In a choppy market, the stock of Endeavor Silver (EXK 7.74%) stood out as it hit 20.6% in early morning trading today. The penny silver stock lost ground as the day progressed, but was still trading up 12.3% as of 12:40 a.m. ET Wednesday.
The silver miner, which operates in Mexico, easily beat analysts’ estimates on its first-quarter numbers and is now bracing for strong growth in the second quarter.
Here are some key numbers from Endeavor Silver’s first quarter earnings report (all changes are year over year):
- Silver ounces produced: +25%.
- All-In Sustaining Cost (AISC): Up to 5% at $20.90 per ounce.
- Revenue: up 67% to $57.7 million.
- Net income: down 5% to $11.7 million.
- Adjusted net income: up 357% to $11.7 million.
The market did not expect such strong growth in revenue and adjusted earnings from Endeavor Silver. Although the miner realized lower prices on the silver it sold in the quarter compared to the first quarter of last year, its sales volumes increased significantly. However, Endeavor Silver’s AISC, which is a key cost metric for the mining industry, still rose during the quarter due to higher input costs and capital expenditures.
Encouraged by Endeavor Silver’s strong first quarter, CEO Dan Dickson is confident of meeting 2022 production guidance, which includes silver production of 4.2-4.8 million ounces and AISC of $20 to $21 per ounce. Note that his forecast calls for a drop of nearly 7.5% from last year, and that’s partly because of a mine he closed last year.
Endeavor Silver is considering two major milestones in the second quarter: obtaining financing for the Terronera project in Mexico, which is at an advanced stage of development, and the acquisition of the Pitarrilla mine in Mexico from SSR Mining for $70 million.
Pitarrilla is an undeveloped silver mine, but is considered one of the largest such mines in the world based on its mineral resource estimate. Endeavor Silver currently has two operating mines, and if it can acquire and develop Pitarrilla as planned in the coming years, it should become a much bigger and stronger silver mining company.