Endeavour Mining, a leading West-Africa-focused gold miner, sets sights on free cash flow and organi

Endeavour Mining PLC is one of the world’s top ten senior gold producers and the largest in West Africa, with producing mines in Senegal, Cote d’Ivoire and Burkina Faso and a strong portfolio of advanced development projects and exploration assets on the highly prospective Birimian Greenstone Belt across West Africa.

(, , , ) has set an ambitious new target to discover 15-20 million indicated ounces of gold from its projects in West Africa over the next five years.

Over the past four years, the FTSE 250 miner has defined 8.5 million ounces (Moz) of indicated resources and said it will use the same ranking and screening methodology for its new plans with discovery costs forecast to be less than US$25 per oz.

Sebastien de Montessus, Endeavour chief executive said: “Our exploration success has been a significant value creation driver over the past four years. Our track record gives us the confidence to set ambitious new targets and, given the strong expected returns, investment in exploration will continue to be an important component of our capital allocation framework”.

The exploration strategy is built around extending the mine lives of its core assets to well beyond ten years, he said, as well as discovering new greenfield projects.

Although the likely (and short-lived) promotion of bid stocks Meggit PLC and Morrison (Wm) Supermarkets PLC to the FTSE 100 garnered most of the press commentary, a few interesting stocks are set to enter the FTSE 250 for the first time in the next reshuffle.

Although things may yet change before 31 August, when the final additions and deletions to the FTSE 100 and FTSE 250 are calculated, FTSE Russell, the global index provider, released “indicative changes” to the FTSE 250 index earlier this week that included (), (), (), () and (, , , ).

“These are a good set of results and we maintain a buy recommendation and price target of 2,800p per share based on multiples of 1.5 times net asset value and eight times EBITDA,” said broker Berenberg after (, , , ) delivered an upbeat set of second quarter results.

“Production a beat driven by Hounde and Ity,” continued Berenberg, referring to two of Endeavour’s gold mines in West Africa.

Barclays described (, , , ) as “catalyst-rich” as it started it coverage of the stock with an ‘overweight’ recommendation.

With a GBP23.50 price target Barclays’ investment banking arm sees some 40% upside to the miner’s current price of GBP16.70.

In an initiation note, Barclays highlighted the discount implied by Endeavour’s market value.