Endeavour Silver Corp (C-EDR) - News Release
Endeavour Silver loses $4.14-million in 2006
2007-04-11 16:38 ET - News Release
Shares issued 43,444,325
EDR Close 2007-04-10 C$ 5.83
Mr. Bradford Cooke reports
ENDEAVOUR SILVER CORP.: FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2006 AND FINANCIAL OUTLOOK FOR 2007
Endeavour Silver Corp. has released its financial statements for the year ended Dec. 31, 2006, and its financial outlook for 2007.
Sales in 2006 totalled $17.8-million from the production of 1.35 million ounces silver (net of gold credits) or $12.51 (U.S.) per ounce, from the company's Guanacevi mines in Durango, Mexico. The first year of Endeavour's consolidated financial results for its Mexican subsidiaries is 2006, so there is no comparable sales period from 2005.
Cost of sales in 2006 totalled $10.4-million. Cash costs were approximately $6.55 (U.S.) per ounce of payable silver net of gold credits and adjusted for the date of acquisition (Jan. 28, 2006). Mine operating profits before administrative costs and non-cash items amounted to $7.4-million.
After all costs, including corporate, future tax and stock-based compensation, Endeavour recorded a loss of $4.1-million, or 11 cents per share in 2006. The consolidated statements of operations are shown in the table.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of dollars, except per share amounts)
Year Ten months Year
ended ended ended
Dec. 31, Dec. 31, Feb. 28,
2006 2005 2005
Sales $ 17,768 $ - $ -
Cost of sales 10,401 - -
Depreciation and depletion 2,992 - -
General and administrative 2,891 2,571 1,122
Corporate development 521 97 303
Stock-based compensation 3,994 1,372 1,499
Impairment of mineral properties - - 43
----------- ----------- -----------
Operating loss 3,031 4,040 2,967
Foreign exchange gain (loss) 560 (415) 75
Income (loss) from property
option interest 138 (1,353) -
Investment and other income 1,094 139 327
----------- ----------- -----------
Loss before taxes and
other items 1,239 5,669 2,565
----------- ----------- -----------
Non-controlling interest 1,311 - -
Income tax provision 1,598 - -
----------- ----------- -----------
Loss for the period $ 4,148 $ 5,669 $ 2,565
=========== =========== ===========
Basic and diluted loss
per share $ 0.11 $ 0.23 $ 0.15
Cash operating costs were higher than forecast due to a jump in mine labour costs, as the Guanacevi mines switched from contract to employee labour, and higher plant costs, due to a lack of plant availability during the mill expansion program. The operations were being prepared for a higher production rate in 2007. Management expects cash costs to decline below $6 (U.S.) per ounce in 2007, as rising production should drive unit costs down.
At Dec. 31, 2006, Endeavour held $48.1-million in current assets, including $37.1-million in cash and equivalents, both up more than double from 2005. Current liabilities at year-end were $3.5-million, and future income tax and asset retirement liabilities totalled $4.6-million. The company has no long-term debt.
Shareholders' equity jumped 120 per cent to $63.9-million in 2006, as shown in the consolidated balance sheet in the full financial results.
For 2007, Endeavour is forecasting sales of $36-million to $39-million, based on 2.6 million ounces silver production from Guanacevi, using a $12 (U.S.) per ounce silver price, $600 (U.S.) per ounce gold price and a 0.85 U.S./Canadian dollar exchange rate. Costs of sales are expected to come in around $17-million to $20-million, or $5.75 (U.S.) to $6.75 (U.S.) per ounce, generating a mine operating profit of approximately $19-million before taxes.
Once the company completes its review of expanded production plans for the recently announced acquisition of the Unidad Bolanitos mines and plant in Guanajuato, Mexico, a revised 2007 forecast including Bolanitos will be released at the end of the second quarter.
The company's operations were previously undertaken by private corporations and in remote locations in Mexico. The officers and staff of those private corporations have previously not been required to maintain disclosure controls or internal controls over financial reporting to the same standard now required. The company has taken steps to improve its internal controls through the appointment of more experienced and qualified staff in Mexico and Canada, and through the hiring of specialist services, particularly in relation to local Mexican taxation regulatory matters. Significant time has been spent by senior financial staff on proving balances in the Mexican subsidiaries as at Dec. 31, 2006. More rigorous reporting and control standards have been introduced since year-end. Management and senior financial staff will continue to closely monitor the financial reporting from the operations in Mexico. Management and the audit committee intend to engage additional external audit services to perform additional procedures, including the testing of internal controls and the review of the accuracy of financial reporting progressively through 2007, until the control weaknesses are remedied (see management's discussion and analysis for Dec. 31, 2006, for further comments).
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