Endeavour Silver Reports Financial Results for Third Quarter, 2015; Conference Call at 11am PST (2pm EST) on November 2, 2015
VANCOUVER, BC -- (Marketwired) -- 11/02/15 --
Endeavour Silver Corp. (NYSE: EXK) (TSX: EDR) released today its financial results for the third quarter ended September 30, 2015. 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, 2015 reflects higher revenue and cash flow but lower net earnings compared to both the Second Quarter, 2015 and the Third Quarter, 2014. The improved top-line performance was a result of higher metal production and lower operating costs both quarter-on-quarter and year-on-year, while the reduced bottom-line performance was due to the negative impact of the falling Mexican peso on current assets and deferred income taxes, and a write-down of marketable security investments.
Highlights of Third Quarter 2015 (Compared to Third Quarter 2014)
Financial
- Net loss of $14.1 million(1) ($0.14 per share) compared to $11.4 million ($0.11 per share)
- Adjusted net loss of 9.3 million (($0.09 per share) compared to $11.4 million ($0.11 per share)
- Adjusted EBITDA(2) increased 93% to $6.9 million
- Cash flow from operations before working capital changes increased 9% to $4.8 million
- Mine operating cash flow before taxes(1) increased 5% to $12.0 million
- Revenue increased 5% to $42.7 million
- Realized silver price decreased 22% to $14.67 per ounce (oz) sold
- Realized gold price decreased 16% to $1,074 per oz sold
- Cash costs(2) decreased 24% to $8.11 per oz silver payable (net of gold credits)
- All-in sustaining costs (AISC) decreased 25% to $15.05 per oz silver payable (net of gold credits)
- On track to significantly beat cash cost and AISC guidance for 2015
Operations
- Silver production increased 11% to 1,820,282 oz
- Gold production increased 9% to 15,319 oz
- Silver equivalent production increased 10% to 2.9 million oz (at a 70:1 silver: gold ratio)
- Silver oz sold up 50% to 1,844,556 oz
- Gold oz sold up 7% to 14,599 oz
- Bullion inventory at quarter-end included 97,654 oz silver and 223 oz gold
- Concentrate inventory at quarter-end included 95,574 oz silver and 1,460 oz gold
- On track to meet or beat high end of 2015 silver production guidance
- On track to meet lower end of 2015 gold production guidance
- On track to meet higher end of 2015 silver equivalent production guidance
- The Consolidated Interim Financial Statements and Management's Discussion & Analysis can be viewed on the Company's website at www.edrsilver.com, on SEDAR at www.sedar.com and EDGAR at www.sec.gov. All amounts are reported in US$
- Mine operating cash flow, adjusted 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, "Given the falling precious metal prices this year, management has continued to focus on reducing costs and improving productivity at each of our mines, with significant success. Over the past five quarters, we have reduced our consolidated operating costs per tonne by 28% from US$103.58 down to US$75.07. Our operations team can take great pride in their accomplishments resulting from our philosophy of continuous improvement. We expect to meet or beat our guidance on all operating metrics for 2015."
Operating Results
At Guanaceví, operating performance in Q3, 2015 continued to exceed expectations with metal production up due to slightly higher than planned plant throughput, metal recoveries and silver grades. Ore grades started to decline in Q3, 2015 as mining moved into lower grade areas of the mine plan. Exploration drilling and an underground development heading at the Santa Cruz mine extended mineralization into a new high-grade area to the southeast, outside of the current resource. Guanaceví production is on track to beat 2015 guidance.
At Bolañitos, operations exceeded plan in the context of a scheduled production ramp-down to 1,000 tpd this year. Lower than planned mill feed from the El Cubo mine allowed Bolañitos to mill just under 1,200 tpd of Bolañitos ore in Q3, 2015. The development of, and production from, the new LL-Asunción vein continues to expand as it replaces falling production from the Lucero group of veins. Bolañitos is on track to exceed 2015 silver production guidance and meet the high end of the 2015 gold production guidance.
At El Cubo, mine and mill operations achieved the 2,200 tpd target in early July but averaged 2,000 tpd in the third quarter due to lower than expected equipment and personnel availabilities and slower than planned mine development. Site management continues to push mine development in order to achieve 2,200 tpd in the fourth quarter. To help offset holiday downtime, the mine is developing some new long-hole stopes. Management has deferred the decision to install additional plant equipment to increase the El Cubo plant capacity to 2,000 tpd as other minor improvements in the flow sheet could increase throughput further and improve recoveries. El Cubo is on track to meet its annual silver production guidance but fall short of the 2015 annual gold production guidance.
On a consolidated basis, the Company expects to meet or beat on 2015 silver production guidance and meet the lower end of the 2015 gold production guidance. On a silver equivalent basis the Company expects to meet the high end of its 2015 production guidance.
Financial Results
For the third quarter ended September 30, 2015, the Company generated revenue totaling $42.7 million (2014 - $40.5 million). During the period, the Company sold 1,844,556 oz silver and 14,599 oz gold, for realized prices of $14.67 and $1,074 per oz respectively, compared to sales of 1,227,466 oz silver and 13,631 oz gold, for realized prices of $18.78 and $1,278 per oz respectively, in the same period of 2014. The accounting treatment for concentrate sales that are pending finalization require mark-to-market adjustments at period-end, significantly reducing the recognized revenue and reported price realized per ounce.
After cost of sales of $40.7 million (2014 - $44.1 million), mine operating earnings amounted to $2.1 million (2014 - loss of $3.6 million) from mining and milling operations in Mexico. Excluding depreciation and depletion of $9.8 million (2014 - $14.4 million), and share-based compensation of $0.1 million (2014 - $0.1 million), mine operating cash flow before taxes was $12.0 million (2014 - $11.5 million) in Q3, 2015. Net operating losses were $0.9 million (2014 - $11.0 million) after exploration expense of $1.2 million (2014 - $4.9 million) and corporate general and administrative costs of $1.8 million (2014 - $2.2 million).
Falling precious metal prices have required all of Endeavour's mines to continue focusing on cost reductions and operational efficiencies. This focus and the depreciation of the Mexican peso resulted in operations being well below cost guidance for the year. For the nine months ended September 30, 2015, cash costs were $7.96 per oz and AISC was $15.07 per oz compared to already revised guidance of $9-10 per oz and $16.00-17.50 per oz respectively. Management expects fourth quarter cost metrics to be similar to the nine months ended September 30, 2015, putting Endeavour on track to significantly beat its revised cash cost and AISC guidance for 2015.
Conference Call
A conference call to discuss the results will be held on Monday, November 2 at 11am PST (2pm EST). 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 4890 followed by the # sign. 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 2014 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; fluctuations in the prices of commodities and their impact on reserves and resources 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
All amounts in US$
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Three months ended Sept. 30 Nine months ended Sept. 30
------------------------------ ------------------------------
Q3 2015
2015 2014 % Highlights 2015 2014 %
Change Change
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Production
----------------------------------------------------------------------------
Silver oz
1,820,282 1,634,294 11% produced 5,445,901 5,202,902 5%
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Gold oz
15,319 14,118 9% produced 44,557 47,768 (7%)
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Payable silver
1,773,459 1,582,525 12% oz produced 5,305,309 5,046,879 5%
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Payable gold
14,961 13,558 10% oz produced 43,512 45,961 (5%)
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Silver
2,892,612 2,622,554 10% equivalent oz 8,564,891 8,546,662 0%
produced
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Cash costs
($/oz silver,
8.11 10.70 (24%) net of by- 7.96 8.30 (4%)
product
credits)
----------------------------------------------------------------------------
Total
production
13.57 19.86 (32%) costs ($/oz 13.48 17.15 (21%)
silver, net
of by-product
credits)
----------------------------------------------------------------------------
All-in
sustaining
15.05 20.18 (25%) costs ($/oz 15.07 17.34 (13%)
silver, net
of by-product
credits)
----------------------------------------------------------------------------
Processed
404,878 344,393 18% tonnes 1,157,415 1,030,194 12%
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Direct
production
75.07 99.02 (24%) costs 80.05 98.47 (19%)
($/tonne)
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Silver co-
10.33 13.14 (21%) product cash 10.68 12.19 (12%)
costs($/oz)
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Gold co-
756 894 (15%) product cash 774 796 (3%)
costs ($/oz)
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Financial
----------------------------------------------------------------------------
42.7 40.5 5% Revenue ($M) 141.6 148.3 (5%)
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1,844,556 1,227,466 50% Silver oz sold 5,619,126 4,539,433 24%
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14,599 13,631 7% Gold oz sold 44,195 44,688 (1%)
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Realized
14.67 18.78 (22%) silver price 16.05 19.88 (19%)
($/oz)
----------------------------------------------------------------------------
Realized gold
1,074 1,278 (16%) price ($/oz) 1,163 1,298 (10%)
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Net earnings
(14.1) (11.4) 24% (loss) ($M) (13.7) (7.6) 79%
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Adjusted net
(9.3) (11.4) (18%) earnings ($M) (8.9) (6.2) 44%
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2.1 (3.6) (159%) Mine operating 18.0 12.1 49%
earnings ($M)
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Mine operating
12.0 11.5 5% cash flow 48.0 56.6 (15%)
($M)
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Operating cash
flow before
4.8 4.4 9% working 29.6 34.6 (14%)
capital
changes ($M)
----------------------------------------------------------------------------
Earnings
1.3 2.2 (40%) before ITDA 28.6 34.9 (18%)
($M)
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Working
20.4 39.8 (49%) capital ($M) 20.4 39.8 (49%)
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Shareholders
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Earnings per
(0.14) (0.11) (25%) share - basic (0.13) (0.08) (63%)
($)
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Adjusted
(0.09) (0.11) 19% earnings per (0.09) (0.06) (42%)
share - basic
($)
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Operating cash
flow before
0.05 0.04 8% working 0.29 0.34 (15%)
capital
changes per
share
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Weighted
101,976,901 101,527,951 0% average 101,976,901 101,123,404 1%
shares
outstanding
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Please refer to the definitions of the financial and operating metrics
disclosed in the table above in the Company's Management's
Discussion & Analysis.
ENDEAVOUR SILVER CORP.
CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(expressed in thousands of US dollars)
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Three months ended Nine months ended
Sept 30, Sept 30, Sept 30, Sept 30,
2015 2014 2015 2014
----------------------------------------------------------------------------
Operating activities
Net earnings (loss) for the
period $ (14,079) $ (11,386) $ (13,696) $ (7,638)
Items not affecting cash:
Share-based compensation 735 937 2,329 2,869
Depreciation and depletion 9,849 14,471 29,824 43,402
Deferred income tax
expense (recovery) 3,110 (1,039) 5,188 (7,957)
Unrealized foreign
exchange loss (gain) 48 310 196 287
Mark-to-market loss (gain)
on derivative liability - - - 1,434
Mark-to-market loss (gain)
on contingent liability - (126) - (99)
Finance costs 338 317 950 1,019
Write down of marketable
securities 4,785 - 4,785 -
Write down of inventory to
net realizable value - 527 - 892
Write off of exploration
property - 381 - 381
Net changes in non-cash
working capital (747) (6,908) (2,188) (6,589)
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Cash from (used in)
operating activities 4,039 (2,516) 27,388 28,001
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Investing activites
Property, plant and
equipment expenditures (9,291) (10,047) (27,308) (30,079)
Change in long term
deposits - (82) - (82)
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Cash used in investing
activities (9,291) (10,129) (27,308) (30,161)
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Financing activities
Repayment of revolving
credit facility (3,000) (2,000) (7,000) (6,000)
Repayment of obligation
under finance lease (224) - (224) -
Interest paid (257) (252) (706) (825)
Exercise of options and
warrants - 305 - 3,405
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Cash from (used in)
financing activites (3,481) (1,947) (7,930) (3,420)
----------------------------------------------------------------------------
Increase (decrease) in cash
and cash equivalents (8,733) (14,592) (7,850) (5,580)
Effect of exchange rate
change on cash and cash (235) (309) (383) (287)
equivalents
Cash and cash equivalents,
beginning of period 31,780 44,038 31,045 35,004
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Cash and cash equivalents,
end of period $ 22,812 $ 29,137 $ 22,812 $ 29,137
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This statement should be read in conjunction with the condensed consolidated
interim financial statements for the period ended September 30, 2015 and the
related notes contained therein.
ENDEAVOUR SILVER CORP.
CONSOLIDATED INTERIM 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,
2015 2014 2015 2014
----------------------------------------------------------------------------
Revenue $ 42,737 $ 40,477 $ 141,565 $ 148,251
Cost of sales:
Direct production
costs 30,447 28,840 92,807 90,909
Royalties 304 175 795 787
Share-based
compensation 109 140 349 427
Depreciation and
depletion 9,768 14,386 29,604 43,168
Write down of
inventory to net
realizable value - 527 - 892
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40,628 44,068 123,555 136,183
Mine operating
earnings (loss) 2,109 (3,591) 18,010 12,068
Expenses:
Exploration 1,173 4,900 4,726 9,874
Write off of
exploration
property - 381 - 381
General and
administrative 1,812 2,165 6,215 8,120
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2,985 7,446 10,941 18,375
Operating earnings
(loss) (876) (11,037) 7,069 (6,307)
Mark-to-market
loss/(gain) on
derivative
liabilities - - - 1,434
Mark-to-market
loss/(gain) on
contingent
liability - (126) - (99)
Finance costs 370 359 1,037 1,061
Other income
(expense):
Write down of
marketable
securities (4,785) - (4,785) -
Foreign exchange (2,964) (1,353) (4,335) (1,165)
Investment and
other income 121 27 805 294
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(7,628) (1,326) (8,315) (871)
Earnings (loss)
before income taxes (8,874) (12,596) (2,283) (9,574)
Income tax expense
(recovery):
Current income tax
expense 2,095 (171) 6,225 6,021
Deferred income
tax expense
(recovery) 3,110 (1,039) 5,188 (7,957)
--------------------------------------------------------------------------
5,205 (1,210) 11,413 (1,936)
----------------------------------------------------------------------------
Net earnings (loss)
for the period (14,079) (11,386) (13,696) (7,638)
----------------------------------------------------------------------------
Other comprehensive
income (loss), net
of tax
Unrealized gain
(loss) on
available for
sale investments 633 (722) (27) (646)
Reclassification
of gain (loss) on
available for
sale investments,
included in the
net loss
4,785 - 4,785 -
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Total other
comprehensive
income (loss) for
the period 5,418 (722) 4,758 (646)
----------------------------------------------------------------------------
Comprehensive income
(loss) for the
period $ (8,661) $ (12,108) $ (8,938) $ (8,284)
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Basic and diluted
earnings (loss) per
share based on net
earnings $ (0.14) $ (0.11) $ (0.13) $ (0.08)
Basic and diluted
weighted average
number of shares
outstanding 101,976,901 101,527,951 101,976,901 101,123,404
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This statement should be read in conjunction with the condensed consolidated
interim financial statements for the period ended September 30, 2015 and the
related notes contained therein.
ENDEAVOUR SILVER CORP.
CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(expressed in thousands of US dollars)
----------------------------------------------------------------------------
December
September 30, 31,
2015 2014
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ASSETS
Current assets
Cash and cash equivalents $ 22,812 $ 31,045
Investments 759 786
Accounts receivable 16,943 19,715
Inventories 18,905 21,604
Prepaid expenses 1,947 2,656
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Total current assets 61,366 75,806
Non-current deposits 855 1,048
Deferred income tax asset 4,329 6,253
Mineral properties, plant and equipment 182,254 182,730
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Total assets $ 248,804 $ 265,837
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 15,223 $ 17,408
Finance lease obligation 926 -
Income taxes payable 2,860 8,181
Revolving credit facility 22,000 29,000
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Total current liabilities 41,009 54,589
Provision for reclamation and rehabilitation 6,575 6,496
Deferred income tax liability 15,556 12,479
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Total liabilities 63,140 73,564
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Shareholders' equity
Common shares, unlimited shares authorized, no
par value, issued
and outstanding 101,976,901 shares (Dec 31, 2014
- 101,976,901 shares) 367,853 367,853
Contributed surplus 8,909 8,430
Accumulated comprehensive income (loss) - (4,758)
Retained earnings (deficit) (191,098) (179,252)
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Total shareholders' equity 185,664 192,273
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Total liabilities and shareholders' equity $ 248,804 $ 265,837
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This statement should be read in conjunction with the condensed consolidated interim financial statements for the period ended September 30, 2015 and the related notes contained therein.
For more information, please contact:Meghan BrownDirector Investor Relations Toll free: 1-877-685-9775Tel: 604-640-4804Fax: 604-685-9744 Email: [email protected]: www.edrsilver.com
Source: Endeavour Silver Corp.