Endomines - Having a record year
Endomines delivered a strong performance in H1, despite a slight shortfall relative to our profitability estimate. We anticipate continued strong results in H2 and beyond, while pricing remains elevated.
Pampalo cash cost was slightly higher than expected in H1
With production growth of near 26% and some 39% higher average gold price, the company’s sales grew expectedly 64% to EUR 21.5m (Evli est. EUR 22.4m). Group EBITDA came close to our estimate yet fell short as Pampalo’s cash cost did not scale down according to our estimate (group EBITDA act. EUR 7.7m, Evli est. EUR 9.1m). According to our understanding, despite higher volumes, the cash cost was negatively affected by lower head grade. Due to higher gold price levels, the company has been able to utilize the lower grade ore which has slightly increased the cash cost per ounce. The overhead expenses were in line with our estimates. The company continues seeking solutions for its US deposits. The US assets incur annual costs of about EUR 0.7m, mostly from Idaho, making the divestment of Idaho assets the top priority in the US.
Power Mining should drive lower cash cost from 2026
We keep our estimates unchanged for H2 volumes, as we estimate gold production of some 19,300 ounces for the full year. We expect production growth to be faster in H2 in line with the company’s guidance. Faster production growth coupled with higher gold prices should continue to drive rapid net sales growth also in H2. We have increased our estimate for Pampalo cash cost slightly for H2 due to the company’s selective mining approach seen in H1 and possible hiccups to production related to the Power Mining acquisition in Q3. Despite this, profitability should improve over H1 as a product of higher gold price. On the other hand, we have further decreased our estimate for cash cost for the coming years. Going forward, Endomines expects Power Mining acquisition to reduce cash cost by some EUR 90-120 per ounce starting from 2026. We also expect the average gold price in 2026 to be higher than in 2025. Given these components and increased production, we model improving profitability also going forward. The main negative driver remains EUR/USD as the dollar has further depreciated from the levels seen in H1.
SELL with a TP of EUR 24.5
After slight updates to our estimates and market parameters, we retain TP at EUR 24.5 and rating at SELL. The current share price remains above the fair value derived from our SOTP-model. In addition, the pricing looks elevated compared to peers on both resource and earnings-based multiples.