Endeavour Silver’s Earnings Call: Production Up, Challenges Persist

Endeavour Silver ((TSE:EDR)) has held its Q2 earnings call. Read on for the main highlights of the call.

Endeavour Silver’s latest earnings call reveals a company in the midst of significant transformation. While the call highlighted positive strides in production and integration, these advancements were somewhat overshadowed by financial challenges and losses during the commissioning phase of the Terronera project.

Increased Production and Revenue

Endeavour Silver reported a notable increase in production, achieving 1.5 million ounces of silver and 7,800 ounces of gold, which translates to approximately 2.5 million silver equivalent ounces. This marks a 13% increase compared to the second quarter of 2024. The company’s revenue also saw a substantial rise, increasing by 46% to $85 million, driven by higher precious metal prices and increased production levels.

Successful Integration of Kolpa

Following the acquisition of Kolpa on May 1, Endeavour Silver has made significant progress in integrating the new asset. The company anticipates maintaining a production profile similar to Kolpa’s 2024 annual production of 5 million silver equivalent ounces, indicating a smooth transition and effective management.

Advancements Towards Commercial Production at Terronera

The Terronera project is making strides towards commercial production, with throughputs averaging between 1,900 and 2,000 tonnes per day. Silver and gold recoveries are averaging 71% and 67%, respectively, showcasing promising developments in the project’s operational capabilities.

Net Loss Due to Commissioning and Integration Costs

Despite the positive production and revenue figures, Endeavour Silver reported a net loss of $20 million. This loss is attributed to operating losses at Terronera during its commissioning phase, increased general and administrative expenses related to the Kolpa acquisition, a $10 million non-cash loss on derivatives, and heightened depreciation and tax expenses.

Negative Working Capital

The company reported a negative working capital position, despite holding $52 million in cash. Excluding non-cash derivatives, there is a $14 million surplus, which is strategically planned as Terronera approaches commercial production.

Forward-Looking Guidance

CEO Dan Dickson provided forward-looking guidance, emphasizing the company’s goal to achieve an annualized production profile of 20 million silver equivalent ounces by 2026. This target is supported by the successful integration of new assets like Kolpa. The company also reported operating costs below guidance, with cash costs at $15.35 per ounce of payable silver and all-in sustaining costs at $25 per ounce.

In conclusion, Endeavour Silver’s earnings call reflects a company navigating through a transformative phase. While production and revenue figures are promising, financial challenges during the commissioning of Terronera present hurdles. The company’s strategic planning and forward-looking goals, however, indicate a positive trajectory towards achieving significant production milestones in the coming years.