Endeavour Mining plc

Hello, everyone. I am Martino, Deputy CFO and Head of Investor Relations, and I'd like to welcome you to our Q1 2023 results webcast. Before we start, please note our usual disclaimer. On the call, I am joined by Sebastian, Mark, Guy, and Jono. Today's call will follow our usual format, where we'll first go through the quarter's highlights, then the financials, and finally, we'll walk you through our operating results by mind. We'll try to be as quick as possible to leave time for questions at the end. And now, I'll hand it over to Sebastian to walk you through our Q1 highlights.

Thank you, Martino, and hello, everyone. 2023 is an exciting year for Endeavor, and we are pleased to be delivering against our key objectives. Driven by last year's strong operational performance, we began the year with financial strength, which provides the flexibility to deliver against this year's capital allocation priority, which is to maintain an attractive shareholder returns program while unlocking our growth potential. Given that the Sabadola-Massawa expansion and the Lafigue-Greenfield builds are expected to both increase the group's production and lower our cost base, they will further enhance our capability to reward our shareholders. As such, Our goal is to increase our shareholder return program once our organic growth projects are completed, thereby ensuring that our efforts to unlock growth immediately benefit all our stakeholders. We are therefore pleased to report that both projects are progressing on time and on budget, with first production expected in Q2 of next year for the Sabadola-Massawa expansion and shortly afterwards for the La Figue project. And looking further ahead, our exploration program continues to provide us with a strong platform for future growth. Further drilling at last year's Tenda Iguala discovery in Côte d'Ivoire continues to demonstrate its potential to become another cornerstone asset, and we will provide a resource update later this year. On the operational front, we're tracking in line with our guidance, as we expect production weighted towards the second half of the year due to mine sequencing across the group. On the financial front, our business continues to operate with low leverage, and thanks to our strong balance sheet, we were able to settle the principal on our $330 million convertible notes in cash, thereby minimizing shareholder dilution. Meanwhile, we are continuing to progress on our ESG initiatives, which have been well received by external agencies. Over the next slide, I'll touch upon our progress against this year's strategic objectives, starting with our safety performance. So looking at the next slide, safety remains, of course, our top priority. And while our lost time injury frequency rate remains industry leading, we're continuing to put significant emphasis on our zero harm target. Any time we have construction activities, the potential for incidents increases as the nature of the work changes, and more man hours are worked as there are significantly more people on site. It is for these reasons that we are amplifying our safety campaign and training to ensure everyone gets home safely. Turning to the next slide, you see our quarterly production and cost trend. As mentioned, we're tracking in line with our guided trend, as we expect production weighted towards the second half of the year. As we enter 23, with considerable financial strength, we were able to implement the optimal mine sequence to take advantage of the dry season in the first half of the year and accelerate stripping activities. This meant mining in Q1 was focused on the lower-grade areas, specifically at Sabadola-Massawa, where we started to develop the Sabadola pit for in-pit tailings deposition and started developing new non-refractory pits at Massawa, as you can see in the call-out box on the slide. Marc will detail performance by mine later in the presentation. Speaking of Sabadola-Massawa, we see on slide 9 that its expansion project is progressing on budget with 70% of the $290 million initial capital cost now committed. It is also tracking on schedule with first gold from the biox plant expected during the second quarter of next year. On the slide, you can see a picture of the processing plant construction progress, but I'll let Marc provide further details on the project built within his section. Of course, we are extremely excited about this project because of its strategic and financial benefits. Once this expansion is completed, the Savadra-Massawa mine will rank as a Tier 1 asset capable of producing over 400,000 oz per year, thereby increasing the quality of our portfolio and further diversifying our production base. Moving to our next growth project, which is our Lafiguier Greenfield development in Côte d'Ivoire. As a reminder, Lafayette will be another cornerstone asset for the company, with an envisaged annual production of over 200,000 oz over the initial 13-year mine life, at a low oil and sustaining cost of below $900 per oz. Its construction is also progressing on budget, as 46% of the initial capex has been committed, and pricing is in line with expectations. It's also progressing on schedule, with first gold expected beginning of the third quarter of next year. Thanks to the two growth projects, within just over 12 months from now, we will have more lower-cost production from Sabo de la Massawa in Senegal and another cornerstone asset in production with La Figue coming online in Côte d'Ivoire. I will let Marc walk you through a more detailed update later on. Turning to slide 11, to touch upon our ongoing exploration efforts, we continue to be very pleased with our results, which have yielded over 15 million ounces of discoveries since 2016. This year, we have a $70 million budget and have already used a third of it during the first quarter to drill intensively ahead of the rainy season. As you see in the top left pie chart, the largest focus has been on drilling the major Tenda Iguala green trail discovery we made last year. In addition, we're continuing to focus on extending the mine lives of our producing assets. Overall, we are thrilled to remain on track to discover our target of between 15 to 20 million answers of indicated resources by 2025, with already 6.5 million answers discovered over the last two years. Given its increasing importance, I'd like to touch upon Tenda Iguala on the next slide. Based on the ongoing drill results, we are more and more convinced that it will not only be another flagship asset for Endeavor, But it also has the potential to be a Tier 1 asset in the region. So far, we have 1.1 million ounces in the indicated category and another 1.9 million ounces of inferred, all achieved in less than 15 months at a cost of less than $10 per ounce. Last year, we drilled 60,000 meters. And this year, we're planning to drill a further 70,000 meters. And based on what we are seeing, we might increase our drilling budget as well. As shown with the yellow dots on the map, our main goal this year is to infill drill and extend the resources at the Asafo deposit, and in Q1 we completed over 40,000 meters of drilling. Based on this drilling, we expect to publish an updated resource later this year, which will form the basis of the first study on the property. In addition, we are also seeing good success by drill testing other highly prospective targets identified on the property with similar structural and geological settings. Beyond the exploration potential, what is nice with Tenda Iguala is the fact that it appears to be amenable to open pit mining and that the metallurgical test work indicates high gold recovery rates of more than 95%. In addition, it is located near good infrastructure as both the main road and grid power are nearby and there are limited relocation requirements. So given everything that I just said about TENDA, I feel obliged to reiterate that it would be difficult for us to justify buying a project and paying over a billion dollars for three, four million ounces when we are capable of discovering something similar directly in our backyard. On slide 13, you can see details of our shareholder returns program, which is a capital allocation priority for us. Last year, we delivered nearly $300 million of dividends and share buybacks, which was double our minimum dividend commitments of $150 million for the year. We paid out our H-222 dividend in March of this year and expect to announce and pay the H-123 dividend during the third quarter. Given the strong gold price environment and our healthy balance sheet, we again expect to pay out more than the minimum dividend commitment, which was set at $175 million this year. In addition, we've been continuing to supplement our minimum dividend commitment with share buyback. During the quarter, we bought $11 million worth of shares, which on a cumulative basis means that we have repurchased $244 million worth of shares since the program began two years ago. On slide 14, you can see that at the end of last year, our shareholder returns program had already delivered $633 million in the form of dividends and buyback, or $200 for every ounce of gold produced. And this amount is expected to surpass the $800 million mark by the end of this year. On a similar theme, in order to minimize shareholder dilution, in February of this year, we settled our convertible notes of $330 million in cash for the principal amount. We also issued 835,000 shares worth $20 million, an equivalent of 0.3% of shared outstanding for the in-the-money option value, as you see in the pie chart on page 15. The convertible note ended up being a low-cost financing solution which had a 3% coupon and an implicit cost of capital of less than 4% over the life of the notes once incorporating the value of the in-the-money option. Turning to slide 16, you see that our business continues to have low leverage despite the cash outflows experience during the quarter relating to the shareholder return payment, gross capital, and the contingent payment made. Thanks to our strong cash regeneration and disciplined capital allocation, we expect to maintain low leverage throughout our current construction phase. Turning to slide 17 to provide a quick update on our ongoing sustainability initiatives. Given that there are many initiatives, it's nice to have the opportunity to describe a few of them on each webcast. Starting with the top left, we have a big focus on diversity this year with a target of 15% female new hires. to try and address the perception that the mining industry is for men, we launched our Woom Mines initiative, which is an outreach program focused on promoting mining as a career to young women. This event was held at our regional office in Abidjan and was very successful with over 230 students attending. Staying with the education theme, we also launched the start of a six-month vocational training program near our Lafigue project, This will improve their employability, and we also hope to hire some of them. Moving to the top right, as you know, plastic waste is an issue in West Africa, and we are playing a part in reducing the consumption of single-use water bottles. We organized a big awareness campaign in Dakar with our NGO partners, Plastic Odyssey, who are developing recycling technologies that can be used by entrepreneurs. Now the fun part. We've mentioned many times that mining has the potential to be one of the most impactful industries in contributing to improvements in living standards, particularly in West Africa. And it is now very rewarding to see that our gold is being used by the jewelry industry for the same reason. We are delighted and extremely proud to have supplied the gold worn by Michaela Cole, Wakanda Forever, on the red carpet at the Met Gala in New York last Monday. Both she and MFA Cole, who crafted the jewelry, have West African origins and were keen to use fully traceable and ethically sourced gold, which we provide through the Single Mine Origin Initiative. The gold came from our ET mine, and a specific QR code has been developed, which takes the consumer on a journey from the mine to the end product. In addition, last week we were pleased to host jewelry designer Fernando Jorge, who also uses single-mineraging gold in his jewelry pieces, and Vanity Fair at our ET mine. It was a great opportunity for them to see firsthand our high standards and the social and economic benefits that we provide to our host communities. We hope that efforts such as these will help raise awareness for the importance of responsibly sourced gold, We already have several jewelry brands that have adopted our goals, such as Messika, and we're excited to see others wanting to follow. A lot more ESG initiatives will be detailed in our sustainability report, which will be published later this month. Turning to slide 19 now, given we are approaching our two-year anniversary of our listing on the premium segment of the LSE, we'd like to share a few stats. We're very pleased with our listing given that approximately 40% of our trading volume has occurred in the UK over the last 12 months. This is a great outcome given that we didn't issue equity into the UK along with our listing. As you see on the chart, getting included in the FTSE 100 has clearly helped drive appetite for our stock. The volume increase is also reflective of the change in our shareholder base, which has seen UK and European shareholders climb up the register. And now I'd like to formally welcome Guy to the team and hand the webcast over to him to run you through the quarter's financial performance. And what a perfect day for you to start, Guy. So may the force be with you.

Thank you, Sebastian. And hello to everyone. I'm very pleased to have joined Endeavor at such an exciting time for the company. It's now roughly my second month in the role. and I've had the opportunity to visit some of our mines and regional offices that has allowed me to see firsthand the potential which remains to be unlocked throughout the business as well as the quality of the teams across the group. If I could turn to our Q1 results, slide 21 summarizes both our operational and financial highlights for the quarter and underlines our previously communicated expectation for a second half-weighted production profile in 2023. Rather than spending too much time on this slide, I'll take you through the detail in subsequent slides, starting with our operating cash flow before working capital on slide 22. As depicted in the chart, we continue to generate strong quarterly cash flows of $242 million during the first quarter, despite lower volumes. The 14% decrease on the prior quarter is broadly in line with the lower gold sales and partially offset by the higher realized gold price. If we could turn to slide 23, to review the operating cash flow variances between Q1 and Q4. Our operating cash flow for the quarter was $206 million, which is a decrease of some $105 million versus Q4 last year. Looking at the variances from left to right, we benefited from a $128 higher realized gold price, offset by 43,000 ounces of lower gold sales due to our production, again, being weighted towards the second half of the year. Lower production meant that cash operating expenses were also lower in absolute terms. Income taxes paid increased by $25 million, largely due to the prior period, including tax payment deferrals across Bungu, Iti, and Sabadala-Masawa. And finally, working capital was an outflow of $67 million and a reversal of the prior course's inflow, largely due to lower trade and other payables. an increase in stockpiles at Sabadala, and an increase in VAT receivable due to the timing of sales. Turning to the next slide, you see that we continue to have a very healthy financial position, ending the quarter with $50 million of net debt and a low leverage ratio of 0.04 times net debt to adjusted EBITDA, well below our targets of 0.5 times. Taking a look at the waterfall charts, you see the net debt bridge between Q4 and Q1. During the quarter, we generated $206 million in operating cash flow, of which we invested some $200 million to fund both our mine capital expenditure and growth. On the financing side, we used $186 million to settle our convertible notes for $330 million and paid $100 million in shareholder dividends. In addition, we paid $46 million to Barrick Gold for Taranga's acquisition of Massawa, which had a three-year look-back gold price-linked contingent payment component. As a result of the timing of these cash outflows, we drew down $360 million on our RCF to manage short-term offshore cash flows. And finally, owing to the appreciation of the Euro against the US dollar, the value of our cash on hand increased by around $9 million. Moving to slide 25 in our debt structure, as Sebastian detailed earlier, during the quarter we improved our capital structure by setting the principle of our convertible notes in cash, locking in a 4.1% cost of capital over the life of the notes. Our capital structure is now composed of our $500 million 5% senior notes and our $645 million unsecured RCF, which we upsized from $575 million during the quarter while maintaining the same favorable terms. While our gross debt position hasn't changed significantly, we have a clear capital structure in place with long-term visibility and no upcoming maturities. Our debt structure therefore positions us well to deliver our near-term growth with significant liquidity headroom. In terms of profitability, slide 26 shows our quarterly adjusted EBITDA. In Q1, we delivered $279 million of adjusted EBITDA, which compares favorably with our performance in the last two quarters as a higher gold price, strong earnings from mine operations, and lower share-based compensation offset increased exploration costs and lower volume sold. Our strong EBITDA has helped maintain our attractive margins close to 50%. It remains competitive, not only within our peer group, but across other sectors as well. Moving to slide 27 and our net earnings, rather than focusing on each and every line item, I'll just touch upon the key items which we circled on the slide. Regarding the loss on financial instruments of $73 million, this includes unrealized losses on gold hedges of $41 million, losses on the settlement of the conversion option on convertible debt of $19 million, realized losses on the gold collars and forward contracts of $6 million, and losses on forward exchange contracts amounting to some $7 million. Secondly, adjustments in the quarter were $67 million and included the unrealized losses on financial instruments and the loss on other expenses, which was partially offset by gain on non-cash, tax, and other adjustments. It's also worth noting the NCI portion decreased by $11 million, while the adjusted net earnings decreased by only $6 million. This is due to the impairment added back in the prior quarter resulting in higher earnings attributable to non-controlling interests. Overall, this meant that adjusted net earnings per share amounted to 28 cents, which represents an increase of two cents per share over the prior quarter. This is due to the benefits of the higher gold price, lower total costs, lower taxes, and share-based expenses, which were offset by the increase in exploration costs. I'd now like to hand over to Mark, who'll go through the details of our operations on a mind-by-mind basis.

Thank you, Guy, and hello to everyone on the call. Before I talk through the operational performance slides, I would like to share a few insights from more than seven weeks spent in West Africa so far this year. We have a very strong group of general managers to run our operations and also a good pipeline of talent coming through who get the opportunity to act as GM during roster breaks. Following the decision of one of our GMs to step down for an extended period for health reasons, We've moved a number of people around and also promoted another West African into a GM role, with three of our operations now managed by West Africans. All of these moves have been seamless, with each operation continuing to perform as good as, if not better, than before. The added benefit is that our GMs have knowledge of multiple endeavour mines, which means that they can also support each other with decisions around people, equipment, other assets and various challenges that may be faced. Looking at the portfolio's performance as a whole, I am pleased to say that we are on track to achieve our full-year production and cost guidance. Production is expected to be stronger in the second half of the year at five out of six of our mines, as in general, we were focused on stripping in quarter one to open up high-grade mining areas for later in the year, particularly ahead of the wet season, which starts in late quarter two. This trend is not something that is new to us. As in three out of the last four years, our production has been weighted towards half two. The benefit of managing a diverse portfolio is that we can stage our mine plans to ensure we are well prepared for the wet season. On the next slide, you can see the production variance compared to quarter four of last year. It is very clear in this waterfall chart that the main reason for the quarter-on-quarter production decrease was driven by the 42,000-ounce decline at Sabadala-Masawa. In addition, we had lower production at Hunde, Bungu and Manna, which was partially offset by stronger production at Iti and Wanyong. I will detail these variances further in the following slides, starting with Sabadala-Masawa. Moving to Sabadala-Masawa in Senegal on slide 31, as mentioned during the first quarter, There was an increased waste development at the Sabadala pit cutback to access the remaining ore blocks as the pit approaches the end of its economic life and the commencement of mining at the Masawin Orson satellite pits in accordance with the mining plan. This resulted in lower process grades and lower production for the quarter. Later in the year, we expect to finish mining at the Safia North and Bambariya pits and commission the Nyakafiri and Delia pits which would help increase processing grades and production as the year progresses. At the Sabadala-Masawa expansion, I am pleased to see the construction of the Vioxx plant and associated infrastructure progressing very well and is on schedule for a Q2 2024 start-up. We have now committed around 70% of the initial capital and costs are in line with our expectations. The project will add around 200,000 ounces per year of refractory ore for the first five years of production, bumping the complex up to Tier 1 status at an industry-leading all-in-sustaining cost. As you can see from the photos, we've made significant progress since we launched construction in April last year. Bulk earthworks are complete and civil works are nearly complete. In the top left image, you can see that the biops reactors and the neutralisation tanks have now been constructed to full height, whilst the foundations for the thickeners have also been laid. In the top right image, the power plant expansion is well underway, with the earthworks and concrete foundations for the engine hall completed. Foundations for the mills and the CIL tanks have been completed, as you can see in the lower image, and the priorities for the remainder of the year will be the progression into piping, electrical and then instrumentation. We look forward to keeping you updated each quarter as the project approaches completion early next year. Turning to slide 33 in our Hyundai mine in Burkina Faso. In quarter one, we were focused on stripping activity at the high-grade carry pump pit to unlock access to the next phase of ore mining there. At the same time, we've been feeding ore predominantly from the lower-grade carry west pit. As a result, the processing head grade of 1.2 grams per tonne and production of 47,000 ounces were lower quarter on quarter. As the stripping activity at Carry Pump advances, we expect all mining there during quarter two, which will drive progressively increase in grades through the year. At our Wanyan mine, we saw production increase quarter on quarter to 39,000 ounces, and all in sustaining costs improved as well, as we are starting to benefit from the mine establishment work undertaken last year to open up the Samovogo pits to access higher grade reserves there. Head grades were stable quarter on quarter and we expect increased speed from Samovogo through the year. At the same time, we are completing planning to establish infrastructure to open up the Stinger satellite pits later this year. This will add further high grade oil sources and are expected to drive continued improvement in the grade and production profile, in addition to improving oil and sustaining costs through the year. Moving to our iffy mine in Cote d'Ivoire on slide 35. During the first quarter production increased due to higher volumes milled as we processed a higher proportion of soft oxide material which supported increased use of the surge bin and higher mill availability as well as improved recovery rates. All in sustaining cost decreased due to the increased volume of gold sold. as well as lower mining unit costs, which benefited from mining high volumes at Bakatu and Walter Pits, and lower processing unit costs resulting from less fresh ore in the feed. For the remainder of the year, we expect a slight decrease in throughput as we move into the wet season. Mining will start waste stripping activities to merge the Bakatu and Walter Pits as part of our updated mine plan, which will bring additional ounces and should benefit operating costs and efficiencies. Last year, following strong performance at ETI, we identified the opportunity to add a re-sign circuit to improve recoveries, optimise costs by lowering cyanide consumption, potentially recovering additional gold and silver and reducing cyanide in the tails. The project is progressing well and is expected to be fully commissioned in the second half of 2023. At our Bungu mine, production decreased during the quarter due to lower tonnes of ore mined and milled at lower head grades. This came as supply chain challenges had an impact on operations, particularly on the mining side, where we reduced activities during the quarter. Unit costs and oil and sustaining costs per ounce were higher as a result. For the remainder of the year, processing and mining activities will be focused on, sorry, mining activities will be focused on stripping in the west flank pit to open up zones of higher grade ore for processing later in the year. As previously guided, production is expected to be weighted to the second half of 2023 with increased volumes of higher grade ore expected to be sourced from the west flank pit. Turning to slide 37, production at Manor decreased during the first quarter as we prioritised underground development to open up the third portal into the Wauna underground to provide an additional source of ore. In order to provide supplemental feed for the mill, we fed an increased tonnage of lower-grade ore from the Maula open pit. In the second quarter of 2023, ore will be sourced primarily from the underground at CU, whilst production gradually ramps up at Wauna, with supplemental feed continuing from the Maula open pit. Process grades are expected to increase throughout the year, as higher-grade underground stroke production is expected to progressively represent a larger portion of the mill feed, with the bulk of production weighted towards the second half of the year. Lastly, on slide 38, I am pleased to report that the construction project is progressing very well at Le Figuet. We launched this project early in the fourth quarter of 2022, and today it's approximately $205 million, or 46% of the total growth capital has now been committed, with pricing in line with expectations. One positive aspect of having two growth projects underway at the same time is that we have seen both good sharing of information and some competitive tension between the two teams. The Le Figuet team are performing very well, particularly when we consider that it is a greenfields project where we are having to construct an entire operation including TSF, water harvest and water storage dams, upgrade access roads and a 225 kilovolt power line, in addition to the administration, mining and processing facilities. As the bulk of the earthworks are nearing completion, we are starting to turn our attention to the tankage and other structural, mechanical and piping work in the processing plant, power line construction and TSF. In the top left image, you can see the foundations for the primary crusher are advancing well. In the lower image, our construction team are celebrating the successful completion of the CIL Tank Foundation concrete pours, whilst in the top right image, the substation civils are progressing well. At Le Figuet, we are in track for start-up in quarter three next year, and to that end, we are working hard to train over 500 local potential employees with vocational and educational programs, so that we have a good skilled local workforce available to work at the mine when it is up and running. I will now hand back to Sebastian.

Thank you, Mark. In summary, we are diligently executing our strategy to continue delivering operating excellence while we grow the business to increase stakeholder value, all while preserving our financial strength. Over the next 18 months, our efforts to unlock near-term growth through the completion of the expansion of Sabado La Massawa and the build of La Figue will further increase the quality of our portfolio, increase our production, lower our cost, and enable enhanced cash flow generation. This, in turn, will allow us to further increase our returns to all stakeholders on a sustainable basis. I look forward to providing further updates as the year progresses. As always, I'd like to thank my team for their continued hard work and dedication. Thank you for joining us. I will now hand over to the operator for Q&A.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. As a reminder, if you wish to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. We will be prioritizing questions from covering analysts at this time. If you wish to cancel your request, please press star 1 and 1 again. Once again, please press star 1 and 1 if you wish to ask a question. Please stand by while we compile the Q&A queue. We will take our first question. And the first question comes from Farad Tariq from Credit Suisse. Please go ahead. Your line is open.

Hi, thanks for taking my question. On slide 29, you talk about the all of the standing costs and how it's tracking for each mine. Can you maybe just walk through, it sounds like for most mines, the great improvement will result in all of these costs falling within the guidance range. I'd be curious to know, are there any mines where it sounds like it might still be above the top end of the range? Thanks.

Thanks, Fahad. Yes, I mean, I think we're comfortable that all the mines are on track. As we said, there is a lot of production weight towards H2, and therefore a lot of the improvements on the oil and sustaining costs will be seen as we move from Q2 to Q3 and then to Q4. Overall, very comfortable with the current quarter and as we head into the rest of the year.

Okay, and then maybe as a follow-up, just on the underlying cost, it sounds like on the expansion project, costs are coming in as expected, pricing coming in as expected. On the OPEC side of things, can you maybe just provide some commentary on what you're seeing in terms of inflationary pressures easing, or is it more or less the same? Any color there would be really appreciated. Thank you.

Sure. I think on Q1, we've been continuing to see the same pressure that we had on cost as in Q3 and Q4 last year. But we were expecting that this will start to ease as we move into Q2 and in particular in Q3 and Q4. So, so far, I mean, things are in line. If we take fuel, for example, we've got some slight increases in some countries and already some decreases in others. So overall, we are about slightly below what we had in Q4 last year, and we would anticipate that this should start to drop more significantly, in particular in Q3 and Q4. Okay, thank you.

Thank you. As a reminder, if you wish to ask a question, You will need to press star 1 and 1 on your telephone and wait for your name to be announced. We will take our next question. And your next question comes from the line of Anita Soni from CIBC World Markets. Please go ahead. Your line is open.

Hi. Good morning, everyone. Thanks for taking my question. Actually, Fahad asked a couple of them already. But I just wanted to get an idea of the cadence of how you expect the rest of the year to progress. Is it fair to say that you think Q2 is going to be higher than Q1, or is there anything that we should be focused on going into Q2?

Sure. Hi, Anita. We expect Q2 to be mostly in line with Q1. and then q3 improving and then you know a strong q4 again that's uh you know as we uh walk away from the rainy season uh in q3 and get into uh you know dry season most of q4 then we've got strong picked up in terms of uh mining rate processing and we've got to also access i mean to new bits that we've been developing in q1 and q2 with higher grades that will have impact in Q3 and Q4.

And then at E2, that one is, I guess, delivering ahead of plan at this stage. And so is that a function of, I think there was software or feed there? Is that going to reverse in the second half of the year?

So E2 is probably the one mine that in terms of sequencing had a a much higher quarter than the other mines in Q1 because of the sequencing of the mine plan with higher pit grades in Q1. It's clear that when you look at Q4 last year and Q1, I mean, ET is just massively, I mean, performance at the ET is massive. We should see, I mean, some slowdown in those EG rates in Q2 and Q3 and pick up again in Q4. So, yeah, I mean, very happy with EG current performance, but, you know, clearly also linked to mine plan sequencing and current high-grade areas. Okay.

And then just a final question on the commentary that you provided about picking up the shareholder return program after the completion of the two organic growth projects that you have. Could you just give a, is there any further color that you can provide on that? I mean, would we expect that like immediately assuming these projects come on time and on budget or would this be more of a 2025 endeavor?

Sure. Well, a bit like when we came out of the construction phase of Hyundai NITI in a row, you know, it took us about, you know, 12, 18 months. maximize, I mean, the cash on the balance sheet and be in a position after that, I mean, to start for the first time our dividend policy. Our expectations is that, you know, this year we should be at minimum at the level of where we were last year, which is about, you know, $200 million dividend versus the initial $175 million, which was committed for 23. So my expectations would be that, in particular, if we continue to have you know, a strong gold price environment to be able to increase again, you know, that dividend policy starting in 24 and onwards.

All right. Starting in 24 and onwards. Yeah, I was wondering about the gold price and how that played in. And then just, I guess I have one last one. In terms of the capital allocation priorities, you do have some debt. You do have the cash to offset that, obviously, but I'm Where would you slot that in in terms of debt reduction versus shareholder returns?

So the bonds repayment is 2026. And I think we came out, I mean, to do the bonds quite at the right time when we did it on the back of our listing in London because we are at the 5% coupon. you know, which probably looks, you know, quite attractive, you know, today versus the market. And I think it just shows also the discipline that we have on the management of the balance sheet the same way we did, I mean, with the convertible bond when we came out with a 3% coupon to finance our construction projects in both Côte d'Ivoire and Burkina Faso. So right now, I mean, we are ensuring that we can – continue to manage the buying, I mean, buying back our shares and generate, you know, strong returns and at the same time manage the overall growth debt. So I would expect that progressively as we finish the completion, I mean, of the two projects, a big part of the growth debt and in particular the RCF, you know, will be completely paid down and start, you know, really piling up some cash for better returns.

Okay, thank you. That's it for my question.

Thank you. We will take our next question. And the next question comes from the line of Ove Habib from Scottier Bank. Please go ahead. Your line is open.

Thanks, Operator. Hi, Sebastian and Endeavor team. Congrats on the Q1 beat. A couple of questions from me. Sebastian, in the Q4 conference call, you kind of talked about potentially divesting out of some of your non-core assets. Any sort of progress on that sale process or any colors that you can provide to us?

Sure. Hi, Yves. I think as we previously mentioned, the Bumbu and One Your Minds are becoming increasingly non-core for the group simply because of their slightly higher cost, shorter mine lives, and lower production versus the rest of the portfolio. In particular, looking at the two upcoming projects and looking at the size of what Tenda Iguala could be also. So typically, in the past, I mean, you know that we've timed the sales of assets with bringing on board new assets and better production. So the current build of La Figue and Sabadola are progressing well. They are expected to come online towards the Q2 24. We haven't started any specific official sale process, although we've been receiving some inbound inquiries from several companies. I would say that if something was to happen on one of the assets, it would be rather towards the end of the year, so that it is in sync with the increased production from the two upcoming projects.

Perfect. Thanks a lot, Sebastian. And just moving on to exploration, I mean, you guys are being very aggressive on exploration, especially in Q1. You did about 110,000 meters of drilling. Focus looks like it was on Tandaguela. Where were the remaining meters drilled? Were they mostly in and around the existing operating mines, or do you have any other Tandaguelas in your back pocket?

I'll let Jono, who's on the call, to comment on where else they've been drilling.

Hi, Herve. It's Jono. The bulk of our next amount of drilling and exploration has been around Iti and at Sabadala Masawa, mostly on the mine permits. The mine permits are very large at SabMass, and we've got a very large holding again in Iti. So we continue with our off-mine permit or greenfield exploration. But it's advancing those targets in the brownfields is what we're pushing.

But we won't comment yet on the new discovery. That's a surprise for later.

Okay. Thanks for that, Sebastian. That's it from me.

Thanks, Tobias.

Thank you. We will take our next question. Please stand by. And the next question comes from the line of Daniel Major from UBS. Please go ahead. Your line is open.

Hi. Thanks. Thanks for the questions, and that's a good quarter. Yeah, some of mine have already been answered, but the first one on the expiration side looks like the run rate of spend is running a little ahead of your full year guidance. if you are able to deploy more exploration dollars at Tanda Agueda, does that mean that you will sort of take parts from elsewhere of the exploration budget? Or should we expect that if you can deploy more, there's upside to the 70 million?

Sure. Well, I think somehow it's a good thing that we are a bit ahead. I mean, we always try to... do as much as we can during the dry season. So this is why we usually have a big push in Q1 and then during Q3 and Q4. Quite excited, I would say, by overall the results that we're getting, and in particular at Tenda Iguala. So I think we'll review at the end of Q2 where we stand. And if required, and if we continue to have strong results, in particular Tenda Iguala, then it might be good news if we decide to increase the exploration budget. But not on the agenda yet. It's something that we will review at the end of Q2.

Okay, thanks. And the next one, you built some working capital this quarter. Part of that was, I think, some receivables for some of the gold you sold directly to Burkina government. Is this something that's kind of in discussion to be ongoing? Was it a one-off? And can you just give us a sense of the kind of working capital impact on cash flow through the remaining quarters?

No, I see that more as a one-off. And ultimately, I mean, it was less than $10 million, I mean, the gold that was sold, I mean, to government of Burkina. So I don't expect this, I mean, to be repeated, I mean, frequently. Overall, I mean, it's been very small compared to the entire turnover for the quarter. I think, you know, part of it is also as we build, you know, some of the two big projects, you still have a lot of equipment and others, you know, going into working capital. So, yeah, nothing which is, you know, particularly, you know, to be highlighted there.

Great, thanks a lot.

Bye. Thank you. We will take our next question. And the next question comes from the line of Harman Puri from Bank of America Securities. Please go ahead. Your line is open.

Hi, good morning. Thank you for taking my question and thank you for the update. Earlier in the presentation, I think when Sebastian spoke about Tanda Gwela You mentioned it had the potential to be a flagship asset, but also a potentially a tier one asset. Can you sort of remind us what sort of throughput or plant sizing you're looking at when it comes to a potential economic study for the asset, obviously later next year or thereafter?

Sure. I mean, I think that, you know, we're just at the beginning of the exploration program there, so difficult to, you know, to give some numbers. But I would say that from an exploration, purely from an exploration standpoint, I mean, if we are able, I mean, to get above 5 million oz, then, you know, resources, then, you know, we are obviously getting in territories of a potential, you know, Tier 1 asset, and that's what we are currently targeting. And then for us, I mean, a Tier 1 asset would mean, you know, about 400,000 homes, you know, annual production and lowered in sustaining costs. So, you know, let's see. You know, it's been just the first, you know, drilling campaign last year. Things are looking, you know, pretty good. But, you know, we'll get more, you know, by the end of the year. I just see, you know, Jono around the table smiling and the team excited about this asset, which doesn't happen, you know, very often. So, you know, I still believe that, you know, this is the industry.

Okay. And my second question is just on ET. It looks like the throughput and the recoveries in Q1 were quite strong. Can you sort of guide us on where we can expect them for the rest of the year.

During the dry season, a bit in the wet. So there will be a reduction just through the wet season. From a recovery perspective, with the commissioning of the pre-leach tank, it's going very well. And also what we've done is we've taken the DePleur semi-refractory or out of the mix. So when you look at that, it's certainly had a positive on recovery and we are expecting recovery to remain pretty much in line throughout the rest of the year.

Okay, that's it for me. Thank you.

Thank you. We will take our next question. The next question comes from the line of Don DeMarco from National Bank Financial. Please go ahead. Your line is open.

Thank you, Operator, and good morning, Sebastian and team. So the Sabadell Masala expansion commenced in April last year. We're almost a year into its two-year growth project. yet only $90 million of the $290 million budget has been spent. So can you just comment on why spending has been lighter in the first year and what's going to drive the increase in the home stretch?

Yes, Don, it's a fair point. In fact, we've got the committed part, I mean, is extremely high, but the cash outflow, I mean, is much lower than what we expected. And that's simply timing of payments. You're not going to believe it, but a lot of the suppliers aren't sending their invoices. So contracts were awarded and the work is progressing well on the ground. But a lot of those suppliers haven't sent the invoices to get the cash. So that's why you've got this slight difference or discrepancy between the committed part and the cash outflow.

Okay. That makes sense. So we'll see that reconcile over the coming quarters then. And can you just remind us, too, what are the bottleneck items in terms of the schedule over the next 12 months?

Sure. So Mark, I mean, do you want to comment for Sabadala?

The critical part for Sabadala has always been the biox reactors because of the amount of stainless steel tankage and then piping and so forth. You've got cooling coils and quite a lot of other complexity within that. And so that's certainly been the key focal point. Everything else is tracking well around that.

Okay. And continuing with Sabadala Masala, The expiration in 2023 takes a large piece of the budget, over 20%. So are the results that you're seeing in Q1 or expect to see, are they targeted or supporting a potential increase above that 400,000 ounce per year rate? Or is it more about backfilling beyond 2027? I don't know, just some kind of color, but what's that expiration program, what insights it might be yielding at this early stage?

Yes, with the drilling and the results that we're seeing, we're looking at targeting, maintaining the 400,000 ounces plus extra on top with new discoveries and growth. It's a very big plant to fill and fortunately for us, Savadala Masala is a very fertile exploration ground. Lots of targets that we think may have been tested in the past, we're going back over those and reviewing it and there's plenty of opportunities. that are coming out, and we're putting the drill bit on them. So we'll see those results later this year.

Okay. Thank you. Good luck with Q2. That's all from me.

Thanks, John.

Thank you. We will take our next question. And the next question comes from the line of Sandy Petey from Morgan Stanley. Please go ahead. Your line is open.

Good morning, Sebastian and team, and thank you for taking my questions. I have two left. So firstly, your prior comments suggest that production needs to average around 390 kilohms during 2H to achieve midpoint of the guidance. In that context, are you comfortable to be at midpoint or are you pointing towards lower end of the guidance?

You're right.

Hello, sorry, can you hear me now?

Yeah, yeah. You're talking about the production range, is that right? Yeah, yeah.

So my question was that your prior comments suggest that production needs to average around 390 kilo-ounce during second half of the year to achieve midpoint of the guidance range. In that context, are you comfortable to be at midpoint or are you pointing towards lower end of the guidance?

No, I mean, so far, I mean, we're comfortable to be, you know, in line, so midpoint, you know, of the guidance.

Okay, okay. That's helpful. And secondly, on dividend policy, so your current dividend policy is coming to end in 2023. And I appreciate the fact that you will provide details on the new policy in coming quarters. But can I ask, how are you thinking about it? Are you thinking to switch to earnings cash flow based policy similar to other mining companies? Or are you comfortable with progressive policy that you have in place currently?

Sure. The objective is to continue to increase the dividend policy, in particular starting in 2024 once the commissioning of the two key projects is done. And we're still reviewing what's the best metrics to give more visibility around the dividend policy. But clearly the objective is to move forward increasing that overall return policy to shareholders. Perfect. Thank you.

Thank you. We will take our next question. And the next question comes from the line of Kerry McRory from Canaccord, Genuity. Please go ahead. Your line is open.

Hi, good morning, guys. Maybe just another question on Tanda Igweala. I know it's obviously early days, but is there potential for this project to be kind of shovel ready by 2026 or so, or is it Do you expect this to be or take longer than that?

I think we need to be realistic on the fact that depending on the size of the beast, we would be looking at probably 27. It would be if everything goes well, that means that we'd be launching construction the earliest towards the end of 25. And then it's an 18-month construction, I would guess. So yeah, I mean, 27 is probably the earliest, which would mean also that it's becoming bigger and bigger. So we need to give time for the team to be able to really assess how big it is so that we don't make any mistakes in terms of mine plan and plant size.

Great, thank you. And I guess based on what you're saying on the project, it looks like it's pretty much moving to the head of the queue in front of all the other projects that you have.

Well, given, you know, we continue, I mean, to receive some, you know, drilling results. And just as an example, this morning, Jono was telling us, you know, 51 meters at 3.2 grams per tonne. So, you know, yes, I mean, clearly, on the basis of what we currently see, that will be the most attractive, you know, next project for the group. So, you know, the good news is that we've got a strong organic growth pipeline, and that's what we want. And this is why we've been insisting that, you know, West Africa was so attractive in terms of region because of its prospectivity. And I think that, you know, we're demonstrating day after day that being focused in that region is probably the right thing to do, given all the organic growth we are able to get and discover.

Great. That's it for me. Thanks a lot.

Thank you. We will take our next question. And the next question comes from the line of Amos Fletcher from Barkers. Please go ahead. Your line is open.

Yeah, hi, guys. Thanks for the opportunity. Two questions. First one, I just wanted to ask about OPEX for the growth projects. Is there any risk to the guidance, do you think, from inflationary factors since the feasibility study was set, for example, at Lafigue? So if we were to mark the market on inputs and FX, where would you say that the $871 an ounce all-in-sustaining cost guidance would move to?

I mean, unless there are some significant changes between now and next year when we go into production, we wouldn't expect, you know, some changes. Overall, what we see is that, you know, this asset will be producing at below $900 only in sustaining cost, and that's why. you know, we like, you know, this asset. We usually, I mean, if you take the examples of, you know, our previous builds, we usually do much better in throughput, you know, progressively on those assets, which tends to improve also, you know, the overall unit cost and total cost per asset. So, yeah, I mean, at this stage, you know, pretty confident.

Okay, thanks very much. And then not wanting Guy to feel like he's been left out on his first call, can I ask, how do you think about potentially early redemption of the bonds, which I see are yielding 9.5%, which seems pretty attractive to me?

So as we said, you know, may the force, you know, be with him. So Guy, if you want to have...

Thank you. At this stage, I mean, I think as we've tried to outline, the capital structure is both simple and is working for us at the moment. We can continue to consider as we go forward, but at this stage, no formal plans to look at any kind of early redemption.

Okay, fair enough. Thank you.

Thank you. That will conclude today's Q&A session. I would now like to turn the call back to Martino DiCiccio for any closing remarks.

Thank you, everyone, for joining today's webcast. We remain available for questions offline, so don't hesitate. Thank you again, and have a good day.