Ann: Endeavour Mining Updates Agbaou Gold Mine Pe, page-4

re: Ann: Endeavour Mining Updates Agbaou Gold... Response to Rowingboat post (from another thread).

Summary of points

1. I think EVR's AISC are actually lower than B2Gold. I am not sure what you include in Global AISC (I suppose the borrowing costs would be one cost). Basically the AISC are higher for almost all companies if you included borrowings, and all the past costs that went into the acquisition development of their assets.

2. I agree that taxes are too high in west Africa, and there is the real fear of confiscation of assets and new imposts (eg the super profits tax will be an issue once the POG heads closer to USD1800). That means one needs to diversify across regions and countries

3. EVR has 4 mines. I agree that the mine life of one or two of these mines are a bit short and they need to find more ore for them (especially higher grade ore). This is not an immediate problem, but it affects EVR's valuation. They have scope to develop a 5th mine in BK (180k ounce pa for 8 years) and I think there is another deposit in Mali (Kofi) that may turn into a mine one day. Once the POG heads up they will start funding more exploration, but for now they do not need to find ore over the next 3-4 years to pump out over 400k ounces pa, and that is what the market will focus on. Nzema's sulphide/gold ore could be developed in the future if the POG heads up - will need some sort of separation system for the sulphide.

4. I expect the net debt to be well under control by the end of 2014 - could be down to only around $120m, which is not a lot given the scale of their cashflow.

5. AISC is dropping, and I expect it to be close to (if not under) USD1000 by the end of this year - The Mali mine will be accessing higher grade ore from the second half of 2014, Agbaou will be operating well under USD1000 AISC, Nzema needs higher grade ore to bring costs down and they purchase 2+gram/tonne ore for that purpose.

6. EVR has a good technical team and their directors have a pretty solid history in the gold mining industry (except their CEO is a bit of an oddity).

EVR did a very good deal taking over Avion and I think they will do others as opportunities arise.

I do not intend to hold EVR forever. In the short to medium term over the next 2-4 years there is every reason to expect its share price to head up if the POG recovers.

I am not suggesting that EVR is the best or only goldie, just that it provides a lot of upside over the next couple of years, depending on the POG.

loki