Endeavour Silver - How Enough Silver And Gold Create It Have?
Endeavour Silver (NYSE:EXK) is a mid-cap silver / gold producer operating three mines in Mexico. I guess the company is quite popular among precious metals investors. What is more, it is generally regarded as a decent miner. However, since middle 2014 Endeavour's share prices have been underperforming against the broad precious metals stock market, represented by Market Vectors Junior Gold Miners ETF (NYSEARCA:GDXJ):
Source: Simple Digressions
As the red arrow indicates, the company lost its luster. What went wrong? Here is my theory.
Depreciation and impairment chargesInvestors do not care too much about such accounting measures as depreciation or impairment charges. The popular wisdom is that these measures have been made up by accountants and only accountants are able to understand it. In my opinion, it is a big misunderstanding because these two accounting measures may deliver very important information about mineral reserves / resources held by a mining company. Let me start from impairment charges. Since 2013 Endeavour has recognized impairment charges of $352.1M in total. In my opinion, it is a very high charge - remember that now the company's shares are valued at around $416M. The chart below gives a breakdown of these impairments:
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