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TABLE OF CONTENTS Jul 28 - Aug 3, 2014 Volume 100 Number 24 - 0 comments

Endeavour Mining bounces back in 2014

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VANCOUVER — After posting a big-time loss in 2013, West Africa-focused gold producer Endeavour Mining (TSX: EDV; US-OTC: EDVMF) pledged for a comeback, and based on the company’s performance over the first half of 2014, it looks like that promise is becoming a reality. On July 15 Endeavour released its half-year results, which position the company to hit the upper end of its annual production guidance.

Amid last year’s weak gold prices, Endeavour lost US$333 million in 2013, or US81¢ per share, despite cranking out a record 324,300 oz. gold at all-in sustaining costs of US$1,099 per oz. The company responded with cost-cutting that included a move from contract to owner-operated mining, and boosted its annual gold output target to between 400,000 and 440,400 oz. gold.

Endeavour operates four gold mines across West Africa — Tabakoto in Mali, Nzema in Ghana, Youga in Burkina Faso and Agbaou in Côte d’Ivoire — which all either achieved or exceeded key operating metrics over the past six months. As a result Endeavour produced 122,520 oz. gold in the second quarter and 228,430 oz. gold so far this year. The company expects its all-in sustaining cash costs will improve from the US$1,059 per oz. benchmark in the first quarter.

CEO Neil Woodyer noted in a release that “Agbaou and Nzema are performing above expectations, and Tabakoto is positioned to have a strong second half, as we are ramping up ore production from the new Segala underground mine.”

The underground Segala main deposit contains proven and probable reserves of 2.3 million tonnes grading 3.8 grams gold per tonne for 284,000 contained oz., which represents 36% of Endeavour’s overall reserves at Tabakoto.

The company began underground production at Segala in mid-June, using a spiral decline from the mined-out Segala open pit, following the footwall of a steeply dipping orebody. Mineralization occurs as parallel, closely spaced zones that comprise the main orebody, which averages 20 metres wide.

Endeavour has newly received its Kofi Nord mining permit, which encompasses all eight of the Kofi satellite deposits at Tabakoto. Kofi hosts a total 8.1 million indicated tonnes grading 2.3 grams gold for 599,100 contained oz., and 10.5 million inferred tonnes grading 1.7 grams gold for 577,600 contained oz.

The Kofi C deposit is the most advanced of the eight and adds 1.6 million probable tonnes at 4.26 grams gold for 213,000 oz.

Endeavour is planning to build a 38 km haul road, with production scheduled at Kofi C in early 2015. Total capital expenditures for the project are pegged at under $13 million.

BMO Capital Markets analyst Andrew Breichmanas — who has a “market perform” rating on Endeavour, along with a $1.25-per-share price target — noted on July 16 that the company’s second-quarter production was “well ahead” of BMO Research’s 99,400 oz. gold estimate.

He said permitting at Kofi is “encouraging,” since the satellite deposits are likely to offer low-cost surface ore to use the expanded processing capacity at Tabakoto’s mill.

According to BMO Research, Segala and Kofi are expected to drop Tabakoto’s operating costs from US$981 per oz. in 2014 to US$814 per oz. in 2015.

“The impressive performance in [the second quarter] places the company on course to achieve full-year guidance, as a strong second half is expected,” Breichmanas writes, noting that BMO has bumped its full-year production estimate on Endeavour by 6% to 437,600 oz. gold. “While the sustainability of current production levels at Agbaou and Nzema are uncertain, and cost improvements must still be demonstrated, BMO Research believes the operational results should alleviate balance sheet concerns and enable the company to evaluate further growth opportunities throughout the year.”

Endeavour shares jumped 70%, or 37¢ over the first half, en route to a 91¢ close at press time. The company had cash and equivalents of US$68 million at the end of March. With 413 million shares outstanding, it has a $384-million market capitalization.

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Endeavour Mining's Tabakoto gold mine, 360 km west of Bamako in southwestern Mali, near the Senegal border. Credit: Endeavour Mining
Endeavour Mining's Tabakoto gold mine, 360 km west of B...

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