Full disclosure: I own shares in Endeavor Mining.

I will strive to get 1 of these posted each day, except on Sunday. We値l see how it goes.

Endeavor is in the process of taking over Teranga Mining (TGZ-T) and when that occurs, they値l become the largest single entity gold miner in Africa, having already consolidated Semafo痴 assets. This is a very astute management team, the shares are trading at ludicrous cheap valuations, and a new dividend policy has been initiated, which should see tremendous growth in shareholder returns over time. This has become my single largest gold position at 2.25% portfolio weight.

The analysis below does not include the Teranga assets, I値l incorporate those when they complete the merger.

All dollars are in USD for this analysis.

Production profile (000痴 of oz.):

Q3-20 = 244
FY 2020 = 1,025
FY 2021 = 1,050
FY 2022 = 1,100

Cash costs per oz.

Q3-20 = $685
FY 2020 = $675
FY 2021 = $670

Balance Sheet Analysis:

Cash = $523
Debt = ($698)
Net Debt = ($175)

*Solid balance sheet, even when they eventually take on the $400 M or so in net debt from Teranga.

Shares outstanding = 163.0
Share price = $22.30
Market Cap = $3,637
Enterprise Valuation = $3,812

EBITDA Profile (with EV: EBITDA):

2020 EBITDA = $750 (5.1x)
2021 EBITDA = $1,000 (3.8x)

Free Cash flow analysis (all in 000痴 of USD):

_________________2020________2021

CFFO____________645_________900
CAPEX___________400_________450
Free CF__________+245________+400
Free CF yield______+6.4%______+11.8%

Reserves Analysis:

Reserves = 6.2 mm oz.
Resources = 8.6 mm oz.

Reserve Life Index (2021 production):

Reserves = 5.9 years
Resources = 8.2 years

EV : Reserve = $615
EV: Resource = $443

NAV = ?
P/NAV = ?

EV:Production Analysis:

2020 = $3,719
2021 = $3,630
2022 = $3,465
*Dirt cheap

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My subjective take: Endeavor is in the midst of becoming. A major player in the African gold space. By the end of next year, they値l be Africa痴 largest single gold producer, minting over 1,500 oz. a year with the Teranga assets merged in. In 2022 and beyond, the company will sport an ultra cheap valuation, rock solid balance sheet, and the ability to return profits to shareholders via dividends and buybacks. I expect total shareholder returns to eclipse 5% annualized in 2022 and beyond, with potential for dramatic improvements if gold prices can average above $2,000 an ounce in that timeframe.

Gold price assumptions used:

2020 = $1,790
2021 = $2,100
2022 = $2,000

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