Endeavour Silver Reports Gold and Silver Production
- By Alberto Abaterusso
Endeavour Silver Corp. (EXK) provided the markets with its operating results for the second quarter of fiscal 2017 on July 12.
The Canadian mid-tier miner closed the quarter with silver equivalent production of 2.1 million ounces, a 19.2% decline from 2.6 million ounces in the comparable quarter of 2016. The total amount was calculated using a silver to gold ratio of 70:1.
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The intrinsic value of EXK
Endeavour produced 13,057 ounces of gold, a 17% decrease from the second quarter of 2016, and 1,143,788 ounces of silver, a 26% decrease on a year-over-year basis.
The decline in quarterly production on a year-over-year basis is due to differences in the annual mine plans. When second-quarter production is compared to the production of the previous quarter, however, the company reported an improvement of approximately 200,000 ounces of silver equivalent, which is attributed to increased production levels at the Bolanitos and El Cubo mines.
At Bolanitos mine, Endeavour produced 231,016 ounces of silver and 6,965 ounces of gold for a total silver equivalent production of 718,566 ounces. This represents a 17.4% decrease on a year-over-year basis. Production in the second quarter, however, was 114,583 ounces higher than the previous quarter. While the production of gold was characterized by higher throughput and grades, the production of silver - in contrast - was affected by lower grades that more than offset the higher throughput.
At El Cubo mine, Endeavour produced a total volume of 795,011 ounces of silver equivalent, a 24.5% decrease from the second quarter of 2016 and a nearly 17% increase from the production of the previous quarter of fiscal 2017. Here, the production was also influenced by lower throughput levels even though the precious metals were mined at a higher grades.
At the Guanacevi mine, the company produced 544,271 ounces of silver equivalent, a 25% decrease from the comparable quarter of fiscal 2016 and an 11.4% decrease from the production in the previous quarter. Lower performance at Guanacevi was the result of lower output and grades. The company is trying to improve the efficiency of operations at the mine to better face issues it experienced over the last 12 months.
Of course, as a reflection of lower production on a year-over-year basis, the company also reported decreased volumes of gold and silver sold. In the second quarter, Endeavour sold 988,821 ounces of silver, a 34% decline from the comparable quarter of 2016, and 12,294 ounces of gold, a 20% decline from the same period.
On Aug. 3, Endeavour will release its financial figures for the second quarter of fiscal 2017. For the time being, analysts forecast the mid-tier mining company will report EPS of three cents backed by revenue of $38.24 million. These are average figures.
Endeavour Silver is currently trading at $2.99 per share with a market capitalization of $360.93 million, a price-book (P/B) ratio of 2.73, a price-earnings (P/E) ratio of 47.62, a price-sales (P/S) ratio of 2.38 and an EV/Ebitda ratio of 11.70.
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 $4.63. The price represents nearly 54.8% 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 $315.16 million. When the enterprise value is divided by the amount of silver reserves, it yields an EVO metric of $4.97.
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
