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Endeavour Q2 profit dwindles on lower metal prices
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7th August 2012
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TORONTO ( – Mexico-focused miner Endeavour Silver’s second-quarter net profit slumped by 56% to $7.5-million or 9c a share, impacted on by lower metal prices, a lower derivative liability gain, lower other income and a higher foreign exchange loss.

The company said the average realised price for silver sold in the quarter fell by 22% to $29.21/oz, which was broadly in line with the average spot price of the metal. Silver production was up by 22% to 1.04-million ounces, and the increased production resulted in a 22% lower production cost per ounce at $5.46, net of gold credits.

Gold production also increased by 59% to 7 695 oz in the period and the price realised in sales of oz was up 5% to $1 599/oz.

Endeavour’s revenue increased with 11% to $40.4-million in the June quarter compared with $36.4-million in the same period of 2011. It incurred foreign exchange losses of $3.4-million during the quarter.

Adjusted earnings, excluding onetime gains and expenditures were $5.9-million or 6c a share.

The company spent $11.9-million on capital expenditure in the period, focusing mainly on underground development at the Guanacevi and Bolanitos mines, expanding the mining fleet and upgrading various circuits at the plants to handle increased throughputs.

The miner remained positive that its financial position for the second half of the year would remain steady in light of current silver and gold prices, while it expected to steadily ramp up metals production.

“Industry-wide inflationary pressures on operating costs should be offset by the new economies of scale attained at the Bolanitos and Guanacevi mines as well as the operational turnaround now under way at El Cubo,” Endeavour Silver CEO Bradford Cooke said in a statement.

Silver production and cash costs were expected to rise in the third quarter, reflecting the recent addition of the El Cubo mine.

The Bolanitos mine expansion from 1 000 t/d to 1 600 t/d, the Guanacevi plant optimisation from 1 000 t/d to 1 200 t/d, and the operational turnaround at El Cubo should each contribute to higher silver production and falling cash costs in the fourth quarter the miner said.

The company expected to produce between 4.9-million and 5-million ounces of silver and between 33 500 oz and 35 000 oz of gold for the year.

Endeavour also said it had entered into a $75-million secured revolving credit facility to enhance its access to cash, which should allow management to remain acquisitive while metal and stock prices were depressed.

The company’s TSX-listed stock traded up 2.79% at C$8.10 apiece on Tuesday.

Edited by: Creamer Media Reporter


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