Endomines - Riding the golden wave
Endomines is progressing well in line with its strategy and the H2/24 was clear evidence of the company’s capability to deliver results. After significant net positive adjustments to our models, we increase our TP to EUR 10.8 (prev. EUR 8.3).
Profitability in Pampalo topped our estimates
Revenue in H2 amounted to EUR 15.6m (EUR 9.0m H2/23), in line with our estimate of EUR 15.4m as the production figures were already reported. The production growth rate of 20.7%, combined with an average gold price of 2,599 USD per ounce, contributed to the overall growth. The group EBITDA in H2 was at EUR 3.9m (-1.0m H2 2023), higher than our estimate of EUR 3.6m. The profitability of Pampalo’s operations developed favorably and was higher than we estimated as cash cost was at 1,252 USD per ounce (H2/23 1,399 USD per ounce). The group overhead was slightly higher than we expected, yet it was more than offset by Pampalo’s profitability.
Earnings should level up in 2025
Endomines estimates gold production to be between 16 000 and 22 000 ounces in 2025. Production growth is estimated to be greater during the H2. We have revised our production estimate to 19 300 ounces (prev. 18 200 ounces). With average gold price estimate of nearly 2,700 USD/oz for 2025E, we forecast substantial revenue growth of 61% to EUR 46.2m. We have also decreased the cash cost estimate slightly for Pampalo as the cost level seems to scale well with increasing volumes. We model similar group overhead costs for 2025. With the current estimate parameters, we forecast group EBITDA of EUR 17.3m with a margin of 37%. Our projections for the coming years have also been adjusted upward for both volumes and profitability. Endomines will update its resources during the spring 2025. 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 with a TP of EUR 10.8 (prev. EUR 8.3)
We have made several adjustments to our SOTP model. While the changes positively impact the valuation of the company’s assets in the Karelian Gold Line, we have lowered our estimates for the value of the US assets. With the Pampalo production operations developing favorably backed by the strong gold market and the weight of the US asset portfolio decreased in our SOTP-model, we now base our TP in the middle of our fair value range.