Endeavour Silver's Q2 Silver Production Declines 12% Y/Y

Endeavour Silver Corporation EXK produced 2.2 million silver equivalent ounces in the second quarter of 2024, a 5% decline from the year-ago quarter, primarily due to reduced silver production at both of its mines, which offset higher gold output. The company also expects to commission the Terronera mine in the fourth quarter of 2024 and commence production in 2025.

Silver Production Declines on Lower Grades, Gold Up

Consolidated silver production fell 12% year over year to 1.31 million ounces. This was due to a 12% reduction in silver output at the Guanaceví mine and a 17% decrease at Bolañitos, both due to lower grades. 

Endeavour Silver, however, witnessed a 7% year-over-year improvement in gold production at 10,549 ounces. The growth was driven by higher gold grades mined at both Guanaceví and Bolañitos, as well as higher gold content in third-party feed processed at Guanaceví. Gold output at the Guanaceví mine rose 9% year over year to 4,243 ounces, while the Bolañitos mine output grew 6% to 6,306 ounces. 

Guanaceví's silver production was 1.196 million ounces (down 12% year over year), which met the company's expectations. Gold production at 4,243 ounces (up 9%) was higher than expected due to increased gold grades mined and higher content in the third-party feed.

Local third-party feed contributed 15% to Guanaceví's quarterly throughput. At current prices, management expects local third-party feed to be higher than 10% of throughput going forward. The Guanaceví operations are realizing the benefits of the significant plant improvements and modifications made in 2023.

At Bolanitos, gold production increased 6% to 6,306 ounces, while silver production plunged 17% due to lower grades. Silver production was slightly below expectations due to decreased silver grades and lower silver recovery, while throughput remained steady. Milled grades are expected to show similar variations in the second half of the year.

2024 Production Guidance Maintained

So far in 2024, EXK has produced 2.2 million silver equivalent ounces and believes it is on track to attain its production target range of 8.1-8.8 million silver equivalent ounces in 2024.

Improved Metal Prices to Reflect on Q2 Results

For the second quarter, Endeavour Silver reported a 6% year-over-year decline in silver sales at 1.22 million ounces, while gold sales were flat at 9,887 ounces. At the quarter's end, the company held 262,160 ounces of silver and 939 ounces of gold in bullion inventory. EXK also held 5,860 ounces of silver and 322 ounces of gold in the concentrate inventory.

The lower sales figures will likely be offset by the elevated gold and silver prices observed through the second quarter and will reflect on Endeavour Silver's upcoming second-quarter 2024 results. We expect other industry players such as Hecla Mining HL and Fortuna Silver Mines Inc. FSM, among others, to also benefit from this trend.

Peer Performances

Fortuna Silver Mines recently announced that it produced 116,570 gold equivalent ounces in the second quarter, which marked a 25% increase from the year-ago quarter. This includes a gold production of 92,716 ounces and a silver production of 990,574 ounces. While gold output marked a 44% year-over-year increase, silver was down 22%.

FSM maintains its gold equivalent production guidance for 2024 to be between 457,000 ounces and 497,000 ounces. Gold production guidance is pegged at 343,000-385,000 ounces while silver production is pegged at 4-4.7 million ounces.

Hecla Mining reported 4.5 million ounces of silver production in the second quarter. This marked a 16% improvement year over year, reflecting solid performance at Keno Hill. HL's gold production was up 6% at 37,324 ounces from the year-ago quarter as improved results at Casa Berardi offset lower output at Greens Creek. 

Hecla Mining has produced 7.9 million ounces of silver in the first half of 2024 and believes it is on track to produce 17 million ounces of silver in 2024.

EXK's Price Performance

Shares of EXK have gained 43.8% over the past year compared with the industry's 43.3% growth.

Image Source: Zacks Investment Research

Zacks Rank & a Stock to Consider

Endeavour Silver currently carries a Zacks Rank #3 (Hold).

A better-ranked stock from the basic materials space is Ero Copper Corp. ERO, which sports a Zacks Rank #1 (Strong Buy) at present.

The Zacks Consensus Estimate for Ero Copper's 2024 earnings is pegged at $1.66 per share. The consensus estimate for earnings has moved 20.3% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 53.9%. ERO shares have gained 9.7% in a year.

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