Endeavour Silver Corporation

Standing by, this is the conference operator. Welcome to the Endeavor Silver first quarter 2025 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 may signal an operator by pressing star then zero. I would now like to turn the conference over to Allison 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 MD&A precautionary 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 EBRSilver.com. On today's call, we have Dan Dixon, Endeavor Silver's CEO, Elizabeth Seneff, our CFO, and Don Gray, Endeavor's COO. Following Dan's formal remarks, we will open the call for questions. And now, over to Dan.

Thank you, Allison, and welcome, everyone. Q1 marked a strong start to the year for Endeavor Silver, with solid production figures and continued progress on key developments. With Q1SB involving those performing in line with plan and Terran Air now producing concentrates as it approaches the final stages of construction, we're quickly approaching a major milestone. The addition of this transformational asset will soon become a key contributor to our production profile, marking significant steps forward in our growth strategy. In Q1, Endeavor produced 1.2 million ounces of silver and 8,300 ounces of gold, totaling 1.9 million silver equivalent ounces. We reported revenue of $64 million in line with the prior year, benefiting from the higher precious metal prices. Direct offering costs per ton increased by 6% compared to Q1 2024, caused by 6% lower throughput, while total direct offering costs remained relatively slack. The company reported a net loss of $32.9 million for the period, primarily due to the unrealized non-cash impact of gold hedging and four swap contracts entered into March 2024. These contracts, which relate to the portion of the forecasted gold production from the Terran Air project, were implemented as part of the senior debt facility used to finance its construction. As gold rose from $2,600 to $3,100 in the quarter, the loss reflects a mark-to-market accounting adjustment and does not represent cash overflows. Excluding mark-to-market adjustments, the company reported a small adjusted loss of $200,000 compared to incomes of $300,000 in Q1 2024. Cash costs were $15.89 per ounce of silver, and all entertaining costs were $24.48. Net of gold credits, both slightly below annual guidance, primarily driven by the higher byproduct gold credits. As of March 31, 2025, the company's cash position was $55 million, and working capital was $15 million. Cash and working capital decreased from September 31st, 2024, as the company continued investing in development activities at Terranera. Terranera is in its final phases of construction and started producing its first fast concrete at the end of Q1, and as of our latest news release on May 6th, commissioning is currently underway. Terranera represents a game-changing opportunity for Endeavor Silver. and is poised to redefine the trajectory of our company. As we move closer to commercial production, we remain excited about the transformational impact this asset will have on our business. With a projected mine life span of well over a decade, Terranero will serve as a long-term cornerstone asset in our portfolio, underpinning our growth strategy and reinforcing our position as a leading mid-tier silver producer. As the commissioning phase progresses, potential will be driven to increasing fees, and runtime, and ramping up to full throughput. The company will provide operational guidance as ramp-up advances. On April 1st, we announced the acquisition of the Colpa mine in Peru, and on May 1st, we closed that transaction. We're excited about the addition of Colpa to Endeavor's operating and growth pipeline as it significantly enhances our current production profile, with significant exploration upside and existing infrastructure for a long mine life. Coldwell represents a compelling opportunity where we can leverage our proven technical expertise and development capabilities. The project aligns with our existing operations and supports our strategy of building a scalable, silver-dominant asset base. The company is working towards validating and updating the historical resource estimates prepared for the previous honors. In the meantime, using CULPA's 2024 annual production of 5 million silver equivalent ounces as a guide, and with Terranair expected to come online in the near term, we are well positioned for a significant step change in production. When combined with our two producing assets, Squanus P and Volneos, Endeavor is on track to achieve annualized production of approaching 20 million silver equivalent ounces. With that, I'm happy to open up to questions.

Operator, please proceed to our Q&A session. We will now begin the question and answer session.

To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. The first question comes from Nick Giles with B. Riley Securities. Please go ahead.

Thanks, Dr. Ritter, and good afternoon, everyone.

Ben and team, congrats on all the progress this quarter. Really good to see. And my first question comes here, Nara. I think you said you'll provide guidance. As the ramp-up advances, my question is, what do you ultimately need to see in the ramp to have the confidence to come out with something more formal, specifically on the cost side?

Yeah, I mean, first and foremost, it's going to come down to production and throughput. We want to see that we maintain consistent throughput through the mill and all the way to the filter press. That way we have confidence on timelines of that ramp-up. Ultimately, we have a very short planned ramp-up of about 90 days, and that obviously could be plus or minus the 90 days. And because of that uncertainty, we don't want to give production guidance until we know at a higher probability of how many months we'll be offering at Terran Air. It doesn't make a lot of sense, skips the market. Six months, if we're only going to be offering for five months, or six months, we're going to be seven months. So that's the first and foremost is the production guidance. And then behind that comes the cost and the impact of the cost. Obviously, in the first three to six months of commercial production, we'll be running lower-grade ore than what would be deemed in our long-term mine plan, just to make sure we're getting through all the bugs. And we just want to go through that when we understand – grades and ultimately the timeline that we'll be offering for 2025 and provide guidance around costs with that. Obviously for 2026 we'll come up with operational guidance and costs with the other mines.

Dan, that all makes sense. I appreciate those comments.

Maybe just as a follow-up, it seems like white commissioning has gone well to date, but what are some of the most near-term priorities and just ensuring that, you know, the rent kind of stays on path specifically at the plant.

Yeah, I'm going to defer that to Don. I mean, but before I give it to Don, ultimately I'd say wet commission, it's hard to say how well it's going to date because it's a start and stop process. Ultimately, some days you feel like you're making steps forward, other days you take a break, and I think that's part of the nature of commissioning. You've got punch list items that you need to do, but as far as particulars of what's required, I don't defer to John on that.

Yeah, so Nick, thanks for your question. To stay on path, you know, our team there is really focused on, you know, going system by system. And, you know, you start at the upper end of the plant and work through the through to the lower end of the plant and that's what we've been doing now we've been we've been you know running the mills um been running the mills and and and checking systems out making sure uh you know bearings and clearances and things like that are running well and then we've just just started to feed um just started to feed um water and shortly the the tailing down into the tailing filter area that'll really get things rolling so it's just the process of uh

a process of working down through the system. Got it. That's all very helpful.

Guys, one more if I could. Can you remind me, what's ultimately the capital intensity? This is at COPA. What's the capital intensity of the throughput expansion from 1,800 times per day to the 2,500 level?

Yeah, at this point in time, just for the estimates work that was previously done by the front office, it's anywhere from $12 to $16 million to $2,000 to $2,500.

Got it. Okay, very clear. Well, guys, again, congrats on the progress, and keep up the good work. Thanks for the questions, Hank.

The next question comes from Wayne Lamb with TD Securities. Please go ahead.

Yeah, thanks, guys. Sorry, maybe just one follow-up question on the previous ramp-up period. Can you just clarify on that 90-day ramp-up, is that 90 days from when you started watching this thing, or if you could just clarify what specific timeline period you're kind of referring to?

Yeah. From May 1st, May 6th, we put that out just to keep it easy, May 1st. Okay, great.

And then this is on the cost of completion on the 332 at Piranera. Looks like you guys have about $7 million remaining in guided spend. Is that inclusive of all the costs through the commissioning and the wrap-up phase? Or just wondering if perhaps we should be basing it on a modest increase in the funding requirement as you guys kind of continue the wrap-up?

Hi, Wayne. This is Libby Fenness. To answer your question on how much to complete, the bills cost, yeah, you're right, we're about $10 million off from the guided total. And we're not anticipating many more costs to go into that, build costs. During the operating phase, or during the ramp-up phase, all of those costs are operating costs and go into the cost of the inventory, not into the build costs of the project.

Okay, great. Thanks. And then maybe just last one on the balance sheet. How comfortable are you guys in terms of the cash balance and working capital requirements you need to uh funds a terror narrow through the ramp up and just curious um you know how you think about the flexibility here on the balance sheet and if there's potential to quickly refinance uh once you've declared commercial production yeah there's a handful in there i mean any time with ramp up and going through commission there's a lot of uncertainty uh obviously our cash balance being 65 million

million dollars. We're at that phase of the project where it's high stress, high anxiety, and pushing to get it there. Make sure we don't run too low. In cash, it's something that we're going to be monitoring very closely over the next kind of two, three months to see how ramp up is going, to see where cash balances are. As far as when we get into commercial production, what we do with the project loan facility, and again, that's the overnight rates It's down to your risk and in operations. As a management team, our core job is to find the best cost of capital and also with that, make sure that we have sufficient liquidity to get through what we need to get through. Obviously, one of the low needles right now are creating cash flow for us. But like I say, we're at the stress point of the build and we're coming down to the end. And the sooner we can get into it, commercial production, obviously, the better for Karen Aaron, ultimately, the company.

Okay, perfect. Thanks for taking my questions, and best of luck with the graph up on the moon side.

Thanks, Wayne. I appreciate the questions.

Again, if you have a question, please press star then one. The next question comes from Heiko Ely with H.T. Wainwright. Please go ahead.

Hey there, Dan and team. Thanks for taking my questions. Just building on your prepared remarks from earlier and the first question that was asked in the Q&A portion earlier, are there still meaningful cash flows going into Terranera in Q2? And if so, you want to give us a best-get estimate how much is getting shipped there in Q2 and what it's being spent on? Yeah, we are still spending money. In April, we were spending money down there to get everything completed, get into the commissioning process. Let me touch on a little bit, too. What's changed in the accounting world is ultimately revenues are recognizing the income statement and cost of sales are recognizing the income statement. Obviously, going from zero tons, hopefully up to 2,000 tons, we'll be making a lot here in QG as we're commissioning. But we don't capitalize that anymore, and there is cash out for it. Unfortunately, we don't have April data ready and complete, so I don't want to comment exactly on how much cash we sent down in April. We did continue to fund in April, but now with kind of the whole plant being run, tailings prep in there, it's about instrumentation and going through commissioning. There's still costs incurred with that. Obviously, there's going to be costs incurred with finishing up various little things, but the big spend said done, that

Hopefully, it's slowed down, and now it's just about commissioning going into operations. That's a good answer.

And obviously, I wrote these questions before I joined the question here, so I have to adjust a little bit. Shifting gears completely on COPA and Julio curiosity, there's a huge operation on the 25-pound excerpt of claims. And in your press release announcing the deal, there was a little note in there that only 10% of the claims have seen work thus far. Can you walk us through some of the higher-priority targets that you have for this year and even beyond that now that the deal is formally closed?

Yeah.

I mean, we actually have a significant budget at COPA. Again, it was from the press after a couple of days. and worked on from October to December. They made a new discovery on a vein they call Podorosa. That was an interhistorical resource estimate. We have just got our boots on the ground with regards to our exploration team and trying to help the COPA team out with their exploration plans. I think they've done a phenomenal job mining the COPA assets. They've done a phenomenal job growing that asset. We think where we can help them out is the exploration, the work that we can do on it. There is a main structure that supports about half the production at Copa. We think there's opportunities for additional structures like that, and perhaps this Polarosa is one of those. We have effectively a $12 million exploration program for the next 24 months or from when we acquired it in 24 months. Then there's also tension veins coming off the main structure that were recently discovered again by the predecessors, and we're working on that. So right now, on the year's term, we're going to continue to focus on some of these veins that they were previously working on, and we're going to take a step back with our exploration team, look at some brownfields opportunities, and look for markers on surface through geochem work, trenching work, geophysics, to try to identify some of the more significant structures. There's a lot of things. There's a lot of workings over the history. So it's very similar to almost all of those that we went to 20 years ago where we can bring in exploration techniques and expertise and hopefully uncover more resources. I would point that there is a historical resource of about 118 million ounces. We are working to validate that. and ultimately eventually grow from there. So we have some time. They have a long time in place. Before we give too much comment, we just want to get more into the data and validate a lot of the historical work they've done. Just through our standards, we're more comfortable talking about it.

That's very helpful. I'm going to get back to you and thanks again for the answer and good quarter. Thank you, Heiko.

This concludes the question and answer session. I would like to turn the conference back over to Dan Dixon for any closing remarks.

Thank you, operator, and thanks for everybody attending our Q1 session. As everyone likely knows, Q2 is going to be a very important quarter for us. Obviously, we're really focused to get Carinera ramped up and into commercial production as soon as possible, and look forward to our Q2 earnings call in July or August.

Thank you.

This brings to an end today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.