Endeavour Silver Corporation

Thank you for standing by. This is the conference operator. Welcome to the Endeavor Silver Corp second quarter 2024 financial results conference call. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you need signal and operator by pressing star then zero. I would now like to turn the conference over to Alison Pettit, Director of Investor Relations. Please go ahead.

Thank you, Operator, and good morning, everyone. Before we get started, I ask that you view our NDNA precautionary language regarding forward-looking statements and the risk factors pertaining to these statements. Our NDNA and financial statements are available on our website at edrsilver.com. On today's call, we have Dan Dixon, Endeavor Silver's CEO, Elizabeth Senez, our Chief Financial Officer, and Dawn Gray, Endeavor's COO. Following Dan's formal remarks, we will open the call for questions. And now, over to Dan.

Thank you, Alison, and welcome, everyone. It's been a productive second quarter at Endeavor Silver. As gold reached new all-time highs and with silver starting to fall low, companies' cash flow and financial position should continue to benefit from these higher prices. At Terranera, there was significant advance of the upper platform surface infrastructure, and the overall project progress reached 65% at June 30th. Terranera is on track for commissioning Q4 2024. And we are excited for it to contribute to our production profile next year and become a cornerstone asset. Q2 silver equivalent production totaled 22.2 million ounces or 1.3 million ounces of silver and 10,500 ounces of gold. We are in great position to meet the upper range of our 2024 production guidance. Silver equivalent grades have been in line with expectations. with gold grades slightly higher and silver grades slightly lower. This is expected to be similar going forward, and therefore, we expect a similar production profile for the second half of the year. We reported top line revenue of $58 million, up 17% year over year, due to higher metal prices compared to Q2 2023. Cost of sales totaled $48 million, up 28% from Q2 2023. due to the strength in Mexican peso contributing to higher labor, power, and consumable costs, and continued inflationary effects from 2023 that flowed into 2024. At Guanicebi, purchased material from local miners increased to 18% of throughput and accounted for $5 million of our cost of sales. In Q2 2023, purchased material was $1.5 million. With higher precious metal prices, the availability and costs of the purchased material have both increased. There are a number of benefits of purchasing the local material, and management expects the purchase of material to remain elevated for the foreseeable future. The higher prices also means higher royalty expense, and we are generating mining profits, increasing our special mining duty, which are impacting our cost metrics. Direct offering costs. Our mining, processing, and site administrative costs are within management's expectations. Cash costs and all unsustainable costs benefit from the higher gold credit than estimated at the beginning of the year, offsetting the higher royalties, special mining duty, and increased purchase material. The company reported a net loss of $14 million for the three-month period ended June 30, 2024, compared to a $1 million loss in Q2 of 2023 months. excluding certain non-cash and unusual items and items that are subject to volatility which are unrelated to the company's operations, the adjusted loss was $1.0 million compared to the adjusted earnings of 1.6 in Q2 2023. With production results and construction results previously released, today's substantial share price action was unexpected and still the magnitude is somewhat puzzling. With higher precious metals, Price is clearly there's an expectation for better earnings. I believe this is one data point over time we will deliver on those expectations. As of June 30th, 2024, the company's cash position was $68 million and working capital was $65 million. The company raised $14.7 million through share issuances, primarily to fund Terranera, and during the quarter, the company completed its first drawdown of the Terranera Senior Secured Debt Facility, drawing $60 million. Subsequent to the reporting end, the company completed a second draw of $50 million and has an additional $45 million committed and available for future drawdowns expected in the third or fourth quarter. As I mentioned earlier, the Terra Nero project reached 65% completion with more than $204 million of project budget spent today. Project commitments total $260 million, which is 96% of our $271 million capital budget and remains on track for commission in Q4 2024 as we continue to advance on schedule. Over 1,250 meters of underground mine development were completed in Q2 for a cumulative total of 4.5 kilometers, and our mine crews continue working in Portals 1, 2, and 4 declines. Development has cut through the Terranera vein, and we've started to develop test stoves. On the upper platform, surface, mill, and infrastructure construction is 88% complete, with concrete and structural steel erection being fully complete A mechanical piping electrical installation is well underway. The excavation of the tailing storage facility embankment key trench is about 95% complete, and the lower platform is nearly 50% complete. Concrete work on the lower platform is scheduled to start early Q3 and remains the critical tab for commissioning in Q4. Through June 30th, 87 of 95... The procurement packages are now complete and it's now really an exercise in execution and productivity over the next six months. The company anticipates commissioning using temporary power with the LNG and power generation to be operational subsequent to commissioning. The temporary power has been planned and is expected to be available for Q4. Similarly, there'll be other minor structures under construction during commissioning. And lastly, from a community relations standpoint, with the local community support continue to be a major commitment. A plant operator training program was established. A comprehensive training and support service plan is being prepared for groups and individuals seeking to form businesses that can provide local goods and services within the community. Again, for a fulsome construction update at Terra Nera, I would encourage you to visit our website where you'll find our quarterly photo gallery showcasing the latest developments, progress, and information on Terra Nera. Before we move to the Q&A part of the call, I would also like to highlight that we published our 2023 sustainability report titled Transformation in Motion in May that provides a deep dive into Endeavor's sustainability commitments, performance, and ongoing approach to responsible mining. You can view the full report and the company strategy on our website under the sustainability tab. With that, Operator, I'm happy to open this up to questions. Please proceed to that session, Operator.