One of the Sector’s Top Merchant Banks Turns Miner
Top 10 Mining Stocks 2012 – Pick #5 Endeavour Mining Corp
Company: Endeavour Mining
Symbol: EDV (TSX)
Share price: $2.46 (Close on Jan 26, 2012)
Shares outstanding: 244,609,949 and 295,372,875 FD (At Dec 19, 2011)
Market cap: $601,740,474
Cash & Cash Equivalents: $200.1 Million (As of Sept 30, 2011)
Endeavor Mining Corp – 1 Year Chart
In our quest for a junior gold producer with significant upside and the ability to bring more ounces into production as the price of gold heads higher in these tough economic times we bring you Endeavor Mining Corp.
Endeavor Mining Corp is a gold production and exploration company with reserves of 2 million ounces and currently producing at about 170,000 ounces per year from two operating mines. With near-term mine construction decisions and ongoing exploration work their goal is to produce 250,000 ounces/year by the end of 2013.
Many of you might remember Endeavor from its banking days when it advised many mining companies on their finances. It was these experiences that led Endeavor to trade in the suit and tie for a hardhat and go mining.
After you have seen as many merger and acquisitions and company restructuring deals as Endeavor has, its only a matter of time before a deal comes across the desk that you can’t ignore and take action on.
And that’s exactly what happened.
- Acquired Etruscan Resources (Sept 2010)
- Completed merger with Adamus Resources Limited (Dec 2011)
Etruscan Resources Acquisition
Etruscan Resources was an emerging junior gold producer, but it didn’t have its financial ducks in a row and hoped Endeavor could help them get things on track. They did and made a big investment in the company before eventually taking over the company in September 2010.
Adamus Resources Limited Merger
Announced in August 2011 and completed in December 2011, Endeavour and Adamus combined through an all-stock merger of equals transaction creating a new growth focused West African gold producer (“The Company”). As a result the company has double the shares outstanding post merger, but the pros of the deal far outweigh their still respectable shares outstanding count for a junior gold producer.
Mid-Tier Producer in the Making
As defined in Mining Stocks Guide a mid-tier gold company produces anywhere from 200,000 million to 1 million ounces of gold per year and Endeavor is well on its way to graduating from junior miner status. The company is forecasting 2012 gold production of 172,000 ounces from its two mines (Youga and Nzema) and if all goes well with their advanced-stage Agbaou project 200,000 million ounces is in the cards.
Worth Mentioning:
- Increasing leverage to gold via planned $100M de-heding
- They have cash costs of $575 – $625
- Q3 2011 reported record gold production of 24,047 ozs
- Endeavor has an “A” warrant (EDV.WT.A) with an exercise price of $2.50 and expiry of February 4, 2014 that closed at $0.71 on January 26th, 2012.
Near Term Catalysts:
- De-hedging news
- Growth via further M&A Activity
- Q4 Results (Guidance 84,000 ounces at $610 to $650/oz)
- Agbaou Construction Decision Q1 2012 (Production late 2013)
- Mid-Tier Status in 2013
- Breaking thru 50 DMA on the chart
- Possible Takeover Target
The Bottom Line
Endeavor is a seasoned financial company that has gone from merchant bank to miner because they know a good deal when they see one. They are financially sound with great growth potential and should definitely be watched closely as they go from Junior Gold Producer to Mid-Tier status.
More to come on Endeavor Mining Corp and 4 more top picks!
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