Endeavour Silver Corp

Endeavour Silver Corp (NYSE: EXK) is a Canadian mid-tier mining company focused on precious metals. Its portfolio includes two operational silver-gold mines in Mexico—Guanacevi and Bolanitos—along with a development-stage silver-gold project currently under construction in Jalisco, known as Terronera. In addition, the company holds five exploration projects across Mexico, Chile, and the United States: Pitarrilla, Parral, Bruner, Aida, and Lourdes.

As per our previous US Inflation Report published on ‘EXK’ on 11^th April, 2025, Kalkine provided an ‘Buy’ stance on the stock at USD 3.73 based on fundamental analysis and the stock price has now moved by ~ 35.39% since then and is trading above resistance 2.

Noted below are the details of support and resistance levels provided in our previous report:

Rationale – Sell at USD 5.05

• Decline in Production and Higher Operating Costs: The company faced a significant decline in production volumes during Q1 2025. Silver production fell 17% to 1.21 million ounces, while gold output dropped 18% to 8,338 ounces, resulting in an 18% decline in silver equivalent ounces produced. This production shortfall led to an increase in cash costs per ounce, which rose 20% to USD 15.89, and all-in sustaining costs, which increased 14% to USD 24.48 per ounce. Lower throughput (6%) further drove a 6% increase in direct operating costs per tonne. Overall, declining output combined with rising unit costs pressured margins during the quarter.
• Weak Operational Cash Flow and Shrinking Working Capital: The company’s ability to generate cash from operations weakened during the quarter. Operating cash flow before working capital changes decreased 18% to USD 8.3 million compared to Q1 2024. Simultaneously, working capital saw a sharp 74% reduction, dropping to USD 14.8 million from USD 56.4 million a year ago. This decline reflects not only reduced cash generation from core operations but also higher capital deployment, particularly linked to the development of the Terronera Project and the recent acquisition of Minera Kolpa.
• Steep Net Loss Driven by Derivative Losses: The bottom line was severely impacted in Q1 2025. The company reported a net loss of USD 32.9 million, a dramatic deterioration from the USD 1.2 million net loss reported in Q1 2024. A substantial driver of this loss was a USD 31.9 million hit from derivative contract losses. Additionally, foreign exchange losses and rising finance costs contributed to the negative earnings. While adjusted net loss was limited to USD 0.2 million, the headline net loss underscores the volatility and risk exposures impacting the company’s financial results.
• Reduced Sales Volumes Despite Higher Metal Prices: Although realized prices for silver and gold surged by 36% and 37%, respectively, this pricing strength could not fully compensate for the sharp drop in sales volumes. Silver ounces sold declined 30%, and gold ounces sold were down 22% year-over-year. The lower sales volumes were primarily a consequence of the production declines. Despite higher realized prices sustaining revenue at USD 63.5 million (flat vs. Q1 2024), the combination of lower output and higher costs eroded profitability and limited the company’s ability to leverage favourable market conditions.

Valuation (Using EV/EBITDA Multiple)

Share Price Chart 

Conclusion

The company’s Q1 2025 performance reflected several negative trends, including a sharp 17–18% decline in silver and gold production, which led to higher unit costs and squeezed margins. Operating cash flow fell 18%, while working capital shrank 74%, highlighting growing liquidity pressures amid continued capital investments. Despite higher realized metal prices, sales volumes dropped significantly (silver down 30%, gold down 22%), limiting revenue growth. Moreover, a steep net loss of USD 32.9 million—primarily driven by USD 31.9 million in derivative losses—underscored financial volatility and elevated risk exposure, painting a cautious outlook for near-term profitability.

Based on the notional gains, valuation downside and price action stance, a "Sell" recommendation on Endeavour Silver Corp (NYSE: EXK) has been given at the current market price of USD 5.05 as on 09 June 2025 at 08:20 AM PDT.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is 09 June 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and/or technical analysis taking into consideration both short-term and long-term scenario.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: Dividend Yield may vary as per the stock price movement.