Thank you for standing by. This is the Chorus Call conference operator. Welcome to the Endeavour Silver First Quarter 2015 Financial Results. [Operator Instructions] And the conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Meg Brown, Director of Investor Relations. Please go ahead, Ms. Brown.

Thank you, operator. Good morning, everyone, and welcome to Endeavour's 2015 First Quarter Conference Call. On the line today, we have the company's CEO, Brad Cooke; as well as our President and COO, Godfrey Walton; our CFO, Dan Dickson; and our VP Corporate Development, Terry Chandler. Before we get started, I'm required to remind you that certain statements on this call will contain forward-looking information within the meaning of applicable securities laws. This may include statements regarding Endeavour's anticipated performance in 2015 and future years, including revenue and cost forecast, silver and gold productions, grades and recoveries and the timing and expenditures required to develop new silver mines in mineralized zones. The company does not intend to and does not assume any obligation to update such forward-looking statements or information other than as required by applicable law. So with that, I'll turn the call over to our CEO, Brad Cooke.

Thank you, Meg, and welcome, everybody, to this Q1 financial results call. As usual, I'll start off just hitting the highlights. Endeavour returned to positive earnings in the first quarter this year, that was largely due to our improved operating cash flow and EBITDA, and that was driven by our reduced cash operating cost and all other sustaining costs compared to the last quarter of last year where significantly improved on the cost side. Revenues in the quarter were $51 million, cash flow was $15.8 million and earnings of $1.4 million, all of which were slightly higher compared to Q4 last year, down compared to a year ago though when we had a very strong first quarter in 2014. Looking forward to the second quarter, as we have previously announced, there's a Phase 2 mine expansion now underway at our El Cubo mine, an almost 50% mine expansion, to primarily drive our unit cost down into the money at El Cubo. And we expect to deliver that ramp up by the end of this quarter. So the first full quarter at the new capacity at El Cubo will be Q3. And that should help to continue driving our operating cost down, both at El Cubo and on a consolidated basis. I should point out, however, that mine expansion involves an additional $4 million of capital investment at the mines at El Cubo, and that coupled with an increase in our exploration expenditures this quarter and moving into Q3 as well, means that those that are interested in cost will drift higher in Q2, Q3, and then we'll look to Q3, Q4 as a snapshot of all 3 mines look at steady-state. So I think that's all my comments for the results today and I'll turn it over to Q&A.

[Operator Instructions] Our first question is from Benjamin Asuncion from Haywood Securities.

I've got a few questions. Just in so far as the comments on trying to unbundle what the peso movement versus what you're on-site operating improvements are in reflection of direct costs, can you give me a sense of where your cost had moved to exclusive of the peso? And kind of how does that compare to you're benchmarking for called the back half of this year?

Yes, Ben, it's Dan here. Thanks for the question, also not an overly easy question, but I think I do have an answer for you. It's going us to be, we are up in the $100 per cost per tonne and we ended up at about $88 for the quarter or $87 for the quarter. Just under $7 of that was related directly to the peso and similar actually for buying [ph] those 2, I think there's about $8 of that. One of the key things that's probably wasn't articulated through Q4, that's when there is a significant peso drop. Bolañitos and Guanaceví both carry stockpile, so essentially those costs were hung in our stockpile inventory and in our finished goods inventory for Q4 and really flowed-through here in Q1, with again, a little bit more depreciation because of the peso. Because you'll see it from El Cubo standpoint, I think we're at $88, $87, $88 here in Q1 compared to Q4 where we're about $87. So the depreciation of peso in Q4 came all the way through Cubo because we know we have a stockpile or any really significant levels of finished goods at Cubo. So the rest of that drop at Guanaceví. It's the just reduction in our cost focusing on where silver prices are now and what we can spend at site and same with Bolañitos. So we are ramping down a little bit -- we are ramping down at Bolañitos from 1,600 tonnes to 1,200 tonnes this quarter. So we'd have less contractor cost going through and same thing, just comes at our cost with today's price environment.

Okay, perfect. And just touch 1 CV for gold production for the year, we're still looking at maintaining 6,000 to 7,000 ounces as per the revised guidance?

This is Godfrey. We are still looking at maintaining that 6,000, to 7000 ounces.

Okay. Is your outlook on grade sort of changed then for the remainder of the year?

You mean for the gold grade or for our silver, or both?

I guess, for both, and then we saw -- I thought the grade was somewhere around 2 75 kind of what we're looking at and you obviously delivered a stronger quarter than that recently.

Similar to last year, yes. We -- our grade was coming in around the 300 range and we do expect to keep that level for most of the year. It will drop off towards the end of the year.

Okay. And on the gold side, are we still kind of looking around that 0.6 for the remainder of the year?

Yes, yes, that should still be able to be possible for the -- onto the year.

Okay. And just last question here, insofar as El Cubo, just to reiterate, I guess, the ramp up that Brad had mentioned in the opening comments was to the 2,200 tonnes a day by the end of this quarter, that's correct?

That is correct, yes.

Okay. And grade expectations, when we're looking throughout the year, when do you think we'll start to see some of the better grades coming through from the mine?

As we continue with our development, we are increasing development at Cubo to be able to do that 2,200. And you go through high and low-grade sections, and until we have enough developments, we can actually choose where we mine from rather than just taking what's in front of our face. That's what we have -- we have days where we're high grade and days where we're low grade. And so, it's going to be later this year before things smooth out and we get a steady-state average grade coming through.

And if I can chip in, Ben, it's Brad here. So the focus clearly is on tonnes this quarter. But we're not forsaking grade, but we're just trying to hold the fort on grade. And then once we've got the plant operating at it's -- the plant -- the mine operating at its new expanded capacity, we will turn our attention to grade. Like what Godfrey said, we need to get some more development done before we can really focus on grade. So you'll see that more in Q3, Q4.

The next question is from Bhakti Pavani from Euro Pacific Capital.

Just a couple of questions from my side. I was curious to know for Bolañitos, the ore that has been processed currently, from which ore body is that ore coming from?

This is Godfrey. We've got mineral coming from the Lucero mine, which covers Daniela, Carina, La Joya and a little bit in the Lucero itself. So a lot of it is coming from there and we're now starting to bring in mineral coming from La Luz. We have a ramp that goes from the plant right into the La Luz vein. And so, all was coming from there towards the end of the quarter.

Okay. So you just said there's been a mine ramp down at Bolañitos from 1,600 to 1,200 and I believe the additional output at El Cubo will be processed at Bolañitos, correct?

That is the plan, yes.

So while are you guys developing the ore body of LL Asunción [La Luz-Asunción], what is the timeline for developing that ore body?

As far as I've mentioned, we have the ramp, it has connected the La Luz area or the Asunción-La Luz zone bane to the plant, and we are bringing ore out that way now. And that will allow us to increase our production from there as we reduce our production from Daniela and Carina, La Joya. So it started already.

Okay. All right, that's it for my side.

Bhakti, it's basically similar to Cubo. We're in the process of ramping up the La Luz-Asunción area, but it will take most of the year. And there's a lot of lateral development ongoing at La Luz-Asuncion as well.

The next question is from Malcolm Gibson[ph], he's a private investor.

Ben asked about 6 of the questions that I was going to ask, but I did want to ask you about continued growth in terms of organic growth versus acquisitions. Knowing Brad, I have to believe that he's still looking at a lot of opportunities and with prices, commodity prices where they are, there should still be lots of opportunities. Can we expect that you will continue to do so and make acquisitions in this environment?

Thanks for your question, Malcolm, and I think the short answer is certainly, yes. We've lived off of both strategic acquisitions, as well as organic growth, brownfield's discoveries and new mine developments. So we'll certainly expect that combination to continue. Obviously, the next phase of our growth is our high-grade discovery at Terronera and it's in prefeas now. We should hope to have some preliminary economic numbers shortly and on the way to a full prefeasibility study by the end of the third quarter, and that clearly represents the next leg of our growth. But we're not forsaking M&A. Terry here has been working with me on generating and evaluating ideas in the sector. And we think that the principal bylaws saw higher price to properties and companies, as well as to investors. So we are scouring the plant and looking for opportunities and we'd like to think that we can consummate at least one this year.

And do you have a geographic limitation on that?

Well, we were restricted the mix to up until a couple of years ago and then we started expanding our horizons. So we have an exploration office in Chile, we're certainly looking there. We're looking in Peru, in Canada and in the U.S., and we're starting to think about other Latin American countries as well and we're also thinking about gold. There's such a scarcity of quality silver projects out there that even though, we think there's a couple of interest, there's more available in the gold sector as well. And our strategy basically is Mexico first, but we're going to Canada, the U.S., Chile and Peru, and silver first but we'll go with silver plus anything. And gold, obviously, was a very significant by-product. So M&A strategy is still in our plans for this year.

The next question is from Christos Doulis from PI Financial.

Congratulations on the decrease in costs, certainly beat my expectations. I just -- most of the questions I have already been covered off, but I just wanted a little more clarity on Bolañitos. So ramping down to about 1,000 tonnes per day until Asunción is able to fill it. And so, what do you think Q2 and Q3 looks like here for kind of throughput at Bolañitos?

Christos, this is Godfrey. In Q2 here, we're looking at 1,200 tonnes from Bolañitos and that's progressing very well. And then in Q3, we're actually looking at 1,000 from Bolañitos.

The next question is from Howard Flinker from Flinker & Co.

Why was D&A so much lower in this quarter than in last year's first quarter?

It's Dan. Big thing that the Canadian dollar went from $0.94 down to, I think, we averaged about $0.81 to the U.S. dollar. That's a big chunk of it. Q1 of 2014, we had some layoffs at the corporate office as well. So it's just, again, from prices at the beginning of last year up in the 20s and now we're at the $16 range. We run a pretty tight ship here in Vancouver. I think, we only have about 13 people in the office at any given time. So we're very cognizant of what we're spending at the corporate level to make sure that from a cash flow standpoint, consolidated, we're doing the best we can.

You heard G&A, I said D&A, depreciation and amortization.

Oh, I hope you like the explanation on G&A.

Yes, I took it down verbatim, I'll memorize it.

Depreciation and amortization, the biggest thing is we deplete on reserves. So at Bolañitos, we had to actually deplete a lot of our mine development as of last year, then we start depleting the new development that we did in 2014 here in 2015 and then we also had impairments at El Cubo. So additional impairments that really brought down our DD&A.

[Operator Instructions] The next question is from Benjamin Asuncion from Haywood Securities.

Just if I can here get a breakdown based on the new or the guidance revision that you had. Any chance to get a segment on what the op cost on a per tonne basis are? What your expectations are for kind of 2015 guidance by mine?

Yes, I think we released that...

Yes, we do release that. Let me just jog my memory here. By mine basis, our guidance for Bolañitos is $84. Our guidance for Cubo was $85 for the whole year. I believe our guidance for Guanaceví was $104.

Yes. I think that's fair enough.

Mine by mine.

So I guess just on I Guanaceví then, even layering back in that sort of $7 sort of peso movement and unwinding that, I mean, you're still markedly below what your guidance is. Was there anything unusual? Or any other sort of accounting transitions that would have accounted for that lower cost? Or is that kind of the new base going forward?

Yes, I would say that's new base going forward. When we go through our budgeting process, we're typically finalized by the end of October, that depreciation drop all happened in October, November and December. I'm trying to remember what we use from a budget standpoint, whether it's 14 or 14.5 from foreign exchange rate, but also just even cost cutting measures. I like to think that we're very conservative in our budgeting process, I mean, you see that sometimes with our grades that we have. But we -- I do expect Bolañitos and Guanaceví to kind of come up a bit in Q2, Q3 because that activity ramps up just given around development. You'll have more staff on-site dealing with that stuff, but, yes, hopefully, this is our new norm and we expect it to be somewhere around there.

Okay. So about, let's call it, adding the $7 back, $94 $95, that's a pretty sustainable level without any unusual activities at Guanaceví.

Exactly.

There are no more questions at this time. I will now hand the call back over to Brad Cooke for closing comments.

Thank you, operator, and thanks, everybody, for sitting in. We did end at a pretty strong quarter in Q1 and we do expect to continue our focus on cost containment going forward. Currently, the ramp up at El Cubo should help drive those unit costs down and also our consolidated costs. But the first full quarter will be Q3 where we see what all 3 mines look like on a steady-state basis. Guanaceví is just chugging along, steady-state for the year and looks like its on track for another very good year. Bolañitos, we did forecast a ramp down, as you heard from Godfrey, and that's now underway. We're working at La Luz-Asunción discovery to try and open it up for production, expanded production later this year. Aggressive drilling is underway at all 3 mine sites. And currently, we want to continue our track record of making new discoveries and moving them to new mine development. Terronera represents the other real value creation theme for the company this year, if pushing the production up at El Cubo to drive our cost down creates short-term value for stockholders. I think, the long-term value proposition is this prefeasibility study now underway at Terronera, and hopefully going to the board for a production decision later this year. We did, if you recall, receive our umbrella government approval of the environmental study at Terronera late last year. We did initiate the prefeas late last year. Preliminary economic numbers will come out here shortly in the next week or 2. And that's on the way to a full prefeas at the end of September. Permitting is underway, there's a lot more work that needs to be done in this second and third quarter at Terronera. I think the, Godfrey, 5,000 meters of drilling, primarily infill?

I think that's right.

To move inferred into indicated so that we can use that entire number, indicated number for the prefeas. And we're hoping to go to the board with a feasible and permitted project late this year. I have also started kicking the tires on what's out there in the financial markets in terms of financing Terronera on a standalone basis, and I'm encouraged actually. We've received some indicative term sheets and expressions of interest from a number of bankers and metal traders and others. We will move that process along through the second and third quarter as well, so that we have clarity on how to build, finance some built at Terronera at the same time that we're going to the board for a decision. So that's our outlook for the short term. And again, thank you, everybody, for sitting in. We'll talk to you at Q2. Thanks, operator.

This concludes today's conference call. You may now disconnect your lines. Thank you for participating, and have a pleasant day.