Endeavour Silver Corp. (TSX:EDR)(NYSE Amex:EXK)(DBFrankfurt:EJD) announced today
record earnings, cash-flows and revenues for the fourth quarter and fiscal year
ended December 31, 2010, thanks to the Company's sixth consecutive year of
growing silver and gold production, lower cash operating costs and higher
precious metal prices.
Highlights of Fiscal Year 2010 (Compared to Fiscal Year 2009)
-- Net Earnings improved to $7.1 million ($0.11 per share) from a loss of
$1.9 million
-- Operating cash-flow jumped 167% to $32.7 million
-- Revenues increased 70% to $86.5 million
-- Realized silver price rose 27% to $19.62 per oz sold
-- Cash operating costs fell 5% to $5.71 per oz silver produced, net of by-
product gold credits
-- Year-end working capital of $102 million, with cash and short-term
investments of $88 million
-- Silver production increased 26% to 3.3 million oz
-- Gold production rose 33% to 17,713 oz
-- Silver and equivalents production escalated 20% to 4.2 million oz (at a
50:1 silver:gold ratio)
-- Silver proven and probable reserves decreased 19% to 13.4 million oz
-- Silver indicated resources up 16% to 27.4 million oz
-- Silver inferred resource up 62% to 29.7 million oz
Highlights of Fourth Quarter 2010 (Compared to Fourth Quarter 2009)
-- Net Earnings increased 81% to $5.6 million ($0.09 per share)
-- Operating cash-flow jumped 107% to $21.5 million
-- Revenues climbed 18% to $28.5 million
-- Realized silver price averaged $24.16 per oz sold
-- Cash operating costs fell 5% to $4.72 per oz silver produced, net of by-
product gold credits
-- Silver production increased 15% to 895,931 oz
-- Gold production rose 6% to 4,871 oz
-- Silver and equivalents production escalated 13% to 1.14 million oz
Guidance for 2011
-- Silver production forecast of 3.7 million oz
-- Gold production forecast of 19,000 oz
-- Silver and equivalents production forecast of 4.7 million oz
-- Cash cost forecast of less than $5.70 per oz of silver produced, net of
by-product gold credits
-- Capital cost forecast of $36.7 million and exploration budget of $9.2
million
-- Revenue forecast of $113.9 million assuming $24 silver and $1,320 gold
Bradford Cooke, Chairman and CEO, commented, "Endeavour delivered yet another
year of record financial and operating performance in 2010 and as a result, the
Company has never been in a better financial position. We finished last year
with robust earnings, more than $100 million in working capital, no debt,
falling cash costs, rising silver production and higher precious metals prices."
"In 2011, management is forecasting Endeavour's seventh consecutive year of
organic silver production growth by expanding the Guanajuato plant from 600 up
to 1000 tonnes per day. Cash costs are expected to continue declining into the
mid-$5 per oz range and if we assume a US$30 average silver price in 2010, our
mine operating profit margin will be around $24 per oz - remarkable by any
standards."
"We remain focused on the continuous expansion and improvement of our two
operating mines, the organic growth of our reserves and resources, and last but
not least, we continue to seek opportunities to grow through mergers and
acquisitions that are accretive to our shareholders. 2011 promises to be another
great year for Endeavour Silver."
To view a video of Chairman Bradford Cooke commenting on today's results, please
visit our website or click here:
http://www.edrsilver.com/i/video/pressreleases/2011-03-22/2010_Financial_Results.html
The financial results are expressed in US dollars ("US$") and are based on
Canadian generally accepted accounting practices (Canadian "GAAP"). For a more
detailed review, shareholders are referred to the 2010 Audited Financial
Statements, Management Discussion and Analysis ("MD&A") and Annual Information
Form ("AIF") at the Company's website, www.edrsilver.com or on the SEDAR
website, http://www.sedar.com/ and to the SEC Form 40F filed on EDGAR at
http://www.sec.gov/edgar.shtml.
Financial Results (Consolidated Statement of Operations appended below)
For the year ended December 31, 2010, the Company generated Revenues totalling
$86.5 million (2009 - $50.8 million) at an average sale price of $19.62 per oz
(2009 - $15.49 per oz) for its silver production. After Costs of Sales of $41.5
million (2009 - $29.5 million), Mine Operating Cash-flows amounted to $45.0
million (2009 - $21.3 million) from its mining and milling operations in Mexico.
After Depreciation and Depletion of $15.5 million (2009 - $11.3 million), Mine
Operating Earnings were $29.6 million (2008 - $10.0 million) in 2010. Operating
Earnings were $14.0 million (2009 - break even) and the Company incurred Net
Earnings for the year ended December 31, 2010 of $7.1 million (2009 - loss of
$1.9 million). Cash operating costs were $5.71 per oz silver produced (2009 -
$6.04), net of gold by-product credits.
Endeavour invested US$30.1 million on capital projects in 2010, including
US$18.7 million on mine development, US$6.8 million on plant improvements and
US$4.6 million on equipment, vehicles and buildings. The main focus was at
Guanacevi ($19.4 million) where over six kilometers of mine development were
completed, including the new Santa Cruz and Porvenir Cuatro mines, and the plant
was expanded to 1,000 tonnes per day. At Guanajuato, capital expenditures ($10.7
million) focused on completing over five kilometers of mine development,
including the new Lucero South access ramp.
Endeavour is well-positioned for both organic and acquisition growth in 2011,
with year-end working capital of $102 million, including $88 million in cash and
short term investments. Working capital and 2011 mine operating cash flows will
be used to fund an aggressive 2011 capital investment program focused on
accelerating mine development ($21.8 million), additional Guanacevi plant
improvements ($6.1 million) including a new dry stack tailings facility, a major
plant expansion at Guanajuato to 1,000 tonnes per day ($5.3 million) and an
upgrade to our fleet of Guanajuato mining equipment ($3.0 million).
Operating Results (Consolidated Table of Operations appended below)
In 2010, Endeavour achieved two important milestones in its silver mining
operations: the Company recorded its sixth consecutive year of growing silver
production, up 26% from 2009 to 3,285,634 payable ounces (oz) silver; and cash
costs declined for the third consecutive year, down 5% to $5.71 per oz silver.
Similar to 2009, silver production in 2010 was relatively flat in the first two
quarters, as management focused primarily on the capital investment programs at
the Guanacevi Mines in Durango State, and the Guanajuato Mines in Guanajuato
State. As a result of completing the 2010 capital projects, consolidated
throughput rose from 113,000 tonnes in Q1, 2010 to 144,000 tonnes in Q4, 2010.
Consolidated cash operating costs of production fell from US$6.39 per oz silver
in Q1, 2010 to US$4.71 per oz silver in Q4, 2010.
Exploration Results
In the San Pedro area of Guanacevi, Endeavour made two exciting new discoveries
in the Epsilon and La Blanca veins and expanded the Company's land position at
Guanacevi with the addition of 3 properties totalling 25 hectares. In the
Guanajuato district, the Company identified three significant new veins, the
Karina, Fernanda and Daniela veins, and expanded the Company's land position at
Guanajuato with the addition of 4 properties totalling 243 hectares.
At the San Juanico property in the Parral district, drilling successfully
expanded the NI 43-101 indicated resources to 1.63 million tonnes containing 2.6
million oz silver and inferred resources to 1.30 million tonnes containing 2.7
million ounces plus significant gold, lead and zinc resources. Please visit
Endeavour's website or refer to the Company's March 8th, 2011 press release for
December 31, 2010 updated reserves and resources table. For more information on
the 2010 exploration program and 2011 exploration outlook please refer to the
Company's February 1, 2011 press release.
2011 Outlook
In 2011, Endeavour anticipates its financial performance will reflect
significantly higher anticipated silver and gold bullion prices, further
increases in silver and gold production, continued growth of reserves and
resources and a further reduction in cash costs. Cash operating costs should
continue to trend downward due to economies of scale resulting from the planned
Guanajuato plant expansion. However, this benefit will be partly offset by
continued increases in some operating costs such as labour.
Similar to 2010, the first two quarters of silver production in 2011 are
scheduled to be relatively flat, as we focus on mine development and plant
expansion capital programs. Silver production is expected to rise again in the
third quarter, as the expansion at Guanajuato is completed.
The Guanacevi mines are scheduled to produce 1,000 tonnes per day (tpd) for the
entire year. Guanacevi currently draws 80% of its ore production from the
Porvenir Mine and the balance will be from Porvenir Dos, Porvenir Cuatro and
Santa Cruz.
At Guanajuato, the Lucero vein now contributes 80% of ore production with the
balance coming from Cebada and Bolanitos. The 2011 expansion of the Guanajuato
plant is anticipated to increase capacity from 600 tpd to 1,000 tpd, with
completion expected in Q3, 2011. The added plant capacity should be met with
increased production from the Bolanitos and Lucero veins and development ore
from our 2010 discoveries of the Karina and Fernanda veins.
In 2011 Endeavour plans to push ahead on its exploration programs at several
projects. The Company is undertaking an aggressive $9.2 million, 47,000 meter,
175-hole exploration drill program to test multiple exploration targets within
three of the mining districts plus some new property acquisitions.
At Guanacevi, a total of 10,000 meters of diamond drilling is planned to test
several newly discovered veins in the San Pedro area. At Guanajuato, drilling
will continue at Karina, Fernanda and Daniela and other prospective areas, with
14,500 meters planned.
Endeavour will also commence drilling on the San Sebastian properties acquired
last year in Jalisco state, Mexico. Surface sampling has identified numerous
high-grade silver and gold mineralized zones at San Sebastian with a 6,500 meter
program planned for 2011.
A telephone conference call to discuss the results will be held at 10:00 AM PDT
(1:00 PM EDT) on Tuesday, March 22, 2011. To participate in the telephone
conference call, please dial the following:
-- 1-800-319-4610 Canada and USA (Toll-free)
-- 604-638-5340 Vancouver Dial In
-- 1-604-638-5340 Outside of Canada & USA
-- No pass-code is necessary to participate in the conference call
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 & USA. The required
pass-code is 4890 followed by the # sign.
To view the Company's Annual Report on Form 40F containing the Company's Annual
Audited Financial Statements for the year ended December 31, 2010 plus ancillary
documents, please click on the link below. All holders have the ability to
receive a hard copy of the Company's complete Audited Financial Statements free
of charge upon request. To receive this material in hard copy, please contact
Hugh Clarke, VP Corporate Communications by email at 604-685-9775 or toll free
877-685-9775.
ENDEAVOUR SILVER CORP.
BRADFORD COOKE, Chairman and CEO
About Endeavour Silver Corp. - Endeavour Silver 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
growing silver production, reserves and resources. 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.
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 2011, including revenue, cash cost and capital cost forecasts,
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 the Company's
working capital. 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); fluctuations in the price of consumed commodities,
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, reliability of calculation of mineral reserves and
resources and precious metal recoveries, diminishing quantities or grades of
mineral reserves as properties are mined; the ability to successfully integrate
acquisitions; risks in obtaining necessary licenses and permits, global market
events and conditions 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 TABLE OF CONSOLIDATED MINE OPERATIONS
---------------------------------------------------------------------------
Ore Grades Recovered Ounces Recoveries Cash Direct
Plant ---------- ---------------- ---------- Cost Cost
T'put Ag Au Ag Au Ag Au $ per $ per
Period Tonnes (gpt) (gpt) (oz) (oz) (%) (%) oz tonne
---------------------------------------------------------------------------
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 143,623 267 1.37 895,931 4,871 72.6 76.7 4.72 80.86
---------------------------------------------------------------------------
YTD 2010 507,010 267 1.37 3,285,634 17,713 75.4 79.4 5.71 82.10
---------------------------------------------------------------------------
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
---------------------------------------------------------------------------
Total 384,827 268 1.33 2,598,518 13,298 78.3 82.6 6.04 78.14
---------------------------------------------------------------------------
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
---------------------------------------------------------------------------
Total 352,196 279 0.85 2,342,915 8,019 74.5 84.2 9.03 80.42
---------------------------------------------------------------------------
Q4, 2010 :
Q4, 2009 24% -1% -15% 15% 6% -7% 1% -5% 2%
---------------------------------------------------------------------------
Q4, 2010 :
Q3, 2010 13% 1% -5% 12% 6% -2% -1% -20% -1%
---------------------------------------------------------------------------
YTD 2010 :
YTD 2009 32% 0% 3% 26% 33% -4% -4% -5% 5%
---------------------------------------------------------------------------
ENDEAVOUR SILVER CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)
(expressed in thousands of US dollars, except for shares and per share
amounts)
---------------------------------------------------------------------------
Year Year Year
Ended Ended Ended
December December December
31, 2010 31, 2009 31, 2008
---------------------------------------------------------------------------
Revenues $ 86,510 $ 50,769 $ 39,302
Cost of sales 41,514 29,478 27,802
Depreciation and depletion 15,447 11,264 8,383
Exploration 4,283 2,394 8,570
General and administrative 5,485 4,356 5,078
Accretion of convertible debentures 1,088 1,466 -
Stock-based compensation 4,679 1,801 2,349
---------------------------------------------------------------------------
Earnings (loss) before other items 14,014 10 (12,880)
Foreign exchange gain (loss) 1,156 (1,057) (1,452)
Realized gain (loss) on marketable
securities 195 15 (637)
Mark to market gain (loss) on redemption
call option 703 2,693 -
Impairment on asset backed commercial
paper - - (1,394)
Allowance for value added tax - - (945)
Investment and other income 478 506 305
---------------------------------------------------------------------------
Earnings (loss) before taxes 16,546 2,167 (17,003)
---------------------------------------------------------------------------
Income tax provision 9,467 4,093 1,001
---------------------------------------------------------------------------
Net earnings (loss) for the year 7,079 (1,926) (18,004)
---------------------------------------------------------------------------
Other comprehensive income, net of tax
Unrealized gain (loss) on marketable
securities 22 150 (1,145)
Unrealized gain on notes receivable 953 423 -
Unrealized foreign exchange gain (loss)
on available for sale securities 127 (21) -
Reclassification adjustment for loss
(gain) included in net income (195) (15) 637
---------------------------------------------------------------------------
907 537 (508)
---------------------------------------------------------------------------
Comprehensive income (loss) for the year 7,986 (1,389) (18,512)
---------------------------------------------------------------------------
Basic earnings (loss) per share $ 0.11 $ (0.04) $ (0.37)
---------------------------------------------------------------------------
Diluted earnings (loss) per share $ 0.10 $ (0.04) $ (0.37)
---------------------------------------------------------------------------
Basic weighted average number of shares
outstanding 65,646,786 53,212,960 49,032,192
Diluted weighted average number of shares
outstanding 69,122,226 53,212,960 49,032,192
---------------------------------------------------------------------------
ENDEAVOUR SILVER CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(expressed in thousands of U.S. dollars)
---------------------------------------------------------------------------
Year Year Year
Ended Ended Ended
December December December
31, 2010 31, 2009 31, 2008
---------------------------------------------------------------------------
Operating activities
Net earnings (loss) for the period $ 7,079 $ (1,926) $ (18,004)
Items not affecting cash:
Stock-based compensation 4,679 1,801 2,349
Depreciation and depletion 15,447 11,264 8,383
Future income tax expense 6,054 4,068 21
Unrealized foreign exchange loss (gain) (65) 1,384 (58)
Impairment of asset backed commercial
paper - - 1,394
Allowance for value added tax - - 945
(Gain) loss on marketable securities (195) (15) 637
Accretion of convertible debentures 1,088 1,466 -
Mark to market gain on redemption call
option (703) (2,693) -
Net changes in non-cash working capital (700) (3,103) (291)
---------------------------------------------------------------------------
Cash from (used for) operations 32,684 12,246 (4,624)
---------------------------------------------------------------------------
Investing activities
Property, plant and equipment
expenditures (30,176) (17,065) (12,625)
Investment in short term investments (20,009) - -
Long term deposits 375 (239) (37)
Investment in marketable securities (1,021) (2,361) (3,963)
Proceeds from sale of marketable
securities 3,215 581 5,995
---------------------------------------------------------------------------
Cash used in investing activities (47,616) (19,084) (10,630)
---------------------------------------------------------------------------
Financing activities
Equity issued on exercise of options and
warrants 7,946 1,351 2,541
Equity issued on public offering 52,431 17,337 -
Equity issued on private placement - 3,703 -
Issuance of convertible debentures - 11,225 -
Share issuance costs (3,121) (1,673) (282)
Debenture issuance costs - (1,191) -
Interest paid (989) (794) -
---------------------------------------------------------------------------
Cash from financing activities 56,267 29,958 2,259
---------------------------------------------------------------------------
Increase (decrease) in cash and cash
equivalents 41,335 23,120 (12,995)
Cash and cash equivalents, beginning of
period 26,702 3,582 16,577
---------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 68,037 $ 26,702 $ 3,582
---------------------------------------------------------------------------
ENDEAVOUR SILVER CORP.
CONSOLIDATED BALANCE SHEETS
(expressed in thousands of US dollars)
---------------------------------------------------------------------------
December December
31, 2010 31, 2009
---------------------------------------------------------------------------
ASSETS
Current assets
Cash and cash equivalents $ 68,037 $ 26,702
Short term investments 20,009 -
Marketable securities 81 2,045
Notes receivable 3,551 2,476
Accounts receivable and prepaids 10,299 7,467
Inventories 12,971 6,100
Due from related parties 218 243
---------------------------------------------------------------------------
Total current assets 115,166 45,033
Long term deposits 778 1,153
Redemption call option on convertible debentures - 2,693
Mineral property, plant and equipment 72,479 57,002
---------------------------------------------------------------------------
Total assets $ 188,423 $ 105,881
---------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 9,464 $ 5,230
Current portion of promissory note 231 231
Accrued interest on convertible debentures - 254
Income taxes payable 3,260 545
---------------------------------------------------------------------------
Total current liabilities 12,955 6,260
Promissory note 56 248
Asset retirement obligations 2,242 1,740
Future income tax liability 14,157 8,103
Liability portion of convertible debentures - 8,149
---------------------------------------------------------------------------
Total liabilities 29,410 24,500
---------------------------------------------------------------------------
Shareholders' equity
Common shares, unlimited shares authorized, no par
value, issued and outstanding 80,720,420 shares
(2009 - 60,626,203 shares) 183,296 112,173
Equity portion of convertible debentures - 2,164
Contributed surplus 13,635 12,948
Accumulated comprehensive income 1,656 749
Deficit (39,574) (46,653)
---------------------------------------------------------------------------
Total shareholders' equity 159,013 81,381
---------------------------------------------------------------------------
$ 188,423 $ 105,881
---------------------------------------------------------------------------
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