Endeavour Mining posts record $761M free cash flow as gold surges

Endeavour Mining plc (LSE:EDV, TSX:EDV) generated record first-half free cash flow of $761 million, up 48% from a year earlier, as surging gold prices more than offset a 13% drop in production and sharply higher costs.

"The strong free cash flow generation and healthy net cash balance sheet position of $254 million means we are well positioned to deliver sector leading organic growth and shareholder returns," Chief Executive Officer Ian Cockerill said.

Adjusted EBITDA rose 38% to $1.61 billion in the six months ended June 30, while adjusted net earnings increased 69% to $672 million, or $2.78 per share. The results were driven by a 55% jump in the realized gold price to $4,579 an ounce, which outweighed a decline in output to 564,000 ounces and a 46% increase in all-in sustaining costs to $1,871 an ounce.

The West Africa-focused gold miner maintained its full-year production guidance of 1.09 million to 1.265 million ounces, with operating performance weighted toward the fourth quarter. All-in sustaining costs are expected to land within the $1,600 to $1,800 per ounce range when adjusted for the impact of higher gold-linked royalties, which added $184 an ounce to costs in the first half.

Record Shareholder Returns

Endeavour returned a record $301.5 million to shareholders in the first half, more than double its minimum commitment, comprising a $230 million dividend and $71.5 million in share buybacks. The company has returned over $1.9 billion since the start of 2021, 85% above its minimum commitment over that period.

The company declared a H1-2026 dividend of approximately $0.95 per share, payable Oct. 9, with an ex-dividend date of Sept. 10 on the London Stock Exchange and Sept. 11 on the Toronto Stock Exchange.

Mine-Level Performance

Production at the Houndé mine in Burkina Faso fell to 110,000 ounces from 161,000 a year earlier, while Ity in Côte d'Ivoire produced 148,000 ounces, down from 168,000. The Mana mine, also in Burkina Faso, is expected to fall below its 155,000- to 180,000-ounce guidance range after the accelerated depletion of the high-grade Siou underground deposit. Lafigué in Côte d'Ivoire is tracking toward the top half of its 170,000- to 195,000-ounce guidance after throughput exceeded design nameplate by 8.5% in the first half.

Growth Pipeline

Endeavour expects to make a final investment decision on the Assafou project in Côte d'Ivoire by year-end. The project, which has an after-tax net present value of $5.1 billion and a 55% internal rate of return at a $4,000 gold price, is designed to produce 320,000 ounces annually at an all-in sustaining cost of $1,026 per ounce over its first eight years.

The Sabodala-Massawa underground expansion in Senegal is on track to launch in the second half, with first development ore targeted by year-end. The company also expects to deliver significant resource updates at the Vindaloo Deeps and Kawsara discoveries in the second half.

Financial Position

Endeavour ended the quarter with a net cash position of $254 million and total available liquidity of $1.54 billion, including $1.25 billion in cash and $290 million available under its revolving credit facility. The company subsequently repaid the outstanding balance on its revolving credit facility after quarter-end.

The record cash generation and strong balance sheet position Endeavour to fund its organic growth pipeline while maintaining sector-leading shareholder returns. Investors will watch for the Assafou final investment decision by year-end and the ramp-up of the Sabodala-Massawa underground expansion in the second half.

This article is for informational purposes only and does not constitute investment advice.