Q3 2025 Endeavour Silver Corp Earnings Call

Speaker #3: Thank you for standing by. This is the conference operator. Welcome to the Endeavour Silver Corp third quarter 2025 financial results conference call.

Speaker #3: 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 .

Speaker #3: To join the question queue, you may press star, then one on your telephone keypad. Did you need assistance during the conference call?

Speaker #3: You may signal an operator by pressing star, then zero. I would now like to turn the conference over to Allison Pettit, Vice President of Investor Relations.

Speaker #3: Please go ahead .

Speaker #4: Thank you . Operator . And good morning , everyone . Before we get started , I ask that you view our mDNA for cautionary language regarding forward looking statements and the risk factors pertaining to these statements .

Speaker #4: Our mDNA and financial statements are available on our website at Endeavour Silver Corp. On today's call, we have Dan Dickson, Endeavour Silver Corp's Chief Executive Officer.

Speaker #4: Elizabeth Seanez . Our Chief Financial officer , and Don gray , Endeavor's , chief operating officer . Following Dan's formal remarks , we will open the call for questions .

Speaker #4: And now, over to Dan.

Speaker #5: Thank you . Allison , and welcome , everyone . Q3 has been a transformational quarter at ENDEAVOUR SILVER CORP with Tarana . Now in commercial production and Culpas first full quarter under production are production profile .

Speaker #5: We have significantly expanded our operational capabilities and strengthened our position in the market. This progress sets the stage for continued growth and improved performance as we move forward in Q3. Endeavour produced 1.8 million ounces of silver and 7,300 ounces of gold, totaling approximately 3 million silver equivalent ounces.

Speaker #5: This does not include Tarana and represents an 88% increase compared to Q3 2020, primarily due to the addition of the Kulpa mine and full quarter production from Guanacevi.

Speaker #5: We reported revenue of $111 million, an increase of 109% compared to the prior year, benefiting from the higher precious metal prices and increased production profile.

Speaker #5: Mine operating cash flow . Before working capital changes rose by 102% , while cash costs increased $18 of payable silver ounce . The increase is driven by the impact of higher royalties , higher profit participation and higher costs of third party mineralized material .

Speaker #5: During the quarter , coupled with lower grades processed at Guanacevi and Bonita's , all in sustaining costs , increased from the same quarter in 2024 to $30.53 per ounce , net of byproduct credits , due to a number of factors , including elevated expiration at Copa , do validate historical resources , initial capital investment to upgrade facilities , and an increase in treatment and refining charges .

Speaker #5: All in sustaining costs include $2.3 million of mark to market charge in the quarter for deferred share units granted previous periods within G&A , mine operating earnings increased to 15.6 million from 12.5 million in Q3 2024 , due to the higher operating earnings out of Bonitas and Guanacevi , as well as 3.9 million in operating earnings from Copa , offset by mine operating loss of $3.6 million during the commissioning period .

Speaker #5: The company reported a net loss of $37.5 million for the period . After a loss on derivative contracts of $39 million . As previously reported , the company entered into forward gold sales as part of the project loan facility in March 2024 , when gold was trading at $2,325 .

Speaker #5: As of September 30th, the company's cash position was $57 million, and on October 16th, the company announced that Tarana was officially reached.

Speaker #5: Commercial production . Following a successful commissioning phase . During commissioning , the operation performed at an average of 90% of its design capacity of 2000 tons per day , while also achieving at least 90% of its projected metal recoveries .

Speaker #5: This achievement not only underscores a transformational milestone for the company but also represents a pivotal moment in our corporate strategy, further strengthening our position as a leading mid-tier silver producer.

Speaker #5: The company forecasts throughput of approximately 350,000 tons over the next six months, with average grades estimated to be about 120 g per tonne.

Speaker #5: Silver and 2.5g per tonne gold . This higher grade zones are scheduled to be accessed in mid 2026 . During this period , the operating team will be working to refine and optimize the operating processes , incrementally improving throughput recoveries and our operating processes and efficiencies .

Speaker #5: In January of 2026 , the company will issue annualized 2026 production and cost guidance for for Ternera with our consolidated guidance . Since completing the Monero culpa acquisition on May 1st , the integration of the asset and the team has progressed smoothly .

Speaker #5: On September 25th, the company announced positive drill results from its ongoing exploration program at Colpa, demonstrating outstanding potential. The exploration program is designed to target potential and will also complete work to validate historical resource estimates.

Speaker #5: Part of the acquisition agreement includes $12 million of exploration spend to validate the historical resources over 24 months in Q3 , we incurred $1.5 million , which is included for infill and step out drilling in Q3 2025 , Copa produced 1.3 million silver ounces , including its base metals , continued continuing to remain on track to align with copper's historical performance .

Speaker #5: Benchmarks of 5 million silver equivalent ounces . Grades were marginally lower than expected . However , throughput was slightly higher , resulting in slightly higher cash costs per ounce than the historical site trend and management's expectations .

Speaker #5: Additionally, investments are being made to modernize some parts of the plant and surrounding infrastructure to support a potential increase in production. The mine received permits to increase throughput to 2,500 tons per day, and the team is executing improvements in the mill and the mine to support an expansion.

Speaker #5: Management expects to complete its evaluation of an expanded operation late this quarter. Lastly, before we open the call to questions, we continue to advance the pizzeria and are excited for the next chapter as we move on to the project.

Speaker #5: This project forward , focusing on the upgrading the inferred resources to indicate it will . Engineers are working on various studies to support a tailings dam permit , a feasible and a feasibility study to be published mid 2026 .

Speaker #5: With that, I would like to open up to questions.

Speaker #3: Thank you . We will now begin the question and answer session . To join the question queue , you may press star , then one on your telephone keypad .

Speaker #3: 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.

Speaker #3: The first question comes from Heiko with H.C. Wainwright. Please go ahead.

Speaker #5: Hey , thanks so much for taking my questions . Hey , Heiko , hope all is well . Oh yeah , very .

Speaker #6: Much so. Hey, you hinted at some of this a bit earlier on the call, but maybe walk us through what you've been seeing with culpa versus expectations.

Speaker #6: And , I mean , just talking about grades and costs . The obvious ones , but also , you know , like labor relations equipment uptime work you've seen with the communities other unexpected impacts , you know , actual versus anticipated 12 months ago , either better or worse than pre-acquisition .

Speaker #5: Yeah , there's a lot in there . I mean , obviously the key drivers for a lot of our cost profile and it comes down to throughput .

Speaker #5: Our throughput was above 2,000 tons per day. Obviously, it's designed to be 2,000 tons per day, and the grades were just slightly lower.

Speaker #5: I mean , obviously we're seeing higher price environment . And there's always opportunities to go into some lower grade areas . And I think we as management have to be very mindful that we're balancing that to extend my life versus cash flow today .

Speaker #5: And obviously, when we took control as of May 1st, we have some standards that we want to keep as a company with regards to what our assets and our facilities are.

Speaker #5: And we start some of those programs and , and then a big chunk that we're spending on exploration as well . And so the exploration has gone as expected , if not better .

Speaker #5: As I said, in early September, we put out results, and we'll continue to put out results as we go through our exploration program to really validate these historical resources.

Speaker #5: I think it's very important that we get that 43 101 estimate up to date , and published so we can speak to guidance and cost profiles on the forward basis , as opposed to always looking at benchmarks , going back .

Speaker #5: Labor relations and community relations— we did a lot of work on that going into the acquisition of Copa, and those aligned with what we saw.

Speaker #5: They've got very good community , community relations , very good labor relations . I think we're very impressed with the operating team . They're very gung ho to try to push this 2500 ton per day plant and expansion forward .

Speaker #5: We're still trying to go through some of the cash flows and the ultimate benefits, and ensuring that there's going to be economies of scale to really push that $2,500.

Speaker #5: So whether we have that capacity, or how we push that for an underground mine is very important. But again, it's been one quarter.

Speaker #5: Our expectation is that we will be delivering cash flow from Copa. If you look at it from a mine free cash flow perspective, because of the investments we've made in improvements in the plant and exploration, it's higher than or lower than what we want it to be.

Speaker #5: But ultimately, I think it will deliver us good cash flow in 2026 and beyond.

Speaker #6: Fair enough. I promise the next one's a lot less loaded. And just a quick clarification: Terra seems to have had eight days of downtime in Q3.

Speaker #6: What happened? And also, we're halfway through Q4 at this point. Has there been any downtime this quarter so far? And same question.

Speaker #6: If so, what happened?

Speaker #5: Yeah , I mean , that's a very fair question . And we had a very good result . I think , leading into September , August , July , we did close to 2000 tons per day in in August , we brought that back to around 1800 to focus on recoveries or even 1600 tons per day to focus on recoveries .

Speaker #5: And then and did very well till about September 22nd , September 23rd , somewhere around that timeline , we had a shutdown for seven days and obviously we expect it to announce commercial production on October 1st .

Speaker #5: Just getting through September . With that consistency and being shut down , and it was electrical issue and we had to get some specific resistors , which is a very small investment , but ultimately something we didn't have on hand .

Speaker #5: And they're made to order, so it wasn't that they were available off the shelf either. We had to wait for that.

Speaker #5: And it took a little bit longer, a couple of days longer than what we expected. But nonetheless, we started up that plant in late September again and got going. Since October, we haven't had any down days in November.

Speaker #5: Here we're about a week into November . We had a half day , a day and a half . We have had intermittent , so we're not going to be running fully at 2000 .

Speaker #5: More like what we saw in Q3 , which is still a great rate above 90% . Ultimately , we are in that kind of honeymoon phase now of , hey , we're in commercial production .

Speaker #5: We really need to hit our targets and our throughputs. And, like I say, over the next six months, it's going to be about refining and optimizing that plant.

Speaker #5: We're still refining little things, but again, above what our threshold was for commercial production or declaring commercial production.

Speaker #6: Very fair . As you know , I'm quite positive on the assets . So it's nice to see it all come together . And actually seeing it in person last week , I'll get back to you .

Speaker #6: Thank you, guys, very much, and have a great weekend.

Speaker #5: Thanks for the questions, Heiko.

Speaker #3: The next question comes from Wayne Lam with TD Securities. Please go ahead.

Speaker #7: Yeah . Thanks guys . Maybe just following up on Hiko's question . Maybe a Turnera . Do you have an update on maybe how the performance has gone in the month of October ?

Speaker #7: And just curious, what kind of stockpile do you have ahead of the mill? And then maybe, just in terms of the grades, the mine plan in the early years had around double the initially guided grades here.

Speaker #7: So, just wondering what you're seeing in terms of access to those higher grade zones and reconciliation to date versus plan.

Speaker #5: Yep . Sure . Lots in there . Again , thanks for the question , Wayne . For stockpile . And this we've been saying for a long time , we have we have room for about 60 000 tons .

Speaker #5: We can kind of push that to 80,000 tons because of the topography at Tarana and where we have laydown yards. We don't have the ability to carry six months of stockpile in front of us.

Speaker #5: So, it's about making sure we have sufficient stops available underground and be able to go from underground grade to the crusher grades. Thus far, we're in an area where it's lower grade, and that's just a function of our ultimately in our initial mine plans or feasibility study.

Speaker #5: It's about focus on IRR payback period . And ultimately when you're kind of going through these , refinements , nothing's perfect yet in that plant .

Speaker #5: We want to make sure we're not putting metal into our tailings dam and getting the best recoveries we can on some of the higher-grade material.

Speaker #5: Now , we've had pretty decent recoveries , but again , there are still some minor issues that we work might be down for half an hour or an hour , and we want to make sure we don't have those surges .

Speaker #5: So we designed now that the plum of the resource , the plum , which is basically the middle chute or about 100m away from that area , and ultimately we have plans that comes in mid 2026 .

Speaker #5: So, right now, we're putting through lower-grade, what we deem to be lower-grade. As I said earlier on the call, about 2.5 g gold and 120 g silver is our expectation for the next six months.

Speaker #5: And then we bring [material], which is a high-grade deposit in [location]. That's about a kilometer away to supplement what's coming out of Ternera.

Speaker #5: So again, mid-year next year we're going to see those grades pick up to what you're going to see in Q4 with Q3, Q4, and Q1, Q2.

Speaker #5: But we should start seeing that in Q2 and Q3, ultimately, grade reconciliation. There are a couple of things that have been happening that we've seen on the vein; our grade reconciliations are relatively in line.

Speaker #5: We're getting a lot of stock work. So for those on the call who are familiar, stock would be the mineralization between veins. So we have a hanging wall, footwall, and vein on Ternera.

Speaker #5: And in between we have what grades to be about 150 to 200g silver equivalents . Obviously that has a lot of value and we've moved from either longitudinal stoping or cut and fill stoping , doing some transverse stoping .

Speaker #5: And so, in these areas where we should have been at a little bit higher grade, we're bringing in lower grade, but we're getting more—tons more ounces.

Speaker #5: And ultimately extend mine life . And we are in no position to update resources . It's still relatively early days in it , and it's a question of how long these stock works continue on as we get into that main shoot with the higher grade , bigger widths , we don't expect that stock work .

Speaker #5: So we expect those grades to come through. But otherwise, the answer to that question is that grades have aligned relatively well with what our resource model has.

Speaker #5: And then as far as October , October has been a pretty steady month . Not any huge events , knock on wood . So it's kind of continuing on and again , we want to make sure we refine and optimize what we can do in the plant and then really focus on driving down costs .

Speaker #5: Next year is a big push to get us through into commercial production, and I commend our team on doing that. Now it's really focusing on operating efficiencies and processes, and making sure we hit our marks.

Speaker #7: Okay , perfect . That was a great detail . Dan . Maybe just wondering on the balance sheet with Ternera now , having declared commercial production , have you continued to execute on the ATM over the past month ?

Speaker #7: And now that you're commercial, would you be able to refinance that facility for a larger amount? And what could be the timeline beyond that?

Speaker #8: Sure , Wayne , I'll take that . This is Elizabeth , the CFO . So in terms of your first question on the ATM , no , we've not used the ATM in the past month .

Speaker #8: You can see in our Q3 that we used $50 million during Q3, but since the end of September, we've not used the ATM.

Speaker #8: And then regarding your second question on the project finance and our plans, what to do with that now that we're in commercial production?

Speaker #8: Yes, we are evaluating our options with how to refinance. Now that we're in commercial production, we anticipate doing that in the next six months.

Speaker #7: Okay . That's great . And maybe just one last one for me , just on the balance sheet flexibility . You guys were in a bit of a negative working capital position .

Speaker #7: The past quarter . Do you have enough in terms of supplies and spares available at the various sites to mitigate or have any buffer to some of the any , any potential hiccups ?

Speaker #5: Yeah , I'll take that . Wayne . Ultimately , we believe so . You'll see our warehouse inventories a healthy number obviously going into a new new operation .

Speaker #5: Min Max has to be determined and get that experience . And what those trends are . We have the idea that we have sufficient inventory and warehouse inventory to be able to work through that , giving us effectively that flexibility .

Speaker #5: I say that and know that there's always something out there that will come up, and that's our job as management to kind of make sure that we manage that properly.

Speaker #5: If there's something that we've we've not seen and comes up in that sense , but we feel like we have lots of flexibility right , about the negative working capital on our balance sheet for the last two quarters , a big portion of that is actually our derivative liabilities .

Speaker #5: Again, I touched on the $39 million derivative liability based on the hedges that we put in from the project loan financing that we did in 2024.

Speaker #5: We put those hedges in. So again, we've seen gold prices come from $4,500 down to $4,000. It's reduced that a little bit.

Speaker #5: But ultimately, our goal is now to get our balance sheet in a strong position. We have positive working capital and hopefully will see that sooner rather than later.

Speaker #7: Okay, great. Thanks for taking my questions, and best of luck over the coming months.

Speaker #5: Thanks, Wayne. Those are good questions.

Speaker #3: Next question comes from Alex with National Bank. Please go ahead.

Speaker #9: Hey guys, thanks for taking my questions here. I just have a couple of questions on spending, and the first one really just relates to CapEx.

Speaker #9: It looks CapEx spending so far this year . You know relative to to guidance has been a bit lower than planned . Am I correct in assuming we could see a bit of a catch up in Q4 , or is just spending a little bit below planned here ?

Speaker #9: That's my first question .

Speaker #5: Yeah , no , that's a very good question . I think you're going to see pretty consistent dosing Guanacevi . Obviously , at at at Copa , it probably will end up being a little bit similar as we finish off some of these projects going into the end of the year .

Speaker #5: For Karen, er, we haven't put out specific guidance around sustaining capital and what we need for mine development, but I don't see it being outsized.

Speaker #5: I think mostly to answer that question , it comes down to the existing ones operation . It's what we've seen is what you'll get in Q4 .

Speaker #9: Okay . And just sticking with culpa . I mean , I know you guys are working towards , you know , evaluating that underground expansion .

Speaker #9: You know , can you , you know , in the past , you did give some guidance on spending there , but can you give us any color kind of maybe even over the next six months or a little bit , how we can think about spending on that ?

Speaker #9: I know you have the permit to construct , obviously you're doing some underground development as well . You know , I think it's from my from my view , it seems like it's pretty clear that you would go ahead , but until you officially made that decision , I guess you can't say so .

Speaker #9: But I mean, any clarity on spending plans for the next six months?

Speaker #5: Well, yeah, part of that for the next six months is difficult to say because we're coming through that budget season. That's part of that evaluation aspect of it.

Speaker #5: And ultimately, we really need to see what that capital is. And that's going to be all part of our guidance that will come out in January.

Speaker #5: I don't want to jump the gun . On what it necessarily is . A little bit a bit of the background on that and the expansion of 2500 .

Speaker #5: They have applied for the expansion prior to our acquisition , and they'd actually made some commitments on that expansion . For example , Ball Mill , 2500 ton ball mill was already committed to and on site when we kind of acquired it .

Speaker #5: And our concern just comes down to ensuring that there's sufficient economies of scale, not through the plant, not through the indirect costs.

Speaker #5: So the camps and support on site , it's really down into the mine . And are we going to be able do we need to open up more stopes and have more labor , more equipment and not get economies of scale ?

Speaker #5: Or are there some areas where we can get better tons out, be more efficient, and actually see that benefit of economies of scale?

Speaker #5: And that's a process. Like I say, we're kind of in the next two months; hopefully, we can make a final decision on that.

Speaker #5: And then move forward . And again , that's part of all the trade offs , studies of understanding what that total capital spend is .

Speaker #5: And like I say, should have that done by December. And hopefully, it will be out in everybody's hands or minds by January, or in January.

Speaker #5: Okay. Sorry, I can't give you any more than that right now.

Speaker #9: No , no , I understand , I know it's the time of year and I was just pressing my luck and asking . Anyways , last question , just on culpa Q3 G&A 2.245 million I think was the number there .

Speaker #9: And I know just the deal closed in Q2. Is that kind of a number we should be expecting going forward on a quarterly basis?

Speaker #9: Or do you think that can come down a little?

Speaker #8: Hi , Alex . It's Elizabeth , I'll take that question . So on the Q3 G&A , it was higher than anticipated because of the share price increase , which affected the revaluation of our DSU .

Speaker #8: So it was $2.7 million of expense during the quarter related to the DSU. If you exclude that from the quarterly G&A number, then that's our run rate going forward on corporate G&A.

Speaker #5: I think it's a very good question on that , Alex , because that flows into culpa . And we had the internal discussions of , well , we have a out of Vancouver and we've given out these dsus historically that get marked to market .

Speaker #5: And in itself , when you look at the the all in sustaining costs for culpa that includes the dsus being allocated and how we do our allocations a way to way to calculation and how we distribute the costs out of Vancouver to that .

Speaker #5: So that G&A is not a cost at Copa Culpas. G&A costs are in their indirect costs and on a per ton basis. So obviously there's no right or wrong answer to how you allocate those answers.

Speaker #5: That's how we've done it . That's how consistently be it's a non-cash item . But we do include that as it is an expense that historically goes through .

Speaker #5: So again, not reflective of Culpa's performance, just an allocation on that all-in sustaining cost.

Speaker #9: Okay . That makes sense . Perfect . Okay . That's it for me . Thanks .

Speaker #5: Thanks for those questions, Alex. Good questions. Thank you.

Speaker #3: The next question comes from Soundarya Iyer with Securities. Please go ahead. Hi Dan, and thanks for taking my question. I just wanted to follow up on the sustaining CapEx question asked earlier.

Speaker #3: So, at Guanaceví, you spend about $13 million of the $19 million planned, and there is a considerable amount of development being done. So how critical is completing this development to maintaining, you know, production levels at Guanaceví, and what's the current pace of advancement over there?

Speaker #5: Yeah , no , it's a very good question . So as you pointed out , we spent $13 million year to date . So we're the nine months , which is just about 3 million .

Speaker #5: Just over 3 million per quarter . And that's what we were here in Q3 . And again , we don't have a big catch up in Q4 .

Speaker #5: A lot of the go on us to be sustaining capital is mine development, and we always want to stay ahead from mine development.

Speaker #5: That's ultimately underground mining . We have sufficient development to continue on , and obviously we try to always try to get a bit ahead and I think we're always a little bit of ambitious .

Speaker #5: On our total capital . So 19 million , when we come in , 16 million , I think it's positive . We've got the meters that we've needed to get this year thus far , and we expect that to come .

Speaker #5: Typically , what we see in Mexico is December slows down a little bit because of the Christmas . So we focus on or extraction is less on mine development because of that kind of a two week period around Christmas at Bolzaneto .

Speaker #5: Similarly , we did have some mine equipment that we purchased early this early Q3 , but most of the work that we do at is mine development .

Speaker #5: Again , if you look at guidance , we're slightly behind on what we expect spend , but we're hitting our meters , so we don't see an expected change in our in our operating profile because of mine development at either of those operations .

Speaker #3: No , that makes sense . Thank you . Thank you for that . And just one more on this , this third party or purchases that are gone up and increase the cash cost .

Speaker #3: So, could you just provide some context on the economics of these purchases and how this fits into like your own, or extracted at the mine, versus this third party?

Speaker #5: Yeah , happy to give detail on that . We do have some third party Oracle , which is a lot more lower impact ultimately to ounces .

Speaker #5: And costs. But at CV, it's about 15% of our throughput now. The plant was built in 1980 or 1981 by the Mexican government.

Speaker #5: And under that original , when it was passed on to who we bought it from , there was a requirement that 10% , at least 10% of throughput can go through to local miners and in our district of Guanacevi , there's a lot of small local miners .

Speaker #5: And obviously, with higher prices, there's actually a lot more ore that's coming to our plant asking to be told the way we pay out.

Speaker #5: Ultimately , we buy that toll door for percentage around 70% , and we have margins between 20 and 25% , depending on the group , depending on recoveries .

Speaker #5: And ultimately , where prices end up . It does to place displace our own or obviously , but at the same time it extends life at Guanacevi .

Speaker #5: And as the price has gone up, that cost per ton when we're buying that over time is higher because what it contains is silver and gold.

Speaker #5: So, with the price increases, we've gotten similar grades. Sometimes lower grades, but the actual cost for that Autun is higher.

Speaker #5: And how we incorporate that in is purchase order. So it's a higher cost in our mine tons, but again, it displaces ours. And we are making a profit somewhere around 20% to 25%.

Speaker #5: So we'll continue to do that. And again, more and more toll is coming to Guanaceví. And again, we're required to take at least 10%.

Speaker #5: And we've been taking higher than that. I hope that answers your question.

Speaker #3: Yeah . Thank you . I'll get back . Thank you . Once again , if you have a question , please press star .

Speaker #3: Then one. The next question comes from Cosmo Shoe with CIBC. Please go ahead.

Speaker #10: Thanks , Dan and team and thanks for a lot of good details on this call today . But overall , I guess my question is , Dan , you know , when should we start expecting the company to generate positive free cash flow ?

Speaker #10: You know , you got close in Q3 , but you know , based on prices . Now when would you expect you know , is it next year .

Speaker #10: You know clearly we're hitting an inflection point for the company. But when can we expect free cash flow?

Speaker #5: Yeah , it's very fair . I mean obviously we average $38 on silver this quarter . We're up in the $48 range . So I would fully expect free cash flow in Q4 .

Speaker #5: It's all predicated now that Turner has gone from commissioning to commercial production. We hit our numbers in Q4; Q1, we're going to have free cash flow out of Turner.

Speaker #5: I think it's easier to always speak it separately: guanosine and cosmos. You know, I've had this conversation with mature assets.

Speaker #5: I think , where they are in their life cycle . We got to make sure that the grades that we're pulling out of the grades that make free cash flow at this point in time , we can always go into back old areas and trade dollars , but it's also about harvesting and what our job is .

Speaker #5: The management team is to deliver a rate of return, the right rate of return on investment, and we wanted to have done a phenomenal job for us to build our company.

Speaker #5: They are going to be high cost assets going forward . The transition that we've gone through over the last two years , and it's been a bit of a heavy lift some days , it's trying to find assets that are long life , low cost .

Speaker #5: And Aaron itself completely changes our profile as we go through Q4. Q1, Q2, it's going to be our job to work to get those cost profiles down to what we expected in the feasibility study.

Speaker #5: It's not going to be $88 that we have there . It's going to we've seen inflation 25 , 30% . So if we can be around 120 to $130 , I think that's going to be good .

Speaker #5: Of course, we want it to be 88, but the world's changed right now. We have aspects around Turner that are making our costs higher.

Speaker #5: We're running diesel gensets because we're waiting for a permit from the Mexican government. The power arm will ultimately let us start using our LNG plant.

Speaker #5: That's completed. So we've had the construction permit. Now we're waiting for our vaporization permit to be able to take the LNG and turn it into electricity.

Speaker #5: We expect that relatively soon. We didn't have any setbacks in Mexico. There was an LNG truck that exploded in Mexico City; it required everybody to put in an emergency response plan.

Speaker #5: Hopefully we get that before the year is out, but that's out of our control. But that diesel cost versus LNG costs, you're talking about $0.33 per kilowatt-hour compared to LNG or an expectation of $0.17.

Speaker #5: Big savings that comes from that . Ultimately , we're trucking some waste , trucking some . Or for the way we want . Part of that is our regional permit that we received .

Speaker #5: We have our some Kanagawa stuff . Again , great dialogue through the authorities . We expect that to come . All that's to say over the next ten to your question on free cash flow , we expect it soon and we expect those costs at Turner to really improve over the partly from some of these permits , partly from our operational efficiencies .

Speaker #5: So Q4 and Q1 free cash flow are going to be in a great position again, and we'll get that stuff out, and you'll see that in January.

Speaker #5: I hope that helps answer the question. Cause.

Speaker #10: Yeah , yeah , that that does and I do have a follow up and , you know , to Q4 and Q1 positive free cash flow .

Speaker #10: When can I start asking you about capital return in terms of, you know, potentially a dividend, share buybacks, or a reverse ATM and other sort of capital return policies like that?

Speaker #10: Instead of me asking you about your ATM, are you using it? I can potentially ask you about share buybacks?

Speaker #5: Yeah . No , it's very fair . And I think we're still in that transition . Right . So we're excited about what is going to deliver to us from a cash flow standpoint .

Speaker #5: And I can understand when you look at those numbers, it comes down to dividends. But what we haven't really talked about today is the opportunity with Pizzeria.

Speaker #5: So, Pizzeria has 600,000,000 oz in the ground. Half of that is sulfides. Obviously, I touched that. We have a feasibility study out next year.

Speaker #5: Obviously, there are the envelope numbers that you can look at for Pit 3, and it's a very compelling asset. We foresee any of the cash flow that we have from Terranora going into pushing on Pizzeria.

Speaker #5: Our goal is to produce 30,000,000 oz by 2030—30 by 30. We anticipate the pizzeria being between 3,000 and 4,000 tons per day operation.

Speaker #5: The grades run around 300 g silver, silver equivalents. Sixty percent of that is silver. It could have a mine life of 10, 15, 20, or 25 years, but ultimately it will be a low-cost asset.

Speaker #5: So, I roundabout saying that the cash flow that we're going to generate is going to go into Pizzeria and completely transform into Endeavour Silver, and then we can start talking about returning cash to our shareholders.

Speaker #5: I think it's very important that we deliver it here at Turner and hit our marks. That will give us the ability to go out and build pizzerias.

Speaker #5: But I really think that the numbers we're going to see from the pizzeria feasibility study are going to be compelling and allow us to invest in that operation or that development project.

Speaker #10: So, investing in a pizzeria is likely to come before capital return.

Speaker #5: Yes .

Speaker #10: Okay . But how about , you know , as you mentioned and you had to do it , but you had to put in some for sales contracts in place , some hedges in place for part of your gold production .

Speaker #10: And, you know, gold prices have now since done a lot better. And it's created some volatility for you in terms of accounting.

Speaker #10: Also , you know , Mark , to market you're selling gold at lower price . Now . Any thoughts in terms of buying those back .

Speaker #5: Yeah, we talked about it all the time. And ultimately, as Libby said in an earlier question, we have a Project Loan facility right now.

Speaker #5: And we're always looking to try to improve our cost profile. Of course, that's our job as management. Taking that project loan and trying to get it refinanced and put it at the corporate level.

Speaker #5: It's something that we're looking at. Obviously, part of that whole discussion and security around everything is those hedge contracts that sit with those project loan providers, and that's part of our discussion.

Speaker #5: We haven't made any any decision on how to handle those hedges going forward . Whether we leave them fully in , fully take them out or partial .

Speaker #5: And when we figure that out, obviously we'll announce that to the market. We don't have one way or the other at this point in our heads.

Speaker #10: Okay. Sounds good. And maybe one last question.

Speaker #5: Yeah , for sure .

Speaker #10: I didn't I didn't know that Guanacevi was older than you . The mill . But hopefully it's aged . Okay . But on that , you know , as you mentioned , Q3 throughput , higher grade , lower .

Speaker #10: How should we look ? You know , at throughput and grade into Q4 and then , as you mentioned , both throughput and grade were lower in Q3 .

Speaker #10: How should we look at Q4?

Speaker #5: Yeah, throughput would be similar. I mean, we know they're pretty steady state between 1,100 and 1,200 tons per day for both operations.

Speaker #5: Ultimately, grades have continued in October to be slightly lower. We always look at the trend for the year. I know for the year we've trended relatively on plan.

Speaker #5: If you look at our production profile that we put out for guidance at Guanosine, we're trending towards the bottom end of that guidance, and that's because of the grades that we're seeing really out of balance.

Speaker #5: And a little bit lower grades out of Guanaceví, but mostly the lower gold grades that are out of Alamitos. I expect that to continue here in Q4.

Speaker #10: Great . Thanks , Dan , for answering all my questions . That's all I have . Have a good weekend .

Speaker #5: No, I appreciate all those questions. Thank you.

Speaker #10: Thank you .

Speaker #3: The next question comes from Trevor Ward, private investor. Please go ahead.

Speaker #2: Hey, Dan, thanks for taking my call.

Speaker #6: Happy to take .

Speaker #5: Your call .

Speaker #2: To .

Speaker #11: The other .

Speaker #2: Thanks , buddy . It's been quite some time since I last spoke . Almost two years ago . Obviously a lot has changed in two years .

Speaker #2: I will say , you know , obviously , like I mentioned earlier , obviously these other talking heads , it sounds to me for the most part , a lot of them represent clients .

Speaker #2: Whereas myself , being a personal investor , obviously it's rather disappointing to see my portfolio , which I'm mostly exposed with endeavor . So , you know , to fall .

Speaker #2: So , so hard . So fast in one month . And it's I think it's almost 30% or thereabouts . So just a couple of questions in terms of going forward , obviously another big loss in this third quarter .

Speaker #2: And if I'm correct, I think I heard you say initially that this third quarter, you didn't include Terranora.

Speaker #5: Correct .

Speaker #2: But Terranora did . So I'm so when you say you didn't include in the third quarter , it didn't obviously it didn't make any money or you just included the losses from there into the third quarter .

Speaker #5: No . So let me clarify that then . Trevor . Yeah . Ultimately in our in our income statement , Tarana is included .

Speaker #5: And it was going through the commissioning phase. So we actually recognized the revenue. We recognized the cost of sales. Obviously, we incur.

Speaker #5: It sits on our balance sheet. The working capital numbers sit on our balance sheet, where Terrans has not been included in our production profile metrics.

Speaker #5: So as we've gone through construction into commissioning and commissioning , now into commercial production , going forward , our cash costs are all in sustaining costs .

Speaker #5: Our production profile will include terrorist numbers. Prior to that, it's unfair to kind of throw those in because they're so volatile.

Speaker #5: We've got days where we're operating and days where we're not operating. We're testing different things. It's not reflective of what we see going forward at Tarana.

Speaker #5: So it's just not in our operating metrics . When we report that or or speak to that , because we're speaking to numbers that aren't reflective of what we see going forward .

Speaker #5: And I hear you from a standpoint on losses and significant loss coming through on Q3. I'm appreciative of that, and that's a big function of that.

Speaker #5: Trevor , is the loss derivatives that we're recognizing on a mark to market basis under accounting rules , under IFRS and ultimately , it was $39 million this quarter .

Speaker #5: That's a reflection of gold price going from $2,300 or $2,325 when we entered into these hedges. At the end of the quarter, I think gold sat around $4,400.

Speaker #5: So that delta of $2,000 plus times 68,000oz of gold , we recognize that immediately as it's happening , and it creates in Gaza , the last question , it creates a lot of noise in that income statement and a lot of volatility .

Speaker #5: And unfortunately , those are the IFRS rules . We don't change that . It is what it is . We have to report to that .

Speaker #5: It creates so much noise that sometimes it's nice pulling that out. And that's why you'll have various companies use adjusted earnings or adjusted EPS, etc.

Speaker #5: , etc. to take away some of that noise . Or one time items or mark to market that aren't actually cash . So again , we'd love to have that go the other way .

Speaker #5: But if that meant the other way , that means my revenue number goes down . The value of the company goes down . If you've held endeavor for two years , we talked .

Speaker #5: I would argue that our share price is a lot higher. I know there's been movements over the last 30 days, where silver hit $55.

Speaker #5: Now we're sitting at $48. That's going to be reflected in our share price, and those movements are sometimes hard. But I think the volatility is... Endeavour has attracted a lot of different shareholders into us.

Speaker #5: And over time, I hope our share price appreciates, and that you stick with us.

Speaker #2: Yeah sure . So these derivatives going forward are kind of are kind of get it I understand it to some extent where it went from 2325 .

Speaker #2: Obviously you're having to pay the difference there . I mean obviously I suppose you needed you needed the input . You needed the money .

Speaker #2: So you had to take this option, right?

Speaker #5: But ultimately, when we entered into the project loan facility in 2022, all the offers on the table put in a $6,800 gold hedge, our gold hedge on 68,000 oz at $2,300.

Speaker #5: When gold was at 1600 , 1700 felt like a good thing at 4400 . Probably feels a little bit differently . Obviously . .

Speaker #2: So now , going forward , what's the exposure to this same scenario happening in the next quarter ? The following quarter , these recurring charges in terms of this derivatives , how does that look going forward ?

Speaker #5: Yeah. So right now we originally entered into $68,000. I think we're sitting on about $57,000 in that. So it rolls off over time.

Speaker #5: We have no interest in entering any other gold hedges . But at that means in pizzeria comes and depending on the market in depending on how we want to finance that , we're going to look at it .

Speaker #5: Our preference is to stay out of that hedge. If you're going to invest in Endeavour Silver Corp, you believe in the silver price going up; that's the first hypothesis.

Speaker #5: I really believe that we want to we don't want to take that away from our shareholders . And there's times maybe little things in your quarters or whatever have you , that we do things .

Speaker #5: But fully recognize that you're buying a silver company because you believe the silver price is going up.

Speaker #2: Sure . Okay . But I didn't quite understand that . How long ? How much , how what are you looking at ? Let's just give an average price of this cost in the quarters going forward .

Speaker #2: I mean , 39 million is a big chunk . I mean , how does that show in real terms on paper or I don't quite understand that .

Speaker #5: Yeah , maybe . What do you think ? Yeah . So we have 57,000oz sold at 23 , 25 over the next 18 months , 20 months , we'll roll out of that .

Speaker #5: And so ultimately, our cash flow coming in is going to be $23 million, $25 million. And we recognize that loss on a mark-to-market basis.

Speaker #5: That flows through as the price happens. So if gold goes to $5,000 at the end of this quarter, you're going to see more loss go through.

Speaker #5: And that's that delta from 4,400 to 5,000. If gold goes from 4,400 to 4,000, like you've seen, you're going to see a reversal at derivative liability.

Speaker #5: So, you're going to have a gain in our income statement of $400 times 57,000. Again, that rolls off; that noise goes away.

Speaker #2: It is not possible, and there's no way you can buy yourself out of it or refinance somewhere else.

Speaker #5: That would cause question previously can you buy yourself out of it ? And again , right now with where our cash is going , we're not in a position to go spend $90 million to buy out those hedges , and it's the right thing .

Speaker #5: Wrong thing. We haven't made a decision on that at this point in time.

Speaker #2: Okay , so that was because I didn't understand his question . But now I , I get to see it . So . Ultimately , the best thing to do would be hopefully to find the money somewhere to buy yourself out of the situation .

Speaker #2: Considering that going forward, gold and silver could reach much higher prices, it's going to hurt even more.

Speaker #5: Correct. But we just need to produce and deliver into those hedges, so we're good. Thanks for the questions today, Trevor.

Speaker #5: Much appreciated, and thank you for being a shareholder.

Speaker #11: Thanks .

Speaker #2: Okay. Thanks. Bye.

Speaker #3: This concludes the question-and-answer session. I would like to turn the conference back over to Dan Dickson for any closing remarks.

Speaker #3: Please go ahead .

Speaker #5: Thank you, operator. I appreciate everybody listening in on our Q3 financial call. Again, it was a very transformational quarter for Endeavour, with us bringing Tarana online.

Speaker #5: We're very excited about what it's going to mean for us going forward. Q4, Q1, Q2, and ultimately get our guidance here in January on next year.

Speaker #5: And again with where prices are , I expect again , a big and ultimately exciting future for our company . Thanks a lot .

Speaker #3: This brings to a close today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.