Endeavour Mining - Strong Q2 tees up strong H2

Endeavour’s Q220 results were materially ahead of both Edison and consensus estimates. Adjusted EBITDA of US$120.2m was within 7.5% of the first quarter’s record, while adjusted net earnings reached a new recent record of US$52.8m, or 47.6c/share. At least as importantly, all operations were reported to be continuing to operate at near-normal levels, despite COVID-19. As a result, we have upgraded our FY20 forecasts materially, driven by sharply increased production in Q4 in particular, combined with a materially higher gold price. Given its current rate of deleveraging, we calculate that Endeavour could be net debt free early in FY21, at which point it is likely to transition to dividend payments and a focus on shareholder returns at the same time as developing new projects, such as Fetekro (currently valued at US$1.68/share – see page 12).