With all the talk of flux in gold and silver prices, many investors are clamoring over which route is best for a portfolio. This week, more information to support the case for silver has come to light, furthering the notion that the metal may be replacing gold, at least temporarily, in terms of potential financial gains.
According to a press release on MarketWire, Endeavour Silver (NYSE:EXK) announced yesterday record earnings and cash flow for the end of 2012. The company owns three underground silver mines in Mexico and has enjoyed eight years of growth in both gold and silver production.
Endeavour Silver is a mid-tier silver miner with silver production and reserves in Mexico. The company first got its start in 2004, and it has seen production growth in each of its years of operation. It is currently carrying out organic expansion programs at three different silver mines in Mexico, with hopes of becoming the next premier silver mining company in the world.
The company’s net earnings increased by 124%, rising from $0.22 per share to $0.45. It also experienced a rather significant increase in revenue: 63% to $208.1 million. Its silver equivalent production rose 33% to 6.4 million oz, further proof that silver is likely to enjoy a banner year in 2013. Probable reserves of both gold and silver have risen significantly as well to 222,300 oz and 23.1 million oz, respectively.
For a company to go from $128 million in revenue (2011) to $208.1 million is more than impressive, and this has a lot of investors keeping their eyes on the potential future of precious metals.
Much of Endeavour’s success comes down to the fact that it has expanded operations significantly in the since the end of 2011, launching discovery programs and drilling out new high-grade gold and silver in Lana vein at Bolinitos. This comes as a result of a $15 million surface exploration program testing multiple targets in three of the company’s mining districts in January of 2012.
The discovery of more high-grade gold and silver can only mean good things for the industry, as it dramatically improves the outlook for precious metals in 2013. The forecast for Endeavor’s silver growth includes a 12-18% increase to 5.0 to 5.3 oz, with gold production rising 19-27% to 46,000 to 49,000 oz.
This makes an excellent case for both precious metals, although analysts have recently forecasted silver to be a better investment than gold in 2013 and perhaps 2014 as well.
While things have certainly been going well for the company, Endeavour is not ready to settle on its successes. The company continues to look towards ways to expand its project portfolio, especially at it site at El Cubo, where it says there are multiple potentially attractive drilling targets to explore.
It will also be focusing on Terronera vein in Jalisco State, where a new high-grade silver discovery is emerging. Management has made clear its efforts to continue expanding operations throughout Mexico, with many additional sites that it feels are worth exploring.
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This comes at a time when precious metals are very much a topic of conversation among investors. With the price of gold falling steadily, many are looking towards silver as a replacement metal to help balance their portfolios. While Endeavour’s gold production numbers are actually more impressive than what they’ve seen for silver, the latter of the two metals is expected to see a dramatic resurgence in the coming years.
For investors who already have a vested interest in the production of gold, the shift away from the metal towards silver has caused a fair amount of discomfort. After all, it’s not easy to move away from a metal that one has a great deal of experience with, and the change can cause plenty of problems if the right route is not taken.
For those who do not have a vested interest in gold, however, silver is looking to be the perfect entry-point for 2013. While it’s unclear as to whether or not the current trends in precious metals will continue past the start of the year, it appears that now is the best time to invest in silver in at least two years.
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