Endeavour Mining Corp. (EDV:TSX; EVR:ASX) Q3/22 financial results were solid, and the miner is well-positioned to reach the upper end of 2022 production guidance, reported Haywood Securities analyst Geordie Mark in a November 10 research note.
"The company's operations and financials performances beat average analysts' forecasts surveyed across the board," Mark wrote.
Value for Shareholders
With a current share price of CA$27.55, Mark pointed out, the gold producer is trading "mostly cheaply compared to its peers on a range of metrics, especially considering its nearer-term growth potential." Haywood's target price on Endeavor is CA$40 per share, and its rating is Buy.
Mark added that "Endeavor is now a Top 10 gold producer by production volume and the largest gold producer in West Africa."
"Endeavor's shares offer shareholder value in a higher gold price environment given the diverse asset base, organic growth catalysts, and raw natural resource potential across its exploration portfolio," Mark wrote.
He added that "Endeavor is now a Top 10 gold producer by production volume and the largest gold producer in West Africa, and we continue to view EDV as a favorable pick in the senior producer space."
A Look at Production
Mark reviewed the England-based miner's Q3/22 figures, noting the company reported softer financial performance during the quarter than in the previous one.
Production and all-in-sustaining cost (AISC) remained relatively static. Production came in at 343,000 ounces (343 Koz) of gold versus Q2/22 production of 345 Koz and Haywood's Q3/22 estimate of 318 Koz.
Production at Ity and at Hounde was better than Haywood anticipated due to higher grade and throughput. It produced 81 Koz Au versus 78 Koz Au. Hounde produced 72 Koz Au versus 67 Koz Au. On the other hand, Sabodala-Massawa underperformed, yielding 86 Koz Au, due to lower-than-expected average mill grades.
Q3/22 AISC was US$960, below Haywood's forecast of US$1,000 but slightly above Q2/22's AISC of US$954.
Cash costs, though, were higher than Haywood expected, coming in at US$843 per ounce (US$843/oz) versus US$824/oz.
"Given reported production, Endeavor remains well-positioned to meet full-year 2022 (FY22) guidance of 1,315–1,400 Koz at [an] AISC of US$880–930/oz," wrote Mark.
Cash flow from operations stands out in Q3/22, at US$253 million (US$253M), well above Haywood's projection of US$237M. At the quarter's end, the company had US$833M in cash.
"The company's groundbreaking cash position has led to [a] successful dividend payment of about US$100M in Q3/22," Mark noted.
Endeavor's EBITDA in Q3/22 was US$329M, above Haywood's estimate of US$322M. However, adjusted earnings per share were slightly lower than Haywood's forecast, at US$0.45 versus US$0.46.
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Disclosures For Haywood Capital Markets, Endeavour Mining Corp., November 10, 2022
Analyst Certification: I, Geordie Mark, hereby certify that the views expressed in this report (which includes the rating assigned to the issuer’s shares as well as the analytical substance and tone of the report) accurately reflect my/our personal views about the subject securities and the issuer. No part of my/our compensation was, is, or will be directly or indirectly related to the specific recommendations.
Important Disclosures: Of the companies included in the report the following Important Disclosures apply:
Haywood Securities, Inc. has reviewed lead projects of Endeavour Mining Corp. (EDV-T), Alamos Gold Inc. (AGI-T) and a portion of the expenses for this travel may have been reimbursed by the issuer.
Haywood Securities, Inc. or one of its subsidiaries has received compensation for investment banking services from Alamos Gold Inc. (AGI-T) in the past 12 months.