Endeavour Silver Reports 2nd Quarter
- By Alberto Abaterusso
Endeavour Silver Corp. (EXK) released its financial results for the second quarter of fiscal 2017 on Aug. 3.
The Canadian mid-tier mining company closed the second quarter reporting EPS of zero cents, or a loss of $16,000, down 100% from one cent, or $1.7 million, in second-quarter 2016.
Warning! GuruFocus has detected 2 Warning Signs with EXK. Click here to check it out.
The intrinsic value of EXK
The company missed earnings expectations by two cents, producing a negative surprise of 100%.
Source: Yahoo Finance
Revenue for the quarter came in at $32.7 million, a 27% decrease year over year.
During the quarter, a total volume of 988,821 ounces of silver was sold, a 34% decline from the second quarter of 2016, and a total volume of 12,294 ounces of gold was sold, a 20% decrease on a year-over-year basis. Gold was sold at an average price of $1,270 per ounce while silver was sold at an average price of $17.16 per ounce.
The lower sales volumes were a result of a decline in production due to differences in the annual mine plans.
Net of gold credits, the company reported a 56% year-over-year increase in cash costs to $8.36 per ounce and all-in sustaining costs (AISC) by 94% to $20.46 per ounce of payable silver.
The decline in sales volumes and the average realized gold price - down 1% compared to the second quarter of 2016 - was also reflected in the year-over-year decrease in the Ebitda and operating cash flow before changes in working capital.
The miner closed the quarter with Ebitda of $3.7 million and operating cash flow of $4.4 million. This was a substantial decline from Ebitda of approximately $5.8 million and operating cash flow of around $8.3 million a year ago.
The company says its financial performance was also negatively influenced by increased costs for exploration and development activities compared to the year-ago quarter.
For full fiscal 2017, Endeavour guides silver production to range between 4.8 million and 5.2 million ounces and gold production to range between 49,100 ounces and 51,200 ounces. According to a silver-gold ratio of 75:1, the production of silver equivalent is expected to range between 8.5 million and 9 million ounces.
As of the second quarter, the company has $52.2 million in cash and securities and a $4 million in available credit.
GuruFocus gives Endeavour Silver a financial strength rating of 8 out of a total of 10 and a profitability and growth rating of 4 out of 10.
Endeavour Silver is currently trading around $2.29 per share with a market capitalization of $267.66 million, a price-book (P/B) ratio of 2.08, a price-earnings (P/E) ratio of 36.35, a price-sales (P/S) ratio of 1.76 and an EV/Ebitda ratio of 8.43.
The company's stock has a recommendation rating of 2.4, which ranges between 1.0 (Strong Buy) and 5.0 (Sell). The analysts' average target price per share is $4.22. The price represents a nearly 84.3% upside from the current market value.
Endeavour Silver had 63,397,000 ounces of silver equivalent reserves as of Dec. 31, 2016. The company has an enterprise value of $227.34 million. When the enterprise value is divided by the silver reserves, it yields an EVO metric of $3.59.
Disclosure: I have no positions in Endeavour Silver.
This article first appeared on GuruFocus.
Warning! GuruFocus has detected 2 Warning Signs with EXK. Click here to check it out.
The intrinsic value of EXK
