Endeavour Silver Corporation

Thank you for standing by. This is the conference operator. Welcome to the Endeavour Silver First Quarter 2022 Financial Results Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. I would now like to turn the conference over to Trish Moran, Interim Head of Investor Relations. Please go ahead.

Thank you and good day everyone. Before we get started, I would ask that you view our MD&A for cautionary language regarding forward-looking statements and the risk factors pertaining to these statements. Our MD&A and financial statements are available on our website at edrsilver.com. With us on today's call, we have Dan Dixon, Endeavor's CEO, Christine West, our CFO, and Don Gray, our Chief Operating Officer. Following Dan's formal remarks, we will then open the call for questions. And now over to you, Dan.

Thanks, Trish, and welcome, everyone. 2022 is off to a strong start. Not only was it a good quarter for our operating minds, we have been very active on building out the long-term future of the company. First, let's talk about operations. Consolidated Q1 production was up 4% year-over-year to 2 million silver equivalent ounces. This was more than enough to offset the impact of suspending our Elk Compass operations last August. Qantas V had a great quarter, driven by higher silver and gold grades. And based on where we're mining this high-grade ore, it's expected to continue in the near term. In addition, we're purchasing ore from local miners, which is further enhancing our grades. This is also expected to continue into the second quarter. At Bolognese, gold grade and gold ounces produced were down in Q1, while our silver ounces and silver grades reach up significantly higher. Paulino's production is expected to remain steady and continue to provide mine-free cash flow throughout 2022. Ultimately, the first quarter puts us in great shape to achieve this year's production guidance of between 6.7 and 7.6 million silver equivalent ounces. As noted, consolidated production increased by 4% in the first quarter. However, revenue rose close to 67%. A lot of you listening today on today's call are aware that we've opportunistically withheld metal in 2021. The bullion held at year end had a market value of about $31 million. Spike in this quarter's revenue is attributable to the sale of about half of that unsold bullion that we held at year end. This bullion was sold throughout the first quarter at significantly higher prices than what we saw in December, which contribute to cash flow from operating activities of more than $22 million. As at March 31st, we had $151 million and no long-term debt aside from normal course equipment leases and working capital of $168 million. For the quarter, our all-in sustaining cost per ounce metrics were 5% higher than the previous year, just inside our guidance range of $20 to $21 per ounce. Containing costs continues to be a major focus in this inflationary, supply-constrained environment. While this is an industry-wide issue that is expected to prevail throughout the course of the year, we're closely reviewing our purchasing practices to see where and how we can mitigate the impact. A moment ago, I mentioned that we've been actively building out the long-term future of the company. We are tracking two major milestones here in the second quarter, securing financing for Terranera and closing the Pizzeria acquisition. First, let me update you where things stand with respect to Terranera, which is our biggest priority. Once completed, Terranera is expected to double our production and cut our cost profile in half. We're advancing sustainability documentation to meet commercial banking requirements required for project loan financing. We believe this documentation will be beneficial with regards to the long-term sustainability of the project and comes up consultation with the communities and various levels of government. Aside from the delays to site visits and other due diligence caused by COVID, activity on this documentation has been underway for several months and is expected to wrap up by the end of May. While this has put us slightly behind our original schedule, the project continues to move forward. In terms of our schedule, we are still expecting to complete commissioning in the first half of 2024 if we can secure the debt portion of the project financing by the end of this quarter. Last year, the board approved $21 million to advance the Terranera project while we're working through this financing. We spent $12 million prior to year end and an additional $6 million in Q1. We are well down the road on site clearing, detailed engineering, early earthworks, and camp infrastructure. We have another $9.5 million earmarked to spend at Terranera in the second quarter to complete earthworks, phase one of detailed engineering, and the commencement of the permanent camp construction. For us, Terran Air is a game changer, and it's a very important part of our future. During the first quarter, we also announced the addition of an exciting advanced stage exploration project called PIT3A. Situated in Durango State, Mexico, it's one of the world's largest undeveloped silver deposits, and we believe has the potential to be a Tier 1 asset. We announced this acquisition in mid-January and expect it to close before the end of June. at which time work will immediately commence to define the historical resource as a current resource, assess a number of targets, and advance the project to an updated economic study. To close the transaction, we're waiting approval for the Mexican Federal Economic Competition Commission that's expected imminently. The $70 million acquisition of PITREA is fully financed. 50% of the purchase price will be Endeavor shares, and 50% will be paid in cash. To fund the cash portion, we completed a bought deal for $46 million in March. This equity raised together with the strong operating cash flow this quarter has really strengthened our balance sheet. One last very important item I want to highlight before we move to Q&A. At the outset of the year, you'll recall we introduced a new sustainability strategy focusing on three pillars, our people, our planet, and our business. I'm pleased to say that tomorrow we will be releasing our 2021 sustainability report. It reflects our commitment to transparency and reflects our new strategy and branding. We recognize that our long-term success goes beyond achieving financial metrics. This year's report speaks to our ongoing actions and commitment to help shape a more inclusive and sustainable future for our business and our stakeholders to prosper. I highly recommend you take time to view our new report after it's published online tomorrow. That wraps up my formal comments for today. Myself, Dawn, and Christine are happy to answer any questions that you may have. So over to you, operator, for Q&A.