Endeavour Mining (EDV.TO, ASX:EVR) has announced an update to the market regarding its expected production and cash costs. After producing almost 150,000 ounces of gold in the first half of the year, Endeavour expects to produce between 165,000 and 180,000 ounces of gold in the second half of the year which would bring its total output to 315,000-330,000 ounces. This increase is caused by the grade improvement at Nzema (from 1.6g/t to 1.9g/t) and the completed mill expansion at Tabakoto (from 2200tpd to 4000 tpd). Full year cash costs are expected to be around $840-880/oz, which is relatively high.
As Agbaou will start producing in Q1 2014, Endeavour Mining remains on schedule to produce 400,000 ounces of gold next year and is targeting a sustaining cash cost of approximately $1000/oz. Using a gold price of $1300/oz and 413M outstanding shares, Endeavour Mining is currently trading at just 2.2 times the expected 2014 cash flow.
The company also announced an increased and extended debt facility. The $350M revolving credit facility has a maturity date in 5 years and is subject to financial covenants, such as a maximum net debt/EBITDA ratio and a minimum net tangible book value of $600M.
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Disclosure: The author holds a long position in Endeavour Mining. Please see our disclaimer for current positions.
