Endeavour Mining plc T.EDV

New Edison Note on Endeavour Out - 7 Mar 22

[marben100]

See https://www.edisongroup.com/publication/forecasts-ahead-of-st-patricka%c2%80%c2%99s-day-results/30588/

Forecasting operating cashflow of US$5.50/share for 2022!

Based on the average multiples of its gold major peers, we estimate a value for Endeavour of US$37.72 (C$47.86 or £28.15) per share. By contrast, using an absolute valuation methodology, whereby we discount back five years of cash flow then apply an ex-growth, ad infinitum multiple to steady-state terminal cash flows in FY26, implies a valuation of US$37.16 (C$47.14 or £27.73) per share if performed using a standardised discount rate of 10% or US$58.30 (C$73.97 or £43.50) per share if performed using a CAPM-derived (real) discount rate of 6.51%. Note that to all of these valuations, a further US$4.30–7.45/share may also be added to reflect the value that we ultimately expect to be imparted to Endeavour via its most recent five-year exploration programme (see The second five-year plan). Otherwise, it is trading at a discount to the average multiples of its peers on at least 59% of common valuation measures (Exhibit 6) despite its being the largest premium LSE listed pure gold producer in the FTSE 100 index (from 21 March).

Cheers,
Mark

 

[marben100]

AFAICS Edison's forecasts take no account of Fetekro or Sab-Mas Phase 2 development. So, I'd expect an upwards revision once the DFSs for those projects are published and EDV confirms that they are proceeding.

[mercedesman]

Also the reqport was done when gold was $1890/oz.   Now well over the $ 2k barrier. Not getting the love it deserves.  With phenomenal fundamentals & execution, extraordinary cash flows, resource replenishment for the next 10 years,etc.,  the country risk discount (the only negative I can see) seems a little excessive. Perhaps fiscal 2021 results, new resource estimates