Mr. Bradford Cooke reports
ENDEAVOUR SILVER REPORTS 2017 FINANCIAL RESULTS; CONFERENCE CALL AT 10AM PST (1PM EST) TODAY
Endeavour Silver Corp. has provided its financial results for the fourth quarter and year ended Dec. 31, 2017. The company 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, is developing the El Compas project to production in Zacatecas state, and advancing the Terronera project in Jalisco state to a development decision.
The complete financial statements and management's discussion and analysis can be viewed on the company's website, on SEDAR and on EDGAR. All amounts are reported in U.S. dollars.
Highlights of fiscal 2017 (compared with fiscal 2016)
Net earnings increased 148 per cent to $9.7-million (eight cents per share), compared with $3.9-million (three cents per share).
EBITDA (earnings before interest, taxes, depreciation and amortization (1)) decreased 8 per cent to $25.6-million.
Cash flow from operations before working capital changes decreased 2 per cent to $23.6-million.
Mine operating cash flow (1) decreased 14 per cent to $45.4-million.
Revenue decreased 4 per cent to $150.5-million on 4,892,855 silver ounces sold and 51,460 gold oz sold.
Realized silver price increased 2 per cent to $17.24 per ounce sold (consistent with the 2017 average spot price).
Realized gold price increased 3 per cent to $1,285 per oz sold (2 per cent above the 2017 average spot price).
Cash costs (1) increased 19 per cent to $8.06 per oz silver payable (net of gold credits).
All-in sustaining costs (1) increased 36 per cent to $16.96 per oz silver payable (net of gold credits).
Bullion inventory at year-end included 209,337 oz silver and 487 oz gold.
Concentrate inventory at year-end included 31,984 oz silver and 739 oz gold.
Working capital decreased 19 per cent to $66.2-million at year-end.
No outstanding debt as of Dec. 31, 2017.
Silver production decreased 9 per cent to 4,919,788 oz.
Gold production decreased 8 per cent to 53,007 oz.
Silver equivalent production was 8.9 million oz (75:1 silver:gold ratio) -- within revised guidance.
Completed a prefeasibility study at the Terronera project.
Advanced the Terronera project toward a production decision, including engineering trade-off studies, received permits to build the mine and plant, awaiting waste dumps and tailings permits.
Completed a preliminary economic assessment at the El Compas project, made a development decision and began construction (Endeavour news release dated March 27, 2017).
Explored the prospective Parral project in the historic silver mining district of Hidalgo de Parral in southern Chihuahua state, Mexico, and published an initial mineral resource estimate.
Received "Socially Responsible Company" awards for the Bolanitos and El Cubo mines.
Highlights of fourth quarter 2017 (compared with fourth quarter 2016)
Net earnings of $2.7-million (two cents per share) compared with a loss of $5.2-million (loss of four cents per share).
EBITDA (1) increased 475 per cent to $6.9-million.
Cash flow from operations before working capital changes increased 507 per cent to $4.6-million.
Mine operating cash flow (1) increased 99 per cent to $12.7-million.
Revenue increased 45 per cent to $41.6-million on 1,392,518 silver oz sold and 14,117 gold oz sold.
Realized silver price decreased 1 per cent to $16.84 per oz sold (consistent with Q4 average spot price).
Realized gold price increased 13 per cent to $1,288 per oz sold (consistent with Q4 average spot price).
Cash costs (1) decreased 15 per cent to $7.97 per oz silver payable (net of gold credits).
All-in sustaining costs (1) decreased 37 per cent to $12.70 per oz silver payable (net of gold credits).
Silver production increased 32 per cent to 1,436,962 oz.
Gold production increased 28 per cent to 14,577 oz.
Silver equivalent production was 2.5 million oz (at a 75:1 silver:gold ratio).
(1) Adjusted earnings, mine operating cash flow, EBITDA, cash costs and AISC are non-IFRS measures. Please refer to the definitions in the company's management discussion and analysis.
Bradford Cooke, chief executive officer, commented: "Over all, we worked hard in 2017 to turn a year of challenges into a year of opportunities. I am pleased to report strong growth in net earnings in 2017, up 148 per cent to $9.7-million or eight cents per share, notwithstanding slightly lower revenues compared to 2016. In addition, our financial performance in the Q4 2017 was up across all metrics compared to Q4 2016. We reduced our operating costs during the year and expect to continue that trend into 2018.
"After a tough start to the year in the first quarter, Endeavour posted three consecutive quarters of improved production, making the fourth quarter our best of the year. Ore grades and throughput both improved in the second half. In 2017, silver equivalent production met the low end of our original guidance and the high end of our revised guidance, despite overcoming operational challenges at the Guanacevi mine.
"A new productivity optimization program was launched at Guanacevi last month and additional operational improvements are planned this year at Bolanitos and El Cubo. As we advance our development projects and continue optimizing our existing mines, we look forward to delivering one of the best growth profiles in the silver mining sector."
Financial results (consolidated statement of operations attached)
For the year ended Dec. 31, 2017, the company generated revenue totalling $150.5-million (2016 -- $156.8-million). During the year, the company sold 4,892,855 oz silver and 51,460 oz gold at realized prices of $17.24 and $1,285 per oz respectively, compared with sales of 5,152,031 oz silver and 55,851 oz gold at realized prices of $16.84 and $1,253 per oz respectively in 2016.
After cost of sales of $122.0-million (2016 -- $117.9-million), mine operating earnings amounted to $28.5-million (2016 -- $38.9-million) from mining and milling operations in Mexico.
Excluding depreciation and depletion of $16.6-million (2016 -- $13.9-million), stock-based compensation of $200,000 (2016 -- $100,000) and the non-cash portion of the inventory write-off of $100,000 (2016 -- nil) mine operating cash flow before taxes was $45.4-million (2016 -- $52.9-million) in 2017. Operating earnings were $7.7-million (2016 -- $19.2-million) after exploration expenditures of $12.9-million (2016 -- $10.4-million) and general and administrative expense of $7.9-million (2016 -- $9.3-million).
Net earnings were $9.7-million (eight cents per share) compared with earnings of $3.9-million (three cents per share) in 2016. Earnings significantly improved as El Cubo generated taxable profits offset by historical tax losses. Current income tax expense decreased to $4.6-million (2016 -- $7.8-million), while deferred income tax recognized a $6.4-million recovery (2016 -- expense of $700,000).
Cash cost, all-in sustaining cost and direct operating cost were all slightly higher than the revised guidance due the lower than planned mine output. The higher realized gold price was offset by the appreciation of the Mexican peso.
A conference call to discuss these results will be held today, Monday, Feb. 26, at 10 a.m. PST (1 p.m. EST). To participate in the conference call, please dial the numbers below. No passcode is necessary.
Toll-free in Canada and the United States: 1-800-319-4610
Local Vancouver: 604-638-5340
Outside of Canada and the U.S.: 604-638-5340
A replay of the conference call will be available by dialling 1-800-319-6413 in Canada and the U.S. (toll-free) or 604-638-9010 outside of Canada and the U.S. The required passcode is 1979 (pound sign). The replay will also be available on the company's website.
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 Galina Meleger, director of investor relations, at 604-640-4804 or toll-free at 1-877-685-9775.
About Endeavour Silver Corp.
Endeavour Silver is a mid-tier precious metals mining company that operates three high-grade, underground, silver-gold mines in Mexico. The company is forecasting a 20-per-cent increase in production to 10.2 million to 11.2 million oz silver equivalent in 2018. Endeavour has a compelling pipeline of exploration and development projects to facilitate its goal to become a premier senior silver producer. The company's philosophy of corporate social integrity creates value for all stakeholders.
Three months ended Year ended
Dec. 31, Dec. 31,
2017 2016 2017 2016
Silver ounces produced 1,436,962 1,088,845 4,919,788 5,435,407
Gold ounces produced 14,577 11,402 53,007 57,375
Payable silver ounces produced 1,400,705 1,064,827 4,803,589 5,308,026
Payable gold ounces produced 14,245 11,059 51,797 55,716
Silver equivalent ounces produced 2,530,237 1,943,995 8,895,313 9,738,532
Cash costs per silver ounce 7.97 9.39 8.06 6.78
Total production costs per ounce 11.38 11.31 11.68 9.40
All-in sustaining costs per ounce 12.70 20.11 16.96 12.43
Processed tonnes 349,924 317,555 1,279,873 1,458,917
Direct production costs per tonne 84.38 70.72 82.36 72.42
Silver co-product cash costs 11.57 12.13 11.88 10.89
Gold co-product cash costs 885 811 886 810
Revenue ($ millions) 41.6 28.7 150.5 156.8
Silver ounces sold $1,392,518 $946,456 $4,892,855 $5,152,031
Gold ounces sold 14,117 11,004 51,460 55,851
Realized silver price per ounce 16.84 17.03 17.24 16.84
Realized gold price per ounce 1,288 1,139 1,285 1,253
Net earnings (loss) ($ millions) 2.7 (5.2) 9.7 3.9
Mine operating earnings ($ millions) 7.9 4.5 28.5 38.9
Mine operating cash flow ($ millions) 12.7 6.4 45.4 52.9
Operating cash flow before working capital changes 4.6 (1.1) 23.6 24.0
Earnings before ITDA ($ millions) 6.9 (1.8) 25.6 27.8
Working capital ($ millions) 66.2 81.6 66.2 81.6
Earnings (loss) per share -- basic 0.02 (0.04) 0.08 0.03
Operating cash flow before working capital changes per share 0.04 (0.01) 0.19 0.20
The "Comparative highlights" table includes 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.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(expressed in thousands of U.S. dollars, except for shares and per share amounts)
Revenue $150,499 $156,767
Cost of sales
Direct production costs 103,330 101,896
Royalties 1,740 1,948
Share-based compensation 202 78
Depreciation and depletion 16,582 13,952
Writedown of inventory to net realizable value 166 -
Mine operating earnings 28,479 38,893
Exploration 12,898 10,378
General and administrative 7,914 9,284
Operating earnings 7,667 19,231
Finance costs 715 1,172
Other income (expense)
Write-off of IVA receivable - (434)
Foreign exchange 433 (5,069)
Investment and other 502 (237)
Earnings (loss) before income taxes 7,887 12,319
Income tax expense (recovery)
Current income tax expense 4,650 7,755
Deferred income tax expense (recovery) (6,447) 654
Net earnings for the year 9,684 3,910
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on available-for-sale financial assets 155 80
Reclassification for realized (gain) loss on available-for-sale
financial assets (72) (269)
Available-for-sale financial assets reclassified to net loss - -
Total other comprehensive income (loss) for the year 83 (189)
Comprehensive income for the year $9,767 $3,721
Basic earnings per share based on net earnings $0.08 $0.03
Diluted earnings per share based on net earnings $0.08 $0.03
We seek Safe Harbor.
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