.90 (CAD$29.47) per
share.
On 21 January 2021, the conversion rate of the Notes was
adjusted as a result of the $0.37 per share ordinary dividend
announced on 11 January 2021. The new conversion rate is 42.55 of
the Company's common shares per $1,000 note, and equates to a
conversion price of approximately $23.50 (CAD$29.72) per share.
The Notes bear interest at a coupon rate of 3% payable
semi-annually in arrears on 15 February and 15 August of each year.
Notes mature on 15 February 2023, unless redeemed earlier,
repurchased or converted in accordance with the terms of the Notes.
The note holders can convert their Notes at any time prior to the
maturity date. Also, the Notes are redeemable in whole or in part,
at the option of the Company, at a redemption price equal to the
principal amount of the Notes being redeemed, plus any accrued and
unpaid interest, if the share price exceeds 130% of the conversion
price on each of at least 20 of the trading days during the 30 days
prior to the redemption notice. The Company may, subject to certain
conditions, elect to satisfy the principal amount and conversion
option due at maturity or upon conversion or redemption through the
payment or delivery of any combination of Shares and cash.
The key terms of the Convertible Senior Notes include:
-- Principal amount of $330.0 million.
-- Coupon rate of 3% payable on a semi-annual basis.
-- The term of the notes is 5 years, maturing in February 2023.
-- The notes are reimbursable through the payment or delivery of shares
and/or cash.
-- The conversion price is $23.50 (CAD$29.72) per share.
-- The reference share price of the notes is $18.04 (CAD$22.24) per share.
For accounting purposes, the Company measures the Notes at
amortised cost, accreting to maturity over the term of the Notes.
The conversion option is an embedded derivative and is accounted
for as a financial liability measured at fair value through profit
or loss.
The unrealised gain/loss on the convertible note option for the
three and nine months ended 30 September 2021 was an unrealised
gain of $1.2 million and $31.3 million respectively (three and nine
months ended 30 September 2020 -- unrealised loss of $15.3 million
and $76.5 million million respectively).
The liability component for the Notes at 30 September 2021 has
an effective interest rate of 6.2% (31 December 2020: 6.2%) and was
as follows:
30 September 31 December
2021 2020
-------------- ---------------
Liability component at beginning of the
period 311,925 302,600
Interest expense in the period 14,741 19,225
Less: Interest payments in the period (9,900) (9,900)
-------------- -------------
Total $ 316,766 $ 311,925
------------------------------------------- ---------- ---------
iv. Conversion option
The conversion option related to the Notes is recorded at fair
value, using a convertible bond valuation model, taking account the
observed market price of the Notes. The following assumptions were
used in the determination of fair value of the conversion option
and fixed income component of the Notes, which was then calibrated
to the total fair value of the Notes: volatility of 35% (31
December 2020 -- 56%), term of the conversion option 1.19 years (31
December 2020 -- 2.13 years), a dividend yield of 2.5% (31 December
2020 -- 2.5%), credit spread of 1.93% (31 December 2020 -- 4%), and
a share price of CAD$25.51 (31 December 2020 -- CAD$29.62).
30 September 31 December
2021 2020
-------------- ---------------
Conversion option at beginning of the
period 74,646 31,439
Fair value adjustment (31,251) 43,207
-------------- -------------
Conversion option at end of the period $ 43,395 $ 74,646
------------------------------------------- --- --------- ---------
8 TRADE AND OTHER RECEIVABLES
30 September 31 December
2021 2020
VAT receivable (i) 78,164 30,598
Receivables for gold sales 3,436 4,641
Other receivables (ii) 45,258 19,897
-------------- -------------
Total $ 126,858 $ 55,136
--------------------------- ---------- ---------
i. VAT receivable
VAT receivable relates to net VAT amounts paid to vendors for
goods and services purchased, primarily in Burkina Faso. These
balances are expected to be collected in the next twelve months. In
the nine months ended 30 September 2021, the Company collected
$68.2 million of outstanding VAT receivables, through the sale of
its VAT receivables to third parties or reimbursement from the tax
authorities.
ii. Other receivables
Other receivables at 30 September 2021 include a receivable of
$24.2 million (31 December 2020 -- $nil) related to the sale of
equipment at Ity to third parties, an amount of $5.9 million (31
December 2020 -- $nil) receivable from Allied related to the sale
of the Agbaou mine, and receivables of $6.6 million (31 December
2020 -- $14.6 million) from third parties for which the Company had
entered into contracts which was previously advanced for working
capital purposes. All these amounts are non-interest bearing and
are expected to be repaid in the next twelve months.
9 INVENTORIES
30 September 31 December
2021 2020
-------------- ---------------
Doré bars 16,426 24,065
Gold in circuit 38,512 33,812
Ore stockpiles 320,351 125,694
Spare parts and supplies 135,974 84,040
-------------- -------------
Total $ 511,263 $ 267,611
------------------------- --- --------- ---------
Non-current stockpiles (156,023) (77,010)
------------------------- -------------- -------------
Inventories, current $ 355,240 $ 190,601
------------------------- --- --------- ---------
As of 30 September 2021, there was a provision of $18.8 million
to adjust gold in circuit ("GIC") inventory to net realisable value
at Karma (31 December 2020 -- $19.4 million with respect to GIC and
$0.4 million related to finished goods).
The cost of inventories recognised as an expense in the three
and nine months ended 30 September 2021 was $414.1 million and
$1,235.4 million, respectively, and was included in cost of sales
(three and nine months ended 30 September 2020 -- $281.6 million
and $539.3 million respectively).
10 MINING INTERESTS
MINING INTERESTS
Property,
Non plant and Assets under
Note Depletable depletable(1) equipment construction Total
Cost
Balance as at 1 January 2020 682,792 331,777 1,081,557 21,972 2,118,098
Acquired in business combinations 519,926 453,542 359,118 -- 1,332,586
Additions/expenditures 103,015 67,257 44,569 44,398 259,239
Transfers from inventory -- -- 14,940 -- 14,940
Transfers 40,812 (31,177) 26,082 (35,717) --
Change in estimate of environmental
rehabilitation provision 16,492 -- -- -- 16,492
Transfer to assets held for
sale (149,896) -- (173,378) -- (323,274)
Disposals (342) -- (37,857) -- (38,199)
---------- --------------- ---------- --------------- ----------
Balance as at 31 December
2020 1,212,799 821,399 1,315,031 30,653 3,379,882
Acquired in business combinations 4 2,014,474 152,339 359,622 2,039 2,528,474
Additions/expenditures 151,324 66,123 113,427 77,366 408,240
Transfers from inventory -- -- 15,133 -- 15,133
Transfers 59,353 (40,477) 20,157 (39,033) --
Change in estimate of environmental
rehabilitation provision(2) 15,839 -- -- -- 15,839
Disposals(3) (862) -- (53,272) -- (54,134)
Balance as at 30 September
2021 $3,452,927 $ 999,384 $1,770,098 $ 71,025 $6,293,434
------------------------------------ ---- --------- --- ---------- --------- ---- --------- ---------
Accumulated Depreciation
Balance as at 1 January 2020 294,164 -- 413,660 -- 707,824
Depreciation/depletion 151,953 -- 144,788 -- 296,741
Impairment 25,053 19,949 39,445 -- 84,447
Transfer to assets held for
sale (114,612) -- (144,635) -- (259,247)
Disposals (112) -- (27,615) -- (27,727)
---------- --------------- ---------- --------------- ----------
Balance as at 31 December
2020 356,446 19,949 425,643 -- 802,038
Depreciation/depletion 334,589 -- 178,311 -- 512,900
Disposals(3) -- -- (22,966) -- (22,966)
Balance as at 30 September
2021 $ 691,035 $ 19,949 $ 580,988 $ -- $1,291,972
Carrying amounts
------------------------------------ ---- ---------- --------------- ---------- --------------- ------------
At 31 December 2020 $ 856,353 $ 801,450 $ 889,388 $ 30,653 $2,577,844
------------------------------------ ---- --------- --- ---------- --------- ---- --------- ---------
At 30 September 2021 $2,761,892 $ 979,435 $1,189,110 $ 71,025 $5,001,462
------------------------------------ ---- --------- --- ---------- --------- ---- --------- ---------
(1) As at 30 September 2021, exploration assets with a net book
value of $409.3 million are included in the non-depletable mining
interest category (31 December 2020 -- $391.4 million). Additions
in the nine months ended 30 September 2021 include the acquisition
of the Fetekro license to 80% for $19.7 million.
(2) Change in estimate of environmental rehabilitation provision
relates to the post-acquisition revaluation of the environmental
provisions for the newly acquired Sabodola-Massawa and Wahgnion
mines.
(3) Disposals for the nine months ended 30 September 2021 mainly
relate to mining equipment with a net book value of $28.5 million
sold to the mining contractor at Ity for which we recognised a loss
of $2.4 million (for the nine months ended 30 September 2020, the
Company received proceeds of $10.3 million and recognised a gain of
$4.1 million on the disposal of a mining fleet at Karma in
connection with transferring its mining operations to a
contractor).
(4) During the nine months ended 30 September 2020, the Company
received $22.2 million in cash proceeds from a contractor used in
the original construction of the Karma mine as reimbursement of
previously made capitalised expenditures. The proceeds have been
recognised as other income in the three and nine months ended
September 30, 2020.
The Company's right-of-use assets consist of buildings, plant
and equipment and its various segments which are right-of-use
assets under IFRS 16, Leases. These have been included within the
property, plant and equipment category above.
Heavy
Plant Equipment Property Total
------- ----------- ---------- ------------
Balance as at 1 January 2020 4,209 2,194 1,606 8,009
Acquired in business
combinations 7,200 18,842 1,186 27,228
Additions 5,343 6,119 714 12,176
Depreciation for the year (1,657) (8,560) (1,594) (11,811)
Transferred to assets held for
sale (502) (307) -- (809)
Disposals -- (1,640) -- (1,640)
------- ----------- ---------- ----------
Balance as at 31 December 2020 14,593 16,648 1,912 33,153
Acquired in business
combinations -- 647 4,990 5,637
Additions 17,776 -- 6,150 23,926
Depreciation for the period (6,104) (2,886) (1,282) (10,272)
Balance as at 30 September 2021 $26,265 $ 14,409 $ 11,770 $ 52,444
------------------------------- ------ ------- ------ ------
11 OTHER FINANCIAL ASSETS
Other financial assets are comprised of:
30 September 31 December
Note 2021 2020
---- -------------- ---------------
Restricted cash 30,539 24,398
Long-term receivable (i) 4 5,693 --
Other financial assets (ii) 4 41,454 804
Total $ 77,686 $ 25,202
---------------------------- ---- ---------- ---------
(i) Long-term receivable
The long-term receivable at 30 September 2021 is the fair value
related to the NSR receivable from Allied for the sale of the
Agbaou mine.
(ii) Other financial assets
Other financial assets at 30 September 2021 include $40.0
million related to the shares of Allied received as consideration
upon the sale of the Agbaou mine.
12 TRADE AND OTHER PAYABLES
Trade and other payables consist of the following:
30 September 31 December
2021 2020
-------------- ---------------
Trade accounts payable 245,534 193,106
Royalties payable 36,577 14,516
Payroll and social payables 39,155 26,957
Other payables 2,131 27,695
-------------- -------------
Total trade and other payables $ 323,397 $ 262,274
------------------------------- ---------- ---------
13 OTHER FINANCIAL LIABILITIES
30 September 31 December
Note 2021 2020
---- -------------- ---------------
Share warrant liabilities (i) 24,390 --
DSU liabilities 5 3,681 2,919
PSU liabilities (ii) 5 14,301 --
Repurchased shares (ii) 14,383 --
Call-Rights (iii) 20,862 --
Contingent consideration (iv) 47,343 --
Other long-term liabilities 12,122 --
-------------- -------------
Total 137,082 2,919
Current portion (35,245) --
-------------- -------------
Non-current financial liabilities $ 101,837 $ 2,919
---------------------------------- ---- ---------- ---------
i. Share warrant liabilities
Upon acquisition of Teranga, all outstanding Teranga share
warrants were exchanged for replacement Endeavour warrants at a
ratio of 0.47 Endeavour warrants for each Teranga warrant at an
adjusted exercise price.
The following share warrants were outstanding as at 30 September
2021:
Exercise
Grant date Number Expiry date price (C$)
------- ------------- -----------
16 April 2018 940,000 16 April 2022 11.11
27 February
26 February 2019 70,500 2023 10.81
30 May 2019 658,000 30 May 2023 8.15
30 September
30 September 2019 70,500 2023 13.81
------- -----------
The currency of the exercise price of the warrants is different
from the Company's functional currency and as a result the share
warrants have been classified as a derivative financial liability.
Changes in fair value of share warrants are recognised in
(losses)/gains on financial instruments at the end of each
reporting period. Upon exercise, the associated share warrant
liability will be reclassified to share capital. Should any of the
share warrants expire un-exercised, the associated share warrant
liability will be recorded as gains/(losses) on financial
instruments in the condensed interim consolidated statement of
comprehensive earnings. There is no circumstance under which the
Company would be required to pay any cash upon exercise or expiry
of the warrants.
A reconciliation of the change in fair value of share warrant
liabilities is presented below:
Number of warrants Amount
------------------ ---------
Added upon acquisition of Teranga 1,739,000 22,233
Change in fair value -- 2,157
------------------ -------
Balance as at 30 September 2021 1,739,000 $24,390
---------------------------------- ------------------ ------
Fair values of share warrants were calculated using the
Black-Scholes option pricing model with the following
assumptions:
As at 30 September As at 10 February
2021 2021
Valuation date share price C$ 28.51 C$ 27.06
Weighted average fair value of share
warrants C$17.81 C$16.24
Exercise price C$8.15 - C$13.81 C$8.15 - C$13.81
Risk-free interest rate 0.53% 0.19% - 0.22%
Expected share market volatility 33% - 49% 46% - 55%
Expected life of share warrants
(years) 0.54 - 2.00 1.2 - 2.6
Dividend yield 2.5% 2.5%
Number of share warrants exercisable 1,739,000 1,739,000
-------------------- -------------------
ii. PSU's and repurchased shares
Prior to the Company listing on the LSE, the Company established
an Employee Benefits Trust (the "EBT") in connection with the
Company's employee share incentive plans, which may hold the
Company's own shares in trust to settle future employee share
incentive obligations. During the nine months ended 30 September
2021, the EBT acquired 576,308 outstanding common shares from
certain employees of the Group which remain held in the EBT at 30
September 2021.
In exchange for the shares, a subsidiary of the Company is
obligated to repay the employees cash for the fair value of the
underlying shares of the Company now held in the EBT. The amount of
this liability is $14.4 million at 30 September 2021 and is
included in current financial liabilities. Subsequent changes in
the fair value of the underlying shares will be recognised in
earnings/ (loss) in the period.
In addition to the above, certain PSU's were reclassified to
liabilities during the nine months ended 30 September 2021 as
management determined that the PSU's will be settled in cash upon
vesting. As a result, these PSU's are recognised at fair value at
30 September 2021, and $9.7 million is included in current
liabilities at 30 September 2021 as they are expected to be settled
in the next twelve months. The remaining $4.6 million is classified
as non-current other liabilities as the PSU's do not vest in the
next twelve months.
iii. Call-rights
Upon acquisition of Teranga, the Company acquired all previously
issued and outstanding Teranga call-rights and were exchanged for
replacement Endeavour call-rights at a ratio of 0.47 Endeavour
call-rights for each Teranga call-right at an adjusted exercise
price of C$14.90.
The call-rights are required to be settled in cash at the
difference between Endeavour's 5-day volume weighted average
trading price on the exercise date and the exercise price of
C$14.90. The call-rights expire on 4 March 2024. The call-rights
were recorded as derivative financial liabilities as their value
changes in line with Endeavour's share price. Changes in the fair
value of call-rights are recognised as gains/(losses) on financial
instruments.
A reconciliation of the change in fair value of the call-rights
liability is as follows:
Number of call-rights Amount
--------------------- ---------
Added upon acquisition of Teranga 1,880,000 19,321
Change in fair value -- 1,541
--------------------- -------
Balance as at 30 September 2021 1,880,000 $20,862
---------------------------------- --------------------- ------
The fair value of the call-rights were calculated using the
Black-Scholes option pricing model with the following
assumptions:
As at 30 September As at 10 February
2021 2021
Valuation date share price ((i) () C$ 29.00 C$ 27.93
Fair value per call-right C$ 14.09 C$ 13.05
Exercise price C$ 14.89 C$ 14.89
Risk-free interest rate 0.59% 0.24%
Expected share market volatility 46% 45%
Expected life of call-rights
(years) 2.43 3.06
Dividend yield 2.5% 2.5%
Number of call-rights exercisable 1,880,000 1,880,000
-------------------- -------------------
((i) () Represents 5-day volume weighted average trading price of the
Company's common shares on the TSX
iv. Contingent consideration
As part of the acquisition of Teranga, Endeavour recognised
contingent consideration related to Teranga's acquisition of
Massawa (Jersey) Limited. The contingent consideration is linked to
future gold prices and is payable to Barrick Gold Corporation
("Barrick") in cash three years following the completion of the
Massawa Acquisition by Teranga on 4 March 2020 and is calculated as
follows:
-- If the average gold price for the three-year period immediately following
closing of the Massawa Acquisition (the "three-year average gold price")
is equal to or less than $1,450 per ounce, $ nil;
-- If the three-year average gold price is greater than $1,450 per ounce and
up to, but not more than, $1,500 per ounce, $25.0 million;
-- If the three-year average gold price is greater than $1,500 per ounce and
up to, but not more than, $1,600 per ounce, $35.0 million; or
-- If the three-year average gold price is greater than $1,600 per ounce,
$50.0 million.
The Company has classified the contingent consideration payable
to Barrick as a derivative financial liability as the amount due is
dependent on future gold prices over periods of time in future. As
at 30 September 2021, the Company estimated the fair value of the
contingent consideration using a Monte Carlo simulation model based
on the gold forward curve, expected volatility of 16.97% (10
February 2021 - 19.83%), Endeavour's credit spread of 2.10% (10
February 2021 - 2.78%) and risk-free rate of 0.38% (10 February
2021 - 0.20%).
On the date of acquisition of Teranga, the fair value of the
contingent consideration was estimated to be $45.6 million. For the
three and nine months ended 30 September 2021, the increase in the
non-current liability to $47.3 million resulted in losses on
financial instruments recognised in the condensed interim
consolidated statement of comprehensive earnings of $3.1 million
and $2.4 million, respectively.
14 NON-CONTROLLING INTERESTS
The composition of the non-controlling interests ("NCI") is as
follows:
Houndé Boungou Sabodala-Massawa Wahgnion Total Agbaou
Ity Mine Karma Mine Mine Mana Mine Mine Mine Mine (continuing Mine Total
(15%) (10%) (10%) (10%) (10%) (10%) (10%) Other(2) operations) (15%) (all operations)
---------- ------------ ------------- ----------- ------- ------------------ ---------- ---------- -------------- ---------- ---------------------
At 31 December
2019 23,857 14,002 6,814 -- -- -- -- 522 45,195 53,435 98,630
Acquisition of
NCI -- -- -- 38,275 63,757 -- -- 6,419 108,451 -- 108,451
Net
earnings/(loss) 16,017 (4,186) 17,366 6,528 2,914 -- -- -- 38,639 1,004 39,643
Dividend
distribution (659) -- (1,744) -- -- -- -- -- (2,403) (52,912) (55,315)
Change in NCI -- -- -- -- -- -- -- (199) (199) -- (199)
---------- ------------ ------------- ----------- ------- ------------------ ---------- ---------- -------------- ---------- -------------------
At 31 December
2020 $ 39,215 $ 9,816 $ 22,436 $ 44,803 $66,671 $ -- $ -- $ 6,742 $ 189,683 $ 1,527 $ 191,210
Acquisition of
NCI -- -- -- -- -- 133,583 39,000 14,000 186,583 -- 186,583
Net earnings 21,123 246 14,641 6,004 3,664 15,462 3,874 379 65,393 1,466 66,859
Dividend
distribution (4,519) -- (8,158) (8,044) (7,334) (1,867) -- -- (29,922) -- (29,922)
Disposal of the
Agbaou mine(1) -- -- -- -- -- -- -- -- -- (2,993) (2,993)
At 30 September
2021 $ 55,819 $ 10,062 $ 28,919 $ 42,763 $63,001 $ 147,178 $ 42,874 $ 21,121 $ 411,737 $ -- $ 411,737
---------------- ------ -------- --- -------- ------- ------ ----- ----------- ------ ------ --- --------- ------ ----- ------------
(1) For further details refer to note 4
(2) Exploration, Corporate and Kalana segments are included in
the "other" category.
For summarised information related to these subsidiaries, refer
to Note 17, Segmented Information.
15 SUPPLEMENTARY CASH FLOW INFORMATION
Non-cash items
Below is a reconciliation of non-cash items adjusted for in the
operating cash flows in the consolidated statement of cash flows
for the three and nine months ended 30 September 2021:
THREE MONTHSED NINE MONTHSED
30 September 30 September 30 September 30 September
Note 2021 2020 2021 2020
---- -------------- -------------- -------------- ----------------
Depreciation
and
depletion 156,614 115,314 446,860 193,707
Finance costs 7 14,696 12,213 40,708 35,534
Share-based
compensation 5 7,281 7,117 25,075 13,682
Loss/(gain)
on financial
instruments 6 20,012 26,185 (7,258) 101,141
Write down of
inventory
and other 2,083 (524) 2,083 988
Loss on
disposal of
assets -- -- 2,442 --
Total non-cash
items $ 200,686 $ 160,305 $ 509,910 $ 345,052
--------------- ---- --- --------- --- --------- --- --------- --- ---------
Changes in working capital
Below is a reconciliation of changes in working capital included
in operating cash flows in the consolidated statement of cash flows
for the three and nine months ended 30 September 2021:
THREE MONTHSED NINE MONTHSED
30 September 30 September 30 September 30 September
2021 2020 2021 2020
-------------- -------------- -------------- ----------------
Trade and
other
receivables (3,804) (12,744) (9,179) (30,710)
Inventories 23,946 8,258 48,734 15,661
Prepaid
expenses
and other (3,875) (8,838) (7,788) (9,561)
Trade and
other
payables (30,241) (28) (87,591) (5,584)
-------------- -------------- -------------- --------------
Changes in
working
capital $ (13,974) $ (13,352) $ (55,824) $ (30,194)
------------ --- --------- --- --------- --- --------- --- ---------
16 INCOME TAXES
The Company operates in numerous countries, and accordingly it
is subject to, and pays annual income taxes under the various
income tax regimes in the countries in which it operates. Some
subsidiaries of the Company are not subject to corporate taxation
in the Cayman Islands. However, the taxable earnings of the
corporate entities in Barbados, Burkina Faso, Canada, Côte
d'Ivoire, Mali, Senegal, Monaco, France, Luxembourg and the United
Kingdom are subject to tax under the tax law of the respective
jurisdiction. Significant judgement is required in the
interpretation or application of certain tax rules when determining
the provision for income taxes due to the complexity of the
legislation. From time to time the Company is subject to a review
of its income tax filings and in connection with such reviews,
disputes can arise with the taxing authorities over the
interpretation or application of certain rules to the Company's
business conducted within the country involved. Management
evaluates each of the assessments and recognises a provision based
on its best estimate of the ultimate resolution of the assessment,
through either negotiation or through a legal or arbitrative
process. In the event that management's estimate of the future
resolution of these matters change over time, the Company will
recognise the effects of the changes in its condensed interim
consolidated financial statements in the period that such changes
occur.
Tax expense for the three and nine months ended 30 September
2021 was $40.6 million and $160.7 million respectively (for the
three and nine months ended 30 September 2020 - $11.9 million and
$37.7 million respectively).
THREE MONTHSED NINE MONTHSED
30 September 30 September 30 September 30 September
2021 2020 2021 2020
-------------- -------------- -------------- --------------
Earnings before taxes 173,096 75,468 553,091 98,205
Weighted average domestic tax rate 25% 21% 23% 23%
--- -------- ----- ------ ---- ------- ----- ------
Income tax expense based on weighted
average domestic tax rates 43,819 16,017 126,658 22,293
Reconciling items:
Rate differential 13,070 5,857 15,468 38,844
Effect of foreign exchange rate changes
on deferred taxes 15,482 (18,191) 24,353 (20,987)
Permanent differences (5,159) 2,734 19,159 17,379
Mining convention benefits (32,140) (3,344) (69,006) (9,589)
Effect of alternative minimum taxes and
withholding taxes paid 9,384 3,056 41,150 3,056
True up and tax amounts paid in respect
of prior years (1,528) 8,954 (6,084) 590
Effect of changes in deferred tax assets
not recognised 6,539 (391) 15,251 (4,467)
Other (8,914) (2,808) (6,281) (9,462)
-------------- -------------- -------------- --------------
Income tax expense $40,553 $11,884 $160,668 $37,657
----------------------------------------- -------------- -------------- -------------- --------------
17 SEGMENTED INFORMATION
The Company operates in four principal countries, Burkina Faso
(Karma, Houndé, Wahgnion, Mana and Boungou mines), Côte d'Ivoire
(Ity mine), Senegal (Sabodala-Massawa mine) and Mali (Kalana
Project). The following table provides the Company's results by
operating segment in the way information is provided to and used by
the Company's chief operating decision maker, which is the CEO, to
make decisions about the allocation of resources to the segments
and assess their performance. The Company considers each of its
operational mines a separate segment. Discontinued operations are
not included in the segmented information below. Exploration and
Corporate are aggregated and presented together as part of the
"other" segment on the basis of them sharing similar economic
characteristics.
THREE MONTHSED 30 SEPTEMBER 2021
Sabodala
Ity Karma Houndé Mana Boungou Massawa Wahgnion
Mine Mine Mine Mine Mine Mine Mine Other Total
---------- -------- ------------- ---------- ---------- ---------- ---------- -------- -------------
Revenue
Gold revenue 112,731 34,333 134,399 86,776 73,242 187,995 62,221 10 691,707
---------------- ---------- -------- ------------- ---------- ---------- ---------- ---------- -------- -----------
Cost of sales
Operating
expenses (46,325) (22,890) (39,158) (42,320) (25,248) (49,431) (32,089) (9) (257,470)
Depreciation
and
depletion (11,981) (10,757) (19,791) (14,244) (27,319) (50,516) (18,518) (3,488) (156,614)
Royalties (6,171) (3,136) (8,389) (5,745) (4,365) (10,541) (4,162) -- (42,509)
---------------- ---------- -------- ------------- ---------- ---------- ---------- ---------- -------- -----------
Earnings/(loss)
from mine
operations $ 48,254 $(2,450) $ 67,061 $ 24,467 $ 16,310 $ 77,507 $ 7,452 $(3,487) $ 235,114
---------------- ------ ------- --------- ------ ------ ------ ------ ------- -------
THREE MONTHSED 30 SEPTEMBER 2020
Ity Karma Houndé Boungou
Mine Mine Mine Mana Mine Mine Other Total
---------- -------- ------------- ---------- -------- -------- -------------
Revenue
Gold revenue 88,755 35,844 115,721 128,069 66,450 -- 434,839
---------- -------- ------------- ---------- -------- -------- -----------
Cost of sales
Operating
expenses (29,331) (20,077) (37,352) (51,799) (26,836) (875) (166,270)
Depreciation and
depletion (8,080) (14,904) (14,413) (33,305) (40,234) (4,378) (115,314)
Royalties (5,239) (3,410) (9,515) (7,754) (4,106) -- (30,024)
---------- -------- ------------- ---------- -------- -------- -----------
Earnings/(Loss)
from mine
operations $ 46,105 $(2,547) $ 54,441 $ 35,211 $(4,726) $(5,253) $ 123,231
---------------- ------ ------- --------- ------ ------- ------- -------
NINE MONTHSED 30 SEPTEMBER 2021
Sabodala
Ity Karma Houndé Mana Boungou Massawa Wahgnion
Mine Mine Mine Mine Mine Mine Mine Other Total
----------- -------- ------------- ----------- ---------- ----------- ---------- -------- -------------
Revenue
Gold revenue 395,224 113,416 390,471 284,174 244,093 452,529 201,009 10 2,080,926
-------------------------------- ----------- -------- ------------- ----------- ---------- ----------- ---------- -------- -----------
Cost of sales
Operating expenses (144,165) (69,042) (121,209) (129,940) (82,172) (143,761) (98,281) (9) (788,579)
Depreciation and depletion (45,777) (38,350) (57,055) (53,248) (88,942) (105,331) (48,642) (9,515) (446,860)
Royalties (21,670) (10,294) (26,205) (18,782) (14,706) (25,395) (13,731) -- (130,783)
-------------------------------- ----------- -------- ------------- ----------- ---------- ----------- ---------- -------- -----------
Earnings/(Loss) from continuing
mine operations $ 183,612 $(4,270) $ 186,002 $ 82,204 $ 58,273 $ 178,042 $ 40,355 $(9,514) $ 714,704
-------------------------------- ------- ------- --- -------- ------- ------ ------- ------ ------- -------
NINE MONTHSED 30 SEPTEMBER 2020
Ity Karma Houndé Boungou
Mine Mine Mine Mana Mine Mine Other Total
-------- ---------- ------------- ---------- -------- --------- -------------
Revenue
Gold revenue 268,897 102,579 304,746 128,069 66,450 -- 870,741
-------- ---------- ------------- ---------- -------- --------- -----------
Cost of sales
Operating expenses (94,263) (54,132) (115,759) (51,799) (26,836) (2,801) (345,590)
Depreciation and depletion (27,225) (39,890) (44,542) (33,305) (40,234) (8,511) (193,707)
Royalties (14,455) (9,489) (24,646) (7,754) (4,106) -- (60,450)
-------- ---------- ------------- ---------- -------- --------- -----------
Earnings/(Loss) from continuing
mine operations $132,954 $ (932) $ 119,799 $ 35,211 $(4,726) $(11,312) $ 270,994
-------------------------------- ------- ------ --- -------- ------ ------- -------- -------
Segment revenue reported represents revenue generated from
external customers. There were no inter-segment sales during the
periods ended 30 September 2021 or 30 September 2020. The Company
is not economically dependent on a limited number of customers for
the sale of gold because gold can be sold through numerous
commodity market traders worldwide.
The Company's assets and liabilities, including geographic
location of those assets and liabilities, are detailed below:
Ity Karma Houndé Boungou Wahgnion
Mine Mine Mine Mana Mine Mine Sabodala-Massawa Mine
Côte Burkina Burkina Burkina Burkina Mine Burkina
d'Ivoire Faso Faso Faso Faso Senegal Faso Other Total
------------ -------- ------------- ----------- -------- ------------------ -------- ---------- ------------
Balances as at 30 September
2021
Current assets 128,661 46,390 129,015 175,868 107,573 353,243 106,498 238,846 1,286,094
Mining interests 435,316 43,175 464,521 454,425 656,244 1,830,639 634,495 482,647 5,001,462
Other long-term assets 59,601 13,271 30,566 20,245 16,332 259,553 36,113 70,483 506,164
Total assets $ 623,578 $102,836 $ 624,102 $ 650,538 $780,149 $ 2,443,435 $777,106 $ 791,976 $6,793,720
---------------------------- -------- ------- --------- ------- ------- ---- ------------ ------- --------- ---------
Current liabilities 81,301 25,187 67,275 66,817 53,970 122,314 40,952 119,642 577,458
Other long-term liabilities 29,281 12,245 51,987 69,427 182,449 330,450 56,195 1,008,097 1,740,131
Total liabilities $ 110,582 $ 37,432 $ 119,262 $ 136,244 $236,419 $ 452,764 $ 97,147 $1,127,739 $2,317,589
---------------------------- -------- ------- --------- ------- ------- ---- ------------ ------- --------- ---------
For the period ended 30
September 2021
Capital expenditures 67,263 4,461 50,424 70,337 35,316 84,851 34,950 60,638 408,240
------------ -------- ------------- ----------- -------- ------------------ -------- ---------- ----------
Ity
Mine Karma Houndé
Côte Mine Mine Mana Mine Boungou Mine
d'Ivoire Burkina Faso Burkina Faso Burkina Faso Burkina Faso Other Total(1)
------------ --------------- --------------- --------------- --------------- -------- ------------
Balances as
at 31
December
2020
Current
assets 87,618 50,585 152,761 195,276 121,405 309,384 917,029
Mining
interests 441,549 70,564 467,719 438,297 708,819 450,896 2,577,844
Other
long-term
assets 65,449 12,971 28,352 20,677 17,049 49,016 193,514
------------ --------------- --------------- --------------- --------------- -------- ----------
Total assets $ 594,616 $ 134,120 $ 648,832 $ 654,250 $ 847,273 $809,296 $3,688,387
------------- -------- --- ---------- --- ---------- --- ---------- --- ---------- ------- ---------
Current
liabilities 110,613 28,791 80,666 68,326 75,425 46,319 410,140
Other
long-term
liabilities 17,364 13,862 49,367 64,860 192,783 759,605 1,097,841
------------ --------------- --------------- --------------- --------------- -------- ----------
Total
liabilities $ 127,977 $ 42,653 $ 130,033 $ 133,186 $ 268,208 $805,924 $1,507,981
------------- -------- --- ---------- --- ---------- --- ---------- --- ---------- ------- ---------
For the
period ended
30 September
2020
Capital
expenditures 39,052 12,668 45,976 14,500 1,191 49,057 162,444
------------ --------------- --------------- --------------- --------------- -------- ----------
(1) Totals are excluding assets and liabilities classified as
held for sale as at 31 December 2020.
18 CAPITAL MANAGEMENT
The Company's objectives of capital management are to safeguard
the entity's ability to support the Company's normal operating
requirements on an ongoing basis, continue the development and
exploration of its mining interests and support any expansionary
plans.
In the management of capital, the Company includes the
components of equity, finance obligations, and long-term debt, net
of cash and cash equivalents, restricted cash and marketable
securities.
Capital, as defined above, is summarised in the following
table:
30 September 31 December
2021 2020
-------------- ---------------
Equity 4,476,131 2,248,418
Long-term debt 850,434 688,266
Finance and lease obligations 53,529 37,205
5,380,094 2,973,889
Less:
Cash and cash equivalents (760,368) (644,970)
Cash - restricted (30,539) (24,398)
Marketable securities (2,689) (778)
-------------- -------------
Total $ 4,586,498 $ 2,303,743
------------------------------ ---------- ---------
The Company manages its capital structure and adjusts it
considering changes in its economic environment and the risk
characteristics of the Company's assets. To effectively manage the
entity's capital requirements, the Company has in place a planning,
budgeting and forecasting process to help determine the funds
required to ensure the Company has the appropriate liquidity to
meet its operating and growth objectives.
The Company is not subject to any externally imposed capital
requirements with the exception of complying with covenants under
the RCF and Bridge Facility. As at 30 September 2021 and 31
December 2020, the Company was in compliance with these
covenants.
19 COMMITMENTS AND CONTINGENCIES
The Company has commitments in place at all seven of its mines
and other key projects for drill and blasting services, load and
haul services, supply of explosives and supply of hydrocarbon
services. At 30 September 2021, the Company has approximately $51.7
million in commitments relating to on-going capital projects at its
various mines.
The Company is, from time to time, involved in various claims,
legal proceedings, tax assessments and complaints arising in the
ordinary course of business from third parties. The Company cannot
reasonably predict the likelihood or outcome of these actions. The
Company does not believe that adverse decisions in any other
pending or threatened proceedings related to any matter, or any
amount which may be required to be paid by reason thereof, will
have a material effect on the financial condition or future results
of operations. The Company has recognised tax provisions with
respect to current assessments received from the tax authorities in
the various jurisdictions in which the Company operates, and from
uncertain tax positions identified upon the acquisition of SEMAFO
and Teranga as well as through review of the Company's historical
tax positions. For those amounts recognised related to current tax
assessments received, the provision is based on management's best
estimate of the outcome of those assessments, based on the validity
of the issues in the assessment, management's support for their
position, and the expectation with respect to any negotiations to
settle the assessment. Management re-evaluates the outstanding tax
assessments regularly to update their estimates related to the
outcome for those assessments taking into account the criteria
above. Management evaluates its uncertain tax positions regularly
to update for changes to the tax legislation, the results of any
tax audits undertaken, the correction of the uncertain tax position
through subsequent tax filings, or the expiry of the period for
which the position can be re-assessed. Management considers the
material elements of any other claims to be without merit or
foundation and will strongly defend its position in relation to
these matters and following the appropriate process to support its
position. Accordingly, no provision or further disclosure has been
made as the likelihood of a material outflow of economic benefits
in respect of such claims is considered remote. In forming this
assessment, management has considered the professional advice
received, the mining conventions and tax laws in place in the
various jurisdictions, and the facts and circumstances of each
individual claim.
The Company has received a notice of claim from a former service
provider. The Company is taking legal advice on the merits of the
claim and the probable outcome but intends to vigorously defend
against the claims. The Company does not believe that the outcome
of the claim will have a material impact to the Company's financial
position.
The Company's mining and exploration activities are subject to
various laws and regulations governing the protection of the
environment. These laws and regulations are continually changing
and are generally becoming more restrictive. The Company believes
its operations are materially in compliance with all applicable
laws and regulations. The Company has made, and expects to make in
the future, expenditures to comply with such laws and
regulations.
The Company assumed a gold stream when it acquired the Karma
Mine on 26 April 2016 ("Karma stream"), and when it acquired the
Sabodala-Massawa mine on 10 February 2021 ("Sabodala stream").
-- Under the Karma stream, the Company was obligated to deliver 100,000
ounces of gold (20,000 ounces per year) to Franco-Nevada Company and
Sandstorm Gold Inc. (the "Syndicate") over a five-year period, which
commenced on 31 March 2016, in exchange for 20% of the spot price of gold
for each ounce of gold delivered (the "ongoing payment"). The amount that
was previously advanced for this agreement of $100.0 million is reduced
on each delivery by the excess of the spot price of the gold delivered
over the ongoing payment. Following the five-year period, the Company is
committed to deliver refined gold equal to 6.5% of the gold production at
the Karma Mine for the life of the mine in exchange for ongoing payments.
The Company delivered an additional 7,500 ounces between July 2017 and
April 2019 in exchange for an additional deposit of $5.0 million received
in 2017. Gold ounces sold to the Syndicate under the stream agreement are
recognised as revenue only on the actual proceeds received, which per the
agreement is 20% of the spot gold price. As at 31 March 2021, the Company
had completed the delivery of 100,000 ounces of gold and had started
delivering 6.5% of gold production at the Karma Mine to the syndicate.
-- Under the Sabodala stream, the Company is required to deliver 783 ounces
of gold per month beginning 1 September 2020 until 105,750 ounces have
been delivered to Franco-Nevada (the "Fixed Delivery Period") based on
the Sabodala standalone life of mine plan prior to the Massawa
Acquisition by Teranga on 4 March 2020. At the end of the Fixed Delivery
Period, any difference between total gold ounces delivered during the
Fixed Delivery Period and 6 percent of production from the Company's
existing properties in Senegal (excluding Massawa) could result in a
credit from or additional gold deliveries to Franco-Nevada. Subsequent to
the Fixed Delivery Period, the Company is required to deliver 6 percent
of production from the Company's existing properties in Senegal
(excluding Massawa). For ounces of gold delivered to Franco-Nevada under
the Stream Agreement, Franco-Nevada pays the Company cash at the date of
delivery for the equivalent of the prevailing spot price of gold for on
20 percent of the ounces delivered. Revenue is recognised on actual
proceeds received. The Company delivered 5,483 ounces during the period
ended 30 September 2021 after its acquisition of Teranga and as at 30
September 2021, 95,223 ounces is still to be delivered under the Fixed
Delivery Period.
20 SUBSEQUENT EVENTS
Share buyback programme
Subsequent to 30 September 2021 and up to 10 November 2021, the
Company has repurchased a total of 39,100 shares at an average
price of $22.73 for total cash outflows of $0.9 million.
Capital reduction completed
On 5 October 2021, the Company completed the reduction of
capital whereby 4,450,000,000 deferred shares at a par value of
$1,00 each were cancelled, and the resulting $4.45 billion in share
capital was reclassified to deficit.
Refinancing
On 14 October 2021, the Company completed an offering of $500.0
million fixed rate senior notes (the "Notes") due in 2026 and the
entered into a new $500.0 million unsecured RCF agreement (the "new
RCF") with a syndicate of international banks. The proceeds of the
Notes were used to repay all amounts outstanding under the
Company's existing loan facilities and to pay fees and expenses in
connection with the offering of the Notes. The new RCF will replace
the bridge facility and existing RCF, which was cancelled upon
completion of the Notes offering.
Key terms of the Notes include:
-- Principal amount of $500.0 million
-- Interest rate of 5% per annum payable on a semi-annual basis
-- The term of the Notes is 5 years, maturing in October 2026
-- The notes are reimbursable through the payment of cash
The key terms of the new RCF include:
-- Principal amount of $500.0 million
-- Interest accrues on LIBOR plus 2.4% - 3.4% depending on leverage.
-- The principal outstanding is repayable after a four year tenor in October
2025
-- The undrawn portion has a commitment fee of 35% of the applicable margin
(0.84% based on currently applicable margin)
Covenants on the new RCF include:
-- Interest cover ratio as measured by ratio of earnings before interest,
tax, depreciation and amortisation ("EBITDA") to finance cost for the
trailing 12 months to the end of a quarter shall not be less than 3.0:1.0
-- Leverage as measured by the ratio of net debt to trailing twelve months
EBITDA at the end of each quarter must not exceed 3.5:1.0
Attachment
-- Q3-21_Combined NR&MR&FS_vf
https://ml-eu.globenewswire.com/Resource/Download/bc66b8f5-9cf8-44c5-b8a9-cdbce195672c
(END) Dow Jones Newswires
November 11, 2021 02:00 ET (07:00 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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