Q1 2025 Endeavour Silver Corp Earnings Call
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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: After the presentation, there will be an opportunity to ask questions.
Speaker Change: To join the question queue, you may press star than one on your telephone keypad.
Speaker Change: Should you need assistance during the conference call, you may signal an operator by pressing star than zero. I would now like to turn the conference over to Allison Pettit, Director of Invest Relations. Please go ahead.
Thank you operator, and good morning everyone.
Speaker Change: Before we get started, I ask that you view our MDNA precautionary language regarding forward looking statements and the risk factors pertaining to these statements.
Speaker Change: Our MD&A and financial statements are available on our website at edrsilver.com
Speaker Change: On today's call, we have Dan Dickson, Endeavor Silver CEO , Elizabeth Senez, our CFO , and Dawn Gray, Endeavor CEO of
Speaker Change: Following Dan's formal remarks, we will open the call for questions. And now, over to Dan.
Thank you, Allison, and welcome everyone.
Speaker Change: Kiwan Mark de Strong start to the year for Endeavor Silver, with solid production figures and continue.
Key Development.
Speaker Change: With Gwanis V. and Bullenitos performing in line with plan and Terranair now producing concentrate as it approaches the final 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, marketing significant step forward in our growth strategy.
Speaker Change: In Q1, Endeavor produced 1.2 million ounces of silver and 8,300 ounces of gold, totally 1.9 million silver equivalent ounces.
Speaker Change: We report a revenue of $64 million in line with the prior year benefiting from the higher precious metal braces.
Speaker Change: Direct offering cost per ton increased by 6% compared to Q1 2024, caused by a 6% lower throughput, while Total Direct offering cost remained relatively flat.
Speaker Change: The company reported a net loss of $32.9 million for the period, primarily due to the unrealized non-cash impact of gold hedging and fourth swap contracts entered into March 2024.
Speaker Change: These contracts, which relate to the portion of the forecast at goal production from the Terranair Project, were implemented as part of the senior debt facility used to finance its construction.
Speaker Change: As Gold Rose from 2,600 to 3,100 in the quarter, the loss reflects a marked-to-market accounting adjustment and does not represent cash overflow.
Speaker Change: Excluding Marked Mark Adjustments, the company reported a small adjustment loss of $200,000 compared to income of $300,000 in Q1 2024.
Speaker Change: Cash Costs for $15.99 per ounce of silver and all in sustaining costs for $24.48
Speaker Change: Nat of Gold Credits, both slightly below annual guidance primarily driven by the higher byproduct
Speaker Change: As of March 31st, 2025, the company's cast position was 65 million dollars in working capital with 15.
Speaker Change: Cash and working capital decrease from December 31, 2024 as a company continued investing in development activities at Ternare.
Speaker Change: Karen Ara is in its final stages of construction and started producing its first batch of concrete at the end of 2001, and as of our latest news release on May 6th, commissioning this currently underway.
Speaker Change: Terranair represents a game-changing opportunity for Endeavor Silver, and is poised to redefine its 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 mind-life spending well over a decade, Terna 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 we give into increasing feed and run times and ramping up to fall through, but the company will provide operational guidance as ramp up advances.
Speaker Change: April 1st, we announce the acquisition of the Copa mine in Peru and on May 1st, we close that transaction.
Speaker Change: We're excited about the addition of polpa to Endeavor's operating and growth pipeline as it significantly enhances our current production profile with significant exploration upside and existing infrastructures or a long mind line.
Speaker Change: Colpa represents a compelling opportunity where we can leverage our proven technical expertise and development capabilities. The project 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 and updating the historical resource estimated prepared by the previous owners.
Speaker Change: In the meantime, using Copa's 2024 annual production of 5 million Silver Cove announces.
Speaker Change: As a guide, and with Terran Eric, expect 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, Gwanis, Stephen Bullingos, 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 than one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speaker phone, please pick up your handset before pressing any keys. To withdraw your question, please press star than two.
Nick Giles: The first question comes from Nick Giles with the Riley Securities. Please go ahead.
Nick Giles: Thank you operator and good afternoon everyone. Dan and team congrats on all the progress this quarter. Really good to see and my first one is just on Teranera. I think you said you'll provide guidance as the ramp up advances. So what my question is what do you ultimately need to see in the ramp to have the confidence to come out with something more formal specifically on the cost side?
Nick Giles: 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 all the way to the filter press. That way we have confidence on timelines of that ramp up.
Nick Giles: Ultimately, we have a very short planned ramp up of about 90 days and that obviously could be plus or minus the 90 days and because of that uncertainty, we don't want to give production guidance until we know.
Nick Giles: at a higher probability of how many months will be offering a turn here. It doesn't make a lot of sense to give to the market.
Nick Giles: Six months of rolling to be offering for five months or six months or going to be seven months.
Nick Giles: So that's the first and foremost is the production guidance and then behind that comes the cost and the impact of the cost.
Nick Giles: Obviously in the first three to six months of commercial production, we'll be running lower grade or than what would be teamed in our long-term mind plan, just make sure we're getting through all the bugs and we just want to go through that when we understand.
Nick Giles: Grace, and ultimately the timeline that will be operating for 2025 and then provide guidance around costs with that. Obviously for 2026, it will come out with operational guidance and costs with the other minds.
Speaker Change: The end of that all makes sense. I appreciate those comments. Maybe just as a follow-up, it seems like what commissioning has gone well to date, but what are kind of the most near term priorities and just ensuring that the ramp kind of stays on path? This is great at the plant.
Speaker Change: Yeah, I'm going to defer that to Dawn. I mean, but before I give it to Dawn, ultimately I'd say wet commission. It's hard to say how well it's going to date because it's a start and stop process. Ultimately, some days you feel like you're making step forward. Other days you take a break and I think that's just part of the nature of commissioning. You've got punchless items that you need to do, but as far as
particularly as of what's required on deferred on on them.
Yeah, so
Speaker Change: Nick, thanks for your question. To stay on path, our team, they're really focused on
Unknown Speaker 003 All right. Thanks for having me.
Speaker Change: on, you know, going system by system and you start at the upper end of the plant and work through the, through to the lower end of the plant. That's what we've been doing now. We've been, we've been, you know, running the mills.
Been running the mills and checking systems out, making sure...
Speaker Change: You know, bearings and clearances and things like that are running well and then we've just just started to feed.
Speaker Change: It's just a process of working down through the system.
Speaker Change: Got it done. That's that's all very helpful. Catch one more if I could. Just
Thank you, Remind Me Thank you.
Speaker Change: What's ultimately the capital intensity? This is that colpa. What's the capital intensity of the throughput expansion from?
1800 tons per day to the 2500 level. [inaudible]
Speaker Change: Yeah, at this point in time, there's early estimates work that was previously done by the predecessors in September from $12 to $16 million to go from $2,000 to $2500,000 for their capacity.
Got it. Okay, very clear.
Speaker Change: Well guys, again congrats on the progress and keep up the good work.
Thanks for the questions, Nick.
Speaker Change: The next question comes from Wayne Lam with TV Securities. Please go ahead.
Wayne Lamb: Yeah, thanks, guys. Sorry, maybe just one follow-up question on the previous ramp-up period. Can you just clarify on that 90-day ramp-up? Is that 90 days from when you've started what commissioning or if you can just clarify what specific timeline period you're kind of referring to?
Speaker Change: Yeah, it'd be made from May 1st, May 6th, we put that out just to keep it easy, May 1st.
Dr. Prada,
Okay, great. And then...
Speaker Change: Just curious, on the cost of completion, on the 332 at Teranera, looks like you guys have about 7 million remaining guides spend, is that inclusive of all the costs through the commissioning and the ramp up phase, or just wondering if perhaps we should be baking in a modest increase in the fun, new requirement as you guys can continue to wrap up.
Speaker Change: Hi Wayne, this is Libby Senez, to answer your question on how much to complete. The build cost, yeah, you're right, we're about 10 million off from the guided total and we're not anticipating many more costs to go into that build cost.
Speaker Change: During the operating phase, or during the rampart phase, all of those costs are operating costs and going to the cost of the inventory, not into the build cost of the project.
Wayne Lamb: Okay, great, thanks. And then maybe just last one on the balance sheet. How comfortable are you guys in terms of the cash balance and working capital requirements need to fund the a ternary through the ramp up and just curious how you're thinking about the flexibility here on the balance sheet.
Speaker Change: and if there's potential, the quickly refinance, once you've declared commercial production.
Speaker Change: Yeah, there's a handful in there. I mean, anytime with ramp up and going through commission, there's a lot of uncertainty. Obviously our cash balance being at 65 million at March 31st, feels healthy. In the day, we're being capitals with about $50 million.
Speaker Change: We're at that phase of the project where it's high stress, high anxiety and pushing to get it there to make sure we don't run too low in cash. It's something that we're going to be monitoring very closely over the next kind of two, three months to see how ramp up is going to see where cash balances are.
Thank you.
Speaker Change: As a management team, it's our job to find the best cost of capital and also with that to make sure that we have sufficient liquidity to get through what we need to get through. Obviously, we want us to be in bolinitos right now, we're creating cash flow for us.
Speaker Change: But like I say, we're at the stress point of the build and we're coming down to the end and the sooner we can get into commercial production, obviously the better for for Terran Aaron ultimately the company.
Speaker Change: Okay, perfect. Thanks for taking my questions and best of luck with the ramp up in the month's
Thanks, Wayne. I appreciate the questions.
Speaker Change: The next question comes from Heiko Ihle with HC Wainwright. Please go ahead.
Hey there, Dan and team, thanks for taking my questions.
Speaker Change: Just building on your preparation marks from earlier on, the first question that was asked in the Q&A portion earlier.
Speaker Change: Are there still meaningful cash flows going into Terranera in Q2 and if so, you would give us the best guess estimate how much is getting shipped there in Q2 and what it's being spend on?
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.
Speaker Change: Livy Touchstone, a little bit too, 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 and obviously from
Speaker Change: Going from zero tons, hopefully up to 2,000 tons, they'll be making a loss here in Q2 as we're commissioning.
Speaker Change: But we don't capitalize that anymore and there is cash outflow unfortunately we don't have April data ready complete so I don't want to comment exactly how much cash we sent down in April but we did continue to fund in April but now with kind of the full plant being done tailings press in in there [inaudible]
Speaker Change: It's about instrumentation and going through commissioning. There's still costs incurred with that. Obviously there's going to be costs incurred with finishing up various little things, but the big spend's been done. That's...
Speaker Change: Hopefully it slowed down and now it's just about commissioning, going into operations.
Speaker Change: And in your press release announcing the deal, there was a little note in there that only 10% of the claims have seen worked thus far. Can you walk us through some of the higher priority targets that you have for this year, and even beyond that, now that the deal is formally closed?
Speaker Change: Yeah, I mean, we actually have a significant budget at Culpa. Again, it was from predecessors of what they had worked on. From October to December , they had made a new discovery on a vein they called putarosa. That wasn't in their historical resource estimate.
Speaker Change: We think where we can help them out is exploration, the work that we can do on it. There is a main structure.
Yep.
Supports about half the production at Pulp Up [inaudible]
Speaker Change: We think there's opportunities for additional structures like that and perhaps this Polaroza is one of those and we have effectively a 12 million drill for 12 million dollar exploration program for the next 24 months or from when we acquired it in 24 months. [inaudible]
Speaker Change: Then there's also tension veins coming off the main structure that were recently discovered again by the processors.
Speaker Change: and we're working on that. So right now on 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: To try to identify some of the more significant structures. There's a lot of veins, there's a lot of working over the history. So it's very similar to almost only, just want us to be that we went to 20 years ago where we can bring in exploration techniques and expertise.
Speaker Change: And hopefully I'm covered more resources. I would point that there is a historical resource of about 118.
Unknown Speaker million ounces.
Speaker Change: We are working to validate that and ultimately eventually grow from there. So we have some time, they have a mine plan in place. And before we give too much comment, we just want to get more into the data and validate a lot of the historical work they've done just to our standards. We're more comfortable talking about Heiko.
Speaker Change: That's extremely helpful. I'm going to get back into you and thanks again for the answer and good quarter.
Thank you, Heiko.
Speaker Change: 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, Q2 is going to be a very important quarter for us. Obviously, we're really focused to get Tarenera ramped up and into commercial production as soon as possible and look forward to our Q2 earnings call in July or August . Thank you.
Speaker Change: This brings to an end today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.