Endeavour Silver Announces Q3 Financial Results; Earnings Conference Call at 10am PST (1pm EST) Today
VANCOUVER, British Columbia, Nov. 07, 2023 -- Endeavour Silver Corp. (“Endeavour” or the “Company”) (NYSE: EXK; TSX: EDR) announces its unaudited financial and operating results for the three and nine months ended September 30, 2023. All amounts reported are in United States (US) dollars.
“Our third quarter was challenging on a number of fronts, marking the lowest quarterly production for the Company in over two years. We were negatively impacted by several factors, however reduced productivity at Guanacevi is what led to a production shortfall. This reduced productivity was the result of mine sequencing changes that were initiated to improve access and ventilation, which have resulted in a significant reduction in ore grades. These lower silver and gold grades, combined with lower precious metals prices, a stronger Mexican Peso, and increased operating development and maintenance and repairs, have negatively impacted our financial performance this quarter.” stated Dan Dickson, Chief Executive Officer. “With mine sequencing back on track in Q4, we are now mining in wider, higher-grade areas of the orebody, which has significantly improved mine output and grades. While there is never a good time for these corrective measures to be taken, especially with additional macro pressures, they were necessary, and we have already seen the benefits from the actions implemented in the third quarter.”
Q3 2023 Highlights
- Production Tracking In-Line with Guidance: 1,148,735 ounces (oz) of silver and 9,089 oz of gold for 1.9 million oz silver equivalent (AgEq) (1), totaling 6.5 million AgEq oz for the 9 months ended September 30, 2023.
- Revenue: $49.4 million from the sale of 1,370,032 oz of silver and 8,760 oz of gold at average realized prices of $23.99 per oz silver and $1,948 per oz gold.
- Cash Flow: $3.3 million in operating cash flow before working capital changes(2) and $10.6 million in Mine operating cash flow before taxes(2).
- Negative Earnings: Net loss of $2.3 million, or $0.01 per share. Adjusted net loss of $7.4 million(2) after adjusting for a $7.0 million gain on disposal of the Cozamin royalty and a $1.9 million reduction in the fair value of investments.
- Significant Production Shortfall at Guanacevi, Among Other Items, Resulted in Escalated Costs: Cash costs(2) of $17.94 per oz payable silver and all-in sustaining costs(2) of $29.64 per oz payable silver, net of gold credits. Cost metrics were significantly impacted by lower production at the Guanacevi mine and increased operating development resulting from mine sequencing changes required to focus on improved access and ventilation as well as plant maintenance required during the last week of September. Macro pressures such as inflation, and a strengthened Mexican Peso also contributed to higher costs.
- Management Continues to Monitor Costs: Additional repair work related to the plant shut down continued for the first week of Q4 and increased operating development continued into Q4 to access high grade ore and open more stopes. Although cost pressures will continue, management anticipates that cost metrics will improve as productivity and production will return to expected levels.
- Healthy Balance Sheet: Cash position of $41.0 million and working capital(2) of $75.9 million. Cash decreased as funds were spent on development activities at Terronera. During Q3, 2023 the Company raised gross proceeds of $23.4 million through equity issuances, primarily to fund these activities.
- Construction and Development Update at Terronera: The Company has made significant progress on development activities, with overall construction progress 38% complete. The project remains on schedule for initial production in Q4 2024. (see news release dated October 26, 2023)
- Obtained US$120 Million Project Financing for Terronera: Societe Generale and ING Capital LLC (together with ING Bank N.V.) have signed a definitive credit agreement for a senior secured debt facility of US$120 million (see news release dated October 10, 2023).
Financial Overview (see appendix for consolidated financial statements)
| Three Months Ended September 30 | Q3 2023 Highlights | Nine Months Ended September 30 | ||||
|---|---|---|---|---|---|---|
| 2023 | 2022 | % Change | 2023 | 2022 | % Change | |
| Production | ||||||
| 1,148,735 | 1,458,448 | (21%) | Silver ounces produced | 4,266,280 | 4,132,610 | 3% |
| 9,089 | 9,194 | (1%) | Gold ounces produced | 28,250 | 27,178 | 4% |
| 1,140,597 | 1,445,880 | (21%) | Payable silver ounces produced | 4,231,064 | 4,095,696 | 3% |
| 8,929 | 9,039 | (1%) | Payable gold ounces produced | 27,749 | 26,705 | 4% |
| 1,875,855 | 2,193,968 | (14%) | Silver equivalent ounces produced(1) | 6,526,280 | 6,306,850 | 3% |
| 17.94 | 10.32 | 74% | Cash costs per silver ounce(2) | 13.80 | 10.21 | 35% |
| 24.10 | 14.31 | 68% | Total production costs per ounce(2) | 18.85 | 14.56 | 30% |
| 29.64 | 20.27 | 46% | All-in sustaining costs per ounce (2) | 23.41 | 20.24 | 16% |
| 214,270 | 202,745 | 6% | Processed tonnes | 653,918 | 610,253 | 7% |
| 152.04 | 131.61 | 16% | Direct operating costs per tonne(2) | 140.76 | 128.99 | 9% |
| 176.37 | 146.30 | 21% | Direct costs per tonne(2) | 171.78 | 147.65 | 16% |
| 20.03 | 13.12 | 53% | Silver co-product cash costs(2) | 17.09 | 14.15 | 21% |
| 1,626 | 1,144 | 42% | Gold co-product cash costs(2) | 1,396 | 1,163 | 20% |
| Financial | ||||||
| 49.5 | 39.7 | 25% | Revenue ($ millions) | 155.0 | 128.2 | 21% |
| 1,370,032 | 1,327,325 | 3% | Silver ounces sold | 4,337,112 | 3,647,987 | 19% |
| 8,760 | 8,852 | (1%) | Gold ounces sold | 27,769 | 27,025 | 3% |
| 23.99 | 19.24 | 25% | Realized silver price per ounce | 23.75 | 22.24 | 7% |
| 1,948 | 1,678 | 16% | Realized gold price per ounce | 1,940 | 1,827 | 6% |
| (2.3) | (1.5) | (55%) | Net earnings (loss) ($ millions) | 3.1 | (1.8) | 275% |
| (7.4) | (3.1) | (135) | Adjusted net earnings (loss) (2) ($ millions) | (1.9) | (1.1) | (70%) |
| 2.7 | 5.1 | (48) | Mine operating earnings ($ millions) | 31.3 | 29.9 | 5% |
| 10.6 | 12.3 | (14%) | Mine operating cash flow before taxes ($ millions)(2) | 51.8 | 47.8 | 9% |
| 3.3 | 7.3 | (55%) | Operating cash flow before working capital changes(2) | 27.2 | 31.6 | (14%) |
| 8.8 | 7.9 | 11% | EBITDA(2) ($ millions) | 39.5 | 29.2 | 35% |
| 75.9 | 101.6 | (25%) | Working capital (2) ($ millions) | 75.9 | 101.6 | (25%) |
| Shareholders | ||||||
| (0.01) | (0.01) | 0% | Earnings (loss) per share – basic ($) | 0.02 | (0.01) | 300% |
| (0.04) | (0.02) | (100%) | Adjusted earnings (loss) per share – basic ($)(2) | (0.01) | (0.01) | 0% |
| 0.02 | 0.04 | (50%) | Operating cash flow before working capital changes per share(2) | 0.14 | 0.17 | (18%) |
| 194,249,283 | 189,241,367 | 3% | Weighted average shares outstanding | 192,003,752 | 180,655,842 | 6% |
(1) Silver equivalent (AgEq) is calculated using an 80:1 silver:gold ratio.
(2) These are non-IFRS financial measures and ratios. Further details on these non-IFRS financial measures and ratios are provided at the end of this press release and in the MD&A accompanying the Company’s financial statements, which can be viewed on the Company’s website, on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.
For the three months ended September 30, 2023, revenue increased by 25% to $49.5 million (Q3 2022: $39.7 million).
Gross sales of $49.9 million in Q3 2023 represented a 24% increase over the $40.3 million in Q3 2022. Silver oz sold increased by 3%, primarily due to the timing of silver sales with less silver withheld during the current quarter offsetting the decrease in silver production. Compared to Q3, 2022, there was a 25% increase in the realized silver price resulting in a 29% increase in silver sales. Gold oz sold decreased 1% with a 16% increase in realized gold prices resulting in a 15% increase in gold sales. The decrease in gold ounces sold is primarily driven by the 1% decrease in gold production as gold inventory levels are comparable. During the period, the Company sold 1,370,032 oz silver and 8,760 oz gold, for realized prices of $23.99 and $1,948 per oz, respectively, compared to sales of 1,327,325 oz silver and 8,852 oz gold, for realized prices of $19.24 and $1,678 per oz, respectively, in the same period of 2022. For the three months ended September 30, 2023, the realized prices of silver and gold were within 2% of the London spot prices. Silver and gold London spot prices averaged $23.57 and $1,928, respectively, during the three months ended September 30, 2023.
The Company decreased its finished goods to 424,217 oz silver and slightly increased its finished goods gold inventory to 1,689 oz gold at September 30, 2023 compared to 637,439 oz silver and 1,519 oz gold at June 30, 2023. The cost allocated to these finished goods was $11.0 million as at September 30, 2023, compared to $13.8 million at June 30, 2023. At September 30, 2023, the finished goods inventory fair market value was $12.9 million, compared to $17.6 million at June 30, 2023.
After cost of sales of $46.7 (Q3 2022: $34.5 million), an increase of 35%, mine operating earnings were $2.8 million (Q3 2022: $5.1 million). The increase in the cost of sales compared to the prior period was driven by a strengthened Mexican peso and higher labour, power and consumables costs as the Company, as well the industry, has experienced significant inflationary pressures. Additionally, the Company incurred increased royalty costs during Q3, 2023 compared to the prior period. At Guanacevi additional operating development, decreased mine productivity, an increase in the purchase of third-party ore and additional repair costs associated with the plant shutdown also negatively impacted costs. Including royalties and special mining duty, direct costs per tonne increased 21% to $176.37. Compared to Q3, 2022, royalties have increased 77% from $2.8 million to $4.8 million with the increase occurring at Guanaceví. At Guanaceví the increase in royalty expense recognized during Q3, 2023 is due to the increase in production coming from concessions subject to royalties and an increase in the realized silver price. The royalty increased to 13% from 9% when the realized silver price crossed a price threshold of $20 per oz.
The Company had an operating loss of $3.8 million (Q3 2022: $1.3 million) after exploration and evaluation costs of $4.2 million (Q3 2022: $4.0 million) and general and administrative expense of $2.4 million (Q3 2022: $2.2 million). In the three months ended September 30, 2022, the operating loss also included $0.2 million in care and maintenance costs related to the suspension of the operations at the El Compas mine.
Earnings before income taxes was $$0.8 million (Q3, 2022: $1.7 million) after a gain on the sale of the Cozamin Royalty of $7.0 million (Q3 2022: $2.8 million, finance costs of $0.3 million (Q3 2022: $0.3 million), a foreign exchange loss of $0.4 million (Q3 2022: foreign exchange gain of $0.8 million) and investment and other expenses of $1.6 million (Q3 2022: $0.3 million).
The Company realized a net loss for the period of $2.3 million (Q3 2022: $1.5 million) after an income tax expense of $3.1 million (Q3, 2022: $3.2 million). Current income tax expense decreased to $3.1 million (Q3 2022: $3.2 million) due to decreased profitability impacting the income tax and special mining duty, while deferred income tax expense of $0.9 million is derived from changes in temporary timing differences between deductions for accounting versus deductions for tax (Q3 2022: $2.0 million).
Direct operating costs(2) on a per tonne basis increased to $152.04, up 16% compared with Q3 2022 due to both a strengthening of the Mexican peso and higher operating costs at both Guanacevi and Bolanitos from inflationary pressure during the lasts half 2022 and into 2023. As the Mexican peso strengthens, the Company’s Mexican peso denominated costs are increased in US dollar terms. Guanacevi and Bolanitos have experienced increased labour, power and consumables costs. Additionally, the Company incurred increased royalty costs during Q3, 2023 compared to the prior period. At Guanacevi additional operating development, decreased mine productivity, an increase in the purchase of third-party ore and additional repair costs associated with the plant shutdown also negatively impacted costs
Consolidated cash costs per oz(2), net of by-product credits, increased to $17.94 primarily driven by a reduction in silver production, an increase in direct operating costs, an increase in royalties and special mining duties which are partially offset by an increase in by-product gold sales. AISC(2) increased by 46% on a per oz basis compared to Q2 2023 due to the increase in cash costs and decreased silver production.
The complete financial statements and management’s discussion & analysis can be viewed on the Company’s website, on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. 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 Investor Relations at 604-640-4804, toll free at 1-877-685-9775 or by email at [email protected].
Conference Call
A conference call to discuss the Company’s Q3 2023 financial results will be held today at 10:00 a.m. PST / 1:00 p.m. EST. To participate in the conference call, please dial the numbers below.
Date & Time: Tuesday, November 7, 2023 at 10:00 a.m. PST / 1:00 p.m. EST Telephone: Toll-free in Canada and the US +1-800-319-4610 Local or International +1-604-638-5340 Please allow up to 10 minutes to be connected to the conference call.
Replay: A replay of the conference call will be available by dialing (toll-free) +1-800-319-6413 in Canada and the US (toll-free) or +1-604-638-9010 outside of Canada and the US. The replay passcode is 0484#. The replay will also be available on the Company’s website at www.edrsilver.com.
About Endeavour Silver – Endeavour is a mid-tier precious metals mining company that operates two high-grade underground silver-gold mines in Mexico. Endeavour is advancing construction of the Terronera Project and exploring its portfolio of exploration 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.
Contact Information
Galina Meleger, Vice President of Investor Relations Tel: (604)640-4804 Email: [email protected] Website: www.edrsilver.com Follow Endeavour Silver on Facebook, Twitter, Instagram and LinkedIn
Endnotes
1 Silver equivalent (AgEq)
AgEq is calculated using an 80:1 silver:gold ratio.
2 Non-IFRS and Other Financial Measures and Ratios
Certain non-IFRS and other non-financial measures and ratios are included in this press release, including cash costs per silver ounce, total production costs per ounce, all-in costs per ounce, all-in sustaining cost (“AISC”) per ounce, direct operating costs per tonne, direct costs per tonne, silver co-product cash costs, gold co-product cash costs, realized silver price per ounce, realized gold price per ounce, adjusted net earnings (loss) adjusted net earnings (loss) per share, mine operating cash flow before taxes, working capital, operating cash flow before working capital adjustments, operating cash flow before working capital changes per share, earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA per share and sustaining and growth capital.
Please see the September 30, 2023 MD&A for explanations and discussion of these non-IFRS and other non-financial measures and ratios. The Company believes that these measures and ratios, in addition to conventional measures and ratios prepared in accordance with International Financial Reporting Standards (“IFRS”), provide management and investors an improved ability to evaluate the underlying performance of the Company. The non-IFRS and other non-financial measures and ratios are intended to provide additional information and should not be considered in isolation or as a substitute for measures or ratios of performance prepared in accordance with IFRS. These measures and ratios do not have any standardized meaning prescribed under IFRS, and therefore may not be comparable to other issuers. Certain additional disclosures for these non- IFRS measures have been incorporated by reference and can be found in the section “Non-IFRS Measures” in the September 30, 2023 MD&A available on SEDAR at www.sedar.com.
Reconciliation of Working Capital
| Expressed in thousands US dollars | As at September 30, 2023 | As at December 31, 2022 |
|---|---|---|
| Current assets | $131,436 | $146,333 |
| Current liabilities | 55,487 | 52,749 |
| Working capital | $75,949 | $93,584 |
Reconciliation of Adjusted Net Earnings (Loss) and Adjusted Net Earnings (Loss) Per Share
| Expressed in thousands US dollars | Three Months Ended September 30 | Nine Months Ended September 30 | ||
|---|---|---|---|---|
| (except for share numbers and per share amounts) | 2023 | 2022 | 2023 | 2022 |
| Net earnings (loss) for the period per financial statements | ($2,328) | ($1,499) | $3,074 | ($1,760) |
| Gain on sale of Cozamin royalty | (6,990) | - | (6,990) | - |
| Gain on disposal of El Compas mine and equipment, net of tax | - | (2,733) | - | (2,733) |
| Change in fair value of investments | 1,944 | 1,097 | 1,997 | 3,366 |
| Adjusted net earnings (loss) | ($7,374) | ($3,135) | ($1,919) | ($1,127) |
| Basic weighted average share outstanding | 194,249,283 | 189,241,367 | 192,003,752 | 180,655,842 |
| Adjusted net earnings (loss) per share | ($0.04) | ($0.02) | ($0.01) | ($0.01) |
Reconciliation of Mine Operating Cash Flow Before Taxes
| Expressed in thousands US dollars | Three Months Ended September 30 | Nine Months Ended September 30 | ||
|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |
| Mine operating earnings per financial statements | $2,692 | $5,129 | $31,259 | $29,870 |
| Share-based compensation | 44 | 113 | (118) | 353 |
| Amortization and depletion | 7,855 | 5,753 | 20,704 | 16,234 |
| Write down of inventory to net realizable value | - | 1,323 | - | 1,323 |
| Mine operating cash flow before taxes | $10,591 | $12,318 | $51,845 | $47,780 |
Reconciliation of Operating Cash Flow Before Working Capital Changes and Operating Cash Flow Before Working Capital Changes Per Share
| Expressed in thousands US dollars | Three Months Ended September 30 | Nine Months Ended September 30 | ||
|---|---|---|---|---|
| (except for per share amounts) | 2023 | 2022 | 2023 | 2022 |
| Cash from (used in) operating activities per financial statements | $613 | $7,417 | $5,065 | $10,602 |
Net changes in non-cash working capital per financial (2,650) 85 (22,158) (20,957) statements
| Operating cash flow before working capital changes | $3,263 | $7,332 | $27,223 | $31,559 |
| Basic weighted average shares outstanding | 194,249,283 | 189,241,367 | 192,003,752 | 180,655,842 |
| Operating cash flow before working capital changes per share | $0.02 | $0.04 | $0.14 | $0.17 |
Reconciliation of EBITDA and Adjusted EBITDA
| Expressed in thousands US dollars | Three Months Ended September 30 | Nine Months Ended September 30 | ||
|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |
| Net earnings (loss) for the period per financial statements | ($2,328) | ($1,499) | $3,074 | ($1,760) |
| Depreciation and depletion – cost of sales | 7,855 | 5,753 | 20,704 | 16,234 |
| Depreciation and depletion – exploration | (147) | 143 | 448 | 348 |
| Depreciation and depletion – general & administration | 63 | 57 | 179 | 156 |
| Depreciation and depletion – care & maintenance | - | 10 | - | 70 |
| Finance costs | 170 | 194 | 658 | 583 |
| Current income tax expense | 2,250 | 1,186 | 11,137 | 3,526 |
| Deferred income tax expense | 888 | 2,053 | 3,330 | 10,027 |
| EBITDA | $8,751 | $7,897 | $39,530 | $29,184 |
| Share based compensation | 863 | 760 | 2,904 | 3,259 |
| Gain on sale of Cozamin royalty | (6,990) | - | (6,990) | - |
| Gain on disposal of El Compas mine and equipment, net of tax | - | (2,733) | - | (2,733) |
| Change in fair value of investments | 1,944 | 1,097 | 1,997 | 3,366 |
| Adjusted EBITDA | $4,568 | $7,021 | $37,441 | $33,076 |
Reconciliation of Cash Cost Per Silver Ounce, Total Production Costs Per Ounce, Direct Operating Costs Per Tonne, Direct Costs Per Tonne
| Expressed in thousands US dollars | Three Months Ended September 30, 2023 | Three Months Ended September 30, 2022 | ||||
|---|---|---|---|---|---|---|
| Guanaceví | Bolañitos | Total | Guanaceví | Bolañitos | Total | |
| Direct production costs per financial statements | $23,863 | $10,157 | $34,020 | $15,156 | $9,354 | $24,510 |
| Smelting and refining costs included in net revenue | - | 494 | 494 | - | 744 | 744 |
| Opening finished goods | (10,257) | (962) | (11,219) | (16,164) | (681) | (16,845) |
| Closing finished goods | 8,627 | 656 | 9,283 | 18,080 | 195 | 18,275 |
| Direct operating costs | 22,233 | 10,345 | 32,578 | 17,072 | 9,612 | 26,684 |
| Royalties | 4,754 | 67 | 4,821 | 2,762 | 59 | 2,821 |
| Special mining duty | 306 | 85 | 391 | 241 | (85) | 156 |
| Direct costs | 27,293 | 10,497 | 37,790 | 20,075 | 9,586 | 29,661 |
| By-product gold sales | (5,326) | (11,737) | (17,063) | (5,237) | (9,615) | (14,852) |
| Opening gold inventory fair market value | 1,629 | 1,268 | 2,897 | 4,662 | 1,061 | 5,723 |
| Closing gold inventory fair market value | (2,345) | (815) | (3,160) | (5,368) | (240) | (5,608) |
| Cash costs net of by-product | 21,251 | (787) | 20,464 | 14,132 | 792 | 14,924 |
| Amortization and depletion | 4,684 | 3,171 | 7,855 | 3,119 | 2,634 | 5,753 |
| Share-based compensation | 31 | 13 | 44 | 56 | 57 | 113 |
| Opening finished goods depreciation and depletion | (2,318) | (288) | (2,606) | (3,733) | (199) | (3,932) |
| Closing finished goods depreciation and depletion | 1,509 | 222 | 1,731 | 3,776 | 60 | 3,836 |
| Total production costs | $25,157 | $2,331 | $27,488 | $17,350 | $3,344 | $20,694 |
| Three Months Ended September 30, 2023 | Three Months Ended September 30, 2022 | |||||
|---|---|---|---|---|---|---|
| Guanaceví | Bolañitos | Total | Guanaceví | Bolañitos | Total | |
| Throughput tonnes | 103,345 | 110,925 | 214,270 | 97,728 | 105,017 | 202,745 |
Payable silver ounces 1,038,087 102,510 1,140,597 1,328,193 117,687 1,445,880
| Cash costs per silver ounce | $20.47 | ($7.68) | $17.94 | $10.64 | $6.73 | $10.32 |
| Total production costs per ounce | $24.23 | $22.74 | $24.10 | $13.06 | $28.41 | $14.31 |
| Direct operating costs per tonne | $215.13 | $93.26 | $152.04 | $174.69 | $91.53 | $131.61 |
| Direct costs per tonne | $264.10 | $94.63 | $176.37 | $205.42 | $91.28 | $146.30 |
| Expressed in thousands US dollars | Nine Months Ended September 30, 2023 | Nine Months Ended September 30, 2022 | ||||
|---|---|---|---|---|---|---|
| Guanaceví | Bolañitos | Total | Guanaceví | Bolañitos | Total | |
| Direct production costs per financial statements | $56,886 | $29,128 | $86,014 | $40,837 | $30,222 | $71,059 |
| Smelting and refining costs included in net revenue | - | 1,945 | 1,945 | - | 2,335 | 2,335 |
| Opening finished goods | (4,953) | (245) | (5,198) | (10,093) | (2,857) | (12,950) |
| Closing finished goods | 8,627 | 656 | 9,283 | 18,080 | 195 | 18,275 |
| Direct operating costs | 60,560 | 31,484 | 92,044 | 48,824 | 29,895 | 78,719 |
| Royalties | 16,904 | 201 | 17,105 | 9,124 | 208 | 9,332 |
| Special mining duty | 2,800 | 379 | 3,179 | 1,767 | 286 | 2,053 |
| Direct costs | 80,264 | 32,064 | 112,328 | 59,715 | 30,389 | 90,104 |
| By-product gold sales | (22,228) | (31,654) | (53,882) | (15,978) | (33,405) | (49,383) |
| Opening gold inventory fair market value | 2,740 | 354 | 3,094 | 1,900 | 4,784 | 6,684 |
| Closing gold inventory fair market value | (2,345) | (815) | (3,160) | (5,368) | (240) | (5,608) |
| Cash costs net of by-product | 58,431 | (51) | 58,380 | 40,269 | 1,528 | 41,797 |
| Amortization and depletion | 11,539 | 9,165 | 20,704 | 7,969 | 8,265 | 16,234 |
| Share-based compensation | (50) | (68) | (118) | 176 | 177 | 353 |
| Opening finished goods depreciation and depletion | (862) | (60) | (922) | (1,965) | (635) | (2,600) |
| Closing finished goods depreciation and depletion | 1,509 | 222 | 1,731 | 3,776 | 60 | 3,836 |
| Total production costs | $70,567 | $9,208 | $79,775 | $50,225 | $9,395 | $59,620 |
| Nine Months Ended September 30, 2023 | Nine Months Ended September 30, 2022 | |||||
|---|---|---|---|---|---|---|
| Guanaceví | Bolañitos | Total | Guanaceví | Bolañitos | Total | |
| Throughput tonnes | 322,628 | 331,290 | 653,918 | 292,998 | 317,255 | 610,253 |
| Payable silver ounces | 3,822,057 | 409,007 | 4,231,064 | 3,649,209 | 446,487 | 4,095,696 |
| Cash costs per silver ounce | $15.29 | ($0.12) | $13.80 | $11.03 | $3.42 | $10.21 |
| Total production costs per ounce | $18.46 | $22.51 | $18.85 | $13.76 | $21.04 | $14.56 |
| Direct operating costs per tonne | $187.71 | $95.03 | $140.76 | $166.64 | $94.23 | $128.99 |
| Direct costs per tonne | $248.78 | $96.79 | $171.78 | $203.81 | $95.79 | $147.65 |
| Expressed in thousands US dollars | September 30, 2023 | September 30, 2022 | ||||
|---|---|---|---|---|---|---|
| Guanaceví | Bolañitos | Total | Guanaceví | Bolañitos | Total | |
| Closing finished goods | 8,627 | 656 | 9,283 | 18,080 | 195 | 18,275 |
| Closing finished goods depletion | 1,509 | 222 | 1,731 | 3,776 | 60 | 3,836 |
| Finished goods inventory | $10,136 | $878 | $11,014 | $21,856 | $255 | $22,111 |
Reconciliation of All-In Costs Per Ounce and AISC per ounce
| Expressed in thousands US dollars | Three Months Ended September 30, 2023 | Three Months Ended September 30, 2022 | ||||
|---|---|---|---|---|---|---|
| Guanaceví | Bolañitos | Total | Guanaceví | Bolañitos | Total | |
| Cash costs net of by-product | $21,251 | ($787) | $20,464 | $14,132 | $792 | $14,924 |
| Operations share-based compensation | 31 | 13 | 44 | 56 | 57 | 113 |
| Corporate general and administrative | 1,087 | 514 | 1,601 | 1,200 | 414 | 1,614 |
| Corporate share-based compensation | 475 | 219 | 694 | 405 | 125 | 530 |
Reclamation - 77 69 146 64 52 116 amortization/accretion
| Mine site expensed exploration | 362 | 339 | 701 | 316 | 305 | 621 |
| Equipment loan payments | 189 | 489 | 678 | 245 | 489 | 734 |
| Capital expenditures sustaining | 6,697 | 2,787 | 9,484 | 7,212 | 3,439 | 10,651 |
| All-In-Sustaining Costs | $30,169 | $3,643 | $33,812 | $23,629 | $5,674 | $29,303 |
| Growth exploration and evaluation | 3,476 | 3,142 | ||||
| Growth capital expenditures | 22,252 | 6,240 | ||||
| All-In-Costs | $59,540 | $38,685 |
| Three Months Ended September 30, 2023 | Three Months Ended September 30, 2022 | |||||
|---|---|---|---|---|---|---|
| Guanaceví | Bolañitos | Total | Guanaceví | Bolañitos | Total | |
| Throughput tonnes | 103,345 | 110,925 | 214,270 | 97,728 | 105,017 | 202,745 |
| Payable silver ounces | 1,038,087 | 102,510 | 1,140,597 | 1,328,193 | 117,687 | 1,445,880 |
| Silver equivalent production (ounces) | 1,294,091 | 581,764 | 1,875,855 | 1,623,550 | 570,418 | 2,193,968 |
| Sustaining cost per ounce | $29.06 | $35.54 | $29.64 | $17.79 | $48.21 | $20.27 |
| All-In-costs per ounce | $52.20 | $26.76 |
| Expressed in thousands US dollars | Nine Months Ended September 30, 2023 | Nine Months Ended September 30, 2022 | ||||
|---|---|---|---|---|---|---|
| Guanaceví | Bolañitos | Total | Guanaceví | Bolañitos | Total | |
| Cash costs net of by-product | $58,431 | ($51) | $58,380 | $40,269 | $1,528 | $41,797 |
| Operations share-based compensation | (50) | (68) | (118) | 176 | 177 | 353 |
| Corporate general and administrative | 4,931 | 1,869 | 6,800 | 3,668 | 1,445 | 5,113 |
| Corporate share-based compensation | 1,924 | 730 | 2,654 | 1,849 | 728 | 2,577 |
| Reclamation - amortization/accretion | 235 | 197 | 432 | 198 | 158 | 356 |
| Mine site expensed exploration | 1,068 | 1,002 | 2,070 | 1,028 | 863 | 1,891 |
| Intangible payments | - | - | - | 29 | 12 | 41 |
| Equipment loan payments | 679 | 1,465 | 2,144 | 736 | 1,466 | 2,202 |
| Capital expenditures sustaining | 18,687 | 8,008 | 26,695 | 19,908 | 8,653 | 28,561 |
| All-In-Sustaining Costs | $85,905 | $13,152 | $99,057 | $67,861 | $15,030 | $82,891 |
| Growth exploration and evaluation | 9,792 | 8,456 | ||||
| Growth capital expenditures | 49,622 | 16,778 | ||||
| All-In-Costs | $158,471 | $108,125 |
| Nine Months Ended September 30, 2023 | Nine Months Ended September 30, 2022 | |||||
|---|---|---|---|---|---|---|
| Guanaceví | Bolañitos | Total | Guanaceví | Bolañitos | Total | |
| Throughput tonnes | 322,628 | 331,290 | 653,918 | 292,998 | 317,255 | 610,253 |
| Payable silver ounces | 3,822,057 | 409,007 | 4,231,064 | 3,649,209 | 446,487 | 4,095,696 |
| Silver equivalent production (ounces) | 4,732,278 | 1,794,002 | 6,526,280 | 4,524,110 | 1,782,740 | 6,306,850 |
| Sustaining cost per ounce | $22.48 | $32.16 | $23.41 | $18.60 | $33.66 | $20.24 |
| All-In-costs per ounce | $37.45 | $26.40 |
| Expressed in thousands US dollars | Three Months Ended September 30 | Nine Months Ended September 300 | ||
|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |
| Mine site expensed exploration | $701 | $621 | $2,070 | $1,891 |
| Growth exploration and evaluation | 3,476 | 3,142 | 9,792 | 8,456 |
| Total exploration and evaluation | 4,177 | 3,763 | 11,862 | 10,347 |
| Exploration depreciation and depletion | (147) | 143 | 448 | 348 |
| Exploration share-based compensation | 125 | 117 | 368 | 328 |
| Exploration and evaluation expense | $4,155 | $4,023 | $12,678 | $11,023 |
Reconciliation of Sustaining Capital and Growth Capital
| Expressed in thousands US dollars | Three Months Ended September 30 | Nine Months Ended September 300 | ||
|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |
| Capital expenditures sustaining | $9,484 | $10,651 | $26,695 | $28,561 |
| Growth capital expenditures | 22,252 | 6,240 | 49,622 | 16,778 |
| Property, plant and equipment expenditures per Consolidated Statement of Cash Flows | $31,736 | $16,891 | $76,317 | $45,339 |
Reconciliation of Silver Co-Product Cash Costs and Gold Co-Product Cash Costs
| Expressed in thousands US dollars | Three Months Ended September 30, 2023 | Three Months Ended September 30, 2022 | ||||
|---|---|---|---|---|---|---|
| Guanaceví | Bolañitos | Total | Guanaceví | Bolañitos | Total | |
| Direct production costs per financial statements | $23,863 | $10,157 | $34,020 | $15,156 | $9,354 | $24,510 |
| Smelting and refining costs included in net revenue | - | 494 | 494 | - | 744 | 744 |
| Royalties | 4,754 | 67 | 4,821 | 2,762 | 59 | 2,821 |
| Special mining duty | 306 | 85 | 391 | 241 | (85) | 156 |
| Opening finished goods | (10,257) | (962) | (11,219) | (16,164) | (681) | (16,845) |
| Closing finished goods | 8,627 | 656 | 9,283 | 18,080 | 195 | 18,275 |
| Direct costs | $27,293 | $10,497 | $37,790 | $20,075 | $9,586 | $29,661 |
| Three Months Ended September 30, 2023 | Three Months Ended September 30, 2022 | |||||
|---|---|---|---|---|---|---|
| Guanaceví | Bolañitos | Total | Guanaceví | Bolañitos | Total | |
| Silver production (ounces) | 1,041,211.00 | 107,524 | 1,148,735 | 1,332,190 | 126,258 | 1,458,448 |
| Average realized silver price ($) | 23.99 | 23.99 | 23.99 | 19.24 | 19.24 | 19.24 |
| Silver value ($) | 24,976,320 | 2,579,260 | 27,555,580 | 25,634,615 | 2,429,515 | 28,064,130 |
| Gold production (ounces) | 3,161 | 5,928 | 9,089 | 3,642 | 5,552 | 9,194 |
| Average realized gold price ($) | 1,948 | 1,948 | 1,948 | 1,678 | 1,678 | 1,678 |
| Gold value ($) | 6,157,094 | 11,546,742 | 17,703,836 | 6,110,595 | 9,315,217 | 15,425,812 |
| Total metal value ($) | 31,133,414 | 14,126,002 | 45,259,417 | 31,745,210 | 11,744,732 | 43,489,942 |
| Pro-rated silver costs (%) | 80% | 18% | 61% | 81% | 21% | 65% |
| Pro-rated gold costs (%) | 20% | 82% | 39% | 19% | 79% | 35% |
| Pro-rated silver costs ($) | 21,895 | 1,917 | 23,008 | 16,211 | 1,983 | 19,140 |
| Pro-rated gold costs ($) | 5,398 | 8,580 | 14,782 | 3,864 | 7,603 | 10,521 |
| Silver co-product cash costs ($) | 21.03 | 17.83 | 20.03 | 12.17 | 15.71 | 13.12 |
| Gold co-product cash costs ($) | 1,708 | 1,447 | 1,626 | 1,061 | 1,369 | 1,144 |
| Expressed in thousands US dollars | Nine Months Ended September 30, 2023 | Nine Months Ended September 30, 2022 | ||||
|---|---|---|---|---|---|---|
| Guanaceví | Bolañitos | Total | Guanaceví | Bolañitos | Total | |
| Direct production costs per financial statements | $56,886 | $29,128 | $86,014 | $40,837 | $30,222 | $71,059 |
| Smelting and refining costs included in net revenue | - | $1,945 | $1,945 | - | 2,335 | 2,335 |
| Royalties | 16,904 | 201 | 17,105 | 9,124 | 208 | 9,332 |
| Special mining duty | 2,800 | 379 | 3,179 | 1,767 | 286 | 2,053 |
| Opening finished goods | (4,953) | (245) | (5,198) | (10,093) | (2,857) | (12,950) |
| Finished goods NRV adjustment | - | - | - | - | - | 0 |
| Closing finished goods | 8,627 | 656 | 9,283 | 18,080 | 195 | 18,275 |
Direct costs 80,264 32,064 112,328 59,715 30,389 90,104
| Nine Months Ended September 30, 2023 | Nine Months Ended September 30, 2022 | |||||
|---|---|---|---|---|---|---|
| Guanaceví | Bolañitos | Total | Guanaceví | Bolañitos | Total | |
| Silver production (ounces) | 3,833,558 | 432,722 | 4,266,280 | 3,660,190 | 472,420 | 4,132,610 |
| Average realized silver price ($) | 23.75 | 23.75 | 23.75 | 22.24 | 22.24 | 22.24 |
| Silver value ($) | 91,065,202 | 10,279,202 | 101,344,404 | 81,394,368 | 10,505,555 | 91,899,922 |
| Gold production (ounces) | 11,234 | 17,016 | 28,250 | 10,799 | 16,379 | 27,178 |
| Average realized gold price ($) | 1,940 | 1,940 | 1,940 | 1,827 | 1,827 | 1,827 |
| Gold value ($) | 21,798,062 | 33,017,253 | 54,815,316 | 19,733,100 | 29,929,479 | 49,662,579 |
| Total metal value ($) | 112,863,264 | 43,296,455 | 156,159,719 | 101,127,468 | 40,435,034 | 141,562,501 |
| Pro-rated silver costs (%) | 81% | 24% | 65% | 80% | 26% | 65% |
| Pro-rated gold costs (%) | 19% | 76% | 35% | 20% | 74% | 35% |
| Pro-rated silver costs ($) | 64,762 | 7,612 | 72,899 | 48,063 | 7,895 | 58,494 |
| Pro-rated gold costs ($) | 15,502 | 24,452 | 39,429 | 11,652 | 22,494 | 31,610 |
| Silver co-product cash costs ($) | 16.89 | 17.59 | 17.09 | 13.13 | 16.71 | 14.15 |
| Gold co-product cash costs ($) | 1,380 | 1,437 | 1,396 | 1,079 | 1,373 | 1,163 |
Reconciliation of Realized Silver Price Per Ounce and Realized Gold Price Per Ounce
| Expressed in thousands US dollars | Three Months Ended September 30 | Nine Months Ended September 30 | ||
|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |
| Gross silver sales | $32,864 | $25,541 | $103,027 | $81,123 |
| Silver ounces sold | 1,370,032 | 1,327,325 | 4,337,112 | 3,647,987 |
| Realized silver price per ounces | $23.99 | $19.24 | $23.75 | $22.24 |
| Expressed in thousands US dollars | Three Months Ended September 30 | Nine Months Ended September 30 | ||
|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |
| Gross gold sales | $17,063 | $14,852 | $53,882 | $49,383 |
| Realized gold price per ounces | $1,948 | $1,678 | $1,940 | $1,827 |
Cautionary Note Regarding Forward-Looking Statements
This news release contains “forward-looking statements” within the meaning of the United States private securities litigation reform act of 1995 and “forward-looking information” within the meaning of applicable Canadian securities legislation. Such forward-looking statements and information herein include but are not limited to statements regarding the development and financing of the Terronera Project including: anticipated timing of the project; anticipated timing of completion of conditions precedent to drawdown under the Debt Facility, estimated project economics, Terronera’s forecasted operations, costs and expenditures, and the timing and results of various related activities, Endeavour’s anticipated performance in 2023 including changes in mining operations and forecasts of production levels, anticipated production costs and all-in sustaining costs and the timing and results of various activities. The Company does not intend to and does not assume any obligation to update such forward-looking statements or information, other than as required by applicable law.
Forward-looking statements or information involve known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, production levels, performance or achievements of Endeavour and its operations to be materially different from those expressed or implied by such statements. Such factors include but are not limited changes in production and costs guidance; the ongoing effects of inflation and supply chain issues on mine economics; national and local governments, legislation, taxation, controls, regulations and political or economic developments in Canada and Mexico; financial risks due to precious metals prices; operating or technical difficulties in mineral exploration, development and mining activities; risks and hazards of mineral exploration, development and mining; the speculative nature of mineral exploration and development; risks in obtaining necessary licenses and permits; satisfaction of conditions precedent to drawdown under the Debt Facility; the ongoing effects of inflation and supply chain issues on the Terronera Project economics; fluctuations in the prices of silver and gold, fluctuations in the currency markets (particularly the Mexican peso, Chilean peso, Canadian dollar and U.S. dollar); and challenges to the Company’s title to properties; as well as those factors described in the section “risk factors” contained in the Company’s most recent form 40F/Annual Information Form filed with the S.E.C. and Canadian securities regulatory authorities.
Forward-looking statements are based on assumptions management believes to be reasonable, including but not limited to: the continued operation of the Company’s mining operations, no material adverse change in the market price of commodities, forecasted mine economics as of 2023, mining operations will operate and the mining products will be completed in accordance with management’s expectations and achieve their stated production outcomes, and such other assumptions and factors as set out herein. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or information, there may be other factors that cause results to be materially different from those anticipated, described, estimated, assessed or intended. There can be no assurance that any forward-looking statements or information will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements or information. Accordingly, readers should not place undue reliance on forward-looking statements or information.
Appendix
ENDEAVOUR SILVER CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OFCOMPREHENSIVE EARNINGS (unaudited – prepared by management)
(expressed in thousands of US dollars, except for shares and per share amounts)
Three months ended Nine months ended September September September 30, September 30, 30, 30, 2023 2022 2023 2022
Revenue $ 49,432 $ 39,649 $ 154,964 $ 128,171
Cost of sales:
| Direct production costs | 34,020 | 24,510 | 86,014 | 71,059 | |
| Royalties | 4,821 | 2,821 | 17,105 | 9,332 | |
| Share-based payments | 44 | 113 | (118) | 353 | |
| Depreciation, depletion and amortization | 7,855 | 5,753 | 20,704 | 16,234 | |
| Write down of inventory to net realizable value | - | 1,323 | - | 1,323 | |
| 46,740 | 34,520 | 123,705 | 98,301 | ||
| Mine operating earnings | 2,692 | 5,129 | 31,259 | 29,870 |
Expenses:
| Exploration and evaluation | 4,155 | 4,023 | 12,678 | 11,023 | |
| General and administrative | 2,358 | 2,201 | 9,633 | 7,846 | |
| Care and maintenance costs | - | 203 | - | 582 | |
| Write off of mineral properties | - | - | 435 | 500 | |
| 6,513 | 6,427 | 22,746 | 19,951 | ||
| Operating earnings (loss) | (3,821) | (1,298) | 8,513 | 9,919 | |
| Finance costs | 316 | 311 | 1,090 | 945 |
Other income:
| Foreign exchange gain (loss) | (418) | 841 | 3,326 | 1,363 |
| Gain on asset disposal | 6,992 | 2,780 | 7,059 | 2,780 |
| Investment and other | (1,627) | (272) | (267) | (1,324) |
| 4,947 | 3,349 | 10,118 | 2,819 | |
| Earnings before income taxes | 810 | 1,740 | 17,541 | 11,793 |
Income tax expense:
| Current income tax expense | 2,250 | 1,186 | 11,137 | 3,526 | |||
| Deferred income tax expense | 888 | 2,053 | 3,330 | 10,027 | |||
| 3,138 | 3,239 | 14,467 | 13,553 | ||||
| Net earnings (loss) and comprehensive earnings | $ | (2,328) | $ (1,499) | $ | 3,074 | $ (1,760) | |
| Basic earnings (loss) per share | $ | (0.01) | $ | (0.01) | $ | 0.02 | $ (0.01) |
| Diluted earnings (loss) per share | $ (0.01) | $ (0.01) $ 0.02 $ (0.01) |
| Basic weighted average number of shares outstanding | 194,249,283 189,241,367 | 192,003,752 180,655,842 |
| Diluted weighted average number of shares outstanding | 194,249,283 189,241,367 | 193,875,315 180,655,842 |
ENDEAVOUR SILVER CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION (unaudited – prepared by management)
(expressed in thousands of US dollars)
September 30, December 31, 2023 2022
ASSETS
Current assets
| Cash and cash equivalents | $ 40,957 | $ 83,391 |
| Other investments | 6,192 | 8,647 |
| Accounts and other receivables | 16,664 | 13,136 |
| Income tax receivable | 1,264 | 4,024 |
| Inventories | 27,601 | 19,184 |
| Prepaids | 37,508 | 16,951 |
| Loans receivable | 1,250 | 1,000 |
| Total current assets | 131,436 | 146,333 |
| Non-current deposits | 717 | 565 |
| Non-current income tax receivable | 3,570 | 3,570 |
Non-current other investments 1,388
-
| Non-current IVA receivable | 17,476 | 10,154 |
| Non-current loans receivable | 2,273 | 2,729 |
| Right-of-use leased assets | 819 | 806 |
| Mineral properties, plant and equipment | 276,864 | 233,892 |
| Total assets | $ 433,155 | $ 399,437 |
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
| Accounts payable and accrued liabilities | $ 43,416 | $ 39,831 |
| Income taxes payable | 7,296 | 6,616 |
| Loans payable | 4,339 | 6,041 |
| Lease liabilities | 436 | 261 |
| Total current liabilities | 55,487 | 52,749 |
| Loans payable | 5,500 | 8,469 |
| Lease liabilities | 678 | 812 |
| Provision for reclamation and rehabilitation | 9,582 | 7,601 |
| Deferred income tax liability | 16,273 | 12,944 |
| Other non-current liabilities | 1,016 | 968 |
| Total liabilities | 88,536 | 83,543 |
Shareholders' equity Common shares, unlimited shares authorized, no par value, issued, issuable
| and outstanding 199,700,826 shares (Dec 31, 2022 - 189,995,563 shares) | 684,736 | 657,866 |
| Contributed surplus | 4,597 | 6,115 |
| Retained earnings (deficit) | (344,714) | (348,087) |
| Total shareholders' equity | 344,619 | 315,894 |
| Total liabilities and shareholders' equity | $ 433,155 | $ 399,437 |
ENDEAVOUR SILVER CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS (unaudited – prepared by management)
(expressed in thousands of US dollars)
Three months ended Nine months ended September September September
September
30, 30, 30, 30, 2023 2022 2023 2022
Operating activities
Net earnings (loss) for the period $ (2,328) $ (1,499) $ 3,074 $ (1,760)
Items not affecting cash:
| Share-based compensation | 864 | 760 | 2,904 | 3,259 |
| Depreciation, depletion and amortization | 9,067 | 6,023 | 22,659 | 16,809 |
| Writte off of exploration properties | - | - | 435 | 500 |
| Deferred income tax expense | 888 | 2,053 | 3,330 | 10,027 |
| Unrealized foreign exchange loss (gain) | (409) - | 89 | 1,205 | - (131) |
| Finance costs | 316 | 312 | 1,090 | 946 |
| Accretion of loans receivable | (87) | - | (294) | - |
| Write down of inventory to net realizable value | - | 1,323 | - | 1,323 |
| Gain on asset disposal | (6,992) | (2,826) | (7,059) | (2,780) |
| Loss on other investments | 1,944 | 1,097 | 1,997 | 3,366 |
| Performance and deferred share units settled in cash | - | - | (2,118) | - |
| Net changes in non-cash working capital | 85 | (20,957) |
(2,650) (22,158)
Cash from operating activities 613 7,417 5,065 10,602
Investing activities
| Proceeds on disposal of property, plant and equipment | 7,567 | 250 | 7,567 | 332 | |
| Mineral properties, plant and equipment | (31,736) | (53,046) | (76,317) | (81,494) | |
| Purchase of other investments | - | - | - | (2,119) | |
| Proceeds from disposal of other investments | - | - | 1,846 | - | |
| Redemption of (investment in) non-current deposits | (57) | 30 | (152) | 34 | |
| Cash used in investing activities | (24,226) | (52,766) | (67,056) | (83,247) |
Financing activities
| Repayment of loans payable | (1,522) | (1,268) | (4,671) | (3,565) | |
| Repayment of lease liabilities | (126) | (55) | (275) | (161) | |
| Interest paid | (206) | (204) | (659) | (585) | |
| Public equity offerings | 23,390 | - | 23,390 | 46,001 | |
| Exercise of options | - | 20 | 2,453 | 1,598 | |
| Proceeds from loans receivable | - | - | 500 | - | |
| Share issuance costs | (683) | (93) | (683) | (2,905) |
Performance and deferred share units witholding tax
- - (294) (1,903)
settlement Cash from (used in) financing activities 20,853 (1,600) 19,761 38,480
Effect of exchange rate change on cash and cash 213 (84) (204) 55 equivalents
Increase (decrease) in cash and cash equivalents (46,949) (34,165)
(2,760) (42,230)
Cash and cash equivalents, beginning of the period 43,504 116,226 83,391 103,303 Cash and cash equivalents, end of the period $ 40,957 $ 69,193 $ 40,957 $ 69,193