Q1 2021 Endeavour Mining Corp Earnings Call
[music].
Ladies and gentleman, Thank you for standing by and welcome to the Endeavour mining Q1 2021 results conference call. At this time all participants are in a listen only mode. After management's presentation. There will be a question and answer session to ask a question during the session.
You will need to press star one on your telephone today's conference call is being recorded and a transcript of the call will be available on Endeavour's website Tomorrow I would now like to hand, the call over to management. Please go ahead.
Hi, everyone I am Martino, Vice President strategy, and Investor Relations and I'd like to welcome you to our Q1 2021 results webcast.
On the call I am joined by Sebastian Mark Joanna and Patrick.
Today's call will follow our usual format. We will first present our results at a group level and then dive into by asset will.
We will be as quick as possible to leave time for questions our debt.
Before we start please note our usual disclaimer and now I'll hand, it over to our CEO Sebastian to walk you through our Q1 results Sebastian.
Thank you Martino.
We're excited to share our results for the quarter as it shows the success of the transformation, we have executed over the past year and resulted in a more resilient business we.
We are well positioned to deliver strong cash flow and organic growth.
At the same time rewarding shareholders through our dividend and buyback programs.
You can see a summary of our Q1 results here on slide six we achieved a great outcome in our first quarter, both operationally and financially and we are on track to meet guidance production more than doubled versus Q1 2020 due of course to our acquisitions and in particular, the recent successful integration of the turn your assets.
Looking at our per share metrics, our operating cash flow per share is up nearly 50% while the adjusted EPS is up 111% consistent with our expectation that the transaction would be a credit to our shareholders. While also benefiting from the continued strong gold price environment.
Strategically we are focused on ensuring our shareholders realized strong returns.
Such we have paid out our first $60 million dividend in January and started during Q2, our buyback program, which will run over the year.
On slide seven you can see some of our key performance indicators for the quarter. We've continued to focus on our safety performance with our ultimate goal of zero harm on.
On production, we are solidly on track related to our full year guidance and we will see a full quarter of production at some other non massawa and one you'll included in our results in Q2, and we anticipate our run rates to increase for the balance of the year.
It's important to note that for Q1 it is only.
One month and a half out of three for return on assets that is consolidated here.
Similarly, all in sustaining cost came in at the bottom half of our target range for the full year.
We expect to see the impact of a full quarter from the lower cost stable MSR operation in Q2, and no further impact from the higher cost <unk> operation that was sold in March.
As such we are confident in our progress towards our full year target range of $850 to $900 per loans.
Safety as I mentioned earlier, we continue to focus on improving our safety performance across the board with several operations added into our platform. We are pleased with the strong safety culture at our newly acquired operation you can see that.
LTI remains low however, with for LTI that we have suffered in the last 12 months as we always seek to improve and we continue to evaluate ways to move towards a zero on this metric.
On slide nine you can see our production and the audience sustaining cost results for the past five quarters.
Key to remember here is that we had what was truly an exceptional quarter from the endeavour and former <unk> assets in Q4 last year, which returned to a more normalized output in Q1.
The quarter also factored in the sale of <unk> and pod over quarters production from some other non massawa and when you. We therefore expect improving consolidated production numbers in the upcoming quarters as we would've reported for full quarter of operations across our assets.
On the right side of the page you can see debt. Our consolidated production has increased by 175000 ounces in Q1, 'twenty one versus Q1 'twenty one our production per share has increased by 23% year over year.
On slide 10, I'd like to point out that our portfolio is strong diversification across both assets and countries. This is a big shift compared to the portfolio, we had 12 months ago.
The pie charts show the non achieved the relative contribution of our operations to a production versus the same quarter last year, we've gone from for operations in two countries with two mines contributing two thirds of our production to now seven operations in three country with no single operation.
When accounting for more than 25% of our production.
This contributes significantly to a reduction in our risk profile and helps to ensure that we can meet our guidance based on greater flexibility within the portfolio.
Moving to slide 11, you can see how our all in sustaining margin has trended over the last several quarters as discussed previously our production increased modestly was just over one five months as of Thunder on Massawa and when you included in Q1, and <unk>, who was sold but we were ultimate.
And the weaker gold price environment during the first quarter, which impacted margin versus Q4.
Nevertheless, on a year over year basis, our audience sustaining margin increased by $220 million.
From Q1, 'twenty two the current quarter, while all in sustaining margin per share increased by 30%.
On Slide 12, you can see the trend of our operating cash flow, which increased by $137 million over the prior year quarter with operating cash flow per share before working capital increasing by 47% compared with last year.
The lower gold price resulted in a relatively modest decrease in the quarter on the review.
Looking now on slide 13, you can see the steady improvement in the strength of our balance sheet from the completion of the major build a R. E T mining in 2019 through to the EMS for 2020, when we reached a net cash position.
As part of the <unk> acquisition, we took about $332 million in net debt on the balance sheet and despite this at the end of March we were still left with a very healthy balance sheet.
Our goal is to quickly build a strong net cash position, which at current gold prices should happen over the next quarters.
Having a strong balance sheet position with a net debt to EBITDA leverage ratio currently sitting below two two times gives us the flexibility to focus on both shareholder returns and on investing to unlock our organic growth potential.
One of the best features of our new portfolio is the ability to generate sufficient cash to pay dividends and do buybacks, while also being able to reinvest in the business to support organic growth projects and exploration.
On the next slide we highlight the strength of some of those near term development projects.
Phase one expansion at sub Adelaar, Massawa is well underway phase one will allow the plants to better handle the higher grade ore, which come from the newly added higher grade deposits on the Massawa property for a relatively modest investment of about $20 million in the backend of the plant.
The DFS for phase II is underway for the bio explained which will focus on processing the significant quantity of high grid refractory ore from massawa through a newly built by Explant.
Beyond <unk>, we have the <unk> and the Kalana project, respectively in Cote d'ivoire, and in Mali, where we recently released the results of positive feasibility studies, which showed both projects to have attractive operating metrics and attractive economic returns.
We are focused on showing strong returns across the business and this package of gross project is a great example of how we intend to continue to build on our existing portfolio to deliver just debt.
Moving to slide 15, you can see the key target areas for our 2021 exploration budget of between $70 million to $90 million.
Hagen and his team are expected to break a new record this year with over 600000 meters of drilling.
A large portion will be targeted at our most recently acquired assets, where we see significant opportunities to apply our proven exploration model to the newly acquired tenements.
In addition, we will continue to <unk>.
Fruition budget to Greenfield exploration, where we have repeatedly created value through the drill bit.
In Q1 $16 million was spent at the newly acquired asset.
As well as at <unk> and <unk>, we have a series of new targets are being delineated.
In addition, about $4 million was spent on Greenfield and development projects.
We anticipate activity will continue to ramp up in Q2 ahead of the rainy season before slowing down again during Q3.
I am truly excited to see all of the organic opportunities that will play out over the course of the year.
Moving now onto section two I will now hand things over to Joanna who will take you through the financial results in detail John.
Thank you for asking.
On slide 17, we show a breakdown of our all in sustaining margin on a nominal and per ounce basis because of the substantial changes within our portfolio of assets. That's total.
For interesting story than on a nominal basis alone.
At a group level, we had a strong improvement in our all in sustaining margin you're looking at that $150 pound for <unk>.
Referenced our net tangible uncertainty guidance explanations for key line items.
But overall the margin was helped by a stronger gold price lower cash cost per ounce and lower sustaining capital.
Moving to slide 18, you can see a breakdown of our free cash flow beginning with the all in sustaining margin.
Talked about the all in sustaining margin net increase over Q1, 2020 by a nominal $220 million for $330 million in Q1 of this year.
Literally our all in margin increased by $190 million. This in turn led to a total cash inflow of $164 million during the quarter.
The main cash outflows during the quarter were an increase in our working capital primarily from our acquired businesses cash used in financing activities from our discontinued operations for the payment of dividends and taxes prior to the disposition and increase in taxes paid because of a larger portfolio of operation and increased spending on growth projects, primarily due to the acquisition of the credit card like within the quarter.
These were offset by cash inflows from financing activities related to the private placement, which was completed at the end of the quarter as well as additional drawdowns on the financing.
On slide 19, we have a waterfall chart that shows how our cash position has evolved during the quarter our operations generated around $198 million of net cash while we spent approximately $105 million on our property and paid $20 million to increase our ownership of credit crop. While we also added $27 million in cash from the acquisition of <unk>.
GAAP.
And the financing column, we received $200 million from the momentum Carla mentioned near the end of the quarter as well as $47 million in net proceeds from the refinancing of long term debt.
All set by the $60 million dividends that we paid in Q1 as well as $50 million paid to settle triangle gold offtake liability.
We ended the quarter with a net debt of only $162 million.
Despite absorbing approximately $100 $338 million of net debt from China, which corresponds to a leverage ratio of below two.
Through time.
Current gold prices, we expect to quickly returned to a net cash position.
Moving to slide 20, we have a detailed breakdown of our net earnings I won't go through every line here, but we'll look equity for the most significant items.
I didn't want to start from the bottom of the slide where you can see that we achieved 111% improvement in earnings per share from continuing operations compared to the prior year quarter.
This is an important measure to consider consider as we look at the success of our recent corporate transactions, which are clearly contributed to improvements on a per share basis.
Perhaps the most significant single line item impacting our earnings at the corporate level with our increased current income tax expense.
This is higher than Q1 2021, due primarily to the inclusion of the tax expenses from our newly acquired operations.
And that we saw higher corporate cost, resulting from our larger overall business as well as increased acquisition and restructuring cost related to the <unk> incentive for acquisitions.
Our corporate exploration expense also increased due to increased greenfield exploration activity, primarily on the newly acquired <unk> assets.
I'll now hand things over to Mark who will go through the details of our operations on a mine by mine.
Thank you.
Thank you Joanna and Hello to everyone on the call.
I've just returned from visiting a number of our mines and we will happily try to 40 degree at <unk> for the.
The current English wittner anytime.
Starting on slide 22, you can see.
Production bridge, which primarily shows the significant positive impact of the recently acquired operations.
As well as organic improvement that can diagnose it.
For <unk> in particular, the different steroids from the affected the price.
The volume for a number of months.
2019, and early 2020.
To a full quarter of operating in quarter, one this year.
As you have heard the last quarter results includes a month's number for performance from <unk> and one.
Overall, our production has increased by 175 sales in the ounces compared to the prior year's quarter.
Moving to slide 23.
We'll begin the review of our individual mining operations with <unk>, which is now in flagship asset.
The mine yesterday and can attest to the fact that the team have continued to make great progress on a number of firms.
Mining in the Sofia Pizza's, continuing with another new price 83 per from troubled commission during the quarter.
So the <unk> fleet is in good shape.
The whole road construction to enable us to monitor.
<unk> is progressing well.
The other innovation for the former Barrick exploration camp, which as housing demand increase for <unk>.
Okay.
Moving to slide 24, you can see an overview of Fas volume expansion plan.
The first phase of upgrades for the processing plant are focused on deepwater were making the back end of the existing <unk> to increase capacity to prices for high grade for a milling massawa.
The civil works for the various work packages are all progressing well and are largely complete.
Electro winning silicon has been installed and the elution column Acid-washed column and regeneration can everyone's time.
Erection of steel.
In the coming weeks.
These upgrades are anticipated to be completed in protocol.
The potential Chilean production of up to 90000 ounces per year.
<unk> the processing of higher grade ore without excessive loss of go to timing.
On Slide 25, you can see some features illustrating the price on work in progress.
Starting at the top left the foundations for the electric carbon regeneration kiln and various transfer that complaint.
Out of the steel structure for increase in moving the background.
On the top right. The crew is finalizing preparations for the last concrete book dilution and acid wash com.
In the bottom left for Q1, and the two columns in mainland China.
I'll ask photo shows the leach tank bases with old concrete to be completed for next week.
Income who are undertaking both receivables and S&P work.
Fabricating various components and readiness for the next phase of construction.
Yeah.
On Slide 26, you can see an indicative schematics of the proposed phase two expansion of the processing plant to incorporate the buyout circuit to treat the refractory ore.
Price to include for refractory plant tailings facilities water management and talent sanction upgrades.
Davis, we will incorporate several optimizations of the PFS completed the butcher income.
<unk> improved cumulated, Keith Mitchell logical modeling to incorporate more information on sulfur agnostic, which are key drivers of the <unk> process.
In pit optimization to determine the appropriate split.
Both rate between the two projects and claims.
For the processing optimization will be undertaking in the crushing milling floatation circuit.
We anticipate completion of the DFS in quarter four this year.
Moving now to slide 27, we chat loans progress at between day mining more detail.
I was also one day last week and want to congratulate the team for the Fantastic safety performance, which is <unk> 22 million, mainly all day OTT offering.
Now that the asset has been in operation for more than three years, we can see the maturity and the team yielding great results.
Our short and long term planning has improved experience and with increased mining flexibility through opening up the carry period.
Sorry pump has been the big focus since mid last year and the team is now looking to hit to carrier grade for advanced grade control drilling is underway.
There is a lot of enthusiasm and interest.
Thanks to the strong operational performance from exploration success.
Reviewing the past quarter production decreased as expected increased tons milled were offset by lower grades and recoveries at the high grade oxide material from Kari pump was blended with an increased proportion of threshold from other people.
All in sustaining cost increased in part due to low production as well as expected increase in strip ratio at Kari pump.
In future quarters, we anticipate the completion of mining from the board.
In the current stage of the <unk>.
Sorry company for the mine production tools until carry which commences.
While stripping is set to increase at vindaloo mining.
Grades are expected to increase in the latter part of the Youtube channel for your clients being mined at Kari pump.
Turning now to <unk> on slide 28.
We're very happy with the performance of BT, which achieved its best quarter production Tonight.
The team had many challenges last year due to COVID-19, which was compounded by the focus on the TSA price construction and Whitesnake traction.
I wanted to open up additional mining areas. During 2020 is now paying off.
Given the credit and mining flexibility.
Similar to hone day attainment is excited for the future given both the operational improvements that shape and ongoing resources discoveries Mike.
We have net gearing up for mining in the plant after the rainy season.
Looking at the quarter you can see that production has increased due to higher throughput grades and recoveries.
While all in sustaining cost decreased due to lower mining and processing unit cost.
Quarter, one was better than expected as higher grade and recovery oxide ore was brought forward in the new outperformed.
Going forward for <unk> anticipated.
Continue to be sold for multiple areas.
Back on track for quoting for.
The team has been working on numerous initiatives to improve mill throughput.
With the high moisture content afterwards, when we look forward to seeing the benefits. This will bring us a wet season gets underway.
On slide 20, non India has been completed its second full quarter since the rates out of mining operations in quarter three 2020.
Looking at quarter, one performance was better than initially expected as higher grade ore extraction was brought forward.
Production declined moderately quota for due to lower throughput and grades for recovery remaining strong.
All in sustaining cost increased due to higher unit training cost and the highest strip ratio.
Offset in part by lower mining unit cost and the commissioning of new contract for mining equipment.
Trade is expected to continue from the west pit.
Wait wait stripping occurring at BHP it throughout the year.
Share repurchases expected share remained steady while recoveries for big Horn slightly.
Morning will focus on wisely extraction, which will lead to a modest day corn and process right based on the location and the pit from with your results with some improvement expected light to me.
Moving to slide 30 for manner I would like to think between for the hardware as I focus on optimizing the asset.
Out of all the months, we've recently acquired.
So long operating history.
We found the <unk> optimization, maybe the main change being the decision not to proceed with the volume in all stage for cut back.
And instead to mine the binder sales stage, two and three capex, both setting up mining law for an underground operation.
As highlighted in our recently published reserves in the new information from.
We've promoted a number of West Africa, and some management position.
Putting price the strong technical support line, which is starting to pay off with a renewed enthusiasm across the line.
Looking at the quarter, you can see that as expected production for a minute decrease in all in sustaining cost increased moderately.
As a result of lower prices price for minus sale.
Slightly lower plant throughput.
With higher open pit mining cost due to longer haul distances and higher underground unit mining cost due to increased stock back.
Partially offset by lower processing cost.
Lower power cost at some of the older Gen sets have been replaced.
Overall on a very heavy repayments performance, which was better than budgeted in the first quarter driven by a better than planned mill throughput and grade.
Looking ahead tons pricing are expected to decline moderately due to an increased proportion of threshold for mining.
While the process grade is expected to increase in the latter part of the year due to higher underground strike price.
Moving on to slide 31, we will be discussing the one year demand for Fedex Sean.
Oh is that the mine last week.
Impressed with the way in which the team is focused on some of the important development projects, including construction.
Construction of the second sales for the TSA UAS trip completion of that for core resettlement program.
Commencement of mining at the per cohort.
In quarter, one 1 million for increased production compared with the previous quarter with increased price and a moderate.
Decrease in throughput while recoveries were flat.
Looking forward to the balance of 2021, we anticipate an increase in waste extraction, resulting in our highest strip ratio. So this will be offset somewhat as it will provide access to higher grade oxide ore from the for core sales.
In the latter portion of the year.
Throughput and recoveries are anticipated to decrease margin during the wet season.
And finally on Slide 33, let me discuss Satcom, Oman comes with lower production quota for relative to prior quarter.
Debt grade and recovery they cost most of the or for the quarter sales from the <unk> pit.
In addition, there was an increase in <unk> on a camera for longer than normal, which time of the GG one.
Thanks for <unk> production was partially offset by increased tonnes stacked with good overall performance from the Agglomerated and second system.
All in sustaining cost increased due to higher royalty, but was partially offset by lower mining processing and G&A unit cost.
Driven by lower production drilling blasting free.
Handling and reagent cost.
Looking ahead, the strip ratio is expected to increase in coming quarters.
Oil production is expected to increase in the second half of the year due to higher grade and recovery that channel.
As you can see performance across our operations has been strong in quarter. One low months are on track to achieve the production and all in sustaining cost guidance for 2021.
As a testament to the overall quality of our portfolio and the capabilities and great way for our operating team.
With that I'll hand back to Sebastian to close out the presentation.
Thank you Mark and John are for your overviews.
On slide 34, we have a summary outlining our key priorities for the year. They are based on our guiding framework to continue building a resilient business that is a trusted partner and reward shareholders property. We are pleased to be executing against each of these priorities and we will work hard to continue doing so in the coming months and years, we believe that the.
Our resilient business needs to first be underpinned by our high quality portfolio, which after five years of hard work, we now have.
Priority is now to generate stable cash flows while advancing our organic growth and exploration efforts.
Having a high quality portfolio of mines, which are profitable in both long mine lives allows us to better plan for the future. This is a key element of being able to be a trusted partner.
Having confidence in knowing that we will have a presence in our communities and host countries for many years to come means that we can invest in building our long term partnerships with employees communities and governments.
We will be hosting a kitchen later this loans, where we look forward to sharing the many ESG initiatives going across our business.
And finally, having a high quality portfolio with a strong balance sheet underpinned by our social license to operate means that we can reward our shareholders across cycles. It.
It took us five years to get to this stage and we are proud to have recently initiated our dividend payments for <unk>.
This marked a full turnaround of our business in recent weeks given the confidence that we have in our business and our cash flow we started to supplement our dividend with buybacks we.
We also believe that our shareholders will be rewarded once we complete the process to obtain a premium listing on the LSE. This is expected to drive incremental demand for our share and therefore be a strong catalyst.
Such we are pleased with the progress made and we remain on track to list on the LSE in mid June.
And finally to conclude on slide 36, you can see the key upcoming catalysts in the near term, we will host a capital markets kitchen events to familiarize, London based investors and capital market participants with our business ahead of a listing in mid June.
We also anticipate releasing an initial resource estimate a.
FEMA project, which we recently acquired from Taronga.
We will have an exploration update on <unk> and we also expect to provide a refreshed five year exploration strategy as we reached the close of our first five year exploration plain later this year.
Finally in the fourth quarter, we anticipate completing the phase one expansion at <unk> as well as the DFS for phase III and the DFS for credit growth.
So despite the transformation that I talked about at the beginning we did not standstill.
We took great strides in the last 12 months is to reposition our business today, we can truly say, we've built a resilient business.
More importantly, we have a clear roadmap ahead of us to ensure our business remains robust and continues to deliver returns for our shareholders.
With that I'd like to thank you all for dialing in and open the lineup for questions.
Okay.
Thank you.
Ladies and gentlemen, we will now begin the question and answer session.
As a reminder, if you wish to ask a question. Please press star one on your telephone and wait for your name to be announced today.
Please standby, while we compile the Q&A queue.
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Okay.
Yeah.
The first question comes from the line of <unk> Habib from Scotia Bank. Please go ahead.
Thanks, Operator, congratulation Sebastian Endeavour team for a good quarter and thanks for taking my questions.
Just my first question.
Production is on the triangle assets that you've acquired.
I should elaborate in our has had these strong assets for about two months.
Under the endeavour.
<unk> can you give us some color on how the integration is going with these assets, especially at sub with Amazon.
Sure Good morning <unk>.
What I would say that.
Since since the announcement of the transaction.
Probably been.
For times, two to Massawa sub debt.
Our.
Mark was on the line just came back yesterday again from <unk> looking at the progress in particular of the.
Upgrades to the Seattle pull on the backend of the CRE loans for the phase one of the some of the LMS our project.
And I say I can say that we have.
Extremely extremely pleased with the progress.
We've been saying since the clothing that.
The integration is going extremely smoothly.
As for glass in ovarian.
Very very well because the culture of the two companies were very similar.
Operating level.
So, yes, I mean, it's.
And a very pleasing to see those assets well integrated into our into our portfolio.
Mark maybe you want to.
Based on your.
<unk> yesterday.
Comment.
Yes, sure I guess one thing.
Sorry to mention and this was something that we knew about.
From the beginning.
Incumbent General manager was going to finish this year. So that transition has literally just taken place.
<unk>.
And we're very confident that it will.
Be a smooth transition.
We see lots of really good work done.
Part of the triangle team and look for good opportunities too.
It's a fantastic asset.
Really really strong team day.
Sure.
Everything <unk> seen just suggest.
There is good opportunities for us to to just sort of continue to check the COVID-19.
Yes, Thanks, Marc I think it's fair to say that one of our strongest GM.
Crystal <unk>, who was at Hyundai.
Just arrived at a sub solar Massawa Crystal has been doing an amazing job at <unk> and then at one day and.
Having them now.
<unk> will even accelerate the integration of the asset into into our portfolio.
And get the mine sites onto the same standards and culture that we have in the rest of the organization. So extremely extremely pleased.
Bye Bye this integration progress.
Thanks for the color Sebastian on non Mark that my next question is regarding your pipeline of projects now production you've got several projects that are in the stage and the projects that youre looking to advance as well.
Are there any of these projects that you would consider divesting or maybe bringing in a JV partner to advance those assets, while you're kind of advanced Patrick ROE on Kalana most of those other assets as well.
Well, if you look at what we've done in the past.
We have all the all the options available.
It's a question of capital allocation for US I think it's too early to say decisions that we would be thinking for 2022, but obviously, we've got three strong projects, which are progressing well from PFS for GFS with on one side the biopsy loans for Salmonella Massawa.
Phase II for accrual.
In Cote d'ivoire and collateral in mining.
Clearly we want.
Launch three projects at the same time.
In 'twenty two so we will make some.
Some decisions once we see the numbers and we'll focus on the assets which are the.
The projects, which are giving the best the best returns for the company and for our shareholders.
Thanks for that and just one final question before I jump back in the queue are you noticing any inflationary pressures on your current operations or projects that you plan to advance into construction.
So we have this question several times over the last the last few months I would say probably since the beginning of the year.
I would say that on the on the on our core supplies.
We don't see yet.
Significant or important inflation.
Partly due to the fact that we are integrating progressively all the <unk>.
Quiet assets the semi for one's on Nintendo <unk> into our supply chain, which in fact gives us even more bargaining power with our suppliers. So we've been able to across the board.
Keeping on the same prices or even.
Reduce some of the prices on cost supplies.
We're still monitoring how things will evolve in particular on steel prices and other for our projects.
And if we feel at some point that they are risk of seeing spike in prices then we might ask.
Accelerate or anticipate or looking some some prices for our key projects for the future. So we remain extremely flex.
Flexi boiler and reactive to ensure that we continue to make the right capital allocation choices and protect our returns.
Perfect Sebastian Thats It for me and congrats again on a great quarter.
Thank you very much.
Next question comes from the line of Raj <unk> from BMO capital markets. Please go ahead.
Thank you operator production machine and team just a couple of questions first up on the LSE listing you've probably been asked this question a thousand times, but.
You are now closer to the listing being done so just wanted to get a P. M central to you more clarity on the.
Whether that's <unk> com for the inclusion is going to stay that way and but demand do you expect from the.
Let's see listing with respect to different indexing.
And my second question is with respect to your <unk>.
<unk> bought through the acquisitions from last year.
But I do see them give us some visibility on the growth aspect specifically my line is.
The answer you underground or you're looking at we want one underground or any other growth options and bond grew up as opposed to exploration upside that you are looking at.
Sure. So maybe on the on the first question, which is something which has put up a lot over the last.
A few days and I'll, let Marty to complement if if required.
First of all what is clear as debt, we got confirmation from.
SMT.
They will review I mean the.
The index in September so nothing is going to happen before September.
As we probably said several times, we are expecting to be listed sometimes in June on the LSE and the same way, we would be integrated into FTSE indices in September.
Our current views is that we shouldnt be taken out from the S&P <unk> indices.
At the same time, we should be integrated into the FTSE indices in September. So that's our current views and I understand that some investors have been worried about that I can just confirm based on our exchange with <unk> and S&P that.
Download intending to review I mean, those indices before September and debt based on the information. We currently have we do not expect some changes.
As us in the unit is.
Martino, Illinois, if you want to add something specific on this.
The last thing to add would be that.
We're procuring situation, where we're not Canadian topical today, we already have for an entity in Canada being came in Topco. So we're moving from being foreign came into for in UK. So from a Canadian perspective, they're looking at it much more from a liquidity and where most of the shares are being traded and we.
<unk> debt to remain on the PSX, given we're not issuing equity in the U K.
Okay. Thanks, so much.
Second question, if I may.
If you May just ask again the second question it was around for that growth.
Yes, sure San Sebastian So, yes manner, what's the growth opportunity beyond the <unk> underground is one underground something youre looking youre going to look at.
They also have bongo.
And the exploration upside you are seeing there.
Yes, sure so on on that I mean, it's a fair point I mean, we believe that there is.
Potentially a very interesting one underground.
Potential.
Atlanta.
In fact, we have been working on the on the PFS already preliminary pre feasibility study for went underground and we would expect to move that forward.
For the next the next few months as so it wouldn't be surprises as part of our let's say Q3 in September we're able to to.
Disclose a bit more information of <unk>.
Around the around.
Went underground.
It seems that the economics are more attractive than continuing at the.
The open pit side in particular in the north where greater falling down and therefore cost him being in Ohio.
So quite quite.
Quite interested in seeing the underground opportunity to move forward.
In parallel I mean, we obviously aggressively started exploration around around Menno.
I'll let.
Maybe you could comment a bit on the on this as well as <unk>, which is important I mean, there has been very limited exploration done in the past by smartphone Bongo.
Dumped into.
To put drilling campaigns there.
And we will see that accelerating in Q2 and Q4.
<unk> you want to give a quick question back on Manta and and.
<unk>.
Yes.
Hi, everybody.
Manav, it's been the place where we have been more aggressive in the fourth quarter actually we have been reading over 30000 meter which is quite a lot.
Basically what we are doing we are checking.
Right.
A significant number of smaller.
Size target, but most of the year looking at oxide.
Developing a former or these COVID-19 renamed molar, which is partly to the southeast southwest when he exploitation license for extending into the exploration license.
We are working also on the timing of doing the resource model on a one off to looking at the one non doggone stuff and we are also conducting a.
Quite important exploration to shoot nor sorry up open beta placebo target also for Q1 day overall.
The possibility because we see some true going down that debt.
So is that most of it for yourself.
For all.
Uh huh.
<unk>.
Due to security.
Uh Huh Patrick.
We are consolidating for the time being in.
Also on the minds, so we've been reading in between the two between what speed in the east.
Peter.
Waiting for some result, we're concentrating right now mostly not radar, which is at the northwest which is called the net.
Two.
Not too.
Not for US it just such a junction between non <unk> call, but one doggone debt free.
So that's where we are quite good results. So basically we are working on some peak weighted booboo going slowly by slowly a beachhead, although alta and organizing all sales to start to grow out of Japan.
Basic Tees up quite I can't but.
As it was say the previous need my line, but one of the two two.
<unk> may not be where we are.
Comp sales this year because onboarding by now we should have a high yield debt that we added this.
This year on the key all day.
Looking at the possibility of new day need here is quite significantly for 12 months together with <unk> on some of that out so where we are going to increase your exploration budget.
Thanks, Patrick.
Thanks for question Thats for me.
Thank you next question comes from the line of Don Demarco from.
National Bank. Please go ahead.
Thank you operator, hi, Sebastian team, Okay. So a strong operational quarter you guys are pulling levers such as the dividend the CIB the London listing.
And there's talk of endeavour being positioned to become the new randgold, yet randgold traded at a premium, whereas we're seeing a valuation discrepancy between endeavour and some other peers that have lower free cash flow and fewer development pipeline options.
The question is what other levers do you have to increase your profile or close this valuation gap.
And or is it just a matter of time.
The interest in your comments. Thank you yeah. Thanks, I mean, I think that I mean, you're completely right I think it's.
It's also a question of time.
If you take a.
Randgold with us.
Mark Bristow has been on the LSE for 15 years and has been building <unk> reputation and and this multiple.
Over the years and it took some years to get where he was.
You should take even be to go into them as having you know sometimes a better multiple than we have and the same thing I think that the climate has been around for a while and the success of bema and <unk> over the last.
10, 15 years again.
It takes time to create I would say that visibility and credibility.
And I think we are exactly on the verge.
Just completed this five year turnaround plan.
We are not getting now getting strong cash flow being able to put out you know all the levers that other more mature companies have been doing over the past the past years with dividends buyback and much more visibility.
The London listing while our peers have already either London listing on New York listing so I think that.
We now will be in a position from from June and September to really compete debt at same.
Same level with with all of those peers that tend to have.
Better valuation than us, which in fact makes us extremely attractive from an entry point for investors and and that's why I would expect.
These GAAP I mean, two very quickly.
And hopefully you know in the years to come demonstrate that yes, we are the new wrangler.
Okay, Great. So you mentioned, the <unk> and so on and I'm looking at your in terms of capital allocation you paid out $60 million in dividends in Q1.
And what I agreed to it that you you bought back about 13 million Canadian at least worth.
Shares in Q2, so on the <unk> do you expect that pace to continue that we saw in Q2 and April rather.
Or what are your thoughts going forward on that you've been pretty active.
I think that you should.
CDN CIB.
Getting much more active going forward.
We were only active in fact, a few days.
Over the last.
We started in April and it was only a few days that the NCI kicked in.
And therefore I would.
<unk>.
Much more activity.
From from this quarter in Q3 on the on the CIB Yeah.
Okay, Great and then maybe just finally.
<unk> noted higher grades at chaparral massawa in them.
Part of the year Q1 grade was 253 grams per tonne, so what kind of grades should we model in each two how much higher would they be then two three grams per tonne.
Margin or Mark I mean, you want to give some color on <unk>.
Sure.
So we expect grades to come up for about $2 eight in Q3 and going above three grams in Q4.
Okay. Thanks, so much guys. That's all for me.
Thank you.
Thank you next question comes from the line of Anita Soni. Please go ahead.
Hi, Good morning, Sebastian team. So first off I just wanted to comment. Thank you for the disclosure that you guys put in your in your MD&A and financial debt.
Any thoughts and then it actually makes sense, but I put into my model and I do find that for the senior company that can do that your multiple and you get a premium multiple because it's not as much of a black box for investors.
Secondly, my two questions a little bit more big picture since everybody has gone into the Nitty gritty already so.
From a firstly could you give us a rundown of the countries you operate in in terms of an update on the political situation and then security as well, so Senegal, Burkina Faso quantum bar and then the second question.
Just in terms of M&A, obviously, there's been a transaction in and you're part of the world and your name along with be two comes out that may be M potentially interested.
Hum.
I was just wondering if you could give us for the past comments of reiteration on your prior view on M&A or whenever you feel for it and I'll leave it at that.
Sure no problem in.
In terms of countries, where we operate.
Senegal, I would say Senegal and could you obviously.
Very stable politically.
You probably saw that there was.
Sometime in Q1 I think it was around March there was a two day.
As of routes in the in the capital City.
But that was mainly a political I would say issue we do.
Do you use we're trying to protect our potential.
Candidates for the next presidential election, who was charged for.
I think it was rape and therefore created a bit of attention.
After 48 hours I mean, it all cool down so we received during the day and of course because people.
The country was going on fire and as I look at our.
Do we have.
Investors, calling app.
Total company or.
Or test low and there is an Orion 10.
In Chicago.
And the answer is no. So yes. It happens that sometimes you have these type of events, but I would say that Senegal and could you are extremely stable.
The case of <unk> in particular since the reelection of president with <unk>.
Which is always good when you have a strong I would say liberal president which has been successful so far.
We will have between 7% to 9% GDP growth over the last five six years.
One of the fastest growing country in Africa, and having the same president running the country for another five years I think is going to be very good in terms of stability.
Bookings I mean, obviously, we were the largest gold producer also in booking answer key country for us a.
A bit more tricky I mean on the security standpoint with.
Our regular attacks in one particular area of the country, which is the north part of the country.
The three border region three border between the <unk>, but as you know we will.
We've been operating in those countries for years, we believe that we have the right.
Our relationship with the government and the right protocols with our security team to ensure we are able to protect the assets and the people. Hence the fact that we were comfortable at the time to acquire <unk> and in particular, the <unk> assets that we successfully restarted.
Back in Q3 last year so.
I would say that from a security standpoint, and booking on the things are not improving neither worsening.
There is a big push right now with the booking of the army being extremely active in the north with the French.
Hopefully in the next few weeks, we should see some some improvements on that front.
That's I would say the high level picture on this free on the three countries.
In terms of in terms of M&A as you said I mean, we.
I think we've done our share of the job.
Acquiring the right assets for for our portfolio.
We need now to continue to integrate those assets successfully we are on track to deliver the $100 million of.
And youll synergies that we're expecting from those two acquisitions.
We know and are really focusing on organic gross I mean, we've got amazing projects and are coming up with phase one and two of <unk>. Then we have a fed accrual in colonial so we're really going to focus on that and.
Never been interested in the <unk> gold.
For example.
Funny to see I would say.
Latin American silver company going into <unk>.
Into into bulking up.
Let's see it's going to be it's going to be interesting to watch.
And for other assets unless you know Clive Johnson wants to sell for quota, which I don't think it intends to.
We don't have any particular interest for for external growth.
Okay, I haven't even thought about clients selling for Colo, but yeah.
Anyway, and then just on the Tesla comment I think Elon Musk cost is on this morning with debt with that bitcoin.
I mean, I think there, but thank you for answering my questions. Thank.
Thank you for your questions and your time.
Yes.
Next question comes from the line of Mark Bentley from <unk>. Please go ahead.
Hello to Sebastien and team I have three questions today, if I may.
For the first one is you paid $47 million to settle a taronga gold offtake agreement is that a full and final settlement or are there any further payments due under that agreement.
It's full.
Full and final.
Great. Thank you.
Second question.
Are you currently have 700 million drawn on the corporate finance facility and $868 million of cash, which seems like an awful lot of cash.
Could you just explain the board's rationale for keeping so much cash while still heavily drawn on that facility.
Sure in fact that we are in the process of the restructuring of the balance sheet.
As you might recall I mean, we took up relative debt from the Taronga acquisition.
Cost of debt, we had a bridge financing and obviously the objective for US is to replace debt bridge financing with more long term I would say facilities. The right time, we believe I mean to do it is once the listing is completed in London and once we have proper rating in order to be able to get the best the best <unk>.
From an <unk> in place for the restructuring of the balance sheet in the meantime, I mean in Q1, I mean, we repaid $100 million on the Rcs and shortly after receiving at the end of Q1 to $200 million cash injection from the mantra beginning of Q2, we also repaid another $150 million that you don't see yet on the on the RCM.
So I objective is to make sure that by Q3 and we have.
In a much cleaner balance sheet free agree with you I mean, the objective isn't to keep huge amount of cash and continue to pay debt and interest on the other side. So.
We're really in depth in that process. Thanks for Baskin, that's clear and then my final question just concerns Guangxu has there been any security incidents over the last quarter or has it all been peaceful.
I must say all a peaceful.
So far in Louisville.
Obviously they are.
Have been some incidents, but the close this one was probably around 120 kilometers away from from boom.
And nothing to report on.
<unk>.
<unk> on the mining itself.
The Corporation also with with the government.
Unit, which has been allocated to protect the mine site and also the.
Transport.
Roche.
Is becoming more and more effective trumping up progressively.
So we are getting.
More and more confident and as you know.
For decision we took.
He is not to have any employee on the road between the capital City and the mine site and.
So all our staff are flying in and out.
So so far I mean, we obviously.
Day to day evolving environment, and we are monitoring debt.
Closely but so far happy with what has been put in place.
So if I understand correctly as the situation improves youre, hoping to broaden your exploration activities beyond the mine site is that correct yes.
That's exactly correct.
Thank you very much Sebastian Thank you for your time.
Okay.
There are no real quick.
There are no questions at this time please continue.
As there are no more questions, we'll finish the call I will of course remain available for any additional questions off line have a good day and stay safe everyone.
That will conclude today's conference call. Thank you for your participation ladies and gentlemen, you may now disconnect.
Okay.
Thanks.
Yes.
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