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Endeavour Silver 1Q revenues decline on mine suspension, build in inventory

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(Kitco News) - Endeavour Silver Corp. (NYSE: EXK; TSX: EDR) posted a net loss in the first quarter, with revenue declining due to a suspension of operations at the El Cubo mine and an accumulation of metal that went into inventory rather than immediate sales, the company said Friday.

Revenue fell 22% from the same period a year ago to $21.9 million as a result of 18% lower silver-equivalent production, partly offset by higher gold prices.

During the quarter, the company sold 665,500 silver ounces and 7,454 gold ounces at realized prices of $15.33 and $1,633 per ounce, compared to sales of 1,069,385 silver ounces and 9,559 gold ounces at prices of $15.50 and $1,315 in the same period of 2019. But while sales were lower, officials said the company increased its finished goods inventory to 279,320 silver ounces and 1,452 gold ounces as of March 31, compared to 95,028 silver ounces and 587 gold ounces held as of Dec. 31.

Endeavour Silver listed a net loss $15.9 million (11 cents per share), compared to a $13.3 million loss (10 cents) in the year-ago period.

“Almost half of our net loss was due to the 25% devaluation of the Mexican peso, which devalued our receivables and caused a deferred income-tax expense,” said Bradford Cooke, chief executive officer. “Other extraordinary items included elevated care-and-maintenance costs at El Cubo, which will decline going forward, and high mine depletion due to short reserve lives.”

The company produced 857,659 silver ounces and 8,476 gold ounces, in line with guidance prior to government-mandated suspension of mining operations, the company said. This amounted to 1.54 million silver-equivalent ounces, compared to 1.88 million a year earlier.

Cooke said the company’s operational performance “improved significantly”  compared to both the prior quarter and first quarter of 2019.

“Notably, consolidated cash cost declined 37% year-on-year, reflecting the success of our operational turnaround and transition to higher-grade ore bodies at Guanacevi,” Cooke said. “All-in sustaining cost fell 5%, reflecting the elevated sustaining capex we invested to achieve a similar turn-around at Bolanitos over the next three months.”

The CEO said the company is looking forward to “putting out mines back into operation” later this month, as the Mexican government has said that suspended businesses located in municipalities with low or no COVID-19 cases can start up again May 18. Each of Endeavour’s mines is located in such municipalities, Cooke said.

The company operates three silver-gold mines in Mexico: the Guanaceví mine in the Durango state, the Bolañitos mine in the Guanajuato state and the El Compas mine in the Zacatecas state.

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