Endeavour Silver(US:EXK)2024-08-01 23:29Financial Data and Key Metrics Changes - The company reported top line revenue of $58 million, up 17% year-over-year due to higher metal prices compared to Q2 2023 [4] - Cost of sales totaled $48 million, up 28% from Q2 2023, driven by the strength of the Mexican peso and inflationary effects [4] - The company reported a net loss of $14 million for the three-month period ended June 30, 2024, compared to a $1 million loss in Q2 2023 [5] - Adjusted loss was $1.0 million compared to adjusted earnings of $1.6 million in Q2 2023 [5] - As of June 30, 2024, the company's cash position was $68 million and working capital was $65 million [6] Business Line Data and Key Metrics Changes - Q2's silver equivalent production totaled 2.2 million ounces, consisting of 1.3 million ounces of silver and 10,500 ounces of gold [3] - Purchased material from local miners increased to 18% of throughput, accounting for $5 million of cost of sales, compared to $1.5 million in Q2 2023 [4] Market Data and Key Metrics Changes - The company noted that higher precious metals prices are expected to positively impact cash flow and financial position [3] - The strength of the Mexican peso has contributed to increased labor, power, and consumable costs [4] Company Strategy and Development Direction - The Terronera project is on track for commissioning in Q4 2024, with significant progress made, reaching 65% completion as of June 30 [3][7] - The company plans to continue purchasing local materials, which are expected to remain elevated for the foreseeable future [4] - The company is focused on advancing its sustainability commitments, as highlighted in its 2023 Sustainability Report [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, noting that the higher precious metals prices should lead to better earnings over time [6] - There is some uncertainty regarding the regulatory environment in Mexico following the recent election, but the new administration is expected to be more pro-business [14] - The company anticipates that the remaining $45 million for the Terronera project will be available for drawdown in the second half of 2024 [16] Other Important Information - The company completed its first drawdown of the Terronera senior secured debt facility, drawing $60 million, with an additional $50 million drawn subsequently [6] - The company is also exploring the Pitarrilla project, with a $5 million budget for 2024 and ongoing drilling activities [40] Q&A Session Summary Question: Were ounces withheld for higher prices this quarter or is this just a function of timing? - Management clarified that it was just a timing function and they are not holding back sales at this time [10] Question: Do you think the peso has weakened to a level where you might start putting in broader company hedges in place? - Management indicated that they expect more weakness in the Mexican peso but have no current plans for additional FX hedges [11] Question: Can you comment on the operating environment in Mexico following the recent election? - Management noted that the new administration is expected to be more pro-business, but there is still uncertainty regarding regulatory changes [14] Question: How is the underground development progressing? - Management confirmed that underground development is tracking to plan and they expect to meet tonnage expectations for 2025 [19] Question: What is the expected timeline for the remaining $45 million drawdown for Terronera? - Management stated that there are no specific milestones required for the drawdown and it is expected to be available over the next six months [17] Question: Can you explain the significant loss this quarter despite higher metal prices? - Management explained that the loss was largely due to a $9 million loss related to derivatives and other non-cash items impacting the income statement [33][34]