Ladies and gentlemen, thank you for standing by, and welcome to the Endeavour Mines Q1 2021 Results Conference Call. At this time, all participants are in a listen only mode. After management's presentation, there will be a question and answer session. Today's conference call is being recorded and the transcript of the call which will be available on Endeavour's website tomorrow. I would now like to hand the call over to management.
Please go ahead.
Hi, everyone. I am Martino, Vice President, Strategy and Investor Relations, and I'd like to welcome you to our Q1 2021 results website. On the call, I am joined by Sebastien, Marc, Joanna and Patrick. Today's call will follow our usual format. We'll first present our results at a group level and then dial into by asset.
We'll be as quick as possible to leave time for questions at the end. Before we start, please note our usual disclaimer. And now I'll hand it over to our CEO, Sebastien, to walk through our Q1 results. Sebastian?
Thank you, Martino. I'm very excited to share our results for the quarter as it shows the transformation we have executed over the past year and resulted in a more resilient business. We are well positioned to deliver strong cash flow and organic growth, while at the same time rewarding shareholders through our dividend and buyback programs. You can see a summary of our Q1 results here on Slide 6. We achieved a great outcome in our Q1, both operationally and financially, and we are on track to meet guidance.
Production more than doubled versus Q1 2020 due, of course, to our acquisitions and in particular, the recent successful integration of the Boranga assets. Looking at our per share metrics, our operating cash flow per share is up nearly 50%, while the adjusted EPS is up 111%, consistent with our expectation that the transaction would be accretive to our shareholders while also benefiting from the continued strong gold price environment. Strategically, we are focused on ensuring our shareholders realize strong returns. As such, we have paid out our first $60,000,000 dividend in January and started during Q2, our buyback program, which will run over the year. On Slide 7, you can see some of our key performance indicators for the quarter.
We've continued to focus on our safety performance with our ultimate goal of 0 ARM. On production, we are solidly on track relative to our full year guidance, and we will see a full quarter Of production at Sabado La Massawa and Wahgnion included in our results in Q2, and we anticipate our run rate to increase for the balance of the year. It's important to note that for Q1, it is only 1.5 months out of 3 for the Teranga assets that is consolidated here. Similarly, all in sustaining costs came in at the bottom half of our target range for the full year. Again, we expect to see the impact of a full quarter from the lower cost of Atabado Masao operation And no further impact from the higher cost Agbaou operation that was sold in March.
As such, we are confident In our progress towards our full year target range of $8.50 to $900 per ounce. Safety, as I mentioned earlier, we continue to focus on improving our safety performance across the board with several operations added into our platform. We are pleased With the strong safety culture at our newly acquired operation, you can see that our LTI remains low. However, With 4 LTIs that we have suffered in the last 12 months, we always seek to improve, and we continue to evaluate ways to move towards a 0 on this metric. On Slide 9, you can see our production and all in sustaining cost results for the past 5 quarters.
The key to remember here is that we had what was truly an exceptional quarter from the Endeavour and former MFO assets in Q4 last year, which returned to a more normalized output in Q1. The quarter also factored in the sale of Agbaou and part of the quarter's production from Sabodola We therefore expect improving consolidated production numbers in the upcoming quarters as we will report a full quarter of operations across our assets. On the right side of the page, you can see that our consolidated production has increased by 175,000 ounces in Q1 2021 versus Q1 2020, while our production per share has increased by 23% year over year. On Slide 10, I'd like to point out our portfolio's strong diversification across both assets and countries. This is a big shift compared to the portfolio we had 12 months ago.
The pie chart shows the narrative Contributing 2 thirds of our production to now 7 operations in 3 countries with no single operation accounting for more than 25 percent of our production. This contributes significantly to a reduction in our risk profile and helps to ensure We can meet our guidance based on greater flexibility within the portfolio. Moving to Slide 11. You can see how our all in sustaining margin has trended over the last several quarters. As discussed previously, our production increased modestly with just Over 1.5 months of Sabodola Massawa and Wahgnion included in Q1 and Agbaou was sold, but we were ultimately in a weaker gold price During the Q1, which impacted margin versus Q4.
Nevertheless, on a year over year basis, our all in sustaining margin increased by $220,000,000 From Q1 2020 to the current quarter, while all in sustaining margin per share increased by 30%. On Slide 12, you can see the trend of our operating cash flow, which increased by $137,000,000 over the prior year quarter, Looking now at Slide 13, you can see the steady improvement in the strength of our balance sheet From the completion of the major build of our Ity mine in 2019 through to the end of 2020 when we reached a net cash position. As part of the Teranga acquisition, we took about EUR 332,000,000 in net debt on the balance sheet. And despite this at the end of March, we were still happy with a very healthy balance sheet. Our goal is to quickly build our net cash position, which at current gold prices should happen over the next quarters.
Having this strong balance sheet position with the net debt to EBITDA leverage ratio currently sitting below 2.2 times gives us the flexibility to focus on both shareholder returns and on investing to unlock our organic growth potential. One of the best features of our new portfolio is the ability to generate sufficient cash to pay dividends and buybacks, while also being able to reinvest in the business to support organic growth projects and exploration. On the next slide, we highlight the strengths of some of those near term development projects. The Phase Pensions at Sabadellamasawa is well underway. Phase 1 will allow the plant to better handle the higher grade ore, which come among the newly added higher grade debt On the Methawa property, we already modest investment of around $20,000,000 in the back end of the balance.
A DFS Phase 2 is underway for the BIOX plant, which will be processing the significant quantity of high grade refractory ore from Masagawa Through a new build buyouts plant. Beyond Sabodola Massawa, we have the Fetegro and the Kala projects, Respectively, in Cote D'ivoire and in Mali, where we were recently the results of positive creditabilities, which showed projects to have a deep operating attractive economic returns. We are focused on strong returns across the business and this package of gross project It's a great example of how we intend to continue to build on our existing portfolio to deliver just that. Moving to Slide 15. You can see the key target areas for our 2021 exploration budget of between $70,000,000 to $90,000,000 Patrick and his team are expected to break a new record this year with over 600,000 meters of drilling.
A large portion will be targeted on our most recently acquired assets. We see significant opportunities to apply our proven exploration model to new supply attempts. In addition, we will continue to locate a meaningful portion of our exploration budget to greenfield exploration, where we have repeatedly created value through the drill bit. In Q1, dollars 16,000,000 was spent at the newly acquired assets as well as at Hounde and Ity, where a series of new targets are being delineated. In addition, about $4,000,000 was spent on greenfield and development projects.
We anticipate activity will continue to ramp up in Q2 ahead of the rainy season before slowing down again during Q3. I am truly excited to see all of the organic opportunities that will play out over the course of the year. Moving now on to Section 2. I will now Hand things over to Joanna, who will take you through the financial results in detail. Joanna?
Thanks, Sebastian. On Slide 17, we will break down our all in sustaining margin on a nominal and a per ounce basis. Because of the substantial changes within our portfolio of assets, This tells a frustrating story than on an all basis alone. At a group level, we had a strong improvement in our all in sustaining margin, which was up $150 per pound. For reference, on this page, we inserted Verint's explanation for key line items.
But overall, the margin was helped by a stronger gold price, lower cash cost per ounce and lower standing capital. Moving to Slide 18, you can see a breakdown of our free cash flow, beginning with the all in sustaining margin. As we talked about, the all in sustaining margin has increased over Q1 2020 by a nominal $20,000,000 to $130,000,000 in Q1 of this year. Similarly, our almond margin increased by 190,000,000 This in turn led to a total cash inflow of $134,000,000 during the quarter. The main cash outflows during the quarter were an increase in our working capital, primarily from our acquired businesses, Cash used in financing activities from our discontinued operations for the payment of dividends and taxes prior to the disposition and increase in taxes paid due to the larger portfolio of operations and And increased spending on growth projects, primarily due to the acquisition of Avedico license in the quarter.
These were offset by cash inflows from financing activities related placement, which we completed at the end of the quarter, as well as additional grounds on the financing. On Slide 19, Yellow Waterfall shows how cash was resolved during the quarter. Our operations generated $198,000,000 of Cash, we'll be approximately $105,000,000 on our properties and paid $20,000,000 to increase our ownership of Fetekro, while we also added $27,000,000 in cash from the acquisition of Taranga. In the financing column, we received $200,000,000 from LaMancia near the end of the quarter as well as $47,000,000 in net proceeds from financing of long term debt, offset by the $60,000,000 dividends that we paid in Q1 as well as $50,000,000 paid to settle Tarangas gold offtake laterally. We ended the quarter with debt of only $162,000,000 despite absorbing approximately $332,000,000 of net debt from Taranga, which corresponds to a ratio of about 0.2x.
At critical gold prices, we expect to quickly return to a net cash position. Moving to Slide 20, we have a detailed breakdown of our net earnings. I won't go through every line here, but we'll go through the most significant items. I do want to start from the bottom of the slide where you can see that we achieved 111% improvement in earnings per share from continuing operations compared to the prior year quarter. This is an important measure to consider as we look at the success of our recent corporate transactions, which have clearly contributed to improvements on a per basis.
Perhaps the most significant single line item impacting our earnings per level are increased current income tax expense. This is higher in Q1 2021 due primarily to the inclusion of the tax from our newly acquired operations. Beyond that, we saw higher corporate costs from our larger overall business as well as increased acquisition and restructuring costs related to Tranda and Samafo acquisitions. Our corporate exploration expense also increased due to increased green salt exploration activity, primarily on the newly acquired Turin assets. I'll now hand things over to Mark, who will go
Thank you, Joanna, and hello to everyone on the call. I've just returned from visiting our mines, and we will happily trade the 40 degree heat at Sabadelloa for the current English weather any day. Starting on Slide 22, you can see our production bridge, which primarily shows the significant positive impacts of the recently acquired operations, Organic improvements at Unangenting. Unangu, in particular, the difference drives from the fact that the process was idle for a number of months in late 2019 early 2020 compared to a full quarter of operating in quarter 1 this year. As you have heard, the last quarter results includes only 1.5 months of performance from Sabodala Masala and Wahgnion.
Overall, our production has increased by 175,000 compared to the prior year's quarter. Moving to Slide 23, I will begin the review of our individual mining operations with Tabadana Sawa, I was at the mine yesterday and can attest to the fab team have continued to make progress. Continuing with another new PC3000 shovel commissioned during the quarter, so the digging fleet is in good shape. The haul rig construction to enable us mine and in the ore bodies is progressing well As are other innovations to the former Barrick declaration camp, which is housing the mining crews of the Mersawa Pith. Moving to Slide 24, you can see an overview of our Phase 1 expansion plan.
The first phase of upgrades to the processing plant are focused on debottlenecking The back end of the existing CIL to increase capacity to process the hydro grade for a milling of our ore. The civil works for the various work packages The erection of Seward will commence in the coming weeks. These upgrades are anticipated to be completed in Cordova and have the potential air production of up to 90,000 On slide 25, you can see some pictures illustrating the Phase 1 work in progress. Starting at the top left, the foundations for the electric Carbon regeneration kiln and various transfer tanks are complete. Part of the steel structure has been reassembled in the background.
On the top right, the crew is finalizing preparations for the last concrete port dilution and acid wash column.
In the bottom left,
the Q and the 2 columns are now on-site. The last photo shows the Lichtenk basis of the contract to be completed by next week. Enercon, who are undertaking both the civils and SMP work, are currently fabricating various components in readiness for the next phase of construction. On Slide 26, you can see an indicative schematic of the proposed Phase 2 expansion of the processing plant to incorporate the BIOX circuit to treat the refractory ore. Phase 2 includes refractory plant, tailings facilities, water management and power station upgrades.
The DFS will incorporate several optimizations of the PFS completed by Charinga, including improved geometallurgical modeling to incorporate more information on sulfur and arsenic, which are key drivers of the BIOPS process and pit optimization to determine the appropriate split That will be between the 2 processing plants. Further processing optimization will be undertaken in the crushing, milling and flotation circuit. We anticipate completion of the DFS in quarter 4 this year. Moving now to Slide 27, which outlines Greg Red at the Hounde mine in more detail. I was also at Hunga last week and want to congratulate the team for their fantastic safety performance, which has passed 22,000,000 man hours LTI free.
Now that the asset has been in operation for more than 3 years, we can see the maturity in the team yielding great results. Our short- and long term planning has improved with experience And with increased mine flexibility through opening up the Kari pit. Kari Pump has been the big focus since last year, and The team is now looking into Kary West, where Advanced Great Control is underway. There is a lot of enthusiasm on Hyundai, and this is all thanks to the strong operational performance and exploration success. Reviewing the past quarter, production decreased and expected as these tonnes of mules were offset by lower grade And recoveries as the high grade oil material from KarriWound was blended with increased proportion of shore from other people.
Also, sustaining cost increased In part due to lower production as well as the expected increase in strip ratio of Kari Pump. In future quarters, we anticipate the completion of mining from Gore A pit and the current stage of the Vindaloo and tender pit. Karri Pump will be the main production source until Karri West commences, While stripping is set to increase at Vindaloo mine, grades are expected to increase in the latter part of the year due to the tenure of the ore zones being mined at Karripa. Turning now to Ity on Slide 28. We are very happy with the performance of Ity, which achieved its best quarter of decision take.
The team had many challenges largely due to COVID, which is compounded by the TSF-ray construction and waste extraction. To open up the mining area during 2020 is now off given the greater mining flexibility. Similar to Hune, the Tema Igi is excited for the future Given both the operational improvements achieved and ongoing resources that is making, we are now gearing up to start mining in the path after the raining season. Looking at the quarter, you can see that production has increased due to higher throughput, while all in sustaining cost increased due to low mining and processing new mines. Quarter 1 was better than expected.
Higher grade recovery of hydro ore was brought forward and outperformed. Going forward, we anticipate we anticipate to continue to source multiple years With La Plaque on track for Q4. Potentially, we're working on numerous initiatives to improve mill throughput with a high moisture content size, And we look forward to seeing the benefit these will bring as wet sand gets underway. On Slide 29, Boungou has now completed its 2nd whole quarter since the restart of mining operations in Q3 2020. Looking at quarter 1, performance was better than initially expected as higher grade ore extraction was going forward.
Production declined moderately over quarter 4 due to lower throughput in grades, recovery remained strong. All of the sustaining costs is behind the remaining cement costs and the highest strip ratio, offset in part by lower mining unit costs and the commissioning of new contract to mining equipment. Plant feed is expected to continue from the West pit with waste stripping appearing at the East pit throughout the year. TruFuel is expected to remain steady while recoveries will decline slightly. Mining will focus on waste extraction will lead to a modest decline Increased grade based on the location in the pit from where the ore is sourced with an improvement expected late in the year.
Moving to Slide 30 for Mana. I would like to thank the team for their hard work as they focus on optimizing the asset. Out of all the mines we have recently acquired, given its long operating history, there is where we find the most optimization there. The main change being the decision not to proceed with the Wahgnaugh Stage 4 cutback and instead to mine the Wyndham South Stage 2 and 3 cutbacks while setting up 1 and O for an underground operation, as highlighted in our recently published reserves and the new information form. We have promoted a number of applicants to management position and put in place a strong technical support team, which is starting to pay off with the renewed enthusiasm across the site.
Looking at the quarter, you can see that, as expected, Production from Mana decreased and all in sustaining costs increased moderately as a result of lot process rates from Minasal and slightly lower planned support, coupled with higher open pit mine costs due to longer haul distances and higher underground unit mining costs due to increased stopebackhaul, partially offset by lower processing costs due to lower power costs as some of the older gensets have been replaced. Overall, I am very happy with MEMA's performance, which was better than budgeted in the Q1, driven by better than planned mill throughput in grade. Looking ahead, tonnes processed are expected to decline moderately due to an increased proportion of fresh ore from Moana South, while the process grade is I was at the mine last week and impressed with the way in which the team is focused on some of the important development projects, including Construction of the 2nd sulfur, the TSF, new airstrip, completion of the Fekoro resettlement agreement and the commission of mining at the Fekoro satellite pit. In quarter 1, 1, 1, 1,000,000 increased production compared with the previous quarter with increased grades and a moderate modest decrease in throughput, while recoveries were flat.
Looking forward to the balance of 2021, we anticipate an increase in waste extraction, resulting in a higher strip ratio, But this will be offset somewhat as it will provide access to higher grade oxide ore from the Phukra and North Belay Southeast in the latter portion of the year. Plant throughput and recoveries are anticipated to decrease marginally during the wet season. And finally, On Slide 33, let me discuss our Karma mine. Karma saw lower production in quarter 4 relative to prior quarters as the stack grade and recovery declined with most The ore for the quarter sourced from the GG1 pit. In addition, there was an increase in gold in circuit on account of the longer than normal leach time of the GG1 ore.
Decreased production was partially offset by increased tonne stacked with good overall performance from the agronomistacking system. All in sustaining cost increased due to higher royalty. That was partially offset by lower mining, processing and G and A unit costs, driven by lower production drilling, blasting, freehandling and rail. Looking ahead, the strip ratio is expected to increase in coming quarters, Production is expected to increase in the second half of the year due to high grades and recoveries at Cowen ore. As you can see, performance across our operations has been strong in quarter 1, and all mines are on track to achieve their production and all in sustaining cost guidance for 2021.
This is testament to the overall quality of our portfolio and the capabilities and great work of our operating team. And with that, I'll hand to Sebastian to close out the presentation.
Thank you, Marc and Joanna, for your overviews. On Slide 34, we have a summary outlining our key priorities for the year. They are based on our guide framework to continue building a resilient business That is a trusted partner and rewards shareholders properly. We are pleased to be executing against each of these priorities, and we'll work hard to continue doing so in the coming months years. We believe that the resilient business needs to first be underpinned by a high quality portfolio, which after 5 years of hard work we now have.
Our priority is now to generate stable cash flows while advancing our organic growth and exploration efforts. Having a high quality portfolio of mines which are profitable and both long mine lives allows us to better plan for the future. This is a key element of being able to be a trusted partner. Having confidence in knowing that we will have a presence in our communities and host countries for many years to come means that we can invest in building Our long term partnership with employees, communities and governments. We will be hosting Chichin later this month, where we look forward to sharing the many ESG initiatives going across our business and finally, having a high quality portfolio with a strong balance sheet Underpinned by a social license to operate means that we can reward our shareholders across cycles.
It took us 5 years to get to this stage, and we are now proud to have recently Our dividend payments. For me, this marked the full turnaround of our business. In recent weeks, given the confidence that we have in our business and our cash flow, we started supplement our dividend with buybacks. We also believe that our shareholders will be rewarded once we complete the process to obtain a premium listing on the LSE. This is expected to drive incremental demand for our shares and therefore be a strong catalyst.
As such, we are pleased with the progress made and we remain on track And finally, to conclude on Slide 36, you can see the key upcoming catalysts. In the near term, we will host a capital markets teaching event to familiarize London based investors and capital markets participants with our business ahead of our listing in mid June. We also anticipate really an initial resource estimate on the FEMA project, which we recently acquired from Taronga. We will have an exploration update on Sao Paulo de la Massawa. We to provide a refreshed 5 year exploration strategy as we reach the goal of our first 5 year exploration plan later this year.
Finally, in the Q4, we are anticipating the Phase 1 expansion at SOTA as well as the DFS for Phase 2 and the DFS for Ferrico. So despite the transformation that I talked about at the beginning, we do not stand still. We took great strides in the last 12 months to reposition our business. Today, we can truly say we've built a resilient business. More importantly, we have a clear road map ahead of us to ensure our business remains robust
Thank you. Ladies and gentlemen, we will now be the question and answer session. Please standby while we compile the Q and A The first question comes from the line of Ovais Abid from Scotiabank. Please go ahead.
Thanks, operator. Congratulations, Sebastian and Endeavour team for a good quarter and thanks for taking my questions. Just my first question, Sebastian, is on the trying assets that you've acquired. Sebastian, Endeavor now has had these trying assets For about 2 months under the Endeavour umbrella, can you give us some color on how the integration is going with these assets, especially at Sabodala Masaha?
Sure. Good morning, Oveys. Well, I would say that since the announcement of the transaction, I've probably been now 4 times, I mean, to Massawa, Sabodola Massawa. Marc was on the line Just yesterday again from Sabodel Massawa, look at the progress interior of the upgrades, the CIL plant, the back end of the CIL plant for the Phase 1 of the Saba del Massaro project. And I say I can say that we are extremely pleased with the progress.
We were saying since the closing that the integration is going extremely smoothly and has progressed Very, very well because the culture of the companies were very similar at the operating level. So Yes. I mean it's very pleasing to see those assets well integrated into our portfolio. Ma, maybe you want to, based on your You're through yesterday. Do you want to comment?
Sure. I guess one thing also to mention, and this was something that we knew about Right from the beginning was the incumbent general manager was going to finish this year. So that transition has literally just taken place. And we're very confident that
it will be
a smooth transition. We see lots of really good work Done. I love the Teranga team and what a good opportunity, Phil. I think it's a fantastic asset with a really, really strong team there. And everything that I've seen just suggests that there's good opportunities for us to just sort of continue to take the asset forward.
Yes. Thanks, Marc. I think it's fair to say that one of our strongest GM, Christophe, Will Droghe, who is at Hounde, Just arrived at Alsaba Dalla Massawa. Christo has been doing an amazing job at Agbaou and then at Hounde. And having him now at Alsaba Dalla Massawa will even accelerate, I mean, the integration of the asset into our portfolio and get the mine site to the Same status and culture that we have in the rest of the organization.
So extremely pleased by this integration progress.
Thanks for the color, Sebastian and Mark. My next question is regarding your pipeline of projects. So actually, you've got some projects in the feasibility stage and you're looking to advance as well. Are there any of these projects you would consider investing or maybe bringing in a JV partner to close those assets while you commence Petro and Kalan
Well, if you look at what we've done in the past, we have all the options available. It's a question of capital allocation for us. I think it's too early to say decisions that we will be taking for 2022. But obviously, we've got 3 strong projects which are progressing well From PFS to DFS with on one side the BioX plant for Sabodala Mercara Phase 2, Fetekro In Port Induevara and Kalana in Mali. Clearly, we won't Launch 3 projects at the same time in 2022.
So we will make some decisions Once we see the numbers and we'll focus on the assets which are the products which are giving the best returns for the company and for our shareholders.
Thanks, Sebastian. And just one final question before I jump back in the queue. Are you noticing any inflationary pressures on your current operations Projects that you plan to advance into construction?
So we had this question, I mean, several times over the last few months, I would probably the beginning of the year. I would say that clearly on the core supplies, we don't see yet significant or important inflation, Partly due to the fact that we are integrating progressively all the acquired assets, the Semaphore ones and the Terangar ones into our Supply chain, which in fact gives us even more bargaining power with our suppliers. So we've been able to across the board either keep the same prices or even Reduce some of the prices on supplies. We are still monitoring how things will evolve, in particular, on steel prices that are For our projects and if we feel at some point that there are risk of seeing spike in prices, then we might accelerate So we remain extremely flexible and reactive to ensure that We continue to make the right capital allocation choices and to protect our returns.
Perfect. That's it for me, and congrats again on a great quarter.
Thank you very much, Alif.
Our next question comes from the line of Raj Jay from BMO Capital Markets. Please go ahead.
Thank you, operator. Good afternoon Sebastian and team. Just a couple of questions. First up on the LSE listing, you've probably been asked this question a 100 times, but You are now closer to the listing being done. So just wanted to get a sense of your more clarity on Whether the S and P TSX composite inclusion is going to stay that way and the demand you expect from the LSE listing with And my second question is with respect to your 2 of the assets you bought through the Soma acquisition, so last year Mana And Bangu, if you can give us some visibility on the growth aspect, specifically Mana is beyond sea underground, are you looking at 1 underground or any other growth options?
And Bangu, what's
the cost exposure upside that you're looking at?
Sure. So maybe on the first question, which is something which has popped up a lot over the last few days, And I'll let Martino to complement if required. But first of all, what is clear is that we got confirmation from SME That they will review the index numbers. Something is going to happen before September. As we probably said several times, We are expected to be listed sometime in June on the LSE.
In the same way, we would be integrated into FTSE indices in September. Our current view is that we shouldn't Be taken out from the S&P GDX indices. And at the same time, we should be directed into the FTSE indices In September. So that's our current views. And I understand that some investors have been worried about that.
I can just confirm Based on our exchange with TSX and S and P that they are not intending to review, I mean, those indices before September. And based on the information we currently have, we do not expect Some changes as are in the indices. Manuel, I don't know if you want to add something specific on this.
The last thing to add would be that We're in a particular situation where we are not Canadian Taco today. We are already a foreign entity in Canada being Cayman Taco. So we're moving from being foreign payment to foreign U. K. So Canadian active.
They're looking at it much more from liquidity and where most of the shares are being traded. And we expect that to remain on TRX given we are not issuing equity in the U. K.
Second question, I mean, if you may just again the second question. I think it was around the next call.
Yes, yes, sure, Sebastian. So Mana, What's the growth opportunity beyond sea underground? Is 1 underground something you're looking kind of going to look at? And also at Boungou, Any explosion of side you're seeing there?
Yes, sure. So on Mana, I mean, it's a fair point. We believe that there is Potentially a very interesting, on the ground potential at Mana. In fact, we've been working on the PFS already, preliminary pre feasibility study for 1 underground. And we would expect, I mean, to move forward over the The next few months, so don't be surprised if as part of our, let's say, Q3 in September, we're able to disclose a bit more information of Around Wena Ground.
It seems that the economics are more attractive than continuing at the open pit side, In particular, in the North where grades are falling down and therefore costs are being higher. So yes, quite interested in seeing the Well, on the ground opportunity to move forward. In parallel, I mean, we are obviously aggressively start exploration around Mana. And I'll let maybe Patrick comment a bit on this as well as Boungou, which is important. I mean there has been very limited exploration done in the past by Sema for Boungou.
We started to put drilling campaigns there, and we will see that accelerating in Q2 and Q4. Tatiana, do you want to give a quick feedback on Mana and Boungou? Yes.
Hi, everybody. Well, actually, Mana has been the place where we have been the more aggressive in the Q1. Actually, we have been doing over 30,000 meters, which is Basically, what we are doing, we are checking quite a significant number of small Size target, but mostly looking at oxide. We are developing a former discovery named Maula, which is Lead to the Southwest, the exploration license and also extending into the exploration license. We are working Also on trying redoing the resource model on 1 hour to looking at 1 hour and And we are also conducting quite important exploration into a few North Sahara to compete possible target.
Also, for a few on the round possibility because we see some shoot going in that depth. So that's more of it for the Q1 on Mana. In Bongo, security, Particularly in this area, we are concentrating for the time being all around the mine. So we've been drilling between 2 pit, between a waste pit and It's Pete. We are waiting for some results.
We are concentrating right now mostly in an area which is at the Northwest, which is called Natou Northwest in just a junction between an area called Bonggu underground and the West So that's why we have quite good results. So basically, we are working on a concentric way in Boungou, going slowly by slowly, a bit further out And organizing ourselves to start to go out of the fence. So basically, that's why I can. But as it was said previously, Mana and Mambu are one of the 2 are 2 main areas where we are going to concentrate this year because on Bongru and Mana, we should have a higher budget that we had This year on either Ity or Hounde, which looking at the possibility in Hounde and Ity is quite significant effort for us Together with 1 year 1 Sabodala also where we are going to increase the exploration budget.
Thanks, Patrick.
Thanks so much, Patrick. And thanks, Sebastien. That's from me.
Thank you. Next question comes from the line of Don DeMarco from National Debt, please go ahead.
Thank you, operator. Hi, Sebastien. Okay. So strong operational quarter. You guys are pulling levers such as the dividend, the NCIB, the London listing.
And there's talk of Endeavour being positioned to become the new Randgold, yet Randgold traded at a premium, whereas we're seeing a valuation discrepancy between Endeavour And some other peers that have lower free cash flow and fewer development pipeline options. So my question is, what other levers do you have to increase your profile Or close this valuation gap? And or is it just a matter of time? Interesting comments. Thank you.
Yes. Thanks. I mean, I think that I mean, you're completely right. I think it's also a question of time. If you take Rem Gold with Mike Bristow has been on the LSC for 15 years and has been building his reputation And this multiple over years, and it took some years, I mean, to get where it was.
It should take even B12, having Sometimes a better multiple than we have. And I think that Clive has been around for a while and the success of R and D over the last 10, 15 years, again, It takes time to create, I would say, the visibility and credibility. And I think we are exactly on verge. We've just completed this 5 year turnaround plan. We are not getting strong cash flow, being able to pull out all the levers that other more mature companies have been doing over The past years with dividends buyback and much more visibility with the London listing, while KAES had already either London listing or New York listing.
So I think that we now will be in a position from June September to really compete at At same level with all those peers that tend to have better valuation than us, which in fact makes us extremely attractive From an entry point for investors. And that's why I would expect this gap, I mean, to very quickly Disappear and hopefully in the years to come demonstrate that yes, we are the new wrangled.
Okay, Great. Okay. So you mentioned the NCIB and so on. And I'm looking at your in terms of capital allocation, you paid out $60,000,000 in dividends in Q1. And what I read too is that you bought back about CAD13 1,000,000 at least worth of shares in Q2.
So on the NCIB, do you expect that pace to continue that we saw in Q2 in April rather? Or what are your thoughts going forward on that? You've been pretty active.
I think that you should see the NCIB getting much more active going forward. We were only active in like a few days The last we started in April and it was only a few days that the NCIB kicked in. And therefore, I would expect Much more activity from this quarter and clearly on the FCIB, yes.
Okay, Great. And maybe just finally, since the NDA noted higher grades at Sabodal and Massawa in the latter part of the year, Q1 grade was 2.53 grams per tonne. So what kind of grade should we model in H2? How much higher would they be than a 0.53 grams per tonne?
Marcinot or Marc, You want to give some color on H2?
Sure. So we expect grades to come up to about 2.8 In Q3 and going above 3 grams in Q4.
Okay. Thanks so much guys. That's all for me.
Thank you.
Thank you. Next question comes from the line of Anita Somi. Please go ahead.
Good morning, Sebastian and team. So first off, I just want to comment for what you guys put in your M and A financials. It's Both of them actually makes sense into my model and
I do find that you put a
senior committee that your multiples and multiples is not a black box for investors. My question, a little
bit more pictures everybody has got to the jury already. So,
from firstly, could you give us a rundown of the countries you operate in terms of an update on Political situation and then security as well, so summing all, Burkina Faso, bonbonoir. And then the second question, just in terms of M and A, obviously, There's been a transition in your part of the world and your name along with me too, I thought maybe potentially interested. And I was just wondering if you could give sort of a comment and iteration or prior view on M and A or however you feel it. And I'll get back.
Sure. No problem. In terms of countries where we operate, Senegal, I would say Senegal and Cote d'Ivoire are obviously Very stable politically. You probably saw that there was sometime in Q1, I think it was around March, There was 2 days of riots in the capital C, but that was mainly a political, I would say, issue where The use were trying, I mean, to protect a potential candidate for the next presidential election who was charged for, I think it was right and therefore created a bit of tensions. After 48 hours, I mean, it all cooled down.
So we received during the period, of course, because people thought it was the country was going on fire. And I said, look, Do we have investors calling on our Apple company or Tesla when there is riots In Chicago, and the answer is no. So yes, it happens that sometimes you have this type of event, but I would say that Senegal and DUIs are In the case of Cordova, in particular, since the reelection of President Ouattara, which is always Good when you have a strong, I would say, liberal president, which have been successful so far, but d'Ivoire had between 7% to 9% GDP growth over the last 5, 6 years. It's one of the fastest growing country in Africa. And having The same president running the country for 1 out of 5 years, I think he's going to be very good in terms of stability.
Burkina, I mean, obviously, we are the largest gold producer also in Burkina. It's a key country for us. A bit more tricky, I mean, on a security standpoint With regular attacks in one particular area of the country, which is the north part of the country at the three border region, three border Between Mali, Burkina and Brioard. But as you know, we've been operating in those countries for years. We believe that we have the right Our relationship with the government to and the right protocols with our security team to ensure we are able to protect the assets and the people, Hence, the fact that we were comfortable at the time to acquire Semasco assets and in particular the Boungou assets that we successfully restarted Back in Q3 last year.
So I would say that from a security standpoint in Burkina, it's not improving, neither worsening. There is a bit right now with the Burkinaabe Army being extremely active in the north with the French. And hopefully, in the next few weeks, should see some improvements on that front. That's, I would say, the high level picture on the 3 countries. In terms of M and A, as you said, I mean, we I think we've done our share of the job in Acquiring the right assets for our portfolio.
We need now to continue to integrate those assets We are on track, I mean, to deliver the $100,000,000 of annual synergies that we're expecting from those 2 acquisitions. We're now refocusing on organic costs. I mean we've got amazing projects coming up with Phase 1 and 2 of Sabadelloa Massawa and then with Fetekro and Kalana. So we're really going to focus on that. And I've never been interested in the HOCHUS gold, for example.
It's funny to see, I would say, A Latin American silver company going into right into Burkina. But, Ledi, it's going to be a dream to watch. And as such, unless Cliff Johnson wants to sell Fekola, which I don't think he intends to, we don't have any particular interest for
Yes. I had a lot about Clive selling for cola, but yes.
Anyway, and then just on the Tesla, I think Elon Musk Has his own comment this morning with Bitcoin, albeit I think there. But thank you for answering my question.
No, thank you for your question. End of time.
Next question comes from the line of Marc Bentley from Sheraschok. Please go ahead.
Sebastian and team. I have three questions today, if I may. The first one is you paid $47,000,000 to settle a Tarangagold offtake agreement. Is that a full and final settlement? Or are there any further payment due under that Agreement?
It's full and final.
Correct. Thank you. Second question, You currently have €700,000,000 drawn on the corporate finance facility and €868,000,000 Cash, which seems like an awful lot of cash. Could you just explain the Board's rationale for keeping so much cash whilst still Heavily drawn on that facility.
Sure. In fact, we are in the process of the restructuring of the balance sheet. As you might recall, I mean, we took up a lot of debt from the Teranga acquisition. As part of that, we had a bridge financing. And obviously, the objective for us is To replace that bridge financing with more long term, I would say, facilities.
The right time, we believe, I mean, to do it is once The listing is completed in London and once we have proper rating in order to be able to get the best instruments in place for the restructuring of the balance sheet. In the meantime, I mean in Q1, we repaid $100,000,000 on GarciaF and shortly after receiving At the end of Q1, the $200,000,000 cash injection from La Mancha. Beginning of Q2, we also repaid another $150,000,000 that you don't see yet On the RCF, so our objective is to make sure that by Q3 we have Much cleaner balance sheet. Fully agree with you. And the objective is not to keep the amount of revenue to pay down interest on the upside.
So we're really in that process.
Sebastian, that's Cat. And then my final question just in terms of Boungou. Has there been any security incidents at Boungou over the last Quarter or has it all been peaceful?
I must say all peaceful so far at Boungou. Obviously, there are There have been some incidents, but the closest one was probably around 120 kilometers away from Boungou and nothing to Report on Boungou on the mine itself. I think that the cooperation also with the government And the unit which has been allocated, I mean, to protect the mine site and also the transport route It's becoming more effective. It's ramping up progressively. So we're getting more and more confident.
And as you know, the first decision we took It's not to have any employee on the road between the capital city and the mine site. So all our staff are flying in and out. So yes, so far, I mean we obviously, it's a day to day evolving environment, and we are monitoring that very closely. But so far, happy with what has been put in place.
Good. If I understand correctly, as the situation improves, you're hoping to broaden your exploration activities beyond the mine site. Is that correct?
Yes, that's exactly correct.
Good. Thank you very much, Sebastian.
Thank you for your time.
There are no more questions at this time. Please continue.
As there are no more questions, we'll finish the call. I will, of course, remain available to address any additional questions offline. Have a good day and stay safe everyone.
That will conclude today's conference call. Thank you for participation. Ladies and gentlemen, you may now disconnect.