Thank you for standing by. This is the conference operator. Welcome to the Endeavour Silver Corp. 2021 First Quarter 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 for you to ask questions. [Operator Instructions] I would now like to turn the conference over to Galina Meleger, Director, Investor Relations for opening remarks. Please, go ahead.

Thank you, operator. Good morning, everyone, and welcome to the Endeavour Silver 2021 first quarter financial results conference call. With me on the line today we have the Company's Chief Executive Officer, Bradford Cooke; our Chief Financial Officer, Dan Dickson; and our Chief Operating Officer, Don Gray. Before we get started, I'm required to remind you that, certain statements on today's call will contain forward-looking information within the meaning of applicable securities laws. These may include statements regarding Endeavour's anticipated performance in 2021 and future years, including revenue and cost figures, silver and gold production, grades and recoveries and the timing and expenditures required to develop new silver mines and mineralized zones. We do not intend to and do not assume any obligation to update such forward-looking information, other than as required by applicable law. On behalf of Endeavour Silver, I would like to thank you again for joining today's call. And I will now turn it over to our CEO, Bradford Cooke.

Thanks very much Galina. And welcome everybody to this Q1 financial results call. Endeavour had a very good start to this year. There is a lot going on. We pre-released our metal production at 1.04 million ounces of silver of 22% year-on-year, 10,900 ounces of equivalents, up 31% year-on-year for silver equivalents of 1.9 [indiscernible] ratio of 26%, compared to Q1 last year. Our costs were pretty much flat year-on-year, cash - six per ounce payable, silver and after the gold credit all in costs were up a little bit, 8% to 1994, again that at the gold credit. And that led to revenues of $35.1 million, up 58%, that was partly due to obviously higher production, higher prices, but also we held back so a little for sale during the first quarter, partly due to the downturn in metal prices in late March. And, we fully plan to sold much of that inventory hear to higher prices. That impacted our cash flow. We had $5.2 million of cash flow from operations, but that was up sharply from last year and of course a $12.2 million per share so, up sharply compared to a loss of $16 million last year in the Q1. A good chunk of that though is the reversal of our El Cubo asset, which we sold here just recently, offset partly by increased exploration activities, evaluation activities, and a higher tax expense. We would have taken the adjusted loss in the first quarter, but then that is offset by the rise in finished goods inventory. So, I got a busy quarter, a profitable quarter for us. Now we are looking for another very good quarter here in Q2. So, those really the financial highlights from our release today. And I think rather than carry on, why don't we just open this up for Q&A and we would be happy to answer your questions.

[Operator Instructions]. The first question comes from Heiko Ihle with H.C. Wainwright. Please go ahead.

Hey, there. Thanks for taking my questions. I just want to thank Don for everything he has done for the farm, then best of luck to you, and I think you are taking over a very well, well, well oiled machine here.

Thank you very much. I appreciate that.

You have increased your finished goods inventory by quite a bit in the quarter. I mean, you at 530,000 ounces of silver, just under 1700 ounces of gold. In the past, you have done really well trading silver, but I mean, just briefly, where do you stand right now in regards to dollar terms of finished goods as of today? And philosophically, what do you anticipate future accumulations of finished bits might look like? And yes, I know that, it might be more intelligent to ask this question after the AGM tomorrow. But, just curious, maybe your philosophies there.

Yes. I think Dan and I shared a similar view that, this is a sales strategy that we have used from time to time. And it is based on the seasonal, seasonality to silver and gold. And sometimes quarterly moves in silver and gold. We did this successfully last September when the metal prices fell sharply at the end of the month, and would rather than sell all of our metal last September, we had to hold on to it because we felt that the wearable market and there would be a nice rebound. In fact, there was a very nice rebound. And we are able to take significant additional profit from the sale of that inventory in Q4 last year, and so this example, is exactly the same. The metals had a great run in the first quarter. They tipped over and fell in March, rather than pushing all of our metal out at quarter end, we felt that there would be a nice balance here in Q2, and in fact, there has been.

Yes, I would go down to that question of where we sit today. Generally, we hold about 300,000 ounces of silver just because of outturn timelines, ultimately, that can get down as low as 50,000 ounces of silver, we did sell a lot a big portion of the 525,000 ounces of silver that we had at March 31, with this recent run up into the 26 to 27. So as Brad touched on, it is more of a short-term strategy of watching short-term patterns and trying to, to sell not when the prices are falling, but hopefully when they're rising.

You have been extremely successful with this stuff in the past. And I hope it continues like that. So congratulations. And then just a quick clarification, the impairment reversal for El Cubo is completely done now that this is closed, or is there any lingering tax implications or other costs or anything that we should focus on for Q2 and beyond?

For Q2, we would recognize the full gain on sale. So ultimately, what we reversed in Q1 as of March 31st was historical balance that would have been remaining after depreciation. And in April 9th, we would recognize the full sale so there is contingent payments that would be coming, we have a fair value for the share value of Van Gold as of April 9th is what we recognized. So there will be a residual amount that we would recognize and gain in Q2.

Got it. Well wonderful and once again congratulations to both of you and thank you Brad.

Thanks Heiko.

The next question comes from Mark Reichman with Noble Capital Markets. Please go ahead. Mark Reichman your line is now open.

Thank you, I just wanted to focus a little bit on the cost. So, the all in sustaining costs were impacted by the higher corporate G&A and the higher capital expenditures that want us to be, which I guess you could kind of look at as an investment. But then the direct operating costs were impacted by the higher labor costs. I was just wondering, if Dan could maybe talk a little bit about how he sees those costs trending. And for example, in terms of the all in sustaining costs, I know, the higher capital expenditures are to develop El Curso. So that should benefit, down the road. So, how do you see those line items trending. Dan?

Yes, thanks for the question Mark. You are right, Q1s are a little bit higher. But at Guanacevi, we were well ahead from a mine development standpoint, one of our best development quarters in a long time actually, which ultimately just means either we will do less come year end or continue on, but it should dissipate a little bit. We are getting ahead of ourselves now, which is great for future flexibility. And ultimately, we did have a budget from an all in sustaining costs, which includes our capital expenditures, and that is unchanged for the year for Guanacevi. As far as labor costs and impacting our operating costs. We are seeing a little bit of pressure on labor. I would imagine it is industry wide, things are picking up. A lot of companies are out there looking for operating staff and capable operating staff. We brought on a lot of really good people last year, we had a very good year, we feel from a production standpoint with what we are dealing with and 2020. Some of the bonuses went through on our labor costs in Q1 higher than what we include for a year end. So, that did impact Q1 a bit. So, hopefully we will see labor costs come down. But as we are seeing across the worlds, this global supply chain seems to be quite constrained right now and having issues with that and I don't expect that to change in the next six months. So, maybe a little bit increase in our costs but we are going to work our best to mitigate that. Maybe a little bit increase in our costs. But we are going to work our best to mitigate that and look for solutions and try to get our tonnage up, a little bit to where plan was. We were on plan from announced production standpoint. It would be nicer if our tons and improved for actually - so hopefully our per ton basis, our costs improved throughout the year, and we expect to hit our guidance that we delivered to the market in January.

That is very helpful. Thank you, Dan.

Thanks for the question, Mark.

The next question comes from the Cosmos Chiu with CIBC. Please go ahead.

Thanks, Brad, and Dan. And Dan congratulations, I guess the big day is tomorrow.

Yes. Thanks, Cosmos.

I guess my question is, what took so long. Joking aside, I do have some real questions here. At Guanacevi, as you talked about, royalties were higher in the quarter, due to higher royalties at Porvenir Quatro sorry about the pronunciation. Could you talk a bit more about the mine plan, going forward for the rest of 2021 should we expect tonnage continue to come out from that area and hence higher royalties?

Yes. I think the key to Q1 was, we did have a little bit higher production from El Curso. It is between our program in collateral mine which you are probably familiar with in Malachi. We did mine a little bit more from El Curso just do some of the areas that we are in and a little bit less from Alaska where we don't have that royalty. But the impact on that royalties is when we did our guidance, we guided at $22 silver, $17.60 gold. We sold our silver at $27, and I think gold was slightly below that $17.60. So we had higher royalties in that on that basis. But also the grade that is coming out of El Curso. The grades of Guanacevi were about 15% on a silver equivalent basis above plan. And again, just an area of that El Curso so you saw our, our drill results that we put out a couple of weeks ago with regards to El Curso and Guanacevi and what we were finding on Santa Cruz. So to our surprise, ultimately the grades have been better than what we expected. So, obviously increase in our costs and royalties, but our margins are still extremely good from that area.

Sure. And that is leads in well to my next question here, in terms of, El Curso, and as you mentioned earlier, this month, you put out some very good drill results coming out of Guanacevi. I think I saw over 2000 grand per ton, a lot of it just want to confirm is coming from El Perso. And I guess the other part of my question after confirming is, I guess, in the press release, you mentioned, El Curso and Porvenir Quatro could all become one continuous ore body, potentially over 1.5 kilometers by about 600 or 400 meters. When would we find out more about this potential here and then could you maybe talk about potentially when this concept, when continuous ore body could come into the mind plan now?

Yes. There is a lot there. The drill holes that came out a couple of weeks ago were mainly the El Curso ore body in feeling and step-out drilling there. We are also drilling the Santa Cruz silver ore body, which we are actually mining from as well, or just mining that or drilling at depth. And can you have positive results there. But I would say, a majority of the drill holes that came out two weeks ago are from the El Curso ore body. And if you go onto our website and even in our presentation, we have a beautiful longitudinal section between Porvenir Quatro and Malachi showing the ore body about Curso, which gives a pretty good understanding of the size and scope of that ore body. There are some slivers in there which is owned by Frisco, who we have acquired, or leased the El Curso concessions from, that owned some slivers, and we are working with them to hopefully acquire some of that ground to be able to mine that as well, because we do think it is continuous all the way through. Obviously, we have drilled out Malachi. We have proved that Porvenir Quatro, we actually mined a lot of that ore from that mine. So we feel it is continuous, but the scope and scale of it is pretty clean to see just through our website or presentation.

Yes. I have seen that. I have seen that long section as well. So, I guess my question is, we will find out later on, how this kind of all exploration results will impact the mine plan sometime later on?

Yes, when it comes down to total resources in total tons in the resources, we are still drilling that area. And we will come up with a resource estimate later on in the year and publish that. Brad, I don't know if you have any more color you'd like to provide with regards to El Curso and our drill results there.

Yes, just to answer your question Cosmos. Crystal claim was that we leased from [Frisco] (Ph) and the two gaps between our El Curso at Malachi and El Curso at Porvenir Cuatro, our other properties owned by Frisco, we expressed interests, they expressed interest. And so we are hoping we can consummate a way to add those gaps, if you will, to the existing lease agreement, and then we will be able to drill them and prove that that is one continuous or body, the gaps themselves are only a couple 100 meters wide I think so. It is pretty easy to project that this sink should be continuous.

Of course, maybe switching gears a little bit at Terronera. As you mentioned, you are targeting a feasibility study by Q3 2021. The last PA was sometime in 2020. And I think then, or maybe Brad, you touched on it, labor costs have increased. I don't think that is the only cost is increased in the past year, steel prices have gone up, other input costs have gone up. So, I guess my question is, as you do this, finalize the feasibility study at this point in time. Have you seen cost increase, have you factored into your study here and how are you managing that risk?

So, I will answer from a higher level. Basically, the feasibility study is still underway. So, we still have an opportunity to finalize costs here in the next month or two. And the main cost drivers of these capitals are the design of the mine and the plant. And most of those we put plans in already. Dan, you want to add to that?

Yes, I think it is definitely a risk, and you always look at it. And that is what we paid to manage to do. Ultimately, we are seeing some input increases, which could increase the capital upfront costs or sustaining capital. From an operating standpoint, we think there is a lot of levers there that we can improve our operating costs from the PFS in 2020. So ultimately, when all the numbers come out, which you are right, it'll be early Q3, we will have that we still expect to have a very economic project when it is all said and done.

Okay, for sure. And Dan maybe one last question from me here. Dan as you take the CEO seat, Brad is not leaving, I guess he is going to be Executive Chairperson. And in a press release, talked about Brad, continuing with the company growing the company, one side of it is, for sure billing to an era. The other side, I think we have talked about in the past is potential, acquisitions. Bigger picture, Brad we have seen some of your competitors, divest or diversify into gold, diversify beyond [LATAM] (Ph). You have always talked about in the past, it is harder to make acquisitions, where silver assets, anything that you can share with us in terms of industry wide, are companies specific at this point in time?

Sure, so in terms of growing the business through the drill bit, that is organically, I think we have been more successful, and most notably with finding new resources every year at our operating mines. But of course, the discovery of Terronera and the emerging resources that prowl. In terms of our silver gold mix, we have always been silver dominant producer, but with the healthy gold credit, and we see more of that in our future Terronera a lot. Let me say that the operations this year probably are going to be about 60/40 silver gold revenue. Terronera, I think comes in around 65/35. Prowl is 100% silver. So not only are we I think, one of the most, if not the most silvery of the silver producers to go skew more towards sort with our existing development pipeline. That means to M&A and what I my view is that we have room to take on gold and silver remain a primary silver producer, because there is nothing to buy in silver. We are not allergic to buying a gold dominant asset. It is just that we would like to remain more than 50% so by revenue even after M&A.

Great. Thanks. Those are the questions I have. Congrats again, Dan and Brad as well.

Thanks.

The next question comes from Howard Flinker with Flinker & Co. Please go ahead.

Alright, Brad. My two minor questions are: What price did you get in your sale via ATM in quarter one?

That is Dan's question. Thanks for your question, Howard. Dan, you want to take that?

That is a very good question. We would have averaged just above $5 per for share price. It is actually in our financials. But I don't have it specifically off-the-top of my head right now. So a good question, Howard. But it is just north of $5.

501, 502. Hello?

Pardon Howard?

501, 502 something like that?

Just North of that yes.

Okay. And, how many shares are actually outstanding now as compared to the average?

We have about 167 million shares outstanding right now.

Right now, 167?

Yes.

Okay. Thank you.

Just carrying on from your question. We had this ATM facility available to us all the way back to last July, but we just wanted to use it primarily for any equity portion of a Terronera project financing. And we were very patient we didn't touch it. And the nice run-up in the share price here in the first quarter. We did tap that ATM for $30 million. So, we closed out the first quarter with $86 million cash and $113 million of working capital. And so I’m sufficed to say that, we now feel that any equity component that is a covered.

Thank you.

[Operator Instructions]. The next question comes from Justin Stephens with PI Financials. Please go ahead.

Hey, guys. I think most of what I had to ask is already been covered off. But a couple left on my list here. Obviously, some good results, you guys put out recently, from the [indiscernible]. I was wondering, I mean, you have spent, I would say a good chunk of what you have been budgeting for, I would say brownfields drilling this year already in Q1. Should we expect that, but perhaps you guys won't revisit your drilling budget maybe mid-year as long as you continue to get the good hits that you have been seeing so far?

Yes. Justin, I would just say that, we have done this past when we are having a good year and there is excess cash flow than we look on how to put that cash flow to work and it is probably the case this year as well.

Got it. And obviously we have seen the nice release out of Bolanitos. Can you give some rough timing for when we might see some the Bolanitas’ results?

I would assume that that would be up next, following Terronera results.

Got it. Yes. And, just on the Terronera results, obviously the Q3 is surprisingly soon, I don't know how it got to be mail ready. But in terms of the drawing that you have done there, are you expecting any of that to make it in to the updated resource that will then hit the feasibility study or is it going to be sort of more parallel development?

No, what we are doing now, in fact, I think this year we put the pin in the reserve and resource at the end of last year. So, all of the work...

Got it. Yes. That makes sense. Given the way these timelines work and things got to fit together. Perfect. That is it for me. Thanks guys.

Thank you.

This concludes the question-and-answer session. I would like to turn the conference back over to Bradford Cooke, CEO for any closing remarks.

Well, thank you operator and thanks everybody for tuning in today. This is actually my final quarterly call, on behalf of the management team of Endeavour, and I'm now formally handing the reins over to Dan and Christine and I just want to say that, we have had a great run, but we are not half done yet. And we look forward to I look forward to listening in on Dan in future calls. So again, thanks all and look forward to our second quarter financial results.

Thanks Brad.

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