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Endeavour Silver Corp.(TSX:EDR)(NYSE Amex:EXK)(DBFrankfurt:EJD) announced today record earnings, cash-flows and revenues for the fourth quarter and fiscal year ended December 31, 2010, thanks to the Company’s sixth consecutive year of growing silver and gold production, lower cash operating costs and higher precious metal prices.
Highlights of Fiscal Year 2010 (Compared to Fiscal Year 2009)
Highlights of Fourth Quarter 2010 (Compared to Fourth Quarter 2009)
Guidance for 2011
Bradford Cooke, Chairman and CEO, commented, “Endeavour delivered yet another year of record financial and operating performance in 2010 and as a result, the Company has never been in a better financial position. We finished last year with robust earnings, more than $100 million in working capital, no debt, falling cash costs, rising silver production and higher precious metals prices.”
“In 2011, management is forecasting Endeavour’s seventh consecutive year of organic silver production growth by expanding the Guanajuato plant from 600 up to 1000 tonnes per day. Cash costs are expected to continue declining into the mid-$5 per oz range and if we assume a US$30 average silver price in 2010, our mine operating profit margin will be around $24 per oz – remarkable by any standards.”
“We remain focused on the continuous expansion and improvement of our two operating mines, the organic growth of our reserves and resources, and last but not least, we continue to seek opportunities to grow through mergers and acquisitions that are accretive to our shareholders. 2011 promises to be another great year for Endeavour Silver.”
To view a video of Chairman Bradford Cooke commenting on today’s results, please visit our website or click here: http://www.edrsilver.com/i/video/pressreleases/2011-03-22/2010_Financial_Results.html
The financial results are expressed in US dollars (“US$”) and are based on Canadian generally accepted accounting practices (Canadian “GAAP”). For a more detailed review, shareholders are referred to the 2010 Audited Financial Statements, Management Discussion and Analysis (“MD&A”) and Annual Information Form (“AIF”) at the Company’s website, www.edrsilver.com or on the SEDAR website, http://www.sedar.com/ and to the SEC Form 40F filed on EDGAR athttp://www.sec.gov/edgar.shtml.
Financial Results (Consolidated Statement of Operations appended below)
For the year ended December 31, 2010, the Company generated Revenues totalling $86.5 million (2009 – $50.8 million) at an average sale price of $19.62 per oz (2009 – $15.49 per oz) for its silver production. After Costs of Sales of $41.5 million (2009 – $29.5 million), Mine Operating Cash-flows amounted to $45.0 million (2009 – $21.3 million) from its mining and milling operations in Mexico. After Depreciation and Depletion of $15.5 million (2009 – $11.3 million), Mine Operating Earnings were $29.6 million (2008 – $10.0 million) in 2010. Operating Earnings were $14.0 million (2009 – break even) and the Company incurred Net Earnings for the year ended December 31, 2010 of $7.1 million (2009 – loss of $1.9 million). Cash operating costs were $5.71 per oz silver produced (2009 – $6.04), net of gold by-product credits.
Endeavour invested US$30.1 million on capital projects in 2010, including US$18.7 million on mine development, US$6.8 million on plant improvements and US$4.6 million on equipment, vehicles and buildings. The main focus was at Guanacevi ($19.4 million) where over six kilometers of mine development were completed, including the new Santa Cruz and Porvenir Cuatro mines, and the plant was expanded to 1,000 tonnes per day. At Guanajuato, capital expenditures ($10.7 million) focused on completing over five kilometers of mine development, including the new Lucero South access ramp.
Endeavour is well-positioned for both organic and acquisition growth in 2011, with year-end working capital of $102 million, including $88 million in cash and short term investments. Working capital and 2011 mine operating cash flows will be used to fund an aggressive 2011 capital investment program focused on accelerating mine development ($21.8 million), additional Guanacevi plant improvements ($6.1 million) including a new dry stack tailings facility, a major plant expansion at Guanajuato to 1,000 tonnes per day ($5.3 million) and an upgrade to our fleet of Guanajuato mining equipment ($3.0 million).
Operating Results (Consolidated Table of Operations appended below)
In 2010, Endeavour achieved two important milestones in its silver mining operations: the Company recorded its sixth consecutive year of growing silver production, up 26% from 2009 to 3,285,634 payable ounces (oz) silver; and cash costs declined for the third consecutive year, down 5% to $5.71 per oz silver.
Similar to 2009, silver production in 2010 was relatively flat in the first two quarters, as management focused primarily on the capital investment programs at the Guanacevi Mines in Durango State, and the Guanajuato Mines in Guanajuato State. As a result of completing the 2010 capital projects, consolidated throughput rose from 113,000 tonnes in Q1, 2010 to 144,000 tonnes in Q4, 2010. Consolidated cash operating costs of production fell from US$6.39 per oz silver in Q1, 2010 to US$4.71 per oz silver in Q4, 2010.
Exploration Results
In the San Pedro area of Guanacevi, Endeavour made two exciting new discoveries in the Epsilon and La Blanca veins and expanded the Company’s land position at Guanacevi with the addition of 3 properties totalling 25 hectares. In the Guanajuato district, the Company identified three significant new veins, the Karina, Fernanda and Daniela veins, and expanded the Company’s land position at Guanajuato with the addition of 4 properties totalling 243 hectares.
At the San Juanico property in the Parral district, drilling successfully expanded the NI 43-101 indicated resources to 1.63 million tonnes containing 2.6 million oz silver and inferred resources to 1.30 million tonnes containing 2.7 million ounces plus significant gold, lead and zinc resources. Please visit Endeavour’s website or refer to the Company’s March 8th, 2011 press release for December 31, 2010 updated reserves and resources table. For more information on the 2010 exploration program and 2011 exploration outlook please refer to the Company’s February 1, 2011 press release.
2011 Outlook
In 2011, Endeavour anticipates its financial performance will reflect significantly higher anticipated silver and gold bullion prices, further increases in silver and gold production, continued growth of reserves and resources and a further reduction in cash costs. Cash operating costs should continue to trend downward due to economies of scale resulting from the planned Guanajuato plant expansion. However, this benefit will be partly offset by continued increases in some operating costs such as labour.
Similar to 2010, the first two quarters of silver production in 2011 are scheduled to be relatively flat, as we focus on mine development and plant expansion capital programs. Silver production is expected to rise again in the third quarter, as the expansion at Guanajuato is completed.
The Guanacevi mines are scheduled to produce 1,000 tonnes per day (tpd) for the entire year. Guanacevi currently draws 80% of its ore production from the Porvenir Mine and the balance will be from Porvenir Dos, Porvenir Cuatro and Santa Cruz.
At Guanajuato, the Lucero vein now contributes 80% of ore production with the balance coming from Cebada and Bolanitos. The 2011 expansion of the Guanajuato plant is anticipated to increase capacity from 600 tpd to 1,000 tpd, with completion expected in Q3, 2011. The added plant capacity should be met with increased production from the Bolanitos and Lucero veins and development ore from our 2010 discoveries of the Karina and Fernanda veins.
In 2011 Endeavour plans to push ahead on its exploration programs at several projects. The Company is undertaking an aggressive $9.2 million, 47,000 meter, 175-hole exploration drill program to test multiple exploration targets within three of the mining districts plus some new property acquisitions.
At Guanacevi, a total of 10,000 meters of diamond drilling is planned to test several newly discovered veins in the San Pedro area. At Guanajuato, drilling will continue at Karina, Fernanda and Daniela and other prospective areas, with 14,500 meters planned.
Endeavour will also commence drilling on the San Sebastian properties acquired last year in Jalisco state, Mexico. Surface sampling has identified numerous high-grade silver and gold mineralized zones at San Sebastian with a 6,500 meter program planned for 2011.
A telephone conference call to discuss the results will be held at 10:00 AM PDT (1:00 PM EDT) on Tuesday, March 22, 2011. To participate in the telephone conference call, please dial the following:
A replay of the conference call will be available by dialing 1-800-319-6413 in Canada & USA (Toll-free) or 1-604-638-9010 outside of Canada & USA. The required pass-code is 4890 followed by the # sign.
To view the Company’s Annual Report on Form 40F containing the Company’s Annual Audited Financial Statements for the year ended December 31, 2010 plus ancillary documents, please click on the link below. All holders have the ability to 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 Hugh Clarke, VP Corporate Communications by email at 604-685-9775 or toll free 877-685-9775.
