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Endeavour Silver Corp. Message Board

  • tthemainman38 tthemainman38 Apr 19, 2013 2:26 PM Flag

    A Little Knowledge, A Dangerous Thing

    A little knowledge can be a dangerous thing. Here's my point. Hebba Investments published an article recently siting that the true costs of producing silver is in the $27 area on average rather than the single digits sited by the producing companies. They then mentioned a half a dozen companies, EZK included, and concluded that EZK's cost was in the high $25 range while the remaining companies some higher, some lower, with no significant difference. The formula used to derive this number was subtracting earnings from revs and dividing SEO produced into the remaining figure. The problem with over simplifying by using a formula like this is that it left out a huge amount important information such as How much capex was spent during 2012, how much capacity has been added, how much additional reserves have been added, etc..Also, EZK is a young and growing company focused on growth while some of the others are mature companies, one of them operating in excess of 100 years, HL, so one should compares apples to apples for a valid comparison.

    The most important point is that to the best of my limited knowledge, none have grown top and bottom line growth as impressive as EZK. Also, while Hebba rightly points out. that replacement costs should be included in production costs there is no place in the formula to include the expansion of reserves which in our case is a very significant amount. Sure the price of silver and gold is important BUT this company can and will make a profit at silver sub $20 should that occur. This is not supposition, they already accomplished that when this was a significantly smaller company. Additionally, for those that agree with Hebba, the price of silver cannot stay below $27 for long because since that is the true cost of production, miners cannot or will not produce silver at less than cost for long, thus the $27 floor.

    Mining wise, the company is doing great, focusing on growth and cost efficiencies.

    Sentiment: Strong Buy

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    • I'm in a bio trade so need to be brief. I agree. Hebba Investments is linked to the S.A. article. I had posted some of the accounting format for miner's and EXK and I remember that you liked it. You are so right about your mention of capex. Mainman lets discuss this more later. A great post from a honest person. Thanks

      • 1 Reply to newscentral2002
      • Newscentral- You're by far the most knowledgeable poster on this board. Can you give us some insight on any goings on regarding possible ore development for El Cubo. The key to a major increase in production for 2013 is to tap into a vein that will supply enough ore to fully utilize the new El Cubo plant. Once that happens the company will expand Bolanitos to 2000 tpd. The company already stated that the Bolanitos mine is producing enough ore for the expansion and that it can be accomplished w/o additional personnel. A great cost cutting measure.

        Sentiment: Strong Buy

    • thinking back to the quarter EXK built up their inventory, it was mentioned that it was carried on the books at $17 and change and when sold that cost of production would be used.

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