SOURCE: Endeavour Silver Corp.

Endeavour Silver Corp.

November 03, 2016 06:55 ET

Endeavour Silver Reports Financial Results for Third Quarter, 2016; Conference Call at 11am PDT (2pm EDT) Today

VANCOUVER, BC--(Marketwired - November 03, 2016) - Endeavour Silver Corp. (NYSE: EXK) (TSX: EDR) 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)

Financial

  • 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

Operations

  • 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 $10.1 million to accelerate growth projects, including 23,000 metres extra drilling
  1. The Consolidated Interim Financial Statements and Management's Discussion & Analysis can be viewed on the Company's website at www.edrsilver.com, on SEDAR at www.sedar.com and EDGAR at www.sec.gov. All amounts are reported in US$
  2. 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."

Operations Update

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.

Financial Results

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.

Conference Call

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.

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.

 
ENDEAVOUR SILVER CORP.
COMPARATIVE HIGHLIGHTS
 
Three Months Ended
September 30
    Nine Months Ended
September 30
Q3 2016 Highlights
2016  2015  % Change     2016  2015  % Change
         Production         
1,284,646  1,820,282  (29%)  Silver ounces produced  4,346,562  5,445,901  (20%)
14,364  15,319  (6%)  Gold ounces produced  45,973  44,557  3%
1,258,408  1,773,459  (29%)  Payable silver ounces produced  4,243,199  5,305,309  (20%)
13,939  14,961  (7%)  Payable gold ounces produced  44,657  43,512  3%
2,361,946  2,892,612  (18%)  Silver equivalent ounces produced  7,794,537  8,564,891  (9%)
5.27  8.11  (35%)  Cash costs per silver ounce  6.13  7.96  (23%)
7.28  13.57  (46%)  Total production costs per ounce  8.92  13.48  (34%)
11.47  15.05  (24%)  All-in sustaining costs per ounce  11.01  15.07  (27%)
355,611  404,878  (12%)  Processed tonnes  1,141,362  1,157,415  (1%)
71.18  75.07  (5%)  Direct production costs per tonne  72.89  80.05  (9%)
11.06  10.33  7%  Silver co-product cash costs  10.60  10.68  (1%)
773  756  2%  Gold co-product cash costs  808  774  4%
         Financial         
42.1  42.7  (1%)  Revenue
($ millions)
 128.1  141.6  (10%)
1,200,466  1,844,556  (35%)  Silver ounces sold  4,205,575  5,619,126  (25%)
14,228  14,599  (3%)  Gold ounces sold  44,847  44,195  1%
19.16  14.67  31%  Realized silver price per ounce  16.80  16.05  5%
1,340  1,074  25%  Realized gold price per ounce  1,281  1,163  10%
5.6  (14.1)  140%  Net earnings (loss)
($ millions)
 9.1  (13.7)  167%
15.2  2.1  622%  Mine operating earnings (loss)
($ millions)
 34.4  18.0  91%
17.8  12.0  48%  Mine operating cash flow
($ millions)
 46.5  48.0  (3%)
8.2  4.8  72%  Operating cash flow before working capital changes  25.1  29.6  (15%)
10.8  1.3  703%  Earnings before ITDA  29.6  28.6  4%
91.9  20.4  350%  Working capital
($ millions)
 91.9  20.4  350%
         Shareholders         
0.04  (0.14)  129%  Earnings (loss) per share - basic  0.08  (0.13)  100%

0.07
 
0.05
 
40%
 Operating cash flow before working capital changes per share  
0.22
 
0.29
 
(24%)
125,277,591  101,976,901  23%  Weighted average shares outstanding  114,426,580  101,976,901  12%
             
(1) Silver equivalent ounces calculated using 75:1 ratio in 2016 and 70:1 in 2015
(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.
   
  
ENDEAVOUR SILVER CORP. 
CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS 
(expressed in thousands of U.S. dollars) 
  
     Three Months Ended     Nine Months Ended  
     Sept. 30,     Sept. 30     Sept. 30,     Sept. 30  
     2016     2015     2016     2015  
   
Operating activities                         
Net earnings (loss) for the period  $ 5,586   $ (14,079 ) $ 9,114   $ (13,696 )
Items not affecting cash:                         
 Share-based compensation    775     735     2,636     2,329  
 Depreciation and depletion    2,834     9,849     12,267     29,824  
 Deferred income tax expense (recovery)    (654 )   3,110     (711 )   5,188  
 Unrealized foreign exchange loss (gain)    723     48     589     196  
 Loss on available for sale assets    -     -     269     -  
 Settlement of derivative liability    (1,372 )   -     -     -  
 Finance costs    345     338     926     950  
 Write down of marketable securities    -     4,785     -     4,785  
Net changes in non-cash working capital    8,071     (747 )   (1,425 )   (2,188 )
Cash from (used in) operating activities    16,308     4,039     23,665     27,388  
   
   
Investing activites                         
 Property, plant and equipment expenditures    (5,508 )   (9,291 )   (12,717 )   (27,308 )
 Proceeds from disposition of available for sale assets    -     -     448     -  
 Investment in long term deposits    -     -     133     -  
Cash used in investing activities    (5,508 )   (9,291 )   (12,136 )   (27,308 )
   
   
Financing activities                         
 Repayment of revolving credit facility    (2,500 )   (3,000 )   (10,500 )   (7,000 )
 Repayment of obligation under finance lease    (76 )   (224 )   (465 )   (224 )
 Debt issuance costs    -     -     (474 )   -  
 Interest paid    (243 )   (257 )   (632 )   (706 )
 Public equity offerings    14,229     -     55,353     -  
 Exercise of options and warrants    5,263     -     10,548     -  
 Share issuance costs    (497 )   -     (1,943 )   -  
Cash from (used in) financing activites    16,176     (3,481 )   51,887     (7,930 )
   
Increase (decrease) in cash and cash equivalents    26,976     (8,733 )   63,416     (7,850 )
Effect of exchange rate change on cash and cash equivalents    (584 )   (235 )   (589 )   (383 )
Cash and cash equivalents, beginning of period    56,848     31,780     20,413     31,045  
Cash and cash equivalents, end of period  $ 83,240   $ 22,812   $ 83,240   $ 22,812  
                 

This statement should be read in conjunction with the condensed consolidated interim financial statements for the period ended September 30, 2016 and the related notes contained therein.

  
ENDEAVOUR SILVER CORP. 
CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME 
(expressed in thousands of US dollars, except for shares and per share amounts) 
  
     Three Months Ended     Nine Months Ended  
     Sept. 30,     Sept. 30,     Sept. 30,     Sept. 30,  
     2016     2015     2016     2015  
Revenue  $ 42,066   $ 42,737   $ 128,117   $ 141,565  
   
Cost of sales:                         
 Direct production costs    24,033     30,447     80,852     92,807  
 Royalties    247     304     732     795  
 Share-based compensation    (208 )   109     78     349  
 Depreciation and depletion    2,761     9,768     12,059     29,604  
     26,833     40,628     93,721     123,555  
Mine operating earnings    15,233     2,109     34,396     18,010  
                 
Expenses:                         
 Exploration    2,361     1,173     5,468     4,726  
 General and administrative    2,827     1,812     8,010     6,215  
     5,188     2,985     13,478     10,941  
                          
Operating earnings (loss)    10,045     (876 )   20,918     7,069  
                 
Finance costs    345     370     926     1,037  
                 
Other income (expense):                         
 Write down of marketable securities    -     (4,785 )   -     (4,785 )
 Foreign exchange    (1,650 )   (2,964 )   (2,983 )   (4,335 )
 Investment and other    (426 )   121     (610 )   805  
     (2,076 )   (7,628 )   (3,593 )   (8,315 )
Earnings (loss) before income taxes    7,624     (8,874 )   16,399     (2,283 )
                 
Income tax expense (recovery):                         
 Current income tax    2,731     2,095     7,622     6,225  
 Deferred income tax    (693 )   3,110     (337 )   5,188  
     2,038     5,205     7,285     11,413  
Net earnings (loss) for the period    5,586     (14,079 )   9,114     (13,696 )
                          
Other comprehensive income (loss), net of tax                         
 Unrealized gain (loss) on available for sale investments    4     633     (58 )   (27 )
 Reclassification of gain (loss) on available for sale investments, included in the net loss    -     4,785     269     4,785  
Total other comprehensive income (loss) for the period    4     5,418     211     4,758  
                 
Comprehensive income (loss) for the period  $ 5,590   $ (8,661 ) $ 9,325   $ (8,938 )
   
Basic earnings (loss) per share based on net earnings  $ 0.04   $ (0.14 ) $ 0.08   $ (0.13 )
Diluted earnings (loss) per share based on net earnings  $ 0.04   $ (0.14 ) $ 0.08   $ (0.13 )
                          
Basic weighted average number of shares outstanding    125,277,591     101,976,901     114,426,580     101,976,901  
Diluted weighted average number of shares outstanding    127,414,848     101,976,901     115,916,906     101,976,901  
                 

This statement should be read in conjunction with the condensed consolidated interim financial statements for the period ended September 30, 2016 and the related notes contained therein.

  
ENDEAVOUR SILVER CORP. 
CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION 
(expressed in thousands of US dollars) 
  
   September 30,   December 31,  
     2016   2015  
ASSETS             
         
Current assets             
 Cash and cash equivalents  $ 83,240   $ 20,413  
 Investments    108     614  
 Accounts receivable    25,924     24,343  
 Inventories    11,995     17,350  
 Prepaid expenses    1,230     2,510  
Total current assets    122,497     65,230  
              
Non-current deposits    798     855  
Deferred income tax asset    -     223  
Mineral properties, plant and equipment    56,193     47,925  
Total assets  $ 179,488   $ 114,233  
   
LIABILITIES AND SHAREHOLDERS' EQUITY             
         
Current liabilities             
 Accounts payable and accrued liabilities  $ 16,138   $ 18,949  
 Finance lease obligation    276     1,180  
 Income taxes payable    4,147     5,844  
 Credit facility    10,000     22,000  
Total current liabilities    30,561     47,973  
   
Credit facility - long term    1,500     -  
Provision for reclamation and rehabilitation    7,825     7,762  
Deferred income tax liability    6,689     7,623  
Total liabilities    46,575     63,358  
   
Shareholders' equity             
Share capital, unlimited common shares authorized, no par value, issued and outstanding 125,882,181 shares (Dec 31, 2015 - 102,776,470 shares)    444,392     368,898  
Contributed surplus    6,319     9,465  
Accumulated comprehensive income (loss)    66     (145 )
Retained earnings (deficit)    (317,864 )   (327,343 )
Total shareholders' equity    132,913     50,875  
Total liabilities and shareholders' equity  $ 179,488   $ 114,233  
         

This statement should be read in conjunction with the condensed consolidated interim financial statements for the period ended September 30, 2016 and the related notes contained therein.

Contact Information

  • Contact Information - For more information, please contact:
    Meghan Brown
    Director Investor Relations
    Toll free: 1-877-685-9775
    Tel: 604-640-4804
    Fax: 604-685-9744
    Email: mbrown@edrsilver.com
    Website: www.edrsilver.com