Endeavour Mining - Q419 and FY19 results ahead of expectations

Fourth quarter adjusted EPS at Endeavour of US$0.336 was materially ahead of both our (US$0.188) and consensus (US$0.21–0.27) forecasts, despite all operations being affected by an extension of the traditional Q3 rainy season into Q4. The positive performance was driven by a close control of all-in sustaining costs (AISC), which were US$819/oz for the quarter (cf our forecast of US$884/oz and a consensus of US$869/oz). Production (which was already known) was exactly in line with our prior expectations, albeit it was better at Houndé and Agbaou and worse at Karma. We have now updated our forecasts to reflect FY20 guidance and (in the aftermath of the recent turbulence) a lower gold price. Although this has entailed a reduction in our FY20 estimates – in part owing to a continuation of higher total cash costs for longer – they are nevertheless inherently conservative in their assumptions surrounding Kari Pump (see page 6) and remain materially higher than FY19, reflecting Endeavour’s evolution from a cash consumer to a cash generator.