Endeavour Mining. Q4 and Full Year 2015 Results CREATING A PREMIER AFRICAN GOLD PRODUCER

Transcription

1 Endeavour Mining Q4 and Full Year 2015 Results

2 Disclaimer & Forward Looking Statements Cash cost per ounce and all-in sustaining cash cost per ounce are non-gaap performance measures with no standard meaning under IFRS. This presentation contains forward-looking statements including but not limited to, statements with respect to Endeavour s plans and operating performance, the estimation of mineral reserves and resources, the timing and amount of estimated future production, costs of future production, future capital expenditures, and the success of exploration activities. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as expects, expected, budgeted, forecasts and anticipates. Forwardlooking statements, while based on management s best estimates and assumptions, are subject to risks and uncertainties that may cause actual results to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks related to the successful integration of acquisitions; risks related to international operations; risks related to general economic conditions and credit availability, actual results of current exploration activities, unanticipated reclamation expenses; changes in project parameters as plans continue to be refined; fluctuations in prices of metals including gold; fluctuations in foreign currency exchange rates, increases in market prices of mining consumables, possible variations in ore reserves, grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes, title disputes, claims and limitations on insurance coverage and other risks of the mining industry; delays in the completion of development or construction activities, changes in national and local government regulation of mining operations, tax rules and regulations, and political and economic developments in countries in which Endeavour operates. Although Endeavour has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forwardlooking statements. Please refer to Endeavour s most recent Annual Information Form filed under its profile at for further information respecting the risks affecting Endeavour and its business. 2

3 Out-performed guidance again in 2015 Strong operational performance Beat production and AISC guidance Increased production by 11% Decreased AISC/oz costs by 9% Solidified balance sheet through cash flow generation Free cash flow increased by 2.4x with US$84 million generated before tax, WC & financing costs Net debt reduced by 43%, to US$144m as at end of 2015 Financing sources include US$110m of cash, US$110m of undrawn RCF, US$75m in-principle commitment from La Mancha (Naguib Sawiris), and cash flow generation Guidance Production, koz AISC, US$/oz 1, Free Cash Flow, US$m (before tax, WC & financing costs) (mid-point production, rebased on US$1,157/ozrealized price) Net Debt, US$m

4 Delivering our strategic objectives 1) Increase Production 2) Decrease All-in Sustaining Cash Costs Production, on a 100% basis in koz 466koz +11% 517koz koz $1,137/oz -9% AISC, in US$/oz $1,010/oz 324koz $922/oz $ /oz 2013A 2014A 2015A 2016 Guidance (post-youga sale) 2013A 2014A 2015A 2016 Guidance (post-youga sale) 3) Increase Cash Generation 4) Reduced Net Debt Free cash flow before tax, WC & financing costs, in US$m (realized gold price) x2.4 $85m $90m $227m $254m -43% $28m* $35m $144m (US$1,392/oz) (US$1,264/oz) (US$1,157/oz) (US$1,150/oz) 2013A 2014A 2015A 2016 Guidance (post-youga sale) 2013A 2014A 2015A *Excludes Agbaou capex 4

5 Strong Q4 performance Record Production in Q All-in Sustaining Cash Costs Production, on a 100% basis in koz +14% AISC, in US$/oz koz koz 1,059 1, $995/oz 946-6% $934/oz Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Free cash flow Net Debt Free cash flow before tax, WC & financing costs, in US$m $35m $85m Net Debt, US$m $254m % $12m $144m ($4)m Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 5

6 Production performance by mine Production, in koz on a 100% basis Insights: % 181 Agbaou achieved record production in 2015, mainly due to a 20% increase in mill throughput and the continued benefit of mining free-dig oxide ore % Tabakoto increased production by 19% over the previous year as the mine benefited from the start of mining of the Kofi C open pit and the full ramp-up of the Segala underground mine Nzema s 2015 production slightly declined as the mine strategically increased purchased ore to improve the mine s operating margins, and to preserve reserves in-situ The Ity Mine is included for the postacquisition period of November 28 to December 31, During 2015, the Ity Mine produced a total of 80,807 ounces E Agbaou E E E Youga Tabakoto Nzema Ity On February 29, 2016, Endeavour announced the sale of the Youga Gold Mine for $25.3 million 6

7 Youga 2016E Ity 2016E Nzema 2016E Tabakoto 2016E Agbaou 2016E AISC performance by mine All-in Sustaining Cash Costs, in US$/oz ,067 1,036 1, ,020 Group AISC decreased by 9% $922 in ,335 $1,010 in % Insights: Group AISC decreased by 9% mainly due to lower operating costs, specifically at Agbaou and Tabakoto, as well as the benefit of the decline in crude oil prices and favorable exchange rates against the US$. Agbaou reduced its mine-level AISC by 7% over the previous year to $576/oz, primarily due to a lower strip ratio and a decrease in milling cost per tonne driven by larger volumes. Tabakoto reduced its mine-level AISC by 20% over the previous year to $1,067/oz, as lower fuel prices and switching to owner mining led to a decrease in mining costs (open pit reduced from $4.6 to $2.6/t, and underground reduced from $51 to $40/t) Sustaining capital increased by $27/oz in 2015 mainly due to increased underground development at the Tabakoto mine and capitalized waste at Agbaou ,050 1,200 1,350 1,500 7

8 Maintained sustaining margin despite drop in gold price % US$117m -49 Total Cash Costs decreased by 13% to $720/oz Stable G&A despite increased production +$12 at Tabakoto and +$5.5m at Agbaou -3m US$122m Realized gold price fell 8% from US$1,264 to US$1,157/oz +16 Gold sales increased by 11% Sustaining Margin 2014 Lower gold price Gold sales volume Improved operating costs Corporate costs Sustaining capital Sustaining exploration Sustaining Margin

9 Net Free Cash Flow breakdown $122m $85m $47m $34m AISC Margin Non-sustaining exploration Non-sustaining capital Free cash flow (before working capital, tax & financing costs) Working capital Taxes paid Interest paid Other items* Free Cash Flow Cash received from La Mancha acquisition** Revolving credit facility payments Year over year change in cash *Includes financial fees, lease repayments, hedge settlements, realized loss on derivative financial instruments, unrealized foreign exchange loss on cash, and other non-operating cash adjustments. **Includes $63m of cash received from La Mancha and minority cash interest in Ity operating entity, net of transaction fees 9

10 Net Earnings (in US$m) Variance Revenues Operating expenses (382) (387) (5) Royalties (29) (28) +1 Corporate costs (21) (22) (1) Other (6) (3) (3) EBITDA Depreciation and depletion (84) (92) (8) Impairment - (366) +366 Acquisition costs (13) - (13) Earnings (loss) from operations 67 (315) +382 Gains (losses) on financial instruments 9 (11) +20 Finance costs (30) (28) (2) Other income (expenses) (3) (22) +19 (Loss) earnings before taxes 43 (376) +419 Income and mining taxes (4) (34) +30 Deferred income and mining taxes (3) 81 (84) Net earnings from continuing operations 36 (328) +364 Volume increase partially offset by gold price decrease AISC decrease helped keep total operating costs stable, despite greater production Stable Small uptick in share based payments and exploration expense Decrease due to life of mine extensions and lower cost base of assets in 2015 No impairment charge in 2015 Related to La Mancha transaction 2015 had FX gains, derivative gains on gold price decrease versus losses on both in 2014 Interest cost increase due to full year of leased mining fleet at Tabakato and RCF renewal, offset by lower RCF balance. ($16m interest and $14m finance related fees in 2015) Included $13m in tax related and other provisions 2014 current taxes were higher due to significant tax assessment provisions (Mali) and a higher gold price 2014 deferred tax recovery associated with impairments booked in

11 Avocet AngloGold B2Gold Endeavour 2014 Goldfields Nordgold Endeavour 2015 Resolute Pan African Perseus Centamin Acacia IAMGOLD Teranga Randgold SEMAFO Improved Balance Sheet With Strong Liquidity Net debt reduced by 43%, from US$254 million to US$144 million with US$60 million debt voluntarily reimbursed The Company s liquidity sources, at end of 2015, include: US$110 million cash position US$110 million undrawn RCF capacity 1 US$100 million of free cash flow generation expected in 2016 (before working capital, tax and financing costs) In addition, US$75 million in-principle commitment from La Mancha (Naguib Sawiris) to finance growth projects Net debt to Operating EBITDA ratio improved to 0.9 times, which compares to 1.8 times at the start of 2015 Significantly decreased net debt position (US$m) Healthy Net debt / 2015A EBITDA ratio -$63m 4.7x Source: Factset broker consensus estimates for 2015E EBITDA $316m $253m $62m +$48m $110m $254m -$110m $144m 2.1x 2.0x 1.8x 1.6x 1.1x 0.9x 0.6x 0.4x -1.3x -1.1x -0.8x -0.6x -0.5x -0.4x -0.3x Dec-14 Dec-15 Dec-14 Dec-15 Dec-14 Dec-15 Debt Position Cash Position Net Debt 1 RCF of US$350 million, maturity date March 2020, semi-annual reductions commencing September 2018, annual interest based on LIBOR + a 3.75% to5.75% margin 11

12 Free cash flow expected to increase again in production guidance of koz at AISC of /oz Production Guidance 1, ounces AISC Guidance, $/oz Agbaou 165, ,000 Agbaou Tabakoto 155, ,000 Tabakoto Nzema 110, , ,02 - Nzema 0 Ity 65,000-75,000 Ity Youga (pre-disposal²) 7,000 8, ,03 - Youga (pre-disposal²) 0 Total 502, ,000 Mine-level AISC/oz Group Guidance Range 535, ,000 Corporate G&A 38 Sustaining exploration 11 Group All-In Sustaining costs $90m expected in Free cash flow (before working capital movement, tax and financing costs) $ million $/ounce Revenue (based on production guidance range mid-point) 630 1,150 AISC costs (based on AISC guidance range mid-point) (492) 895 All-in sustaining margin Non-sustaining capital: Agbaou secondary crusher: 12 Nzema pit wall push-back: 12 (48) 80 Non-sustaining exploration: 14 Houndé and the Ity CIL projects: 10 Free cash flow (before working capital movement, tax and financing costs) Insights: At US$1,150 gold price, AISC margin of approximately US$138m in 2016, or US$255/oz Free cash flow (before working capital movement, tax and financing costs) is projected to be US$90m or US$175/oz US$30m sensitivity for a $50 per ounce gold price movement US$20m exploration budget for reserve replacement and mine life extensions US$6m for sustaining exploration and US$14m for non-sustaining exploration US$48m non-sustaining capital allocated to Agbaou, Nzema, exploration and projects 1 Gold production is on a 100% consolidated basis. Actual mine ownership is Agbaou 85%, Nzema 90%, Tabakoto 80%, Youga 90%, Ity 55%. ²Estimate for the pre-sale period ended February 29,

13 Reserves and Resources Successful exploration replenished 93% of M&I resource ounces depleted in 2015 Agbaou fully replaced the soft material mined during 2015 and added an additional year of free-dig oxide mine life, which should allow the mine to maintain its current production level over the next few years Proven and Probable Reserves in Moz 100% basis % Tabakoto exploration replenished 103% of M&I resource ounces depleted, despite realizing only 40% of planned campaign 2016 exploration budget of US$20 with the following objectives: Agbaou: Replace 2016 depleted reserves, and increase oxide ore availability Tabakoto: Replace underground 2016 depleted reserves and generate new inferred resources. Replace Kofi depletion within the Kofi Nord permit area Reserves (End 2014) Ore depleted Ounces added Measured and Indicated Resources in Moz 100% basis (inclusive of reserves) Ity acquisition +29% +3.1 Implied of M&I price of $9/oz Reserves (End 2015) 11.0 Youga sale -0.8 PF Reserves (End 2015) 10.2 Ity: Increase of short-term oxide ore to extend Heap Leach operation and define additional targets for CIL M&I Resources (End 2014) Ore depleted Ounces added Ity acquisition M&I Resources (End 2015) Youga sale PF Reserves (End 2015) 13

14 Upcoming Catalysts Continued optimization of operations with 2016 production guidance of koz while AISC expected to decrease to US$ /oz, post Youga sale Houndé project investment decision expected in Q2 Ity CIL project DFS expected by Q3 Exploration strategic review underway 14

15 Appendix 1 Q4 & Year 2015 Results Mine by Mine Summary

16 Agbaou Mine Côte d Ivoire Insights: Agbaou achieved record production in 2015, up 24% over the previous year with a 20% increase in mill throughput and continued benefit from mining free-dig oxide ore Agbaou fully replaced the soft material mined during 2015 and added an additional year of free-dig oxide mine life, which should allow the mine to maintain its current production level over the next few years reserve is now 13% greater than the 2014 pre-production reserve. 147koz % koz Quarter ended Dec 31 Full year ended Dec OperationalData Mining Waste (kt) 6,255 4,171 26,292 15,529 Ore Mined - open pit (kt) ,741 2,818 Open pit strip ratio Processing Ore Processed (kt) ,241 2,665 Grade Milled(g/t) Recovery (%) 97% 97% 97% 97% Production(oz) 47,365 51, , ,365 Unit costs Open pit mining cost (US$/t) Processing Cost (US$/t) G&A Cost (US$/t) Cash cost per ounce sold (US$/oz) All-in Sustaining Costs (US$/oz) Financial data Sustaining Capital(US$m) Sustaining margin (US$m) Production Change in tonnage processed Change in grade Change in recovery rate 2015 Production 16

17 Tabakoto Mine Mali Insights: Tabakoto increased production by 19% over the previous year as the mine benefited from the start of mining of Kofi C open pit and the full ramp-up of the Segala underground mine 127koz % koz OperationalData Mining Quarter ended Dec 31 Full year ended Dec Waste (kt) 1,314 2,286 6,407 6,453 Ore Mined - open pit (kt) Ore Mined underground(kt) ,009 Open pit strip ratio Processing Ore Processed (kt) ,485 1,588 Grade (g/t) Recovery (%) 88% 95% 92% 93% Production(oz) 26, , , ,067 Unit costs Open pit mining cost (US$/t) Underground mining cost (US$/t) Processing Cost (US$/t) G&A Cost (US$/t) Cash cost per gold ounce sold (US$/oz) 1, , All-in Sustaining Costs (US$/oz) 1,373 1,119 1,335 1,067 Financial data Sustaining Capital(US$m) Sustaining margin (US$m) (4.6) (0.7) (8.3) Production Change in tonnage processed Change in grade Change in recovery rate 2015 Production 17

18 Nzema Mine Ghana Insights: Nzema s production remained fairly constant over the previous year as the mine strategically increased the levels of purchased ore to improve operating margins and to preserve reserves in-situ -4% Quarter ended Dec 31 Full year ended Dec OperationalData Mining Waste (kt) 1,826 1,063 6,963 4,096 Ore Mined - open pit (kt) ,366 1,310 Open pit strip ratio Processing Ore Processed (kt) ,587 1,783 Grade milled (g/t) Recovery (%) 91% 87% 90% 87% Production(oz) 1 25,810 23, , , koz Unit costs koz Open pit mining cost (US$/t) Processing Cost (US$/t) G&A Cost (US$/t) Cash Cost per gold ounce sold(us$/oz) 1 1,007 1, All-in Sustaining Costs (US$/oz) 1,191 1,133 1,036 1,064 Financial data Sustaining Capital(US$m) Sustaining margin (US$m) 0 (0.6) Production Change in tonnage processed Change in grade Change in recovery rate 2015 Production 1 Includes purchased ore of 6,315 ounces and 47,383 ounces for the three months and year ended December 31, 2015, and 12,168 ounces and 42,633 ounces in the comparable periods in

19 Youga Mine Burkina Faso Insights: Subsequent to the year ended December 31, 2015, on February 29, 2016, the Corporation announced that it had sold the Youga Gold Mine in Burkina Faso for US$25.3 million -11% Quarter ended Dec 31 Full year ended Dec OperationalData Mining Waste (kt) 21,212 1,502 3,562 6,684 Ore Mined - open pit (kt) ,161 1,335 Open pit strip ratio Processing Ore Processed (kt) ,064 Grade milled (g/t) koz Recovery (%) 91% 85% 91% 90% Production(oz) 19,977 14,801 76,561 68,223 Unit costs -1 68koz Open pit mining cost (US$/t) Processing Cost (US$/t) G&A Cost (US$/t) Cash cost per gold ounce sold (US$/oz) All-in Sustaining Costs (US$/oz) Financial data Sustaining Capital(US$m) Sustaining margin (US$m) Production Change in tonnage processed Change in grade Change in recovery rate 2015 Production 19

20 Ity Mine Côte d Ivoire Insights: The Ity Mine is included for the postacquisition period of November 28 to December 31, 2015, in the company s 2015 financial results The Ity CIL feasibility study is expected to be completed in the third quarter of 2016 In 2016 exploration program aimed at extending the heap leach mine life Strategic exploration planning underway to fully identify all exploration potential of this significantly underexplored area In addition, Endeavour has strategically applied for adjacent exploration tenements OperationalData Mining Full Year 2015 Post acquisition period (Nov 28 to Dec 31, 2015) Waste (kt) 5, Ore Mined - open pit (kt) 1, Open pit strip ratio Processing Ore Processed (kt) 1, Grade (g/t) Recovery (%) 83% 81% Production(oz) 80,807 5,689 Unit costs Open pit mining cost (US$/t) Processing Cost (US$/t) G&A Cost (US$/t) Total Cash Cost excl royalties(us$/oz) All-in Sustaining Costs (US$/oz) Financial data Sustaining Capital(US$m) Sustaining margin (US$m)