Endeavour Silver Corporation

For standing by, this is the conference operator. Welcome to the Endeavor Silver Second 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 1 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, Vice President, Investor Relations. Please go ahead.

Thank you, Operator, and good morning, everyone. Before we get started, I 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. On today's call, we have Endeavor Silver's CEO, Dan Dixon, our CFO, Elizabeth Dennis, and Endeavor's COO, Don Gray. Following Dan's formal remarks, we will open the call for questions. And now, over to Dan.

Thank you, Allison, and welcome, everyone. Q2 marks an eventful quarter for Endeavor Silver. The commissioning of Terranera, the acquisition of Colta, and its ongoing integration. This is transforming our company. As we move forward, our focus remains firmly on achieving commercial production at Terranera. In Q2, Endeavor produced 1.5 million ounces of silver and 7,800 ounces of gold, totaling approximately 2.5 million silver equivalent ounces, including some of our base metals now. This represents a 13% increase compared to Q2 of 2024 with the inclusion of our new mine in Peru, Colpa. We reported revenue of $85 million, an increase of 46% compared to prior year, benefiting from the higher price of metal prices and increased production. Mine operating cash flow before working capital changes rose by 21%. while operating costs remained below guidance with cash costs coming in at $15.35 per ounce of payable silver, and all in sustaining costs were $25.16 per ounce, net of $5 credit. Direct operating costs per term are relatively flat compared to the same period last year. Mine operating earnings decreased to $7.7 million from $10.2 million in Q2 of 2024 impacted by a $6 million loss at Terran Air during the commissioning phase and increased depreciation. The company reported a net loss of $20 million for the period, primarily due to Terran Air's offering losses during commissioning, increased G&A related to the acquisition of COPA, a $10 million non-cash loss on droves with increased depreciation and tax expenses during the quarter. As of June 30th, the company's cash position was $52 million. However, working capital was negative. If we excluded the non-cash derivatives, there is a $14 million surplus. This is by design with Terranair nearing commercial production. On August 5th, the company gave an update on throughput and recovery as the mine makes its way towards commercial production. With throughput significantly averaging between 1,900 and 2,000 tons per day, and silver and gold recovery averaging 71% and 67% during the second half of July, the company will be introducing higher-grade materials to help enhance recovery and sustain the design throughput of 2,000 tons per day. With ramp-up advancing, Charon Air continues to move closer to commercial production, adding a long-term asset to our portfolio while reinforcing the company's position as a leading mid-tier silver producer. Since the Monera-Colpa transaction closed on May 1st, integration of the new asset and teams has been going well. The company has continued to work on validating and updating the historical resources prepared by the previous owners, and as such is unable to provide production guidance for Colpa until a current 43-101 resource exists. Our management expects a similar production profile to Colpa's 2024 annual production of 5 million silver equivalent ounces. Colpa's May and June production annualized, Our production output tracks to align with Copa's historical performance, which would be annualized at 4.8 million ounces of silver equivalent production. Copa has continued to assess and is planning towards a 2,500 ton per day operation, and we've included additional capital in our outlook to achieve these production levels next year. When combined with 1SB involving those and with Terran Air coming online in the near term, Endeavour is on track to achieve an annualized production profile of 20 million silver equivalent ounces and expect that in 2026. Lastly, before we open this call to questions, we continue to advance the Pit the Reel project. Exploration work is focused on upgrading inferred resources to indicate it, and engineers are working on various studies to support tailings dam permits and an economic study. Again, it's been a very eventful and busy quarter, and with that, I'm happy to open this up to questions. Operators, please proceed to our Q&A session.

Certainly. We will now begin the question and answer session. To join the question queue, you may press star, then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your questions, please press star then two.

We will pause for a moment as scholars join the queue. The first question comes from Heiko Ilda with HC Wainwright.

Please go ahead.

Hey there. Thanks for taking my questions and congratulations to Allison for becoming part of the management team. Well done. And commercial production. Oh, lovely. Commercial production at Terra Neris is obviously nearing. In your experience, just knowing exactly what goes on at the site on a daily basis, can you maybe just give a bit of a color on what you're seeing there right now? I mean, you're a leaf. You discussed 71% silver recoveries and 67% gold recoveries, but these figures are from two weeks ago. And the same thing with the 1,900 to 2,100-day throughput rate. Any idea what we're seeing this week more recently? And then more importantly, is the wrap-up going faster than what you had previously thought? Because it's sure quicker than what we had in our model.

Yeah, thanks for the question, Taiko. I mean... I'll be able to answer that past one. We'd always said we thought we could get through commissioning and ramp up in a relatively short period of time. Obviously, we were targeting kind of a commercial production July 31st, and we're very close to that. We really want to see our recovery kind of get within kind of 90% of the historical life of mine recovery. If I recall correctly, over the life of mine for Carinera, in our optimized plan, it was about 88% or 89% recoveries of silver and 76% to 78% recoveries on gold. And obviously, we've kind of reached that from a gold standpoint. Silver grades have been slightly lower just on some of the lower grade ore that we're putting that through. And then some design modifications, just getting the stag mill and the ball mill to grind size as designed, and with the grind size coming down, we'll see increased recoveries on silver. As far as the last couple weeks on site, I haven't particularly been there, so there's nothing that I'm seeing, but on a daily reporting standpoint, we did bring back our tons a little bit just to focus on recoveries and make sure we get that grind size that we need, again, to align to the recoveries that we expect in the feasibility study and the work we've subsequently done. I don't know. I've got Don Gray sitting here with you. I don't know if you've got anything to add to that, Don, with regards to what's happening on site and things that we're seeing.

I think, like Dan said, the focus right now is on getting our, especially our grind size to the design criteria that we have from the net testing. And the order is very grind size dependent versus dependent on other things like reagents and things like that. So if we get the grind size zeroed in, like on the sag mill, we'll see good recoveries on the flash cell, for example. So that's what they're focused on at site, and they're really zeroing in on that now.

And then I know this was a lot, so I'll keep the other one very brief. Just conceptually with Minera Culpa, The integration, I assume, has taken a decent amount of everybody's time here on this call. Is that making you especially unable to go after another target, or are you still looking for additional things, meaningful acquisitions that are out there?

Yeah, no problem, Heiko. That's a good question. I mean, there's only so much capacity that we can pick up as a management team, and Definitely when we announced the acquisition of Colpa on May 1st, and obviously April 1st and closed it on May 1st, it takes up some of our executive time. The one thing that is great about Colpa is its management team. They're reported into two groups. One was a closed-end fund. The other was a property management or real estate company that was actually listed in Lima. So they do have the administrative capabilities to kind of report into us. You didn't have to add a lot of bodies. Obviously, I've probably been working our team a little bit harder than what they want and what I want, but there's certain times in a company's history that those opportunities present themselves, and we took a kick out of it. Are we done? we're not done. We need a bit of a breather. We really need Terran Air to be in commercial production and cash flows to, or April to generate positive free cash flows, improve our balance sheet forward and ultimately pay down debt and then focus on building our balance sheet so we'll take on something like Pizzeria. But, you know, our DC appropriate development continues to review things. We've had a lot of various assets or various opportunities coming to our desk in Peru now just because of that acquisition. But we need a bit of a breather. We need to get where we need to be and then obviously continue to see something that we want to be as a creative and make sense for Endeavor and just stay silver focused and continue to grow the company.

Perfect. I'll get back to you and stop hogging the Q&A. Thanks a lot and congratulations again.

Thanks, Isaac. Our next question comes from Wayne Lam with TD.

Please go ahead.

Yeah, thanks. Morning, guys. Thanks for taking my questions. Yeah, maybe just a follow-up at Terranera. You know, obviously a lot of folks are on the impending commercial production announcement. So I guess, you know, with the tonnage being essentially over 90% in the month of July of design capacity, so just to clarify, you guys are just

um kind of trying to optimize the recovery to get closer to design and that's the only um i guess impediment to a commercial production announcement or is there anything else and just curious no no yeah that's it wayne i mean we don't want to pigeonhole ourselves to that from a from a concentrated spec standpoint we want to hit that but we're generally there so it really comes down to hitting recovery is getting designed great because grind size down to design and need it for recoveries, and we expect that relatively short. We're moving in a good direction, and hopefully we're close.

Okay, yeah, it seems like you guys are, you know, on the verge of an announcement and, you know, giving the expectation that the recoveries would also improve alongside the grades. as well. Maybe turning to Colpa, the operating cost per ton this quarter seems to be a little bit higher relative to those under the prior operating a few years. So just wanted to ask what's driving that and should we anticipate that to come down as you guys sink your teeth a little bit more into the operations of the mine?

Yeah, obviously there's integration costs that are flowing through in May and June. When someone comes in, obviously additional flights, everybody's trying to, whether it's IT systems, some of that gets expensed through that development. changing their accounting policies, a little bit of understanding everything. Obviously our expectations to be more aligned to what they did in 2024. There's obviously inflationary pressures when a new company comes in, they have additional apps. We want to be good custodians of that mind and kind of support them and improve. There's some things we want to improve, but honestly they did everything really well. If we stayed at 2,000 tons for the next six months, I'd expect costs to come down and more aligned to 2024. But again, we are looking at going to 2,500 tons. We have put in kind of growth capital in our outlook. We haven't completely finalized when that's going to occur. Some permits are required for that. But we do expect kind of an increase. And hopefully next year, sometime in 2026, we're at 2,500 tons. Maybe it starts earlier, but we don't have enough information to kind of define that timeline exactly yet.

Okay, got it. Yeah, I guess that would be my last question. Just on that comment on the expansion, which you guys had kind of telegraphed as a potential optimization at the plant on the acquisition announcement. In terms of getting to the 2,500 times a day, what is – I guess, is that $12.5 million the incremental capital that you would need to get there? And then on the permanent side, what exactly would be needed for that incremental extension?

Yeah, so the $12.5 million is the incremental cost required to get there. In our sustaining capital, we've included some capital in the sustaining that would, if we didn't do an expansion, it still would contribute to 2,000 tons per day, so i.e. mine development or partly with tailings expansion. But there are parts of it, i.e. installing vocation cells and the actual mill that is that $12.5 million dollars. They have the permit to expand. They need the permit to operate. I'll let Dawn clarify. Yeah, that's correct.

It's in the process, and, of course, you know, in different countries, different agencies approve, like, the environmental permit and then approve the operating permit.

And that's kind of where we're at on some of the expansion items. Okay, perfect.

Yeah, seems like a well-timed transaction, and certainly looking forward to the optimizations ahead. Thanks for taking my question.

Thanks for the question, Glenn. Our next question comes from Nick Giles with BRID Securities.

Please go ahead.

Hi, Tim. This is Sandhya here on behalf of Nick Giles from BRID Securities. If I may, I just wanted to touch on the financials. How are you thinking about hedging on a go-forward basis, given that the equity appears to be impacted by the volatility in financial statements?

Yeah, I'm happy to answer that. Right now, we do have some hedge contracts on our balance sheet. We have 68,000 ounces of gold that we sold effectively at $2,325 in March of 2024. And that's our derivative liability and ultimately our derivative loss. Our preference is not to hedge precious metals. Obviously, we're a silver company. We believe People that want to buy the Endeavor name and play, first and foremost, their hypothesis is silver is going up. If you think silver is going down, I don't think you should buy a silver company. And we want to give that exposure to our shareholders. We do have some collars put in place that we did this quarter. We collared about 9,000 ounces of silver between $31 and $42. That's all designed around our lending facility, similar to our 68,000 ounces of gold. But as we start getting into cash flow at Terranera and start playing down that debt, I wouldn't expect us to really do any hedge programs around silver and ultimately precious metals.

Thank you. That's helpful. Just maybe one more on the working capital side. So how should we think about working capital in the second half of 2025? Should we expect a release soon this year, or it could be more towards not hitting the triple targets?

Yeah, I mean, it's all tied to commercial production. Terran Air and the cash flows that Terran Air is going to generate. Obviously, as I said kind of in my spiel before the questions, it was by design that our working capital was going to get this low. I mean, we have $52 million in cash, but we do have a significant payable And that's all part of building the mine and getting through commissioning and getting to positive cash flow. So our expectation is Terran Air gets to positive cash flow and that working capital improves over the next two quarters, three quarters and all beyond that and start lowering our debt that we're carrying and then ultimately looking at next transaction and next bill. But again, expect working capital to improve in the second half of the year as Terran Air goes into production.

Thank you. I'll turn it back. Thanks for the question, Sundariya. Yes. Thank you.

Once again, if you have a question, please press star, then 1. Our next question comes from Phil Kerr with Venture Financial. Please go ahead.

Thanks, operator. Just a couple of questions on my end, Dan. At Full Amigos, the mill underperformed on the back of some component replacements. Has the throughput normalized now?

Yeah, that's a great question. I'm glad you brought that up, Phil. Actually, you're right. Our throughput out of the mill in Q2 is lower than what we've seen over the last four or five years. Replaced some parts in the crusher, replaced the motor on one of the mills. It costs us about 10 to 12 days. We are back up to the 1,200 tons per day. Ultimately, our costs at Balmy Dose were higher because of that, just with the lower throughput, same amount of costs over less tons. Obviously, Balmy Dose is in a big part going forward, but it's still important. They're a phenomenal little mine that's been scrappy and continues to find resource and extend mine life and good gas costs, so we expect Q3 and Q4 to be back online and If you look at our guidance between Guam City and Balmido in January and where we're at, we're right in that range. Balmido seems slightly behind Glenn, but again, we expect that to catch up here in Q3 and Q4.

Perfect. That's great. And over at Coldblood, now that you've taken the keys and gotten under the hood a little bit more, assuming that maybe you've dove into some of the exploration potential there, Have you had a little bit more, you know, boots on the ground and evaluated some of the targets and opportunities there? And if you could highlight some of those for us, that would be great.

Yeah, that's another great question. Obviously, when we bought Copa, we explained to kind of our audience that we really like the exploration potential. Luis Castro, our Senior Vice President of Exploration, has been down there a couple times. We are kind of aligning and where we thought we could bring a lot of value was exploration and kind of coming up with a more systematic approach, a lot more surface work. They did a lot of what we see in Latin America falling in the vein. It hinges out and doing cross cuts underground. And Luis is kind of trying to get them to go back to surface and using GeoCam geophysics uh and identify that way with surface work and then be more systematic about how we're drilling and what we're doing that uh assays have to go to third parties so we can include that into our current resource they've been putting interactive out so we are kind of reorganizing exploration group we do expect to get some exploration results out relatively soon there's a thing called poderosa west that we touched on on acquisition seen good grades and good widths, but again, we want to get kind of a group of holes together so it's actually meaningful, and we expect that to be out in the next couple weeks. Things have been lining up exactly as our expectations. When I say next couple weeks, I mean sometime by mid-September. I'm getting that from our staff. Everything's lining up to our expectations. Work needs to continue to be done, but we're

Very good. So it's fair to say that as you prioritize and evaluate the various targets, that maybe a little bit more aggressive efforts will be laid out in 2026? Yeah.

I mean, under the agreement, there's a contingent payment of $10 million based on the resource that we publish. And if we publish $100 to $120 million, we pay a sliding scale payment up to $10 million. We have to spend $12 million on exploration over 20 24 months over that two-year period. Otherwise, if we don't spend that $12 million, that goes towards the $10 million payment. So we expect a program of $12 million over the next 24 months.

That's a great refresh. Appreciate that, Dan. No problem. Good for me, Alfredo. Thank you. Thanks for the question, Phil.

Our next question comes from Alex Terentiu with National Bank. Please go ahead.

Hi, guys. Thanks for taking my call. I apologize if I didn't already answer this question. I'm traveling at the moment, so I just got on a bit late. But at Colpa, on the expansion, you know, you said the development capital is spending about $13 million this year, or that's your guidance. Does that mean there is going to be more for an expansion to get to $2,500 next year? Or I'm just trying to understand kind of timing of getting there and what would be required to operate at those levels.

Yeah, so what we've included in our disclosure, ultimately, we have $18 million in sustaining capital and $13 million in expansion. That $18 million, as I say, includes expansionary stuff. But if we didn't expand, it's part of sustaining. And that has value going forward. The $13 million is effectively size and scale of the tailings. pulpit breath and insulation in the mill and flogation cells, and we talked about that a little bit earlier. We do expect that to get to 2,500 tons per day, and as I say, it's just a question on timing, and Don is so confused. There are some operating permits that are needed that are expected relatively soon, which impact that timing, but we could get that all done and get to 2,500 if everything aligned perfectly this year. Is there any other capital, Don, you think that we would need next year?

And we're going through the budgeting right now, so we'll be evaluating that. But the major push is for this expansion capital and getting that completed on time. And so that's our big push right now.

Okay. Yeah, that's good. You know, I was kind of assuming a bit more spending next year, but it seems like you've brought forward some of that this year instead. So that's fine.

You're correct, actually, on one of those things, and maybe we've spoken in the past. The tailings facility and the expansion, that was not originally in our forecast on May 1st, and because of rainy season and timing, we did bring some of that forward to try to get that done before rainy season just for efficiencies.

All right, perfect. That's it from the operator. Thank you.

Thanks for the questions, Alex. Thank you.

To ask a question, you may press star, then 1. Our next question comes from Craig Stanley with Raymond James. Please go ahead.

Thank you, Aaron. Hi, all. A couple of quick questions for me. Karen, how are the first parts working?

Well, thanks for the question. They're working really, really well. It took about a month to get the first built of press going. As you know, we have those that don't know we have about 4 000 times capacity on our filter presses at the back end of the plant we want to make sure we have redundancy for startup and obviously in the operations and eventually if we ever needed to increase production so we have two kind of twin filter presses a few two thousand times per day each we call it still press one filter press two nothing special with that but with filter press one getting enough in conditioning we were taken sensors and parts from Filter Press 2 and it took about a month to get it commissioned and operating as we expected. And then Med-Phil provided the parts and sensors that we needed for Filter Press 2 to get that going and that took about only a week to get up and commissioning and operating. We've switched between 1 and 2 and as you saw, like I say, we saw our numbers for July and The filter presses have gone really well. We bought a bunch of cloths early on. We've been lucky in the sense that the first cloth we put on the filter presses has gone well. The concentrate filter, we started up, we got our output pretty good. We're still working on some kinks there and starting to change some cloths with regards to the effect of the concentrate. But I think, and Don will touch on this, is ultimately we went a lot smoother than what we expected, which is a pleasant surprise.

Yeah, I think anyone that's been involved with... Historically, with filter press, conditioning and operation sometimes is the bottleneck for your production. And once it got up and running, it just wasn't. Neither the tailing nor the concentrate filters. And now that the concentrate filter is running really well, we're getting good moisture content on the tailing filter. it went really well. We're really pleased with the performance there.

Thanks. Colpa, what would you think you'd put out of press release with the results of an updated technical report? The initial 43-101, I guess, under you guys.

Yeah, well, on acquisition, we actually put out a 43-101. It just had resources and referred to the historical resources We've engaged SGS to kind of go through that, and we have the twin holes. There's work to be done to validate all the work that is historically done, and obviously we want to make sure that number aligns a little bit to what we expect it with our historical resource, and that's going to take some time. It's probably mid-2026. We would try to really push for the beginning of next year, but it it looks difficult to get it done for that soon. So we'll see. Like I say, we know what we're doing. We have an operating plan. But just to get clarity out there in the marketplace, we want to make sure we get that current reverse out there, which will take some time.

And then just finally, Pitoria. Is an updated study still coming out here in the early new year?

Early new year... It's probably optimistic at this point, just because Terranera has split a little bit on us, and we want to move some bodies from Terranera into the pizzeria. We do have various engineering groups, SRPA, STF, working on studies. The biggest thing that we've been focusing on is the Jaming Stam, the Jaming Stam site, so we can get that done. All that work done, part of that study then ultimately into the government because that is the one key permit that's needed. Again, for everybody on the call, we have them here. We have our environmental impact assessment there. We have a permit to build the plant. We have a permit to mine underground. We've got a few kilometers added already into Pizzeria. The biggest bottleneck from a permitting standpoint will be the Taney's Dam. We own over 5,000 hectares there. It's in a great jurisdiction, great state of Durango in Mexico, so it will take a little bit of work, but we feel like we'll be able to just stop for a minute and then hopefully move in and continue to advance Katerina.

Awesome. Thanks for answering my questions. Thanks for the questions, Craig. Hope it's all well. Thank you. Ladies and gentlemen, if you have a question, please press stars and 1. We have no further questions at this time.

I would like to turn the conference back over to Dan Dixon for any closing remarks.

Thanks, operator, and thanks to all our shareholders. I know Q2 had a lot going on, and we're getting very close on Terranera. We completely realize as a management team that the focus is on Terranera and delivering commercial production and ultimately cash flows and ultimately getting Terranera to what we expect it can do and then beyond that. growth with Tipperia, but with COPA coming in and going to be involved in those, continue to perform. We were on the track to improve our balance sheet significantly here over the next six months and then hopefully continue to grow after that.

So have a good day and talk to everybody soon.

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