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Financial Performance //

Why It Matters

Profitability is key to generating shareholder returns and financing the long-term capital investments needed to sustain our mining operations. Our stakeholders are all interested in, and impacted by our profitability. For example, when our Company performs well financially, we can offer more training, better security and better compensation to our employees and contractors. In some Mexican communities, this is especially important because mining is one of the few economic opportunities available for people.

Management Approach

Financial Health

We strive to foster the conditions requisite for a financially-healthy business that is sustainable over the long term. To achieve that, our business strategy balances short-term profitability with long-term investments in exploration and development programs, aimed at extending our existing mine lives and building new mines to fuel future growth.

Creating Value

We believe that our financial success combined with our broader focus on economic, social and environmental sustainability reinforce one another. For this reason, we are committed to simultaneously creating value for shareholders, employees, contractors, communities and society as a whole. For more details about our management approach around economic parameters, please see the Governance and About Endeavour sections of this report.

2018 Performance

  • Reported flat year-over year revenue at $150.5 million. Mine operating cash flow decreased 3% to $43.9 million as a result of lower metal prices, offset by higher production from 2017. A net loss of $12.4 million (loss of $0.10 per share) was reported, compared to net earnings of $9.7 million (earnings of $0.08 per share) in 2017. The net loss was driven by higher depreciation (non-cash expense) at Guanaceví.
  • Experienced an increase in production costs due to continued operational challenges at Guanaceví, partially offset by improved costs at El Cubo. Cash costs were flat at $8.06 per oz silver payable compared to 2017 (net of the gold credits) and all-in-sustaining- costs decreased 9%, to $15.45 per oz silver payable (net of the gold credits) compared to 2017. EBITDA decreased 14% to $21.9 million compared to 2017. There was no outstanding debt as of December 31, 2018.
  • Produced 9.5 million silver equivalent ounces (75:1 silver: gold ratio).
  • Reinvested $12.4 million into exploration, primarily to advance the Terronera project and to explore the Parral properties, where both projects had significant additions to reserves and resources, respectively in 2018. We completed an Updated Pre-feasibility Study at the Terronera project and subsequently increased Terronera Mineral Reserves.
  • Continued to realize advances at existing operations; for example, we intercepted newly discovered high- grade vein at the Bolañitos operation, and proven and probable reserves at Guanaceví increased 150% with the development of the Milache ore body.
  • Completed the development of the El Compas mine and initiated commissioning of the plant.

2019 Priorities

  • All-in sustaining costs (AISC) measure in the range of $15-16/oz
  • Consolidated direct costs in the range of $85-90/tonne
  • Cash costs, net of gold by-product credits in the range of $8.50 -$9.50 per ounce of silver
  • Obtain permits and financing for Terronera

Luis Castro