Mr. Bradford Cooke reports
ENDEAVOUR SILVER REPORTS 2015 FINANCIAL RESULTS; CONFERENCE CALL AT 10AM PST (1PM EST) ON MARCH 4, 2016
Endeavour Silver Corp. has released its financial results for the year ended Dec. 31, 2015, for its three underground silver-gold mines in Mexico: the Guanacevi mine in Durango state, and the Bolanitos and El Cubo mines in Guanajuato state.
The complete financial statements and management's discussion and analysis can be viewed on the company's website, SEDAR and EDGAR. All shareholders can receive a hard copy of the company's complete audited financial statements free of charge upon request. All amounts are reported in U.S. dollars.
Highlights of fiscal 2015 (compared with fiscal 2014)
Financial:
- Net loss of $149.9-million ($1.47 per share) which includes a $134.0-million impairment of the El Cubo and Bolanitos mines, compared with a loss in 2014 of $74.5-million (74 cents per share), which included an $83.0-million impairment of El Cubo;
-
Adjusted loss
reduced 35 per cent to $11.2-million (11 cents per share) compared with adjusted loss of $17.2-million (17 cents per share);
-
Earnings before interest, taxes, depreciation and amortization decreased 20 per cent to $34.1-million;
-
Cash flow from operations before working capital changes increased 20 per cent to $35.2-million;
-
Mine operating cash flow
decreased 18 per cent to $57.7-million;
-
Revenue decreased 7 per cent to $183.6-million;
-
Realized silver price decreased 16 per cent to $15.79 per ounce sold (consistent with 2015 average spot price);
-
Realized gold price decreased 10 per cent to $1,148 per ounce sold (consistent with 2015 average spot price);
-
Cash costs
beat guidance, increased 1 per cent to $8.39 per ounce silver payable (net of gold credits);
-
All-in sustaining costs beat guidance, decreasing 7 per cent to $15.62 per ounce silver payable (net of gold credits);
-
Bullion inventory at year-end of 121,913 ounces silver and 317 ounces gold;
-
Concentrate inventory at year-end of 72,583 ounces silver and 967 ounces gold;
-
Cash and equivalents decreased 34 per cent to $20.4-million at year-end compared with $31.0-million;
-
Working capital decreased 19 per cent to $17.2-million at year-end compared with $21.2-million;
-
Draw on line of credit reduced 24 per cent to $22-million at year-end compared with $29-million;
-
Subsequent to year-end, amended line of credit facility to a $20-million term loan amortized over two years;
-
Subsequent to year-end, raised $5.5-million in equity financing through an ATM facility to augment working capital and finance growth projects including Terronera exploration and engineering.
Operations:
-
Silver production beat guidance, flat year on year at 7,178,666 ounces;
-
Gold production met guidance, decreasing 5 per cent to 59,990 ounces;
-
Silver-equivalent production was 11.4 million ounces (at a 70-to-1 silver-to-gold ratio);
-
Silver ounces sold totalled 7,301,698 ounces;
-
Gold ounces sold totalled 59,450 ounces;
-
Completed mine expansion at El Cubo to 2,200 tonnes per day;
-
Developed ramp access and increased production from the LL-Asuncion orebody at Bolanitos;
-
Extended Santa Cruz and Porvenir Centro orebodies at Guanacevi;
-
Infilled and extended ore zone and mapped other prospective veins at the Terronera project;
-
Published a preliminary economic assessment with positive economics for Terronera;
-
Received socially responsible company awards for all three mines.
Highlights of fourth quarter 2015 (compared with fourth quarter 2014)
Financial:
- Net loss of $136.2-million ($1.33 per share) which includes a $134.0-million impairment of the El Cubo and Bolanitos mines compared with a loss of $66.9-million (67 cents per share) which included an $83.0-million impairment of El Cubo;
- Adjusted loss of $2.2-million (two cents per share) compared with adjusted loss of $11.0-million (11 cents per share);
-
EBITDA
decreased 29 per cent to $5.5-million;
- Cash flow from operations before working capital changes increased 207 per cent to $5.7-million;
- Revenue decreased 12 per cent to $42.7-million on 1,682,572 silver ounces sold and 15,255 gold ounces sold;
- Realized silver price decreased 8 per cent to $14.93 per ounce sold (consistent with the fourth quarter average spot price);
- Realized gold price decreased 7 per cent to $1,105 per ounce sold (consistent with Q4 average spot price);
- Cash costs
increased 17 per cent to $9.76 per ounce silver payable (net of gold credits);
- All-in sustaining costs increased 13 per cent to $17.33 per ounce silver payable (net of gold credits);
- Prior to year-end, raised $1.1-million in equity financing through an ATM facility.
Operations:
- Silver production decreased 14 per cent to 1,732,765 ounces.
- Gold production increased 2 per cent to 15,433 ounces.
- Silver equivalent production was 2.8 million ounces (at a 70-to-1 silver-to-gold ratio).
- Silver ounces sold totalled 1,682,572 ounces.
- Gold ounces sold totalled 15,255 ounces.
Endeavour chief executive officer Bradford Cooke stated: "We delivered another solid year of operating performance in 2015, beating our guidance for silver production, cash costs and all-in sustaining costs, and meeting our gold production guidance. Guanacevi continued to perform better than plan and the completion of the phase two mine expansion from 1,500 tonnes per day to 2,200 tpd at El Cubo was a significant accomplishment.
"As a result, Guanacevi and Bolanitos continued to generate free cash flow, and we reduced the operating losses at El Cubo in 2015 by improving the productivity of each of our mines and reducing all-in sustaining costs for the third consecutive year. Our strong operating cash flow allowed us to reduce the line of credit and we converted the balance to a two-year term loan subsequent to year-end.
"Each mine is focused on minimizing all-in sustaining costs and improving after-tax free cash flow this year so we plan lower production in 2016. For El Cubo, that means we have suspended further investments on exploration and development until metal prices recover, so production will decline through the year until the mine goes on care and maintenance in the fourth quarter. At the other two mines, we are evaluating opportunities to further enhance their upside potential.
"In 2016, we plan to continue aggressively exploring and engineering the exciting new Terronera project to make the proposed mine bigger and better, and significantly enhance its economics at current metal prices. We will also continue to focus on merger and acquisition opportunities to take advantage of these low metal prices and acquire accretive new mines and/or development projects."
Financial results
For the year ended Dec. 31, 2015, the company generated revenue totalling $183.5-million (2014 -- $196.9-million). During the year, the company sold 7,301,698 ounces silver and 59,450 ounces gold at realized prices of $15.79 and $1,148 per ounce, respectively, compared with sales of 6,539,686 ounces silver and 58,323 ounces gold at realized prices of $18.76 and $1,273 per ounce, respectively, in 2014.
After cost of sales of $166.8-million (2014 -- $182.6-million), mine operating earnings amounted to $16.7-million (2014 -- $14.3-million) from mining and milling operations in Mexico.
Excluding depreciation and depletion of $40.3-million (2014 -- $54.3-million), stock-based compensation of $400,000 (2014 -- $500,000), and a writedown of inventory of $200,000 (2014 -- $1.3-million), mine operating cash flow before taxes was $57.7-million (2014 -- $70.5-million) in 2015. Operating loss was $131.3-million (2014 -- $91.5-million) driven by impairment charges of $134.0-million on the El Cubo and Bolanitos mines (2014 -- $83.0-million at El Cubo).
At Dec. 31, 2015, the company determined there were indicators of potential impairment of its producing mineral properties, including the sustained decline in precious metal prices. The net after-tax impairment totalled $137.0-million related to the carrying value of the El Cubo and Bolanitos mines.
Excluding the net impairment charges, the adjusted loss was $11.2-million (11 cents per share) compared with adjusted loss of $17.2-million (17 cents per share) in 2015. The drop in precious metal prices was partly offset by reduced direct production costs, the depreciation of the Mexican peso and the reduction of finished goods inventories which reduced the company's loss year over year.
Consolidated direct operating costs fell 17 per cent or $16 per tonne to $80.14 per tonne due to the depreciation of the Mexican peso, economies of scale achieved at El Cubo and improved productivities. Cash costs per ounce, net of gold byproduct credits, rose 1 per cent to $8.39 per ounce of payable silver compared with $8.31 per ounce in 2014 and all-in sustaining costs fell 7 per cent. The lower operating costs were partly offset by lower ore grades and lower gold credits.
The company invested a total of $37.6-million in property, plant and equipment during 2015. Of this, $20.9-million was invested at El Cubo, $6.5-million at Bolanitos and $9.6-million at Guanacevi, with all mines primarily focused on sustaining mine development and tailings dam expansions. An additional $600,000 was spent on corporate infrastructure and land acquisition agreements.
OPERATIONAL HIGHLIGHTS
Three months ended Dec. 31, Year ended Dec. 31,
2015 2014 2015 2014
Silver ounces
produced 1,732,765 2,009,172 7,178,666 7,212,074
Gold ounces
produced 15,433 15,127 59,990 62,895
Payable silver
ounces produced 1,686,330 1,950,037 6,991,639 6,996,916
Payable gold
ounces produced 15,073 14,557 58,585 60,518
Silver-
equivalent
ounces
produced 2,813,075 3,068,062 11,377,966 11,614,724
Cash costs per
silver
ounce $9.76 $8.33 $8.39 $8.31
Total production
costs per
ounce 16.11 14.36 14.11 16.37
All-in
sustaining
costs per
ounce 17.33 15.37 15.62 16.79
Processed tonnes 408,092 374,212 1,565,507 1,404,406
Direct
production
costs per
tonne $80.39 $89.63 $80.14 $96.11
Silver co-product
cash costs 11.41 10.76 10.87 11.76
Gold co-product
cash costs 845 788 791 798
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands of U.S. dollars, except per share)
Year ended Dec. 31,
2015 2014
Revenue $183,556 $196,928
Cost of sales
Direct production costs 124,840 125,309
Royalties 1,032 1,146
Share-based compensation 432 537
Depreciation and depletion 40,278 54,312
Writedown of inventory to net realizable
value 234 1,255
166,816 182,559
Mine operating earnings 16,740 14,369
Expenses
Exploration 6,327 12,548
General and administrative 7,721 9,692
Impairment of non-current assets 134,000 83,000
Write-off of exploration properties - 631
148,048 105,871
Operating earnings (loss) (131,308) (91,502)
Mark-to-market loss/(gain) on derivative
liabilities - 1,434
Mark-to-market loss/(gain) on contingent
liability - (99)
Finance costs 1,368 1,382
Other income (expense)
Writedown of available-for-sale financial
assets (4,785) -
Foreign exchange (5,006) (1,709)
Investment and other 553 (546)
(9,238) (2,255)
Earnings (loss) before income taxes (141,914) (96,474)
Income tax expense (recovery)
Current income tax expense 6,853 20,886
Deferred income tax expense (recovery) 1,174 (42,827)
8,027 (21,941)
Net earnings (loss) for the year (149,941) (74,533)
Other comprehensive income (loss), net of tax
Unrealized gain (loss) on available-for-sale
financial assets (145) (677)
Available-for-sale financial assets
reclassified to net loss 4,785 -
Total other comprehensive income (loss) for the
year 4,640 (677)
Comprehensive income (loss) for the year (145,301) (75,210)
Basic and diluted earnings (loss) per share
based on net earnings (1.47) (0.74)
We seek Safe Harbor.
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