Endeavour Silver Corp. EXK recently restarted processing activities at the Guanacevi mine site after implementing temporary modifications.
Mechanical Mishap
The unexpected failure of the primary ball mill’s trunnion on Aug 12, 2024, led to a halt in material processing at the Guanacevi mill.
Modified Operations
Endeavour Silver swiftly made adjustments to repurpose one of the regrind mills as the primary ball mill to resume operations. However, for the time being, mining operations will run at a reduced rate of 400 tons per day (tpd) to ensure operational safety and long-term sustainability.
Path to Recovery
While operating at a reduced capacity, the plant aims to maintain a production rate of 500 tpd, approximately half of its typical output capacity of 1,200 tpd. Despite the challenges, the mining operation prioritizes delivering high-grade ore to the mill during this temporary phase.
Financial Impact
The company anticipates higher operating costs and all in-sustaining costs due to the diminished processing capacity for an estimated duration of 15 weeks. This setback follows an increase in operating costs and other sustaining expenses observed in the first half of 2024.
Production Projections
Consequently, Guanacevi’s silver production is forecasted to decline by 0.9-1.1 million ounces and gold production is expected to decrease by 2,000-3,000 ounces from the original projections. The overall silver production for 2024 is estimated at 4.4-4.6 million ounces, with expected gold production of 36,000-38,000 ounces.
Company Performance
Endeavour Silver’s silver-equivalent production for 2024 ranges between 7.3 million and 7.6 million ounces, with a reported 4.4 million silver-equivalent ounces in the first half of the year. Notably, the company experienced a 5% drop in silver-equivalent production in the second quarter of 2024 compared to the previous year.
Despite challenges in silver output at the Guanacevi mine and Bolañitos, gold production witnessed a 7% year-over-year growth, attributed to increased gold grades mined at both sites.
Price Performance and Industry Comparison
While EXK shares rose by 13.7% over the past year, the industry experienced a more substantial growth of 48.8%.
Stock Recommendations
Endeavour Silver currently holds a Zacks Rank #3 (Hold). Other notable stocks in the basic materials sector include Carpenter Technology Corporation CRS, IAMGOLD Corporation IAG, and Eldorado Gold Corporation EGO, all currently holding a Zacks Rank #1.
Analysis of these stocks shows positive growth projections, with significant earnings surprises and substantial share price increases over the past year.
