Endeavour Silver Corp. EXK revealed that processing has recommenced at the Guanacevi mine site following temporary adjustments.
Operational Updates
The company reported a trunnion failure in the primary ball mill at the Guanacevi mill on Aug 12, 2024, leading to a halt in material processing.
Endeavour Silver swiftly repurposed one of the regrind mills as the primary ball mill to address the issue and resume operations. However, production will operate at a reduced rate of 400 tons per day (tpd) temporarily to ensure safety and the mine’s long-term sustainability. The plant’s capacity is expected to increase to around 500 tpd during this period, nearly half of its typical output of 1,200 tpd.
With a focus on delivering high-grade ore to the mill, mining activities will aim to maintain optimal throughput levels while accumulating lower-grade ore for future processing. External mining operations and material sourcing will remain suspended until the plant is back to full capacity.
Financial Implications
These temporary measures are designed to support cash flow until full mill functionality is restored. However, the reduced operational capacity for 15 weeks is anticipated to result in higher-than-projected operating costs and all in-sustaining costs for 2024.
Initial estimates indicate a potential decline in Guanacevi’s production by 0.9 million to 1.1 million silver ounces and 2,000-3,000 gold ounces compared to the original projections. The consolidated silver production forecast for 2024 stands at 4.4-4.6 million ounces, with an estimated gold output of 36,000-38,000 ounces.
Endeavour Silver targets a silver-equivalent production range of 7.3 million to 7.6 million ounces for 2024, surpassing the 4.4 million silver-equivalent ounces produced in the first half of the year.
In the second quarter of 2024, the company reported a 5% year-over-year decrease in silver-equivalent production to 2.16 million ounces, attributed to lower output at the Guanaceví and Bolañitos mines. However, gold production witnessed a 7% improvement to 10,549 ounces, primarily driven by higher gold grades at both mines.
Stock Performance
Endeavour Silver’s stock has appreciated by 13.7% in the past year, contrasting with the industry’s 48.8% growth trajectory.
Analyst Insights
The Zacks Rank places Endeavour Silver at #3 (Hold) status. Noteworthy stocks in the basic materials sector include Carpenter Technology Corporation, IAMGOLD Corporation, and Eldorado Gold Corporation, all boasting a Zacks Rank #1 currently.
Among them, Carpenter Technology anticipates fiscal 2025 earnings of $6.06 per share, displaying a 17% upward revision in the consensus estimate over the past 60 days. Meanwhile, IAMGOLD and Eldorado Gold foresee 2024 earnings of 39 cents and $1.32 per share, respectively, with significant positive revisions in the estimates.