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Endeavor Silver recently reported Q2 2014 results, which showed rising cash costs.

However, management had previously warned that costs were expected to rise in the second and third quarters, so the higher costs do not change my investment thesis.

Endeavor remains one of my favorite silver stocks as the company has the potential to become a 16+ million ounce producer in just a few years.

This article provides an update on Endeavor Silver (NYSE:EXK), a company I first covered in an article on August 7. To recap briefly, Endeavor owns and operates three high-grade underground silver mines in Mexico, which produced a combined 6.8 million silver ounces in 2013. The company has a very impressive track record of growth, with 9 consecutive years of production growth, plus a 95% increase in gold production in 2013 and a 52% increase in silver production. The company has also grown its reserve and resource base at a rate of 49% a year since 2004.

Endeavor Silver recently announced its Q2 2014 results. The company recorded a net loss of $.3 million, with EBITDA decreasing 20% to $13.4 million and cash flow from operations decreasing 4% to $11.9 million. In addition, revenue decreased 23% to $54.8 million. During this quarter, the averaged realized silver price decreased 6% to $21.10 per ounce, which definitely had an effect on the company's earnings. However, cash costs increased to $9.87 and all-in sustaining costs increased to $20.48 an ounce, compared to $12.15 in the first quarter of 2014.

At first glance, the results appear a bit disappointing. All-in sustaining costs were higher than the first quarter, finishing at just over $20 per silver ounce; this is much higher than the $12.15 all-in costs reported for the first quarter of 2014. However, cash costs are expected to be higher in Q2 and Q3 as the company increases its spending on capital and exploration programs. Management even pointed this out in the first quarter 2014 news release: "all-in sustaining costs are expected to increase in the second and third quarters with higher planned exploration and mine development expenditures."

For the full-year 2014, the company had previously given all-in sustaining cost guidance of approximately $19 per ounce, so investors should expect costs to fall below this figure in the coming quarters. In my view, the story hasn't changed at Endeavor. With 60% production growth possible - from 10 million silver equivalent ounces of production to 16 million by 2016 - the company remains a solid growth stock that gives investors leverage to a rising silver price. I think investors should be adding shares on any further pullbacks, and I think anything under $6 a share is an attractive entry point.

Disclosure: The author has no positions in any stocks mentioned, but may initiate a long position in EXK over the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.