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Endeavour in the mix to break into FTSE100 after posting strong third quarter earnings

ENDEAVOUR Mining said it could crack the FTSE100 Index in the next few months following a 22% improvement in its market value since taking a premium listing on the London Stock Exchange.

“As our share price continues to perform well, we have sight on becoming eligible for other indices,” said Sébastien de Montessus, CEO of Endeavour Mining. “Next up could be the FTSE 100 which has a market cap review date on 30 November.”

The West African gold producer had been ranked between 90th position and the early hundreds since the LSE listing. “So we’re watching that closely,” said De Montessus.

Endeavour reported third quarter gold production of 382,000 ounces, slightly down on the previous quarter. However, this was considered to be a good performance as it was rainy season for Endeavour’s Burkina Faso, Cote d’Ivoire and Senegal mines.

Given the final three months of the financial year is normally the strongest production quarter, the company said it could report full year output at the top end of its guidance. “We are on track to again beat our full year production guidance for the ninth year in a row and produce over 1.5 million ounces,” said De Montessus.

Based on market capitalisation, companies that are ranked the 90th largest and larger are automatically included into the FTSE100 Index which attracts mandatory investment of certain funds. A range of factors over several months of performance are considered when deciding on inclusion to the index from 90th position to 100, the company said.

De Montessus said about a quarter of Endeavour’s trading volume is traded in London while nearly 20% of its shares outstanding have migrated to the UK. “These are strong stats for just the first few months of trading particularly when compared to some of our geo listed peers,” he said.

Shares in the company gained about a fifth since mid-July when it listed on the LSE. In September, Endeavour Mining was included in the FTSE 250 and the FTSE all share indices. De Montessus said he expected this would “… drive both direct demand and passive demand as investors start to take notes of our index inclusion. [This] should continue to boost our liquidity on the UK line”.

Endeavour reported third quarter adjusted EBITDA of $370m, down on the $400m reported in the third quarter. Yet the business continues to generate strong cash with operating cash flow of $312m after paying a $70m dividend and $35m in share buy-backs. The company posted an operating cash flow of $300m in the previous quarter. Net debt stood at $70m as of end-September.

The company has committed to a minimum payout of $125m but this was expected to increase to at least $175m by its 2023 financial year.

“I say this is a minimum dividend because it will be supplemented with additional dividends and share buybacks provided that the prevailing gold price remains above $1,500/oz and our leverage remains below 0.5 times net debt to adjusted EBITDA,” said De Montessus.

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