Condensed Consolidated Interim Financial Statements
Prepared by Management
Second Quarter Report
Three Months and Six Months Ended June 30, 2014 and 2013
ENDEAVOUR SILVER CORP. |
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION |
(Unaudited–Prepared by Management) |
(expressed in thousands of US dollars) |
June 30, | December 31, | ||||||||
Notes | 2014 | 2013 | |||||||
ASSETS | |||||||||
Current assets | |||||||||
Cash and cash equivalents | $ | 44,038 | $ | 35,004 | |||||
Investments | 4 | 1,539 | 1,463 | ||||||
Accounts receivable | 5 | 27,226 | 23,749 | ||||||
Inventories | 6 | 24,117 | 23,647 | ||||||
Prepaid expenses | 2,292 | 3,341 | |||||||
Total current assets | 99,212 | 87,204 | |||||||
Non-current deposits | 1,077 | 1,186 | |||||||
Mineral properties, plant and equipment | 8 | 269,038 | 278,533 | ||||||
Total assets | $ | 369,327 | $ | 366,923 | |||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||
Current liabilities | |||||||||
Accounts payable and accrued liabilities | $ | 20,651 | $ | 17,221 | |||||
Income taxes payable | 2,815 | 3,259 | |||||||
Derivative liabilities | 10 | - | 1,491 | ||||||
Revolving credit facility | 29,000 | 33,000 | |||||||
Total current liabilities | 52,466 | 54,971 | |||||||
Provision for reclamation and rehabilitation | 6,672 | 6,652 | |||||||
Contingent liability | 126 | 99 | |||||||
Deferred income tax liability | 42,134 | 49,053 | |||||||
Total liabilities | 101,398 | 110,775 | |||||||
Shareholders' equity | |||||||||
Common shares, unlimited shares authorized, no par value, issued and outstanding 101,456,014 shares (Dec 31, 2013 - 99,784,409 shares) | Page 4 | 365,406 | 358,408 | ||||||
Contributed surplus | Page 4 | 15,795 | 14,836 | ||||||
Accumulated comprehensive income (loss) | Page 4 | (4,005 | ) | (4,081 | ) | ||||
Deficit | (109,267 | ) | (113,015 | ) | |||||
Total shareholders' equity | 267,929 | 256,148 | |||||||
Total liabilities and shareholders' equity | $ | 369,327 | $ | 366,923 |
The accompanying notes are an integral part of the condensed consolidated interim financial statements.
Endeavour Silver Corp. | Page - 2 - |
ENDEAVOUR SILVER CORP. |
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME (LOSS) |
(Unaudited–Prepared by Management) |
(expressed in thousands of US dollars, except for shares and per share amounts) |
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | June 30, | June 30, | June 30, | ||||||||||
Notes | 2014 | 2013 | 2014 | 2013 | |||||||||
Revenue | $ | 54,774 | $ | 71,250 | $ | 107,774 | $ | 141,123 | |||||
Cost of sales: | |||||||||||||
Direct production costs | 34,849 | 44,746 | 62,069 | 81,633 | |||||||||
Royalties | 278 | 356 | 612 | 806 | |||||||||
Share-based compensation | 9 (a) | 219 | 202 | 287 | 277 | ||||||||
Depreciation and depletion | 14,709 | 13,149 | 28,782 | 25,223 | |||||||||
Write down of inventory to net realizable value | 6 | 365 | 6,383 | 365 | 7,878 | ||||||||
14 | 50,420 | 64,836 | 92,115 | 115,817 | |||||||||
Mine operating earnings | 4,354 | 6,414 | 15,659 | 25,306 | |||||||||
Expenses: | |||||||||||||
Exploration | 11 | 2,806 | 4,978 | 4,974 | 9,168 | ||||||||
General and administrative | 12 | 3,517 | 3,787 | 5,955 | 6,917 | ||||||||
6,323 | 8,765 | 10,929 | 16,085 | ||||||||||
Operating earnings (loss) | (1,969 | ) | (2,351 | ) | 4,730 | 9,221 | |||||||
Mark-to-market loss/(gain) on derivative liabilities | 10 | - | (2,386 | ) | 1,434 | (3,838 | ) | ||||||
Mark-to-market loss/(gain) on contingent liability | (14 | ) | (5,408 | ) | 27 | (7,899 | ) | ||||||
Finance costs | 256 | 531 | 702 | 778 | |||||||||
Other income (expense): | |||||||||||||
Foreign exchange | 445 | (2,439 | ) | 188 | (1,039 | ) | |||||||
Investment and other income | 83 | 371 | 267 | 2,349 | |||||||||
528 | (2,068 | ) | 455 | 1,310 | |||||||||
Earnings (loss) before income taxes | (1,683 | ) | 2,844 | 3,022 | 21,490 | ||||||||
Income tax expense: | |||||||||||||
Current income tax expense | 3,250 | 4,363 | 6,192 | 6,199 | |||||||||
Deferred income tax expense (recovery) | (4,644 | ) | (1,158 | ) | (6,918 | ) | 1,295 | ||||||
(1,394 | ) | 3,205 | (726 | ) | 7,494 | ||||||||
Net earnings (loss) for the period | (289 | ) | (361 | ) | 3,748 | 13,996 | |||||||
Other comprehensive income (loss), net of tax | |||||||||||||
Net change in fair value of available for sale investments | 4 | 68 | (4,242 | ) | 76 | (3,929 | ) | ||||||
�� | |||||||||||||
Comprehensive income (loss) for the period | $ | (221 | ) | $ | (4,603 | ) | $ | 3,824 | $ | 10,067 | |||
Basic earnings (loss) per share based on net earnings | $ | (0.00 | ) | $ | (0.00 | ) | $ | 0.04 | $ | 0.14 | |||
Diluted earnings (loss) per share based on net earnings | 9 (c) | $ | (0.00 | ) | $ | (0.00 | ) | $ | 0.04 | $ | 0.10 | ||
Basic weighted average number of shares outstanding | 101,336,743 | 99,710,933 | 100,985,709 | 99,685,615 | |||||||||
Diluted weighted average number of shares outstanding | 9 (c) | 102,048,413 | 99,710,933 | 101,920,835 | 101,828,232 |
The accompanying notes are an integral part of the condensed consolidated interim financial statements.
Endeavour Silver Corp. | Page - 3 - |
ENDEAVOUR SILVER CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
(Unaudited– Prepared by Management)
(expressed in thousands of U.S. dollars, except share amounts)
Accumulated | |||||||||||||||||||
other | |||||||||||||||||||
Number of | Share | Contributed | comprehensive | Total | |||||||||||||||
Note | shares | Capital | Surplus | income (loss) | Deficit | Equity | |||||||||||||
December 31, 2012 | 99,541,522 | $ | 357,296 | $ | 12,828 | $ | (5,331 | ) | $ | (24,597 | ) | $ | 340,196 | ||||||
Exercise of options | 9 (a) | 133,000 | 698 | (244 | ) | 454 | |||||||||||||
Exercise of warrants | 9 (b), 10 | - | - | - | - | ||||||||||||||
Share appreciation rights | 9 (a) | 66,488 | 234 | (234 | ) | - | |||||||||||||
Share-based compensation | 9 (a) | 1,939 | 1,939 | ||||||||||||||||
Unrealized gain (loss) on available for sale assets | 4 | (1,755 | ) | (1,755 | ) | ||||||||||||||
Realized gain (loss) on available for sale assets | 4 | (2,174 | ) | (2,174 | ) | ||||||||||||||
Expiry and forfeiture of options | (960 | ) | 960 | - | |||||||||||||||
Net earnings for the period | 13,996 | 13,996 | |||||||||||||||||
June 30, 2013 | 99,741,010 | 358,228 | 13,329 | (9,260 | ) | (9,641 | ) | 352,656 | |||||||||||
Exercise of options | 9 (a) | 6,000 | 32 | (11 | ) | 21 | |||||||||||||
Exercise of warrants | 9 (b), 10 | 37,399 | 148 | - | 148 | ||||||||||||||
Share-based compensation | 9 (a) | 1,605 | 1,605 | ||||||||||||||||
Unrealized gain (loss) on available for sale assets | 4 | 6,096 | 6,096 | ||||||||||||||||
Realized gain (loss) on available for sale assets | 4 | (917 | ) | (917 | ) | ||||||||||||||
Expiry and forfeiture of options | (87 | ) | 87 | - | |||||||||||||||
Loss for the period | (103,461 | ) | (103,461 | ) | |||||||||||||||
December 31, 2013 | 99,784,409 | 358,408 | 14,836 | (4,081 | ) | (113,015 | ) | 256,148 | |||||||||||
Exercise of options | 9 (a) | 515,700 | 1,872 | (725 | ) | 1,147 | |||||||||||||
Exercise of warrants | 9 (b), 10 | 1,155,905 | 5,126 | (248 | ) | 4,878 | |||||||||||||
Share-based compensation | 9 (a) | 1,932 | 1,932 | ||||||||||||||||
Unrealized gain (loss) on available for sale assets | 4 | 76 | 76 | ||||||||||||||||
Net earnings for the period | 3,748 | 3,748 | |||||||||||||||||
June 30, 2014 | 101,456,014 | $ | 365,406 | $ | 15,795 | $ | (4,005 | ) | $ | (109,267 | ) | $ | 267,929 |
The accompanying notes are an integral part of the condensed consolidated interim financial statements.
Endeavour Silver Corp. | Page - 4- |
ENDEAVOUR SILVER CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(Unaudited– Prepared by Management)
(expressed in thousands of U.S. dollars)
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | June 30 | June 30, | June 30 | ||||||||||
Notes | 2014 | 2013 | 2014 | 2013 | |||||||||
Operating activities | |||||||||||||
Net earnings (loss) for the period | $ | (289 | ) | $ | (361 | ) | $ | 3,748 | $ | 13,996 | |||
Items not affecting cash: | |||||||||||||
Share-based compensation | 9 (a) | 1,473 | 1,376 | 1,932 | 1,939 | ||||||||
Depreciation and depletion | 14,776 | 13,228 | 28,931 | 25,376 | |||||||||
Deferred income tax expense (recovery) | (4,644 | ) | (1,158 | ) | (6,918 | ) | 1,295 | ||||||
Unrealized foreign exchange loss (gain) | (20 | ) | 687 | (23 | ) | 602 | |||||||
Mark-to-market loss (gain) on derivative liability | 10 | - | (2,386 | ) | 1,434 | (3,838 | ) | ||||||
Mark-to-market loss (gain) on contingent liability | (14 | ) | (5,408 | ) | 27 | (7,899 | ) | ||||||
Finance costs | 266 | 35 | 702 | 152 | |||||||||
Write down of inventory to net realizable vallue | 6 | 365 | 6,383 | 365 | 7,878 | ||||||||
Gain on sale of investments | 4 | - | - | - | (1,777 | ) | |||||||
Net changes in non-cash working capital | 13 | 1,497 | 7,282 | 319 | (8,508 | ) | |||||||
Cash from operating activities | 13,410 | 19,678 | 30,517 | 29,216 | |||||||||
Investing activites | |||||||||||||
Property, plant and equipment expenditures | 8 | (10,798 | ) | (31,641 | ) | (20,032 | ) | (60,357 | ) | ||||
Investment in short term investments | - | - | - | (130 | ) | ||||||||
Proceeds from sale of short term investments | - | - | - | 4,720 | |||||||||
Cash used in investing activities | (10,798 | ) | (31,641 | ) | (20,032 | ) | (55,767 | ) | |||||
Financing activities | |||||||||||||
Proceeds from (repayments of) revolving credit facility | (3,000 | ) | 6,000 | (4,000 | ) | 30,000 | |||||||
Exercise of options and warrants | 9 (a)(b) | 373 | 161 | 3,100 | 454 | ||||||||
Interest paid | (262 | ) | (90 | ) | (573 | ) | (132 | ) | |||||
Cash from (used in) financing activites | (2,889 | ) | 6,071 | (1,473 | ) | 30,322 | |||||||
Effect of exchange rate change on cash and cash equivalents | 20 | (164 | ) | 22 | (79 | ) | |||||||
Increase (decrease) in cash and cash equivalents | (277 | ) | (5,892 | ) | 9,012 | 3,771 | |||||||
Cash and cash equivalents, beginning of period | 44,295 | 28,365 | 35,004 | 18,617 | |||||||||
Cash and cash equivalents, end of period | $ | 44,038 | $ | 22,309 | $ | 44,038 | $ | 22,309 | |||||
Supplementary cash flow information | 13 |
The accompanying notes are an integral part of the condensed consolidated interim financial statements.
Endeavour Silver Corp. | Page - 5 - |
ENDEAVOUR SILVER CORP.
Notes to the Condensed Consolidated Interim Financial Statements
Three and Six months ended June 30, 2014 and 2013
(Unaudited – Prepared by Management)
(expressed in thousands of US dollars, unless otherwise stated)
1. | CORPORATE INFORMATION |
Endeavour Silver Corp. (the “Company” or “Endeavour Silver”) is a corporation governed by the Business Corporation Act | |
(British Columbia). The Company is engaged in silver mining in Mexico and related activities including acquisition, exploration, development, extraction, processing, refining and reclamation. The Company is also engaged in exploration activities in Chile. The address of the registered office is #301 – 700 West Pender Street, Vancouver, B.C., V6C 1G8. | |
2. | BASIS OF PRESENTATION |
These condensed consolidated interim financial statements have been prepared in accordance with IAS 34Interim Financial Reportingand do not include all of the information required for full annual financial statements. | |
The Board of Directors approved the condensed consolidated interim financial statements for issue on August 8, 2014. | |
The preparation of interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. | |
These condensed consolidated interim financial statements are presented in the Company’s functional currency of US dollars and include the accounts of the Company and its wholly owned subsidiaries: Endeavour Management Corp., Endeavour Zilver SARL, Endeavour Gold Corporation S.A. de C.V., Endeavour Capital S.A. de C.V. SOFOM ENR, Minera Santa Cruz Y Garibaldi S.A de C.V., Metalurgica Guanacevi S.A. de C.V., Minera Plata Adelante S.A. de C.V., Refinadora Plata Guanacevi S.A. de C. V., Minas Bolanitos S. A. de C.V., Guanacevi Mining Services S.A. de C.V., Recursos Humanos Guanacevi S.A. de C.V., Recursos Villalpando S.A. de C.V., Servicios Administrativos Varal S.A. de C.V., Minera Plata Carina Spa, MXRT Holding Ltd., Compania Minera El Cubo S.A. de C.V., Minas Lupycal S.A. de C.V. and Metales Interamericanos S.A. de C.V. All intercompany transactions and balances have been eliminated upon consolidation of these subsidiaries. | |
3. | SIGNIFICANT ACCOUNTING POLICIES |
The accounting policies applied in these condensed consolidated interim financial statements are the same as those applied in the Company’s annual audited consolidated financial statements as at and for the year ended December 31, 2013, except as noted in Note 3(a). | |
In preparing these condensed consolidated interim financial statements, the significant judgments made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the annual consolidated financial statements as at and for the year ended December 31, 2013. In addition, the following accounting policy has been further defined for these condensed consolidated interim financial statements. |
(a) | Changes in International Financial Reporting Standards (IFRS) |
The Company has adopted the following new standards, along with any consequential amendments, effective January 1, 2014. These changes were made in accordance with the applicable transitional provisions. | |
IFRIC 21 | |
In May 2013, the IASB issued IFRIC 21,Levies,which provides guidance on accounting for levies in accordance with the requirements of IAS 37,Provisions, Contingent Liabilities and Contingent Assets. The interpretation defines a levy as an outflow from an entity imposed by a government in accordance with legislation. It also notes that levies do not arise from executor contracts or other contractual arrangements. The interpretation also confirms that an entity recognizes a liability for a levy only when the triggering event specified in the legislation occurs. IFRIC 21 was applied retrospectively with no material impact on the consolidated financial statements. | |
(b) | Changes in IFRS Not Yet Adopted |
New standards and amendments have been proposed; however, they do not impact the condensed consolidated interim financial statements and are not anticipated to impact the Company’s annual consolidated financial statements. The nature and impact of each new standard and amendment applicable to the Company are described below: | |
IFRS 9 Financial Instruments | |
In November 2009, the IASB issued IFRS 9,Financial Instruments,as the first step in its project to replace IAS 39,Financial Instruments: Recognition and Measurement. IFRS 9 retains but simplifies the mixed measurement model and establishes two primary measurement categories for financial assets: amortized cost and fair value. The basis of classification depends on an entity’s business model and the contractual cash flows of the financial asset. |
Endeavour Silver Corp. | Page - 6 - |
ENDEAVOUR SILVER CORP.
Notes to the Condensed Consolidated Interim Financial Statements
Three and Six months ended June 30, 2014 and 2013
(Unaudited – Prepared by Management)
(expressed in thousands of US dollars, unless otherwise stated)
Classification is made at the time the financial asset is initially recognized, namely when the entity becomes a party to the contractual provisions of the instrument. | |
IFRS 9 amends some of the requirements of IFRS 7,Financial Instruments: Disclosures, including added disclosures about investments in equity instruments measured at fair value in Other Comprehensive Income, and guidance on the measurement of financial liabilities and de-recognition of financial instruments. In February 2014, the International Accounting Standards Board issued an amendment that tentatively decided the mandatory effective date of IFRS 9 will be for periods on or after January 1, 2018. The Company is currently assessing the impact of adopting IFRS 9 on its consolidated financial statements. | |
IFRS 15,Revenue from Contract with Customers | |
On May 28, 2014, the IASB issued IFRS 15. The new standard is effective for fiscal years ending on or after December 31, 2017 and is available for early adoption. IFRS 15 will replace IAS 11Construction Contracts, IAS 18Revenue, IFRIC 13 | |
Customer Loyalty Programmes, IFRIC 15Agreements for the Construction of Real Estate, IFRIC 18Transfer of Assets from Customersand SIC 31 Revenue –Barter Transactions Involving Advertising Services. | |
The standard contains a single model that applies to contracts with customers and two approaches to recognizing revenue: at a point in time or over time. The model features a contract-based five-step analysis of transactions to determine whether, how much and when revenue is recognized. New estimates and judgmental thresholds have also been introduced, which may affect the amount and/or timing of revenue recognized. | |
The Company intends to adopt IFRS 15 in its consolidated financial statements for the annual period beginning on January 1, 2017. The extent of the impact of adoption of the standard has not yet been determined. | |
The Company has not early adopted any other standard, interpretation or amendment in the condensed consolidated interim financial statements that have been issued, but not yet effective. | |
4. | INVESTMENTS |
June 30 | December 31 | ||||||
2014 | 2013 | ||||||
Investment in marketable securities, at cost | $ | 5,544 | $ | 5,544 | |||
Unrealized gain (loss) on marketable securities | (3,712 | ) | (3,772 | ) | |||
Unrealized foreign exchange gain (loss) | (293 | ) | (309 | ) | |||
$ | 1,539 | $ | 1,463 |
The marketable securities are classified as Level 1 in the fair value hierarchy (see Note 15) and as available for sale financial assets. The fair value of available for sale investments are determined based on a market approach reflecting the closing price of each particular security at the reporting date. The closing price is a quoted market price obtained from the exchange that is the principal active market for the particular security, being the market with the greatest volume and level of activity for the assets. | |
5. | ACCOUNTS RECEIVABLE |
June 30 | December 31 | |||||||||
Note | 2014 | 2013 | ||||||||
Trade receivables | $ | 10,175 | $ | 10,263 | ||||||
IVA receivables | 14,873 | 12,717 | ||||||||
Income taxes receivables | 1,647 | 411 | ||||||||
Due from related parties | 7 | 237 | 248 | |||||||
Other receivables | 294 | 110 | ||||||||
$ | 27,226 | $ | 23,749 |
The trade receivables consist of receivables from provisional silver and gold sales from the Bolanitos and El Cubo mines. The fair value of receivables arising from concentrate sales contracts that contain provisional pricing mechanisms is determined using the appropriate quoted closing price on the measurement date from the exchange that is the principal active market for the particular metal. As such, these receivables, which meet the definition of an embedded derivative, are classified within Level 1 of the fair value hierarchy (see Note 15).
Endeavour Silver Corp. | Page - 7 - |
ENDEAVOUR SILVER CORP.
Notes to the Condensed Consolidated Interim Financial Statements
Three and Six months ended June 30, 2014 and 2013
(Unaudited – Prepared by Management)
(expressed in thousands of US dollars, unless otherwise stated)
6. | INVENTORIES |
June 30 | December 31 | ||||||
2014 | 2013 | ||||||
Warehouse inventory | $ | 10,476 | $ | 10,522 | |||
Stockpile inventory(1) | 7,950 | 8,530 | |||||
Finished Goods inventory(2)(3) | 4,871 | 1,023 | |||||
Work in process inventory(3) | 820 | 3,572 | |||||
$ | 24,117 | $ | 23,647 |
(1) | The Company stockpiled 96,757 tonnes of mined ore as of June 30, 2014 (December 31, 2013 – 128,604 tonnes) | |
(2) | The Company held 206,590 silver ounces and 1,538 gold ounces in finished goods as of June 30, 2014 (December 31, 2013 – 51,000 and 198, respectively). These ounces are carried at the lesser of cost and net realizable value. As at June 30, 2014, the quoted market value of the silver ounces was $4,312 (December 31, 2013 - $995) and the quoted market value of the gold ounces was $2,022 (December 31, 2013 - $238). | |
(3) | The finished goods inventory balance at June 30, 2014 includes a write down to net realizable value of $365 for the finished goods inventory held by the El Cubo mine. The work in process inventory balances at December 31, 2013 includes a write down to net realizable value of $664 for work in process inventory held by the El Cubo mine. |
7. | RELATED PARTY TRANSACTIONS |
The Company shares common administrative services and office space with a related party company, with a director in common and from time to time will incur third party costs on behalf of the related party on a full cost recovery basis. The Company has a $237 net receivable related to administration costs and other items outstanding as of June 30, 2014 (December 31, 2013 – $248). | |
The Company was charged $64 for the six months ended June 30, 2014 for legal services from a legal firm in which the Company’s Corporate Secretary is a partner (June 30, 2013 - $90). The Company has a $Nil payable related to legal costs outstanding as of June 30, 2014 (December 31, 2013- $8). |
Endeavour Silver Corp. | Page -8 - |
ENDEAVOUR SILVER CORP.
Notes to the Condensed Consolidated Interim Financial Statements
Three and Six months ended June 30, 2014 and 2013
(Unaudited – Prepared by Management)
(expressed in thousands of US dollars, unless otherwise stated)
8. | MINERAL PROPERTIES, PLANT AND EQUIPMENT |
Mineral properties, plant and equipment comprise: |
Mineral | Machinery & | Transport & | |||||||||||||||||
property | Plant | equipment | Building | office equipment | Total | ||||||||||||||
Cost | |||||||||||||||||||
Balance at December 31, 2012 | $ | 329,314 | $ | 51,885 | $ | 40,334 | $ | 6,721 | $ | 6,027 | $ | 434,281 | |||||||
Additions | 38,761 | 35,034 | 11,675 | 1,977 | 1,218 | 88,665 | |||||||||||||
Disposals | - | (16 | ) | - | - | (114 | ) | (130 | ) | ||||||||||
Balance at December 31, 2013 | 368,075 | 86,903 | 52,009 | 8,698 | 7,131 | 522,816 | |||||||||||||
Additions | 14,955 | 2,265 | 2,131 | 391 | 275 | 20,017 | |||||||||||||
Disposals | - | - | - | - | (27 | ) | (27 | ) | |||||||||||
Balance at June 30, 2014 | $ | 383,030 | $ | 89,168 | $ | 54,140 | $ | 9,089 | $ | 7,379 | $ | 542,806 | |||||||
Accumulated amortization | |||||||||||||||||||
Balance at December 31, 2012 | $ | 72,231 | $ | 11,459 | $ | 8,559 | $ | 1,014 | $ | 2,587 | $ | 95,850 | |||||||
Amortization | 39,091 | 5,964 | 5,319 | 703 | 1,634 | 52,711 | |||||||||||||
Impairment | 81,743 | 14,072 | - | - | - | 95,815 | |||||||||||||
Disposals | - | - | - | - | (93 | ) | (93 | ) | |||||||||||
Balance at December 31, 2013 | 193,065 | 31,495 | 13,878 | 1,717 | 4,128 | 244,283 | |||||||||||||
Amortization | 22,480 | 2,878 | 3,060 | 377 | 717 | 29,512 | |||||||||||||
Disposals | - | - | - | - | (27 | ) | (27 | ) | |||||||||||
Balance at June 30, 2014 | $ | 215,545 | $ | 34,373 | $ | 16,938 | $ | 2,094 | $ | 4,818 | $ | 273,768 | |||||||
Net book value | |||||||||||||||||||
At December 31, 2013 | $ | 175,010 | $ | 55,408 | $ | 38,131 | $ | 6,981 | $ | 3,003 | $ | 278,533 | |||||||
At June 30, 2014 | $ | 167,485 | $ | 54,795 | $ | 37,202 | $ | 6,995 | $ | 2,561 | $ | 269,038 |
As of June 30, 2014, the Company had $163 committed to capital equipment purchases. | |
9. | SHARE CAPITAL |
(a) | Purchase Options |
Options to purchase common shares of the Company have been granted to directors, officers, employees and consultants pursuant to the Company’s current stock option plan approved by the Company’s shareholders in fiscal 2009 and ratified in 2012, at exercise prices determined by reference to the market value of the Company’s common shares on the date of grant. The stock option plan allows for, with approval by the Board, granting of options to its directors, officers, employees and consultants to acquire up to 7.5% of the issued and outstanding shares at any time. |
Endeavour Silver Corp. | Page - 9 - |
ENDEAVOUR SILVER CORP.
Notes to the Condensed Consolidated Interim Financial Statements
Three and Six months ended June 30, 2014 and 2013
(Unaudited – Prepared by Management)
(expressed in thousands of US dollars, unless otherwise stated)
The following table summarizes the status of the Company’s stock option plan and change during the periods presented:
Expressed in Canadian dollars | Period Ended | Year Ended | |||||||||||
June 30, 2014 | December 31, 2013 | ||||||||||||
Weighted | Weighted | ||||||||||||
average | average | ||||||||||||
Number | exercise | Number | exercise | ||||||||||
of Shares | price | of Shares | price | ||||||||||
Outstanding, beginning of period | 5,695,550 | $ | 5.26 | 4,171,450 | $ | 5.87 | |||||||
Granted | 1,925,000 | $ | 4.67 | 2,022,500 | $ | 4.12 | |||||||
Exercised(1) | (515,700 | ) | $ | 2.43 | (259,000 | ) | $ | 3.56 | |||||
Cancelled | - | - | (239,400 | ) | $ | 8.20 | |||||||
Outstanding, end of period | 7,104,850 | $ | 5.30 | 5,695,550 | $ | 5.26 | |||||||
Options exercisable at period-end | 4,751,400 | $ | 5.71 | 4,307,550 | $ | 5.45 |
(1)There were nil options cancelled in exchange for share appreciation rights in the period ended June 30, 2014 (June 30, 2013 – 120,000 options priced at CAN $3.67 cancelled in exchange for 66,488 share appreciation rights).
The following tables summarize information about stock options outstanding at June 30, 2014:
Expressed in Canadian dollars | ||||||
Options Outstanding | Options Exercisable | |||||
Weighted | ||||||
Number | Average | Weighted | Number | Weighted | ||
CAN $ | Outstanding | Remaining | Average | Exercisable | Average | |
Price | as at | Contractual Life | Exercise | as at | Exercise | |
Intervals | June 30, 2014 | (Number of Years) | Prices | June 30, 2014 | Prices | |
$3.00 - $3.99 | 1,267,400 | 0.8 | $3.56 | 1,267,400 | $3.56 | |
$4.00 - $4.99 | 3,911,800 | 4.4 | $4.39 | 1,562,800 | $4.26 | |
$8.00 - $8.99 | 1,925,650 | 2.4 | $8.31 | 1,921,200 | $8.31 | |
7,104,850 | 3.2 | $5.30 | 4,751,400 | $5.71 |
During the six month period ended June 30, 2014, the Company recognized share-based compensation expense of $1,932 (June 30, 2013 - $1,939) based on the fair value of the vested portion of options granted in the current and prior periods. | |
(b) | Warrants |
The following table summarizes information about share purchase warrants outstanding at June 30, 2014: |
Exercise | Oustanding at | Oustanding at June | ||||
Price | Expiry Dates | December 31, 2013 | Issued | Exercised | Expired | 30, 2014 |
CAN $ | ||||||
$1.90 | February 25, 2014 | 475,000 | - | (475,000) | - | - |
$1.51 | February 25, 2014 | 25,292 | - | (25,292) | - | - |
$1.90 | February 26, 2014 | 322,207 | - | (322,207) | - | - |
$2.05 | February 26, 2014 | 374,468 | - | (374,468) | - | - |
1,196,967 | - | (1,196,967) | - | - |
The warrants with an expiry date of February 26, 2014, consisting of agents’ warrants issued for placing debentures and warrants issued on conversion of debentures, were eligible to be exercised “cashless” in which event no payment of the exercise price is required and the holder receives the number of shares based upon the intrinsic value of the warrants over the five day trading average prior to exercise. For the period ended June 30, 2014, 85,525 warrants (June 30, 2013 – nil) were elected by the holders to be exercised “cashless” resulting in 44,463 shares (June 30, 2013 – nil) being issued.
Endeavour Silver Corp. | Page - 10 - |
ENDEAVOUR SILVER CORP.
Notes to the Condensed Consolidated Interim Financial Statements
Three and Six months ended June 30, 2014 and 2013
(Unaudited – Prepared by Management)
(expressed in thousands of US dollars, unless otherwise stated)
(c) | Diluted Earnings per Share |
Three Months ended | ||||||||||
June 30 | June 30 | |||||||||
Note | 2014 | 2013 | ||||||||
Basic earnings (loss) | $ | (289 | ) | $ | (361 | ) | ||||
Effect of dilutive securities | - | - | ||||||||
Diluted earnings (loss) | $ | (289 | ) | $ | (361 | ) | ||||
Basic weighted average number of shares outstanding | 101,336,743 | 99,710,933 | ||||||||
Effect of dilutive securities | - | - | ||||||||
Diluted weighted average number of share outstanding | 101,336,743 | 99,710,933 | ||||||||
Diluted earnings per share | $ | (0.00 | ) | $ | (0.00 | ) |
Six Months ended | ||||||||||
June 30 | June 30 | |||||||||
Note | 2014 | 2013 | ||||||||
Basic earnings | $ | 3,748 | $ | 13,996 | ||||||
Effect of dilutive securities: | ||||||||||
Mark to market (gain) on warrant derivative liability | 10 | - | (3,838 | ) | ||||||
Diluted earnings | $ | 3,748 | $ | 10,158 | ||||||
Basic weighted average number of shares outstanding | 100,979,486 | 99,685,615 | ||||||||
Effect of dilutive securities: | ||||||||||
Stock options | 941,349 | 1,319,684 | ||||||||
Share purchase warrants | - | 233,386 | ||||||||
Share purchase warrants with embedded derivative liabilities | - | 589,547 | ||||||||
Diluted weighted average number of share outstanding | 101,920,835 | 101,828,232 | ||||||||
Diluted earnings per share | $ | 0.04 | $ | 0.10 |
Endeavour Silver Corp. | Page - 11 - |
ENDEAVOUR SILVER CORP.
Notes to the Condensed Consolidated Interim Financial Statements
Three and Six months ended June 30, 2014 and 2013
(Unaudited – Prepared by Management)
(expressed in thousands of US dollars, unless otherwise stated)
10. | DERIVATIVE LIABILITIES |
Warrants | |
Equity offerings were completed in previous periods whereby warrants were issued with exercise prices denominated in Canadian dollars. As the warrants had an exercise price denominated in a currency which is different from the functional currency of the Company (U.S. dollar), the warrants were treated as a financial liability. The Company’s share purchase warrants were classified and accounted for as a financial liability at fair value with changes in fair value recognized in net earnings. The warrant derivative liability was classified as level 2 in the fair value hierarchy (see Note 15). The publicly traded warrants and warrants with similar characteristics were valued using the quoted market price as of exercise or at period end, from the market with the greatest volume and level of activity. For the non-publicly traded warrants, the Company uses the Black-Scholes option pricing model to estimate the fair value of the Canadian dollar denominated warrants. All warrants outstanding as at December 31, 2013 were exercised during the period ended June 30, 2014. |
Balance at December 31, 2012 | $ | 5,336 | ||
Exercise of financial liability | - | |||
Mark to market loss (gain) | (3,838 | ) | ||
Balance at June 30, 2013 | 1,498 | |||
Exercise of financial liability | (95 | ) | ||
Mark to market loss (gain) | 88 | |||
Balance at December 31, 2013 | 1,491 | |||
Exercise of financial liability | (2,925 | ) | ||
Mark to market loss (gain) | 1,434 | |||
Balance at June 30, 2014 | $ | - |
Assumptions used in the Black-Scholes model to estimate the fair value of the warrant derivative liability:
Period Ended | Year Ended | |||
Jun 30, 2014 | Dec 31, 2013 | |||
Outstanding warrants | - | 849,468 | ||
Weighted average fair value of warrants at period end | - | $1.75 | ||
Risk-free interest rate | - | 0.88% | ||
Expected dividend yield | - | 0% | ||
Expected stock price volatility | - | 45% | ||
Expected warrant life in years | - | 0.2 |
Black-Scholes pricing models require the input of highly subjective assumptions. Volatility was estimated based on average daily volatility based on historical share price observations over the expected life of the warrants.
Endeavour Silver Corp. | Page - 12 - |
ENDEAVOUR SILVER CORP.
Notes to the Condensed Consolidated Interim Financial Statements
Three and Six months ended June 30, 2014 and 2013
(Unaudited – Prepared by Management)
(expressed in thousands of US dollars, unless otherwise stated)
11. | EXPLORATION |
Three month ended | Six months ended | ||||||||||||
June 30 | June 30 | June 30 | June 30 | ||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
Depreciation and depletion | $ | 32 | $ | 33 | $ | 67 | $ | 67 | |||||
Share-based compensation | 107 | 66 | 132 | 66 | |||||||||
Salaries, wages and benefits | 624 | 1,001 | 1,111 | 1,629 | |||||||||
Direct costs | 2,043 | 3,878 | 3,664 | 7,406 | |||||||||
$ | 2,806 | $ | 4,978 | $ | 4,974 | $ | 9,168 |
12. | GENERAL AND ADMINISTRATIVE |
Three months ended | Six months ended | ||||||||||||
June 30 | June 30 | June 30 | June 30 | ||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
Depreciation and depletion | $ | 44 | $ | 46 | $ | 82 | $ | 86 | |||||
Share-based compensation | 1,147 | 1,108 | 1,513 | 1,596 | |||||||||
Salaries, wages and benefits | 1,287 | 1,888 | 2,335 | 3,093 | |||||||||
Direct costs | 1,039 | 745 | 2,025 | 2,142 | |||||||||
$ | 3,517 | $ | 3,787 | $ | 5,955 | $ | 6,917 |
13. | SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS |
Six Months Ended | |||||||
June 30 | June 30 | ||||||
2014 | 2013 | ||||||
Net changes in non-cash working capital | |||||||
Accounts receivable | $ | (3,488 | ) | $ | (8,824 | ) | |
Inventories | (239 | ) | 4,479 | ||||
Prepaid expenses | 1,049 | 1,859 | |||||
Due from related parties | 11 | (72 | ) | ||||
Accounts payable and accrued liabilities | 3,430 | (3,586 | ) | ||||
Income taxes payable | (444 | ) | (2,364 | ) | |||
$ | 319 | $ | (8,508 | ) | |||
Non-cash financing and investing activities: | |||||||
Fair value of exercised options allocated to share capital | $ | 725 | $ | 244 | |||
Fair value of shares issued under the share appreciation rights plan | - | 234 | |||||
Fair value of exercised agent warrants allocated to share capital | 248 | - | |||||
Other cash disbursements: | |||||||
Income taxes paid | $ | 7,844 | $ | 8,668 |
Endeavour Silver Corp. | Page - 13 - |
ENDEAVOUR SILVER CORP.
Notes to the Condensed Consolidated Interim Financial Statements
Three and Six months ended June 30, 2014 and 2013
(Unaudited – Prepared by Management)
(expressed in thousands of US dollars, unless otherwise stated)
14. | SEGMENT DISCLOSURES |
The Company’s operating segments are based on internal management reports that are reviewed by the Company’s executives (the chief operating decision makers) in assessing performance. The Company has three operating mining segments, Guanacevi, Bolanitos and El Cubo, which are located in Mexico as well as exploration and corporate segments. The exploration segment consists of projects in the exploration and evaluation phases in Mexico and Chile. |
June 30, 2014 | |||||||||||||||||||
Corporate | Exploration | Guanacevi | Bolanitos | El Cubo | Total | ||||||||||||||
Cash and cash equivalents | $ | 10,062 | $ | 100 | $ | 16,873 | $ | 16,561 | $ | 442 | $ | 44,038 | |||||||
Investments | 1,539 | - | - | - | - | 1,539 | |||||||||||||
Accounts receivables | 298 | 383 | 5,996 | 7,723 | 12,826 | 27,226 | |||||||||||||
Inventories | - | - | 9,610 | 9,440 | 5,067 | 24,117 | |||||||||||||
Prepaid expenses | 1,086 | 239 | 468 | 258 | 241 | 2,292 | |||||||||||||
Non-current deposits | 221 | 56 | 583 | 143 | 74 | 1,077 | |||||||||||||
Mineral property, plant and equipment | 253 | 4,305 | 26,513 | 45,582 | 192,385 | 269,038 | |||||||||||||
Total assets | $ | 13,459 | $ | 5,083 | $ | 60,043 | $ | 79,707 | $ | 211,035 | $ | 369,327 | |||||||
Accounts payable and accrued liabilities | $ | 4,325 | $ | 1,975 | $ | 4,051 | $ | 3,486 | $ | 6,814 | $ | 20,651 | |||||||
Income taxes payable | - | - | 3,199 | (381 | ) | (3 | ) | 2,815 | |||||||||||
Revolving credit facility | 29,000 | - | - | - | - | 29,000 | |||||||||||||
Provision for reclamation and rehabilitation | - | - | 1,854 | 1,041 | 3,777 | 6,672 | |||||||||||||
Contingent liability | 126 | - | - | - | - | 126 | |||||||||||||
Deferred income tax liability | (138 | ) | - | 2,477 | 17,039 | 22,756 | 42,134 | ||||||||||||
Total liabilities | $ | 33,313 | $ | 1,975 | $ | 11,581 | $ | 21,185 | $ | 33,344 | $ | 101,398 |
December 31, 2013 | |||||||||||||||||||
Corporate | Exploration | Guanacevi | Bolanitos | El Cubo | Total | ||||||||||||||
Cash and cash equivalents | $ | 6,991 | $ | 143 | $ | 9,696 | $ | 13,880 | $ | 4,294 | $ | 35,004 | |||||||
Investments | 1,463 | - | - | - | - | 1,463 | |||||||||||||
Accounts receivables | 374 | 78 | 3,204 | 9,807 | 10,286 | 23,749 | |||||||||||||
Inventories | - | - | 12,138 | 6,675 | 4,834 | 23,647 | |||||||||||||
Prepaid expenses | 1,562 | 242 | 517 | 220 | 800 | 3,341 | |||||||||||||
Non-current deposits | 331 | 56 | 582 | 143 | 74 | 1,186 | |||||||||||||
Mineral property, plant and equipment | 231 | 4,321 | 23,392 | 58,399 | 192,190 | 278,533 | |||||||||||||
Total assets | $ | 10,952 | $ | 4,840 | $ | 49,529 | $ | 89,124 | $ | 212,478 | $ | 366,923 | |||||||
Accounts payable and accrued liabilities | $ | 4,931 | $ | 365 | $ | 4,219 | $ | 2,713 | $ | 4,993 | $ | 17,221 | |||||||
Income taxes payable | 411 | - | - | 2,848 | - | 3,259 | |||||||||||||
Derivative liabilities | 1,491 | - | - | - | - | 1,491 | |||||||||||||
Revolving credit facility | 33,000 | - | - | - | - | 33,000 | |||||||||||||
Provision for reclamation and rehabilitation | - | - | 1,846 | 1,039 | 3,767 | 6,652 | |||||||||||||
Contingent liability | 99 | - | - | - | - | 99 | |||||||||||||
Deferred income tax liability | 172 | - | 2,090 | 20,372 | 26,419 | 49,053 | |||||||||||||
Total liabilities | $ | 40,104 | $ | 365 | $ | 8,155 | $ | 26,972 | $ | 35,179 | $ | 110,775 |
Endeavour Silver Corp. | Page - 14 - |
ENDEAVOUR SILVER CORP.
Notes to the Condensed Consolidated Interim Financial Statements
Three and Six months ended June 30, 2014 and 2013
(Unaudited – Prepared by Management)
(expressed in thousands of US dollars, unless otherwise stated)
Corporate | Exploration | Guanacevi | Bolanitos | El Cubo | Total | ||||||||||||||
Three months ended June 30, 2014 | |||||||||||||||||||
Silver revenue | $ | - | $ | - | $ | 19,077 | $ | 11,258 | $ | 5,323 | $ | 35,658 | |||||||
Gold revenue | - | - | 2,283 | 11,631 | 5,202 | 19,116 | |||||||||||||
Total revenue | $ | - | $ | - | $ | 21,360 | $ | 22,889 | $ | 10,525 | $ | 54,774 | |||||||
Salaries, wages and benefits: | |||||||||||||||||||
mining | $ | - | $ | - | $ | 2,039 | $ | 1,544 | $ | 2,583 | $ | 6,166 | |||||||
processing | - | - | 658 | 342 | 542 | 1,542 | |||||||||||||
administrative | - | - | 1,020 | 1,155 | 1,063 | 3,238 | |||||||||||||
stock based compensation | - | - | 72 | 73 | 74 | 219 | |||||||||||||
change in inventory | - | - | 180 | (7 | ) | 28 | 201 | ||||||||||||
Total salaries, wages and benefits | - | - | 3,969 | 3,107 | 4,290 | 11,366 | |||||||||||||
Direct costs: | |||||||||||||||||||
mining | - | - | 3,623 | 3,808 | 2,850 | 10,281 | |||||||||||||
processing | - | - | 3,366 | 4,573 | 2,065 | 10,004 | |||||||||||||
administrative | - | - | 720 | 728 | 864 | 2,312 | |||||||||||||
change in inventory | - | - | 784 | 142 | 179 | 1,105 | |||||||||||||
Total direct production costs | - | - | 8,493 | 9,251 | 5,958 | 23,702 | |||||||||||||
Depreciation and depletion: | |||||||||||||||||||
depreciation and depletion | - | - | 1,070 | 8,240 | 4,713 | 14,023 | |||||||||||||
change in inventory | - | - | 100 | 201 | 385 | 686 | |||||||||||||
Total depreciation and depletion | - | - | 1,170 | 8,441 | 5,098 | 14,709 | |||||||||||||
Royalties | - | - | 140 | 103 | 35 | 278 | |||||||||||||
Write down of inventory to NRV | - | - | - | - | 365 | 365 | |||||||||||||
Total cost of sales | $ | - | $ | - | $ | 13,772 | $ | 20,902 | $ | 15,746 | $ | 50,420 | |||||||
Earnings (loss) before taxes | $ | (3,231 | ) | $ | (2,806 | ) | $ | 7,588 | $ | 1,987 | $ | (5,221 | ) | $ | (1,683 | ) | |||
Current income tax expense | - | - | 2,333 | 964 | (47 | ) | 3,250 | ||||||||||||
Deferred income tax expense (recovery) | - | - | (50 | ) | (3,227 | ) | (1,367 | ) | (4,644 | ) | |||||||||
Total income tax expense (recovery) | - | - | 2,283 | (2,263 | ) | (1,414 | ) | (1,394 | ) | ||||||||||
Net earnings (loss) | $ | (3,231 | ) | $ | (2,806 | ) | $ | 5,305 | $ | 4,250 | $ | (3,807 | ) | $ | (289 | ) |
Three months ended June 30, 2013 | |||||||||||||||||||
Silver revenue | $ | - | $ | - | $ | 11,874 | $ | 21,688 | $ | 4,653 | $ | 38,215 | |||||||
Gold revenue | - | - | 2,250 | 26,572 | 4,213 | 33,035 | |||||||||||||
Total revenue | $ | - | $ | - | $ | 14,124 | $ | 48,260 | $ | 8,866 | $ | 71,250 | |||||||
Salaries, wages and benefits: | |||||||||||||||||||
mining | $ | - | $ | - | $ | 1,672 | $ | 1,928 | $ | 3,132 | $ | 6,732 | |||||||
processing | - | - | 677 | 625 | 557 | 1,859 | |||||||||||||
administrative | - | - | 917 | 1,253 | 1,535 | 3,705 | |||||||||||||
stock based compensation | - | - | 68 | 67 | 67 | 202 | |||||||||||||
change in inventory | - | - | (605 | ) | 1,546 | (146 | ) | 795 | |||||||||||
Total salaries, wages and benefits | - | - | 2,729 | 5,419 | 5,145 | 13,293 | |||||||||||||
Direct costs: | |||||||||||||||||||
mining | - | - | 3,657 | 5,049 | 3,291 | 11,997 | |||||||||||||
processing | - | - | 3,168 | 6,642 | 2,254 | 12,064 | |||||||||||||
administrative | - | - | 797 | 953 | 1,092 | 2,842 | |||||||||||||
change in inventory | - | - | (1,579 | ) | 5,647 | 684 | 4,752 | ||||||||||||
Total direct production costs | - | - | 6,043 | 18,291 | 7,321 | 31,655 | |||||||||||||
Depreciation and depletion: | |||||||||||||||||||
depreciation and depletion | - | - | 3,646 | 3,321 | 5,208 | 12,175 | |||||||||||||
change in inventory | - | - | (671 | ) | 1,742 | (97 | ) | 974 | |||||||||||
Total depreciation and depletion | - | - | 2,975 | 5,063 | 5,111 | 13,149 | |||||||||||||
Royalties | - | - | 356 | - | - | 356 | |||||||||||||
Write down of inventory to NRV | - | - | 4,398 | - | 1,985 | 6,383 | |||||||||||||
Total cost of sales | $ | - | $ | - | $ | 16,501 | $ | 28,773 | $ | 19,562 | $ | 64,836 | |||||||
Earnings (loss) before taxes | $ | 1,408 | $ | (4,978 | ) | $ | (2,377 | ) | $ | 19,487 | $ | (10,696 | ) | $ | 2,844 | ||||
Current income tax expense | - | - | 1,186 | 2,473 | 704 | 4,363 | |||||||||||||
Deferred income tax expense | - | - | 6 | 1,971 | (3,135 | ) | (1,158 | ) | |||||||||||
Total income tax expense | - | - | 1,192 | 4,444 | (2,431 | ) | 3,205 | ||||||||||||
Net earnings (loss) | $ | 1,408 | $ | (4,978 | ) | $ | (3,569 | ) | $ | 15,043 | $ | (8,265 | ) | $ | (361 | ) |
The Exploration segment included $147 for the three months ended June 30, 2014 (June 30, 2013 - $742) of costs incurred in Chile.
Endeavour Silver Corp. | Page - 15 - |
ENDEAVOUR SILVER CORP.
Notes to the Condensed Consolidated Interim Financial Statements
Three and Six months ended June 30, 2014 and 2013
(Unaudited – Prepared by Management)
(expressed in thousands of US dollars, unless otherwise stated)
Corporate | Exploration | Guanacevi | Bolanitos | El Cubo | Total | ||||||||||||||
Six months ended June 30, 2014 | |||||||||||||||||||
Silver revenue | $ | - | $ | - | $ | 34,407 | $ | 22,451 | $ | 10,321 | $ | 67,179 | |||||||
Gold revenue | - | - | 4,663 | 24,975 | 10,957 | 40,595 | |||||||||||||
Total revenue | $ | - | $ | - | $ | 39,070 | $ | 47,426 | $ | 21,278 | $ | 107,774 | |||||||
Salaries, wages and benefits: | |||||||||||||||||||
mining | $ | - | $ | - | $ | 3,551 | $ | 2,730 | $ | 4,510 | $ | 10,791 | |||||||
processing | - | - | 1,213 | 621 | 1,005 | 2,839 | |||||||||||||
administrative | - | - | 1,932 | 2,092 | 1,819 | 5,843 | |||||||||||||
stock based compensation | - | - | 95 | 96 | 96 | 287 | |||||||||||||
change in inventory | - | - | (393 | ) | 51 | (422 | ) | (764 | ) | ||||||||||
Total salaries, wages and benefits | - | - | 6,398 | 5,590 | 7,008 | 18,996 | |||||||||||||
Direct costs: | |||||||||||||||||||
mining | - | - | 6,931 | 7,610 | 5,691 | 20,232 | |||||||||||||
processing | - | - | 6,740 | 8,853 | 4,101 | 19,694 | |||||||||||||
administrative | - | - | 1,366 | 1,294 | 1,503 | 4,163 | |||||||||||||
change in inventory | - | - | (476 | ) | 378 | (631 | ) | (729 | ) | ||||||||||
Total direct production costs | - | - | 14,561 | 18,135 | 10,664 | 43,360 | |||||||||||||
Depreciation and depletion: | |||||||||||||||||||
depreciation and depletion | - | - | 3,285 | 15,005 | 10,458 | 28,748 | |||||||||||||
change in inventory | - | - | 225 | (277 | ) | 86 | 34 | ||||||||||||
Total depreciation and depletion | - | - | 3,510 | 14,728 | 10,544 | 28,782 | |||||||||||||
Royalties | - | - | 286 | 223 | 103 | 612 | |||||||||||||
Write down of inventory to NRV | - | - | - | - | 365 | 365 | |||||||||||||
Total cost of sales | $ | - | $ | - | $ | 24,755 | $ | 38,676 | $ | 28,684 | $ | 92,115 | |||||||
Earnings (loss) before taxes | $ | (7,663 | ) | $ | (4,974 | ) | $ | 14,315 | $ | 8,750 | $ | (7,406 | ) | $ | 3,022 | ||||
Current income tax expense | - | - | 3,730 | 2,440 | 22 | 6,192 | |||||||||||||
Deferred income tax expense (recovery) | - | - | 73 | (3,328 | ) | (3,663 | ) | (6,918 | ) | ||||||||||
Total income tax expense (recovery) | - | - | 3,803 | (888 | ) | (3,641 | ) | (726 | ) | ||||||||||
Net earnings (loss) | $ | (7,663 | ) | $ | (4,974 | ) | $ | 10,512 | $ | 9,638 | $ | (3,765 | ) | $ | 3,748 |
Six months ended June 30, 2013 | |||||||||||||||||||
Silver revenue | $ | - | $ | - | $ | 29,364 | $ | 40,791 | $ | 12,567 | $ | 82,722 | |||||||
Gold revenue | - | - | 3,612 | 43,568 | 11,221 | 58,401 | |||||||||||||
Total revenue | $ | - | $ | - | $ | 32,976 | $ | 84,359 | $ | 23,788 | $ | 141,123 | |||||||
Salaries, wages and benefits: | |||||||||||||||||||
mining | $ | - | $ | - | $ | 3,365 | $ | 3,549 | $ | 5,448 | $ | 12,362 | |||||||
processing | - | - | 1,170 | 1,164 | 968 | 3,302 | |||||||||||||
administrative | - | - | 1,780 | 2,528 | 2,515 | 6,823 | |||||||||||||
stock based compensation | - | - | 93 | 92 | 92 | 277 | |||||||||||||
change in inventory | - | - | (523 | ) | 2,158 | (132 | ) | 1,503 | |||||||||||
Total salaries, wages and benefits | - | - | 5,885 | 9,491 | 8,891 | 24,267 | |||||||||||||
Direct costs: | |||||||||||||||||||
mining | - | - | 7,861 | 9,442 | 6,571 | 23,874 | |||||||||||||
processing | - | - | 6,058 | 12,152 | 3,871 | 22,081 | |||||||||||||
administrative | - | - | 1,781 | 1,871 | 2,248 | 5,900 | |||||||||||||
change in inventory | - | - | (1,276 | ) | 6,367 | 697 | 5,788 | ||||||||||||
Total direct production costs | - | - | 14,424 | 29,832 | 13,387 | 57,643 | |||||||||||||
Depreciation and depletion: | |||||||||||||||||||
depreciation and depletion | - | - | 7,210 | 5,808 | 10,434 | 23,452 | |||||||||||||
change in inventory | - | - | (815 | ) | 2,194 | 392 | 1,771 | ||||||||||||
Total depreciation and depletion | - | - | 6,395 | 8,002 | 10,826 | 25,223 | |||||||||||||
Royalties | - | - | 806 | - | - | 806 | |||||||||||||
Write down of inventory to NRV | - | - | 4,398 | - | 3,480 | 7,878 | |||||||||||||
Total cost of sales | $ | - | $ | - | $ | 31,908 | $ | 47,325 | $ | 36,584 | $ | 115,817 | |||||||
Earnings (loss) before taxes | $ | 5,352 | $ | (9,168 | ) | $ | 1,068 | $ | 37,034 | $ | (12,796 | ) | $ | 21,490 | |||||
Current income tax expense | - | - | 2,516 | 2,949 | 734 | 6,199 | |||||||||||||
Deferred income tax expense | - | - | 728 | 2,600 | (2,033 | ) | 1,295 | ||||||||||||
Total income tax expense | - | - | 3,244 | 5,549 | (1,299 | ) | 7,494 | ||||||||||||
Net earnings (loss) | $ | 5,352 | $ | (9,168 | ) | $ | (2,176 | ) | $ | 31,485 | $ | (11,497 | ) | $ | 13,996 |
The Exploration segment included $280 for the six months ended June 30, 2014 (June 30, 2013 - $1,074) of costs incurred in Chile.
Endeavour Silver Corp. | Page - 16 - |
ENDEAVOUR SILVER CORP.
Notes to the Condensed Consolidated Interim Financial Statements
Three and Six months ended June 30, 2014 and 2013
(Unaudited – Prepared by Management)
(expressed in thousands of US dollars, unless otherwise stated)
15. | FAIR VALUE MEASUREMENTS |
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices in markets that are not active, quoted prices for similar assets or liabilities in active markets, inputs other than quoted prices that are observable for the asset or liability (for example, interest rate and yield curves observable at commonly quoted intervals, forward pricing curves used to value currency and commodity contracts and volatility measurements used to value option contracts), or inputs that are derived principally from or corroborated by observable market data or other means. Level 3 inputs are unobservable (supported by little or no market activity). The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. | |
Financial assets and liabilities measured at fair value on a recurring basis include: |
Total | Level 1 | Level 2 | Level 3 | |||||||||
As at June 30, 2014 | $ | $ | $ | $ | ||||||||
Financial assets: | ||||||||||||
Available for sale securities | 1,539 | 1,539 | - | - | ||||||||
Trade receivables | 10,175 | 10,175 | - | - | ||||||||
Total financial assets | 11,714 | 11,714 | - | - | ||||||||
Financial liabilities: | ||||||||||||
Contingent liabilities | 126 | - | 126 | - | ||||||||
Total financial liabilities | 126 | - | 126 | - |
Fair values of financial assets and liabilities:
As at June 30, 2014 | As at December 31, 2013 | |||||||||||
Carrying | Estimated Fair | Carrying | Estimated Fair | |||||||||
value | value | value | value | |||||||||
$ | $ | $ | $ | |||||||||
Financial assets: | ||||||||||||
Cash and cash equivalents | 44,038 | 44,038 | 35,004 | 35,004 | ||||||||
Available for sale securities | 1,539 | 1,539 | 1,463 | 1,463 | ||||||||
Trade receivables | 10,175 | 10,175 | 10,263 | 10,263 | ||||||||
Other receivables | 17,051 | 17,051 | 13,486 | 13,486 | ||||||||
Total financial assets | 72,803 | 72,803 | 60,216 | 60,216 | ||||||||
Financial liabilities: | ||||||||||||
Accounts payable and accrued liabilities | 20,651 | 20,651 | 17,221 | 17,221 | ||||||||
Revolving credit facility | 29,000 | 29,000 | 33,000 | 33,000 | ||||||||
Contingent liabilities | 126 | 126 | 99 | 99 | ||||||||
Derivative liabilities | - | - | 1,491 | 1,491 | ||||||||
Total financial liabilities | 49,777 | 49,777 | 51,811 | 51,811 |
Disclosure of the valuation techniques to estimate the fair values of financial assets and liabilities are disclosed in the following notes:
• | Available for sale securities (see Note 4) | |
• | Trade receivables (see Note 5) | |
• | Derivative liabilities (see Note 10) |
Endeavour Silver Corp. | Page - 17 - |
ENDEAVOUR SILVER CORP.
Notes to the Condensed Consolidated Interim Financial Statements
Three and Six months ended June 30, 2014 and 2013
(Unaudited – Prepared by Management)
(expressed in thousands of US dollars, unless otherwise stated)
HEAD OFFICE | Suite #301, 700 West Pender Street | |
Vancouver, BC, Canada V6C 1G8 | ||
Telephone: (604) 685-9775 | ||
1-877-685-9775 | ||
Facsimile: (604) 685-9744 | ||
Website: www.edrsilver.com | ||
DIRECTORS | Geoff Handley | |
Ricardo Campoy | ||
Bradford Cooke | ||
Rex McLennan | ||
Kenneth Pickering | ||
Mario Szotlender | ||
Godfrey Walton | ||
OFFICERS | Bradford Cooke ~ Chief Executive Officer | |
Godfrey Walton ~ President and Chief Operating Officer | ||
Dan Dickson ~ Chief Financial Officer | ||
Dave Howe ~ Vice-President, Country Manager | ||
Luis Castro ~ Vice-President, Exploration | ||
Terrence Chandler ~ Vice-President, Corporate Development | ||
Bernard Poznanski ~ Secretary | ||
REGISTRAR AND | Computershare Trust Company of Canada | |
TRANSFER AGENT | 3rdFloor - 510 Burrard Street | |
Vancouver, BC, V6C 3B9 | ||
AUDITORS | KPMG LLP | |
777 Dunsmuir Street | ||
Vancouver, BC, V7Y 1K3 | ||
SOLICITORS | Koffman Kalef LLP | |
19thFloor – 885 West Georgia Street | ||
Vancouver, BC, V6C 3H4 | ||
SHARES LISTED | Toronto Stock Exchange | |
Trading Symbol - EDR | ||
New York Stock Exchange | ||
Trading Symbol – EXK |
Endeavour Silver Corp. | Page - 18 - |