November 5, 2020
Endeavour Silver Reports Financial Results For Third Quarter 2020, Conference Call At 10am PST (1pm EST) Today
VANCOUVER, British Columbia, Nov. 05, 2020 (GLOBE NEWSWIRE) -- Endeavour Silver Corp. (NYSE: EXK; TSX: EDR) released today its financial results for the three month and nine month periods ended September 30, 2020. The Company operates three silver-gold mines in Mexico: the Guanaceví mine in Durango state, the Bolañitos mine in Guanajuato state and the El Compas mine in Zacatecas state.
Bradford Cooke, Endeavour CEO, commented, “Revenue, operating cash flow and net earnings were all sharply higher in Q3, 2020 compared to Q3, 2019. Cash cost and all-in sustaining cost (AISC) were significantly lower year-on-year. The improved operating performance and higher precious metal prices generated the Company’s return to profitability for the first time in 18 months. The Company’s cash and working capital positions increased substantially during the Third Quarter 2020.”
“Our consolidated operating costs continue to trend lower, generating significant operating cash flow and improving our net earnings performance. We held a significant portion of our production as inventory at quarter end due to the sharp sell-off of metal prices in September, which muted our revenue and earnings performance this quarter, but we expect to sell this inventory this quarter based on an anticipated rebound of metal prices.”
20 20 Thir d Quarter Highlights (all dollar amounts in US$)
- Net Income: Income of $0.5 million ($0.00 per share), compared to loss of $6.8 million in Q3, 2019. Earnings would have been higher but for the increased metal inventory at quarter-end and the $1.6 million general and administrative expense related to the mark to market of deferred share units at the higher share price.
- Cash Flow: $10.3 million cash flow from operations before working capital changes, an increase of 397% and EBITDA(1) of $10.6 million, an increase of 936%, both compared to Q3, 2019.
- Revenue: $35.6 million revenue, up 29% compared to Q3, 2019 from the sale of 741,262 oz of silver and 8,997 oz gold at average realized prices of $25.08 per oz silver and $1,952 per oz gold.
- Balance Sheet: Cash position of $44.9 million, up 47% and working capital of $53.8 million, up 21%, both compared to Q2, 2020. Term liabilities consist solely of equipment loans of $10.7 million. Raised $2.1 million in ATM equity financing and $5.6 million from exercised stock options during the quarter, net of issuance costs.
- Metal Production: Produced 932,837 oz silver and 10,041 oz gold for a total of 1.8 million oz silver equivalent (AgEq) at an 80:1 silver:gold ratio.
- Metal Inventory: The Company increased metal holdings 81% to 462,674 silver oz and 53% to 2,995 gold oz. The cost allocated on the balance sheet to this metal is $6.0 million, while the fair market value at September 30, 2020 is $15.7 million.
- Operating Costs: Cash cost(1) decreased 68% to $3.69 per oz payable silver and all-in sustaining cost (AISC)(1) was down 19% to $17.48 per oz payable silver, both net of gold credits. Cash cost and AISC were substantially lower compared to Q3, 2019 year-on-year due to the improved operating performance at Guanacevi, and the higher realized gold price that increased the by-product credit. The AISC was elevated due to higher general and administration costs.
- Guanacevi Out- P erform ed : Silver and gold grades continued well above plan, however throughput was affected by significant rainfall in Q3, 2020. The improved grades and higher metal prices significantly increased royalty costs during the quarter. Additionally, management increased its processing of toll ores as higher prices increased mining activity from small local miners in the district.
- Bolanitos Continue d to Improve : Throughput averaged 1,075 tpd while gold grades aligned with plan and silver grades remain lower than plan, and costs were in line with budget.
- El Compas Throughput Steady : Throughput remained steady with gold grades similar to plan, while silver grades remained lower than plan. Increased mine development and administrative costs (COVID protocols, training, security) significantly impacted financial performance.
(1) 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.
Financial Results (Consolidated Statement of Operations Appended B elow)
For the three-month period ended September 30, 2020, the Company generated net revenue totaling $35.6 million (Q2, 2019 - $27.6 million). During the period, the Company sold 741,262 silver oz sold and 8,997 oz gold at realized prices of $25.08 and $1,952 per oz respectively, compared to sales of 835,045 oz silver and 9,373 oz gold at realized prices of $17.52 and $1,489 per oz respectively in the same period of 2019. The Company increased its finished goods silver and gold inventories to 462,674 silver oz and 2,995 gold oz, respectively at September 30, 2020. The finished goods inventory is held on the balance sheet at $6.0 million, the cost to produce the metal, compared to the market value of $15.7 million.
Cost of sales for Q3, 2020 was $29.3 million, a 1% decrease over the cost of sales of $29.4 million for the same period of 2019. The 1% decrease in cost of sales was primarily related to improved productivity at the Guanacevi and Bolanitos operations and the deprecation of the Mexican Peso offset by significantly higher royalty costs and higher costs incurred at the El Compas operation.
After cost of sales of $29.3 million (Q3, 2019 - $29.4 million), mine operating earnings was $6.3 million (Q3, 2019 – loss of $1.7 million) from mining and milling operations in Mexico.
Exploration expenses were relatively flat in Q3, 2020 to $1.6 million from $1.7 million for the same period of 2019 as activities resumed planned levels following the suspension of activities in Q2, 2020 due to the pandemic. General and administrative expenses increased to $3.7 million in Q2, 2020 compared to $2.4 million for the same period of 2019, primarily due to mark-to-market fluctuations for director’s deferred share units. The quarter included $0.6 million of care and maintenance costs at the El Cubo mine shutdown in November 2019.
Excluding depreciation and depletion of $8.1 million (Q3, 2019 - $7.1 million), stock-based compensation of $0.1 million (Q3, 2019- $0.1 million) and the inventory write off of $0.6 million (Q3, 2019- $1.2 million) mine operating cash flow before taxes was $15.1 million in Q3, 2020 (Q3, 2019 – $6.6 million). Operating earnings was $0.4 million (Q3, 2019 – loss of $5.8 million) after exploration expenditures, general and administrative expense and care and maintenance costs.
Net earnings amounted to $0.5 million (break-even per share) compared to a net loss of $6.8 million (loss of $0.05 per share) in Q3, 2019.
Direct production costs per tonne in Q3, 2020 increased 4%, to $112.37 compared with Q3, 2019 due to a significant increase in royalty costs and purchased ore at the Guanaceví operation, higher costs incurred at the El Compas operation, offset by the lower costs at the Bolañitos.
Consolidated cash costs per oz, net of by-product credits (a non-IFRS measure and a standard of the Silver Institute) decreased 68% to $3.69 primarily due to higher gold grades and higher realized gold price that increased the by-product credit compared to the same period in 2019. The higher proportional gold production, and rising gold price, which increased 31% compared to the same period ended in 2019, were significant drivers in the lower cash cost net of by-product credits.
On a co-product cash costs basis, both silver and gold cost per ounce improved compared to the Q3, 2019. Silver co-product cash costs fell 5%, while gold co-product costs fell 13% to $13.32 per ounce and $1,037 per ounce respectively. The improvement was primarily driven by the higher grade ore.
All-in sustaining costs (also a non-IFRS measure) decreased 19% to $17.48 per oz in Q3, 2020 as a result of lower operating costs offset by higher corporate general and administrative costs, increased brownfield expenditures and increased capital expenditures to accelerate mine development to improve daily mine output. General and administrative costs increased due to mark to market deferred share units. Exploration expenditures increased compared to prior year at Guanacevi and Bolanitos to in-fill and extent recent discoveries. At El Compas, exploration expenditures increased to test regional targets to grow resources in the district to process at the El Compas plant.
The Condensed Consolidated Interim Financial Statements and Management’s Discussion & Analysis can be viewed on the Company’s website at www.edrsilver.com, on SEDAR at www.sedar.com and EDGAR at www.sec.gov. All amounts are reported in US$.
A conference call to discuss these results will be held today, Thursday, November 5, 2020 at 10am PDT (1pm EDT). 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 5378#. The replay will also be available on the Company’s website at www.edrsilver.com.
Bradford Cooke, Chief Executive Officer, prepared a four minute video update on the Q3 Financial results released today. The video can be accessed here and will be archived on the company website, under the Investor Relations, Events Section.
About Endeavour Silver – Endeavour Silver Corp. is a mid-tier precious metals mining company that owns and operates three high-grade, underground, silver-gold mines in Mexico. Endeavour is currently advancing the Terronera mine project towards a development decision 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.
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 2020 including changes in mining operations and production levels, the timing and results of various activities and the impact of the COVID 19 pandemic on operations . 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, production levels, performance or achievements of Endeavour and its operations to be materially different from those expressed or implied by such statements. Such factors include but are not limited to the ultimate impact of the COVID 19 pandemic on operations and results, changes in production and costs guidance, 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.
ENDEAVOUR SILVER CORP.
Three Months Ended September 30 Q3 2020 Highlights Nine Months Ended September 30 2020 2019 % Change 2020 2019 % Change Production 942,274 948,547 (1 %) Silver ounces produced 2,396,478 3,079,224 (22 %) 10,260 9,716 6 % Gold ounces produced 24,553 29,329 (16 %) 932,837 938,572 (1 %) Payable silver ounces produced 2,373,246 3,028,383 (22 %) 10,041 9,465 6 % Payable gold ounces produced 24,078 28,606 (16 %) 1,763,074 1,725,827 2 % Silver equivalent ounces produced 4,360,718 5,425,544 (20 %) 3.69 11.51 (68 %) Cash costs per silver ounce 4.95 12.61 (61 %) 13.53 19.33 (30 %) Total production costs per ounce 13.74 20.82 (34 %) 17.48 21.53 (19 %) All-in sustaining costs per ounce 17.16 20.58 (17 %) 206,324 234,196 (12 %) Processed tonnes 519,771 718,355 (28 %) 112.37 106.76 5 % Direct production costs per tonne 107.68 108.97 (1 %) 13.32 14.09 (5 %) Silver co-product cash costs 11.91 13.87 (14 %) 1,037 1,198 (13 %) Gold co-product cash costs 1,117 1,213 (8 %) Financial 35.6 27.6 29 % Revenue ($ millions) 77.7 84.0 (8 %) 741,262 835,045 (11 %) Silver ounces sold 2,041,601 3,004,495 (32 %) 8,997 9,373 (4 %) Gold ounces sold 21,669 28,348 (24 %) 25.08 17.52 43 % Realized silver price per ounce 19.40 15.88 22 % 1,952 1,489 31 % Realized gold price per ounce 1,820 1,389 31 % 0.5 (6.8) 107 % Net earnings (loss) ($ millions) (18.8) (30.2) 38 % 6.3 (1.7) 467 % Mine operating earnings (loss) ($ millions) 6.5 (13.6) 148 % 15.1 6.6 129 % Mine operating cash flow ($ millions) 27.1 13.9 95 % 10.3 2.1 397 % Operating cash flow before working capital changes 7.2 (1.0) 805 % 10.6 1.0 936 % Earnings before ITDA ($ millions) 5.1 (6.3) 181 % 53.8 49.4 9 % Working capital ($ millions) 53.8 49.4 9 % Shareholders 0.00 (0.05) 100 % Earnings (loss) per share – basic (0.13) (0.23) 43 % 0.07 0.02 250 % Operating cash flow before working capital changes per share 0.05 (0.01) 600 % 156,265,280 137,739,857 13 % Weighted average shares outstanding 148,673,768 133,788,084 11 %
The above highlights are key measures used by management, however they should not be the sole measures used in determining the performance of the Company’s operations. The related definitions and reconciliations are contained in the Management Discussion and Analysis.
ENDEAVOUR SILVER CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(expressed in thousands of U.S. dollars)
Three months ended Nine months ended September 30, September 30, September 30, September 30, 2020 2019 2020 2019 Operating activities Net earnings (loss) for the period $ 451 $ (6,768 ) $ (18,764 ) $ (30,169 ) Items not affecting cash: Share-based compensation 793 763 2,386 2,613 Depreciation, depletion and amortization 8,296 7,194 18,777 21,735 Deferred income tax expense (recovery) 556 (567 ) 1,906 (1,740 ) Unrealized foreign exchange loss (gain) (779 ) 48 (265 ) 155 Finance costs 377 177 1,025 372 Write off of mineral properties - - - 45 Write down of inventory to net realizable value 639 1,224 2,167 5,943 Loss on asset disposal 27 - 162 - Unrealized loss (gain) on other investments (76 ) (3 ) (190 ) 24 Net changes in non-cash working capital 5,288 (7,333 ) 5,110 (13,213 ) Cash from (used in) operating activities 15,572 (5,265 ) 12,314 (14,235 ) Investing activities Proceeds on disposal of property, plant and equipment 50 - 150 - Mineral property, plant and equipment expenditures (8,561 ) (5,497 ) (18,945 ) (15,160 ) Intangible asset expenditures - - - (204 ) Cash used in investing activities (8,511 ) (5,497 ) (18,795 ) (15,364 ) Financing activities Repayment of loans payable (847 ) (410 ) (2,173 ) (662 ) Repayment of lease liabilities (45 ) (51 ) (137 ) (154 ) Interest paid (235 ) (125 ) (696 ) (216 ) Public equity offerings 2,179 10,255 26,367 19,446 Exercise of options 5,569 343 5,589 343 Share issuance costs (96 ) (298 ) (1,133 ) (586 ) Cash from financing activities 6,525 9,714 27,817 18,171 Effect of exchange rate change on cash and cash equivalents 833 (72 ) 213 38 Increase (decrease) in cash and cash equivalents 13,586 (1,048 ) 21,336 (11,428 ) Cash and cash equivalents, beginning of the period 30,498 23,106 23,368 33,376 Cash and cash equivalents, end of the period $ 44,917 $ 21,986 $ 44,917 $ 21,986 Supplemental cash flow information (Note 14)
This statement should be read in conjunction with the condensed consolidated interim financial
statements for the periods ended September 30, 2020 and the related notes contained therein.
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 September 30, September 30, September 30, September 30, 2020 2019 2020 2019 Revenue $ 35,586 $ 27,642 $ 77,714 $ 83,956 Cost of sales: Direct costs 18,418 20,582 46,940 69,007 Royalties 2,029 446 3,720 1,099 Share-based payments 87 50 270 158 Depreciation, depletion and amortization 8,122 7,054 18,096 21,319 Write down of inventory to net realizable value 639 1,224 2,167 5,943 29,295 29,356 71,193 97,526 Mine operating earnings (loss) 6,291 (1,714 ) 6,521 (13,570 ) Expenses: Exploration 1,670 1,724 5,717 7,264 General and administrative 3,695 2,341 8,837 7,392 Severance costs - - - 1,100 Care and maintenance costs 533 - 4,789 - 5,898 4,065 19,343 15,756 Operating earnings (loss) 393 (5,779 ) (12,822 ) (29,326 ) Finance costs 359 177 1,025 372 Other income (expense): Write off of IVA receivable - - - - Foreign exchange 890 (946 ) (3,287 ) (703 ) Investment and other 678 79 1,332 (114 ) 1,568 (867 ) (1,955 ) (817 ) Earnings (loss) before income taxes 1,602 (6,823 ) (15,802 ) (30,515 ) Income tax expense (recovery): Current income tax expense 595 512 1,056 1,394 Deferred income tax expense (recovery) 556 (567 ) 1,906 (1,740 ) 1,151 (55 ) 2,962 (346 ) Net and comprehensive income (loss) for the period 451 (6,768 ) (18,764 ) (30,169 ) Basic and diluted earnings (loss) per share based on net earnings $ 0.00 $ (0.05 ) $ (0.13 ) $ (0.23 ) Basic and diluted weighted average number of shares outstanding 156,265,280 137,739,857 148,673,768 133,788,084
This statement should be read in conjunction with the condensed consolidated interim financial statements for the period ended September 30, 2020 and the related notes contained therein.
ENDEAVOUR SILVER CORP.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(expressed in thousands of US dollars)
September 30, December 31, 2020 2019 ASSETS Current assets Cash and cash equivalents $ 44,917 $ 23,368 Other investments 259 69 Account and other receivables 17,203 18,572 Income tax receivable 77 4,378 Inventories 17,571 13,589 Prepaid expenses 1,910 3,302 Total current assets 81,937 63,278 Non-current deposits 591 606 Deferred financing costs 146 Non-current IVA receivable 2,983 2,048 Deferred income tax asset 5,324 7,136 Intangible assets 614 975 Right-of-use leased assets 1,014 1,337 Mineral properties, plant and equipment 90,008 88,333 Total assets $ 182,617 $ 163,713 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable and accrued liabilities $ 23,048 $ 19,775 Income taxes payable 1,107 1,947 Loans payable 3,783 2,958 Lease liabilities 166 164 Total current liabilities 28,104 24,844 Loans payable 6,924 5,917 Lease liabilities 918 1,074 Provision for reclamation and rehabilitation 8,683 8,403 Deferred income tax liability 778 682 Total liabilities 45,407 40,920 Shareholders' equity Common shares, unlimited shares authorized, no par value, issued and outstanding 157,412,308 shares (Dec 31, 2019 - 141,668,178 shares) 515,797 482,170 Contributed surplus 9,638 11,482 Retained earnings (deficit) (388,225 ) (370,859 ) Total shareholders' equity 137,210 122,793 Total liabilities and shareholders' equity $ 182,617 $ 163,713
This statement should be read in conjunction with the condensed consolidated interim financial
statements for the period ended September 30, 2020 and the related notes contained therein.