What happened
Endeavour Silver (EXK +8.01%) stock crashed today and was trading 12.4% lower as of 12:30 p.m. ET. Prices of silver were trending lower as well, but that's not the reason behind the silver stock's fall.
So what
Endeavour Silver operates two silver-gold mines in Mexico. The stock has been holding up well since March as investors expected strong numbers from the company after a solid fourth quarter. This morning, though, the miner reported lower revenue and a sharp drop in earnings for its first quarter.
Endeavour Silver's revenue fell 4% year over year in Q1 despite higher sales volumes for gold. Its net income plunged 45% to $6.5 million, with management putting the blame on higher raw material and labor costs and a stronger Mexican peso.
While a fall in profits can be concerning, the markets seem to have overreacted.
NYSE: EXK
Key Data Points
Now what
While it's true that higher costs ate into Endeavour Silver's profits, management said it is working on its input costs and striving to improve efficiency.
More importantly, Endeavour Silver's production growth was on track last quarter, with silver and gold production rising 23% and 7%, respectively. The miner now even expects to hit the higher end of its production guidance this year. Here's what the company is aiming for:
- Gold production: 5.7 million to 6.3 million ounces.
- Silver production: 36,000 ounces to 40,000 ounces.
For perspective, Endeavour Silver produced 5.9 million ounces of silver and roughly 37,500 ounces of gold in 2022.
There's another important number you should know: Higher silver production in Q1 helped cut Endeavour Silver's all-in sustaining cost (AISC) by 4% to $20.16 per ounce. AISC is a comprehensive cost measure used in the mining industry to determine a mining company's true costs. A lower AISC, therefore, is favorable.
Above all, Endeavour Silver's key growth project -- a third mine in Mexico -- is on track. The miner secured funding for the project last quarter and expects to start production by the end of 2024. It will also be Endeavour Silver's largest mine and could double the miner's annual production once fully operational.
In short, once you look beyond the headlines, the dramatic fall in Endeavour Silver shares today doesn't make much sense.
