Shares of Endeavour Silver (TSX:EDR) jumped further this week, reaching as high a climb as 10% on Friday after the company reported earnings. Yet shares continued to climb as the company announced the first drawdown for a future project. So, let’s get into why investors should consider whether now is the time to invest in Endeavour stock based on this news.
What happened?
Let’s first look at this drawdown to see why investors should care about it! A drawdown is when a company, in this case, Endeavour stock, is able to take out cash from a previously approved credit line. In this case, Endeavour stock announced the first step of withdrawing US$60 million from its total available US$120 million in credit.
This money is being used to develop its Terronera Mine in Jalisco state, Mexico. The mine is underway and on track, and the draw now reduces the company’s financial risk in the project. Forward sales are projected to reach 68,000 ounces of gold, executed at US$2,325 per ounce. This would represent 55% of planned gold production during the first three years of operations at the mine.
Yet this was news on top of more good news as the company reported strong earnings from its previous quarter. So, let’s look at why investors were happy with the results.
Up after miss
During the fourth quarter of 2023, Endeavour stock saw shares drop as the company missed out on earnings estimates for yet another quarter. And yet, the company made a sharp return in the first quarter of 2024.
First quarter production of silver amounted to 1,460,006 silver ounces and 10,133 ounces of gold. This would create 2.3 million ounces of silver equivalent. Production, therefore, reached expectations to deliver the company’s production guidance of between 8.1 and 8.8 million silver equivalent ounces in 2024.
With gold and silver prices remaining high — and seeming to stay that way for the next year at least — this has strengthened the company considerably. That is why they’ve been using the cash to further grow company mines while they can.
Still valuable
Even after the climb in share price this week, investors can certainly find value by investing in Endeavour stock these days. The company is still down by 33% in the last year, for one, even as its profit margin improves. Meanwhile, it trades at just 1.72 times book value and 2.75 times sales, making it even more attractive for investors.
Now that the stock has also been improving its debts and expanding its operations as well, it’s a great time to look to Endeavour stock for further share growth. A new mine and increasing production, as prices continue to climb for silver and gold, is good news. And with share prices still low like they are, it’s a great time to jump on the stock.
So, while Endeavour stock might still be down, it’s now improving, which is the perfect opportunity for investors seeking income to jump on the stock while they can.
