VANCOUVER, British Columbia, May 06, 2019 (GLOBE NEWSWIRE) -- Endeavour Silver Corp. (NYSE: EXK; TSX: EDR) released today its financial results for the period ended March 31, 2019. The Company owns and operates four underground silver-gold mines in Mexico, the Guanaceví mine in Durango state, the Bolañitos and El Cubo mines in Guanajuato state and the recently commissioned El Compas mine in Zacatecas State. Endeavour is also advancing the Terronera project in Jalisco state to a development decision and completing a preliminary economic assessment to advance the Parral project in Chihuahua state.

The Company recorded a significant net loss in the First Quarter, 2019, compared to a small net gain in the First Quarter, 2018, primarily due to lower revenue and higher unit costs of production. Revenue decreased 28% due to lower production and lower realized prices. All-in sustaining costs increased 37% due to reduced production and higher cash operating costs, inventory write-downs, employee severance payments, exploration and general and administrative expenses.

Management has implemented multiple measures to improve its operational and financial performance and further actions are being planned. In addition to experiencing various one-time events that impacted performance in Q1, 2019, management has conducted a company-wide cost review and has initiated both short and long-term actions to reduce costs and defer certain investments, as detailed herein.

Highlights of First Quarter 2019 (Compared to First Quarter 2018)

Financial
•Net earnings decreased to a $13.3 million loss ($0.10 per share)
•Cash flow from operations before working capital changes decreased to $2.1 million
•Mine operating cash flow before taxes(1) decreased 66% to $4.6 million
•Revenue decreased 28% to $29.1 million
•Realized silver price decreased 7% to $15.50 per ounce (oz) sold
•Realized gold price decreased 1% to $1,315 per oz sold
•Cash costs(1) increased 93% to $12.55 per oz silver payable (net of gold credits)
•All-in sustaining costs(1) increased 37% to $19.37 per oz silver payable (net of gold credits)
•Cash and cash equivalents fell 35% to $21.8 million
•Working capital fell to $46.8 million compared to $54.5 million at year end

Operations
•Silver production decreased 21% to 1,071,355 oz
•Gold production decreased 24% to 10,055 oz
•Silver equivalent production was 1.9 million oz (at a 80:1 silver: gold ratio)
•Silver oz sold decreased 24% to 1,069,385 oz
•Gold oz sold decreased 25% to 9,559 oz
•Bullion inventory at quarter-end included 114,696 oz silver and 288 oz gold
•Concentrate inventory at quarter-end included 63,894 oz silver and 1,698 oz gold

(1) EBITDA, mine operating cash flow, cash costs and all-in sustaining costs are non-IFRS measures. Please refer to the definitions in the Company’s Management Discussion & Analysis.

In Q1, 2019, Bolanitos and El Cubo continued to be profitable but the Guanacevi mine incurred almost half the net loss incurred during the quarter. Management is currently conducting a detailed review of mining alternatives for Guanacevi, including ways to improve the viability of the main Santa Cruz orebody and accelerate the development of the Milache and SCS orebodies.

Endeavour has faced difficulties in the past and successfully resolved them. Management has initiated the following actions to conserve cash and turn around the current performance.
•Operations are focused on accelerating development and production rates to get back on plan, as well as mining higher grades and improving metal recoveries wherever possible at each mine
•Management changes have been implemented at Guanacevi and Bolanitos to address systemic issues and improve supervision to achieve planned development and production targets
•Mine development is increasing due to improved equipment utilization and contractor performance, certain mining equipment has been and will be moved to higher priority areas and certain mining contractors have been and will be replaced for under-performance
•New mobile mining equipment has arrived onsite and additional equipment is being leased for delivery in H2, 2019 to reduce maintenance costs and enhance productivity
•New senior mine planning engineer hired to review and redo certain mine plans and senior mine geological consultant retained to review and improve grade control at each mine
•Employee and contractor reductions were implemented in Q1, 2019 and additional reductions will be made in Q2, 2019
•The exploration department has already ceased most brownfields and greenfields drilling, and is now assisting mine exploration with mine-site drilling
•Senior management have taken voluntary reductions in pay, Vancouver administrative staff have moved to a reduced work week and administration is reducing all discretionary spending
•Management is assessing a number of mining alternatives for the Guanacevi mine and the viability of the deep Santa Cruz ore body, which is expected to be completed by month-end

Bradford Cooke, CEO of Endeavour, stated, “We experienced a challenging start to the year in operations, with no improvement of the systemic issues at Guanacevi and unexpected events such as the seven-week shut-down at El Compas due to a mill failure. However, Endeavour management has dealt with similar issues before, we successfully cut costs across the board to address similar operational and economic challenges in 2008 and 2013. The Company emerged financially stronger and more profitable as a result.

“With El Compas now commercial, management is focused on Terronera, arranging debt financing and continuing to optimize the pre-feasibility study released last year, while we await receipt of the final government permit and board approval to commence construction. A preliminary economic assessment and mine permitting are both underway for the Parral project, which, although reduced, will be the Company’s largest exploration investment in 2019.”

Quarterly Financial Results

In the first quarter ended March 31, 2019, the Company generated revenue totaling $29.1 million (Q1 2018 - $40.3 million). During the quarter, the Company sold 1,069,385 silver ounces and 9,559 gold ounces at realized prices of $15.50 and $1,315 per ounce respectively, compared to sales of 1,406,143 silver ounces and 12,674 gold ounces at realized prices of $16.70 and $1,330 per ounce respectively in Q1, 2018.

After cost of sales of $34.9 million (Q1 2018 - $37.1 million), mine operating losses amounted to $5.8 million (Q1 2018 - earnings of $3.3 million) from mining and milling operations in Mexico. The 6% decrease in cost of sales was primarily due to decreased depreciation, depletion and amortization and $3.2 million write down of production of inventories to net realizable value. Excluding depreciation and depletion of $7.1 million (Q1 2018 - $9.8 million), share-based payments of $55,000 (Q1 2018 - $37,000) and inventory write down of $3.2 million (Q1 2018 - $0.8 million), mine operating cash flow before taxes was $4.6 million (Q1 2018 – $13.8 million) in Q1, 2019.

Net loss was $13.3 million (Q1 2018 – earnings of $2.3 million) after exploration, general and administrative, foreign exchange, other income and taxes.

Direct production costs per tonne in Q1, 2019 increased 33% compared with Q1, 2018 due reduced throughput. The higher production costs per tonne were driven mainly by lower mine output at each operation.

At Guanacevi, the new Milache orebody is now producing 250 tonnes per day (tpd) of development ore, on its way to 400 tpd by the end of third quarter, and the new SCS orebody is being developed for production in H2, 2019. Production rates at the Milache and SCS orebodies are expected to increase each quarter, initially to fill the plant to its 1,200 tpd capacity and then to steadily displace the higher cost production at Porvenir Norte and Santa Cruz. Throughput was 95% of plan, while silver grades were lower than plan, due to a higher proportion of lower grade ore still being mined from Santa Cruz rather than higher grade ore scheduled to come from Milache. Silver grades are expected to improve in the second half of the year.

At Bolañitos, mine output was lower than plan due to elevated arsenic content (still low in the ore but high enough to penalize the concentrate net returns) at a certain elevation in the orebodies, which required the mine plan to be re-sequenced to allow for blending with low arsenic ore. Management expects the mining rates should revert to plan by the end of Q3, 2019.

At El Cubo, mine output decreased as planned due to the short mine life, and silver grades and gold grades were all higher in Q1, 2019 compared to Q1, 2018, which offset the sharp decrease in production in Q1, 2019 compared to Q1, 2018. Throughput was higher than plan, offset by lower gold grades than plan. The lower production rate results in higher operating costs compared to 2018. Accordingly, the Company implemented work force reductions in Q1, 2019 to reflect the lower production rate this year.

At El Compas, the mine and plant achieved commercial production in mid-March but only contributed two weeks of production during the first quarter. The ball mill was repaired and the plant re-commenced operations in mid-February, processing a total 11,200 tonnes from February 11th to quarter end. Higher mine dilution impacted head grades which resulted in replacement of the mining contractor. Management expects the throughput to meet plan capacity in Q2, 2019 and grades to improve each quarter as dilution is reduced. Optimization studies are underway at El Compas to increase throughput, grades and recoveries to their design capacities.

The higher costs per tonne resulted in higher cash costs per oz, net of by-product credits (a non-IFRS measure and a standard of the Silver Institute). Similarly, all-in sustaining costs (also a non-IFRS measure) which, compared to Q1, 2018, increased 37% to $19.37 per oz in Q1, 2019. This increase in all?in sustaining costs was a result of the higher operating costs per oz and the lower capital expenditures in Q1, 2019 compared to Q1, 2019.

The Condensed Consolidated Interim Financial Statements and Management’s Discussion & Analysis can be viewed on the Company’s website at www.edrsilver.com, on SEDAR at www.sedar.com and EDGAR at www.sec.gov. All amounts are reported in US$.