Endeavour lifts lid on dividends plan, mulls London or New York listing
Thursday, August 6, 2020 - 2:16:03 PM
Mining Weekly

With the current gold price outlook, dividend initiation could come quickly, CEO Sebastien de Montessus said on a conference call on Wednesday, a day after the precious metal broke through $2 000/oz for the first time.

In question-and-answer time, he said that Endeavour would consider the overall market and peers as a benchmark for its dividend, not only Toronto-listed peers, adding that Africa-focused Randgold Resources, which is now part of Barrick Gold, would be a good benchmark to follow.

With the C$1-billion acquisition of Semafo Gold concluded on July 1, Endeavour is also considering a secondary listing, with London or New York the most likely destinations.

A formal recommendation could be forthcoming in the next two to three months.

De Montessus reported that the integration of Semafo’s assets in Burkina Faso – Mana and Boungou – was progressing well and that synergies were already starting to be realised. Overall, savings of $20-million to $25-million have been identified.

Reporting on the security situation on the public road to Boungou mine, where a 2019 attack on a convoy of busses with mine personnel left 37 dead, De Montessus said that he had recently met with five government officials, including the President and Prime Minister.

“Discussions went very well, particularly with the President,” he said.

Although unable to divulge much about the security plan, De Montessus said that Endeavour expected to restart mining operations at Boungou in the fourth quarter.

The miner kept its guidance for both Endeavour and Semafo operations, despite the Covid-19 pandemic.The group expects the 2020 proforma guidance, including Semafo’s production, to amount to 995 000 oz to 1.1-million ounces, at an all-in sustaining cost of $865/oz to $915/oz.

Meanwhile, second-quarter gold production and sales fell to 149 000 oz and 150 000 oz, respectively, from about 172 000 oz in the March quarter.

Revenue of $253-million was higher than the $219-million of the June 2019 quarter, but lower than the $270-million of the March 2020 quarter.

Endeavour boosted net earnings to $53-million in the June quarter, from $34-million in the previous quarter and $9-million in the same quarter a year earlier.

Cash flow generation would be stronger in the second half of the year, owing to higher production and lower nonsustaining spend, lower exploration spend and the benefit of gold prices and the expiry of the collar programme on June 30. This programme had a $1 500/oz cap for half its production.

Endeavour noted that it had already spent 85% of its 2020 exploration guidance in the first half of the year.

“Exploration is a key value driver for us,” De Montessus reaffirmed.

Endeavour also announced that Benoit Desormeaux had decided to step down to pursue other opportunities.

The former Semafo CEO joined Endeavour as president when the transaction closed in July.

“I would like to thank Benoit for his significant efforts to build Semafo over the last decade and his help over the recent months in completing the transaction and the integration.”

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