The Prospector News

Endeavour Silver Reports Financial Results for the Third Quarter 2021

You have opened a direct link to the current edition PDF

Open PDF Close
Uncategorized

Share this news article

Endeavour Silver Reports Financial Results for the Third Quarter 2021

 

 

 

 

 

Endeavour Silver Corp. (NYSE: EXK) (TSX: EDR) released its financial results today 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. All amounts reported are in United States dollars.

 

Dan Dickson, CEO, commented, “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 1 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.”

 

“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, totaling 6.1 million AgEq oz for the 9 months ended September 30, 2021.
  • Net Revenue: $34.6 million from the sale of 699,539 oz silver and 9,925 oz gold at average realized prices of $24.56 per oz silver and $1,791 per oz gold. Management withheld metal sales during the quarter and continues to carry higher metal inventory totaling 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(1) of $8.16 per oz payable silver and all-in sustaining costs(1) of $17.46 per oz payable silver, net of gold credits.
  • Cash Flow: $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 $4.5 million or $0.03 loss per share. The loss is due to the fact that the finished goods inventory was carried at a cost of $18.3 million compared to the estimated fair market value of $29.2 million at quarter end.
  • Strong Balance Sheet: Cash position of $101.1 million and working capital $128.7 million. Cash decreased this quarter, as funds were spent to acquire the $10 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 $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 $0.3 million in Q4, 2021.
  • 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 Overview (Consolidated Statement of Operations Appended Below)

 

For the three months ended September 30, 2021, the Company generated net revenue of $34.6 million a decrease of 3% compared to $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 $35.0 million in Q3, 2021 represented a 3% decrease over the $36.1 million for the same period in 2020.

 

There was a 6% decrease in silver ounces sold and a 2% decrease in the realized 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 $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 $25.08 and $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 $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 $18.3 million at September 30, 2021, compared to $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 $17.3 million at June 30, 2021.

 

After cost of sales of $26.3 million (Q3, 2020 – $29.3 million), mine operating earnings amounted to a $8.3 million (Q3, 2020 –$6.3 million) from mining and milling operations in Mexico. The decrease in cost of sales was primarily related to the 6% decrease in silver ounces sold offset by higher royalty costs, labour costs and additional costs attributed to global supply constraints. Royalties increased 33% from $2.0 million to $2.7 million due to higher production and realized prices and the increased mining of the high grade Porvenir Cuatro extensions at the Guanaceví operation, which are subject to the higher royalty rates.

 

Excluding depreciation and depletion of $4.8 million (Q3, 2020 – $8.1 million) and stock-based compensation of $0.1 million (Q3, 2020- $0.1 million) mine operating cash flow before taxes was $13.2 million in Q3, 2021 (Q3, 2020 – $15.1 million) with Q3, 2020 also including a write-down of inventory of $0.6 million. Operating earnings were $3.0 million (Q3, 2020 –$0.4 million) after exploration and evaluation expenditures of $4.7 million (Q3, 2020 – $1.7 million), general and administrative expense recovery of $0.5 million (Q3, 2020 – expense of $3.7 million), severance costs of $0.7 million (Q3, 2020 – $Nil) and care and maintenance costs of $0.4 million (Q3, 2020 – $.6 million). The general and administrative expense recovery was primarily due to mark-to-market fluctuations for director’s cash settled deferred share units, with a $2.8 million recovery in Q3 2021 versus a $1.5 million expense in Q3, 2020.

 

Net loss was $4.5 million ($0.03 loss per share) compared to net earnings of $0.5 million (loss of $0.00 per share) in Q3, 2020. Compared to Q3, 2020, the Company increased its investment in exploration and evaluation activities by $3.4 million, experienced a $1.2 million loss in foreign exchange and incurred a $3.0 million unrealized loss on marketable securities.

 

Current income tax expense increased to $0.7 million (Q32 2020 – $0.6 million) due to increased profitability impacting special mining duty, while deferred income tax expense of $3.0 million was recognized due to the estimated use of loss carry forwards to reduce taxable income primarily at Guanacevi (Q3 2020 – $0.6 million).

 

Direct operating costs per tonne in Q3, 2021 increased 15%, to $115.57 compared with Q3, 2020 due to higher operating costs at all operations. The operations have seen a strengthening of the Mexican Peso, increased labour costs and, increased third party ore purchased Guanaceví compared to prior year and budgeted. Including royalties and special mining duty, direct costs per tonne increased 16% to $130.38. Royalties increased 33% to $2.7 million as increased production from the El Curso and El Porvenir concessions at Guanaceví with higher prices substantially increasing the royalty expense. The improved profitability increased special mining duty expense to $0.6 million for Q3, 2021 compared to $0.4 million for Q3, 2020.

 

Consolidated cash costs per ounce, net of by-product credits (a non-IFRS measure and a standard of the Silver Institute) increased to $8.16 due to the increased direct costs per tonne. All-in sustaining costs per ounce (also a non-IFRS measure) remained relatively flat at $17.46. In Q3, 2021 corporate general and administrative included a $2.8 million mark-to-market expense recovery for deferred share units whereas the mark to market expense was $1.5 million in Q3, 2020.

 

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.

 

About Endeavour Silver

Endeavour Silver Corp. is a mid-tier precious metals mining company that owns three and operates two high-grade, underground, silver-gold mines in Mexico. Endeavour is currently advancing the Terronera mine project towards a development decision, pending financing and final permits and exploring its portfolio of exploration and development projects in Mexico, Chile and the United States to facilitate its goal to become a premier senior silver producer.  Our philosophy of corporate social integrity creates value for all stakeholders.

 

 

ENDEAVOUR SILVER CORP.
COMPARATIVE HIGHLIGHTS

 

Three Months Ended September 30 Q3 2021 Highlights Nine Months Ended September 30
2021 2020 % Change 2021 2020 % Change
Production
1,305,399 942,274 39% Silver ounces produced 3,427,223 2,396,478 43%
10,541 10,260 3% Gold ounces produced 32,816 24,553 34%
1,295,126 932,837 39% Payable silver ounces produced 3,394,103 2,373,246 43%
10,328 10,041 3% Payable gold ounces produced 32,177 24,078 34%
2,148,679 1,763,074 22% Silver equivalent ounces produced 6,052,503 4,360,718 39%
8.16 3.69 121% Cash costs per silver ounce 9.59 4.95 94%
13.14 13.53 (3%) Total production costs per ounce 15.84 13.74 15%
17.46 17.48 (0%) All-in sustaining costs per ounce 20.70 17.16 21%
222,461 206,324 8% Processed tonnes 673,932 519,771 30%
115.57 100.36 15% Direct operating costs per tonne 116.14 99.39 17%
130.38 112.37 16% Direct costs per tonne 133.12 107.68 24%
13.98 13.32 5% Silver co-product cash costs 15.86 11.91 33%
1,020 1,037 (2%) Gold co-product cash costs 1,078 1,117 (4%)
Financial
34.6 35.6 (3%) Revenue ($ millions) 116.8 77.7 50%
699,539 741,262 (6%) Silver ounces sold 2,443,184 2,041,601 20%
9,925 8,997 10% Gold ounces sold 30,398 21,669 40%
24.56 25.08 (2%) Realized silver price per ounce 26.26 19.40 35%
1,791 1,952 (8%) Realized gold price per ounce 1,784 1,820 (2%)
(4.5) 0.5 (1,093%) Net earnings (loss) ($ millions) 14.4 (18.8) 177%
(4.5) 0.5 (1,093%) Adjusted net earnings (loss) ($ millions) (8.2) (18.8) 56%
8.3 6.3 (32%) Mine operating earnings (loss) ($ millions) 24.1 6.5 270%
13.2 15.1 (13%) Mine operating cash flow ($ millions) 43.7 27.1 62%
7.7 10.3 (26%) Operating cash flow before working capital changes 21.6 7.2 (199%)
4.4 10.6 (59%) Earnings before ITDA ($ millions) 44.2 5.1 (763%)
128.7 53.8 139% Working capital ($ millions) 128.7 53.8 139%
Shareholders
(0.03) 0.00 (300%) Earnings (loss) per share – basic 0.09 (0.13) 169%
(0.03) 0.00 (1,011%) Adjusted earnings (loss) per share – basic (0.05) (0.13) 61%
0.04 0.07 (32%) Operating cash flow before working capital changes per share(9) 0.13 0.05 168%
170,432,326 156,265,280 9% Weighted average shares outstanding 166,201,727 148,673,768 12%

 

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.
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
(expressed in thousands in U.S. dollars)
                 
    Three months ended   Nine months ended
    September 30, September 30, September 30, September 30,
    2021   2020   2021   2020
                 
Operating activities                
Net earnings (loss) for the period   $ (4,479 )   $ 451     $ 14,426     $ (18,764 )
                 
Items not affecting cash:                
Share-based compensation     725       793       2,918       2,386  
Depreciation, depletion and amortization     4,980       8,296       19,327       18,777  
Impairment reversal of non-current assets                 (16,791 )      
Deferred income tax expense (recovery)     3,017       556       7,260       1,906  
Unrealized foreign exchange loss (gain)     140       (779 )   87       (265 )
Finance costs     195       377       702       1,025  
Write down of inventory to net realizable value           639       272       2,167  
Loss (gain) on asset disposal           27       (5,807 )     162  
Loss (gain) on other investments     3,077       (76 )     (835 )     (190 )
Net changes in non-cash working capital     (7,808 )     5,288       (16,168 )     5,110  
Cash from (used in) operating activities     (153 )     15,572       5,391       12,314  
                 
                 
Investing activities                
Proceeds on disposal of property, plant and equipment           50       7,541       150  
Mineral property, plant and equipment expenditures     (23,373 )     (8,561 )     (38,807 )     (18,945 )
Purchase of marketable securities                 (832 )      
Proceeds from disposal of marketable securities                 9,288        
Redemption of (investment in) non-current deposits     1                    
Cash from (used in) investing activities     (23,372 )     (8,511 )     (22,810 )     (18,795 )
                 
                 
Financing activities                
Repayment of loans payable     (843 )     (847 )     (2,730 )     (2,173 )
Repayment of lease liabilities     (46 )     (45 )     (131 )     (137 )
Interest paid     (159 )     (235 )     (526 )     (696 )
Public equity offerings     864       2,179       59,998       26,367  
Exercise of options           5,569       4,583       5,589  
Share issuance costs     (27 )     (96 )     (1,293 )     (1,133 )
Performance share unit redemption     (189 )           (2,363 )      
Cash from (used in) financing activities     (400 )     6,525       57,538       27,817  
                 
Effect of exchange rate change on cash and cash equivalents   (190 )     833       (126 )     213  
                 
Increase (decrease) in cash and cash equivalents     (23,925 )     13,586       40,119       21,336  
Cash and cash equivalents, beginning of the period     125,191       30,498       61,083       23,368  
Cash and cash equivalents, end of the period   $ 101,076     $ 44,917     $ 101,076     $ 44,917  

This statement should be read in conjunction with the condensed consolidated interim financial statements for the period ended September 30, 2021 and the related notes contained therein.

 

 

ENDEAVOUR SILVER CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME (LOSS)
(expressed in thousands in U.S. dollars, except for share and per share amounts)
 
    Three months ended Nine months ended
    September 30,   September 30, September 30,   September 30,
    2021   2020 2021   2020
               
Revenue   $ 34,562     $ 35,586 $ 116,803     $ 77,714  
               
Cost of sales:              
Direct production costs     18,639       18,418   63,590       46,940  
Royalties     2,698       2,029   9,498       3,720  
Share-based payments     105       87   334       270  
Depreciation, depletion and amortization     4,843       8,122   18,963       18,096  
Write down of inventory to net realizable value           639   272       2,167  
      26,285       29,295   92,657       71,193  
               
Mine operating earnings     8,277       6,291   24,146       6,521  
               
Expenses:              
Exploration and evaluation     4,660       1,670   13,815       5,717  
General and administrative     (522 )     3,695   7,294       8,837  
Care and maintenance costs     364       533   940       4,789  
Severance costs     737         737        
Impairment reversal of non-current assets             (16,791 )    
      5,239       5,898   5,995       19,343  
               
Operating earnings (loss)     3,038       393   18,151       (12,822 )
               
Finance costs     195       359   702       1,025  
               
Other income (expense):              
Foreign exchange     (1,184 )     890   (1,219 )     (3,287 )
Gain on asset disposals             5,841        
Investment and other     (2,462 )     678   2,091       1,332  
      (3,646 )     1,568   6,713       (1,955 )
               
Earnings (loss) before income taxes     (803 )     1,602   24,162       (15,802 )
               
Income tax expense (recovery):              
Current income tax expense     659       595   2,476       1,056  
Deferred income tax expense (recovery)     3,017       556   7,260       1,906  
      3,676       1,151   9,736       2,962  
               
Net earnings (loss) and comprehensive earnings (loss) for the period   (4,479 )     451   14,426       (18,764 )
               
Basic earnings (loss) per share based on net earnings (loss)   $ (0.03 )   $ 0.00 $ 0.09     $ (0.13 )
Diluted earnings (loss) per share based on net earnings (loss) $ (0.03 )   $ 0.00 $ 0.09     $ (0.13 )
               
Basic weighted average number of shares outstanding     170,432,326       156,265,280   166,201,727       148,673,768  
Diluted weighted average number of shares outstanding     173,689,576       156,265,280   169,628,783       148,673,768  

This statement should be read in conjunction with the condensed consolidated interim financial statements for the period ended September 30, 2021 and the related notes contained therein.

 

 

ENDEAVOUR SILVER CORP.

CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
(expressed in thousands in U.S. dollars, except for share and per share amounts)
         
         
    September 30,   December 31,
    2021   2020
         
ASSETS        
         
Current assets        
Cash and cash equivalents   $ 101,076     $ 61,083  
Other investments     7,047       4,767  
Accounts and other receivable     17,290       20,144  
Income tax receivable     67       52  
Inventories     30,504       16,640  
Prepaid expenses     5,114       2,284  
Total current assets     161,098       104,970  
         
Deposits     591       591  
Deferred financing costs           294  
Income tax recoverable     3,570        
IVA receivable     2,879       2,676  
Deferred income tax asset     5,493       12,753  
Intangible assets     138       492  
Right-of-use leased assets     711       861  
Mineral properties, plant and equipment     108,133       87,955  
Total assets   $ 282,613     $ 210,592  
         
LIABILITIES AND SHAREHOLDERS’ EQUITY        
         
Current liabilities        
Accounts payable and accrued liabilities   $ 25,950     $ 27,764  
Income taxes payable     3,146       3,038  
Loans payable     3,131       3,578  
Lease liabilities     200       173  
Total current liabilities     32,427       34,553  
         
Loans payable     3,801       6,094  
Lease liabilities     848       921  
Provision for reclamation and rehabilitation     7,433       8,876  
Deferred income tax liability     1,080       1,077  
Total liabilities     45,589       51,521  
         
Shareholders’ equity        
Common shares, unlimited shares authorized, no par value, issued        
and outstanding 170,461,307 shares (Dec 31, 2020 – 157,924,708 shares)   585,211       517,711  
Contributed surplus     5,689       9,662  
Retained earnings (deficit)     (353,876 )     (368,302 )
Total shareholders’ equity     237,024       159,071  
Total liabilities and shareholders’ equity   $ 282,613     $ 210,592  
         

This statement should be read in conjunction with the condensed consolidated interim financial statements for the period ended September 30, 2021 and the related notes contained therein.

 

Posted November 9, 2021

Share this news article

MORE or "UNCATEGORIZED"


Hemlo Explorers Announces Closing of First Tranche of Non-Brokered Private Placement

Hemlo Explorers Inc. (TSX-V: HMLO) is pleased to announce that it... READ MORE

November 26, 2021

Pasinex Announces Third Quarter 2021 Financial Results

Pasinex Resources Limited (CSE: PSE) (FSE: PNX) reports the Compa... READ MORE

November 25, 2021

Contact Gold Closes First Tranche of Private Placement Financing

Contact Gold Corp. (TSX-V: C) (OTCQB: CGOLF) is pleased to announ... READ MORE

November 25, 2021

Benton and Sokoman Announce Gold Discovery at the Grey River Gold Project, Southern Newfoundland

Assays for six of 13 core samples, “super rushed” for... READ MORE

November 25, 2021

Metallica Metals Intersects High Grade Gold Mineralization in First Drill Holes Completed on Starr Gold-Silver Project

Metallica Metals Corp. (CSE:MM) (OTC:MTALF) (FWB:SY7P) is ple... READ MORE

November 25, 2021

We acknowledge the [financial] support of the Government of Canada.

Government of Canada Supported
Copyright 2021 The Prospector News