Silver Producer Focused on Growth - Mexico
Three producing silver mines/mills in Mexico, the Guanacevi Mine in Durango State and the Bolanitos and El Cubo in Guanajuato. Production forcast for 2013: 8M Oz Eq @ 8-9$/Oz
Message: Reports Financial and Operating Results for Q1,Production Up 13%,etc.
| May 14, 2009 |
| Endeavour Silver Reports Financial and Operating Results for Q1, 2009; Silver Production Up 13%, Cash Costs Down 24% Compared to Q1, 2008 |
| VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 14, 2009) - Endeavour Silver Corp. ("Endeavour" or the "Company") (TSX:EDR)(NYSE Amex:EXK)(DBFrankfurt:EJD) announced today its' financial and operating results and unaudited financial statements for the First Quarter, 2009. Endeavour owns and operates two high-grade, underground, silver-gold mines in Mexico, the Guanacevi Mines in Durango State and the Guanajuato Mines in Guanajuato State. The financial results are expressed in US dollars ("US$") and are based on Canadian generally accepted accounting practices (Canadian "GAAP"). For a more detailed review, shareholders are referred to the Q1, 2009 Financial Statements and Management Discussion and Analysis ("MD&A") posted on the Company's website, www.edrsilver.com. First Quarter, 2009 Highlights (Compared to Q1, 2008) - Silver production rose 13% to 572,785 oz - Gold production jumped 63% to 2,335 oz - Silver-equivalent production up 22% to 736,235 oz (70:1 silver:gold ratio and no base metals) - Mineral sales fell 21% to $8.5 million - Mine operating cash-flow dropped 37% to $2.6 million - Cash costs reduced 24% to $7.56 per oz silver produced - Closed $11 million convertible redeemable debenture financing - Total silver-equivalent mineral inventory rose 24% to 62.3 million oz (assuming 75:1 silver:gold ratio based on gold/silver prices in December 2008, not including any base metals as equivalents) and proven and probable reserves now total 7.8 million ounces (oz) silver (9.6 million oz silver-equivalents), indicated resources increased to 19.5 million oz silver (26.1 million oz silver-equivalents) and inferred resources climbed to 19.5 million oz silver (26.6 million oz silver-equivalents) - Commenced 2009 capital and exploration projects at Guanacevi and Guanajuato -- Mine Development Completed: 1,248 meters at Guanacevi, 583 meters at Guanajuato -- Guanacevi Access Ramps Underway at Alex Breccia, Porvenir Dos and Santa Cruz -- Guanacevi Ventilation Shaft Completed and Fan Installation Underway -- Guanacevi Pump Station Upgraded and Further Modifications are Underway -- Guanacevi Tailings Expansion Now Underway -- Soil Geochemical Sample Grids Completed at San Pedro and Bolanitos -- Diamond drilling permits pending for Q2 start-up Bradford Cooke, Chairman and CEO, commented, "Endeavour enjoyed another strong quarter of silver production in Q1, 2009 compared to Q1, 2008. We put the brakes on our production growth late last year due to the low silver price and as a result, silver production is down from Q4, 2008. However, the silver price rebounded in the First Quarter, and thanks to our recent US$11 million financing, new capital projects are now underway at both mines that should facilitate a +20% expansion of silver production this year to the 2.7-2.9 million oz range." "Cash costs were also sharply lower in Q1, 2009 compared to Q1, 2008 as a result of the plant upgrade programs that facilitated higher tonnage throughputs and improved silver recoveries, and the depreciation of the Mexican peso relative to the US dollar. Notwithstanding the recent five day temporary shut-down to comply with the Presidential decree to restrict the spread of the H1N1 swine influenza virus, management expects Q2, 2009 silver production and cash costs to be comparable with Q1, 2009 as previously forecast." Financial Results (see Consolidated Statement of Operations below) Mineral Sales totalled $8.5 million in Q1, 2009, down 21% (Q1, 2008 - $10.7 million) due to lower silver prices and higher finished goods. Costs of Sales amounted to $5.9 million, down 11% (Q1, 2008 - $6.6 million) due to lower cash costs, so Mine Operating Cash Flows also declined 37% to $2.6 million (Q1, 2008 - $4.2 million) because of the lower prices and delayed revenue from accumulation of finished goods. With Depreciation and Depletion rising to $2.3 million (Q1, 2008 - $1.5 million) due to lower ore reserves, the Company realized lower Mine Operating Earnings of $0.3 million (Q1, 2008 - $2.6 million). The Operating Loss for the three months ended March 31, 2009 declined to $1.2 million (Q1, 2008 - $1.8 million) after Exploration costs of $0.2 million (Q1, 2008 - $2.0 million), General and Administrative costs of $1.2 million (Q1, 2008 - $1.4 million), Accretion of Convertible Debentures of $0.1 (Q1, 2008 - Nil) and Stock Based Compensation costs of $0.1 million (Q1, 2008 - $1.0 million). The Loss Before Taxes for the three months ended March 31, 2009 also increased to $1.9 million (Q1, 2008 - $1.4 million) after Foreign Exchange Loss of $0.9 million (Q1, 2008 - $0.5 million), and Investment and Other Income of $0.2 million (Q1, 2008 - $0.1 million). During the First Quarter, 2008 there was also a realized Gain on Marketable Securities of $0.8 million. The Company incurred a lower Net Loss in Q1, 2009 of $1.8 million (Q1, 2008 - $2.4) after an Income Tax recovery of $0.1 million (Q1, 2008 - Income Tax provision of $0.6 million). Cash costs were $7.56 per oz silver produced in Q1, 2009, down 24% (Q1, 2008 - $10.01 per oz) thanks to higher tonnage throughputs at Guanajuato as a result of the rehabilitation and re-opening of the four main mine shafts in Q2, 2008, higher metal recoveries at Guanacevi as a result of the numerous plant upgrade capital projects completed last year, and the depreciation of the Mexican peso. Endeavour reports its cash costs according to the Gold Institute cash cost reporting guidelines so they include offsite costs such as transportation, smelting and refining costs. The company made capital investments totalling $2.5 million in property, plant and equipment during the First Quarter, 2009. Approximately $2.0 million was spent at Guanacevi, including $1.6 million on mine development, $0.3 million on mine equipment and $0.1 million office equipment. Some $0.5 million was spent at Guanajuato, including $0.2 million on mine development and $0.3 million on mine equipment. At March 31, 2009, Company held cash and cash equivalents of $7.8 million and working capital of $15.7 million. Operating Results (see Consolidated Table of Operations below) Silver production in Q1, 2009 was 572,785 ounces, an increase of 13% compared to 504,669 ounces in the first quarter of 2008. Plant throughputs in Q1, 2009 totalled 85,731 tonnes (up 10%) at average grades of 271 grams per tonne (gpt) silver (down 11%) and 1.02 gpt gold (up 44%) as compared to 78,157 tonnes at average grades of 304 gpt silver and 0.71 gpt gold during Q1, 2008 and plant recoveries in Q1, 2009 were 81.8% for silver (up 24%) and 88.4% for gold (up 11%). The increased tonnage throughputs, lower silver grades and higher gold grades in Q1, 2009 are all attributable to Guanajuato operating near capacity during the quarter (up 265% to 456 tonnes per day), offset by a decrease in Guanacevi's output (down 26% to 567 tonnes per day) as stockpiles were depleted and more personnel and equipment were allocated to mine development. The Guanajuato mines have lower silver grades but significantly higher gold grades than the Guanacevi mines. Guanacevi production was also compounded by higher than expected water inflows that has reduced the current mine output as the access ramp progresses deeper below the water table. Pumping and electrical capacities are both in the process of being expanded as part of the 2009 mine development capital program. The increased silver and gold recoveries (silver up 24% to 81.8%) reflect the plant upgrades and lower manganese ore-types now being processed at Guanacevi, and the higher throughputs of higher recovery ore-types at Guanajuato. The Company also changed how it reports its silver production from Guanajuato in Q1, 2009. Prior to December, 2008, the Company recovered gold and silver at Guanajuato into bulk sulfide concentrates and shipped the concentrates to the Met-Mex ("Penoles") refinery in Torreon, Mexico for treatment. Guanajuato production was previously reported as silver-in-concentrate. However, Penoles significantly increased their smelting charges, deductions and penalties mid-2008. Therefore, the Company evaluated its process alternatives for the Guanajuato concentrates and determined that it could materially reduce its costs by shipping the concentrates to the Guanacevi plant for treatment to produce dore silver-gold bars. Smelters typically pay more than 99% for the silver and gold in dore as compared to 95% in concentrates, but re-processing the concentrates at Guanacevi only recovers 88% of the silver and gold in concentrate, resulting in slightly lower production, but significantly lower costs, overall improving the Company's gross margin. Therefore, all Guanajuato production is now reported as silver in dore, similar to the Guanacevi production. Q2, 2009 Outlook In Q2, 2009, Endeavour expects silver production and cash costs to be comparable with Q1, 2009 as previously forecast. The 2009 mine development capital program is well on track to bring both the new Alex Breccia mine at Guanacevi and the new Lucero vein at Guanajuato into full production by the end of Q2, 2009. Furthermore, the new Porvenir Dos mine at Guanacevi should be ready for production by the end of Q3, 2009, thereby facilitating a jump in silver production in Q3/Q4 compared to Q1/Q2. Increased production from the San Jose vein which has split into two veins will start production in Q2 on one split and in Q3 on the other split. Exploration drilling will get underway in the San Pedro area of Guanacevi and the Lucero area of Guanajuato during the Second Quarter, 2009 in order to better define and expand these new silver-gold discoveries. In Guanacevi, drilling proposed for the San Pedro area will test both high grade veins as well as moderate grade mantos and one larger stock-work zone of silver-lead-zinc mineralization, all within an area measuring more than 1.5 kilometers (0.9 miles) in length and 500 meters (1,600 feet) across. In Guanajuato, drilling will try to extend the Bolanitos, San Jose and Lucero vein mineralization to the south where it still remains open. Previous drilling highlights include intervals of 5.54 grams per tonne gold and 166 gpt silver over 5.80 meters (19 feet), including 11.45 gpt gold and 239 gpt silver over 1.90 meters (6 feet) on the Bolanitos vein. Endeavour Silver Corp. (TSX:EDR)(NYSE Amex:EXK)(DBFrankfurt:EJD) 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 four consecutive years of aggressive silver production and resource growth. The organic expansion programs now underway at Endeavour's two operating silver mines in Mexico combined with its strategic acquisition program should help Endeavour achieve its goal to become the next premier mid-tier primary silver producer. ENDEAVOUR SILVER CORP. BRADFORD COOKE, Chairman and CEO |
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