Endeavour Silver Corp. (NYSE: EXK; TSX: EDR – http://www.commodity-tv.net/c/search_adv/?v=298293) released today its financial results for the Second Quarter ended June 30, 2018. The Company operates three silver-gold mines in Mexico, the Guanaceví mine in Durango state, and the Bolañitos and El Cubo mines in Guanajuato state. Endeavour is currently commissioning its fourth mine, El Compas, in Zacatecas state and advancing the Terronera mine project in Jalisco state to a development decision.
The Company reports a net loss of $5.7 million in the Second Quarter, 2018 compared to $16 thousand loss in the Second Quarter, 2017, primarily due to higher depreciation and depletion charges and foreign exchange loss. Revenue increased 19% to $38.8 million and mine operating cash flow before taxes(1) increased 69% to $14.9 million due to higher production, but cash flow from operations before working capital changes decreased 17% to $3.6 million and EBITDA fell 26% to $2.7 million as compared to the same period last year.
Cash costs fell 9% to $7.61 per oz silver payable (net of gold credits) and all-in sustaining costs fell 16% to $17.28 per oz silver payable (net of gold credits).
Highlights of Second Quarter 2018 (Compared to Second Quarter 2017)
- Net loss increased to 5.7 million (loss of $0.04 per share) compared to break even in 2017
- EBITDA(1) decreased 26% to $2.7 million
- Cash flow from operations before working capital changes decreased 17% to $3.6 million
- Mine operating cash flow before taxes(1) increased 69% to $14.9 million
- Revenue increased 19% to $38.8 million
- Realized silver price decreased 2% to $16.76 per ounce (oz) sold
- Realized gold price increased 1% to $1,281 per oz sold
- Cash costs(1) fell 9% to $7.61 per oz silver payable (net of gold credits)
- All-in sustaining costs(1) fell 16% to $17.28 per oz silver payable (net of gold credits)
- Working capital has fallen 11% at $58.9 million compared to $66.2 million at year end
- Secured ATM of up to $35.7 million primarily to advance the Terronera Project
- Silver production increased 19% to 1,355,895 oz
- Gold production increased 5% to 13,674 oz
- Silver equivalent production was 2.4 million oz (at a 75:1 silver: gold ratio)
- Silver oz sold increased 27% to 1,258,617 oz
- Gold oz sold increased 12% to 13,800 oz
- Bullion inventory at quarter-end included 176,452 oz silver and 265 oz gold
- Concentrate inventory at quarter-end included 53,810 oz silver and 827 oz gold
- Completed construction of the El Compas project, commenced plant commissioning
- Completed engineering trade-off studies for Terronera, preparing updated PFS
- Reported positive drill results from both an in-fill drill program at Terronera
- Reported positive metallurgy and positive drill results from a step-out drill program at the Parral exploration property
- Appointed VP, New Projects, Manuel Echevarria to oversee technical services and development projects
- EBITDA, mine operating cash flow, cash costs and all-in sustaining costs are non-IFRS measures. Please refer to the definitions in the Company’s Management Discussion & Analysis.
Bradford Cooke, Endeavour CEO, commented, “Our financial performance in Q2, 2018 was tempered by higher depreciation and depletion charges primarily at Guanacevi, higher foreign exchange losses related to depreciation of the Mexican peso, higher current taxes primarily at Bolanitos and El Cubo and increased expenditures advancing Terronera and exploring Parral.
“El Cubo continues to out-perform plan, delivering record grades and providing strong cash flow for the Company. Bolanitos is running a bit behind plan but continues to generate strong cash flow and should improve in Q3. Guanacevi continues to be challenging, but the focus on higher development in Q2 is returning higher throughput in July. El Compas is expected to achieve commercial production in Q3 and start generating positive cash flow for the Company in the second half of this year.”
Revenue in the Second Quarter, 2018 totaled $38.8 million (2017 – $32.7 million) on sales of 1,258,617 silver ounces and 13,800 gold ounces at realized prices of $16.76 and $1,281 per ounce respectively, compared to sales of 988,821 silver ounces and 12,294 gold ounces at realized prices of $17.16 and $1,270 per ounce respectively in Q2, 2017.
After cost of sales of $34.2 million (2017 – $27.2 million), mine operating earnings amounted to $4.6 million (2017 – $5.4 million) from mining and milling operations in Mexico. The 26% increase in cost of sales was primarily due to increased depreciation and depletion. Excluding depreciation and depletion of $7.9 million (2017 – $3.3 million), share-based payments recovery of $0.1 million and an inventory write down of $2.5 million, mine operating cash flow before taxes was $14.9 million (2017 – $8.8 million) in Q2, 2018.
Net losses amount to $5.7 million (2017 –$16 thousand) after depreciation and depletion, exploration, general and administrative expenses and foreign exchange.
Direct production costs per tonne in Q2, 2018 increased 3% compared with Q2, 2017. The higher production costs per tonne were driven mainly by lower Guanaceví mine output due to increased mine development and the costs related to implementing a productivity optimization program. The higher costs at Guanaceví were offset by increased production due to higher throughput and grades at El Cubo.
The out-performance of El Cubo resulted in 9% lower consolidated cash costs per oz, net of by-product credits (a non-IFRS measure and a standard of the Silver Institute). Similarly, all-in sustaining costs (also a non-IFRS measure) decreased 16% to $17.28 per oz in Q2, 2018 due to lower operating costs per ounce and lower capital expenditures in Q2, 2018 compared to Q2, 2017, offset by higher general and administration charges at the corporate level.
The Condensed Consolidated Interim Financial Statements and Management’s Discussion & Analysis can be viewed on the Company’s website at www.edrsilver.com, on SEDAR at www.sedar.com and EDGAR at www.sec.gov. All amounts are reported in US$.
A conference call to discuss the results will be held today, Thursday, August 2, 2018 at 10:00am PT (1:00pm ET). To participate in the conference call, please dial the numbers below. No pass-code is necessary.
Toll-free in Canada and the US: 1-800-319-4610
Local Vancouver: 604-638-5340
Outside of Canada and the US: + 604-638-5340
A replay of the conference call will be available by dialing 1-800-319-6413 in Canada and the US (toll-free) or +604-638-9010 outside of Canada and the US. The required pass-code is 2443#. The audio replay and a written transcript will be available on the Company’s website at www.edrsilver.com under the Investor Relations, Events section.
About Endeavour Silver – Endeavour Silver Corp. is a mid-tier precious metals mining company that operates three high-grade, underground, silver-gold mines in Mexico. The Company is forecasting 20% production growth to 10.2-11.2 million oz silver equivalent in 2018. Endeavour is currently commissioning its fourth mine at El Compas, advancing towards development of the Terronera project and exploring its portfolio of exploration and development projects in Mexico and Chile to facilitate its goal to become a premier senior silver producer. Our philosophy of corporate social integrity creates value for all stakeholders.
SOURCE Endeavour Silver Corp.
Contact Information – For more information, please contact:
Swiss Resource Capital AG
Cautionary Note Regarding Forward-Looking Statements
This news release contains “forward-looking statements” within the meaning of the United States private securities litigation reform act of 1995 and “forward-looking information” within the meaning of applicable Canadian securities legislation. Such forward‑looking statements and information herein include but are not limited to statements regarding Endeavour’s anticipated performance in 2018 including changes in mining and operations and the timing and results of various activities. The Company does not intend to, and does not assume any obligation to update such forward-looking statements or information, other than as required by applicable law.
Forward-looking statements or information involve known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Endeavour and its operations to be materially different from those expressed or implied by such statements. Such factors include, among others, changes in national and local governments, legislation, taxation, controls, regulations and political or economic developments in Canada and Mexico; financial risks due to precious metals prices, operating or technical difficulties in mineral exploration, development and mining activities; risks and hazards of mineral exploration, development and mining; the speculative nature of mineral exploration and development, risks in obtaining necessary licenses and permits, and challenges to the Company’s title to properties; as well as those factors described in the section “risk factors” contained in the Company’s most recent form 40F/Annual Information Form filed with the S.E.C. and Canadian securities regulatory authorities.
Forward-looking statements are based on assumptions management believes to be reasonable, including but not limited to: the continued operation of the Company’s mining operations, no material adverse change in the market price of commodities, mining operations will operate and the mining products will be completed in accordance with management’s expectations and achieve their stated production outcomes, and such other assumptions and factors as set out herein. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or information, there may be other factors that cause results to be materially different from those anticipated, described, estimated, assessed or intended. There can be no assurance that any forward-looking statements or information will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements or information. Accordingly, readers should not place undue reliance on forward-looking statements or information.
1) Silver equivalents are calculated using a 75:1 ratio.
2) Cost metrics, EBITDA, mine operating cash flow, operating cash flow before working capital changes are non-IFRS measures. Please refer to the definitions in the Company’s Management Discussion & Analysis.
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