Endeavour Silver’s Production Down 14% in 3Q24

Canada-based silver company Endeavour Silver reported production of 1.6Moz of silver equivalent (AgEq) in 3Q24, 14% down from the 1.8Moz AgEq produced during 3Q23. The company noted the decrease was due to a mill failure at its Guanacevi mine in Durango. 

Endeavour Silver’s production in 3Q24 reached 874,717oz of silver and 9,290oz of gold, or 1.6Moz AgEq. This performance reflects a decrease following a trunnion failure of the primary ball mill at its Guanacevi mine on Aug. 12, 2024. As for financial outcomes, Endeavour Silver achieved revenues of US$53.4 million from the sale of 1.07Moz silver and 9,412oz of gold, with average realized prices of US$29.63/oz silver and US$2,528/oz gold.

Endeavour Silver reported an operating cash flow of US$4.5 million before working capital changes, compared to US$3.3 million in the same quarter of 2023. Mine operating cash flow before taxes reached US$19.6 million, up from US$10.6 million in 2023. Adjusted earnings for 3Q24 were US$1.6 million, after excluding losses on derivative contracts, deferred share unit revaluations, and foreign exchange and investment losses. However, the company recorded a net loss of US$17.3 million, compared to a net loss of US$2.3 million in 3Q23.

Endeavor Silver reported the Terronera project in Jalisco remains on track, with project completion at 77% by the end of 3Q24, and capital commitments totaling US$270 million, close to the project's overall budget of US$271 million. Endeavour Silver also completed a US$25 million drawdown on its senior secured debt facility during the quarter, with a subsequent final drawdown of US$35 million completed after quarter-end.

Direct operating costs per ton rose to US$138.54, a 2% increase from the same period in 2023, attributed to an 18% reduction in processed tonnage following the temporary capacity reduction at Guanacevi. In response, Endeavour adjusted operations by suspending contract mining activities and purchases of local third-party materials to manage cost impacts. Cash costs per oz of silver, net of by-product credits, were reduced by 37% year-over-year to US$11.35, supported by higher gold sales volumes, while the company’s all-in-sustaining costs (AISC) fell by 14% to US$25.51/oz.

Endeavour Silver reported its consolidated direct operating costs exceeded annual guidance due to Guanacevi’s operational interruptions. The company cited that operating costs and AISC were impacted by several variables and subsequently withdrew its 2024 cost guidance.

Revenue for 3Q24 was US$53.4 million, a rise of 8% from 3Q23, driven by higher realized prices despite a 26% drop in silver oz sold. A 39% increase in gold sales, due to a 7% increase in ounces sold and a 30% increase in realized gold prices, further supported revenue growth. Cost of sales decreased by 12% to US$41.0 million, due to lower silver sales and cost control measures implemented at Guanaceví after the trunnion failure.

Endeavour’s inventory of finished goods declined by the end of 3Q24, with 117,921oz silver and 961oz gold remaining, compared to higher levels in the previous quarter. The fair market value of this inventory was approximately US$6.2 million as of Sep. 30, 2024, down from US$10.8 million at the close of June 2024.

Endeavour Silver also recorded exploration and evaluation expenses of US$4.7 million in 3Q24, consistent with expenditures in 2023. General and administrative costs increased to US$4.0 million from US$2.4 million in 3Q23, largely due to adjustments in the cash-settled deferred share unit liability. Additionally, Endeavour incurred a foreign exchange loss of US$3.1 million, as the weakening of the Mexican peso impacted the value of its peso-denominated working capital. Finance charges during the period were US$500,000, compared to US$300,000 in 3Q23.

The company recognized a US$19.4 million loss on the revaluation of Endeavor Silver’s gold and foreign exchange derivatives, resulting from higher gold forward prices and the appreciation of the US dollar against the Mexican peso.