Endeavour Silver Announces Q2 2022 Financial Results; Raises 2022 Production Guidance

Rhea-AI Summary

Endeavour Silver Corp. (EXK) reported Q2 2022 results, showcasing strong production with 1.36 million oz of silver, exceeding plans by 15%. The company increased production guidance to 7.6 – 8.0 million silver equivalent ounces. However, revenue fell 35% to $30.8 million due to metal sales withholding linked to lower prices. This led to a net loss of $11.9 million or $0.07 per share. Operating costs remained stable at $10.08 per oz, despite inflationary pressures. Holding over 1.6 million oz in inventory, management expects future sales at better prices.

Positive

• Increased production guidance raised to 7.6 – 8.0 million silver equivalent ounces from 6.7 – 7.6 million ounces.
• Q2 silver production surpassed plans by 15%, achieving 1.36 million ounces.
• Cash costs per silver ounce remained stable at $10.08.

Negative

• Revenue dropped 35% to $30.8 million due to withholding silver sales.
• Net loss of $11.9 million reported for Q2 2022, a significant decline from previous earnings.
• Total production metrics negatively impacted by increased inventory held due to market conditions.

VANCOUVER, British Columbia, Aug. 09, 2022 (GLOBE NEWSWIRE) -- Endeavour Silver Corp. (“Endeavour” or the “Company”) (NYSE: EXK; TSX: EDR) is pleased to announce its financial and operating results for the three and six months ended June 30, 2022. As a result of the Company’s strong operating performance, Management has raised its 2022 production guidance. All dollar amounts are in US dollars (US$).  

“We have continued to outperform our mine plans, by delivering an exceptional Q2 with production 15% above plan, stated Dan Dickson, CEO of Endeavour Silver. “This has prompted management to raise our production outlook for 2022 to 7.6 – 8.0 million silver equivalent ounces. The additional production has allowed us to maintain our cost guidance on per ounce metrics, but industry-wide inflation continues to be a challenge. We are seeing the largest inflationary impacts on energy costs, plant reagents and steel prices which are affecting both operating and development costs. Cost control will continue to be a key focus as cost pressures are expected to continue for the remainder of the year.”  

Added Mr. Dickson, “During the 2^nd quarter, again we made the decision to withhold from sale a meaningful amount of silver, due to the drop in silver price. We are holding over 1.6 million silver equivalent ounces in finished goods inventory for future sale. Short term, the increased inventory has negatively impacted our quarterly financial metrics such as revenue, earnings, cash flow and our cash balance. Longer term, we anticipate selling the inventory at higher metal prices.”

Q2 2022 Highlights

• Higher Production: 1,359,207 ounces (oz) of silver and 9,289 oz of gold for 2.1 million oz silver equivalent (AgEq)⁽¹⁾ reinforces delivery of improved consolidated production for the year.
• Lower Revenue Due to Withholding Metal Sales: Revenue of $30.8 million from the sale of 602,894 oz of silver and 9,792 oz of gold at average realized prices of $22.72 per oz silver and $1,840 per oz gold.
• Negative Earnings and Lower Cash Flow Due to Lower Revenue and Non-Cash Items: Net loss of $11.9 million, or $0.07 per share. Adjusted net loss of $4.3 million⁽²⁾ after adjusting for a $7.6 million change in the fair value of investments. $3.6 million in operating cash flow before working capital changes⁽²⁾ and Mine operating cash flow before taxes⁽²⁾ of $8.8 million.
• Operating Costs per Ounce In-Line with Guidance, Despite Industry-Wide Inflation: Cash costs⁽²⁾ of $10.08 per oz payable silver and all-in sustaining costs⁽²⁾ of $19.56 per oz payable silver, net of gold credits.
• Healthy Balance Sheet: Cash position of $116.2 million and working capital⁽²⁾ of $149.7 million.
• Guanacevi Continued to Outperform: Production exceeded plan driven by higher grades.
• Bolañitos Remained Steady: Strong silver production from higher silver grades and increased throughput were offset by lower gold production and lower gold grades.
• Withheld Significant Metal Inventories: Metal inventory at quarter end totaled 1,399,356 oz silver and 2,580 oz gold of bullion inventory and 12,408 oz silver and 587 oz gold in concentrate inventory. The market value of finished goods at June 30, 2022 was $34.5 million.
• Advancing the Terronera Project: Work continued on the early works program initiated last year including engineering, critical contracts, procurement of long-lead items and extensive due diligence on the project financing. The Company intends to make a formal construction decision subject to completion of a financing package and receipt of additional amended permits in the coming months. $18 million has been spent as of June 30^th 2022, with an additional budget of $23 million expected to be spent through to the end of October to continue the advancement of the project.
  

Subsequent to Quarter End

• Closed the Acquisition of the Pitarrilla Project: The addition of the Pitarrilla project enhances the company’s growth profile while maintaining a silver focus.
  

Revision to Full Year 2022 Guidance

The following table summarizes the updated 2022 Production Guidance for Endeavour Silver:

		Guanacevi	Bolanitos	Consolidated
Tonnes per day	tpd	1,100 - 1,200	1,000 - 1,200	2,100 - 2,400
Silver production	M oz	4.3 – 4.5	0.6 - 0.6	4.9 – 5.1
Gold production	k oz	13.0 - 14.0	21.0 - 22.0	34.0 - 36.0
Silver Eq production1	US$/oz	5.3 – 5.6	2.3 - 2.4	7.6 - 8.0
Cash costs, net of gold by-product credits2	US$/oz			$9.00 - $10.00
AISC, net of gold by-product credits2	US$/oz			$19.00 - $20.00

• Consolidated Silver Equivalent(¹) Production has increased to 7.6 – 8.0 million oz from 6.7 – 7.6 million oz. The increase to consolidated production is primarily driven by higher than planned ore-grades along the El Curso orebody at Guanacevi. Production at Bolanitos has been slightly revised upwards to meet the upper end of its previous guidance.
  
  
• Operating Costs Guidance is expected to remain unchanged with cash costs expected to average $9.00 - $10.00 per oz and AISC are expected to average $19.00 - $20.00 per oz. Management notes that the Company is tracking to meet the upper end of the guidance range, given persisting global inflationary pressures. Increases in prices of raw materials such as reagents, explosives, steel, diesel and power are driving continued cost escalation across the industry. The company has identified efficiencies to mitigate pressure on costs and cost metrics in the second half of the year, including enhanced monitoring and tracking at the mines, improved blasting in development, the gradual increase of tonnes milled and reduced waste handling at Guanacevi.
  
  

Financial Overview (see appendix for consolidated financial statements)

Three Months Ended June 30					Q2 2022 Highlights	Six Months Ended June 30
2022		2021	% Change			2022		2021		% Change
					Production
1,359,207		1,073,724	27%		Silver ounces produced	2,674,162		2,121,824		26%
9,289		11,166	(17%)		Gold ounces produced	17,984		22,275		(19%)
1,346,276		1,062,267	27%		Payable silver ounces produced	2,649,816		2,098,977		26%
9,117		10,955	(17%)		Payable gold ounces produced	17,666		21,849		(19%)
2,102,327		1,967,004	7%		Silver equivalent ounces produced(1)	4,112,882		3,903,824		5%
10.08		13.03	(23%)		Cash costs per silver ounce(2)	10.14		10.48		(3%)
14.26		19.55	(27%)		Total production costs per ounce(2)	14.69		17.51		(16%)
19.56		25.39	(23%)		All-in sustaining costs per ounce (2)	20.22		22.69		(11%)
201,361		242,018	(17%)		Processed tonnes	407,508		451,471		(10%)
132.63		119.94	11%		Direct operating costs per tonne(2)	127.69		116.43		10%
148.11		141.61	5%		Direct costs per tonne(2)	148.32		134.48		10%
14.12		18.52	(24%)		Silver co-product cash costs(2)	14.74		16.89		(13%)
1,144		1,289	(11%)		Gold co-product cash costs(2)	1,169		1,116		5%
					Financial
30.8		47.7	(35%)		Revenue ($ millions)	88.5		82.2		8%
602,894		1,120,266	(46%)		Silver ounces sold	2,320,662		1,743,645		33%
9,792		9,810	(0%)		Gold ounces sold	18,173		20,473		(11%)
22.72		26.82	(15%)		Realized silver price per ounce	23.95		26.95		(11%)
1,840		1,866	(1%)		Realized gold price per ounce	1,900		1,781		7%
(11.9)		6.7	(279%)		Net earnings (loss) ($ millions)	(0.3)		18.9		(101%)
(4.3)		2.4	(280%)		Adjusted net earnings (loss) (2) ($ millions)	2.0		(3.7)		155%
4.5		10.2	56%		Mine operating earnings ($ millions)	24.7		15.9		56%
8.8		17.2	(49%)		Mine operating cash flow before taxes ($ millions)(2)	35.5		30.5		16%
3.6		8.7	(58%)		Operating cash flow before working capital changes(2)	24.2		13.9		74%
(4.3)		15.9	(127%)		EBITDA(2) ($ millions)	21.3		39.8		(47%)
149.7		146.8	2%		Working capital (2) ($ millions)	149.7		146.8		2%
					Shareholders
(0.07)		0.04	(275%)		Earnings (loss) per share – basic ($)	0.00		0.12		(100%)
0.02		0.05	(61%)		Operating cash flow before working capital changes per share(2)	0.14		0.08		62%
180,974,609		168,383,755	7%		Weighted average shares outstanding	176,291,929		164,051,368		7%

⁽¹⁾ Silver equivalent (AgEq) is calculated using an 80:1 silver:gold ratio.

⁽²⁾ These are non-IFRS financial measures and ratios. Further details on these non-IFRS financial measures and ratios are provided at the end of this press release and in the MD&A accompanying the Company’s financial statements, which can be viewed on the Company’s website, on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

For the three months ended June 30, 2022, net revenue, decreased by 35% to $30.8 million (Q2 2021: $47.7 million).

Gross sales of $31.7 million in Q2 2022 represented a 34% decrease over the $48.3 million in Q2 2021. Silver oz sold decreased by 46%, due to the buildup of the larger finished goods inventory held at June 30, 2022. There was a 15% decrease in the realized silver price, resulting in a 54% decrease in proceeds from silver sales. Gold oz sold were flat with a 1% decrease in the realized gold price, resulting in a 1% decrease in proceeds from gold sales. During the period, the Company sold 602,894 oz silver and 9,792 oz gold for realized prices of $22.72 and $1,840 per oz, respectively, compared to Q2 2021 sales of 1,120,266 oz silver and 9,810 oz gold for realized prices of $26.82 and $1,866 per oz, respectively. In Q2 2022, London spot prices for silver and gold averaged $22.60 and $1,877, respectively.

The Company significantly increased its finished goods silver inventory and slightly decreased its finished goods gold inventory to 1,411,764 oz and 3,167 oz, respectively, at June 30, 2022 compared to 668,382 oz silver and 3,841 oz gold at March 31, 2022. The cost allocated to these finished goods was $20.8 million at June 30, 2022 compared to $13.5 million at March 31, 2022. At June 30, 2022, the finished goods inventory fair market value was $34.5 million, compared to $24.1 million at March 31, 2022. Earnings and other financial metrics, including mine operating cash flow⁽²⁾, operating cash flow⁽²⁾ and EBITDA⁽²⁾ were impacted by the withholding of sales during Q2 2022.

After cost of sales of $26.3 million (Q2 2021 - $37.5 million), a decrease of 30%, mine operating earnings were $4.5 million (Q2 2021 - $10.2 million). The decrease in cost of sales was impacted by the decrease in the quantity of silver ounces sold during the period offset by increased labour, power and consumables costs with lower royalty costs. Royalties decreased 49% to $2.2 million primarily due to the decrease in silver ounces sold during the period.

The Company had an operating loss of $1.3 million (Q2 2021: operating earnings of $0.8 million) after exploration and evaluation costs of $3.8 million (Q2 2021: $5.0 million), general and administrative costs of $1.3 million (Q2 2021: $4.3 million) a write off of exploration properties of $0.5 million (Q2, 2021 - $Nil), and care and maintenance cost of $0.2 million (Q2 2021: $0.1 million).

The loss before income taxes was $8.8 million (Q2 2021: earnings before taxes of $8.9 million) after finance costs of $0.3 million (Q2 2021: $0.2 million), a foreign exchange loss of $0.3 million (Q2 2021: gain of $0.7 million), and investment and other expense of $6.9 million (Q2 2021: investment and other income of $1.8 million). The investment and other expenses during Q2 2022 primarily resulted from an unrealized loss on marketable securities and warrants of $7.6 million (Q2 2021: $1.5 million).

The Company realized a net loss for the period of $11.9 million (Q2 2021: net earnings of $6.7 million) after an income tax expense of $3.1 million (Q2 2021: $2.2 million).   Current income tax expense increased to $1.3 million (Q2 2021 - $1.1 million) due to increased profitability impacting the income tax and special mining duty, while deferred income tax expense of $1.8 million is primarily due to the estimated use of loss carryforwards to reduce taxable income generated at both Guanacevi and Bolanitos (Q2 2021 – $1.1 million).

Direct operating costs⁽²⁾ on a per tonne basis increased to $132.63, up 11% compared with Q2 2021 due to higher operating costs at Guanaceví and Bolañitos. Guanaceví and Bolañitos have seen increased labour, power and consumables costs and at Guanaceví, increased third party ore purchased and operating development have increased compared to the prior year.

Consolidated cash costs per oz(²), net of by-product credits, decreased to $10.08 driven by increased silver grades, reduced royalty costs and increased by-product gold sales, offset by increased direct operating costs per tonne(²)    AISC(²) decreased by 23% on a per oz basis compared to Q2 2021 as a result of a 27% increase in ounces produced driven by a 51% increase in silver grade, decreased allocated general and administrative costs and a decrease in mine site exploration offset by increased sustaining capital expenditures.

The complete financial statements and management’s discussion & analysis can be viewed on the Company’s website, on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. All shareholders can receive a hard copy of the Company’s complete audited financial statements free of charge upon request. To receive this material in hard copy, please contact Investor Relations at 604-640-4804, toll free at 1-877-685-9775 or by email at gmeleger@edrsilver.com.

Conference Call

A conference call to discuss the Company’s Q2 2022 financial results will be held today at 10:00 a.m. PT / 1:00 p.m. ET. To participate in the conference call, please dial the numbers below.

Date & Time:		Tuesday, August 9, 2022 at 10:00 a.m. PT / 1:00 p.m. ET
Telephone:		Toll-free in Canada and the US +1-800-319-4610 Local or International +1-604-638-5340 Please allow up to 10 minutes to be connected to the conference call.
Replay:		A replay of the conference call will be available by dialing (toll-free) +1-800-319-6413 in Canada and the US (toll-free) or +1-604-638-9010 outside of Canada and the US. The replay passcode is 9151#. The replay will also be available on the Company’s website at www.edrsilver.com.

About Endeavour Silver – Endeavour Silver Corp. is a mid-tier precious metals mining company that operates two high-grade underground silver-gold mines in Mexico. Endeavour is currently advancing the Terronera project towards a development decision, pending financing and final permits and exploring its portfolio of exploration and development projects in Mexico, Chile and the United States to facilitate its goal to become a premier senior silver producer.  Our philosophy of corporate social integrity creates value for all stakeholders.

SOURCE Endeavour Silver Corp.

Contact Information
Galina Meleger,
Vice President of Investor Relations
Tel: (604)640-4804
Email: gmeleger@edrsilver.com
Website: www.edrsilver.com

Follow Endeavour Silver on Facebook, Twitter, Instagram and LinkedIn

Endnotes

¹ Silver equivalent (AgEq)

AgEq is calculated using an 80:1 silver:gold ratio.

² Non-IFRS and Other Financial Measures and Ratios

Certain non-IFRS and other non-financial measures and ratios are included in this press release, including cash costs per silver ounce, total production costs per ounce, all-in costs per ounce, all-in sustaining cost (“AISC”) per ounce, direct operating costs per tonne, direct costs per tonne, silver co-product cash costs, gold co-product cash costs, realized silver price per ounce, realized gold price per ounce, adjusted net earnings (loss) adjusted net earnings (loss) per share, mine operating cash flow before taxes, working capital, operating cash flow before working capital adjustments, operating cash flow before working capital changes per share, earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA per share and sustaining and growth capital.

Please see the June 30, 2022 MD&A for explanations and discussion of these non-IFRS and other non-financial measures and ratios. The Company believes that these measures and ratios, in addition to conventional measures and ratios prepared in accordance with International Financial Reporting Standards (“IFRS”), provide management and investors an improved ability to evaluate the underlying performance of the Company. The non-IFRS and other non-financial measures and ratios are intended to provide additional information and should not be considered in isolation or as a substitute for measures or ratios of performance prepared in accordance with IFRS. These measures and ratios do not have any standardized meaning prescribed under IFRS, and therefore may not be comparable to other issuers. Certain additional disclosures for these non-IFRS measures have been incorporated by reference and can be found in the section “Non-IFRS Measures” in the June 30, 2022 MD&A available on SEDAR at www.sedar.com.

Reconciliation of Working Capital 

Expressed in thousands US dollars	As at June 30, 2022						As at December 31, 2021
Current assets				$	186,454					$	161,762
Current liabilities					36,733						40,554
Working capital				$	149,721					$	121,208
Reconciliation of Adjusted Net Earnings (Loss) and Adjusted Net Earnings (Loss) Per Share
Expressed in thousands US dollars	Three Months Ended June 30						Six Months Ended June 30
(except for share numbers and per share amounts)		2022			2021			2022			2021
Net earnings (loss) for the period per financial statements	($	11,923	)	$	6,656		($	261	)	$	18,905
Impairment (reversal) of non-current assets, net of tax		-			-			-			(16,791	)
Gain on disposal of El Cubo mine and equipment, net of tax		-			(5,807	)		-			(5,807	)
Change in fair value of investments		7,626			1,539			2,269			9
Adjusted net earnings (loss)	($	4,297	)	$	2,388		$	2,008		($	3,684	)
Basic weighted average share outstanding		180,974,609			168,383,755			176,291,929			164,051,368
Adjusted net earnings (loss) per share	($	0.02	)	$	0.01		$	0.01		($	0.02	)
Reconciliation of Mine Operating Cash Flow Before Taxes
Expressed in thousands US dollars	Three Months Ended June 30						Six Months Ended June 30
		2022			2021			2022			2021
Mine operating earnings per financial statements	$	4,472		$	10,205		$	24,741		$	15,869
Share-based compensation		113			111			240			229
Amortization and depletion		4,175			6,624			10,481			14,120
Write down of inventory to net realizable value		-			272			-			272
Mine operating cash flow before taxes	$	8,760		$	17,212		$	35,462		$	30,490
Reconciliation of Operating Cash Flow Before Working Capital Changes and Operating Cash Flow Before Working Capital Changes Per Share
Expressed in thousands US dollars	Three Months Ended June 30						Six Months Ended June 30
(except for per share amounts)		2022			2021			2022			2021
Cash from (used in) operating activities per financial statements	($	18,548	)	$	9,467		$	3,185		$	5,544
Net changes in non-cash working capital per financial statements		(22,160	)		806			(21,046	)		(8,360	)
Operating cash flow before working capital changes	$	3,612		$	8,661		$	24,231		$	13,904
Basic weighted average shares outstanding		180,974,609			168,383,755			176,291,929			164,051,368
Operating cash flow before working capital changes per share	$	0.02		$	0.05		$	0.14		$	0.08
Reconciliation of EBITDA and Adjusted EBITDA
Expressed in thousands US dollars	Three Months Ended June 30						Six Months Ended June 30
		2022			2021			2022			2021
Net income for the period per financial statements	($	11,923	)	$	6,656		($	261	)	$	18,905
Depreciation and depletion – cost of sales		4,175			6,624			10,481			14,120
Depreciation and depletion – exploration		98			72			205			151
Depreciation and depletion – general & administration		51			38			99			72
Depreciation and depletion – care & maintenance		30			(11	)		60			4
Depreciation and depletion – inventory write down		-			6			-			6
Finance costs		212			216			389			507
Current income tax expense		1,325			1,146			2,340			1,817
Deferred income tax expense		1,752			1,116			7,974			4,243
EBITDA	($	4,280	)	$	15,863		$	21,287		$	39,825
Share based compensation		972			1,028			2,499			2,193
Impairment (reversal) of non-current assets, net of tax		-			-			-			(16,791	)
Gain on disposal of El Cubo mine and equipment, net of tax		-			(5,807	)		-			(5,807	)
Change in fair value of investments		7,626			1,539			2,269			9
Adjusted EBITDA	$	4,318		$	12,623		$	26,055		$	19,429
Basic weighted average shares outstanding		180,974,609			168,383,755			176,291,929			164,051,368
Adjusted EBITDA per share	$	0.02		$	0.07		$	0.15		$	0.12

 Reconciliation of Cash Cost Per Silver Ounce, Total Production Costs Per Ounce, Direct Operating Costs Per Tonne, Direct Costs Per Tonne

Expressed in thousands US dollars	Three Months Ended June 30, 2022									Three Months Ended June 30, 2021
	Guanaceví			Bolañitos			Total			Guanaceví			Bolañitos			El Compas			Total
Direct production costs per financial statements	$	7,797		$	12,031		$	19,828		$	15,713		$	7,770		$	2,740		$	26,223
Smelting and refining costs included in net revenue		-			937			937			-			514			68			582
Opening finished goods		(7,908	)		(2,995	)		(10,903	)		(5,935	)		(204	)		(442	)		(6,581	)
Finished goods NRV adjustment		-			-			-			-			-			266			266
Closing finished goods		16,164			681			16,845			6,985			408			1,145			8,538
Direct operating costs		16,053			10,654			26,707			16,763			8,488			3,777			29,028
Royalties		2,128			66			2,194			4,158			70			112			4,340
Special mining duty (1)		795			127			922			684			257			(38	)		903
Direct costs		18,976			10,847			29,823			21,605			8,815			3,851			34,271
By-product gold sales		(5,719	)		(12,302	)		(18,021	)		(4,209	)		(11,909	)		(2,187	)		(18,305	)
Opening gold inventory fair market value		3,724			3,763			7,487			1,925			309			662			2,896
Closing gold inventory fair market value		(4,662	)		(1,061	)		(5,723	)		(3,349	)		(633	)		(1,038	)		(5,020	)
Cash costs net of by-product		12,319			1,247			13,566			15,972			(3,418	)		1,288			13,842
Amortization and depletion		940			3,235			4,175			2,487			3,800			337			6,624
Share-based compensation		57			56			113			54			51			6			111
Opening finished goods depreciation and depletion		(1,689	)		(897	)		(2,586	)		(1,137	)		(118	)		(133	)		(1,388	)
NRV depreciation cost adjustment		-			-			-			-			-			6			-
Closing finished goods depreciation and depletion		3,733			199			3,932			1,333			220			30			1,583
Total production costs	$	15,360		$	3,840		$	19,200		$	18,709		$	535		$	1,534		$	20,772
	Three Months Ended June 30, 2022									Three Months Ended June 30, 2021
	Guanaceví			Bolañitos			Total			Guanaceví			Bolañitos			El Compas			Total
Throughput tonnes		94,017			107,344			201,361			111,893			107,912			22,213			242,018
Payable silver ounces		1,190,568			155,708			1,346,276			936,424			112,456			13,387			1,062,267
Cash costs per silver ounce	$	10.35		$	8.01		$	10.08		$	17.06		($	30.39	)	$	96.21		$	13.03
Total production costs per ounce	$	12.90		$	24.66		$	14.26		$	19.98		$	4.76		$	114.59		$	19.55
Direct operating costs per tonne	$	170.75		$	99.25		$	132.63		$	149.81		$	78.66		$	170.04		$	119.94
Direct costs per tonne	$	201.84		$	101.05		$	148.11		$	193.09		$	81.69		$	173.37		$	141.61
Expressed in thousands US dollars	Six Months Ended June 30, 2022									Six Months Ended June 30, 2021
	Guanaceví			Bolañitos			Total			Guanaceví			Bolañitos			El Compas			Total
Direct production costs per financial statements	$	25,681		$	20,868		$	46,549		$	23,773		$	14,875		$	6,303		$	44,951
Smelting and refining costs included in net revenue		-			1,591			1,591			-			1,003			206			1,209
Opening finished goods		(10,093	)		(2,857	)		(12,950	)		(1,509	)		(250	)		(642	)		(2,401	)
Finished goods NRV adjustment		-			-			-			-			-			266			266
Closing finished goods		16,164			681			16,845			6,985			408			1,145			8,538
Direct operating costs		31,752			20,283			52,035			29,249			16,036			7,278			52,563
Royalties		6,362			149			6,511			6,371			138			291			6,800
Special mining duty (1)		1,526			371			1,897			941			408			-			1,349
Direct costs		39,640			20,803			60,443			36,561			16,582			7,569			60,712
By-product gold sales		(10,741	)		(23,790	)		(34,531	)		(7,673	)		(22,438	)		(6,352	)		(36,463	)
Opening gold inventory fair market value		1,900			4,784			6,684			735			746			1,283			2,764
Closing gold inventory fair market value		(4,662	)		(1,061	)		(5,723	)		(3,349	)		(633	)		(1,038	)		(5,020	)
Cash costs net of by-product		26,137			736			26,873			26,274			(5,743	)		1,462			21,993
Amortization and depletion		4,850			5,631			10,481			4,080			7,593			2,447			14,120
Share-based compensation		120			120			240			93			91			45			229
Opening finished goods depreciation and depletion		(1,965	)		(635	)		(2,600	)		(271	)		(104	)		(804	)		(1,179	)
NRV depreciation and depletion cost adjustment		-			-			-			-			-			6			6
Closing finished goods depreciation and depletion		3,733			199			3,932			1,333			220			30			1,583
Total production costs	$	32,875		$	6,051		$	38,926		$	31,509		$	2,057		$	3,186		$	36,752
	Six Months Ended June 30, 2022									Six Months Ended June 30, 2021
	Guanaceví			Bolañitos			Total			Guanaceví			Bolañitos			El Compas			Total
Throughput tonnes		195,270			212,238			407,508			200,525			205,604			45,342			451,471
Payable silver ounces		2,321,016			328,800			2,649,816			1,851,886			211,444			35,647			2,098,977
Cash costs per silver ounce	$	11.26		$	2.24		$	10.14		$	14.19		($	27.16	)	$	41.01		$	10.48
Total production costs per ounce	$	14.16		$	18.40		$	14.69		$	17.01		$	9.73		$	89.38		$	17.51
Direct operating costs per tonne	$	162.61		$	95.57		$	127.69		$	145.86		$	77.99		$	160.51		$	116.43
Direct costs per tonne	$	203.00		$	98.02		$	148.32		$	182.33		$	80.65		$	166.93		$	134.48

Expressed in thousands US dollars	June 30, 2022						June 30, 2021
	Guanaceví		Bolañitos		Total		Guanaceví		Bolañitos		El Compas		Total
Closing finished goods		16,164		681		16,845		6,985		408		1,145		8,538
Closing finished goods depletion		3,733		199		3,932		1,333		220		30		1,583
Finished goods inventory	$	19,897	$	880	$	20,777	$	8,318	$	628	$	1,175	$	10,121

Reconciliation of All-In Costs Per Ounce and AISC per ounce

Expressed in thousands US dollars	Three Months Ended June 30, 2022								Three Months Ended June 30, 2021
	Guanaceví			Bolañitos		Total			Guanaceví		Bolañitos			El Compas			Total
Cash costs net of by-product	$	12,319		$	1,247	$	13,566		$	15,972	($	3,418	)	$	1,288		$	13,842
Operations share-based compensation		57			56		113			39		40			39			118
Corporate general and administrative		401			155		556			2,013		1,093			277			3,383
Corporate share-based compensation		527			214		741			460		250			64			773
Reclamation - amortization/accretion		69			53		122			13		11			3			27
Mine site expensed exploration		360			308		668			538		305			2			845
Intangible payments		(0	)		0		(0	)		80		29			(16	)		94
Equipment loan payments		246			488		734			300		524			-			824
Capital expenditures sustaining		7,050			2,788		9,838			3,696		3,366			-			7,062
All-In-Sustaining Costs	$	21,028		$	5,310	$	26,338		$	23,112	$	2,200		$	1,656		$	26,968
Growth exploration and evaluation							2,901											3,963
Growth capital expenditures							5,613											1,102
All-In-Costs						$	34,852										$	32,033
	Three Months Ended June 30, 2022								Three Months Ended June 30, 2021
	Guanaceví			Bolañitos		Total			Guanaceví		Bolañitos			El Compas			Total
Throughput tonnes		94,017			107,344		201,361			111,893		107,912			22,213			242,018
Payable silver ounces		1,190,568			155,708		1,346,276			936,424		112,456			13,387			1,062,267
Silver equivalent production (ounces)		1,488,550			613,777		2,102,327			1,185,961		660,284			120,759			1,967,004
Sustaining cost per ounce	$	17.66		$	34.10	$	19.56		$	24.68	$	19.56		$	123.73		$	25.39
All-In-costs per ounce						$	25.89										$	30.16
Expressed in thousands US dollars	Six Months Ended June 30, 2022								Six Months Ended June 30, 2021
	Guanaceví			Bolañitos		Total			Guanaceví		Bolañitos			El Compas			Total
Cash costs net of by-product	$	26,137		$	736	$	26,873		$	26,274	($	5,743	)	$	1,462		$	21,993
Operations share-based compensation		120			120		240			93		91			45			229
Corporate general and administrative		2,468			1,031		3,499			3,622		1,966			498			6,086
Corporate share-based compensation		1,444			603		2,047			987		536			136			1,658
Reclamation - amortization/accretion		134			106		240			25		22			5			52
Mine site expensed exploration		712			558		1,270			994		539			195			1,728
Intangible payments		29			12		41			111		60			15			187
Equipment loan payments		491			977		1,468			608		1,092			-			1,700
Capital expenditures sustaining		12,696			5,214		17,910			7,900		6,100			-			14,000
All-In-Sustaining Costs	$	44,230		$	9,358	$	53,588		$	40,615	$	4,663		$	2,355		$	47,633
Growth exploration and evaluation							5,314											6,970
Growth capital expenditures							10,538											1,434
All-In-Costs						$	69,440										$	56,037
	Six Months Ended June 30, 2022								Six Months Ended June 30, 2021
	Guanaceví			Bolañitos		Total			Guanaceví		Bolañitos			El Compas			Total
Throughput tonnes		195,270			212,238		407,508			200,525		205,604			45,342			451,471
Payable silver ounces		2,321,016			328,800		2,649,816			1,851,886		211,444			35,647			2,098,977
Silver equivalent production (ounces)		2,900,560			1,212,322		4,112,882			2,323,618		1,261,071			319,135			3,903,824
Sustaining cost per ounce	$	19.06		$	28.46	$	20.22		$	21.93	$	22.05		$	66.07		$	22.69
All-In-costs per ounce						$	26.21										$	26.70

Reconciliation of Sustaining Capital and Growth Capital  

Expressed in thousands US dollars	Three Months Ended June 30				Six Months Ended June 30
		2022		2021		2022		2021
Capital expenditures sustaining	$	9,838	$	7,062	$	17,910	$	14,000
Growth capital expenditures		5,613		1,102		10,538		1,434
Property, plant and equipment expenditures per Consolidated Statement of Cash Flows	$	15,451	$	8,164	$	28,448	$	15,434

Reconciliation of Silver Co-Product Cash Costs and Gold Co-Product Cash Costs    

Expressed in thousands US dollars	Three Months Ended June 30, 2022									Three Months Ended June 30, 2021
	Guanaceví			Bolañitos			Total			Guanaceví			Bolañitos			El Compas			Total
Direct production costs per financial statements	$	7,797		$	12,031		$	19,828		$	15,713		$	7,770		$	2,740		$	26,223
Smelting and refining costs included in net revenue		-			937			937			-			514			68			582
Royalties		2,128			66			2,194			4,158			70			112			4,340
Special mining duty (1)		795			127			922			684			257			(38	)		903
Opening finished goods		(7,908	)		(2,995	)		(10,903	)		(5,935	)		(204	)		(442	)		(6,581	)
Finished goods NRV adjustment		-			-			-			-			-			266			266
Closing finished goods		16,164			681			16,845			6,985			408			1,145			8,538
Direct costs	$	18,976		$	10,847		$	29,823		$	21,605		$	8,815		$	3,851		$	34,271
	Three Months Ended June 30, 2022									Three Months Ended June 30, 2021
	Guanaceví			Bolañitos			Total			Guanaceví			Bolañitos			El Compas			Total
Silver production (ounces)		1,194,150			165,057			1,359,207			939,241			120,044			14,439			1,073,724
Average realized silver price ($)		22.72			22.72			22.72			26.82			26.82			26.82			26.82
Silver value ($)		27,131,580			3,750,163			30,881,743			25,186,472			3,219,073			387,193			28,792,738
Gold production (ounces)		3,680			5,609			9,289			3,084			6,753			1,329			11,166
Average realized gold price ($)		1,840			1,840			1,840			1,866			1,866			1,866			1,866
Gold value ($)		6,772,598			10,322,691			17,095,289			5,754,599			12,600,781			2,479,852			20,835,232
Total metal value ($)		33,904,178			14,072,854			47,977,032			30,941,072			15,819,854			2,867,045			49,627,970
Pro-rated silver costs (%)		80	%		27	%		64	%		81	%		20	%		14	%		58	%
Pro-rated gold costs (%)		20	%		73	%		36	%		19	%		80	%		86	%		42	%
Pro-rated silver costs ($)		15,185			2,891			19,196			17,587			1,794			520			19,883
Pro-rated gold costs ($)		3,791			7,956			10,627			4,018			7,021			3,331			14,388
Silver co-product cash costs ($)		12.72			17.51			14.12			18.72			14.94			36.02			18.52
Gold co-product cash costs ($)		1,030			1,419			1,144			1,303			1,040			2,506			1,289
Expressed in thousands US dollars	Six Months Ended June 30, 2022									Six Months Ended June 30, 2021
	Guanaceví			Bolañitos			Total			Guanaceví			Bolañitos			El Compas			Total
Direct production costs per financial statements	$	25,681		$	20,868		$	46,549		$	23,773		$	14,875		$	6,303		$	44,951
Smelting and refining costs included in net revenue		-		$	1,591		$	1,591			-			1,003			206			1,209
Royalties		6,362			149			6,511			6,371			138			291			6,800
Special mining duty (1)		1,526			371			1,897			941			408			-			1,349
Opening finished goods		(10,093	)		(2,857	)		(12,950	)		(1,509	)		(250	)		(642	)		(2,401	)
Finished goods NRV adjustment		-			-			-			-			-			266			266
Closing finished goods		16,164			681			16,845			6,985			408			1,145			8,538
Direct costs		39,640			20,803			60,443			36,561			16,582			7,569			60,712
	Six Months Ended June 30, 2022									Six Months Ended June 30, 2021
	Guanaceví			Bolañitos			Total			Guanaceví			Bolañitos			El Compas			Total
Silver production (ounces)		2,328,000			346,162			2,674,162			1,857,458			226,271			38,095			2,121,824
Average realized silver price ($)		23.95			23.95			23.95			26.95			26.95			26.95			26.95
Silver value ($)		55,757,752			8,290,900			64,048,652			50,053,984			6,097,454			1,026,568			57,178,006
Gold production (ounces)		7,157			10,827			17,984			5,827			12,935			3,513			22,275
Average realized gold price ($)		1,900			1,900			1,900			1,781			1,781			1,781			1,781
Gold value ($)		13,599,206			20,572,670			34,171,876			10,378,054			23,037,606			6,256,754			39,672,414
Total metal value ($)		69,356,958			28,863,570			98,220,528			60,432,038			29,135,060			7,283,321			96,850,420
Pro-rated silver costs (%)		80	%		29	%		65	%		83	%		21	%		14	%		59	%
Pro-rated gold costs (%)		20	%		71	%		35	%		17	%		79	%		86	%		41	%
Pro-rated silver costs ($)		31,868			5,976			39,414			30,282			3,470			1,067			35,843
Pro-rated gold costs ($)		7,772			14,827			21,029			6,279			13,112			6,502			24,869
Silver co-product cash costs ($)		13.69			17.26			14.74			16.30			15.34			28.00			16.89
Gold co-product cash costs ($)		1,086			1,369			1,169			1,078			1,014			1,851			1,116

Reconciliation of Realized Silver Price Per Ounce and Realized Gold Price Per Ounce     

Expressed in thousands US dollars	Three Months Ended June 30				Six Months Ended June 30
		2022		2021		2022		2021
Gross silver sales	$	13,698	$	30,052	$	55,582	$	46,987
Silver ounces sold		602,894		1,120,266		2,320,662		1,743,645
Realized silver price per ounces	$	22.72	$	26.82	$	23.95	$	26.95
Expressed in thousands US dollars	Three Months Ended June 30				Six Months Ended June 30
		2022		2021		2022		2021
Gross gold sales	$	18,021	$	18,305	$	34,531	$	36,463
Gold ounces sold		9,792		9,810		18,173		20,473
Realized gold price per ounces	$	1,840	$	1,866	$	1,900	$	1,781

 
Cautionary Note Regarding Forward-Looking Statements

This news release contains “forward-looking statements” within the meaning of the United States private securities litigation reform act of 1995 and “forward-looking information” within the meaning of applicable Canadian securities legislation. Such forward-looking statements and information herein include but are not limited to statements regarding Endeavour’s anticipated performance in 2022 including changes in mining operations and forecasts of production levels, anticipated production costs and all-in sustaining costs, the timing and results of various activities and the impact of the COVID 19 pandemic on operations. The Company does not intend to and does not assume any obligation to update such forward-looking statements or information, other than as required by applicable law.

Forward-looking statements or information involve known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, production levels, performance or achievements of Endeavour and its operations to be materially different from those expressed or implied by such statements. Such factors include but are not limited to the ultimate impact of the COVID 19 pandemic on operations and results, changes in production and costs guidance, national and local governments, legislation, taxation, controls, regulations and political or economic developments in Canada and Mexico; financial risks due to precious metals prices, operating or technical difficulties in mineral exploration, development and mining activities; risks and hazards of mineral exploration, development and mining; the speculative nature of mineral exploration and development, risks in obtaining necessary licenses and permits, and challenges to the Company’s title to properties; as well as those factors described in the section “risk factors” contained in the Company’s most recent form 40F/Annual Information Form filed with the S.E.C. and Canadian securities regulatory authorities.

Forward-looking statements are based on assumptions management believes to be reasonable, including but not limited to: the continued operation of the Company’s mining operations, no material adverse change in the market price of commodities, mining operations will operate and the mining products will be completed in accordance with management’s expectations and achieve their stated production outcomes, and such other assumptions and factors as set out herein. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or information, there may be other factors that cause results to be materially different from those anticipated, described, estimated, assessed or intended. There can be no assurance that any forward-looking statements or information will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements or information. Accordingly, readers should not place undue reliance on forward-looking statements or information.

Appendix

ENDEAVOUR SILVER CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE EARNINGS
(unaudited – prepared by management)
(expressed in thousands of US dollars, except for shares and per share amounts)

		Three months ended							Six months ended
		June 30,				June 30,			June 30,				June 30,
			2022				2021			2022				2021
Revenue		$	30,782			$	47,775		$	88,522			$	82,241
Cost of sales:
Direct production costs			19,828				26,223			46,549				44,951
Royalties			2,194				4,340			6,511				6,800
Share-based payments			113				111			240				229
Depreciation, depletion and amortization			4,175				6,624			10,481				14,120
Write down of inventory to net realizable value			-				272			-				272
			26,310				37,570			63,781				66,372
Mine operating earnings			4,472				10,205			24,741				15,869
Expenses:
Exploration and evaluation			3,784				5,025			7,000				9,155
General and administrative			1,348				4,293			5,645				7,816
Care and maintenance costs			189				55			379				576
Impairment (reversal of impairment) of non-current assets, net			-				-			-				(16,791	)
Write off of exploration properties			500				-			500				-
			5,821				9,373			13,524				756
Operating earnings (loss)			(1,349	)			832			11,217				15,113
Finance costs			336				216			634				507
Other income (expense):
Foreign exchange			(289	)			659			522				(35	)
Gain on asset disposal			-				5,841			-				5,841
Investment and other			(6,872	)			1,802			(1,052	)			4,553
			(7,161	)			8,302			(530	)			10,359
Earnings (loss) before income taxes			(8,846	)			8,918			10,053				24,965
Income tax expense:
Current income tax expense			1,325				1,146			2,340				1,817
Deferred income tax expense			1,752				1,116			7,974				4,243
			3,077				2,262			10,314				6,060
Net earnings (loss) and comprehensive earnings (loss) for the period		$	(11,923	)		$	6,656		$	(261	)		$	18,905
Basic earnings (loss) per share based on net earnings		$	(0.07	)		$	0.04		$	(0.00	)		$	0.12
Diluted earnings (loss) per share based on net earnings		$	(0.07	)		$	0.04		$	(0.00	)		$	0.11
Basic weighted average number of shares outstanding			180,974,609				168,383,755			176,291,929				164,051,368
Diluted weighted average number of shares outstanding			184,569,970				172,195,942			179,018,499				167,743,113

ENDEAVOUR SILVER CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(unaudited – prepared by management)
(expressed in thousands of US dollars)

		June 30,				December 31,
			2022				2021
ASSETS
Current assets
Cash and cash equivalents		$	116,226			$	103,303
Other investments			8,293				11,200
Accounts and other receivable			13,486				14,462
Income tax receivable			1,219				177
Inventories			35,664				27,485
Prepaid expenses			11,566				5,135
Total current assets			186,454				161,762
Non-current deposits			595				599
Non-current income tax receivable			3,570				3,570
Non-current other investments			2,943				-
Non-current IVA receivable			7,528				4,256
Deferred income tax asset			-				936
Intangible assets			-				40
Right-of-use leased assets			614				664
Mineral properties, plant and equipment			141,806				122,197
Total assets		$	343,510			$	294,024
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities		$	26,383			$	31,991
Income taxes payable			4,995				4,228
Loans payable			5,179				4,128
Lease liabilities			176				207
Total current liabilities			36,733				40,554
Loans payable			7,392				6,366
Lease liabilities			755				794
Provision for reclamation and rehabilitation			7,576				7,397
Deferred income tax liability			8,545				1,506
Total liabilities			61,001				56,617
Shareholders' equity
Common shares, unlimited shares authorized, no par value, issued
and outstanding 181,051,354 shares (Dec 31, 2021 - 170,537,307 shares)			631,751				585,406
Contributed surplus			5,349				6,331
Retained earnings (deficit)			(354,591	)			(354,330	)
Total shareholders' equity			282,509				237,407
Total liabilities and shareholders' equity		$	343,510			$	294,024

ENDEAVOUR SILVER CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(unaudited – prepared by management)
(expressed in thousands of US dollars)

			Three months ended								Six months ended
			June 30,				June 30,				June 30,				June 30,
				2022				2021				2022				2021
Operating activities
Net earnings (loss) for the period			$	(11,923	)		$	6,656			$	(261	)		$	18,905
Items not affecting cash:
Share-based compensation				972				1,028				2,499				2,193
Depreciation, depletion and amortization				4,324				6,723				10,786				14,347
Impairment (reversal of impairment) of non-current assets, net				-				-				-				(16,791	)
Write off of exploration properties				500				-				500				-
Deferred income tax expense				1,752				1,116				7,974				4,243
Unrealized foreign exchange loss (gain)				(84	)	-		(143	)			(220	)	-		(53	)
Finance costs				336				216				634				507
Write down of inventory to net realizable value				-				272				-				272
Loss (gain) on asset disposal				105				(5,841	)			46				(5,807	)
Loss (gain) on other investments				7,626				(1,366	)			2,269				(3,912	)
Net changes in non-cash working capital				(22,156	)			806				(21,042	)			(8,360	)
Cash from (used in) operating activities				(18,548	)			9,467				3,185				5,544
Investing activities
Proceeds on disposal of property, plant and equipment				48				6,985				82				7,541
Mineral property, plant and equipment				(15,451	)			(8,164	)			(28,448	)			(15,434	)
Purchase of investments				(748	)			-				(2,119	)			(832	)
Proceeds from disposal of marketable securities				-				4,905				-				9,288
Redemption of (investment in) non-current deposits				2				19				4				(1	)
Cash from (used) in investing activities				(16,149	)			3,745				(30,481	)			562
Financing activities
Repayment of loans payable				(1,214	)			(918	)			(2,297	)			(1,887	)
Repayment of lease liabilities				(54	)			(43	)			(106	)			(85	)
Interest paid				(204	)			(174	)			(381	)			(367	)
Public equity offerings				-				29,034				46,001				59,134
Exercise of options				1,448				785				1,578				4,583
Share issuance costs				(15	)			(664	)			(2,812	)			(1,266	)
Deferred share unit redemption				(6	)			-				(6	)			-
Performance share unit redemption				-				(2,174	)			(1,897	)			(2,174	)
Cash from (used) financing activities				(45	)			25,846				40,080				57,938
Effect of exchange rate change on cash and cash equivalents				(46	)			144				139				64
Increase (decrease) in cash and cash equivalents				(34,742	)			39,058				12,784				64,044
Cash and cash equivalents, beginning of the period				151,014				85,989				103,303				61,083
Cash and cash equivalents, end of the period			$	116,226			$	125,191			$	116,226			$	125,191

 

FAQ

What were Endeavour Silver's earnings results for Q2 2022?

Endeavour Silver reported a net loss of $11.9 million or $0.07 per share for Q2 2022.

How did Endeavour Silver's production performance compare to expectations?

The company produced 1.36 million ounces of silver, exceeding production plans by 15%.

What is the updated production guidance for Endeavour Silver in 2022?

Endeavour Silver raised its production guidance to 7.6 – 8.0 million silver equivalent ounces for 2022.

How did revenue change for Endeavour Silver in Q2 2022 compared to the previous year?

Revenue decreased by 35% to $30.8 million in Q2 2022 due to withholding sales.

What challenges did Endeavour Silver face in Q2 2022?

The company faced challenges from industry-wide inflation impacting operating costs.