Slide 1: Silver Producer Focused on Growth
Silver Producer Focused on Growth.
Slide 2: Caution - Forward Looking Statements
CAUTION - FORWARD LOOKING STATEMENTS Certain statements contained herein regarding the Company and its operations constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995. All statements that are not historical facts, including
Slide 3: Capitalization Summary
Capitalization Summary: • TSX Ticker EDR • Share Price (31 Aug 06) C$3.50 • Market Capitalization C$147 million • Shares Outstanding 41.9 million • Options 3.8 million • Warrants 6.6 million • Fully Diluted 52.3 million • Debt None • Cash C$42 million 3
Slide 4: Introduction: Who is Endeavour?
Introduction: Who is Endeavour? • Endeavour Silver Corp: North America’s fastest growing silver mining company • Core Asset: Santa Cruz silver mine, Porvenir silver mine and Guanaceví process plant in Durango, Mexico (the “Guanaceví Mines Project”) • Goal: Become a top 5 primary silver producer 4
Slide 5: Highlights: Why Own Endeavour?
Highlights: Why Own Endeavour? • Demonstrated Success – Already delivered three- fold production, resource and cashflow growth at Guanaceví. • Strong Growth Profile – Additional three-fold growth over next two years through exploration and development at Guanaceví to fill the 3.6 M oz per year plant
Slide 6: Highlights: Why Own Endeavour?
Highlights: Why Own Endeavour? • High Grade, High Leverage Ores – High grade (+450 gpt Ag) silver ores highly leveraged (>90% of revenue) to silver price. • Strategic Relationships – Through Endeavour’s Strategic Alliance with Peñoles and other senior companies, Endeavour can acquire select mining p
Slide 7: Growth Strategy
Growth Strategy Phase I: • Expand resources and production at Guanaceví over three years to find 35 million oz silver and produce 3.6 million oz per year. Phase II: • Acquire other privately owned silver mines in Mexico and duplicate the success of Guanaceví. Phase III: • Grow through consolidation
Slide 8: Highlights: What's New
Highlights: What’s New • Guanacevi Mines Project Set Records in Q2, 2006 for: • Silver production 350,087 oz Ag up 16% on Q1 • Mine output 491 tpd up 11% • Plant stock piles 37,357 up 412% • Operating cashflow US $3.2 million up 265% • Operating earnings US $2.3 million up 404% • Cash costs US $4.65
Slide 9: Highlights: What's New
Highlights: What’s New • Endeavour Expanded into Second Major Silver District: • Dominant land position in Parral • Potential for large tonnage, medium grade, polymetallic orebodies • Closed US $25 Million Equity Financing • Penoles purchased 1 million shares @ CA $2.10 to hold 5% • Cash and equival
Slide 10: Highlights: What's New
Highlights: What’s New Endeavour has acquired a core land-holding in the famous Parral silver district, Chihuahua 10
Slide 11: Silver vs Gold
Silver vs Gold Silver typically follows gold higher, but is more volatile. Gold Silver 11
Slide 12: Silver Supply
Silver Supply Global Buillon Inventories Government Supply at Record Lows Bullion Inventories (Months of Demand) Courtesy of CPM group 12
Slide 13: Mexico: History Rich In Silver
Mexico: History Rich In Silver • Top silver producing country in the world, 103 million oz in 2005. • Four hundred year culture of silver mining, dating back to the Spaniards. • Low political risk, modern growing economy and attractive mining code. • Substantially under-explored by modern companies
Slide 14: Guanacevi Mines Project: 100% Interest for US $7 Million over 4 years
Guanacevi Mines Project: 100% Interest for US $7 Million over 4 years • May 2004 – Optioned the Santa Cruz mine and Guanacevi plant (the “Guanacevi Mine Project”) and commenced an aggressive exploration program to expand resources. • November 2004 – Discovered new, high grade, North Porvenir zone, d
Slide 15: Guanacevi: A Top 5 Mexican Silver District
Guanacevi: A Top 5 Mexican Silver District Located in the Sierra Madre gold and silver belt, the Guanacevi district has produced over 450 million oz silver. 15
Slide 16: Location: Excellent Access & Infrastructure
Location: Excellent Access & Infrastructure Paved road access, state power grid and all modern amenities. 16
Slide 17: Geology: Classic Low Sulfidation, Epithermal Vein District
Geology: Classic Low Sulfidation, Epithermal Vein District Five main veins have been traced for over 6 km. 17
Slide 18: Mine: Fully Mechanized Underground Mine
Mine: Fully Mechanized Underground Mine Porvenir is the only significant mine operating in the Guanacevi district. 18
Slide 19: Ore: High Silver Grades, Leverage
Ore: High Silver Grades, Leverage High silver grades >450 gpt over robust vein widths (2-10m) >90% of the ore value is silver 19
Slide 20: 2004 Exploration: Three High Priority Targets
2004 Exploration: Three High Priority Targets Longitudinal Section looking NE Proposed Ramp 250 m Targeting a 10 year mine life at 3.5 million oz per year capacity based on known length, presumed depth, average thickness, density and grade of 3 prospective ore zones. 20
Slide 21: New Discovery 2005: North Porvenir Zone
New Discovery 2005: North Porvenir Zone Longitudinal Section looking NE • Initial inferred resource of 4.8 M oz Silver or 5.4 M oz Silver Equivalents (287,900 tonnes @ 516 gpt Ag, 1.2 gpt Au) – May 2005. • Open in several directions. 21
Slide 22: Exploration 2006: Select Drill Results
Exploration 2006: Select Drill Results Hole From Length Silver Gold Ag Equiv (no.) (m) (m) (gpt) (gpt) (opt) (ft) NP11D 94.70 13.95 290 0.33 9.0 45.8 NP16-3 356.40 1.00 3898 0.07 113.8 3.3 NP19-3 292.00 10.10 378 0.84 12.4 33.1 NP19-4 304.70 7.00 334 1.07 11.5 23.0 DSC2-8 197.0 5.70 938 3.84 32.9 18
Slide 23: Reserves/Resources 2006: 14.1 M oz Silver (March 2006)
Reserves/Resources 2006: 14.1 M oz Silver (March 2006) Classification Tonnes Silver Gold Silver Gold Ag Equivalent (gpt) (gpt) oz oz (gpt) (opt) Total Porvenir Mine Reserves 183,875 589 0.85 3,481,200 5,053 642 3,792,588 (Proven & Probable) Porvenir Mine Inferred Resources 392,757 390 0.81 4,924,300
Slide 24: Reserves/Resources: Longitudinal Section
Reserves/Resources: Longitudinal Section 24
Slide 25: Plant: 3.6 Million Opy Silver Capacity
Plant: 3.6 Million Opy Silver Capacity Filling the plant to capacity (3.6 million oz Ag per year) should make Endeavour a top 5 primary silver producer. 25
Slide 26: Quarterly Production Targets Guanacevi: Doubling Production In 2006
Quarterly Production Targets Guanacevi: Doubling Production In 2006 Quarterly Silver Production (millions oz) 1.0 0.95 est. 0.5 0.40 est. 0.30 0.35 0 Q1 Q2 Q3E Q4E 26
Slide 27: Annual Production Targets Guanaceví: Nine-Fold Growth Over Three Years
Annual Production Targets Guanaceví: Nine-Fold Growth Over Three Years Annual Silver Production (millions oz) 4.0 3.5 3.0-3.3 3.0 2.5 2.0-2.2 2.0 1.5 0.95 1.0 0.35 0.5 0.0 2004 2005 2006E 2007E 27
Slide 28: Annual Resource Targets Guanaceví: Ten Year Mine-Life at Plant Capacity
Annual Resource Targets Guanaceví: Ten Year Mine-Life at Plant Capacity Total Resources (millions oz) 50 40 30-40 30 20-30 20 14.1* 10 0 2004 2005 2006E 2007E *Proven/Probable reserves of 3.5 million oz and inferred resources of 10.6 million oz (updated March 2006). • Long term target is >35 million
Slide 29: Cash Cost Targets Guanacevi: Reducing Cash Costs
Cash Cost Targets Guanacevi: Reducing Cash Costs Cash Cost Per Oz 10 8 $7.10 $7.10 - $4.90 6 $4.75 – $4.25 <$4.25 4 2 0 2004 2005 2006E 2007E *Cash costs have decreased from $7.10 per oz in Q1, 2005 to $4.65 in Q2,2006. Long term target is $3.90 cash cost per oz. 29
Slide 30: Cash-Flow Targets at Guanaceví: Increasing Operating Cash-Flows
Cash-Flow Targets at Guanaceví : Increasing Operating Cash-Flows Net Pre-Tax Cash-Flow (US$ millions) 12 $22-$24 10 8 $10-$12 6 4 Silver price 2 $1.48 assumptions $6.67/oz $7.25/oz $10.00/oz $12.00/oz 0 2004 2005 2006E 2007E • Operating Cash-Flows rose from nil in 2004 to $1.48 million in 2005. • OC
Slide 31: Company Comparison: Increasing Valuation On Growth
Company Comparison: Increasing Valuation On Growth 2500 240 220 200 Market Cap ($ USM) 2000 Market Cap/Oz Annual 180 Production- 2005 160 1500 140 120 1000 100 80 60 500 40 20 0 0 SLW EDR (FD) CDE EDR PAA HL • Production of 3.6 Million oz silver per year would rank Endeavour as a top 5 primary silve
Slide 32: Silver/Endeavour: Price Comparison
Silver/Endeavour: Price Comparison Endeavour vs Silver SILVER ($US) EDR ($CA) 32
Slide 33: Management Team: Wealth of Experience
Management Team: Wealth of Experience • Bradford Cooke, M.Sc, P.Geo. - Chairman and CEO, Professional Geologist - 30 years experience with Shell, Chevron, Noranda and Canarc. • Godfrey Walton, M.Sc, P.Geo. - President and COO, Professional Geologist - 32 years specializing in discovery and developme
Slide 34: Summary
Summary: • Demonstrated Success at Guanaceví: Discovered and developed into production the new Porvenir Mine within the first six months of operations. • Strong Growth Profile: Both by organic expansion at Guanacevi and through strategic acquisitions like Parral. • High Leverage to Silver: High grad