Endeavour Mining : reports record Q2-2021 results

 

ENDEAVOUR REPORTS RECORD Q2-2021 RESULTS;
WELL POSITIONED TO ACHIEVE TOP-HALF OF FULL YEAR PRODUCTION GUIDANCE

OPERATIONAL AND FINANCIAL HIGHLIGHTS Q2-2021 production up 18% over Q1-2021 to 409koz, while AISC decreased by $15/oz to $853/oz Strong H1-2021 performance of 756koz at an AISC of $860/oz positions the Group well to meet the top half of its FY-2021 production guidance of 1,365-1,495koz at an AISC of $850-900/oz Adjusted Net Earnings (from cont. operations) of $183m or $0.73/share in Q2-2021; $276m or $1.20/share in H1-2021 Operating Cash Flow before working capital (from cont. operations) of $286m or $1.13/share in Q2-2021; $549m or $2.39/share in H1-2021 Healthy balance sheet at quarter-end with Net Debt to adjusted EBITDA leverage ratio of 0.07x; Net Debt decreased by $85m during the quarter to $77m and gross debt decreased by $120m SHAREHOLDER RETURNS PROGRAMME First dividend of $60m paid on 5 February 2021 for the 2020 fiscal year Declaration of H1-2021 interim dividend of $70m, with record date set at 10 September 2021; well positioned to deliver more than the minimum committed dividend of $125m for the full year Share buybacks continue to supplement shareholder returns with a total of $70m of shares repurchased since April 2021, $59m of which were repurchased in Q2-2021 ORGANIC GROWTH Construction of Sabodala-Massawa Phase 1 expansion on schedule for completion by year-end; DFS underway for Sabodala-Massawa Phase 2 expansion, Fetekro, and Kalana projects Group on track to discover over 2.5Moz of Indicated resources in 2021; significant discoveries recently made at Ity, Houndé, Sabodala-Massawa and Fetekro

London, 4 August, 2021 – Endeavour Mining plc (LSE:EDV, TSX:EDV, OTCQX:EDVMF) ('Endeavour' or the 'Group' or the 'Company') is pleased to announce its financial and operating results for Q2-2021 and H1-2021, with highlights provided in Table 1 below. Management will host a conference call and webcast on Wednesday 4 August, at 8:30 am ET / 1:30 pm BST. For instructions on how to participate, please refer to the conference call and webcast section at the end of the news release.

Table 1: Consolidated Highlights¹

All amounts in US$ million, unless otherwise stated	THREE MONTHS ENDED			SIX MONTHS ENDED
	30 June 2021	31 March 2021	30 June 2020	30 June 2021	30 June 2020	Δ H1-2021 vs. H1-2020
OPERATING DATA
Gold Production, koz	409	347	149	756	321	+136%
All-in Sustaining Cost2, $/oz	853	868	941	860	916	(6)%
Realised Gold Price, $/oz	1,791	1,749	1,680	1,771	1,603	+10%
CASH FLOW FROM CONTINUING OPERATIONS3
Operating Cash Flow Before Changes in Working Capital	286	263	75	549	170	+223%
Operating Cash Flow Before Changes in Working Capital2, $/share	1.13	1.27	0.67	2.39	1.54	+55%
Operating Cash Flow	300	207	53	507	153	+231%
Operating Cash Flow2, $/share	1.19	0.99	0.48	2.21	1.38	+60%
PROFITABILITY FROM CONTINUING OPERATIONS3
EBITDA2	363	333	23	696	124	+461%
Adjusted EBITDA2	400	306	99	706	206	+243%
Net Earnings/(loss) Attributable to Shareholders2	127	87	(38)	213	(22)	(1068)%
Net Earnings per Share, $/share	0.50	0.42	(0.35)	0.93	(0.20)	(565)%
Adjusted Net Earnings Attributable to Shareholders2	183	93	49	276	74	+273%
Adjusted Net Earnings per Share2, $/share	0.73	0.45	0.44	1.20	0.66	+82%
SHAREHOLDER RETURNS
Dividends paid	—	60	—	60	—	n.a.
Share buyback (commenced in Q2-2021)	59	—	—	59	—	n.a.
FINANCIAL POSITION HIGHLIGHTS
Net Debt/(Net Cash)2	77	162	473	77	473	(84)%
Net (Cash)/Debt / Adjusted EBITDA (LTM) ratio2,4	0.07	0.16	1.00	0.07	1.00	(93)%

¹All amounts include Teranga assets from 10 February, 2021 ²This is a non-GAAP measure. Refer to the non-GAAP measure section of the Management Report. ³From Continuing Operations excludes the Agbaou mine which was divested on 1 March, 2021. ⁴LTM means last twelve months.

Sebastien de Montessus, President and CEO, commented: “Our strong Q2 performance positions us well to achieve the top half of our production guidance for the full year, as all our mines are continuing to perform well and we have quickly integrated the Teranga assets within our business.

Our strong free cash flow generation has significantly improved our balance sheet strength and bolstered our ability to reward shareholders. We paid our first dividend of $60 million in Q1 for the 2020 fiscal year, and today we are declaring an interim dividend of $70 million for H1-2021, placing us on track to deliver more than the guided minimum dividend of $125 million for the full year. Given our near zero Net Debt to adjusted EBITDA leverage ratio, we have been supplementing our shareholder return programme with share buybacks, having repurchased $70 million of shares since April.

Our growth pipeline continues to develop with the Sabodala-Massawa phase 1 expansion on track to be completed in Q4-2021 while Definitive Feasibility Studies are progressing well for the Sabodala-Massawa Phase 2 expansion, Fetekro, and Kalana projects.

We have enjoyed further exploration success, with significant discoveries made at Ity, Houndé, Sabodala-Massawa and Fetekro, where updated resources are expected to be published later this year. Overall, the group is on track to delineate over 2.5 million ounces of Indicated resources in 2021, which represents significantly more than the expected annual depletion and contributes to our portfolio’s longevity.

We are also very pleased to have successfully completed our listing on the premium-segment of the London Stock Exchange in June and remain on track to be included into the UK and European indexes.

These achievements leave Endeavour well positioned for the remainder of the year and beyond.”

UPCOMING CATALYSTS

The key upcoming expected catalysts are summarized in the table below.

Table 2: Key Upcoming Catalysts

TIMING	CATALYST
Q3-2021	Exploration	5-year exploration strategy
Q4-2021	Sabodala-Massawa	Completion of Phase 1 plant upgrades
Q4-2021	Sabodala-Massawa	Completion of Definitive Feasibility Study for Phase 2
Q4-2021	Fetekro	Completion of Definitive Feasibility Study
Q1-2022	Kalana	Completion of Definitive Feasibility Study

LONDON STOCK EXCHANGE LISTING

• Endeavour’s premium listing on the London Stock Exchange (“LSE”) was successfully completed on 14 June 2021, positioning Endeavour as the largest pure-play gold producer listed on the premium segment of the LSE.
• Endeavour is well positioned to be included in the upcoming FTSE Russell index quarterly review based on its recent re-domicile to the UK and subject to its trading liquidity being above the required threshold. Membership changes to the indices are expected to be communicated by FTSE Russell on 1 September 2021 with potential inclusion becoming effective on the 20 September 2021.
• In addition, Endeavour expects to be eligible for inclusion in the MSCI Europe index, with index rebalancing occurring on 30 November 2021 following the semi-annual review which is expected to be completed by mid-November.
  
  

SHAREHOLDER RETURNS PROGRAM

• As disclosed on 7 June 2021, Endeavour has implemented a shareholder returns programme that is composed of a minimum progressive dividend that may be supplemented with additional dividends and buybacks, providing the prevailing gold price remains above $1,500/oz and that Endeavour’s leverage remains below 0.5x Net Debt / adjusted EBITDA.
• The minimum progressive dividend policy has a target of distributing at least $500 million to shareholders over the next three years. Minimum dividends are set at $125 million, $150 million and $175 million for FY-2021, FY-2022, and FY-2023 respectively, payable semi-annually, significantly higher than our inaugural FY-2020 dividend of $60 million.
• Endeavour is pleased to declare its H1-2021 interim dividend of $70 million or $0.28 per share based on its current issued share capital, which represents 56% of the minimum dividend for FY-2021, highlighting its strong commitment to paying supplemental shareholder returns. The ex-dividend date for the interim dividend will be 9 September 2021 and the record date will be 10 September 2021. The dividend will be paid on or about 28 September 2021 (the “Payment Date”).
• Shareholders of shares traded on the Toronto Stock Exchange will receive dividends in Canadian Dollars (“CAD”), but can elect to receive United States Dollars (“USD”). Shareholders of shares traded on the London Stock Exchange will receive dividends in USD, but can elect to receive Pounds Sterling (“GBP”). Certificated shareholders will receive dividends in USD but can elect to receive dividends in GBP or CAD. Currency elections must be made by shareholders prior to 17:00 GMT on 13 September 2021. Dividends will be paid in the default or elected currency on the Payment Date, at the prevailing USD:CAD and USD:GBP exchange rates on 15 September 2021. This dividend does not qualify as an “eligible dividend” for Canadian income tax purposes. The tax consequences of the dividend will be dependent on the particular circumstances of a shareholder.
• Shareholder returns are being supplemented through the Company’s share buyback programme. A total of $70 million of shares have been repurchased since the start of the buyback programme on 9 April 2021 until end of July 2021, of which $59 million or 2.7 million shares were repurchased in Q2-2021.
  
  

ON TRACK TO ACHIEVE FY-2021 GUIDANCE

• Strong H1-2021 performance of 756koz at an AISC of $860/oz positions the Group well to meet the top-half of its FY-2021 production guidance of 1,365-1,495koz at an AISC of $850-900/oz.
• H2-2021 will benefit from the full consolidation of the Sabodala-Massawa and Wahgnion mines, which have been consolidated starting from the closing date of the Teranga Gold acquisition of 10 February 2021.
• Group sustaining and non-sustaining capital expenditure outlook for FY-2021 remains in line with initial guidance of $173 million and $201 million, respectively.
  
  

Table 3: H1-2021 Performance vs. FY-2021 Guidance

	H1-2021	2021 FULL YEAR GUIDANCE
Production, koz	756	1,365	—	1,495
AISC, $/oz	860	850	—	900

CASH FLOW AND LIQUIDITY SUMMARY

The table below presents the cash flow and Net Debt position for Endeavour for the three and six month period ending 30 June, 2021, with accompanying notes below.

Table 4: Cash Flow and Net Debt Position

		THREE MONTHS ENDED						SIX MONTHS ENDED
In US$ million unless otherwise specified		30 June 2021		31 March 2021		30 June 2020		30 June 2021		30 June 2020
Net cash from (used in), as per cash flow statement:
Operating cash flows before changes in working capital from cont. operations		286		263		75		549		170
Changes in working capital		15		(57)		(21)		(42)		(17)
Cash generated from/(used by) discontinued operations		0		(9)		4		(9)		30
Cash generated from operating activities	(Note 1)	300		198		57		498		183
Cash used by investing activities	(Note 2)	(137)		(105)		(48)		(243)		(105)
Cash (used in)/generated from financing activities	(Note 3)	(192)		65		(16)		(127)		84
Effect of exchange rate changes on cash		(7)		(4)		1		(10)		0
INCREASE/(DECREASE) IN CASH		(35)		154		(6)		118		162
Cash position at beginning of period		868		715		357		715		190
CASH POSITION AT END OF PERIOD	(Note 4)	833		868		352		833		352
Equipment financing		0		0		(64)		0		(64)
Convertible senior bond		(330)		(330)		(330)		(330)		(330)
Drawn portion of corporate loan facility	(Note 5)	(580)		(700)		(430)		(580)		(430)
NET DEBT/ (CASH) POSITION	(Note 6)	77		162		473		77		473
Net Debt / Adjusted EBITDA (LTM) ratio1	(Note 7)	0.07	x	0.16	x	1.00	x	0.07	x	1.00	x

¹Net Debt and Adjusted EBITDA are Non-GAAP measures. Refer to the non-GAAP measure section of the Management Report.

NOTES:

1)   Operating cash flows increased by $102.5 million from $197.9 million (or $0.99 per share) in Q1-2021 to $300.5 million (or $1.19 per share) in Q2-2021 mainly due to higher gold sales at a higher realised price as well as lower operating costs and a working capital inflow, which more than offset the higher income taxes paid and the foreign exchange losses incurred. Operating cash flow before non-cash working capital from all operations increased by $22.2 million from $263.4 million (or $1.27 per share) in Q1-2021 to $285.7 million (or $1.13 per share) in Q2-2021. Notable variances are summarised below:

• Gold sales increased by 57koz over Q1-2021 to 421koz in Q2-2021 due to the benefit of a full quarter of production from the newly acquired Sabodala-Massawa and Wahgnion mines, together with strong performances at Houndé and Ity. The realised gold price for Q2-2021 was $1,791/oz compared to $1,749/oz for Q1-2021. Total cash cost per ounce decreased from $751/oz in Q1-2021 to $729/oz in Q2-2021 due to the inclusion of the lower cost Wahgnion and Sabodala-Massawa mines for the full quarter
• Income taxes paid increased by $82.9 million to $106.5 million in Q2-2021 reflective of the timing of provisional payments based on full year 2020 earnings
• Working capital was an inflow of $14.8 million in Q2-2021 due to the reduction in receivable balances and inventories. Specifically, VAT receivables at Houndé decreased and certain corporate receivables were received in Q2-2021. There was also a reduction in inventory stockpiles and finished gold inventories at Ity, Sabodala-Massawa and Wahgnion
• Acquisition and restructuring costs of $14.5 million in Q2-2021 related to the Teranga acquisition and integration as well as restructuring costs

2)   Cash flows used by investing activities increased from Q1-2021 to $137.3 million in Q2-2021 due to increased expenditures on mining interest including sustaining capital and non-sustaining capital:

• Sustaining capital from continuing operations increased by $13.9 million from Q1-2021 to $41.5 million in Q2-2021 due to higher sustaining capital at Boungou, Houndé and Ity primarily due to planned waste capitalisation
• Non-sustaining capital from continuing operations increased slightly in Q2-2021 to $58.3 million, due to increases at Wahgnion and increases in non-mining capital expenditure which were mostly offset by decreases at Ity, Mana and Houndé
• Growth capital spend decreased by $15.4 million from Q1-2021 to $12.6 million in Q2-2021 and primarily relates to the Massawa expansion with the remainder for ongoing Definitive Feasibility Studies (“DFS”) studies

3)   Cash flows used by financing activities increased by $256.4 million to $191.8 million in Q2-2021 mainly due to a higher net repayment of long-term debt in Q2-2021, which was $120.0 million and payments for the acquisition of own shares, as part of the ongoing share buyback programme, of $59.5 million, which started in Q2-2021.

4)   At quarter-end, Endeavour’s liquidity remained strong with $832.9 million of cash on hand and $220.0 million undrawn of the RCF. The Company will seek to reduce its cash balance in the upcoming quarters by continuing to pay down its debt.

5)   Endeavour's corporate loan facility was increased from $430.0 million to $800.0 million in Q1-2021 to retire Teranga’s various higher cost debt facilities. In Q2-2021 $120.0 million was repaid on the facility with $580.0 million drawn on the facility at quarter-end.

6)   Net Debt amounted to $77.1 million at quarter-end, a decrease of $84.9 million during the quarter despite dividend payments of $60.0 million and $59.5 million of shares repurchased. In H1-2021, Net Debt increased by $152 million compared to the beginning of the year as approximately $332 million of Net Debt was absorbed from Teranga in Q1-2021.

7)   The Net Debt / Adjusted EBITDA (LTM) leverage ratio ended the quarter at a healthy 0.07x, down from 0.16x in Q1-2021, and well below the Company’s long-term target of less than 0.50x, which provides flexibility to continue to supplement its shareholder return programme while maintaining headroom to fund its organic growth. The ratio has improved by 93% from the corresponding period last year when the ratio stood at 1.00x.

EARNINGS FROM CONTINUING OPERATIONS

The table below presents the earnings and adjusted earnings for Endeavour for the three and six month period ending 30 June, 2021, with accompanying notes below.

Table 5: Earnings from Continuing Operations

		THREE MONTHS ENDED						SIX MONTHS ENDED
		30 June 2021		31 March 2021		30 June 2020		30 June 2021		30 June 2020
Revenue	(Note 8)	753		636		210		1,389		436
Operating expenses	(Note 9)	(278)		(253)		(83)		(531)		(179)
Depreciation and depletion	(Note 9)	(158)		(132)		(35)		(290)		(78)
Royalties	(Note 10)	(44)		(44)		(15)		(88)		(30)
Earnings from mine operations		273		207		76		480		148
Corporate costs	(Note 11)	(16)		(11)		(5)		(30)		(10)
Acquisition and restructuring costs	(Note 12)	(15)		(12)		(3)		(27)		(7)
Share-based compensation		(10)		(8)		(5)		(18)		(7)
Exploration costs		(6)		(10)		(2)		(16)		(3)
Earnings from operations		227		165		61		389		121
(Loss)/gain on financial instruments	(Note 13)	(15)		42		(72)		27		(75)
Finance costs		(14)		(12)		(12)		(26)		(23)
Other (expense)/income		(7)		(6)		(2)		(11)		—
Earnings before taxes		191		189		(25)		380		23
Current income tax expense	(Note 14)	(44)		(72)		—		(117)		(19)
Deferred income tax recovery/(expense)		2		(6)		(6)		(4)		(7)
Net comprehensive earnings/(loss) from continuing operations	(Note 15)	149		111		(31)		260		(3)
Add-back adjustments	(Note 16)	59		14		89		71		97
Adjusted net earnings from continuing operations	(Note 17)	208		125		59		331		94
Portion attributable to non-controlling interests		25		32		9		54		20
Adjusted net earnings from continuing operations attributable to shareholders of the Company	(Note 17)	183		93		49		276		74
Earnings/(loss) per share from continuing operations		0.50		0.40		(0.35)		0.93		(0.20)
Adjusted net earnings per share from continuing operations		0.73		0.45		0.44		1.20		0.66

NOTES:

8)   Revenue for Q2-2021 was $753.4 million compared to $635.8 million for Q1-2021. The increase in revenue in Q2-2021 was mainly due to higher gold sales in Q2-2021 due to the benefit of a full quarter of production from the newly acquired Sabodala-Massawa and Wahgnion mines, together with strong performances at Houndé and Ity and a higher realised gold price for Q2-2021 of $1,791/oz compared to $1,749/oz for Q1-2021.

9)   Operating expenses and depreciation and depletion increased for Q2-2021 compared to Q1-2021 due to the addition of the Wahgnion and Sabodala-Massawa mines, which were acquired on 10 February, 2021, for the full quarter.

10)   Royalties were $43.9 million for Q2-2021, compared to $44.4 million in Q1-2021. Royalty expenses remained stable as the decrease in realised gold price was offset by increased production from the Wahgnion and Sabodala-Massawa mines acquired on 10 February, 2021.

11)   Corporate costs were $15.9 million for Q2-2021 compared to $11.4 million for Q1-2021. The increase in corporate costs are primarily due to costs associated with listing on the LSE as well as additional corporate costs following the integration of Teranga.

12)   Acquisition and restructuring costs were $14.5 million in Q2-2021 compared to $12.2 million in Q1-2021. Costs slightly increased in Q2-2021 compared to the comparative period due to the acquisition of Teranga on 10 February 2021 and the costs related to the integration of the entity into the Endeavour Group.

13)   The loss on financial instruments was $14.8 million in Q2-2021 compared to a gain of $42.1 million in Q1-2021. The loss in Q2-2021 is mainly due to the net impact of a loss on change in fair value of the warrant liabilities and call rights of $5.3 million and $7.0 million respectively, and foreign exchange losses of $7.2 million. The gain in Q1-2021 is primarily due to the net impact of the unrealised gain/(loss) on convertible senior bond derivative of $30.0 million, loss on foreign exchange of $6.2 million, and a loss on change in fair value of warrant liabilities of $1.5 million.

14)   Current income tax expense was $44.5 million in Q2-2021 compared to $72.1 million in Q1-2021. Current income tax expense for Q2-2021 decreased compared to Q1-2021, despite the inclusion of the Wahgnion and Sabodala-Massawa mines acquired in Q1-2021, due to an adjustment to the income tax accrual upon finalisation of the FY-2020 income tax filings. Income taxes paid of $106.5 million in Q2-2021 were materially higher than income taxes expensed reflecting higher provisional payments made at the end of the 2020/2021 tax year.

15)   Net comprehensive earnings were $148.9 million for Q2-2021 compared to $110.9 million in Q1-2021. The increase in earnings was related to higher earnings from mine operations due to the addition of Wahgnion and Sabodola-Massawa, as well as a lower income tax expense, which contained one-off expenses related to the divestment of Agbaou in Q1-2021.

16)   Adjustments relate mainly to loss/(gain) on financial instruments, loss on discontinued operations, deferred income tax, share based compensation, non-recurring items and acquisition and restructuring costs.

17)   Adjusted Net Earnings attributable to shareholders for continuing operations were $183.1 (or $0.73 per share) in Q2-2021 compared to  $93.2 million (or $0.45 per share) in Q1-2021.

OPERATIONS REVIEW SUMMARY

• Continued strong safety record for the Group, with a Lost Time Injury Frequency Rate (“LTIFR”) of 0.16 for the trailing twelve months ending 30 June, 2021.
• The acquisition of Teranga Gold was completed on 10 February, 2021 and the Sabodala-Massawa and Wahgnion assets have been consolidated into the financial statements from this date. The sale of Endeavour's non-core Agbaou mine closed on 1 March, 2021, and has been classified as a discontinued operation.
• A stronger than guided performance was achieved in Q2-2021 due to outperformance at Houndé and Ity which benefited from less rainfall than usual.
• Production increased 18% in Q2-2021 over Q1-2021 to 409koz, while AISC decreased by $15/oz to $853/oz, due to the full benefit of consolidated production from Sabodala-Massawa and Wahgnion, and the strong operational performance as noted above.

Table 6: Consolidated Group Production

	THREE MONTHS ENDED						SIX MONTHS ENDED
	30 June 2021		31 March 2021		30 June 2020		30 June 2021		30 June 2020
(All amounts in koz, on a 100% basis)
Boungou	39		60		—		99		—
Houndé	80		66		57		146		113
Ity	79		71		47		150		108
Karma	25		22		20		47		48
Mana	49		52		—		102		—
Sabodala-Massawa1	96		39		—		135		—
Wahgnion1	41		25		—		66		—
PRODUCTION FROM CONTINUING OPERATIONS	409		334		125		743		269
Agbaou2	—		13		24		13		52
GROUP PRODUCTION	409		347		149		756		321

¹Included for the post acquisition period commencing 10 February, 2021. ²Divested on 1 March, 2021.

Table 7: Consolidated All-In Sustaining Costs¹

(All amounts in US$/oz)	THREE  MONTHS ENDED						SIX MONTHS ENDED
	30 June 2021		31 March 2021		30 June 2020		30 June 2021		30 June 2020
Boungou	950		690		—		793		—
Houndé	741		839		965		787		1,020
Ity	806		786		789		796		707
Karma	1,070		1,179		951		1,120		889
Mana	1,016		954		—		982		—
Sabodala-Massawa1	637		749		—		675		—
Wahgnion1	980		780		—		903		—
Corporate  G&A	25		31		34		28		32
Sustaining exploration	—		—		—		—		—
AISC FROM CONTINUING OPERATIONS	853		858		938		855		909
Agbaou2	—		1,131		955		1,131		953
GROUP AISC	853		868		941		860		916

¹Included for the post acquisition period commencing 10 February, 2021. ²Divested on 1 March 2021.

OPERATING ACTIVITIES BY MINE

Boungou Gold Mine, Burkina Faso

Table 8: Boungou Performance Indicators

For The Period Ended	Q2-2021		Q1-2021		Q2-2020			H1-2021		H1-2020
Tonnes ore mined, kt	350		246		—			596		—
Total tonnes mined, kt	8,347		6,672		—			15,018		—
Strip ratio (incl. waste cap)	22.82		26.11		—			24.18		—
Tonnes milled, kt	336		315		—			651		—
Grade, g/t	3.84		5.52		—			4.65		—
Recovery rate, %	95		96		—			95		—
PRODUCTION, KOZ	39		60		—			99		—
Total cash cost/oz	714		619		—			657		—
AISC/OZ	950		690		—			793		—

Q2-2021 vs Q1-2021 Insights

• Gold production significantly decreased relative to Q1-2021, as greater throughput was offset by lower grades. Mining and mill feed was constrained to lower grade areas as the larger mining fleet was focused on waste extraction at the East pit.
  • Total tonnes mined was higher following the commissioning of additional mining equipment during Q1-2021. Mining activities continued to focus on the West pit with total tonnes of ore mined increasing as a result of the lower strip ratio and the benefit of mining on the top benches. Pre-stripping activities at the East pit continued during Q2-2021.
  • Tonnes milled increased in Q2-2021 relative to Q1-2021 as higher mill utilisation resulted from improved mining fragmentation of the ore, as well as the benefit of improvements made to the SAG mill, pebble crusher and vertical tower mill which started in Q4-2020 following the restart of mining.
  • Average processed grade decreased during Q2-2021 as the mill feed was mainly sourced from the lower grade areas of the West Pit, as the higher grade areas were targeted during the restart of mining activities in Q4-2020 and Q1-2021.

• AISC per ounce increased during Q2-2021 compared to Q1-2021 due to the decrease in head grade and higher sustaining capital (an increase of $165 per ounce) due to waste stripping. Unit mining and unit processing costs decreased due to increased efficiencies as a result of additional mining equipment commissioned in Q1-2021 and improved mining fragmentation.
• Sustaining capital expenditures of $9.0 million during Q2-2021 mainly related to waste capitalisation at the West pit and the TSF lift.
• Non-sustaining capital expenditure of $3.9 million during Q2-2021 mainly related to pre-stripping at the East pit.
  
  

2021 Outlook

• Boungou is well positioned to meet its FY-2021 production guidance of 180 - 200koz, while AISC are expected to continue to trend above the guided $690 - 740 per ounce range as a result of higher fuel prices and increased security costs.
• Plant feed is expected to continue to be sourced from the West Pit with waste stripping activities continuing at the East Pit throughout the year. Mill throughput is expected to remain broadly consistent with H1-2021 performance, along with average processed grades, while recovery rates are expected to slightly decline due to the ore characteristics.
• The sustaining capital spend outlook for FY-2021 remains unchanged compared to the initial guidance of $19.0 million, of which $13.1 million has been incurred in H1-2021. The non-sustaining capital spend outlook for FY-2021 also remains unchanged compared to the initial guidance of $22.0 million, of which $8.4 million has been incurred in H1-2021.

Houndé Gold Mine, Burkina Faso

Table 9: Houndé Performance Indicators

For The Period Ended	Q2-2021		Q1-2021		Q2-2020			H1-2021		H1-2020
Tonnes ore mined, kt	1,399		1,625		1,072			3,024		1,972
Total tonnes mined, kt	11,717		13,937		11,509			25,654		22,820
Strip ratio (incl. waste cap)	7.38		7.58		9.73			7.48		10.57
Tonnes milled, kt	1,108		1,147		1,035			2,254		2,101
Grade, g/t	2.47		1.89		1.91			2.17		1.83
Recovery rate, %	92		91		92			92		91
PRODUCTION, KOZ	80		66		57			146		113
Total cash cost/oz	629		768		772			694		820
AISC/OZ	741		839		965			787		1,020

Q2-2021 vs Q1-2021 Insights

• Production significantly increased due to higher average processed grades, as the high grade Kari Pump ore contributed a higher proportion of the mill feed during the quarter
  • Total tonnes mined decreased as a result of decreased availability of mining equipment, as scheduled maintenance and repairs were carried out, as well as mining progressing to deeper elevations. This contributed to the decrease in tonnes of ore mined as the strip ratio remained fairly constant over the previous quarter. Ore tonnes mined were primarily sourced from the Kari Pump and Vindaloo Centre deposits with mining at Vindaloo Main focusing on waste stripping.
  • Tonnes milled slightly decreased despite the higher proportion of oxide ore from the Kari Pump pit, as a result of an increase in interruptions to the grid power supply and the increased reliance on generators.
  • Average gold grade milled increased along with recoveries due to the increase in the proportion of high grade oxide ore sourced from Kari Pump and a localised nugget effect in the higher grade zones of Kari Pump.

• AISC decreased, despite higher unit costs and sustaining capital spend, due to the increase in production from the higher grade oxide ore sourced from Kari Pump which resulted in increased gold sales. Mining unit costs increased due to scheduled maintenance, higher haulage costs associated with Kari Pump, and increased blasting and grade control drilling carried out during the quarter. Unit processing costs increased, despite an increase in oxide ore processed, due to higher power costs, as generator utilisation increased due to interruptions to the grid power supply.
• Sustaining capital expenditure of $8.6 million during Q2-2021 mainly related to the waste capitalisation at Vindaloo Main.
• Non-sustaining capital expenditure of $3.0 million during Q2-2021 mainly related to costs associated with the development of the Kari West mining area.
  
  

2021 Outlook

• H1-2021 performance was stronger than scheduled due to good mining productivities achieved during the Kari Pump pre-stripping enabling, increased access to high grade oxide ore. As such, Houndé is on track to meet the top half of its FY-2021 production guidance of 240—260koz, with AISC expected to achieve the guided $855—905 per ounce range.
• Mining activities in H2-2021 will continue to focus on Kari Pump, supplemented by contributions from Bouéré and Vindaloo Centre pits. Mining is expected to focus on lower grade areas during the wet season and as a greater focus is placed on waste stripping activities, primarily related to Vindaloo Main pit and Kari West where the pre-strip is expected to be completed in late 2021. Throughput is expected to slightly decline in H2-2021, while recovery rates are expected to remain similar to H1-2021 and processed grade is expected to be lower following the higher grades brought forward in Q2-2021.
• The sustaining capital spend outlook for FY-2021 remains unchanged compared to the initial guidance of $39.0 million, of which $13.3 million has been incurred in H1-2021. The non-sustaining capital spend outlook for FY-2021 also remains unchanged compared to the initial guidance of $13.0 million, of which $9.7 million has been incurred in H1-2021.

Ity Gold Mine, Côte D’Ivoire

Table 10: Ity Performance Indicators

 

For The Period Ended	Q2-2021		Q1-2021		Q2-2020			H1-2021		H1-2020
Tonnes ore mined, kt	1,877		2,105		1,650			3,982		3,559
Total tonnes mined, kt	5,934		6,816		5,374			12,750		10,600
Strip ratio (incl. waste cap)	2.16		2.24		2.26			2.20		1.98
Tonnes milled, kt	1,544		1,550		1,180			3,094		2,590
Grade, g/t	1.96		1.76		1.59			1.86		1.61
Recovery rate, %	81		79		77			80		81
PRODUCTION, KOZ	79		71		47			150		108
Total cash cost/oz	720		715		740			718		676
AISC/OZ	806		786		789			796		707

Q2-2021 vs Q1-2021 Insights

• Production was ahead of expectation due to the increased average processed grade and gold recovery rate as higher grade ore was brought forward in the mine plan
  • Total tonnes mined, together with total ore mined, decreased in Q2-2021, due to a decrease in mining equipment availability, as scheduled maintenance was carried out on the excavators. The strip ratio also remained relatively stable. Mining activity continued at the Ity, Bakatouo, Daapleu, Walter, Colline Sud and Flotouo pits with an increase in ore being sourced from the heap dumps.
  • Tonnes milled continued to perform above nameplate capacity due to high plant uptime as well as a high proportion of oxide materials from the Daapleu, Bakatouo, Colline Sud pits and the heap dumps, with fresh ore sourced from Daapleu, Bakatouo and Ity pits.
  • Average gold grade milled increased in Q2-2021 due to an increase in the grade of the ore sourced from the Daapleu and Bakatouo pits.
  • Despite the higher proportion of transitional and fresh ore processed in Q2-2021, recovery rates increased, as higher quality material from Flotouo was treated preferentially displacing the more viscous Verse Ouest material.

• AISC per ounce increased due to higher unit mining costs as a result of longer hauling distance for ore mined from the newly commissioned Flotouo and Walter pits as well as the transition to contractor mining. In addition, unit processing costs increased due to the increase in the proportion of transitional and fresh material and the higher reagent consumption due to an increase in the proportion of Daapleu ore processed. Higher power costs impacted AISC by approximately $20/oz due to increased utilisation of generators as a result of temporarily reduced grid power availability. The cost increase was also impacted by higher sustaining capital expenditure.
• Sustaining capital expenditures of $7.1 million during Q2-2021 mainly relates to waste capitalisation at the Ity, Bakatouou and Daapleu pits.
• Non-sustaining capital expenditures of $8.4 million during Q2-2021 mainly relates to the TSF stage 3 lift, the Le Plaque haul road construction and river diversions as well as small processing plant upgrades.
• During Q2-2021, Ity transitioned from owner mining to contract mining with Societe de Forage et des Travaux Publics (“SFTP”), a local contractor who are already performing contract mining services at Endeavour’s Karma and Boungou mines. As a part of the transition, the mining fleet at Ity was sold to SFTP for approximately $24.2 million.
  
  

2021 Outlook

• H1-2021 performance was stronger than scheduled due to the benefit of a good processing performance with a combination of higher throughput, grade, and recovery. As such, Ity is on track to meet the top half of its FY-2021 production guidance of 230—250koz, with AISC expected to achieve the top-end of the guided $800—850 per ounce range
• Waste extraction activities are expected to ramp up at the Ity pit in H2-2021 as stripping which was deferred from H1-2021 is carried out. As a result, the proportion of ore mined from Bakatouo, Daapleu and Colline Sud is expected to decrease in H2-2021. Throughput is expected to be slightly lower in H2-2021 compared to H1-2021 due to the onset of the wet season, while the average processed grade is expected to be lower due to a higher proportion of feed from historical lower grade stockpiles.
• The sustaining capital spend outlook for FY-2021 remains unchanged compared to the initial guidance of $28.0 million, of which $12.3 million has been incurred in H1-2021. Non-sustaining capital spend for FY-2021 is expected to amount to approximately $40.0 million, of which $20.4 million has been incurred in H1-2021. This increase compared to the initial H1-2021 guidance of $27.0 million is due to initiation of new optimization initiatives, primarily associated with reducing reagent consumption and enhancing recoveries.

Karma Gold Mine, Burkina Faso

Table 11: Karma Performance Indicators

For The Period Ended	Q2-2021		Q1-2021		Q2-2020			H1-2021		H1-2020
Tonnes ore mined, kt	1,253		1,242		1,288			2,496		2,517
Total tonnes mined, kt	6,212		5,146		4,802			11,358		9,755
Strip ratio (incl. waste cap)	3.96		3.14		2.73			3.55		2.87
Tonnes stacked, kt	1,267		1,380		1,238			2,647		2,352
Grade, g/t	0.91		0.71		0.81			0.81		0.91
Recovery rate, %	68		66		80			67		81
PRODUCTION, KOZ	25		22		20			47		48
Total cash cost/oz	1,059		1,169		856			1,110		834
AISC/OZ	1,070		1,179		951			1,120		889

Q2-2021 vs Q1-2021 Insights

• Production increased due to the higher average grade stacked and the higher gold recovery rate, which offset a modest decrease in tonnes stacked.
  • Total tonnes mined increased slightly due to an additional load and haul unit, with an increase in strip ratio at GG1 as a higher proportion of transitional ore tonnes were mined. Ore continued to be sourced from the GG1 and Kao North pits.
  • Ore tonnes stacked decreased due to slightly lower stacking availability and utilisation. Ore tonnes from the GG1 and Kao North pit were mostly oxide material with a blend of transitional materials that were supplemented with stockpiles.
  • The stacked ore grade increased mainly due to a higher average grade sourced from the North Kao pit while the average grade from the GG1 pit also increased slightly.
  • The recovery rate increased due to the lower proportion of ore from the GG1 pit and the higher proportion of oxide material stacked, which has a higher associated recovery rate.

• AISC per ounce decreased due to the increased production and associated gold sales which offset the higher mining strip ratio and higher unit processing and G&A costs. Processing unit costs were higher as a result of increased cyanide consumption and the lower Q2-2021 stacking capacity, while G&A unit costs increased as operation management patents taxes were incurred during the quarter.
• Sustaining capital expenditure was $0.3 million during Q2-2021 and related to mining pit dewatering boreholes and other site equipment upgrades.
• Non-sustaining capital expenditure was $2.1 million during Q2-2021, which was related to construction of new cells within the heap leach pad.

2021 Outlook

• Given its strong H1-2021 performance, Karma is well positioned to meet its FY-2021 production guidance of 80—90koz at an AISC of $1,220—$1,300 per ounce
• Mining activity is expected to focus on the GG1 pit for the remainder of the year. As a result of the increase in transitional material mined from the GG1 pit, processed grades and recoveries are expected to be lower in H2-2021, while ore stacked is expected to decrease in Q3-2021 due to the wet season, before returning to normal levels in Q4-2021
• The sustaining capital outlook at Karma is expected to be significantly lower than the $11.0 million guided as a result of the waste development being included as an operating cost for 2021. The non-sustaining capital spend outlook for FY-2021 remains unchanged compared to the initial guidance of $5.0 million, of which $2.9 million has been incurred in H1-2021.

Mana Gold Mine, Burkina Faso

Table 12: Mana Performance Indicators

For The Period Ended	Q2-2021		Q1-2021		Q2-2020			H1-2021		H1-2020
OP tonnes ore mined, kt	549		355		—			904		—
OP total tonnes mined, kt	7,187		8,533		—			15,720		—
OP strip ratio (incl. waste cap)	12.09		23.01		—			16.38		—
UG tonnes ore mined, kt	214		245		—			459		—
Tonnes milled, kt	670		604		—			1,275		—
Grade, g/t	2.49		2.90		—			2.68		—
Recovery rate, %	92		90		—			91		—
PRODUCTION, KOZ	49		52		—			102		—
Total cash cost/oz	911		907		—			909		—
AISC/OZ	1,016		954		—			982		—

Q2-2021 vs Q1-2021 Insights

• Production slightly decreased due to a reduction in the average processed grade which was partially offset by an increase in plant throughput and recoveries.
  • Total open pit tonnes of ore mined was higher as a result of the lower strip ratio, following the planned waste development at the Wona South pit in Q1-2021, which provided access to a wider ore floor to be mined. In Q2-2021 ore was mainly sourced from Wona Main and Wona South Pits while mining at Wona North Stage 3 completed during Q1-2021.
  • Total underground ore tonnes mined decreased as underground mining focused on development and backfilling.
  • Tonnes milled increased due to an increase in mill availability and better mining fragmentation, which resulted in higher plant throughput. The ore processed in both Q1-2021 and Q2-2021 was mainly fresh material, sourced from both the open pit and underground mines.
  • The average processed grade was lower during Q2-2021 due to a decrease in the proportion of ore sourced from the higher grade underground mine and from the open pit Wona Main deposit.
• AISC increased due to higher sustaining capital spend and increased open pit and underground unit mining costs. The open pit unit mining costs increased due to higher production drilling and blasting activities in the fresh ore areas of Wona South pit, as well as higher underground unit mining costs as a result of increased stope activity costs, which was partially offset by lower unit processing costs due to improved fragmentation.
• Sustaining capital expenditure of $5.2 million during Q2-2021 mainly relates to underground development and waste capitalisation.
• Non-sustaining capital of $21.1 million during Q2-2021 mainly relates to open pit waste development, the TSF raise and other infrastructure projects.

2021 Outlook

• Given its strong H1-2021 performance driven by strong mill throughput and grades, Mana is well positioned to meet its FY-2021 production guidance of 170 - 190koz at an AISC of $975 - 1,050 per ounce
• In H2-2021, ore will continue to be sourced from the Siou underground mine while open pit mining activities at Siou are expected to wind down. Following optimization studies completed in Q2-2021, Wona will be pursued as an underground operation rather than being continued as an open pit operation and eliminate the need for a large pit cut-back. Underground development at Wona will therefore be expedited, with decline development expected to commence in Q3-2021. Mill throughput and grades are expected to be slightly lower in H2-2021, compared to H1-2021, while recovery rates are expected to remain similar.
• The total sustaining and non-sustaining capital spend outlook for FY-2021 remains unchanged. As a result of the reduction in required stripping activities at Wona, following the decision to shift to underground mining, the FY-2021 sustaining capital outlook is expected to be significantly lower than the $27.0 million guided, of which $8.0 million has been incurred in H1-2021. Due to the reallocation of capital for the Wona underground development, the non-sustaining capital outlook for FY-2021 is expected to amount to slightly more the $62.0 million guided, of which $45.2 million has been incurred in H1-2021.

Sabodala-Massawa Gold Mine, Senegal

Table 13: Sabodala-Massawa Performance Indicators

For The Period Ended	Q2-2021		Q1-2021 (Consolidated)		Q1-2021			H1-2021 (Consolidated)		H1-2020
Tonnes ore mined, kt	2,111		1,056		1,622			3,167		—
Total tonnes mined, kt	10,798		5,831		10,713			16,629		—
Strip ratio (incl. waste cap)	4.11		4.52		5.62			4.25		—
Tonnes milled, kt	1,067		550		1,027			1,617		—
Grade, g/t	3.20		2.53		2.48			2.97		—
Recovery rate, %	89		90		90			90		—
PRODUCTION, KOZ	96		39		75			135		—
Total cash cost/oz	548		564		n.a.			553		—
AISC/OZ	637		749		n.a.			675		—

Q2-2021 vs Q1-2021 Insights

• Production increased in Q2-2021 compared to Q1-2021 (full quarter basis) mainly due to higher processed grades which more than offset the slightly lower recoveries.
  • Tonnes mined increased due to favourable mining conditions experienced in Q2-2021 as a result of the improved haul road profile, improved mining sequencing, additional equipment and increased productivity of shovels and excavators. Tonnes of ore mined increased due to the aforementioned reasons as well as the lower strip ratio. Mining activities in Q2-2021 continued to progress on the Massawa permit with Sofia Main and Sofia North contributing 70% and 30% of total ore mined respectively.
  • Total tonnes milled increased in Q2-2021, due to increased mill availability and utilisation, despite the increase in fresh material milled which resulted in a slight decrease in recoveries
  • The average processed grade for the period benefited from the high grade ore from the Sofia Main pit
• AISC per ounce decreased in Q2-2021 compared to Q1-2021 (for post consolidation period commencing 10 February, 2021) mainly due to the decrease in the strip ratio and lower sustaining capital spend per ounce sold ($90/oz vs. $185/oz) and the lower processing unit cost which more than offset the higher unit mining costs (higher due to increased haulage cost).
• Sustaining capital expenditure of $8.9 million during Q2-2021 mainly relates to purchases of additional mining equipment, TSF raise and planned waste capitalisation.
• Non-sustaining capital expenditure of $5.2 million during Q2-2021 mainly relates to the relocation activities of the Sabodala village, the new haul road and infrastructure developments at the Massawa permit mining areas.
  
  

2021 Outlook

• Given its strong H1-2021 performance, Sabodala-Massawa is well positioned to meet its FY-2021 production guidance of 310—330koz at an AISC of $690—740 per ounce, for the post acquisition period commencing on 10 February 2021.
• The Sofia Main and Sofia North pits will continue to contribute the majority of the ore mined for the remainder of 2021, while waste extraction at Sofia North is expected to increase in H2-2021. Mill throughput and process grades are expected to slightly decrease in H2-2021, compared to Q2-2021, while recovery rates are expected to remain similar.
• The sustaining capital spend outlook for FY-2021 is expected to be slightly above the previously guided $35.0 million, of which $18.4 million has been incurred in H1-2021, due to investments in mining fleet and additional equipment. The non-sustaining capital spend outlook for FY-2021 is expected to be slightly below the guided $47.0 million, of which $9.7 million has been incurred in H1-2021 due to the deferral of spend on the Sabodala relocation construction and development costs as a greater focus is placed on mining the Sofia pits.
  
  

Wahgnion Gold Mine, Burkina Faso

Table 14: Wahgnion Performance Indicators

For The Period Ended	Q2-2021		Q1-2021 (Consolidated)		Q1-2021			H1-2021 (Consolidated)		H1-2020
Tonnes ore mined, kt	1,187		649		1,183			1,836		—
Total tonnes mined, kt	7,615		4,451		7,751			12,066		—
Strip ratio (incl. waste cap)	5.42		5.86		5.55			5.57		—
Tonnes milled, kt	1,016		538		962			1,554		—
Grade, g/t	1.31		1.35		1.46			1.32		—
Recovery rate, %	95		94		95			95		—
PRODUCTION, KOZ	41		25		43			66		—
Total cash cost/oz	928		746		n.a.			858		—
AISC/OZ	980		780		n.a.			903		—

Q2-2021 vs Q1-2021 Insights

• Production decreased in Q2-2021 compared to Q1-2021 (full quarter basis) despite higher mill throughput, due to the lower average grade processed
  • Total tonnes and ore mined remained fairly consistent. Ore mined was sourced mainly from the Nogbele North and Nogbele South pits and supplemented with ore from the Fourkoura pit where mining commenced earlier this year.
  • Tonnes milled increased as a result of planned maintenance which was carried out in Q1-2021, leading to increased mill availability in Q2-2021. The mill feed blend and recoveries remained consistent with Q1-2021, with minimal transitional ore and a 60/40 split between oxide and fresh ore.
  • Average grade milled decreased slightly as the proportion of lower grade ore sourced from the Nogbele South deposit increased during the quarter.
• AISC per ounce increased in Q2-2021 compared to Q1-2021 (for post consolidation period commencing 10 February, 2021) mainly due to increased sustaining capital per ounce sold and higher unit mining and processing costs. Both mining and processing unit costs were higher as a result of increased fuel costs, with increased drilling and blasting and haulage costs also contributing to the higher unit mining cost.
• Sustaining capital expenditure of $2.5 million during Q2-2021 mainly relates to waste capitalisation and other mining equipment and IT infrastructure upgrades.
• Non-sustaining capital expenditure of $9.0 million during Q2-2021 mainly relates to the TSF stage 2 raise, construction of the airstrip and resettlement costs.
  
  

2021 Outlook

• Given its strong H1-2021 performance, Wahgnion is well positioned to meet its FY-2021 production guidance of 140—155koz at an AISC of $940—990 per ounce, for the post acquisition period commencing on 10 February 2021.
• Mining is expected to continue at Nogbele North, Nogbele South, and Fourkoura pits with significant waste development continuing throughout the year. Plant throughput is expected to decrease in H2-2021 compared to H1-2021 due to the wet season and a higher proportion of fresh ore being processed, while process grades are expected to increase and recovery rates to slightly decline.
• The sustaining capital spend outlook for FY-2021 remains unchanged compared to the initial guidance of $14.0 million, of which $3.4 million has been incurred in H1-2021, with the remaining spend mainly related to waste extraction. The non-sustaining capital spend outlook for FY-2021 also remains unchanged compared to the initial guidance of $26.0 million, of which $12.8 million has been incurred in H1-2021. The H2-2021 non-sustaining spend mainly relates to construction of a second TSF cell.
  
  

EXPLORATION AND DEVELOPMENT ACTIVITIES

• Exploration efforts remain on track to discover over 2.5 million ounces of Indicated resources in 2021, which represents significantly more than the expected depletion for the year.
• Following significant exploration success in H1-2021, updated resource estimates are expected to be published in H2-2021 notably for Ity, Houndé, Sabodala-Massawa, and Fetekro.
• A total of over 312,000 meters have been drilled across the group during H1-2021, amounting to a total spend of $50 million, which represents more than half the guided annual spend of $70-90 million as the exploration programme is more heavily weighted towards the first half of the year to take advantage of the dry season.
  
  

Table 15: Consolidated Exploration Expenditures¹

(All amounts in US$m)	H1-2021	2021 GUIDANCE
Sabodala-Massawa	4	~13
Wahgnion	2	~12
Ity	6	~9
Mana	7	~8
Houndé	7	~7
Boungou	5	~7
Karma	0	~0
MINE SUBTOTAL	31	~56
Greenfield and development projects	19	~14 - 34
TOTAL	50	$70 - 90

¹Consolidated exploration expenditures include expensed, sustaining, and non-sustaining exploration expenditures. Amounts may differ from Management Report due to rounding.

Boungou mine

• An exploration programme of up to $7.0 million has been planned for 2021, of which $4.6 million was spent in H1-2021 consisting of 24,307 meters of drilling across 245 drillholes. The exploration efforts were focused on delineating near mine targets and the area between the East and West pit.
• Drilling conducted in H1-2021 at Natougou NW identified a zone of higher-grade mineralisation trending north-northwest that extends for over 700 meters and remains open to the north. In H2-2021 drilling will focus on delineating this trend. Drilling at Natougou SE, Natougou SW and West Flanc targeted the extension of existing mineralised trends and the evaluation of inferred resources.
• At Boungou NW, H1-2021 drilling evaluated the continuation of the Boungou Shear Zone mineralisation. Initial results are promising and a complete review of all drill results in H2-2021 will guide follow-up drilling in 2022. 

Houndé mine

• An exploration programme of up to $7.0 million has been planned for 2021 of which $6.8 million was spent in H1-2021 consisting of 68,871 meters of drilling across 630 drillholes. The exploration efforts were focused on Vindaloo South, Mambo and the intersection between Kari Gap and Kari Center.
• Drilling has confirmed that the Mambo target, located 12km from the Houndé plant, has the potential to be a significant discovery with mineralisation that extends over 800 meters in length and 200 meters wide and remains open to the southwest, northeast, and at depth. During H2-2021, step out drilling will target lateral extensions of Mambo to the southwest and northeast. A maiden resource at Mambo is expected to be published in H2-2021.
• During H1-2021 exploration in the Kari Area and at Vindaloo South was focussed on delineating mineralised extensions which will be pursued in H2-2021. 

Ity mine

• An exploration programme of $9.0 million has been planned for 2021 of which $6.2 million was spent in H1-2021 consisting of 45,144 meters of drilling across 441 drillholes. The exploration efforts were focused on Le Plaque South (Delta Extension), West Flotouo (Verse Ouest), Daapleu Deep, Yopleu-Legaleu and the junction between Bakatouo and Walter.
• Drilling on the West Flotouo target, which was informed following a re-interpretation of structural and geological data, led to the discovery of a high grade mineralised lenses immediately below the former Flotouo dump, located in proximity to the plant. A maiden resource is expected to be published in late 2021.
• Drilling in the Le Plaque area focussed on extending mineralisation at Le Plaque South and Yopleu-Legaleu. An updated Le Plaque resource is expected to be published in late 2021.
• Drilling conducted at Daapleu confirmed that mineralisation extends at least 300 meters downdip of the current pit design and the target will be delineated further in H2-2021.
• Drilling at the junction between the Bakatouo and Walter deposits confirmed mineralisation is continuous and that it remains open at depth, and will therefore be further explored in H2-2021. 

Karma mine

• In H1-2021, exploration work was carried out as part of the advanced grade control drilling programme, with the aim of delineating near mine extensions and expediting their incorporation in the current mine plan. The focus was on Kao Main, Kao north, Rambo, GG1, GG2, Anomaly B and Kanongo, which will be pursued in H2-2021.

Mana mine

• An exploration programme of up to $8.0 million has been planned for 2021 of which $7.1 million was spent in H1-2021 consisting of 59,620 meters of drilling across 459 drillholes. The exploration efforts were focused on oxide open pit targets, such as Maoula, and on evaluating underground targets at Siou and Nyafe.
• Drilling conducted at Maoula confirmed and extended mineralisation in the western and eastern lenses of the deposit. In H2-2021, exploration work will continue to focus on defining indicated resources and extending the mineralised trend to the southwest, where the deposit remains open. Some delineation drilling was also conducted at Kona North, T2K and Bana West where generally lower grade and non-continuous mineralisation was intercepted.
• Deeper drilling conducted at Siou South, intersected higher grade mineralised zones adjacent to the planned underground development. In H2-2021 further drilling will focus on delineating these higher grade zones.
• At Nyafe, historic drilling and exploitation activities were largely restricted to defining and mining oxide ore due to the refractive nature of the sulphide mineralisation. Scout diamond holes drilled beneath the pits confirmed the down-dip continuation of the structures and higher grade mineralisation. Further drilling is planned to start in late 2021.

Sabodala-Massawa mine

• An exploration programme of up to $13.0 million has been planned for 2021 of which $3.5 million was spent in H1-2021 consisting of 46,439 meters of drilling across 414 drillholes. The exploration efforts were focused on Samina, Tina and other non-refractory targets within the Massawa area. Following the exploration success, an updated resource is expected to be published in late 2021.
• Drilling conducted at the Samina deposit focussed on extending the 500 meters mineralised strike length to over 900 meters, while mineralisation remains open to the north.
• Drilling conducted at the Tina deposit focussed on expanding the inferred resources defined in 2019. The mineralised strike length has been extended by over 300 meters and the deposit remains open to the north and southeast.
• Drilling conducted at the Sofia North deposit followed up on the previously identified Sofia North extension. The extension has been identified to extend over 800 meters along strike and is 150 meters wide, remaining open to the north.
• During the remainder of 2021, exploration work will be focussed on defining resources at Samina, Tina and the Sofia North Extension as well as follow up drilling on other Massawa project area targets.

Wahgnion mine

• An exploration programme of up to $12.0 million has been planned for 2021 of which $2.6 million was spent in H1-2021 consisting of 9,565 meters of drilling across 81 drillholes. The exploration efforts focused on Nogbele North and Nogbele South deposits, targeting the continuation of mineralised structures between the Nogbele pits.
• Exploration efforts are expected to ramp up in H2-2021, and will continue to focus on the extension and expansion of the Nogbele mineralisation. Additionally, the north-northeast continuation of the Fourkoura deposit and the Hillside target will be tested for extensions. Reconnaissance drilling at various attractive targets such as Kafina West and Korindougou will also be completed in H2-2021.

Fetekro project

• In H1-2021, Fetekro was the largest greenfield exploration focus with a total of $6.4 million spent on exploration work.
• In total 43,300 meters of drilling were completed in H1-2021 and 54,117 meters have been completed since the last resource update, published in August 2020. An updated resource estimate is expected to be published in late 2021 due to successful drilling which has focused on extending the Fetekro resource into Lafigué North and in the area between Lafigué Center and Lafigué North.
• At Lafigué North, the exploration programme focused on converting a portion of the remaining inferred resources into indicated resources. At the area between Lafigué Center and Lafigué North, infill drilling focused on delineating recently identified shallow, subparallel, stacked mineralised lenses located outside of the current resource.
• The DFS remains on track to be completed by year-end 2021 with the mining permit expected to be granted in Q3-2021.

Kalana project

• During H1-2021 optimisation of the pre-feasibility study continued, with a particular focus on ore sorting.
• In H2-2021 PFS optimization work will continue along with work on advancing the resettlement site and completion of the Environmental Permit. The DFS remains on track to be completed in Q1-2022.

Afema exploration property

• In H1-2021, Endeavour completed the initial exploration programme initiated by Teranga, drilling 8,347 meters at the Woulo Woulo prospect. Since its discovery in 2020, over 210 drill holes, totalling 31,492 meters of drilling have been completed at Woulo Woulo Main, Woulo Woulo West and Woulo Woulo East.
• An initial resource of 4.196MT at 1.10g/t Au for 148,000 ounces of indicated resources and 3.175MT at 1.03g/t Au for 105,000 ounces of inferred resources have been defined at Woulo Woulo, with further work in H2-2021 focussed on expanding the mineralised trend and delineating other high priority targets within the Afema permit. For associated resource calculation technical notes, please reference the below section entitled “AFEMA’S WOULO-WOULO AREA RESOURCE MODELING”.
• At Woulo Woulo Main the mineralised unit extends over 2.5 km and remains open along strike to the north and south and at depth. The host unit at Woulo Woulo is a highly fractured and veined altered felsic Intrusive which is observed to be approximately 40 to 50 meters thick, occasionally swelling to more than 80 meters in thickness. The mineralized global envelope appears to be quite continuous, with some thinner individual lenses. Higher grade mineralisation has been identified in the north and south extents of Woulo Woulo’s main mineralised unit, with average grades between 1.0 – 1.5g/t gold around the center.

Bantou exploration property

• At Bantou, during H1-2021 exploration work on the Karankasso JV permits focussed on completing soil geochemical surveys and ground geophysical surveys to help advance high priority targets ahead of the Dynkikongolo permit approval, and the start of the resource conversion drilling programmes in H2-2021 on Bantou and Bantou North deposits.

Siguri exploration property

• At Siguiri, a total of 23,000 meters of drilling will start in early H2-2021 on two promising targets that were selected in H1-2021.
  

CONFERENCE CALL AND LIVE WEBCAST

Management will host a conference call and webcast on Wednesday 4 August, at 8:30 am ET / 1:30 pm BST to discuss the Company's financial results.

The conference call and webcast are scheduled at:
5:30am in Vancouver
8:30am in Toronto and New York
1:30pm in London
8:30pm in Hong Kong and Perth

The webcast can be accessed through the following link:
https://edge.media-server.com/mmc/p/j5h3ojje

Analysts and investors are also invited to participate and ask questions using the dial-in numbers below:
International: [phone]
North American toll-free: [phone]
UK toll-free: [phone]

Confirmation Code: 2858954

The conference call and webcast will be available for playback on Endeavour's website.

QUALIFIED PERSONS

Clinton Bennett, Endeavour's VP Metallurgy and Process Improvement - a Fellow of the Australasian Institute of Mining and Metallurgy, is a "Qualified Person" as defined by National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101") and has reviewed and approved the technical information in this news release.

CONTACT INFORMATION

Martino De Ciccio VP – Strategy & Investor Relations [phone] [e-mail]	Brunswick Group LLP in London Carole Cable, Partner [phone] [e-mail]
Vincic Advisors in Toronto   John Vincic, Principal [phone] [e-mail]

ABOUT ENDEAVOUR MINING CORPORATION

Endeavour Mining is one of the world’s senior gold producers and the largest in West Africa, with operating assets across Senegal, Cote d’Ivoire and Burkina Faso and a strong portfolio of advanced development projects and exploration assets in the highly prospective Birimian Greenstone Belt across West Africa.

A member of the World Gold Council, Endeavour is committed to the principles of responsible mining and delivering sustainable value to its employees, stakeholders and the communities where it operates. Endeavour is admitted to listing and to trading on the London Stock Exchange and the Toronto Stock Exchange, under the symbol EDV.

For more information, please visit www.endeavourmining.com.

This document represents Endeavour’s half-yearly report for the purposes of the Disclosure and Transparency Rules (“DTRs”) issued by the UK Financial Conduct Authority (DTR 4.2).

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

This document contains "forward-looking statements" within the meaning of applicable securities laws. All statements, other than statements of historical fact, are “forward-looking statements”, including but not limited to, statements with respect to Endeavour's plans and operating performance, the estimation of mineral reserves and resources, the timing and amount of estimated future production, costs of future production, future capital expenditures, the success of exploration activities, the anticipated timing for the payment of a shareholder dividend and statements with respect to future dividends payable to the Company’s shareholders, the completion of studies, mine life and any potential extensions, the future price of gold and the share buyback programme. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "expects", "expected", "budgeted", "forecasts", "anticipates", believes”, “plan”, “target”, “opportunities”, “objective”, “assume”, “intention”, “goal”, “continue”, “estimate”, “potential”, “strategy”, “future”, “aim”, “may”, “will”, “can”, “could”, “would” and similar expressions .

Forward-looking statements, while based on management's reasonable estimates, projections and assumptions at the date the statements are made, are subject to risks and uncertainties that may cause actual results to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks related to the successful integration of acquisitions or completion of divestitures; risks related to international operations; risks related to general economic conditions and the impact of credit availability on the timing of cash flows and the values of assets and liabilities based on projected future cash flows; Endeavour’s financial results, cash flows and future prospects being consistent with Endeavour expectations in amounts sufficient to permit sustained dividend payments; the completion of studies on the timelines currently expected, and the results of those studies being consistent with Endeavour’s current expectations; actual results of current exploration activities; production and cost of sales forecasts for Endeavour meeting expectations; unanticipated reclamation expenses; changes in project parameters as plans continue to be refined; fluctuations in prices of metals including gold; fluctuations in foreign currency exchange rates; increases in market prices of mining consumables; possible variations in ore reserves, grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; extreme weather events, natural disasters, supply disruptions, power disruptions, accidents, pit wall slides, labour disputes, title disputes, claims and limitations on insurance coverage and other risks of the mining industry; delays in the completion of development or construction activities; changes in national and local government legislation, regulation of mining operations, tax rules and regulations and changes in the administration of laws, policies and practices in the jurisdictions in which Endeavour operates; disputes, litigation, regulatory proceedings and audits; adverse political and economic developments in countries in which Endeavour operates, including but not limited to acts of war, terrorism, sabotage, civil disturbances, non-renewal of key licenses by government authorities, or the expropriation or nationalization of any of Endeavour’s property; risks associated with illegal and artisanal mining; environmental hazards; and risks associated with new diseases, epidemics and pandemics, including the effects and potential effects of the global Covid-19 pandemic.

Although Endeavour has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Please refer to Endeavour's most recent Annual Information Form filed under its profile at www.sedar.com for further information respecting the risks affecting Endeavour and its business.

The declaration and payment of future dividends and the amount of any such dividends will be subject to the determination of the Board of Directors, in its sole and absolute discretion, taking into account, among other things, economic conditions, business performance, financial condition, growth plans, expected capital requirements, compliance with the Company's constating documents, all applicable laws, including the rules and policies of any applicable stock exchange, as well as any contractual restrictions on such dividends, including any agreements entered into with lenders to the Company, and any other factors that the Board of Directors deems appropriate at the relevant time. There can be no assurance that any dividends will be paid at the intended rate or at all in the future.

NON-GAAP MEASURES

Some of the indicators used by Endeavour in this press release represent non-IFRS financial measures, including “all-in sustaining cost”, “net debt”, “adjusted EBITDA”, “cash flow from continuing operations”, “total cash cost per ounce” and “net earnings”. These measures are presented as they can provide useful information to assist investors with their evaluation of the pro forma performance. Since the non-IFRS performance measures listed herein do not have any standardized definition prescribed by IFRS, they may not be comparable to similar measures presented by other companies. Accordingly, they are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Please refer to the non-GAAP measures section of the Company’s most recently filed management discussion and Analysis for a reconciliation of the non-IFRS financial measures used in this press release.

AFEMA’S WOULO-WOULO AREA RESOURCE MODELING

The geological models, statistical analysis and resource estimates were prepared by Kevin Harris, CPG is Endeavour Mining's Vice President Resources and a Qualified Person as defined by NI 43-101. The Woulo-Woulo Mineral Resource Estimate (MREs) was developed within the Afema project area in Leapfrog Geo and Geovia Surpac software. Mineral Resource estimates follow the Canadian Institute of Mining, Metallurgy and Petroleum ("CIM") definitions standards for mineral resources and reserves and have been completed in accordance with the Standards of Disclosure for Mineral Projects as defined by National Instrument 43-101.

The mineralisation model for Woulo-Woulo was developed in Leapfrog Geo with the drilling data as of 18 June, 2021. Twelve mineralised domains were defined within the approximately 2.9 km strike length of the deposit defined so far. The gold assays from the drill holes were composited to one-meter intervals within the mineralised wireframes and capped by the mineralised domain, or not at all depending on the high-grade outliers within the individual lens. Four of the domains were capped at 10 g/t Au and the remainder were not capped. The spatial relationship of the gold grade distribution was analysed for each mineralized domain using directional variograms. The majority of the lenses showed a good continuity of gold grade along strike and down-dip and were used to establish ordinary kriging (“OK”) estimation parameters. Density parameters were determined by weathering zone. The saprolite is 1.8 t/m³, saprock is 2.2 t/m³ and fresh rock is 2.8 t/m³. The gold grade was estimated using Ordinary Kriging (OK), constrained by the mineralised domains. The grade was estimated in multiple passes to define the higher confidence areas and to extend the grade into areas of extrapolated mineralization. The grade estimation was validated by visually comparing drilling data and block grades, comparing inverse distance squared and OK estimated grades and by swath plots comparing block grades and composite grades.

No Measured resources have been estimated. The mineralisation was classified as Indicated and Inferred Mineral Resources depending on the sample spacing, number samples, confidence in mineralised zone continuity and geostatistical analysis. The Indicated Mineral Resource was defined by least three-drill holes within a 50 meter search using a minimum of 7 and a maximum of 20 samples. Inferred Mineral Resource classification was defined by a minimum of three samples within a 75 meter search.

The Mineral Resources were constrained by $1,500/oz gold price within a Whittle pit optimisation and a 0.50 g/t Au cut-off grade. The Whittle pit shell optimisations assumed a base mining cost of $2.50/t and an adjusted ore mining and haulage cost of $2.50/t for oxide, $3.25/t for transition and $3.75/t for fresh rock, a mining recovery of 95%, mining dilution of 10%, a pit slope of 40o, average gold recovery of 90%, a processing and G&A cost of $16.00/t for oxide, $18.00/t for transition and $20.00/t for fresh rock, and a gold selling cost (royalty, refining and selling) of $70/oz.

Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

Reported tonnage and grade figures have been rounded from raw estimates to reflect the relative accuracy of the estimate. Minor variations may occur during the addition of rounded numbers.

Corporate Office: 5 Young St, Kensington, London W8 5EH, UK

Table of Contents

MANAGEMENT REPORT
1. BUSINESS OVERVIEW	3
1.1. OPERATIONS DESCRIPTION	3
2. HIGHLIGHTS FOR THE THREE AND SIX MONTHS ENDED 30 JUNE 2021	4
3. ENVIRONMENTAL, SOCIAL AND GOVERNANCE	5
3.1. HEALTH AND SAFETY	5
3.2. COVID-19 RESPONSE	6
4. OPERATIONS REVIEW	8
4.1 OPERATIONAL REVIEW SUMMARY	8
4.2. BOUNGOU GOLD MINE	9
4.3. HOUNDE GOLD MINE	11
4.4. ITY GOLD MINE	13
4.5. KARMA GOLD MINE	15
4.6. MANA GOLD MINE	17
4.7. SABODALA-MASSAWA GOLD MINE	19
4.8. WAHGNION GOLD MINE	21
4.9. DISCONTINUED OPERATIONS	23
5. FINANCIAL REVIEW	24
5.1. STATEMENT OF COMPREHENSIVE EARNINGS	24
5.2. SUMMARISED CASH FLOWS	26
5.3. SUMMARISED BALANCE SHEET	28
5.4. LIQUIDITY AND FINANCIAL CONDITION	29
5.5. RELATED PARTY TRANSACTIONS	30
5.6. ACCOUNTING POLICIES AND CRITICAL JUDGEMENTS	30
6. USE OF PROCEEDS	30
7. NON-GAAP MEASURES	31
7.1 ALL-IN MARGIN	31
7.2. ADJUSTED EBITDA	32
7.3. CASH AND ALL-IN SUSTAINING COST PER OUNCE OF GOLD SOLD	32
7.4. ADJUSTED NET EARNINGS AND ADJUSTED NET EARNINGS PER SHARE	35
7.5. OPERATING CASH FLOW PER SHARE	35
7.6. NET DEBT, NET CASH/ADJUSTED EBITDA RATIO	35
7.7. RETURN ON CAPITAL EMPLOYED	36
8. QUARTERLY AND ANNUAL FINANCIAL AND OPERATING RESULTS	37
9. PRINCIPAL RISKS AND UNCERTAINTIES	39
10. CONTROLS AND PROCEDURES	42
10.1. DISCLOSURE CONTROLS AND PROCEDURES	42
10.2. INTERNAL CONTROLS OVER FINANCIAL REPORTING	42
10.3. LIMITATIONS OF CONTROLS AND PROCEDURES	42
11. RESPONSIBILITY STATEMENTS	43
UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
INDEPENDENT REVIEW REPORT TO ENDEAVOUR MINING PLC	45
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME	47
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS	48
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION	50
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY	51
NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS	52

This Management Report should be read in conjunction with Endeavour Mining plc’s (“Endeavour ”, the “Company”, or the “Group”) condensed interim consolidated financial statements for the three and six months ended 30 June 2021 which has been prepared in accordance with UK adopted International Accounting Standard 34-Interim Financial Reporting using accounting policies consistent with International Financial Reporting Standards (“IFRS”) or (“GAAP”) and are included in section 2.1 of the unaudited interim condensed financial statements for the three and six months ended 30 June 2021, as well as the audited consolidated financial statements for the years ended 31 December 2020 and 2019 and notes thereto which has been prepared in accordance with IFRS. This Management Report is prepared as an equivalence to the Company’s Management Discussions & Analysis (“MD&A”) which is the Canadian filing requirement in accordance with National Instrument 51-102, Continuous Disclosure Obligations (“NI 51-102”), and includes all of the disclosures as required by NI 51-102.

This Management Report contains “forward-looking statements” that are subject to risk factors set out in a cautionary note contained herein. The reader is cautioned not to place undue reliance on forward-looking statements. All figures are in United States Dollars, unless otherwise indicated. Tabular amounts are in thousands of United States Dollars, except per share amounts and where otherwise indicated. This Management Report is prepared as of 3 August 2021. Additional information relating to the Company is available, including the Company’s prospectus (available on the Company’s website at www.endeavourmining.com) and the Company’s Annual Information Form (available on SEDAR at www.sedar.com).

1. BUSINESS OVERVIEW

1.1.        OPERATIONS DESCRIPTION

Endeavour is a multi-asset gold producer focused on West Africa and dual-listed on the Toronto Stock Exchange (“TSX”) and the London Stock Exchange (“LSE”) under the symbol EDV on both exchanges. The Company’s assets include five mines (Houndé, Mana, Boungou, Wahgnion and Karma) in Burkina Faso, the Ity mine in Côte d’Ivoire, the Sabodala-Massawa mine in Senegal, six development projects (Fetekro, Kalana, Bantou, Nabanga, Golden Hill and Afema) and a strong portfolio of exploration assets on the highly prospective Birimian Greenstone Belt across Burkina Faso, Côte d’Ivoire, Mali, Senegal, and Guinea. On 10 February 2021, Endeavour completed the acquisition of Teranga Gold Corporation (“Teranga”), a TSX-listed gold company which owned the Sabodala-Massawa and Wahgnion mines, as well as certain development and exploration assets. On 1 March 2021, the Company completed the disposition of its Agbaou mine in Côte d’Ivoire.

As a leading global gold producer and the largest in West Africa, Endeavour is committed to principles of responsible mining and delivering sustainable value to its employees, stakeholders, and the communities where it operates.

2. HIGHLIGHTS FOR THE THREE AND SIX MONTHS ENDED 30 JUNE 2021

Table 16: Consolidated Highlights

		THREE MONTHS ENDED		SIX MONTHS ENDED
($’000s)	Unit	30 June 2021	30 June 2020	30 June 2021		30 June 2020
Operating data from continuing operations
Gold produced	oz	408,992	124,561	743,254		268,994
Gold sold	oz	420,761	124,761	784,279		271,892
Realised gold price1	$/oz	1,791	1,680	1,771		1,603
All-in sustaining costs (AISC) per ounce sold 2	$/oz	853	938	855		909
Cash flow data from continuing operations
Operating cash flows before working capital	$	285,650	74,909	549,068		170,238
Operating cash flows before working capital per share2	$/share	1.13	0.67	2.39		1.54
Operating cash flows	$	300,475	53,497	507,218		153,396
Operating cash flows per share2	$/share	1.19	0.48	2.21		1.38
Profit and loss data from continuing operations
Revenue1	$	753,427	209,582	1,389,219		435,902
Earnings from mine operations	$	272,976	75,584	479,590		147,763
Net comprehensive earnings/(loss) attributable to shareholders	$	126,779	(38,488)	213,443		(21,817)
Basic earnings/(loss) per share attributable to shareholders	$/share	0.50	(0.35)	0.93		(0.20)
EBITDA2	$	363,322	22,625	696,253		124,451
Adjusted EBITDA2	$	399,755	99,262	706,197		206,182
Adjusted net earnings attributable to shareholders2	$	183,147	49,217	276,321		73,666
Adjusted net earnings per share attributable to shareholders2	$/share	0.73	0.44	1.20		0.66
Balance Sheet Data
Cash	$	832,877	357,343	832,877		357,343
Net Debt/(Cash)2	$	77,123	472,654	77,123		472,654
Net Debt/(Cash)/ Adjusted EBITDA (LTM) ratio2	:	0.07	1.00	0.07		1.00

¹ Revenue and ealized gold price are inclusive of the Sabodala-Massawa and Karma streams.
² This is a non-GAAP measure. Refer to the non-GAAP measure section of this Management Report.

3. ENVIRONMENT, SOCIAL AND GOVERNANCE

Endeavour is committed to being a responsible gold miner, creating long-term value and sharing the benefits of its operations among all its stakeholders, including employees, host communities and shareholders. As the largest gold miner in West Africa and a trusted partner, Endeavour’s operations have the potential to provide a significant positive impact on the economies and social development of its local communities and host countries, while inimizing their impact on the environment.

Environment, social and governance (“ESG”) policies, systems and practices are embedded throughout the business and the Company reports annually on its ESG performance via its Sustainability Report. A dedicated sustainability governance structure has been established with an Environment, Sustainability and Governance Committee at board level, which the management of the ESG Committee reports into.

The Responsible Gold Mining Principles (“RGMPs”)

The RGMPs were launched by the World Gold Council, the industry body responsible for stimulating and sustaining demand for gold, to reflect the commitment of the world’s leading gold producers to responsible mining. The RGMPs provide a comprehensive ESG reporting framework that sets out clear expectations as to what constitutes responsible gold mining to help provide confidence to investors, supply chain participants and ultimately, consumers.

The RGMPs consist of ten umbrella principles and fifty-one detailed principles that cover key ESG themes. Member companies have three years to comply with the RGMPs and are required to obtain external assurance on their conformance to the RGMPs.

During 2020, Endeavour received external assurance on its first RGMP, 1.7 Accountabilities and Reporting and continued to progress on the implementation of the other RGMPs, including commissioning an independent external readiness assessment to confirm Endeavour’s internal gap assessment (conducted in 2019) and to provide additional recommendations in preparation for external assurance. For the year ended 31 December 2020, Endeavour received external assurance on seven RGMPs, the details of which are included in the Company’s 2020 Sustainability Report.

Responding to Climate Change

Being responsible stewards of the environment is critical to the Group’s long-term success. The Group has been reporting on its Scope 1 and Scope 2 greenhouse gas emissions since 2017 and Scope 3 emissions since 2019.

In Q2-21, Endeavour launched an augmented ESG strategy to reflect Company’s increased size. Central to the strategy is protecting the environment, with a core focus on tackling climate change, water stewardship, conserving biodiversity as well as plastic waste, a material issue in its host countries.

As part of Endeavour’s journey to net zero by 2050, the Company is working on its roadmap to reduce its greenhouse gas emissions intensity by 30% by 2030. Among the eight levers identified to reduce emissions, the Company has identified that switching to renewable power has the most potential. Solar power is expected to form a core part of the Group’s energy mix going forward, starting with the solar power plant project at the Houndé mine.

To support this commitment, 25% of the 2021 long-term executive compensation award (vesting in 2023) is tied to the successful implementation of a carbon reduction strategy and the commissioning of at least one significant renewable energy power plant.

Sustainability Update

During Q2-2021, Endeavour published its 2020 Sustainability Report. This Report marks a new milestone in the Company’s disclosure with the continued enhancement of transparency and the adoption of standards set by the Task Force on Climate-related Financial Disclosures (“TCFD”) and the Sustainability Accounting Standards Board (“SASB”). In addition, external assurance was obtained for the first time on key ESG indicators.

To increase transparency on local procurement, Endeavour has also adopted the Local Procurement Reporting Mechanism (“LPRM”), a framework created by Mining Shared Value to support transparency within the supply chain and standardize information on mine site procurement.

Endeavour’s 2020 sustainability highlights include:

• 95% of the Group’s workforce is from host countries and 66% of senior management is from West Africa
• 74% of total procurement, amounting to approximately $622 million, spent on in-country suppliers, supporting over 2,000 national and local businesses
• Distribution of $894 million in economic value to host countries, including $262 million in taxes and royalties
• Invested $24 million, equivalent to $27 per ounce of gold produced, in local communities and host countries, including $6 million to support the fight against COVID-19
• Successful decrease in malaria cases by 19% and the Group’s malaria incidence rate by 38%
• Fourth consecutive year of no significant environmental incidents, since annual sustainability reporting began
• Greenhouse gas emission intensity (CO2-equivalent per oz gold produced) reduced by 13% compared to 2018
• Significantly improved CDP Climate Change score from D- to C and achieved a C for Water Security performance

Launch of an augmented ESG Strategy

During the quarter, Endeavour announced an updated ESG strategy to reflect its increased size and scale. Endeavour’s ESG strategy is centered around two key pillars: investing in host countries and protecting the environment (as detailed above). These two pillars are underpinned by a strong governance framework and linked to clear, measurable ESG-related executive compensation targets (as outlined in the 2021 Management Information Circular).

The Company has also created the Endeavour Foundation, which will be its primary vehicle to implement its social investments and sustainability projects at the regional and national levels. The Endeavour Foundation’s focus areas are health, particularly malaria, education, access to water and energy, and economic development. The Endeavour Foundation will supplement the efforts being undertaken by ECODEV, an economic development fund established by Endeavour to support local economic growth by promoting and investing in the creation of long-term, sustainable, small and medium enterprises.

3.1.    HEALTH AND SAFETY

Endeavour puts the highest priority on safe work practices and systems. The Company’s ultimate aim is to achieve “zero harm” performance. The following table shows the safety statistics for the trailing twelve months ended 30 June 2021. The Group’s lost time injury frequency rate (“LTIFR”) continues to be well below the industry benchmark.

Table 17: LTIFR² and TRIFR³ Statistics for the Trailing Twelve Months ended 30 June 2021¹

							Incident Category
	Fatality		Lost Time Injury		Total People Hours		LTIFR2		TRIFR3
Boungou1	—		1		2,679,945		0.37		1.87
Houndé	—		—		4,749,512		—		1.26
Ity	—		1		5,975,853		0.17		1.51
Karma	—		—		3,195,348		—		—
Mana1	—		—		5,008,755		—		3.39
Non Operations4	—		1		4,024,433		0.25		0.50
Sabodala-Massawa1	—		1		2,532,725		0.39		2.76
Wahgnion1	—		1		2,180,042		0.46		2.75
Total	—		5		30,346,613		0.16		1.60

 

¹Data relating to the acquired SEMAFO and Teranga entities have been included from their acquisition date.
²LTIFR = Number of LTIs in the Period x 1,000,000 / Total people hours worked for the period.
³Total Recordable Injury Frequency Rate (“TRIFR”) = Number of (LTI+Fatalities+Restricted Work Injury+Medical Treated Injury+First Aid Injury) in the period x 1,000,000 / Total people hours worked for the period.
⁴ “Non Operations” includes Corporate, Kalana and Exploration.

3.2.    COVID-19 RESPONSE

Since the outbreak of the global COVID-19 pandemic, Endeavour has focused on the well-being of its employees, contractors and local communities, while ensuring business continuity. In addition, host governments in Côte d’Ivoire, Burkina Faso, Senegal and Mali have taken strict and pro-active measures to minimise overall exposure in their countries.

Protecting the well-being of employees, contractors, and local communities

• Endeavour has implemented a range of preventative measures at all its sites, including social distancing, health screening, augmented hygiene and restricted access to sites. During Q2-21, this has also included vaccination awareness campaigns across sites and offices.
• Endeavour has donated key medical equipment and supplies to regional, community and on-site medical centres across all four countries of its projects and operations and continues to monitor the needs of its communities.
• A range of community programmes have been implemented during the pandemic, including micro-credit programmes, which have helped to support people in host communities whose livelihoods were impacted by the pandemic, and e-learning programmes in Burkina Faso to facilitate access to distance learning for students.

Business continuity response plan

• In early March 2020, Endeavour put in place a business continuity plan to mitigate the risks and potential impact of the global COVID-19 pandemic, which has three levels of response:
  • Level 1, which the Group is currently operating under, involves a range of preventative measures including temperature checks, restricted access to sites, social distancing, increased hygiene standards and mandatory quarantine periods for employees arriving in-country, while otherwise continuing operations as normal.
  • Level 2 is designed to be initiated should COVID-19 become more prevalent in the countries in which the Group operates and involves comprehensive restrictions on movement into and out of the mines. Under these circumstances, Endeavour’s mines would be isolated, but mining operations and the shipment of gold would continue.
  • Level 3 involves the full or partial suspension of mining and processing operations.
• The Company’s cloud-based strategy ensures that employees who need to work from home are able to access all the relevant applications, systems and collaboration tools needed to perform their duties. In addition, the Company’s cyber security response has been updated and is constantly tracked in light of the increased cyber security risk generally observed during the pandemic.

4.  OPERATIONS REVIEW

The following tables summarises operating results for the three and six months ended 30 June 2021 and 30 June 2020.

4.1.    Operational Review Summary

• Q2-2021 consolidated production from continuing operations amounted to 408,992 ounces, an increase of 284,431 ounces or 228% compared to Q2-2020. Group production increased due to higher production at Houndé, Ity and Karma as well as the addition of the Mana and Boungou mines which were acquired on 1 July 2020 and the Wahgnion and Sabodala-Massawa mines which were acquired on 10 February 2021. Group AISC from continuing operations decreased by 9% or $85 per ounce primarily due to the inclusion of lower cost Wahgnion and Sabodala-Massawa mines during the quarter as well as lower cost at Houndé due to lower sustaining capital expenditure.
• H1-2021 consolidated production from continuing operations increased by 474,260 ounces or 176% which was more than double that of H1-2020, as a result of the addition of four new mines (Mana, Boungou, Wahgnion and Sabodala-Massawa) since the end of Q2-2020. AISC for all operations decreased by $56 per ounce or 6% to $860 per ounce due to the inclusion of lower cost Wahgnion and Sabodala-Massawa mines during the quarter as well as lower cost at Houndé due to lower sustaining capital.

Table 18: Group Production

	THREE MONTHS ENDED				SIX MONTHS ENDED
	30 June 2021		30 June 2020		30 June 2021		30 June 2020
(All amounts in koz, on a 100% basis)
Boungou	39		—		99		—
Houndé	80		57		146		113
Ity	79		47		150		108
Karma	25		20		47		48
Mana	49		—		102		—
Sabodala-Massawa1	96		—		135		—
Wahgnion1	41		—		66		—
PRODUCTION FROM CONTINUING OPERATIONS	409		125		743		269
Agbaou2	—		24		13		52
GROUP PRODUCTION	409		149		756		321

 

¹Included for the post acquisition period commencing 10 February, 2021.
²Divested on 1 March, 2021.

Table 19: Group All-In Sustaining Costs¹

(All amounts in US$/oz)	THREE MONTHS ENDED				SIX MONTHS ENDED
	30 June 2021		30 June 2020		30 June 2021		30 June 2020
Boungou	950		—		793		—
Corporate  G&A	25		34		28		32
Houndé	741		965		787		1,020
Ity	806		789		796		707
Karma	1,070		951		1,120		889
Mana	1,016		—		982		—
Sabodala-Massawa2	637		—		675		—
Wahgnion2	980		—		903		—
AISC1 FROM CONTINUING OPERATIONS	853		938		855		909
Agbaou3	—		955		1,131		953
GROUP AISC1	853		941		860		916

¹This is a non-GAAP measure.
²Included for the post acquisition period commencing 10 February 2021.
³Divested on 1 March 2021.

4.2    Boungou Gold Mine, Burkina Faso

Table 20: Boungou Key Performance Indicators⁴

		THREE MONTHS ENDED				SIX MONTHS ENDED
	Unit	30 June 2021		30 June 2020		30 June 2021		30 June 2020
Operating Data
Tonnes ore mined	kt	350		—		596		—
Tonnes of waste mined	kt	7,996		—		14,422		—
Tonnes of ore milled	kt	336		—		651		—
Average gold grade milled	g/t	3.84		—		4.65		—
Recovery rate	%	95		—		95		—
Gold produced	oz	38,802		—		98,549		—
Gold sold	oz	37,974		—		95,833		—
Realised gold price	$/oz	1,801		—		1,783		—
Financial Data ($'000)
Revenue	$	68,375		—		170,851		—
Operating expenses	$	(23,580)		—		(56,924)		—
Royalties	$	(4,147)		—		(10,341)		—
Non-cash operating expenses2	$	624		—		4,329		—
Total Cash Cost1	$	(27,103)		—		(62,936)		—
Sustaining capital1	$	(8,955)		—		(13,065)		—
Total All-in Sustaining Costs1	$	(36,058)		—		(76,001)		—
Non-sustaining capital1	$	(3,932)		—		(8,425)		—
Total All-in Costs1	$	(39,990)		—		(84,426)		—
All-In Margin1, 3	$	28,385		—		86,425		—
Cash cost per ounce sold1	$/oz	714		—		657		—
Mine All-In Sustaining Costs per ounce sold1	$/oz	950		—		793		—

¹ Non-GAAP measure. Refer to the non-GAAP Measures section for further details.

² Non-cash operating expenses relates to the reversal in the period of the fair value adjustment of inventory on hand at the acquisition date.
³ All-In Margin is calculated as revenue less all-in costs for the period.
⁴ Analysis of operations is only for the period after its acquisition by Endeavour on 1 July 2020.

Q2-2021 Insights

• Production of 38,802 ounces on account of ore milled from lower grade areas of the West pit offsetting higher plant throughput which resulted from good fragmentation of mined materials as well as good recovery rates.
  • Tonnes mined in the quarter focused on a combination of pre-stripping of the top oxide benches in the West Pit Phase 3 and fresh waste rock in West Pit Phase 2 and with pre-stripping activity in the East Pit, following completion of mobilisation of the mining contractor fleet. Tonnes of ore mined was mainly sourced from the West pit.
  • Tonnes milled benefited from high throughput associated with good fragmentation of material mined as well as operational improvements made to optimise feed to the SAG mill, pebble crusher and vertical tower mill.
  • Processed grade was lower as mill feed was mainly sourced from lower grade areas of the West Pit per the mining sequence.
• AISC was $950 per ounce due to planned sustaining capital expenditures, which were partially offset by lower unit mining costs associated with the low strip ratio and higher portion of oxide ore mined, and a lower unit processing cost due to higher throughput.
• Sustaining capital expenditure was $9.0 million and related predominantly to waste capitalisation at the West pit and the commencement of the TSF wall raise #3.
• Non-sustaining capital expenditure was $3.9 million and related to pre-stripping at the East pit.

H1-2021 Insights

• Strong production during Q1-2021 offset the decrease in production during Q2-2021 as a result of lower average processed grade despite higher plant throughput.
  • Total tonnes mined was high, which is attributable to ramp up of mining activities following the commissioning of additional mining equipment during Q1-2021 and the benefit of mining on the top benches as well as lower strip ratio during Q2-2021. Pre-stripping activities at the East pit which started in Q1-2021 continued during Q2-2021. Tonnes of ore mined was mainly sourced from the West pit during H1-2021.
  • Tonnes milled increased through the period as a result of the higher mill utilisation due to better mining fragmentation, as well as the benefit of operational improvements to optimise the feed to the SAG mill, pebble crusher and vertical tower mill.
  • Average processed grade decreased during the period as the mill feed was increasingly sourced from the lower grade areas of the West Pit towards the end of the period, in accordance with the mining sequence, following completion of mining of the higher grade areas which required minimal waste stripping during the restart of mining activities in Q4-2020 and Q1-2021.
• AISC per ounce increased during Q2-2021 compared to Q1-2021 due to an increase in sustaining waste capital. Unit mining and unit processing cost decreased in Q2-2021 compared to Q1-2021, benefiting from increased tonnes mined and processed.
• Sustaining capital expenditures of $13.1 million during H1-2021 related to waste capitalisation at West pit and the commencement of the TSF wall raise #3.
• Non-sustaining capital expenditure of $8.4 million related to pre-stripping at the East pit.
  
  

2021 Outlook

• Boungou is well positioned to meet its FY-2021 production guidance of 180 - 200koz, while AISC are expected to continue to trend above the guided $690 - 740 per ounce range as a result of higher fuel prices and increased security costs.
• Plant feed is expected to continue to be sourced from the West Pit with waste stripping activities continuing at the East Pit throughout the year. Mill throughput is expected to remain broadly consistent with H1-2021 performance, along with average processed grades, while recovery rates are expected to slightly decline due to the ore characteristics.
• The sustaining capital spend outlook for FY-2021 remains unchanged compared to the initial guidance of $19.0 million, of which $13.1 million has been incurred in H1-2021. The non-sustaining capital spend outlook for FY-2021 also remains unchanged compared to the initial guidance of $22.0 million, of which $8.4 million has been incurred in H1-2021.
  
  

2021 Exploration Programme

• An exploration programme of up to $7.0 million has been planned for 2021, of which $4.6 million was spent in H1-2021 consisting of 24,307 meters of drilling across 245 drillholes. The exploration efforts were focused on delineating near mine targets and the area between the East and West pit.
• Drilling conducted in H1-2021 at Natougou NW identified a zone of higher-grade mineralisation trending north-northwest that extends for over 700 meters and remains open to the north. In H2-2021 drilling will focus on delineating this trend. Drilling at Natougou SE, Natougou SW and West Flanc targeted the extension of existing mineralised trends and the evaluation of inferred resources.
• At Boungou NW, H1-2021 drilling evaluated the continuation of the Boungou Shear Zone mineralisation. Initial results are promising and a complete review of all drill results in H2-2021 will guide follow-up drilling in 2022.
  

4.3    Houndé Gold Mine, Burkina Faso

Table 21: Houndé Key Performance Indicators

		THREE MONTHS ENDED				SIX MONTHS ENDED
	Unit	30 June 2021		30 June 2020		30 June 2021		30 June 2020
Operating Data
Tonnes ore mined	kt	1,399		1,072		3,024		1,972
Tonnes of waste mined	kt	10,319		10,437		22,630		20,848
Tonnes milled	kt	1,108		1,035		2,254		2,101
Average gold grade milled	g/t	2.47		1.91		2.17		1.83
Recovery rate	%	92		92		92		91
Gold produced	oz	79,632		57,444		145,686		113,304
Gold sold	oz	76,827		57,431		143,858		114,102
Realised gold price	$/oz	1,790		1,745		1,780		1,657
Financial Data ($'000)
Revenue	$	137,549		100,190		256,070		189,026
Operating expenses	$	(41,556)		(36,304)		(82,051)		(78,407)
Royalties	$	(6,803)		(8,025)		(17,815)		(15,130)
Total Cash Cost1	$	(48,359)		(44,329)		(99,866)		(93,537)
Sustaining capital1	$	(8,602)		(11,117)		(13,304)		(22,891)
Total All-In Sustaining Costs1	$	(56,961)		(55,446)		(113,170)		(116,428)
Non-sustaining capital1	$	(2,985)		(5,750)		(9,681)		(7,565)
Total All-in Costs1	$	(59,946)		(61,196)		(122,851)		(123,993)
All-In Margin1, 2	$	77,603		38,994		133,219		65,033
Cash cost per ounce sold1	$/oz	629		772		694		820
Mine All-In Sustaining Costs per ounce sold1	$/oz	741		965		787		1,020

¹ Non-GAAP measure. Refer to the non-GAAP Measures section for further details.
² All-In Margin is calculated as revenue less all-in costs for the period.

Q2-2021 vs Q2-2020 insights

• Production increased significantly relative to Q2-2020 due to higher plant throughput from the addition of high grade oxide materials sourced from the Kari Pump area while recovery rate remained consistent with prior periods.
  • Tonnes of ore mined increased due to an increase in the proportion of oxide ore tonnes mined and a lower strip ratio. Mining was focused on high grade oxide ore at Kari Pump and supplemented by fresh ore from the Vindaloo Center and Bouéré pits. Mining ramped up at Kari Pump following pre-stripping in Q2-2020 and the planned waste stripping in Q1-2021.
  • Tonnes milled increased due to the increased milling rate that resulted from higher proportion of oxide ore in the blend.
  • Average gold grade milled increased due to the benefit of higher grade ore from the Kari-Pump and Bouéré pits, supplemented by lower amounts of lower grade fresh ore from Vindaloo Center.
• AISC decreased due to lower sustaining capital which was offset by higher unit mining cost as a result of more tonnes sourced from the Kari Pump area which has a longer hauling distance. Processing unit costs remained consistent.
• Sustaining capital of $8.6 million is related to waste capitalisation at the Vindaloo Main pit.
• Non-sustaining capital of $3.0 million is related to the costs associated with the development of the Kari West pit.
  
  

H1-2021 vs H1-2020 Insights

• Production increased due to increased throughput and higher average processed grades, mainly as a result of the ramp-up of the Kari Pump deposit.
  • Tonnes of ore mined increased mainly due to the ramp up at the Kari Pump pit, which allowed further optionality in the mine plan compared to prior periods when Kari Pump was at the pre-stripping stage.
  • Tonnes milled increased as mill throughput improved due to the higher proportion of oxide ore from the Kari Pump pit, offsetting the higher volumes of fresh ore from the Vindaloo Main and Bouéré pits.
  • Average gold grade milled increased due to the addition of the high grade Kari Pump ore, which was supplemented by ore from the Vindaloo Main and the Bouéré pits.
• AISC decreased due to lower unit mining costs as a result of a lower strip ratio as well as the decrease in sustaining capital, which was slightly offset by higher royalties associated with the higher realised gold price, higher unit processing cost associated with scheduled maintenance and higher unit G&A costs as a result of increase in patent taxes and insurance with the commencement of mining Kari pump area.
  
  

2021 Outlook

• H1-2021 performance was stronger than scheduled due to good mining productivities achieved during the Kari Pump pre-stripping enabling, increased access to high grade oxide ore. As such, Houndé is on track to meet the top half of its FY-2021 production guidance of 240—260koz, with AISC expected to achieve the guided $855—905 per ounce range.
• Mining activities in H2-2021 will continue to focus on Kari Pump, supplemented by contributions from Bouéré and Vindaloo Centre pits. Mining is expected to focus on lower grade areas during the wet season and as a greater focus is placed on waste stripping activities, primarily related to Vindaloo Main pit and Kari West where the pre-strip is expected to be completed in late 2021. Throughput is expected to slightly decline in H2-2021, while recovery rates are expected to remain similar to H1-2021 and processed grade is expected to be lower following the higher grades brought forward in Q2-2021.
• The sustaining capital spend outlook for FY-2021 remains unchanged compared to the initial guidance of $39.0 million, of which $13.3 million has been incurred in H1-2021. The non-sustaining capital spend outlook for FY-2021 also remains unchanged compared to the initial guidance of $13.0 million, of which $9.7 million has been incurred in H1-2021.

2021 Exploration Programme

• An exploration programme of up to $7.0 million has been planned for 2021 of which $6.8 million was spent in H1-2021 consisting of 68,871 meters of drilling across 630 drillholes. The exploration efforts were focused on Vindaloo South, Mambo and the intersection between Kari Gap and Kari Center.
• Drilling has confirmed that the Mambo target, located 12km from the Houndé plant, has the potential to be a significant discovery with mineralisation that extends over 800 meters in length and 200 meters wide and remains open to the southwest, northeast, and at depth. During H2-2021, step out drilling will target lateral extensions of Mambo to the southwest and northeast. A maiden resource at Mambo is expected to be published in H2-2021.
• During H1-2021 exploration in the Kari Area and at Vindaloo South was focussed on delineating mineralised extensions which will be pursued in H2-2021.

4.4.    Ity Gold Mine, Côte d’Ivoire

Table 22: Ity CIL Key Performance Indicators

		THREE MONTHS ENDED				SIX MONTHS ENDED
	Unit	30 June 2021		30 June 2020		30 June 2021		30 June 2020
Operating Data
Tonnes ore mined	kt	1,877		1,650		3,982		3,559
Tonnes of waste mined	kt	4,057		3,725		8,768		7,042
Tonnes milled	kt	1,544		1,180		3,094		2,590
Average gold grade milled	g/t	1.96		1.59		1.86		1.61
Recovery rate	%	81		77		80		81
Gold produced	oz	79,487		46,790		150,369		107,795
Gold sold	oz	83,377		46,146		157,860		109,660
Realised gold price	$/oz	1,803		1,721		1,790		1,643
Financial Data ($'000)
Revenue	$	150,337		79,419		282,493		180,142
Operating expenses	$	(51,756)		(29,702)		(97,840)		(64,932)
Royalties	$	(8,311)		(4,453)		(15,499)		(9,216)
Total Cash Cost1	$	(60,067)		(34,155)		(113,339)		(74,148)
Sustaining capital1	$	(7,102)		(2,253)		(12,340)		(3,376)
Total All-in Sustaining Costs1	$	(67,169)		(36,408)		(125,679)		(77,524)
Non-sustaining capital1	$	(8,376)		(10,746)		(20,423)		(21,693)
Total All-in Costs1	$	(75,545)		(47,154)		(146,102)		(99,217)
All-In Margin1, 2	$	74,792		32,265		136,391		80,925
Cash cost per ounce sold1	$/oz	720		740		718		676
Mine All-In Sustaining Costs per ounce sold1	$/oz	806		789		796		707

¹ Non-GAAP measure. Refer to the non-GAAP Measures section for further details.
² All-In Margin is calculated as revenue less all-in costs for the period.

Q2-2021 vs Q2-2020 insights

• Production was ahead of expectation as higher-grade ore was brought forward in the mine plan and there was also higher throughput, higher processed average grade, as well as higher plant recovery rate while the prior quarter production was lower due to prioritising waste extraction.
  • Tonnes ore mined increased due to higher mining fleet availability and lower strip ratio. Ore extraction increased at Ity pit which benefited from lower strip ratio compared to Q2-2020 due to the planned cutback. In addition, mining activities commenced at the Walter pit and the Flotouo low grade dump providing greater operational flexibility.
  • Tonnes milled increased and performed above nameplate due to increased plant operating time as well as a higher proportion of oxide materials from the Daapleu, Bakatouo, Heap Dump, Flotouo dump and Colline Sud pits, with a slight increase in fresh blend sourced from Daapleu, Bakatouo and Ity pits.
  • Processed grade increased due to the benefit of the higher grade ore from the Bakatouo pit, which was supplemented with ore from the Daapleu and Walter pits.
  • Despite the higher proportion of transitional and fresh ore processed in Q2-2021, recovery rates increased, as higher quality material from Flotouo was treated preferentially displacing the more viscous Verse Ouest material.
• AISC per ounce increased due to higher unit mining costs as a result of longer hauling distance for ore mined from the newly commissioned Flotouo and Walter pits as well as the transition to contractor mining. In addition, unit processing costs increased due to the increase in the proportion of transitional and fresh material and the higher reagent consumption due to an increase in the proportion of Daapleu ore processed. Higher power costs impacted AISC by approximately $20/oz due to increased utilisation of generators as a result of temporarily reduced grid power availability. The cost increase was also impacted by higher sustaining capital expenditure.
• Sustaining capital expenditure of $7.1 million related primarily to waste stripping at the Ity, Walter and Colline Sud pit.
• Non-sustaining capital expenditure of $8.4 million mainly related to the construction of the Stage 3 raise of the Tailings Storage Facility (“TSF”), the Le Plaque haul road construction, and the Cavally river diversion.
• During Q2-2021, Ity transitioned from owner mining to contract mining with Societe de Forage et des Travaux Publics (“SFTP”), a local contractor who are already performing contract mining services at our Karma and Boungou mines. As a part of the transition, the mining fleet at Ity were sold to SFTP for approximately $24.2 million.
  
  

H1-2021 vs H1-2020 Insights

• Production increased due to the higher throughput and higher processed grades.
  • Despite the slightly higher strip ratio in H1-2021, tonnes of ore mined increased due to higher mining fleet availability and commencement of mining at the Walter, Colline Sud and Flotouo pits, which in turn provided greater operational flexibility.
  • Tonnes milled increased due to increased mill utilisation and the supplemental processing of oxide ore through the surge bin.
  • Average gold grade milled increased in H1-2021 due to the higher grade ore sourced from the Bakatouo and Daapleu pits, whereas in H1-2020 a higher proportion of the mill feed was supplemented by lower grade oxide stockpiles, as mining was focused on waste extraction.
  • The higher proportion of fresh ore sourced from Daapleu in H1-2021 resulted in a slight decrease in recovery rates.
• AISC per ounce increased due to higher mining and processing unit costs and increased sustaining capital as a result of higher capitalised waste. The higher unit mining costs were a result of the longer haul distance for ore mined from the newly commissioned Walter and Flotouo pits, while the higher processing costs are due to a higher proportion of fresh ore being processed.

2021 Outlook

• H1-2021 performance was stronger than scheduled due to the benefit of a good processing performance with a combination of higher throughput, grade, and recovery. As such, Ity is on track to meet the top half of its FY-2021 production guidance of 230—250koz, with AISC expected to achieve the top-end of the guided $800—850 per ounce range.
• Waste extraction activities are expected to ramp up at the Ity pit in H2-2021 as stripping which was deferred from H1-2021 is carried out. As a result, the proportion of ore mined from Bakatouo, Daapleu and Colline Sud is expected to decrease in H2-2021. Throughput is expected to be slightly lower in H2-2021 compared to H1-2021 due to the onset of the wet season, while the average processed grade is expected to be lower due to a higher proportion of feed from historical lower grade stockpiles.
• The sustaining capital spend outlook for FY-2021 remains unchanged compared to the initial guidance of $28.0 million, of which $12.3 million has been incurred in H1-2021. Non-sustaining capital spend for FY-2021 is expected to amount to approximately $40.0 million, of which $20.4 million has been incurred in H1-2021. This increase compared to the initial H1-2021 guidance of $27.0 million is due to initiation of new optimization initiatives, primarily associated with reducing reagent consumption and enhancing recoveries.
  
  

2021 Exploration Programme

• An exploration programme of $9.0 million has been planned for 2021 of which $6.2 million was spent in H1-2021 consisting of 45,144 meters of drilling across 441 drillholes. The exploration efforts were focused on Le Plaque South (Delta Extension), West Flotouo (Verse Ouest), Daapleu Deep, Yopleu-Legaleu and the junction between Bakatouo and Walter.
• Drilling on the West Flotouo target, which was informed following a re-interpretation of structural and geological data, led to the discovery of a high grade mineralised lenses immediately below the former Flotouo dump, located in proximity to the plant. A maiden resource is expected to be published in late 2021.
• Drilling in the Le Plaque area focussed on extending mineralisation at Le Plaque South and Yopleu-Legaleu. An updated Le Plaque resource is expected to be published in late 2021.
• Drilling conducted at Daapleu confirmed that mineralisation extends at least 300 meters downdip of the current pit design and the target will be delineated further in H2-2021.
• Drilling at the junction between the Bakatouo and Walter deposits confirmed mineralisation is continuous and that it remains open at depth, and will therefore be further explored in H2-2021.

4.5.    Karma Gold Mine, Burkina Faso

Table 23: Karma Key Performance Indicators

		THREE MONTHS ENDED				SIX MONTHS ENDED
	Unit	30 June 2021		30 June 2020		30 June 2021		30 June 2020
Operating Data
Tonnes ore mined	kt	1,253		1,288		2,496		2,517
Tonnes of waste mined	kt	4,959		3,513		8,862		7,237
Tonnes of ore stacked	kt	1,267		1,238		2,647		2,352
Average gold grade stacked	g/t	0.91		0.81		0.81		0.91
Recovery rate	%	68		80		67		81
Gold produced	oz	25,057		20,327		46,630		47,895
Gold sold	oz	25,615		21,184		48,011		48,130
Realised gold price1	$/oz	1,729		1,415		1,647		1,387
Financial Data ($'000)
Revenue1	$	44,283		29,973		79,083		66,735
Operating expenses	$	(23,285)		(15,296)		(46,152)		(34,055)
Royalties	$	(3,853)		(2,828)		(7,158)		(6,079)
Total Cash Cost2	$	(27,138)		(18,124)		(53,310)		(40,134)
Sustaining capital2	$	(258)		(2,028)		(482)		(2,667)
Total All-In Sustaining Costs2	$	(27,396)		(20,152)		(53,792)		(42,801)
Non-sustaining capital2	$	(2,073)		(3,838)		(2,895)		(5,912)
Total All-in Costs2	$	(29,469)		(23,990)		(56,687)		(48,713)
All-In Margin2, 3	$	14,814		5,983		22,396		18,022
Cash cost per ounce sold2	$/oz	1,059		856		1,110		834
Mine All-In Sustaining Costs per ounce sold2	$/oz	1,070		951		1,120		889

¹Revenue and realised gold price are inclusive of the Karma stream.
²Non-GAAP measure. Refer to the non-GAAP Measures section for further details.

³ All-In Margin is calculated as revenue less all-in costs for the period.

Q2-2021 vs Q2-2020 insights

• Production increased due to the increased stacking rate and higher average grade stacked offset by lower recovery rates on account of higher tonnage of GG1 ore stacked.
  • Total ore tonnes mined decreased slightly due to the increase in strip ratio at GG1 as higher transitional ore tonnes were mined. Ore continued to be sourced from the GG1 and Kao North pits.
  • Ore tonnes stacked slightly increased as a higher proportion of coarse material from the GG1 pit was available, with stacker availability and utilisation remaining consistent. Ore tonnes from the GG1 and Kao North pit were mostly oxide with a blend of transitional materials. The proportion of transitional material increased with stacked tonnes being supplemented by stockpiles.
  • The stacked ore grade increased due to a higher average grade sourced from the North Kao pit while the average grade from the GG1 remained flat.
  • Recovery rate decreased due to the increased proportion of ore from the GG1 pit and an increased proportion of transitional ore, which has a lower associated recovery rate.
• AISC per ounce increased due to increased mining strip ratio, with the completion of Kao North phase 3 and commencement of phase 4, lower recovery rate and higher royalties, which was partially offset by slightly lower mining and processing unit cost.
• Sustaining capital expenditure was $0.3 million and related to mining pit dewatering boreholes and other site equipment upgrades.
• Non-sustaining capital expenditure was $2.1 million, which was related to construction of new cells within the heap leach pad.

H1-2021 vs H1-2020 Insights

• Production decreased despite the higher ore tonnes stacked due to lower grade material being stacked and lower recovery rates.
  • Ore tonnes mined decreased due to increased strip ratio and reduced mining at the Kao North pit which was partially offset by increased mining at the GG1 pit.
  • Ore tonnes stacked increased due to higher stacker utilisation which permitted stockpile to be processed to supplement the mill feed.
  • The average stacked grade decreased due to higher proportion of the low grade GG1 and low grade supplemental stockpile ore stacked in H1-2021 compared to H1-2020 where a higher proportion of the high grade Kao North ore was stacked.
  • Recovery rate decreased due to the increased GG1 ore and the transitional ore stacked, which has a lower associated recovery rate.
• AISC per ounce increased due to higher strip ratio, higher royalties as well as lower recovery rates.
• Sustaining capital expenditure was $0.5 million and related to mining pit dewatering boreholes and other site equipment upgrade.
• Non-sustaining capital expenditure was $2.9 million and related to construction of new cells within the heap leach pad compared to non-sustaining costs in Q1-2020 related to the completion of the stacking system upgrades.

Outlook

• Given its strong H1-2021 performance, Karma is well positioned to meet its FY-2021 production guidance of 80—90koz at an AISC of $1,220—$1,300 per ounce.
• Mining activity is expected to focus on the GG1 pit for the remainder of the year. As a result of the increase in transitional material mined from the GG1 pit, processed grades and recoveries are expected to be lower in H2-2021, while ore stacked is expected to decrease in Q3-2021 due to the wet season, before returning to normal levels in Q4-2021.
• The sustaining capital outlook at Karma is expected to be significantly lower than the $11.0 million guided as a result of the waste development being included as an operating cost for 2021. The non-sustaining capital spend outlook for FY-2021 remains unchanged compared to the initial guidance of $5.0 million, of which $2.9 million has been incurred in H1-2021.
  
  

2021 Exploration Programme

• In H1-2021, exploration work was carried out as part of the advanced grade control drilling programme, with the aim of delineating near mine extensions and expediting their incorporation in the current mine plan. The focus was on Kao Main, Kao north, Rambo, GG1, GG2, Anomaly B and Kanongo, which will be pursued in H2-2021.
  
  

4.6.    Mana Gold Mine, Burkina Faso

Table 24: Mana Key Performance Indicators⁴

		THREE MONTHS ENDED			SIX MONTHS ENDED
	Unit	30 June 2021		30 June 2020	30 June 2021		30 June 2020
Operating Data
Tonnes ore mined - open pit	kt	549		—	904		—
Tonnes of waste mined - open pit	kt	6,638		—	14,816		—
Tonnes ore mined – underground	kt	214		—	459		—
Tonnes of waste mined - underground	kt	82		—	165		—
Tonnes of ore milled	kt	670		—	1,275		—
Average gold grade milled	g/t	2.49		—	2.68		—
Recovery rate	%	92		—	91		—
Gold produced	oz	49,167		—	101,566		—
Gold sold	oz	49,769		—	110,323		—
Realised gold price	$/oz	1,804		—	1,789		—
Financial Data ($'000)
Revenue	$	89,784		—	197,398		—
Operating expenses	$	(40,847)			(87,620)		—
Royalties	$	(4,867)		—	(13,037)
Non-cash operating expenses2	$	372			379		—
Total Cash Cost1	$	(45,342)		—	(100,278)		—
Sustaining capital1	$	(5,215)		—	(8,020)		—
Total All-in Sustaining Costs1	$	(50,557)		—	(108,298)		—
Non-sustaining capital1	$	(21,093)		—	(45,165)		—
Total All-in Costs1	$	(71,650)		—	(153,463)		—
All-In Margin1, 3	$	18,134		—	43,935		—
Cash cost per ounce sold1	$/oz	911		—	909		—
Mine All-In Sustaining Costs per ounce sold1	$/oz	1,016		—	982		—

¹ Non-GAAP measure. Refer to the non-GAAP Measures section for further details.

² Non-cash operating expenses relates to the reversal in the period of the fair value adjustment of inventory on hand at the acquisition date.
³ All-In Margin is calculated as revenue less all-in costs for the period.
⁴ Analysis of operations is only for the period after its acquisition by Endeavour on 1 July 2020.

Q2-2021 Insights

• Production of 49,167 ounces is due to a higher plant throughput rate and utilisation, good recovery rates associated with ore milled from the Wona South pit and offset by lower average processed grades from the underground mine.
  • Open pit ore tonnes mined was higher following the planned waste development at the Wona South pit which provided access to a wider ore floor to be mined.
  • Total underground tonnes mined was lower due to reduced development ore meters advanced and fewer stope ore tonnes available for mining.
  • Tonnes milled increased due to an increase in mill availability and utilisation following the scheduled plant maintenance in Q1-2021 and higher plant throughput rate due to the softer ore characteristics in Wona South compared to Wona North.
  • The average processed grade decreased due to lower open pit grades mined from the Wona South Pit.
• AISC was higher due to high open pit unit mining costs as a result of increased production drilling and blasting activities in the fresh ore areas of Wona South pit, as well as higher underground unit mining cost due to additional ground support installed. The higher costs were partially offset by lower processing unit costs due to improved power supply from newly installed generators.
• Sustaining capital of $5.2 million is related to underground development to create new stoping levels.
• Non-sustaining capital expenditure of $21.1 million was mainly related to open pit waste capitalisation at the Wona South Stage 3 pit and TSF raise.

H1-2021 Insights

• Production in Q2-2021 decreased compared to Q1-2021 due to a reduction in the average processed grade which was slightly offset by the increase in plant throughput.
  • Total open pit tonnes of ore mined was higher in Q2-2021, as a result of the lower strip ratio, following the planned waste development at the Wona South pit in Q1-2021 and final benches of mining in the Wona North Stage 3 pit. In Q2-2021 ore was mainly sourced from Wona Main and Wona South Pits while mining at Wona North Stage 3 completed during Q1-2021.
  • Total underground ore tonnes mined in Q2-2021 decreased as underground mining focused on development and backfilling.
  • Tonnes milled increased in Q2-2021 due to an increase in mill utilisation and average throughput per hour due to the softer ore characteristics of Wona South pit which resulted in the higher plant throughput. The ore processed in both Q1-2021 and Q2-2021 was mainly fresh materials, sourced from both the open pit and underground mines.
  • The average processed grade was high due to higher processed grade sourced from Wona Main pit during Q1-2021 despite the lower average grade during Q2-2021.
• AISC was higher but remains within guidance due to higher open pit unit mining costs in Q2-2021 compared to Q1-2021 as a result of higher production drilling and blasting activities in the fresh ore areas of Wona South pit, as well as higher underground unit mining costs as a result of increased stope activity costs.
• Sustaining capital expenditures of $8.0 million are related to underground development, as well as heavy mobile equipment.
• Non-sustaining capital of $45.2 million primarily related to open pit waste development, and a TSF raise.

Outlook

• Given its strong H1-2021 performance driven by strong mill throughput and grades, Mana is well positioned to meet its FY-2021 production guidance of 170 - 190koz at an AISC of $975 - 1,050 per ounce.
• In H2-2021, ore will continue to be sourced from the Siou underground mine while open pit mining activities at Siou are expected to wind down. Following optimization studies completed in Q2-2021, Wona will be pursued as an underground operation rather than being continued as an open pit operation and eliminate the need for a large pit cut-back. Underground development at Wona will therefore be expedited, with decline development expected to commence in Q3-2021. Mill throughput and grades are expected to be slightly lower in H2-2021, compared to H1-2021, while recovery rates are expected to remain similar.
• The total sustaining and non-sustaining capital spend outlook for FY-2021 remains unchanged. As a result of the reduction in required stripping activities at Wona, following the decision to shift to underground mining, the FY-2021 sustaining capital outlook is expected to be significantly lower than the $27.0 million guided, of which $8.0 million has been incurred in H1-2021. Due to the reallocation of capital for the Wona underground development, the non-sustaining capital outlook for FY-2021 is expected to amount to slightly more the $62.0 million guided, of which $45.2 million has been incurred in H1-2021.

2021 Exploration Programme

• An exploration programme of up to $8.0 million has been planned for 2021 of which $7.1 million was spent in H1-2021 consisting of 59,620 meters of drilling across 459 drillholes. The exploration efforts were focused on oxide open pit targets, such as Maoula, and on evaluating underground targets at Siou and Nyafe.
• Drilling conducted at Maoula confirmed and extended mineralisation in the western and eastern lenses of the deposit. In H2-2021, exploration work will continue to focus on defining indicated resources and extending the mineralised trend to the southwest, where the deposit remains open. Some delineation drilling was also conducted at Kona North, T2K and Bana West where generally lower grade and non-continuous mineralisation was intercepted.
• Deeper drilling conducted at Siou South, intersected higher grade mineralised zones adjacent to the planned underground development. In H2-2021 further drilling will focus on delineating these higher grade zones.
• At Nyafe, historic drilling and exploitation activities were largely restricted to defining and mining oxide ore due to the refractive nature of the sulphide mineralisation. Scout diamond holes drilled beneath the pits confirmed the down-dip continuation of the structures and higher grade mineralisation. Further drilling is planned to start in late 2021.

4.7.    Sabodala-Massawa Gold Mine, Senegal

Table 25: Sabodala-Massawa Key Performance Indicators⁵

		THREE MONTHS ENDED				SIX MONTHS ENDED
	Unit	30 June 2021		30 June 2020		30 June 2021		30 June 2020
Operating Data
Tonnes ore mined	kt	2,111		—		3,167		—
Tonnes of waste mined	kt	8,687		—		13,462		—
Tonnes milled	kt	1,067		—		1,617		—
Average gold grade milled	g/t	3.20		—		2.97		—
Recovery rate	%	89		—		90		—
Gold produced	oz	95,856		—		134,804		—
Gold sold	oz	99,467		—		151,016		—
Realised gold price1	$/oz	1,779		—		1,752		—
Financial Data ($'000)
Revenue1	$	176,965		—		264,534		—
Operating expenses	$	(57,186)		—		(94,330)		—
Royalties	$	(9,913)		—		(14,854)		—
Non-cash operating expenses3	$	12,632		—		25,640		—
Total Cash Cost2	$	(54,467)		—		(83,544)		—
Sustaining capital2	$	(8,923)		—		(18,446)		—
Total All-In Sustaining Costs2	$	(63,390)		—		(101,990)		—
Non-sustaining capital2	$	(5,178)		—		(9,741)		—
Total All-in Costs2	$	(68,568)		—		(111,731)		—
All-In Margin2, 4	$	108,397		—		152,803		—
Cash cost per ounce sold2	$/oz	548		—		553		—
Mine All-In Sustaining Costs per ounce sold2	$/oz	637		—		675		—

¹ Revenue and realised gold price are inclusive of the Sabodala-Massawa stream.
² Non-GAAP measure. Refer to the non-GAAP Measures section for further details.

³ Non-cash operating expenses relates to the reversal in the period of the fair value adjustment of inventory on hand at the acquisition date.
⁴ All-In Margin is calculated as revenue less all-in costs for the period.
⁵ Analysis of operations is only for the period after its acquisition by Endeavour on 10 February 2021.

Q2-2021 Insights

• Strong production of 95,856 ounces due to a higher throughput, better average gold grade milled as well as expected recovery rate and represents the first full quarter of production following the acquisition on 10 February 2021.
  • Total tonnes mined during the quarter were associated to favourable mining conditions and good productivity of mining equipment. Furthermore, the short haul road profile and short dumping sequencing also contributed to higher tonnes mined.
  • Ore mined was mainly sourced from Sofia Main and Sofia North pits on the Massawa lease following the completion of mining at Golouma West and Kourouloulou pits on the Sabodala lease in Q1-2021.
  • Tonnes milled were high due to a long processing plant run time despite a greater proportion of fresh ore materials milled. Ore tonnes milled comprised mainly fresh ore from the Sofia Main pit, supplemented by oxide material from Sofia North pit.
  • Average processed grades were high due to processing high grade fresh materials sourced from Sofia Main, supplemented by oxide ore from the Sofia North pit.
• AISC of $637 per ounce was as expected due to planned sustaining capital as unit mining and unit processing cost remained as anticipated.
• Sustaining capital expenditure of $8.9 million was related to purchases of additional mining equipment, TSF raise and planned waste capitalisation.
• Non-sustaining capital expenditure of $5.2 million mostly related to the relocation activities of the Sabodala village, the new haul road and infrastructure developments at the Massawa permit mining areas.

H1-2021 Insights

• Strong production of 134,804 ounces represents operations following the acquisition on 10 February 2021. Production ramped up in Q2-2021 due to longer operating time and higher processed grades, as the throughput rate remained constant.
  • Tonnes ore mined increased in Q2-2021 due to the longer operating time, lower strip ratio, favourable mining conditions and good productivity of mining equipment. Ore was mainly sourced from the Sofia Main and Sofia North during H1-2021 supplemented by ore from Golouma and Kourouloulou during Q1-2021.
  • Tonnes milled were mainly fresh materials from the Sofia Main pit while the oxide blend was sourced from the Sofia North during H1-2021 supplemented by oxide from Golouma West during Q1-2021.
  • The average processed grade for the period benefited from the processing of fresh high grade from the Sofia Main pit.

AISC per ounce was as expected due to conformity to mine plan, scheduled feed blend yielding a stable recovery rate, as well as anticipated sustaining capital expenditure.

Sustaining capital expenditure of $18.4 million was related to purchases of additional mining equipment, TSF raise and planned waste capitalisation.

Non-sustaining capital expenditure of $9.7 million mostly related to the relocation activities of the Sabodala village, the new haul road and infrastructure developments at the Massawa permit mining areas.

2021 Outlook

Given its strong H1-2021 performance, Sabodala-Massawa is well positioned to meet its FY-2021 production guidance of 310—330koz at an AISC of $690—740 per ounce, for the post acquisition period commencing on 10 February 2021.

The Sofia Main and Sofia North pits will continue to contribute the majority of the ore mined for the remainder of 2021, while waste extraction at Sofia North is expected to increase in H2-2021. Mill throughput and process grades are expected to slightly decrease in H2-2021, compared to Q2-2021, while recovery rates are expected to remain similar.

The sustaining capital spend outlook for FY-2021 is expected to be slightly above the previously guided $35.0 million, of which $18.4 million has been incurred in H1-2021, due to investments in mining fleet and additional equipment. The non-sustaining capital spend outlook for FY-2021 is expected to be slightly below the guided $47.0 million, of which $9.7 million has been incurred in H1-2021 due to the deferral of spend on the Sabodala relocation construction and development costs as a greater focus is placed on mining the Sofia pits.

Plant Expansion

The Massawa deposit is being integrated into the Sabodala mine through a two-phased approach, as outlined in the 2020 pre-feasibility study (“PFS”).

Phase 1 of the plant expansion will facilitate processing of an increased proportion of high grade, free-milling Massawa ore through the Sabodala processing plant.
Civil works for phase 1 are now complete ahead of schedule, and the installation and commissioning of the additional electrowinning cell, a carbon regeneration kiln, an acid wash and elution circuit, an additional leach tank and the gravity circuit has commenced and the project is on schedule for completion in Q4-2021. In H1-2021 a total of $7.6 million was incurred for the Phase 1 plant expansion and classified as growth capital, of which $0.3 million was incurred prior to its acquisition on 10 February 2021.
Phase 2 of the expansion will add an additional processing circuit to process the high grade refractory ore from the Massawa deposit. The definitive feasibility study (“DFS”) for Phase 2 is underway and is on track for completion in Q4-2021.

2021 Exploration Programme

An exploration programme of up to $13.0 million has been planned for 2021 of which $3.5 million was spent in H1-2021 consisting of 46,439 meters of drilling across 414 drillholes. The exploration efforts were focused on Samina, Tina and other non-refractory targets within the Massawa area. Following the exploration success, an updated resource is expected to be published in late 2021.
Drilling conducted at the Samina deposit focussed on extending the 500 meters mineralised strike length to over 900 meters, while mineralisation remains open to the north.
Drilling conducted at the Tina deposit focussed on expanding the inferred resources defined in 2019. The mineralised strike length has been extended by over 300 meters and the deposit remains open to the north and southeast.
Drilling conducted at the Sofia North deposit followed up on the previously identified Sofia North extension. The extension has been identified to extend over 800 meters along strike and is 150 meters wide, remaining open to the north.
During the remainder of 2021, exploration work will be focussed on defining resources at Samina, Tina and the Sofia North Extension as well as follow up drilling on other Massawa project area targets.

Wahgnion Gold Mine, Burkina Faso

Table 26: Wahgnion Key Performance Indicators⁴

		THREE MONTHS ENDED				SIX MONTHS ENDED
	Unit	30 June 2021		30 June 2020		30 June 2021		30 June 2020
Operating Data
Tonnes ore mined	kt	1,187		—		1,836		—
Tonnes of waste mined	kt	6,428		—		10,230		—
Tonnes milled	kt	1,016		—		1,554		—
Average gold grade milled	g/t	1.31		—		1.32		—
Recovery rate	%	95		—		95		—
Gold produced	oz	40,991		—		65,650		—
Gold sold	oz	47,732		—		77,378		—
Realised gold price	$/oz	1,805		—		1,794		—
Financial Data ($'000)
Revenue	$	86,133		—		138,788		—
Operating expenses	$	(39,952)		—		(66,192)		—
Royalties	$	(6,015)		—		(9,569)		—
Non-cash operating expenses2	$	1,665		—		9,344		—
Total Cash Cost1	$	(44,302)		—		(66,417)		—
Sustaining capital1	$	(2,454)		—		(3,449)		—
Total All-In Sustaining Costs1	$	(46,756)		—		(69,866)		—
Non-sustaining capital1	$	(9,011)		—		(12,758)		—
Total All-in Costs1	$	(55,767)		—		(82,624)		—
All-In Margin1, 3	$	30,366		—		56,164		—
Cash cost per ounce sold1	$/oz	928		—		858		—
Mine All-In Sustaining Costs per ounce sold1	$/oz	980		—		903		—

¹ Non-GAAP measure. Refer to the non-GAAP Measures section for further details.

² Non-cash operating expenses relates to the reversal in the period of the fair value adjustment of inventory on hand at the acquisition date.
³ All-In Margin is calculated as revenue less all-in costs for the period.
⁴ Analysis of operations is only for the period after its acquisition by Endeavour on 10 February 2021.

Q2-2021 Insights

Strong production of 40,991 ounces was due to a high throughput and a high recovery rate despite a lower average gold grade milled. Production for Q2-2021 represents the first full quarter of production following the acquisition on 10 February 2021.

Tonnes of ore mined were mainly sourced from the Nogbele North and Nogbele South mining areas, supplemented with ore from the Fourkoura pit where mining commenced earlier this year.

Tonnes milled was a blend of greater quantities of oxide materials sourced from Nogbele North and Nogbele South and smaller oxide quantities from the Fourkoura pit while fresh materials mostly sourced from the Nogbele North pit.

Average gold grade milled was impacted by mining in low ore zones of the Nogbele South and Fourkoura pits due to focus on waste stripping.

AISC per ounce is in line with guidance despite an expected high waste capitalisation cost related to high strip ratio at the Fourkoura pits.

Sustaining capital expenditure of $2.5 million was related to waste capitalisation and other mining equipment and IT infrastructure upgrade.

Non-sustaining capital expenditure of $9.0 million related to the TSF stage 2 raise, construction of the airstrip and Foukoura resettlement costs.

H1-2021 Insights

Production represents operations following the acquisition on 10 February 2021. Production was higher in Q2-2021 due to a full quarter of operations and a higher grade which more than offset a lower grade and a shorter consolidation period in Q1-2021.

Total tonnes mined increased in the second quarter due to the consolidation of a full quarter of results in Q2-2021. Tonnes of ore mined were mainly sourced from the Nogbele North and Nogbele South Pits, supplemented with ore from the Fourkoura pit where mining commenced earlier this year.

Tonnes milled were mainly oxide materials sourced from Nogbele North pit during H1-2021 supplemented by fresh ore from Fourkoura and oxide from Nogbele South during Q1-2021 and Q2-2021 respectively.

Average gold grade milled was impacted by mining in low ore zones of the Nogbele South and Fourkoura pits due to focus on waste stripping during the period.

AISC per ounce is in line with guidance as sustaining capital expenditure, unit mining cost and unit processing cost were as expected.

Sustaining capital expenditure of $3.4 million was related to waste capitalisation and other mining equipment and IT infrastructure upgrades.

Non-sustaining capital expenditure of $12.8 million related to the TSF stage 2 raise, construction of the airstrip and Foukoura resettlement costs.

2021 Outlook

Given its strong H1-2021 performance, Wahgnion is well positioned to meet its FY-2021 production guidance of 140—155koz at an AISC of $940—990 per ounce, for the post acquisition period commencing on 10 February 2021.

Mining is expected to continue at Nogbele North, Nogbele South, and Fourkoura pits with significant waste development continuing throughout the year. Plant throughput is expected to decrease in H2-2021 compared to H1-2021 due to the wet season and a higher proportion of fresh ore being processed, while process grades are expected to increase and recovery rates to slightly decline.

The sustaining capital spend outlook for FY-2021 remains unchanged compared to the initial guidance of $14.0 million, of which $3.4 million has been incurred in H1-2021, with the remaining spend mainly related to waste extraction. The non-sustaining capital spend outlook for FY-2021 also remains unchanged compared to the initial guidance of $26.0 million, of which $12.8 million has been incurred in H1-2021. The H2-2021 non-sustaining spend mainly relates to construction of a second TSF cell.

2021 Exploration Programme

An exploration programme of up to $12.0 million has been planned for 2021 of which $2.6 million was spent in H1-2021 consisting of 9,565 meters of drilling across 81 drillholes. The exploration efforts focused on Nogbele North and Nogbele South deposits, targeting the continuation of mineralised structures between the Nogbele pits.

Exploration efforts are expected to ramp up in H2-2021, and will continue to focus on the extension and expansion of the Nogbele mineralisation. Additionally, the north-northeast continuation of the Fourkoura deposit and the Hillside target will be tested for extensions. Reconnaissance drilling at various attractive targets such as Kafina West and Korindougou will also be completed in H2-2021.

DISCONTINUED OPERATIONS

Agbaou Gold Mine, Côte d’Ivoire

Table 27: Agbaou Key Performance Indicators

		THREE MONTHS ENDED				SIX MONTHS ENDED
	Unit	30 June 2021		30 June 2020		30 June 2021		30 June 2020
Operating Data
Tonnes ore mined	kt	—		659		353		1,416
Tonnes of waste mined	kt	—		4,589		2,102		10,265
Tonnes milled	kt	—		675		348		1,407
Average gold grade milled	g/t	—		1.14		1.09		1.23
Recovery rate	%	—		94		95		94
Gold produced	oz	—		24,437		12,575		51,897
Gold sold	oz	—		25,067		14,045		52,490
Realised gold price	$/oz	—		1,735		1,810		1,659
Financial Data ($'000)
Revenue	$	—		43,503		25,426		87,084
Operating expenses	$	—		(20,080)		(14,250)		(38,391)
Royalties	$	—		(2,464)		(1,418)		(4,797)
Total Cash Cost1	$	—		(22,544)		(15,668)		(43,188)
Sustaining capital1	$	—		(1,386)		(223)		(6,822)
Total All-in Sustaining Costs1	$	—		(23,930)		(15,891)		(50,011)
Non-sustaining capital1	$	—		(316)		(25)		(450)
All-In Margin1, 2	$	—		19,257		9,510		36,623
Cash cost per ounce sold1	$/oz	—		899		1,116		823
Mine All-In Sustaining Costs per ounce sold1	$/oz	—		955		1,131		953

¹ Non-GAAP measure. Refer to the non-GAAP Measures section for further details.

² All-In Margin is calculated as revenue less all-in costs for the period.
³ Analysis of operations is only for the period up to its disposal by Endeavour on 1 March 2021.

On 1 March 2021, the Company completed the sale of its 85% interest in the Agbaou mine cash generating unit to Allied Gold Corp Limited ("Allied"). The consideration upon sale of the Agbaou mine included (i) a cash payment of $16.4 million (net of working capital adjustments of $3.6 million upon closing), of which $10.5 million was received in the first quarter of 2021; (ii) $40.0 million in Allied shares of which Endeavour has the option to sell the shares back to Allied at the issue price which expires on 31 December 2022 or earlier if Allied conducts an IPO before then; (iii) contingent consideration of up to $20.0 million comprised of $5.0 million payments for each quarter where the average gold price exceeds $1,900 per ounce; and (iv) a net smelter royalty ("NSR") on ounces produced in excess of the Agbaou reserves estimated as at 31 December 2019. The NSR royalty is based on a sliding scale, linked to the average spot gold price as follows: 2.5% if the gold price is at least $1,400 per ounce, 2% if the gold price is at least $1,200 per ounce and less than $1,400 per ounce, 1% if the gold price is at least $1,000 per ounce and less than $1,200 per ounce, and 0% if the gold price is below $1,000 per ounce.

H1-2021 vs H1-2020 Insights

Production decreased compared to same period in prior year due to operating the mine for a shorter period as the operations was discontinued through a sale. Average grade decreased due to lower grade at the deeper elevation of the North, West and South pits mined. Recovery rate remained flat.
AISC increased in line with expectation as a result of lower ounces sold as well as higher mining cost and higher processing cost. This was partially offset by lower sustaining capital spend.

FINANCIAL REVIEW

STATEMENT OF COMPREHENSIVE EARNINGS/(LOSS)

Table 28: Statement of Comprehensive Earnings/(Loss)

		THREE MONTHS ENDED				SIX MONTHS ENDED
($'000s)	Notes	30 June 2021		30 June 2020		30 June 2021		30 June 2020
Revenue	[1]	753,427		209,582		1,389,219		435,902
Operating expenses	[2]	(278,161)		(83,227)		(531,109)		(179,320)
Depreciation and depletion	[3]	(158,382)		(35,465)		(290,246)		(78,393)
Royalties	[4]	(43,908)		(15,306)		(88,274)		(30,426)
Earnings from mine operations		272,976		75,584		479,590		147,763
Corporate costs	[5]	(15,890)		(5,049)		(30,161)		(10,280)
Acquisition and restructuring costs	[6]	(14,544)		(2,589)		(26,704)		(6,919)
Share-based compensation	[7]	(9,839)		(4,942)		(17,794)		(6,565)
Exploration costs	[8]	(5,874)		(1,796)		(15,684)		(3,129)
Earnings from operations		226,829		61,208		389,247		120,870
(Loss)/gain on financial instruments	[9]	(14,807)		(72,257)		27,270		(74,956)
Finance costs	[10]	(13,694)		(11,818)		(26,012)		(23,321)
Other (expense)/income	[11]	(7,082)		(1,791)		(10,510)		144
Earnings before taxes		191,246		(24,658)		379,995		22,737
Current income tax expense	[12]	(44,463)		(263)		(116,611)		(19,269)
Deferred income tax recovery/(expense)	[12]	2,166		(5,597)		(3,504)		(6,504)
Net earnings/(loss) from discontinued operations		—		7,902		(3,702)		15,883
Net comprehensive earnings/(loss)		148,949		(22,616)		256,178		12,847

Review of results for the three and six months ended 30 June 2021:

Revenue for Q2-2021 was $753.4 million compared to $209.6 million for Q2-2020. The increase in revenue in Q2-2021 over Q2-2020 was mainly due to the acquisition of the Wahgnion and Sabodala-Massawa operating mines on 10 February 2021 and the acquisition of the Mana and Boungou operating mines on 1 July 2020. During Q2-2021, the Wahgnion, Sabodala-Massawa, Mana and Boungou mines contributed 234,942 ounces amounting to $421.3 million of the consolidated revenue while the legacy mines contributed 185,819 ounces amounting to $332.2 million. With respect to the three legacy operations, an increase in total ounces sold favourably impacted revenue by $104.2 million while an increase in average realised price favourably impacted revenue by $18.4 million.

Revenue for H1-2021 increased by 219% compared to H1-2020 due to the acquired Mana, Boungou, Wahgnion and Sabodala-Massawa mines, subsequent to H1-2020, which contributed a total of $771.6 million to revenue for the six months ended 30 June 2021. The realised gold price increased from $1,603 per ounce in H1-2020 to $1,771 per ounce in H1-2021 which accounted for an increase in revenue of approximately $53.4 million for the Company’s three legacy continuing operations. In addition, an additional 77,837 ounces sold in H1-2021 compared to H1-2020 from the Company’s three legacy mines favourably impacted revenue by $128.3 million.

Operating expenses for Q2-2021 were $278.2 million compared to $83.2 million in Q2-2020. The increase in operating expenses is mainly due to the addition of the Wahgnion, Sabodala-Massawa, Mana and Boungou mines , with attributable operating expenses of $161.6 million for the current quarter. Additionally, operating expenses increased at Ity by $22.1 million due to higher mining and processing cost on account of ore sourced from the Daapleu pit which has a longer hauling distance and associated higher reagent consumption cost. Operating expenses increased by $8.0 million at Karma as a result of increased cyanide consumption due to processing a higher proportion of GG1 materials.

The significant increase in operating expenses in H1-2021 compared to the same period in the prior year was due to the addition of the Mana and Boungou mines, which were acquired on 1 July 2020, as well as the acquisition of the Wahgnion and Sabodala-Massawa mines, which were acquired on 10 February 2021. The total operating expenses for the four additional mines was $305.1 million. Ity, Karma and Hounde mine’s operating expenses were higher in H1-2021 compared to same period in 2020 due to increased contractor mining costs as well as increased production at Ity and Houndé.

Depreciation and depletion in Q2-2021 was $158.4 million compared to $35.5 million in Q2-2020 with the increase mainly attributable to the acquisition of the Wahgnion, Sabodala-Massawa, Mana and Boungou mines. Depreciation and depletion increased in H1-2021 by $211.9 million compared to H1-2020 with the inclusion of Mana, Boungou, Wahgnion and Sabodala-Massawa subsequent to H1-2020. The depletion charge also reflects the higher carrying values for the mining interests upon determination of the fair values of the various mines upon acquisition.

Royalties were $43.9 million for Q2-2021, compared to $15.3 million in Q2-2020, and $88.3 million in H1-2021 compared to $30.4 million in H1-2020. The increase in royalty expense in the quarter and the year to date is due to the inclusion of the Wahgnion and Sabodala-Massawa mines acquired on 10 February, 2021, and the Mana and Boungou mines acquired on 1 July, 2020. Royalties were further impacted by the increase in the realised gold price, which influenced the underlying royalty rate based on the applicable sliding scale (in Burkina Faso, a spot price of gold above $1,300 per ounce increases the government royalty rates from 4.0% to 5.0%, and in Côte d'Ivoire, a spot price of gold above $1,600 per ounce increases the royalty rates from 4.0% to 5.0%). The gold royalty rate in Senegal is a flat 5%.

Corporate costs were $15.9 million for Q2-2021 compared to $5.0 million for Q2-2020, and $30.2 million for H1-2021 compared to $10.3 million for H1-2020. The increase in corporate costs are primarily due to costs associated with listing on the LSE as well as additional corporate costs following the integration of SEMAFO Inc. (“SEMAFO”) and Teranga head office costs.

Acquisition and restructuring costs were $14.5 million in Q2-2021 compared to $2.6 million in Q2-2020, and $26.7 million in H1-2021 compared to $6.9 million in H1-2020. Costs increased in 2021 compared to the comparative period due to the acquisition of SEMAFO on 1 July 2020, and Teranga on 10 February 2021 and the costs related to the integration of the two entities into the Endeavour Group.

Share based compensation was $9.8 million in Q2-2021 compared to $4.9 million for Q2-2020, and $17.8 million in H1-2021 compared to $6.6 million in H1-2020. The increase is mainly due to the increase in fair value of performance share units (“PSUs”) granted. The fair value of the PSUs is determined based on total shareholder return relative to peer companies and achieving certain operational performance measures.

Exploration costs in Q2-2021 were $5.9 million compared to $1.8 million in Q2-2020, and $15.7 million in H1-2021 compared to $3.1 million in H1-2020. The increase in exploration cost is related to a larger exploration portfolio and increased greenfield exploration activities mainly at the newly acquired Teranga exploration properties.

The loss on financial instruments was $14.8 million in Q2-2021 compared to a loss of $72.3 million in Q2-2020. The loss in Q2-2021 is mainly due to the net impact of a loss on change in fair value of the warrant liabilities and call rights of $5.3 million and $7.0 million respectively, and foreign exchange losses of $7.2 million. In H1-2021 there was a gain on financial instruments of $27.3 million compared to a loss in the comparative prior period of $75.0 million The gain in H1-2021 is primarily due to the net impact of the unrealised gain/(loss) on convertible senior bond derivative of $30.0 million, loss on foreign exchange of $6.2 million, and a loss on change in fair value of warrant liabilities $1.5 million.

Finance costs were $13.7 million for Q2-2021 compared to $11.8 million in Q2-2020, and $26.0 million in H1-2021 compared to $23.3 million in H1-2020. Finance costs are primarily associated with interest expense on the revolving credit facility (“RCF”) and bridge facility, convertible debt, finance obligations, and lease liabilities.

Other expenses increased from $1.8 million in Q2-2020 to $7.1 million for Q2-2021 mainly due to a loss on disposal of assets at Ity of $2.4 million. Other expenses for H1-2021 was $10.5 million compared to an income of $0.1 million in H1-2020. Other expense for H1-2021 mainly relates to the loss on disposal of assets at Ity, as well as legal and covid related expenses at Corporate of $1.6 million.

Current income tax expense was $44.5 million and $116.6 million in Q2-2021 and H1-2021 respectively compared to $0.3 million and $19.3 million in Q2-2020 and H1-2020 respectively. Current income tax expense for Q2-2021 increased in comparison to Q2-2020 primarily due to the inclusion of the current tax expense at the Mana and Boungou mines which were acquired at the start of Q3-2020 along with the Wahgnion and Sabodala-Massawa mines acquired in Q1-2021. Current income tax expense for H1-2021 increased when compared to H1-2020 due to the inclusion of the Wahgnion and Sabodala-Massawa mines acquired in Q1-2021.

CASH FLOWS

Table 29: Summarised cash flows

			THREE MONTHS ENDED				SIX MONTHS ENDED
($'000s)	Note	Unit	30 June 2021		30 June 2020		30 June 2021		30 June 2020
Operating cash flows before changes in working capital	[1]	$	285,650		74,909		549,068		170,238
Changes in working capital	[2]	$	14,825		(21,412)		(41,850)		(16,842)
Cash generated from/(used by) discontinued operations		$	—		3,887		(8,808)		29,975
Cash generated from operating activities	[3]	$	300,475		57,384		498,410		183,371
Cash used by investing activities	[4]	$	(137,311)		(48,091)		(242,584)		(105,325)
Cash (used in)/generated from financing activities	[5]	$	(191,772)		(15,828)		(127,159)		83,732
Effect of exchange rate changes on cash		$	(6,710)		1,009		(10,465)		150
(Decrease)/increase in cash		$	(35,318)		(5,526)		118,202		161,928

Operating cash flows before changes in working capital for Q2-2021 and H1-2021 were $285.7 million and $549.1 million respectively compared to $74.9 million in Q2-2020 and $170.2 million in H1-2020. The increase in the comparative periods is attributable to the acquisition of the Wahgnion and Sabodala-Massawa operating mines on 10 February 2021 and the acquisition of the Mana and Boungou operating mines on 1 July 2020, as well as a higher realised gold price.

Income taxes paid were $106.5 million in Q2-2021 and $130.1 million in H1-2021 compared to $8.2 million and $16.8 million in Q2-2020 and H1-2020, respectively. These higher cash payments relative to the comparative periods are reflective of the increase in the Company’s earnings and higher provisional payments in 2021 based on 2020 earnings. Taxes paid for the three and six months ended 30 June 2020 are displayed in the table below:

Table 30: Tax payments

	THREE MONTHS ENDED				SIX MONTHS ENDED
($'000s)	30 June 2021		30 June 2020		30 June 2021		30 June 2020
Boungou	32,411		n.a.		33,811		n.a.
Houndé	23,009		724		26,509		6,757
Ity	21,097		7,509		27,597		7,500
Karma	1,172		—		1,172		—
Mana	5,005		n.a.		5,005		n.a.
Sabodala-Massawa	13,564		n.a.		19,364		n.a.
Wahgnion	7,851		n.a.		7,851		n.a.
Other	2,381		—		8,755		2,500
Taxes from continuing operations	106,490		8,233		130,064		16,757
Agbaou	—		11,915		19,918		11,900
Consolidated taxes paid	106,490		20,148		149,982		28,657

The Q2-2021 and H1-2021 change in working capital is an inflow of $14.8 million and an outflow of $41.9 million respectively, which is broken down as follows:

Receivables were an inflow of $11.0 million for Q2-2021 and an outflow of $5.4 million for H1-2021. The inflow in Q2-2021 is mainly due to a decrease in amounts receivable from a third party at corporate of $8.0 million. The H1-2021 outflow is mainly due to the increase in VAT receivable at Mana, Houndé and Boungou mines.

Inventories were an inflow of $4.1 million for Q2-2021 and an inflow of $24.8 million in H1-2021. The inflow in Q2-2021 due primarily to the decrease in inventory stockpiles and finished gold balances at Ity, Sabodala-Massawa and Wahgnion which were slightly offset by an increase in gold in circuit (“GIC”) at Mana and Sabodala-Massawa. The inflow in H1-2021 is mainly due to a decrease in finished goods and consumables at Ity, Sabodala-Massawa, Wahgnion and Mana offset partially by an increase in stockpiles at Sabodala-Massawa and Houndé.

Prepaid expenses and other was an inflow of $9.0 million for Q2-2021 and an outflow of $3.9 million for H1-2021 . The inflow in Q2-2021 was mainly due to a decrease in prepayments at Boungou of $3.9 million and at Sabodala-Massawa of $3.7 million. The outflow for H1-2021 was mainly due to an increase in prepaid capital at Sabodala-Massawa of $5.2 million offset by a decrease in prepayments at Boungou of $1.8 million.

Accounts payable was an outflow of $9.3 million in Q2-2021 and $57.4 million in H1-2021. The outflow in Q2-2021 mainly relates to payments made at Ity and Mana, while payments made at Houndé and acquisition related costs paid in relation to the Teranga acquisition also contributed to the outflow in H1-2021.

Operating cash flows after changes in working capital in Q2-2021 and H1-2021 were $300.5 million and $498.4 million respectively compared to $57.4 million and $183.4 million in Q2-2020 and H1-2020 respectively. Q2-2021 increased by $243.1 million compared to Q2-2020 mainly due to a higher realised gold price and the inflow in working capital due to the reduction in receivable balances and inventories as well the production from the newly acquired mines. H1-2021 has increased by $315.0 million relative to H1 2020 due to increased production for the year from the Company’s existing mines, as well as from the Wahgnion, Sabodala-Massawa, Mana and Boungou mines, at higher realised gold prices.

Cash flows used by investing activities were $137.3 million and $242.6 million in Q2-2021 and H1-2021 respectively compared to and $48.1 million and $105.3 million in Q2-2020 and H1-2020 respectively. The Q2-2021 amount has increased relative to Q2-2020 mainly due to expenditure on mining interests of $144.0 million given the increase in the size of the Group’s operations.

Cash flows used in financing activities were $191.8 million and $127.2 million in Q2-2021 and H1-2021 respectively compared to a cash outflow of $15.8 million and a cash inflow of $83.7 million in Q2-2020 and H1-2020 respectively. A repayment of long-term debt of $120.0 million, payments for the acquisition of the Company’s own shares of $59.5 million and repayments of finance and lease obligations of $7.9 million. The outflow in H1-2021 was due to a net repayment of long-term debt of $73.0 million, a payment of dividends amounting to $60.0 million, the settlement of the gold offtake agreement which was acquired from Teranga amounting to $49.7 million, repayments of lease obligations of $18.7 million offset by proceeds received from the issue of common shares of $200.0 million.

SUMMARISED STATEMENT OF FINANCIAL POSITION

Table 31: Summarised Statement of Financial Position

($'000s)	As at 30 June 2021		As at 31 December 2020
ASSETS
Cash	832,877		644,970
Other current assets	517,614		272,059
Current assets excluding assets held for sale	1,350,491		917,029
Assets held for sale	—		180,808
Total current assets	1,350,491		1,097,837
Mining interests	5,039,323		2,577,844
Deferred income taxes	9,960		19,774
Other long term assets	485,995		173,740
TOTAL ASSETS	6,885,769		3,869,195
LIABILITIES
Other current liabilities	421,459		275,935
Income taxes payable	219,134		134,205
Current liabilities excluding liabilities held for sale	640,593		410,140
Liabilities held for sale	—		112,796
Total current liabilities	640,593		522,936
Long-term debt	929,760		688,266
Environmental rehabilitation provision	128,169		78,011
Other long-term liabilities	131,152		26,463
Deferred income taxes	614,390		305,101
TOTAL LIABILITIES	2,444,064		1,620,777
TOTAL EQUITY	4,441,705		2,248,418
TOTAL EQUITY AND LIABILITIES	6,885,769		3,869,195

 

Other current assets as at 30 June 2021 consists of $127.8 million of trade and other receivables, $349.5 million of inventories and $40.3 million of prepaid expenses and other.

Trade and other receivables increased by $72.7 million compared to 31 December 2020 mainly due to the inclusion of VAT receivable acquired at Wahgnion mine, as well as increases in VAT at Houndé, Mana, Boungou and Karma in the period and an increase in other amounts receivable at Ity relating to the sale of mining equipment to the mining contractor. VAT received during the six months ended 30 June 2021 was $40.0 million consisting of proceeds from Mana mine ($4.0 million), Hounde mine ($15.4 million), Boungou mine ($3.3 million), Karma mine ($8.0 million) and Wahgnion mine ($9.4 million).

Inventories increased by $158.9 million primarily due to the inclusion of the inventories at the Wahgnion and Sabodala-Masawa mines, offset by decrease in stockpiles and GIC at the Company’s legacy operating mines.

Prepaid expenses and other increased by $14.0 million primarily due to the prepayments acquired from the Wahgnion and Sabodala-Massawa mines.

Mining interests increased by $2.5 billion primarily due to the acquisition of mineral property of the Teranga assets.

Other long-term assets are made up of $262.2 million of goodwill related to the Semafo and Teranga acquisitions, $146.7 million of long-term stockpiles not expected to be used in the next twelve months at the Ity, Sabodala-Massawa and Houndé mines, $47.2 million long-term asset related to the sale of Agbaou, as well as $29.7 million of restricted cash relating to reclamation bonds. Other long-term assets increased by $312.3 million in 2021 compared to Q4-2020 mainly due to the recognition of goodwill arising from the transaction with Teranga, as well as the long-term asset of $45.9 million recognised for the sale of Agbaou.

Other current liabilities are made up of $374.0 million of trade and other payables, $31.3 million of derivatives related to warrants and call-rights, and $16.1 million of lease obligations. Trade and other payables increased by $111.7 million mainly due to the inclusion of the Teranga assets accounting for an additional $110.9 million compared to prior year.

Income taxes payable increased by $84.9 million compared to the prior year and is due to the inclusion of Wahgnion and Sabodala-Massawa mines during the quarter.

LIQUIDITY AND FINANCIAL CONDITION

Net Debt Position

The following table summarises the Company’s net debt position as at 30 June 2021 and 31 December 2020.

Table 32: Net Debt Position

($'000s)	30 June 2021		31 December 2020
Cash and cash equivalents	832,877		644,970
Cash included in assets held for sale	—		69,705
Less: Convertible senior bond	(330,000)		(330,000)
Less: Drawn portion of corporate loan facilities1	(580,000)		(310,000)
Net (Debt)/Cash	(77,123)		74,675
Net Debt/(Cash) / Adjusted EBITDA LTM ratio2	0.07		(0.09)

¹Corporate loan facilities are presented at face value.

² Adjusted EBITDA is per table 35 and is calculated using the trailing twelve months Adjusted EBITDA as presented in prior reporting.

Equity and Capital

On 14 June 2021, the Company announced its entire issued ordinary share capital consisting of 250,491,775 shares had been admitted to the premium listing segment of the LSE. The Company no longer has authorised share capital. The table below summarises Endeavour’s share structure at 30 June 2021.

Table 33: Outstanding Shares

	30 June 2021		31 December 2020
Shares issued and outstanding	250,553,482		163,036,473
Stock options	2,059,394		—

As at 3 August 2021, the Company had 250,025,450 shares issued and outstanding, and 2,055,394 outstanding stock options.

As part of the Company’s share buyback programme, subsequent to 30 June 2021 and up to 3 August 2021, the Company has repurchased a total of 363,497 shares at an average price of $23.0, for total cash outflows of $8.4 million.

Going Concern

The directors have performed an assessment of whether the Company would be able to continue as a going concern for at least the next twelve-month period. In their assessment, the Company has taken into account its financial position, expected future trading performance, its debt and other available credit facilities, future debt servicing requirements, its working capital and capital expenditure commitments and forecasts.

At 30 June 2021, the Company’s net debt was $77.1 million with gross debt of $910.0 million and gross liquid funds of $832.9 million.

Based on a detailed cash flow forecast prepared by management, in which it included any reasonably possible change in the key assumptions on which the cash flow forecast is based, and taking into account possible changes in performance due to the COVID-19 pandemic impact, the Directors have a reasonable expectation that the Group will have adequate resources to continue in operational existence for twelve months from 3 August 2021 and that at this point in time there are no material uncertainties regarding going concern. Key assumptions underpinning this forecast include a gold price of $1,500 per ounce and production volumes in line with annual guidance.

The Board is satisfied that the going concern basis of accounting is an appropriate assumption to adopt in the preparation of the half year report for the period ended 30 June 2021.

RELATED PARTY TRANSACTIONS

A related party is considered to include shareholders, affiliates, associates and entities under common control with the Company and members of key management personnel.

Key management compensation

During the six months ended 30 June 2021, an amount of $13.5 million was paid to key management personnel as incentive awards for the completion of the Teranga and SEMAFO acquisitions and the successful listing on the LSE, as well as for termination benefits following the acquisition of SEMAFO and Teranga.

Other related party transactions

During the six-month period ended 30 June 2021, the Company entered into a transaction with La Mancha Holding S.àr.l. (“La Mancha”) when La Mancha exercised its anti-dilution right to maintain its interest in the Company and completed a $200.0 million private placement for 8,910,592 shares of Endeavour. La Mancha’s future anti-dilution rights have now been extinguished and La Mancha’s ownership interest in Endeavour was 19.1% at 30 June 2021 (31 December 2021 - 24.1%).

During the six-month period ended 30 June 2021, and prior to the Company listing on the London Stock Exchange, the Company established an Employee Benefits Trust (“EBT”) in connection with the Company’s employee share incentive plans , which may hold repurchased shares on trust to settle future employee share incentive obligations. During the three months ended 30 June 2021, the EBT acquired 576,308 outstanding common shares from certain employees of the Group, which remain held in the EBT at 30 June 2021. In exchange for the shares, the Group is obligated to repay the employees cash for the fair value of the underlying shares of the Company now held in the EBT. The amount of this liability is $12.4 million at 30 June 2021 and is included in current financial liabilities.

ACCOUNTING POLICIES AND CRITICAL JUDGEMENTS

Critical judgements and key sources of estimation uncertainty

The Company’s management has made critical judgments and estimates in the process of applying the Company’s accounting policies to the consolidated financial statements that have significant effects on the amounts recognised in the Company’s consolidated financial statements. These judgements and estimations include commencement of commercial production, determination of economic viability, functional currency, indicators of impairment and impairment of mining interests, assets held for sale and discontinued operations, value added tax, estimated recoverable ounces, mineral reserves, environmental rehabilitation costs, share-based payments, net realisable value and obsolete stock provisions of inventories, current income tax provisions, business combinations, capitalisation of waste stripping, the Purchase Price Allocation (“PPA”) of the SEMAFO acquisition. and the PPA of the Teranga acquisition, which is still provisional. The judgements applied in the period ended 30 June 2021 are consistent with those in the consolidated financial statements for the year ended 31 December 2020, except for the judgements and estimates made relating to the acquisition of Teranga in the quarter ended 31 March, 2021.

6. USE OF PROCEEDS

In the Company’s prospectus supplement dated 29 March 2021 to the short form base shelf prospectus dated 17 June 2020, the Company disclosed that they intended to use the proceeds of $200.0 million from the issuance of approximately 8.9 million common shares to partially repay outstanding indebtedness under the refinancing of the debt upon the acquisition of Teranga and for general corporate purposes. The Company repaid $120.0 million of the outstanding balance of the revolving credit facility in Q2-2021. The remainder of the proceeds are included in the Company’s cash and cash equivalents at 30 June 2021 and are being used for general working capital purposes, including fees related to the acquisition and integration of Teranga, expenses related to the London listing, as well as general corporate costs. There has been no change on how the remaining proceeds are expected to be used.

In the Company’s prospectus supplement dated 2 July 2020 to the short form base shelf prospectus dated 17 June 2020, the Company disclosed that they intended to use the proceeds of $100.0 million from the issuance of approximately 4.5 million common shares for general corporate purposes. As disclosed in the prospectus supplement, the Company has used the proceeds from that financing for general corporate purposes over the past twelve months, including for costs related to the acquisition and integration of SEMAFO, as well as general corporate costs.

NON-GAAP MEASURES

This Management Report as well as the Company’s other disclosures contain multiple non-GAAP measures, which the Company believes that, in addition to conventional measures prepared in accordance with GAAP, certain investors use to assess the performance of the Company. These do not have a standard meaning and are intended to provide additional information which are not necessarily comparable with similar measures used by other companies and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The definitions of these measures, and the reconciliation to the amounts presented in the condensed interim consolidated financial statements, and the reasons for these measures are included below. The non-GAAP measures are consistent with those presented previously and there have been no changes to the bases of calculation, except with respect to the determination of free cash flows, the definition of which has been changed to be more consistent with our peers and reflective of how management evaluates the free cash flows of the Company.

ALL-IN MARGIN

The Company believes that, in addition to conventional measures prepared in accordance with GAAP, certain investors use the all-in margin and adjusted earnings before interest, tax, depreciation and amortisation (“Adjusted EBITDA”) to evaluate the Company’s performance and ability to generate cash flows and service debt. These do not have a standard meaning and are intended to provide additional information which are not necessarily comparable with similar measures used by other companies and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The following tables provide the illustration of the calculation of this margin, for the three and six months ended 30 June 2021 and 30 June 2020.

Table 34: All-In Sustaining Margin and All-In Margin

	THREE MONTHS ENDED				SIX MONTHS ENDED
($'000s)	30 June 2021		30 June 2020		30 June 2021		30 June 2020
Revenue	753,427		209,582		1,389,219		435,902
Less: Total cash costs	(306,776)		(96,607)		(579,691)		(207,820)
Less: Corporate G&A1	(10,539)		(5,049)		(21,948)		(10,280)
Less: Sustaining capital	(41,509)		(15,398)		(69,106)		(28,934)
All-in sustaining margin from continuing operations	394,603		92,528		718,474		188,868
Gold ounces sold	420,761		124,761		784,279		271,892
All-in sustaining margin per ounce sold from continuing operations	938		742		916		695
Less: Non-Sustaining capital	(58,243)		(21,793)		(115,089)		(39,379)
Less: Non-Sustaining exploration	(26,762)		(17,346)		(33,036)		(32,492)
All-in margin from continuing operations	309,598		53,389		570,349		116,997

EBITDA AND ADJUSTED EBITDA

The Company believes that, in addition to conventional measures prepared in accordance with GAAP, certain investors use the earnings before interest, tax, depreciation and amortization (“EBITDA”) and the adjusted earnings before interest, tax, depreciation and amortisation (“Adjusted EBITDA”) to evaluate the Company’s performance and ability to generate cash flows and service debt. The following tables provide the illustration of the calculation of this margin, for the three and six months ended 30 June 2021 and 30 June 2020.

Table 35: EBITDA and Adjusted EBITDA

	THREE MONTHS ENDED				SIX MONTHS ENDED
($'000s)	30 June 2021		30 June 2020		30 June 2021		30 June 2020
Earnings/(Loss) before taxes	191,246		(24,658)		379,995		22,737
Add back: Depreciation and depletion	158,382		35,465		290,246		78,393
Add back: Finance costs	13,694		11,818		26,012		23,321
EBITDA from continuing operations	363,322		22,625		696,253		124,451
Add back: Acquisition and restructuring costs	14,544		2,589		26,704		6,919
Add back: Other expense/(income)	7,082		1,791		10,510		(144)
Add back: Loss/(gain) on financial instruments	14,807		72,257		(27,270)		74,956
Adjusted EBITDA from continuing operations	399,755		99,262		706,197		206,182

CASH AND ALL-IN SUSTAINING COST PER OUNCE OF GOLD SOLD

The Company reports cash costs and all-in sustaining costs based on ounces of gold sold. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, certain investors may find this information useful to evaluate the costs of production per ounce. The following table provides a reconciliation of cash costs per ounce of gold sold, for the three and six months ended 30 June 2021 and 30 June 2020.

Table 36: Cash Costs

	THREE MONTHS ENDED				SIX MONTHS ENDED
($'000s except ounces sold)	30 June 2021		30 June 2020		30 June 2021		30 June 2020
Operating expenses from mine operations	(278,161)		(83,227)		(531,109)		(179,320)
Royalties	(43,908)		(15,306)		(88,274)		(30,426)
Non-cash and other adjustments	15,293		1,926		39,692		1,926
Cash costs from continuing operations	(306,776)		(96,607)		(579,691)		(207,820)
Gold ounces sold	420,761		124,761		784,279		271,892
Total cash cost per ounce of gold sold from continuing operations	729		774		739		764
Cash costs from discontinued operations	—		(22,546)		(15,668)		(43,188)
Total cash costs	(306,776)		(119,153)		(595,359)		(251,008)
Gold ounces sold	420,761		149,828		798,324		324,382
Total cash cost per ounce of gold sold	729		795		746		774

The Company is reporting all‐in sustaining costs per ounce sold. This non‐GAAP measure provides investors with transparency regarding the total cash cost of producing an ounce of gold in each period, including those capital expenditures that are required for sustaining the on-going operation of the mines.

Table 37: All-In Sustaining Costs

	THREE MONTHS ENDED				SIX MONTHS ENDED
($'000s except ounces sold)	30 June 2021		30 June 2020		30 June 2021		30 June 2020
Total cash costs for ounces sold from continuing operations	(306,776)		(96,607)		(579,691)		(207,820)
Corporate G&A1	(10,539)		(5,049)		(21,948)		(10,280)
Sustaining Capital	(41,509)		(15,398)		(69,106)		(28,934)
All-in sustaining costs from continuing operations	(358,824)		(117,054)		(670,745)		(247,034)
Gold ounces sold	420,761		124,761		784,279		271,892
All-in sustaining costs per ounce sold from continuing operations	853		938		855		909
Including discontinued operations
All in sustaining costs from Agbaou	—		(23,930)		(15,891)		(50,011)
All-in sustaining costs from all operations	(358,824)		(140,984)		(686,636)		(297,045)
Gold ounces sold	420,761		149,828		798,324		324,382
All-in sustaining cost per ounce sold	853		941		860		916

¹Corporate G&A costs included in the calculation for all-in sustaining costs has been adjusted to exclude expenses associated to listing on the LSE of $8.2 million for the three and six months ended 30 June 2021.

The Company presents its sustaining capital expenditures in its all-in sustaining costs to reflect the capital expenditures related to producing and selling gold from its on-going mine operations. The distinction between sustaining and non-sustaining capital reflects the definition set out by the World Gold Council. Non-sustaining capital is capital expenditure incurred at new projects and costs related to major projects or expansions at existing operations where these projects will materially benefit the operations. This non‐GAAP measure provides investors with transparency regarding the capital costs required to support the on-going operations at its mines, relative to its total capital expenditures. Readers should be aware that these measures do not have a standardised meaning. It is intended to provide additional information and should not be considered in isolation, or as a substitute for measures of performance prepared in accordance with IFRS.

Table 38: Sustaining and Non-Sustaining Capital

	THREE MONTHS ENDED				SIX MONTHS ENDED
($'000s)	30 June 2021		30 June 2020		30 June 2021		30 June 2020
Expenditures on mining interests	139,102		58,325		257,982		112,277
Non-sustaining capital expenditures1	(58,268)		(22,109)		(115,114)		(39,829)
Non-sustaining exploration	(26,762)		(17,346)		(33,036)		(32,492)
Growth projects	(12,563)		(2,086)		(40,503)		(4,200)
Sustaining Capital1	41,509		16,784		69,329		35,756

¹Non-sustaining and sustaining capital expenditures include amounts incurred at the Agbaou mine.

Table 39: Consolidated Sustaining Capital

	THREE MONTHS ENDED				SIX MONTHS ENDED
($’000s)	30 June 2021		30 June 2020		30 June 2021		30 June 2020
Boungou	8,955		n.a.		13,065		n.a.
Houndé	8,602		11,117		13,304		22,891
Ity	7,102		2,253		12,340		3,376
Karma	258		2,028		482		2,667
Mana	5,215		n.a.		8,020		n.a.
Sabodala-Massawa	8,923		n.a.		18,446		n.a.
Wahgnion	2,454		n.a.		3,449		n.a.
Sustaining capital from continuing operations	41,509		15,398		69,106		28,934
Agbaou	—		1,386		223		6,822
Total sustaining capital from all operations	41,509		16,784		69,329		35,756

Table 40: Consolidated Non-Sustaining Capital

	THREE MONTHS ENDED				SIX MONTHS ENDED
($’000s)	30 June 2021		30 June 2020		30 June 2021		30 June 2020
Boungou	3,932		n.a.		8,425		n.a
Houndé	2,985		5,750		9,681		7,565
Ity	8,376		10,746		20,423		21,693
Karma	2,073		3,838		2,895		5,912
Mana	21,093		n.a.		45,165		n.a
Sabodala-Massawa	5,178		n.a.		9,741		n.a.
Wahgnion	9,011		n.a.		12,758		n.a.
Non-mining	5,621		1,459		6,002		4,209
Consolidated non-sustaining capital	58,268		21,793		115,090		39,379
Agbaou	—		316		25		450
Total non-sustaining capital from all operations	58,268		22,109		115,115		39,829

ADJUSTED NET EARNINGS AND ADJUSTED NET EARNINGS PER SHARE

Net earnings have been adjusted for items considered exceptional in nature and not related to Endeavour’s core operation of mining assets. The presentation of adjusted net earnings may assist investors and analysts to understand the underlying operating performance of our core mining business. However, adjusted net earnings and adjusted net earnings per share do not have a standard meaning under IFRS. They should not be considered in isolation, or as a substitute for measures of performance prepared in accordance with IFRS and are not necessarily indicative of operating profit or cash flow from operations as determined under IFRS.

The following table reconciles these non‐GAAP measures to the most directly comparable IFRS measure.

Table 41: Adjusted Net Earnings

	THREE MONTHS ENDED				SIX MONTHS ENDED
($'000s)	30 June 2021		30 June 2020		30 June 2021		30 June 2020
Total net and comprehensive earnings/(loss)	148,949		(22,616)		256,178		12,847
Net loss/(earnings) from discontinued operations	—		(7,902)		3,702		(15,883)
Deferred income tax (recovery)/expense	(2,166)		5,597		3,504		6,504
Loss/(gain) on financial instruments	14,807		72,257		(27,270)		74,956
Other expenses/(income)	7,082		1,791		10,510		(144)
Share-based compensation	9,839		4,942		17,794		6,565
Acquisition and restructuring costs	14,544		2,589		26,704		6,919
Non-cash and other adjustments1	15,293		1,926		39,692		1,926
Adjusted net earnings	208,348		58,584		330,814		93,690
Attributable to non-controlling interests	25,201		9,367		54,493		20,024
Attributable to shareholders of the Corporation	183,147		49,217		276,321		73,666
Weighted average number of shares issued and outstanding	251,779,650		110,993,240		230,008,280		110,788,798
Adjusted net earnings from continuing operations per basic share	0.73		0.44		1.20		0.66

¹ Non-cash and other adjustments in Q1-2021 mainly relate to non-cash depreciation of inventory associated with the fair value bump on purchase price allocation of SEMAFO and Teranga.

OPERATING CASH FLOW PER SHARE

The Company believes that, in addition to conventional measures prepared in accordance with GAAP, certain investors use free cash flow to assess the Company’s ability to generate and manage liquid resources. These terms do not have a standard meaning and are intended to provide additional information. They should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

Table 42: Operating Cash Flow (OCF) and Operating Cash Flow (OCF) per share

	THREE MONTHS ENDED						SIX MONTHS ENDED
($'000s)	30 June 2021			30 June 2020			30 June 2021			30 June 2020
Operating cash flow
Cash generated from operating activities by continuing operations	300,475			53,497			507,218			153,396
Changes in working capital from continuing operations	(14,825)			21,412			41,850			16,842
Operating cash flows before working capital from continuing operations	285,650			74,909			549,068			170,238
Divided by weighted average number of outstanding shares, in thousands	251,780			110,993			230,008			110,789
Operating cash flow per share from continuing operations	$	1.19		$	0.48		$	2.21		$	1.38
Operating cash flow per share before working capital from continuing operations	$	1.13		$	0.67		$	2.39		$	1.54

NET DEBT, NET CASH/ADJUSTED EBITDA RATIO

The Company is reporting Net Debt/ Cash and Net Debt/ Cash/Adjusted EBITDA ratio. This non‐GAAP measure provides investors with transparency regarding the liquidity position of the Company. It is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The calculation of net debt and net cash is shown in table 32. The following table explains the calculation of net debt, net cash/Adjusted EBITDA ratio using the last twelve months of Adjusted EBITDA.

Table 43: Net Debt, Net Cash/ Adjusted EBITDA ratio

($'000s)	30 June 2021		31 March 2021
Net Debt/(Cash)	77,123		(74,675)
Trailing twelve month Adjusted EBITDA1	1,072,668		802,773
Net Debt/(Cash) / Adjusted EBITDA LTM ratio	0.07		(0.09)

¹ Trailing twelve month Adjusted EBITDA is as reported in prior periods for each quarter prior to Q2-2021.

RETURN ON CAPITAL EMPLOYED

The Company uses Return on Capital Employed (“ROCE”) as a measure of long-term operating performance to measure how effectively management utilises the capital it has been provided. The calculation of ROCE, expressed as a percentage, is Adjusted EBIT (based on Adjusted EBITDA as per table 35 adjusted to include Adjusted EBITDA from discontinued operations) divided by the average of the opening and closing capital employed for the twelve months preceding the period end. Capital employed is the total assets less current liabilities.

Table 44: Return on Capital Employed

	TRAILING TWELVE MONTHS
($'000s unless otherwise stated)	30 June 2021		30 June 2020
Adjusted EBITDA	1,072,668		471,013
Depreciation and amortization	(473,084)		(205,406)
Adjusted EBIT (A)	599,584		265,607
Opening Capital employed (B)	1,807,766		1,753,857
Total Assets	6,885,769		2,057,124
Current Liabilities	(640,593)		(249,358)
Closing Capital employed (C)	6,245,176		1,807,766
Average Capital Employed (D)=(B+C)/21	3,727,808		1,780,812
ROCE (A)/(D)	16%		15%

¹ Assets for Teranga and SEMAFO have been included in the calculation from the date of their acquisition by Endeavour on 10 February, 2021 and 1 July, 2020 respectively.

QUARTERLY AND ANNUAL FINANCIAL AND OPERATING RESULTS

The following tables summarise the Company’s financial and operational information for the last eight quarters and three fiscal years.

Table 45: 2021 - 2020 Quarterly Key Performance Indicators

 

		FOR THE THREE MONTHS ENDED
($'000s except ounces sold)	Unit	30 June 2021		31 March 2021		31 December 2020		September 30  2020
Gold ounces sold	oz	420,761		363,518		300,622		236,292
Revenue	$	753,427		635,792		553,370		434,839
Operating cash flows from continuing operations	$	300,475		204,907		383,992		173,174
Earnings from continuing  mine operations	$	272,976		195,525		218,372		123,230
Net comprehensive earnings	$	148,949		99,158		29,271		70,164
Net comprehensive (loss)/earnings from discontinued operations	$	—		(3,702)		(44,265)		13,094
Net earnings from continuing operations attributable to shareholders	$	126,779		77,838		64,698		45,007
Net (loss)/earnings from discontinued operations attributable to shareholders	$	—		(5,168)		(48,180)		14,791
Basic earnings per share from continuing operations	$	0.50		0.42		0.40		0.27
Diluted earnings per share from continuing operations	$	0.50		0.42		0.40		0.27
Basic earnings per share from all operations	$	0.50		0.43		0.11		0.36
Diluted earnings per share from all operations	$	0.50		0.43		0.11		0.36

Table 46: 2020 - 2019 Quarterly Key Performance Indicators

		FOR THE THREE MONTHS ENDED
($'000s except ounces sold)	Unit	30 June 2020		31 March 2020		31 December 2019		30 September 2019
Gold ounces sold	oz	124,761		147,131		139,058		149,187
Revenue	$	209,581		226,321		199,406		213,918
Operating cash flows from continuing operations	$	53,529		29,757		92,006		72,822
Earnings from continuing mine operations	$	75,583		72,182		44,757		64,974
Net comprehensive (loss)/earnings	$	(22,616)		35,463		(113,076)		(23,545)
Net comprehensive earnings from discontinued operations	$	1,392		7,978		2,790		6,282
Net (loss)/earnings from continuing operations attributable to shareholders	$	(38,488)		19,366		(111,662)		(37,160)
Net earnings/(loss) from discontinued operations attributable to shareholders	$	1,259		6,632		(1,507)		4,961
Basic (loss)/earnings per share from continuing operations	$	(0.35)		0.18		(1.02)		(0.34)
Diluted (loss)/earnings per share from continuing operations	$	(0.35)		0.18		(1.02)		(0.34)
Basic (loss)/earnings per share from all operations	$	(0.34)		0.24		(1.03)		(0.29)
Diluted (loss)/earnings per share from all operations	$	(0.34)		0.24		(1.03)		(0.29)

Table 47: Annual Key Performance Indicators¹

	FOR THE YEAR ENDED
($'000s except per share amounts)	31 December 2020		31 December 2019		31 December 2018
Gold ounces sold	808,806		511,749		469,544
Revenue	1,424,111		694,848		571,701
Operating cash flows from continuing operations	710,563		205,531		196,371
Operating cash flows from discontinued operations	38,365		96,354		54,549
Earnings/(Loss) from continuing mine operations	337,564		(27,502)		53,568
Net and comprehensive earnings/(loss) from continuing operations	134,085		(159,974)		127,609
Net and comprehensive (loss)/earnings from discontinued operations	(21,803)		18,814		(110,549)
Net earnings/(loss) from continuing operations attributable to shareholders	95,243		(174,506)		(37,675)
Net earnings/(loss) attributable to shareholders	72,528		(163,718)		(144,856)
Basic earnings/(loss) per share from continuing operations	0.69		(1.59)		(0.35)
Diluted earnings/(loss) per share from continuing operations	0.69		(1.59)		(0.35)
Basic earnings/(loss) per share	0.53		(1.49)		(1.00)
Diluted earnings/(loss) per share	0.53		(1.49)		(1.00)
Total assets	3,881,718		1,872,791		1,922,043
Total long term liabilities (excluding deferred taxes)	792,740		738,294		660,472
Total attributable shareholders' equity	2,057,015		717,867		858,006
Adjusted net earnings per share2	2.28		0.33		0.49

¹ Prior year figures for continuing operations have been adjusted to exclude Agbaou.
² The adjusted net earnings per share is inclusive of the prior period tax adjustment included in the 31 December 2018 adjusted earnings per share.

PRINCIPAL RISKS AND UNCERTAINTIES

Readers of this Management Report should consider the information included in the Company’s condensed interim consolidated financial statements and related notes for the six months ended 30 June 2021. The nature of the Company’s activities and the locations in which it works mean that the Company’s business generally is exposed to significant risk factors, many of which are beyond its control. The Company examines the various risks to which it is exposed and assesses any impact and likelihood of those risks. For discussion on all the risk factors that affect the Company’s business generally, please refer to the prospectus prepared as part of the admission to the premium listing segment of the Official List and to trading on the Main Market of the London Stock Exchange (the “Prospectus”) and which is available on its website, www.endeavourmining.com, its most recent Annual Information Form filed on SEDAR at www.sedar.com, and the consolidated financial statements for the year ended 31 December 2020. The risks that affect the financial statements specifically, and the risks that are reasonably likely to affect them in the future which are incorporated by reference in this Management Report, are set out below.

There have been no significant changes to the principal risks and uncertainties of the Company from those disclosed in the Prospectus. The principal risks that affect the Company’s business are listed below:

External risks

Gold price

Exchange rates

Inability to compete successfully with other mining companies

Global economic conditions

Effect of COVID-19 on the business

Climate change

Fixed and floating gold delivery obligations

Operational risks

Mining, development and exploration activities are subject to operational risks and hazards inherent in the mining industry, such as geological problems, seismic activity, flooding, metallurgical and other processing problems, etc.

Risks and potential liabilities related to our tailings storage facilities.

Risks and expenses related to reclamation costs and related liabilities.

The Company’s ability to maintain or increase the present level of gold production is dependent in part on the Company’s development projects, which are subject to numerous known and unknown risks.

No assurance can be given that the current or future mineral production estimates will be achieved.

Future exploration and development projects may not results in economically viable mining operations or yield new reserves.

Risks associated with illegal or artisanal mining, which may, among other things, create environmental, health and safety risks.

Surrounding communities may affect mining operations through restriction of access of supplies and workforce to mine site or through legal challenges asserting ownership rights.

The Company depends on management and skilled personnel and may not be able to attract and retain qualified personnel in the future.

French officials are conducting a judicial inquiry into certain past employees of Areva S.A. (“Areva”), including into our CEO Sébastien de Montessus in relation to his time as an employee of Areva, which could lead to negative publicity and/or reputational damage for the Group, and which could have an adverse impact on his ability to continue in his role.

The Company is dependent on its workforce, and the workforce of its third-party contractors, to extract and process minerals containing gold, and are therefore sensitive to any labour disruption at its properties.

Risks associated with use of third-party contractors.

The Company may require further licences and encounter title claims to develop and realise certain gold reserves or to process the ore of third parties and may encounter title claims to any of its properties which may result in future losses or additional expenditures.

The Company may be adversely affected by the availability and costs of key inputs.

Legal and regulatory risks

The Company is subject to a number of laws and regulations and may not be able to enforce our legal rights.

The Company’s activities are extensively regulated in respect of environmental, health and safety standards which are likely to become more stringent over time and may be subject to unforeseen changes.

The Company’s business is subject to evolving climate change initiatives and legislation that may increase both compliance costs and the risk of non-compliance.

Government regulation may have an adverse effect on the Company’s exploration, development and mining operations.

The Company may be adversely affected by violations of applicable anti-corruption laws, as well as export control regulations and related laws and economic sanctions programmes.

The Company may face the risk of litigation in connection with its business and other activities.

Other risks

The Company may fail to successfully integrate acquired properties, including those acquired from SEMAFO and Teranga.

The Company may face IT and cyber security threats.

The Company’s business requires substantial capital expenditure and there can be no assurance that such funding will be available on a timely basis, or at all

The Company’s use of derivative instruments involves certain inherent risks, including credit risk, market liquidity risk, and unrealised mark-to-market risk.

The Company’s insurance coverage does not cover all of our potential losses, liabilities and damage related to our business, and certain risks are uninsured or uninsurable

Risks related to operations in West Africa

The Company is subject to geopolitical and other risks associated with operating in West Africa.

The location of the Company’s assets subjects the Company to safety and security risks.

The Company’s continued operations depend on adequate infrastructure, which is underdeveloped in certain parts of West Africa, and the uninterrupted flow of power, materials, supplies and services.

The Company’s mining properties are subject to various government equity interests and royalty payments payable to the respective governments of the countries in which we operate.

There are health risks associated with the mining work force in Africa.

Risks related to shares

Shares in the Company may be subject to market price volatility and the market price of the Shares in the Company may decline disproportionately in response to developments that are unrelated to the Company’s operating performance.

The current value of Old Endeavour Shares cannot be taken as indicative of the likely development of the market and future demand for the Shares.

Future sales of Shares by major shareholders could depress the price of the Shares.

The issuance of additional Shares in the Company in connection with future acquisitions, any share incentive or share option plan or otherwise may dilute all other shareholdings.

The Company’s ability to pay dividends in the future depends, among other things, on the Group’s financial performance and capital requirements.

The Company is a holding Company with no business operations of its own and depends on its subsidiaries for cash, including in order to pay dividends.

Shareholders may become subject to foreign exchange rate risk as a result of an investment in the Shares.

Shareholders in the United States and other jurisdictions outside of the United Kingdom may not be able to participate in future equity offerings.

The rights afforded to Shareholders are governed by English law. Not all rights available to shareholders under US law will be available to holders of the Shares.

The Company’s activities expose it to a variety of risks that may include credit risk, liquidity risk, currency risk, interest rate risk and other price risks, including equity price risk. The Company examines the various financial instrument risks to which it is exposed and assesses any impact and likelihood of those risks.

Credit risk

Credit risk is the risk that the counterparty to a financial instrument will cause a financial loss for the Company by failing to discharge its obligations. Credit risk arises from cash, restricted cash, marketable securities, trade and other receivables, long-term receivable and other assets.

The Company manages the credit risk associated with cash by investing these funds with highly rated financial institutions, and by monitoring its concentration of cash held in any one institution. As such, the Company deems the credit risk on its cash to be low.

The Company closely monitors its financial assets and does not have any significant concentration of credit risk other than receivable balances owed from the governments in the countries the Company operates in and its other receivables of $14.6 million due from third parties. The Company monitors the amounts outstanding from its third parties regularly and does not believe that there is a significant level of credit risk associated with these receivables given the current nature of the amounts outstanding and the on-going customer/supplier relationships with those companies.

The Corporation sells its gold to large international organizations with strong credit ratings, and the historical level of customer defaults is minimal. As a result, the credit risk associated with gold trade receivables at 30 June 2021 is considered to be negligible. The Company does not rely on ratings issued by credit rating agencies in evaluating counterparties’ related credit risk.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with its financial liabilities that are settled by delivering cash, physical gold or another financial asset. The Company has a planning and budgeting process in place to help determine the funds required to support the Company’s normal operating requirements. The Company ensures that it has sufficient cash and cash equivalents and loan facilities available to meet its short term obligations.

Currency risk

Currency risk relates to the risk that the fair values or future cash flows of the Company’s financial instruments will fluctuate because of changes in foreign exchange rates. Exchange rate fluctuations may affect the costs that the Company incurs in its operations. There has been no change in the Company’s objectives and policies for managing this risk during the period ended 30 June 2021.

The Company has not hedged its exposure to foreign currency exchange risk.

Interest rate risk

Interest rate risk is the risk that future cash flows from, or the fair values of, the Company’s financial instruments will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk primarily on its long-term debt. Since marketable securities and government treasury securities held as loans are short term in nature and are usually held to maturity, there is minimal fair value sensitivity to changes in interest rates. The Company continually monitors its exposure to interest rates and is comfortable with its exposure given the relatively low short-term US interest rates and LIBOR.

CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and reported on a timely basis to senior management, including the Chief Executive Officer (CEO) and the Chief Financial Officer (CFO). Additionally, these controls and procedures provide reasonable assurance that information required to be disclosed in the Company’s annual and interim filings (as such terms are defined under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings) and other reports filed or submitted under Canadian securities law is recorded, processed, summarised and reported within the time periods specified by those laws, and that material information is accumulated and communicated to management including the CEO and CFO as appropriate to allow timely decisions regarding required disclosure.

Management evaluated the design and operating effectiveness of the Company’s disclosure controls and procedures as required by Canadian Securities Law. Based on that evaluation, the CEO and CFO concluded that as of 31 December 2020, the disclosure controls and procedures were effective.

INTERNAL CONTROLS OVER FINANCIAL REPORTING

The Company’s management, including the CEO and CFO, is responsible for establishing and maintaining adequate internal controls over financial reporting. Under the supervision of the CFO, the Company’s internal controls over financial reporting are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS.

There have been no material changes in the Company’s internal controls over financial reporting since the year ended 30 June 2021 that have materially affected or are reasonably likely to materially affect the Company’s internal controls over financial reporting.

The Company assessed the SEMAFO and Teranga mines’ disclosure controls and procedures and internal control over financial reporting; however, in accordance with National Instrument 52-109 - Certification of Disclosure in Issuer’s Annual and Interim Filings, because the SEMAFO operations were acquired not more than 365 days before the end of 31 December 2020, the Company has limited the scope of its design of disclosure controls and procedures and internal controls over financial reporting to exclude the controls, policies and procedures of SEMAFO.

LIMITATIONS OF CONTROLS AND PROCEDURES

The Company’s management, including the CEO and CFO believe that any disclosure controls and procedures or internal control over financial reporting, can provide only reasonable, but not absolute, assurance that the objectives of the control system are met. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the actions of one individual, by collusion of two or more people, or by unauthorised override of the control. Accordingly, because of the inherent limitations in a control system, misstatements due to error or fraud may occur and not be detected.

DIRECTORS’ RESPONSIBILITY STATEMENT

The directors of Endeavour Mining plc confirm that to the best of their knowledge:

the condensed interim consolidated financial statements for the six months ended 30 June 2021 has been prepared in accordance with UK adopted International Accounting Standard 34, “Interim Financial Reporting”, and International Accounting Standard 34, “Interim Financial Reporting” as issued by the International Accounting Standards Board (IASB), and that it gives a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8

The Directors of Endeavour Mining plc are listed on the Company’s website at www.endeavourmining.com

By order of the Board

/s/ Sebastien de Montessus

Chief Executive Officer
Sebastien de Montessus
3 August 2021

INDEPENDENT REVIEW REPORT TO ENDEAVOUR MINING PLC

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the interim financial report for the three and six months ended 30 June 2021 which comprises the condensed interim consolidated statement of comprehensive earnings/ loss, the condensed interim consolidated statement of cash flows, the condensed interim consolidated statement of financial position, the condensed interim consolidated statement of changes in equity and related notes.

We have read the other information contained in the interim financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors’ responsibilities

The interim financial report is the responsibility of and has been approved by the directors. The directors are responsible for preparing the interim financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom’s Financial Conduct Authority.

As disclosed in note 2, the annual financial statements of the Group will be prepared in accordance with UK adopted international accounting standards and International Financial Reporting Standards as issued by the International Accounting Standards Board (“IASB”). The condensed set of financial statements included in this interim financial report has been prepared in accordance with UK adopted International Accounting Standard 34, ‘‘Interim Financial Reporting’’.

As explained in note 2 to the condensed set of financial statements included in this interim financial report, the group, in addition to preparing condensed interim consolidated financial statements in accordance with UK adopted International Accounting Standard 34, “Interim Financial Reporting”, has also applied International Accounting Standard 34, “Interim Financial Reporting” as issued by the IASB.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the interim financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ‘‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’’, issued by the Financial Reporting Council for use in the United Kingdom and International Standard on Review Engagements 2410, ‘‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the IAASB. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the interim financial report for the three and six months ended 30 June 2021 is not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the United Kingdom’s Financial Conduct Authority.

In addition, based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the interim financial report for the three and six months ended 30 June 2021 is not prepared, in all material respects, in accordance with International Accounting Standard 34 Interim Financial Reporting as issued by the International Accounting Standards Board.

Use of our report

Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting its responsibilities in respect of interim financial reporting in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom’s Financial Conduct Authority and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

BDO LLP
Chartered Accountants
London
3 August 2021

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

		THREE MONTHS ENDED						SIX MONTHS ENDED
	Note	30 June 2021			30 June 2020			30 June  2021			30 June 2 2020
Revenues
Revenue		753,427			209,582			1,389,219			435,902
Cost of sales
Operating expenses		(278,161)			(83,227)			(531,109)			(179,320)
Depreciation and depletion		(158,382)			(35,465)			(290,246)			(78,393)
Royalties		(43,908)			(15,306)			(88,274)			(30,426)
Earnings from mine operations		272,976			75,584			479,590			147,763
Corporate costs	3	(15,890)			(5,049)			(30,161)			(10,280)
Acquisition and restructuring costs	4	(14,544)			(2,589)			(26,704)			(6,919)
Share-based compensation	5	(9,839)			(4,942)			(17,794)			(6,565)
Exploration costs		(5,874)			(1,796)			(15,684)			(3,129)
Earnings from operations		226,829			61,208			389,247			120,870
Other income/(expense)
(Loss)/gain on financial instruments	6	(14,807)			(72,257)			27,270			(74,956)
Finance costs	7	(13,694)			(11,818)			(26,012)			(23,321)
Other (expense)/income		(7,082)			(1,791)			(10,510)			144
Earnings/(Loss) before taxes		191,246			(24,658)			379,995			22,737
Current income tax expense		(44,463)			(263)			(116,611)			(19,269)
Deferred income tax recovery/(expense)		2,166			(5,597)			(3,504)			(6,504)
Net comprehensive earnings/(loss) from continuing operations		148,949			(30,518)			259,880			(3,036)
Net comprehensive earnings/(loss) from discontinued operations	4	—			7,902			(3,702)			15,883
Net comprehensive earnings/(loss)		$	148,949		$	(22,616)		$	256,178		$	12,847
Net earnings/(loss) from continuing operations attributable to:
Shareholders of Endeavour Mining plc		126,779			(38,488)			213,443			(21,817)
Non-controlling interests	14	22,170			7,970			46,437			18,781
		$	148,949		$	(30,518)		$	259,880		$	(3,036)
Total net earnings/(loss) attributable to:
Shareholders of Endeavour Mining plc		126,779			(37,229)			208,275			(11,231)
Non-controlling interests	14	22,170			14,613			47,903			24,078
		$	148,949		$	(22,616)		$	256,178		$	12,847
Earnings/(Loss) per share from continuing operations
Basic earnings/(loss) per share	5	$	0.50		$	(0.35)		$	0.93		$	(0.20)
Diluted earnings/(loss) per share	5	$	0.50		$	(0.35)		$	0.92		$	(0.20)
Earnings/(Loss) per share
Basic earnings/(loss) per share	5	$	0.50		$	(0.34)		$	0.91		$	(0.10)
Diluted earnings/(loss) per share	5	$	0.50		$	(0.34)		$	0.90		$	(0.10)



The accompanying notes are an integral part of these condensed interim consolidated financial statements

 

		THREE MONTHS ENDED						SIX MONTHS ENDED
	Note	30 June 2021			30 June 2020			30 June 2021			30 June 2020
Operating Activities
Earnings/(Loss) before taxes		191,246			(24,658)			379,995			22,737
Adjustments for:
Depreciation and depletion		158,382			35,465			290,246			78,393
Finance costs	7	13,694			11,818			26,012			23,321
Share-based compensation	5	9,839			4,942			17,794			6,565
Loss/(gain) on financial instruments	6	14,807			72,257			(27,270)			74,956
Write down of inventory and other		—			1,512			—			1,512
Loss on disposal of assets		2,442			—			2,442			—
Cash received/(paid) on settlement of DSUs, PSUs and options	5	1,895			(7)			(11,962)			(221)
Cash received/(paid) on settlement of other financial assets and liabilities		2,788			(16,754)			2,788			(17,251)
Income taxes paid		(106,490)			(8,233)			(130,064)			(16,757)
Foreign exchange loss		(2,953)			(1,433)			(913)			(3,017)
Operating cash flows before changes in working capital		285,650			74,909			549,068			170,238
Trade and other receivables		11,023			(10,265)			(5,375)			(17,966)
Inventories		4,088			(4,716)			24,788			7,403
Prepaid expenses and other		9,037			591			(3,913)			(723)
Trade and other payables		(9,323)			(7,022)			(57,350)			(5,556)
Operating cash flows generated from continuing operations		300,475			53,497			507,218			153,396
Operating cash flows generated from/(used by) discontinued operations	4	—			3,887			(8,808)			29,975
Cash generated from operating activities		$	300,475		$	57,384		$	498,410		$	183,371
Investing Activities
Expenditures on mining interests	10	(144,037)			(56,622)			(257,733)			(105,005)
Cash paid for additional interest of Ity mine	14	—			—			—			(5,430)
Cash acquired on acquisition of Teranga	4	—			—			27,036			—
Changes in other assets		6,726			(58)			(6,924)			2,165
Proceeds from sale of assets	10	—			10,292			—			10,292
Net proceeds from sale of Agbaou	4	—			—			(4,714)			—
Investing cash flows used by continuing operations		(137,311)			(46,388)			(242,335)			(97,978)
Investing cash flows used by discontinued operations	4	—			(1,703)			(249)			(7,347)
Cash used in investing activities		$	(137,311)		$	(48,091)		$	(242,584)		$	(105,325)
		THREE MONTHS ENDED						SIX MONTHS ENDED
		30 June 2021			30 June 2020			30 June 2021			30 June 2020
Financing Activities
Proceeds received from the issue of common shares	5	—			—			199,988			—
Dividends paid	5	—			—			(60,000)			—
Payment of financing fees and other		(434)			(94)			(7,522)			(441)
Interest paid		(3,937)			(6,157)			(13,230)			(16,728)
Proceeds of long-term debt	7	—			—			490,000			120,000
Repayment of long-term debt	7	(120,000)			—			(563,042)			—
Acquisition of shares in share buyback	5	(59,454)			—			(59,454)			—
Repayment of finance and lease obligation		(7,947)			(9,276)			(18,730)			(18,430)
Settlement of gold offtake liability	4	—			—			(49,735)			—
Financing cash flows generated from continuing operations		(191,772)			(15,527)			(81,725)			84,401
Financing cash flows used by discontinued operations	4	—			(301)			(45,434)			(669)
Cash (used in)/generated from financing activities		$	(191,772)		$	(15,828)		$	(127,159)		$	83,732
Effect of exchange rate changes on cash		(6,710)			1,009			(10,465)			150
(Decrease)/Increase in cash and cash equivalents		(35,318)			(5,526)			118,202			161,928
Cash and cash equivalents, beginning of period		868,195			357,343			644,970			189,889
Cash relating to assets held for sale, beginning of period		—			—			69,705			—
Cash and cash equivalents, end of period		$	832,877		$	351,817		$	832,877		$	351,817

The accompanying notes are an integral part of these condensed interim consolidated financial statements

	Note	As at   30 June 2021			As at 31 December 2020
ASSETS					(Note 4b)
Current
Cash and cash equivalents		832,877			644,970
Trade and other receivables	8	127,839			55,136
Inventories	9	349,478			190,601
Prepaid expenses and other		40,297			26,322
Current assets excluding assets held for sale		1,350,491			917,029
Assets held for sale	4	—			180,808
		1,350,491			1,097,837
Non-current
Mining interests	10	5,039,323			2,577,844
Deferred tax assets		9,960			19,774
Other financial assets	11	77,120			25,202
Other long term assets	9	146,683			77,010
Goodwill	4	262,192			71,528
Total assets		$	6,885,769		$	3,869,195
LIABILITIES
Current
Trade and other payables	12	373,993			262,274
Finance and lease obligations		16,120			13,661
Other financial liabilities	13	31,346			—
Income taxes payable	15	219,134			134,205
Current liabilities excluding liabilities held for sale		640,593			410,140
Liabilities held for sale	4	—			112,796
		640,593			522,936
Non-current
Finance and lease obligations		34,604			23,544
Long-term debt	7	929,760			688,266
Other financial liabilities	13	96,548			2,919
Environmental rehabilitation provision		128,169			78,011
Deferred tax liabilities		614,390			305,101
Total liabilities		$	2,444,064		$	1,620,777
EQUITY
Share capital	5	2,506			16,299
Share premium	5	604			3,027,467
Share based payment reserve	5	83,790			70,390
Capital redemption reserve	5	225			—
Merger reserve	5	4,946,766			—
Deficit		(984,967)			(1,056,948)
Equity attributable to shareholders of the Corporation		$	4,048,924		$	2,057,208
Non-controlling interests	14	392,781			191,210
Total equity		$	4,441,705		$	2,248,418
Total equity and liabilities		$	6,885,769		$	3,869,195

 

COMMITMENTS AND CONTINGENCIES (NOTE 18)
SUBSEQUENT EVENTS (NOTE 19)

Approved by the Board: 3 August 2021
"Sebastien de Montessus" Director		"Alison Baker" Director
The accompanying notes are an integral part of these condensed interim consolidated financial statements

		SHARE CAPITAL
	Note	Number of Common Shares		Share Capital			Share Premium Reserve			Capital Redemption Reserve			Share Based Payment Reserve			Merger Reserve			Deficit			Total Attributable to Shareholders			Non-Controlling Interests			Total
At 1 January 2020		109,927,097		10,988			1,763,184			—			72,487			—			(1,128,792)			717,867			98,630			816,497
Shares issued on exercise of options and PSU's		1,066,143		107			18,853			—			(18,960)			—			—			—			—			—
Share based compensation	5	—		—			—			—			5,185			—			—			5,185			—			5,185
Change in non-controlling interests	14	—		—			—			—			—			—			(430)			(430)			—			(430)
Total net and comprehensive earnings		—		—			—			—			—			—			(11,231)			(11,231)			24,078			12,847
At 30 June 2020		110,993,240		$	11,095		$	1,782,037		$	—		$	58,712		$	—		$	(1,140,453)		$	711,391		$	122,708		$	834,099
At 1 January 2021		163,036,473		16,299			3,027,467			—			70,390			—			(1,056,948)			2,057,208			191,210			2,248,418
Consideration on the acquisition of Teranga	4	78,766,690		7,877			1,670,408			—			30,361			—			—			1,708,646			186,583			1,895,229
Shares issued on private placement	5	8,910,592		891			199,088			—			—			—			—			199,979			—			199,979
Purchase and cancellation of own shares	5	(2,246,503)		(225)			—			225			—			—			(76,294)			(76,294)			—			(76,294)
Shares issued on exercise of options and PSU's		2,086,230		203			27,868			—			(21,565)			—			—			6,506			—			6,506
Share based compensation	5	—		—			—			—			18,986			—			—			18,986			—			18,986
Dividends paid	5	—		—			—			—			—			—			(60,000)			(60,000)			—			(60,000)
Dividends to non-controlling interests	14	—		—			—			—			—			—			—			—			(29,922)			(29,922)
Disposal of the Agbaou mine	4	—		—			—			—			—			—			—			—			(2,993)			(2,993)
Reorganisation	1, 4	—		(22,539)			(4,924,227)			—			—			4,946,766			—			—			—			—
Reclassification of PSU's to liabilities	5	—		—			—			—			(14,382)			—			—			(14,382)			—			(14,382)
Total net and comprehensive earnings		—		—			—			—			—			—			208,275			208,275			47,903			256,178
At 30 June 2021		250,553,482		$	2,506		$	604		$	225		$	83,790		$	4,946,766		$	(984,967)		$	4,048,924		$	392,781		$	4,441,705

The accompanying notes are an integral part of these condensed interim consolidated financial statements

1    DESCRIPTION OF BUSINESS AND NATURE OF OPERATIONS

Endeavour Mining plc, together with its subsidiaries (collectively, “Endeavour”, the "Group", or the “Company”), is a publicly listed gold mining Company that operates seven mines in West Africa in addition to having project development and exploration assets. Endeavour is focused on effectively managing its existing assets to maximise cash flows as well as pursuing organic and strategic growth opportunities that benefit from its management and operational expertise.

Endeavour’s corporate office is in London, England, and its shares are listed on the London Stock Exchange ("LSE") (symbol EDV), and on the Toronto Stock Exchange (“TSX”) (symbol EDV) and quoted in the United States on the OTCQX International (symbol EDVMF). The Company is incorporated in the United Kingdom and its registered office is located at 5 Young Street, London, United Kingdom, W8 5EH.

Prior to its listing on the London Stock Exchange on 14 June 2021, Endeavour Mining Corporation ("EMC") was the parent Company of the Group for which consolidated financial statements were produced. On 11 June 2021, the shareholders of EMC transferred all of their shares in EMC to Endeavour Mining plc in exchange for ordinary shares of equal value in Endeavour Mining plc (the "Reorganisation"). This resulted in Endeavour Mining plc, which was incorporated on 21 March 2021, becoming the new parent Company for the Group. As a result of the Reorganisation, there was no change in the legal ownership of any of the assets of EMC or Endeavour Mining plc, nor any change in the ownership of existing shares or securities of EMC or Endeavour Mining plc. The financial information as at 30 June 2021 and for the three and six months ended 30 June 2021 (and comparative information) is presented as a continuation of EMC.

The Company has been taking steps to monitor and address the risks in response to the COVID-19 pandemic and their impact on the Company's operations (Note 2.3).

2    BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

2.1.    STATEMENT OF COMPLIANCE

The annual financial statements of the group will be prepared in accordance with UK adopted international accounting standards and International Financial Reporting Standards as issued by the International Accounting Standards Board (“IASB”). These condensed interim consolidated financial statements have been prepared in accordance with UK adopted International Accounting Standard (“IAS”) 34, Interim Financial Reporting. In addition to preparing condensed interim consolidated financial statements in accordance with UK adopted International Accounting Standard 34, “Interim Financial Reporting”, the Company has also applied International Accounting Standard 34, “Interim Financial Reporting” as issued by the IASB. These condensed interim financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards ("IFRS") and UK adopted international accounting standards in conformity with the requirements of the Companies Act 2006, and do not include all of the information required for full annual financial statements prepared using IFRS, and are also in accordance with the requirements of the Disclosure Guidance and Transparency Rules ("DTR") in the United Kingdom as applicable to interim financial reporting. These condensed consolidated financial statements represent a ‘condensed set of financial statements’ as referred to in the DTR.

These condensed consolidated financial statements for the three and six months ended 30 June 2021 were authorised for issue in accordance with a resolution of the Board on 3 August 2021. The condensed consolidated financial statements are unaudited and do not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. These condensed consolidated financial statements should be read in conjunction with the annual consolidated financial statements of the Company for the year ended 31 December 2020, which include information necessary or useful to understanding the Company’s operations, financial performance, and financial statement presentation. In particular, the Company’s significant accounting policies were presented as Note 2 to the consolidated financial statements for the year ended 31 December 2020 and have been consistently applied in the preparation of these condensed interim consolidated financial statements.

None of the new standards or amendments to standards and interpretations applicable during the period has had a material impact on the financial position or performance of the Group. The Group has not early adopted any standard, interpretation or amendment that was issued but is not yet effective.

During the period ended 30 June 2021, the Company has applied the following accounting policies which were not applied in the annual consolidated financial statements for the year ended 31 December 2020:

Merger accounting

Group reorganisations, including transfer of assets and liabilities and acquisition of companies within the Endeavour Mining plc group are accounted for using merger accounting. As a result, any assets and liabilities are transferred at carrying value rather than fair value. The difference between the carrying value of assets and liabilities transferred and the consideration paid has been recognised in the merger reserve.

Employee Benefit Trust

The Employee Benefit Trust ("EBT") is considered to be a Special Purpose Entity and is accounted for under IFRS 10 and consolidated on the basis that the Company has control, thus the assets and liabilities of the EBT are included in the financial position and results of operations of the Group and the shares held by the EBT are presented as a deduction from equity.

Treasury shares

When the Company purchases its own share capital ("treasury shares"), the consideration paid, including any directly attributable incremental costs, net of income taxes, is deducted from retained earnings/(deficit). If treasury shares are subsequently cancelled, the par value of the cancelled shares is credited to the capital redemption reserve. If treasury shares are subsequently re-issued, any consideration received, net of transaction costs, is included in share capital.

2.2.    BASIS OF PREPARATION

These condensed interim consolidated financial statements have been prepared on the historical cost basis, except for the acquisition of SEMAFO Inc. ("SEMAFO") and Teranga Gold Corporation ("Teranga") (Note 4) and certain financial instruments that are measured at fair value at the end of each reporting period. The Company’s accounting policies have been applied consistently to all periods in the preparation of these condensed interim consolidated financial statements. In preparing the Company's condensed interim consolidated financial statements for the three and six months ended 30 June 2021, the Company applied the critical judgments and estimates disclosed in note 3 of its consolidated financial statements for the year ended 31 December 2020.

These condensed interim consolidated financial statements include the accounts of the Company and its subsidiaries. Subsidiaries are entities controlled by the Company, which is defined as having the power over the entity, rights to variable returns from its involvement with the entity, and the ability to use its power to affect the amount of returns. All intercompany transactions and balances are eliminated on consolidation. The Company's material subsidiaries at 30 June 2021 are consistent with the consolidated financial statements for the year ended 31 December 2020, except for the sale of Agbaou Gold Operations on 1 March 2021, and for the following subsidiaries which were acquired on 10 February 2021 with the completion of the acquisition of Teranga (Note 4):

Entities	Principal activity	Place of incorporation and operation	Proportion of ownership interest and voting power held
			30 June 2021
Sabodala Gold Operations SA	Gold Operations	Senegal	90%
Wahgnion Gold Operations SA	Gold Operations	Burkina Faso	90%
Teranga Gold Corporation	Holding	Canada	100%
Teranga Gold (Senegal) Corporation	Holding	Canada	100%
Sabodala Mining Company Sarl	Exploration	Senegal	100%

2.3.    GOING CONCERN

The directors have performed an assessment of whether the Company would be able to continue as a going concern for at least the next twelve month period. In their assessment, the Company has taken into account its financial position, expected future trading performance, its debt and other available credit facilities, future debt servicing requirements, its working capital and capital expenditure commitments and forecasts.

At 30 June 2021, the Company’s net debt was $77.1 million with long-term debt of $910.0 million and cash of $832.9 million. The Company had current assets of $1,350.5 million and current liabilities of $641 million representing a total working capital balance (current assets less current liabilities) of $709.9 million as at 30 June 2021. Cash flow from operations for the three and six months ended 30 June 2021 was $300.5 million and $498.4 million respectively.

Based on a detailed cash flow forecast prepared by management, in which it included any reasonably possible change in the key assumptions on which the cash flow forecast is based, and taking into account possible changes in performance due to the COVID-19 pandemic impact, the directors have a reasonable expectation that the Group will have adequate resources to continue in operational existence for twelve months from 3 August 2021 and that at this point in time there are no material uncertainties regarding going concern. Key assumptions underpinning this forecast include a gold price of $1,500/oz and production volumes in line with annual guidance.

The Board is satisfied that the going concern basis of accounting is an appropriate assumption to adopt in the preparation of the half year report for the period ended 30 June 2021.

COVID-19 PANDEMIC RISKS

On 11 March 2020, the World Health Organization declared the outbreak of a respiratory disease caused by a new novel coronavirus (“COVID-19”) as a pandemic. In response to health risks associated with the spread of COVID-19, the Company implemented a number of health and safety measures designed to protect employees at its operations around the world.

As of the date of issuance of these condensed interim consolidated financial statements, the Company’s operations have not been significantly impacted, however, the Company continues to monitor the situation. While the Company's financial position, performance and cash flows could be further negatively impacted, the extent of the impact cannot be reasonably estimated at this time. Management continues to monitor and assess the short and medium-term impacts of the COVID-19 virus, including for example supply chain, mobility, workforce, market and trade flow impacts, as well as the resilience of Canadian, West African, and other global financial markets to support recovery. Any longer term impacts are also being considered and monitored, as appropriate. However, this pandemic continues to evolve rapidly and its effects on our own operations are uncertain. It is possible that in the future operations may be temporarily shut down or suspended for indeterminate amounts of time, any of which may, individually or in the aggregate, have a material and adverse impact on our business, results of operations and financial performance. The extent to which COVID-19 may impact the Company’s business and operations will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information which may emerge concerning the severity of and the actions required to contain COVID-19 or remedy its impact.

The global response to the COVID-19 pandemic has resulted in, among other things, border closures, severe travel restrictions, as well as quarantine, self-isolation and other emergency measures imposed by various governments. Additional government or regulatory actions or inaction around the world in jurisdictions where the Company operates may also have potentially significant economic and social impacts. The COVID-19 virus and efforts to contain it may have a significant effect on commodity prices, and the possibility of a prolonged global economic downturn may further impact commodity demand and prices. If the business operations of the Company are disrupted or suspended as a result of these or other measures, it may have a material adverse effect on the Company’s business, results of operations and financial performance.

The global pandemic caused by COVID-19 may affect Endeavour's ability to operate at one or more of its mines for an indeterminate period of time, may affect the health of its employees or contractors resulting in diminished expertise or capacity, may mean that key expat or contract resources cannot access West Africa, may result in delays or disruption in its supply chain leading to unavailability of critical spares and inventory (or increased costs), may lead to restrictions on transferability of currency, may cause business continuity issues at global gold refineries (and therefore its ability to generate revenue), may mean it cannot transport gold from its sites to refineries, may result in failures of various local administration, logistics and critical infrastructure, may cause social instability in West African countries which in turn could disrupt business continuity, and may result in additional and currently unknown liabilities.

3    CORPORATE COSTS

The following table summarises the components of corporate costs:

	THREE MONTHS ENDED						SIX MONTHS ENDED
	30 June 2021			30 June 2020			30 June 2021			30 June 2020
London Stock Exchange listing expenses	5,351			—			8,213			—
Employee compensation	4,542			2,731			11,397			5,489
Professional services	3,143			1,208			5,044			2,362
Other corporate expenses	2,854			1,110			5,507			2,429
Total corporate costs	$	15,890		$	5,049		$	30,161		$	10,280

4    ACQUISITIONS AND DIVESTITURES

In the three and six months ended 30 June 2021, the Company incurred $14.5 million and $26.7 million (for the three and six months ended 30 June 2020 $2.6 million and $6.9 million respectively) of acquisition related costs relating to advisory, legal, valuation and other professional fees, primarily with respect to the acquisition of Teranga, the disposal of the Agbaou cash generating unit ('CGU') and the acquisition of SEMAFO. These costs are expensed as acquisition and restructuring costs within the condensed interim consolidated statement of comprehensive earnings/(loss) .

a.    Acquisition of Teranga

On 10 February 2021, the Company completed the acquisition of Teranga. Teranga was a Canadian-based gold mining company listed on the TSX and in the United States on the OTCQX market with two operating mines in West Africa: the Sabodala-Massawa Gold Complex ("Sabodala-Massawa") in Senegal and the Wahgnion Gold Mine ("Wahgnion") in Burkina Faso. In addition, Teranga had a number of early to advanced stage exploration properties in Burkina Faso, Côte d'Ivoire and Senegal. The acquisition of Teranga supports the Company's growth strategy and enhances the Company's production profile.

Under the terms of the agreement, the Company acquired 100% of the issued and outstanding shares of Teranga at an exchange rate of 0.47 of an Endeavour share for each Teranga share held which resulted in a total of 78,766,690 shares issued upon closing of the acquisition. Given the issuance of Endeavour common shares as a result of the transaction and the relative voting rights of the Endeavour and Teranga shareholders subsequent to the transaction being completed, Endeavour has been identified as the acquirer and has accounted for the transaction as a business combination.

Following the acquisition of Teranga, La Mancha Holding S.àr.l. ("La Mancha") exercised its anti-dilution right to maintain its interest in the Company and completed a $200.0 million private placement for 8,910,592 shares of Endeavour (Note 5).

As of the date of these condensed interim consolidated financial statements, the determination of the fair value of assets acquired and liabilities assumed is based on preliminary estimates at the date of acquisition and has not been finalised. The Company retained an independent appraiser to determine the fair value of the assets acquired and liabilities assumed, using income, market and cost valuation methods. The excess of total consideration over the estimated fair value of the amounts initially assigned to the identifiable assets acquired and liabilities assumed has been recorded as goodwill, which is not deductible for tax purposes. The goodwill balance is attributable to the recognition of a deferred tax liability from the difference between the assigned fair values and the tax bases of assets acquired and liabilities assumed at amounts that do not reflect fair value. The non-controlling interest is measured at its proportionate share of the fair value of net assets.

The Company is still in the process of finalising the fair values of the mining interests acquired, which are estimated using discounted cash flow models, where the expected future cash flows are based on estimates of future gold prices, estimated quantities of ore reserves and mineral resources, expected future production costs and capital expenditures based on the life of mine plans at the acquisition date. In addition to the fair value of the mining interests, the evaluation of the inventories on hand at the acquisition date, the evaluation of the liabilities and tax contingencies assumed, and the resulting determination of the deferred taxes, are all subject to change at 30 June 2021 if information arises which would impact management's assessment of the fair value at the acquisition date. The actual fair values of the assets and liabilities may differ materially from the amounts disclosed in the preliminary fair value below, and the amount recognised as goodwill may change. Any adjustments to the allocation of the purchase consideration will be recognized retrospectively and comparative information will be revised. Adjustments to the purchase price allocation can be made throughout the measurement period, which is not to exceed one year from the acquisition date.
The consideration and preliminary allocation to the value of assets acquired and liabilities assumed are as follows and are unchanged since the quarter ended 31 March 2021:

	Notes	Fair value at acquisition
Purchase price:
Fair value of 78.8 million Endeavour common shares issued		1,678,285
Fair value of Endeavour options issued		30,361
Fair value of Endeavour warrants and call-rights issued		41,554
		$	1,750,200
Net assets/(liabilities) acquired
Cash		27,036
Net working capital (excluding inventory)		(125,545)
Inventory		239,000
Mining interests		2,528,474
Other long-term assets		2,000
Goodwill		190,664
Debt		(358,856)
Income taxes payable		(100,000)
Offtake Liability		(49,735)
Contingent consideration	13	(45,600)
Reclamation liability		(38,064)
Other liabilities acquired		(9,599)
Deferred taxes		(322,992)
Non-controlling interest		(186,583)
Net Assets		$	1,750,200

The significant assumptions used in the determination of the fair value of the mining interests were as follows:

Assumption	Sabodala-Massawa		Wahgnion
Gold price - 2021 to 2024	$1,900 to $1,750 per ounce		$1,900 to $1,750 per ounce
Long-term gold price	$1,600 per ounce		$1,600 per ounce
Discount rate	6.3	%	7.0	%
Mine life	14 years		10 years
Average grade over life of mine	1.97 g/t		1.57 g/t
Average recovery rate	89	%	92	%

On 31 March 2021, the Company settled the full amount outstanding under the gold off-take liability which resulted in a cash outflow of $49.7 million.

Consolidated revenue for the six months ended 30 June 2021 includes revenue from the date of acquisition from the assets acquired in the acquisition of Teranga of $403.3 million. The consolidated earnings for the six months ended 30 June 2021 includes net earnings before tax from the date of acquisition from the assets acquired in the acquisition of Teranga of $135.1 million. Had the transaction occurred on 1 January 2021, the pro forma unaudited consolidated revenue and net earnings before taxes for the six months ended 30 June 2021 would have been approximately $1,452.0 million and $290.4 million, respectively.

b.    Acquisition of SEMAFO

On 1 July 2020, the Company completed the acquisition of SEMAFO. SEMAFO was a gold mining company listed on the TSX with two operating mines in West Africa: the Mana and Boungou mines in Burkina Faso as well as certain exploration stage assets. The acquisition of SEMAFO supported the Company's growth strategy and enhanced the Company's production profile.

Under the terms of the transaction, the Company acquired 100% of the issued and outstanding shares of SEMAFO at an exchange rate of 0.1422 Endeavour share for each outstanding SEMAFO share, which resulted in the issuance of 47,561,205 common shares of Endeavour. Given the issuance of Endeavour common shares as a result of the transaction, the relative voting rights of the Endeavour and SEMAFO shareholders subsequent to the transaction being completed, Endeavour has been identified as the acquirer and has accounted for the transaction as a business combination.

Following the acquisition of SEMAFO, La Mancha exercised its anti-dilution right to maintain its interest in the Company and completed a $100.0 million private placement for 4,507,720 shares of Endeavour (Note 5).

The Company retained an independent appraiser to determine the fair value of the assets acquired and liabilities assumed, using income, market and cost valuation methods. The excess of total consideration over the estimated fair value of the amounts assigned to the identifiable assets acquired and liabilities assumed has been recorded as goodwill, which is not deductible for tax purposes. The goodwill balance is attributable to the recognition of a deferred tax liability from the difference between the assigned fair values and the tax bases of assets acquired and liabilities assumed at amounts that do not reflect fair value. The non-controlling interest is measured at its proportionate share of the fair value of net assets.

The fair values of the mining interests acquired were estimated using discounted cash flow models, where the expected future cash flows are based on estimates of future gold prices, estimated quantities of ore reserves and mineral resources, expected future production costs and capital expenditures based on the life of mine plans at the acquisition date. Adjustments to the allocation of the purchase consideration has been recognized retrospectively and comparative information has been revised.

The consideration and allocation to the value of assets acquired and liabilities assumed are as follows:

	Preliminary purchase price allocation at 31 December 2020			Adjustments			Final purchase price allocation
Purchase price:
Fair value of 47.6 million Endeavour common shares issued	1,151,328			—			1,151,328
	$	1,151,328		$	—		$	1,151,328
Net assets/(liabilities) acquired
Cash	92,981			—			92,981
Net working capital acquired (excluding cash)	107,987			563			108,550
Mining interests	1,319,587			13,000			1,332,587
Goodwill	98,704			(27,176)			71,528
Restricted cash	24,000			—			24,000
Other long-term assets	7,505			—			7,505
Current portion of long-term debt	(29,758)			—			(29,758)
Lease liabilities	(24,044)			—			(24,044)
Income taxes payable	(36,093)			16,254			(19,839)
Other long-term liabilities	(40,661)			9,220			(31,441)
Deferred tax	(262,678)			(9,612)			(272,290)
Non-controlling interest	(106,202)			(2,249)			(108,451)
Net Assets	$	1,151,328		$	—		$	1,151,328

During the second quarter of 2021, the Company finalised the fair values of certain assets acquired and liabilities assumed in the acquisition, in particular as it relates to mining interests, and liabilities with respect to certain income tax positions. Management re-evaluated its life of mine plans for the Mana and Boungou mines, and the expected ounces to be produced over the life of mine, which resulted in a change in their fair values. As a result of the above adjustments, the deferred tax liabilities were also adjusted to reflect the tax impact of these changes. The significant assumptions used in the determination of the fair value of the mining interests were as follows:

Assumption	Mana		Boungou
Gold price – 2020 to 2025	$1,550 to $1,883 per ounce		$1,550 - $1,865 per ounce
Long-term gold price	$1,485 per ounce		$1,485 per ounce
Discount rate	6.00	%	6.50	%
Mine life	9.5 years		14 years
Average grade over life of mine	3.25 g/t		3.58 g/t
Average recovery rate	88	%	94	%

As a result of the change in the fair values of the mining interests, depletion expense for the three months ended 31 March 2021 was increased retrospectively by $9.3 million. For the six months from 1 July 2020 to 31 December 2020, the depletion expense was increased retrospectively by $0.7 million to reflect the change in the value of the mining interests upon determination of the final purchase price allocation.

c.    Discontinued operations

On 1 March 2021, the Company completed the sale of its 85% interest in the Agbaou mine CGU to Allied Gold Corp Limited ("Allied"). The consideration upon sale of the Agbaou mine included (i) a cash payment of $16.4 million (net of working capital adjustments of $3.6 million upon closing), of which $10.5 million was received in the first quarter of 2021; (ii) $40.0 million in Allied shares of which Endeavour has the option to sell the shares back to Allied at the issue price which expires on 31 December 2022 or earlier if Allied conducts an IPO before then; (iii) contingent consideration of up to $20.0 million comprised of $5.0 million payments for each quarter where the average gold price exceeds $1,900 per ounce; and (iv) a net smelter royalty ("NSR") on ounces produced in excess of the Agbaou reserves estimated as at 31 December 2019. The NSR royalty is based on a sliding scale, linked to the average spot gold price as follows: 2.5% if the gold price is at least $1,400 per ounce, 2% if the gold price is at least $1,200 per ounce and less than $1,400 per ounce, 1% if the gold price is at least $1,000 per ounce and less than $1,200 per ounce, and 0% if the gold price is below $1,000 per ounce.

The fair value of the various aspects of the consideration at the closing date were as follows (all of which, except for the cash, are classified as Level 3 fair value measurements):

• The cash was determined to have a fair value of $16.4 million, which is the agreed upon $20.0 million, net of working capital adjustments on closing;
• The fair value of the Allied shares was determined to be $40.0 million based on the value of the option to sell back the shares, as well as the most recent share issuances of Allied shares with other arm's length parties;
• The fair value of the contingent consideration based on the gold price was estimated using a Monte Carlo simulation model using the following key inputs: spot price of gold of $1,723 per ounce, annualised gold price volatility of 18.36%, for each of the quarters in 2021, which resulted in a fair value of $0.5 million; and
• The fair value of the NSR was estimated using probability-weighted scenarios with respect to discounted cash flow models for future production that might exceed the Agbaou reserves at 31 December 2019. Based on the various scenarios considered, the fair value of the NSR was $5.5 million.

The results of operations have been restated for the comparative periods to reclassify the earnings/(loss) relating to Agbaou as earnings/(loss) from discontinued operations. During the six months ended 30 June 2021, the financing cash flows from discontinued operations include the payment of dividends to minority shareholders of $45.2 million which had been declared in December 2020. As at 31 December 2020 the net assets of the Agbaou CGU were classified as held for sale.

At 30 June 2021, the fair value of the Allied shares had not changed, the NSR was revalued to $5.9 million and the fair value of the contingent consideration was $nil, resulting in a loss of $0.2 million and $0.5 million respectively being recognised in other expense in the three months ended 30 June 2021, and a gain of $0.2 million and a loss of $3.7 million for the six months ended 30 June 2021 respectively.

The Corporation recognised a loss on disposal of $13.5 million, net of tax, calculated as follows:

	1 March 2021
Cash proceeds	16,350
Shares in Allied Gold	40,000
Contingent consideration	517
Net smelter royalty	5,548
Transaction costs	(471)
Total proceeds	61,944
Cash and cash equivalents	15,214
Restricted cash	6,292
Trade and other receivables	257
Prepaid expenses and other	2,018
Inventories	29,439
Mining interests	64,951
Other long term assets	8,837
Total assets	127,008
Trade and other payables	(22,113)
Other liabilities	(26,420)
Total liabilities	(48,533)
Net assets	78,475
Non-controlling interests	(2,991)
Net assets attributable to Endeavour	75,484
Loss on disposition	(13,540)

The earnings and loss for the CGU was as follows:

	THREE MONTHS ENDED						SIX MONTHS ENDED
	30 June 2021			30 June 2020			30 June 2021			30 June 2020
Revenue	—			43,502			25,426			87,084
Operating costs	—			(20,081)			(14,250)			(38,391)
Depreciation and depletion	—			(8,295)			—			(17,896)
Royalties	—			(2,465)			(1,418)			(4,797)
Other income/(expenses)	—			162			80			(790)
Loss on disposition	—			—			(13,540)			—
Earnings/(loss) before taxes	$	—		$	12,823		$	(3,702)		$	25,210
Deferred and current income tax expense	—			(4,921)			—			(9,327)
Net comprehensive earnings/(loss) from discontinued operations	$	—		$	7,902		$	(3,702)		$	15,883
Attributable to:
Shareholders of Endeavour Mining Corporation	—			1,259			(5,168)			10,586
Non-controlling interest	—			6,643			1,466			5,297
Total comprehensive earnings/(loss) from discontinued operations	$	—		$	7,902		$	(3,702)		$	15,883
Net (loss)/earnings per share from discontinued operations
Basic	$	0.00		$	0.01		$	(0.02)		$	0.10
Diluted	$	0.00		$	0.01		$	(0.02)		$	0.10

5    SHARE CAPITAL

I.     Share capital

Outstanding

• 250,553,482 voting shares of $0.01 par value as at 30 June 2021.
  
  

On 11 June 2021, the Company completed its reorganisation, whereby it issued 250.5 million common shares with a par value of $0.01 per share in exchange for 100% of the issued and outstanding shares of EMC. As part of the reorganisation, the various management incentive plans (including PSUs, DSUs, and options), as well as the outstanding share warrants and call-rights were also transferred to Endeavour Mining plc. As part of the group reorganisation, a merger reserve was created equal to a value of $4.9 billion which represents the difference between the nominal value of shares in the new parent Company, Endeavour Mining plc, and the aggregate of the share capital, share premium account and equity reserve of the prior parent Company, EMC.

On 22 March 2021, the Company commenced a share buyback programme under which the Company is able to acquire up to 12.2 million of its outstanding ordinary shares, which represents up to 5% of the total issued and outstanding ordinary shares as of 16 March 2021. During the three and six months ended 30 June 2021, the Company had repurchased a total of 2,666,537 shares at an average price of C$28.26, for total amount of $62.1 million (C$75.8 million). 420,034 shares were repurchased but not yet cancelled as at 30 June 2021. The shares were subsequently cancelled in July 2021.

During the six months ended 30 June 2021, the Company acquired 576,308 outstanding common shares from certain employees of the Group through and employee benefit trust (note 13). An amount of $14.2 million has been included in the statement of changes in equity as a reduction in equity attributable to the shareholders together with other purchases and cancellations of the Company's own shares.

On 30 March 2021, La Mancha exercised its anti-dilution right to maintain its interest in the Company and completed a $200.0 million private placement for 8,910,592 shares of Endeavour (Note 4). Upon completion of the investment, La Mancha's future anti-dilution rights were extinguished. La Mancha's ownership of Endeavour was 19.0% at 31 March 2021 (31 December 2020 – 24.1%).

On 10 February 2021, the Company completed the acquisition of Teranga. Under the terms of the transaction, the Company acquired 100% of the issued and outstanding shares of Teranga at an exchange rate of 0.47 Endeavour shares for each outstanding Teranga share, which resulted in the issuance of 78,766,690 common shares of Endeavour at a total fair value of $1,678.3 million.

On 12 November 2020, the Board of Directors of the Company declared a dividend of $0.37 per share totalling $60.0 million (2019 - nil). The dividend was paid on 5 February 2021 to shareholders on record on the close of business on 22 January 2021.

On 1 July 2020, the Company completed the acquisition of SEMAFO. Under the terms of the transaction, the Company acquired 100% of the issued and outstanding shares of SEMAFO at an exchange rate of 0.1422 Endeavour share for each outstanding SEMAFO share, which resulted in the issuance of 47,561,205 common shares of Endeavour at a total fair value of $1,151.3 million.

On 3 July 2020, La Mancha exercised its anti-dilution right to maintain its interest in the Company and completed a $100.0 million private placement for 4,507,720 shares of Endeavour (note 4).

On 30 June 2020, the Company held 448,181 shares in SEMAFO which were converted into 63,731 common shares of Endeavour on 1 July 2020. On 22 September 2020, the Company cancelled these treasury shares which resulted in a reduction of $1.2 million in share capital.

ii.    Share-based compensation

The following table summarises the share-based compensation expense:

	THREE MONTHS ENDED						SIX MONTHS ENDED
	30 June 2021			30 June 2020			30 June 2021			30 June 2020
Amortisation and change in fair value of DSUs	512			1,687			351			1,160
Amortisation and change in fair value of PSUs	9,327			3,255			17,443			5,405
Total share-based compensation	$	9,839		$	4,942		$	17,794		$	6,565

iii.    Options

	Options outstanding		Weighted average exercise price (C$)
Added upon acquisition of Teranga	3,517,187		16.27
Exercised	(868,413)		8.32
Expired	(589,380)		31.92
At 30 June 2021	2,059,394		14.93

Upon acquisition of Teranga, all outstanding Teranga stock options, whether previously vested or unvested, became fully vested and exchanged for replacement options to purchase common shares of Endeavour at a ratio of 0.47 Endeavour share options for each Teranga share option at an adjusted exercise price, with an expiry date of the earlier of (i) the original expiry date of each Teranga stock option, and (ii) the second year anniversary of the closing date of the acquisition transaction. The fair values at the acquisition date were calculated using the Black-Scholes valuation model using a volatility of 42.64% - 60.05%, a dividend yield of 2.6% and a risk free rate of 0.1%. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time to the date of their expiry.

As at 30 June 2021, the weighted average remaining contractual term of outstanding stock options exercisable was 1.49 years. The share options are exercisable at prices ranging from C$6.60 to C$31.92.

iv.    Share unit plans

A summary of the changes in share unit plans is presented below:

	DSUs outstanding		Weighted average grant price (C$)		PSUs outstanding		Weighted average grant price (C$)
At 31 December 2019	178,684		13.67		3,298,377		19.05
Granted	20,455		28.62		2,072,183		21.55
Exercised	(73,978)		16.88		(1,089,232)		19.08
Forfeited	—		—		(1,152,986)		19.50
Added by performance factor	—		—		85,463		18.57
At 31 December 2020	125,161		14.22		3,213,805		20.48
Granted	23,835		26.14		2,169,274		28.28
Exercised	(1,858)		31.33		(1,226,846)		22.48
Forfeited	(689)		25.33		(51,661)		22.85
Adjustment for dividend	2,210		18.39		76,698		23.12
Added by performance factor	—		—		292,922		22.54
At 30 June 2021	148,659		15.93		4,474,192		23.87

v.    Deferred share units

The Company established a deferred share unit plan (“DSU”) for the purposes of strengthening the alignment of interests between non-executive directors of the Company and shareholders by linking a portion of the annual director compensation to the future value of the Company’s common shares. Upon establishing the DSU plan for non-executive directors, the Company no longer grants options to non-executive directors.

The DSU plan allows each non-executive director to choose to receive, in the form of DSUs, all or a percentage of their director’s fees, which would otherwise be payable in cash. Compensation for serving on committees must be paid in the form of DSUs. The plan also provides for discretionary grants of additional DSUs by the Board. Each DSU vests upon award but is distributed only when the director has ceased to be a member of the Board. Vested units are settled in cash based on the common share price at the date of settlement.

The fair value of the DSUs is determined based on multiplying the 5 day volume weighted average share price of the Company by the number of DSUs at the end of the reporting period.

The total fair value of DSUs at 30 June 2021 was $3.2 million (31 December 2020 – $2.9 million). The total DSU share-based compensation recognised in the condensed interim consolidated statement of comprehensive earnings/(loss) was an expense of $0.5 million and $0.4 million for the three and six months ended 30 June 2021 respectively (for the three and six months ended 30 June 2020 – expense of $1.69 million and $1.16 million respectively).

vi.    Performance share units

The Company's long-term incentive plan (“LTI Plan”) includes a portion of performance-linked share unit awards (“PSUs”), intended to increase the pay mix in favor of long-term equity-based compensation with three-year cliff-vesting to serve as an employee retention mechanism.

The fair value of the PSUs is determined based on Total Shareholder Return (“TSR”) relative to peer companies for 50% of the value of the PSU's, while the remaining 50% of the value of the PSU's granted is based on achieving certain operational performance measures. The vesting conditions related to the achievement of operational performance measures noted above are determined at the grant date and the number of units that are expected to vest is reassessed at each subsequent reporting period based on the estimated probability of reaching the operational targets.

• Key future operational targets in 2023 for 2021 PSU grants are gold production targets (25%), capital project targets (12.5%), and carbon reduction and renewable energy targets (12.5%);
• Key future operational targets in 2022 for 2020 PSU grants are net debt / earnings before interest, tax, depreciation and amortization ("EBITDA") (25%), gold production targets (12.5%), and Environmental, Social and Governance ("ESG") targets (12.5%);
• Key future operational targets in 2021 for 2019 PSU grants were resource discovery (25%), gold production relative to guidance (12.5%), and net debt / EBITDA (12.5%).

The fair value related to the TSR portion is determined using a multi-asset Monte Carlo simulation model using a dividend yield of 2.5% (2019 – 0%), as well as historical TSR levels and historical volatility of the constituents of the S&P TSX Global Gold Index (2019 – same).

During the six months ended 30 June 2021, the Company determined certain PSU's whereby they will be settled in cash upon exercise. The fair value of these PSU's have been reclassified from equity to liabilities as these PSU's will be settled in cash upon exercise. The fair value of the PSUs on date of reclassification was determined to be $14.4 million and was transferred from equity reserve to liabilities. Subsequent measurement of the liability to fair value is recognised in profit or loss.

vii.   Basic and diluted earnings per share

Diluted net earnings per share was calculated based on the following:

	THREE MONTHS ENDED				SIX MONTHS ENDED
	30 June 2021		30 June 2020		30 June 2021		30 June 2020
Basic weighted average number of shares outstanding	251,779,650		110,993,240		230,008,280		110,788,798
Effect of dilutive securities1
Stock options and warrants	1,647,851		—		1,620,915		14,950
Diluted weighted average number of shares outstanding	253,427,501		110,993,240		231,629,195		110,803,748
Total common shares outstanding	250,553,482		110,993,240		250,553,482		110,993,240
Total potential diluted common shares	258,249,760		115,092,032		258,249,760		115,092,032

At 30 June 2021, a total of 3,897,884 PSU's (5,568,080 at 30 June 2020) could potentially dilute basic earnings per share in future, but were not included in diluted earnings per share as all vesting conditions have not been satisfied at the end of the reporting period. 312,550 stock options were anti-dilutive as at 30 June 2021 and were excluded from the determination of the diluted weighted average number of shares outstanding 30 June 2020 – nil). The potentially dilutive impact of the convertible senior notes are anti-dilutive for the period and were not included in the diluted earnings per share.

6 FINANCIAL INSTRUMENTS AND RELATED RISKS

i.    Financial assets and liabilities

The Company’s financial instruments are classified as follows:

	Financial assets/liabilities at amortised cost	Financial instruments at fair value through other comprehensive income	Financial instruments at fair value through profit and loss ('FVTPL')
Cash			X
Trade and other receivables	X
Restricted cash			X
Marketable securities			X
Other long-term receivable			X
Other financial assets			X
Trade and other payables	X
Share warrant liabilities			X
Call-rights			X
Contingent consideration			X
Corporate loan facilities	X
Convertible senior notes	X
Conversion option on convertible senior notes			X

The fair value of these financial instruments approximates their carrying value, unless otherwise noted below, except for the convertible note, which has a fair value of approximately $378.0 million (31 December 2020 – $398.6 million).

As noted above, the Company has certain financial assets and liabilities that are held at fair value. The fair value hierarchy establishes three levels to classify the inputs to valuation techniques to measure fair value:
Classification of financial assets and liabilities

Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 – inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); and

Level 3 – inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

As at each of 30 June 2021 and 31 December 2020, the levels in the fair value hierarchy into which the Company’s financial assets and liabilities measured and recognised in the condensed interim consolidated statement of financial position at fair value are categorised as follows:

		AS AT 30 JUNE 2021
	Note	Level 1 Input			Level 2 Input			Level 3 Input			Aggregate Fair Value
Assets:
Cash		832,877			—			—			832,877
Cash - restricted	11	29,746			—			—			29,746
Other long term receivable	11	—			439			5,472			5,911
Other financial assets	11	204			40,000			1,259			41,463
Marketable securities		2,705			—			—			2,705
Total		$	865,532		$	40,439		$	6,731		$	912,702
Liabilities:
Conversion option on Notes	7	—			(44,616)			—			(44,616)
Share warrant liabilities	13	—			(23,764)			—			(23,764)
Call-rights	13	—			(18,983)			—			(18,983)
Contingent consideration	13	—			(44,228)			—			(44,228)
Total		$	—		$	(131,591)		$	—		$	(131,591)

		AS AT 31 DECEMBER 2020
	Note	Level 1 Input			Level 2 Input			Level 3 Input			Aggregate Fair Value
Assets:
Cash		644,970			—			—			644,970
Cash - restricted	11	24,398			—			—			24,398
Other long term receivable	11	—			—			804			804
Marketable securities		778			—			—			778
Total		$	670,146		$	—		$	804		$	670,950
Liabilities:
Conversion option on Notes	7	—			(74,646)			—			(74,646)
Derivative financial instruments	17	—			—			—			—
Total		$	—		$	(74,646)		$	—		$	(74,646)

There were no transfers between level 1 and 2 during the period. The fair value of level 3 financial assets were determined using a Monte Carlo or discounted cash flow valuation models, taking into account assumptions with respect to gold prices and discount rates as well as estimates with respect to production and operating results at the disposed mine.

ii.    (Loss)/gain on financial instruments

		THREE MONTHS ENDED						SIX MONTHS ENDED
	Note	30 June 2021			30 June 2020			30 June 2021			30 June 2020
(Loss)/gain on other financial instruments		(207)			535			167			590
Change in value of receivable at FVTPL		710			(175)			890			(307)
Unrealised gain/(loss) on convertible senior bond derivative	7	1,640			(63,893)			30,020			(61,218)
(Loss)/gain on change in fair value of warrant liabilities	13	(5,319)			—			(1,531)			—
(Loss)/gain on change in fair value of call rights	13	(7,011)			—			338			—
(Loss)/gain on change in fair value of contingent consideration	13	(220)			—			764			—
(Loss)/gain on foreign exchange		(7,189)			1,447			(6,167)			449
Realised gain on forward contract1		2,789			—			2,789			6,686
Loss on gold revenue protection program2		—			(10,171)			—			(21,156)
Total (loss)/gain on financial instruments		$	(14,807)		$	(72,257)		$	27,270		$	(74,956)

¹ On 9 March 2020, the Company entered into a gold forward contract to manage the risk of changes in the market price of gold. Under the gold forward contract, the Company bought 73,919 ounces of gold at an average gold prices of $1,590 per ounce. On 30 March 2020, the Company exited the gold forward contract at a final gold price of $1,681 per ounce and recognised a gain of $6.7 million.
² In the year ended 31 December 2019, the Company implemented a deferred premium collar strategy (“Collar”) using written call options and bought put options for the 12-month period from July 2019 to June 2020. The program covered a total of 360,000 ounces, representing approximately 50% of Endeavour’s total estimated gold production for the period, with an average floor price of $1,358 and a ceiling price of $1,500. The Collar was accounted for at FVTPL and the Company realised a loss of $35.9 million over the life of the Collar of which $10.2 million and $21.2 million was recognised in the three and six months ended 30 June 2020.

Financial instrument risk exposure

The Company’s activities expose it to a variety of risks that may include credit risk, liquidity risk, currency risk, interest rate risk and other price risks, including equity price risk. The Company examines the various financial instrument risks to which it is exposed and assesses any impact and likelihood of those risks. There has been no significant changes to the financial instrument risk exposure as disclosed in note 7 of its consolidated financial statements for the year ended 31 December 2020.

7    LONG-TERM DEBT

 

	30 June 2021			31 December 2020
Corporate loan facilities (i)(ii)	580,000			310,000
Deferred financing costs	(11,560)			(8,305)
Revolving credit facility	$	568,440		$	301,695
Convertible senior notes (iii)	316,704			311,925
Conversion option (iv)	44,616			74,646
Convertible senior bond	$	361,320		$	386,571
Total long-term debt	$	929,760		$	688,266

The Company incurred the following finance costs in the period:

	THREE MONTHS ENDED						SIX MONTHS ENDED
	30 June 2021			30 June 2020			30 June 2021			30 June 2020
Interest expense	10,276			10,781			20,237			21,012
Amortisation of deferred facility fees	1,927			757			3,667			1,497
Commitment, structuring and other fees	1,491			280			2,108			812
Total finance costs	$	13,694		$	11,818		$	26,012		$	23,321

i.    Corporate Loan Facility

On 24 December 2020, the Company entered into an amendment agreement to its $430.0 million revolving credit facility ("RCF") with a syndicate of leading international banks, extending its maturity to 15 January 2023 which became effective on 10 February 2021.

The key terms of the RCF include:

• Principal amount of $430.0 million.
• Interest accrues on a sliding scale of between LIBOR plus 2.95% to 3.95% based on the Company’s leverage ratio.
• Commitment fees for the undrawn portion of the RCF of 1.03%.
• The RCF matures on 15 January 2023.
• The principal outstanding on the RCF is repayable as a single bullet payment on the maturity date.
• Banking syndicate includes Société Générale, ING, Citibank N.A., Investec Bank plc, Macquarie Bank Ltd, Barclays Bank, HSBC and BMO.
• The RCF can be repaid at any time without penalty.
  

Covenants on the RCF include:

• Interest cover ratio as measured by ratio of earnings before interest, tax, depreciation and amortisation ("EBITDA") to finance cost for the trailing 12 months to the end of a quarter shall not be less than 3.0:1.0
• Leverage as measured by the ratio of net debt to trailing twelve months EBITDA at the end of each quarter must not exceed 3.5:1.0

ii.    Corporate Bridge Facility

On 24 December 2020, the Company entered into an agreement for a new facility agreement ("Bridge Facility") with a syndicate of international banks which came into effect on 10 February 2021.

The key terms of the Bridge Facility include:

• Principal amount of $370.0 million.
• Interest accrues on LIBOR plus 2.25% for the first six months after first utilisation and increases by 50 basis points each subsequent six month period.
• The principal outstanding on the Bridge Facility is repayable as a single bullet payment on the maturity date of 15 January 2023.
• The Bridge Facility can be repaid at any time without penalty but may not be redrawn.

Covenants on the Bridge Facility include:

• Interest cover ratio as measured by ratio of EBITDA to finance cost for the trailing 12 months to the end of a quarter shall not be less than 3.0:1.0
• Leverage as measured by the ratio of net debt to trailing twelve months EBITDA at the end of each quarter must not exceed 3.5:1.0

iii.    Convertible Senior Notes

On 8 February 2018, the Company completed a private placement of convertible senior notes with a total principal amount of $330.0 million due in 2023 (the “Notes”). The initial conversion rate was 41.84 of the Company’s common shares (“Shares”) per $1,000 Note, or an initial conversion price of approximately $23.90 (CAD$29.47) per share.

On 21 January 2021, the conversion rate of the Notes was adjusted as a result of the $0.37 per share ordinary dividend announced on 11 January 2021. The new conversion rate is 42.55 of the Company's common shares per $1,000 note, and equates to a conversion price of approximately $23.50 (CAD$29.72) per share.

The Notes bear interest at a coupon rate of 3% payable semi-annually in arrears on 15 February and 15 August of each year. Notes mature on 15 February 2023, unless redeemed earlier, repurchased or converted in accordance with the terms of the Notes. The note holders can convert their Notes at any time prior to the maturity date. Also, the Notes are redeemable in whole or in part, at the option of the Company, at a redemption price equal to the principal amount of the Notes being redeemed, plus any accrued and unpaid interest, if the share price exceeds 130% of the conversion price on each of at least 20 of the trading days during the 30 days prior to the redemption notice. The Company may, subject to certain conditions, elect to satisfy the principal amount and conversion option due at maturity or upon conversion or redemption through the payment or delivery of any combination of Shares and cash.

The key terms of the Convertible Senior Notes include:

• Principal amount of $330.0 million.
• Coupon rate of 3% payable on a semi-annual basis.
• The term of the notes is 5 years, maturing in February 2023.
• The notes are reimbursable through the payment or delivery of shares and/or cash.
• The conversion price is $23.50 (CAD$29.72) per share.
• The reference share price of the notes is $18.04 (CAD$22.24) per share.

For accounting purposes, the Company measures the Notes at amortised cost, accreting to maturity over the term of the Notes. The conversion option is an embedded derivative and is accounted for as a financial liability measured at fair value through profit or loss.

The unrealised gain/loss on the convertible note option for the three and six months ended 30 June 2021 was an unrealised gain of $1.6 million and $30.0 million respectively (three and six months ended 30 June 2020 – unrealised loss of $63.9 million and $61.2 million respectively).

The liability component for the Notes at 30 June 2021 has an effective interest rate of 6.2% (31 December 2020: 6.2%) and was as follows:

	30 June   2021			31 December 2020
Liability component at beginning of the period	311,925			302,600
Interest expense in the period	9,729			19,225
Less: Interest payments in the period	(4,950)			(9,900)
Total	$	316,704		$	311,925

iv.    Conversion option

The conversion option related to the Notes is recorded at fair value, using a convertible bond valuation model, taking account the observed market price of the Notes. The following assumptions were used in the determination of fair value of the conversion option and fixed income component of the Notes, which was then calibrated to the total fair value of the Notes: volatility of 43% (31 December 2020 – 56%), term of the conversion option 1.60 years (31 December 2020 – 2.13 years), a dividend yield of 2.5% (31 December 2020 – 2.5%), credit spread of 2.05% (31 December 2020 – 4%), and a share price of CAD$26.62 (31 December 2020 – CAD$29.62).

	30 June 2021			31 December 2020
Conversion option at beginning of the period	74,646			31,439
Fair value adjustment	(30,030)			43,207
Total	$	44,616		$	74,646

8    TRADE AND OTHER RECEIVABLES

	30 June 2021			31 December 2020
VAT receivable (i)	81,386			30,598
Receivables for gold sales	4,619			4,641
Other receivables (ii)	41,834			19,897
Total	$	127,839		$	55,136

• VAT receivable
  

VAT receivable relates to net VAT amounts paid to vendors for goods and services purchased, primarily in Côte d'Ivoire and Burkina Faso. These balances are expected to be collected in the next twelve months. In the six months ended 30 June 2021, the Company collected $40.0 million of outstanding VAT receivables, through the sale of its VAT receivables to third parties or reimbursement from the tax authorities.

• Other receivables
  

Other receivables at 30 June 2021 include a receivable of $24.3 million (31 December 2020 – $nil) related to the sale of articulated dump trucks at Ity to third parties, an amount of $5.9 million (31 December 2020 – $nil) receivable from Allied related to the sale of the Agbaou mine, and receivables of $6.6 million (31 December 2020 – $14.6 million) from third parties for which the Company had entered into contracts which was previously advanced for working capital purposes. All these amounts are non-interest bearing and are expected to be repaid in the next twelve months.

9    INVENTORIES

	Note	30 June 2021			31 December 2020
Doré bars		26,364			24,065
Gold in circuit		42,050			33,812
Ore stockpiles		272,988			125,694
Spare parts and supplies		154,759			84,040
Total		$	496,161		$	267,611
Non-current stockpiles		(146,683)			(77,010)
Inventories, current		$	349,478		$	190,601

As of 30 June 2021, there was a provision of $18.8 million to adjust gold in circuit ("GIC") inventory to net realisable value at Karma (31 December 2020 – $19.4 million with respect to GIC and $0.4 million related to finished goods).

The cost of inventories recognised as an expense in the three and six months ended 30 June 2021 was $436.5 million and $821.4 million respectively and was included in cost of sales (three and six months ended 30 June 2020 – $118.7 million and $257.7 million respectively).

10    MINING INTERESTS

		MINING INTERESTS
	Note	Depletable			Non depletable1			Property, plant and equipment			Assets under construction			Total
Cost
Balance as at 1 January 2020		682,792			331,777			1,081,557			21,972			2,118,098
Acquired in business combinations		519,926			453,542			359,118			—			1,332,586
Additions/expenditures		103,015			67,257			44,569			44,398			259,239
Transfers from inventory		—			—			14,940			—			14,940
Transfers		40,812			(31,177)			26,082			(35,717)			—
Change in estimate of environmental rehabilitation provision		16,492			—			—			—			16,492
Transfer to assets held for sale		(149,896)			—			(173,378)			—			(323,274)
Disposals		(342)			—			(37,857)			—			(38,199)
Balance as at 31 December 2020		1,212,799			821,399			1,315,031			30,653			3,379,882
Acquired in business combinations	4	2,014,474			152,339			359,622			2,039			2,528,474
Additions/expenditures		103,264			55,678			64,430			46,879			270,251
Transfers from inventory		—			—			2,589			—			2,589
Transfers		2,628			—			8,320			(10,948)			—
Change in estimate of environmental rehabilitation provision2		14,685			—			—			—			14,685
Disposals3		(862)			—			(49,780)			—			(50,642)
Balance as at 30 June 2021		$	3,346,988		$	1,029,416		$	1,700,212		$	68,623		$	6,145,239
Accumulated Depreciation
Balance as at 1 January 2020		294,164			—			413,660			—			707,824
Depreciation/depletion		151,953			—			144,788			—			296,741
Impairment		25,053			19,949			39,445			—			84,447
Transfer to assets held for sale		(114,612)			—			(144,635)			—			(259,247)
Disposals		(112)			—			(27,615)			—			(27,727)
Balance as at 31 December 2020		356,446			19,949			425,643			—			802,038
Depreciation/depletion		198,151			—			122,457			—			320,608
Disposals3		—			—			(16,730)			—			(16,730)
Balance as at 30 June 2021		$	554,597		$	19,949		$	531,370		$	—		$	1,105,916
Carrying amounts
At 31 December 2020		$	856,353		$	801,450		$	889,388		$	30,653		$	2,577,844
At 30 June 2021		$	2,792,391		$	1,009,467		$	1,168,842		$	68,623		$	5,039,323

¹ As at 30 June 2021, exploration assets with a net book value of $441.2 million are included in the non-depletable mining interest category.(31 December 2020 – $391.4 million). Additions in the six months ended 30 June 2021 include the acquisition of the Fetekro license to 80% for $19.7 million.
²Change in estimate of environmental rehabilitation provision relates to the post-acquisition revaluation of the environmental provisions for the newly acquired Sabodola-Massawa and Wahgnion mines.
³ Disposals for the six months ended 30 June 2021 mainly relate to mining equipment with a net book value of $28.5 million sold to the mining contractor at Ity.

The Company's right-of-use assets consist of buildings, plant and equipment and its various segments which are right-of-use assets under IFRS 16, Leases. These have been included within the property, plant and equipment category above.

	Plant			Heavy Equipment			Property			Total
Balance as at 1 January 2020	4,209			2,194			1,606			8,009
Acquired in business combinations	7,200			18,842			1,186			27,228
Additions	5,343			6,119			714			12,176
Depreciation for the year	(1,657)			(8,560)			(1,594)			(11,811)
Transferred to assets held for sale	(502)			(307)			—			(809)
Disposals	—			(1,640)			—			(1,640)
Balance as at 31 December 2020	14,593			16,648			1,912			33,153
Acquired in business combinations	—			647			4,990			5,637
Additions	9,384			—			2,487			11,871
Depreciation for the period	(2,806)			(2,278)			(571)			(5,655)
Balance as at 30 June 2021	$	21,171		$	15,017		$	8,818		$	45,006

11    OTHER FINANCIAL ASSETS

Other financial assets are comprised of:

	Note	30 June   2021			31 December 2020
Restricted cash		29,746			24,398
Long-term receivable (i)	4	5,911			—
Other financial assets (ii)	0.004	41,463			804
Total		$	77,120		$	25,202

 

(i)    Long-term receivable

The long-term receivable at 30 June 2021 is the fair value related to the NSR receivable from Allied for the sale of the Agbaou mine.

(ii)    Other financial assets

Other financial assets at 30 June 2021 include $40.0 million related to the shares of Allied received as consideration upon the sale of the Agbaou mine.

12    TRADE AND OTHER PAYABLES

Trade and other payables consist of the following:

	30 June 2021			31 December 2020
Trade accounts payable	288,302			193,106
Royalties payable	33,709			14,516
Payroll and social payables	33,280			26,957
Other payables	18,702			27,695
Total trade and other payables	$	373,993		$	262,274

13    OTHER FINANCIAL LIABILITIES

	Note	30 June 2021			31 December 2020
Share warrant liabilities (i)		23,764			—
DSU liabilities	5	3,157			2,919
PSU liabilities (ii)	5	12,953			—
Repurchased shares (ii)		12,364			—
Call-Rights (iii)		18,983			—
Contingent consideration (iv)		44,228			—
Other long-term liabilities		12,445			—
Total		127,894			2,919
Current portion		(31,346)			—
Non-current financial liabilities		$	96,548		$	2,919

i.    Share warrant liabilities

Upon acquisition of Teranga, all outstanding Teranga share warrants were exchanged for replacement Endeavour warrants at a ratio of 0.47 Endeavour warrants for each Teranga warrant at an adjusted exercise price.

The following share warrants were outstanding as at 30 June 2021:

Grant date	Number		Expiry date	Exercise price (C$)
16. April 2018	940,000		16 April 2022	11.11
26. February 2019	70,500		27 February 2023	10.81
30. May 2019	658,000		30 May 2023	8.15
30. September 2019	70,500		30 September 2023	13.81

The currency of the exercise price of the warrants is different from the Company's functional currency and as a result the share warrants have been classified as a derivative financial liability. Changes in fair value of share warrants are recognised in other expenses at the end of each reporting period. Upon exercise, the associated share warrant liability will be reclassified to share capital. Should any of the share warrants expire un-exercised, the associated share warrant liability will be recorded as gains/(losses) on financial instruments in the condensed interim consolidated statement of comprehensive earnings. There is no circumstance under which the Company would be required to pay any cash upon exercise or expiry of the warrants.

A reconciliation of the change in fair value of share warrant liabilities is presented below:

	Number of warrants		Amount
Added upon acquisition of Teranga	1,739,000		22,233
Change in fair value	—		1,531
Balance as at 30 June 2021	1,739,000		$	23,764

Fair values of share warrants were calculated using the Black-Scholes option pricing model with the following assumptions:

	As at 30 June 2021		As at 10 February 2021
Valuation date share price	C$ 26.62		C$ 27.06
Weighted average fair value of share warrants	C$16.94		C$16.24
Exercise price	C$8.15 - C$13.81		C$8.15 - C$13.81
Risk-free interest rate	0.35% - 0.45%		0.19% - 0.22%
Expected share market volatility	41.6% - 50.2%		46% - 55%
Expected life of share warrants (years)	0.79 - 2.25		1.2 - 2.6
Dividend yield	2.5	%	2.5	%
Number of share warrants exercisable	1,739,000		1,739,000

ii.    PSU's

Prior to the Company listing on the London stock exchange, the Company established an Employee Benefits Trust (the “EBT”) in connection with the Company’s employee share incentive plans, which may hold the Company's own shares in trust to settle future employee share incentive obligations. During the three months ended 30 June 2021, the EBT acquired 576,308 outstanding common shares from certain employees of the Group, which remain held in the EBT at 30 June 2021.

In exchange for the shares, a subsidiary of the Company is obligated to repay the employees cash for the fair value of the underlying shares of the Company now held in the EBT. The amount of this liability is $12.4 million at 30 June 2021 and is included in current financial liabilities. Subsequent changes in the fair value of the underlying shares will be recognised in earnings/ (loss) in the period.

In addition to the above, certain PSU's were reclassified to liabilities at 30 June 2021 as management has determined that the PSU's will be settled in cash upon vesting. As a result, these PSU's are recognised at fair value at 30 June 2021, and $9.8 million is included in current liabilities at 30 June 2021 as they are expected to be settled in the next twelve months. The remaining $3.2 million is classified as non-current other liabilities as the PSU's do not vest in the next twelve months.

iii. Call-rights

Upon acquisition of Teranga, the Company acquired all previously issued and outstanding Teranga call-rights and were exchanged for replacement Endeavour call-rights at a ratio of 0.47 Endeavour call-rights for each Teranga call-right at an adjusted exercise price of C$14.90.
The call-rights are required to be settled in cash at the difference between Endeavour's 5-day volume weighted average trading price on each exercise date and the exercise price of C$14.90. The call-rights expire on 4 March 2024. The call-rights were recorded as derivative financial liabilities as their value changes in line with Endeavour's share price. Changes in the fair value of call-rights are recognised as gains/(losses) on financial instruments.

A reconciliation of the change in fair value of the call-rights liability is as follows:

	Number of call-rights		Amount
Added upon acquisition of Teranga	1,880,000		19,321
Change in fair value	—		(338)
Balance as at 30 June 2021	1,880,000		$	18,983

The fair value of the call-rights were calculated using the Black-Scholes option pricing model with the following assumptions:

	As at 30 June 2021		As at 10 February 2021
Valuation date share price (i)	C$ 26.98		C$ 27.93
Fair value per call-right	C$ 12.52		C$ 13.05
Exercise price	C$ 14.89		C$ 14.89
Risk-free interest rate	0.58	%	0.24	%
Expected share market volatility	46	%	45	%
Expected life of call-rights (years)	2.68		3.06
Dividend yield	2.5	%	2.5	%
Number of call-rights exercisable	1,880,000		1,880,000
(i) Represents 5-day volume weighted average trading price of the Company's common shares on the TSX/LSE

iv.    Contingent consideration

As part of the acquisition of Teranga, Endeavour recognised contingent consideration related to Teranga's acquisition of Massawa (Jersey) Limited. The contingent consideration is linked to future gold prices and is payable to Barrick Gold Corporation ("Barrick") in cash three years following the completion of the Massawa Acquisition by Teranga on 4 March 2020 and is calculated as follows:

• If the average gold price for the three-year period immediately following closing of the Massawa Acquisition (the "three-year average gold price") is equal to or less than $1,450 per ounce, $ nil;
• If the three-year average gold price is greater than $1,450 per ounce and up to, but not more than, $1,500 per ounce, $25.0 million;
• If the three-year average gold price is greater than $1,500 per ounce and up to, but not more than, $1,600 per ounce, $35.0 million; or
• If the three-year average gold price is greater than $1,600 per ounce, $50.0 million.

The Company has classified the contingent consideration payable to Barrick as a derivative financial liability as the amount due is dependent on future gold prices over periods of time in future. As at 30 June 2021, the Company estimated the fair value of the contingent consideration using a Monte Carlo simulation model based on the gold forward curve, expected volatility of 17.55% (10 February 2021 - 19.83%), Endeavour's credit spread of 1.87% (10 February 2021 - 2.78%) and risk-free rate of 0.33% (10 February 2021 - 0.20%).

On the date of acquisition of Teranga, the fair value of the contingent consideration was estimated to be $45.6 million. For the three and six months ended 30 June 2021, the decrease in the non-current liability to $44.2 million resulted in gains on financial instruments recognised in the condensed interim consolidated statement of comprehensive earnings/(loss) of $0.1 million and $1.3 million respectively.

14    NON-CONTROLLING INTERESTS

The composition of the non-controlling interests (“NCI”) is as follows:

	Ity Mine (15%)			Karma Mine (10%)			Houndé Mine (10%)			Mana Mine (10%)			Boungou Mine (10%)			Sabodala-Massawa Mine (10%)			Wahgnion Mine (10%)			Other2			Total (continuing operations)			Agbaou Mine (15%)			Total (all operations)
At 31 December 2019	23,857			14,002			6,814			—			—			—			—			522			45,195			53,435			98,630
Acquisition of NCI	—			—			—			38,051			63,757			—			—			6,419			108,227			—			108,227
Net earnings/(loss)	16,017			(4,186)			17,366			6,752			2,914			—			—			—			38,863			1,004			39,867
Dividend distribution	(659)			—			(1,744)			—			—			—			—			—			(2,403)			(52,912)			(55,315)
Change in NCI	—			—			—			—			—			—			—			(199)			(199)			—			(199)
At 31 December 2020	$	39,215		$	9,816		$	22,436		$	44,803		$	66,671		$	—		$	—		$	6,742		$	189,683		$	1,527		$	191,210
Acquisition of NCI	—			—			—			—			—			133,583			39,000			14,000			186,583			—			186,583
Net earnings	14,678			425			9,641			4,529			2,871			11,164			2,750			379			46,437			1,466			47,903
Dividend distribution	(4,519)			—			(8,158)			(8,044)			(7,334)			(1,867)			—			—			(29,922)			—			(29,922)
Disposal of the Agbaou mine1	—			—			—			—			—			—			—			—			—			(2,993)			(2,993)
At 30 June 2021	$	49,374		$	10,241		$	23,919		$	41,288		$	62,208		$	142,880		$	41,750		$	21,121		$	392,781		$	—		$	392,781

¹For further details refer to note 4
²Exploration, Corporate and Kalana segments are included in the "other" category.

For summarised information related to these subsidiaries, refer to Note 16, Segmented Information.

15    INCOME TAXES

The Company operates in numerous countries, and accordingly it is subject to, and pays annual income taxes under the various income tax regimes in the countries in which it operates. Some subsidiaries of the Company are not subject to corporate taxation in the Cayman Islands. However, the taxable earnings of the corporate entities in Barbados, Burkina Faso, Canada, Côte d’Ivoire, Mali, Senegal, Monaco, France, Luxembourg and the United Kingdom are subject to tax under the tax law of the respective jurisdiction. Significant judgement is required in the interpretation or application of certain tax rules when determining the provision for income taxes due to the complexity of the legislation. From time to time the Company is subject to a review of its income tax filings and in connection with such reviews, disputes can arise with the taxing authorities over the interpretation or application of certain rules to the Company's business conducted within the country involved. Management evaluates each of the assessments and recognizes a provision based on its best estimate of the ultimate resolution of the assessment, through either negotiation or through a legal or arbitrative process. In the event that management's estimate of the future resolution of these matters change over time, the Company will recognize the effects of the changes in its condensed interim consolidated financial statements in the period that such changes occur.

Tax expense for the three and six months ended 30 June 2021 was $42.3 million and $120.1 million respectively (for the three and six months ended 30 June 2020 - $5.9 million and $25.8 million respectively). The following is a summary of the tax rates in the Company's taxable jurisdictions:

	30 June 2021	31 December 2020
Barbados	2.5%	2.5%
Burkina Faso	17.5%/27.5%	17.5%
Canada	27.0%	27.0%
Cayman Islands	0.0%	0.0%
Côte d’Ivoire	25.0%	25.0%
France	31.0%	31.0%
Ghana	25.0%	35.0%
Luxembourg	17.0%	17.0%
Mali	30.0%	30.0%
Monaco	28.0%	31.0%
Senegal1	25%/0%	n/a
United Kingdom	19.0%	19.0%

 ¹In Senegal the Massawa segment of the Sabodala-Massawa mine is subject to a tax holiday and therefore has an effective tax rate of 0%.

16    SEGMENTED INFORMATION

The Company operates in four principal countries, Burkina Faso (Karma, Houndé, Wahgnion, Mana and Boungou mines), Côte d’Ivoire (Ity mine), Senegal (Sabodala-Massawa mine) and Mali (Kalana Project). The following table provides the Company’s results by operating segment in the way information is provided to and used by the Company’s chief operating decision maker, which is the CEO, to make decisions about the allocation of resources to the segments and assess their performance. The Company considers each of its operational mines a separate segment. Discontinued operations are not included in the segmented information below. Exploration and Corporate entities do not generate any revenue and are aggregated and presented together as part of the "other" segment on the basis of them sharing similar economic characteristics.

	THREE MONTHS ENDED 30 JUNE 2021
	Ity Mine			Karma Mine			Houndé Mine			Mana Mine			Boungou Mine			Sabodala Massawa Mine			Wahgnion Mine			Other			Total
Revenue
Gold revenue	150,337			44,283			137,551			89,784			68,374			176,965			86,133			—			753,427
Cost of sales
Operating expenses	(51,756)			(23,285)			(41,556)			(40,846)			(23,580)			(57,186)			(39,952)			—			(278,161)
Depreciation and depletion	(19,460)			(13,099)			(20,919)			(14,248)			(24,851)			(41,536)			(21,199)			(3,070)			(158,382)
Royalties	(8,310)			(3,853)			(6,804)			(4,867)			(4,146)			(9,913)			(6,015)			—			(43,908)
Earnings/(loss) from mine operations	$	70,811		$	4,046		$	68,272		$	29,823		$	15,797		$	68,330		$	18,967		$	(3,070)		$	272,976

	THREE MONTHS ENDED 30 JUNE 2020
	Ity Mine			Karma Mine			Houndé Mine			Other			Total
Revenue
Gold revenue	79,419			29,974			100,189			—			209,582
Cost of sales
Operating expenses	(29,702)			(15,295)			(36,304)			(1,926)			(83,227)
Depreciation and depletion	(8,466)			(11,318)			(13,726)			(1,955)			(35,465)
Royalties	(4,453)			(2,827)			(8,026)			—			(15,306)
Earnings/(Loss) from mine operations	$	36,798		$	534		$	42,133		$	(3,881)		$	75,584

	SIX MONTHS ENDED 30 JUNE 2021
	Ity Mine			Karma Mine			Houndé Mine			Mana Mine			Boungou Mine			Sabodala Massawa Mine			Wahgnion Mine			Other			Total
Revenue
Gold revenue	282,493			79,083			256,072			197,398			170,851			264,534			138,788			—			1,389,219
Cost of sales
Operating expenses	(97,840)			(46,152)			(82,051)			(87,620)			(56,924)			(94,330)			(66,192)			—			(531,109)
Depreciation and depletion	(33,796)			(27,593)			(37,264)			(39,004)			(61,623)			(54,815)			(30,124)			(6,027)			(290,246)
Royalties	(15,499)			(7,158)			(17,816)			(13,037)			(10,341)			(14,854)			(9,569)			—			(88,274)
Earnings/(Loss) from continuing mine operations	$	135,358		$	(1,820)		$	118,941		$	57,737		$	41,963		$	100,535		$	32,903		$	(6,027)		$	479,590

	SIX MONTHS ENDED 30 JUNE 2020
	Ity Mine			Karma Mine			Houndé Mine			Other			Total
Revenue
Gold revenue	180,142			66,735			189,025			—			435,902
Cost of sales
Operating expenses	(64,932)			(34,055)			(78,407)			(1,926)			(179,320)
Depreciation and depletion	(19,145)			(24,986)			(30,129)			(4,133)			(78,393)
Royalties	(9,216)			(6,079)			(15,131)			—			(30,426)
Earnings/(Loss) from continuing mine operations	$	86,849		$	1,615		$	65,358		$	(6,059)		$	147,763

Segment revenue reported represents revenue generated from external customers. There were no inter-segment sales during the periods ended 30 June 2021 or 30 June 2020. The Company is not economically dependent on a limited number of customers for the sale of gold because gold can be sold through numerous commodity market traders worldwide.

The Company’s assets and liabilities, including geographic location of those assets and liabilities, are detailed below:

	Ity Mine Côte d’Ivoire			Karma Mine Burkina Faso			Houndé Mine Burkina Faso			Mana Mine Burkina Faso			Boungou Mine Burkina Faso			Sabodala-Massawa Mine Senegal			Wahgnion Mine Burkina Faso			Other			Total
Balances as at 30 June 2021
Current assets	138,460			53,777			170,101			227,894			147,269			259,325			105,917			247,748			1,350,491
Mining interests	431,134			52,140			452,422			457,522			688,589			1,853,511			635,400			468,605			5,039,323
Other long-term assets	59,619			13,094			30,762			20,787			16,411			225,801			28,348			101,133			495,955
Total assets	$	629,213		$	119,011		$	653,285		$	706,203		$	852,269		$	2,338,637		$	769,665		$	817,486		$	6,885,769
Current liabilities	104,447			25,286			83,424			77,757			71,428			111,190			45,042			122,019			640,593
Other long-term liabilities	29,037			12,813			46,181			68,177			183,100			323,323			60,860			1,079,980			1,803,471
Total liabilities	$	133,484		$	38,099		$	129,605		$	145,934		$	254,528		$	434,513		$	105,902		$	1,201,999		$	2,444,064
For the period ended 30 June 2021
Capital expenditures	51,491			3,082			23,972			58,849			25,829			45,510			18,201			45,911			272,845

	Ity Mine Côte d’Ivoire			Karma Mine Burkina Faso			Houndé Mine Burkina Faso			Mana Mine Burkina Faso			Boungou Mine Burkina Faso			Other			Total1
Balances as at 31 December 2020
Current assets	87,618			50,585			152,761			195,276			121,405			309,384			917,029
Mining interests	441,549			70,564			467,719			438,297			708,819			450,896			2,577,844
Other long-term assets	65,449			12,971			28,352			20,677			17,049			49,015			193,513
Total assets	$	594,616		$	134,120		$	648,832		$	654,250		$	847,273		$	809,295		$	3,688,386
Current liabilities	110,613			28,791			80,666			68,326			75,425			46,318			410,139
Other long-term liabilities	17,364			13,862			49,367			64,860			192,783			759,605			1,097,841
Total liabilities	$	127,977		$	42,653		$	130,033		$	133,186		$	268,208		$	805,923		$	1,507,980
For the period ended 30 June 2020
Capital expenditures	29,167			10,620			30,456			—			—			39,245			109,488

¹Totals are excluding assets and liabilities classified as held for sale as at 31 December 2020.

17    CAPITAL MANAGEMENT

The Company’s objectives of capital management are to safeguard the entity’s ability to support the Company’s normal operating requirements on an ongoing basis, continue the development and exploration of its mining interests and support any expansionary plans.

In the management of capital, the Company includes the components of equity, finance obligations, and long-term debt, net of cash and cash equivalents, restricted cash and marketable securities.

Capital, as defined above, is summarised in the following table:

	30 June 2021			31 December 2020
Equity	4,441,705			2,248,418
Long-term debt	929,760			688,266
Finance and lease obligations	50,724			37,205
	5,422,189			2,973,889
Less:
Cash and cash equivalents	(832,877)			(644,970)
Cash - restricted	(29,746)			(24,398)
Marketable securities	(2,705)			(778)
Total	$	4,556,861		$	2,303,743

The Company manages its capital structure and adjusts it considering changes in its economic environment and the risk characteristics of the Company’s assets. To effectively manage the entity’s capital requirements, the Company has in place a planning, budgeting and forecasting process to help determine the funds required to ensure the Company has the appropriate liquidity to meet its operating and growth objectives.

The Company is not subject to any externally imposed capital requirements with the exception of complying with covenants under the RCF and Bridge Facility. As at 30 June 2021 and 31 December 2020, the Company was in compliance with these covenants.

18    COMMITMENTS AND CONTINGENCIES

The Company has commitments in place at all seven of its mines and other key projects for drill and blasting services, load and haul services, supply of explosives and supply of hydrocarbon services. At 30 June 2021, the Company has approximately $77.0 million in commitments relating to on-going capital projects at its various mines.

The Company is, from time to time, involved in various claims, legal proceedings, tax assessments and complaints arising in the ordinary course of business from third parties. The Company cannot reasonably predict the likelihood or outcome of these actions. The Company does not believe that adverse decisions in any other pending or threatened proceedings related to any matter, or any amount which may be required to be paid by reason thereof, will have a material effect on the financial condition or future results of operations. The Company has recognised tax provisions with respect to current assessments received from the tax authorities in the various jurisdictions in which the Company operates, and from uncertain tax positions identified upon the acquisition of SEMAFO and Teranga as well as through review of the Company's historical tax positions. For those amounts recognised related to current tax assessments received, the provision is based on management's best estimate of the outcome of those assessments, based on the validity of the issues in the assessment, management's support for their position, and the expectation with respect to any negotiations to settle the assessment. Management re-evaluates the outstanding tax assessments regularly to update their estimates related to the outcome for those assessments taking into account the criteria above. Management evaluates its uncertain tax positions regularly to update for changes to the tax legislation, the results of any tax audits undertaken, the correction of the uncertain tax position through subsequent tax filings, or the expiry of the period for which the position can be re-assessed. Management considers the material elements of any other claims to be without merit or foundation and will strongly defend its position in relation to these matters and following the appropriate process to support its position. Accordingly, no provision or further disclosure has been made as the likelihood of a material outflow of economic benefits in respect of such claims is considered remote. In forming this assessment, management has considered the professional advice received, the mining conventions and tax laws in place in the various jurisdictions, and the facts and circumstances of each individual claim.

The Company has received a notice of claim from a former service provider. The Company is taking legal advice on the merits of the claim and the probable outcome but intends to vigorously defend against the claims. The Company does not believe that the outcome of the claim will have a material impact to the Company’s financial position.

The Company’s mining and exploration activities are subject to various laws and regulations governing the protection of the environment. These laws and regulations are continually changing and are generally becoming more restrictive. The Company believes its operations are materially in compliance with all applicable laws and regulations. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations.

The Company assumed a gold stream when it acquired the Karma Mine on 26 April 2016 ("Karma stream"), and when it acquired the Sabodala-Massawa mine on 10 February 2021 ("Sabodala stream").

• Under the Karma stream, the Company is obligated to deliver 100,000 ounces of gold (20,000 ounces per year) to Franco-Nevada Company and Sandstorm Gold Inc. (the “Syndicate”) over a five-year period, which commenced on 31 March 2016, in exchange for 20% of the spot price of gold for each ounce of gold delivered (the “ongoing payment”). The amount that was previously advanced for this agreement of $100.0 million is reduced on each delivery by the excess of the spot price of the gold delivered over the ongoing payment. Following the five-year period, the Company is committed to deliver refined gold equal to 6.5% of the gold production at the Karma Mine for the life of the mine in exchange for ongoing payments. The Company delivered an additional 7,500 ounces between July 2017 and April 2019 in exchange for an additional deposit of $5.0 million received in 2017. Gold ounces sold to the Syndicate under the stream agreement are recognised as revenue only on the actual proceeds received, which per the agreement is 20% of the spot gold price. As at 30 June 2021, the Company had completed the delivery of 100,000 ounces of gold and had started delivering 6.5% of gold production at the Karma Mine to the syndicate.
  
  
• Under the Sabodala stream, the Company is required to deliver 783 ounces of gold per month beginning 1 September 2020 until 105,750 ounces have been delivered to Franco-Nevada (the "Fixed Delivery Period") based on the Sabodala standalone life of mine plan prior to the Massawa Acquisition by Teranga on 4 March 2020. At the end of the Fixed Delivery Period, any difference between total gold ounces delivered during the Fixed Delivery Period and 6 percent of production from the Company’s existing properties in Senegal (excluding Massawa) could result in a credit from or additional gold deliveries to Franco-Nevada. Subsequent to the Fixed Delivery Period, the Company is required to deliver 6 percent of production from the Company’s existing properties in Senegal (excluding Massawa). For ounces of gold delivered to Franco-Nevada under the Stream Agreement, Franco-Nevada pays the Company cash at the date of delivery for the equivalent of the prevailing spot price of gold for on 20 percent of the ounces delivered. Revenue is recognised on actual proceeds received. The Company delivered 3,134 ounces during the period ended 30 June 2021 after its acquisition of Teranga and as at 30 June 2021, 97,572 ounces is still to be delivered under the Fixed Delivery Period.
  
  

19    SUBSEQUENT EVENTS

Share buyback programme

Subsequent to 30 June 2021 and up to 3 August 2021, the Company has repurchased a total of 363,497 shares at an average price of $22.98 for total cash outflows of $8.4 million.

 

 

 

 

 

 

 

 

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