Gold Miner Posts Q2/21 Financial, Operational Beat, 2021 Numbers Look Good

A report by CIBC contains its full-year 2021 estimates for top pick, Endeavour Mining.

In an Aug. 4 research note, CIBC analyst Anita Soni reported that Endeavour Mining Corp. (EDV:TSX; EVR:ASX) achieved “a solid Q2/21 operational and financial beat” and confirmed that the outlook for the company’s full-year 2021 looks good.

Soni outlined the changes CIBC made to its model on Endeavour to reflect the miner’s successful Q2/21. The financial services firm increased its overall 2021 production estimate to 149,300 ounces (1.493 Koz), which falls within the higher end of Endeavour’s guidance of 1,365–1,495 Koz.

On the other hand, CIBC lowered its 2021 production forecasts for Boungou and Mana. This is because, according to Endeavour, recovery rates at Boungou and mill throughput and grades at Mana will likely decrease in H2/21.

In another change to the Endeavour model, CIBC raised its all-in sustaining cost (AISC) projection for 2021 by 3% to $900 per ounce, the maximum AISC to which the miner guided. Expected increases in three sets of costs in H2/21 drove this change. They are AISC at Boungou due to higher fuel prices and security costs; AISC at Karma resulting from decreased grades, throughput and recoveries; and general and administrative costs. CIBC also bumped up its total 2021 capex estimate to $478 million ($478M) from $471M.

With respect to inflation driving up costs for the mining company, Soni noted that Endeavour expects little of that, given it recently renegotiated most of its contracts. However, the company does expect that capex for its next two projects, Fetekro and phase two of Sabodala-Massawa, will be higher than originally anticipated, due to inflation.

Soni indicated that in terms of 2021 free cash flow, CIBC continues to forecast it to be strong, around $793M. Endeavour, in fact, had $833M in cash at the end of Q2/21. Net debt was $97M.

Expected free cash flow “should more than support Endeavour’s capital return to shareholders via its minimum dividend policy and share buyback,” Soni affirmed.

CIBC has an Outperformer rating and a CA$41 per share target price on Endeavor Mining, one of its top picks. The miner’s current share price is about CA$31.39.

“We continue to recommend Endeavour as a cornerstone name in an investor’s portfolio as we expect it to continue to rerate as it earns back investor confidence after two acquisitions last year and the outflows from the Toronto Stock Exchange index exclusion,” Soni explained.

Disclosures:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.  
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of none of the companies mentioned in this article.

Related Articles