Endeavour Silver Q3 Earnings Call Highlights

Key Points

• Q3 results improved sharply: Silver and gold production rose 19% and 39% year over year, revenue increased 29% to $185 million, and mine operating cash flow before taxes climbed 139% to $95 million.
• Operational disruptions and lower Guanaceví grades prompted lower 2026 production guidance: Endeavour now expects 7.8–8.1 million ounces of silver and 42,000–43,500 ounces of gold, while consolidated direct operating cost guidance is $155–$165 per ton.
• Terronera costs are declining, while Pitarrilla remains dependent on permitting: Terronera’s Q3 costs fell to $156 per ton, partly helped by its switch to LNG; Endeavour expects a Pitarrilla tailings dam permit in Q1 or Q2 2027 before a potential midyear construction decision.

Endeavour Silver NYSE: EXK reported higher third-quarter production and a sharp increase in mine operating cash flow, as stronger metal prices and improving performance at its Terronera mine helped offset operational disruptions.

The company produced 2 million ounces of silver and 10,000 ounces of gold in the quarter, up 19% and 39%, respectively, from a year earlier. Revenue rose 29% to $185 million, with realized average prices of $62 per ounce of silver and $4,290 per ounce of gold.

Mine operating cash flow before taxes increased 139% to $95 million, while mine operating earnings rose to $69 million from $16 million a year earlier. Earnings before taxes were $40 million, compared with a loss of $38 million in the prior-year quarter.

Disruptions and lower grades shape outlook

Endeavour revised its 2026 production outlook to 7.8 million to 8.1 million ounces of silver and 42,000 to 43,500 ounces of gold. It expects silver equivalent production of 13.7 million to 14.3 million ounces.

CEO Dan Dickson said the updated outlook reflects results to date and fourth-quarter expectations. Terronera suspended operations for 12 days in August while the company addressed local community concerns. At Guanaceví, a crack in a trunnion reduced capacity for the final nine days of the quarter. Dickson said the replacement was completed on schedule and the company hopes to recover some production in the fourth quarter.

Silver grades at Guanaceví have also been below plan throughout the year. Dickson attributed that partly to natural variability in the ore body and partly to a decision to mine lower-grade material made economic by higher metal prices. He said the approach could allow Endeavour to recover more ounces from existing resources and potentially extend mine lives.

The company revised annual direct operating cost guidance to $170 to $180 per ton at Terronera and $155 to $165 per ton on a consolidated basis. Dickson said higher costs in the first half of the year were too significant to overcome, despite the recent downward trend.

Terronera costs continue to fall

Consolidated direct operating costs declined to $152 per ton in the third quarter, from $162 in the second quarter and $187 in the first. At Terronera, costs fell to $156 per ton from $169 and $195 in the preceding quarters, respectively.

Dickson said Terronera's grades have risen during the year and recoveries have reached feasibility study targets. He expects further operational improvements, although he told analysts that future cost reductions would likely be smaller than the quarter-to-quarter declines already achieved.

Terronera completed its liquefied natural gas plant during the third quarter, allowing a switch from diesel power generation. Dickson estimated that the shift accounted for a cost reduction of $8 to $10 per ton, depending on fuel use. He also said a new waste dump near Portal 4 could reduce hauling distances in the fourth quarter. The Mexican peso's exchange rate remains an important cost variable, he added.

Dickson said Terronera's fourth-quarter grades could be relatively flat with the third quarter, with higher grades expected in 2027 as the mine accesses more material from a high-grade chute. The timing of production from the La Luz vein remains under assessment, he said.

Quarterly cash costs were $16.55 per payable ounce of silver, net of byproducts, down 9% year over year. All-in sustaining costs fell 3% to $29.54 per ounce. Dickson said the company deliberately did not provide updated consolidated or Terronera cash cost and all-in sustaining cost guidance.

Pitarrilla study and permit in focus

Endeavour ended September with $288 million in cash and $247 million in working capital. It converted its project loan into a $25 million secured revolving credit facility, with an option to expand it by up to $75 million.

Dickson said the feasibility study for the Pitarrilla project was nearing completion and a news release was expected within roughly 10 days. The key condition for a construction decision, however, is a tailings dam permit. The company has submitted its application and expects the permit in the first or second quarter of 2027, with a construction decision potentially around midyear.

Dickson said Endeavour believes it can fund Pitarrilla with cash flow and its credit facility, depending on metal prices, while continuing to consider other financing mechanisms. Early work, including road improvements and power-line planning, has moved more slowly than expected, partly because some design criteria were awaiting completion of the study. He said the company is working toward a potential first-quarter 2030 production timeline, contingent on a mid-2027 construction decision.

New resource estimates for Terronera, Guanaceví and Kolpa are expected early in the new year, Dickson said. Endeavour also expects to issue 2027 guidance in January.

About Endeavour Silver (NYSE:EXK)

Endeavour Silver Corp. is a Canadian mining company that acquires, explores, develops and operates silver and gold properties. Founded in 2004, the company focuses on producing precious metals and expanding its portfolio through mine development and exploration. Its mining and development activities have centered on Mexico, including the Guanaceví and Bolañitos operations and the Terronera project. Endeavour has also expanded into Peru through its acquisition of the Kolpa mine, which produces silver as well as lead, zinc and copper.

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