Vancouver, Canada – November 3, 2016 - Endeavour Silver Corp. (NYSE: EXK; TSX: EDR - http://www.commodity-tv.net/c/mid,35493,Invest_2016_Stuttgart/?v=296119 ) released today its financial results for the third quarter ended September 30, 2016. Endeavour owns and operates three underground silver-gold mines in Mexico: the Guanaceví mine in Durango state, and the Bolañitos and El Cubo mines in Guanajuato state.
The Company's financial performance in the Third Quarter, 2016 improved compared to the Third Quarter, 2015. Earnings were up as a result of higher metal prices and lower operating costs. Management continued to strengthen the balance sheet by generating free cash flow and completing its second ATM equity offering during the third quarter (click here for an audio review of Q3 highlights).
Highlights of Third Quarter 2016 (Compared to Third Quarter, 2015)
- Net earnings of $5.6 million(1) ($0.04 per share) compared to a net loss of $14.1 million (loss of $0.14 per share)
- EBITDA(2) increased 703% to $10.8 million
- Cash flow from operations before working capital changes increased 72% to $8.2 million
- Mine operating cash flow before taxes(1) increased 48% to $17.8 million
- Revenue decreased 1% to $42.1 million
- Realized silver price increased 31% to $19.16 per ounce (oz) sold
- Realized gold price increased 25% to $1,340 per oz sold
- Cash costs(2) decreased 35% to $5.27 per oz silver payable (net of gold credits)
- All-in sustaining costs (AISC)(2) decreased 24% to $11.47 per oz silver payable (net of gold credits)
- Raised net proceeds of $13.9 million in Q3, 2016 to complete second ATM equity financing
- Cash increased 308% to $83.2 million and working capital increased 433% to $91.9 million from year end
- Silver production decreased 29% to 1,284,646 oz
- Gold production decreased 6% to 14,364 oz
- Silver equivalent production was 2.4 million oz (at a 75:1 silver: gold ratio)
- Silver oz sold down 35% to 1,200,466 oz
- Gold oz sold down 3% to 14,228 oz
- Bullion inventory at quarter-end included 189,831 oz silver and 334 oz gold
- Concentrate inventory at quarter-end included 22,384 oz silver and 498 oz gold
- Acquired prospective Parral exploration properties in the Parral District, Chihuahua
- Raised 2016 production guidance to 9.0 million to 9.8 million oz silver equivalent, increased capital budget to $17.4 million and exploration budget to $10.1 million to accelerate growth projects, including 23,000 metres extra drilling
- The Consolidated Interim Financial Statements and Management’s Discussion & Analysis can be viewed on the Company’s website at www.edrsilver.com, on SEDAR at www.sedar.com and EDGAR at www.sec.gov. All amounts are reported in US$
- Mine operating cash flow, EBITDA, cash costs and all-in sustaining costs are non-IFRS measures. Please refer to the definitions in the Company’s Management Discussion & Analysis
Endeavour CEO Bradford Cooke commented, “Our financial performance in the third quarter was much improved thanks to higher metal prices and lower operating costs. Having successfully minimized our all-in sustaining costs and boosted our free cash flows in recent quarters, management continued to focus on optimizing near-term production and long-term growth in Q3, 2016.
“As a result of our growing cash position in recent quarters, we elected to increase our exploration and development budgets in H2, 2106, which means our AISC should rise in Q4, 2016. Notwithstanding, we are well ahead of our production targets and below our cost targets for the year so we expect to readily meet our guidance on both in 2016.
“We currently have 12 drill rigs working on six projects to grow our resource base. With the recent acquisition of the Parral properties to our project pipeline, Endeavour now has one of the strongest organic growth profiles in the silver mining sector.”
At Guanaceví, plant throughput of 892 tonnes per day (tpd) in Q3, 2016 continued to lag behind plan as the mining contractor focused on accelerating mine development, and company personnel focused on improving underground services, including power, dewatering and ventilation. Due to variations in the ore-bodies, grades were lower than plan for the quarter. Management expects throughput to improve in the fourth quarter.
The Company is initiating a $2.8 million capital investment program in Q4, 2016, as part of a three-year, $8.4 million capital investment for mine development and ramp down into the Santa Cruz Sur ore-body. This investment will provide access to an indicated resource of over 650,000 tonnes grading 250 g/t silver and 0.70 g/t gold. The currently defined ore-body is open to the south and at depth.
At Bolañitos, plant throughput averaging 1,442 tpd in Q3, 2016 continued to exceed plan due in part to the draw-down of an historical ore stockpile and mining of new extensions of the LL-Asunción ore-body in and around historic mine workings. Bolañitos is significantly ahead of production guidance for the year.
The Company commenced a $1.7 million capital investment program in Q3, 2016 to develop the Plateros orebody located close to the existing LL-Ascunción mine workings. The development is accessing an indicated resource of over 130,000 tonnes grading 116 g/t silver and 1.61 g/t gold, still open at depth.
At El Cubo, plant throughput of 1,531 tpd in Q3, 2016 also exceeded plan, as development opened up new areas for mining at Santa Cecilia. Production is expected to continue close to 1,500 tpd in the fourth quarter. El Cubo is also significantly ahead of production guidance for the year.
The Company commenced a $1.6 million program in Q3, 2016 to extend the V-Asunción ramp to depth an additional 1.6 km in order to access an indicated resource of more than 300,000 tonnes grading 141 g/t silver and 1.55 g/t gold. The V-Asunción ore-body extends well south of the current mine plan.
For the third quarter ended September 30, 2016, the Company generated revenue totaling $42.1 million (2015 - $42.7 million). During the quarter, the Company sold 1,200,467 silver oz and 14,228 gold oz at realized prices of $19.16 and $1,340 per oz respectively, compared to sales of 1,844,556 silver oz and 14,599 gold oz at realized prices of $14.67 and $1,074 per oz respectively in Q3, 2015.
After cost of sales of $26.9 million (2015 - $40.6 million), mine operating earnings amounted to $15.2 million (2015 –$2.1 million) from mining and milling operations in Mexico. Excluding depreciation and depletion of $2.8 million (2015 - $9.8 million), and share-based compensation recovery of $0.2 million (2015- $0.1 million expense), mine operating cash flow before taxes was $17.8 million (2015 – $12.0 million) in Q3, 2016. Net earnings were $5.6 million (2015 – net loss of $14.1 million) after exploration expense of $2.4 million (2015 – $1.1 million) and corporate general and administrative costs of $2.8 million (2015 – $1.8 million).
Consolidated cash costs of production were $5.27 per oz, net of gold by-product credits in Q3, 2016, significantly lower than the $8-9 per oz guidance due to higher throughput, depreciation of the Mexican peso, and higher gold prices impacting the gold credit. Management expects cash costs to rise slightly in the fourth quarter but on an annual basis should be significantly lower than company guidance.
All-in sustaining costs (AISC) in accordance with the World Gold Council standard were $11.47 per oz, net of gold by-product credits, in Q3, 2016, substantially lower than the $12-13 per oz AISC guidance due to reduced cash operating costs and lower sustaining investments. Management expects AISC to rise in the fourth quarter with an increase in sustaining mine development and exploration expenditures but on an annual basis should be lower than company guidance.
Cash holdings at the end of Q3, 2016 grew to $83.2 million and working capital rose to $91.9 million which is sufficient for the Company to meet its short- and medium-term growth goals.
A conference call to discuss the results will be held on Thursday, November 3 at 10am PDT (1pm EDT). To participate in the conference call, please dial the following:
Toll-free in Canada and the US: 1-800-319-4610
Local Vancouver: 604-638-5340
Outside of Canada and the US: 1-604-638-5340
No pass-code is necessary to participate in the conference call.
A replay of the conference call will be available by dialing 1-800-319-6413 in Canada and the US (toll-free) or 1-604-638-9010 outside of Canada and the US. The required pass-code is 0867#. The audio replay and a written transcript will also be made available on the Company’s website at www.edrsilver.com.
About Endeavour – Endeavour is a mid-tier silver mining company focused on growing production, reserves and resources in Mexico. Since start-up in 2004, Endeavour has posted nine consecutive years of accretive growth of its silver mining operations. Endeavour’s three silver-gold mines in Mexico combined with its strategic acquisition and exploration programs should facilitate Endeavour’s goal to become a premier senior silver producer.
Contact Information - For more information, please contact:
Meghan Brown, Director Investor Relations
Toll free: 1-877-685-9775
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 2016 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; 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.