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2016-04-11

Endeavour Mining Corporation: Endeavour Mining starts construction of its Houndé Project, its next low-cost gold mine

Endeavour starts construction of its Houndé Project, its next low-cost gold
mine
View News Release in PDF Format
http://hugin.info/171882/R/2002257/738873.pdf
> Houndé to raise Endeavour's overall portfolio quality

* Average annual production of 235,000 ounces at All-In Sustaining Costs
("AISC") of $610/oz over the first 4 years
* 10 year mine life based on current reserves
* Significant exploration upside to extend mine life
* Expected to increase the Group's production to approximately 900,000 ounces
per year and lower average AISC to below $800/oz by 2018(1)

> $328 million capex, fully funded from existing sources of capital

> 18-month construction period with gold pour expected Q4-2017

> 15-month Gold Revenue Protection Program implemented to increase cash flow
certainty during peak construction period

George Town,
April 11,
2016
- Endeavour Mining (TSX:EDV) (OTCQX:EDVMF) is pleased to announce that its
90%-owned Houndé Project in Burkina Faso has entered the construction phase
of its development, following approval from its Board of Directors.

The Houndé Project is expected to deliver average production of 190,000 ounces
per year over a 10-year mine life at an AISC of US$709/oz, based on current
reserves. The project is an open pit mine with a 3.0Mtpa gravity circuit/
Carbon-In-Leach plant. The initial capital cost is estimated at $328 million,
inclusive of $47 million for the owner-mining fleet. The Project is permitted
to commence operations and early earthworks have begun.

Neil Woodyer, CEO of Endeavour, stated:
"With the ramp-up of Karma soon underway, and our operations delivering a
strong performance, we are now well positioned to build the Houndé project,
which will further lift the overall quality of our portfolio. Once in
production, it will become our flagship low-cost mine and will rank amongst
West Africa's top tier cash generating mines. Furthermore, Houndé will
benefit both from our construction track-record, demonstrated most recently
at Agbaou, and our team's operating experience in Burkina Faso.

The Project is fully-funded based on our expected pro-forma cash position
following the completion of the True Gold acquisition, the mine equipment
financing, and the undrawn portion of our revolving credit facility. However,
rather than draw on our revolving facility, our objective is to fund the
remaining
capital needs from free cash flow. We have therefore prudently implemented a
short-term Gold Revenue Protection program to secure and de-risk the
necessary cash flows, providing comfort even if the gold price were to fall
to $1,000/oz."

Houndé Project Highlights

During the past year, a thorough review and optimization of the Houndé Project
was completed and an implementation plan was established. The mining and ore
processing schedules have remained unchanged since February 2015 while the
operating and capital costs were fully scoped and optimized by Endeavour,
with assistance from Lycopodium Minerals ("Lycopodium").

------------------------------------------------------------------------------------------
| Table 1: Houndé Project Highlights |
| Ownership 90% Endeavour, 10% Burkina Faso |
| Reserve and Resources |
|(2) |
| P+P Reserves 31Mt at 2.1 g/t Au for 2.1Moz |
| M+I Resources (inclusive of reserves) 38Mt at 2.1 g/t Au for 2.5Moz |
| Inferred Resources 3Mt at 2.6 g/t Au for 0.3Moz |
| Mine type Open pit |
| Mill type Gravity / CIL plant |
| Production |
| Mine life 10 years |
| Strip ratio, W:O 8.4 |
| Processing rate 3.0 Mtpa |
| Average LOM Recovery rate 93% |
| Total LOM gold production 1,906 koz |
| Average annual production 190 koz |
| Average LOM $709/oz |
|AISC |
| Upfront Capital $328m, inclusive of $47m for owner mining fleet |
------------------------------------------------------------------------------------------

Table 2: Houndé Project Economics

(3)
------------------------------------------------------------------
| Gold Price (US$/oz) $1,150 $1,200 $1,250 $1,300 1,350 |
| After-tax Project NPV5% $230 $286 $342 $398 $437 |
| After-tax Project IRR 24% 28% 32% 36% 39% |
| Payback, years(4) 2.7 2.4 2.2 2.0 1.8 |
------------------------------------------------------------------

Houndé Operating Cost Optimization

As shown in the table below, AISC per ounce has remained fairly stable
following the completion of a comprehensive review and optimization of life
of mine operating costs and sustaining capital requirements.

Table 3: Operating Cost Optimizations

--------------------------------------------------------------------
| 2015 Case 2016 Optimization Change |
| (5) |
| Mining costs, $/t moved 2.03 2.17 +7% |
| Processing costs, $/t 14.31 13.36 (7%) |
| Site G&A costs, $m/yr 10.6 9.8 (8%) |
| LOM Sustaining capital, $m 89 77 (13%) |
| AISC, US$/oz 714 709 (1%) |
--------------------------------------------------------------------

Following cost and business risk comparisons, the "Owner Operator" option was
selected over the "Contractor Mining" approach. The fully scoped mining costs
were revised upward mainly due to increased cost assumptions for ore
re-handling, blasting and fixed cost re-allocation.

During the optimization process both the Run of Mine ("ROM") pad and the
Tailings Storage Facility ("TSF") were relocated to more favorable locations.
Furthermore, the TSF was changed from basin to paddock style to optimize the
usage of waste material and generate nearly $25 million in reclamation and
closure cost savings.

The processing costs estimate decreased due to the positive impacts of i)
reagents use optimization; ii) power demand optimizations; and iii)
relocation of the TSF, which more than offset the power costs increasing from
$0.15 to $0.18 per kWhr.

Site General and Administrative ("G&A") costs have decreased due to favorable
exchange rate variations and re-allocation of fixed labour costs into mining
costs.

Houndé Capital Costs and Project Management

The optimized and fully scoped upfront capital cost has been estimated at $328
million, inclusive of $47 million for the owner-mining fleet and $28 million
for contingencies, which is in line with the 2015 estimate of $32 million.

-----------------------------------------------------------------------------------
| Table 4: Project Capital Cost Summary in US$m |
| Mining (inclusive of $47 million for the fleet) 75 |
| Owner Project Costs 68 |
| Treatment Plant Costs 57 |
| Infrastructure (inclusive of $17 million for the 91kv overhead power line) 47 |
| EPCM Management Costs 17 |
| Owner Operation Costs 15 |
| Construction Indirect Cost 14 |
| Reagents and Services 7 |
| Sub-Total 300 |
| Contingency 28 |
| Total 328 |
-----------------------------------------------------------------------------------

The current upfront capital cost estimate is based on power supply from
Sonabel, the national electricity utility, consisting of a 38 kilometer, 91kv
overhead power line.

Project capital commitment in 2016 is expected to be approximately $180
million, with the remainder in 2017. Within the coming weeks, Endeavour
expects to lock-in approximately 25% of the total capital cost by placing
firm orders for the SAG and Ball mills, purchasing the mining fleet and
paying land compensation and related taxes.

Replicating its successful construction partnership at both Nzema and Agbaou,
Endeavour has awarded the EPCM contract to Lycopodium Minerals, and detailed
engineering is now commencing. Lycopodium has already had detailed
involvement in the Houndé Project, through the completion of the Detailed
Feasibility Study and the recently completed optimization reviews.

The overall duration of the Project construction is estimated to be 18 months.
Endeavour plans to self-perform 72% of the project build, while Lycopodium
will focus primarily on the processing facility which is the remaining 28% of
the total capital commitment for the project. Endeavour's Project Management
Team will include approximately 90 personnel to perform all remaining
construction tasks. Endeavour's team will also be responsible for all
concrete work, which was the successful approach employed at Agbaou.

The contingency allocation for the Houndé Project is based on evaluating the
risk level of confidence and experience of the Construction Services Team,
for every line item. This method for determining contingency is deemed to be
more realistic as opposed to applying a single, all-encompassing contingency
for the entire Project. The design of the processing plant and supporting
infrastructure for the Project has been carried out in sufficient detail to
arrive at cost estimates of appropriate accuracy of +/-10%.

Houndé Project Funding and Gold Revenue Protection Strategy

The Houndé Project is expected to be funded from internal and existing sources
of capital, as well as the planned mining equipment financing (as per Table
5). In addition, the free cash flow generated during 2016 and 2017 from
Endeavour's five operating mines is expected to increase total financing
sources to above 1.5 times the total capital cost, representing in excess of
50% financing headroom.

--------------------------------------------------------------------------
| Table 5: Funding Sources in US$m |
| Cash Balance (as at Dec 31, 2015) 110 |
| Undrawn RCF (as at Dec 31, 2015)(6) 110 |
| Proceeds from Youga Sale 20 |
| La Mancha Anti-dilution Equity Investment (True Gold acquisition) 62 |
| Mining Equipment financing 50 |
| Total Existing Sources of Capital Excluding 2016-17 Cash Flow 352 |
| Houndé Initial Capex 328 |
--------------------------------------------------------------------------

Endeavour's objective is to fund Houndé utilizing its free cash flow generated
over the construction period rather than accessing its...

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