Neil Woodyer - CEO Attie Roux - COO Ota Hally - CFO

Rahul Paul - Canaccord Genuity Tara Hassan - Haywood Securities

Greetings, and welcome to the Endeavour Mining Third Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Neil Woodyer, CEO of Endeavour Mining. Thank you, sir. You may begin.

Thank you, operator. With me today down here in Accra, we have most of La Mancha management team and most of Endeavour management team, because we’re going through our integration plans and also through Draft 2016 budget, so hopefully you can hear us well. But I have with me in the same room, I have Attie Roux, our Chief Operating Officer; and I have Ota Hally, our CFO. So hopefully communications will work properly. If you turn first of all to slide number four, which highlights the results of Q3, in the quarter, we achieved 125,000 ounces of production at an all-in sustaining cost of $109 sic [$908] an ounce. We generated all-in sustaining margin of $26 million, and after tax net earnings of $6.7 million. For the year-to-date, we produced 380,000 at $917 all-in sustaining cost, which means that we’re positioned to deliver the high-end of our full year production guidance which was 475k to 500k and are also well-positioned to deliver just below our all-in sustaining cost guidance of $930 to $980. In addition, we’ve reduced our advanced payments on our debt facility of $40 million so far this and our debt is now down to $260 million. And very importantly, we are in the process of completing the La Mancha acquisition and creating the long-term partnership with Naguib Sawiris and his family. We are currently waiting for the final Ivory Coast government approval, which we expect in the next day or so, and then we will go into the process of flowing pumps around, so we hope we can complete the transaction by the end of this week. If I can now hand over to Ota, who take us through the financial highlights.

Thank you, Neil. Just on slide five, we see a little more detail in the longer year-to-date trends of our portfolio of mines. Looking rather well, as Neil indicated, on track for the high-end of guidance of production at 380,000 ounces year-to-date; the 917 all-in sustaining cost, also below the low end of the guidance at 930; and the sustaining margin turning to our free cash flow of $73 million which is 73% of what we guided at the midpoint range for the year. If we turn to slide six, we usually do a walkthrough of our cash position. So, starting with the $53 million that we opened up the quarter with, we had an all-in sustaining margin of $26 million. And in that, the revenue line in this quarter versus the prior quarter was affected by $9 million of price variant through the lower gold price. And we had 600 ounces of gold less sold which was another $8 million, so there is $17 million in that sustaining margin affected by the revenue line. We had non-sustaining capital investments where we allocated capital to a few opportunities, both exploration in Houndé, so slightly higher non-sustaining capital this quarter; working capital changes quite difficult with timing differences. And most importantly, completed another voluntary $20 million repayment on our revolving credit facility, which finished up our cash position at $32 million at the end of September. And with that, I will hand it over to Attie to take us through the mines.

Okay, thanks Ota. I’ll take you quickly through summary of each of the mines. If we look at slide seven, the Agbaou Mine, in Ivory Coast. Agbaou had another fantastic quarter, despite the slightly lower pit grade, we managed to push the plant to its maximum and have very good tonnage throughput through the plant. And that’s the result of the soft nature of the oxide ore, which has been continuing due to the success of our exploration progress. And if you look at the statistics on the left, the exploration program continued during the first half of this year and going into the second half with some of the intersections, as you can see, very-very good interceptions of Agbaou and with the intention to continue replacing the mining. If you turn to slide eight, Nzema Gold Mine in Ghana. Nzema had a fairly tough quarter as far as grades concerned. They’d very good throughput through the process and facility. The rainy season that we had in Ghana, contributed to some lower mining in the Adamus pit and the associated pits around the Nzema complex. We concentrated full as a result of it on increasing the availability of the total materials which we use strategic top up [ph] to the economics of the mining. And I think the increase of the tonnes on the top has eased off [ph] on the grade that tends to materials that will be addressed in the next quarter going forward. Turn to slide nine, Tabakoto Mine in Mali, very good throughput through the process in plant. However, the grade for the quarter was a little bit lower than the previous quarter. It’s mainly a resultant of the extreme rainfall that we had in Mali during this year and it affected in particular the underground sections of Tabakoto, both sides of the mine and also on the Kofi [ph] period which is currently [indiscernible] going through the transition right now becoming very-very sticky when we get to it. And this will be sorted for this year as we go into the transition run. And as far as the underground sections at Tabakoto Mine that are all back to normal operations now. Turning to page 10, Youga Mine in Burkina. As expected, we can see the grade coming down at Youga Mine and that’s mainly a result of the mining moved to Zergoré which is the one of the remote pits as the maintenance all complete. The lower grades will continue from now onwards at Youga Mine. At this point, I will hand back to Neil.

Thanks Attie. So, Attie and Ota were taking you through the quarter’s results and detail of course in the MD&A which we released on Friday. I’d just like to spend a second and just talk again about the La Mancha transaction. It creates the strategic long-term partnership with Naguib and family. It’s built on both of our successes in the Ivory Coast. We’ve got $63 million of cash investments and strengthens our balance sheet. Very importantly it gives us the ability to fund the Houndé Project with construction and again with hopefully a reasonable gold price, we should be able to make a decision in the first quarter of next year. And additionally, it brings 55% interest in the Ity Mine which will obviously contribute in the cash flow. It also brings in the CIL project which could be a very significant expansion for the Ity Mine. So we’re becoming a solid base West African gold producer, now producing about 580,000 a year from five mines in four countries. With the growth target that we go for the Houndé to about 800,000 ounces in 2018, gives us a solid base with 2P reserves of 4.8 million and we are well-positioned to continue to follow the strategy of build and acquire, building at the low point in this gold price cycle. And if I can ask you to turn to the next page this one diagram really shows what we’ve been doing and where we gained. It shows about five years ago we acquired our first mine at 80,000 ounces; we’re now producing near high 500,000 ounces and we added Ity we’ve done that through the acquisition over the five-year period of four mines and we built it back. We brought down our all-in sustaining cost and are now ready to move forward financially and capability of expanding the Company by the construction of Houndé and also to continue to reduce our all-in sustaining costs. So I think this chart really summarizes the strategy both from the past what we’ve achieved and where we’re going. So, if you turn to the last slide, the concluding comments. In the beginning of the year, we set ourselves five primary objectives: To produce 475,000 to 500,000 ounces. So far in the nine months, we produced 380,000, so we’re on track. We said that we would have an all-in sustaining cost of $930 to $900, mid-900; so we far we’ve 917. And our objective is profitability. Our nine months profitability has been about $57 million of net income. We also said we’d reduce debt; we have done by about $40 million. And we are in the process of expanding our mine lives through exploration. So, we’re very much in line with our objectives and we expect to be able to deliver on those for the rest of the year. And very importantly, the deal that we’re doing now and hopefully as I said, closing this week with La Mancha, gives us a very-very strong base for additional downside protection if the gold prices goes out and it gives us a strong base so far -- in the stronger gold market. So that’s ladies and gentlemen, the formal part of the presentation. And operator, if you could take us through question-and-answer section that would be good.

At this time, we’ll be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Rahul Paul from Canaccord Genuity. Please proceed with your question.

Question on Tabakoto, whether any other factors aside from the rainfall that led to underground grades being lower than expected? And now that rainfall has abated, are you seeing an improvement in grades from the underground mine?

The rain was really the main issue, we were left with only low grades stopes that we could mine during this period. The grade fell off quite badly during the -- especially in September and early October. Currently, we’re seeing significant return back to the normal grades that we have seen prior to that.

And then just moving on Kofi C, was it mostly saprolite ores that you mined in Q3 and at this point have you mined out the saprolite ore?

Yes, because most of the saprolite up to that point in time, we’re now transitioning into some soft transition which starts requiring to blast and drilling blast. So yes, it’s a transition now from saprolitic. There will be still some sets coming from the latest [ph] but mostly going into the transition going now.

Okay, and are the grades a little bit higher than the transition and the primary ore at Kofi C?

If you look at the grade profile of the orebody, it actually does increase, so it is getting better, correct.

[Operator Instructions] And our next question comes from the line of Tara Hassan from Haywood Securities. Please proceed with your question.

Attie, could you possibly give some more details on the capital spend in the quarter on the non-sustaining side, seems like it was a bit bigger than we had expected and just wanted to see if you’re still on track for your guidance for that category for the year?

Tara, it’s Ota here. I mean we made a strategic decision to when we explore of it more, we spend money at Houndé. And I think you can see from our numbers that on the non-sustaining that we’re going to be over from our guidance. But yes, it’s little more this quarter than what we expect.

Tara, we’re fairly tied on our exploration budget for the year and we saw the ability to allocate a little bit more capital because it performs on our operations through exploration which we did -- I think we took a good investment decision in doing that, same with Houndé actually because Houndé is becoming much more -- fairly good [ph] now from a financing point of view. We just gave a little bit extra push there too.

And just on Nzema, can you talk a bit on the discussions on the purchased ore? I mean there is a drop in grade there this quarter. So, if you could give some clarity on what you have in the pipeline for Q4 and also going into 2016 on security of supply for that operation?

I think what happened during the quarter is because we concentrated a lot more on the material being available at this point in time, the emphasis might gone off slightly on concentrating on the grade per se. Up to now, we have had retail [ph] suppliers back and better grade availability. And the plan is to get the last quarter back to the normal sort of grade. As far as security of supply is concerned, you can mainly rely on what the suppliers value and what you can observe and the thing. So from now, we are fairly happy that what we’ve seen is reasonable to assume that they can deliver the material.

Okay. Is that in like through 2016 as well or just through the remainder of this year?

No, we don’t think to have some proportion of into 2016 as well.

And Attie, touching on the question already asked on Tabakoto, what are you doing now that the rainy season or sort of excessive rains are behind to ensure that you guys have access to some higher grade stopes in the underground?

All the pumping of the areas is currently completed, everything is dry at the momentum. So, we’re back to normal scheduling as far as the mining is concerned. Maybe just to put it in context, the question does come up why the rain caused you? And this year the rainfall has been 40% higher than average for the last eight years. And it’s been 25% higher than the highest during that period for the last eight years. So just to put it in context, you can plan as best you can but sometimes your plan is not good enough. [Ph] But if you then move from [indiscernible] obviously next year we will be well positioned from the rainy season outcome.

And are you feeling comfortable with the amount of development you have in the underground, just so you’re self up with some optionality and stopes, if you’re having any further issues with grade?

No, no problem we’ve lost a little bit of development but the plan is to catch it up. And as far as availability of stopes going forward should not be a problem.

[Operator Instructions] And our next question comes from the line of Rahul Paul from Canaccord Genuity. Please proceed with your question.

Attie, just a follow-up question, again Tabakoto. What were your underground mining costs per tonne at Tabakoto in Q3? And I am wondering if you -- have you fully realized the benefits of moving to own [ph] a mine?

I think by now we’re in a position where the Easter [ph] has been wiped out. I think maybe Richard [ph] can pick up the numbers very quickly. But we are essentially half of the cost that the contract used cost us. It’s in the mid-40s in -- about $45 a tonne compared to structure of $90 that we used to run at.

And then just on the non-sustaining capital spending in Q3, can you give me a breakdown by mine of what that was?

You’ll have to come back on that one.

Sure, thanks. That’s all that I had.

[Operator Instructions] It appears there’re no further questions at this time. Management, would you like to make any closing remarks?

Thank you, operator. Well, thank you very much ladies and gentlemen. As we said, we’re projecting a good year in terms of operational performance this year. And I hope shortly in the few days we’ll be issue the press release saying we’ve successfully built on our new platform for the development in the future with La Mancha. So thank you very much for attending the call. Thank you.

This concludes today’s conference. Thank you for your participation. You may disconnect your lines at this time.