Q1 2025 Endeavour Silver Corp Earnings Call
Speaker Change: Thank you for standing by. This is the conference operator. Welcome to the Endeavor Silver First Quarter 2025 Financial Results Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded.
Speaker Change: Now I'd like to turn the conference over to Alison Pettit Director of Investor Relations. Please go ahead.
Alison Pettit: Thank you operator, and good morning, everyone.
Alison Pettit: Before we get started I ask that you view our M. D N a the cautionary language regarding forward looking statements and the risk factors pertaining to <unk>.
Alison Pettit: Our MD&A and financial statements are available on our website at Edr silver Dot com.
Alison Pettit: On today's call, we have Dan Dickson Endeavour Silver's CEO.
Speaker Change: Elizabeth our.
Speaker Change: Our C of O and Don Gray endeavors E Oh Wow.
Speaker Change: And Dan formal remarks, we will open the call for questions.
Speaker Change: Now over to them.
Speaker Change: Thank you Allison and welcome everyone.
Speaker Change: Q1 marked a strong start.
Speaker Change: For the year for Endeavour silver with solid production figures and continued progress on key developments.
Speaker Change: With Qantas being bought any of those performing in line with plan and turn their now producing copper concentrate as it approaches the final stages.
Speaker Change: Stages of construction, we're quickly approaching a major milestone.
Speaker Change: The addition of this transformational asset will soon become a key contributor to our production profile Mark Signet permit significant step forward in our growth strategy.
Speaker Change: In Q1 endeavor produced one 2 million ounces of silver and 8300 ounces of gold totaling $1 9 million silver equivalent ounces.
Speaker Change: We reported revenue of $64 million in line with the prior year benefiting from the higher precious metal prices.
Speaker Change: Direct operating cost per ton increased by six 6% compared to Q1 2024 caused by 6% lower throughput while total direct operating costs remained relatively flat.
Speaker Change: The company reported a net loss of $32 $9 million for the period, primarily due to the unrealized noncash impact of gold hedging and forward swap contracts entered into March 2024.
Speaker Change: These contracts, which relates to the portion of the forecast gold production from the Terra narrow project were implemented as part of the senior debt facility used to finance its construction.
Speaker Change: Gold Rose from 2600 3100 in the quarter a loss reflects a mark to market accounting adjustment and does not represent cash.
Speaker Change: Excluding mark to Mark adjustments the company reported a small adjusted loss of $200000 compared to income of 300000 in Q1 2024.
Speaker Change: Cash costs of $15 <unk> per ounce of silver and all in sustaining costs were 24 48.
Speaker Change: Net of gold credits, both slightly below annual guidance, primarily driven by the <unk>.
Speaker Change: Higher byproduct credits.
Speaker Change: As of March 31, 2025, the company's cash position was $65 million.
Speaker Change: Working capital was 15.
Speaker Change: Cash and working capital decreased from December 31, 2024, as the company continued investment and development activities at Turner.
Speaker Change: Germany is in its final stages of construction and started producing its first batch of <unk> Street.
Speaker Change: Q1, and as of our latest news release on May six commissioning is currently underway.
Speaker Change: Karen Arrow represents a game changing opportunity for endeavour silver and is poised to redefine the trajectory of our company as we move closer to commercial production. We remain excited about the transformational impact this asset will have on our business.
Speaker Change: With a projected mine life spending well over a decade turn arrow will serve as a long term cornerstone asset in our portfolio underpinning our growth strategy and reinforcing our position as a leading mid tier silver producer.
Speaker Change: As the commissioning phase progresses attention given to increasing feed and run times and ramping up to full throughput the company will provide operational guidance as ramp up events.
Speaker Change: On April 1st we announced the acquisition of the copper mine in Peru, and all May burst, we close that transaction.
Speaker Change: We're excited about the addition of Copa to endeavors operating and growth pipeline as it significantly enhances our current production profile with significant exploration upside and existing infrastructure or a long mine life.
Copa represents a compelling opportunity, where we can leverage our proven technical expertise and development capabilities. The.
Speaker Change: The projects aligns with our existing operations and supports our strategy of building a scalable silver dominant asset base.
Speaker Change: The company is working towards validating updating the historical resource estimate are prepared by the previous owners in the meantime, using pulp as 2024 annual production of 5 million silver equivalent ounces.
Speaker Change: As a guide and with 10 are expected to come online in the near term, we are well positioned for a significant step change in production.
Speaker Change: When combined with our two producing assets want us to be in volunteers endeavor is on track to achieve annualized production of approaching 20 million silver equivalent ounces.
Speaker Change: With that I'm happy to open up to questions. Operator. Please proceed to our Q&A session.
Speaker Change: 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'll hear a tone acknowledging your request if you're using a speakerphone. Please pick up your handset before pressing.
Speaker Change: The keys to withdraw your question. Please press Star then two.
Nick Giles: The first question comes from Nick Giles with B Riley Securities. Please go ahead.
Nick Giles: Thank you operator.
Speaker Change: Good afternoon, everyone Dan.
Nick Giles: Dan and team congrats on all the progress this quarter.
Speaker Change: Ian My first one is just on care narrow I think you said you'll provide guidance.
Speaker Change: As the ramp up advances so what my question is what do you ultimately need to see in the Ram cap the confidence to come out with something more formal specifically on the cost side.
Speaker Change: Yeah, I mean, first and foremost, it's going to come down to production and throughput and we want to see that we maintain consistent throughput through the mill and I'll wait until the filter press that way, we are confident timelines of that ramp up.
Speaker Change: Ultimately, we have a very short planned ramp up of about 90 days and then obviously it could be plus or minus the 90 days and because of that uncertainty we don't want to give production guidance until we know.
Speaker Change: At a higher probability of how many months will be offer unit Turner, it's it doesn't make a lot of sense given to the market.
Speaker Change: Six months of Berlin can be operating for five months or six months, we're going to be seven months.
Speaker Change: It's the first and foremost is the production guidance and then behind that comes the costs and the impact of the cost obviously in the first three to six months of commercial production will be running lower grade ore than what would be deemed in our long term mine plan just to make sure we're getting through all the bugs and we just.
Speaker Change: Wanted to go through that when we understand our grades and ultimately the timeline that will be operating for 2025, and then provide guidance around costs with that obviously for 2026, So we'll come up with operational guidance and costs with with the other mines.
And that all makes sense I appreciate those comments.
Maybe just as a follow up it seems like what commissioning has.
Speaker Change: <unk> gone well to date, but what are kind of the.
Most near term priorities and just ensuring that the right kind of stay on path specifically at the plant.
Dawn: Yeah, I'm going to defer that to dawn I mean.
Dawn: Before I give it to dawn ultimately I'd say wet commissioning, it's hard to say, how well it's going to date since the start and stop process.
Dawn: Ultimately someday you feel like Youre, making step, Florida. Other days you take a break and I think that's just the nature of commissioning you've got punch list items that you need to do but as far as <unk>.
Speaker Change: Most of what's required I'll defer to Don on that.
Dawn: So.
Dawn: Nick Thanks for your question.
Dawn: To stay on path you know our our team there is really focused on on on you know.
Dawn: Boeing system by system, then you start at the at the upper end of the plant work through the through to the lower end of the plan and that's what we've been doing now we've been we've been running the mill been running the mills in and checking systems out making sure.
Dawn: You know bearings and clearances and things like that are running well and then we've just just started to feed just started a feed water and shortly the tailing down into the tailing filter area that that'll really get things rolling So it's just a process of a process of working down too.
Dawn: The system.
Dawn: Got it.
Dawn: That's all very helpful catch one more if I could just then can you remind me what's what's ultimately the capital intensity in this is that Copa what's the capital intensity of the throughput expansion from.
Dawn: 1800 tons per day to 2500 level.
Dawn: Yeah at this point in time, just early estimates work that was previously done.
Dawn: Some of our 12 six.
Dawn: $60 million.
Dawn: 2025.
Dawn: Yeah.
Dawn: Got it okay very clear.
Dawn: Okay.
Dawn: And congrats on the progress and keep up the good work.
Speaker Change: Thanks for the questions Nick.
Speaker Change: The next question comes from Wayne Lam with TD Securities. Please go ahead.
Yes, Thanks, guys, sorry, maybe just one follow up question on the previous set of ramp up period can you just clarify on that 90 day ramp up is that 90 days from when you started what commissioning or if you could just clarify what specific timeline period, you're kind of referring to.
Speaker Change: Yeah. It would be from my first may six we put that out just to keep it easy may 1st.
Speaker Change: Okay, Great and then.
Speaker Change: Just curious on the cost of completion on the $3 32 at Turner.
Speaker Change: It looks like you guys have about $7 million remaining guide spend is that inclusive of all of the costs through the commissioning and the ramp up phase or just wondering if.
Speaker Change: Perhaps we should be baking in a modest increase in net funding requirement as guys cannot continue ramp up.
Speaker Change: Hi, Wayne this is may be centers and to answer your question on how much to compete and to Bill's comps yeah, you're right. We were about $10 million guided title and we're not anticipating many more customers to go into that build cost janey operating phase and ramp up pace, what do they cost.
Speaker Change: Our operating costs and go into the cost of the inventory.
Speaker Change: The build cost.
Speaker Change: Okay, great. Thanks, and then maybe just last one on the balance sheet.
Speaker Change: How comfortable are you guys in terms of the cash balance and working capital requirements need to.
Speaker Change: Fund the terra narrow through the ramp up and just curious.
Speaker Change: How are you thinking about the flexibility here on the balance sheet and if theres potential to quickly refinance once you've declared commercial production.
Speaker Change: Yeah, there's a handful in there I mean, any time with ramp up and going through commissioning there is a lot of uncertainty.
Speaker Change: Obviously, our cash balance being at 65 million at March 31st feels healthy they were outflows of about $15 million.
Speaker Change: We're at that phase of the project, where it's high stress anxiety pushing to get it there sure we don't run too low.
Speaker Change: Cash and it's something that we're going to be monitoring very closely over the next kind of two to three months to see how ramp ups going to see where our cash balances are as far as when we get into commercial production and what we do with the project loan facility again.
Speaker Change: We're in a great plus for two 5% right now closer to 375% always looking to lower our cost of capital obviously it completely changes the project.
Speaker Change: Now de risked and in operations.
Speaker Change: As a management team our it's our job to find the best cost of capital and also with that to make sure that.
Speaker Change: Sufficient liquidity to get through what we need to get through obviously you'd want us to be emboldened. He knows right now are creating cash flow for us.
Speaker Change: But like I say, we're up with stress point of the build and we're coming down to the end and the sooner we can get into.
Speaker Change: Commercial production, obviously, the better for <unk> and ultimately the company.
Speaker Change: Yes.
Speaker Change: Okay perfect.
Speaker Change: For taking my questions and best of luck with the ramp up in the months ahead.
Speaker Change: Thanks, Wayne I appreciate the questions.
Speaker Change: Again, if you have a question. Please press Star then one.
The next question comes from Heiko Ely with H C. Wainwright. Please go ahead.
Heiko Ely: Hey, there Dan and team thanks for taking my questions.
Speaker Change: Just building on your prepared remarks from earlier on the first question that was asked in the Q&A portion of you earlier.
Speaker Change: They're still meaningful cash flows going into the Terra and they are in Q2 and if so.
Speaker Change: You won't give us a best guess estimate how much it was getting shipped here in Q2, and what it's being spindle.
Speaker Change: Yeah, we are still sending money in April we were sending money down there to get everything completed get into the commissioning process. Let me touched on a little bit to what's changed in the accounting World is ultimately revenues are recognized in the income statement and cost of sales are recognized in the income statement, obviously from going from zero.
Speaker Change: Tons, hopefully up to 2000 tons there'll be making a loss here in Q2, as we're commissioning, but we don't capitalize that anymore and there is cash out floor. Unfortunately, we don't have April data ready incomplete. So I don't want to comment exactly how much cash we spent down in April but we did continue to fund in April, but now with kind of the.
Speaker Change: Plant being done tailings press in there, it's about instrumentation and going through commissioning there still costs incurred with that.
Speaker Change: Obviously, theres going to be costs incurred with finishing up various little things, but the big spend has been done.
Speaker Change: Hopefully you've slowed down and now it's just about commissioning going into operations.
Speaker Change: That's a good answer and obviously our royalties questions before I join the question queue. So just.
Speaker Change: Just a little bit.
Speaker Change: Shifting gears completely on Copa and purely out of curiosity is obviously a huge operation on the 25000 hectares.
Speaker Change: Claims.
Speaker Change: And in your press release announcing the deal there was a little note in there that only 10% of the claims FES seem.
Speaker Change: C work, thus far can you walk us through some of the higher priority targets that you have for this year and even beyond that in order to deal with formally close.
Speaker Change: Yeah.
Speaker Change: Yeah, I mean, we actually have a significant budget at Copa again, it was from predecessors.
Speaker Change: I worked on from October to December they made a new discovery on ebay and they called on our roads.
Speaker Change: That wasn't in their historical resource estimate.
Speaker Change: We have just got our boots on the ground with regards to our exploration team and trying to help the Copa team out with their exploration plans I think they've done a phenomenal job mining the Copa asset they've done a phenomenal job growing that asset.
Speaker Change: We think where we can help them out is exploration work that we can do on it there is a main structure.
Speaker Change: Supports about half the production at Copa.
Speaker Change: There's opportunities for additional structures like that and perhaps this quarter also is one of those and we have effectively a $12 million drill for.
Speaker Change: $12 million exploration program.
Speaker Change: For the next 24 months from when we acquired it in 24 months.
Speaker Change: Then there's also tension beans coming off the main structure that were recently discovered again by the processors.
Speaker Change: We are working on that so right now our near term we're going to continue to focus on some of these veins that they were previously working on and we're going to take a step back with our exploration team.
Speaker Change: Look at some brownfields opportunities.
Speaker Change: And look for markers on surface through Geo Chem work Trenching work geophysics and tried to identify some of the more significant structures theres a lot of veins theres a lot of workings over over the history.
Speaker Change: So it's very similar to almost <unk> want us to be that we went to 20 years ago, where we can bring in exploration techniques and expertise and hopefully uncover more resources I would point that there is a historical resource of about a 118 million ounces, we are working to validate that and ultimately.
Speaker Change: Eventually grow from there. So we have some time they have a mine plan in place before we give too much comment we just want to get more into the data and validated a lot of the historical work they've done just to our standards, we're more comfortable talking about it.
Speaker Change: Yeah.
Speaker Change: That's extremely helpful I'm going to get back in queue and thanks again for the answer and good quarter.
Heiko Ely: Thank you Heiko.
Heiko Ely: This concludes the question and answer session I would like to turn the conference back over to Dan Dickson for any closing remarks.
Speaker Change: Thank you operator, and thanks for everybody attending our Q1 session as everyone likely knows Q2s can be a very important quarter for us. Obviously, we're really focused to get Terra naira are ramped up and into commercial production as soon as possible and look forward to our Q2 earnings call in July.
Heiko Ely: Our August thank you.
Heiko Ely: This brings to an end today's conference call. You may disconnect. Your lines. Thank you for participating and have a pleasant day.
Heiko Ely: Okay.
Okay.
Heiko Ely: Okay.
Heiko Ely: Okay.
Heiko Ely: Yeah.
Heiko Ely: [music].
Heiko Ely: Okay.