UBS has identified Endeavour Mining PLC (LSE:EDV, TSX:EDV, OTCQX:EDVMF) as being at a “free cash flow inflection” point, maintaining its ‘buy’ rating and setting a price target of £20 per share.
The bank argues that improving cash flow and debt reduction could help narrow the valuation gap between Endeavour and its peers in the gold sector.
Following a challenging 2024, where higher costs and production shortfalls affected performance, the company is now positioned for recovery.
UBS highlights strong free cash flow in the fourth quarter, expecting this momentum to continue in 2025. The company has issued gold production guidance of 1.11 to 1.26 million ounces, with all-in sustaining costs—a key industry metric—forecast between $1,150 and $1,350 per ounce.
UBS sees Assafou, Endeavour’s major project in Ivory Coast, as a significant growth driver.
According to a pre-feasibility study, Assafou is expected to produce around 330,000 ounces of gold annually for at least 10 years, with costs below $900 per ounce.
UBS believes this will help Endeavour increase total output by 50% to over 1.6 million ounces by 2029.
Challenges remain, including production setbacks at Sabodala-Massawa in Senegal and operational risks in Burkina Faso, but UBS sees these as manageable. The bank expects cash flow improvements to strengthen the company’s financial position, boosting investor confidence over time.
At an estimated 2025 free cash flow yield of nearly 15%, UBS considers Endeavour undervalued compared to other gold producers. The bank argues that consistent cash flow and debt reduction will support a re-rating of the stock.
The shares were changing hands for £17.45.