On 29 October, Endeavour Mining (OTC:EDVMF) announced a maiden resource at its Fetekro property in north central Côte d’Ivoire of 719koz Au, contained within 9.8Mt. The resource equates to 4.0% of Endeavour’s prior, global resource (on a 100% basis), or 4.8% on an attributable basis. However, it equates to a rather more significant 4.5-7.6% of Endeavour’s 9.5-16.0Moz exploration target over the course of the next five years. Moreover, at 2.25g/t, its average grade is 21.0% above the average of Endeavour’s other resources. The target remains open at depth and to the south-east, while ground geophysics and geochemical data suggest that its mineralisation also extends towards the east and north-east. As a result, a second, 45,000m exploration campaign has now been launched by Endeavour in conjunction with a regional exploration programme to test nearby targets.
Resource multiple valuation up to 0.44/share
The cost of delineating Fetekro’s resource, to date, is reported to be US$6m (5.6 US cents per EDV share), which equates to a discovery cost of US$8.34 per resource oz of gold and is below the average estimated US$14.12/oz cost of discovery projected across its exploration programme for 9.5-16.0Moz over all of the group’s geological assets over the course of the next five years. Ultimately, Endeavour’s target at Fetekro is in excess of 2Moz (to support standalone production in the order of 150-200koz pa) and airborne surveys to date have confirmed that this scale is achievable. Applying a pre-development valuation for EDV’s existing resources of US$66.00/oz (see page 3) suggests a valuation for Fetekro to Endeavour of US$47.5m (or US$0.44/share), a valuation that is implicitly supported by applying a similar methodology to nine out of 14 of Endeavour’s peers with a similar positive pre-development resource valuation (see Exhibit 2).
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