Q1 2021 Endeavour Silver Corp Earnings Call
Thursday, Thursday, Thursday.
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Pardon the interruption. Ladies and gentlemen. It has come to our attention that the call has been moved back by one hour from the time. Originally scheduled, please dial back at this number and about fifty minutes or so. Thank you.
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Thursday, Thursday.
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Thursday, Thursday.
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Thursday, Thursday.
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Thank you for standing by. This is the conference operator. Welcome to the Endeavour silvercorp 2021. First quarter of financial results conference call as a reminder, offer to Spence are in listen-only mode. And the conference is being recorded after the presentation. There will be an opportunity for you to ask questions to join the question queue. You may press start, then one on your telephone keypad. Should you need assistance during the conference call? You may say no and Operator by pressing the star and zero.
I would now like to turn the conference over to Galena malaker director of investor relations for opening remarks. Please go ahead.
Thank you, operator. Good morning, everyone, and welcome to the Endeavour silver. 2021 first quarter of financial results conference call with me on the line. Today, we have the company's chief executive officer Bradford, cook our Chief Financial Officer, Dan Dixon, and our chief operating officer, Don Gray. Before we get started, I'm required to remind you that certain statements on today's call will contain forward-looking information within the meaning of applicable. Securities laws. These may include statements regarding Endeavors anticipated performance in 2021 and future years, including revenue and cost taxpayers silver and gold production grades and recoveries and the timing and expenditures required to develop new, Silver, Mines, and mineral. I zones, we do not intend to, and do not assume any obligation to update such forward-looking information other than, as required by applicable law.
On behalf of Endeavors, silver. I'd like to thank you again for joining today's call, and I will now turn it over to our CEO Bradford cook.
Thanks very much Kalina and welcome everybody to This One Financial result, call and Ever Had A, a very good start to what's going on Thursday. We pre-release star-metal production, at one point zero, four million ounces of silver up 22% year-on-year, ten thousand nine hundred ounces of pull up 31% year-on-year, for silver, equivalents of 1.9 million. It does that. And eighty two, one ratio of 26% compared to q1 last year off, our costs were pretty much flat year-on-year, cash 26, ounce of silver and after the Gold credit all-in costs were up a little bit off 8% to Nineteen Ninety Four again that at the credit and that led to revenues of 35.1 million dollars up 58% off.
It was partly due to obviously higher production higher prices but also, we held back some level for sale during the first quarter, a partly due to the downturn and the prices in late March and we fully plan to sold much of that inventory hearing to higher prices, that impacts cash flow. We had five point, two million of cash flow from operations, but with that was up, sharply last year and of course, twelve point two million dollar cents per share. So up, sharply compared to a loss of sixty million dollars last year in the q1. A good chunk of that though, is the reversal of our end of the month asset, which we sold. You're just recently set partly by increased exploration activities, evaluation activities, and a higher tax expense. We would have taken off.
Posted a loss in the first quarter, but then that's offset by the right.
In finished goods inventory. So, I got a busy quarter, a profitable quarter for us. Now, we're looking for a, another very good quarter here in Q2 wage is really the financial highlights from our release today. And I think rather than carry on why don't we just open this up for Q&A and we'd be happy to answer your questions.
We will now begin the question-and-answer session to join the question queue. You may press star then one on your telephone keypad. You will hear a tone acknowledging your choice. If you were using a speaker phone, please pick up your handset before pressing any keys to withdraw your question. Please press *. Then two we will pause for a moment. As caller has joined the queue.
The first question comes from heiko with HC, Wainwright, please go ahead.
Hey there, thanks for taking my questions. I just want to thank Brad for everything he's done for the farm, then best of luck to you. And I think you're taking over a very well, well, well oiled machine here
Thank you very much. I appreciate that.
Yeah, thanks. I could gladly, you've increased quite a bit in the court. I mean, you are at 530000 ounces of silver 1700 just under $700 of gold in the past. You've done really well, trading silver. But I mean, just briefly, where do you stand right now? In regards to Dollar terms of finished goods as of today and philosophical? What do you anticipate future accumulations of finished? Goods, might look like. And yeah, I know that it might be more intelligent to ask this question after the AGM tomorrow. But yeah, just just curious, I could be your your philosophies there.
Yeah, his dad and I shared a similar view that this is a sales strategy that we've used from time to time and it's based on the seasonal seasonality to silver and gold. And sometimes quarterly moves in silver and gold. We did this successfully last September when the prices fell sharply at the end of the month and would rather than. So, all of our metal last September, we had to hold on to it because we felt that the rental market and there would be a nice Rebound. In fact, there was a very nice rebound and we were able to take the, the additional profit from the sales at inventory in Q4 last year. And so this example is exactly the same, the metals had a great run in the first quarter, they they tipped over a month and fell in March rather than pushing all of our metal out at quarter-end. We felt that there would be a nice balance here in Q2 and in fact there has been
And just add the great. Yeah, I go daddy. That question of where we sit today generally, we hold about three hundred thousand ounces of silver, just because of out, turn timeline, maybe I can get down as low as fifty thousand ounces of silver. We did sell a lot of big portion of the five hundred. Twenty five thousand ounces of silver that we had at March 31st with this recent break up into the 26th 27th. So um as but Brad touched on, it's more of a short-term strategy of watching short-term patterns and trying to to sell them. The prices are falling. But hopefully, when the rising, you've been extremely successful with this stuff in the past and and I hope it continues like that. So congratulations.
and,
A quick clarification, the impairment reversal for Cuba, is completely done. Now that this is closed, or is there any lingering tax implications or other costs or anything that Thursday we should focus on for two and Beyond?
For Cutie, we had recognized the full gain-on-sale. So ultimately what we reversed in q1 as a March, 31st was historical balance. That would have been remaining after depreciation and in April 9th, we would have recognized the Full Sail. So there's contingent payments that would be coming. We have a fair value for the Share value of angle. That's of April 9th is what we recognize. So they'll be a residual amount that we'd recognize in a gain in Q2.
Got it, wonderful. And once again, congratulations to both of you and thank you. Brett.
Michael.
The next question comes from Mark, reichman with Noble Capital markets, please go ahead.
Mark Lakeman. Your line is now open.
Thank you. I just wanted to focus a little bit on the cost so the all-in sustaining costs were impacted by the higher corporate G&A and the the higher Capital expenditures that want us to be, I guess, you can kind of look at it as an investment. But then the direct operating costs were impacted by the higher labor costs. I was just wondering if Dan could maybe talk a little bit about how he sees them cost trending. And, you know, for example, in terms of the all-in sustaining costs, I know the higher Capital expenditures are to develop El curso, so that should benefit, you know down. So, how do you see those those, those line, items, trending, Dan?
Yeah, thanks for the question mark. You're right Q1s were a little bit higher but want us to be we were well ahead from a Mine Development standpoint. One of our best development quarters in a long time. Actually which ultimately just means either will do less come year end or continue on but it should dissipate a little bit. We're getting ahead of ourselves now, which is great for future flexible. And ultimately we did have a budget from an all-in sustaining cost which includes our Capital expenditures and that's unchanged for the year for going to Savi as far as labor costs and impacting our office costs. We are seen a little bit of pressure on on labor. I would imagine it's industry-wide things are picking up. A lot of companies are out there looking for offering staff and capable off and stuff. We brought on a lot of really good people. Last year, we had a very good year, we feel from a production standpoint with what we were dealing with and twenty twenty. Some of the bonuses went through on our labor Club
In q1 higher than what we include for year-end. So that did impact you want a bit. So hopefully we'll see. Labor costs come
Down. But as we're seeing across the world, uh, This Global Supply Chain seems to be, um, quite constrained right now and having issues with that. And I don't expect that to change in the next six months. So maybe a little bit increase in our cost, but we're going to work our best to mitigate that um, look for Solutions and try to get our tonnage up a little bit to where plan was. We we were on planning an ounce production standpoint. It would be nicer if are tons had improved and we're we're actually able so hold on a part-time basis. Our costs improve throughout the year and will we expect to hit our, our guidance that we took it to the market in in January
That's very helpful. Thank you, Dan.
Thanks for the question, mark.
The next question comes from Cosmos Chu CI. BC, please go ahead. Thanks, Brad. And then and then congratulations, I guess the big game tomorrow. Yeah, thanks Cosmos.
I guess my question is what? What? Took so long joking aside, I do have some real questions here. Wants a v as long as you talked about, you know, royalties were higher in the quarter due to higher royalties at purveyor Quattro. Sorry about the pronunciation. Could you talk a bit more about the mine plan? You know going forward for the rest of 2021. Should we expect you know tonnage you know continue to come out from that area wage and hence higher royalties
Yeah I think the the key to key one was we did have a little bit higher production from El curso. It's between our program are Quattro mine, which you're probably familiar with the milache a we did my national bit more from El curso just do do some of the errors that we're in and a little bit less from a lot. So we we don't have that royalty. But the big impact on that real is when we did our guidance be guided $22 / 1760 gold, we sold our silver at $27 and I think gold was slightly below that 1760. So we had higher royalties in that on that basis. But also the grass, it's coming over all curso, the grades of going to be, we're about fifteen percent on a silver equivalent basis above plan and again just an area of that helped curso. You saw our Jewel results that we took out a couple of weeks ago, uh, with regards to El curso iguanas and what we were finding on Santa Cruz. So to our surprise ultimately, the grades have been better than what. We expect it. So dead.
Obviously, increasing our costs and royalties, but our margins are still extremely good at from that area for sure. And that's that leads to my next question. Here in terms of jobs, El curso. And as you mentioned earlier this month, you put out some very good results. Coming out at one of the fee. I think I saw over 2000 Grand per ton, Dodge, a lot of it. Just want to confirm his coming from El curso. And I guess the other part of my question after confirming that is I guess in the press release, you mentioned, you know, the El curso de manashe and prevent could all become one continuous or body potentially over 1.5 kilometres by about 6 or 400 meters. When would we find out more about, you know, this potential here and then, you know, could you maybe talk about potentially when you know this concept, one continue age.
Nobody could come into the.
Mine planner.
Yeah, there's a lot there. The drill holes that came out a couple of weeks ago, were mainly the El curso or body in failing and step out drilling there. We are also drilling the Santa Cruz Center or body, which Thursday morning from as well or just mining that are drilling that at depth and can you have positive results there? But I'd say a majority of the the drill holes that came out two weeks ago were from the Elks club or body. And if you go onto our website and even in our presentation, we have a beautiful longitudinal section between porvenir, Quattro and milache a showing the or body of el curso wage, which gives a pretty good understanding of of the size and scope of that or body. There are some slippers in there which is owned by Frisco, who we've acquired or at least midnight. Or so, concessions from that, owns some slippers, and we're working with them to hopefully acquire, some of that ground to be able to mind that as well. Cuz we do think it's continuous all the way through obviously dead.
Drilled out in the lot. She, we've proved that porvenir Quattro. We actually mind a lot of that, um, or from that, that mind. So, we feel it's continuous, but the scope and scale of it's pretty clean to see, just through our website, or, or presentation. Yep. Yeah, I've seen that, I've seen that long section as well. So I guess my question is, will find out later on? You know, how this kind of all this exploration results will impact the mind, playing some time later on. Yeah, it's coming when it comes down to Total resources and tons in the resources, we're still drilling that area and will come up with a resource estimate later on in the year and publish that Brad, I don't know. If you have any more color you'd like to provide with regards to El curso in our Jewel results there.
Yeah, just to answer your question cuz of the hi Brian. Hi, Crystal claim was that we leased from Frisco and the two gap between el Crystal and and they'll Crystal River near Clarksville our other properties owned by Frisco, we expressed interest, they expressed interest and so we're hoping we can constipation to a way to add those gaps. If you will to the existing lease agreement and then we would be able to drill them and prove that that's one continuous or body. The gaps themselves are only couple hundred meters wide. I think so it's pretty easy to project that this thing should be continuous.
Of course, maybe Switching gears a little bit at terronera, you know. As you mentioned, you're targeting a feasibility study by Q321. The last name was sometime in 2020 and I think then or maybe brought you touched on it labor costs have increased. I don't think that's the only cost has increased in the past year. Steel prices have gone up you know other input costs have gone up. So I guess my question is you know as you do this you know finalized the feasibility study at this point in time off you know have you seen costs increase? How have you factored into your study here? And you know, how are you managing that risk?
So I'll answer it from a higher level. Basically, the feasibility study is still underway. So we still have an opportunity to finalize costs here in the next month or month. And the, but the main cost drivers of these on Capitol are the design of the mind and the plant. And most of those, we put pins in already Dan you want to add
Yeah, I think it's definitely a risk, you know, always look at it and that's what we paid to manage to do. Ultimately, we are seeing some input increases which could increase the the capital upfront costs or Thursday capital from an operating standpoint. We think there was a lot of levers there that we can improve our operating costs from the PFS in 2020. So ultimately when all the numbers come out which you're right, it'll be early Q3 will have that. We still expect to have a very economic project when it's all said and done. Okay, for sure. And then maybe one last question from me here. You know, then that you take the the CEO seat brats, not leaving. I guess he's going to be executive chairperson and you know, in the press release talked about Brad, you know, continuing with a company, the company one side of it is you know for sure building terronera. The other side I think we've talked about in the past is potential you know Acquisitions bigger picture.
You know, we've seen some of your competitors divest diversify into gold diversify Beyond, latam, you've always talked about in the past, it is harder to make up for silver assets, um, you know, anything that you can share with us in terms of industry-wide, or or companies specific at this point in time. Oh, sure. So long terms of growing the business through the drill bit. That is organically, I think we've been more successful than most normally with finding new resources every year at our operating life. But of course, the discovery of terronera and the emerging resources that prowl, in terms of our silver gold mix, we've always been a silver dominant producer but with income tax credit and we see more of that in our future terronera, a lot, let me say that the operations this year probably are going to be about $64 silver, gold Revenue dead.
Turner, I think comes in around $65.35 per a low as 100% silver. So not only are we, I think one of the most, if not the most silvery of the of the sort producers, let me go ask you more towards with our existing development pipeline that needs to have an. A and my my view is that we took em to take on goal of still remain a primary producer because there's nothing to buy in silver. We're not allergic to buying a gold dominant asset. It's just that we would like to juice remain, you know, more than 50% silver by the revenue even after having
Great. Thanks. And those are the questions. I have congrats again, Dan, and Brad as well.
Thank you, ma'am.
The next question comes from. Howard blinker. With blinker. And please. Go ahead. All right. Brad my my two minor questions. Are what price did you bring in your sale ATM in quarter? One
Well, that's a damn question. Thanks for your question. Howie. Daniel and take a look. That's a very good question. We would have averaged just above $5 per per month. Share price is actually in our financials cuz I don't have it specifically off the top of my head right now. So good question, Howard, but it's just north of $5. US Route 501 502.
Hello, pardon Howard. Yes.
Okay. And how many shares are actually outstanding now as compared to the average,
We have about $167 million shares outstanding right now 167. Yeah. Okay, thank you.
Yeah, just carrying on from your question. We had this facility available to us all the way back to last July but we just wanted to to use it primarily for any Equity portion of terronera project financing. And we're very patient we didn't touch the nice run up in in the share price here in the first quarter that we did tap that ATM for thirty million dollars. So we closed out the first quarter with six million cash and 113 million of working capital. And so, suffice to say that we now feel that any Equity component at Turner is, is covered
Thank you.
Once again, if you have a question please press * then 1.
The next question comes from Justin Stevens. With pi Financial. Please go ahead.
Hey, guys, I think most of what I had to ask is already been covered off, but a couple left on my list here. Obviously, some good results that you guys put out recently from the drilling. I don't want to be, uh, well, covered off there. I was wondering. I mean, you've spent, I'd say, yeah, a good chunk of what you've been budgeting for. It's a brownfields, uh, drilling this year already in q1 off. The is there, should we expect to that? But perhaps, you guys will revisit your, your drilling budget, maybe they'd year, as long as you continue to get the good hits that you've been seeing so far.
yeah, just
And yeah go ahead. I would just say that we have done this past when we have a good year and there's excess cash flow and then I looked on how to put that cash flow to work and it's probably the case this year as well.
Got it and you know, obviously we've seen seen the next release out of one of the city. Can you get some rough timing? For when we might see some of the bolanitos results
I would soon that would be up next following Mass terronera results results. You've got it. Yeah. And just on the terronera results. You know, obviously the you know, Q3 is surprisingly soon. I don't know how it got to be male ready. Um but the in terms of the drilling that you've done there, I'm not expecting any of that to make it in to the updated resource that will then hit the feasibility study or is it going to be sort of more parallel development?
Know what we're doing now. In fact, I think this year, we put the pin in the reserve and resource at the end of last year. So all the work.
Got it? Yeah, that makes sense given the way these timelines work and things together. Perfect, that's it for me. Thanks guys. Thank you.
This concludes the question-and-answer session, I would like to turn the conference back over to Bradford cook for any closing remarks.
Well, thank you operator, and and thanks everybody for tuning in today. This is actually my final quarterly call on behalf of the management team of in dead know. Formally handing the reins over to Dan and Christine and I just want to say that we've had a great run but we're not half done yet and we look forward to do. I look forward to listening in on, on dance and future calls? So again, thanks all and look forward to our second-quarter financial results, that one's life.
Thanks, Brad.
This concludes today's conference call, you may disconnect your lines. Thank you for participating and have a pleasant day.
Juno.
Dead. Dead dead.