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« First Majestic Silver Corporation: A volatile ride! | Main | Hecla Mining drops 10.13% on quarterly results! »
Thursday
May152008

Endeavour Silver Corporation Q1 Results: Stock Up 4.06% today!

Endeavour logo 11oct07

Endeavours stock price rose 4.06% today to close at $3.33 as the latest set of figures were released. Firstly we will look at the highlights as issued by Endeavour.

“Mineral sales jumped by 48% to $10.7 million compared to Q1 2007.
Silver production rose by 3% to 505,000 oz compared to Q1 2007.
Mine operating earnings remained constant at $2.7 million compared to Q1 2007.
Cash costs were $10.01 per oz, sharply higher than Q1 2007, but 10% lower than Q4 2007.
Extended Porvenir Mine ore-body by drilling at Guanacevi Mines project in Durango.
Discovered new "3785" gold-silver mineralized zone by drilling at Guanajuato Mines project.
Acquired new "Navegantes" silver properties near the Parral project in Chihuahua.
Announced new appointments to management team.”


Chairman and CEO, Bradford Cooke, had this to say:

"Endeavour successfully reduced its cash costs and advanced its numerous capital expansion and upgrade projects in Q1 2008. Silver production and cash costs are expected to improve slightly in the 2nd quarter as various capital projects are completed. The Company's expansion and upgrade programs should significantly impact production output and costs in the second half of the year. Management also anticipates reporting on substantial progress from its exploration and acquisition programs in Mexico over the next two quarters. Endeavour currently has four drills working on three of its silver projects".

The cash cost of $10.01 per ounce produced for Q1, 2008 was almost double the $5.85 per oz in Q1, 2007. On face value that figure would give most investors the shivers, as they are looking for a reduction. However, it is important to understand just what lies behind these numbers.

Endeavour has invested $3.9 million on capital projects during the quarter, including $1.3 million on plant projects, $0.5 million on mine equipment, $0.3 million on buildings and $1.8 million for underground mine development. The Company expects to complete the new silver refinery; tailings thickeners and agitation leach circuit expansion in Q2 2008. So it is evident that funds are being used to improve facilities, which in turn will deliver lower cash costs down the line. As we have said before we are not good at patience but in this instance we can see that progress is being made towards this companies stated objectives. Without this capital expenditure we cannot expect to see production grow or cash costs diminish. If you are a regular reader you will also know that we have been accumulating Endeavours shares for some time now with our last purchase being at $3.26. We expect the second quarter to show improved figures and the picture to improve from then on. The reason being that the lions share of the capital expenditure will have been invested and the benefits of those improvements will drive production up, thus reducing the cash cost per ounce of production. The team has also been strengthened, they are on the acquisition trail and they are un-hedged, which fits our criteria.

We will continue to monitor the situation closely especially if we have a period of the summer doldrums ahead of us, when new opportunities may well present themselves. This summer should be used to acquire some more of your favourite silver stocks as we anticipate much bigger moves starting in the fall for both silver and silver stocks. As you may recall we spent last summer accumulating stocks to the point of being 100% invested in anticipation of the fall breakout, which arrived with a vengeance and right on cue. We then locked in some profits during the run up in order to generate some ‘opportunity cash’, which we will invest going forward. This fall will be similar, however we expect the spikes to go a lot higher followed by a milder correction. So, take your time and pick your shots carefully and then prepare to hold on tight to your core position, its not called a Bull Market for nothing!

Have a sparkling day!

Endeavour Silver Corporation trades as EDR: TSX, EXK: AMEX, EJD: DB Frankfurt.


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Reader Comments (3)

To add to the excellent article, EDR is expecting to double/triple their production output by Q3/Q4. Along with decreased cash costs, and increased silver prices, I see a modest 30%-40% increase in this stock minimum by EOY.

I may even see my $5.50 entry point :( But that was my fault and I've learned my lessons.

May 17, 2008 | Unregistered CommenterPhong Tran

Phon Tran, Have you thought about buying a few more shares and lowering your average price on this stock?

May 18, 2008 | Unregistered CommenterSilver Prices

Thanks for the thoughtful suggestion. Yes :)

Right now I'm at about a $4.04 break even point with my newest purchases.

I'll consider purchasing more, but short on cash right now and want to let more of my other larger caps run that are in the positive. Might switch them over closer to end of second quarter.

Keep up your great work!

May 19, 2008 | Unregistered CommenterPhong Tran

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