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Endeavour Silver (EXK) to Sell El Compas Property Entirely

Endeavour Silver Corporation EXK has entered into an agreement to sell its 100% interest in Minera Oro Silver de Mexico, S.A. de C.V. (MOS) to Grupo ROSGO.

MOS holds the El Compas property and the lease on the La Plata processing plant in Zacatecas, Mexico. The sale will help EXK streamline its project portfolio and advance its extensive growth pipeline.

Per the terms of the agreement, Grupo ROSGO will pay Endeavour Silver $5 million in cash over five years with an initial payment of $0.25 million on signing the definitive agreement. Instalment payments of $0.5 million will be made every six months other than the third payment, which will be $0.75 million. The payments are secured by a pledge of the shares of MOS.

In July 2022, Endeavour Silver completed the acquisition of SSR Mining Inc.’s SSRM Pitarrilla Project. Located in Durango, Mexico, the site is one of the largest undeveloped silver deposits in the world and adds to EXK’s growth pipeline in a mining-friendly jurisdiction, where it already has extensive experience and expertise. This move marks a step forward in achieving EXK’s goal of becoming a premier senior silver producer. The buyout adds to its pipeline of growth projects, which includes Terronera and Parral.

Pitarrilla is a strategic fit for Endeavour Silver with a successful development, exploration and underground mining track record in the region. The project was de-risked by SSR Mining, with several key exploration and mining permits obtained and collaboration agreements already in place with the local community. The geology at Pitarrilla is similar to EXK’s underground mines, namely Guanacevi and Bolanitos, which is an advantage.

Regarding Terronera, EXK stated that it plans to make a formal construction decision, subject to completion of a financing package and receipt of additional amended permits in the coming months.

Endeavour Silver reported a loss per share of 2 cents for second-quarter 2022 against earnings of a penny per share in the year-ago quarter. Revenues plunged 35% year over year to $31 million in the quarter. This was mainly due to lower silver sales during the quarter. The average realized silver price was $22.72 per ounce in the quarter, down 15% year over year.

Due to lower silver prices, EXK had decided to withhold a certain amount of silver sales, which affected its top and bottom line, and cash flow.  At the end of the second quarter of 2022, EXK held 1.6 million silver equivalent ounces in finished goods inventory. Endeavour Silver plans to sell it when prices pick up. For 2022, EKX expects production in the range of 7.6-8.0 million silver equivalent ounces.

Price Performance

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Shares of EXK have plunged 30.4% over the past year compared with the industry's decline of 37.1%.

Zacks Rank & Stocks to Consider

Endeavour Silver currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the basic materials space include Daqo New Energy Corp. DQ and Albemarle Corporation ALB.

Daqo New Energy, currently sporting a Zacks Rank #1 (Strong Buy), has an expected earnings growth rate of 177.5% for the ongoing year. The Zacks Consensus Estimate for DQ's current-year earnings has been revised 9.8% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Daqo New Energy’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, while missing in one quarter, the average beat being 10.8%. DQ has gained around 5% over a year.

Albemarle has a projected earnings growth rate of 425.7% for the current year. The consensus estimate for ALB's current-year earnings has been revised 67.9% upward in the past 60 days.

Albemarle’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. ALB has a trailing four-quarter earnings surprise of 24.2%, on average. The stock has gained around 29% in a year and currently flaunts a Zacks Rank of 1.

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