Endeavour Mining plc T.EDV

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[chalkmarks]

ONE OF THE CHEAPEST GOLD

PRODUCERS IN OUR COVERAGE

UNIVERSE

Investment recommendation

We maintain our SPECULATIVE BUY recommendation on the shares of

Endeavour Mining Corporation with a target price of C$5.00 per share.

Investment highlights

• Q3/10 was essentially a non-event. EDV reported EPS of US
.08

per share, which reflected only 20 days of operating results from its

Youga operation (Burkina Faso) following the closing of the

Etruscan acquisition.

• The Youga mine has a solid quarter of operations, producing 23,173

ounces of gold at a cash cost of US$598 per ounce. Production was

in line with our forecasts, cash costs were roughly 17% higher than

we expected.

• Endeavour ended the quarter with US$187 million in cash and

equivalents, US$22.4 million in long-term debt and an untapped

US$100 million acquisition facility. EDV is going to use this balance

sheet to acquire new production, and investors continue to wait and

see what EDV makes a bid on.

Valuation

We continue to value the shares of Endeavour Mining based on a

discounted cash flow valuation of its Youga gold mine (5%, Burkina

Faso), Agbaou gold project (10%, Cote d’Ivoire) and Finkolo gold project

(10%, Mali). Our peak gold price estimate of NAVPS (US$1500/oz Au) for

Endeavour Mining has increased to C$5.54, up from C$5.45 previously.

We value the shares of Endeavour based on a 0.9x multiple to our peak

gold price NAVPS (5%, US$1500/oz Au).