Endeavour Silver Corporation

Thank you for standing by. This is the conference operator. Welcome to the Endeavour Silver Third Quarter 2020 Financial Results Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there'll be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Galina Mellinger, Director, Investor Relations. Please go ahead.

Thank you, Operator. Good morning, everyone, and welcome to the Endeavor Silver 2020 Third 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, our Chief Operating Officer, Don Gray, and and our President, 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 Endeavor's anticipated performance in 2020 and future years, including revenue and cost figures, silver and gold production, grades and recoveries, and the timing and measures required to develop new silver mines and mineralized zones. while 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 will now turn it over to our CEO, Brad Cook.

Thank you very much, Galina, and again, welcome everybody to this conference call on our third quarter financial results. I think first of all, I'd like to welcome Don Gray to the group. This is his first earnings call as our new COO. And I'd also especially like to recognize Godfrey Walton, who was with me when we went to Mexico in 2003 looking for an asset we could build a company around. This was Godfrey's last earnings call, and so kudos, Godfrey. It was a great run. Moving on to our press release this morning, I'd just like to open with a comment on the quarter. It was our best quarter in 18 months. In fact, our best quarter in a long time when you consider the changes of revenue, cash flow, and earnings, all sharply higher this year compared to the same quarter last year. Our cash costs and all unsustaining costs were significantly lower year on year. And this improved operating performance combined with higher precious metal prices generated a significant return to profitability, again, for the first time in six quarters. As a result, our cash and working capital positions also increased substantially during the third quarter. So let's drill down a little bit into the numbers. Our revenues were up 29% to just shy of $36 million in the quarter. And our cash flow, jumped almost 400% to $10.3 million year-on-year. Net income or earnings came in at a positive half a million dollars compared to an almost $7 million loss a year ago. And I should point out that we did carry a significant increased metal inventory through the quarter end, largely because of the summer run-up in metal prices and then the significant correction at the end of September. So we chose not to sell amount of silver and gold at the end of the quarter. We carried it in inventory, and the cost of that inventory is about $6 million, but the mark-to-market of that inventory at the end of September was in the order of $15 million. What that implies is that if we had sold that metal, our earnings would actually be in the $10 million range, not the half-million-dollar range. Production on the quarter was just shy of a million ounces of silver and 10,000 ounces of gold for 1.8 million ounces of silver equivalents. And I mentioned already our balance sheet cash was up 47% to just shy of $45 million. The working cap is up in the $54 million range, up 21% year-on-year. Moving to the operations, Guantanamo City continued to outperform with both silver and gold grades well above planned. We were affected by significant rainfall in the rain season in Q3, and as a result, throughput was only 911 tons per day in the quarter, with a 1,200-ton plant. That implies that as we bounce back here, exiting the rain season in Q4, there's actually more production and lower costs in our future at Guanicevique. I should point out, however, that the improved grades are accompanied by higher royalty payments. We're mining a property at Guanista V where there are very significant royalties paid. So our costs will slowly rise as the middle price rises just due to the royalties. Bolonitos continued to improve. It's not quite on plan yet, but we achieved 1,075 tons per day into a 1,200-ton plant, again, implying that there's still room for improvement on throughputs. Gold grades were on plan, silver grades remained below plan, but costs were fine. And all three assets generated free cash flow in the quarter. Last but not least, Dell Compass is pretty much on plan, throughput steady, gold grades on plan, silver grades below plan, but we're doing fine there and making a little bit of money. It's our smallest mine. One of the, our largest mine has by far the biggest impact on our financial performance. So I think on that note, operator, let's wrap up my comments and open it up for Q&A.