Endeavour Silver Corporation’s Stock Price fails to reflect achievements

Print This Post | Topic: Silver Mining Companies — August 9th, 2010

Endeavour Silver Corporation (EXK) has once again come up with some good results continuing with their solid progress as evidenced by their ability to stick to their schedule. However, the results are struggling to find their way into the stock price as with many other silver producers. Taking a quick look at the above chart we can see that progress has been down to sideways in a pattern of consolidation albeit at a level that is a little low in our humble opinion. The downward crossover made by the 50 day moving average crossing over the 200 day moving average does not bode well for the stock price, so a fairly rapid upward movement is required in order to reverse this situation.

The following highlights below have been extracted from Endeavour’s recently published financial results:

Silver production climbed 41% to 826,439 ounces (oz)
Gold production jumped 61% to 4,460 oz
Silver equivalent production rose 46% to 1,116,404 oz (65:1 silver: gold ratio, no base metals)
Cash costs fell 15% to $5.94 per oz silver produced (net of gold credits)
Sales revenues increased 140% to $19.7 million
Mine operating cash-flow escalated 263% to $9.4 million
EBITDA was up 250% to $4.9 million

Bradford Cooke, Chairman and CEO, added the following comments:

“Endeavour Silver’s financial and operating performance continued to shine in Q2, 2010 thanks to rising silver-gold production, falling cash costs and higher metal prices. As a result, Company revenues, cash-flow, EBITDA and earnings were all sharply higher in Q2, 2010 compared to Q2, 2009. Add to that our recent exploration success at Lucero South and the acquisition of the new Belen properties in Guanajuato and it is safe to say Endeavour enjoyed a good Second Quarter.”

A point of note for those considering an investment in this tiny sector of the market is the cash cost element of their operations, which are stated below and are calculated as per the Gold Institute reporting guidelines. You might want to check the reporting methodology of your favourite precious metals producers as not all of them use the same reporting format and therefore results can be misleading.

Cash Operating Costs declined 15% to $5.94 per oz silver produced in Q2, 2010 (Q1, 2009 - $6.95 per oz) thanks to higher plant throughputs at Guanacevi, higher gold production and gold prices, partially offset by the appreciation of the Mexican peso. Endeavour reports its cash operating costs according to the Gold Institute reporting guidelines so they include offsite costs such as transportation, smelting and refining, net of by-product credits.

Endeavour Silver Corporation is appearing on a screen near you as the company trades on three stock exchanges as follows:

(TSX: EDR) (NYSE-AMEX: EXK) (DB-Frankfurt: EJD)

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