Endeavour Silver Reports Second Quarter, 2019 Financial Results; Conference Call at 10am PDT (1pm EDT) Today
Endeavour Silver Reports Second Quarter, 2019 Financial Results; Conference
Call at 10am PDT (1pm EDT) Today
VANCOUVER, British Columbia, Aug. 08, 2019 -- Endeavour Silver Corp. (NYSE: EXK; TSX: EDR ) released today its
financial results for the Second Quarter ended June 30, 2019 from the Company’s four silver-gold mines in Mexico: the
Guanaceví mine in Durango state, the Bolañitos and El Cubo mines in Guanajuato state and the El Compas mine in
Zacatecas state.
The Company reports a net loss of $10.1 million in the Second Quarter, 2019 compared to $5.7 million loss in the Second
Quarter, 2018, primarily due to lower revenue and higher unit costs of production. Revenue decreased 24% due to lower
production and lower realized silver prices, partially offset by higher realized gold prices. Mine operating cash flow before
taxes(1) decreased 82% to $2.6 million due to lower production, while cash flow from operations before working capital
changes decreased to a $1.0 million loss. Cash costs rose 80% to $13.67 per oz silver payable (net of gold credits) and all-in
sustaining costs increased 21% to $20.90 per oz silver payable (net of gold credits).
Bradford Cooke, Endeavour CEO, commented, “Our Second Quarter, 2019 financial performance reflects the continued
operational challenges we experienced in the First Quarter, 2019. However, we initiated several changes in Q2 to turn around
our operating performance and we are seeing progress at two mines. At Guanacevi, both grades and recoveries improved as
production increased from the new Milache orebody. At El Compas, throughput, grades and recoveries improved as we
delivered our first full quarter of commercial production. At Bolanitos, the operational changes continued into July so we are
looking for progress in H2, 2019. At El Cubo, Q2 production was as planned.”
“Our net loss was lower in Q2, 2019 compared to Q1, 2019 but unit costs were higher due in part to the costs of implementing
the operational changes, and various one-time expenses such as hiring costs, severance payments and new equipment
purchase and lease payments. Management expects to see significant improvement in our operating and financial
performance in H2 as the changes at each mine gain traction. Our goal is to generate free cash flow at current metal prices
during the Second Half of 2019.”
Highlights of Second Quarter 2019 (Compared to Second Quarter 2018)
Financial
• Net loss increased to $10.1 million ($0.08 per share) compared to $5.7 million loss ($0.4 per share)
• Cash flow from operations before working capital changes decreased to a $1.0 million loss
• Mine operating cash flow before taxes(1) decreased 82% to $2.6 million
• Revenue decreased 24% to $29.4 million
• Realized silver price decreased 10% to $15.02 per ounce (oz) sold
• Realized gold price increased 7% to $1,366 per oz sold
• Cash costs (1) increased 80% to $13.67 per oz silver payable (net of gold credits)
• All-in sustaining costs (1) increased 21% to $20.90 per oz silver payable (net of gold credits)
• Working capital decreased 21% to $46.6 million compared to $54.5 million at year end
• Raised $7.6 million through the at-the-market offering
Operations
• Silver production decreased 22% to 1,059,322 oz
• Gold production decreased 30% to 9,558 oz
• Silver equivalent production was 1.8 million oz (80:1 silver: gold ratio)
• Silver oz sold decreased 13% to 1,100,065 oz
• Gold oz sold decreased 32% to 9,416 oz
• Bullion inventory at quarter-end included 68,559 oz silver and 247 oz gold
• Concentrate inventory at quarter-end included 49,562 oz silver and 1,656 oz gold
• Achieved commercial production at El Compas
• Reported positive drill results from Bolanitos and Guanacevi drill programs
• Received the final tailings permit for the Terronera project
(1) 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 Results
Revenue in the Second Quarter, 2019 totaled $29.4 million (2018 - $38.8 million) on sales of 1,100,065 silver ounces and 9,416
gold ounces at realized prices of $15.02 and $1,366 per ounce respectively, compared to sales of 1,258,617 silver ounces and
13,800 gold ounces at realized prices of $16.76 and $1,281 per ounce respectively in Q2, 2018.
After cost of sales of $35.5 million (2018 - $34.1 million), mine operating losses amounted to $6.1 million (2018 - $4.6 million)
from mining and milling operations in Mexico. The 4% increase in cost of sales was primarily due included higher power costs
as a result of increased power usage and higher electrical rates, mobilization costs for new contractors, the expensing of
development expenditures due to the low reserve life at El Cubo and the first quarter of commercial production costs at the El
Compas operation. Excluding depreciation and depletion of $7.1 million (2018 - $7.9 million), share-based payments expense
of $0.1 million (2018 – recovery of $0.1 million) and an inventory write down of $1.5 million (2018 -$2.5 million) mine operating
cash flow before taxes was $2.6 million (2018 – $14.9 million) in Q2, 2019. Net losses amounted to $10.1 million (2018 –$5.7
million) after exploration, general and administrative expenses and foreign exchange.
Direct production costs per tonne in Q2, 2019 increased 32% compared with Q2, 2018 due to reduced throughput. The higher
production costs per tonne were driven mainly by lower mine output at the Bolañitos and El Cubo operations. Production costs
also included higher power costs due to increased electrical rates, mobilization costs for new contractors and the expensing of
development expenditures due to the low reserve life at El Cubo.
Consolidated cash costs per oz, net of by-product credits (a non-IFRS measure and a standard of the Silver Institute)
increased primarily due to higher costs per tonne. All-in sustaining costs (also a non-IFRS measure), compared to Q2, 2018,
increased 21% to $20.90 per oz in Q2, 2019. This increase in all -in sustaining costs was a result of higher operating costs,
offset by lower exploration costs, reduced corporate general and administrative costs and lower capital expenditures at the
operation in Q2, 2019 compared to Q2, 2018. Capital expenditures decreased due to reduced mine development at El Cubo.
The Condensed Consolidated Interim Financial Statements and Management’s Discussion & Analysis can be viewed on the
Company’s website at www.edrsilver.com, on SEDAR at www.sedar.com and EDGAR at www.sec.gov. All amounts are
reported in US$.
Revised 2019 Production and Cost Guidance
The Company anticipates the second half production to be higher than first half production and second half costs forecasted to
be lower than first half costs. However, 2019 full year production is expected to be lower than the original 2019 guidance and
2019 costs are anticipated to be higher than originally estimated. The revised 2019 production guidance is as follows:
Mine Ag (M oz) Au (K oz) Ag Eq (M oz) Tonnes/Day (tpd)
Guanacevi 2.2-2.4 5.5-6.0 2.6-2.9 900-1,200
Bolanitos 0.7-0.9 15.0-17.0 1.9-2.3 1,000-1,200
El Cubo 1.2-1.3 12.0-13.0 2.2-2.3 700-750
El Compas 0.1-0.1 7.0-8.0 0.7-0.7 200-275
Total 4.2-4.7 39.5-44.0 7.4-8.2 2,800-3,425
With the revised production guidance, the Company estimates its consolidated cash cost will be $10-11 per oz silver for 2019
(implying $8-$9 per ounce in the second half of 2019) and the all-in sustaining cost is estimated to be $17-18 per oz silver
(implying $15-16 per ounce in the second half of 2019), both net of the gold by-product credit using an estimated $1,275 gold
price. Direct operating costs are estimated to be in the range of $90-$100 per tonne.
Conference Call
A conference call to discuss the results will be held today, Thursday, August 8, 2019 at 10:00am PT (1:00pm ET). To
participate in the conference call, please dial the numbers below. No pass-code is necessary.
Toll-free in Canada and the US: 1-800-319-4610
Local Vancouver: 604-638-5340
Outside of Canada and the US: + 604-638-5340
A replay of the conference call will be available by dialing 1-800-319-6413 in Canada and the US (toll-free) or +604-638-9010
outside of Canada and the US. The required pass-code is 3413#. The audio replay and a written transcript will be available on
the Company's website at www.edrsilver.com under the Investor Relations, Events section.
About Endeavour Silver – Endeavour Silver Corp. is a mid-tier precious metals mining company that owns and operates four
high-grade, underground, silver-gold mines in Mexico. Endeavour is currently advancing the Terronera mine project towards a
development decision and exploring its portfolio of exploration and development projects in Mexico and Chile to facilitate its
goal to become a premier senior silver producer. Our philosophy of corporate social integrity creates value for all stakeholders.
SOURCE Endeavour Silver Corp.
Contact Information:
Galina Meleger, Director Investor Relations
Toll free: (877) 685-9775
Tel: (604) 640-4804
Fax: (604) 685-9744
Email: [email protected]
Website: www.edrsilver.com
Follow Endeavour Silver on Facebook, Twitter, Instagram and LinkedIn
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 2019 including changes in mining operations and production levels, 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 to changes
in production and costs guidance, 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 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,
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
Three Months Ended June 30
Q2 2019 Highlights
Six Months Ended June 30
2019 2018 %
Change 2019 2018 %
Change
Production
1,059,322 1,355,895 (22%) Silver ounces produced 2,130,677 2,706,735 (21%)
9,558 13,674 (30%) Gold ounces produced 19,613 26,882 (27%)
1,039,596 1,328,844 (22%) Payable silver ounces produced 2,089,811 2,653,700 (21%)
9,332 13,396 (30%) Payable gold ounces produced 19,141 26,340 (27%)
1,823,962 2,449,815 (26%) Silver equivalent ounces produced(1) 3,699,717 4,857,295 (24%)
13.67 7.61 80% Cash costs per silver ounce(2)(3) 13.11 7.05 86%
22.87 14.10 62% Total production costs per ounce(2)(4) 21.49 14.12 52%
20.90 17.28 21% All-in sustaining costs per ounce (2)(5) 20.15 15.73 28%
237,640 314,305 (24%) Processed tonnes 484,159 639,974 (24%)
114.40 86.43 32% Direct production costs per tonne (2)(6) 110.04 82.84 33%
14.10 11.31 25% Silver co-product cash costs (7) 13.82 11.04 25%
1282 865 48% Gold co-product cash costs (7) 1215 861 41%
Financial
29.4 38.8 (24%) Revenue ($ millions) 58.5 79.1 (26%)
1,100,065 1,258,617 (13%) Silver ounces sold 2,169,450 2,664,760 (19%)
9,416 13,800 (32%) Gold ounces sold 18,975 26,474 (28%)
15.02 16.76 (10%) Realized silver price per ounce 15.25 16.72 (9%)
1,366 1,281 7% Realized gold price per ounce 1,340 1,304 3%
(10.1) (5.7) (79%) Net earnings (loss) ($ millions) (23.4) (3.3) (609%)
(6.1) 4.6 (232%) Mine operating earnings ($ millions) (11.9) 7.9 (250%)
2.6 14.9 (82%) Mine operating cash flow(8) ($ millions) 7.2 28.7 (75%)
(1.0) 3.6 (126%) Operating cash flow before working capital changes (9) (3.1) 15.2 (120%)
(2.7) 2.7 (199%) Earnings before ITDA (10)($ millions) (7.3) 14.1 (152%)
46.6 58.9 (21%) Working capital ($ millions) 46.6 58.9 (21%)
Shareholders
(0.08) (0.04) (100%) Earnings (loss) per share – basic (0.18) (0.03) (500%)
(0.01) 0.03 (125%) Operating cash flow before working capital changes
per share (9) (0.02) 0.12 (120%)
132,158,891 127,570,254 4% Weighted average shares outstanding 131,779,448 127,529,558 3%
1) Silver equivalents are calculated using a 80:1 ratio.
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.
ENDEAVOUR SILVER CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(unaudited – prepared by management)
(expressed in thousands of U.S. dollars)
Three months ended Six months ended
June 30, June 30, June 30, June 30,
2019 2018 2019 2018
Operating activities
Net earnings (loss) for the period $ (10,123 ) $ (5,651 ) $ (23,401 ) $ (3,326 )
Items not affecting cash:
Share-based compensation 851 777 1,850 1,193
Depreciation, depletion and amortization 7,314 7,939 14,541 17,776
Deferred income tax expense (recovery) (824 ) (2,415 ) (1,174 ) (4,201 )
Unrealized foreign exchange loss (gain) 112 398 108 348
Finance costs 103 37 195 75
Write off of IVA receivable - - - -
Write off of mineral properties 45 - 45 -
Write down of inventory to net realizable value 1,507 2,527 4,719 3,282
Unrealized loss (gain) on other investments 55 26 27 46
Net changes in non-cash working capital 824 661 (5,880 ) (2,875 )
Cash from operating activities (136 ) 4,299 (8,970 ) 12,318
Investing activites
Property, plant and equipment expenditures (5,740 ) (11,772 ) (9,663 ) (22,737 )
Intangible asset expenditures (1 ) - (204 ) -
Redemption of (investment in) non-current deposits - 1 - 1
Cash used in investing activities (5,741 ) (11,771 ) (9,867 ) (22,736 )
Financing activities
Restricted cash - - - 1,000
Repayment of loans payable (152 ) - (252 ) -
Repayment of lease liabilities (32 ) - (103 ) -
Interest paid (70 ) - (91 ) -
Public equity offerings 7,619 2,071 9,191 2,071
Exercise of options - 256 - 256
Share issuance costs (223 ) (84 ) (288 ) (84 )
Cash from (used in) financing activites 7,142 2,243 8,457 3,243
Effect of exchange rate change on cash and cash
equivalents 65 (274 ) 110 (45 )
Increase (decrease) in cash and cash equivalents 1,265 (5,229 ) (10,380 ) (7,175 )
Cash and cash equivalents, beginning of the period 21,776 36,560 33,376 38,277
Cash and cash equivalents, end of the period $ 23,106 $ 31,057 $ 23,106 $ 31,057
This statement should be read in conjunction with the condensed consolidated interim financial statements for the period
ended June 30, 2019 and the related notes contained therein.
ENDEAVOUR SILVER CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME
(unaudited – prepared by management)
(expressed in thousands of US dollars, except for shares and per share amounts)
Three months ended Six months ended
June 30, June 30, June 30, June 30,
2019 2018 2019 2018
Revenue $ 29,382 $ 38,765 $ 58,525 $ 79,095
Cost of sales:
Direct production costs 26,442 23,720 50,636 49,526
Royalties 336 177 653 875
Share-based payments 53 (130 ) 108 (93 )
Depreciation, depletion and amortization 7,149 7,855 14,265 17,614
Write down of inventory to net realizable value 1,507 2,527 4,719 3,282
35,487 34,149 70,381 71,204
Mine operating earnings (loss) (6,105 ) 4,616 (11,856 ) 7,891
Expenses:
Exploration 3,207 4,430 5,540 6,453
General and administrative 2,009 3,211 5,051 5,529
Severance costs - - 1,100 -
5,216 7,641 11,691 11,982
Operating earnings (loss) (11,321 ) (3,025 ) (23,547 ) (4,091 )
Finance costs 103 49 195 98
Other income (expense):
Foreign exchange 646 (3,170 ) 243 (897 )
Investment and other 16 143 (193 ) 212
662 (3,027 ) 50 (685 )
Earnings (loss) before income taxes (10,762 ) (6,101 ) (23,692 ) (4,874 )
Income tax expense (recovery):
Current income tax expense 184 1,965 882 2,653
Deferred income tax expense (recovery) (823 ) (2,415 ) (1,173 ) (4,201 )
(639 ) (450 ) (291 ) (1,548 )
Net earnings (loss) for the period (10,123 ) (5,651 ) (23,401 ) (3,326 )
Basic earnings (loss) per share based on net earnings $ (0.08 ) $ (0.04 ) $ (0.18 ) $ (0.03 )
Diluted earnings (loss) per share based on net earnings $ (0.08 ) $ (0.04 ) $ (0.18 ) $ (0.03 )
Basic weighted average number of shares outstanding
132,158,891
127,570,254
131,779,448
127,529,558
Diluted weighted average number of shares outstanding
132,158,891
127,570,254
131,779,448
127,529,558
ENDEAVOUR SILVER CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(unaudited – prepared by management)
(expressed in thousands of US dollars)
June 30, December 31,
2019 2018
ASSETS
Current assets
Cash and cash equivalents $ 23,106 $ 33,376
Other investments 61 88
Accounts receivable 26,697 26,947
Inventories 15,053 14,894
Prepaid expenses 2,160 2,704
Total current assets 67,077 78,009
Non-current deposits 607 1,114
Deferred income tax asset 10,321 9,147
Intangible assets 1,245 -
Right-of-use leased assets 1,625 -
Mineral properties, plant and equipment 83,468 88,777
Total assets $ 164,343 $ 177,047
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 17,538 $ 19,470
Income taxes payable 1,801 4,050
Loans payable 895 -
Lease liabilities 221 -
Total current liabilities 20,455 23,520
Deferred lease inducement - 217
Loans payable 1,924 -
Lease liabilities 1,097 -
Provision for reclamation and rehabilitation 8,299 8,195
Deferred income tax liability 553 335
Total liabilities 32,328 32,267
Shareholders' equity
Common shares, unlimited shares authorized, no par value, issued
and outstanding 135,395,757 shares (Dec 31, 2018 - 130,781,052 shares) Page 4 467,895 459,109
Contributed surplus Page 4 10,358 9,676
Retained earnings (deficit) (346,238 ) (324,005 )
Total shareholders' equity 132,015 144,780
Total liabilities and shareholders' equity $ 164,343 $ 177,047
This statement should be read in conjunction with the condensed consolidated interim financial statements for the period
ended June 30, 2019 and the related notes contained therein.