Endeavour Mining Q2 Earnings Call Highlights

Key Points

• Record first-half performance: Endeavour Mining generated $761 million in free cash flow, up 19% from the second half of 2025, while adjusted EBITDA reached a record $1.6 billion. The company returned $301 million to shareholders through dividends and buybacks and ended Q2 with $254 million in net cash.
• Guidance maintained despite near-term pressure: Full-year production and cost guidance remain unchanged, although management expects a higher-cost, lower-output third quarter due to wet-season conditions, lower grades and stripping activity. Sustaining capital guidance rose to $280 million from $230 million.
• Growth projects advancing, while Mana faces setbacks: Endeavour is targeting a final investment decision for the Assafou development by year-end and first ore from the Sabodala-Massawa underground expansion by year-end. Mana is expected to miss production and cost guidance following operational disruptions, while a fatal contractor accident at Lafigué prompted additional safety measures.

Endeavour Mining LON: EDV reported record free cash flow and shareholder returns for the first half of 2026, while maintaining its full-year production and cost guidance despite expected operational variability across its mine portfolio.

Chief Executive Officer Ian Cockerill said the company produced 564,000 ounces in the first half at all-in sustaining costs of $1,871 per ounce. Production was stable versus the prior period, while all-in sustaining margins increased 37%, aided by higher gold prices.

The company generated $761 million of free cash flow in the first half, up 19% from the second half of 2025, despite seasonal tax payments. Adjusted EBITDA rose 41% to a record $1.6 billion, representing a 63% margin. Endeavour ended the second quarter with net cash of $254 million.

Capital Returns and Growth Plans

Endeavour announced $301 million in shareholder returns for the first half, comprising $230 million in dividends and $71 million in share repurchases. Cockerill said the returns were more than double the company’s minimum commitment and represented 40% of first-half free cash flow.

Since 2021, Endeavour has returned nearly $2 billion to shareholders, according to Cockerill. The company remains on track to return at least $1.1 billion between 2026 and 2028 and expects to meet that objective even at a gold price of $3,000 per ounce.

Chief Financial Officer Guy Young said the company does not intend to accumulate excess cash, but added that management wants sufficient financial capacity to fund its organic growth pipeline, including the Assafou development. He said the company would consider additional shareholder returns if cash is not required for organic growth investments.

At Assafou, Endeavour is targeting a final investment decision before the end of 2026. Front-end engineering and design work has been completed, while procurement of long-lead equipment, including crushers, mills, high-pressure grinding rolls and apron feeders, is advancing. Management said negotiations over the mining convention are progressing under Côte d’Ivoire’s 2014 Mining Code, with a 10% state free carry expected.

The company is also advancing an underground expansion at Sabodala-Massawa. Initial work, including dewatering, earthworks and power establishment, is underway, with the first equipment fleet expected at site in the third quarter. Endeavour is targeting first ore from the initial development phase by year-end, subject to the planned schedule.

Quarterly Financial Results and Outlook

In the second quarter, Endeavour produced 283,000 ounces, broadly in line with the first quarter. Higher output at Ity and Houndé was offset by lower production at Mana, Lafigué and Sabodala-Massawa. All-in sustaining costs rose modestly to $1,907 per ounce, while the company generated an all-in sustaining margin of $2,441 per ounce, or 56%.

Young said adjusted net earnings were $392 million, or $1.25 per share, for the quarter. Free cash flow totaled $149 million, lower than the first quarter due to seasonal tax payments, lower realized gold prices, increased stripping activity and investments in new venture exploration partners.

Realized gold prices declined 10% quarter-over-quarter, reducing cash flow by $129 million, according to Young. Income taxes paid increased by $419 million during the quarter. Working capital provided a $52 million inflow, driven partly by increased trade payables, timing of gold sales and value-added tax refunds in Côte d’Ivoire and Senegal.

Management expects a higher-cost third quarter as wet-season conditions, lower grades and stripping programs affect output. It expects a material improvement in production and grades in the fourth quarter, particularly at Houndé, Ity and Sabodala-Massawa.

Endeavour increased its sustaining capital expenditure guidance to $280 million from $230 million, largely due to increased ore mining and capitalized waste stripping at Houndé and Lafigué. Non-sustaining and growth capital guidance was unchanged.

Mine Performance and Mana Challenges

Lafigué was a standout performer during the first half, producing nearly 60% of the midpoint of its annual production guidance. Throughput exceeded design capacity by nearly 10%, and management now expects the operation to achieve production in the top half of its guidance range and costs in the lower half.

At Mana, however, Endeavour expects production to fall below the low end of its guidance range and costs to exceed the top end. Production fell to 29,000 ounces in the second quarter after mining at the Siou deposit concluded in the first quarter. The start of mining at the Banakem open pit was also deferred until later in the year.

In July, Endeavour paused activity in the Aviera area of the Wona underground mine after a fracture appeared on the surface above the deposit. Djariat Traore, executive vice president of operations and ESG, said the pause was precautionary and that partial re-entry was expected subject to geotechnical validation. Other areas of the mine remain active.

Cockerill said Mana continues to generate cash at current gold prices and retains a sizable resource base despite its shorter reserve life. He added that the mine also provides operational experience relevant to Endeavour’s future underground projects.

Exploration and Safety Update

Endeavour plans to release a maiden resource later in 2026 for Vindaloo Deeps at Houndé, an underground discovery adjacent to the processing plant. Sonia Scarselli, executive vice president of exploration and growth, said the deposit is expected to be a large, high-grade underground resource and is not included in the company’s existing growth outlook to reach 1.5 million ounces of production by 2030.

At Sabodala-Massawa, the company has seven drill rigs working on the Kawsara discovery, with an updated measured and indicated resource targeted by year-end. Management said Kawsara could potentially provide non-refractory ore for the Sabodala carbon-in-leach plant. The company is also completing environmental work needed to incorporate the area into the mine permit, a process expected to take two to three years.

Traore also reported a fatality at Lafigué on May 29 involving contractor team leader Sam Dauda during water drainage activities. The company completed an investigation and is implementing recommendations involving contractor supervision, safety training, onboarding requirements and supervisor capability programs.

“Any loss of life at our operations is unacceptable,” Traore said. Endeavour’s trailing 12-month total recordable injury frequency rate was 0.72.

About Endeavour Mining (LON:EDV)

Endeavour Mining is one of the world's senior gold producers and the largest in West Africa, with operating assets across Senegal, Côte 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 meaningful value to people and society. Endeavour is admitted to listing and to trading on the London Stock Exchange and the Toronto Stock Exchange, under the symbol EDV.

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