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Ladies and gentlemen, thank you for standing by, and welcome to Endeavour Mining's Q1 2021 Results Conference Call. [Operator Instructions] Today's conference call is being recorded, and a transcript of the call will be available on Endeavour's website tomorrow. I would now like to hand the call over to management. Please go ahead.
Hi, everyone. I am Martino, Vice President, Strategy and Investor Relations, and I'd like to welcome you to our Q1 2021 results webcast. On the call, I am joined by Sebastien, Mark, Joanna and Patrick.Today's call will follow our usual format. We'll first present our results at a group level and then dive into by asset. We'll be as quick as possible to leave time for questions at the end. Before we start, please note our usual disclaimer.And now I'll hand it over to our CEO, Sebastien, to walk you through our Q1 results. Sebastien?
Thank you, Martino. I'm very excited to share our results for the quarter as it shows the success of the transformation we have executed over the past year and resulted in a more resilient business. We are well positioned to deliver strong cash flow and organic growth while, at the same time, rewarding shareholders through our dividend and buyback programs.You can see a summary of our Q1 results here on Slide 6. We achieved a great outcome in our first quarter, both operationally and financially, and we are on track to meet guidance. Production more than doubled versus Q1 2020 due, of course, to our acquisitions and, in particular, the recent successful integration of the Teranga assets. Looking at our per-share metrics, our operating cash flow per share is up nearly 50%, while the adjusted EPS is up 111%, consistent with our expectation that the transaction would be accretive to our shareholders while also benefiting from the continued strong gold price environment. Strategically, we are focused on ensuring our shareholders realize strong returns. As such, we have paid out our first $60 million dividend in January and started during Q2 our buyback program, which will run over the year.On Slide 7, you can see some of our key performance indicators for the quarter. We've continued to focus on our safety performance, with our ultimate goal of zero harm. On production, we are solidly on track relative to our full year guidance, and we will see a full quarter of production at Sabodala-Massawa and Wahgnion included in our results in Q2, and we anticipate our run rate to increase for the balance of the year. It's important to note that for Q1, it is only 1.5 months out of 3 for the Teranga assets that is consolidated here.Similarly, all-in sustaining costs came in at the bottom half of our target range for the full year. Again, we expect to see the impact of a full quarter from the lower-cost Sabodala-Massawa operation in Q2 and no further impact from the higher-cost Agbaou operation that was sold in March. As such, we are confident in our progress towards our full year target range of $850 to $900 per ounce.Safety. As I mentioned earlier, we continued to focus on improving our safety performance across the board, with several operations added into our platform. We are pleased with the strong safety culture at our newly acquired operation. You can see that our LTI remains low. However, with 4 LTIs that we have suffered in the last 12 months, we always seek to improve, and we continue to evaluate ways to move towards zero on this metric.On Slide 9, you can see our production and all-in sustaining cost results for the past 5 quarters. The key to remember here is that we had what was truly an exceptional quarter from the Endeavour and former SEMAFO assets in Q4 last year, which returned to a more normalized output in Q1. The quarter also factored in the sale of Agbaou and part of a quarter's production from Sabodala-Massawa and Wahgnion. We, therefore, expect improving consolidated production numbers in the upcoming quarters as we will report a full quarter of operations across our assets. On the right side of the page, you can see that our consolidated production has increased by 175,000 ounces in Q1 '21 versus Q1 '20, while our production per share has increased by 23% year-over-year.On Slide 10, I'd like to point out our portfolio's strong diversification across both assets and countries. This is a big shift compared to the portfolio we had 12 months ago. The pie chart shows the relative contribution of our operations to our production versus the same quarter last year. We've gone from 4 operations in 2 countries with 2 mines contributing 2/3 of our production to now 7 operations in 3 countries with no single operation accounting for more than 25% of our production. This contributes significantly to a reduction in our risk profile and helps to ensure that we can meet our guidance based on greater flexibility within the portfolio.Moving to Slide 11. You can see how our all-in sustaining margin has trended over the last several quarters. As discussed previously, our production increased modestly with just over 1.5 months of Sabodala-Massawa and Wahgnion included in Q1 and Agbaou was sold. But we were ultimately in a weaker gold price environment during the first quarter, which impacted margin versus Q4. Nevertheless, on a year-over-year basis, our all-in sustaining margin increased by $220 million from Q1 '20 to the current quarter, while all-in sustaining margin per share increased by 30%.On Slide 12, you can see the trend of our operating cash flow which increased by $137 million over the prior year quarter, with operating cash flow per share before working capital increasing by 47% compared with last year. Lower gold price resulted in a relatively modest decrease in the quarter under review.Looking now at Slide 13, you can see the steady improvement in the strength of our balance sheet from the completion of the major build of our Ity mine in 2019 through to the end of 2020 when we reached a net cash position. As part of the Teranga acquisition, we took about $332 million in net debt on the balance sheet. And despite this, at the end of March, we were still left with a very healthy balance sheet. Our goal is to quickly build a strong net cash position, which, at current gold prices, should happen over the next quarters.Having this strong balance sheet position with a net debt-to-EBITDA leverage ratio currently sitting below 2.2x gives us the flexibility to focus on both shareholder returns and on investing to unlock our organic growth potential. One of the best features of our new portfolio is the ability to generate sufficient cash to pay dividends and do buybacks while also being able to reinvest in the business to support organic growth projects and exploration.On the next slide, we highlight the strength of some of those near-term development projects. The Phase 1 expansion at Sabodala-Massawa is well underway. Phase 1 will allow the plant to better handle the higher-grade ore which come from the newly added higher-grade deposits on the Massawa property for a relatively modest investment of about $20 million in the back end of the plant. DFS for Phase 2 is underway for the BIOX plant, which will focus on processing the significant quantity of high-grade refractory ore from Massawa through a newly built BIOX plant.Beyond Sabodala-Massawa, we have the Fetekro and the Kalana projects, respectively, in Côte d'Ivoire and in Mali, where we recently released the results of positive prefeasibility studies, which showed both projects to have attractive operating metrics and attractive economic returns. We are focused on showing strong returns across the business, and this package of growth project is a great example of how we intend to continue to build on our existing portfolio to deliver just that.Moving to Slide 15. You can see the key target areas for our 2021 exploration budget of between $70 million to $90 million. Patrick and his team are expected to break a new record this year with over 600,000 meters of drilling. A large portion will be targeted at our most recently acquired assets, where we see significant opportunities to apply our proven exploration model to the newly acquired tenement. In addition, we will continue to allocate a meaningful portion of our exploration budget to greenfield exploration where we have repeatedly created value through the drill bit.In Q1, $16 million was spent at the newly acquired assets as well as at Houndé and Ity, where a series of new targets are being delineated. In addition, about $4 million was spent on greenfield and development projects. We anticipate activity will continue to ramp up in Q2 ahead of the rainy season before slowing down again during Q3. I am truly excited to see all of the organic opportunities that will play out over the course of the year.Moving now on to Section 2. I will now hand things over to Joanna, who will take you through the financial results in detail. Joanna?
Thanks, Sebastien. On Slide 17, we show a breakdown of our all-in sustaining margin on a nominal and a per-ounce basis. Because of the substantial changes within our portfolio of assets, this tells a more interesting story than on a nominal basis alone. At a group level, we had a strong improvement in our all-in sustaining margin, which was up $150 per ounce. For reference, on this page, we inserted variance explanations for key line items. But overall, the margin was helped by a stronger gold price, lower cash cost per ounce and lower sustaining capital.Moving to Slide 18, you can see a breakdown of our free cash flow, beginning with the all-in sustaining margin. As we talked about, the all-in sustaining margin has increased over Q1 2020 by a nominal $220 million to $330 million in Q1 of this year. Similarly, our all-in margin increased by $190 million. This in turn led to a total cash inflow of $154 million during the quarter. The main cash outflows during the quarter were an increase in our working capital, primarily from our acquired businesses; cash used in financing activities from our discontinued operations for the payment of dividends and taxes prior to the disposition; and increase in taxes paid due to the larger portfolio of operations; and increased spending on growth projects, primarily due to the acquisition of the Fetekro license in the quarter. These were offset by cash inflows from financing activities related to the private placement, which was completed at the end of the quarter as well as additional drawdowns on the financing.On Slide 19, we have a waterfall chart, which shows how our cash position has evolved during the quarter. Our operations generated around $198 million of net cash, while we spent approximately $105 million on our properties and paid $20 million to increase our ownership of Fetekro, while we also added $27 million in cash from the acquisition of Teranga. In the financing column, we received $200 million from La Mancha near the end of the quarter as well as $47 million in net proceeds from the refinancing of long-term debt, offset by the $60 million dividends that we paid in Q1 as well as $50 million paid to settle Teranga's gold offtake liability.We ended the quarter with a net debt of only $162 million despite absorbing approximately $332 million of net debt from Teranga, which corresponds to a leverage ratio of below 0.2x. At current gold prices, we expect to quickly return to a net cash position.Moving to Slide 20. We have a detailed breakdown of our net earnings. I won't go through every line here, but we'll address a few of the most significant items. I do want to start from the bottom of the slide, where you can see that we achieved 111% improvement in earnings per share from continuing operations compared to the prior year quarter. This is an important measure to consider as we look at the success of our recent corporate transaction, which have clearly contributed to improvements on a per-share basis.Perhaps the most significant single line item impacting our earnings at the corporate level was our increased current income tax expense. This is higher in Q1 2021 due primarily to the inclusion of the tax expenses from our newly acquired operations. Beyond that, we saw higher corporate costs resulting from our larger overall business as well as increased acquisition and restructuring costs related to the Teranga and SEMAFO acquisitions. Our corporate exploration expense also increased due to increased greenfield exploration activity, primarily on the newly acquired Teranga assets.I'll now hand things over to Mark, who will go through the details of our operations on a mine-by-mine basis. Thank you.
Thank you, Joanna, and hello to everyone on the call. I've just returned from visiting a number of our mines, and we'll happily trade the 40-degree heat at Sabodala for the current English weather any day. Starting on Slide 22, you can see our production bridge, which primarily shows the significant positive impact of the recently acquired operations as well as organic improvement at Houndé and Ity. For Boungou, in particular, the difference derives from the fact that the [ processing plant ] was idle for a number of months in late 2019 and early 2020 compared to a full quarter of operating in quarter 1 this year. As you have heard, the last quarter results includes only 1.5 months of performance from Sabodala-Massawa and Wahgnion. Overall, our production has increased by 175,000 ounces compared to the prior year's quarter.Moving to Slide 23. I will begin the review of our individual mining operations with Sabodala-Massawa, which is now our flagship asset. I was at the mine yesterday and can attest to the fact that the team has continued to make great progress on a number of fronts. Mining in the Sofia pit is continuing, with another new PC3000 shovel commissioned during the quarter, so the digging fleet is in good shape. The haul road construction to enable us to mine the CZ and NZ ore bodies is progressing well, as are other innovations to the former Barrick exploration camp, which is housing the mining crews for the Massawa crew.Moving to Slide 24. You can see an overview of our Phase 1 expansion plan. The first phase of upgrades to the processing plant are focused on debottlenecking the back end of the existing CIL to increase capacity to process the higher-grade free-milling Massawa ore. The civil works for the various work packages are all progressing well and are largely complete. The electrowinning cell has been installed and the elution column, acid wash column and regeneration kiln are all on site. Erection of steel work will commence in the coming weeks. These upgrades are anticipated to be completed in quarter 4 and have the potential to add production of up to 90,000 ounces per year by allowing the processing of higher-grade ore without excessive loss of gold to tailings.On Slide 25, you can see some pictures illustrating the Phase I work in progress. Starting at the top left, the foundations for the electric carbon regeneration kiln and various transfer tanks are complete. Part of the steel structure has been pre-assembled in the background. On the top right, the crew is finalizing preparations for the last concrete vault for elution and acid wash columns. In the bottom left, the kiln and the 2 columns are now on site. The last photo shows the leach tank bases with all concrete to be completed by next week. ENERCON, who are undertaking both the civil and SMP work, are currently fabricating various components and readiness for the next phase of construction.On Slide 26, you can see an indicative schematic of the proposed Phase 2 expansion of the processing plant to incorporate the BIOX circuit to treat the refractory ore. Phase 2 includes refractory plant, tailings facilities, water management and power station upgrade. The DFS will incorporate several optimizations of the PFS completed by Teranga, including improved geometallurgical modeling to incorporate more information on sulfur and arsenic, which are key drivers of the BIOX process, and pit optimization to determine the appropriate split of ore feed between the 2 processing plants. Further processing optimization will be undertaken in the crushing, milling and flotation circuits. We anticipate completion of the DFS in quarter 4 this year.Moving now to Slide 27, which outlines progress at the Houndé mine in more detail. I was also at Houndé last week, and I want to congratulate the team for their fantastic safety performance, which has passed 22 million manhours LTI-free. Now that the asset has been in operation for more than 3 years, we can see the maturity in the team yielding great results. Our short- and long-term planning has improved with experience and with increased mining flexibility through opening up the Kari pit. Kari Pump has been the big focus since mid-last year, and the team is now looking ahead to Kari West, where advanced grade control drilling is underway. There is a lot of enthusiasm at Houndé, and this is all thanks to the strong operational performance and exploration success.Reviewing the past quarter, production decreased as expected as increased tonnes milled were offset by lower grade and recoveries, as the high-grade oxide material from Kari Pump was blended with an increased proportion of fresh ore from other pits. All-in sustaining cost increased in part due to lower production as well as expected increase in strip ratio at Kari Pump. In future quarters, we anticipate the completion of mining from the Bouéré pit and the current stage of the Vindaloo Centre pit.Kari Pump will be the main production source until Kari West commences, while stripping is set to increase at Vindaloo Main. Grades are expected to increase in the latter part of the year due to the tenor of the ore zones being mined at Kari Pump.Turning now to Ity on Slide 28. We are very happy with the performance of Ity, which achieved its best quarter of production to date. The team had many challenges last year due to COVID, which was compounded by the focus on the TSF road construction and waste extraction. Our work to open up additional mining areas during 2020 is now paying off given the greater mining flexibility. Similar to Houndé, the team at Ity is excited for the future, given both the operational improvements achieved and ongoing resources discoveries made. We are now gearing up to start mining Le Plaque after the rainy season.Looking at the quarter, you can see that production has increased due to higher throughput, grades and recoveries, while all-in sustaining costs decreased due to lower mining and processing unit costs. Quarter 1 was better than expected as higher grade and recovery oxide ore was brought forward and the mill outperformed. Going forward, plant feed is anticipated to continue to be sourced from multiple areas, with Le Plaque on track for quarter 4. The team has been working on numerous initiatives to improve mill throughput with the high moisture content oxides, and we look forward to seeing the benefit these will bring as the wet season gets underway.On Slide 29, Boungou has now completed its second full quarter since the restart of mining operations in quarter 3 2020. Looking at quarter 1, performance was better than initially expected, as higher grade ore extraction was brought forward. Production declined moderately over quarter 4 due to lower throughput and grades, while recovery remained strong. All-in sustaining costs increased due to higher unit sustaining cost and a higher strip ratio, offset in part by lower mining unit costs and the commissioning of new contract and mining equipment.Plant feed is expected to continue from the West Pit, with waste stripping occurring at the East Pit throughout the year. Throughput is expected to remain steady, while recoveries will decline slightly. Mining will focus on waste extraction, which will lead to a modest decline in processed grade based on the location in the pit from where the ore is sourced, with an improvement expected late in the year.Moving to Slide 30 for Mana. I would like to thank the team for their hard work as I focus on optimizing the asset. Out of all the mines we have recently acquired, given its long operating history, Mana is where we find the most optimization levers. The main change brings the decision not to proceed with the Wona North Stage 4 cutback and instead to mine the Wona South Stage 2 and 3 cutbacks while setting up Wona North for an underground operation as highlighted in our recently published Reserves and annual information form. We've promoted a number of West Africans to management position and put in place a strong technical support team, which is starting to pay off with a renewed enthusiasm across the site.Looking at the quarter, you can see that, as expected, production from Mana decreased and all-in sustaining costs increased moderately as a result of lower processed grades from Wona South and slightly lower plant throughput, coupled with higher open pit mining costs due to longer haul distances and higher underground unit mining costs due to increased stope backfill, partially offset by lower processing costs due to lower power costs as some of the older gen sets have been replaced.Overall, I am very happy with Mana's performance, which was better than budgeted in the first quarter, driven by better-than-planned mill throughput and grade. Looking ahead, tonnes processed are expected to decline moderately due to an increased proportion of fresh ore from Wona South, while the processed grade is expected to increase in the latter part of the year due to higher underground stope grades.Moving on to Slide 31, we will be discussing the Wahgnion mine for the first time. I was at the mine last week and impressed with the way in which the team is focused on some of the important development projects, including construction of the second cell for the TSF, new airstrip, completion of the Fourkoura resettlement program and commencement of mining at the Fourkoura satellite pit. In quarter 1, Wahgnion saw increased production compared with the previous quarter, with increased grades and a modest decrease in throughput, while recoveries were flat.Looking forward to the balance of 2021, we anticipate an increase in waste extraction resulting in a higher strip ratio, but this will be offset somewhat as it will provide access to higher-grade oxides ore from the Fourkoura and Nogbele South pits in the latter portion of the year. Plant throughput and recoveries are anticipated to decrease marginally during the wet season.And finally, on Slide 32, let me discuss our Karma mine. Karma saw lower production in quarter 4 relative to prior quarters as the stack grade and recoveries declined with most of the ore for the quarter sourced from the GG1 pit. In addition, there was an increase in gold in circuit on account of the longer-than-normal leach time of the GG1 ore. Decreased production was partially offset by increased tonnes stacked, with good overall performance from the agglomerator and staffing system. All-in sustaining costs increased due to higher royalty that was partially offset by lower mining processing and G&A unit costs, driven by lower production drilling, blasting, rehandling and reagent costs.Looking ahead, the strip ratio is expected to increase in coming quarters, while production is expected to increase in the second half of the year due to higher grades and recoveries at Kao North.As you can see, performance across our operations has been strong in quarter 1, and all mines are on track to achieve their production and all-in sustaining cost guidance for 2021. This is a testament to the overall quality of our portfolio and the capabilities and great work for our operating team.And with that, I'll hand back to Sebastien to close out the presentation.
Thank you, Mark and Joanna, for your overviews.On Slide 34, we have a summary outlining our key priorities for the year. They are based on our guiding framework to continue building a resilient business that is a trusted partner and reward shareholders properly. We are pleased to be executing against each of these priorities, and we'll work hard to continue doing so in the coming months and years. We believe that the resilient business needs to first be underpinned by a high-quality portfolio, which after 5 years of hard work we now have. Our priority is now to generate stable cash flows while advancing our organic growth and exploration efforts.Having a high-quality portfolio of mines, which are profitable and boasts long mine lives, allows us to better plan for the future. This is a key element of being able to be a trusted partner. Having confidence in knowing that we will have a presence in our communities and host countries for many years to come means that we can invest in building our long-term partnerships with employees, communities and governments. We will be hosting a teach-in later this month, where we look forward to sharing the many ESG initiatives going across our business.And finally, having a high-quality portfolio with a strong balance sheet, underpinned by a social license to operate, means that we can reward our shareholders across cycles. It took us 5 years to get to this stage, and we are now proud to have recently initiated our dividend payments. For me, this marked the full turnaround of our business. In recent weeks, given the confidence that we have in our business and our cash flow, we started to supplement our dividend with buybacks. We also believe that our shareholders will be rewarded once we complete the process to obtain a premium listing on the LSE. This is expected to drive incremental demand for our shares and, therefore, be a strong catalyst. As such, we are pleased with the progress made, and we remain on track to list on the LSE in mid-June.And finally, to conclude on Slide 36 (sic) [ Slide 35 ], you can see the key upcoming catalysts. In the near term, we will host a capital markets teach-in event to familiarize London-based investors and capital market participants with our business ahead of our listing in mid-June. We also anticipate releasing an initial resource estimate on the Afema project, which we recently acquired from Teranga. We will have an exploration update on Sabodala-Massawa, and we also expect to provide a refreshed 5-year exploration strategy as we reach the close of our first 5-year exploration plan later this year.Finally, in the fourth quarter, we anticipate completing the Phase 1 expansion at Sabodala as well as the DFS for Phase 2 and the DFS for Fetekro. So despite the transformation that I talked about at the beginning, we do not stand still.We took great strides in the last 12 months to reposition our business. Today, we can truly say we've built a resilient business. More importantly, we have a clear road map ahead of us to ensure our business remains robust and continues to deliver returns for our shareholders.With that, I'd like to thank you all for dialing in and open the line up for questions.
[Operator Instructions] The first question comes from the line of Ovais Habib from Scotiabank.
Congratulations, Sebastien and Endeavour team, for a good quarter. Just my first question, Sebastien, is on the Teranga assets that you've acquired. Sebastien, Endeavour now has had these Teranga assets for about 2 months under the Endeavour umbrella. Can you give us some color on how the integration is going with these assets, especially at Sabodala-Massawa?
Sure. Well, I would say that since the announcement of the transaction, I've probably been now 4 times, I mean, to Massawa, Sabodala-Massawa. Mark was on the line, just came back yesterday again from Sabodala-Massawa looking at the progress, in particular, of the upgrades to the CIL plant, the back end of the CIL plant for the Phase 1 of the Sabodala-Massawa project. And I say -- I can say that we're extremely pleased with the progress. We've been saying since the closing that the integration is going extremely smoothly and has progressed very well because the culture of the 2 companies were very similar at the operating level. So yes, I mean it's very pleasing to see those assets well integrated into our portfolio.Mark, maybe you want to -- based on your trip yesterday, do you want to comment?
Yes. Sure. I guess one thing also to mention, and this was something that we knew about right from the beginning was the incumbent general manager was going to finish this year. So that transition has literally just taken place. And we're very confident that it'll be a smooth transition. We see lots of really good work done by the Teranga team and lots of good opportunities still. I think it's a fantastic asset with a really, really strong team there, and everything that I've seen just suggests that there's good opportunities for us to just sort of continue to take the asset forward.
Yes. Thanks, Mark. I think it's fair to say that one of our strongest GM, Christo Viljoen, who was at Houndé, just arrived at Sabodala-Massawa. Christo has been doing an amazing job at Agbaou and then at Houndé. And having him now at Sabodala-Massawa will even accelerate, I mean, the integration of the asset into our portfolio and get the mine site to the same standards and culture that we have in the rest of the organization. So extremely pleased by this integration progress.
My next question is regarding your pipeline of projects. So actually, you've got several projects that are in the feasibility stage and other projects that you're looking to advance as well. Are there any of these projects that you would consider divesting or maybe bringing in a JV partner to advance those assets while you kind of advance Fetekro and Kalana and those other assets as well?
Well, if you look at what we've done in the past, we have all the options available. It's a question of capital allocation for us. I think it's too early to say decisions that we will be taking for 2022, but obviously, we've got 3 strong projects which are progressing well from PFS to DFS, with, on one side, the BIOX plant for Sabodala-Massawa Phase 2, Fetekro in Cote d'Ivoire and Kalana in Mali. Clearly, we won't launch 3 projects at the same time in '22, so we will make some decisions once we see the numbers. And we'll focus on the assets which are -- the projects which are giving the best returns for the company and for our shareholders.
And just one final question before I jump back in the queue. Are you noticing any inflationary pressures on your current operations or projects that you plan to advance into construction?
So we had this question, I mean, several times over the last few months, I would say, probably since the beginning of the year. I would say that on the core supplies, we don't see yet significant or important inflation, partly due to the fact that we are integrating progressively all the acquired assets, the SEMAFO ones and the Teranga ones into our supply chain, which, in fact, gives us even more bargaining power with our suppliers. So we've been able to, across the board, either keep the same prices or even reduce some of the prices on cost supplies.We are still monitoring how things will evolve, in particular, on steel prices and other 4 projects. And if we feel at some point that there are risks of seeing spike in prices, then we might accelerate or anticipate or lock in some prices for our key projects for the future. So we remain extremely flexible and reactive to ensure that we continue to make the right capital allocation choices and protect our returns.
The next question comes from the line of Raj Ray from BMO Capital Markets.
Sebastien and team, just a couple of questions, first up, on the LSE listing. You've probably been asked this question 1,000 times, but you are now closer to the listing being done. So just wanted to get if you have a sense of more clarity on whether the S&P/TSX Composite inclusion is going to stay that way and the demand you expect from the LSE listing with respect to different indexing?And my second question is with respect to your -- 2 of the assets you bought through the SEMAFO acquisition last year, Mana and Boungou, if you can give us some visibility on the growth aspect. Specifically, Mana is beyond Siou underground. Are you looking at Wona underground or any other growth options? And Boungou, what is the exploration upside that you're looking at?
Sure. So maybe on the first question, which is something which has popped up a lot over the last few days, and I'll let Martino to complement if required. But first of all, what is clear is that we got confirmation from S&P that they will review, I mean, the index in September. So nothing is going to happen before September. As we probably said several times, we are expecting to be listed sometimes in June on the LSE and the same way we would be integrated into FTSE indices in September. Our current view is that we shouldn't be taken out from the S&P, GDX indices. And at the same time, we should be integrated into the FTSE indices in September.So that's our current views. And I understand that some investors have been worried about that. I can just confirm based on our exchange with TSX and S&P that they are not intending to review, I mean, those indices before September and that based on the information we currently have, we do not expect some changes as in the indices. Martino, I don't know if you want to add something specific on this.
The last thing to add would be that we're in a peculiar situation where we're not a Canadian topco today. We are already a foreign entity in Canada being Cayman topco. So we're moving from being foreign Cayman to foreign U.K. So from a Canadian perspective, they're looking at it much more from a liquidity, where most of the shares are being traded, and we expect that to remain on the TSX given we are not issuing equity in the U.K.
Okay. Thanks, Martino. Second question, I mean, if you may just ask again the second question. I think it was around Mana growth.
Yes, yes. Sure, Sebastien. So yes, Mana, what's the growth opportunity beyond Siou underground? Is Wona underground something you're looking -- you're going to look at? And also, at Boungou, any exploration upside you're seeing there?
Yes. Sure. So on Mana, I mean, it's a fair point. I mean we believe that there is potentially a very interesting Wona underground potential at Mana. In fact, we've been working on the PFS already, preliminary -- prefeasibility study for Wona underground. And we would expect, I mean, to move that forward over the next few months. So I wouldn't be surprised as part of our, let's say, Q3 in September, we are able to disclose a bit more information of -- around Wona underground. It seems that the economics are more attractive than continuing the open pit side, in particular in the north where grades are falling down and, therefore, costs are being higher.So yes, quite interested in seeing the Wona underground opportunity to move forward. In parallel, I mean, we are -- obviously, aggressively started exploration around Mana, and I'll let maybe Patrick comment a bit on this, as well as Boungou, which is important. I mean there has been very limited exploration done in the past by SEMAFO and Boungou. We started to put drilling campaigns there, and we will see that accelerating in Q2 and Q4. Patrick, I mean, do you want to give quick feedback on Mana and Boungou?
Yes. Well, actually, Mana has been the place where we have been more aggressive in the first quarter. Actually, we have been drilling over 30,000 meters, which is quite a lot. Basically, what we are doing, we are checking quite a significant number of small size target, but mostly looking at oxide. We are developing a former discovery named [ Marula ], which is a property to the Southeast -- Southwest with [ expedition ] license and also extending into the exploration license. We are working also on trying -- redoing resource model on Wona to -- looking at Wona underground stuff, and we are also conducting quite important exploration into a few North [ areas for ] open pit possible target, also a few underground possibility because we see some fruit going down in that depth. So that's most of it for the first quarter on Mana.In Boungou, due to security, particularly in this area, we are concentrating for the time being all around the mine, so we've been [ reading ] in between the 2 pits, between West Pit and East Pit. We are waiting for some results. We are concentrating right now mostly in an area which is at Northwest, which is called [ Natuwu ] Northwest and just a junction between an area called Boungou underground and the West Pit. So that's where we have quite good results.So basically, we are working on a concentric way in Boungou, going slowly by slowly a bit further out and organizing ourselves to start to go out of the [ fence ]. So basically, that's quite I can, but as it was said previously, Mana and Boungou are one of the 2 main areas where we are willing to concentrate this year because on Boungou and Mana, we should have a higher budget that we had this year on either Ity or Houndé, which, looking at the possibility in Houndé and Ity, is quite significant effort from us, together with [ one year ] on Sabodala also where we are going to increase the exploration budget.
Thanks, Patrick.
Next question comes from the line of Don DeMarco from National Bank.
Strong operational quarter. You guys are pulling levers such as the dividend, the NCIB, the London listing. And there's a talk of Endeavour being positioned to become the new Randgold, yet Randgold traded at a premium, whereas we're seeing a valuation discrepancy between Endeavour and some other peers that have lower free cash flow and fewer development pipeline options. So my question is, what other levers do you have to increase your profile or close this valuation gap? And -- or is it just a matter of time? Be interested in your comments.
Yes. Thanks. I mean I think that -- I mean you're completely right. I think it's also a question of time. If you take Randgold with Mark Bristow, has been on the LSE for 15 years and has been building his reputation and this multiple over years. And it took some years, I mean, to get where he was. If you take -- even B2Gold is having sometimes a better multiple than we have. And same thing, I think that Clive has been around for a while. And the success of Bema and B2 over the last 10, 15 years, again, it takes time to create, I would say, that visibility and credibility. And I think we are exactly on that verge. We've just completed this 5-year turnaround plan. We are not getting -- now getting strong cash flow, being able to pull out all the levers that other more mature companies have been doing over the past years with dividends, buyback and much more visibility with the London listing, while our peers had already either London listing or New York listing.So I think that we now will be in a position from June and September to really compete at the same level with all those peers that tend to have better valuation than us, which, in fact, makes us extremely attractive from an entry point for investors. And that's why I would expect this gap, I mean, to very quickly disappear and, hopefully, in the years to come, demonstrate that, yes, we are the new Randgold.
Okay. Great. Okay. So you mentioned the NCIB and so on. And I'm looking at your -- in terms of capital allocation, you paid out $60 million in dividends in Q1. And what I read too is that you bought back about CAD 13 million at least worth of shares in Q2. So on the NCIB, do you expect that pace to continue that we saw in Q2 -- in April, rather? Or what are your thoughts going forward on that? You've been pretty active.
I think that you should see the NCIB getting much more active going forward. We were only active, in fact, a few days over the last -- we started in April, and it was only a few days that the NCIB kicked in. And therefore, I would expect much more activity from this quarter and Q3 on the NCIB. Yes.
Okay. Great. And maybe just finally, since the MDA noted higher grades at Sabodala-Massawa in the latter part of the year, Q1 grade was 2.53 grams per tonne. So what kind of grades should we model in H2? How much higher would they be than 2.53 grams per tonne?
Martino or Mark, do you want to give some color on H2?
Sure. So we expect grades to come up to about 2.8 in Q3 and going above 3 grams in Q4.
Next question comes from the line of Anita Soni.
So first off, I just want to comment, thank you for the disclosure that you guys put in your MD&A and financials. It's pretty fulsome, and it actually makes sense when I put into my model. And I do find that for the senior companies, if you do that, your multiple -- you get a premium multiple because it's not as much of a black box for investors.But secondly, my 2 questions, a little bit more big picture since everybody has gone into the nitty-gritty already. So from -- firstly, could you give us a rundown of the countries you operate in, in terms of an update on the political situation and the security as well, so Senegal, Burkina Faso, Côte d'Ivoire?And then the second question, just in terms of M&A, obviously, there's been transactions in your part of the world and your name along with B2 comes up as maybe potentially interested. And I was just wondering if you could give sort of a comment or reiteration on your prior view on M&A or whatever you feel fit. And I'll leave at that.
Sure. No problem. In terms of countries where we operate, Senegal, I would say, Senegal and Côte d'Ivoire are, obviously, very stable politically. You probably saw that there was -- some time in Q1, I think, it was around March, there were 2 days of riots in the capital city. But that was mainly a political, I would say, issue, where the youth were trying, I mean, to protect a potential candidate for the next presidential election who was charged for, I think, it was rape and, therefore, it created a bit of tension. After 48 hours, I mean, it all cooled down. So we received during that period, of course, because people thought it was -- the country was going on fire. And I said, look, do we have investors calling Apple company or Tesla when there is a riot in Chicago? And the answer is no.So yes, it happens that sometimes you have these type of events, but I would say that Senegal and Côte d'Ivoire are extremely stable. In the case of Côte d'Ivoire, in particular, since the re-election of President Ouattara, which is always good when you have a strong, I would say, liberal president, which has been successful so far. Côte d'Ivoire had between 7% to 9% GDP growth over the last 5, 6 years. It's one of the fastest-growing countries in Africa. And having the same president running the country for another 5 years, I think, is going to be very good in terms of stability.Burkina, I mean, obviously, we are the largest gold producer also in Burkina. It's a key country for us. A bit more tricky, I mean, from a security standpoint, with regular attacks in one particular area of the country, which is the North part of the country at the 3-border region, 3 borders between Mali, Burkina and Côte d'Ivoire. But as you know, we've been operating in those countries for years. We believe that we have the right relationship with the government to -- and the right protocols with our security team to ensure we are able to protect the assets and the people. Hence, the fact that we were comfortable at the time to acquire SEMAFO assets and, in particular, the Boungou assets that we successfully restarted back in Q3 last year.So I would say that from a security standpoint, in Burkina, things are not improving, neither worsening. There is a big push right now with the Burkinabe army being extremely active in the North with the French. And hopefully, in the next few weeks, we should see some improvements on that front. That's, I would say, the high-level picture on the 3 countries.In terms of M&A, as you said, I mean, we -- I think, we've done our share of the job in acquiring the right assets for our portfolio. We need now to continue to integrate those assets successfully. We are on track, I mean, to deliver the $100 million of annual synergies that we are expecting from those 2 acquisitions. We're now really focusing on organic growth. I mean we've got amazing projects coming up with Phase 1 and 2 of Sabodala-Massawa and then with Fetekro and Kalana. So we're really going to focus on that and never been interested in [indiscernible], for example. It's funny to see, I would say, a Latin American silver company going into -- right into Burkina, but let's see. It's going to be interesting to watch. And for other assets, unless Clive Johnson wants to sell Fourkoura, which I don't think he intends to, we don't have any particular interest for external growth.
Okay. I hadn't even thought about Clive selling Fourkoura, but -- yes. Anyway, and just on the Tesla comments, I think, Elon Musk has his own problems this morning with Bitcoin, self-made, I think, there.
Thank you for your question and your time.
Next question comes from the line of Mark Bentley from ShareSoc.
Sebastien and team. I have 3 questions today, if I may. The first one is, you paid $47 million to settle a Teranga gold offtake agreement. Is that a full and final settlement? Or are there any further payments due under that agreement?
It's full and final.
Great. Second question. You currently have $700 million drawn on the corporate finance facility and $868 million of cash, which seems like an awful lot of cash. Could you just explain the Board's rationale for keeping so much cash whilst still heavily drawn on that facility?
Sure. In fact, we are in the process of the restructuring of the balance sheet. As you might recall, I mean, we took up a lot of debt from the Teranga acquisition. As part of that, we had a bridge financing and, obviously, the objective for us is to replace that bridge financing with more long-term, I would say, facilities. The right time we believe, I mean, to do it is once the listing is completed in London and once we have proper rating in order to be able to get the best instruments in place for the restructuring of the balance sheet.In the meantime, I mean, in Q1, I mean, we repaid $100 million on the RCF and shortly after receiving at the end of Q1 the $200 million cash injection from La Mancha, beginning of Q2, we also repaid another $150 million that you don't see yet on the RCF. So our objective is to make sure that by Q3, we have a much cleaner balance sheet. I fully agree with you, I mean, the objective is not to keep a huge amount of cash and continue to pay debt and interest on the other side. So we're really in that process.
That's clear. And then my final question just concerns Boungou. Have there been any security incidents at Boungou over the last quarter? Or has it all been peaceful?
I must say all peaceful so far at Boungou. Obviously, there are -- there have been some incidents, but the closest one was probably around 120 kilometers away from Boungou, and nothing to report on Boungou and the mine itself. I think that the cooperation also with the government and the unit, which has been allocated, I mean, to protect the mine site and also the transport road is becoming more and more effective. It's ramping up progressively, so we're getting more and more confident.And as you know, the first decision we took is not to have any employee on the road between the capital city and the mine side. So all our staff are flying in and out. So yes, so far, I mean, we -- obviously, it's a day-to-day evolving environment, and we are monitoring that very closely. But so far, happy with what has been put in place.
Good. So if I understand correctly, as the situation improves, you're hoping to broaden your exploration activities beyond the mine site. Is that correct?
Yes, that's exactly correct.
There are no more questions at this time. Please continue.
As there are no more questions, we'll finish the call. I will, of course, remain available to address any additional questions off-line. Have a good day, and stay safe, everyone.
That will conclude today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.