Endeavour Silver Corp. · TSX:EDR
Endeavour Silver — Investor Presentation (May 2017)
61 slides from Endeavour Silver's investor presentation, May 2017
Slide 1: Building New Mines, Focus on Growth
Building New Mines, Focus on Growth May 2017
Slide 2: Cautionary Note
Cautionary Note This presentation 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: Investor Highlights
Investor Highlights Mid-tier precious metals miner; produced 9.7 Endeavour Silver Corp. million oz Ag Eq in 2016, in line with guidance Three high-grade silver-gold mines located in Core Assets two historic mining districts of Mexico Reduced AISC for four consecutive years; Operational Excellence ne
Slide 4: Core Assets
Core Assets Sierra Madre Occidental Silver & Gold Belt Chihuahua Guanaceví Guadalupe y Calvo Parral Durango Canada Zacatecas Bolañitos El Compas Lourdes Head Office Vancouver El Cubo Terronera Jalisco Guanajuato Mexico City Mexico Production Mines Development Exploration Development Guanaceví Terron
Slide 5: Three Operating Mines; Three Development Projects
Three Operating Mines; Three Development Projects Guanaceví – 2004 Bolañitos – 2007 El Cubo – 2012 El Compas – 2017 Terronera – 2018 Parral – 2019 Increasing exploration and acquisitions at three operating mines to extend mine lives; building three new mines in next three years to fuel next phase of
Slide 6: 2016 Highlights
2016 Highlights Positive financials – Revenue $157 million; cash flow $24 million; net earnings $4 million Produced in line with guidance – 5.4 million oz silver and 57,375 oz gold, totalling 9.7 million oz Ag Eq (75:1) at cash costs of $6.78/oz Strengthened balance sheet – Generated operating free
Slide 7: Organic Resource Growth
Organic Resource Growth Reserves and Resources (million oz) 250 Five years of no 2012 growth during bear Acquired market El Cubo 200 Gold Silver Nine years of resource growth Silver equivalents during bull market 150 million oz 2007 100 Acquired Bolañitos 2004 50 Acquired Guanaceví 0 2004 2005 2006
Slide 8: Strategic Production Growth
Strategic Production Growth Annual Production (million oz) 15 Ten years of production growth during bull market Four years of no growth during Gold bear market Silver Silver equivalents 10 2012 acquired El Cubo million oz 2007 5 acquired Bolañitos 2004 acquired Guanaceví 0 2004 2005 2006 2007 2008 2
Slide 9: Operating Costs
Operating Costs Consolidated Cash Costs ($/oz) $10 $8.31 $8.39 $9 $7.87 $7.39 $8 $6.78 $7 Consolidated Direct Costs ($/tonne) $120 $6 $92.17 $96.81 $95.05 $5 $100 $4 $80.18 $72.42 $3 $80 $2 $1 $60 $- 2012 2013 2014 2015 2016 $40 $20 $30 $27.79 Consolidated AISC ($/oz) $- $25 2012 2013 2014 2015 2016
Slide 10: History of Beating Guidance
History of Beating Guidance 2013 2014 2015 2016 2017E Silver BEAT BEAT BEAT MISS Production 5.0-5.3E 6.8A 6.5-6.9E 7.2A 5.8-6.4E 7.2A 5.5-6.0E 5.4A 5.2-5.7E (million oz) +32% +7% +18% -2% BEAT MISS BEAT BEAT Gold Production 50-53E (thousand oz) 46-49E 76A 65-69E 63A 47-52E 60A 49-54E 57.4A +60% -3%
Slide 11: High Silver Leverage
High Silver Leverage One-year beta Three-year beta Five-year beta Endeavour 1.86 1.74 1.66 Americas Silver 1.46 1.64 1.55 Coeur 1.25 1.48 1.27 First Majestic 1.58 1.64 1.48 Fortuna 1.65 1.59 1.57 Fresnillo 1.48 1.12 1.11 Great Panther 1.45 1.43 1.56 Hecla 1.49 1.26 1.14 Hochschild 1.60 1.76 1.36 Pan
Slide 12: Shareholder Information
Shareholder Information Issued/outstanding (Mar 31, 2017) 127.1 million Exchange listings NYSE:EXK, TSX:EDR Fully diluted (Mar 31, 2017) 131.5 million Working capital (Mar 31, 2017) $82 million Recent price (May 3, 2017) US$3.20 Cash position (Mar 31, 2017) $70 million Market cap (May 3, 2017) US$40
Slide 13: Guanaceví
Title GUANACEVĺ 13 GROWTH WITH INTEGRITY
Slide 14: Guanaceví – A Top Five Mexican Silver District
Guanaceví – A Top Five Mexican Silver District Location Durango, Mexico Property approx. 4,200 hectares State highway, power, local Infrastructure labour Past production 450 million oz silver Plant capacity 1,200 tonnes/day Porvenir Norte Operating mines Porvenir Cuatro Santa Cruz Milache New discov
Slide 15: Guanaceví – Our Largest Silver Producer
Guanaceví – Our Largest Silver Producer 2016 Reserves and Resources (1) Proven and probable 5.0 million oz Ag 11,900 oz Au Measured and indicated 24.6 million oz Ag 56,900 oz Au Inferred 9.8 million oz Ag 19,400 oz Au Operations 2016 Production (2) 2,364,045 oz Ag 5,328 oz Au 2,763,645 oz Ag Eq Thro
Slide 16: Bolañitos
BOLAÑITOS 16
Slide 17: Bolañitos – Second Largest Mexico Silver District
Bolañitos – Second Largest Mexico Silver District Location Guanajuato, Mexico Property approx. 2,500 hectares State road, power, Infrastructure local labour 1.2 billion oz silver Past production 5 million oz gold Plant capacity 1,600 tonnes/day Lucero, Bolanitos, Operating mines Karina, Fernanda, Da
Slide 18: Bolañitos – Our Lowest Cost Mine
Bolañitos – Our Lowest Cost Mine 2016 Reserves and Resources (1) Proven and probable 1.3 million oz Ag 28,100 oz Au Measured and indicated 4.1 million oz Ag 52,300 oz Au Inferred 5.7 million oz Ag 84,800 oz Au Operations 2016 Production (2) 1,052,617 oz Ag 30,720 oz Au 3,356,617 oz Ag Eq Throughput
Slide 19: El Cubo
Endeavour ® 19
Slide 20: El Cubo – Second Mine in Guanajuato
El Cubo – Second Mine in Guanajuato Location Guanajuato, Mexico approx. 8,100 Property hectares State road, power, Infrastructure local labour 80 million oz silver Past production 2 million oz gold Plant capacity 1,500 tonnes/day San Nicholas, Dolores, Operating mines Villalpando, Peregrina New disc
Slide 21: El Cubo – Operations Continue to Improve
El Cubo – Operations Continue to Improve 2016 Silver Reserves and Resources (1) Direct Production Costs ($/tonne) Proven and probable 4.3 million oz Ag $140 51,100 oz Au $120 Measured and indicated 5.9 million oz Ag $100 78,800 oz Au $80 Inferred 10.0 million oz Ag $60 129,900 oz Au $40 $20 Operatio
Slide 22: El Compas
EL COMPAS Endeavour ®
Slide 23: El Compas – Near Term, High-Grade Production
El Compas – Near Term, High-Grade Production Low-cost acquisition – US$6.7 million in shares Large property – 3,990 hectares Major district – Zacatecas >750 million oz Ag Well located – Adjacent to city; excellent road access; grid power; water; labour, and services Historic production – Small shaft
Slide 24: El Compas – Developing Our Fourth Mine
El Compas – Developing Our Fourth Mine Mineral resource – small but shallow and high grade Preliminary Economic Assessment – robust economic returns, very scalable if we discover or purchase additional mineral resources in the Zacatecas district and refurbish the second ball mill to double the plant
Slide 25: El Compas – Mine Already Permitted
El Compas – Mine Already Permitted 25
Slide 26: El Compas – Multiple Exploration Targets
El Compas – Multiple Exploration Targets • El Compas and El Orito veins ready for development • 10 additional vein targets for future exploration • Other prospective properties available for acquisition • Potential for 100,000-500,000 oz Au Eq per vein target; typical of Zacatecas district Hole From
Slide 27: Terronera
TERRONERA 27
Slide 28: Terronera – Large, Low Cost Mine Potential
Terronera – Large, Low Cost Mine Potential Low-cost acquisition – US$2.5 million Large property – 6,100 hectares Historic district – Discovered in 1542; >50 small historic mines on >20 separate veins Well located – 40 km northeast of Puerto Vallarta in Jalisco State, excellent road access; grid powe
Slide 29: Terronera – New Discovery Still Open
Terronera – New Discovery Still Open Open Open From True Width Au Ag AgEq From True Width Au Ag AgEq Hole Structure Hole Structure (m) (m) (g/t) (g/t) (g/t) (m) (m) (g/t) (g/t) (g/t) Terronera 380.75 6.56 2.94 717 923 Terronera 80.70 4.99 2.70 81 270 TR10.5-1 TR20-7 Including 386.90 0.39 2.99 4,860
Slide 30: Terronera – Developing Our Fifth Mine
Terronera – Developing Our Fifth Mine Mineral resource – large, high-grade, still growing Pre-feasibility study – robust economic returns; 1,000 tpd, expanding to 2,000 tpd in year three Production decision – waiting for green light to develop the new Terronera mine subject to receiving final permit
Slide 31: Terronera – PFS
Terronera – PFS Mineral Reserves and Resources (at December 31, 2017) Ag Eq Ag oz Au oz Ag Eq oz Silver-Gold Reserves Tonnes Ag g/t Au g/t g/t (000s) (000s) (000s) Probable 4,061 207 1.95 353 27,027 254.6 46,122 Ag Eq Ag oz Au oz Ag Eq oz Silver-Gold Resources Tonnes Ag g/t Au g/t g/t (000s) (000s)
Slide 32: Terronera – Nine New High-Grade Veins
Terronera – Nine New High-Grade Veins 32
Slide 33: Parral
PARRAL Endeavour @
Slide 34: Parral – Expanding the Project Pipeline
Parral – Expanding the Project Pipeline Low-cost acquisition – US$6.0 million in shares plus $0.20/oz for new resources Large property – 3,432 hectares Major district – Parral >250 million oz Ag Well located – Adjacent to city; excellent road access; grid power; water; labour, and services Historic
Slide 35: Parral – Discovery and Production Potential
Parral – Discovery and Production Potential Historic resource – 32.1 million oz silver in three zones totaling 4.0 million tonnes grading 249 g/t in Veta Colorada estimated by IMMSA * Virgin zone – Remedio-Argentina contains 15 million oz silver within 1.55 million tonnes grading 300 g/t silver, ave
Slide 36: Parral – Abundant High-Grade Targets
Parral – Abundant High-Grade Targets • Exploration permits and land access agreements already in place • Will conduct twin, infill drilling to verify Remedio Argentina historic resource in 2017 • US$2 million exploration commitment at San Patricio and La Palmilla over next two years • Many additiona
Slide 37: Future Catalysts
Future Catalysts • Guanaceví – resolve operational issues and get mine back on plan: higher throughput and grades, lower costs • Terronera – update drill results and resource estimate; make production decision, and explore multiple new veins to expand resource potential • El Compas – commence mine d
Slide 38: Why Endeavour?
Why Endeavour? Experienced Board and Strategic Acquisitions Proven Track Record Management Identified hidden potential 11 consecutive years of 400+ years in mining at Guanaceví, Bolañitos, out-performance in industry El Cubo, El Compas, mining operations Terronera Quality Assets Organic Growth Unfol
Slide 39: Appendix
APPENDIX 39 GROWTH WITH INTEGRITY
Slide 40: Management and Board
Management and Board Management Bradford Cooke, M.Sc., P.Geo. – Founder and CEO Godfrey Walton, M.Sc., P.Geo. – President and COO Dan Dickson, CA – CFO Tomas Iturriaga-Hidalgo, B.Sc., Global MBA – VP, Operations and Country Manager, Mexico Dale Mah, B.Sc., P.Geo. – VP, Corporate Development Luis Cas
Slide 41: Institutional Investors, Analyst Coverage
Institutional Investors, Analyst Coverage • Van Eck Associates • Andrew Kaip, BMO • Fresnillo • Dalton Baretto, Canaccord Genuity • Renaissance Technologies • Cosmos Chiu, CIBC • Connor Clark & Lunn • Bhakti Pavani, Euro Pacific Capital • Arrowstreet Capital • Ian Parkinson, GMP Securities • AMG Fon
Slide 42: Reserves and Resources (Dec 31, 2016)
Reserves and Resources (Dec 31, 2016) Silver-Gold Reserves and Resources Tonnes Au oz Ag Eq oz Ag g/t Au g/t Ag Eq g/t Ag oz (000s) (000s) (000s) (000s) Proven Guanaceví 87 247 0.49 284 691 1.4 794 Bolañitos 157 90 2.84 311 454 14.3 1,570 El Cubo 409 154 1.99 295 2,025 26.2 3,879 Total Proven 653 15
Slide 43: Reserves and Resources (Dec 31, 2016)
Reserves and Resources (Dec 31, 2016) Notes 1. Mineral resources are not mineral reserves and do not have demonstrated economic viability. There is no certainty that any or all part of the mineral resources will be converted into mineral reserves. 2. Mineral resources are exclusive of and in additio
Slide 44: Consolidated Mine Operations Table
Consolidated Mine Operations Table Comparative Table of Consolidated Mine Operations Ore grades (g/t) Recovered ounces Recoveries (%) Plant throughput Cash costs AISC ($/oz Direct costs Period Silver Gold Silver Gold Silver Gold (tonnes) ($/oz Ag) Ag) ($/tonne) Q1 2012 193,759 229 1.33 1,072,491 6,3
Slide 45: Guanaceví Mine Operations Table
Guanaceví Mine Operations Table Ore grades (g/t) Recovered ounces Recoveries (%) Plant Cash costs AISC Direct costs Period throughput Silver Gold Silver Gold Silver Gold ($/oz Ag) ($/oz Ag) ($/tonne) (tonnes) Q1 2012 98,963 292 0.60 726,697 1,620 78.2 85.3 12.38 - 113.69 Q2 2012 100,208 269 0.87 669
Slide 46: Guanaceví – Operations Overview
Guanaceví – Operations Overview 46
Slide 47: Bolañitos Mine Operations Table
Bolañitos Mine Operations Table Ore grades (g/t) Recovered ounces Recoveries (%) Plant Cash costs AISC Direct costs Period throughput Silver Gold Silver Gold Silver Gold ($/oz Ag) ($/oz Ag) ($/tonne) (tonnes) Q1 2012 94,796 163 2.10 345,794 4,701 69.5 73.6 (6.63) - 70.26 Q2 2012 102,779 149 2.05 370
Slide 48: Bolañitos – Operations Overview
Bolañitos – Operations Overview 48
Slide 49: El Cubo Mine Operations Table
El Cubo Mine Operations Table Ore grades (g/t) Recovered ounces Recoveries (%) Plant Cash costs AISC Direct costs Period throughput Silver Gold Silver Gold Silver Gold ($/oz Ag) ($/oz Ag) ($/tonne) (tonnes) Q3 2012 80,550 92 1.42 106,260 1,724 44.6 46.9 29.21 68.96 119.32 Q4 2012 90,175 96 1.42 198,
Slide 50: El Cubo – Operations Overview
El Cubo – Operations Overview 50
Slide 51: Significant Operating Costs Breakdown
Significant Operating Costs Breakdown Consolidated 7% El Cubo 4% 5% Labour 5% Re-agents & Grinding Labour 32% Fuel 38% Re-agents & Grinding 27% Power Fuel 21% Royalties Power Contractor Contractor Refining Explosives 2% Explosives 11% 11% tolled Ore 14% 17% 3% 3% Guanaceví Labour 6% Bolañitos 8% 3%
Slide 52: Corporate Social Integrity and Sustainable Development, CSR The Endeavour Way
Corporate Social Integrity and Sustainable Development, CSR The Endeavour Way “Corporate Social Integrity”, The Endeavour Way to CSR or Why “Who You Are” and “What You Do” Determine the Strength of Your Community Relationships We receive annual awards 52 for the way we do business
Slide 53: Mission, Vision, Values
Mission, Vision, Values Who we are and what we do: We find, build and operate quality silver mines in a sustainable way to create real value for all stakeholders Our goal is to continue growing to become a premier, low cost senior producer in the silver mining sector By continually improving what we
Slide 54: Formal Sustainability Policies
Formal Sustainability Policies In 2008 Endeavour started formalizing its sustainable development policies: • Corporate governance • Economic development • Health and safety • Education and training • Environmental protection 54 GROWTH WITH INTEGRITY
Slide 55: Corporate Governance
Corporate Governance • Corporate governance lays the foundation upon which our business is built • Formalized our approach to doing business by establishing our Board and Committee charters and policies on Ethical Code of Conduct, Anti-Bribery and Corruption, Whistle Blower, Disclosure and Advance N
Slide 56: Economic Development
Economic Development • Investments are essential to generate economic impact and profits are essential to fulfil community and sustainability objectives • Our most obvious positive economic impacts have been from investing in acquisition of properties, mines and plants exploration to discover ne
Slide 57: Health and Safety
Health and Safety • Because mining is a high risk industry, employee health and safety is our #1 priority, governed by extensive safety policies and practices • Every employee goes through rigorous safety induction, daily safety procedures, regular refresher courses, job site audits and each mine ha
Slide 58: Education and Training
Education and Training • Education and training are important to improving the quality of life in the local communities • Endeavour sponsors university scholarships in Mexico and Canada, high school scholarships in Mexico, and online courses to complete high school diplomas, technical and self-emplo
Slide 59: Environmental Protection
Environmental Protection • Protection of our natural environment is paramount for Endeavour • We monitor dumps, tailings, water and energy consumption and emissions, waste recycling and disposal and biodiversity • In particular, tailings management has been a hot topic recently but from day one we h
Slide 60: Community Enrichment
Community Enrichment • We support our local communities in many ways in order to improve their quality of life, resolve issues and build sustainable capacity • Endeavour donates our time, funds, food and gifts for cultural and religious celebrations; we sponsor sports teams, kids camps and field tri
Slide 61: Formal Sustainability Reporting
Formal Sustainability Reporting • 2012 – Endeavour started GRI G4 reporting of its sustainability activities, based on stakeholder engagement and materiality assessment • Every year, we go to our stakeholders for feedback on a full range of interests, and every two years, we conduct a materiality re