2017 Outlook //

We expect 2017 to be a transformative year for Endeavour as our attention returns to growth. The emergence of our exciting new Terronera discovery and the acquisition of two attractive development projects last year, El Compas and Parral, have positioned us for significant growth over the next three years. We believe precious metals prices should rise in the coming years so now is the right time to invest for the future.

In 2017, we plan to produce at slightly lower throughput and higher silver grades compared to 2016, resulting in similar silver production and slightly lower gold production estimates. Returning the Guanaceví mine to better safety performance, higher production, throughput and grades and lower operating costs are key operating goals for the year. Development of the newEl Compas mine may lead to a production start-up late in the year.

Silver production in 2017 is guided to be in the range of 5.2 to 5.7 million oz with gold production in the 50,000 to 53,000 oz range. Silver equivalent production in 2017 is expected to be 8.9 to 9.7 million oz using a 75:1 ratio, as shown in the table below.

Cash costs, net of gold credits, are forecast to be $6.50 to $7.50 per oz of silver produced in 2017, comparable to the first three quarters of 2016. Consolidated cash costs on a co-product basis are anticipated to be $10.25 to $11.25 per oz silver and $775 to $825 per oz gold. Cost forecasts are based on a $17 per oz silver price, $1,190 per oz gold price, and 20:1 Mexican peso per U.S. dollar exchange rate.

All-in sustaining costs, net of gold credits, in accordance with the World Gold Council standard, are guided to be $14 to $15 per oz of silver produced in 2017, higher than 2016 due to increased investments in exploration and development programs. When non-cash items such as stock-based compensation are excluded, all-in sustaining costs of production are estimated to be in the $13.50 to $14.50 range. On a co-product basis, all-in sustaining costs are anticipated to be $14.50 to $15.50 per oz silver and $1,050 to $1,150 per oz gold. Direct operating costs are expected to be in the range of $70 to $75 per tonne.

We plan to invest significantly in exploration and development programs to extend the existing mine lives and build new mines to fuel future growth. In 2017, Endeavour plans to invest $43.3-million on capital projects at the three operating mines, including $7.7-million of growth capital, all primarily for mine development, in order to access reserves and resources for mining. At today’s prices, the investments at operations will be covered by operating cash flow, while exploration and growth capital will be financed by the company’s treasury.

In exploration, a total of 64,000 metres (m) will be drilled in 2017 as part of a $15.2 million exploration budget, including brownfields and greenfields exploration, development engineering, and land payments across our portfolio of properties. At the three existing mines, 20,000 m of core drilling is planned at a cost of $3.0 million. At the exploration and development projects, 44,000 m is planned to be drilled at a cost of $10.5 million.

MineAg (million oz)Au (thousand oz)Ag Eq. (million oz)*Tonnes per day (tpd)
Guanaceví2.4-2.65.3-6.32.8-3.11,000-1,200
Bolañitos0.9-1.021.5-22.52.5-2.71,000-1,100
El Cubo1.9-2.123.2-24.23.6-3.91,300-1,500
Total5.2-5.750.0-53.08.9-9.73,300-3,800