Shares of London-based Endeavour Mining plc (GB:EDV) fell 3.3% yesterday, hitting a new 52-week low of 1,334p after the company provided its Q4 FY23 trading update and outlook for Fiscal 2024. EDV said that it marginally exceeded the FY23 gold production target by producing 1,072 koz (thousand ounces), marking the 11th consecutive year of beating or meeting guidance. Plus, the company expects Fiscal 2024 gold production to increase by 18% to reach 1,130 to 1,270 koz, thanks to new projects. However, higher-than-anticipated costs in FY23 dragged down Endeavour shares.
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FTSE 100-listed Endeavour Mining is a multinational gold mining company. It owns and operates gold mines in Côte d’Ivoire, Burkina Faso, and Senegal. EDV shares have lost roughly 30% in the past year.
Here’s How Endeavour Mining Performed in FY23
In Q4 FY23, EDV’s production remained flat compared to the third quarter at 280 koz, while All-in Sustaining Costs (AISC) fell by 3.2% to $936/oz. Endeavour Mining said that output in the second half of FY24 will jump as the work in the Sabodala-Massawa mine and the new Lafigué projects will be completed and start production.
Despite the ongoing production ramp-up, shareholders were disappointed by the increasing AISC that averaged $964/oz for the year, much higher than the guidance. This was due to increased royalty costs, which are expected to remain high in 2024 as well. For Fiscal 2024, EDV expects AISC in the range of $955/oz to $1,035/oz.
On the brighter side, Endeavour Mining declared a second-half 2023 dividend of $100 million, totaling $200 million for the year, 14% higher than its minimum commitments. Plus, EDV undertook a share buyback of $26 million in Q4, bringing the total to $66 million for FY23.
EDV’s newly instated CEO, Ian Cockerill, said he was happy that the company exceeded the production guidance and remains one of the “lowest all-in sustaining cost producers within the sector.” He also looks forward to increasing shareholder returns once the two ongoing organic growth projects become live.
Is Endeavour Mining a Good Buy?
Following the Q4 update yesterday, Stifel Nicolaus analyst Andrew Breichmanas reiterated a Buy rating on EDV stock but cut the price target to 2,200p (64.7% upside) from 2,350p. the analyst is encouraged by the production guidance and the targeted AISC. Breichmanas expects the company to return to significant free cash flow generation and enhance shareholder returns.
With nine unanimous Buy ratings, EDV stock commands a Strong Buy consensus rating on TipRanks. The Endeavour Mining share price forecast of 2,243.95p implies 68% upside potential from current levels.
