Endeavour Silver’s production rebounds

VANCOUVER — Mexico-focused producer Endeavour Silver (TSX: EDR; NYSE: EXK) has benefitted from a bounceback in production over the past three months, as the company saw both its silver and gold output jump.

Endeavour operates three underground mines across Mexico — Guanacevi in Durango State, and Bolanitos and El Cubo in Guanajuato State — and all three assets showed improvement during the recent quarter. Quarterly silver production rose 63% to 1.9 million oz. compared to the year-ago period, while gold production was up 95% to 22,947 oz.

Similarly, compared to the second quarter of 2013, there was an overall a 27% silver-gold production increase, from 1.5 million oz. silver and 19,900 oz. gold during the second quarter, with better-than-expected grades at Guanacevi and El Cubo underpinning a strong quarter.

Endeavour has been streamlining operations at the company’s Las Torres plant, which boosted production and recoveries at El Cubo and Bolanitos.

Guanacevi chipped in 715,000 oz. silver and 1,978 oz. gold; Bolanitos, 794,734 oz. silver and 15,868 oz. gold; and El Cubo, 346,032 oz. silver and 5,100 oz. gold.

“Our operations team continues to meet or beat their production targets. Production at each of the three mines was above plan for the quarter, and we made a seamless transition from processing extra Bolanitos production through the Las Torres leased plant to filling the excess capacity at the newly rebuilt El Cubo plant,” CEO Bradford Cooke said in a release.

“We are now halfway through our two-year operational turnaround at El Cubo, and it appears to have turned the corner. I would like to credit our workforce for making the changes needed to improve productivity. There is still much work to do, but through continued co-operation, our goal is to continue improving the production grades and lowering the operating costs,” he said.

Endeavour’s revenues rose 31% year-on-year to US$68 million on 1.8 million silver oz. and 21,000 gold oz. sold, with averaged realized silver and gold prices of US$22.60 per oz. and US$1,409 per oz.

Despite the production increase, the company reported a 5% drop in revenues compared to the second quarter, when it generated US$71.3 million. This was due to  lower realized prices of US$21.38 per oz. silver and US$1,297 per oz. gold.

Though financial operating metrics were unavailable at press time, Endeavour had been struggling with rising costs to start the year, as its cash costs net of by-product gold credits soared 93% year-on-year during the second quarter to US$10.53 per oz. silver, while cash costs on a co-product basis were US$14.75 per oz. silver and US$854 per oz. gold.

Endeavour will release its full financial results in November.

The company had exploration success during the quarter, which included discovering mineralized zones at Bolanitos and El Cubo.

In July Endeavour reported it had intersected three high-grade and  gold-enriched silver zones at Bolanitos near historic mine workings in the Asuncion, La Luz and Plateros areas of the La Luz vein system.

Results include hole 1, which cut 4.4 metres true width of 124 grams silver per tonne and 3.45 grams gold per tonne at the Plateros vein from 130 metres depth.

In September the company announced the discovery of two veins at El Cubo near historic mine workings in the Asuncion area of the Villalpando vein system.

Endeavour shares have traded within a 52-week window of $3.03 and $9.32, and closed at $4.11 at press time.

During the second quarter the shares rose 16%, or 57¢.

The company has 100 million shares outstanding for a $398-million market capitalization.