Endeavour Mining plc

Good day and thank you for standing by. Welcome to Endeavour's Minings fourth quarter and full year 2023 results webcast. At this time, all participants are in listen-only mode. After management's presentation, there will be a question and answer session. So for those who wish to ask a question, please dial into the phone line for questions. Please note that due to time constraints, we will be prioritising questions from covering analysts. Today's conference call is being recorded and a transcript of the conference will be made available on Endeavor's website tomorrow. I would now like to turn the conference over to Endeavor's Vice President, Investor Relations, Jack Garman.

Hello everyone and welcome to Endeavor's Q4 and full year 2023 results webcast. Before we start, please note our usual disclaimer. On the call today, I'm joined by Ian, Guy, Mark, Giaudia, and Jono. Today's call will follow our usual format. Ian will first go through our full year results highlights. Giaudia will provide an ESG update. Guy will present the financials. Mark will walk you through our operating results by mine. Jono will provide an exploration update. After Ian's closing remarks, we'll open up the line for questions. I'll now hand over to Ian.

Thanks, Jack. Hello to everyone, and thank you for joining us today on the call. Now, I'm delighted to have joined Endeavor at such a pivotal time for this company. I joined the board initially in 2013 until 2019, and then I rejoined again in 2022, holding several positions on the board. So I do have a great familiarity with the company as well as its assets and many of its people. Now, the team and I are focused on delivering value for all of our shareholders through our strong operational performance, executing our high-margin growth project construction, and maximizing our prospective exploration portfolio, all in a safe and responsible manner so that we can reward all of our shareholders, all of our stakeholders on a sustainable basis. Now, we're currently moving to a new phase in the company's development, from one focused on investing in organic growth to one of enhanced cash flow generation, debt reduction, as well as shareholder return. However, before I highlight our key priorities for 2024, I just wanted to talk a little bit about our achievements in 2023. I'm proud to say that 2023 was another very successful year for Endeavour, in which we delivered on all of our key priorities. On the operational front, we produced almost 1.1 million ounces of gold, meeting our production guidance for the 11th consecutive year. Our all-in sustaining cost continued to be at a level that places us amongst the lowest cost producers in the entire gold mining industry. Although slightly higher than guidance, as we had incurred slightly higher royalty costs following a higher gold price environment. During the year, we were focused on growth, as I said earlier. We accelerated our two high-margin growth projects, the Sabadala Masala expansion, as well as the Lafigue development project. In total, we spent $448 million on growth capital during the year. I'm pleased to report that both these projects are on budget and on schedule for first gold in quarter two, with La Figue expected to deliver first gold a quarter earlier than we had previously guided. Now, our strong exploration results continue to demonstrate our ability to generate an organic growth pipeline. This year, we put great emphasis and prioritization on our recent Tanda Iguala discovery in Cote d'Ivoire. We reallocated resources from across our exploration portfolio to focus on tanda because of what we realized was great potential. As a result, we were able to deliver a 303% increase in indicated resource, and the project now stands at an impressive 4.5 million ounces of indicated resource and certainly ranks as one of the most significant discoveries in West Africa in the past decade. Moreover, We're confident there is more to come from Tanda Iguala, as you'll see later on when we discuss. And we'll continue to explore this area further throughout the year. Alongside this year's investments in our organic growth, we're pleased to continue to pay attractive shareholder returns as we deliver $266 million in the form of dividends and share buybacks to our shareholders. And that's equivalent to $227 for every ounce of gold that we've produced. Looking ahead, our goal is to further increase shareholder returns once our two organic growth projects are complete to ensure that our efforts to unlock growth can deliver immediate benefit to all of our stakeholders. And we expect to provide an update on the next phase of the shareholder return program in early portion of H2 this year. Despite investing over $800 million in growth, exploration, and shareholder returns during the year, our leverage remains healthy at about 0.5 times net debt to adjusted EBITDA. As we finalize our two growth projects in the coming months, we expect that leverage to incrementally increase. But once these projects come online, we will then focus on deleveraging the balance sheet as well as increasing our commitment to shelter returns. As part of our ESG strategy, we continue to focus on initiatives that protect the places where we operate and promote sustainable socioeconomic growth in our host communities to support the long-term success of the business. Today, we published our seventh annual sustainability report, highlighting the significant milestones we've achieved over the past 12 months. As you can see, 2023 was a very successful year for us, and we're really well positioned to continue this momentum that we have built into 2024. Now, let me just take a moment to discuss the termination of the former CEO that occurred in January this year. The decision to remove Sebastian from the role was taken by the board after an investigation uncovered an irregular payment instruction of $5.9 million to a third-party bank account in the United Arab Emirates, which was related to the disposal of the Agbaal mine in 2021. The board then expanded its investigation to try and identify the beneficiaries of the $5.9 million, which was unsuccessful, but did uncover two further payments that totaled $15 million that were made in August and November 2020 to the same third-party company as the $5.9 million payment. These two payments were deliberately disguised as advance payments to a contractor through repeated false representations to management. Now, there's strong evidence that the former CEO abused his position actively misled the board and senior executive team through repeated and deliberate false representations and concealment of information over a sustained period. His termination was the most important step in protecting the company from any further conduct of this nature. We've taken very deliberate steps under the leadership of our CFO and our audit committee to improve and enhance our internal controls and processes to prevent this behavior from happening again. And whilst we're disappointed to have uncovered some additional payments, it should be noted that we are satisfied with the integrity of our financial reports. And as such, our auditors have declared that no restatement of prior year accounts will be required or forthcoming. We're pleased the board has now completed this very comprehensive investigation, and this enables us to put this matter behind us and focus on delivery. It's important to reiterate that the strong foundations that underpin Endeavor are its high-quality assets, its great people, and it's because of that that I am thrilled to now be working with this team. And together, I have absolutely no doubt that we can continue to generate value for all of our stakeholders. If we take a closer look at our operating performance last year, as I said earlier, we produced 1.1 million ounces marking our 11th straight year of achieving guidance. We did that and in the process we achieved an industry-leading all-in sustaining cost of $967 per ounce for the full year. That was slightly above the top end of our guidance range, but that really was driven mostly by higher royalty costs that we had to pay of $18 an ounce. This was higher than originally anticipated due to the higher realized gold price and the higher royalty rates kicked in above the $17.50 that we had used in our guidance. On the safety front, despite our industry-leading LTIFR, I'm certain to say that in February of this year, a contractor colleague passed away as a result of injuries sustained in a maintenance incident at the Marla Mine in Burkina Faso. And naturally, we extend our sincere sympathies and support to his family, his colleagues, and his friends. The health, safety, and welfare of all of our colleagues is a top priority. and we'll do everything that we can to ensure this doesn't happen again. Later, Mark will talk you through some of the work we're doing to help us achieve our zero-harm goals. As you can see on slide 8, production from continuing operations decreased during 2023 compared to the prior year, as production decreased at Mana and Sabadala Masala mines. and that was partially offset by record production at Hyundai and Iti Mines. Both achieved over 300,000 ounces of production for the year. Meanwhile, all-in sustaining cost, as I said earlier, increased to 967, but we did maintain our status as one of the cost leaders in the sector. On slide 9, you can see in the chart here, the all-in sustaining cost of 967 positions us not only in the first cost quartile of the sector, but as one of the lowest cost producers in the industry and one of only a few large gold producers that have been able to maintain an all-in sustaining cost below the magic $1,000 mark. Hopefully, we're not going to stop there. Following the startup of our two new growth projects, we certainly hope that we'll be able to maintain that strong cost performance as we bring online lower cost production. We don't want to produce ounces for the sake of producing ounces, but rather we want to continue to focus on delivering high margin ounces because that's what generates decent returns for our stakeholders. On slide 10, you can see that our high margin ounces supports our robust EBITDA generation. And on this slide, you can see we generated over a billion dollars of adjusted EBITDA during the year. And again, that's due to our high-quality portfolio, which has been supported by our low operating costs as well as the naturally higher gold price. Over the last two years, we've been focused on delivering the two growth projects. Sabadala-Masawa expansion and the Lefige development project. As we're approaching completion of both projects, I'd like to take a moment just to provide a bit of a short update on each project. At Sabadala, 90% of the $290 million initial capex is now committed and the project remains on budget and on schedule for first gold sometime in early May. Since late February, Wet commissioning has been underway, and last week we started feeding ore through the crushing, milling, and flotation circuits. We've already started feeding our own Masawa concentrate through the biox circuits, and I'm pleased to report this has been very successful with the biox inoculum taking to the Masawa concentrate very well. And as I say, the bugs are bugging, so we're really pleased with what they're doing there. As a reminder, we expect to produce over 100,000 ounces of gold from this plant during the year. And once fully ramped up, there's no doubt that Sabadala Masawa will rank as a Tier 1 asset, so thereby increasing the overall quality of our portfolio and further diversifying the geography of our production base. Turning now to Lafigue on slide 12. We've now committed 92% of the initial capital of $448 million, and not only we're on budget, but we're also nicely ahead of schedule with our targeted first gold pour now expected in Q2, not as we said earlier, a full quarter ahead of the original schedule. Now remember, We launched construction at Le Figuer in October 2022, and we're now expected to deliver gold in less than 21 months since the start of construction. I think that's a pretty impressive achievement, given we're building a brand new cornerstone asset from scratch in under two years. It's also another example of the competitive advantage that we have with our projects team and our understanding of how to operate here in West Africa. where we can build and commission projects far more quickly and for lower capex than many other people in the region. The FIGE is expected to deliver around 100,000 ounces this year, and that will increase to about 200,000 ounces when we get a full year's production over next year. Once fully ramped up, obviously costs will improve to become in line with life of mine expectations. I'll leave Mark to provide a detailed update on how both those projects are progressing. Turning to slide 13, our exploration success continues to be a fundamental contributor to our organic growth and is really very much a fundamental part of the DNA of Endeavour Mining. This year, as I said, we prioritized our Tanda Iguala discovery in the Cote d'Ivoire delivering record annual resource discoveries of 3.6 million ounces at a cost of less than $25 per ounce. This brings the total measured and indicated discovered since we launched our first exploration plan to 18.6 million ounces. Over this period, we've produced 7.6 million ounces, so that's reinforcing the value that our exploration program generates in terms of additional resource base that we can exploit. On slide 14, during 2023, we quickly identified the Tandy Gwela Exploration Program as a high priority as we saw the potential to significantly increase the resource base at the Asafo deposit on the Tandy Gwela property. The increased resources that will definitely underpin the preliminary feasibility study, which is now underway, and it's our plan to have this out by the end of 2024. In order to expedite the exploration program, we allocated additional resources to bringing tender iguela to a head during the year. At one time, we had up to 10 drill rigs operating there, and that enabled us to deliver you know, this over 300% increase in resource. This year, we're going to focus on resource to reserve conversion across the group, particularly at our core assets, as well as Tanda Iguala, where we expect to be able to convert a high portion of the current indicated resource to reserve throughout the year. Thanks to the discovery at Tanda Iguala and our core assets, we've been able to deliver over 10 million ounces of measured and indicated resource discovery since 2021 when we launched our five-year exploration program. And we're now really well positioned to achieve our 12 to 17 million ounce indicated resource discovery target by the end of 2025. with a $65 million spend outlined for 2024, as well as a focus on the cornerstone assets Sabadala, Iti and Hyundai, as well as continued focus on looking at the potential around Tanda Iguala. Now, we're going to prioritize Sabadala and Iti, where approximately 50% of the full-year spend will be allocated. Elsewhere, we're going to continue to explore in close proximity to Lafigue processing plant where we've seen some encouraging drill results and we'll advance early stage greenfield opportunities across the region. We're also going to continue to advance the high priority tender Iguala project where we're going to be expanding resources but converting that to reserves as in parallel to us progressing the preliminary feasibility study. Now, Tanda Igweala is an excellent example of the opportunities that lie in West Africa and our ability to historically unlock these projects. In just over two years, we've delineated a potential Tier 1 deposit with a four and a half million ounce resource at two grams a ton that was discovered for a complete discovery cost of $11 per ounce. And Tandegoela is one of the most significant low-cost discoveries made in West Africa in the last decade. It's got significant upside potential remaining along its 20-plus kilometer corridor, as well as potential satellite targets in adjacent structures within close proximity of any processing facility that we will put up. on site. I'm going to let Jono provide you with some more detail later on when he steps up to the microphone to talk. Moving to slide 16, we will be completing our two organic growth projects in the coming months. I just wanted to touch on our capital allocation priorities. As we transition from the phase of investing in organic growth and move to one of more increased cash generation. As I mentioned earlier, we consistently invest in our exploration, as I believe that exploration underpins our long-term growth. And as we've demonstrated on more than one occasion, our exploration program can deliver high-quality projects into our pipelines at low discovery costs. But exploration is not something you can just start and stop and still be successful at. So we're going to continue to invest in exploration, particularly when we know that we have the ability to discover ounces at less than $25 per ounce. We've taken a phased approach to growth over the recent years, and it's not the end of our growth. Obviously, Tenda Iguala will be coming forward in due course as well. When we completed our last growth phase, having invested around $788 million in the Hyundai and Nitti builds, we were able to fully deliver our balance sheet in less than 18 months, and at which point we launched our shareholder returns program. We've continued returning capital to shareholders throughout our current construction phase. And the importance of maintaining a high-quality portfolio and a disciplined approach to capital allocation is reflected in our ability to deliver sector-leading shoulder returns while simultaneously investing well over $700 million in the two current growth projects. We're now exiting this current phase of growth at the end of H1 2024, and we're going to enter into a cash flow generative phase where we'll focus on strengthening our balance sheet, deleveraging it, and increasing our shareholder returns, which will reflect the stronger cash flow outlook over the next few years. And we certainly look forward to outlining our updated shareholder policy return policy later on this year. Touching on shareholder returns for the fiscal year 23 on slide 17, we're certainly proud that we've returned $266 million to our shoulders this year. That was $200 million in dividends and $66 million in share buybacks. That's equivalent to a very attractive indicative yield of around about 6%, or as we said earlier, $227 per ounce for every ounce that we've produced throughout the year. Now, 2023 marks the last year of our existing shoulder return policy. is slide 18 showing the cumulative returns to shareholders since the start of that policy. And this slide really is a testament to the strength of the underlying business and the commitment Endeavor has to reward its shareholders by paying above the minimum shareholder return commitment. Over this three-year period, we returned $903 million to shareholders. That was 77% above the $510 million minimum commitment and represented over $200 return to Shell for every ounce of gold that we've produced over that period. To put that in perspective, $903 million is equal to roughly a quarter of the market cap of the business. Of course, Shell is only one of our stakeholders. Alongside our full year results, we also published our sustainability report today. So I want you to hand over to Jaria, EVP of ESG and supply chain, who can talk you through to some of our achievements this year. Jaria, over to you.