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Why Endeavour Silver Stock Is Slumping Today

By Matthew DiLallo - Nov 5, 2019 at 4:06PM

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The mining company fell short in the third quarter.

What happened

Shares of Endeavour Silver ( EXK -3.02% ) sank more than 11% by 2:30 p.m. EST on Tuesday. Weighing on the silver and gold miner: its third-quarter results.

So what

Endeavour Silver reported a steep decline in production during the third quarter. Its silver output plunged 34% to 948,547 ounces while its gold production slumped 25% to 9,716 ounces. Weighing on its output were a planned reduction at its El Cubo mine and lower volumes and ore grades at its Bolanitos mine. Those issues more than offset higher production at Guanacevi and the start-up at El Compas.

Silver and gold bars

Image source: Getty Images.

That decline in its production caused its costs to soar 30%. The company reported a net loss of $6.8 million, or $0.05 per share, which missed the analysts' consensus estimate by $0.02 per share. The company's loss increased from $5.5 million, or $0.04 per share, in the year-ago period; the loss came even though silver and gold prices have improved by more than 20% over the past year.

Now what

Endeavor's CEO Bradford Cooke noted in the earnings release that while "production in the Third Quarter 2019 was down year-on-year ... we are seeing positive traction from all the operational changes we made in the past two quarters." He pointed out that the company's cash costs and net loss improved from the second quarter due to its operational improvements.

However, despite those positives, the company doesn't expect to meet its production and cost guidance for this year due to the issues it's facing at El Cubo, which were worse than expected -- it might end up closing the mine. The uncertainty surrounding that mine could continue to weigh on the company's stock price in the coming months.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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$4.17 (-3.02%) $0.13

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