Mr. Bradford Cooke reports
ENDEAVOUR SILVER REPORTS FIRST QUARTER, 2016 FINANCIAL RESULTS; CONFERENCE CALL AT 10AM PDT (1PM EDT) TODAY
Endeavour Silver Corp. has released its financial results for the period ended March 31, 2016. Endeavour 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.
The company's financial performance in the first quarter of 2016 improved compared with the first quarter of 2015. Revenue was down due to lower silver production and lower silver prices, but earnings were up as a result of lower operating costs.
Highlights of the first quarter of 2016 (compared with the first quarter of 2015)
Financial
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Net earnings increased 35 per cent to $1.8-million (two cents per share), compared with $1.4-million (one cent per share);
-
EBITDA
(earnings before interest, taxes, depreciation and amortization) decreased 47 per cent to $8.6-million;
-
Cash flow from operations before working capital changes decreased 46 per cent to $7.5-million;
-
Mine operating cash flow before taxes
decreased 41 per cent to $11.5-million;
-
Revenue decreased 19 per cent to $41.5-million;
-
Realized silver price fell 11 per cent to $15.18 per ounce sold (2 per cent above average spot price);
-
Realized gold price was flat at $1,219 per ounce sold (3 per cent above average spot price);
-
Cash costs
rose 6 per cent to $7.63 per ounce silver payable (net of gold credits);
-
All-in sustaining costs
fell 17 per cent to $11.12 per ounce silver payable (net of gold credits);
-
Working capital rose 70 per cent to $29.3-million, compared with $17.3-million at year-end;
-
Cash and cash equivalents of $20.4-million;
-
Raised equity financing of $1.1-million in the fourth quarter of 2015, $9.1-million in the first quarter of 2016 and $6.3-million in the second quarter of 2016 for gross proceeds of $16.5-million ($16-million net proceeds) through an at-the-market facility to augment working capital and finance growth projects, including Terronera exploration and engineering.
Operations
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Silver production decreased 17 per cent to 1,510,065 ounces;
-
Gold production increased 1 per cent to 15,960 ounces;
-
Silver equivalent production was 2.7 million ounces (at a 75:1 silver:gold ratio);
-
Silver ounces sold down 19 per cent to 1,511,319 ounces;
-
Gold ounces sold down 3 per cent to 15,255 ounces;
-
Bullion inventory at quarter-end included 88,609 ounces silver and 188 ounces gold;
-
Concentrate inventory at quarter-end included 67,690 ounces silver and 1,316 ounces gold.
Endeavour Silver chief executive officer Bradford Cooke commented: "In the first quarter of 2016, we delivered on our plan to minimize all-in sustaining costs and improve after-tax free cash flow. We also raised $9.1-million of equity financing during the quarter to improve our working capital and fund some of our growth projects, primarily exploration and engineering at Terronera. Aggressive step-out drilling is now under way at Terronera to further test the Terronera vein and other prospective veins. The next phase of engineering work will also get under way in the second quarter as part of the Terronera prefeasibility study."
Financial results
For the first quarter ended March 31, 2016, the company generated revenue totalling $41.5-million (2015: $51.1-million). During the quarter, the company sold 1,511,319 silver ounces and 15,255 gold ounces at realized prices of $15.18 and $1,219 per ounce respectively, compared with sales of 1,861,975 silver ounces and 15,799 gold ounces at realized prices of $17.11 and $1,221 per ounce, respectively, in the first quarter of 2015.
After cost of sales of $35.2-million (2015: $42-million), mine operating earnings amounted to $6.3-million (2015: $9.1-million) from mining and milling operations in Mexico. The 16-per-cent decrease in cost of sales was primarily due to cost-reduction measures, the weakening of the Mexican peso against the U.S. dollar, as well as reduced depletion due to accounting impairments recorded in 2015 that reduced the carrying value of the El Cubo operation. Excluding depreciation and depletion of $5.2-million (2015: $10.5-million) and stock-based compensation of $100,000 (2015: $100,000), mine operating cash flow before taxes was $11.5-million (2015: $19.6-million) in the first quarter of 2016. Net earnings were $1.8-million (2015: $1.4-million).
Compared with the first quarter of 2015, the Mexican peso depreciated 21 per cent against the U.S. dollar, helping offset the weakness in precious metal prices. The falling Mexican peso and continued focus on cost reductions lowered the consolidated operating cost 10 per cent to $74.26 per tonne in the first quarter of 2016. Lower silver grades resulted in rising cash costs per ounce net of byproduct credits, a non-IFRS (international
financial reporting standards) measure and a standard of the Silver Institute, which increased 6 per cent to $7.63 per ounce of payable silver, compared with $7.17 per ounce in the first quarter of 2015. The suspension of exploration and development expenditures at the Bolanitos and El Cubo operations helped decrease the all-in sustaining costs (also a non-IFRS measure) by 17 per cent to $11.12 per ounce compared with $13.32 per ounce in the first quarter of 2015.
The condensed consolidated interim financial statements and management discussion and analysis can be viewed on the company's website, on SEDAR and on EDGAR. All amounts are reported in U.S. dollars.
Conference call
A conference call to discuss the results will be held on Thursday, May 5, 2016, at 10 a.m. PDT (1 p.m. EDT). To participate in the conference call, please dial the following numbers.
Toll-free in Canada and the United States: 1-800-319-4610
Local Vancouver: 604-638-5340
Outside of Canada and the United States: 1-604-638-5340
No passcode is necessary to participate in the conference call.
A replay of the conference call will be available until May 19, 2016, by dialling 1-800-319-6413 in Canada and the United States (toll-free) or 1-604-638-9010 outside of Canada and the United States. The required passcode is 00389 followed by the number sign. The replay will also be available on the company's website.
COMPARATIVE HIGHLIGHTS
Three months ended March 31,
2016 2015
Production
Silver ounces produced 1,510,065 1,820,050
Gold ounces produced 15,960 15,808
Payable silver ounces produced 1,473,682 1,769,924
Payable gold ounces produced 15,518 15,429
Silver equivalent ounces produced (1) 2,707,065 2,926,610
Cash costs per silver ounce (2) 7.63 7.17
Total production costs per ounce (2) 10.95 12.97
All-in sustaining costs per ounce (2) 11.12 13.32
Processed tonnes 408,553 380,792
Direct production costs per tonne (2) 74.26 82.67
Silver co-product cash costs (2) 10.87 10.68
Gold co-product cash costs (2) 873 762
Financial
Revenue ($ millions) $ 41.5 $ 51.1
Silver ounces sold 1,511,319 1,861,975
Gold ounces sold 15,255 15,799
Realized silver price per ounce 15.18 17.11
Realized gold price per ounce 1,219 1,221
Net earnings (loss) ($ millions) 1.8 1.4
Mine operating earnings (loss) ($ millions) 6.3 9.1
Mine operating cash flow (2) ($ millions) 11.5 19.6
Operating cash flow before working
capital changes (2) 7.5 13.8
Earnings before ITDA (2) 8.6 16.4
Working capital ($ millions) 29.3 25.8
Shareholders
Earnings (loss) per share -- basic 0.02 0.01
Operating cash flow before working
capital changes per share (2) 0.07 0.14
(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 and analysis.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME
(in thousands of U.S. dollars, except for per-share amounts)
Three months ended
March 31, March 31,
2016 2015
Revenue $ 41,541 $ 51,109
Cost of sales
Direct production costs 29,844 31,269
Royalties 209 248
Share-based compensation 56 73
Depreciation and depletion 5,154 10,454
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35,263 42,044
Mine operating earnings 6,278 9,065
Expenses
Exploration 1,199 1,074
General and administrative 2,028 1,829
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3,227 2,903
Operating earnings (loss) 3,051 6,162
Finance costs 287 313
Other income (expense)
Foreign exchange 514 (667)
Investment and other (141) 354
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373 (313)
Earnings (loss) before income taxes 3,137 5,536
Income tax expense (recovery)
Current income tax expense 1,411 3,176
Deferred income tax expense (recovery) (103) 1,003
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1,308 4,179
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Net earnings (loss) for the period 1,829 1,357
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Other comprehensive income (loss), net of tax
Net change in fair value of available for sale
investments 162 404
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Comprehensive income (loss) for the period $ 1,991 $ 1,761
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Basic and diluted earnings (loss)
per share based on net earnings $ 0.02 $ 0.01
Diluted earnings (loss) per share
based on net earnings $ 0.02 $ 0.01
We seek Safe Harbor.
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