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1/30/15

Endeavour Silver (EDR.to) (EXK): There's no point

I really don't see the point in owning this. Endeavour Silver (EDR.to) (EXK) announced its new reserves/resource estimates plus its 2015 guidance in this NR yesterday, which (unusually) came with a ConfCall (listen to it here) and after doing all the number thing and listening carefully to the company's arguments (twice, replay this morning) I'm left with the impression that the only people who can benefit from the existence of EDR are the people who work there.

Now that's not such a bad thing (aside from the overstuffed paypackets of Brad Cooke and the assembled directors) as I'm all for providing gainful employment to Latin Americans. But why should a shareholder own a company that bases its reserves/resources on $18/oz silver and $1,260/oz gold when it's already shown that it can't make a profit on those numbers? I mean, it may see cost reductions in the pipeline but the hard fact is that in 3q14, when its realized price for both metals was higher than that (U$18.78/oz Ag and U$1,278/oz Au) it returned an operating loss of $3.6m and a net loss of $11.386m for the quarter.

Also, when it comes to the future Brad Cooke told us on the CC that the company "had to crack the nut" on El Cubo and I was "Whaaaaat?", because this is the same nut they promised  to crack in 2013. And 2014. This company is pure jam tomorrow, but when it comes to execution it never lives up to the sweet talk.

Seriously, what's the point in owning a loss-making silver company at the current price deck? In fact, even if it breaks even, even if it runs a modest profit, it still has a crapload of financial debt on its books (oh...they're promising to get that down to $25m by end 2q15...we'll see). And that's the bottom line here; EDR and many other silvercos in Mexico are running to stand still, with all that mining and production and busy ness that shows nothing for shareholders. Nothing at all.