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« A Thanksgiving Gift Idea | Main | Bullish Momentum Building in Gold and Silver »

Endeavour Silver Corporation Terrific Q3 results

Today we were in touch with Hugh Clarke, VP Corporate Communications of the Endeavour Silver Corporation (EXK) regarding Endeavour's 3rd Quarter results, who summarized this performance as follows:

"We are really pleased with the Q3 results….record revenues, record cash flows, very strong earnings and a further reduction in cash production costs. Coupled with $145 million in working capital and zero debt; that’s a very tidy basket of financial results to deliver to the market."

Endeavour owns and operates two high-grade, underground, silver-gold mines in Mexico, the Guanacevi Mines in Durango State and the Guanajuato Mines in Guanajuato State.

The Company reported record adjusted earnings (a non-IFRS measure) of $8.9 million ($0.10 per share) in the Third Quarter, 2011. Net Earnings (an IFRS measure) were $3.1 million and operating cash-flow was $14.3 million from revenues totaling $38.8 million. Silver sales averaged $40.72 per ounce (oz) and the Company's cash cost of production was $5.03 per oz of silver net of gold credits in Q3, 2011.

Highlights are as follows:

  • Adjusted Earnings (non-IFRS measure) rose to $8.9 million ($0.10 per share) compared to $4.8 million loss (see IFRS comment below)

  • Net Earnings increased to $3.1 million ($0.04 per share) compared to $9.6 million loss

  • EBITDA gained 494% to $13.8 million ($0.16 per share) compared to a Loss of $3.5 million.

  • Operating Cash-Flow jumped 191% to $14.3 million

  • Mine Operating Cash-Flow climbed 194% to $27.1 million

  • Revenues escalated 93% to $38.8 million

  • Silver production up 8% to 858,738 oz

  • Gold production up 7% to 4,926 oz

  • Silver equivalent production up 4% to 1.04 million oz (40:1 silver: gold ratio, no base metals)

  • Realized silver price up 120% to $40.72 per oz sold, realized gold price up 35% to $1,679 per oz sold

  • Precious metals held in inventory at quarter-end included 270,536 silver oz and 2,420 gold oz

  • Cash costs fell 18% to $5.03 per oz silver produced (net of gold credits)

We draw your attention to the reduction in the cash costs to $5.03 per oz of silver produced, which is now less then the Silver Institute estimated for the year 2010, which was in the order of $5.27/oz. So we see this as good progress in terms of containing rising costs by operating in a more efficient manner. 

Bradford Cooke, Chairman and CEO, commented, "Endeavour delivered another great quarter of operating performance in Q3, 2011 which translated directly into robust financial results. Thanks to substantially higher precious metal prices and lower operating costs, our revenues, cash-flow, EBITDA and earnings continue to rise, up sharply from 2010."

"The highlight for operations during the quarter was the completion of the Guanajuato plant expansion on time and budget by the end of Q3, 2011, which facilitated a 60% increase in the production rate in October. The new 1,000 tpd plant circuit is now operating at capacity and the old 600 tpd circuit will continue to be utilized from time to time to top up the Q4 production rate to 1100 tpd until the year-end."

"Management elected to not to sell all the silver and gold produced during the 3rd quarter due to the falling precious metal prices. As a result, precious metals held in inventory at quarter-end increased 270,536 oz silver and 2,420 oz gold. Given that silver and gold prices are already rebounding in the 4th quarter, these inventories should substantially enhance our future financial results when sold."

"The Company continues to generate excellent drill results along the Daniela vein and other prospective targets in Guanajuato and Guanacevi. In exploration, we currently have eight drill rigs working, three at Guanajuato, three at Guanacevi and one each at the San Sebastian project in Jalisco and the new Lomas Bayas project in Chile. Additional results from our exploration programs are expected this quarter."

Back to Hugh Clarke, when asked about withholding the selling of 270,000 ounces of silver and 2,420 ounces of gold (worth roughly $13 million at today’s prices) he told us this action clearly demonstrates a belief in higher precious metals in the near term and that they were very optimistic of another very strong quarter for the last 3 months of 2011.

Endeavour Silver Corporation, this is a mid-cap silver mining company focused on the growth of its silver production, reserves and resources in Mexico. Since start-up in 2004, Endeavour has posted six consecutive years of aggressive silver production and resource growth. The organic expansion programs now underway at Endeavour's two operating silver mines in Mexico combined with its strategic acquisition program should help Endeavour achieve its goal to become a premier, mid-tier silver mining company. 

The companies market capitalization is $943.69 million with 93.1 million shares (fully diluted) outstanding. The 52 week trading range is $4.70 to $13.10 and the stock price closed at $11.23 on the NYSE yesterday.

Endeavour Silver Corporation is traded in Canada, USA and Europe on the following three stock exchanges:



(DB-Frankfurt: EJD)

So they have plenty of exposure to the financial markets.

For disclosure purposes we do own this stock and will look to increase our holdings going forward.

Regarding We currently have a number of open trades at the moment however, we do not update the charts until the trade is closed and the cash is back in our account. 

Our model portfolio is up 407.38% since inception

An annualized return of 113.83%

Average return per trade of 42.43%

86 closed trades, 83 closed at a profit

Average trade open for 45.85 days



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