Endeavour Silver Reports Record EBITDA, Cash-Flow, Revenues in Q3, 2010; Silver Production of 797,000 oz Up 20% Compared to Q3, 2009 Conference Call Scheduled for 10:30 AM PDT on Friday, November 12
Conference Call Scheduled for 10:30 AM PDT on Friday, November 12
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 11/10/10 -- Endeavour Silver Corp. (TSX: EDR)(NYSE Amex: EXK)(DBFrankfurt: EJD) announced today its financial and operating results for the Third Quarter, 2010, including record quarterly EBITDA, cash-flow and revenues. 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 financial results are expressed in US dollars ('US$') and are based on Canadian generally accepted accounting practices (Canadian 'GAAP'). Shareholders are referred to the Company's website for more details: Third Quarter 2010 Financial Statements - http://www.edrsilver.com/s/FinancialStatements.asp and Management Discussion and Analysis ('MD&A') - http://www.edrsilver.com/s/MDA.asp.
Third Quarter 2010 Highlights (Compared to Q3, 2009)
-- Net Earnings climbed from $1.5 million loss to $0.1 million gain
-- EBITDA rose 826% to $6.5 million
-- Mine operating cash-flow escalated 181% to $10.9 million
-- Sales revenues increased 105% to $20.1 million
-- Cash costs increased 14% to $5.93 per oz silver produced (net of gold
credits)
-- Silver production climbed 20% to 797,054 ounces (oz)
-- Gold production jumped 28% to 4,607 oz
-- Silver equivalent production rose 22% to 1,096,509 oz (65:1 silver: gold
ratio, no base metals)
-- Plant expansion to 1,000 tonnes per day at Guanacevi now substantially
complete
-- Acquired three new properties and identified three new silver-gold veins
at Guanacevi
-- Discovered two new silver-gold veins at Guanajuato
-- Commenced new Lucero South access ramp to accelerate development and
production of Lucero vein
-- Became debt-free with conversion of $10.1 million debentures into 5.3
million units
-- Launched all-cash bid to acquire Cream Minerals (since amended)
Bradford Cooke, Chairman and CEO, commented, 'Endeavour Silver's record financial performance in Q3, 2010 can be attributed to our growing silver-gold production, improving cash costs and higher metal prices. Once again, our operating team did an excellent job, as Endeavour remains ahead of schedule on our 2010 production targets and our capital expansion projects for 2010 are now substantially complete.'
'Plant production should climb and cash costs should fall once again in Q4, 2010 as our mining operations approach the 1,000 tonne per day capacity at Guanacevi and the 600 tonne per day capacity at Guanajuato. Both mines now have very healthy ore stockpiles (90,000 tonnes at Guanacevi, 5,000 tonnes at Guanajuato) to facilitate the current phase of production growth.'
'Endeavour's exploration team also 'delivered the goods' in the third quarter, with the successful extension of the Lucero vein and the discovery of two new veins, Karina and Fernanda, at Guanajuato. As a result, management is now considering a substantial mine and mill expansion at Guanajuato for next year.'
'Last but not least, Endeavour amended its offer to acquire Cream Minerals yesterday with the support and recommendation of the Cream Board. If successful, our bid to acquire control of Cream is an integral part of our acquisition growth strategy. Management will remain focused on both organic growth and acquisition opportunities in the Fourth Quarter.'
Financial Results (see Consolidated Statement of Operations)
Sales Revenues increased 181% to $20.1 million in Q3, 2010 (Q3, 2009 - $9.8 million) thanks to sharply higher mineral production and metal prices. The Company sold 849,858 silver oz and 3,550 gold oz at average realized prices of $18.47 per oz and $1,241 per oz respectively. Costs of Sales were up 67% to $10.9 million (Q3, 2009 - $6.5 million) primarily due to the increased production rate.
Mine Operating Cash Flows increased 181% to $9.2 million (Q3, 2009 - $3.3 million) and Mine Operating Earnings rose to $5.3 million (Q3, 2009 - $1.3 million). The Company realized a positive Operating Income of $1.3 million (Q3, 2009 - Loss of $1.1 million), primarily due to higher Mine Operating Earnings. Income Before Tax was $2.2 million (Q3, 2009 - Loss of $1.7 million). The Company incurred an Income Tax Expense of $2.1 million (Q3, 2009 - Recovery of $0.3 million) for Net Earnings of $0.1 million (Q3, 2009 - loss of $1.5 million) for the period.
Cash Operating Costs increased 14% to $5.93 per oz silver produced in Q3, 2010 (Q3, 2009 - $5.19 per oz) primarily due to slightly lower grades and recoveries and minor escalations in costs, partially offset by higher gold production and gold prices. Endeavour reports its cash operating costs according to the Gold Institute reporting guidelines so they include offsite costs such as transportation, smelting and refining, net of by- product credits.
The Company made Capital Investments totalling $9.9 million in property, plant and equipment during the Third Quarter, 2010. The main focus of the capital expansion programs at Guanacevi continued to be the development of the Santa Cruz and Porvenir Cuatro access ramps, and the expansion of the crushing and other plant circuits. At Guanajuato, mine development continued on the South extensions of the Lucero and Bolanitos veins, and work commenced on the new Lucero South access ramp.
At September 30, 2010, the Company held cash and cash equivalents of $19.6 million and working capital totalled $42.4 million, up from $38.8 million at the end of 2009.
Operating Results (see Consolidated Table of Operations)
Silver production climbed 20% to 797,054 oz and gold production jumped 28% to 4,607 oz in Q3, 2010 compared to Q3, 2009, thanks to higher plant throughput at both Guanacevi and Guanajuato. As a result, silver and equivalent production rose 22% to 1,096,509 oz (65:1 silver: gold ratio, no base metals).
Plant throughputs in Q3, 2010 totalled 126,599 tonnes, up 36% compared to Q3, 2009 due to the benefits of the 2009-10 mine development programs at both operations and the 20% plant expansion at Guanajuato last year. Guanacevi averaged 815 tonnes per day (tpd) and Guanajuato averaged 560 tpd in Q3, 2010.
Consolidated silver grades averaged 265 grams per tonne (gpt) silver (8.5 oz per ton) and gold grades averaged 1.42 gpt gold (0.05 oz per ton), comparable to Q3, 2009. Consolidated silver and gold recoveries were down slightly as a result of processing new ores from the Porvenir Dos mine at Guanacevi and adjusting the ore blend from the Lucero, Bolanitos and Cebada mines at Guanajuato. Work is now underway to try and increase metal recoveries back to previous levels.
Fourth Quarter 2010 Outlook
In Q4, 2010, Endeavour anticipates its financial performance will continue to improve, to reflect significantly higher silver and gold bullion prices and a moderate increase in production. Cash operating costs should continue to trend downward toward the $5.00-$5.50 per oz range, and our profit margin is expected to rise accordingly. As a result, management expects to record its first year of net earnings in 2010.
Silver production remains slightly ahead of schedule for the year. Similar to 2009, the first two quarters of silver production in 2010 were scheduled to be relatively flat, as we focused on mine development and plant expansion capital programs. Silver production started rising again in the Third Quarter, 2010, as the new ore- bodies under development during the first half of the year at Guanacevi and Guanajuato entered into production.
Guanacevi mine production is scheduled to reach 1,000 tonnes per day (tpd), and Guanajuato mine production is targeting 600 tonnes per day (tpd) in Q4, 2010. Guanacevi currently draws 80% of its ore from the Porvenir Mine and the balance from Porvenir Dos. Both the Porvenir Cuatro and Santa Cruz access ramps were completed ahead of schedule, and both are now in ore development. Work on the new crushing and other existing circuits at the Guanacevi plant is now substantially complete and the plant is nearing full production.
At Guanajuato, the Lucero vein now contributes 80% of the ore production with the balance coming from Cebada and Bolanitos. With last year's expansion of the Guanajuato plant capacity to 600 tpd, production is still climbing with the development of the ore zones on the Bolanitos and Lucero veins. Plant capacity is expected to be achieved when the new Lucero South access ramp is completed in Q4, 2010.
Exploration expenses should remain constant into the Fourth Quarter, 2010 as Endeavour pushes ahead on its exploration programs at several projects. A total of 10,000 meters of core drilling is planned during the fourth quarter for Guanajuato, Guanacevi, and San Sebastian, as well as surface surveys and target definition work on other properties.
At Guanacevi, the next phase of diamond drilling will be carried out in the San Pedro area. At Guanajuato, drilling continues at Lucero South and will be initiated in the Bolanitos North area.
At Parral, drill results will be assessed and released shortly. At San Sebastian, a Phase 1 drill program will get underway in the Real Alto area to test several prospective targets.
At El Toro, machine trenching, rock sampling & diamond drilling has been completed and assays are pending. At Arroyo Seco, drill results should be released in during the fourth quarter.
Q3, 2010 Conference Call at 10:30 AM PDT, Friday, November 12, 2010
A conference call to discuss the results will be held at 1:30 PM Eastern Time (10:30 AM Pacific Time) on Friday, November 12, 2010. To participate in the conference call, please dial the following:
800-319-4610 Canada and USA (Toll-free)
604-638-5340 Vancouver Dial In
1-604-638-5340 Outside of Canada & USA
No pass-code is necessary
A replay of the conference call will be available by dialing 1-800-319-6413 in Canada & USA (Toll-free) or 1- 604-638-9010 outside of Canada and USA. The required pass code is 4890 followed by #.
Godfrey Walton, M.Sc., P.Geo., the President and COO, is the Qualified Person who reviewed this news release and oversaw the mining operations. Barry Devlin, M.Sc., P.Geo., the Vice President of Exploration, is the Qualified Person who reviewed this news release and supervised the exploration programs.
Endeavour Silver Corp. is a small-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 five consecutive years of aggressive silver production, reserve and resource growth. The organic expansion programs now underway at Endeavour's two operating silver mines in Mexico combined with its strategic acquisition and exploration programs should help Endeavour achieve its goal to become the next premier mid-tier silver mining company.
ENDEAVOUR SILVER CORP.
Dan Dickson, Chief Financial Officer
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 2010, including silver and gold production, timing and expenditures to develop new silver mines and mineralized zones, silver and gold grades and recoveries, cash costs per ounce, capital expenditures and sustaining capital and the use of proceeds from the Company's recent financing. 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: fluctuations in the prices of silver and gold, fluctuations in the currency markets (particularly the Mexican peso, Canadian dollar and U.S. dollar); changes in national and local governments, legislation, taxation, controls, regulations and political or economic developments in Canada and Mexico; operating or technical difficulties in mineral exploration, development and mining activities; risks and hazards of mineral exploration, development and mining (including environmental hazards, industrial accidents, unusual or unexpected geological conditions, pressures, cave-ins and flooding); inadequate insurance, or inability to obtain insurance; availability of and costs associated with mining inputs and labour; the speculative nature of mineral exploration and development, diminishing quantities or grades of mineral reserves as properties are mined; the ability to successfully integrate acquisitions; 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. 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.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited-Prepared by Management)
(expressed in thousands of US dollars, except for shares and per share
amounts)
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Three Months Ended Nine Months Ended
September 30 September 30 September 30 September 30
2010 2009 2010 2009
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Revenue $ 20,091 $ 9,796 $ 58,035 $ 26,519
Cost of sales 10,858 6,516 30,291 18,039
Depreciation and
depletion 3,977 1,997 10,306 6,701
Exploration 1,189 647 3,385 1,230
General and
administrative 1,126 993 3,514 3,011
Accretion of
convertible
debentures 248 444 1,088 1,018
Stock-based
compensation 1,353 264 3,697 862
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Earnings (loss) 1,340 (1,065) 5,754 (4,342)
Foreign exchange gain
(loss) 244 (723) 153 (968)
Realized gain on
marketable
securities 142 - 189 -
Mark to market gain
(loss) on redemption
call option 413 - 703 -
Investment and other
income 117 43 286 239
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Earnings (loss)
before taxes 2,256 (1,745) 7,085 (5,071)
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Income tax recovery
(expense) (2,129) 258 (5,650) 12
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Net earnings (loss)
for the period 127 (1,487) 1,435 (5,059)
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Other comprehensive
income, net of tax
Unrealized gain
(loss) on
marketable
securities (54) 119 (28) 119
Unrealized foreign
exchange gain
(loss) on
investments 29 267 - 267
Unrealized gain
(loss) on other
investments 72 - 736 -
Realized gain on
marketable
securities included
in net income (142) - (189) -
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(95) 386 519 386
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Comprehensive income
(loss) for the
period 32 (1,101) 1,954 (4,673)
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Basic and diluted
earnings (loss) per
share $ 0.00 $ (0.03) $ 0.02 $ (0.10)
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Weighted average
number of shares
outstanding 65,511,785 52,082,469 63,004,088 51,330,621
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ENDEAVOUR SILVER CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited-Prepared by Management)
(expressed in thousands of U.S. dollars)
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Three Months Ended Nine Months Ended
September September September September
30, 30, 30, 30,
2010 2009 2010 2009
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Operating activities
Net earnings (loss) for the
period $ 127 $ (1,487) $ 1,435 $ (5,059)
Items not affecting cash:
Stock-based compensation 1,353 265 3,697 862
Depreciation and depletion 3,977 1,997 10,306 6,701
Future income tax expense
(recovery) 2,200 506 5,620 (525)
Unrealized foreign exchange loss
(gain) (97) 581 (71) 1,298
Accretion of convertible
debentures 248 445 1,088 1,018
(Gain) on redemption call option (413) - (703) -
Realized (gain) on marketable
securities (142) - (189) -
Net changes in non-cash working
capital (2,121) (50) (9,988) (2,450)
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Cash from (used for) operations 5,132 2,257 11,195 1,845
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Investing activites
Property, plant and equipment
expenditures (9,916) (4,861) (22,779) (11,329)
Long term deposits (49) - (49) (29)
Investment in marketable
securities - (705) (1,021) (705)
Proceeds from sale of marketable
securities 1,996 - 3,214 -
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Cash used in investing activities (7,969) (5,566) (20,635) (12,063)
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Financing activities
Common shares issued, net of
issuance costs 1,471 18 3,373 383
Issuance of convertible
debentures - - - 11,225
Debenture issuance costs - - - (1,191)
Interest paid (364) (321) (989) (477)
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Cash from financing activites 1,107 (303) 2,384 9,940
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Increase (decrease) in cash and
cash equivalents (1,730) (3,612) (7,056) (278)
Cash and cash equivalents,
beginning of period 21,376 6,916 26,702 3,582
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Cash and cash equivalents, end of
period $ 19,646 $ 3,304 $ 19,646 $ 3,304
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ENDEAVOUR SILVER CORP.
CONSOLIDATED BALANCE SHEETS
(Unaudited-Prepared by Management)
(expressed in thousands of US dollars)
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September 30 December 31
2010 2009
ASSETS
Current assets
Cash and cash equivalents $ 19,646 $ 26,702
Marketable securities 42 2,045
Notes receivable 3,212 2,476
Accounts receivable and prepaids 17,350 7,467
Inventories 11,023 6,100
Due from related parties 390 243
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Total current assets 51,663 45,033
Long term deposits 1,202 1,153
Redemption call option on convertible debentures - 2,693
Mineral property, plant and equipment 70,138 57,002
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Total assets $ 123,003 $ 105,881
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 7,318 $ 5,230
Current portion of promissory note 231 231
Accrued interest on convertible debentures - 254
Income taxes payable 1,653 545
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Total current liabilities 9,202 6,260
Promissory note 106 248
Asset retirement obligations 1,847 1,740
Future income tax liability 13,723 8,103
Liability portion of convertible debentures - 8,149
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Total liabilities 24,878 24,500
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Shareholders' equity
Common shares, unlimited shares authorized, no par
value, issued and outstanding 69,757,153 shares
(2009 - 60,626,203 shares) 128,278 112,173
Equity portion of convertible debentures - 2,164
Contributed surplus 13,788 12,948
Accumulated comprehensive income 1,277 749
Deficit (45,218) (46,653)
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Total shareholders' equity 98,125 81,381
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$ 123,003 $ 105,881
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ENDEAVOUR SILVER CORP.
CONSOLIDATED MINE OPERATIONS
Comparative Table of Consolidated Mine Operations
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Ore Recovered Reco- Cash Direct
Plant Grades Ounces veries Cost Cost
T'put Ag Au Ag Au Ag Au $ per $ per
Period Tonnes (gpt) (gpt) (oz) (oz) (%) (%) oz tonne
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Production 2010
Q1, 2010 112,963 270 1.34 766,210 3,775 78.3 78.7 6.39 79.45
Q2, 2010 123,825 267 1.32 826,439 4,460 77.6 84.9 5.94 86.69
Q3, 2010 126,599 265 1.45 797,054 4,607 73.8 77.8 5.93 81.35
Q4, 2010
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YTD 2010 363,387 267 1.37 2,389,703 12,842 76.5 80.5 6.08 82.58
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Production 2009
Q1, 2009 85,731 271 1.02 572,785 2,335 78.8 86.7 7.56 74.69
Q2, 2009 90,338 259 1.16 584,486 2,768 77.2 85.0 6.95 79.46
Q3, 2009 93,276 271 1.42 661,903 3,604 79.6 84.6 5.19 78.91
Q4, 2009 115,482 270 1.62 779,344 4,591 77.8 76.2 4.96 79.07
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Total 384,827 268 1.33 2,598,518 13,298 78.3 82.6 6.04 78.14
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Production 2008
Q1, 2008 78,157 304 0.71 504,669 1,433 66.2 79.8 10.01 84.75
Q2, 2008 86,391 257 0.77 517,077 1,705 72.8 83.0 9.62 75.96
Q3, 2008 96,721 270 0.93 625,094 2,465 75.4 84.9 9.55 80.11
Q4, 2008 90,927 288 0.98 696,075 2,416 82.2 88.4 7.43 81.25
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Total 352,196 279 0.85 2,342,915 8,019 74.5 84.2 9.03 80.42
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Q3, 2010 : Q3, 2009 36% -2% 2% 20% 28% -7% -8% 14% 3%
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Q3, 2010 : Q2, 2010 2% -1% 10% -4% 3% -5% -8% 0% -6%
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YTD 2010 : YTD 2009 35% 0% 14% 31% 47% -3% -6% -6% 6%
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Contacts:
Endeavour Silver Corp.
Hugh Clarke
(604) 685-9775 or Toll Free: 1-877-685-9775
(604) 685-9744 (FAX)
hugh@edrsilver.com
www.edrsilver.com