Leading International Investment Research, Edison Investment Research

Edison Investment Research

Leading International Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting.

Equity Bottom-Up

Endeavour’s Q121 financial results exceeded our expectations and were towards the top end of the range of analysts’ forecasts. In summary, Endeavour produced c 20% more gold than we expected during the quarter and sold c 30% more. This (positive) variance was then partially offset by a fractionally higher (negative) variance in operating expenses (albeit these were artificially inflated by US$22.6m of non-cash operating expenses) to give rise to a positive variance in adjusted net earnings attributable to shareholders from continuing operations of 16.6% relative to our prior expectations (see Exhibit 1). Perhaps more significantly, the results demonstrate that the integration of the Teranga assets into Endeavour’s portfolio is progressing smoothly (as expected) ahead of the latter’s London listing next month.

Endeavour’s Q121 financial results exceeded our expectations and were towards the top end of the range of analysts’ forecasts. In summary, Endeavour produced c 20% more gold than we expected during the quarter and sold c 30% more. This (positive) variance was then partially offset by a fractionally higher (negative) variance in operating expenses (albeit these were artificially inflated by US$22.6m of non-cash operating expenses) to give rise to a positive variance in adjusted net earnings attributable to shareholders from continuing operations of 16.6% relative to our prior expectations (see Exhibit 1). Perhaps more significantly, the results demonstrate that the integration of the Teranga assets into Endeavour’s portfolio is progressing smoothly (as expected) ahead of the latter’s London listing next month.

Endeavour Mining - Showing its mettle as well as its metal

Endeavour’s Q220 results were materially ahead of both Edison and consensus estimates. Adjusted EBITDA of US$120.2m was within 7.5% of the first quarter’s record, while adjusted net earnings reached a new recent record of US$52.8m, or 47.6c/share. At least as importantly, all operations were reported to be continuing to operate at near-normal levels, despite COVID-19. As a result, we have upgraded our FY20 forecasts materially, driven by sharply increased production in Q4 in particular, combined with a materially higher gold price. Given its current rate of deleveraging, we calculate that Endeavour could be net debt free early in FY21, at which point it is likely to transition to dividend payments and a focus on shareholder returns at the same time as developing new projects, such as Fetekro (currently valued at US$1.68/share – see page 12).

Endeavour’s Q220 results were materially ahead of both Edison and consensus estimates. Adjusted EBITDA of US$120.2m was within 7.5% of the first quarter’s record, while adjusted net earnings reached a new recent record of US$52.8m, or 47.6c/share. At least as importantly, all operations were reported to be continuing to operate at near-normal levels, despite COVID-19. As a result, we have upgraded our FY20 forecasts materially, driven by sharply increased production in Q4 in particular, combined with a materially higher gold price. Given its current rate of deleveraging, we calculate that Endeavour could be net debt free early in FY21, at which point it is likely to transition to dividend payments and a focus on shareholder returns at the same time as developing new projects, such as Fetekro (currently valued at US$1.68/share – see page 12). 

Endeavour Mining - Strong Q2 tees up strong H2

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

New developments outlined in today’s report are of the bullish variety. The way we see it, the positives continue to heavily outweigh the negatives. With positive new developments and essentially nothing new to be worried about, our view remains bullish. Buy the dips. In today’s report we highlight attractive Groups and stocks within Consumer Discretionary and Materials: CD-46 Retailers, Home Improvement, CD-30 Internet Retailers, CD-55 Lawn &amp; Garden, and MA-27 Gold, Western Hemisphere, Small-Cap.

New developments outlined in today’s report are of the bullish variety. The way we see it, the positives continue to heavily outweigh the negatives. With positive new developments and essentially nothing new to be worried about, our view remains bullish. Buy the dips. In today’s report we highlight attractive Groups and stocks within Consumer Discretionary and Materials: CD-46 Retailers, Home Improvement, CD-30 Internet Retailers, CD-55 Lawn &amp; Garden, and MA-27 Gold, Western Hemisphere, Small-Cap.

Endeavour’s Q1 results were characterised by record revenue, record adjusted EBITDA and record operating cash flow. At least as importantly, all operations were reported to be operating near normal. While Q120 was, to all intents and purposes, unaffected by the effects of COVID-19; however, it is clear there have been some consequences in Q2. In the main, these have arisen as a result of travel restrictions on technical and engineering consultants and have particularly affected maintenance schedules. As a result, we have updated our Q2–Q420 forecasts to reflect changes in mine scheduling. Offsetting this, we have decreased our expectations of unit working costs. We have also refined our forecasts for SEMAFO’s Mana and Boungou mines to reflect operational detail on a quarter by quarter basis provided by management.

Endeavour’s Q1 results were characterised by record revenue, record adjusted EBITDA and record operating cash flow. At least as importantly, all operations were reported to be operating near normal. While Q120 was, to all intents and purposes, unaffected by the effects of COVID-19; however, it is clear there have been some consequences in Q2. In the main, these have arisen as a result of travel restrictions on technical and engineering consultants and have particularly affected maintenance schedules. As a result, we have updated our Q2–Q420 forecasts to reflect changes in mine scheduling. Offsetting this, we have decreased our expectations of unit working costs. We have also refined our forecasts for SEMAFO’s Mana and Boungou mines to reflect operational detail on a quarter by quarter basis provided by management.

Endeavour Mining - Maiden fully consolidated valuation (EDV+SFO)

Endeavour’s Q1 results were characterised by record revenue, record adjusted EBITDA and record operating cash flow. At least as importantly, all operations were reported to be operating near normal and all of Endeavour’s employees who had contracted COVID-19 were reported to have recovered. Gold production in Q120 was 10.5koz (6.5%) in excess of our forecasts, which drove a positive variance of US$20.0m in revenue, only partially offset by tax and minority charges to result in a US$6.3m positive variance in attributable profits. As a result, at 30.3c/share, adjusted net earnings per share were materially ahead of both Edison’s and the market’s forecasts of 21.5c and 24.0c for the quarter, respectively.

Endeavour’s Q1 results were characterised by record revenue, record adjusted EBITDA and record operating cash flow. At least as importantly, all operations were reported to be operating near normal and all of Endeavour’s employees who had contracted COVID-19 were reported to have recovered. Gold production in Q120 was 10.5koz (6.5%) in excess of our forecasts, which drove a positive variance of US$20.0m in revenue, only partially offset by tax and minority charges to result in a US$6.3m positive variance in attributable profits. As a result, at 30.3c/share, adjusted net earnings per share were materially ahead of both Edison’s and the market’s forecasts of 21.5c and 24.0c for the quarter, respectively. 

United Kingdom

Endeavour Mining Corporation is a gold mining company. The Company engages in gold mine production, development and exploration activities in West Africa. Endeavour Mining operates mining projects located in Ghana, Mali, Burkina Faso, and Cote d'Ivoire.

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Endeavour Mining (EDV CN)

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