Endeavour Mining PLC (LSE:EDV, TSX:EDV, OTCQX:EDVMF, FRA:6E2) has set an ambitious new target to discover 15-20 million indicated ounces of gold from its projects in West Africa over the next five years.
Over the past four years, the FTSE 250 miner has defined 8.5 million ounces (Moz) of indicated resources and said it will use the same ranking and screening methodology for its new plans with discovery costs forecast to be less than US$25 per oz.
Sebastien de Montessus, Endeavour chief executive said: “Our exploration success has been a significant value creation driver over the past four years. Our track record gives us the confidence to set ambitious new targets and, given the strong expected returns, investment in exploration will continue to be an important component of our capital allocation framework”.
The exploration strategy is built around extending the mine lives of its core assets to well beyond ten years, he said, as well as discovering new greenfield projects.
In particular, de Montessus said that the Sabodala-Massawa, Houndé and Ity mines all have potential to be Tier 1 assets with "over 10mln oz resource endowment, inclusive of historical production," de Montessus added.
Significant discoveries have recently been made at Ity, Houndé, Sabodala-Massawa and Fetekro. Endeavour’s acquired assets (Semafo, Teranga) meanwhile have the potential to grow their current resources by as much as 60%, he noted: “Setting these exploration targets demonstrates our commitment to both near-term and long-term growth.”
De Montessus said that as an investment, Endeavour now offers long-term visibility, a minimum progressive dividend supported by a robust five-year production outlook, growth prospects from existing projects and now a five-year discovery horizon.
Endeavour Mining generates all of its production from West Africa with Burkina Faso, Senegal and the Ivory Coast key areas where it operates
Notes offering, credit facility
Separately, Endeavour Mining announced the launch of an offering of fixed-rate senior notes due 2026 as well as the entry into a new revolving credit facility.
The proceeds of the notes will be used to repay all amounts outstanding under the group’s $370 million bridge term loan facility, which was used to retire higher cost debt facilities acquired upon the acquisition of Teranga Gold Corporation; to repay the $130 million drawn under the group’s existing revolving credit facility (RCF), and to pay fees and expenses in connection with the offering of the notes.
The company said it has entered into a $500 million RCF with a 4-year tenor, which may increase in accordance with its terms up to an aggregate amount of $650 million, with borrowing availability in US dollars for the general corporate purposes of the company and certain of its subsidiaries. This new revolving credit facility will replace the Bridge Facility and the existing RCF, which will be cancelled upon completion of any Notes offering.
The effectiveness of the new RCF is conditioned upon the closing of any notes offering.
Endeavour was recently promoted to the FTSE 250 after listing in London in June. The company's stock is also listed in Toronto and New York.
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Contact the author at jon.hopkins@proactiveinvestors.com