Endeavour Silver Corp. (NYSE:EXK)(TSX:EDR) announced today its financial results
for the Third Quarter, 2013 (reported in US$). Endeavour is a mid-cap silver
mining company that owns and operates three underground silver-gold mines in
Mexico, the Guanacevi mine in Durango state and the Bolanitos and El Cubo mines
in Guanajuato state.
Highlights of Third Quarter, 2013 (Compared to Third Quarter, 2012)
Financial
-- Net earnings increased from $0 to $12.3 million ($0.12 per share)
Adjusted earnings(1) increased 663% to $13.0 million ($0.13 per share)
EBITDA(1) increased 140% to $29.3 million
-- Cash flow from operations before working capital changes decreased 34%
to $25.9 million Mine operating cash flow(1) increased 27% to $31.8
million
-- Revenue increased 31% to $67.8 million on 1,693,989 silver oz sold and
20,958 gold oz sold Realized silver price fell 21% to $22.60 per oz sold
-- Realized gold price fell 14% to $1,409 per oz sold Direct costs of
production increased 7% to $104.05 per tonne
-- Cash costs of production net of by-product gold credits (1) increased
10% to $5.14 per oz silver All-in sustaining costs fell 43% to 12.14 per
oz silver
-- Cash costs of production on a co-product basis were $12.32 per oz silver
and $768 per oz gold Bullion inventory at quarter-end included 365,481
oz silver and 2,176 oz gold Concentrate inventory at quarter-end
included 19,645 oz silver and 297 oz gold
-- Cash and equivalents of $25.2 million and working capital of $26.8
million at quarter-end
Operations
-- Silver production up 63% to 1,855,846 oz Gold production up 95% to
22,947 oz
-- Silver equivalent production up 75% to 3.23 million oz (at a 60:1
silver:gold ratio) Enhanced cash flow by increasing production tonnes
and/or grades at all three mines Continued to cut costs through
additional work-force reductions and operating efficiencies
-- El Cubo and Bolanitos production and recoveries both benefitted from
processing metal concentrates accumulated in Q2, 2013 and the clean-out
of the leased Las Torres plant
-- Increased 2013 production guidance as a result of the out-performance of
the Bolanitos mine and better production from the El Cubo mine
(1) Adjusted earnings, mine operating cash flow, EBITDA and cash costs are
non-IFRS measures. Please refer to the definitions in the Company's Management's
Discussion and Analysis.
Bradford Cooke, CEO of Endeavour Silver, stated, "Our solid financial
performance in Q3, 2013 was a direct result of the Company's ability to respond
quickly to the drop in metal prices earlier this year. By aggressively cutting
cash and other costs and boosting production and cash flow, Endeavour was able
to deliver sharply higher EBITDA and net earnings in Q3, 2013 compared to Q3,
2012.
"We are now half way through our two year operational turn-around at El Cubo and
it appears to have turned the corner. Our next focus at El Cubo is to expand the
reserves and resources to facilitate a 35% mine expansion to 1,550 tonnes per
day plant capacity over the next year. Our goal over the next year is to reduce
cash operating costs to single digits, which would make El Cubo the profitable
core asset we originally envisaged when we acquired the mine in 2012.
"Our free cash flow in the third quarter allowed us to start rebuilding our cash
position and we were able to take our foot off the brakes, albeit carefully,
with regard to capital and exploration spending. Management will continue to
focus on improving our operating performance and profit margin at each mine,
especially in the light of the new mining taxes currently being legislated in
Mexico."
Financial Results (see Consolidated Statement of Operations below)
Mine Operations
For the quarter ended September 30, 2013, the Company generated revenue totaling
$67.8 million (2012 - $51.9 million). During the period, the Company sold
1,693,989 oz silver and 20,958 oz gold at realized prices of $22.60 and $1,409
per oz respectively, compared to sales of 1,294,241 oz silver and 8,984 oz gold
at realized prices of $28.72 and $1,637 per oz respectively in 2012. After cost
of sales of $46.1 million (2012 - $34.8 million), mine operating earnings
amounted to $21.7 million (2012 - $17.1 million).
Cash Flow
Mine operating cash flow before taxes was $31.8 million (2012 - $26.9 million),
excluding depreciation and depletion of $12.6 million (2012 - $6.4 million),
stock-based compensation of $0.1 million (2012- $0.1 million), and a recovery of
a previous inventory write down of $2.7 million (2012- Write down of $3.3
million). The mine operating cash flow directly resulted in operating cash flow
before working capital changes to increase 34% to $25.9 million (2012 - $19.3
million).
Net Earnings
Net earnings were $12.3 million or $0.12 per share compared to $0 in Q3, 2012.
They included a mark-to- market derivative liability loss related to share
purchase warrants issued in 2009 denominated in Canadian dollars, while the
Company's functional currency is the US dollar. Under IFRS, these warrants are
classified and accounted for as financial liability at fair market value with
adjustments recognized through net earnings. The appreciation of these warrants
resulted in a derivative liability loss of $0.7 million (2012 - $1.7 million).
Therefore, the adjusted earnings were $13.0 million ($0.13 per share) compared
to $1.7 million ($0.02 per share) in Q3, 2012.
Cash Costs
Cash costs of production, net of gold by-product credits, increased 10% to $5.14
per oz silver produced (2012 - $4.70), and on an all-in sustaining basis were
$12.14 per oz silver, a 43% drop from 2012. On a co-product basis, cash costs
were $12.74 per oz of silver and $794 per oz of gold. The higher cash costs were
largely due to the growing contribution of the El Cubo operation and lower gold
credits, offset by the increased production from the Bolanitos operation.
Operating Results (see Consolidated Table of Mine Operations below)
Guanacevi
Silver production at the Guanacevi mine during Q3, 2013 was 715,080 oz, a
increase of 20% compared to 598,285 oz, and gold production was 1,977 oz, a
decrease of 26% compared to 2,667 oz in Q2, 2012. Metal production was up due to
higher metal grades and recoveries. Plant throughput was 107,480 tonnes at
average grades of 265 gpt silver and 0.70 gpt gold compared to 108,343 tonnes
grading 227 gpt silver and 0.87 gpt gold. The higher silver grades are a
function of geological variations of the different ore zones, while the lower
gold grades are primarily due to final reconciliation of concentrate processed
on behalf of Bolanitos in 2012.
Bolanitos
Silver production at the Bolanitos mine was 794,734 oz, an increase of 83%
compared to 433,388 oz, and gold production was 15,869 oz, an increase of 116%
compared to 7,363 oz in Q3, 2012. Metal production was up due to higher
throughput, grades and recoveries. The Bolanitos mine averaged 2,082 tpd, well
above the mine plan due to increased contract mining and the switch from 100%
cut-and-fill mining to 50% long-hole mining. The Bolanitos plant operated at its
1,600 tpd capacity, and the extra tonnes produced by the mine were processed at
the El Cubo operation. This additional plant access allowed Bolanitos production
to significantly exceed planned output.
Plant throughput was 181,442 tonnes at average grades of 147 gpt silver and 2.75
gpt gold compared to 117,271 tonnes grading 148 gpt silver and 2.39 gpt gold in
Q3, 2012. Ore grades were also significantly above plan, as mining accessed
better than planned ore grades, specifically in the Daniela vein. Silver and
gold recoveries were both anomalously higher due three one-time events: the Las
Torres flotation plant was cleaned out of concentrate in July prior to expiry of
the lease, the El Cubo leach circuit was cleaned out as El Cubo commenced
concentrate sales in September and the precipitate inventory at El Cubo at the
end of Q2 was processed into dore in Q3.Management expects recoveries to return
to historic levels in Q4, 2013.
In addition, selling concentrates as opposed to producing dore at the El Cubo
plant will increase recoveries going forward. Concentrate sales result in higher
payable metal production and higher refining charges, resulting in a net
financial benefit at current metal prices. Depending on certain variables, the
net financial benefit can move in favour of producing dore. Management will
closely monitor these variables to optimize the financial benefit.
El Cubo
Silver production at the El Cubo mine was 346,032 oz, an increase of 226%
compared to 106,260 oz in Q3, 2012 and gold production was 5,101 oz, an increase
of 196% compared to 1,724 oz in Q3, 2012. The Company acquired the El Cubo mine
in July 2012 and has made immediate and lasting improvements at El Cubo to
ensure its economic viability at current metal prices.
Plant throughput was 100,168 tonnes at average grades of 112 gpt silver and 2.62
gpt gold compared to 80,550 tonnes grading 92 gpt silver and 1.42 gpt gold in
Q3, 2012. Silver and gold recoveries were both anomalously higher due three
one-time events: the Las Torres flotation plant was cleaned out of concentrate
in July prior to expiry of the lease, the El Cubo leach circuit was cleaned out
as El Cubo commenced concentrate sales in September, and in Q2 the El Cubo plant
held a significant work-in- process metal balance that was processed in Q3 once
the filter presses were installed and commissioned. Management expects
recoveries to return to historic levels in Q4, 2013.
In addition, selling concentrates as opposed to producing dore at the El Cubo
plant will increase recoveries going forward. Concentrate sales result in higher
payable metal production and higher refining charges, resulting in a net
financial benefit at current metal prices. Depending on certain variables, the
net financial benefit can move in favour of producing dore. Management will
closely monitor these variables to optimize the financial benefit.
Conference Call
A telephone conference call to discuss the results will be held at 10:00 am PST
(1:00 pm EST) on Wednesday, November 6, 2013. To participate in the conference
call, please dial the following:
Toll-free in Canada and the USA: 1-800-319-4610
Local Vancouver: 604-638-5340
Outside of Canada and the USA: 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 & USA (Toll-free) or 1-604-638-9010 outside of Canada & USA. The required
pass-code is 4890 followed by the # sign.
The replay will also be available on the Company's website at www.edrsilver.com.
All shareholders can receive a hard copy of the Company's complete audited
financial statements free of charge upon request. To receive this material in
hard copy, please contact Meghan Brown, Director Investor Relations at
604-640-4804 or toll free 877-685-9775.
About Endeavour Silver - Endeavour is a mid-tier silver mining company focused
on growing its profits, production, reserves and resources in Mexico. Since
start-up in 2004, Endeavour has posted eight consecutive years of accretive
growth of its silver mining operations. The organic expansion programs now
underway at 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 2013 and the timing and results of exploration drill programs.
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 TABLE OF CONSOLIDATED MINE OPERATIONS
Comparative Table of Consolidated Mine Operations
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Period Plant T'put Ore Grades Recovered Ounces
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Ag Au Ag Au
Tonnes (gpt) (gpt) (oz) (oz)
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Production 2013
Q1, 2013 376,344 154 1.51 1,489,746 15,032
Q2, 2013 393,070 165 1.96 1,535,873 19,914
Q3, 2013 389,090 171 1.89 1,855,846 22,947
Q4, 2013
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Total 1,158,504 164 1.79 4,881,465 57,893
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Production 2012
Q1, 2012 193,759 229 1.33 1,072,491 6,321
Q2, 2012 202,987 208 1.47 1,040,026 7,695
Q3, 2012 306,164 161 1.49 1,137,933 11,754
Q4, 2012 362,779 151 1.55 1,235,026 12,917
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Total 1,065,689 179 1.48 4,485,476 38,687
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Q3, 2013 : Q3, 2012 27% 6% 27% 63% 95%
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Q3, 2013 : Q2, 2013 -1% 4% -4% 21% 15%
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YTD 2013:YTD 2012 65% -15% 24% 50% 125%
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ENDEAVOUR SILVER CORP.
COMPARATIVE TABLE OF CONSOLIDATED MINE OPERATIONS
Comparative Table of Consolidated Mine Operations
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Period Recoveries Cash Cost Direct Cost
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Ag Au
(%) (%) $ per oz $ per tonne
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Production 2013
Q1, 2013 79.9 82.3 10.04 99.63
Q2, 2013 73.6 80.4 10.53 96.45
Q3, 2013 86.7 96.9 5.14 104.06
Q4, 2013
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Total 80.1 86.8 8.09 99.06
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Production 2012
Q1, 2012 75.2 76.2 6.26 92.44
Q2, 2012 76.5 80.3 5.46 86.32
Q3, 2012 71.8 80.1 4.70 97.05
Q4, 2012 70.1 71.7 12.25 92.86
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Total 73.2 76.5 7.33 92.74
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Q3, 2013 : Q3, 2012 21% 21% 9% 7%
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Q3, 2013 : Q2, 2013 18% 21% -51% 8%
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YTD 2013:YTD 2012 8% 10% 48% 12%
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ENDEAVOUR SILVER CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
(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,
2013 2012 2013 2012
------------------------------------------------- --------------------------
Revenue $ 67,803 $ 51,880 $ 208,926 $ 141,360
Cost of sales:
Direct production
costs 35,739 24,485 117,372 56,986
Royalties 287 454 1,093 1,397
Share-based
compensation 131 146 408 421
Amortization and
depletion 12,566 6,353 37,789 19,177
Write down (recovery)
of inventory to net
realizable value (2,668) 3,345 5,210 3,345
------------------------------------------------- --------------------------
46,055 34,783 161,872 81,326
------------------------------------------------- --------------------------
Mine operating
earnings 21,748 17,097 47,054 60,034
Expenses:
Exploration 1,854 3,420 11,022 7,342
General and
administrative 2,464 2,850 9,381 9,564
------------------------------------------------- --------------------------
4,318 6,270 20,403 16,906
------------------------------------------------- --------------------------
Operating earnings 17,430 10,827 26,651 43,128
Mark-to-market
loss/(gain) on
derivative
liabilities 679 1,728 (3,159) (47)
Mark-to-market
loss/(gain) on
contingent liability 127 5,005 (7,772) 5,005
Finance costs 313 181 1,091 191
Other income
(expense):
Foreign exchange (1,191) 1,814 (2,230) 2,981
Investment and other
income 1,247 (106) 3,596 1,834
------------------------------------------------- --------------------------
56 1,708 1,366 4,815
------------------------------------------------- --------------------------
------------------------------------------------- --------------------------
Earnings before income
taxes 16,367 5,621 37,857 42,794
Current income tax
expense 2,729 3,420 8,928 9,903
Deferred income tax
expense 1,341 2,185 2,636 5,595
------------------------------------------------- --------------------------
4,070 5,605 11,564 15,498
------------------------------------------------- --------------------------
Net earnings (loss)
for the period 12,297 16 26,293 27,296
------------------------------------------------- --------------------------
------------------------------------------------- --------------------------
Other comprehensive
income (loss), net of
tax
Net change in fair
value of available
for sale investments 517 1,321 (3,412) (2,046)
------------------------------------------------- --------------------------
Comprehensive income
(loss) for the period $ 12,814 $ 1,337 $ 22,881 $ 25,250
------------------------------------------------- --------------------------
------------------------------------------------- --------------------------
Basic earnings (loss)
per share based on
net earnings $ 0.12 $ 0.00 $ 0.26 $ 0.30
------------------------------------------------- --------------------------
Diluted earnings
(loss) per share
based on net earnings $ 0.12 $ 0.00 $ 0.23 $ 0.29
------------------------------------------------- --------------------------
Basic weighted average
number of shares
outstanding 99,741,010 97,666,618 99,704,100 91,159,694
------------------------------------------------- --------------------------
Diluted weighted
average number of
shares outstanding 100,637,952 99,322,475 101,617,107 93,699,625
------------------------------------------------- --------------------------
This statement should be read in conjunction with the condensed consolidated
financial statements for the period ended September 30, 2013 and the related
notes contained therein
ENDEAVOUR SILVER CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(expressed in thousands of U.S. dollars)
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Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2013 2012 2013 2012
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Operating activities
Net earnings (loss) for the
period $ 12,297 $ 16 $ 26,293 $ 27,296
Items not affecting cash:
Share-based compensation 886 1,018 2,825 3,803
Amortization and depletion 12,648 6,427 38,024 19,354
Deferred income tax
provision 1,341 2,184 2,636 5,595
Unrealized foreign exchange
loss (gain) 124 (731) 726 (1,632)
Mark to market loss (gain)
on derivative liability 679 1,728 (3,159) (47)
Mark to market loss (gain)
on contingent liability 127 5,005 (7,772) 5,005
Finance costs 477 6 629 16
Write down (recovery) of
inventory to net
realizable value (2,668) 3,345 5,210 3,345
Loss (gain) on marketable
securities - 325 (1,777) (158)
Net changes in non-cash
working capital (3,881) (3,979) (12,389) (6,244)
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Cash from operating
activities 22,030 15,344 51,246 56,333
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Investing activites
Property, plant and
equipment expenditures (18,579) (18,249) (78,936) (39,544)
Acquisition of Mexgold
Resources Inc. - (100,000) - (100,000)
Investment in short term
investments - - (130) (27,884)
Proceeds from sale of short
term investments - 3,740 4,720 50,373
Investment in long term
deposits (54) (741) (54) (917)
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Cash from (used in)
investing activities (18,633) (115,250) (74,400) (117,972)
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Financing activities
Proceeds from revolving
credit facility - - 30,000 -
Common shares issued on
exercise of options and
warrants - 1,034 454 2,312
Interest paid (467) - (599) -
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Cash from financing
activites (467) 1,034 29,855 2,312
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Effect of exchange rate
change on cash and cash
equivalents (38) 613 (117) 1,078
Increase (decrease) in cash
and cash equivalents 2,930 (98,872) 6,701 (59,327)
Cash and cash equivalents,
beginning of period 22,309 115,444 18,617 75,434
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Cash and cash equivalents,
end of period $ 25,201 $ 17,185 $ 25,201 $ 17,185
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This statement should be read in conjunction with the condensed consolidated
financial statements for the period ended September 30, 2013 and the related
notes contained therein
ENDEAVOUR SILVER CORP.
CONSOLIDATED BALANCE SHEETS
(expressed in thousands of US dollars)
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September 30, December 31,
2013 2012
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ASSETS
Current assets
Cash and cash equivalents $ 25,201 $ 18,617
Investments 2,295 8,520
Accounts receivable 28,794 20,526
Inventories 32,007 40,797
Prepaid expenses 2,803 9,940
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Total current assets 91,100 98,400
Non-current deposits 1,042 1,451
Mineral property, plant and equipment 378,633 338,431
Goodwill 39,245 39,245
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Total assets $ 510,020 $ 477,527
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 21,714 $ 34,631
Income taxes payable 1,370 3,854
Derivative liabilities 2,177 5,336
Revolving credit facility 39,000 9,000
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Total current liabilities 64,261 52,821
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Provision for reclamation and rehabilitation 6,526 6,496
Contingent liability 725 8,497
Deferred income tax liability 72,152 69,517
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Total liabilities 143,664 137,331
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Shareholders' equity
Common shares, unlimited shares authorized, no
par value, issued and outstanding 99,741,010
shares (Dec 31, 2012 - 99,541,522 shares) 358,228 357,296
Contributed surplus 14,128 12,828
Accumulated comprehensive income (loss) (8,743) (5,331)
Retained earnings (deficit) 2,743 (24,597)
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Total shareholders' equity 366,356 340,196
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Total liabilities and shareholders' equity $ 510,020 $ 477,527
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This statement should be read in conjunction with the condensed consolidated
financial statements for the period ended September 30, 2013 and the related
notes contained therein.
FOR FURTHER INFORMATION PLEASE CONTACT:
Endeavour Silver Corp.
Meghan Brown
Director Investor Relations
604-640-4804 or Toll free: 1-877-685-9775
mbrown@edrsilver.com
www.edrsilver.com
Endeavour Silver (TSX:EDR)
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