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- Endomines - Growth in production and resources
Endomines - Growth in production and resources
Endomines releases its H2/24 results on 13th of February. Despite experiencing some production issues in the fourth quarter, we estimate that net sales growth has led to improved profitability for Pampalo. We increase our TP to EUR 8.3 while revise recommendation to REDUCE (prev. HOLD) to match the updated ratings methodology (see page 3).
Some production hiccups in Q4, preparing financing package
Endomines produced 14,304 ounces of gold in 2024, slightly more than we estimated after the profit warning related to production issues in November (Evli est. 14 110 ounces). In January, the company announced that it is beginning to prepare a financing package of around EUR 10m. The purpose of the financing is to enable the execution of the company’s growth strategy that is to be updated during the spring 2025. The EUR 10m financing consists of convertible loans worth of EUR 2.3m and of the remaining approx. EUR 8m where the form of financing is yet to be decided.
Riding the golden wave
In 2024, gold continued its strong run, with the price increasing by over 25%, marking its best performance in 14 years. Gold is now trading above the 2850 USD/oz mark, at all time high levels. With the strong performance, the consensus gold price estimates have increased for the coming years. We have also revised our gold price forecasts upwards. With the production of 14,304 ounces and high gold market prices in Q4, we expect net sales of EUR 28.6m for FY 2024. Due to increased volume and strong market prices, we project an EBITDA of EUR 5.5m. We model similar overhead costs for H2 compared to H1 while we estimate a touch higher production cost for Pampalo. For 2025, we continue to model production of over 18,200 ounces (growth of 27% y/y) and net sales of EUR 42.4m (growth of 48% y/y). We expect some production growth for Pampalo yet the largest growth in volumes is expected to materialize from Hosko. With the production growth and our updated estimates for market parameters, we estimate EBITDA of EUR 13.7m for 2025E with a margin of 32%. Endomines has typically updated its resources in connection with H2 report. We expect the total KGL resource base (incl. Pampalo) to contain somewhere around 500k ounces of gold with the largest increase in resources in the Southern Gold Line.
REDUCE (prev. HOLD) with a TP of EUR 8.3
After positive adjustments to our estimates, the value of Pampalo and the Karelian gold line increases in our SOTP. In line with the SOTP, we increase TP to EUR 8.3 (prev. EUR 7.7). We revise our recommendation to REDUCE (prev. HOLD, see page 3).