A Deep Discounted Emerging Gold Producer
August 3, 2011
Shares of Endeavour Mining (EDV) rallied higher this morning after the company provided an operational update on their operating Youga Mine in Burkina Faso and feasibility-stage Agbaou project in Ivory Coast.
At Agbaou where infill drilling started in June 2011, results received to date demonstrate consistent continuity of grades and widths, confirming the quality and interpretation of the mineralized zones within the deposit. Intersections include 24 m at 10.66 g/t gold and 10 m at 17.06 g/t gold. In addition, significant new exploration results were obtained from condemnation drilling in areas being concept-ually considered for a tailings storage facility and the waste rock dump. Intersections from the waste rock dump area included 4 m at 9.75 g/t gold and 6 m at 3.58 g/t gold.
At the Youga Mine, positive technical evaluation work for the expansion of the Main and East pits was received, and the 2010 NI 43-101 resource estimate will be updated during the Q4 2011 to include the encouraging exploration results on the periphery of the current pits. Exploration results from a resource delineation and expansion program at the nearby Ouar� deposit, 40 km NW of the Youga Mine, include 8.8 m of 3.83 g/t gold and 6.4 m of 2.55 g/t gold, confirming earlier interpretation and demonstrating continuity at the Ouar� Main Zone. Metallurgical testwork is being initiated at Ouar� in preparation for scoping studies to evaluate whether the deposit will be fed to the Youga mill or be developed as a heap leach operation.
Management noted that in Q2 the Youga Mine produced 21,575 oz of gold. Based on actual production results of 41,631 oz for the first half of 2011 and the budgeted plan for the remainder of 2011, full-year guidance of approximately 84,000 oz was confirmed. EDV is scheduled to release its full Q2 2011 results on Wednesday, August 10.
Review Endeavour Mining (EDV) is a gold producer with an extensive exploration land position and various advanced-stage development gold projects in West Africa. They are executing on a compelling growth strategy, supported by deep financial resources and a strong management team with company-building expertise. The company's immediate goal is to gain market recognition and higher cash flow multiple as an intermediate gold producer, and achieve growth through both the drill bit and strategic acquisitions.
The company continues to make substantial progress, building on its already significant resources to increase shareholder value. The stock price however has languished. Given new highs in the price of gold as the metal trades through $1,670/oz, EDV seems disconnected even within an already deeply discounted gold producer sector. This provides a compelling and timely opportunity for investors.
We suspect savvy investors scouring the gold sector in this oversold "risk-off" environment will find EDV particularly appealing. Today we added 25,000 shares to the Model Portfolio at an average $2.396 per share to hold 125,000 shares with an average cost of $1.91/share.
We expect EDV to attract a broader institutional interest as it extends the life of its operating Youga mine, optimizes the Agbaou gold project, and uses its substantial financial resources to add new production. In mid-July Endeavour had cash and marketable securities of ~US$195 million ($1.71 per share), was debt-free, and had available an undrawn US$100 million acquisition debt facility.
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Stephen Roberts, Senior Vice President - Investor Relations Tel: 604.609.6130 sroberts@endeavourmining.com Vanguard Shareholder Solutions Tel: 604.608.0824 Toll Free: 866.341.4111 investor@endeavourmining.com www.endeavourmining.com |