Endeavour Mining produced more ounces at a lower cost in Q2 2014.
The company will very likely hit the mid-range of its official cost guidance and the upper end of its production guidance.
The development pipeline is starting to look empty, and I expect Endeavour to make another Africa-focused acquisition shortly.
Endeavour Mining (OTCQX:EDVMF), the Africa-focused gold mining company, has just released its financial statements for the second quarter of this year. The total production came in at just over 122,000 ounces of gold at an all-in sustaining cash cost (which includes sustaining capex, G&A, exploration expenditures) of $1,021/oz (which is approximately $170/oz higher than the "cash" cost of the gold). This AISC is an improvement over Q1, when the AISC was still higher than $1050/oz, and indicates Endeavour Mining is on the right path to become free cash flow-positive.
These numbers aren't very surprising, as Endeavour Mining has repeatedly stated it was aiming to reach an AISC of $1000/oz, and it seems to be on its way to do so, as the company is staying within its official AISC guidance of $985-1070/oz. The output of 228,000 ounces of gold in H1 2014 means the company is on track to meet my expectation of 450,000 ounces of gold being produced in calendar year 2014 (even though the official guidance calls for an output of 400-440,000 ounces). This means there's only one uncertainty left; its development pipeline is looking quite empty, and I'm expecting Endeavour to announce an acquisition within the next few months.
The company's share price increased substantially since my first article, and at this moment, I would remain on the sidelines - even though the company has ticked every box it was supposed to tick. I was aiming for a production of 450,000 ounces of gold in 2014 at an AISC of $1000/oz, and it looks like the production will be coming in exactly around that number. The costs will be slightly (less than 5%) higher than I anticipated, but the situation obviously isn't worrisome.
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