Endeavour Silver Corp. (NYSE: EXK) (TSX: EDR) is pleased to announce its financial and operating results for the year ended December 31, 2021. All dollar amounts are in US dollars (US$).

“2021 marked another strong year for Endeavour Silver. Our two producing mines – Guanaceví and Bolañitos – generated significant operating cash flow that we are using to extend mine lives and fund future growth,” stated Dan Dickson, CEO of Endeavour Silver. “Investment in the next leg of our growth, the transformational Terronera project, began last fall and is advancing well. While project financing is moving more slowly than expected, the project continues to move forward and with the receipt of financing and board approval in the next couple of months, is still expected to complete commissioning in H1 2024.

2021 Highlights

• Production Surpasses 2021 Guidance: 4,870,787 ounces of silver and 42,262 oz of gold for 8.3 million oz silver equivalent¹.
• Highest Recorded Revenue in 5 years: Net revenue of $165.3 million from the sale of 3,856,883 oz of silver and 39,113 oz of gold at average realized prices of $25.22 per oz silver and $1,790 per oz gold. Management withheld metal sales during the year and carried a significant metal inventory at year end totaling 1,028,340 oz silver and 1,044 oz gold of bullion inventory and 54,270 oz silver and 2,630 oz gold in concentrate inventory.
• Improved Net Earnings: $14.0 million, or $0.08 per share, up from net earnings of $1.2 million, or $0.01 per share in 2020. Net earnings in 2021 were impacted by the increased finished goods inventory held, which was carried at a cost of $15.6 million compared to the estimated fair market value of $31.7 million at December 31, 2021.
• Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)⁽²⁾: $54.9 million, an increase of 87% from 2020.
• Increased Cash Flow: $32.2 million in operating cash flow before working capital changes⁽²⁾, an increase of 12%. Mine operating cash flow before taxes⁽²⁾ was $61.9 million, an increase of 10%.
• Costs Impacted by Industry-Wide Inflationary Pressures: Cash costs⁽²⁾ of $9.31 per oz payable silver and all-in sustaining costs ⁽²⁾ of $20.34 per oz payable silver, net of gold credits were slightly above guidance due to increased labour, power and consumables costs.
• Strong Balance Sheet: Cash position of $103.3 million and working capital⁽²⁾ $121.2 million as at December 31, 2021.
• Guanaceví Continued to Outperform: Silver and gold grades continued to deliver well above plan and throughput approached plant capacity.
• Bolañitos’ Performance Remained Steady: Silver grades and plant throughput exceeded plan with gold grades slightly below plan.
• Encouraging Brownfields Exploration Results from Guanaceví and Bolañitos: Drilling continued to intersect high-grade gold-silver mineralization in the Santa Cruz vein at Guanaceví and to intersect multiple mineralized structures near current workings at Bolañitos.
• Positive Greenfields Exploration Results from the Parral Project: Drilled over 18,000 metres targeting several areas along the La Colorada vein with encouraging results in areas outside the current mineral resource estimate.
• Continued to Advance the Terronera Project: Work continued on final detailed engineering, early earth works, critical contracts and procurement of long lead items. The financing and final permitting processes are progressing, however, delays caused by the Omicron variant have slightly extended the anticipated timeline. The Company intends to make a formal construction decision subject to completion of financing and receipt of additional amended permits in the coming months.
• Sold El Cubo Assets: The Company sold its El Cubo assets in Guanajuato, Mexico to Guanajuato Silver Company (formerly Vangold Mining Corp) for $15 million plus contingent payments of up to $3 million in a transaction that closed April 9, 2021.
• Suspended Operations at El Compas: Management suspended operations at El Compas in mid-August and is currently evaluating its alternatives for the asset.
• Acquired Bruner, an Advanced Stage Exploration Project: Ideally situated within Nevada’s Walker Lane northwest trending mineral belt, this acquisition closed on September 1, 2021.

Financial Overview (see appendix for consolidated financial statements)

⁽¹⁾ Silver equivalent (AgEq) is calculated using an 80:1 silver:gold ratio.

⁽²⁾ These are non-IFRS financial measures and ratios. Further details on these non-IFRS financial measures and ratios are provided at the end of this press release and in the MD&A accompanying the Company’s financial statements on SEDAR at www.sedar.com.

For the year ended December 31, 2021, net revenue, net of $2.0 million of smelting and refining costs, increased by 19% to $165.3 million (2020: $138.4 million).

Gross sales of $167.3 million in 2021 represented a 19% increase over the $140.2 million in 2020. Silver oz sold increased by 11% with a 17% increase in the realized silver price, resulting in a 30% increase in silver sales. Gold oz sold increased by 10% with a 3% reduction in the realized gold price, resulting in a 7% increase in gold sales. During the period, the Company sold 3,856,883 oz silver and 39,113 oz gold for realized prices of $25.22 and $1,790 per oz, respectively, compared to sales of 3,460,638 oz silver and 35,519 oz gold for realized prices of $21.60 and $1,846 per oz, respectively, in 2020. In 2021, silver and gold London spot prices averaged $25.14 and $1,799, respectively.

The Company significantly increased its finished goods silver and gold inventory to 1,082,610 oz and 3,674 oz, respectively, at December 31, 2021 compared to 116,484 oz silver and 1,459 oz gold at December 31, 2020. The cost allocated to these finished goods was $15.6 million at December 31, 2021 compared to $3.6 million at December 31, 2020. At December 31, 2021, the finished goods inventory fair market value was $31.7 million, compared to $5.8 million at December 31, 2020. Earnings and other financial metrics, including mine operating cash flow⁽²⁾, operating cash flow⁽²⁾ and EBITDA⁽²⁾ were impacted by the increased bullion inventory held at year end.

After cost of sales of $128.9 million (2020 – $111.1 million), an increase of 16%, mine operating earnings were $36.4 million (2020 – $27.3 million). The increase in cost of sales was due to increased production, labour, power and consumables costs and significantly higher royalty costs, offset by improved productivity at the Guanaceví and Bolañitos operations. Royalties increased 69% to $13.8 million due to increased mining of the high-grade Porvenir and Porvenir Cuatro extensions at the Guanaceví operation, which are subject to significantly higher royalty rates. During 2021 the Company’s operations experienced higher than budgeted costs due to global supply constraints, inflationary pressure, materials shortages, labour costs tracking higher than planned and increased purchased ore at the Guanaceví operation. In 2020, there was a temporary suspension of the Guanaceví, Bolañitos and El Compas operations due to COVID-19, which impacted sales and costs of sales during that period.

The Company had operating earnings of $22.3 million (2020: operating loss $0.8 million) after exploration and evaluation costs of $17.9 million (2020: $9.8 million), general and administrative costs of $10.1 million (2020: $12.7 million), an impairment reversal of $16.8 million (2020: $0.4 million impairment expense), care and maintenance cost of $1.3 million (2020: $5.2 million), severance cost of $0.7 million in severance (2020: $Nil) and a write-off of exploration properties of $0.7 million (2020: $Nil). The impairment reversal of $16.8 million is resulting from the valuation assessment performed for the El Cubo mine and related assets upon classification as held for sale whereas the 2020 impairment charge on non-current assets of $0.4 million related to the value in use estimates of the Guanaceví and El Compas operations. The $1.3 million in care and maintenance costs for 2021 are comprised of $0.7 million recognized for the El Cubo operation for costs to the sale of the mine and related assets in April 2021, and $0.6 million recognized for the El Compas operation, where operations were suspended in mid-August, 2021. During the comparative period of 2020 the Company recognized $3.0 million in care and maintenance costs for the suspended El Cubo operation and $2.2 million in care and maintenance costs related to the temporary suspension of the Guanaceví, Bolañitos and El Compas operations due to COVID-19.

Earnings before income taxes were $29.7 million (2020: loss before income taxes $1.0 million) after finance costs of $1.0 million (2020: $1.3 million), a foreign exchange loss of $1.1 million (2020: $1.5 million), a gain on disposal of the El Cubo mine and related assets of $5.8 million (2020: $Nil) and investment and interest income of $3.7 million (2020: $2.6 million).

The Company realized net earnings for the period of $14.0 million (2020: $1.2 million) after an income tax expense of $15.7 million (2020: income tax recovery of $2.2 million). Current income tax expense increased to $3.5 million (2020 – $3.0 million) due to increased profitability impacting the special mining duty, while deferred income tax expense of $12.2 million is primarily due to the estimated use of loss carryforwards to reduce taxable income at Guanaceví (2020 – deferred income tax recovery $5.2 million).

Direct operating costs⁽²⁾ on a per tonne basis increased to $115.36, up 14% compared with 2020 due to higher operating costs at Guanaceví and Bolañitos. Guanaceví and Bolañitos have seen increased labour, power and consumables costs and at Guanaceví, increased third party ore purchased and operating development have increased compared to the prior year. There has also been a slight appreciation of the Mexican Peso to US Dollar foreign exchange rate compared to the prior period, which increased expenses denominated in Mexican Pesos.

Consolidated cash costs per oz, net of by-product credits, increased to $9.31 primarily due to the higher direct costs per tonne and lower realized gold prices compared to 2020. All-in sustaining costs increased 16% to $20.34 per oz in 2021 as a result of higher cash costs, increased mine site exploration expenses and increased capital expenditures at Guanaceví to accelerate mine development within the El Curso ore body. Actual cost metrics were slightly higher than 2021 cost guidance primarily due to the increased costs relating to labour, power, consumables, increased third party ore purchases, higher royalties and special mining duty offset by the higher ore grades mined at Guanaceví.

The complete financial statements and management’s discussion & analysis can be viewed on the Company’s website, on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. All shareholders can receive a hard copy of the Company’s complete audited financial statements free of charge upon request.

About Endeavour Silver 

Endeavour Silver Corp. is a mid-tier precious metals mining company that operates two high-grade underground silver-gold mines in Mexico. Endeavour is currently advancing the Terronera mine project towards a development decision, pending financing and final permits and exploring its portfolio of exploration and development projects in Mexico, Chile and the United States to facilitate its goal to become a premier senior silver producer. Our philosophy of corporate social integrity creates value for all stakeholders.

Reconciliation of Working Capital

Reconciliation of Adjusted Net Earnings (Loss) and Adjusted Net Earnings (Loss) Per Share

Reconciliation of Mine Operating Cash Flow Before Taxes

Reconciliation of Operating Cash Flow Before Working Capital Changes and Operating Cash Flow Before Working Capital Changes Per Share

Reconciliation of EBITDA and Adjusted EBITDA

Reconciliation of Cash Cost Per Silver Ounce, Total Production Costs Per Ounce, Direct Operating Costs Per Tonne, Direct Costs Per Tonne

Reconciliation of All-In Costs Per Ounce and AISC per ounce

Reconciliation of Sustaining Capital and Growth Capital

Reconciliation of Silver Co-Product Cash Costs and Gold Co-Product Cash Costs

Reconciliation of Realized Silver Price Per Ounce and Realized Gold Price Per Ounce

Appendix

ENDEAVOUR SILVER CORP.
CONSOLIDATED STATEMENTS OFCOMPREHENSIVE EARNINGS (LOSS)
(expressed in thousands of US dollars, except for shares and per share amounts)

ENDEAVOUR SILVER CORP.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(expressed in thousands of US dollars)

ENDEAVOUR SILVER CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(expressed in thousands of US dollars)