Endeavour Silver Corp. (NYSE: EXK; TSX: EDR) has released solid financial results for the three and nine months ended September 30, 2021.
The company operates two silver-gold mines in Mexico: the Guanaceví mine in Durango state and the Bolañitos mine in Guanajuato state and has recently suspended operations at the El Compas mine in Zacatecas state.
“Since our Q2 reporting, our operating costs have decreased to levels that are closer to our 2021 guidance. We continued to withhold metals sales in Q3, which has dampened our financial performance and Q3 earnings. At quarter end, we held over one million ounces of silver and 1,200 ounces of gold bullion. We expect to sell this inventory in the coming months, which will ensure a strong finish to the year,” CEO, Dan Dickson, said.
“As of the beginning of November, approximately 90% of our workforce is fully or partially vaccinated. Our operations are running at steady state and we are pleased with the overall performance. Our focus is also on our growth plan, and we have expanded our project development team and commenced preparations for construction at Terronera.”
2021 Third Quarter Highlights
- Metal Production: 1,305,399 ounces (oz) of silver and 10,541 oz of gold for 2.1 million oz silver equivalent (AgEq) at an 80:1 silver:gold ratio, totalling 6.1 million AgEq oz for the 9 months ended September 30, 2021.
- Net Revenue: US$34.6 million from the sale of 699,539 oz silver and 9,925 oz gold at average realized prices of US$24.56 per oz silver and US$1,791 per oz gold. Management withheld metal sales during the quarter and continues to carry higher metal inventory totalling 1,030,304 oz silver and 1,211 oz gold of bullion inventory and 37,100 oz silver and 2,028 oz gold in concentrate inventory.
- Operating Costs: Cash costs of US$8.16 per oz payable silver and all-in sustaining costs (AISC) of US$17.46 per oz payable silver, net of gold credits.
- Cash Flow: US$7.7 million in cash flow from operations before working capital changes. The Company continued to hold significant finished goods, increased deposits for equipment purchases, invested in exploration activities and advanced the Terronera project.
- Earnings: Realized loss of US$4.5 million. The loss is due to the fact that the finished goods inventory was carried at a cost of $US18.3 million compared to the estimated fair market value of US$29.2 million at quarter end.
- Strong Balance Sheet: Cash position of US$101.1 million and working capital US$128.7 million. Cash decreased this quarter, as funds were spent to acquire the $US10 million Bruner Gold Project and to prepare for construction at Terronera including advancing initial earthworks, site clearing, temporary camp and ordering of long lead items. Withheld sales also impacted the cash balance at quarter end.
- Acquired the Bruner Gold Project: A strategic acquisition for an advanced stage exploration property in Nevada, a favorable jurisdiction. The transaction closed on August 31, 2021 for US$10.0 million in cash.
- Suspended Operations at El Compas: Management is currently evaluating its alternatives for the assets, with temporary closure estimated to cost US$0.3 million in Q4, 2021.
Financial Overview (Consolidated Statement of Operations Appended Below)
For the three months ended September 30, 2021, the company generated net revenue of US$34.6 million a decrease of 3% compared to US$35.6 million in the same period in 2020 due to withholding metal sales during the quarter, which significantly increased finished goods inventory. Earnings and financial metrics including mine operating cash flows, operating cash flows and EBITDA were also impacted by the increased holding of production inventory.
Gross sales of US$35.0 million in Q3, 2021 represented a 3% decrease over the US$36.1 million for the same period in 2020.
There was a 6% decrease in silver ounces sold and a 2% decrease in the realised silver price resulting in an 8% decrease to silver sales. There was a 10% increase in gold ounces with an 8% decrease in the realized gold price resulting in a 2% increase in gold sales. During the period, the Company sold 699,539 oz silver and 9,925 oz gold, for realized prices of US$24.56 and $1,791 per oz, respectively, compared to sales of 741,262 oz silver and 8,997 oz gold, for realized prices of US$25.08 and US$1,952 per oz, respectively, in the same period of 2020. For the three months ended September 30, 2021, silver and gold spot prices averaged US$24.36 and $1,790 respectively.
The company significantly increased its finished goods silver and gold inventory to 1,067,404 oz and 3,239 oz, respectively at September 30, 2021 compared to 459,659 oz silver and 2,835 oz gold at June 30, 2021. The cost allocated to these finished goods was US$18.3 million at September 30, 2021, compared to US$10.1 million at June 30, 2021. At September 30, 2021, the finished goods inventory estimated fair market value was $29.2 million, compared to US$17.3 million at June 30, 2021.
For further information please visit: https://www.edrsilver.com
