Endeavour Silver Corporation

Thank you for standing by. This is the conference operator. Welcome to the Endeavor Silver second quarter financial results conference call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star, then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and 0. I would now like to turn the conference over to Galina Meliger, Director of Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to the Endeavor Silver 2020 Second Quarter Financial Results Conference Call. With me on the line today, we have the company's Chief Executive Officer, Bradford Cook, our Chief Financial Officer, Dan Dixon, and our Chief Operating Officer, Godfrey Walton. Before we get started, I'm required to remind you that certain statements on today's call will contain forward-looking information within the meaning of applicable securities laws. These may include statements regarding endeavors anticipated performance in 2020 and future years, including revenue and cost figures, silver and gold production, grades and recoveries, and the timing and expenditures required to develop new silver mines and mineralized zones. We do not intend to and do not assume any obligation to update such forward-looking information other than as required by applicable law. On behalf of Endeavor Silver, I'd like to thank you again for joining our call, and I'll now turn it over to our CEO, Bradford Cook.

Great. Thank you, Galina, and welcome everybody to this financial results for the second quarter conference call. We had a lot of challenges thrown at us during the second quarter, not the least of which was the COVID-19 pandemic, the government-mandated shutdown of mines in Mexico since reopened, and all the issues related to that. I am pleased to report that notwithstanding all of that, Endeavor was actually able to deliver a decent quarter. We reduced our net loss quarter on quarter. Each mine generated positive mine-free cash flow. And that was generally due to not only the higher precious metal prices, but our improved operating performance across the three mines. So I'm just going to go through the highlights of today's news release, and then we'll open it up for Q&A. Top line revenue was $20.2 million in the second quarter. And of course, with reduced production, That was quite an accomplishment. Our cash flow came in at $1.9 million before, sorry, that's from operations before working capital changes. That income was a loss of $3.3 million, or two cents per share, but virtually all of that could be found in the care and maintenance costs during the mine suspension period when we actually had to send our employees home on their full wages and wait out the suspension period. and also in general administrative costs related to the mark-to-market of our different share units due to the higher share price. So balance sheet improved during the quarter. We finished the quarter with more than $30 million in cash and more than $44 million in working capital. That was partly due to making use of our ATM equity financing, but also due to the performance of the operations. Metal production, as a reminder, was just shy of 600,000 ounces of silver and 6,000 ounces of gold. That works out to about 1.1 million ounces of silver equivalents at the now 80 to 1 silver-gold ratio. Operating costs improved significantly during the quarter. Cash costs were down to $2.78 per ounce net of the gold credit. And the all-in sustaining costs consolidated were $14.91 per ounce of payable silver net of the gold credit. both substantially lower quarter-on-quarter and year-on-year, again, due to the improved operating performance at Gwena Sivi and the higher realized gold price for the byproduct credit. Gwena Sivi continues to outperform. If you recall, we launched over a year ago a complete clean sweep of the operations, operating turnaround and a transitioning from mining deep low-grade ore bodies to opening new higher-grade ore bodies. That transition was completed in January. As a result, in Q2, Guanusvi continued to generate mine-free cash flow of around $2.7 million, and we saw higher processed tons, higher silver and gold grades, higher silver and gold recoveries, all well above plan. We also had an advantage at Guanusvi when we did the restart in May, in that we'd had not only a significant high-grade stockpile built up prior to shutdown, but we'd prepared some long-haul stoves for blasting prior to shutdown. And that really expedited both an early plant restart and an on-time mine restart. Bolonitos, still trading the corner, as forecasted. The operating turnaround there was launched not even a year ago. But it also was able to squeak out a small profit on a mine-free cash flow basis. And its restart was slower because of a smaller stockpile and more of a focus on accelerating the mine development and grade control during the ramp-up period, the restart period. El Compass was also able to generate free cash flow with mine-free cash flow at $1.1 million dollars. Its restart was also slower than Guanacevi, again due to a smaller stockpile and the focus on mine development and grade control. And last but not least, we did rev up the exploration drills again in late May after a shutdown in early April, and we did enjoy continued exploration, positive exploration drill results from the El Curso area at Guanacevi and the Mayadito area at Bolanitos. We're actually mining the El Crystal area now, and they continue to grow the resources there. And we're currently developing towards the Mayadito area, and we'll hope to be in it here in Q3, Q4 for production. So that's basically a summary of our Q2 operational and financial performance. I think now we might as well open this up for Q&A.