Endeavour Silver 2026 Q2 Earnings Call

Now over to Dan. Thanks, Allison, and welcome everyone.

Endeavour Silver's second quarter performance reflects the strength of our operations with increased production, record metal sales, and a meaningful improvement in mine operating cash flow. Terronera's ramp up and the higher throughput achieved at Kolpa, together with our strong cash position, gives us a solid base to continue advancing our growth plans throughout the remainder of the year. In Q2, Endeavour produced nearly 2 million ounces of silver and over 10,000 ounces of gold, totaling 3 million silver equivalent ounces. This represents a 36% increase compared to Q2 2025. We reported revenue of $212 million, an increase of 150% compared to prior year, with mining operating earnings of $74 million, again higher than the $7 million in Q2 2025, and mine operating cash flow of $100 million before taxes, a 300% increase from Q2 2025.

Our all-in sustaining costs net of by-product credits were $37 this quarter, representing a 47% increase from Q2 2025. Profitability has significantly increased our operating costs with increased royalties, purchase material, profit sharing, and mining taxes. With increased profitability, we continue to invest in sustaining capital costs, especially compared to the prior period. In Q2, Endeavour recognized an adjusted net earnings of $45 million or an adjusted net earnings per share of $0.15. Changes in the metal price have a meaningful impact on our direct cost per ton. For example, for every $1 increase in silver ounce, cost per ton rise by about $0.90 at Terronera, $3.80 at Guanaceví, and $0.50 at Kolpa. Due to the higher royalties, mining duties, third-party purchase or imperatively required profit sharing.

Direct operating costs per ton were 14% higher this quarter compared to Q2 last year, as the Mexican peso has appreciated and put pressure on inputs impacting our costs. During the first quarter, Kolpa installed and commissioned a new 3-stage pressure ball mill, increasing plant capacity to 2,500 tons per day. Additional expansion expenditures remain, along with capital improvement initiatives, including the expansion of the tailing storage facility to accommodate the increased plant capacity, construction of a new water treatment plant, new power substations required to support current and future operating levels, as well as upgrades to the camp accommodations aimed at attracting and retaining skilled miners in Peru. Management continues to evaluate the long-term capital needs of Kolpa and has increased the 2026 budget by $18 million to bring projects forward and meet company and Peruvian recommendations.

At Terronera, daily throughput remained consistent as the processing plant focused on metal recoveries. Silver grades were in line with plan for the quarter and are expected to increase during the second half of the year as mining operations access our higher grade areas. Further progress is expected on recoveries as the grinding circuit continues to find efficiencies and to meet the design criteria. With higher grade areas and other ramp-up efficiency initiatives, such as the LNG plant commissioning and the waste dump to development, management expects an incremental decrease in Terronera's cost per ton throughout the second half of the year.

Exploration drilling also restarted at Terronera, making it the first drill program at the mine since 2020, aimed at expanding and better defining mineralization along strike and depth within the Terronera vein and defining the limits of mineralization near historical workings to support mine design and long-term planning outcomes. For more details, we released initial results on June 18th, and you can find them on our website. Guanaceví incurred higher direct cost per ton this quarter, largely due to higher volume and cost of third-party material purchased, which have become more expensive on a per ton basis due to higher prices. The higher metal prices also drove higher royalties, special mining duty payable for the period.

The higher prices have allowed the operating team to mine lower grade zones, ultimately extending mine life, and we do expect higher grade areas to come in line in the near future, increasing grades from current levels. Drilling continued throughout Q2 at Guanaceví as well, focusing on underground diamond drilling in deeper parts of the areas, and we continued to test down the Cruz vein and look for additional extensions to the north. As of June 30th, 2026, we had a cash position of $236 million, working capital of $214 million, providing a strong and stable foundation to advance our ongoing initiatives. We continue to advance the Pitarrilla feasibility study, which is expected at the end of Q3, with economic information being collected with drafts expected shortly for management.

In closing, Endeavour delivered a strong second quarter supported by higher production, record metal sales, improved mine operating cash flow and strengthened balance sheet. With the Cochema expansion now achieving higher throughput, Terronera continued advance through its ramp up and the events of the Pitarrilla feasibility study underway. We are well positioned to build on this momentum through the second half of the year and into next year. Thank you for your continued support and engagement. With that, I'm happy to open for questions. Operator, let's please proceed to the Q&A session.

Hey, Heiko, how are you?