Endeavour Silver Corp.
Condensed Consolidated Interim Financial Statements
Prepared by Management
Three Months Ended March 31, 2024 and 2023
ENDEAVOUR SILVER CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(unaudited - prepared by management)
(expressed in thousands of US dollars)
March 31, | December 31, | ||||||
Notes | 2024 | 2023 | |||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 34,876 | $ | 35,286 | |||
Other investments | 4 | 1,631 | 5,135 | ||||
Accounts and other receivables | 5 | 44,251 | 22,276 | ||||
Income tax receivable | 2,893 | 3,268 | |||||
Inventories | 6 | 21,322 | 27,258 | ||||
Prepaids and other assets | 6,796 | 7,550 | |||||
Total current assets | 111,769 | 100,773 | |||||
Non-current income tax receivable | 4,341 | 4,262 | |||||
Non-current IVA receivable | 5 | 10,769 | 23,320 | ||||
Non-current loans receivable | 5 | 1,449 | 1,874 | ||||
Deferred financing fees | 9 | 8,241 | 7,545 | ||||
Other non-current assets | 8 | 31,210 | 22,376 | ||||
Mineral properties, plant and equipment | 8, 9 | 342,409 | 314,657 | ||||
Total assets | $ | 510,188 | $ | 474,807 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current liabilities | |||||||
Accounts payable, accrued liabilities and other current liabilities | $ | 43,913 | $ | 46,582 | |||
Income taxes payable | 7,930 | 7,801 | |||||
Loans payable | 9 | 3,514 | 3,861 | ||||
Total current liabilities | 55,357 | 58,244 | |||||
Loans payable | 9 | 3,817 | 4,658 | ||||
Provision for reclamation and rehabilitation | 9,191 | 8,745 | |||||
Deferred income tax liability | 13,599 | 13,730 | |||||
Other non-current liabilities | 2,997 | 3,089 | |||||
Total liabilities | 84,961 | 88,466 | |||||
Shareholders' equity | |||||||
Common shares, unlimited shares authorized | 761,605 | 722,695 | |||||
Contributed surplus | 5,726 | 4,556 | |||||
Retained deficit | (342,104 | ) | (340,910 | ) | |||
Total shareholders' equity | 425,227 | 386,341 | |||||
Total liabilities and shareholders' equity | $ | 510,188 | $ | 474,807 |
The accompanying notes are an integral part of these consolidated financial statements.
Approved on behalf of the Board:
/s/ Margaret Beck | /s/ Daniel Dickson | |
Director | Director |
ENDEAVOUR SILVER CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE EARNINGS (LOSS)
(unaudited - prepared by management)
(expressed in thousands of US dollars, except for shares and per share amounts)
Three months ended | |||||||
March 31, | March 31, | ||||||
Notes | 2024 | 2023 | |||||
Revenue | 11 | $ | 63,725 | $ | 55,461 | ||
Cost of sales: | |||||||
Direct production costs | 36,705 | 26,516 | |||||
Royalties | 6,408 | 6,535 | |||||
Share-based compensation | 10 (b)(c) | 79 | 132 | ||||
Depreciation | 8,877 | 6,253 | |||||
52,069 | 39,436 | ||||||
Mine operating earnings | 11,656 | 16,025 | |||||
Expenses: | |||||||
Exploration, evaluation and development | 12 | 4,270 | 4,164 | ||||
General and administrative | 13 | 4,044 | 4,917 | ||||
8,314 | 9,081 | ||||||
Operating earnings | 3,342 | 6,944 | |||||
Finance costs | 314 | 400 | |||||
Other income (expense): | |||||||
Foreign exchange gain | 1,179 | 1,889 | |||||
Investment and other | 33 | 4,144 | |||||
1,212 | 6,033 | ||||||
Earnings before income taxes | 4,240 | 12,577 | |||||
Income tax expense: | |||||||
Current income tax expense | 5,667 | 4,445 | |||||
Deferred income tax expense (recovery) | (233 | ) | 1,676 | ||||
5,434 | 6,121 | ||||||
Net earnings (loss) and comprehensive earnings (loss) for the period | $ | (1,194 | ) | $ | 6,456 | ||
Basic earnings (loss) per share | $ | (0.01 | ) | $ | 0.03 | ||
Diluted earnings (loss) per share | 10(f) | $ | (0.01 | ) | $ | 0.03 | |
Basic weighted average number of shares outstanding | 227,503,581 | 190,274,768 | |||||
Diluted weighted average number of shares outstanding | 10(f) | 227,503,581 | 192,295,971 |
The accompanying notes are an integral part of these consolidated financial statements.
ENDEAVOUR SILVER CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(unaudited - prepared by management)
(expressed in thousands of US dollars, except for shares and per share amounts)
Total | ||||||||||||||||
Number of | Share | Contributed | Retained | Shareholders' | ||||||||||||
Notes | shares | Capital | Surplus | Deficit | Equity | |||||||||||
Balance at December 31, 2022 | 189,995,563 | $ | 657,866 | $ | 6,115 | $ | (348,087 | ) | $ | 315,894 | ||||||
Exercise of options | 10 (b) | 869,000 | 2,758 | (946 | ) | - | 1,812 | |||||||||
Settlement of performance and deferred share units | 10 (c) | 411,836 | 405 | (2,817 | ) | - | (2,412 | ) | ||||||||
Share-based compensation | 10 (b)(c) | - | - | 1,625 | - | 1,625 | ||||||||||
Canceled options | 10 (b) | - | - | (4 | ) | 4 | - | |||||||||
Earnings for the period | - | - | - | 6,456 | 6,456 | |||||||||||
Balance at March 31, 2023 | 191,276,399 | $ | 661,029 | $ | 3,973 | $ | (341,627 | ) | $ | 323,375 | ||||||
Public equity offerings, net of issuance costs | 10 (a) | 25,740,193 | 60,666 | - | - | 60,666 | ||||||||||
Exercise of options | 10 (b) | 228,900 | 1,000 | (359 | ) | - | 641 | |||||||||
Share-based compensation | 10 (b)(c) | - | - | 1,992 | - | 1,992 | ||||||||||
Canceled options | 10 (b) | - | - | (1,050 | ) | 1,050 | - | |||||||||
Loss for the period | - | - | - | (333 | ) | (333 | ) | |||||||||
Balance at December 31, 2023 | 217,245,492 | $ | 722,695 | $ | 4,556 | $ | (340,910 | ) | $ | 386,341 | ||||||
Public equity offerings, net of issuance costs | 10 (a) | 23,091,986 | 38,910 | - | - | 38,910 | ||||||||||
Share-based compensation | 10 (b)(c) | - | - | 1,170 | - | 1,170 | ||||||||||
Loss for the period | - | - | - | (1,194 | ) | (1,194 | ) | |||||||||
Balance at March 31, 2024 | 240,337,478 | $ | 761,605 | $ | 5,726 | $ | (342,104 | ) | $ | 425,227 |
The accompanying notes are an integral part of these consolidated financial statements.
ENDEAVOUR SILVER CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(unaudited - prepared by management)
(expressed in thousands of US dollars)
Three months ended | |||||||
March 31, | March 31, | ||||||
Notes | 2024 | 2023 | |||||
Operating activities | |||||||
Net earnings (loss) for the period | $ | (1,194 | ) | $ | 6,456 | ||
Items not affecting cash: | |||||||
Share-based compensation | 10 (b)(c) | 1,170 | 1,625 | ||||
Depreciation | 8 | 9,135 | 6,619 | ||||
Deferred income tax expense (recovery) | (131 | ) | 1,676 | ||||
Unrealized foreign exchange loss | 136 | 1,095 | |||||
Finance costs | 314 | 400 | |||||
Accretion of loans receivable | (75 | ) | (93 | ) | |||
Gain (loss) on asset disposal | 18 | (62 | ) | ||||
Gain (loss) on other investments | 4 | 861 | (3,097 | ) | |||
Performance and deferred share units settled in cash | - | (2,118 | ) | ||||
Net changes in non-cash working capital | 14 | (5,651 | ) | (12,902 | ) | ||
Cash from (used in) operating activities | 4,583 | (401 | ) | ||||
Investing activities | |||||||
Proceeds from disposal of property, plant and equipment | 18 | - | |||||
Payment for mineral properties, plant and equipment | 8 | (44,887 | ) | (20,717 | ) | ||
Proceeds from disposal of other investments | 4 | 2,643 | - | ||||
Redemption of non-current deposits | - | 68 | |||||
Cash used in investing activities | (42,226 | ) | (20,649 | ) | |||
Financing activities | |||||||
Repayment of loans payable | 9 | (1,188 | ) | (1,574 | ) | ||
Repayment of lease liabilities | (97 | ) | (63 | ) | |||
Interest paid | (135 | ) | (239 | ) | |||
Proceeds from public equity offerings | 10 (a) | 38,910 | - | ||||
Proceeds from exercise of options | 10 (b) | - | 1,812 | ||||
Proceeds from loans receivable | 450 | 100 | |||||
Payment of deferred financing fees | (696 | ) | - | ||||
Performance and deferred share units withholding tax settlement | - | (294 | ) | ||||
Cash from (used in) financing activities | 37,244 | (258 | ) | ||||
Effect of exchange rate change on cash and cash equivalents | (11 | ) | (433 | ) | |||
Decrease in cash and cash equivalents | (410 | ) | (21,741 | ) | |||
Cash and cash equivalents, beginning of the period | 35,286 | 83,391 | |||||
Cash and cash equivalents, end of the period | $ | 34,876 | $ | 61,650 |
Supplemental cash flow information (Note 14)
The accompanying notes are an integral part of these consolidated financial statements.
ENDEAVOUR SILVER CORP. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS Three months ended March 31, 2024 and 2023 (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 Corporations Act (British Columbia, Canada). 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 and United States. The address of the registered office is #1130 - 609 Granville Street, Vancouver, B.C., V7Y 1G5.
2. BASIS OF PRESENTATION
These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and do not include all of the information required for full annual financial statements and should be read in conjunction with the Company's consolidated financial statements as at and for the year ended December 31, 2023.
The Board of Directors approved the consolidated financial statements for issue on May 8, 2024.
The preparation of consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
These consolidated 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. All intercompany transactions and balances have been eliminated upon consolidation of these subsidiaries.
3. MATERIAL 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, 2023, except as described below.
In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Company's accounting policies and the key sources of estimation uncertainty were the same as those that were applied to the annual audited consolidated financial statements for the year ended December 31, 2023 and should be read in conjunction with the Company's annual audited consolidated financial statements for the year ended December 31, 2023.
The accounting policies below have been applied consistently to all years presented and by all subsidiaries in the group except for new accounting standards adopted during the year, which were adopted either on a prospective basis or on a modified retrospective basis, without restatement of comparative periods as described below.
ENDEAVOUR SILVER CORP. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS Three months ended March 31, 2024 and 2023 (unaudited – prepared by management) (expressed in thousands of US dollars, unless otherwise stated) |
Derivative financial instruments
The Company may hold derivative financial instruments to hedge its risk exposure to fluctuations in commodity prices and other currencies against the US Dollar. Derivative financial instruments are measured at fair value at each reporting period. All derivative instruments not designated in a hedge relationship that qualify for hedge accounting are classified as financial instruments at fair value through profit or loss. Changes in fair value of non-hedging derivative financial instruments are included in net earnings or loss as non-hedging derivative gains or losses.
Accounting standards adopted during the year
The Company applied Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants - Amendments to IAS 1, issued in 2020 and 2022, for the first time in its 2024 condensed consolidated interim financial statements. The amendments clarify certain requirements for determining whether a liability is classified as current or non-current and require new disclosures in the annual financial statements for non-current liabilities that are subject to covenants within 12 months after the end of the reporting period. The adoption of the amendments did not result in any material classification adjustment to the condensed consolidated interim financial statements.
4. OTHER INVESTMENTS
March 31, | December 31, | |||||
2024 | 2023 | |||||
Balance, beginning of period | $ | 5,135 | $ | 10,035 | ||
Investment additions, at cost | - | 73 | ||||
Proceeds from disposals | (2,643 | ) | (2,451 | ) | ||
Gain (loss) on investments | (861 | ) | (2,522 | ) | ||
Balance, end of period | $ | 1,631 | $ | 5,135 |
The Company holds $1,568 in marketable securities that are classified as Level 1 and $63 in marketable securities that are classified as Level 3 in the fair value hierarchy (Note 17) and are classified as financial assets measured at FVTPL. Marketable securities classified as Level 3 in the fair value hierarchy are share purchase warrants and the fair value of the warrants at each period end has been estimated using the Black-Scholes Option Pricing Model.
5. ACCOUNTS AND OTHER RECEIVABLES
March 31, | December 31, | |||||
2024 | 2023 | |||||
Trade receivables | $ | 8,960 | $ | 6,608 | ||
IVA receivable | 29,110 | 12,564 | ||||
Other receivables | 4,681 | 1,654 | ||||
Current portion of loan receivable | 1,500 | 1,450 | ||||
$ | 44,251 | $ | 22,276 |
The trade receivables consist of receivables from provisional silver and gold sales from the Bolañitos mine. The fair value of receivables arising from concentrate sales contracts that contain provisional pricing mechanisms is determined using the appropriate period end closing prices 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 2 of the fair value hierarchy (Note 17).
ENDEAVOUR SILVER CORP. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS Three months ended March 31, 2024 and 2023 (unaudited – prepared by management) (expressed in thousands of US dollars, unless otherwise stated) |
At March 31, 2024, Guanaceví holds $11,349 in IVA receivables which the Company and its advisors have determined to be recoverable from tax authorities (December 31, 2023 - $11,122). The Company is in regular contact with the tax authorities in respect of its IVA filings and believes the full amount of its IVA receivables will ultimately be received. However, the timing of recovery of these amounts and the nature and extent of any adjustments to the Company's IVA receivables remains uncertain.
As at March 31, 2024, the total IVA receivable of $39,879 (December 31, 2023 - $35,884) has been allocated between the current portion of $29,110, which is included in accounts and other receivables, and a non-current portion of $10,769 (December 31, 2023 - $12,564 and $23,320 respectively). The non-current portion includes $1,760 receivable in Guanacevi, which is currently under appeal and is unlikely to be received in the next 12 months, and $8,358 IVA receivable for Terronera which has not been submitted for refund.
The Company has a loan receivable in the amount of $5,000 due in cash payments over a five year period of which $3,500 remains unpaid as of March 31, 2024. As of March 31, 2024, the carrying value of the loan receivable is $2,949, consisting of the current portion of $1,500 and non-current portion of $1,449.
6. INVENTORIES
March 31, | December 31, | |||||
2024 | 2023 | |||||
Warehouse inventory | $ | 13,259 | $ | 12,885 | ||
Stockpile inventory | 2,495 | 3,279 | ||||
Finished goods inventory | 3,956 | 9,491 | ||||
Work in process inventory | 1,612 | 1,603 | ||||
$ | 21,322 | $ | 27,258 |
The warehouse inventory balance at March 31, 2024 includes a provision created in the prior year ended December 31, 2023 of $1,179 at the Guanacevi mine and $1,038 at the Bolañitos mine.
7. RELATED PARTY TRANSACTIONS
The Company was charged $113 for legal services for the three months ended March 31, 2024, by a legal firm in which the Company's corporate secretary is a partner (March 31, 2023 - $67). The Company has $75 payable to the legal firm as at March 31, 2024 (December 31, 2023 - $86).
ENDEAVOUR SILVER CORP. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS Three months ended March 31, 2024 and 2023 (unaudited – prepared by management) (expressed in thousands of US dollars, unless otherwise stated) |
8. MINERAL PROPERTIES, PLANT AND EQUIPMENT
Mineral | Machinery & | Transport & | ||||||||||||||||
properties | Plant | equipment | Building | office equipment | Total | |||||||||||||
Cost | ||||||||||||||||||
Balance at December 31, 2022 | $ | 600,068 | $ | 96,860 | $ | 106,260 | $ | 20,356 | $ | 13,277 | $ | 836,821 | ||||||
Additions | 56,753 | 36,754 | 12,134 | 5,194 | 2,382 | 113,217 | ||||||||||||
Disposals | (674 | ) | - | (417 | ) | - | (623 | ) | (1,714 | ) | ||||||||
Balance at December 31, 2023 | $ | 656,147 | $ | 133,614 | $ | 117,977 | $ | 25,550 | $ | 15,036 | $ | 948,324 | ||||||
Additions | 21,227 | 8,767 | 5,983 | 587 | 270 | 36,834 | ||||||||||||
Disposals | - | - | (217 | ) | - | - | (217 | ) | ||||||||||
Balance at March 31, 2024 | $ | 677,374 | $ | 142,381 | $ | 123,743 | $ | 26,137 | $ | 15,306 | $ | 984,941 | ||||||
Accumulated depreciation | ||||||||||||||||||
Balance at December 31, 2022 | $ | 445,981 | $ | 84,034 | $ | 54,420 | $ | 9,381 | $ | 9,113 | $ | 602,929 | ||||||
Depreciation | 20,723 | 1,598 | 7,241 | 365 | 1,581 | 31,508 | ||||||||||||
Disposals | - | - | (177 | ) | - | (593 | ) | (770 | ) | |||||||||
Balance at December 31, 2023 | $ | 466,704 | $ | 85,632 | $ | 61,484 | $ | 9,746 | $ | 10,101 | $ | 633,667 | ||||||
Depreciation | 6,172 | 488 | 1,963 | 95 | 363 | 9,081 | ||||||||||||
Disposals | - | - | (216 | ) | - | - | (216 | ) | ||||||||||
Balance at March 31, 2024 | $ | 472,876 | $ | 86,120 | $ | 63,231 | $ | 9,841 | $ | 10,464 | $ | 642,532 | ||||||
Net book value | ||||||||||||||||||
At December 31, 2023 | $ | 189,443 | $ | 47,982 | $ | 56,493 | $ | 15,804 | $ | 4,935 | $ | 314,657 | ||||||
At March 31, 2024 | $ | 204,498 | $ | 56,261 | $ | 60,512 | $ | 16,296 | $ | 4,842 | $ | 342,409 |
Included in mineral properties is $80,307 in acquisition costs for exploration properties and $73,859 for acquisition and development costs of development properties (December 31, 2023 - $80,231 and $59,682 respectively).
Other non-current assets include $29,875 of deposits related to items of property, plant and equipment at Terronera (December 31, 2023 - $20,952).
9. LOANS PAYABLE
Equipment financing
March 31, | December 31, | |||||
2024 | 2023 | |||||
Balance, beginning of period | $ | 8,519 | $ | 14,510 | ||
Net proceeds from software and equipment financing | - | - | ||||
Finance cost | 116 | 728 | ||||
Repayments of principal | (1,188 | ) | (5,991 | ) | ||
Repayments of finance costs | (116 | ) | (728 | ) | ||
Balance, end of period | $ | 7,331 | $ | 8,519 | ||
Less: Current loans payable | $ | 3,514 | $ | 3,861 | ||
Balance: Non-current loans payable | $ | 3,817 | $ | 4,658 |
The equipment financing is secured by the underlying equipment purchased and is subject to various non-financial covenants and as at March 31, 2024 the Company was in compliance with these covenants. As at March 31, 2024, the net book value of equipment includes $14,546 (December 31, 2023 - $17,720) of equipment pledged as security for the equipment financing.
ENDEAVOUR SILVER CORP. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS Three months ended March 31, 2024 and 2023 (unaudited – prepared by management) (expressed in thousands of US dollars, unless otherwise stated) |
Debt Facility
The Debt Facility is subject to certain customary conditions precedent and debt servicing covenants, including the requirement for the Company to enter into gold and foreign exchange hedging programs prior to initial drawdown. On March 28, 2024, the Company entered into gold swap agreements to hedge against the fluctuation in gold prices. The Company has committed to the swap contracts which settle between January 2025 and March 2027, for 68,000 ounces of gold at $2,325 per ounce.
The Company is also required to hedge 75% of the estimated remaining capital expenditures incurred in Mexican Pesos.
Subsequent to the end of the reporting period the Company entered into Mexican Peso forward purchase contracts for a total of $45,000 over the construction period from April 2024 to December 2024 at 16.56 pesos per US dollar. On April 9, 2024, the Company completed the first drawdown of $60,000 of the debt facility.
10. SHARE CAPITAL
(a) Common Shares
As of March 31, 2024, the Company had 240,337,478 common shares issued issuable and outstanding, with no par value (December 31, 2024 - 217,245,492). During the three months period ended March 31, 2024, the Company issued 23,091,986 common shares under the "At-The-Market" ("ATM") distributions equity facility (the "December 2023 ATM Facility") at an average price of $1.72 per share for gross proceeds of $39,811, less commission of $796 and recognized $105 of other transaction costs related to the ATM financing as share issuance costs, which have been presented net within share capital.
(b) Stock Options
Expressed in Canadian dollars | Three months ended | Year ended | ||||||||||
March 31, | December 31, | |||||||||||
2024 | 2023 | |||||||||||
Weighted | Weighted | |||||||||||
Number of | average | Number of | average | |||||||||
options | exercise price | options | exercise price | |||||||||
Outstanding, beginning of period | 3,488,291 | $ | 4.24 | 3,899,630 | $ | 4.09 | ||||||
Granted | 1,945,000 | $ | 2.89 | 1,079,000 | $ | 4.12 | ||||||
Exercised | - | - | (1,097,900 | ) | $ | 3.05 | ||||||
Expired and forfeited | (432,400 | ) | $ | 3.23 | (392,439 | ) | $ | 5.76 | ||||
Outstanding, end of period | 5,000,891 | $ | 3.80 | 3,488,291 | $ | 4.24 | ||||||
Options exercisable at the end of the period | 3,097,691 | $ | 4.20 | 2,798,934 | $ | 4.18 |
Subsequent to March 31, 2024, an additional 4,000 common shares were issued on the exercise of 4,000 options, with a weighted average exercise price of CAN$2.89.
ENDEAVOUR SILVER CORP. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS Three months ended March 31, 2024 and 2023 (unaudited – prepared by management) (expressed in thousands of US dollars, unless otherwise stated) |
Expressed in Canadian dollars | |||||||||||||||
Options Outstanding | Options Exercisable | ||||||||||||||
Number | Weighted Average | Weighted | Number | Weighted | |||||||||||
Exercise | Outstanding | Remaining | Average | Exercisable | Average | ||||||||||
Price | as at | Contractual Life | Exercise | as at | Exercise | ||||||||||
Intervals | March 31, 2024 | (Number of Years) | Price | March 31, 2024 | Price | ||||||||||
$2.00 - $2.99 | 2,905,600 | 3.6 | $2.64 | 1,401,600 | $2.38 | ||||||||||
$4.00 - $4.99 | 954,000 | 4.0 | $4.12 | 554,800 | $4.12 | ||||||||||
$5.00 - $5.99 | 60,000 | 1.5 | $5.60 | 60,000 | $5.60 | ||||||||||
$6.00 - $6.99 | 1,081,291 | 2.5 | $6.54 | 1,081,291 | $6.54 | ||||||||||
5,000,891 | 3.4 | $3.80 | 3,097,691 | $4.21 |
During the three months ended March 31, 2024, the Company recognized share-based compensation expense of $711 (March 31, 2023 - $615) based on the fair value of the vested portion of options.
The weighted-average fair values of stock options granted have been estimated using the Black-Scholes Option Pricing Model with the following assumptions:
Three months ended | ||
March 31, | March 31, | |
2024 | 2023 | |
Weighted-average fair value of options in CAN$ | $1.38 | $2.21 |
Risk-free interest rate | 3.75% | 3.83% |
Expected dividend yield | 0% | 0% |
Expected stock price volatility | 62% | 70% |
Expected options life in years | 3.52 | 3.77 |
(c) Share Units Plan
Performance Share Units
The Performance Share Units ("PSU"s) granted are subject to a performance payout multiplier between 0% and 200% based on the Company's total shareholder return at the end of a three-year period, relative to the total shareholder return of the Company's peer group.
Three months ended | Year ended | |||||
March 31, | December 31, | |||||
2024 | 2023 | |||||
Number of units | Number of units | |||||
Outstanding, beginning of period | 878,000 | 1,158,000 | ||||
Granted | 635,000 | 471,000 | ||||
Cancelled | (194,000 | ) | (140,000 | ) | ||
Settled for shares | - | (611,000 | ) | |||
Outstanding, end of period | 1,319,000 | 878,000 |
Performance criteria are based on the Company's share price performance relative to a representative group of other mining companies. 215,000 PSUs vest on March 24, 2025, 409,000 PSUs vest on March 7, 2026, 635,000 PSUs vest on March 13, 2027 and 60,000 will vest once certain performance criteria are met.
During the three months ended March 31, 2024, the Company recognized share-based compensation expense of $441 related to the PSUs (March 31, 2023 - $394).
ENDEAVOUR SILVER CORP. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS Three months ended March 31, 2024 and 2023 (unaudited – prepared by management) (expressed in thousands of US dollars, unless otherwise stated) |
(d) Deferred share units
Deferred Share Units - Equity Settled
The DSUs granted are vested immediately and are redeemable for shares at the time of a director's retirement.
Three months ended | Year ended | |||||
March 31, | December 31, | |||||
2024 | 2023 | |||||
Number of units | Number of units | |||||
Outstanding, beginning of period | 330,078 | 104,596 | ||||
Granted | 7,858 | 225,482 | ||||
Outstanding, end of period | 337,936 | 330,078 |
There were 7,858 DSUs granted during the three months ended March 31, 2024 (March 31, 2023 - 203,421) under the SUP. During the three months ended March 31, 2024, the Company recognized share-based compensation expense of $18 related to the DSUs (March 31, 2023 - $616).
Deferred Share Units - Cash Settled (No further grants to be made)
The Company previously had a Deferred Share Unit ("DSU") plan whereby deferred share units were granted to independent directors of the Company in lieu of compensation in cash or share purchase options. These DSUs vested immediately and are redeemable for cash, based on the market value of the units at the time of a director's retirement. Upon adoption of the SUP plan in March 2021, no new DSUs will be granted under this cash settled plan.
Expressed in Canadian dollars | Three months ended | Year ended | ||||||||||
March 31, | December 31, | |||||||||||
2024 | 2023 | |||||||||||
Number | Weighted Average | Number | Weighted Average | |||||||||
of Units | Grant Price | of Units | Grant Price | |||||||||
Outstanding, beginning of period | 1,044,204 | $3.19 | 1,044,204 | $3.19 | ||||||||
Redeemed | - | $0.00 | - | $0.00 | ||||||||
Outstanding, end of period | 1,044,204 | $3.19 | 1,044,204 | $3.19 | ||||||||
Fair value at period end | 1,044,204 | $3.26 | 1,044,204 | $2.60 |
During the three months ended March 31, 2024, the Company recognized a mark to market expense on director's compensation related to these DSUs, which is included in general and administrative salaries, wages and benefits, of $465 (March 31, 2023 - a mark to market expense of $653) based on the change in the fair value of the DSUs granted in prior years. As of March 31, 2024, deferred share units outstanding have a fair market liability value of $2,513 (December 31, 2023 - $2,048) recognized in accounts payable and accrued liabilities.
(e) Share Appreciation Rights
As part of the Company's bonus program, the Company may grant share appreciation rights ("SARs") to its employees in Mexico and Chile. The SARs are subject to vesting conditions and, when exercised, constitute a cash bonus based on the value of the appreciation of the Company's common shares between the SARs grant date and the exercise date.
ENDEAVOUR SILVER CORP. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS Three months ended March 31, 2024 and 2023 (unaudited – prepared by management) (expressed in thousands of US dollars, unless otherwise stated) |
Three months ended | Year ended | |||||||||||
March 31, | December 31, | |||||||||||
2024 | 2023 | |||||||||||
Number | Weighted Average | Number | Weighted Average | |||||||||
of Units | Grant Price | of Units | Grant Price | |||||||||
Outstanding, beginning of period | 51,349 | $ | 5.07 | 181,739 | $ | 5.12 | ||||||
Cancelled | - | - | (130,390 | ) | $ | 5.13 | ||||||
Outstanding, end of period | 51,349 | $ | 5.07 | 51,349 | $ | 5.07 | ||||||
Exercisable at the end of the period | 43,870 | $ | 5.09 | 43,870 | $ | 5.09 |
During the three months ended March 31, 2024, the Company recognized an expense related to SARs, which is included in operation and exploration salaries, wages and benefits, of $1 (March 31, 2023 - an expense of $4) based on the change in the fair value of the SARs granted in prior years. As of March 31, 2024, SARs outstanding have a fair market liability value of $45 (December 31, 2023 - $43) recognized in accounts payable and accrued liabilities.
(f) Diluted Earnings per Share
Three months ended | ||||||
March 31, | March 31, | |||||
2024 | 2023 | |||||
Net earnings (loss) | $ | (1,194 | ) | $ | 6,456 | |
Basic weighted average number of shares outstanding | 227,503,581 | 190,274,768 | ||||
Effect of dilutive securities: | ||||||
Stock options | - | 743,186 | ||||
Equity settled deferred share units | - | 308,017 | ||||
Performance share units | - | 970,000 | ||||
Diluted weighted average number of share outstanding | 227,503,581 | 192,295,971 | ||||
Diluted earnings per share | $ | (0.01 | ) | $ | 0.03 |
As of March 31, 2024, there are 4,895,734 anti-dilutive stock options (March 31, 2023 - 3,276,844).
11. REVENUE
Three months ended | ||||||
March 31, | March 31, | |||||
2024 | 2023 | |||||
Silver sales | $ | 41,222 | $ | 38,620 | ||
Gold sales | 22,996 | 17,497 | ||||
Less: smelting and refining costs | (493 | ) | (656 | ) | ||
Revenue | $ | 63,725 | $ | 55,461 |
Changes in fair value from provisional pricing in the period are included in silver and gold sales.
ENDEAVOUR SILVER CORP. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS Three months ended March 31, 2024 and 2023 (unaudited – prepared by management) (expressed in thousands of US dollars, unless otherwise stated) |
Three months ended | ||||||
March 31, | March 31, | |||||
2024 | 2023 | |||||
Revenue by product | ||||||
Concentrate sales | $ | 15,355 | $ | 11,785 | ||
Provisional pricing adjustments | (711 | ) | (247 | ) | ||
Total revenue from concentrate sales | 14,644 | 11,538 | ||||
Refined metal sales | 49,081 | 43,923 | ||||
Total revenue | $ | 63,725 | $ | 55,461 |
Provisional pricing adjustments on sales of concentrate consist of provisional and final pricing adjustments made on the finalization of the sales contract. The Company's sales contracts are provisionally priced with provisional pricing periods lasting typically one to three months with provisional pricing adjustments recorded to revenue as market prices vary.
12. EXPLORATION, EVALUATION AND DEVELOPMENT
Three months ended | ||||||
March 31, | March 31, | |||||
2024 | 2023 | |||||
Depreciation | $ | 159 | $ | 278 | ||
Share-based compensation | 151 | 131 | ||||
Exploration salaries, wages and benefits | 660 | 429 | ||||
Direct exploration expenditures | 1,630 | 1,546 | ||||
Evaluation and development salaries, wages and benefits | 754 | 445 | ||||
Direct evaluation and development expenditures | 916 | 1,335 | ||||
$ | 4,270 | $ | 4,164 |
13 GENERAL AND ADMINISTRATIVE
Three months ended | ||||||
March 31, | March 31, | |||||
2024 | 2023 | |||||
Depreciation | $ | 99 | $ | 62 | ||
Share-based compensation | 940 | 1,361 | ||||
Salaries, wages and benefits | 1,182 | 1,167 | ||||
Directors' DSU expense (recovery) | 465 | 653 | ||||
Direct general and administrative | 1,358 | 1,674 | ||||
$ | 4,044 | $ | 4,917 |
ENDEAVOUR SILVER CORP. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS Three months ended March 31, 2024 and 2023 (unaudited – prepared by management) (expressed in thousands of US dollars, unless otherwise stated) |
14. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
Three months ended | ||||||
March 31, | March 31, | |||||
2024 | 2023 | |||||
Net changes in non-cash working capital: | ||||||
Accounts and other receivables | $ | (9,374 | ) | $ | (4,375 | ) |
Income tax receivable | 296 | 2,163 | ||||
Inventories | 5,407 | (3,093 | ) | |||
Prepaids | 754 | (1,382 | ) | |||
Accounts payable and accrued liabilities | (2,863 | ) | (4,276 | ) | ||
Income taxes payable | 129 | (1,939 | ) | |||
$ | (5,651 | ) | $ | (12,902 | ) | |
Non-cash financing and investing activities: | ||||||
Reclamation included in mineral properties, plant and equipment | $ | (102 | ) | $ | (436 | ) |
Fair value of exercised options allocated to share capital | $ | - | $ | (946 | ) | |
Fair value of performance share units allocated to share capital | $ | - | $ | (405 | ) | |
Other cash disbursements: | ||||||
Income taxes paid | $ | 2,534 | $ | 1,859 | ||
Special mining duty paid | $ | 2,574 | $ | 2,515 |
15. 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 two operating mining segments which are located in Mexico, Guanaceví and Bolañitos. The Company has one development project in Mexico, Terronera, as well as Exploration and Corporate segments. The Exploration segment consists of projects in the exploration and evaluation phases in Mexico, Chile and the USA. Exploration projects that are in the local district surrounding a mine are included in the mine's segments.
Cost of sales | Net earnings and | |||||||||||||||
excluding | Mine operating | comprehensive | ||||||||||||||
Three months ended March 31 | Revenue | depreciation | Depreciation | earnings | earnings | |||||||||||
Guanaceví | 2024 | $ | 49,082 | $ | 33,280 | $ | 5,815 | $ | 9,987 | $ | 4,283 | |||||
2023 | 43,924 | 24,682 | 3,473 | 15,769 | 9,754 | |||||||||||
Bolañitos | 2024 | 14,643 | 9,912 | 3,062 | 1,669 | 1,327 | ||||||||||
2023 | 11,537 | 8,501 | 2,780 | 256 | 150 | |||||||||||
Terronera | 2024 | - | - | - | - | (1,670 | ) | |||||||||
2023 | - | - | - | - | (1,780 | ) | ||||||||||
Exploration | 2024 | - | - | - | - | (2,600 | ) | |||||||||
2023 | - | - | - | - | (2,384 | ) | ||||||||||
Corporate | 2024 | - | - | - | - | (2,534 | ) | |||||||||
2023 | - | - | - | - | 716 | |||||||||||
Consolidated | 2024 | $ | 63,725 | $ | 43,192 | $ | 8,877 | $ | 11,656 | $ | (1,194 | ) | ||||
2023 | 55,461 | 33,183 | 6,253 | 16,025 | 6,456 |
ENDEAVOUR SILVER CORP. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS Three months ended March 31, 2024 and 2023 (unaudited – prepared by management) (expressed in thousands of US dollars, unless otherwise stated) |
Total Assets | Total Liabilities | Capital expenditures | ||||||||
Guanaceví | March 31, 2024 | $ | 115,777 | $ | 44,212 | $ | 4,752 | |||
Dec 31, 2023 | 125,456 | 44,916 | 24,631 | |||||||
Bolañitos | March 31, 2024 | 44,222 | 9,304 | 2,267 | ||||||
Dec 31, 2023 | 44,205 | 11,200 | 10,709 | |||||||
Terronera | March 31, 2024 | 228,751 | 24,172 | 29,021 | ||||||
Dec 31, 2023 | 186,860 | 23,604 | 62,495 | |||||||
Exploration | March 31, 2024 | 83,949 | 527 | 121 | ||||||
Dec 31, 2023 | 83,312 | 1,319 | 1,297 | |||||||
Corporate | March 31, 2024 | 37,489 | 6,746 | - | ||||||
Dec 31, 2023 | 34,974 | 7,427 | 276 | |||||||
Consolidated | March 31, 2024 | $ | 510,188 | $ | 84,961 | $ | 36,161 | |||
Dec 31, 2023 | 474,807 | 88,466 | 99,408 |
The Exploration segment included $428 of costs incurred in Chile for the three months ended March 31, 2024 (March 31, 2023 - $305) and $5 of costs incurred in USA (March 31, 2023 - $16).
16. COMMITMENTS & CONTINGENCIES
Commitments
As of March 31, 2024, the Company has $38,299 committed for capital equipment purchases.
Contingencies
Due to the nature of the Company's activities, various legal and tax matters are outstanding from time to time. The Company is routinely subject to audit by tax authorities in the countries in which it operates and has received a number of tax assessments in various locations, which are currently at various stages of progress with the relevant authorities. The outcomes of these audits and assessments are uncertain however, the Company is confident of its position on the various matters under review.
17. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
(a) Financial assets and liabilities
As at March 31, 2024, the carrying and fair values of the Company's financial instruments by category are as follows:
Fair value | ||||||||||||
through profit or | Amortized | Carrying | ||||||||||
loss | cost | value | Fair value | |||||||||
$ | $ | $ | $ | |||||||||
Financial assets: | ||||||||||||
Cash and cash equivalents | - | 34,876 | 34,876 | 34,876 | ||||||||
Other investments | 1,631 | - | 1,631 | 1,631 | ||||||||
Accounts and other receivables | 8,960 | 4,681 | 13,641 | 13,641 | ||||||||
Loans receivable | - | 2,949 | 2,949 | 2,949 | ||||||||
Total financial assets | 10,591 | 42,506 | 53,097 | 53,097 | ||||||||
Financial liabilities: | ||||||||||||
Accounts payable and accrued liabilities | 2,558 | 40,964 | 43,522 | 43,522 | ||||||||
Loans payable | - | 7,331 | 7,331 | 7,331 | ||||||||
Total financial liabilities | 2,558 | 48,295 | 50,853 | 50,853 |
ENDEAVOUR SILVER CORP. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS Three months ended March 31, 2024 and 2023 (unaudited – prepared by management) (expressed in thousands of US dollars, unless otherwise stated) |
(b) Fair value hierarchy
Assets and liabilities as at March 31, 2024 measured at fair value on a recurring basis include:
Level 1 | Level 2 | Level 3 | Total | |||||||||
$ | $ | $ | $ | |||||||||
Financial assets: | ||||||||||||
Accounts and other receivables | - | 8,960 | - | 8,960 | ||||||||
Other investments | 1,568 | - | 63 | 1,631 | ||||||||
Total financial assets | 1,568 | 8,960 | 63 | 10,591 | ||||||||
Financial liabilities: | ||||||||||||
Deferred share units | 2,513 | - | - | 2,513 | ||||||||
Share appreciation rights | - | 45 | - | 45 | ||||||||
Total financial liabilities | 2,513 | 45 | - | 2,558 |
ENDEAVOUR SILVER CORP. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS Three months ended March 31, 2024 and 2023 (unaudited – prepared by management) (expressed in thousands of US dollars, unless otherwise stated) |
HEAD OFFICE | Suite #1130, 609 Granville Street |
Vancouver, BC, Canada V7Y 1G5 | |
Telephone: (604) 685-9775 1-877-685-9775 | |
Website: www.edrsilver.com | |
DIRECTORS | Margaret Beck Ricardo Campoy Daniel Dickson Amy Jacobsen Rex McLennan Kenneth Pickering Mario Szotlender Christine West |
OFFICERS | Daniel Dickson - Chief Executive Officer Donald Gray - Chief Operating Officer Elizabeth Senez - Chief Financial Officer Gregory Blaylock - Vice President, Operations Luis Castro - Senior Vice-President, Exploration Dale Mah - Vice-President, Corporate Development Galina Meleger - Vice-President, Investor Relations Bernard Poznanski - Corporate Secretary |
REGISTRAR AND TRANSFER AGENT | Computershare Trust Company of Canada 3rd Floor - 510 Burrard Street Vancouver, BC, V6C 3B9 |
AUDITORS | KPMG LLP 777 Dunsmuir Street Vancouver, BC, V7Y 1K3 |
SOLICITORS | Koffman Kalef LLP 19th Floor - 885 West Georgia Street Vancouver, BC, V6C 3H4 |
SHARES LISTED | Toronto Stock Exchange Trading Symbol - EDR New York Stock Exchange Trading Symbol - EXK |