ADAMUS RESOURCES PTY LTD 
By January 22, 2013
Endeavour Mining Delivers 310,000 Oz Gold Production Exceeding 2012 Guidance And Provides 2013 Forecast
Vancouver, January 22, 2013 - Endeavour Mining Corporation ("Endeavour" or the "Corporation") (TSX:EDV, ASX:EVR, OTCQX:EDVMF) announces total annual production for 2012 of 310,778 ounces of gold exceeding the 2012 production guidance range of 282,000 to 304,000 ounces. For 2013, Endeavour expects gold production in the range of 310,000 to 345,000 ounces at a cash cost per ounce (excluding royalties) of $790 to $830, with all gold sold at spot prices due to recent de-hedging transactions. Additional near-term production growth of over 100,000 ozs per year is expected from the Agbaou Gold Mine which is currently in construction (Q1 2014 completion). A recently completed Preliminary Economic Assessment (PEA) shows potential for 160,000 ozs per year from the Houndé Gold Project (Burkina Faso) in 2016.
(All amounts in US dollars unless otherwise indicated)
Neil Woodyer, CEO, stated
"2012 was a strong year of growth for your company. We continued to increase the scale of the business with the successful acquisition of Avion in October 2012, and we delivered above guidance gold production for the quarter and the year.
Agbaou construction is on schedule for completion in Q1 2014 with commitments to date on-track at 46% of budget. Expansion of the Tabakoto mill is progressing on schedule for completion by the end of Q1 2013, with ramp-up in the following quarter.
We are also pleased to be rapidly advancing the Houndé Gold Project with a significant increase in the Indicated mineral resource to 1.46 million ounces and Inferred mineral resource of 749,000 ounces, the positive PEA announced today, and the anticipated completion of a Feasibility Study led by Lycopodium in Q4 2013.
Endeavour is now producing gold at a rate of over 300,000 ounces per year from three mines - a significant increase compared to 82,400 ounces produced from only one mine in 2010. The expansion of Tabakoto and start of production at Agbaou are anticipated to add an additional approximately 150,000 ounces per year, with Houndé potentially adding a further 160,000 ounces of production per year, bringing Endeavour to over 550,000 ounces from five mines in 2016.
During 2013 we will be focused on realizing this growth from our existing assets with a $195 million capital program, and $32 million of exploration and feasibility study programs. In addition to Agbaou construction, the Tabakoto expansion, and the capital needs of Nzema and Youga, this will include the completion of a cost reduction and profit improvement plan at Tabakoto, completion of the access development at Segala, and focused exploration on Tabakoto and Kofi.
We anticipate that, at current market prices, we can fund our planned capital expenditure program over the next 3 to 4 years, including Houndé, from current financial resources. In view of changing market conditions, and changes and updates to our project development and implementation plans as they evolve and mature, we must maintain our financial flexibility and liquidity. We believe that this can and should be achieved by expanding our bank credit facilities rather than accessing the equity markets.
We have also maximized the company's exposure to the gold price in 2013 by eliminating the 2013 hedge positions at Tabakoto and Nzema in December 2012."
2012 Production Results by Mine
Table 1 Nzema Gold Mine, Ghana - 2012 Production
Nzema, Ghana |
2012 |
2012 Q4 |
2012 |
2012 | |||||
Ore Milled ('000 t) | 1,616 | 528 | 2,144 | ||||||
Milled Grade (g/t Au) | 1.78 | 1.85 | 1.80 | ||||||
Gold Production (ozs) | 82,780 | 26,667 | 109,447 |
102,000 | |||||
Cash Cost per Ounce | $709 | ||||||||
Cash Cost per Ounce | $675 |
In guidance |
In guidance | $680 - $700 |
Table 2 Youga Gold Mine, Burkina Faso - 2012 Production
Youga, Burkina Faso |
2012 |
2012 Q4 |
2012 |
2012 | |||||
Ore Milled ('000 t) | 772 | 241 | 1,013 | ||||||
Milled Grade (g/t Au) | 2.90 | 3.03 | 2.92 | ||||||
Gold Production (ozs) | 69,379 | 21,651 | 91,030 |
85,000 | |||||
Cash Cost per Ounce Produced (US$/oz)1,2 | $616 |
In guidance |
In guidance | $655 - $675 |
Table 3 Tabakoto Gold Mine, Mali - 2012 Production
Tabakoto, Mali |
2012 |
2012 Q4 |
2012 |
2012 | |||||
Ore Milled ('000 t) | 616 | 185 | 801 | ||||||
Milled Grade (g/t Au) | 4.76 | 4.42 | 4.70 | ||||||
Gold Production (ozs) | 87,030 | 23,271 | 110,301 |
95,000 | |||||
Cash Cost per Ounce Produced (US$/oz)1,2 | $874 | n/a |
* Tabakoto production guidance provided by Avion Gold Corporation, July 4, 2012 news release
Full year 2012 gold production totalled 310,778 ounces, and cash operating costs are estimated to be in line with 2012 guidance. Endeavour anticipates providing the Q4 2012 and full year 2012 cash operating costs with the audited financial statements to be released in March 2013.
The preliminary Q4 2012 production and other financial information provided in this news release are approximate figures and may differ from the final results included in the 2012 annual audited statements and MD&A. In addition, as Endeavour completed its acquisition of Avion Gold Corporation effective October 18, 2012 the consolidated financial statements will only include results from the Tabakoto Gold Mine for the 75 day period of October 18 to December 31, 2012.
2013 Guidance
Endeavour's 2013 gold production is forecast to be 310,000 to 345,000 ounces at a cash cost per ounce (excluding royalties) of $790 to $830.
Table 4 2013 Production and Cash Cost Guidance
Gold Production |
Cash Cost per Ounce | ||||||||||
2012 |
2013 |
2013 | |||||||||
Nzema, Ghana | 109,446 | 100,000 - 110,000 | $780 - $820 | ||||||||
Youga, Burkina Faso | 91,030 | 75,000 - 85,000 | $740 - $780 | ||||||||
Tabakoto, Mali | 110,301 | 135,000 - 150,000 | $830 - $870 | ||||||||
TOTAL | 310,777 | 310,000 - 345,000 | $790 - $830 | ||||||||
Forecast 2013 Costs as Compared to 2012
-
Nzema: Cost increase is primarily driven by higher mining costs due to increasing requirements for drilling and blasting as Salman moves into transition ore, the additional 9 km trucking distance of ore from Anwia-Teleku Bokazo, and increased labour costs in Ghana. Gold production from Anwia-Teleku Bokazo pit started in December 2012 at a lower rate than planned for Q1 2013 due slower than expected access from the community to start mining in this area, however, it is anticipated that the rate will improve during subsequent quarters.
-
Youga: Cost increase is primarily driven by an approximate 15% increase in the total tonnes to be mined and a 5% local payroll increase.
- Tabakoto: The operation has undertaken an in-depth review of the organization, working practices and management reporting systems as part of the integration program, with a specific focus on reducing operating cost while increasing production.
-
$17 million of sustaining capital which is equivalent to between $50 and $55 per ounce of forecast 2013 production. The sustaining capital includes: $3 million at Nzema, $9.5 million at Tabakoto and $4.5 million at Youga.
- $190 million of development capital, with the most significant items being $106 million for Agbaou construction, $7 million for Tabakoto mill expansion and $29 million for underground ramp and access development at the Segala and Tabakoto underground mines, $17 million for the Anwia-Teleku Bokazo access and resettlement at Nzema, and $12 million for the Houndé Gold Project feasibility study.
Update on Near-term Production Growth Projects
Tabakoto Gold Mine, Mali - Expansion to be Completed in Q1 2013
Expansion of the Tabakoto mill capacity from 2,000 tonnes per day (tpd) to 4,000 tpd is proceeding on schedule, with all contractors on site since November of 2012. The expansion is expected to be completed by the end of March 2013, after which ramp-up of throughput will begin.
Agbaou Gold Mine, Côte d'Ivoire - Currently in Construction
Construction at Agbaou is progressing well and is on-schedule for production beginning in Q1 2014. Earthworks are well-underway, including clearing of all construction areas and the access road construction was also recently completed. Civil works are advancing, with CIL ring beams completed in December 2012 and foundations for SAG and ball mills recently poured. The five year mining contract was awarded to BCM International Ltd. and approximately 46% of the total construction cost of $159 million has been committed. In February 2013 we expect completion of the next major milestone: structural steel delivery. Endeavour continues discussions with the Côte d'Ivoire government regarding the mining convention for Agbaou.
Houndé Gold Project, Burkina Faso - PEA Completed, Infill-drilling Underway, Feasibility Study Commenced
Endeavour's potential production growth profile has been significantly enhanced today with the announcement, in a separate news release, of the results of the PEA on the Houndé Gold Project in Burkina Faso. Endeavour currently has a 100% interest in the Houndé Gold Project, situated in the south-western region of Burkina Faso just south of Semafo's Mana mine. Upon achieving gold production, Endeavour's ownership will become 90% with a 10% carried interest held by the government of Burkina Faso.
Incorporation of potential production from Houndé revises Endeavour's growth trajectory from the current 300,000 ounces per year to over 550,000 during 2016. This includes Agbaou and potential production from Houndé as well as additional production from the mill expansion at Tabakoto.
The PEA includes an updated resource estimate which shows a 63% increase in the Indicated mineral resources to 23,708,000 tonnes at 1.91 g/t Au containing 1,456,000 ounces of gold and a 6% increase in the Inferred mineral resource to 12,210,000 tonnes at 1.91 g/t Au containing 752,000 ounces of gold.
Houndé PEA Study Highlights, discussed in the separate news release, include on a 100% basis:
-
Estimated potential average annual production of 161,000 gold ozs per year over a 10 year mine life, with total life of mine production of 1.61 million ozs
-
An average 91% process recovery at a milling rate of 8,000 tonnes per day supplying a conventional gravity and CIL circuit
-
Owner operated open pit mining and a potentially economic portion of the resource is 28 million tonnes grading 2.0 g/t Au (at 0.91 g/t Au cut-off); comprised of 20.6 Mt at 2.0 g/t of Indicated mineral resources plus 7.3 Mt at 2.1 g/t of Inferred mineral resources
-
Initial start-up capital is estimated at $303 million with sustaining capital estimated at $57 million (excluding VAT and import duties)
-
Total initial funding requirement is estimated at $345 million including start-up capital, VAT, import duties and certain first year equipment purchases
-
Forecast life of mine direct cash cost of $563 per ounce (excluding royalties)
-
The project yields, on an after-tax basis:
At $1,300/oz Gold Price
(Base Case)At $1,650/oz Gold Price
(Sensitivity)NPV 0%
$505 million
$920 million
NPV 5%
$288 million
$584 million
IRR
21%
34%
The PEA is preliminary in nature as it includes Inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves at this time, and as such there is no certainty that the preliminary assessment and economics set forth in the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability. The PEA should not be considered a substitute for a preliminary feasibility study.
All current mineral resources on the Houndé property lie within the Kari Nord and Kari Sud concessions ('Initial Licenses Areas') and are subject to a Transfer and Claw-Back Option Agreement with African Barrick Gold plc ("African Barrick"). If the resources on the Initial Licenses Areas, as determined by an independent feasibility study, are less than 3 million ounces then African Barrick does not have any claw-back right but retains a 2% NSR.
In addition, in order to advance the Houndé Gold Project, Endeavour started an infill drilling program on assuming control of the project in October 2012. The drilling program is almost 70% complete and due to finish in early February 2013. The infill drilling program is designed to reclassify Inferred Mineral resources to Measured and Indicated classifications and results to date demonstrate excellent continuity of the mineralized zones.
Furthermore, Endeavour has commissioned a Feasibility Study to be delivered in Q4 2013 by Lycopodium, the EPCM contractor for construction of our Agbaou and Nzema mines. Other contributors to the Feasibility Study include Cube Consulting, Orelogy and Knight Piesold.
Mine-life Extensions
Ouaré - PEA Results in an Attractive Potential Addition to Extend Youga Life
Micon International Limited (Micon) was contracted to complete a PEA to examine production scenarios for the Ouaré deposit and concluded that trucking mineralized material approximately 41 km to the Youga Mine as a supplemental feed to existing reserves is preferable to a standalone operation. The PEA results are currently being reviewed by the Mining Department at Youga to refine potential scheduling of the Ouaré deposit into the overall mine plan at Youga. A mineral resource update was also completed by AMEC Americas Ltd. (AMEC) for use in the PEA. At a cut-off grade of 0.8 g/t Au the Measured and Indicated mineral resource is 3.9 million tonnes at a grade of 1.90 g/t Au containing 239,000 ounces of gold and the Inferred mineral resource is 283,000 tonnes at a grade of 1.93 g/t Au containing 18,000 ounces of gold. The potentially economic portion of the resource that is within a pit shell using a $1,500/oz gold price and a cut-off grade of 0.86 g/t Au includes Measured and Indicated mineral resources of 2.9 million tonnes at an average grade of 1.94 g/t Au containing 183,000 ounces of gold and Inferred mineral resources of 211,000 tonnes at a grade of 1.76 g/t Au containing 12,000 ounces of gold.
The results indicate that treating the Ouaré material at Youga has the potential to increase the life of the Youga mine by 3 years, based on the current process capacity of 1 million tonnes per year.
Tables 5 and 6 in the Appendix provide details of the Ouaré Mineral Resources and Mineralized Resources contained in a pit shell.
Nzema Sulphides - PEA Completed, Potential to Extend Nzema Life upon Depletion of Oxide Reserves
The Nzema Sulphide project included a major drilling and metallurgical testwork program on the refractory sulphide portion of the Salman deposits. The program included testwork to assess the merits of producing a flotation concentrate to be treated subsequently by ultra-fine grinding, LeachOx, BIOX, or pressure oxidation. Flotation of the sulphides results in approximately 95% recovery of the gold into concentrate at a 7% mass pull. The flotation concentrate would be treated by pressure oxidation, the best processing route which produced average oxidation/leach recoveries of 92.5% and an average overall recovery of 86%, which is a very good outcome for refractory material exceeding those typically reported in the area.
A sulphide resource estimate and preliminary economic assessment were prepared on the basis of this process option. The resource base used for the study is shown in Table 7 in the Appendix, while the potentially economic portion of the resource of 12 million tonnes grading 1.59 g/t Au, containing 615,600 ounces of gold, is shown in Table 8 of the Appendix. The PEA indicates that additional sulphide resources need to be identified before proceeding with any further studies, and given the demands and potential of Endeavour's other development projects (Houndé, Tabakoto, Kofi), further sulphides exploration will be deferred.
Financing Activities
In December 2012 Endeavour took the following steps to maximize short and medium term exposure to the gold price:
-
Eliminated the company's 2013 gold hedge positions, comprising 12,132 ounces at Tabakoto and 10,000 ounces at Nzema for a cost of $17.3 million; as a result, 100% of Endeavour's 2013 gold production will be sold at spot prices.
- Accumulated a holding of 27,000 ozs of gold bullion ($45.2 million at a current spot price of $1,675/oz), which partially offsets the remaining hedge positions in 2014 to 2016.
In order to fund the gold bullion position, buy back the 2013 hedge, repay the Bank Atlantique Mali loan, and maintain a high level of cash liquidity, Endeavour drew down the available $100 million of the $200 million corporate debt facility during December 2012. As a result, cash and cash equivalents and gold bullion (at fair value) held at December 31, 2012 amounts to $151 million.
Assuming a gold price of $1,600 per ounce, Endeavour's three mines are forecast to generate $230 million of cash margin during 2013 (using mid-guidance production volume and cash costs, and deducting royalties), which when combined with the cash position of $151 million, will more than fund the 2013 planned capital and exploration spending of $227 million.
Conference Call Details
Management will host two conference calls to discuss the 2012 Production Results, 2013 Guidance and Houndé Gold Project PEA on January 23, 2013 and January 24, 2013 as detailed below. Both conference calls will include Neil Woodyer, Chief Executive Officer, Attie Roux, Chief Operating Officer, Christian Milau, Chief Financial Officer, and Don Dudek, Senior Vice President -- Technical Services.
Analysts and interested investors are invited to participate using the dial in numbers below. The same dial in numbers will be used for both conference calls
International: +1 201-689-8433
North American toll-free: +1 877-407-0832
Australian toll-free: 0011-800-2246-2666
The conference call can also be accessed through the following link: http://www.endeavourmining.com/s/Webcasts.asp
To accommodate the North American/European market, the first conference call will be held and webcast by V-Call on Wednesday, January 23, 2013 at:
| 10:00 am | in Vancouver |
| 1:00 pm | |
| in Toronto and New York |
in Perth (Jan 24, 2013)in Sydney (Jan 24, 2013) To accommodate the Australian market, the will be held and webcast by V-Call on Thursday,
The calls will be archived for later playback on Endeavour's website until January 24, 2014.
Qualified PersonsAdriaan "Attie" Roux, Pr. Sci.Nat, Endeavour's Chief Operating Officer, is a Qualified Person under NI 43-101, and has reviewed and approved the technical information related to mining operations in this news release.
Don Dudek, P.Geo, Senior Vice President, Technical Services of Endeavour is a Qualified Person within the definition of that term in NI 43-101, and has supervised the preparation of the technical information related to the Houndé Gold Project in this news release.
The excerpt on the Ouaré PEA has been reviewed by Chris Lattanzi, P.Eng., on behalf of Micon. The Ouaré mineral resource estimate was prepared by Rodrigo Marinho, P.Geo., during his employ at AMEC and the excerpt in this news release was reviewed by him.
The information on the Nzema Sulphides PEA has been reviewed by Stewart Findlay, Project Development Manager, on behalf of GR Engineering Services Ltd. The Nzema Sulphides mineral resource estimate information was reviewed by Nic Johnson, M.AIG., on behalf of MPR and the mining engineering portion of the resource was reviewed by Quinton de Klerk, Director -- Mining Engineering, on behalf of Cube.
The Houndé PEA information in this news release was reviewed by Jim Yakasovich, P.Eng., Principal Consultant (Mining) on behalf of SRK. The Houndé mineral resource estimate information was reviewed by Eugene Puritch, P.Eng., President and Principal Engineer, on behalf of P&E.
About Endeavour Mining CorporationEndeavour is a gold producer delivering growth. Endeavour owns three gold mines producing more than 300,000 ounces per year in Mali, Ghana and Burkina Faso that are generating significant operating cash flows to fund further expansion. Endeavour's gold production is forecast to be over 550,000 ounces per year in 2016, including the Tabakoto mill expansion in 2013, completion of construction of Agbaou Gold Mine in Côte d'Ivoire scheduled for Q1 2014 and a recently completed PEA that shows potential for 160,000 ozs per year from the Houndé Project in Burkina Faso in 2016.
Endeavour Mining Corporation is listed on the TSX (symbol EDV) and ASX (symbol EVR), and also trades on the OTCQX (symbol EDVMF).
On behalf of Endeavour Mining CorporationNeil Woodyer
Chief Executive Officer
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