ENDEAVOUR REPORTS RECORD FY-2021 RESULTS Production of 1.54Moz at AISC of $885/oz Operating cash flow of $1.2 billion FY-2021 total shareholder return of $278m OPERATIONAL AND FINANCIAL HIGHLIGHTS
NEWS RELEASE – LSE & TSX: EDV All amounts in US$
ENDEAVOUR REPORTS RECORD FY-2021 RESULTS Production of 1.54Moz at AISC of $885/oz Operating cash flow of $1.2 billion FY-2021 total shareholder return of $278m
OPERATIONAL AND FINANCIAL HIGHLIGHTS
- Q4-2021 production of 398koz, up 4% over Q3-2021, while AISC increased by $11/oz to $915/oz
- Record FY-2021 production of 1,536koz, a 69% increase over FY-2020, while AISC remained stable at $885/oz
- Ninth consecutive year of achieving or beating annual production and AISC guidance
- Adjusted Net Earnings of $145m or $0.58/sh in Q4-2021; FY-2021 up $254m over FY-2020 to $577m (up 79% to $2.40/sh)
- Net loss attributable to shareholders of $103m or $0.41/sh in Q4-2021; which includes the impairment of $259m; FY- 2021 Net Earnings of $221m or $0.92/sh, up $0.22/sh compared to FY-2020
- Operating Cash Flow of $356m or $1.43/sh in Q4-2021; FY-2021 up $464m over FY-2020 to $1,175m (up 65% to $4.89/sh)
- Healthy balance sheet at year-end with Net Cash position of $76m achieved, after absorbing circa $330m of Teranga net debt and paying strong shareholder returns during the year
SHAREHOLDER RETURNS PROGRAMME
- FY-2021 dividend of $140m, representing $15m more than the minimum committed dividend of $125m for the year; FY- 2022 minimum committed dividend set at $150m with strong potential for supplemental shareholder returns
- Share buybacks continue to supplement shareholder returns with a total of $138m worth of shares repurchased in FY- 2021, $44m of which were repurchased in Q4-2021
ORGANIC GROWTH
- Sabodala-Massawa Phase 1 expansion complete; robust organic growth pipeline with DFS underway for Sabodala- Massawa Phase 2, Lafigué and Kalana projects
- Group M&I resources (excluding the divested Karma mine) increased by 1.0Moz year-on-year to 27.5Moz while P&P reserves remained flat at 17.8Moz as new discoveries are in the process of being converted to reserves
- Group on track to discover 15-20Moz of Indicated resources over 2021-2025 period
London, 17 March 2022 – Endeavour Mining plc (LSE:EDV, TSX:EDV, OTCQX:EDVMF) (“Endeavour”, the “Group” or the “Company”) is pleased to announce its operating and financial results for FY-2021, with highlights provided in Table 1 below.
Table 1: Consolidated Highlights THREE MONTHS ENDED YEAR ENDED
| All amounts in US$ million, unless otherwise stated | 31 December | 30 September 2021 | 31 December | 31 December | 31 December 2020 | Δ FY-2021 vs. |
| 2021 | 2020 | 2021 | FY-2020 | |||
| OPERATING DATA FROM ALL OPERATIONS Gold Production, koz All-in Sustaining Cost1, $/oz Realised Gold Price, $/oz | 382 344 904 803 1,763 1,841 | 908 873 1,760 | ||||
| 398 | 1,536 | +69% | ||||
| 915 | 885 | +1% | ||||
| 1,787 | 1,773 | +1% | ||||
| CASH FLOW FROM CONTINUING OPERATIONS2 Operating Cash Flow before Changes in WC Operating Cash Flow before Changes in WC1, $/sh Operating Cash Flow Operating Cash Flow1, $/sh | 327 289 1.31 1.77 312 375 1.25 2.30 | 629 4.59 711 5.18 | ||||
| 316 | 1,167 | +86% | ||||
| 1.27 | 4.86 | +6% | ||||
| 356 | 1,175 | +65% | ||||
| 1.43 | 4.89 | (6)% | ||||
| PROFITABILITY FROM CONTINUING OPERATIONS2 Net (Loss)/Earnings Attributable to Shareholders Net (Loss)/Earnings per Share, $/sh Adjusted Net Earnings Attributable to Shareholders1 Adjusted Net Earnings per Share1, $/sh EBITDA1 Adjusted EBITDA1 | 117 65 0.47 0.40 152 154 0.61 0.95 344 227 381 329 | 96 0.70 323 2.36 530 771 | ||||
| (103) | 221 | +130% | ||||
| (0.41) | 0.92 | +31% | ||||
| 145 | 577 | +79% | ||||
| 0.58 | 2.40 | +2% | ||||
| 123 | 1,139 | +115% | ||||
| 371 | 1,506 | +95% | ||||
| SHAREHOLDER RETURNS Shareholder dividends paid Share buyback (commenced in Q2-2021) | 70 — 35 — | — — | ||||
| — | 130 | n.a. | ||||
| 44 | 138 | n.a. | ||||
| FINANCIAL POSITION HIGHLIGHTS (Net Cash), Net Debt1 Net Debt / Adjusted EBITDA (LTM) ratio1 | 70 (75) 0.05 (0.09) | (75) (0.09) | ||||
| (76) | (76) | +1% | ||||
| (0.05) | (0.05) | (44)% |
1This is a non-GAAP measure. Refer to the non-GAAP measure section of the Management Report. 2From Continuing Operations excludes the Agbaou mine which was divested on 1 March 2021.
Management will host a conference call and webcast, today, on Thursday 17 March at 9:30 am EST / 1:30 pm GMT. For instructions on how to participate, please refer to the conference call and webcast section at the end of the news release.
Sebastien de Montessus, President and CEO, commented: “2021 was a very successful year for Endeavour during which we delivered against all our objectives. Our focus was on executing our capital allocation priorities to fully deliver our shareholder returns programme, while supporting our operations, continuing to strengthen our balance sheet and investing in exploration. Operationally, after the rapid and successful integration of the Teranga and SEMAFO assets, we were able to achieve a record year with production in excess of 1.5Moz, ensuring we have now met or exceeded guidance for the ninth consecutive year. Our strong operating performance generated $1.2 billion in operating cash flow which has allowed us to deliver robust shareholder returns while improving our net cash position. Since commencing our shareholder returns programme, marked by the first dividend payment in early 2021, we have already returned $338 million by way of dividends and buybacks. On the balance sheet front, we have re-established a strong net cash position after absorbing circa $330 million of net debt following the Teranga acquisition.
We are also pleased to have recently completed the sale of our non-core Karma mine which will allow us to focus management efforts on our high margin, long-life and low cost core assets.
We have entered 2022 with considerable momentum and we expect to deliver another strong year for the Group. We will remain focussed on prudent balance sheet management, cash flow generation and shareholder returns while we continue to drive long- term value for shareholders through our key growth projects and our focus on exploration."
UPCOMING CATALYSTS
The key upcoming expected catalysts are summarised in the table below.
Table 2: Key Upcoming Catalysts CATALYST TIMING
Sabodala-Massawa Q1-2022 Completion of Definitive Feasibility Study for Phase 2 Q2-2022 Sabodala-Massawa Launch of Phase 2 construction Lafigue deposit - Fetekro property Q2-2022 Completion of Definitive Feasibility Study Shareholder returns Q3-2022 Payment of H1-2022 dividend Mana Wona Underground first stope production Q3-2022
2021 FULL YEAR PERFORMANCE AND 2022 GUIDANCE
- FY-2021 production from all operations amounted to 1,536koz, beating the top end of the guided 1,365-1,495koz range, due to out-performance at the Houndé, Ity, Sabodala-Massawa and Mana mines. FY-2021 all-in sustaining costs ("AISC") amounted to $885/oz, achieving the guided $850-900/oz range in spite of inflationary pressures. Further details are provided in the below “Operations Review” section.
Table 3: FY-2021 Performance vs. FY-2021 Guidance1
| FY-2021 | 2021 FULL YEAR GUIDANCE | |
| Production, koz AISC, $/oz | 1,536 | 1,365 — 1,495 850 — 900 |
| 885 |
1Production and AISC from all operations includes Agbaou until 1 march 2021 and the Teranga assets from 10 February 2021
- Following the divestment of the non-core Karma mine that was announced on 11 March 2022, Endeavour has updated its production and AISC guidance for its continuing operations to account for the removal of Karma’s guided production, with guidance for the other operations remaining unchanged. As a result, the Group’s updated 2022 guidance for continuing operations amounts to 1,315-1,400koz at an AISC of $880-930/oz.
Table 4: Group Production and AISC FY-2022 Guidance
| PREVIOUS FY-2022 GUIDANCE | |||||||
|---|---|---|---|---|---|---|---|
| UPDATED FY-2022 GUIDANCE1 | VARIANCE | ||||||
| Gold Production, koz 1,400 — 1,500 All-in Sustaining Cost2, $/oz 890 — 940 | 1,315 | — | 1,400 | (85) | — | (100) | |
| 880 | — | 930 | (10) | — | (10) |
1Updated FY-2022 guidance excludes production from the Karma mine, which was divested on 10 March 2022.
SHAREHOLDER RETURNS PROGRAMME
- In FY-2021, Endeavour implemented a shareholder returns programme that is composed of a minimum progressive dividend of $125.0 million, $150.0 million and $175.0 million for FY-2021, FY-2022, and FY-2023 respectively, that may be supplemented with additional dividends and buybacks, provided that the prevailing gold price remains above $1,500/oz and that Endeavour’s leverage remains below 0.5x Net Debt / adjusted EBITDA.
- Endeavour’s FY-2021 declared dividends amounted to $140.0 million or $0.56 per share, which represents $15.0 million more than the minimum dividend commitment, reiterating Endeavour's strong focus on paying supplemental shareholder returns.
- Shareholder returns are being supplemented through the Company’s share buyback programme. A total of $137.9 million, or 6.0 million shares have been repurchased from the start of the buyback programme on 9 April 2021 until year-end 2021, of which 1.9 million shares were repurchased in Q4-2021 for $43.9 million.
- As shown in the table below, since the launch of the Company’s shareholder returns programme in early 2021, a cumulative $338.0 million has been delivered to shareholders in the form of dividends and share buybacks.
Table 5: Cumulative Shareholder Returns Delivered
TOTAL SHAREHOLDER RETURNS, $m FY-2020 dividend (paid in Q1-2021) 60 H1-2021 dividend (paid in Q3-2021) 70 H2-2021 dividend (paid in Q1-2022) 70
TOTAL DIVIDENDS 200
Share buyback (bought in FY-2021) 138
TOTAL SHAREHOLDER RETURNS 338
- Endeavour has received approval from the Toronto Stock Exchange (“TSX”) to renew its Normal Course Issuer Bid (“NCIB”) for its share repurchase programme, in order to continue to supplement its minimum progressive dividend and maximize value for its shareholders. Under the NCIB, Endeavour is entitled to repurchase up to 5% of its total issued and outstanding shares as of 14 March 2022, or 12,458,989 shares, during the 12 month period of the NCIB, and up to 25% of the average daily trading volume (“ADTV”) for the six months ended 28 February 2022, calculated in accordance with the rules of the TSX for purposes of the NCIB or 195,081 shares during each trading day, excluding purchases made in accordance with the block purchase exemptions under applicable TSX policies. All ordinary shares repurchased under the share repurchase programme will be cancelled.
- The renewed NCIB will commence on 22 March 2022 and end on 21 March 2023, or such earlier date as Endeavour may complete its purchases pursuant to the notice of intention filed with the TSX.
- Under Endeavour’s prior NCIB, that commenced on 22 March 2021 and ends on 21 March 2022, Endeavour had obtained approval to purchase up to 12,172,871 ordinary shares, and purchased a total of 7,136,656 ordinary shares at a weighted average price of approximately CAD 29.32 per share.
- Endeavour’s previously announced automatic share purchase agreement with Stifel Nicolaus Europe Limited (“Stifel”) will continue to allow for the purchase of ordinary shares, subject to certain trading parameters, at times when Endeavour would not be active in the market due to regulatory close periods, its own internal trading black-out periods, insider trading rules or otherwise. Outside of these periods, ordinary shares may be repurchased in accordance with management’s discretion and in compliance with applicable law.
- Share purchases will be made by Stifel (or through its agent, Stifel Nicolaus Canada, Inc.) on the TSX and the London Stock Exchange, as well as through other designated exchanges and alternative trading systems in accordance with applicable regulatory requirements. The price paid for repurchased ordinary shares will be the market price of such ordinary shares at the time of acquisition or such other price as may be permitted in accordance with applicable regulatory requirements and Endeavour’s existing shareholder authority to conduct share repurchases. Endeavour intends to ask shareholders to renew that authority at its 2022 AGM.
CASH FLOW AND LIQUIDITY SUMMARY
The table below presents the cash flow and Net Debt position for Endeavour for the three and twelve month period ending 31 December 2021, with accompanying notes below.
Table 6: Cash Flow and Net Cash/(Net Debt) Position THREE MONTHS ENDED YEAR ENDED
| In US$ million unless otherwise specified | 31 December | 30 September | 31 December | 31 December | 31 December | |
| 2021 | 2021 | 2020 | 2021 | 2020 | ||
| Net cash from (used in), as per cash flow statement: Operating cash flows before changes in working capital from continuing operations Changes in working capital Cash (used by)/generated from discontinued operations | 327 289 (15) 87 — (11) | 629 82 38 | ||||
| 316 | 1,167 | |||||
| 40 | 8 | |||||
| — | (9) | |||||
| Cash generated from operating activities [1] Cash used in investing activities [2] Cash used in financing activities [3] Effect of exchange rate changes on cash | 356 | 313 364 (137) (97) (233) (80) (15) 4 | 1,166 | 749 (160) (71) 7 | ||
| (132) | (512) | |||||
| (71) | (431) | |||||
| (7) | (32) | |||||
| INCREASE/(DECREASE) IN CASH | 146 | (73) | 191 | 192 | 525 | |
| Cash position at beginning of period | 760 | 833 523 | 715 | 190 | ||
| CASH POSITION AT END OF PERIOD | [4] | 906 | 760 | 715 | 906 | 645 |
| Cash included in assets held for sale Corporate bond Convertible senior bond Drawn portion of corporate loan facility [5] | — | — — — — (330) (330) (500) (310) | — | 70 — (330) (310) | ||
| (500) | (500) | |||||
| (330) | (330) | |||||
| — | — | |||||
| NET CASH/(NET DEBT) POSITION | [6] | 76 | (70) | 75 | 76 | 75 |
| Net debt/Adjusted EBITDA (LTM) ratio1 [7] | (0.05) x | 0.05 x (0.09) x | (0.05) x | (0.09) x |
1Net cash / debt and Adjusted EBITDA are Non-GAAP measures. Refer to the non-GAAP measure section of the Management Report.
NOTES:
1) Operating cash flows increased by $43.4 million from $312.5 million (or $1.25 per share) in Q3-2021 to $355.9 million (or $1.43 per share) in Q4-2021 mainly due to an increase in working capital, a higher realised gold price and lower income taxes paid, while gold sales remained flat. Operating cash flow before working capital decreased by $10.8 million from $327.2 million (or $1.31 per share) in Q3-2021 to $316.4 million (or $1.27 per share) in Q4-2021. Operating cash flows increased by $417.2 million from $748.9 million (or $5.46 per share) in FY-2020 to $1,166.1 million (or $4.86 per share) in FY-2021 due to the addition of the acquired Wahgnion and Sabodala-Massawa mines on 10 February 2021 and the inclusion of the Boungou and Mana mines for the full year in 2021. The reduced operating cash flow per share in FY-2021 compared to FY-2020 is due to the reduction in working capital inflows and the increase in income taxes paid. Notable variances are summarised below:
- Working capital was an inflow of $39.5 million in Q4-2021, an increase of $54.2 million over Q3-2021 mainly due to decreases in receivables, decreases in prepaid expenses and increases in trade and other payables, which was slightly offset by a reduction in inventories. Trade and other payables was an inflow of $27.4 million which mainly relates to an increase in payables at corporate, Ity, Houndé and Mana, which was slightly offset by a decrease in payables at Karma. Receivables were an inflow of $7.8 million mainly due to a decrease in receivables at Ity related to amounts received from a local contractor, Societe de Forage et des Travaux Publics (“SFTP”). Prepaid expenses were an inflow of $12.4 million mainly due to a decrease in prepayments at Wahgnion, Houndé and Boungou. Inventories were an outflow of $8.1 million for Q4-2021 due primarily to an increase in the value of long-term stockpiles at Ity.
- Gold sales decreased slightly from 392koz in Q3-2021 to 390koz in Q4-2021. The realised gold price for Q4-2021 was $1,787/oz compared to $1,763/oz for Q3-2021 and was $1,773/oz for FY-2021 compared to $1,761/oz for FY-2020. Total cash cost per ounce increased from $743/oz in Q3-2021 to $756/oz in Q4-2021 due to lower costs at the Ity, Sabodala- Massawa and Wahgnion mines.
- Income taxes paid decreased by $13.3 million compared to Q3-2021 to $42.1 million in Q4-2021, due to lower taxes paid at Ity as a result of less ounces sold. Taxes paid in Q4-2021 included a payment of $12.1 million related to the settlement of a tax assessment related to the Massawa project.
2) Cash flows used by investing activities remained consistent with the prior quarter, amounting to $132.3 million in Q4-2021 as sustaining capital expenditures decreased while non-sustaining capital expenditure increased, as described below:
- Sustaining capital from continuing operations decreased by $11.3 million from $54.5 million in Q3-2021 to $43.2 million in Q4-2021 due to lower sustaining capital at Houndé, Sabodala-Massawa and Boungou primarily due to less planned waste capitalisation.
- Non-sustaining capital from continuing operations increased from $44.8 million in Q3-2021 to $60.4 million in Q4-2021, due to fleet and plant optimisations at Ity, Houndé and Sabodala-Massawa and to pre-stripping activities at Boungou.
- Growth capital spend decreased by $0.9 million from Q3-2021 to $11.8 million in Q4-2021 and primarily relates to the Sabodala-Massawa Phase 1 expansion and ongoing Definitive Feasibility Studies (“DFS”) studies.
3) Cash flows used by financing activities decreased by $161.7 million to $71.2 million in Q4-2021. During Q4-2021, the Company repaid long-term debt of $500.0 million, received proceeds from the issue of Senior Notes of $494.6 million, made payments towards the Company’s share buyback programme of $39.7 million and payments of financing and other fees of $19.4 million.
4) At quarter-end, Endeavour’s liquidity remained strong with $906.2 million of cash on hand and the full $500.0 million quantum undrawn under the revolving credit facility.
5) Endeavour's corporate loan facilities were increased from $430.0 million to $800.0 million in Q1-2021 to retire Teranga’s various higher cost debt facilities. In Q4-2021, Endeavour restructured its debt replacing its corporate loan facility with $500.0 million fixed rate senior notes and a $500.0 million unsecured RCF that remained undrawn at year-end. Endeavour’s debt restructuring is described in the below “Debt Refinancing” section.
6) Endeavour ended FY-2021 with a net cash financial position of $76.2 million. Net debt decreased by $145.8 million during Q4-2021 despite completing $39.7 million of shares buybacks. Net cash remained flat compared to the beginning of the year despite absorbing approximately $332.0 million of Net Debt from Teranga in Q1-2021.
7) Given the net cash position, the net debt / Adjusted EBITDA (LTM) leverage ratio stood at (0.05)x at year-end, down from 0.05x in Q3-2021, and well below the Company’s long-term target of less than 0.50x, which provides flexibility to continue to supplement its shareholder return programme while maintaining headroom to fund its organic growth. The leverage ratio remained stable year-over-year.
DEBT REFINANCING
- On 14 October 2021, the Company completed an offering of $500.0 million fixed rate senior notes (the "Notes") due in 2026 with a 5.00% annual coupon paid semi-annually. The Company also entered into a new $500.0 million unsecured revolving credit facility agreement due in 2025 with an interest rate between 2.40-3.40% plus LIBOR depending on leverage (the "New RCF") with a syndicate of international banks. The proceeds of the Notes, together with the Group’s available cash, were used to repay all amounts outstanding under the Company's existing loan facilities and to pay fees and expenses in connection with the offering of the Notes. The New RCF replaced the bridge facility and existing revolving credit facility, which were cancelled upon completion of the Notes offering.
- The New RCF and Notes extend the maturities of the Company’s existing debt structure, while providing enhanced financial flexibility and ample liquidity headroom.
EARNINGS FROM CONTINUING OPERATIONS
The table below presents the earnings and adjusted earnings for Endeavour for the three and twelve month period ending 31 December 2021, with accompanying notes below.
Table 7: Earnings from Continuing Operations
THREE MONTHS ENDED YEAR ENDED
| 31 December | 30 September | 31 December | 31 December | 31 December | ||
| 2021 | 2021 | 2020 | 2021 | 2020 | ||
| Revenue [8] Operating expenses [9] Depreciation and depletion [9] Royalties [10] | 697 | 692 553 (257) (204) (158) (93) (43) (38) | 2,778 | 1,424 (575) (261) (99) | ||
| (250) | (1,063) | |||||
| (202) | (649) | |||||
| (45) | (176) | |||||
| Earnings from mine operations | 201 | 235 | 218 | 891 | 489 | |
| Corporate costs [11] Acquisition and restructuring costs [12] Impairment charge of mining interests [13] Share-based compensation Exploration costs | (20) | (12) (8) (2) (14) — (65) (7) (5) (3) (1) | (63) | (24) (40) (65) (19) (5) | ||
| (1) | (29) | |||||
| (259) | (259) | |||||
| (7) | (32) | |||||
| (5) | (24) | |||||
| (Loss)/earnings from mine operations | (92) | 211 | 126 | 483 | 338 | |
| Gain/(loss) on financial instruments [14] Finance costs Other (expense)/income | 16 | (20) 22 (15) (13) (3) (14) | 23 | (79) (49) 9 | ||
| (25) | (66) | |||||
| (2) | (16) | |||||
| (Loss)/earnings before taxes | (104) | 172 | 121 | 424 | 220 | |
| Current income tax expense [15] Deferred income tax recovery [16] | (39) | (40) (51) 4 3 | (196) | (123) 37 | ||
| 34 | 52 | |||||
| Net comprehensive (loss)/earnings from continuing | ||||||
| [17] | (109) | 136 | 74 | 279 | 134 | |
| operations | ||||||
| Add-back adjustments [18] | 248 | 36 102 | 367 | 242 | ||
| Adjusted net earnings from continuing operations | [19] | 139 | 172 | 175 | 647 | 376 |
| Portion attributable to non-controlling interests | (7) | 20 21 | 70 | 53 | ||
| Adjusted net earnings from continuing operations | ||||||
| [19] | 145 | 152 | 154 | 577 | 323 | |
| attributable to shareholders of the Company | ||||||
| (Loss)/earnings per share from continuing operations Adjusted net earnings per share from continuing operations | (0.41) | 0.47 0.40 0.61 0.95 | 0.92 | 0.70 2.36 | ||
| 0.58 | 2.40 |
NOTES:
8) Revenue increased by $5.5 million in Q4-2021 over Q3-2021 mainly due to the higher realised gold price for Q4-2021 of $1,787/oz compared to $1,763/oz for Q3-2021, which was offset slightly by lower gold sales at the Boungou, Ity and Karma mines. Revenue for FY-2021 increased by 95% compared to FY-2020 due to the acquired Wahgnion and Sabodala-Massawa mines, which contributed a total of $926.0 million to revenue and the inclusion of the Boungou and Mana mines for the full year in 2021, which contributed a total of $682.9 million to revenue for FY-2021. In addition, gold sales at the Company’s three legacy mines increased by 76koz in FY-2021 compared to FY-2020, favourably impacting revenue by $135.9 million. The realised gold price also increased from $1,761 per ounce in FY-2020 to $1,773 per ounce in FY-2021 which accounted for an increase in revenue of approximately $30.0 million for the Company’s three legacy continuing operations.
9) Operating expenses decreased by $7.0 million in Q4-2021 compared to Q3-2021 due to decreased levels of production at the Boungou, Ity, Sabodala-Massawa and Karma mines. Depreciation and depletion increased by $43.7 million in Q4-2021 mainly due to additional depletion of the mining interests relating to TSFs based on the updated capacity estimates at yearend. FY-2021 operating expenses and depreciation increased mainly due to the acquired Wahgnion and Sabodala-Massawa mines and the inclusion of the Boungou and Mana mines for the full year in 2021.
10) Royalties slightly increased to $44.9 million in Q4-2021 over Q3-2021 due to higher realised gold prices, while the underlying royalty rate stood at 5% across all assets.
11) Corporate costs were $20.3 million for Q4-2021 compared to $12.0 million for Q3-2021. The increase in corporate costs are primarily due to costs associated with corporate integration and listing on the LSE.
12) Acquisition and restructuring costs were $1.0 million in Q4-2021 compared to $1.8 million in Q3-2021. Costs decreased in Q4-2021 compared to the prior period due to the completion of several integration projects earlier in the year, after the completion of the acquisition of Teranga.
13) Impairment of mining interests and goodwill was $259.4 million in Q4-2021 and FY-2021. The impairment was mainly due to the impairment of the Boungou mine of $246.3 million and $11.7 million for the Karma mine. The impairment of the Boungou mine was driven by a revised life of mine plan which reflects the increased operating costs, lower than expected production and processed grades, and a decrease in the estimated resource to reserve conversion and exploration potential surrounding the Boungou mine. The impairment of the Karma mine is based on the fair value of the total consideration to be received following disposal of the Karma mine.
14) The gain on financial instruments was $15.6 million in Q4-2021 compared to a loss of $20.0 million in Q3-2021. The gain in Q4-2021 was mainly due to an unrealised gain on revaluation of the conversion option on the convertible notes of $8.7 million, a gain on other financial instruments of $5.8 million, gain on change in fair value of the call rights and warrant liabilities of $1.6 million and $0.8 million respectively, and a gain on the gold collar of $6.2 million and a realised gain on forward sale of $3.7 million which are both detailed below. These gains were offset by foreign exchange losses of $8.1 million, a loss on the change in fair value of receivable measured at fair value through profit and loss of $2.3 million. The Company entered into a revenue protection programme for a portion of its production for 2022 and 2023 in order to protect against gold price volatility during its upcoming construction phase. The programme is structured as a low premium collar with a put price of $1,750 per ounce and a call price of $2,100 per ounce for a total of approximately 600,000 ounces. The premium for the collar of $10.0 million was paid in Q4-2021. In addition, the Company entered into a forward sales contract for approximately 540,000 ounces of production at average gold price of approximately $1,830 per ounce.
15) Current income tax expense was $39.4 million in Q4-2021 compared to $40.4 million in Q3-2021. Current income tax expense for Q4-2021 decreased slightly compared to Q3-2021 due to lower income tax expense at Boungou associated with lower production levels and revenue generated.
16) Deferred income tax recovery was $34.1 million In Q4-2021 compared to a recovery of $4.4 million in Q3-2021. The increase is due to the timing difference between recognising earnings and taxable earnings related to the impairments at Boungou and Karma.
17) Net comprehensive loss of $109.4 million was recorded for Q4-2021 compared to a gain of $136.4 million in Q3-2021 due to impairments charges as described in Note 14.
18) For Q4-2021, adjustments mainly included impairments on mineral interests of $259.4 million, a gain on financial instruments of $15.6 million, non-cash expense of inventory associated with the fair value adjustment on purchase price allocation of Teranga of $1.3 million, acquisition and restructuring costs of $1.0 million and other non-recurring expenses of $2.1 million. Full year adjustments include impairments on mineral interests of $259.4 million, non-cash expense of inventory associated with the fair value adjustment on purchase price allocation of SEMAFO and Teranga of $85.4 million, acquisition and restructuring costs of $29.5 million, gain on financial instruments of $22.9 million, net loss from discontinued operations of $3.7 million and other non-recurring expenses of $16.0 million.
19 Adjusted net earnings attributable to shareholders for continuing operations were $145.3 million (or $0.58 per share) in Q4- 2021 a decrease compared to $152.3 million (or $0.61 per share) in Q3-2021 due to increased depreciation and depletion, corporate costs and finance costs, which were slightly offset by an increase in deferred income tax recovery.
Q4-2021 & FY-2021 OPERATIONS REVIEW
- Continued strong safety record for the Group, with a Lost Time Injury Frequency Rate (“LTIFR”) of 0.20 for the trailing twelve months ending 31 December 2021.
- FY-2021 production from continuing operations amounted to a record 1,524koz, an increase of 721koz, or 90% over FY-2020 due to the addition of Sabodala-Massawa and Wahgnion in the first quarter of the year, full year production from Boungou and Mana (which were acquired in 2020), and stronger performances at Houndé and Ity. Over the same period, AISC from continuing operations amounted to $883/oz, an increase of $30/oz or 4% over FY-2020 due to increases at the Group’s legacy assets, which were partially offset by the addition of the low cost Sabodala-Massawa mine.
- Q4-2021 production from continuing operations amounted to 398koz, an increase of 16koz or 4% over Q3-2021, as a result of stronger performance across Houndé, Mana and Wahgnion. AISC from continuing operations increased by $11/oz or 1% to $915/oz in Q4-2021 due to higher costs at Boungou, Mana and Karma which were partially offset by lower costs at the flagship assets Houndé, Ity and Sabodala-Massawa as well as Wahgnion.
Table 8: Consolidated Group Production THREE MONTHS ENDED YEAR ENDED
| (All amounts in koz, on a 100% basis) | 31 December 2021 | 30 September 2021 | 31 December 2020 | 31 December 2021 | 31 December 2020 |
|---|---|---|---|---|---|
| Boungou1 Houndé Ity Karma Mana1 Sabodala-Massawa2 Wahgnion2 | 35 | 41 | 64 | 174 | 94 277 213 98 121 — — |
| 77 | 70 | 101 | 293 | ||
| 60 | 61 | 61 | 272 | ||
| 20 | 21 | 28 | 88 | ||
| 54 | 49 | 61 | 205 | ||
| 105 | 106 | — | 345 | ||
| 47 | 34 | — | 147 | ||
| PRODUCTION FROM CONTINUING OPERATIONS | 398 | 382 | 315 | 1,524 | 803 |
| Agbaou3 | — | — 28 | 13 | 105 | |
| GROUP PRODUCTION | 398 | 382 | 344 | 1,536 | 908 |
1Included for the post acquisition period commencing 1 July 2020.2Included for the post acquisition period commencing 10 February 2021. 3Divested on 1 March 2021.
Table 9: Consolidated All-In Sustaining Costs1
THREE MONTHS ENDED YEAR ENDED
| (All amounts in US$/oz) | 31 December 2021 | 30 September 2021 | 31 December 2020 | 31 December 2021 | 31 December 2020 |
|---|---|---|---|---|---|
| Boungou1 Houndé Ity Karma Mana1 Sabodala-Massawa2 Wahgnion2 Corporate G&A | 825 | 800 | 534 | 801 | 609 |
| 874 | 921 | 612 | 843 | 837 | |
| 854 | 915 | 1,055 | 836 | 807 | |
| 1,300 | 1,259 | 1,132 | 1,193 | 1,005 | |
| 1,116 | 1,029 | 803 | 1,026 | 853 | |
| 592 | 655 | — | 645 | — | |
| 1,066 | 1,097 | — | 994 | — | |
| 48 | 23 28 | 32 | 29 | ||
| AISC FROM CONTINUING OPERATIONS | 915 | 904 779 | 883 | 853 | |
| Agbaou3 | — | — 1,068 | 1,132 | 1,027 | |
| GROUP AISC | 915 | 904 | 803 | 885 | 873 |
1Included for the post acquisition period commencing 1 July 2020.2Included for the post acquisition period commencing 10 February 2021. 3Divested on 1 March 2021.
FY-2022 OUTLOOK
- Following the divestment of the non-core Karma mine that was announced on 11 March 2022, the Group’s production and cost guidance for continuing operations in 2022 is expected to amount to 1,315-1,400koz at an AISC of $880-930/oz. Production and AISC guidance is unchanged for all continuing operations, as published on 24 January 2022. More details on individual mine guidance have been provided in the below sections.
Table 10: Production 2022 Guidance1
| (All amounts in koz, on a 100% basis) | 2022 FULL-YEAR GUIDANCE | ||
|---|---|---|---|
| Boungou Houndé Ity Mana Sabodala-Massawa Wahgnion | 130 | — | 140 |
| 260 | — | 275 | |
| 255 | — | 270 | |
| 170 | — | 190 | |
| 360 | — | 375 | |
| 140 | — | 150 | |
| GROUP PRODUCTION FROM CONTINUING OPERATIONS1 | 1,315 | — | 1,400 |
12022 guidance from continuing operations excludes production from the Karma mine, which was divested on 10 March 2022.
Table 11: AISC 2022 Guidance1
| (All amounts in US$/oz) | 2022 FULL-YEAR GUIDANCE | ||
|---|---|---|---|
| Boungou Houndé Ity Mana Sabodala-Massawa Wahgnion Corporate G&A | 900 | — | 1,000 |
| 875 | — | 925 | |
| 850 | — | 900 | |
| 1,000 | — | 1,100 | |
| 675 | — | 725 | |
| 1,050 | — | 1,150 | |
| 30 | |||
| GROUP AISC FROM CONTINUING OPERATIONS1 | 880 | — | 930 |
12022 guidance from continuing operations excludes production from the Karma mine, which was divested on 10 March 2022.
- Sustaining and non-sustaining capital spend for continuing operations is expected to decrease by approximately $34.2 million in FY-2022 compared to FY-2021. Sustaining capital for 2022 is expected to amount to $169.0 million, compared to a spend of $166.4 million in FY-2021. Non-sustaining capital for FY-2022 is expected to amount to $173.0 million compared to a spend of $209.9 million in FY-2021. More details on individual mine capital expenditures have been provided in the mine sections below.
Table 12: Sustaining and Non-Sustaining Mine Capital Expenditure 2022 Guidance1
| (All amounts in US$m) | ||
|---|---|---|
| SUSTAINING CAPITAL | NON-SUSTAINING CAPITAL | |
| Boungou Houndé Ity Mana Sabodala-Massawa Wahgnion Non-mining | 15 | 19 |
| 44 | 18 | |
| 20 | 29 | |
| 7 | 40 | |
| 63 | 34 | |
| 20 | 23 | |
| 0 | 10 | |
| MINE CAPITAL EXPENDITURES FROM CONTINUING OPERATIONS | 169 | 173 |
12022 guidance from continuing operations excludes production from the Karma mine, which was divested on 10 March 2022.
- Total growth capital spend for FY-2022 is expected to amount to $6 million for the addition of a leach tank at Sabodala- Massawa and various study work across other assets.
- Exploration will continue to be a strong focus in FY-2022 with a company-wide exploration budget of $80 million, as detailed in the table below.
Table 13: Exploration 2022 Guidance1
2022 GUIDANCE (All amounts in US$m unless stated) 2022 ALLOCATION
| Sabodala-Massawa mine | 15 | 19% |
| Hounde mine | 14 | 18% |
| Other greenfield projects | 15 | 19% |
| Ity mine | 10 | 13% |
| Wahgnion mine | 9 | 11% |
| Lafigue project | 7 | 9% |
| Mana mine | 6 | 8% |
| Boungou mine | 4 | 4% |
| TOTAL FROM CONTINUING OPERATIONS | 80 | 100% |
Note: Approximately 50% is expected to be classified as expensed and 50% as non-sustaining capital 12022 guidance from continuing operations excludes production from the Karma mine, which was divested on 10 March 2022.
OPERATING ACTIVITIES BY MINE
Boungou Gold Mine, Burkina Faso Table 14: Boungou Performance Indicators (for the post acquisition period)
| For The Period Ended | Q4-2021 | Q3-2021 | Q4-2020 | FY-2021 | FY-2020 |
|---|---|---|---|---|---|
| Tonnes ore mined, kt Total tonnes mined, kt Strip ratio (incl. waste cap) Tonnes milled, kt Grade, g/t Recovery rate, % PRODUCTION, KOZ | 301 | 539 7,126 12.22 349 3.76 95 41 | 335 | 1,437 | 459 2,534 4.53 641 5.10 95 94 |
| 4,294 | 2,240 | 26,439 | |||
| 13.27 | 5.69 | 17.40 | |||
| 352 | 333 | 1,352 | |||
| 3.36 | 6.92 | 4.07 | |||
| 95 | 96 | 95 | |||
| 35 | 64 | 174 | |||
| Total cash cost/oz AISC/OZ | 778 | 717 800 | 516 | 695 | 592 609 |
| 825 | 534 | 801 |
Q4-2021 vs Q3-2021 Insights
- Production decreased due to a lower mined and processed grade while throughput and recovery rate remained fairly flat.
- Total ore tonnes mined decreased due to a focus on the planned pre-stripping activities at the East Pit in order to open up access to ore in 2022.
- Tonnes milled remained at high level due to enhancements made to the SAG mill, pebble crusher and the vertical tower mill earlier in the year.
- Processed grade decreased in line with the mining sequence as a result of mining in low grade areas of the West Pit.
- AISC increased due to lower ounces sold which was partially offset by lower sustaining capital and lower operating costs.
- Sustaining capital expenditure of $1.6 million was lower than the $3.4m incurred in Q3-2021 and mainly related to the third TSF wall raise and capital spares and equipment for the processing plant. Non-sustaining capital expenditure of $9.0 million related to pre-stripping at the East pit, an increase compared to the $5.4m incurred in Q3-2021 which also related to prestripping at the East pit.
FY-2021 Performance
- FY-2021 production of 174koz was slightly below the guided 180-200koz range as a result of lower processed grades. AISC of $801/oz was in line with the outlook provided in Q3-2021, which stated that AISC is expected to continue to trend above the guided $690 - 740/oz range as a result of higher fuel prices and increased security costs. FY-2021 production was significantly above FY-2020 due to the benefit of consolidating a full year of operations and the restart of mining at Boungou in Q4-2020. AISC of $801/oz was higher than FY-2020, as the prior year period benefitted from the processing of higher grade stockpiled ore after the re-start of mining operations.
2022 Outlook
- Boungou is expected to produce between 130—140koz in FY-2022 at an AISC of between $900—1,000/oz.
- Mining activities in H1-2022 will focus on waste stripping and ore extraction from the East pit in addition to waste stripping in Phase 3 of the West pit. In H2-2022, stripping activities will continue in both pits, while ore will be sourced mainly from the West pit. Due to the flat dipping nature of the orebody, progressive backfilling activity will be undertaken in mined out areas of the pit which is expected to benefit mining costs and ultimately rehabilitation costs. Mill throughput is expected to remain broadly consistent with the FY-2021 performance while grades are expected to decline in line with the life of mine schedule.
- Sustaining capital expenditure is expected to decrease from approximately $18.1 million in 2021 to $15.0 million in FY-2022 mainly due to the conclusion of Phase 2 waste stripping at the West pit in FY-2022.
- Non-sustaining capital expenditure is expected to decrease to approximately $19.0 million in FY-2022 compared to $22.9 million in FY-2021, with FY-2022 spend primarily relating to a significant cut back at the East pit.
Houndé Gold Mine, Burkina Faso Table 15: Houndé Performance Indicators
| For The Period Ended | Q4-2021 | Q3-2021 | Q4-2020 | FY-2021 | FY-2020 |
|---|---|---|---|---|---|
| Tonnes ore mined, kt Total tonnes mined, kt Strip ratio (incl. waste cap) Tonnes milled, kt Grade, g/t Recovery rate, % PRODUCTION, KOZ | 777 | 596 11,966 19.07 1,142 2.11 92 70 | 2,120 | 4,397 | 5,324 43,495 7.17 4,228 2.21 93 277 |
| 12,297 | 10,741 | 49,917 | |||
| 14.83 | 4.07 | 10.35 | |||
| 1,226 | 1,117 | 4,622 | |||
| 2.05 | 3.06 | 2.13 | |||
| 94 | 94 | 92 | |||
| 77 | 101 | 293 | |||
| Total cash cost/oz AISC/OZ | 684 | 631 921 | 541 | 675 | 703 837 |
| 874 | 612 | 843 |
Q4-2021 vs Q3-2021 Insights
- Production increased due to the higher recovery rates as well as the increased mill tonnage despite the lower grade milled.
- Tonnes of ore mined significantly increased due to increased oxide ore mined in the Kari area, as ore mining commenced in the Kari West pit, which allowed for greater machine efficiency. In H2-2021, ore tonnes mined were significantly lower than tonnes milled as a greater focus was placed on waste extraction activities at Kari Pump, Vindaloo Main and Kari West, taking advantage of the flexibility provided by the available ore stockpiles.
- Tonnes milled increased as the plant feed was made up of predominantly oxide ore from the Kari Pump and Kari West pits, supplemented by fresh materials from the Vindaloo deposit and stockpiles.
- Average processed grades slightly decreased despite higher grades mined at Kari Pump mainly due to supplemental feed being sourced from lower grade stockpiles.
- Recovery rates increased due to the higher proportion of oxide ore processed from Kari Pump and Kari West.
- AISC decreased primarily due to lower sustaining capital expenditure as well as lower unit processing cost on account of increased oxide material milled, which lowered grinding media costs and reagent consumption. This overall decrease was partially offset by higher mining costs associated with longer hauling cycle times from the Kari Pump and Kari West pits.
- Sustaining capital of $13.9 million is lower than the $21.9 million incurred in Q3-2021 and related to waste capitalisation at the Vindaloo Main and Kari Pump pits and fleet re-builds.
- Non-sustaining capital of $6.8 million is higher than the $0.6 million incurred in Q3-2021 and primarily related to the costs associated with the development of the Kari West pit and new mining fleet acquired.
FY-2021 Performance
- Production for FY-2021 totalled 293koz, beating the guided 230-250koz range driven by mining efficiencies at the Kari area pits enabling access to greater volumes of high grade oxide ore. AISC amounted to approximately $843/oz, well below the guided $865-895/oz range due to the benefit of higher production.
- Production increased compared to the prior year due to higher throughput as a greater proportion of oxide ore from Kari Pump was milled. This was partially offset by slightly lower grades and recoveries. AISC of $843/oz remained broadly in line with the prior year.
2022 Outlook
- Following a record 2021 performance, Houndé is expected to produce between 260—275koz in 2022 at AISC of $875— 925/oz.
- Mining activities in FY-2022 will focus on Vindaloo Main, Kari Pump and Kari West. In H1-2022, ore will primarily be mined from Kari Pump, supplemented by Vindaloo Main, while stripping is underway at Kari West. In H2-2022, ore will be mined from Kari Pump and Kari West, once stripping has been completed. Mill throughput and recoveries are expected to decline slightly in FY-2022 due to changes in the ore blend.
- Sustaining capital expenditure is expected to decrease from $49.1 million in FY-2021 to approximately $44.0 million in FY- 2022, with FY-2022 expenditure relating mainly to waste extraction and fleet re-builds.
- Non-sustaining capital expenditure is expected to remain broadly consistent with the $17.1 million in FY-2021 at approximately $18.0 million in FY-2022. The FY-2022 expenditures are mainly related to waste stripping, resettlement and associated mine infrastructure in the Kari area and completion of a TSF wall raise.