Endeavour Silver Reports Financial Results for Second Quarter, 2017; Updates on Development Projects and 2017 Guidance ______________________________________________________________________________
NEWS RELEASE
Endeavour Silver Reports Financial Results for Second Quarter, 2017;
Updates on Development Projects and 2017 Guidance
______________________________________________________________________________
Vancouver, Canada – August 3, 2017 - Endeavour Silver Corp. (NYSE: EXK; TSX: EDR) released
today its financial results for the second quarter ended June 30, 2017. Endeavour owns and operates three
underground silver-gold mines in Mexico: the Guanaceví mine in Durango state, and the Bolañitos and El
Cubo mines in Guanajuato state.
The Company's financial performance in the Second Quarter, 2017 was impacted by lower production and
increased exploration and development activities compared to the Second Quarter, 20 16. Production was
lower in Q2, 2017 compared to Q2, 2016 due to differences in the annual mine plans. In 2016, production
was higher in H1 and declined in H2 whereas in 2017, production should rise incrementally from H1 to H2
with increased access to reserves at all three mines.
Production in the Second Quarter, 2017 was higher than the First Quarter, 2017 due primarily to improved
performance of the Bolañi tos and El Cubo mines. Both mines are now performing in line with their
operating plans for the year whereas Guanacevi continues to lag behind plan. (Click here for an audio
review of Q2 highlights).
Highlights of Second Quarter 2017 (Compared to Second Quarter 2016)
Financial
Net loss of $16 thousand(1) (loss of $0.00 per share) compared to net earnings of $1.7 million ($0.01
per share)
EBITDA(2) decreased 64% to $3.7 million
Cash flow from operations before working capital changes decreased 53% to $4.4 million
Mine operating cash flow before taxes(1) decreased 49% to $8.8 million
Revenue decreased 27% to $32.7 million
Realized silver price increased 4% to $17.16 per ounce (oz) sold
Realized gold price decreased 1% to $1,270 per oz sold
Cash costs(2) increased 56% to $8.36 per oz silver payable (net of gold credits)
All-in sustaining costs (AISC)(2) increased 94% to $20.46 per oz silver payable (net of gold credits)
Working capital decreased 8% to $75.2 million from year end
Operations
Silver production decreased 26% to 1,143,788 oz
Gold production decreased 17% to 13,058 oz
Silver equivalent production was 2.1 million oz (at a 70:1 silver: gold ratio)
Silver oz sold down 34% to 988,821 oz
Gold oz sold down 20% to 12,294 oz
Bullion inventory at quarter-end included 226,437 oz silver and 631 oz gold
Concentrate inventory at quarter-end included 50,644 oz silver and 890 oz gold
Acquired the Calicanto and Veta Grande properties near the El Compas gold-silver mine project in
Zacatecas, Mexico
(1) The Consolidated Interim Financial Statements and Management’s Discussion & Analysis can be viewed on the
Company’s website at www.edrsil ver.com, on SEDAR at www.sedar.com and EDGAR at www.sec.gov. All amounts
are reported in US$
(2) Mine operating cash flow, EBITDA, cash costs and all-in sustaining costs are non-IFRS measures. Please refer to the
definitions in the Company’s Management Discussion & Analysis
Endeavour CEO Bradford Cooke commented, “Our second quarter production was an improvement over
the first quarter thanks to higher tonnes and/or grades from the Bolañitos and El Cubo mines. The Guanaceví
mine continued to lag behind plan and another internal review was initiated in order to better understand
the new issues and possible resolutions.
“At Guanaceví, power outages in the first quarter caused pump failures and some flooding underground.
Slower than planned mine development due to narrower vein widths than in the resource model also
contributed to lower mine output than planned, while excess dilution of the ore resulted in lower than
planned grades. In July, a lightning st rike caused a repeat in the electrical issues just as electrical repairs
were nearing completion, resulting in another pump failure and renewed flooding in the deeper workings.
Recent completion of electrical and ventilation repairs and construction of a new underground pump station
should help smooth production in H2, 2017 . However, g iven these setbacks, w e have concluded that
Guanacevi will not meet its planned production this year and accordingly, we are reducing our consolidated
production guidance and raising our consolidated cost guidance.
“We will conti nue to closely monitor the operating performance at Guanacevi. Returning Guanacevi to
long-term profitability relies in part on developing two new orebodies, Milache and Santa Cruz Sur.
Underground ramp access is already underway towards Milache and initia l production is expected in the
second half of 2018. Mine development at Santa Cruz Sur is scheduled to coincide with the development
of Milache.”
Mine Operations Update
In January, management guided Guanacevi 2017 production to range between 2.4 to 2.6 million silver
ounces and 5,300 to 6,300 gold ounces. Due to the narrower vein widths, management now estimates
production will range from 800 to 900 tonnes per day, generating 1.0 to 1.1 million silver ounces and 2,100
to 2,200 gold ounces in the second half of 2017. As a result, the revised Guanacevi 2017 full year forecast
production is 2.0 to 2.1 million ounces silver and 4,400 to 4,500 ounces gold.
At Bolañitos, silver grades improved during the Second Quarter but were below plan due to grade variations
in the LL -Asunción vein. The lower silver grades were offset by higher throughput than planned. Gold
production exceeded plan due to higher throughput and gold grades. Management expects production on a
silver equivalent basis to meet 2017 production guidance.
At El Cubo, both silver and gold grades were higher than plan, and throughput was slightly below plan.
During the quarter, management made changes to both mining methods and ore control processes to reduce
the dilution and provide higher-grade material to the plant. Grades are expected to stabilize and throughput
should regain plan through year -end with the completion of a secondary ramp to access better grades .
Management expects production on a silver equivalent basis to meet 2017 production guidance.
Development Projects Update
At El Compas, work has begun on installing project infrastructure, collaring the mine access ramp and
refurbishing the plant. Project engineering is being refined and optimization studies are underway on mining
methods and crushing and grinding alternatives. T he Company is waiting for clarification from the state
government of Zacatecas regarding an exemption from the new environmental taxes. The explosives permit
may take until year-end due to a substantial slowdown in the government permitting process. In the interim,
mine development will proceed using a form of low impact gunpowder. Management therefore anticipates
an increase in the timeline to production compared to the PEA with mine and plant commissioning now
expected to commence in the first quarter, 2018.
At Terronera, work is currently focused on refinement of the project engineering and optimization studies
on mining methods, crushing and grinding alternatives and power options. Similar to El Compas, permitting
delays have affected the explosives, mine dumps and plant tailings permits so management does not expect
to break ground on mine development until the first quarter, 2018, with mine and plant commissioning now
anticipated to commence in mid-2019.
Revised 2017 Guidance
Silver production is now expected to be in the range of 4.8-5.2 million oz and gold production is expected
be in the 49,100-51,200 oz range. Silver equivalent production is forecast to be 8.5-9.0 million oz using a
75:1 silver:gold ratio, as shown in the table below.
Mine Silver (M oz) Gold (K oz) Ag Eq (M oz) Tonnes/Day (tpd)
Guanaceví 2.0-2.1 4.4-4.5 2.3-2.4 800-900
Bolañitos 0.9-1.0 21.5-22.5 2.5-2.7 1,000-1,100
El Cubo 1.9-2.1 23.2-24.2 3.6-3.9 1,300-1,500
Total 4.8-5.2 49.1-51.2 8.5-9.0 3,100-3,500
Using the 2017 annual guidance assumptions of $17 per oz silver price, $1,190 per oz gold price, and 20:1
Mexican peso per U.S. dollar exchange rate, cash costs, net of gold by -product credits, are now expected
to be $7.00 to $8.00 per oz of silver produced in 2017 . Consolidated cash costs on a co -product basis are
anticipated to be $10.75 to $11.75 per oz silver and $825 to $900 per oz gold.
All-in sustaining costs of production, net of gold by -product credits in accordance with the World Gold
Council standard, are estimated to be $15.25 to $16.25 per oz of silver produced in 2017. When non-cash
items such as stock -based compensation are excluded, all -in sustaining costs are estimated to be in the
$14.75 to $15.75 range. Direct operating costs are estimated to be in the range of $7 5 to $80 per tonne.
Guanacevi has incurred $10.1 million to date of the annual budgeted $16.7 million in sustaining capital.
Financial Results
For the second quarter ended June 30, 2017, the Company generated revenue totaling $32.7 million (2016
- $44.5 million). During the quarter, the Company sold 988,821 silver oz and 13,058 gold oz at realized
prices of $17.16 and $1,270 per oz respectively, compared to sales of 1,493,790 silver oz and 15,364 gold
oz at realized prices of $16.54 and $1,289 per oz respectively in Q2, 2016.
After cost of sales of $ 27.2 million (2016 - $31.6 million), mine operating earnings amounted to $ 5.4
million (2016 –$12.9 million). Excluding depreciation and depletion of $3.3 million (2016 - $4.1 million),
and share-based compensation of $0.1 million (2016- $0.2 million), mine operating cash flow before taxes
was $8.8 million (2016 – $17.3 million) in Q2, 2017. Net loss was $16 thousand (2016 – net earnings of
$1.7 million) after exploration expense of $3.8 million (2016 – $1.9 million) and corporate general and
administrative costs of $2.4 million (2016 – $3.2 million).
Direct production costs per tonne per ounce in Q2, 2017 increased 15% compared with Q2, 2016. Reduced
mining activity was offset by cost reductions and the benefits of a lower Mexican peso. Cash costs pe r
ounce rose 56% due to the higher costs per tonne and lower silver grades. All-in sustaining costs rose as a
result of management significantly increasing capital investments for the long -term benefit of Guanaceví
and El Cubo operations after a two -year period of reduced capital investment to m aximize cash flow and
ensure the viability of its operations during times of low silver and gold prices.
Working capital dipped to $75.2 million, down 8% from December 31, 2016, more than sufficient for the
Company to meet its short and medium term goals.
Conference Call
A conference call to discuss the results will be held today, Thursday, August 3rd at 10am PDT (1pm EDT).
To participate in the conference call, please dial the following:
Toll-free in Canada and the US: 1-800-319-4610
Local Vancouver: 604-638-5340
Outside of Canada and the US: 1-604-638-5340
No pass-code is necessary to participate in the conference call.
A replay of the conference call will be available by dialing 1 -800-319-6413 in Canada and the US (toll -
free) or 1-604-638-9010 outside of Canada and the US. The required pass -code is 1573 followed by the #
sign. The audio replay and a written transcript will also be made available on the Company’s website at
www.edrsilver.com.
About Endeavour Silver – Endeavour Silver is a mid-tier precious metals mining company that owns three
high grade, underground, silver -gold mines in Mexico. Since start -up in 2004, Endeavour has grown its
mining operations organically to produce 9.7 million ounces of silver and equivalents in 2016. We find,
build and operate quality silver mines in a sustainable way to create real value for all stakeholders.
Endeavour Silver’s shares trade on the TSX (EDR) and the NYSE (EXK).
Contact Information - For more information, please contact:
Meghan Brown, Director Investor Relations
Toll free: (877) 685-9775
Tel: (604) 640-4804
Fax: (604) 685-9744
Email: [email protected]
Website: www.edrsilver.com
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 Endeavour’ s anticipated
performance in 2017 including changes in mining and operations and the timing a nd 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, performance or achievements of Endeavour and its operations to be materially different from those
expressed or implied by such statements. Such factors include, among others, changes in 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, and challenges to the Company’s title to properties; as well as those factors describ ed
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, 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.
ENDEAVOUR SILVER CORP.
COMPARATIVE HIGHLIGHTS
1) Silver equivalents are calculated using a 70:1 ratio. 2016 Silver equivalents have been restated from 75:1 to 70:1 for comparative purposes
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 & Analysis.
2017 2016 % Change 2017 2016 % Change
1,143,788 1,551,851 (26%) Silver ounces produced 2,220,762 3,061,916 (27%)
13,058 15,649 (17%) Gold ounces produced 24,782 31,609 (22%)
1,116,799 1,511,109 (26%) Payable silver ounces produced 2,170,909 2,984,791 (27%)
12,756 15,200 (16%) Payable gold ounces produced 24,215 30,718 (21%)
2,057,848 2,725,526 (24%) Silver equivalent ounces produced (1) 3,955,502 5,274,546 (25%)
8.36 5.37 56% Cash costs per silver ounce (2) 8.09 6.49 25%
12.02 8.30 45% Total production costs per ounce (2) 11.83 9.61 23%
20.46 10.53 94% All-in sustaining costs per ounce (2) 19.38 10.82 79%
303,943 377,198 (19%) Processed tonnes 607,165 785,751 (23%)
84.01 73.01 15% Direct production costs per tonne (2) 79.90 73.66 8%
12.10 9.94 22% Silver co-product cash costs (2) 12.05 10.41 16%
896 774 16% Gold co-product cash costs (2) 878 823 7%
32.7 44.5 (27%) Revenue ($ millions) 69.1 86.0 (20%)
988,821 1,493,790 (34%) Silver ounces sold 2,224,415 3,005,109 (26%)
12,294 15,364 (20%) Gold ounces sold 23,584 30,619 (23%)
17.16 16.54 4% Realized silver price per ounce 17.51 15.86 10%
1,270 1,289 (1%) Realized gold price per ounce 1,275 1,254 2%
(0.0) 1.7 (101%) Net earnings (loss) ($ millions) 6.0 3.5 71%
5.5 12.9 (58%) Mine operating earnings (loss) ($ millions) 13.3 19.2 (31%)
8.8 17.3 (49%) Mine operating cash flow (8) ($ millions) 20.8 28.7 (28%)
4.4 9.4 (53%) Operating cash flow before working capital changes (2) 13.3 16.8 (21%)
3.7 10.1 (64%) Earnings before ITDA (10) 12.6 18.8 (33%)
75.2 72.1 4% Working capital ($ millions) 75.2 72.1 4%
0.00 0.01 100% Earnings (loss) per share – basic 0.05 0.03 67%
0.03 0.08 (59%) Operating cash flow before working capital changes
per share (2) 0.10 0.15 (33%)
127,318,926 113,236,504 12% Weighted average shares outstanding 127,207,961 108,941,454 17%
Shareholders
Three Months Ended June 30
Q2 2017 Highlights
Six Months Ended June 30
Production
Financial
ENDEAVOUR SILVER CORP.
CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(expressed in thousands of U.S. dollars)
June 30 June 30 June 30 June 30
2017 2016 2017 2016
Operating activities
Net earnings (loss) for the period (16)$ 1,699$ 6,019$ 3,528$
Items not affecting cash:
Share-based compensation 1,231 1,404 1,568 1,861
Depreciation and depletion 3,333 4,211 7,515 9,433
Deferred income tax expense (recovery) (354) 46 (2,019) (57)
Unrealized foreign exchange loss (gain) 30 108 (432) (134)
Loss (gain) on available for sale assets (72) - (72) 269
Loss on derivative liability - 1,372 - 1,372
Finance costs 208 518 444 581
Write off of exploration property - - 233 -
Net changes in non-cash working capital (8,636) 828 (7,865) (9,496)
Cash from operating activities (4,276) 10,186 5,391 7,357
Investing activites
Mineral property, plant and equipment expenditures (11,371) (4,122) (20,739) (7,209)
Proceeds from disposition of available for sale assets 72 - 72 448
Investment in long term deposits (6) - (6) 133
Cash used in investing activities (11,305) (4,122) (20,673) (6,628)
Financing activities
Repayment of revolving credit facility (2,500) (5,000) (5,000) (8,000)
Repayment of obligation under finance lease - (163) - (389)
Debt issuance costs - (170) - (474)
Interest paid (137) (215) (304) (389)
Public equity offerings - 32,026 - 41,124
Exercise of options - 5,254 74 5,285
Share issuance costs - (1,168) - (1,446)
Cash from (used in) financing activites (2,637) 30,564 (5,230) 35,711
Effect of exchange rate change on cash and cash equivalents (30) (165) 432 (5)
Increase (decrease) in cash and cash equivalents (18,218) 36,628 (20,512) 36,440
Cash and cash equivalents, beginning of period 70,485 20,385 72,317 20,413
Cash and cash equivalents, end of period 52,237$ 56,848$ 52,237$ 56,848$
Three Months Ended Six Months Ended
This statement should be read in conjunction with the condensed consolidated interim financial
statements for the period ended June 30, 2017 and the related notes contained therein.
ENDEAVOUR SILVER CORP.
CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME
(expressed in thousands of US dollars, except for shares and per share amounts)
June 30, June 30, June 30, June 30,
2017 2016 2017 2016
Revenue 32,636$ 44,510$ 69,077$ 86,051$
Cost of sales:
Direct production costs 23,483 26,975 47,531 56,819
Royalties 340 276 780 485
Share-based compensation 92 230 92 286
Depreciation and depletion 3,271 4,144 7,384 9,298
27,186 31,625 55,787 66,888
Mine operating earnings 5,450 12,885 13,290 19,163
Expenses:
Exploration 3,765 1,908 7,101 3,107
General and administrative 2,431 3,155 4,386 5,183
6,196 5,063 11,487 8,290
Operating earnings (loss) (746) 7,822 1,803 10,873
Finance costs 208 294 444 581
Other income (expense):
Foreign exchange 868 (1,847) 3,015 (1,333)
Investment and other 212 (43) 289 (184)
1,080 (1,890) 3,304 (1,517)
Earnings (loss) before income taxes 126 5,638 4,663 8,775
Income tax expense (recovery):
Current income tax expense 545 3,480 844 4,891
Deferred income tax (recovery) (403) 459 (2,200) 356
142 3,939 (1,356) 5,247
Net earnings (loss) for the period (16) 1,699 6,019 3,528
Other comprehensive income (loss), net of tax
Realized (gain) on available-for-sale financial assets
included in net income (72) - (72) -
Unrealized gain (loss) on available-for-sale financial assets 163 45 180 207
Comprehensive income (loss) for the period 75$ 1,744$ 6,127$ 3,735$
Basic earnings (loss) per share based on net earnings (0.00)$ 0.01$ 0.05$ 0.03$
Diluted earnings (loss) per share based on net earnings (0.00)$ 0.01$ 0.05$ 0.03$
Six Months EndedThree Months Ended
This statement should be read in conjunction with the condensed consolidated interim financial statements
for the period ended June 30, 2017 and the related notes contained therein.
ENDEAVOUR SILVER CORP.
CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(expressed in thousands of US dollars)
June 30, December 31,
2017 2016
ASSETS
Current assets
Cash and cash equivalents 52,237$ 72,317$
Investments 193 85
Accounts receivable 30,381 25,560
Inventories 15,055 13,431
Prepaid expenses 1,693 2,037
Total current assets 99,559 113,430
Non-current deposits 665 659
Deferred income tax asset 569 183
Mineral properties, plant and equipment 78,957 66,238
Total assets 179,750$ 180,510$
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities 18,543$ 18,229$
Income taxes payable 1,863 4,631
Credit facility 4,000 9,000
Total current liabilities 24,406 31,860
Provision for reclamation and rehabilitation 7,889 7,846
Deferred income tax liability 5,912 7,545
Total liabilities 38,207 47,251
Shareholders' equity
Common shares, unlimited shares authorized, no par value, issued
and outstanding 127,456,410 shares (Dec 31, 2016 - 127,080,264 shares) 450,642 449,594
Contributed surplus 7,712 6,689
Accumulated comprehensive income (loss) 152 44
Retained earnings (deficit) (316,963) (323,068)
Total shareholders' equity 141,543 133,259
Total liabilities and shareholders' equity 179,750$ 180,510$
This statement should be read in conjunction with the condensed consolidated interim financial statements
for the period ended June 30, 2017 and the related notes contained therein.