Neil Woodyer - CEO Christian Milau - CFO Attie Roux - COO Doug Reddy - SVP Business Development

Chris Thompson - Raymond James Danny Ochoa - Haywood Securities Mark Bentley - MAB Trading

Greetings, and welcome to Endeavour Mining’s Year-End 2014 Results Webcast. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Neil Woodyer, Chief Executive Officer of Endeavour Mining Corporation. Thank you, sir, you may begin.

Thank you, operator. As usual, I have Attie Roux, our COO with me. I have Christian Milau, our CFO; and also Doug Reddy, Business Development. If we turn to Slide 4 first of all and looking at the highlights for the year, we had a very, very good operational performance in 2014. Our production was 465,000 ounces, which was above our guidance. Our all-in sustaining costs for the year was 1,010 per ounce, which was below the midpoint of our guidance. And in fact for Q3 and Q4, we were below 1,000 all-in sustaining costs. Exploration was also successful. We were able to extend our mine lives and increase our reserves to 4.5 million ounces. We added 870,000 ounces through exploration additions in the year. We replaced and added to our 2P reserves at Agbaou and Tabakoto and incidentally that’s the second year in a row. Plus we were able to increase our reserves at Houndé by 34% bringing us up to 2.1 million ounces, which gives us a 10-year project. Our all-in sustaining margin was 117 million and very significantly, we completed the very major capital expenditure programs that we’ve been going through for 2014 and 2013, and that puts us in a position that in 2015 this year, non-sustaining capital spending is expected to be only 20 million. If we look at the next page, this gives you an idea of our key objectives for the year 2015, very simply to produce 475,000 to 500,000 ounces at an all-in sustaining costs below 1,000 – maintain it below 1,000. Our range is actually 930 to 980. Our third objective is to be profitable as a corporation. Our fourth very important objective is to use our free cash flow to reduce debt and to extend our mine life through exploration success, the continuation of what we did this last year. So those are the highlights. I’ll hand you over now to Christian to take you through some of the more detail.

Thank you, Neil. So if we flip over to Slide 6 just looking at the 2014 highlights by mine there; Agbaou had obviously a very good year as been flagged earlier, almost 150,000 ounces produced with almost $600 all-in sustaining costs, which is an extremely good performance. Nzema had another good year of 115,000 ounces with almost 1,000 all-in costs. Tabakoto 127,000 at $1,300 all-in costs, which is slightly behind plan for the year and Youga another good year at 76,000 ounces at $800 almost all-in costs. So, overall, we exceeded our guidance by almost 26,000 ounces for the year for the whole corporation and we almost hit our $1,000 mark for all-in costs for the whole year. Thankfully for the last two quarters that we below that 1,000, very pleased that we hit that target before the end of the year. That was in the lower half of our guidance as well. For 2015, as Neil alluded to, almost 500,000 ounces in guidance for gold produced but the all-in costs of 930 to 980 is a nice improvement upon last year. And as well, hopefully, we’ll start to see some benefits some point this year, maybe second quarter more or less where we start to see a bit of savings on fuel and possibly some FX savings as well on our local currency spend in West Africa. Turning over to Slide 7, looking at the all-in sustaining margin and costs, almost $600 million in revenue for the year leaving us with a margin of $174 million almost after royalties and cash costs. And from there we take out 22 million of corporate G&A, which is I think a good achievement for the year and is less than $50 per ounce, which I think is a very good achievement versus our peers in the industry. Sustaining capital just over 30 million, a little bit of a sustaining exploration of 4 million, leaving us with 117 million of all-in sustaining margin, which is about 20% on our revenues. Our guidance for the year was just under 100 million for all-in sustaining margin and 18% overall. So exceeding that for the year I think is a good achievement as well. Turning over to Slide 8, just to give you the reconciliation of our cash position for the year. We started with 73 million and we added in 117 million of all-in sustaining margin, and our total non-sustaining investments for the year were just about $87 million with the largest proportion being dedicated to Tabakoto where we had the underground equipment, the CRF plant, Segala & Kofi development, so quite a bit of activity at Tabakoto during the year. A small amount of that is paid early in the new year, the 2015 year, so give or take $7 million is actually paid in this year. As well, our working capital is virtually neutral for the year. We had some good success in the fourth quarter in producing our working capital balances. We also had the gold hedge settlement, which is the old remnant hedge from the Adamus acquisition a few years ago, which was settled for 12 million during the year and the taxes and interest paid which is about 25 million and a large portion of that obviously being interest on debt. That left us with $62 million at the end of 2014. Turning over to Slide 9, the adjusted net earnings. We had a net loss for the year, unadjusted of $328 million and the major item in there obviously was the net non-cash impairment of $279 million. The majority of that, almost 250 million being dedicated to Tabakoto. The key drivers of the impairment were a lower gold price. We used 1,250 gold price for short term and long term. I think the ranges for our peers were in the 1,200 to 1,350 range, a lot at 1,300, so we’ve been a bit prudent and conservative hopefully on that. As well, we’ve highlighted the entire discount rates if you see our ranges in our MD&A. One reason for that was the tax climate in Mali, so we decided on Tabakoto. We use a slightly higher discount rate to be conservative again. And we used a slightly shorter mine life, which is seven years instead of 10 years on Tabakoto. So it all ended up with the impairment being primarily allocated to Tabakoto. Obviously, under IFRS, we don’t write up any of our assets where assets like Agbaou and Houndé would have a higher value after good performances and success on the drilling there but for IFRS, you can’t write those up. So, overall, we think at the end of the year we ended up with a fairly conservative balance sheet is where we wanted to be going into 2015 to have a fresh year. Looking down the right-hand side in the box being after the impairment, there are a few smaller items. The other expenses being added back there. There’s small fuel tax recovery write-off, a payroll assessment and tax assessment related to Mali, which we have included in there. And we took a little discount on our VAT balances in Mali as well, which make up that balance. So, overall, the net adjusted earnings after tax was $16 million or $0.03 a share. I’ll turn it over to Attie Roux on Page 10.

It seems like we’ve lost Attie. This is Doug Reddy. I’ll speak to some of the aspects of the operations if that’s okay. If you look at Page 10 and discussing Agbaou, as mentioned we had an exceptional year with Agbaou. Our guidance was for just under 100,000 ounces. We produced about 146,000 ounces at Agbaou for the year. We beat guidance on both production and our cash cost. Our mine-level all-in sustaining cost was $621 per ounce. And we had a successful exploration program at Agbaou. We started partly through the year and by the end of the year, we were able to report an increase in our proven and probable reserves to a total of 0.9 million ounces, which was not only replacement of production but also added to our reserve base overall. Attie, are you there?

Yes. You can just finish what you were talking about.

Okay. And the mineralized zones that we did explore at Agbaou, they do remain open on strike and at depth, and we have a drill program for 2015 that’s just commenced that will continue to explore on the property. Attie, if you want to take over on Page 11, it’s on Nzema.

Okay. Thank you. Let’s talk about Nzema gold mine in Ghana. At Nzema, we saw mid guidance performance at 115,000 ounces for the year and we expect similar performance in 2015. At Nzema, we will be doing an exploration program covering the 2015, 2016 time period with 2015 focusing mainly on the development of targets and then in 2016 drilling in targets into resources. Carry on to Page 12, the Tabakoto gold mine in Mali. Tabakoto continues marginally below guidance mainly on the back of lower grade with the closure of Djambaye and the opening of the first Segala stopes. On the positive side, the conversion to owner mining was successful and we’re now seeing the full benefits of the reduced underground mining cost coming down by more than 30% year-on-year. We also had the very successful exploration program during 2014 where we not only replaced the depletion from mining but we also grew the reserves. And the exploration program for 2015 is continuing as we speak. We had a fairly good start to 2015 with the year-to-date mined grade above 3.2 grams per tonne. This is following a successful closure of the lower grade Djambaye pit and replacing it with the higher grade Kofi C pit. Kofi C is now in full production. On Segala, we now have proper sequenced mining with six stopes in operation with some stopes being in development, some in backfill and some in mining. Equally, on the Tabakoto mine we’ve got eight stopes operational also in this small sort of sequence. The newly commissioned CRF plant at Segala has improved productivity markedly and the mining sequence is compared to the manual [ph] mixing that we’ve done before. As Neil mentioned earlier, the major capitalization program at Tabakoto is now complete and with all equipment now on sites, we’ll certainly reduce the all-in sustaining costs for this year. Please turn to Page 13, Youga gold mine in Burkina. Youga performed consistently and above guidance namely on the back of good grades and also good cost structure. Youga continued during the year to generate good cash and although we see the grade declining in 2015, we expect relatively consistent performance for 2015 from Youga mine. If we turn to Page 14, this is a breakdown of the guidance for 2015 as far as production and cost structure is concerned. I think Christian mentioned some of the numbers earlier. Agbaou will be in the order of 150,000 to 155,000 ounces and it’s similar to the tonnes and recovery that we’ve experienced during 2014. Nzema will be a similar production to last year. Tabakoto will markedly go up with the increase in grade that we’ve seen from the mine. And Youga will be marginally lower mainly due to grade but consistent performance we expect. If we look at the all-in sustaining cost guidance by mine, with the higher ounces Agbaou will continue with its really good cost profile. Nzema will be consistent on the upper side. Tabakoto will – the all-in sustaining cost will come down mainly due to the better ounces but also due to lower capital spend in the previous year. Youga will be marginally up as far as all-in sustaining cost is concerned but consistent performance expected from Youga. So that gives us a mine-level all-in sustaining cost of around $900 per ounce. If we add the corporate G&A and the sustaining costs, which is mainly exploration, we’re looking at all-in sustaining cost of around $950 per ounce. If we look at Slide 15, I’ll talk about the midpoint guidance as far as cash is concerned. If we consider the 2015 production guidance and the cost guidance, at $1,200 per ounce gold price, we generate an all-in sustaining margin of about $120 million. If you takeoff the small amount of non-sustaining capital, which Neil mentioned earlier, of $20 million, we generate a free cash flow before tax and financing obviously of $100 million. That puts us in a very good position to start reducing the debt. If we move to Slide 16, I want to give a quick update on the Houndé project. During the latter part of 2014, we embarked on an exploration drilling program at Houndé to the valley of nearly $7 million. The program was concentrated on looking at the expansion of the Vindaloo deposit, which is the main deposit of the Houndé project and we also looked at the potential of the [indiscernible] around the Houndé deposit. We concentrated mainly on the inclusion of two deposits, Bouéré on the western side and Dohoun which is on the northern side of the Belize [ph] area. This program was extremely successful, as Neil mentioned earlier, in increasing the reserves by over 0.5 million ounces to close to 2.1 million ounces, an increase of 34%. Now if you put that in context, the exploration dollars we spent yielded the reserves at $13 per ounce, which is quite good. If we turn to Page 17, the shows how the increased exploration ounces improved the project economics at Houndé. The project now has a 10-year mine life and with a much improved ounce profile earlier in the project, which is obviously good for the NPV. The project now has a recoverable growth of 1.9 million ounces at all-in sustaining cost of just over $700 an ounce. The project capital is in order of $325 million of which $270 million is for the project and $55 million for an owner mining fleet. If you look at the range of gold prices between 1,200 and 1,300, the IRR range is between 28% and 35% and the NPV 5 at $1,250 per ounce gold price of $360 million. So at this point, I’ll hand it back to Neil.

Okay. Thanks, Attie. From a concluding summary point of view, I’d like to go through some of the points again but also pick up a couple of additional points. As we said earlier, it was a very successful year for the company. We ended two to three years of heavy capital investment, which included building Agbaou and effectively rebuilding Tabakoto. This and the additional changes we made to management and improvements that we made to operational and control systems results in a very good year. We delivered on production growth. We lowered our all-in sustaining costs. We extended our mine life through exploration. We advanced Houndé through permitting and increased its mineral reserves to 2.1 million ounces. And we increased the total corporate mineral reserves to 4.5 million. Our heavy capital expenditure program was financed over the last few years by generated cash and also by bank debt. Today, we have approximately 250 million of net debt. This is made up of 300 – drawn from our 350 revolver and cash in hand of about 50, so 250 net debt. And as we generate free cash flow during the year, we intend to reduce these debt levels. The example that we’re around 1,200 showed $100 million of free cash flow being generated. From this we have to take off debt service and taxes and as we all know, taxes in West Africa tend to be a little benevolent [ph], but we feel comfortable with the savings that we will be able to see in fuel and also the euro saving for the West African currency should cover those costs, so we should get about net-net 100 million. We’re also looking to increase the financial flexibility and the optionality of Houndé and we’re looking to discuss the banks the possibilities of extending the maturity of our revolver to give us space to go forward and take advantage of various opportunities from Houndé and the financing of the company. Houndé is a very attractive project today and we have the successful Agbaou team ready to build it. But it’s very important that firstly before we start doing such a thing, we have to strengthen our balance sheet. We have to be sensitive to the gold prices and we have to conscious of the investment climate of our host country. So in 2015, our primary focus will be on strengthening our balance sheet. And to do this we have five key objectives; to produce 500,000 ounces, to maintain our all-in sustaining cost below 1,000 and as Attie said, the midpoint of our guidance is 950, to limit sustaining capital only to about 20 million, 15 of that objective will be to continue to expand our mine life through exploration. Our fourth objective is to be profitable and our fifth and primary objective is to use our free cash flow to reduce our debt. So here this year of addressing our balance sheet and improving our balance sheet so can take decisions later in the year on Houndé. That ladies and gentlemen is the formal part of our presentation. I’d like to ask the operator to take us through any questions and answers that people may have.

Thank you. We will be now be conducting a question-and-answer session. [Operator Instructions]. Our first question comes from the line of Chris Thompson with Raymond James. Please proceed with your question.

Good morning, guys. Thanks for the opportunity for me to ask a question. Just a quick question relating to Nzema. Could you just describe the current power situation there at the moment, what you’ve been experiencing relating to the power cuts and the sort of assumptions that you’re layering into your guidance at that mine?

Okay, thanks. It’s Attie. I’ll answer the question. As you possibly know, the current situation in Ghana is that all the mines have been asked and in big industries as well to cut between 25% and 30% of the power on a load-shedding basis. So all the mines at the moment have to shut down every third day for 24 hours to conserve power. Fortunately, most of the mines like ourselves have got a power-generating facility on site, which is diesel driven. So obviously you incur diesel, which is slightly more expensive than getting power from the grid. But we have planned accordingly, so it’s not interrupting our operation at the moment.

Great. Do you see this past situation improving later in the year?

I’ll answer that question as well. I think the biggest issue is the power generated from the hydroelectric steam, we all know that Lake Volta is one of the lowest levels in history. So, the reliance on lying [ph] higher up in the north of Ghana and in Burkina will obviously feed the dam. So I think in the short term, the power situation will remain where it is now and may most likely later in the year will improve.

Okay. Thanks a lot, guys. Thank you.

Okay.

[Operator Instructions]. Thank you. Our next question comes from the line of Danny Ochoa with Haywood. Please proceed with your question.

Hello. Thanks, guys. First question is just on Agbaou. I was hoping you can provide some guidance on the split of sustaining capital either quarterly or half year for the project?

It’s Christian here, Danny. In terms of sustaining capital for the year, give or take $15 million for the year is the expectation, so almost a third of our sustaining capital. About half of that or so will be waste capitalization and the rest will be smaller items, so nothing significant in that other than the waste capitalization.

1-5, correct?

Yes.

I’m sorry, the split between the first half of the year or the second half of the year?

It’s fairly evenly split. I don’t have the exact split to hand, but it’s fairly evenly split over the year, particularly because it’s waste capitalization for a lot of it.

Okay, great. And then also at Agbaou, would you guys be able to provide the expectations for capitalized versus non-capitalized for the year?

I don’t have the split between capitalized and non-capitalized split for the year to hand but maybe I can get back to you on that.

Okay, no problem. And then my final question at Nzema, just any idea on the variance of the grade expected to come first half of the year and the second half?

I don’t see too much difference. Obviously, the guide is a mix of the owned material plus the foreign material, so we don’t see too much of a difference in grade.

Okay, great. Thanks a lot. That’s all from me.

Okay.

Our next question comes from the line of Mark Bentley with MAB Trading. Please proceed with your question.

Good afternoon, gentlemen. I speak as a shareholder in Endeavour and have two questions. Firstly, concerning the tax situation particularly in Mali, somewhat disappointed by the claim that the government is making on us there considering that there haven’t been any returns to shareholders to-date. And could you just outline the chief difference between the views of the Mali and tax authorities on which they based their claim and your views? Secondly, concerning financing of the Houndé project. I noticed another one of my gold investments has used a gold loan and so – what seems like quite an intelligent way of financing some future CapEx. And is that a methodology you’d consider and what are your views on it? Thank you.

So I’ll take the tax question, it’s Christian here. In terms of the taxes, we have included in our notes the assessment we received late last year, early this year and it’s similar to a few years ago. We did receive one in Burkina, fairly high headline number. We do expect that ultimately we’ll negotiate and settle at quite a bit lower number than that. It’s not all income tax. Some of it is things like payroll taxes and other sort of indirect taxes. They’ve looked back a number of years and have done a reassessment. A lot of the period relates to the pre-Endeavour acquisition point in time. They’ve certainly taken liberal interpretations I think on some of the tax rules and definitions and obviously we have our advisors locally and internationally helping us to address that and respond. We do expect it to be quite a bit lower number in the end. However, at year end, we’ve been fairly prudent to disclose to full amount and obviously to include an amount in our accrued liabilities. And we think we’ve taken quite a conservative view and hopefully we’ll see some upside and recovery from that in the first quarter or second quarter this year.

Okay. Thank you on that one.

Can I address the second part of your question about possibility of a gold loan for Houndé? We’ve thought of asset, we thought about streaming, we thought about all sorts of things. We’re not keen on streaming – we’re not keen on anything that locks in a price, which is what a gold loan does, but when it comes to an appropriate time, we will look at the best way to do it. I doubt we’ll do a gold loan. We certainly won’t do streaming. It’s going to come back to what we view the gold prices and how strongly our balance sheet is.

Okay. Thank you.

It appears we have no further questions at this time. I would now like to turn the floor back over to Mr. Woodyer for closing comments.

Well, thank you, operator. Interesting when we have PDAC, we have less questions and obviously I guess is quite natural. I know that the chaps have fielded questions from a lot of analysts over the weekend, because we announced our results before the end of the weekend. So I’d like to thank everybody for participating in the call. We’ll answer any additional questions you care to send us either by email or any other way. Thank you and look forward to our next call and hopefully we can report success again. Thank you very much indeed everybody.

Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.