Endeavour Silver Corp. (EXK, Financial) released the results on first-quarter 2017 gold and silver production.
The Canadian midtier precious metals mining company closed the first quarter with 1,076,974 ounces of silver and 11,724 ounces of gold produced, 29% and 27% decreases on a year-over-year basis, “due to the decision at low metal prices in January 2016 to cut spending on exploration and development at all three mines, which reduced mine access to reserves and therefore reduced metal production,” the company said.
The volume of ounces of equivalent silver produced, according to a 70:1 silver-gold ratio, was 1,897,654, a 28% decrease on a year-over-year basis.
At the Guanacevà  mine, where silver and gold contributed 32.4% to the company's total first-quarter production of equivalent silver, a slowdown in the development of the mine caused Endeavour to produce fewer ounces of silver and gold than expected. The company says that “the mine operations are expected to slowly improve in 2017.”
In the first quarter, Bolañitos mine contributed 31.8% to the company's total production of equivalent silver, with 168,723 ounces of silver and 6,218 ounces of gold. Here, the company mined silver at a lower grade than expected, but the company says that “silver grades should improve” over the coming months.
At El Cubo mine, Endeavour produced 377,568 ounces of silver and 4,314 ounces of gold, for a total of 679,548 ounces of equivalent silver, or 35.8% of the company's total first-quarter production. Here, the company mined silver and gold at lower grades than originally planned, but the miner expects to improve them together with production during the next quarter.
In the first quarter, Endeavour sold 1,235,594 ounces of silver and 11,290 ounces of gold, 18% and 26% decreases on a year-over-year basis.
"From a production standpoint, we are still recovering from the reduced mine development and operational challenges we faced in 2016," Endeavour CEO Bradford Cooke commented. "Our plan is to increase production throughout the year as we improve ore grade controls at El Cubo, slowly return Guanacevà  to good health, optimize throughput at Bolañitos and regain access to reserves at each mine in order to achieve our production guidance."
Cooke also said that El Compas, Parral and Terronera development projects position Endeavour well “for significant growth over the next three years.”
Endeavour is trading at $3.39, down 3 cents or minus 0.91% from the previous trading day with a price-sales (P/S) ratio of 2.81 and a price-book (P/B) ratio of 3.24.
The EV/EBITDA ratio is 11.04.
The precious metals stock has a recommendation rating of 2.4, which ranges between 1.0 (Strong Buy) and 5.0 (Sell); as of Wednesday, the analysts' average target price per share was $4.74. The latter represents nearly 40% upside from the current market value.
Disclosure: I have no positions in Endeavour Silver.
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