Endeavour Silver Reports Third Quarter, 2013 Financial Results; Conference Call at 10am PST (1pm EST) on November 6, 2013

Marketwired

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Nov. 5, 2013) - Endeavour Silver Corp. (EXK)(EDR.TO) announced today its financial results for the Third Quarter, 2013 (reported in US$). Endeavour is a mid-cap silver mining company that owns and operates three underground silver-gold mines in Mexico, the Guanaceví mine in Durango state and the Bolañitos and El Cubo mines in Guanajuato state.

Highlights of Third Quarter, 2013 (Compared to Third Quarter, 2012)

Financial

  • Net earnings increased from $0 to $12.3 million ($0.12 per share) Adjusted earnings(1) increased 663% to $13.0 million ($0.13 per share) EBITDA(1) increased 140% to $29.3 million
  • Cash flow from operations before working capital changes decreased 34% to $25.9 million Mine operating cash flow(1) increased 27% to $31.8 million
  • Revenue increased 31% to $67.8 million on 1,693,989 silver oz sold and 20,958 gold oz sold Realized silver price fell 21% to $22.60 per oz sold
  • Realized gold price fell 14% to $1,409 per oz sold Direct costs of production increased 7% to $104.05 per tonne
  • Cash costs of production net of by-product gold credits (1) increased 10% to $5.14 per oz silver All-in sustaining costs fell 43% to 12.14 per oz silver
  • Cash costs of production on a co-product basis were $12.32 per oz silver and $768 per oz gold Bullion inventory at quarter-end included 365,481 oz silver and 2,176 oz gold Concentrate inventory at quarter-end included 19,645 oz silver and 297 oz gold
  • Cash and equivalents of $25.2 million and working capital of $26.8 million at quarter-end

Operations

  • Silver production up 63% to 1,855,846 oz Gold production up 95% to 22,947 oz
  • Silver equivalent production up 75% to 3.23 million oz (at a 60:1 silver:gold ratio) Enhanced cash flow by increasing production tonnes and/or grades at all three mines Continued to cut costs through additional work-force reductions and operating efficiencies
  • El Cubo and Bolañitos production and recoveries both benefitted from processing metal concentrates accumulated in Q2, 2013 and the clean-out of the leased Las Torres plant
  • Increased 2013 production guidance as a result of the out-performance of the Bolañitos mine and better production from the El Cubo mine

(1) Adjusted earnings, mine operating cash flow, EBITDA and cash costs are non-IFRS measures. Please refer to the definitions in the Company's Management's Discussion and Analysis.

Bradford Cooke, CEO of Endeavour Silver, stated, "Our solid financial performance in Q3, 2013 was a direct result of the Company's ability to respond quickly to the drop in metal prices earlier this year. By aggressively cutting cash and other costs and boosting production and cash flow, Endeavour was able to deliver sharply higher EBITDA and net earnings in Q3, 2013 compared to Q3, 2012.

"We are now half way through our two year operational turn-around at El Cubo and it appears to have turned the corner. Our next focus at El Cubo is to expand the reserves and resources to facilitate a 35% mine expansion to 1,550 tonnes per day plant capacity over the next year. Our goal over the next year is to reduce cash operating costs to single digits, which would make El Cubo the profitable core asset we originally envisaged when we acquired the mine in 2012.

"Our free cash flow in the third quarter allowed us to start rebuilding our cash position and we were able to take our foot off the brakes, albeit carefully, with regard to capital and exploration spending. Management will continue to focus on improving our operating performance and profit margin at each mine, especially in the light of the new mining taxes currently being legislated in Mexico."

Financial Results (see Consolidated Statement of Operations below)

Mine Operations

For the quarter ended September 30, 2013, the Company generated revenue totaling $67.8 million (2012 - $51.9 million). During the period, the Company sold 1,693,989 oz silver and 20,958 oz gold at realized prices of $22.60 and $1,409 per oz respectively, compared to sales of 1,294,241 oz silver and 8,984 oz gold at realized prices of $28.72 and $1,637 per oz respectively in 2012. After cost of sales of $46.1 million (2012 - $34.8 million), mine operating earnings amounted to $21.7 million (2012 - $17.1 million).

Cash Flow

Mine operating cash flow before taxes was $31.8 million (2012 - $26.9 million), excluding depreciation and depletion of $12.6 million (2012 - $6.4 million), stock-based compensation of $0.1 million (2012- $0.1 million), and a recovery of a previous inventory write down of $2.7 million (2012- Write down of $3.3 million). The mine operating cash flow directly resulted in operating cash flow before working capital changes to increase 34% to $25.9 million (2012 - $19.3 million).

Net Earnings

Net earnings were $12.3 million or $0.12 per share compared to $0 in Q3, 2012. They included a mark-to- market derivative liability loss related to share purchase warrants issued in 2009 denominated in Canadian dollars, while the Company's functional currency is the US dollar. Under IFRS, these warrants are classified and accounted for as financial liability at fair market value with adjustments recognized through net earnings. The appreciation of these warrants resulted in a derivative liability loss of $0.7 million (2012 - $1.7 million). Therefore, the adjusted earnings were $13.0 million ($0.13 per share) compared to $1.7 million ($0.02 per share) in Q3, 2012.

Cash Costs

Cash costs of production, net of gold by-product credits, increased 10% to $5.14 per oz silver produced (2012 - $4.70), and on an all-in sustaining basis were $12.14 per oz silver, a 43% drop from 2012. On a co-product basis, cash costs were $12.74 per oz of silver and $794 per oz of gold. The higher cash costs were largely due to the growing contribution of the El Cubo operation and lower gold credits, offset by the increased production from the Bolañitos operation.

Operating Results (see Consolidated Table of Mine Operations below)

Guanaceví

Silver production at the Guanaceví mine during Q3, 2013 was 715,080 oz, a increase of 20% compared to 598,285 oz, and gold production was 1,977 oz, a decrease of 26% compared to 2,667 oz in Q2, 2012. Metal production was up due to higher metal grades and recoveries. Plant throughput was 107,480 tonnes at average grades of 265 gpt silver and 0.70 gpt gold compared to 108,343 tonnes grading 227 gpt silver and 0.87 gpt gold. The higher silver grades are a function of geological variations of the different ore zones, while the lower gold grades are primarily due to final reconciliation of concentrate processed on behalf of Bolañitos in 2012.

Bolañitos

Silver production at the Bolañitos mine was 794,734 oz, an increase of 83% compared to 433,388 oz, and gold production was 15,869 oz, an increase of 116% compared to 7,363 oz in Q3, 2012. Metal production was up due to higher throughput, grades and recoveries. The Bolañitos mine averaged 2,082 tpd, well above the mine plan due to increased contract mining and the switch from 100% cut-and-fill mining to 50% long-hole mining. The Bolañitos plant operated at its 1,600 tpd capacity, and the extra tonnes produced by the mine were processed at the El Cubo operation. This additional plant access allowed Bolañitos production to significantly exceed planned output.

Plant throughput was 181,442 tonnes at average grades of 147 gpt silver and 2.75 gpt gold compared to 117,271 tonnes grading 148 gpt silver and 2.39 gpt gold in Q3, 2012. Ore grades were also significantly above plan, as mining accessed better than planned ore grades, specifically in the Daniela vein. Silver and gold recoveries were both anomalously higher due three one-time events: the Las Torres flotation plant was cleaned out of concentrate in July prior to expiry of the lease, the El Cubo leach circuit was cleaned out as El Cubo commenced concentrate sales in September and the precipitate inventory at El Cubo at the end of Q2 was processed into doré in Q3.Management expects recoveries to return to historic levels in Q4, 2013.

In addition, selling concentrates as opposed to producing doré at the El Cubo plant will increase recoveries going forward. Concentrate sales result in higher payable metal production and higher refining charges, resulting in a net financial benefit at current metal prices. Depending on certain variables, the net financial benefit can move in favour of producing doré. Management will closely monitor these variables to optimize the financial benefit.

El Cubo

Silver production at the El Cubo mine was 346,032 oz, an increase of 226% compared to 106,260 oz in Q3, 2012 and gold production was 5,101 oz, an increase of 196% compared to 1,724 oz in Q3, 2012. The Company acquired the El Cubo mine in July 2012 and has made immediate and lasting improvements at El Cubo to ensure its economic viability at current metal prices.

Plant throughput was 100,168 tonnes at average grades of 112 gpt silver and 2.62 gpt gold compared to 80,550 tonnes grading 92 gpt silver and 1.42 gpt gold in Q3, 2012. Silver and gold recoveries were both anomalously higher due three one-time events: the Las Torres flotation plant was cleaned out of concentrate in July prior to expiry of the lease, the El Cubo leach circuit was cleaned out as El Cubo commenced concentrate sales in September, and in Q2 the El Cubo plant held a significant work-in- process metal balance that was processed in Q3 once the filter presses were installed and commissioned. Management expects recoveries to return to historic levels in Q4, 2013.

In addition, selling concentrates as opposed to producing doré at the El Cubo plant will increase recoveries going forward. Concentrate sales result in higher payable metal production and higher refining charges, resulting in a net financial benefit at current metal prices. Depending on certain variables, the net financial benefit can move in favour of producing doré. Management will closely monitor these variables to optimize the financial benefit.

Conference Call

A telephone conference call to discuss the results will be held at 10:00 am PST (1:00 pm EST) on Wednesday, November 6, 2013. To participate in the conference call, please dial the following:

Toll-free in Canada and the USA: 1-800-319-4610

Local Vancouver: 604-638-5340

Outside of Canada and the USA: 1-604-638-5340

No pass-code is necessary to participate in the conference call.

A replay of the conference call will be available by dialing 1-800-319-6413 in Canada & USA (Toll-free) or 1-604-638-9010 outside of Canada & USA. The required pass-code is 4890 followed by the # sign.

The replay will also be available on the Company's website at www.edrsilver.com.

All shareholders can receive a hard copy of the Company's complete audited financial statements free of charge upon request. To receive this material in hard copy, please contact Meghan Brown, Director Investor Relations at 604-640-4804 or toll free 877-685-9775.

About Endeavour Silver - Endeavour is a mid-tier silver mining company focused on growing its profits, production, reserves and resources in Mexico. Since start-up in 2004, Endeavour has posted eight consecutive years of accretive growth of its silver mining operations. The organic expansion programs now underway at Endeavour's three silver-gold mines in Mexico combined with its strategic acquisition and exploration programs should facilitate Endeavour's goal to become a premier senior silver producer.

Cautionary Note Regarding Forward-looking Statements

This news release contains "forward-looking statements" within the meaning of the United States private securities litigation reform act of 1995 and "forward-looking information" within the meaning of applicable Canadian securities legislation. Such forward-looking statements and information herein include but are not limited to statements regarding Endeavour's anticipated performance in 2013 and the timing and results of exploration drill programs. The Company does not intend to, and does not assume any obligation to update such forward-looking statements or information, other than as required by applicable law.

Forward-looking statements or information involve known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Endeavour and its operations to be materially different from those expressed or implied by such statements. Such factors include, among others, changes in national and local governments, legislation, taxation, controls, regulations and political or economic developments in Canada and Mexico; operating or technical difficulties in mineral exploration, development and mining activities; risks and hazards of mineral exploration, development and mining; the speculative nature of mineral exploration and development, risks in obtaining necessary licenses and permits, and challenges to the Company's title to properties; as well as those factors described in the section "risk factors" contained in the Company's most recent form 40F/Annual Information Form filed with the S.E.C. and Canadian securities regulatory authorities.

Forward-looking statements are based on assumptions management believes to be reasonable, including but not limited to: the continued operation of the Company's mining operations, no material adverse change in the market price of commodities, mining operations will operate and the mining products will be completed in accordance with management's expectations and achieve their stated production outcomes, and such other assumptions and factors as set out herein. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward- looking statements or information, there may be other factors that cause results to be materially different from those anticipated, described, estimated, assessed or intended. There can be no assurance that any forward-looking statements or information will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements or information. Accordingly, readers should not place undue reliance on forward-looking statements or information.

ENDEAVOUR SILVER CORP.  
COMPARATIVE TABLE OF CONSOLIDATED MINE OPERATIONS  
   
Comparative Table of Consolidated Mine Operations  
Period Plant T'put   Ore Grades   Recovered Ounces   Recoveries   Cash Cost   Direct Cost  
  Tonnes   Ag
(gpt)
  Au
(gpt)
  Ag
(oz)
  Au
(oz)
  Ag
(%)
  Au
(%)
  $ per oz   $ per tonne  
Production 2013                                    
Q1, 2013 376,344   154   1.51   1,489,746   15,032   79.9   82.3   10.04   99.63  
Q2, 2013 393,070   165   1.96   1,535,873   19,914   73.6   80.4   10.53   96.45  
Q3, 2013 389,090   171   1.89   1,855,846   22,947   86.7   96.9   5.14   104.06  
Q4, 2013                                    
Total 1,158,504   164   1.79   4,881,465   57,893   80.1   86.8   8.09   99.06  
Production 2012                                    
Q1, 2012 193,759   229   1.33   1,072,491   6,321   75.2   76.2   6.26   92.44  
Q2, 2012 202,987   208   1.47   1,040,026   7,695   76.5   80.3   5.46   86.32  
Q3, 2012 306,164   161   1.49   1,137,933   11,754   71.8   80.1   4.70   97.05  
Q4, 2012 362,779   151   1.55   1,235,026   12,917   70.1   71.7   12.25   92.86  
Total 1,065,689   179   1.48   4,485,476   38,687   73.2   76.5   7.33   92.74  
                                     
Q3, 2013 : Q3, 2012 27 % 6 % 27 % 63 % 95 % 21 % 21 % 9 % 7 %
                                     
Q3, 2013 : Q2, 2013 -1 % 4 % -4 % 21 % 15 % 18 % 21 % -51 % 8 %
                                     
YTD 2013:YTD 2012 65 % -15 % 24 % 50 % 125 % 8 % 10 % 48 % 12 %
                                     
ENDEAVOUR SILVER CORP.  
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)  
(expressed in thousands of US dollars, except for shares and per share amounts)  
   
  Three Months Ended     Nine Months Ended  
  Sept. 30,   Sept. 30,     Sept. 30,   Sept. 30,  
  2013   2012     2013   2012  
                           
Revenue $ 67,803   $ 51,880     $ 208,926   $ 141,360  
Cost of sales:                          
  Direct production costs   35,739     24,485       117,372     56,986  
  Royalties   287     454       1,093     1,397  
  Share-based compensation   131     146       408     421  
  Amortization and depletion   12,566     6,353       37,789     19,177  
  Write down (recovery) of inventory to net realizable value   (2,668 )   3,345       5,210     3,345  
    46,055     34,783       161,872     81,326  
Mine operating earnings   21,748     17,097       47,054     60,034  
Expenses:                          
  Exploration   1,854     3,420       11,022     7,342  
  General and administrative   2,464     2,850       9,381     9,564  
    4,318     6,270       20,403     16,906  
Operating earnings   17,430     10,827       26,651     43,128  
Mark-to-market loss/(gain) on derivative liabilities   679     1,728       (3,159 )   (47 )
Mark-to-market loss/(gain) on contingent liability   127     5,005       (7,772 )   5,005  
Finance costs   313     181       1,091     191  
Other income (expense):                          
  Foreign exchange   (1,191 )   1,814       (2,230 )   2,981  
  Investment and other income   1,247     (106 )     3,596     1,834  
    56     1,708       1,366     4,815  
Earnings before income taxes   16,367     5,621       37,857     42,794  
Current income tax expense   2,729     3,420       8,928     9,903  
Deferred income tax expense   1,341     2,185       2,636     5,595  
    4,070     5,605       11,564     15,498  
Net earnings (loss) for the period   12,297     16       26,293     27,296  
Other comprehensive income (loss), net of tax                          
  Net change in fair value of available for sale investments   517     1,321       (3,412 )   (2,046 )
                           
Comprehensive income (loss) for the period $ 12,814   $ 1,337     $ 22,881   $ 25,250  
                             
Basic earnings (loss) per share based on net earnings $ 0.12   $ 0.00     $ 0.26   $ 0.30  
Diluted earnings (loss) per share based on net earnings $ 0.12   $ 0.00     $ 0.23   $ 0.29  
                           
Basic weighted average number of shares outstanding   99,741,010     97,666,618       99,704,100     91,159,694  
Diluted weighted average number of shares outstanding   100,637,952     99,322,475       101,617,107     93,699,625  

This statement should be read in conjunction with the condensed consolidated financial statements for the period ended September 30, 2013 and the related notes contained therein

ENDEAVOUR SILVER CORP.  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(expressed in thousands of U.S. dollars)  
   
  Three Months Ended   Nine Months Ended  
  Sept. 30,   Sept. 30,   Sept. 30,   Sept. 30,  
  2013   2012   2013   2012  
                         
Operating activities                        
Net earnings (loss) for the period $ 12,297   $ 16   $ 26,293   $ 27,296  
Items not affecting cash:                        
  Share-based compensation   886     1,018     2,825     3,803  
  Amortization and depletion   12,648     6,427     38,024     19,354  
  Deferred income tax provision   1,341     2,184     2,636     5,595  
  Unrealized foreign exchange loss (gain)   124     (731 )   726     (1,632 )
  Mark to market loss (gain) on derivative liability   679     1,728     (3,159 )   (47 )
  Mark to market loss (gain) on contingent liability   127     5,005     (7,772 )   5,005  
  Finance costs   477     6     629     16  
  Write down (recovery) of inventory to net realizable value   (2,668 )   3,345     5,210     3,345  
  Loss (gain) on marketable securities   -     325     (1,777 )   (158 )
Net changes in non-cash working capital   (3,881 )   (3,979 )   (12,389 )   (6,244 )
Cash from operating activities   22,030     15,344     51,246     56,333  
                         
Investing activites                        
  Property, plant and equipment expenditures   (18,579 )   (18,249 )   (78,936 )   (39,544 )
  Acquisition of Mexgold Resources Inc.   -     (100,000 )   -     (100,000 )
  Investment in short term investments   -     -     (130 )   (27,884 )
  Proceeds from sale of short term investments   -     3,740     4,720     50,373  
  Investment in long term deposits   (54 )   (741 )   (54 )   (917 )
Cash from (used in) investing activities   (18,633 )   (115,250 )   (74,400 )   (117,972 )
                         
Financing activities                        
  Proceeds from revolving credit facility   -     -     30,000     -  
  Common shares issued on exercise of options and warrants   -     1,034     454     2,312  
  Interest paid   (467 )   -     (599 )   -  
Cash from financing activites   (467 )   1,034     29,855     2,312  
                         
Effect of exchange rate change on cash and cash equivalents   (38 )   613     (117 )   1,078  
Increase (decrease) in cash and cash equivalents   2,930     (98,872 )   6,701     (59,327 )
Cash and cash equivalents, beginning of period   22,309     115,444     18,617     75,434  
Cash and cash equivalents, end of period $ 25,201   $ 17,185   $ 25,201   $ 17,185  

This statement should be read in conjunction with the condensed consolidated financial statements for the period ended September 30, 2013 and the related notes contained therein

ENDEAVOUR SILVER CORP.  
CONSOLIDATED BALANCE SHEETS  
(expressed in thousands of US dollars)  
   
  September 30,   December 31,  
  2013   2012  
ASSETS            
Current assets            
  Cash and cash equivalents $ 25,201   $ 18,617  
  Investments   2,295     8,520  
  Accounts receivable   28,794     20,526  
  Inventories   32,007     40,797  
  Prepaid expenses   2,803     9,940  
Total current assets   91,100     98,400  
Non-current deposits   1,042     1,451  
Mineral property, plant and equipment   378,633     338,431  
Goodwill   39,245     39,245  
Total assets $ 510,020   $ 477,527  
   
LIABILITIES AND SHAREHOLDERS' EQUITY            
Current liabilities            
  Accounts payable and accrued liabilities $ 21,714   $ 34,631  
  Income taxes payable   1,370     3,854  
  Derivative liabilities   2,177     5,336  
  Revolving credit facility   39,000     9,000  
Total current liabilities   64,261     52,821  
   
Provision for reclamation and rehabilitation   6,526     6,496  
Contingent liability   725     8,497  
Deferred income tax liability   72,152     69,517  
Total liabilities   143,664     137,331  
   
Shareholders' equity            
Common shares, unlimited shares authorized, no par value, issued and outstanding 99,741,010 shares (Dec 31, 2012 - 99,541,522 shares)   358,228     357,296  
Contributed surplus   14,128     12,828  
Accumulated comprehensive income (loss)   (8,743 )   (5,331 )
Retained earnings (deficit)   2,743     (24,597 )
Total shareholders' equity   366,356     340,196  
Total liabilities and shareholders' equity $ 510,020   $ 477,527  

This statement should be read in conjunction with the condensed consolidated financial statements for the period ended September 30, 2013 and the related notes contained therein.

Contact:
Endeavour Silver Corp.
Meghan Brown
Director Investor Relations
604-640-4804 or Toll free: 1-877-685-9775
mbrown@edrsilver.com
www.edrsilver.com

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