Endeavour Silver Corporation

Thank you for standing by. This is the conference operator. Welcome to the Endeavor Silver First Quarter 2026 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. To give you distance 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 Pettis, 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 Dan Dixon, Endeavor Silver's CEO. Elizabeth Sennett, our CFO, and Luis Castro, Endeavor's CO. Following Dan's formal remarks, we will open the call for questions. And now, over to Dan.

Thank you, Alison, and welcome, everyone. Endeavor Silver delivered excellent results in the first quarter of 2026, setting new records in both production and revenue. The strong performance generated significant cash flow, underscoring the company's remarkable growth trajectory. With the Coldwell plant expansion substantially complete and Terraneris operations performing near design expectations, we are entering an exciting phase for the company, and we look forward to building on this momentum as we progress throughout the year. In Q1, Endeavor produced nearly 2 million ounces of silver and 12,000 ounces of gold with base metals, totaling 3 million silver equivalent ounces. This represents a 78% increase compared to Q1 2025 with the additions of Culpa and Terranera. We reported revenue of $210 million, an increase of 230% compared to prior year, with top sales of $116 million, mine offering earnings of $94 million, and mine offering cash flow of $150 million before tax. 400% increase from Q1 2025. Our all-in sustaining costs netted by-product credits for $37 this quarter. This represents a 51% increase compared to Q1 2025, when Colpa and Serenara had not yet joined Endeavor's production portfolio. It's also worth noting that these costs were 9% lower than Q4 2025, primarily due to the ramp-up of operations of Terranera with gain deficiencies throughout the quarter, and we anticipate further reductions in these costs as we continue to optimize operations throughout the year and capital expenditures become normalized. In Q1, Endeavor recognized adjusted net earnings of $59 million on adjusted earnings per share of 21 cents. Both direct operating costs per ton and direct costs per ton were allocated this quarter. To clarify how we define these costs, our direct operating costs per ton include direct input costs associated with mining, milling, and site-level G&A. Our definition of direct costs per ton includes royalties, mining duties, and purchase of third-party materials. Changes in the metal prices have a meaningful impact on our direct cost per tonne. For an example, a $1 increase in silver, cost per tonne rise by about $0.90 at Terranera, Guana City is $3.80, and $0.50 at Colpa, obviously due to the higher royalties, the mining duties, third purchase costs, and federally required profit sharing. Our direct offering cost per tonne rose by 30% in Q1 compared to Q1 last year, as a result of the inclusion of Copa and Terranera into our portfolio. Both assets carried higher offering costs in Q1 than what is expected going forward. During the first quarter, Copa installed and commissioned a new three-stage crusher and ball mill, increasing plant capacity to above 2,500 tonnes per day. There remains additional plant expansion expenditures. However, these will dissipate as we move through 2026, and we expect to see benefits on cost metrics starting this quarter. In Peru, we've experienced pressures on attracting and retaining skilled labor, impacting labor costs, training costs, and overall efficiencies. We expect this to continue, but the additional costs will be offset by the efficiencies of an updated and expanded operations. At Terranera, we're in the infancy of operations. In Q1, we made a significant transition from a construction startup team to an operations team, adjusting and reducing personnel. Mine and plant metrics have steadily improved through continuous measurement, review, and adjustments. As the operation settles into consistent day-to-day rhythm, cost efficiencies are expected. As one-time capital investments are completed in the first half of the year, we expect operating cost metrics to decrease, with higher ore grades expected in the second half. We also expect significant improvements on a cost-per-ounce basis. Exploration billing has restarted at Terran Air, and we expect to provide an update later this quarter. I should note, we have not transitioned our power generation to the LNG plant. But expected before the end of this quarter, we have the necessary authorizations and plan to commission the LNG vaporization plant this month. At Guam City, cash flows were north of $20 million this quarter. The mine incurred higher operating costs per ton, largely due to lower throughput with minor increases in our absolute costs. As an operation, the royalties purchased over mining duties and profit share is a significant part of that cost structure, and thus we saw increases. Step-out drilling has commenced, and also we expect to provide results later this quarter. As of March 31st, our cash position was over $232 million. Working capital was north of $173 million. which gives us a strong and stable foundation to drive our ongoing initiatives. We remain committed to advancing progress at Pitharia, where steady investment in exploration studies and economic evaluation continues to move forward with the expectation to provide economic evaluation in the third quarter. In closing, our strong financial footing in the successful expansion of the focal point and the steady improvements at Terranera could endeavor in an excellent position to meet our production targets this year. These achievements reflect our unwavering focus on operational excellence and our ongoing dedication to delivering long-term value for our shareholders. I'd like to thank everyone for their continued support and engagement. And with that, I'm happy to open up to questions. Operator, let's proceed to the Q&A session.

Thank you. During the question queue, you may press star then 1 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 2. Our first question comes from Heiko Ehle with A2WinRite. Please go ahead.

Hi, Steve. This is Keith Bondurn filling in for Heiko. He's on a flight right now. Thank you for taking our call.

Happy to take your call. Thank you. Absolutely.

First question, the grades step up at Terranera. Next week will be halfway through the second quarter. Any views of what you've seen with grades in sight during this period so far?

Yeah, we have a Q1 and Q2 grades a little bit similar. Q2 we expect to be slightly higher than Q1. Ultimately, the real step up in grades is the back up to be green into Q4.

Okay, great. Thank you. And the second question may be a bit of a philosophical one. The tear and error approaches named plate capacity. Could you maybe talk about what you saw and learned during the ramp-up phase that maybe will be useful as you move other assets into production? And I guess as a sweetener to that, anything you expect to add to the pit or rail feasibility study that you may not have expected a year ago?

how much time do you have of things that we learned during the turn, a build-out phase? I mean, I think as an organization, it's our first build from scratch, and there's a lot of learning, and I think we can apply a lot of that. In fact, in Q4 and Q1, we did a post-mortem or post-review of construction of things that we can improve, so we can take that over to Obviously, continuity is a very important part, and this year, Don Gray retired, and we replaced Don with Luis Castro, who's been with the company for 21 years, but there are a lot of people that remain in the company that were involved with the construction of Terranera. If we can move Pizzeria along in accordance with what we think of our timeline, sometime in 2027, starting that construction, we can benefit from it. from processes and protocols and procedures that would be put in place at Terranera. I think those will be stronger going forward. And it's just a lot better position as a company to take on a second build, so to speak. And so we're well positioned. The biggest part of that is really understanding all the permits and permits that are required. I mean, as we went through, we originally got our MIA up Terranera about 2015, 2016. P3 already has its MIA. There are some other permits that are required around that NIA specifically around the tailings storage facility. And we're going through that process to try to obtain that by Q1 of next year. But behind all that, there's about 130 some odd permits that you learn to go through and how to navigate that through the government. And I think we have the ability to do that a lot quicker than what we did at Terra Nera. We're excited about what we've gained from a knowledge standpoint at Terran Era, and we think we can apply it at PITREA. And then for your second part of that question, at this point, there's nothing new that's surprising at PITREA. There's a lot of work that was done. SSR has invested $145 million. They've done a pre-feasibility study on underground operation in 2009. They did a lot of work on an open pit operation in the feasibility study that was 2012. I mean, we've been looking at this now for three years. And so there hasn't been anything, I'd say, in the last six months to eight months that jumped out that's been surprising to us. We have a good indication of what the plant's going to look like and what the capacity of the mine is. And that will come out in due course when we put out, effectively, the feasibility study or 43-101 feasibility study later this year.

Thank you so much. I'll hop back in the queue. Thank you for your questions.

Once again, if you have a question, please press star, then 1. The next question comes from John Tommaso with John Tommaso's Very Independent Research. Please go ahead.

Congratulations on all the increased production and raining cash and all the good things. Some other companies in Mexico have had bumps in the road. One company had their plane shot down a month ago. Another company had a very tragic incident in January. You've got at least four locations where you're operating. Is there any particular secret to your operational success and good security results? Some parts of Mexico are so much better than others.

Yeah, but I think that's the specifics to it all, is there are parts of Mexico that are more secure than others. I mean, it's hard to say that we haven't had our issues. In February, there was a code red in the state of Jalisco when one of the captains of the cartel was killed, and that on the Sunday following, they put a blockade into 22 different states, and Puerto Vallarta or the state of Jalisco and around Puerto Vallarta was significantly impacted with blockades of the highways. Now, I don't think there was a lot of, there was some unfortunate incidents with citizens, but generally citizens weren't targeted. It was just a target to the government to show power, I guess, of that cartel and For us, it impacted our supply chains, and we shut down operations for three days to make sure that if we had any safety incidents, we could get to a hospital. So, like I say, it's not to say that we have not been impacted, but I'd say generally our areas that we operate haven't had significant violence. But we've got a team in place, a security team in place that's provides us intelligence, and we make various decisions based on what's happening in Mexico and what's happening in various states. So, again, we've been in Guanajuato for 20 years and very low impact to all that, and we actually sold our Balonizos operation in January, so we're no longer in Guanajuato, and then in Jalisco, like I say, we're an hour and a half from Puerto Vallarta, which is considered a very safe area other than that two-day event, and There's about 3 million Americans and Canadians that visit that area on an annualized basis, and we're very happy to operate there, but keep our eyes open and keep your stick around and try to understand what's all happening.

Are there any variations in cost between your locations due to logistical costs where you maybe avoid a bad neighborhood or anything like that?

Not so much. Yeah, nothing that would be significant. I can recall back in 08 or 09, we made sure we didn't drive by a certain town, which had about 35, 45 minutes of driving time up to Guantanamo City, which was about four hours away. But ultimately, the costs associated with our security between Terranera and between Guantanamo City and ultimately also now at Culpa are very similar, right? a lot of the same procedures and protocols are in place. So from a significant standpoint, I would say no.

Thank you, and I apologize for even asking these questions, but they're things investors mind.

Yeah, no, that's a very fair question. We get them often in our meetings with investors, so happy to answer them.

Thank you.

The next question comes from , but please go ahead.

Hi, team. Congratulations on the quarter. I was on another call, so I don't know if this question has been answered, but so on , I mean, the grades have come pretty low year over year. So third-party material approaches have also increased almost one-third. At what point does this ore economics change, you know, and start to dilute margins, that we stop purchasing third-party ore or we continue doing that?

Yeah, I mean, the higher prices obviously allows us to go after lower-grade materials, and the great thing is we mine corn and seed now for 20 years, and there's areas of the old parts of the mines, North Provenier and what we call Santa Cruz South and Central Portmere that would have material left behind that would have been running 225, maybe even 250 gram silver equivalent material that you can go back in and mine. As prices go up, your cutoff rates come down. Some of the grades that we're pulling right now, we have 275 grams, more from the depth of El Curso, which is on the Frisco ground. We pay a significant royalty there too. As we move through the year, we're going to be going into an area called Malache, which is 100% controlled by us. We've got an area near P, near Dulce, which we mined up at 2015. We've been working in there. Some of that's on Crisco's ground, some of it's on ours. Obviously, as a management team, we continually look at grades and cut off grades and ultimately margins and is provided that GuanaSuite is going to still continue to be profitable. And as I say, we did north of $20 million of free cash flow there this quarter. We're going to continue to operate it. Right now, we don't have a huge reserve base. We know we can get into 2027 and maybe into 2028, probably extend that. We're going through that work. We've started some drilling in various areas and started to go back into other areas and build out our resources. And we'll have a plan in place for the end of the year of how much longer we'll be at Fauna City. And I suspect we can get there for quite a while, especially at these prices.

Got it. That's really clear. And just one more on Petulia FS. So is it still targeted for Q2 2026, given that the spend, 1.8 million spend in one queue was pretty low? Yeah, we've made a lot of commitments.

Yeah, we've made a lot of commitments. Our spend's a little lower in Q1 than we expected, but we've started to push that work. We would be probably a handful of weeks behind, but not significant amounts. We're still hoping Q3 of 2026. Maybe it ends up being more of the back half of Q3 rather than the front half of Q3, but we'll see how all that progresses over the next couple months.

That's good. Thank you. Thanks for taking the questions.

Thanks for the questions.

The next question comes from Craig Stanley with Raymond Gaines. Please go ahead.

Thanks. Thank you for taking my call, guys. I think you indicated you expect grades to pick up a bit at Terran Air in the second half of this year. Are you going to be mining Lelouse?

Yeah, Craig, good questions. We're actually drilling Lelouse right now. As you probably know, it's about 150,000 to 250,000 tons in our mine plan, in our feasibility mine plan. So right now we're actually drilling a little bit to depth to come up with a more efficient mine plan just because of the scale. I'm trying to figure that out. So we took the rigs out. We were drilling Terranera this past quarter, and those rigs are going back to La Luz now that we have assays, and that will drill La Luz probably until mid-year and then start building a mine plan for that. So I suspect because of how things are going in Terranera that La Luz will get pushed to Q1 or Q2 of next year. But again, we'll have your results out before this quarter's out of Terran Aaron and maybe some of those as well.

Okay. And then, were you saying in Pitteria you're sort of hoping to get the final permits in the first half of next year and then start construction later in 2027?

Yeah, ultimately, we have a very good idea because of what PIT3A is and the resources that's there, underground sulfide resources that we've been mining from an underground standpoint. I don't necessarily think the economic evaluation is going to be that far off than what we've historically known. But really, the gating item is the permit to build the tailing storage facility, which is going to be a dry stack facility. We've been going back and forth with the authorities on that. hoping we can get through it relatively quickly. Now, at the beginning of the year, we thought maybe Q1 2027, we could get that permit. Things have seemed to be still sticky when it comes to permits in Mexico. We've heard a lot of our peers expecting permits in Q1, and that never came to fruition. Then it was going to be early Q2, and we're almost halfway through Q2. So I'm getting a bit nervous on timelines when it comes to permits. just because we haven't seen a real floodgates open, so to speak. But that's what we were targeting. And if we could start building in next year, that would be great. Now, we are still continuing forward with our construction camp this year. So we have ultimately a plan of 800 beds. I think we're putting in maybe a little bit less than that to start, like 250 to 300 beds. And we're still making our movement. so we can do the basic and detailed engineering properly when it comes to the plant. So we're still pushing ahead, but the real ticker for construction decision is the tailings down permit. Okay.

And then just the last thing for me, when you're out talking to institutional investors, does M&A come up more in regards to Endeavor Silver being a potential target? Because when you look at the Silver State, you have a lot of these companies with what's more of your market cap, like Pan American, Kooler, Haclup, or Majestic? And then it sort of drops off, and you're sort of in the sort of middle stage, you know, before you get down into sort of the real smaller producers. I'm just curious, like, you know, Paranair is now ramped up. Is that something that's in discussion? Again, more with clients.

Yeah, I mean, with the investors, people always ask, like, how do we want to grow? I mean, we say we want to be a senior silver producer, and yes, Terranera's ramped up hitting criteria through the plant. I think once those grades really start coming through and we get our costs down to expectations, I think there's a lot more value in our shares there. We want to build that value in our shares. Ultimately, we're a pretty young management team. I think we're pretty still hungry to grow and find things. Never say never, but It's such a small space that there's only a handful of people that can actually look at us, and there's only a handful of things that we can look at. So we have a pretty good corporate development guy. Some days he works ours. He's staying right in front of me. So we are always looking at things and trying to figure out the right combination for Endeavor. Okay. Thank you. No problem. Thanks for the questions, Craig.

We have a follow-up question from somebody. Please go ahead. Thanks, Dan.

Sorry for getting into another question. Just curious on the capital allocation. Here is on the capital allocation part. You have 250 million in cash, and then this has been a record operating cash flow. How are you thinking about, like, from dividends or buybacks, not this year, maybe, but in the future, right?

Yeah, I think it's very clear. Yeah, that's a fair question. I mean, for us, we're still on a growth trajectory. We're really excited about what we have at PID3. I think the market's going to understand that when a feasibility study comes out in Q3, the expectations, the cost of buildings can be somewhere between $500 million, $600 million. If we keep generating cash at this rate, we'll have a good chunk of that built into our balance sheet by the end of the year, and then obviously cash flows into 2027. Until PIT3 is built and operating and providing its cash flow is probably the time you'd start looking at dividends for share buybacks. But at this point in time, we feel like the rate of return that we can get out of PIT3 will be very valuable for our shareholders, and that's what the cash that we're generating is going to be used for.

That's helpful, Colin. Thank you. Thank you, Dan.

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

Well, thank you, Operator, and thanks for all our listeners today. I think Q1 was a good quarter for Endeavor, but we still have more expectations going to the back of the year. As you say, Terranera's grades should pick up in the second half of the year. Colpa will be operating close to 2,500 tons per day. We'll get more rhythm from Gwana, Seville, Terranera, and Colpa. But ultimately, we expect a very strong next three quarters and specifically the second half of the year. So we're excited with what we have. We're excited where we're going and I look forward to getting that feasibility study out on PIT-3 in the second half of the year as well.

So thanks for joining today.

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