UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of November 2024
Commission File Number: 001-33153
ENDEAVOUR SILVER CORP.
(Translation of registrant's name into English)
#1130-609 Granville Street
Vancouver, British Columbia, Canada V7Y 1G5
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
[ ] Form 20-F [ x ] Form 40-F
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]
Incorporated by Reference
Exhibits 99.1 and 99.2 to this Form 6-K of Endeavour Silver Corp. (the “Company”) are hereby incorporated by reference as exhibits to the Registration Statement on Form F-10 (File No. 333-272755) of the Company, as amended or supplemented.
SUBMITTED HEREWITH
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
Endeavour Silver Corp. |
|
(Registrant) |
|
|
|
Date: November 5, 2024 |
By: |
/s/ Daniel Dickson |
|
|
Daniel Dickson |
|
Title: |
CEO |
Endeavour Silver Corp.
Condensed Consolidated Interim Financial Statements
Unaudited
Three and Nine Months Ended September 30, 2024 and 2023
ENDEAVOUR SILVER CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(unaudited)
(expressed in thousands of US dollars)
|
|
|
September 30, |
|
|
December 31, |
|
|
Notes |
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
54,934 |
|
$ |
35,286 |
|
Other investments |
4 |
|
666 |
|
|
5,135 |
|
Accounts and other receivables |
5 |
|
19,471 |
|
|
22,276 |
|
Income tax receivable |
|
|
26 |
|
|
3,268 |
|
Inventories |
6 |
|
24,029 |
|
|
27,258 |
|
Prepaids and other assets |
|
|
4,994 |
|
|
7,550 |
|
Total current assets |
|
|
104,120 |
|
|
100,773 |
|
|
|
|
|
|
|
|
|
Non-current income tax receivable |
|
|
3,668 |
|
|
4,262 |
|
Non-current IVA receivable |
5 |
|
25,969 |
|
|
23,320 |
|
Non-current loans receivable |
5 |
|
1,080 |
|
|
1,874 |
|
Deferred financing fees |
9 |
|
3,104 |
|
|
7,545 |
|
Other non-current assets |
8 |
|
32,231 |
|
|
22,376 |
|
Mineral properties, plant and equipment |
8, 9 |
|
441,224 |
|
|
314,657 |
|
Total assets |
|
$ |
611,396 |
|
$ |
474,807 |
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
Accounts payable, accrued liabilities and other current liabilities |
|
$ |
50,564 |
|
$ |
46,582 |
|
Income taxes payable |
|
|
11,590 |
|
|
7,801 |
|
Loans payable |
9 |
|
3,368 |
|
|
3,861 |
|
Derivative liability |
17 |
|
9,222 |
|
|
- |
|
Total current liabilities |
|
|
74,744 |
|
|
58,244 |
|
|
|
|
|
|
|
|
|
Loans payable |
9 |
|
81,943 |
|
|
4,658 |
|
Provision for reclamation and rehabilitation |
|
|
9,237 |
|
|
8,745 |
|
Deferred income tax liability |
|
|
12,822 |
|
|
13,730 |
|
Other non-current liabilities |
|
|
2,470 |
|
|
3,089 |
|
Derivative liability |
17 |
|
17,140 |
|
|
- |
|
Total liabilities |
|
|
198,356 |
|
|
88,466 |
|
|
|
|
|
|
|
|
|
Shareholders' equity |
|
|
|
|
|
|
|
Common shares |
|
|
780,200 |
|
|
722,695 |
|
Contributed surplus |
|
|
6,020 |
|
|
4,556 |
|
Retained deficit |
|
|
(373,180 |
) |
|
(340,910 |
) |
Total shareholders' equity |
|
|
413,040 |
|
|
386,341 |
|
Total liabilities and shareholders' equity |
|
$ |
611,396 |
|
$ |
474,807 |
|
The accompanying notes are an integral part of these consolidated financial statements.
Approved on behalf of the Board:
/s/ Margaret Beck |
|
/s/ Daniel Dickson |
Director |
|
Director |
ENDEAVOUR SILVER CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE EARNINGS (LOSS)
(unaudited)
(expressed in thousands of US dollars, except for shares and per share amounts)
|
|
|
Three months ended |
|
|
Nine months ended |
|
|
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
Notes |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
11 |
$ |
53,443 |
|
$ |
49,432 |
|
$ |
175,428 |
|
$ |
154,964 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct production costs |
|
|
28,704 |
|
|
34,020 |
|
|
99,112 |
|
|
86,014 |
|
Royalties |
|
|
5,151 |
|
|
4,821 |
|
|
17,207 |
|
|
17,105 |
|
Share-based compensation |
10 (b)(c) |
|
73 |
|
|
44 |
|
|
226 |
|
|
(118 |
) |
Depreciation |
|
|
7,032 |
|
|
7,855 |
|
|
24,548 |
|
|
20,704 |
|
|
|
|
40,960 |
|
|
46,740 |
|
|
141,093 |
|
|
123,705 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mine operating earnings |
|
|
12,483 |
|
|
2,692 |
|
|
34,335 |
|
|
31,259 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration, evaluation and development |
12 |
|
4,707 |
|
|
4,155 |
|
|
13,267 |
|
|
12,678 |
|
General and administrative |
13 |
|
3,982 |
|
|
2,358 |
|
|
12,266 |
|
|
9,633 |
|
Write off of mineral properties |
|
|
- |
|
|
- |
|
|
- |
|
|
435 |
|
|
|
|
8,689 |
|
|
6,513 |
|
|
25,533 |
|
|
22,746 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings (loss) |
|
|
3,794 |
|
|
(3,821 |
) |
|
8,802 |
|
|
8,513 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance costs |
|
|
509 |
|
|
316 |
|
|
1,100 |
|
|
1,090 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange gain (loss) |
|
|
(3,070 |
) |
|
(418 |
) |
|
(5,889 |
) |
|
3,326 |
|
Loss on derivative contracts |
17 |
|
(19,379 |
) |
|
- |
|
|
(28,632 |
) |
|
- |
|
Gain on asset disposal |
|
|
- |
|
|
6,992 |
|
|
- |
|
|
7,059 |
|
Investment and other |
|
|
5,875 |
|
|
(1,627 |
) |
|
6,478 |
|
|
(267 |
) |
|
|
|
(16,574 |
) |
|
4,947 |
|
|
(28,043 |
) |
|
10,118 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) before income taxes |
|
|
(13,289 |
) |
|
810 |
|
|
(20,341 |
) |
|
17,541 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current income tax expense |
|
|
4,523 |
|
|
2,250 |
|
|
13,068 |
|
|
11,137 |
|
Deferred income tax expense (recovery) |
|
|
(512 |
) |
|
888 |
|
|
(908 |
) |
|
3,330 |
|
|
|
|
4,011 |
|
|
3,138 |
|
|
12,160 |
|
|
14,467 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) and comprehensive earnings (loss) |
|
$ |
(17,300 |
) |
$ |
(2,328 |
) |
$ |
(32,501 |
) |
$ |
3,074 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share |
|
$ |
(0.07 |
) |
$ |
(0.01 |
) |
$ |
(0.14 |
) |
$ |
0.02 |
|
Diluted earnings (loss) per share |
|
$ |
(0.07 |
) |
$ |
(0.01 |
) |
$ |
(0.14 |
) |
$ |
0.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average number of shares outstanding |
|
|
246,000,878 |
|
|
194,249,283 |
|
|
238,827,655 |
|
|
192,003,752 |
|
Diluted weighted average number of shares outstanding |
10(f) |
|
246,000,878 |
|
|
194,249,283 |
|
|
238,827,655 |
|
|
193,875,315 |
|
The accompanying notes are an integral part of these consolidated financial statements.
ENDEAVOUR SILVER CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(unaudited)
(expressed in thousands of US dollars, except for shares and per share amounts)
|
Notes |
|
Number of shares |
|
|
Share Capital |
|
|
Contributed Surplus |
|
|
Retained Deficit |
|
|
Total Shareholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2022 |
|
|
189,995,563 |
|
$ |
657,866 |
|
$ |
6,115 |
|
$ |
(348,087 |
) |
$ |
315,894 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Public equity offerings, net of issuance costs |
10 (a) |
|
8,195,527 |
|
|
22,707 |
|
|
- |
|
|
- |
|
|
22,707 |
|
Exercise of options |
10 (b) |
|
1,097,900 |
|
|
3,758 |
|
|
(1,305 |
) |
|
- |
|
|
2,453 |
|
Settlement of performance and deferred share units |
10 (c) |
|
411,836 |
|
|
405 |
|
|
(2,817 |
) |
|
- |
|
|
(2,412 |
) |
Share-based compensation |
10 (b)(c) |
|
- |
|
|
- |
|
|
2,903 |
|
|
- |
|
|
2,903 |
|
Canceled options |
10 (b) |
|
- |
|
|
- |
|
|
(299 |
) |
|
299 |
|
|
- |
|
Earnings for the period |
|
|
- |
|
|
- |
|
|
- |
|
|
3,074 |
|
|
3,074 |
|
Balance at September 30, 2023 |
|
|
199,700,826 |
|
$ |
684,736 |
|
$ |
4,597 |
|
|
($ 344,714 |
) |
$ |
344,619 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Public equity offerings, net of issuance costs |
10 (a) |
|
17,544,666 |
|
|
37,959 |
|
|
- |
|
|
- |
|
|
37,959 |
|
Share-based compensation |
10 (b)(c) |
|
- |
|
|
- |
|
|
714 |
|
|
- |
|
|
714 |
|
Canceled options |
10 (b) |
|
- |
|
|
- |
|
|
(755 |
) |
|
755 |
|
|
- |
|
Earnings for the period |
|
|
- |
|
|
- |
|
|
- |
|
|
3,049 |
|
|
3,049 |
|
Balance at December 31, 2023 |
|
|
217,245,492 |
|
$ |
722,695 |
|
$ |
4,556 |
|
|
($ 340,910 |
) |
$ |
386,341 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Public equity offerings, net of issuance costs |
10 (a) |
|
27,540,971 |
|
|
53,790 |
|
|
- |
|
|
- |
|
|
53,790 |
|
Exercise of options |
10 (b) |
|
1,242,600 |
|
|
3,715 |
|
|
(1,201 |
) |
|
- |
|
|
2,514 |
|
Canceled options |
10 (b) |
|
- |
|
|
- |
|
|
(231 |
) |
|
231 |
|
|
- |
|
Share-based compensation |
10 (b)(c) |
|
- |
|
|
- |
|
|
2,896 |
|
|
- |
|
|
2,896 |
|
Loss for the period |
|
|
- |
|
|
- |
|
|
- |
|
|
(32,501 |
) |
|
(32,501 |
) |
Balance at September 30, 2024 |
|
|
246,029,063 |
|
$ |
780,200 |
|
$ |
6,020 |
|
|
($ 373,180 |
) |
$ |
413,040 |
|
The accompanying notes are an integral part of these consolidated financial statements.
ENDEAVOUR SILVER CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(unaudited)
(expressed in thousands of US dollars)
|
|
|
Three months ended |
|
|
Nine months ended |
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
Notes |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) for the period |
|
$ |
(17,300 |
) |
$ |
(2,328 |
) |
$ |
(32,501 |
) |
$ |
3,074 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items not affecting cash: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation |
10 (b)(c) |
|
564 |
|
|
864 |
|
|
2,896 |
|
|
2,904 |
|
Depreciation |
8 |
|
7,352 |
|
|
9,067 |
|
|
25,420 |
|
|
22,659 |
|
Write off of exploration properties |
|
|
- |
|
|
- |
|
|
- |
|
|
435 |
|
Deferred income tax expense (recovery) |
|
|
(664 |
) |
|
888 |
|
|
(908 |
) |
|
3,330 |
|
Unrealized foreign exchange loss (gain) |
|
|
1,445 |
|
|
(409 |
) |
|
3,777 |
|
|
1,205 |
|
Finance costs |
|
|
509 |
|
|
316 |
|
|
1,100 |
|
|
1,090 |
|
Interest income |
|
|
(4,413 |
) |
|
- |
|
|
(5,685 |
) |
|
- |
|
Accretion of loans receivable |
|
|
(72 |
) |
|
(87 |
) |
|
(206 |
) |
|
(294 |
) |
(Gain) loss on asset disposal |
|
|
33 |
|
|
(6,992 |
) |
|
51 |
|
|
(7,059 |
) |
(Gain) loss on derivatives |
17 |
|
17,109 |
|
|
- |
|
|
26,362 |
|
|
- |
|
(Gain) loss on other investments |
4 |
|
(108 |
) |
|
1,944 |
|
|
1,177 |
|
|
1,997 |
|
Performance and deferred share units settled in cash |
|
|
- |
|
|
- |
|
|
- |
|
|
(2,118 |
) |
Net changes in working capital |
14 |
|
4,012 |
|
|
(2,650 |
) |
|
2,480 |
|
|
(22,158 |
) |
Cash from operating activities |
|
|
8,467 |
|
|
613 |
|
|
23,963 |
|
|
5,065 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds on disposal of property, plant and equipment |
|
|
- |
|
|
7,567 |
|
|
- |
|
|
7,567 |
|
Payment for mineral properties, plant and equipment |
8 |
|
(48,796 |
) |
|
(31,736 |
) |
|
(149,494 |
) |
|
(76,317 |
) |
Proceeds from disposal of other investments |
4 |
|
- |
|
|
- |
|
|
3,292 |
|
|
1,846 |
|
Redemption of non-current deposits |
|
|
- |
|
|
(57 |
) |
|
- |
|
|
(152 |
) |
Proceeds from loans receivable |
|
|
200 |
|
|
- |
|
|
900 |
|
|
500 |
|
Interest received |
|
|
4,413 |
|
|
- |
|
|
5,685 |
|
|
- |
|
Cash used in investing activities |
|
|
(44,183 |
) |
|
(24,226 |
) |
|
(139,617 |
) |
|
(66,556 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of loans payable |
9 |
|
(860 |
) |
|
(1,522 |
) |
|
(3,019 |
) |
|
(4,671 |
) |
Repayment of lease liabilities |
|
|
(98 |
) |
|
(126 |
) |
|
(299 |
) |
|
(275 |
) |
Interest paid |
9 |
|
(1,611 |
) |
|
(206 |
) |
|
(1,862 |
) |
|
(659 |
) |
Net proceeds from public equity offerings |
10 (a) |
|
- |
|
|
22,707 |
|
|
53,790 |
|
|
22,707 |
|
Proceeds from exercise of options |
10 (b) |
|
367 |
|
|
- |
|
|
2,514 |
|
|
2,453 |
|
Proceeds from loans payable |
9 |
|
25,000 |
|
|
- |
|
|
85,000 |
|
|
- |
|
Payment of deferred financing fees |
|
|
(602 |
) |
|
- |
|
|
(1,333 |
) |
|
- |
|
Performance and deferred share units withholding tax settlement |
|
|
- |
|
|
- |
|
|
- |
|
|
(294 |
) |
Cash from financing activities |
|
|
22,196 |
|
|
20,853 |
|
|
134,791 |
|
|
19,261 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate change on cash and cash equivalents |
|
|
357 |
|
|
213 |
|
|
511 |
|
|
(204 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents |
|
|
(13,163 |
) |
|
(2,547 |
) |
|
19,648 |
|
|
(42,434 |
) |
Cash and cash equivalents, beginning of the period |
|
|
68,097 |
|
|
43,504 |
|
|
35,286 |
|
|
83,391 |
|
Cash and cash equivalents, end of the period |
|
|
54,934 |
|
|
40,957 |
|
|
54,934 |
|
|
40,957 |
|
Supplemental cash flow information (Note 14) |
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
1. CORPORATE INFORMATION
Endeavour Silver Corp. (the "Company" or "Endeavour Silver") is a corporation governed by the Business Corporations Act (British Columbia, Canada). The Company is engaged in silver mining in Mexico and related activities including acquisition, exploration, development, extraction, processing, refining and reclamation. The Company is also engaged in exploration activities in Chile and United States. The address of the registered office is #1130 - 609 Granville Street, Vancouver, B.C., V7Y 1G5.
2. BASIS OF PRESENTATION
These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and do not include all of the information required for full annual financial statements and should be read in conjunction with the Company's annual audited consolidated financial statements as at and for the year ended December 31, 2023.
The Board of Directors approved the consolidated financial statements for issue on November 4, 2024.
The preparation of consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
These consolidated financial statements are presented in the Company's functional currency of US dollars and include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated upon consolidation of these subsidiaries.
3. MATERIAL ACCOUNTING POLICIES
The accounting policies applied in these condensed consolidated interim financial statements are the same as those applied in
the Company's annual audited consolidated financial statements as at and for the year ended December 31, 2023, except as described below.
In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Company's accounting policies and the key sources of estimation uncertainty were the same as those that were applied to the annual audited consolidated financial statements for the year ended December 31, 2023.
The accounting policies below have been applied consistently to all periods presented and by all subsidiaries in the group except for new accounting standards adopted during the year, which were adopted either on a prospective basis or on a modified retrospective basis, without restatement of comparative periods as described below.
Derivative financial instruments
The Company may hold derivative financial instruments to hedge its risk exposure to fluctuations in commodity prices and other currencies against the US Dollar. Derivative financial instruments are measured at fair value at each reporting period. All derivative instruments not designated in a hedge relationship are classified as financial instruments at fair value through profit or loss. Changes in fair value of non-hedging derivative financial instruments are included in net earnings or loss.
Accounting standards adopted during the period
The Company applied Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants - Amendments to IAS 1, issued in 2020 and 2022, for the first time in its 2024 condensed consolidated interim financial statements. The amendments clarify certain requirements for determining whether a liability is classified as current or non-current and require new disclosures in the annual financial statements for non-current liabilities that are subject to covenants within 12 months after the end of the reporting period. The adoption of the amendments did not result in any adjustment to the condensed consolidated interim financial statements.
4. OTHER INVESTMENTS
|
|
September 30, |
|
|
December 31, |
|
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
Balance, beginning of period |
$ |
5,135 |
|
$ |
10,035 |
|
Investment additions, at cost |
|
- |
|
|
73 |
|
Proceeds from disposals |
|
(3,292 |
) |
|
(2,451 |
) |
Loss on investments |
|
(1,177 |
) |
|
(2,522 |
) |
Balance, end of period |
$ |
666 |
|
$ |
5,135 |
|
The Company holds $624 in marketable securities that are classified as Level 1 and $42 in marketable securities that are classified as Level 3 in the fair value hierarchy (Note 17) and are classified as financial assets measured at FVTPL. Marketable securities classified as Level 3 in the fair value hierarchy are share purchase warrants and the fair value of the warrants at each period end has been estimated using the Black-Scholes Option Pricing Model.
5. ACCOUNTS AND OTHER RECEIVABLES
|
|
September 30, |
|
|
December 31, |
|
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
Trade receivables |
$ |
9,129 |
|
$ |
6,608 |
|
IVA receivable |
|
7,408 |
|
|
12,564 |
|
Other receivables |
|
1,384 |
|
|
1,654 |
|
Current portion of loan receivable |
|
1,550 |
|
|
1,450 |
|
|
$ |
19,471 |
|
$ |
22,276 |
|
The trade receivables consist of receivables from provisional silver and gold sales from the Bolañitos mine. The fair value of receivables arising from concentrate sales contracts that contain provisional pricing mechanisms is determined using the appropriate period end closing prices on the measurement date from the exchange that is the principal active market for the particular metal. As such, these receivables, which meet the definition of an embedded derivative, are classified within Level 2 of the fair value hierarchy (Note 17).
As at September 30, 2024, the total Mexican subsidiaries value added tax, Impuesto al Valor Agregado ("IVA"), receivable of $33,377 (December 31, 2023 - $35,884) has been allocated between the current portion of $7,408, which is included in accounts and other receivables, and the non-current portion of $25,969 (December 31, 2023 - $12,564 and $23,320 respectively). The non-current portion includes $24,373 for Terronera and $1,596 IVA receivables for Pitarrilla - the claims are eligible for submission with generation of revenue. On September 19, 2024, the Company recovered $13,506 IVA receivable related to Terronera. The amount recovered included $1,193 of interest.
During the nine-months period ended September 30, 2024, the Company has recovered $4,546 of IVA receivable related to Guanacevi from 2017, previously disputed and classified as non-current IVA receivable as at December 31, 2023. The amount recovered included $2,859 of interest.
The Company has a loan receivable in the amount of $5,000 due in cash payments over a five-year period of which $3,050 remains unpaid as of September 30, 2024. As of September 30, 2024, the carrying value of the loan receivable is $2,630 (December 31, 2023 - $3,324), consisting of the current portion of $1,550 (December 31, 2023 - $1,450) and non-current portion of $1,080 (December 31, 2023 - $1,874).
6. INVENTORIES
|
|
September 30, |
|
|
December 31, |
|
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
Warehouse inventory |
$ |
14,274 |
|
$ |
12,885 |
|
Stockpile inventory |
|
4,592 |
|
|
3,279 |
|
Finished goods inventory |
|
3,142 |
|
|
9,491 |
|
Work in process inventory |
|
2,021 |
|
|
1,603 |
|
|
$ |
24,029 |
|
$ |
27,258 |
|
7. RELATED PARTY TRANSACTIONS
The Company was charged $30 and $192 for legal services for the three and nine months ended September 30, 2024 by a legal firm in which the Company's corporate secretary is a partner (September 30, 2023 - $204 and $490 respectively). The Company has $14 in accounts payable to the legal firm as at September 30, 2024 (December 31, 2023 - $86).
8. MINERAL PROPERTIES, PLANT AND EQUIPMENT AND OTHER NON-CURRENT ASSETS
|
|
Mineral properties |
|
|
Plant |
|
|
Machinery & equipment |
|
|
Building |
|
|
Transport & office equipment |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2022 |
$ |
600,068 |
|
$ |
96,860 |
|
$ |
106,260 |
|
$ |
20,356 |
|
$ |
13,277 |
|
$ |
836,821 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions |
|
56,753 |
|
|
36,754 |
|
|
12,134 |
|
|
5,194 |
|
|
2,382 |
|
|
113,217 |
|
Disposals |
|
(674 |
) |
|
- |
|
|
(417 |
) |
|
- |
|
|
(623 |
) |
|
(1,714 |
) |
Balance at December 31, 2023 |
$ |
656,147 |
|
$ |
133,614 |
|
$ |
117,977 |
|
$ |
25,550 |
|
$ |
15,036 |
|
$ |
948,324 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions |
|
88,251 |
|
|
44,431 |
|
|
15,713 |
|
|
3,495 |
|
|
1,508 |
|
|
153,398 |
|
Disposals |
|
- |
|
|
(42 |
) |
|
(299 |
) |
|
- |
|
|
(41 |
) |
|
(382 |
) |
Balance at September 30, 2024 |
$ |
744,398 |
|
$ |
178,003 |
|
$ |
133,391 |
|
$ |
29,045 |
|
$ |
16,503 |
|
$ |
1,101,340 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2022 |
$ |
445,981 |
|
$ |
84,034 |
|
$ |
54,420 |
|
$ |
9,381 |
|
$ |
9,113 |
|
$ |
602,929 |
|
Depreciation |
|
20,723 |
|
|
1,598 |
|
|
7,241 |
|
|
365 |
|
|
1,581 |
|
|
31,508 |
|
Disposals |
|
- |
|
|
- |
|
|
(177 |
) |
|
- |
|
|
(593 |
) |
|
(770 |
) |
Balance at December 31, 2023 |
$ |
466,704 |
|
$ |
85,632 |
|
$ |
61,484 |
|
$ |
9,746 |
|
$ |
10,101 |
|
$ |
633,667 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
18,027 |
|
|
1,404 |
|
|
5,969 |
|
|
301 |
|
|
1,126 |
|
|
26,827 |
|
Disposals |
|
- |
|
|
(42 |
) |
|
(295 |
) |
|
- |
|
|
(41 |
) |
|
(378 |
) |
Balance at September 30, 2024 |
$ |
484,731 |
|
$ |
86,994 |
|
$ |
67,158 |
|
$ |
10,047 |
|
$ |
11,186 |
|
$ |
660,116 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2023 |
$ |
189,443 |
|
$ |
47,982 |
|
$ |
56,493 |
|
$ |
15,804 |
|
$ |
4,935 |
|
$ |
314,657 |
|
At September 30, 2024 |
$ |
259,667 |
|
$ |
91,009 |
|
$ |
66,233 |
|
$ |
18,998 |
|
$ |
5,317 |
|
$ |
441,224 |
|
Included in mineral properties is $80,915 in acquisition costs for exploration properties and $130,143 for acquisition and development costs of development properties (December 31, 2023 - $80,231 and $59,682 respectively).
Other non-current assets include $31,366 of deposits related to items of mineral property, plant and equipment at Terronera (December 31, 2023 - $20,952).
9. LOANS PAYABLE
|
|
Debt Facility |
|
|
Equipment financing |
|
|
Total |
|
Currency |
|
USD |
|
|
USD |
|
|
|
|
Interest rate charged during the period |
|
9.97% |
|
|
5.61% |
|
|
|
|
Year of maturity |
|
2031 |
|
|
2026 |
|
|
|
|
Balance at December 31, 2022 |
$ |
- |
|
$ |
14,510 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance cost |
|
- |
|
|
728 |
|
|
728 |
|
Repayments of principal |
|
- |
|
|
(5,991 |
) |
|
(5,991 |
) |
Repayments of finance costs |
|
- |
|
|
(728 |
) |
|
(728 |
) |
Balance at December 31, 2023 |
$ |
- |
|
$ |
8,519 |
|
$ |
8,519 |
|
|
|
|
|
|
|
|
|
|
|
Proceeds from drawdowns |
|
85,000 |
|
|
- |
|
|
85,000 |
|
Applied deferred financing fees |
|
(5,774 |
) |
|
- |
|
|
5,774 |
|
Finance cost |
|
4,472 |
|
|
300 |
|
|
4,772 |
|
Repayments of principal and interest |
|
(1,512 |
) |
|
(3,319 |
) |
|
(4,831 |
) |
Balance at September 30, 2024 |
$ |
82,186 |
|
$ |
5,500 |
|
$ |
87,686 |
|
|
|
|
|
|
|
|
|
|
|
Less: Current portion of loans payable |
|
- |
|
|
3,368 |
|
|
3,368 |
|
Less: Accrued Interest |
|
2,375 |
|
|
- |
|
|
2,375 |
|
Balance: Non-current loans payable |
$ |
79,811 |
|
$ |
2,132 |
|
$ |
81,943 |
|
Debt Facility
On October 10, 2023 the company executed $120 million Debt Facility to finance construction of Terronera project. On April 9, 2024, the Company made the first drawdown of the Debt Facility of $60 million. On July 15, 2024 and August 26, 2024 the Company further drew $15 million and $10 million respectively. The remaining $35 million remained fully committed and undrawn as at September 30, 2024, and on October 7, 2024, the Company made the final drawdown of $35 million.
The Debt Facility is secured through corporate guarantees from the Company, certain of the Company's subsidiaries and a first ranking security interest over the Terronera project. The Debt Facility is subject to certain customary covenants including that at all times the corporate entity must maintain a cash balance in excess of $10,000 and the Reserve Tail Ratio must be in excess of 20%. Then at certain measurement dates, the following must be observed: Loan Life Coverage Ratio must be in excess of 1.3; Project Life Coverage Ratio must be in excess of 1.5; Historical Debt Service Coverage Ratio must be in excess of 1.25; Gross Leverage Ratio must be less than 3.5; and Interest Service Coverage Ratio must be in excess of 2.5. The definitions of capitalized terms used for the financial covenants are in the Debt Facility agreement. The Company was in compliance with the applicable covenants on September 30, 2024.
There are $3,104 deferred financing fees remaining presented as an asset in the statement of the financial position as of September 30, 2024, relating to the undrawn portion of the Debt Facility.
Equipment financing
The equipment financing is secured by the underlying equipment purchased and is subject to various non-financial covenants and as at September 30, 2024, the Company was in compliance with these covenants. As at September 30, 2024, the net book value of equipment includes $12,043 (December 31, 2023 - $17,720) of equipment pledged as security for the equipment financing.
On October 15, 2024, the Company executed additional equipment financing agreements in amount of $3,469 for a period of 48 months. Financing is secured by pledged equipment with the net book value of $4,081.
10. SHARE CAPITAL
(a) Common Shares
As of September 30, 2024, the Company had 246,029,063 common shares issued issuable and outstanding, with no par value (December 31, 2023 - 217,245,492). During the nine months period ended September 30, 2024, the Company issued 27,540,971 common shares under the "At-The-Market" ("ATM") distributions equity facility (the "December 2023 ATM Facility") at an average price of $2.00 per share for gross proceeds of $55,151, less commission of $1,103 and recognized $258 of other transaction costs related to the ATM financing as share issuance costs, which have been presented net within share capital.
(b) Stock Options
Expressed in Canadian dollars |
Nine months ended |
Year ended |
|
September 30, 2024 |
December 31, 2023 |
|
Number of options |
Weighted average exercise price |
Number of options |
Weighted average exercise price |
|
|
|
|
|
|
Outstanding, beginning of period |
3,488,291 |
$4.24 |
3,899,630 |
$ 4.09 |
Granted |
1,994,000 |
$2.94 |
1,079,000 |
$ 4.12 |
Exercised |
(1,242,600) |
$2.75 |
(1,097,900) |
$ 3.05 |
Expired and forfeited |
(588,400) |
$3.55 |
(392,439) |
$ 5.76 |
Outstanding, end of period |
3,651,291 |
$4.15 |
3,488,291 |
$ 4.24 |
Options exercisable at the end of the period |
2,343,891 |
$4.71 |
2,798,934 |
$ 4.18 |
Subsequent to September 30, 2024, an additional 77,000 common shares were issued on the exercise of 77,000 options, with a weighted average exercise price of CAN$3.32.
Expressed in Canadian dollars |
|
|
|
Options Outstanding |
Options Exercisable |
|
Number |
Weighted Average |
Weighted Average |
Number Exercisable |
Weighted Average |
Exercise |
Outstanding |
Remaining |
Price |
as at |
Contractual Life |
Exercise |
as at |
Exercise |
Intervals |
September 30, 2024 |
(Number of Years) |
Price |
September 30, 2024 |
Price |
|
|
|
|
|
|
$2.00 - $2.99 |
1,883,000 |
3.9 |
$2.79 |
809,600 |
$2.65 |
$4.00 - $4.99 |
659,000 |
3.5 |
$4.14 |
444,200 |
$4.13 |
$5.00 - $5.99 |
84,000 |
2.0 |
$5.55 |
64,800 |
$5.59 |
$6.00 - $6.99 |
1,025,291 |
2.0 |
$6.54 |
1,025,291 |
$6.54 |
|
3,651,291 |
3.2 |
$4.15 |
2,343,891 |
$4.71 |
During the three and nine months ended September 30, 2024, the Company recognized share-based compensation expense of $455 and $1,589 respectively (September 30, 2023 - $370 and $1,316 respectively) based on the fair value of the vested portion of options.
The weighted-average fair values of stock options granted have been estimated using the Black-Scholes Option Pricing Model with the following assumptions:
|
Nine months ended |
|
September 30, 2024 |
September 30, 2023 |
Weighted-average fair value of options in CAN$ |
$1.40 |
$2.21 |
Risk-free interest rate |
3.75% |
3.84% |
Expected dividend yield |
0% |
0% |
Expected share price volatility |
62% |
70% |
Expected options life in years |
3.52 |
3.79 |
(c) Share Units Plan
Performance Share Units
The Performance Share Units ("PSU"s) granted are subject to a performance payout multiplier between 0% and 200% based on the Company's total shareholder return at the end of a three-year period, relative to the total shareholder return of the Company's peer group.
|
|
Nine months ended |
|
|
Year ended |
|
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
|
|
Number of units |
|
|
Number of units |
|
|
|
|
|
|
|
|
Outstanding, beginning of period |
|
878,000 |
|
|
1,158,000 |
|
Granted |
|
635,000 |
|
|
471,000 |
|
Cancelled |
|
(334,000 |
) |
|
(140,000 |
) |
Settled for shares |
|
- |
|
|
(611,000 |
) |
Outstanding, end of period |
|
1,179,000 |
|
|
878,000 |
|
Subject to performance criteria 200,000 PSUs will vest on March 24, 2025, 384,000 PSUs vest on March 7, 2026, and 595,000 PSUs vest on March 13, 2027.
During the three and nine months ended September 30, 2024, the Company recognized share-based compensation expense of $91 and $854 respectively related to the PSUs (September 30, 2023 - $476 and $938 respectively).
Deferred share units (DSU's) - Equity Settled
The DSUs granted are vested immediately and are redeemable for shares at the time of a director's retirement.
|
|
Nine months ended |
|
|
Year ended |
|
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
|
|
Number of units |
|
|
Number of units |
|
|
|
|
|
|
|
|
Outstanding, beginning of period |
|
330,078 |
|
|
104,596 |
|
Granted |
|
217,170 |
|
|
225,482 |
|
Outstanding, end of period |
|
547,248 |
|
|
330,078 |
|
There were 217,170 DSUs granted during the nine months ended September 30, 2024 (September 30, 2023 - 216,520). During the three and nine months ended September 30, 2024, the Company recognized share-based compensation expense of $18 and $453 respectively related to the DSUs (September 30, 2023 - $18 and $650 respectively).
(d) Historical Cash Settled Deferred Share Units
The Company previously had a Deferred Share Unit plan whereby deferred share units were granted to independent directors of the Company in lieu of compensation in cash or share purchase options. These Deferred Share Units vested immediately and are redeemable for cash, based on the market value of the units at the time of a director's retirement. Upon adoption of the new plan in March 2021, no new cash-settled Deferred Share Units will be granted under this cash settled plan.
Expressed in Canadian dollars |
Nine months ended |
Year ended |
|
September 30, 2024 |
December 31, 2023 |
|
Number of Units |
Weighted Average Grant Price |
Number of Units |
Weighted Average Grant Price |
|
|
|
|
|
|
Outstanding, beginning of period |
1,044,204 |
$3.19 |
1,044,204 |
$3.19 |
Outstanding, end of period |
1,044,204 |
$3.19 |
1,044,204 |
$3.19 |
|
|
|
|
|
Fair value at period end |
1,044,204 |
$5.34 |
1,044,204 |
$2.60 |
During the three and nine months ended September 30, 2024, the Company recognized a mark to market expense on cash-settled Deferred Share Units related to director's compensation, which is included in general and administrative salaries, wages and benefits, of $454 and $2,078 respectively (September 30, 2023 - a mark to market recovery of $482 and $823 respectively) based on the change in the fair value of the cash-settled Deferred Share Units granted in prior years. As of September 30, 2024, deferred share units outstanding have a fair market liability value of $4,126 (December 31, 2023 - $2,048) recognized in accounts payable and accrued liabilities.
(e) Share Appreciation Rights
As part of the Company's bonus program, the Company may grant share appreciation rights ("SARs") to its employees in Mexico and Chile. The SARs are subject to vesting conditions and, when exercised, constitute a cash bonus based on the value of the appreciation of the Company's common shares between the SARs grant date and the exercise date.
|
Nine months ended
|
Year ended
|
|
September 30, 2024
|
December 31, 2023
|
|
Number of Units
|
Weighted Average Grant Price
|
Number of Units
|
Weighted Average Grant Price
|
|
|
|
|
|
|
Outstanding, beginning of period
|
51,349
|
$5.07
|
181,739
|
$5.12
|
Cancelled
|
-
|
-
|
(130,390)
|
$5.13
|
Outstanding, end of period
|
51,349
|
$5.07
|
51,349
|
$5.07
|
|
|
|
|
|
Exercisable at the end of the period
|
51,349
|
$5.07
|
43,870
|
$5.09
|
During the three and nine months ended September 30, 2024, the Company recognized an expense related to SARs, which is included in operation and exploration salaries, wages and benefits, of $nil and $1 respectively (September 30, 2023 - recovery of $22 and $32 respectively) based on the change in the fair value of the SARs granted in prior years. As of September 30, 2024, SARs outstanding have a fair market liability value of $45 (December 31, 2023 - $43) recognized in accounts payable and accrued liabilities.
(f) Diluted Earnings per Share
|
|
Three months ended |
|
|
Nine months ended |
|
|
|
September 30, 2024 |
|
|
September 30, 2023 |
|
|
September 30, 2024 |
|
|
September 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
$ |
(17,300 |
) |
$ |
(2,328 |
) |
$ |
(32,501 |
) |
$ |
3,074 |
|
Basic weighted average number of shares outstanding |
|
246,000,878 |
|
|
194,249,283 |
|
|
238,827,655 |
|
|
192,003,752 |
|
Effect of dilutive securities: |
|
|
|
|
|
|
|
|
|
|
|
|
Stock options |
|
- |
|
|
- |
|
|
- |
|
|
672,447 |
|
Equity settled deferred share units |
|
- |
|
|
- |
|
|
- |
|
|
878,000 |
|
Performance share units |
|
- |
|
|
- |
|
|
- |
|
|
321,116 |
|
Diluted weighted average number of share outstanding |
|
246,000,878 |
|
|
194,249,283 |
|
|
238,827,655 |
|
|
193,875,315 |
|
As of September 30, 2024, there are 3,167,664 anti-dilutive stock options (September 30, 2023 - 2,876,185).
11. REVENUE
|
|
Three months ended |
|
|
Nine months ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Silver sales |
$ |
30,145 |
|
$ |
32,863 |
|
$ |
106,601 |
|
$ |
103,027 |
|
Gold sales |
|
23,794 |
|
|
17,063 |
|
|
70,264 |
|
|
53,882 |
|
Less: smelting and refining costs |
|
(496 |
) |
|
(494 |
) |
|
(1,437 |
) |
|
(1,945 |
) |
Revenue |
$ |
53,443 |
|
$ |
49,432 |
|
$ |
175,428 |
|
$ |
154,964 |
|
Changes in fair value from provisional pricing in the period are included in silver and gold sales.
|
|
|
Three months ended |
|
|
Nine months ended |
|
|
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
Concentrate sales |
$ |
17,861 |
|
$ |
13,528 |
|
$ |
50,956 |
|
$ |
39,273 |
|
|
Provisional pricing adjustments |
|
117 |
|
|
523 |
|
|
(511 |
) |
|
(66 |
) |
Total revenue from concentrate sales |
|
17,978 |
|
|
14,051 |
|
|
50,445 |
|
|
39,207 |
|
Refined metal sales |
|
35,465 |
|
|
35,381 |
|
|
124,983 |
|
|
115,757 |
|
Total revenue |
$ |
53,443 |
|
$ |
49,432 |
|
$ |
175,428 |
|
$ |
154,964 |
|
Provisional pricing adjustments on sales of concentrate consist of final pricing adjustments made on the finalization of the sales contract. The Company's sales contracts are provisionally priced with provisional pricing periods lasting typically one to three months with provisional pricing adjustments recorded to revenue as market prices vary.
12. EXPLORATION, EVALUATION AND DEVELOPMENT
|
|
Three months ended |
|
|
Nine months ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
$ |
221 |
|
$ |
(147 |
) |
$ |
568 |
|
$ |
448 |
|
Share-based compensation |
|
(204 |
) |
|
125 |
|
|
74 |
|
|
368 |
|
Exploration salaries, wages and benefits |
|
657 |
|
|
791 |
|
|
1,954 |
|
|
2,211 |
|
Direct exploration expenditures |
|
2,363 |
|
|
1,599 |
|
|
5,821 |
|
|
4,653 |
|
Evaluation and development salaries, wages and benefits |
|
1,181 |
|
|
616 |
|
|
2,640 |
|
|
1,622 |
|
Direct evaluation and development expenditures |
|
489 |
|
|
1,171 |
|
|
2,210 |
|
|
3,376 |
|
|
$ |
4,707 |
|
$ |
4,155 |
|
$ |
13,267 |
|
$ |
12,678 |
|
13. GENERAL AND ADMINISTRATIVE
|
|
Three months ended |
|
|
Nine months ended |
|
|
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
$ |
99 |
|
$ |
63 |
|
$ |
304 |
|
$ |
179 |
|
Share-based compensation |
|
695 |
|
|
694 |
|
|
2,596 |
|
|
2,654 |
|
Salaries, wages and benefits |
|
924 |
|
|
971 |
|
|
3,085 |
|
|
3,131 |
|
Directors' DSU expense (recovery) |
|
454 |
|
|
(482 |
) |
|
2,078 |
|
|
(823 |
) |
Direct general and administrative expenditures |
|
1,810 |
|
|
1,112 |
|
|
4,203 |
|
|
4,492 |
|
|
$ |
3,982 |
|
$ |
2,358 |
|
$ |
12,266 |
|
$ |
9,633 |
|
14. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
|
|
Three months ended |
|
|
Nine months ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net changes in non-cash working capital: |
|
|
|
|
|
|
|
|
|
|
|
|
Accounts and other receivables |
$ |
(62 |
) |
$ |
(1,878 |
) |
$ |
(5,725 |
) |
$ |
(10,850 |
) |
Income tax receivable |
|
1,975 |
|
|
(1,098 |
) |
|
3,836 |
|
|
2,760 |
|
Inventories |
|
(303 |
) |
|
1,798 |
|
|
2,855 |
|
|
(7,495 |
) |
Prepaids |
|
1,347 |
|
|
(3,149 |
) |
|
2,556 |
|
|
(4,898 |
) |
Accounts payable and accrued liabilities |
|
(1,459 |
) |
|
1,670 |
|
|
(4,831 |
) |
|
(2,355 |
) |
Income taxes payable |
|
2,514 |
|
|
7 |
|
|
3,789 |
|
|
680 |
|
|
$ |
4,012 |
|
$ |
(2,650 |
) |
$ |
2,480 |
|
$ |
(22,158 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash financing and investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Reclamation included in mineral properties, plant and equipment |
$ |
(606 |
) |
$ |
(9 |
) |
$ |
(1,156 |
) |
$ |
(645 |
) |
Fair value of exercised options allocated to share capital |
$ |
(178 |
) |
|
|
$ - |
|
$ |
(1,201 |
) |
$ |
(1,305 |
) |
Fair value of PSUs allocated to share capital |
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
(405 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other cash disbursements: |
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes paid |
$ |
2,357 |
|
$ |
3,094 |
|
$ |
4,941 |
|
$ |
5,623 |
|
Special mining duty paid |
$ |
- |
|
$ |
- |
|
$ |
2,574 |
|
$ |
2,654 |
|
15. SEGMENT DISCLOSURES
The Company's operating segments are based on internal management reports that are reviewed by the Company's executives (the chief operating decision makers) in assessing performance. The Company has two operating mining segments which are located in Mexico: Guanaceví and Bolañitos. The Company has one development project in Mexico, Terronera, as well as Exploration and Corporate segments. The Exploration segment consists of projects in the exploration and evaluation phases in Mexico, Chile and the USA. Exploration projects that are in the local district surrounding a mine are included in the mine's segments.
Three months ended September 30 |
|
Revenue |
|
|
Cost of sales excluding depreciation |
|
|
Depreciation |
|
|
Mine operating earnings |
|
|
Net earnings and comprehensive earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guanaceví |
2024 |
$ |
35,465 |
|
$ |
24,086 |
|
$ |
4,656 |
|
$ |
6,723 |
|
$ |
3,226 |
|
|
2023 |
|
35,380 |
|
|
28,648 |
|
|
4,684 |
|
|
2,048 |
|
|
(238 |
) |
Bolañitos |
2024 |
|
17,978 |
|
|
9,842 |
|
|
2,376 |
|
|
5,760 |
|
|
5,246 |
|
|
2023 |
|
14,052 |
|
|
10,237 |
|
|
3,171 |
|
|
644 |
|
|
542 |
|
Terronera |
2024 |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(21,048 |
) |
|
2023 |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(1,787 |
) |
Exploration |
2024 |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(3,037 |
) |
|
2023 |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(3,118 |
) |
Corporate |
2024 |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(1,687 |
) |
|
2023 |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
2,273 |
|
Consolidated |
2024 |
$ |
53,443 |
|
$ |
33,928 |
|
$ |
7,032 |
|
$ |
12,483 |
|
$ |
(17,300 |
) |
|
2023 |
|
49,432 |
|
|
38,885 |
|
|
7,855 |
|
|
2,692 |
|
|
(2,328 |
) |
The Exploration segment included $212 of costs incurred in Chile for the three months ended September 30, 2024 (September 30, 2023 - $352) and $9 of costs incurred in USA (September 30, 2023 - $16).
Nine months ended September 30 |
|
Revenue |
|
|
Cost of sales excluding depreciation |
|
|
Depreciation |
|
|
Mine operating earnings |
|
|
Net earnings and comprehensive earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guanaceví |
2024 |
$ |
124,983 |
|
$ |
85,983 |
|
$ |
16,436 |
|
$ |
22,564 |
|
$ |
11,674 |
|
|
2023 |
|
115,756 |
|
|
73,740 |
|
|
11,539 |
|
|
30,477 |
|
|
17,193 |
|
Bolañitos |
2024 |
|
50,445 |
|
|
30,562 |
|
|
8,112 |
|
|
11,771 |
|
|
10,501 |
|
|
2023 |
|
39,208 |
|
|
29,261 |
|
|
9,165 |
|
|
782 |
|
|
349 |
|
Terronera |
2024 |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(33,482 |
) |
|
2023 |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(4,998 |
) |
Exploration |
2024 |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(8,417 |
) |
|
2023 |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(8,865 |
) |
Corporate |
2024 |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(12,777 |
) |
|
2023 |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(605 |
) |
Consolidated |
2024 |
$ |
175,428 |
|
$ |
116,545 |
|
$ |
24,548 |
|
$ |
34,335 |
|
$ |
(32,501 |
) |
|
2023 |
|
154,964 |
|
|
103,001 |
|
|
20,704 |
|
|
31,259 |
|
|
3,074 |
|
|
|
|
Total Assets |
|
|
Total Liabilities |
|
|
Capital expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
Guanaceví |
September 30, 2024 |
$ |
110,441 |
|
$ |
41,933 |
|
$ |
15,657 |
|
|
December 31, 2023 |
|
125,456 |
|
|
44,916 |
|
|
24,631 |
|
Bolañitos |
September 30, 2024 |
|
49,164 |
|
|
10,023 |
|
|
5,621 |
|
|
December 31, 2023 |
|
44,205 |
|
|
11,200 |
|
|
10,709 |
|
Terronera |
September 30, 2024 |
|
329,044 |
|
|
137,050 |
|
|
129,237 |
|
|
December 31, 2023 |
|
186,860 |
|
|
23,604 |
|
|
62,495 |
|
Exploration |
September 30, 2024 |
|
86,306 |
|
|
752 |
|
|
1,071 |
|
|
December 31, 2023 |
|
83,312 |
|
|
1,319 |
|
|
1,297 |
|
Corporate |
September 30, 2024 |
|
36,441 |
|
|
8,598 |
|
|
3 |
|
|
December 31, 2023 |
|
34,974 |
|
|
7,427 |
|
|
276 |
|
Consolidated |
September 30, 2024 |
$ |
611,396 |
|
$ |
198,356 |
|
$ |
151,586 |
|
|
December 31, 2023 |
|
474,807 |
|
|
88,466 |
|
|
99,408 |
|
The Exploration segment included $847 of costs incurred in Chile for the nine months ended September 30, 2024 (September 30, 2023 - $1,148) and $32 of costs incurred in USA (September 30, 2023 - $48).
16. COMMITMENTS & CONTINGENCIES
Commitments
As of September 30, 2024, the Company had $41,355 committed for capital equipment purchases.
Contingencies
Due to the nature of the Company's activities, various legal and tax matters are outstanding from time to time. The Company is routinely subject to audit by tax authorities in the countries in which it operates and has received a number of tax assessments in various locations, which are currently at various stages of progress with the relevant authorities. The outcomes of these audits and assessments are uncertain however, the Company is confident of its position on the various matters under review.
17. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
In connection with the Debt Facility (Note 9), on March 28, 2024, the Company entered into gold forward swap contracts to hedge against the fluctuation in gold prices. The gold forward swap contracts settle between January 2025 and March 2027, for 68,000 ounces of gold at $2,325 per ounce. On October 2, 2024, the Company amended the swap contracts, with updated settlements from February 2027 to May 2027 and revised forward price for those settlements between the $2,389 and $2,325.
The Company is also required to hedge a portion of the estimated remaining capital expenditures incurred in Mexican Pesos, as well as a portion of expected operating costs during a repayment period. During the nine months period ended September 30, 2024 the Company entered into Mexican Peso forward purchase contracts for a total of approximately $58,169 over the period from April 2024 to October 2026, with an average base price of 17.17 pesos per US dollar. As of September 30, 2024, of the Mexican Peso forward contracts originally established, $20,642 remains outstanding, with an average base price of 18.78 pesos per US dollar. During nine months period ended September 30, 2024, the Company executed $37,527 of Mexican Peso forward contracts.
As at September 30, 2024, the Company has revalued the forward contracts to their respective fair values and as a result recorded a loss of $25,077 on the gold swap contracts and a loss of $3,555 on the Mexican Peso contracts in the condensed consolidated interim statement of earnings and loss for the period. During the nine months ended September 30, 2024, the Company has realized $2,270 of losses related to settled Mexican Peso contract. As of September 30, 2024, the Company carries the combined derivative liability of $26,362 in the statement of financial position.
On October 17, 2024, the Company entered into a further $12,300 Mexican Peso forward purchase contracts at spot rate of 19.87 pesos per US dollar settling between February 2025 and November 2026.
(a) Financial assets and liabilities
As at September 30, 2024, the carrying and fair values of the Company's financial instruments by category are as follows:
|
|
Fair value through profit or loss |
|
|
Amortized cost |
|
|
Carrying value |
|
|
Fair value |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
- |
|
|
54,934 |
|
|
54,934 |
|
|
54,934 |
|
Other investments |
|
666 |
|
|
- |
|
|
666 |
|
|
666 |
|
Trade and other receivables |
|
9,129 |
|
|
1,336 |
|
|
10,465 |
|
|
10,465 |
|
Loans receivable |
|
- |
|
|
2,630 |
|
|
2,630 |
|
|
2,630 |
|
Total financial assets |
|
9,795 |
|
|
58,900 |
|
|
68,695 |
|
|
68,695 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable, accrued liabilities and other current liabilities |
|
4,171 |
|
|
46,393 |
|
|
50,564 |
|
|
50,564 |
|
Derivative liability |
|
26,362 |
|
|
- |
|
|
26,362 |
|
|
26,362 |
|
Loans payable |
|
- |
|
|
85,311 |
|
|
85,311 |
|
|
85,311 |
|
Total financial liabilities |
|
30,533 |
|
|
131,704 |
|
|
162,237 |
|
|
162,237 |
|
(b) Fair value hierarchy
Assets and liabilities as at September 30, 2024 measured at fair value on a recurring basis include:
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Other investments |
|
624 |
|
|
- |
|
|
42 |
|
|
666 |
|
Trade receivables |
|
- |
|
|
9,129 |
|
|
- |
|
|
9,129 |
|
Total financial assets |
|
624 |
|
|
9,129 |
|
|
42 |
|
|
9,795 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash-settled deferred share units |
|
4,126 |
|
|
- |
|
|
- |
|
|
4,126 |
|
Share appreciation rights |
|
- |
|
|
45 |
|
|
- |
|
|
45 |
|
Derivative liability |
|
- |
|
|
26,362 |
|
|
- |
|
|
26,362 |
|
Total financial liabilities |
|
4,126 |
|
|
26,407 |
|
|
- |
|
|
30,533 |
|
The fair values of derivative liabilities are measured using Level 2 inputs. The fair values of the Company's Peso forward purchase contracts are based on forward foreign exchange rates and the fair values of the Company's gold forward swap contracts are based on forward metal prices.
HEAD OFFICE Suite #1130, 609 Granville Street
Vancouver, BC, Canada V7Y 1G5
Telephone: 1 (604) 685-9775
1 (877) 685-9775
Website: www.edrsilver.com
DIRECTORS Margaret Beck
Ricardo Campoy
Daniel Dickson
Amy Jacobsen
Angela Johnson
Rex McLennan
Kenneth Pickering
Mario Szotlender
OFFICERS Daniel Dickson - Chief Executive Officer
Donald Gray - Chief Operating Officer
Elizabeth Senez - Chief Financial Officer
Gregory Blaylock - Vice President, Operations
Luis Castro - Senior Vice President, Exploration
Dale Mah - Vice-President, Corporate Development
Bernard Poznanski - Corporate Secretary
REGISTRAR AND Computershare Trust Company of Canada
TRANSFER AGENT 3rd Floor - 510 Burrard Street
Vancouver, BC, V6C 3B9
AUDITORS KPMG LLP
777 Dunsmuir Street
Vancouver, BC, V7Y 1K3
SOLICITORS Koffman Kalef LLP
19th Floor - 885 West Georgia Street
Vancouver, BC, V6C 3H4
SHARES LISTED Toronto Stock Exchange
Trading Symbol - EDR
New York Stock Exchange
Trading Symbol - EXK
Endeavour Silver Corp.
Management’s Discussion & Analysis
For the Three and Nine Months Ended September 30, 2024
This Management Discussion and Analysis ("MD&A") should be read in conjunction with the condensed consolidated interim financial statements of Endeavour Silver Corp. ("Endeavour" or "the Company") for the three and nine months ended September 30, 2024, and the related notes contained therein, which were prepared in accordance with IAS 34 - Interim financial reporting of the International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). The Company uses certain non-IFRS financial measures in this MD&A as described under "Non-IFRS Measures". Additional information relating to the Company, including the most recent Annual Information Form (the "Annual Information Form"), is available on SEDAR+ at www.sedarplus.ca, and the Company's most recent annual report on Form 40-F has been filed with the U.S. Securities and Exchange Commission (the "SEC") on EDGAR at www.sec.gov. This MD&A contains "forward-looking statements" that are subject to risk factors set out in a cautionary note contained herein. All dollar ($) amounts are expressed in United States ("$") dollars and tabular amounts are expressed in thousands of U.S. dollars, unless Canadian dollars (CAN$) or Mexican Pesos (MXN) are otherwise indicated. This MD&A is dated as of November 4, 2024, and all information contained is current as of November 4, 2024, unless otherwise stated.
Cautionary Note to U.S. Investors Regarding Mineral Reserves and Resources
This MD&A has been prepared in accordance with the requirements of Canadian provincial securities laws, which differ from the requirements of U.S. securities laws. As a result, the Company reports the mineral reserves and resources of the projects it has an interest in according to Canadian standards. Canadian reporting requirements for disclosure of mineral properties are governed by National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI-43 101"). NI-43 101 is a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. These standards differ from the requirements of the SEC that are applicable to domestic United States reporting companies under subpart 1300 of Regulation S-K ("S-K 1300") under the Exchange Act. As an issuer that prepares and files its reports with the SEC pursuant to the MJDS, the Company is not subject to the requirements of S-K 1300. Any mineral reserves and mineral resources reported by the Company in accordance with NI 43-101 may not qualify as such under or differ from those prepared in accordance with S-K 1300. Accordingly, information included or incorporated by reference in this MD&A concerning descriptions of mineralization and estimates of mineral reserves and resources under Canadian standards may not be comparable to similar information made public by United States companies subject to the reporting and disclosure requirements of S-K 1300.
Forward-Looking Statements
This MD&A contains "forward-looking statements" within the meaning of the U.S. Securities Litigation Reform Act of 1995, as amended and "forward-looking information" within the meaning of applicable Canadian securities legislation. Such forward‑looking statements and information include, but are not limited to, statements regarding: the development and financing of the Terronera project; anticipated timing of the Terronera project; estimated Terronera project economics; Terronera project’s forecasted operations, costs and expenditures, and the timing and results of various related activities; estimated timeline for fabrication and installation of the new trunnion at Guanacevi; estimation of mineral resources at Pitarrilla; the timing and completion of an economic study for Pitarrilla; prospects for Terronera, Pitarrilla and Parral; Endeavour's anticipated performance in 2024, including silver and gold production and financial results; silver and gold grades and recoveries, cash costs per ounce (oz), capital expenditures and sustaining capital; and the timing and results of various activities. Forward-looking statements are frequently characterized by words such as "plan", "expect", "forecast", "project", "intend", "believe", "anticipate", "outlook" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are based on the opinions and estimates of management at the dates the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements.
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 and are based on assumptions that may cause the actual results, level of activity, performance or achievements of the Company and its operations to be materially different from those expressed or implied by such statements. Such factors and assumptions include, among others: the Company’s ability to continue to comply with the terms of the Debt Facility; the Company's ability to replace the new trunnion in the anticipated timeframe; the successful continued operation of the repurposed regrind mill as the primary ball mill; drill results at Pitarrilla; the ongoing effects of inflation and supply chain issues on the Terronera project economics; fluctuations in the prices of silver and gold; fluctuations in the currency markets (particularly the Mexican peso, Chilean peso, Canadian dollar and U.S. dollar); fluctuations in interest rates, changes in national and local governments, legislation, taxation, controls, regulations and political or economic developments in Canada and Mexico; operating or technical difficulties in mineral exploration, development and mining activities; risks and hazards of mineral exploration, development and mining (including, but not limited to environmental hazards, industrial accidents, unusual or unexpected geological conditions, pressures, cave-ins and flooding); inadequate insurance, or inability to obtain insurance; availability of and costs associated with mining inputs and labour; the speculative nature of mineral exploration and development; diminishing quantities or grades of mineral reserves as properties are mined; risks in obtaining necessary licenses and permits; challenges to the Company’s title to properties; as well as those factors described under “Risk Factors” in the Company’s Annual Information Form. 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.
Qualified Person
The scientific and technical information contained in this MD&A relating to the Company's mines and mineral projects has been reviewed and approved by Dale Mah, B.Sc., P.Geo., Vice President Corporate Development of Endeavour, a Qualified Person within the meaning of NI 43-101.
Table of Contents
OVERVIEW OF THE BUSINESS
The Company is engaged in silver mining in Mexico and related activities including property acquisition, exploration, development, mineral extraction, processing, refining and reclamation. The Company is also engaged in exploration activities in Chile and Nevada, USA. The Company's business strategy is focused on acquiring advanced-stage silver mining properties in Mexico. Company's operations are comprised of Guanaceví and Bolañitos mines located in Durango, Mexico and Guanajuato, Mexico respectively. The Company is developing the Terronera project located in Jalisco State, Mexico. The Company is advancing several other exploration projects in order to achieve its goal to become a premier senior producer in the silver mining sector.
The Company's common shares are listed on the Toronto Stock Exchange (TSX: EDR) and the New York Stock Exchange (NYSE: EXK).
HIGHLIGHTS
Three months ended September 30
|
Q3 2024 Highlights
|
Nine months ended September 30
|
2024
|
2023
|
% Change
|
|
2024
|
2023
|
% Change
|
|
|
|
Production
|
|
|
|
874,717
|
1,148,735
|
(24%)
|
Silver ounces produced
|
3,647,295
|
4,266,280
|
(15%)
|
9,290
|
9,089
|
2%
|
Gold ounces produced
|
29,972
|
28,250
|
6%
|
867,293
|
1,140,597
|
(24%)
|
Payable silver ounces produced
|
3,621,062
|
4,231,064
|
(14%)
|
9,112
|
8,929
|
2%
|
Payable gold ounces produced
|
29,429
|
27,749
|
6%
|
1,617,925
|
1,875,855
|
(14%)
|
Silver equivalent ounces produced(1)
|
6,045,055
|
6,526,280
|
(7%)
|
11.35
|
17.94
|
(37%)
|
Cash costs per silver ounce(2)
|
12.83
|
13.80
|
(7%)
|
18.65
|
24.10
|
(23%)
|
Total production costs per ounce(2))
|
19.41
|
18.85
|
3%
|
25.51
|
29.64
|
(14%)
|
All-in sustaining costs per ounce (2)
|
23.02
|
23.41
|
(2%)
|
175,065
|
214,270
|
(18%)
|
Processed tonnes
|
615,848
|
653,918
|
(6%)
|
138.54
|
135.45
|
2%
|
Direct operating costs per tonne(2)
|
137.90
|
129.28
|
7%
|
189.85
|
176.37
|
8%
|
Direct costs per tonne(2)
|
187.95
|
171.78
|
9%
|
|
|
|
Financial
|
|
|
|
53.4
|
49.5
|
8%
|
Revenue ($ millions)
|
175.4
|
155.0
|
13%
|
1,017,392
|
1,370,032
|
(26%)
|
Silver ounces sold
|
3,991,055
|
4,337,112
|
(8%)
|
9,412
|
8,760
|
7%
|
Gold ounces sold
|
30,179
|
27,769
|
9%
|
29.63
|
23.99
|
24%
|
Realized silver price per ounce
|
26.71
|
23.75
|
12%
|
2,528
|
1,948
|
30%
|
Realized gold price per ounce
|
2,328
|
1,940
|
20%
|
(17.3)
|
(2.3)
|
(643%)
|
Net earnings (loss) ($ millions)
|
(32.5)
|
3.1
|
(1,157%)
|
1.6
|
(8.3)
|
119%
|
Adjusted net earnings (loss) (2) ($ millions)
|
0.9
|
(1.5)
|
158%
|
12.5
|
2.7
|
364%
|
Mine operating earnings ($ millions)
|
34.3
|
31.3
|
10%
|
19.6
|
10.6
|
85%
|
Mine operating cash flow before taxes ($ millions)(2)
|
59.1
|
51.8
|
14%
|
4.5
|
3.3
|
37%
|
Operating cash flow before working capital changes(2)
|
21.5
|
27.2
|
(21%)
|
(5.6)
|
8.8
|
(164%)
|
EBITDA(2) ($ millions)
|
5.7
|
39.5
|
(86%)
|
13.9
|
3.7
|
278%
|
Adjusted EBITDA(2) ($ millions)
|
42.0
|
37.8
|
11%
|
29.4
|
75.9
|
(61%)
|
Working capital (2) ($ millions)
|
29.4
|
75.9
|
(61%)
|
|
|
|
Shareholders
|
|
|
|
(0.07)
|
(0.01)
|
(600%)
|
Earnings (loss) per share - basic ($)
|
(0.14)
|
0.02
|
(800%)
|
0.01
|
(0.04)
|
125%
|
Adjusted earnings (loss) per share - basic ($)(2)
|
0.00
|
(0.01)
|
100%
|
0.02
|
0.02
|
0%
|
Operating cash flow before working capital changes per share(2)
|
0.09
|
0.14
|
(36%)
|
246,000,878
|
194,249,283
|
27%
|
Weighted average shares outstanding
|
238,827,655
|
192,003,752
|
24%
|
(1) Silver equivalents are calculated using an 80:1 (Ag:Au) ratio.
(2) Non-IFRS measure. For a description of how these measures are calculated and a reconciliation of these measures to the most directly comparable measures specified, defined or determined under IFRS and presented in the Company's financial statements, refer to "Non-IFRS Measures".
The above highlights are key measures used by management, however they should not be the sole measures used in determining the performance of the Company's operations.
REVIEW OF OPERATING RESULTS
Consolidated Production Results for the Three and Nine months ended September 30, 2024 and 2023
Three months ended September 30
|
CONSOLIDATED
|
Nine months ended September 30
|
2024
|
2023
|
% Change
|
|
2024
|
2023
|
% Change
|
175,065
|
214,270
|
(18%)
|
Ore tonnes processed
|
615,848
|
653,918
|
(6%)
|
176
|
226
|
(22%)
|
Average silver grade (gpt)
|
207
|
252
|
(18%)
|
88.2
|
90.1
|
(2%)
|
Silver recovery (%)
|
89.1
|
87.7
|
2%
|
874,717
|
1,148,735
|
(24%)
|
Total silver ounces produced
|
3,647,295
|
4,266,280
|
(15%)
|
867,293
|
1,140,597
|
(24%)
|
Payable silver ounces produced
|
3,621,062
|
4,231,064
|
(14%)
|
1.79
|
1.48
|
22%
|
Average gold grade (gpt)
|
1.67
|
1.50
|
11%
|
92.1
|
89.4
|
3%
|
Gold recovery (%)
|
90.7
|
89.6
|
1%
|
9,290
|
9,089
|
2%
|
Total gold ounces produced
|
29,972
|
28,250
|
6%
|
9,112
|
8,929
|
2%
|
Payable gold ounces produced
|
29,429
|
27,749
|
6%
|
1,617,925
|
1,875,855
|
(14%)
|
Silver equivalent ounces produced(1)
|
6,045,055
|
6,526,280
|
(7%)
|
11.35
|
17.94
|
(37%)
|
Cash costs per silver ounce(2)
|
12.83
|
13.80
|
(7%)
|
18.65
|
24.10
|
(23%)
|
Total production costs per ounce(2)
|
19.41
|
18.85
|
3%
|
25.51
|
29.64
|
(14%)
|
All in sustaining costs per ounce (2)
|
23.02
|
23.41
|
(2%)
|
138.54
|
135.45
|
2%
|
Direct operating costs per tonne(2)
|
137.90
|
129.28
|
7%
|
189.85
|
176.37
|
8%
|
Direct costs per tonne(2)
|
187.95
|
171.78
|
9%
|
(1) Silver equivalents are calculated using an 80:1 (Ag:Au) ratio.
(2) Non-IFRS measure. For a description of how these measures are calculated and a reconciliation of these measures to the most directly comparable measures specified, defined or determined under IFRS and presented in the Company's financial statements, refer to "Non-IFRS Measures".
Consolidated Production
Three months ended September 30, 2024 (compared to the three months ended September 30, 2023)
Consolidated silver production during Q3, 2024 was 874,717 oz, a decrease of 24% compared to 1,148,735 oz in Q3, 2023, driven by a 26% decrease in silver production at the Guanaceví mine and a 2% decrease in silver production at the Bolañitos mine. Consolidated gold production was 9,290 oz, an increase of 2% compared to 9,089 oz in Q3, 2023, due to the 11% decrease in gold production at the Guanaceví mine offset by a 9% increase in gold production at the Bolañitos mine.
In August 2024, the trunnion on the primary ball mill at Guanacevi failed suspending operations for over a week. Temporary modifications were completed within the plant to re-purpose one of the regrind mills as the primary ball mill allowing the processing of ore to continue at a reduced capacity. After re-start throughput averaged 565 tonnes per day (tpd). The plant team is closely monitoring the operation of the regrind mills to ensure continued reliability and high mechanical availability, including increased planned maintenance down days during this temporary period.
The Company revised previous production guidance downwards for the Guanaceví mine. Guanaceví production was estimated to decrease by 0.9 million to 1.1 million silver ounces and by 2.0-3.0 thousands of gold ounces compared to its original operating plan over a 15 week period. The timeline for fabrication and installation of the new trunnion on the primary ball mill remains on schedule for December 2024.
Nine months ended September 30, 2024 (compared to the nine months ended September 30, 2023)
Consolidated silver production decreased by 15% to 3,647,295 oz in Q3 2024 compared to Q3 2023, driven by 14% lower silver production at the Guanaceví mine and 20% lower silver production at the Bolañitos mine. Consolidated gold production increased by 6% to 29,972 ounces in Q3 2024 compared to Q3 2023 due to 10% higher gold production at the Bolañitos mine, and consistent gold production at the Guanaceví mine.
Consolidated Operating Costs
Three months ended September 30, 2024 (compared to the three months ended September 30, 2023)
Direct operating costs per tonne in Q3, 2024 increased to $138.54, 2% higher than Q3, 2023 due to 18% lower tonnes processed, predominantly caused by temporarily reduced plant capacity in Guanaceví. Effective in September, the Company ceased contract mining activities and local third-party material purchases to lessen the impact of lower throughput on direct operating costs and cash flow.
Consolidated cash costs per silver ounce, net of by-product credits, in Q3 2024 is $11.35 per silver ounce, a 37% decrease compared with $17.94 per silver ounce in Q3 2023, driven by a 39% increase in by-product gold sales and 12% decrease in direct costs, partially offset by a 24% decrease in silver ounces produced.
All-In-Sustaining Costs ("AISC") decreased by 14% to $25.51 per silver ounce compared to Q3, 2023 due to the lower cash costs ss noted above, and reduced sustaining capital expenditures, partially offset by a higher general and administrative costs.
Due to the reduced operating capacity at Guanacevi, operating costs and all in sustaining cost metrics will be higher than originally guided for 2024. Due to the significant number of variables, estimates and remaining uncertainties, management withdrew its 2024 cost guidance in August.
Nine months ended September 30, 2024 (compared to the nine months ended September 30, 2023)
Direct operating costs per tonne in nine months period ended September 30, 2024 increased to $137.90, a 7% increase compared with $129.28 in the same period of 2023 primarily due to the 6% lower throughput to date in 2024, partially offset by the cost saving measures actioned in the third quarter, as noted above.
Consolidated cash costs per ounce, net of by-product credits, in nine months period ended September 30, 2024 decreased to $12.83 per ounce, a 7% decrease compared with $13.80 per ounce in the same period of 2023, driven by a 15% decrease in silver ounces produced, and a 9% increase in direct operating costs offset by 26% increase in by-product gold sales.
All-In-Sustaining Costs ("AISC") in Q3 2024 at $23.02 per ounce, decreased 2% from $23.41 per ounce in 2023 due to the lower cash costs, lower sustaining capital expenditures, and lower equipment loan repayments, partially offset by lower silver production and higher general and administrative costs.
GUANACEVÍ OPERATIONS
Production Results for the Three and Nine months ended September 30, 2024 and 2023
Three months ended September 30
|
GUANACEVÍ
|
Nine months ended September 30
|
2024
|
2023
|
% Change
|
|
2024
|
2023
|
% Change
|
67,094
|
103,345
|
(35%)
|
Ore tonnes processed
|
294,995
|
322,628
|
(9%)
|
402
|
341
|
18%
|
Average silver grade (g/t)
|
388
|
416
|
(7%)
|
88.7
|
91.9
|
(4%)
|
Silver recovery (%)
|
89.7
|
88.8
|
1%
|
768,905
|
1,041,211
|
(26%)
|
Total silver ounces produced
|
3,300,400
|
3,833,558
|
(14%)
|
766,599
|
1,038,087
|
(26%)
|
Payable silver ounces produced
|
3,290,499
|
3,822,057
|
(14%)
|
1.46
|
1.03
|
42%
|
Average gold grade (g/t)
|
1.32
|
1.18
|
12%
|
89.8
|
92.4
|
(3%)
|
Gold recovery (%)
|
89.4
|
91.8
|
(3%)
|
2,828
|
3,161
|
(11%)
|
Total gold ounces produced
|
11,195
|
11,234
|
(0%)
|
2,821
|
3,152
|
(11%)
|
Payable gold ounces produced
|
11,162
|
11,200
|
(0%)
|
995,146
|
1,294,091
|
(23%)
|
Silver equivalent ounces produced(1)
|
4,196,000
|
4,732,278
|
(11%)
|
19.59
|
20.47
|
(4%)
|
Cash costs per silver ounce(2)
|
17.24
|
15.29
|
13%
|
24.68
|
24.23
|
2%
|
Total production costs per ounce(2)
|
22.00
|
18.46
|
19%
|
30.83
|
29.06
|
6%
|
All in sustaining costs per ounce (2)
|
24.96
|
22.48
|
11%
|
206.56
|
180.72
|
14%
|
Direct operating costs per tonne(2)
|
180.38
|
164.45
|
10%
|
330.55
|
264.10
|
25%
|
Direct costs per tonne(2)
|
279.68
|
248.78
|
12%
|
(1) Silver equivalents are calculated using an 80:1 (Ag:Au) ratio.
(2) Non-IFRS measure. For a description of how these measures are calculated and a reconciliation of these measures to the most directly comparable measures specified, defined or determined under IFRS and presented in the Company's financial statements, refer to "Non-IFRS Measures".
Guanaceví Production Results
Three months ended September 30, 2024 (compared to the three months ended September 30, 2023)
Silver production at the Guanaceví mine during Q3, 2024 was 768,905 oz, a decrease of 26% compared to 1,041,211 oz in Q3, 2023, and gold production was 2,828 oz, a decrease of 11% compared to 3,161 oz in Q3, 2023. Plant throughput was 35% lower in Q3, 2024 with 67,094 tonnes at average grades of 402 gpt silver and 1.46 gpt gold, compared to 103,345 tonnes grading 341 gpt silver and 1.03 gold in Q3, 2023. Decrease in production was caused by lower throughput, following the failure of a trunnion on the primary ball mill in August 2024, offset by processing higher grade material. The operations focused on feeding the highest-grade ore to the mill while stockpiling the remaining ore following the trunnion failure.
Nine months ended September 30, 2024 (compared to the nine months ended September 30, 2023)
Silver production at the Guanaceví mine during the nine months ended September 30, 2024, was 3,300,400 oz, 14% lower than the 3,833,558 oz produced in the same period of 2023, and gold production was 11,195 oz, in line with the 11,234 oz produced in 2023. Due to the failure of a trunnion on the primary ball mill in Q3, throughput in the nine months period ended September 30, 2024, was 9% lower compared to the same period in 2023. Silver production was also impacted by 7% lower average grade - with 388 gpt silver realized in the nine months period ended September 30, 2024, compared to 416 gpt silver realized in the same period of 2023. Despite lower throughput, gold production remained consistent with the same period in the prior year due to 12% higher grade at 1.32 gpt. The variation in grade is consistent with the mine plan and varies from the comparative period due to normal variations within the mine plan.
Guanaceví Operating Costs
Three months ended September 30, 2024 (compared to the three months ended September 30, 2023)
Direct operating costs per tonne for the three months ended September 30, 2024, increased 14% to $206.56 compared with the same period in 2023, caused by 35% lower tonnes processed in Q3 2024. The impact of lower throughput on the direct operating costs was reduced following the termination of contract mining activities during the third quarter of 2024. Including royalty and special mining duty costs, direct cost per tonne increased 25% to $330.55 in Q3 2024 compared with $264.10 in Q3 2023. The purchase of local purchased material contributed $41.67 per tonne during Q3, 2024 compared to $34.41 per tonne in Q3 2023; the volume of purchased material was 10,216 tonnes compared to 21,769 tonnes in the same period in 2023, purchased at higher prices in the current period. Due to higher realized metal prices the royalty rate increased and therefore the total royalty expense for the period increased from $4.8 million to $5.1 million, which are included in cost per tonne and oz metrics.
Cash costs per oz, net of by-product credits, decreased to $19.59 compared to $20.47 for the same period in 2023, driven by the higher value of gold in the by-product credit, offset in part by the higher costs as noted above. AISC per oz increased 6% to $30.83 per oz for the three months ended September 30, 2024, due to lower silver production and higher general and administrative costs, partially offset by lower cash costs and lower sustaining capital expenditures.
Nine months ended September 30, 2024 (compared to the nine months ended September 30, 2023)
Direct operating costs per tonne for the nine months ended September 30, 2024, increased 10% to $180.38 compared with $164.45 in the same period in 2023, primarily resulting from a 9% lower throughput. Including royalty and special mining duty costs, direct cost per tonne increased 12% to $279.68 compared with $248.78 in the same period in 2023. The purchased material contributed $34.68 per tonne during the nine months period ended September 30, 2024 compared to $23.26 per tonne in the same period of 2023 due to the higher cost per tonne. During the nine months ended September 30, 2024, the Company purchased 42,761 tonnes of purchased material compared to 46,493 tonnes in 2023. Royalty expense for the nine months period ended September 30, 2024, was $16.9 million in line with the same period in 2023 and is included in cost per tonne and cost per oz metrics.
Cash costs per oz, net of by-product credits, for the nine months ended September 30, 2024, increased to $17.24 compared to $15.29 for the same period in 2023, driven by the higher direct costs per tonne and lower silver production partially offset by a higher gold credit. AISC per oz increased 11% to $24.96 per oz for the nine months ended September 30, 2024, due to higher cash costs per oz, and slightly higher general and administrative costs, partially offset by a lower sustaining capital expenditure being allocated to silver ounces produced.
BOLAÑITOS OPERATIONS
Production Results for the Three and Nine months ended September 30, 2024 and 2023
Three months ended September 30
|
BOLAÑITOS
|
Nine months ended September 30
|
2024
|
2023
|
% Change
|
|
2024
|
2023
|
% Change
|
107,971
|
110,925
|
(3%)
|
Ore tonnes processed
|
320,853
|
331,290
|
(3%)
|
36
|
37
|
(1%)
|
Average silver grade (g/t)
|
40
|
48
|
(17%)
|
84.7
|
82.6
|
3%
|
Silver recovery (%)
|
84.1
|
84.6
|
(1%)
|
105,812
|
107,524
|
(2%)
|
Total silver ounces produced
|
346,895
|
432,722
|
(20%)
|
100,694
|
102,510
|
(2%)
|
Payable silver ounces produced
|
330,563
|
409,007
|
(19%)
|
2.00
|
1.89
|
6%
|
Average gold grade (g/t)
|
1.99
|
1.81
|
10%
|
93.1
|
87.9
|
6%
|
Gold recovery (%)
|
91.5
|
88.3
|
4%
|
6,462
|
5,928
|
9%
|
Total gold ounces produced
|
18,777
|
17,016
|
10%
|
6,291
|
5,777
|
9%
|
Payable gold ounces produced
|
18,267
|
16,549
|
10%
|
622,779
|
581,764
|
7%
|
Silver equivalent ounces produced(1)
|
1,849,055
|
1,794,002
|
3%
|
(51.38)
|
(7.68)
|
(569%)
|
Cash costs per silver ounce(2)
|
(30.97)
|
(0.12)
|
(24,741%)
|
(27.25)
|
22.74
|
(220%)
|
Total production costs per ounce(2)
|
(6.34)
|
22.51
|
(128%)
|
(14.98)
|
35.54
|
(142%)
|
All in sustaining costs per ounce (2)
|
3.77
|
32.16
|
(88%)
|
96.27
|
93.26
|
3%
|
Direct operating costs per tonne(2)
|
98.84
|
95.03
|
4%
|
102.42
|
94.63
|
8%
|
Direct costs per tonne(2)
|
103.61
|
96.79
|
7%
|
(1) Silver equivalents are calculated using an 80:1 (Ag:Au) ratio.
(2) Non-IFRS measure. For a description of how these measures are calculated and a reconciliation of these measures to the most directly comparable measures specified, defined or determined under IFRS and presented in the Company's financial statements, refer to "Non-IFRS Measures".
Bolañitos Production Results
Three months ended September 30, 2024 (compared to the three months ended September 30, 2023)
Silver production at the Bolañitos mine was 105,812 oz in Q3, 2024, a decrease of 2% compared to 107,524 oz in Q3, 2023, and gold production was 6,462 oz in Q3, 2024, an increase of 9% compared to 5,928 oz in Q3, 2023. Plant throughput in Q3, 2024 was 107,971 tonnes at average grades of 36 gpt silver and 2.00 gpt gold, compared to 110,925 tonnes at average grades of 37 gpt silver and 1.89 gpt gold in Q3, 2023. At the Bolañitos mine the 2% decrease in silver production was attributable to a combination of a 3% decrease in throughput and 1% decrease in ore silver grade, partially offset by a 3% increase in recoveries. The 9% increase in gold production at the Bolañitos mine was attributable to a 6% increase in ore gold grade and a 6% increase in recoveries, partially offset by a 3% decrease in throughput. The difference in ore grade at Bolañitos is primarily due to the fluctuations of ore grades from accessing different areas of the mine and due to normal variations within the mine plan.
Nine months ended September 30, 2024 (compared to the nine months ended September 30, 2023)
Silver production at the Bolañitos mine was 346,895 oz during the nine months ended September 30, 2024, a decrease of 20% compared to 432,722 oz in the same period of 2023, and gold production was 18,777 oz, an increase of 10% compared to 17,016 oz in 2023. Plant throughput for nine months ended September 30, 2024, was 320,853 tonnes at average grades of 40 gpt silver and 1.99 gpt gold, compared to 331,290 tonnes at average grades of 48 gpt silver and 1.81 gpt gold in the same period of 2023. The 20% decrease in silver production and 10% increase in gold production compared to 2023 is primarily due to typical grade variations within the mine plan.
Bolañitos Operating Costs
Three months ended September 30, 2024 (compared to the three months ended September 30, 2023)
Direct costs per tonne in Q3, 2024 increased 3% to $96.27 per tonne, primarily due to 3% lower ore tonnes processed. Cash costs per oz, net of by-product credits, were ($51.38) of payable silver in Q3 2024 compared to
($7.68) in Q3 2023 due to higher gold production and realized gold prices. AISC per oz decreased 142% in Q3 2024 to cash cost per oz of ($14.98) from $35.54 in Q3 2023, primarily due to significantly lower cash costs per oz and lower sustaining capital expenditures, partially offset by higher general and administrative costs.
Nine months ended September 30, 2024 (compared to the nine months ended September 30, 2023)
Direct costs per tonne during nine months ended September 30, 2024, increased 7% to $103.61 per tonne, primarily due to 3% decrease in tonnes processed and a 4% increase in direct operating costs per tonne. Cash cost per oz, net of by-product credits, were ($30.97) in the nine months ended September 30, 2024, compared to cash cost per oz of ($0.12) in the same period of 2023 due to higher by-product gold sales in the period. AISC per oz decreased 88% in the nine months period ended September 30, 2024, to $3.77 primarily due to the decrease in cash costs and lower sustaining capital expenditures.
TERRONERA DEVELOPMENT
Construction and Development Highlights
The Terronera project made substantial progress during the third quarter as the Upper Plant Platform nears completion. Surface mill and infrastructure construction reached 90%, further preparing for advancement into operations. Overall project progress (mine development and surface construction) reached 77% completion, with more than $258 million of the project's budget spent to date. Project commitments totals $270 million, 99% of the $271 million capital budget.
The Upper Platform is nearly complete, and the primary jaw crusher was commissioned, with rock crushed in August. Mill and surface infrastructure construction was 90% complete and continues to transition to operations.
With Upper Platform nearly complete, the major focus is on the Lower Platform and Tailing Storage Facility. Lower Platform area was 30% complete as of September 30, 2024. On the Lower Platform, focus has been on completing the last section of the tailing filter bearing wall prior to starting the filter support deck. In Q3, the first structural steel columns and beams were erected for the Concentration Filter building and equipment mechanical structures. More than 75% of the floor slab and 100% of the filter bearing wall for the tailing filter building has been poured. The tailing filters, which are stored at the Puerto Vallarta warehouse, are scheduled to be transported to site for Q4 2024 installation
During the third quarter, 1,051 metres underground were developed for a project total of 5,544 metres. Development was nearly complete for the test stope that will be used to verify stope design criteria as well as establishing longhole drilling, blasting and backfill procedures. Development ore was stockpiled on surface. Slashing of an existing portal commenced for access to mine the high-gold grade La Luz vein, which is anticipated to be reached in the first half of 2025.
As of September 30, 2024, procurement was 99% complete. Laboratory and Plant Maintenance buildings reached 40% of completion. Structural steel installation for plant maintenance building started in late September. At the end of Q3, the workforce increased to over 250 Endeavour Silver employees and over 800 contract workers, with the total number expected to decrease in Q4 2024 as commissioning begins.
Q4 2024 Outlook and Planning
The Terronera Project is tracking to begin commissioning systems near the end of Q4.
For Q4 2024, the tailing filter area, which was turned over to the mechanical contractor in early October, will allow focus on installing at least one tailing filter along with the concentrate filter using an extended work schedule to allow initial systems commissioning anticipated near the end of Q4. Grinding, flotation, and thickening systems will be mechanically completed in late October, allowing testing and ramp-up of these circuits to begin in November and December.
Mine development in Portals 1, 2, and 4 declines will continue, with longhole stopes being developed and initial production planned for Q4; ore will continue to be stockpiled for mill ramp-up. At La Luz, the portal is being constructed, and the orebody ramp access will advance in Q4.
The critical path remains the TSF, tailing concentrate filters construction and the advancing underground mine.
EXPLORATION AND EVALUATION
At Guanaceví, the Company concluded sampling of the projection of the Santa Cruz vein towards the northwest and started underground diamond drilling in the El Curso mine, testing the Santa Cruz vein. The Company drilled 1,552 metres during Q3 2024, in addition to 1,904 metres drilled during first half of the 2024, and incurred exploration cost of $0.3 million and $0.8 million for the three and nine months ended September 30, 2024 respectively. Drill results are pending assays and analysis.
At Bolañitos, the Company completed surface diamond drilling in the Bolañitos North and Bolañitos South areas. The Company drilled 2,286 metres in Q3 2024, in addition to the 5,504 drilled during first half of 2024. The company incurred exploration costs of $0.3 million and $1.0 million for three and nine months ended September 30, 2024, respectively. Drill results are pending assays and analysis.
At Terronera, the Company has conducted mapping in the Peña Gorda West and Los Espinos and started geological mapping at Las Coloradas area (El Izote vein). In addition, exploration activities were carried out in the El Culebro & Zopilotillo mine (north).
Sampling was carried out in the Guardarraya, La Yesquilla and Los Espinos South areas. The Company incurred total development expense of $1.7 million and $4.9 million for the three and nine months ended September 30, 2024, respectively, which includes social, environmental and management oversight costs that are ineligible for capitalization during construction.
At Pitarrilla, during the three and nine months ended September 30, 2024, the Company incurred total exploration expense of $1.3 million and $3.7 million respectively. The Company fortified an existing underground ramp and extended the ramp 650 metres to further test the high-grade zones and its feeder structures at various angles, including developing the ramp through the projected feeder structures. The Company has completed 6 holes testing the high grade manto zone, the Casas Blancas, Danna, Palmito and Victoria structures. Drill results are pending interpretation and analysis.
The Company commenced preliminary study and design for a tailings storage facility, mine design, including detailed review of mine hydrology and rock mechanics and began a comprehensive review and confirmation of the historical metallurgical test work. These studies are integral information required to facilitate an economic study by the end of 2025.
CONSOLIDATED FINANCIAL RESULTS
Three months ended September 30, 2024 (compared to the three months ended September 30, 2023)
In Q3, 2024, the Company's mine operating earnings were $12.5 million (Q3, 2023 - $2.7 million) on revenue of $53.4 million (Q3, 2023 - $49.4 million) with cost of sales of $41.0 million (Q3, 2023 - $46.7 million).
In Q3, 2024, the Company had operating earnings of $3.8 million (Q3, 2023 - operating loss of $3.8 million) after exploration and evaluations costs of $4.7 million (Q3, 2023 - $4.2 million), general and administrative expense of $4.0 million (Q3, 2023 - $2.4 million).
The loss before taxes for Q3, 2024 was $13.3 million (Q3, 2023 - earnings before taxes of $0.8 million) after finance costs of $0.5 million (Q3, 2023 - $0.3 million), a foreign exchange loss of $3.1 million (Q3, 2023 - foreign exchange loss of $0.4 million) and investment and other income of $5.9 million (Q3, 2023 - expense of $1.6 million) as well as loss incurred on revaluation of the gold and foreign exchange derivatives of $19.4 million (2023 - nil) due to the increase in gold forward prices and appreciation of the US dollar in relation to the fixed Mexican peso contract. The Company realized a net loss for the period of $17.3 million (Q3, 2023 - $2.3 million) after an income tax expense of $4.0 million (Q3, 2023 - $3.1 million). Excluding the loss on derivative contracts and certain non-cash and unusual items as defined in the "Non-IFRS Measures" section, the adjusted earnings for the period are $1.6 million (Q3 2023 - loss of $8.3 million).
Revenue of $53.4 million in Q3, 2024, net of $0.5 million of smelting and refining costs, increased by 8% compared to $49.5 million, net of $0.5 million of smelting and refining costs, in Q3, 2023. Gross sales of $53.9 million in Q3, 2024 represented a 8% increase over the gross sales of $49.9 million for the same period in 2023. A 26% decrease in silver oz sold during the period, offset by a 24% increase in the realized silver price resulted in an 8% decrease to silver sales. A 7% increase in gold oz sold in combination with a 30% increase in realized gold prices resulted in a 39% increase in gold sales. During the period, the Company sold 1,017,392 oz silver and 9,412 oz gold, for realized prices of $29.63 and $2,528 per oz, respectively, compared to sales of 1,370,032 oz silver and 8,760 oz gold, for realized prices of $23.99 and $1,948 per oz, respectively, in the same period of 2023. For the three months ended September 30, 2024, the realized prices of silver and gold were within 2% of the London spot prices. Silver and gold London spot prices averaged $29.43 and $2,474, respectively, during the three months ended September 30, 2024.
The Company decreased its finished goods silver inventory to 117,921 oz and decreased its finished goods gold inventory to 961 oz at September 30, 2024 compared to 268,020 oz silver and 1,261 oz gold at June 30, 2024. The cost allocated to these finished goods was $3.1 million as at September 30, 2024, compared to $6.1 million at June 30, 2024. As of September 30, 2024, the finished goods inventory fair market value was $6.2 million, compared to $10.8 million at June 30, 2024.
Cost of sales for Q3, 2024 was $41.0 million, an decrease of 12% over the cost of sales of $46.7 million for Q3, 2023. The lower cost of sales compared to the prior period was driven by lower silver ounces sold in the quarter. Furthermore, the cost reduction measures undertaken at Guanaceví following the trunnion failure, including the termination of contract mining activities, helped reduce production costs.
Exploration and evaluation expenses were $4.7 million, in line with $4.2 million incurred in the same period of 2023. General and administrative expenses of $4.0 million in Q3 2024 were higher compared to the $2.4 million incurred for the same period of 2023, primarily due to the revaluation of the cash-settled DSU liability caused by an increase in company's share price, amounting to $0.9 million increase.
The Company incurred a foreign exchange loss of $3.1 million in Q3, 2024 compared to a foreign exchange loss of $0.4 million in Q3, 2023 due to a weakening of the Mexican peso at the end of the reporting period, which decreased the US dollar value of Mexican peso denominated working capital surplus. In Q3 2024, the Company incurred $0.5 million in finance charges primarily from interest on loans related to mobile equipment and accretion of reclamation and rehabilitation liabilities, compared to $0.3 million in the same period in 2023. The Company recognized $19.4 million loss incurred on revaluation of the gold and foreign exchange derivatives (2023 - nil) due to the increase in gold forward prices and appreciation of the US dollar in relation to the Mexican peso. Other costs and income in the period include $5.9 million income from investments and other compared to $1.7 million cost in investment and other expenses in Q3, 2023, primarily resulting from $4.7 million in interest income on higher cash deposits and tax refunds (Q3, 2023 - $0.2 million), and $1.1 million in other income (Q3, 2023 - other expense of $0.1 million) partially offset by the loss on marketable securities of $0.1 million (Q3, 2023 - loss of $1.9 million). During Q3 2024 contractual conditions regarding deferred consideration from the 2021 divestment of the Cubo mine were met and the Company recognized of $1.0 million of previously contingent consideration.
Income tax expense was $4.0 million in Q3, 2024 compared to $3.1 million in Q3, 2023. The $4.0 million tax expense is comprised of $4.5 million in current income tax expense (Q3, 2023 - $2.2 million) and $0.5 million in deferred income tax recovery (Q3, 2023 - $0.9 million expense). The current income tax expense consists of $1.0 million in special mining duty taxes and $3.5 million of current income taxes. The deferred income tax recovery of $0.5 million is derived from changes in temporary differences between the timing of deductions for accounting purposes compared to deductions for tax purposes.
Nine months ended September 30, 2024 (compared to the nine months ended September 30, 2023)
During the first nine months of 2024, the Company's mine operating earnings were $34.3 million (2023 - $31.3 million) on revenue of $175.4 million (2023 - $155.0 million) with cost of sales of $141.1 million (2023 - $123.7 million). Higher revenue was offset by higher cost of sales for the period, due to higher allocated costs on direct inputs caused by lower production in the period as well as higher depreciation due to diminished reserves driving higher depletion costs.
During nine months ended September 30, 2024, the Company had operating earnings of $8.8 million (2023 - $8.5 million) after exploration, evaluation and development costs of $13.3 million (2023 - $12.7 million) and general and administrative expense of $12.3 million (2023 - $9.6 million). In the nine-month period ended September 30, 2023, operating earnings also included a write off of mineral properties of $0.4 million.
The loss before taxes for the period were $20.3 million (2023 - earnings before taxes $17.5 million) after finance costs of $1.1 million (2023 - $1.1 million), a foreign exchange loss of $5.9 million (2023 - gain $3.3 million) and investment and other income of $6.5 million (2023 - investment and other expense of $0.3 million) as well as loss on derivatives of $28.6 million (2023 - nil). The Company realized net loss for the period of $32.5 million (2023 - net earnings of $3.1 million) after an income tax expense of $12.2 million (2023 - $14.5 million).
Revenue of $175.4 million net of $1.4 million of smelting and refining costs, increased by 13% compared to $155.0 million, net of $1.9 million of smelting and refining costs, in 2023. Gross sales of $176.8 million in the period represent a 13% increase over the $156.9 million for the same period in 2023. Increase in revenue is driven primarily by 12% increase in realized silver prices and 20% increase in realized gold prices in combination with 9% increase in gold oz sold and partially offset by a 8% decrease in silver oz sold. During the period, the Company sold 3,991,055 oz silver and 30,179 oz gold, for realized prices of $26.71 and $2,328 per oz, respectively, compared to sales of 4,337,112 oz silver and 27,769 oz gold, for realized prices of $23.75 and $1,940 per oz, respectively, in the same period of 2023. For the nine months ended September 30, 2024, the realized prices of silver and gold were within 2% of the London spot prices. Silver and gold London spot prices averaged $27.22 and $2,297, respectively, during the nine months ended September 30, 2024.
The Company decreased its finished goods silver and gold inventory to 117,921 oz silver and 961 oz gold, at September 30, 2024 compared to 487,884 oz silver and 1,711 oz gold at December 31, 2023. The cost allocated to these finished goods was $3.1 million at September 30, 2024, compared to $9.5 million at December 31, 2023. At September 30, 2024, the finished goods inventory fair market value was $6.2 million, compared to $15.1 million at December 31, 2023.
Cost of sales for the nine months ended September 30, 2024 was $141.1 million, an increase of 14%over the cost of sales of $123.7 million for the same period of 2023. The increase in cost of sales was predominantly caused by higher direct costs being allocated to lower production of silver as well as the higher depreciation charge during period. Direct costs were impacted by inflationary pressures and to higher costs of purchased material at Guanacevi. Additionally direct costs on a per ounce basis were impacted by lower grades in Guanaceví compared to 2023. Depreciation costs were impacted by declining estimated reserves and resources at Guanaceví.
Exploration and evaluation expenses were $13.3 million, slightly higher than the $12.7 million incurred in the same period of 2023. General and administrative expenses of $12.3 million in nine months ended September 30, 2024 were 27% higher compared to the $9.7 million incurred for the same period of 2023, due to expense recognized from the revaluation of DSU liability, which with appreciation in value of the company shares increased by 2.9 million compared to the nine months period ended September 30, 2023, partially offset by a slightly lower direct general and administrative expenses.
The Company incurred a foreign exchange loss of $5.9 million during nine months ended September 30, 2024, compared to a foreign exchange gain of $3.3 million in 2023, due to a weakening of the Mexican peso at the end of the reporting period, which decreases the US dollar value of Mexican peso denominated working capital surplus. The Company incurred $1.1 million in finance charges primarily from interest on loans related to mobile equipment and accretion of reclamation and rehabilitation liabilities, in line with the $1.1 million for the same period in 2023. The Company recognized $6.5 million in investment and other income compared to $0.3 million in investment and other expense in 2023, resulting from recognizing an unrealized loss on marketable securities of $1.2 million (2023 - loss of $2.0 million), $6.0 million in interest income (2023 - $1.2 million), and $0.7 million in other income (2023 - nil). During the nine month period ended September 30, 2024, contractual conditions have been met and the Company recognized of $1.0 million of previously contingent consideration on sale of the Cubo mine in 2021. In the same period of 2023, the Company also recognized $0.5 million of royalty income which did not recur in 2024.
Income tax expense was $12.2 million for nine months ended September 30, 2024 compared to $14.4 million in the same period of 2023. The $12.2 million tax expense is comprised of $13.1 million in current income tax expense (2023 - $11.1 million) and $0.9 million in deferred income tax recovery (2023 - deferred income tax expense $3.3 million). The current income tax expense consists of $3.4 million in special mining duty taxes and $9.7 million of income taxes. The deferred income tax recovery of $0.9 million is derived from changes in temporary differences between the timing of deductions for accounting purposes compared to deductions for tax purposes.
KEY ECONOMIC TRENDS
Precious Metal Price Trends
The prices of silver and gold are the largest single factor in determining profitability and cash flow from operations. The financial performance of the Company has been, and is expected to continue to be, closely linked to the prices of silver and gold.
During nine months ended September 30, 2024, the average price of silver was $27.22 per ounce, with silver trading between $22.09 and $32.48 per oz based on the London Fix silver price. This compares to an average of $23.40 per oz for the nine months ended September 30, 2023, with a low of $20.09 and a high of $26.03 per oz. For the nine months ended September 30, 2024, the Company realized an average price of $26.71 per silver oz compared with $23.65 for the nine months ended September 30, 2023.
During nine months ended September 30, 2024, the average price of gold was $2,297 per oz, with gold trading between $1,985 and $2,664 per oz based on the London Fix PM gold price. This compares to an average of $1,931 per oz for the nine months ended September 30, 2023, with a low of $1,811 and a high of $2,048 per oz. For the nine months ended September 30, 2024, the Company realized an average price of $2,328 per oz compared with $1,937 for the nine months ended September 30, 2023.
The silver and gold markets are impacted by changes in monetary policies, rising geopolitical tensions and macro-economic climate primarily as protection against inflationary concerns. Gold and silver prices have increased during 2024 due to rising geo-political tension and the anticipation of falling interest rates. Silver's industrial applications and usage have increased significantly due to the electrical conductivity of the metal. Silver efficiency as an electricity conductor and potential applications as a "green" metal has impacted the industrial demand impacting above ground inventory levels and price. This industrial demand is expected to continue into the near future, while supply is estimated to remain the same.
Currency Fluctuations
Foreign exchange risk arises from transactions denominated in currencies other than the U.S. dollar. The Company's operations are located in Mexico and therefore a significant portion of operating costs and capital expenditures are denominated in Mexican pesos.
During Q1 and Q2, 2024, the Mexican peso continued the 2023 trend of appreciating against the U.S. dollar, however during Q3 2024, trend has reversed and the U.S. dollar has strengthened against the Mexican Peso. During the nine months ended September 30, 2024, the average foreign exchange rate was $17.66 Mexican pesos per U.S. dollar, with the peso trading within a range of $16.34 to $19.99. This compares to an average of $17.80, with a range of $16.67 to $19.48 Mexican pesos per U.S. dollar in the same period of 2023.
During the year ended December 31, 2023, the Mexican peso strengthened against the U.S. dollar. The average foreign exchange rate was $17.73 Mexican pesos per U.S. dollar, with the peso trading within a range of $16.67 to $19.48. This compares to an average of $20.25, with a range of $19.52 to $21.35 Mexican pesos per U.S. dollar during the year ended December 31, 2022.
Cost Trends
The Company's profitability is subject to industry-wide cost pressures on development and operating costs with respect to labour, energy, consumables and capital expenditures. Underground mining is labour intensive and approximately 33% of the Company's production costs are directly tied to labour. In order to mitigate the impact of higher labour and consumable costs, the Company focuses on continuous improvement by promoting more efficient use of materials and supplies and by pursuing more advantageous pricing while increasing performance and without compromising operational integrity. During Q4, 2022 the cost per tonne was impacted by royalty costs recognized upon sale of higher than usual finished goods inventory that had been held during Q2 and Q3 of 2022. During the year ended December 31, 2023, costs continued to be impacted by inflationary and industry costs pressures as well as being impacted by a stronger Mexican Peso. From December 31, 2022, to December 31, 2023, the Mexico Peso appreciated by 15%. During the nine months ended June 30, 2024 cost per tonne increased further due to higher purchased material at Guanacevi and slightly higher direct input costs. During Q3 2024, cost per tonne remained high due to the lower throughput following the failure of the trunnion on the primary ball mill at the Guanacevi mill.
ANNUAL OUTLOOK
2024 Production and Cost Guidance
|
Guanaceví
|
Bolañitos
|
Consolidated
|
Silver Production (revised)
|
M oz
|
4.0-4.1
|
0.4-0.5
|
4.4-4.6
|
Gold Production (revised)
|
K oz
|
13.0-14.0
|
23.0-24.0
|
36.0-38.0
|
Silver Eq Production(1)
|
M oz
|
5.1-5.2
|
2.2-2.4
|
7.3-7.6
|
Sustaining Capital Budget
|
US$M
|
|
|
$30.0
|
Exploration Budget
|
US$M
|
|
|
$8.7
|
(1) 2024 silver equivalent production is calculated using an 80:1 (Ag:Au) ratio
Operating mines
As announced on August 19, 2024, following the failure of the trunnion on the primary ball mill at the Guanaceví, the Company revised downwards previous production guidance for the Guanaceví mine. During this reduced processing period, Guanaceví production was estimated to decrease by 0.9 million to 1.1 million silver ounces and by 2.0-3.0 thousands of gold ounces compared to its original operating plan.
To address the mill failure at Guanaceví, temporary modifications were completed to re-purpose one of the regrind mills as the primary ball mill. The temporary modifications have allowed throughput to average 565 tonnes per day since re-start after the trunnion failure. The plant team is closely monitoring the operation of the regrind mills to ensure continued reliability and high mechanical availability, including increased planned maintenance down days during this temporary period. The timeline for fabrication and installation of the new trunnion on the primary ball mill remains on schedule for December 2024.
Consolidated Operating Costs
Due to the reduced operating capacity at Guanacevi, operating costs and all in sustaining cost metrics will be higher than originally guided for 2024. Due to the significant number of variables, estimates and remaining uncertainties, management withdrew its 2024 cost guidance.
Previous to the cost guidance withdrawal, management guided cash costs, net of gold by-product credits, to be $14.00-$15.00 per oz of silver produced. AISC, net of gold by-product credits, in accordance with the World Gold Council standard, were estimated to be $22.00-$23.00 per oz of silver produced. Direct operating costs per tonne were originally estimated to be $140-$145. Inclusive of royalties and special mining duties direct costs were estimated to be in the range of $165-$170 per tonne. In making these cost forecasts, prior to the withdrawal of the cost guidance, management made the following assumptions in calculating its 2024 cost forecasts: $23 per oz silver price, $1,840 per oz gold price and 17:1 Mexican peso to U.S. dollar exchange rate.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents increased from $35.3 million at December 31, 2023 to $54.9 million at September 30, 2024.
Expressed in thousands US dollars |
|
As at September 30, 2024 |
As at December 31, 2023 |
Current assets |
|
$ 104,120 |
$ 100,773 |
Current liabilities |
|
74,744 |
58,244 |
Working capital surplus |
|
$ 29,376 |
$ 42,529 |
The Company had working capital of $29.4 million as at September 30, 2024 (December 31, 2023 - $42.5 million). The $13.2 million decrease in working capital is caused primarily by $4.5 million decrease in other investments following the sale and re-valuation of marketable securities, a $5.2 million net decrease in current IVA receivable following reimbursements, $3.2 million decrease in income tax receivable, $3.3 million decrease in inventory, $2.6 million decrease in prepaids and other assets, $4.0 million increase in accounts payable, accrued liabilities and other current liabilities, $3.8 million increase in income taxes payable, and the recognition of a $9.2 million current portion of derivative liability relating to the Mexican peso and gold forward contracts, offset by, a $19.3 million increase in cash and cash equivalents, $2.5 million increase in trade receivables. and $0.5 million decrease in current loan payables.
Operating activities provided $24.0 million during the nine months period ended September 30, 2024, compared to providing $5.1 million in the same period of 2023, driven largely by the higher silver and gold realized prices as well as higher gold ounces sold.
Investing activities used net cash $139.6 million during the nine months ended September 30, 2024, compared to using net cash of $66.6 million in the same period in 2023, due to the development of Terronera. Capital asset investments totaled $149.5 million in property, plant and equipment during nine months ended September 30, 2024, compared to capital investments totaling $76.3 million in the same period in 2023. The Company also received $0.9 million of loan receivable repayment compared to $0.5 million in the same period of 2023. In nine months ended September 30, 2024 the Company also received $5.7 million of interest, primarily related to $4.3 million interest earned from delayed IVA claims and $1.4 million interest on cash deposits.
At Guanaceví, the Company invested $15.7 million, with $11.8 million spent on 2.6 km of mine development and underground infrastructure and $2.6 million on mobile equipment. The Company continued to invest in upgrades for the plant and surrounding infrastructure, including $1.3 million on plant upgrades, mine site improvements and the tailings facility.
At Bolañitos, the Company invested $6.6 million, with $5.4 million spent on 3.6 km of mine development and $1.0 million on mobile equipment. The Company continued to invest in upgrades for the plant and surrounding infrastructure, including $0.2 million on plant and vehicles upgrades.
At Terronera, the Company invested $129.2 million, with $69.4 million spent on land payments, surface and mine development and infrastructure, $43.7 million spent for the plant, $3.1 million spent on buildings, $11.8 million spent for mine equipment and $1.3 million spent on light vehicles, office and IT infrastructure. An additional $1.1 million was used for increase in working capital items and other non-current assets.
Investments in the exploration and general and administrative segments were $1.1 million spent on holding costs, mobile equipment, office, building infrastructure and light vehicles.
Financing activities for the nine months period ended September 30, 2024, provided $134.8 million, compared to providing $19.8 million in the same period of 2023. During the nine months ended September 30, 2024, the Company received $85.0 million from Debt Facility proceeds, $53.8 million from public equity offerings net of issuance costs, $2.5 million from exercise of employee stock options, paid $5.2 million in interest and principal repayments on loans and leases, and paid $1.3 million in deferred financing fees. By comparison, in Q3 2023 the Company received $22.7 million from public equity offerings net of issuance costs, $2.5 million on the exercise of employee stock options and paid $5.6 million in interest and principal repayments on loans and leases, and $0.3 million in withholding taxes on equity settled performance share units.
On December 18, 2023, the Company entered into an "At-The-Market" ("ATM") equity facility (the "December 2023 ATM Facility"). Under the terms of this ATM facility, the Company can, from time to time, sell common stock having an aggregate offering value of up to $60.0 million on the New York Stock Exchange. The Company determines, at its sole discretion, the timing and number of shares to be sold under the ATM facility. During the nine months period ended September 30, 2024, the Company issued 27,540,971 common shares under the "At-The-Market" ("ATM") distributions equity facility (the "December 2023 ATM Facility") at an average price of $2.00 per share for gross proceeds of $55.2 million, less commission of $1.1 million and recognized $0.4 million of other transaction costs related to the ATM financing as share issuance costs, which have been presented net within share capital.
For the December 2023 ATM facility, the net proceeds as at September 30, 2024 have been used as follows:
Use of proceeds (thousands) |
|
|
|
Net proceeds received |
$ |
58,263 |
|
|