Endeavour Silver Sails Into Sustained Growth

Like the legendary HMS Endeavour that carried Captain Cook on his maiden voyage of discovery, Endeavour Silver (NYS: EXK) continues to carry investors on a fair wind into following seas. With CEO Bradford Cooke at the helm, this voyage appears destined to become a legend in its own right.

Following the commissioning of its new plant expansion at Guanajuato, Endeavour delivered a noteworthy 30% sequential increase in silver production over third-quarter output and a corresponding 43% jump in gold output. With the newly expanded plant retaining a further 60% upside from fourth-quarter utilization to reach full throughput capacity of 1,600 tons per day, it's no wonder Endeavour is guiding for another solid year of production growth in 2012 with expected production of 5.6 million silver-equivalent ounces.

The crafty navigators at Endeavour executed a bold maneuver during the quarter to avoid the full wrath of the corrective storm that battered silver prices during the period. In a move that I wish more of its peers would emulate, Endeavour held back a portion of its production as inventory to await the improved price environment of early 2012 that did indeed materialize. Before shedding a tear over the company's underwhelming fourth-quarter earnings result -- a marginal loss of $0.03 per share -- investors will wish to consider that Endeavour ended the period with a mineral inventory of 980,000 ounces of silver and 5,400 ounces of gold. As the company points out in this week's earnings release: "Metal prices did rebound in Q1, 2012 and management subsequently sold most of the metal held in inventory at prices significantly higher than the December prices."

Well-played, Captain Cooke! Actually, after speaking with President and COO Godfrey Walton during my visit to Endeavour's Guanajuato operation last October, I believe he deserves much of the credit for Endeavour's knack for outperforming average market prices with strategically tweaked average realized prices of sales. Every captain worth his salt, after all, has a capable first mate standing watch beside him.

I follow the voyages of multiple explorers and miners of silver, and the best-maintained vessels made my list of top 10 silver stocks for 2012. My visit to Fortuna Silver Mines' (NYS: FSM) San Jose mine in December helped to recognize another epic voyage in the making. Others are just setting sail with a world of promise laid out before them. My recent interview with First Majestic Silver (NYS: AG) CEO Keith Neumeyer (stay tuned for the article) revealed that this seasoned navigator has no intention of returning to port. Silver Wheaton (NYS: SLW) has not ventured into a new silver stream contract in quite a while now, and yet the spoils of prior journeys keep its production growth pouring in. Personally, I would willingly board any of these vessels in my quest for hard-won investment gains in silver. After inspecting the hull of Endeavour Silver by visiting the Guanajuato mines, that is one ship I will sail on with confidence.

At the time this article was published Fool contributor Christopher Barker can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He tweets. He owns shares of Endeavour Silver, First Majestic Silver, and Silver Wheaton. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.


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