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News Article

Endeavour Silver Raises Production Expectations for 2022

By Paloma Duran | Wed, 08/10/2022 - 13:47

Endeavour Silver reported its 2Q22 financial and operating results, highlighting that due to its positive performance, its 2022 production guidance has been increased. In addition, the company has decided to withhold a significant amount of metals sales, as it plans to sell when prices rise for higher profits.

According to its press release, the company had a solid production of 1,359,207oz of silver during 2Q22, which represents an increase of 27 percent compared to 2Q21. In addition, the company produced 9,289oz of gold for 2.1Moz of silver equivalent. Endeavour highlighted that with the results of 2Q22, it is all but certain to reach strong production in 2022.

Considering the strong 2Q22 results, the company raised its production forecast from 6.7-7.6Moz to between 7.6 and 8Moz. Endeavour explained the increase in its 2022 production guidance is primarily due to higher-than-expected ore grades at Guanacevi. Meanwhile, production at Bolañitos remains strong due to high silver grades and increased production. However, these results were offset by lower gold grades and production.

“We have continued to outperform our mine plans, by delivering an exceptional 2Q22 with production 15 percent above plan. This has prompted management to raise our production outlook for 2022 to between 7.6 and 8.0Moz of silver. The additional production has allowed us to maintain our cost guidance on per oz metrics, but industry-wide inflation continues to be a challenge,” stated Dan Dickson, CEO, Endeavour Silver.

Endeavour highlighted that it expects its operating cost guidance to remain unchanged through the remainder of 2022. Cash costs are expected to average between US$9 and US$10/oz. However, the company noted that as inflationary pressures continue to increase, the prices of key materials such as reagents, explosives, diesel and energy, as well as operating and development costs could grow. However, the company plans to mitigate these costs in 2H22 through improved monitoring and tracking of operations, improved blasting, increased tons milled and waste reduction.

In addition, Endeavour explained that during 2Q22, it had lower revenues because it decided to retain metal sales, since it expects to sell them when metal prices increase in the future. During 2Q22, only 602,894oz of silver were sold at an average price of US$22.72/oz and 9,792oz of gold at an average price of US$1,840/oz, this for a total revenue of US$30.8 million. Meanwhile, the company had 1,399,356oz silver and 2,580oz gold in bullion inventory and 12,408oz silver and 58oz gold in concentrate inventory.

“During the quarter, again we made the decision to withhold from sale a meaningful amount of silver, due to the drop in silver price. We are holding over 1.6 million silver equivalent oz in finished goods inventory for future sale. Short term, the increased inventory has negatively impacted our quarterly financial metrics such as revenue, earnings, cash flow and our cash balance. Longer term, we anticipate selling the inventory at higher metal prices,” said Dickson.

The data used in this article was sourced from:  
Endeavour Silver
Photo by:   Endeavour Silver
Paloma Duran Paloma Duran Journalist and Industry Analyst