Slide 1: Terronera Project Final PFS 2020 Webinar
t Terronera Project Final PFS 2020 Webinar July 14, 2020 TSX: EDR | NYSE: EXK 1
Slide 2: Cautionary Note
Cautionary Note This news release contains “forward-looking statements” within the meaning of the United States private securities litigation reform act of 1995 and “forward-looking information” within the meaning of applicable Canadian securities legislation. Such forward looking statements and inf
Slide 3: Agenda
Agenda Topic Overview Location, Access, Physiography, Infrastructure Property, History, Geology Project Milestones Mineral Resources and Reserves Production and Grade Profile Base Case Economics Spot Case Economics Project Evolution Value Adds Capex, Sustaining Cap Opex, Cash Cost and MAISC Operatin
Slide 4: Overview
Overview ► Terronera has the potential to become Endeavour’s next core asset and its largest and lowest cost mine ► The Final 2020 Pre-Feasibility Study highlights the robust economics of this high grade vein system ► After tax NPV 5% = $137 million, IRR = 30%, Payback Period = 2.7 years at base cas
Slide 5: Location, Access, Physiography, Infrastructure
Location, Access, Physiography, Infrastructure 50 km northeast of Puerto LOCATION Vallarta, Jalisco State, Mexico Excellent road access 1.5 hour ACCESS drive from PV on Hwy #70 Mountainous, temperate, forested region at elevations of PHYSIOGRAPHY 1500 – 2200 meters ASL Supplies, water, power, Town o
Slide 6: Property, History, Geology, Mineralization
Property, History, Geology, Mineralization PROPERTY HISTORY 24 mineral concessions, totalling Historic silver-gold mining district dating 173 km 2 from 1500’s to 1800’s, mining halted in 1910-12 due to Mexican Revolution applications for new concessions Endeavour optioned property in 2010, paid $2.7
Slide 7: Project Milestones
Project Milestones ► Received final ► Acquired option ► Completed government permits to purchase from initial PEA ► Completed final PFS Grupo Mexico ► Discovered ► Successfully ► Commenced high grade La unlocked value to exploration Luz vein improve economics 2010-2011 2012- 2014 2015-2016 2017-2018
Slide 8: Mineral Reserves and Resources
Mineral Reserves and Resources 100,000 500 Inferred AgEq 90,000 440 g/t 416 g/t 450 M+I AgEq 388 g/t 80,000 2P AgEq AgEq Grade 372 g/t 373 g/t 358 g/t 400 65% 325 g/t increase in AgEq 70,000 350 grade since 2011 298 g/t 60,000 300 248 g/t K oz Ag Eq 50,000 - 74,731 250 56% - - - 69,773 - 57,417 40,0
Slide 9: Production and Grade Profile
Production and Grade Profile Years 1-4: Average Ag Eq annual production of 6.5 million oz ; elevated grade Terronera Vein profile (average Ag Eq grade of 440 gpt) Silver Production (oz) 8,000 550 Gold Production (oz) 7,000 Ag Eq Grade 492 500 480 6,000 450 5,000 K oz Ag Eq 401 381 390 4,000 385 384
Slide 10: Base Case PFS Highlights
Base Case PFS Highlights Underground $137 30% 2.7 Mine million IRR Year NPV Payback Shallow, thick and Period rich deposit, 10 year NPV @ 5% mine life (after tax) $0.00/oz $2.10/oz 5.9 Exploration LOM LOM million oz Upside Cash Ag Eq Cost MAISC per year 50% of known veins 3.0 m oz Ag, not yet net of
Slide 11: Spot Case PFS Highlights
Spot Case PFS Highlights Underground $229 45.7% 1.7 Mine million IRR Year NPV Payback Shallow, thick and Period rich deposit, 10 year NPV @ 5% mine life (after tax) ($4.15)/oz ($2.06)/oz 6.2 Exploration LOM LOM million oz upside MAISC Ag Eq Cash per year 50% of Cost known veins 3.0 m oz Ag, not yet
Slide 12: Project Evolution
Project Evolution 2020 PFS Ausenco $250 - Spot prices as of July 8, 2020 of $18.49/ oz Ag, $1,812/oz Au $200 Completed 5 2019 PFS P&E independent Consultants (4) technical NPV $150 2017 PFS Smith reports ($million Foster (2) USD) $100 2015 PEA Smith Foster (1) 2020 PFS Ausenco - Base case prices : $
Slide 13: Value Adds in 2020 PFS
Value Adds in 2020 PFS Plant Throughput & Mine Development & Plant Equipment Production Schedule Mining Method Capacity increased to 1,600 tpd Deferred development and Incorporated idle equipment Production profile re-sequenced raise meters from El Cubo Elevated grade and production Incorporated mor
Slide 14: Initial and Sustaining Capital
Initial and Sustaining Capital Contingency 10% Project Indirects Decreased initial CAPEX by 14% 11% CAPEX USD (million) Mining $43.9 TMF+ Stacking CAPEX Mining Ore Crushing and Handling $4.7 Plant 44% 3% BREAKDOWN Infrastructure $9.8 Process Plant $99m Owner Costs $5.8 11% Process Plant $11.0 TMF+ S
Slide 15: Operating, Cash and MAISC Costs
Operating, Cash and MAISC Costs LOM MAISC, NET OF THE GOLD CREDIT The projected LOM MAISC is estimated to be in (Base case prices) the lowest decile of operating silver mines* Gold Credit , ($15.62) BASE CASE SPOT US$/T US$/Ag Oz US$/Ag Oz Mining $44.64 $8.32 $8.32 Process $ 19.27 $3.59 $3.59 $2.10/
Slide 16: Operating Cost Comparison
Operating Cost Comparison Terronera est. LOM Cash Costs (1) vs. Operating Peer Group (2) 30 22.41 23.79 20.42 20 17.13 17.37 17.88 12.37 13.18 13.80 9.52 10.12 7.47 8.49 8.57 8.74 10 4.27 4.63 5.52 5.67 6.69 2.61 2.69 2.70 3.00 3.10 3.17 3.57 0.31 0.58 0.86 1.54 0 0.00 (3.78) (3.06) (2.95) (10) (20)
Slide 17: After-Tax Free Cash Flow and EBITDA
After-Tax Free Cash Flow and EBITDA $350 Spot Price Cumulative After Tax FCF Average annual after tax free Base Case Cumulative After Tax FCF cash flow, once in production $300 Base Case After Tax FCF Spot: SPOT $250 Base: Spot Price After Tax FCF $31 million /yr $43 million/ yr $342 million - Yr 10
Slide 18: Sensitivity Analysis
Sensitivity Analysis Project has equal leverage to rising silver and gold prices, as LOM revenue mix is 50/50% silver, gold (Implies 100:1 Au:Ag ratio) Gold Price Silver Price CAPEX CAPEX $NPV (after- tax 5%) %IRR (after- tax) Movement OPEX NPV OPEX IRR ($/oz) ($/oz) NPV IRR -20% 173.2 36.2% 150.4 3
Slide 19: Mine Layout
Mine Layout Terronera – 4 ramps connect to main UNDERGROUND haulageway 2,000 m to the mill, average RAMP ACCESS production of 1600 tpd MINES La Luz – one portal for two ramps Terronera - 59% mechanized cut and fill, MINING 41% long hole METHOD La Luz - 6% Resue, 94% long hole BACKFILL Blend of taili
Slide 20: Process Flow Sheet
Process Flow Sheet Three stage crushing, OVERALL grinding, flotation, PROCESS thickening, filtration DESIGN Crush to 3/8 inches, FLOTATION grind size of 80 % - CONCENTRATES 70 microns PLANT Targets of 84.9% Ag/ RECOVERIES 82.3% Au 20
Slide 21: Surface Infrastructure
Surface Infrastructure Mining fleet: Jumbo Drills Scooptrams Plant Haulage trucks Bolting Jumbos Scissor Decks Loaders Longhole drills Tailings Explosive loaders and trucks Jackleg and Diamond drills Transmixers Shotcrete sprayers Power Plant to use liquified natural gas and solar panels ► Leased ge
Slide 22: Sustainability Goals - Shared Value for all Stakeholders
Sustainability Goals - Shared Value for all Stakeholders The community relations team has been active and successful in mitigating risk and obtaining support from local communities. Results of Social Impact Assessment (1) The 2020 objectives are: No Does not Know 32% 7% Education: a) Scholarships b)
Slide 23: Government Permits
Government Permits ► Mine and plant permits (received Q3, 2017) ► Tailings and dumps permit (received Q2, 2019) ► MIA (EIS) from SEMARNAT (Mexican Environmental Authority) previously received in Q1, 2017, is now being extended for the new 1,600 plant capacity ► Additional minor permits will be filed
Slide 24: Upside Opportunities
Upside Opportunities Expand Property Size - acquire new concessions covering mineralized areas in proximity Expand Resources & Reserves – plan additional drilling to convert inferred to probable, test other veins Expand Mine & Plant – evaluate potential to expand to 2,000 tpd subject to expanding re
Slide 25: Exploration Potential
Exploration Potential Several areas of interest with discovery potential: TERRONERA & open at depth and to surface LA LUZ VEINS 2 other main areas with potential to increase resources LA LOMA-LOS targets range up to 500 m long by PAJAROS VEINS up to 3 m thick in the footwall of the Terronera vein 12
Slide 26: Next Steps
Next Steps Complete feasibility study – approximately 9-12 months Build project team Complete EPC process –contractor bidding and selection Extend Government permits – amend mine access ramp, construction camp Order long lead items – mine and plant procurement Evaluate upside opportunities – recomme
Slide 27: Few Pure Silver Producers
Few Pure Silver Producers 2019 METALS MIX IN REVENUE 120% 100% 39% 46% 58% 69% 80% 53% 52% 55% 60% 58% 2% 54% 47% 40% 42% 34% 32% 20% 27% 27% 0% First Majestic Endeavour Silver SilverCorp Metals Hochschild Fresnillo Pan American Hecla Mining Coeur Mining Silver Mining Silver Silver Gold Base Metals
Slide 28: Scarcity of Silver Projects, Compared to Gold
Scarcity of Silver Projects, Compared to Gold GOLD PROJECTS Technical reports filed in last 3 years, since 2017 SILVERS +50% production Approximately 100 gold projects globally (PFS & FS) silver in revenue COTE DAWSON MCPHILLAMYS PREMIER Kiena Kilgore NORTH BULLFROG TETLIN GRAMALOTE Eskay MIRADO RAV
Slide 29: Sector Leading Beta to Silver Price
Sector Leading Beta to Silver Price For every 1% change in silver bullion, Endeavour stock moves on average 1.6% 1.8 1.7 1.6 1.5 1.6 1.5 1.5 1.5 1.5 1.4 1.4 1.4 1.3 1.2 1.3 1.1 1.0 Endeavour Silver First Majestic Pan American Great Panther Coeur Mining, Inc. Fortuna Silver Silvercorp Metals Hecla Mi
Slide 30: Undervalued Relative to Peers
Undervalued Relative to Peers Current P/NPV (ratio) Stock underperformed in 2019 due to operational 2.6X challenges at 2 mines Endeavour has the strongest Historical silver producer multiples organic growth profile in the during previous precious metals sector that is not bull run were well over 2X
Slide 31: Q&A
Q&A
Slide 32: Terronera Assumptions for 2020 PFS
Terronera Assumptions for 2020 PFS Base Case 2020 Financial Cost Metrics Silver Price 15.97 LOM Revenue (millions) 942.7 Gold Price 1,419 LOM EBITDA (millions) 476.4 Silver:Gold Ratio 89 After Tax LOM Free Cash Flow (millions) 217.4 Operating Statistics LOM Tonnes Processed LOM (thousands) 5,563 Aft
Slide 33: 2020 PFS Base & Spot Case Highlights
2020 PFS Base & Spot Case Highlights 3 million oz silver and BASE CASE SPOT CASE 33,000 oz gold LOM Annual Production Silver price $15.97/oz $18.49 Gold price $1,419/oz $1,812 10 year mine life with 5.9 million oz of Ag Eq at 405 g/pt Gold: silver ratio 89:1 98:1 (89:1 ratio) NPV (5% after-tax) $137
Slide 34: Terronera 2019 Updated Reserves & Resources
Terronera 2019 Updated Reserves & Resources Mineral Resource Tonnes Contained Ag Contained Au Classification Ag (g/t) Au (g/t) Ag Eq (g/t) (kt) (koz) (koz) 2019 Indicated Estimates Terronera 5,275 227.2 2.35 403.4 38,537 398 La Luz 126 192 13.60 1,212 779 55 2019 Inferred Estimates Terronera 1,022 2