Endeavour Silver Corp (EXK) 2025 Q3 法說會逐字稿

Thank you for standing by. This is the conference operator. Welcome to the Endeavour Silver third-quarter 2025 financial results conference call. (Operator Instructions) The conference is being recorded. (Operator Instructions)

I would now like to turn the conference over to Allison Pettitt, Vice President of Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. Before we get started, I ask that you view our MD&A for cautionary language regarding forward-looking statements and the risk factors pertaining to these statements. Our MD&A and financial statements are available on our website at edrsilver.com.

On today's call, we have Dan Dickson, Endeavour Silver's Chief Executive Officer; Elizabeth Senez, our Chief Financial Officer; and Don Gray, Endeavour's Chief Operating Officer. Following Dan's formal remarks, we will open the call for questions. And now over to Dan.

Thank you, Allison, and welcome, everyone. Q3 has been a transformational quarter at Endeavour Silver. With Terronera now in commercial production and Kolpa's first full quarter under production. Our production profile, we have significantly expanded our operational capabilities and strengthened our position in the market. This progress sets the stage for continued growth and improved performance as we move forward.

In Q3, Endeavour produced 1.8 million ounces of silver, 7,300 ounces of gold, totaling approximately 3 million silver equivalent ounces. This does not include Terronera and represents an 88% increase compared to Q3 2024, primarily due to the addition of the Kolpa mine and full quarter production from Guanacevi. We reported revenue of $111 million, an increase of 109% compared to the prior year, benefiting from the higher precious metal prices and increased production profile.

Mine operating cash flow before working capital changes rose by 102%, while cash costs increased to $18 of payable silver ounce. The increase is driven by the impact of higher royalties, higher profit participation, and higher cost of third-party mineralized material during the quarter, coupled with lower grades processed at Guanacevi and Bolanitos.

All-in sustaining costs increased from the same quarter in 2024 to $30.53 per ounce, net of byproduct credits due to a number of factors, including elevated exploration at Kolpa to validate historical resources, initial capital investment to upgrade facilities and an increase in treatment and refining charges.

All-in sustaining costs include $2.3 million of mark-to-market charge in the quarter for deferred share units granted in previous periods within G&A. Mine operating earnings increased to $15.6 million from $12.5 million in Q3 2024 due to the higher operating earnings out of Bolanitos and Guanacevi as well as $3.9 million in operating earnings from Kolpa, offset by Terronera's mine operating loss of $3.6 million during the commissioning period. The company reported a net loss of $37.5 million for the period after a loss on derivative contracts of $39 million.

As previously reported, the company entered into four gold sales as part of the project loan facility in March 2024 when gold was trading at $2,325. As of September 30, the company's cash position was $57 million. And on October 16, the company announced that Terronera was officially reached commercial production following a successful commissioning phase.

During commissioning, the operation performed at an average of 90% of its design capacity of 2,000 tonnes per day while also achieving at least 90% of its projected metal recoveries. This achievement not only underscores a transformational milestone for the company but also represents a pivotal moment in our corporate strategy, further strengthening our position as a leading mid-tier silver producer.

The company forecasts throughput of approximately 350,000 tonnes over the next six months, with average grades estimated to be about 120 grams per tonne silver and 2.5 grams per tonne gold. This higher grade zones are scheduled to be accessed in mid-2026.

During this period, the operating team will be working to refine and optimize the operating processes, incrementally improving throughput, recoveries and our operating processes and efficiencies. In January of 2026, the company will issue annualized 2026 production and cost guidance for Terronera with our consolidated guidance.

Since completing the Minera Kolpa acquisition on May 1, the integration of the asset and the team has progressed smoothly. On September 25, the company announced positive drill results from its ongoing exploration program at Kolpa, demonstrating outstanding potential. The exploration program is designed to target potential while also completing work to validate historical resource estimates. Part of the acquisition agreement includes $12 million of exploration spend to validate the historical resources over 24 months. In Q3, we incurred $1.5 million, which is included for infill and step-out drilling.

In Q3 2025, Kolpa produced 1.3 million silver equivalent ounces, including its base metals, continuing to remain on track to align with Kolpa's historical performance benchmarks of 5 million silver equivalent ounces. Grades were marginally lower than expected. However, throughput was slightly higher, resulting in slightly higher cash cost per ounce than the historical site trend and management's expectations.

Additionally, investments are being made to modernize some parts of the plant and surrounding infrastructure to support a potential increase in production. The mine received permits to increase throughput to 2,500 tonnes per day, and the team is executing improvements in the mill and the mine to support an expansion. Management expects to complete its evaluation of an expanded operation late this quarter.

Lastly, before we open the call to questions, we continue to advance Pitarrilla and are excited for the next chapter as we move this project forward, focusing on the upgrading the inferred resources to indicate while engineers are working on various studies to support a tailings dam permit and a feasibility study to be published mid 2026.

With that, operator, I'd like to open up to questions.

(Operator Instructions) Heiko Ihle, H.C. Wainwright.

I mean you hinted at some of this a bit earlier on the call but maybe walk us through what you've been seeing with Kolpa versus expectations. And I know you can just talk about grades and costs, the obvious ones, but also like labor relations, equipment uptime, work you've seen with the communities, other unexpected impact actual versus anticipated 12 months ago, either better or worse than pre-acquisition.

Yeah, there's a lot in there. I mean, obviously, the key drivers for a lot of our cost profile, it comes down to throughput. Our throughput was above 2,000 tonnes per day. Obviously, it's designed to be 2,000 tonnes per day and grades were just slightly lower.

I mean, obviously, we're seeing a higher price environment, and there's always opportunities to go into some lower grade areas. And I think we, as management, have to be very mindful that we're balancing that to extend mine life versus cash flow today. Obviously, when we took control as of May 1, we have some standards that we want to keep as a company with regards to what our assets and our facilities are, and we started some of those programs. And then a big chunk is that we're spending on exploration as well.

So the exploration has gone as expected, if not better. As I said, in early September, we put out results, and we'll continue to put out results as we go through our exploration program to really validate these historical resources. I think it's very important that we get that 43-101 estimate up to date and published so we can speak to guidance and cost profiles on the forward basis as opposed to always looking at benchmark going back.

Labor relations, community relations, we did a lot of work on that going into the acquisition of Kolpa, and those are aligned to what we saw. They've got very good community relations, very good labor relations. I think we're very impressed with the operating team they're very gunhoed to try to push this 2,500 tonne per day plant and expansion forward.

We're still trying to go through some of the cash flows and the ultimate benefits in ensuring that there's going to be economies of scale to really push that 2,500. So whether we have that capacity or how we push that for an underground mine is very important. But again, it's been one quarter.

Our expectation is that we will be delivering cash flow from Kolpa. If you look at it from a mining free cash flow because of the investments we've made in improvements in the plant and the exploration, it's higher than or lower than what we wanted. But ultimately, I think it will deliver us good cash flow in 2026 and beyond.

Fair enough. I promise the next one is a lot less loaded. And just a quick clarification. Terronera seems to have had eight days of downtime in Q3 what happened? And also, we're halfway through Q4 at this point. Has there been any downtime this quarter so far? And same question, if so, what happened?

Yeah. I mean that's a very fair question. We had very good results, I think, leading into September -- July, we did close to 2,000 tonnes per day. In August, we brought that back to around 1,800 to focus on recoveries or even 1,600 tonnes per day to focus on recoveries and then -- and did very well until about September 22, September 23, somewhere around that timeline. We had a shutdown for seven days.

And obviously, we expected to announce commercial production on October 1, just getting through September with that consistency and being shut down and it was an electrical issue, and we had to get some specific resistors, which is a very small investment, but ultimately something we didn't have on hand, and they're made to order. So it wasn't that they're available off the shelf either.

And we had to wait for that, and it took a little bit longer, a couple of days longer than what we expected. But nonetheless, we started up that plant late September again and got going. Since October, we haven't had any up and down days in November here, we're about a week into November.

We had 0.5 day, 1.5-day. We have had intermittent. We're not going to be running fully at 2,000, more like what we saw in Q3, which is still a great rate above 90%. Ultimately, we are in that kind of honeymoon phase now of, hey, we're in commercial production. We really need to hit our targets and our throughputs.

And like I say, over the next six months, it's going to be about refining and optimizing that plant. We're still refining little things, but again, above what our threshold was for commercial production or declaring commercial production.

Very fair. As you know, I'm quite positive on the assets. So it's nice to see it all come together and actually seeing it in person last week.

Thanks for the question Heiko.

Wayne Lam, TD Securities.

Maybe just following up on Heiko's question, maybe at Terronera, do you have an update on maybe how the performance has gone in the month of October? And just curious what kind of stockpile you might have ahead of the mill.

And then maybe just in terms of the grade, the mine plan in the early years had around double the initially guided grades here. So just wondering what you're seeing in terms of access to those higher-grade zones and reconciliation to date versus plan.

Yeah, sure. Lots in there again. Thanks for the question, Wayne. For stockpile, and this we've been saying for a long time, we have room for about 60,000 tonnes. We can kind of push that to 80,000 tonnes. Because of the topography at Terronera and where we have laydown yards, we don't have the ability to carry six months of stockpile in front of us. So it's about making sure we have sufficient stopes available underground and be able to go from underground rig to the crusher.

Grades thus far, we're in an area where it's lower grade, and that's just a function in our -- ultimately, in our initial mine plans or feasibility study, it's about focus on IRR payback period. And ultimately, when you're kind of going through these refinements, nothing is perfect yet in that plant. We want to make sure we're not putting metal into our tailings dam and getting the best recoveries we can on some of that higher-grade material.

Now we've had pretty decent recoveries, but again, there are still some minor issues that we work might be down for half an hour or an hour, and we want to make sure we don't have those surges. So we designed now that the plum of the resource, the Terronera plum, which is basically the middle shoot.

We're about 100 meters away from that area. And ultimately, we have plans that comes in mid 2026. So right now, we're putting through lower grade, what we deem to be lower grade. So as I said on -- earlier on the call, about 2.5 grams gold, 120 grams silver is our expectations for that next six months. And then we bring La Luz which is a high-grade deposit in that's about a kilometer away to supplement what's coming out of Terronera.

So again, midyear next year, we're going to see those grades pick up to what you're going to see in Q3, Q4, Q1, Q2, but we should start seeing that in Q2, Q3. Ultimately, grade reconciliation, there's a couple of things that have been happening that we've seen. A, on the vein, our grade reconciliation is relatively in line. We're getting a lot of stock work.

So for those on the call that aren't familiar, stockwork would be the mineralization between veins. So we have a hanging wall footwall vein on Terronera. And in between, we have what grades to be about 150 to 200 grams silver equivalents. And obviously, that has a lot of value, and we've moved from either longitudinal stoping or cut and fill stoping doing some transverse stoping. And so in these areas that we should have been a little bit higher grade, we're bringing in lower grade, but we're getting more tonnes, more ounces and ultimately extend mine life.

And we are in no position to update resources. It's still relatively early days in it, and it's a question of how long these stock works continue on. As we get into that main shoot with the higher grade, bigger widths, we don't expect that stock work. So we expect those grades to come through. But otherwise, to answer that question, our grades have aligned relatively well to what our resource model has.

And then as far as October, October has been a pretty steady month, not any huge events, knock on wood. So it's kind of continuing on. And again, we want to make sure we refine and optimize what we can do in the plant and then really focus on driving down costs next year. It's a big push to get us through into commercial production, and I commend our team on doing that. And now it's really focusing on operating efficiencies and processes and making sure we hit our marks.

Okay. Perfect. That was great detail, Dan. Maybe just wondering on the balance sheet with Terronera now having declared commercial production, have you continued to execute on the ATM over the past month? And now that you're commercial, would you be able to refinance that facility for a larger amount? And what could be the timeline beyond that?

Sure, Wayne, I'll take that. This is Elizabeth Senez, the CFO. So in terms of your first question on the ATM, no, we've not used the ATM in the past month. You can see in our Q3 that we used $15 million during Q3. But since the end of September, we've not used the ATM.

And then regarding your second question on the project finance and our plans, what to do with that now that we're in commercial production, yes, we are evaluating our options with how to refinance now that we are in commercial production. We anticipate doing that in the next six months.

Okay. That's great. And maybe just one last one for me. Just on the balance sheet flexibility. You guys were in a bit of a negative working capital position the past quarter. Do you have enough in terms of supplies and spares available at the various sites to mitigate or have any buffer to some of the -- any potential hiccup?

Yeah, I'll take that, Wayne. Ultimately, we believe so. You'll see our warehouse inventory is a healthy number. Obviously, going into a new operation, mid-maxes has to be determined and if you get that experience and what those trends are. We have the idea that we have sufficient inventory and warehouse inventory to be able to work through that, giving us effectively that flexibility.

I say that and know that there's always something out there that will come up, and that's our job as management to kind of make sure that we manage that properly if there's something that we've not seen and comes up in that sense. But we feel like we have lots of flexibility. You're right about the negative working capital on our balance sheet for the last two quarters. A big portion of that is actually our derivative liabilities.

Again, I touched on the $39 million derivative liability based on the hedges that we put in from the project loan financing that we did in 2024, we put those hedges in. So again, we've seen gold prices come from $4,500 down to $4,000, that's reduced that a little bit. But ultimately, our goal is now to get our balance sheet in a strength position, and we have positive working capital and hopefully see that sooner rather than later.

Alex Terentiew, National Bank.

Just got a couple of questions on spending. And first one really just on CapEx. It looks like CapEx spending so far this year relative to guidance has been a bit lower than planned. Am I correct in assuming we could see a bit of a catch-up in Q4? Or it's just spending a little bit below planned here? That's my first question.

Yeah. No, it's a very good question. I think you're going to see pretty consistent at Bolanitos and Guanacevi. Obviously, at Kolpa, it probably will end up being a little bit similar as we finish off some of these projects going into the end of the year.

For Terronera, we haven't put out specific guidance around sustaining capital and what we need for mine development. But I don't see it being outsized. I think mostly to answer that question, it comes down to the existing ones operation. It's what we've seen is what you'll get in Q4.

Okay. And then just sticking with Kolpa, I mean, I know you guys are working towards evaluating that underground expansion. Can you -- in the past, you did give some guidance on spending there, but can you give us any color kind of maybe even over the next six months or a little bit how we can think about spending on that? I know you have the permit to construct. Obviously, you're doing some underground development as well.

I think it's -- from my view, it seems like it's pretty clear that you would go ahead. But until you officially made that decision, I guess, you can't say so. But I mean, any clarity on spending plans for the next six months?

Yeah, part of that for the next six months is difficult to say because we're coming through that budget season. That's part of that evaluation aspect of it. And ultimately, we really need to know what that capital is, and that's going to be all part of our guidance that will come out in January. I don't want to jump the gun on what it necessarily is.

And a little bit of the background on that Kolpa and the expansion of 2,500. They have applied for the expansion prior to our acquisition, and they've actually made some commitments on that expansion. For example, a ball mill, 2,500-tonne ball mill was already committed to on site when we kind of acquired it. And our concern just comes down to ensuring that there's sufficient economies of scale, not through the plant, not through the indirect costs of the camps and support on site.

It's really down into the mine. And are we going to be able -- do we need to open up more stopes and have more labor, more equipment and not get economies of scale? Or are there some areas where we can get better tonnes out and be more efficient and actually see that benefit of economies of scale. And that's a process, like I say, we're kind of in the next two months. Hopefully, we can make a final decision on that and then move forward.

And again, that's part of all the trade-off studies of understanding what that total capital spend is. And like I say, should have that done by December and hopefully out in everybody's hands or minds by January or in January. So I can't give any more than that, right?

No, no, I understand. I know it's a time of year, and I was just pressing my luck and asking anyway. Last question, just on Kolpa. Q3 G&A, $2.245 million, I think, was the number there. And I noted that the deal closed in Q2. Is that kind of a number we should be expecting going forward on a quarterly basis? Or do you think that can come down a little?

Alex, it's Elizabeth. I'll take that question. So on the Q3 G&A, it was higher than anticipated because of the share price increase, which is affected the revaluation of our DSUs. So $2.7 million of expense during the quarter related to the DSUs. If you exclude that, from the quarterly G&A number, then that's our run rate going forward on corporate G&A.

I think it's a very good question on that, Alex, because that flows into Kolpa, and we had the internal discussions of, well, we have G&A out of Vancouver, and we've given out these DSUs historically that get mark-to-market. And in itself, when you look at the all-in sustaining cost for Kolpa, that includes those DSUs being allocated and how we do our allocation is a weighted calculation and how we distribute the cost out of Vancouver to that. So that G&A is not cost at Kolpa. Kolpa's G&A cost in their indirect costs on a per tonne basis.

So obviously, there's no right or wrong answer to how you allocate those ounces. That's how we've done it. That's how it'll consistently be. It's a noncash item, but we do include that as it is an expense that historically goes through. So again, not reflective of Kolpa's performance, just an allocation on that all-in sustaining cost.

Soundarya Iyer, B. Riley Securities.

I just wanted to follow-up on the sustaining CapEx question asked earlier. So at Guanacevi, you spent about $13 million of the $19 million planned, and there is a considerable amount of development being done. So how critical is completing this development to maintaining production levels at Guanacevi? And what's the current pace of advancement over there?

Yeah. No, fair, it's a very good question. So as you pointed out, we spent $13 million year-to-date over the nine months, which is just about $3 million, just over $3 million per quarter, and that's what we were here in Q3. And again, we don't have a big catch-up in Q4.

A lot of the Guanacevi sustaining capital is mine development. And we always want to stay ahead for mine development, and that's ultimately underground mining. We have sufficient development to continue on. And obviously, we try to -- always try to get it a bit ahead. And I think we're always a little bit of ambitious on our total capital, so $19 million when we come in at $16 million. I think it's positive.

We've got the meters that we've needed to get this year thus far, and we expect that to come. Typically, what we see in Mexico is December slows down a little bit because of the Christmas. So we focus on ore extraction is less on mine development because of the kind of a two-week period around Christmas.

At Bolanitos, similarly, we did have some mine equipment that we purchased early this -- early Q3, but most of the work that we do at Bolanitos is mine development. Again, if you look at guidance, we're slightly behind what we expect to spend, but we're hitting our meters. So we don't see an expected change in our operating profile because of mine development at either of those operations.

No, that makes sense. And just one more on this third-party ore purchases that has gone up and increased the cash cost. So could you just provide some context on the economics of these purchases? And how does that fit into like your own ore extracted at the mine versus this third-party ore?

Yeah. Happy to give detail on that. We do have some third-party ore at Kolpa, which is a lot more lower impact ultimately to ounces and costs. But at Guanacevi, it's about 15% of our throughput now. And the Guanacevi plant was built in 1981 by the Mexican government. And under that original when it was passed on to who we bought it from, there's a requirement that 10% -- at least 10% of throughput can go through to local miners.

And in our district of Guanacevi, there's a lot of small local miners. And obviously, with higher prices, there's actually a lot more ore that's coming to our plant asking to be toll. The way we pay out, ultimately, we buy that toll ore for a percentage around 70%, and we have margins between 20% and 25% depending on the group, depending on recoveries and ultimately where prices end up.

It does place -- displace our own ore, obviously, but at the same time, it extends life at Guanacevi. And as price has gone up, that cost per tonne when we're buying that ore tonne is higher because of what it contains of silver and gold. So with the price increases, we've gotten similar grades, sometimes lower grades, but the actual cost for that ore tonne is higher. And how we incorporate that in is purchase ore.

So it's higher cost than our mine tonnes, but again, displaces ours, and we are making a profit somewhere around 20% to 25%. So we'll continue to do that. And again, more and more toll ore is coming to Guanacevi, and again, we're required to take at least 10%, and we've been taking higher than that. I hope that answers your question.

(Operator Instructions) Cosmos Chiu, CIBC.

Thanks for a lot of good details on this call today. But overall, I guess my question is, Dan, when should we start expecting the company to generate positive free cash flow? You got in Q3, but based on prices now, when would you expect is it next year? Clearly, we're hitting an inflection point for the company, but when can we expect positive free cash flow?

Yeah, it's very fair. I mean, obviously, we averaged $38 on silver. This quarter, we're up in the $48 range. So I would fully expect free cash flow in Q4. It's all predicated now that Terronera has gone from commissioning to commercial production. We hit our numbers in Q4, Q1. We're going to have free cash flow out of Terronera. I think it's easier to always speak it separately.

Guanacevi and Bolanitos and Cosmos, I have had this conversation, the mature assets. I think where they are in their life cycle, we've got to make sure that the grades that we're pulling out of the grades that make free cash flow at this point in time. We can always go into back old areas and trade dollars, but it's also about harvesting and what our job as a management team is to deliver rate of return, right, rate of return on investment.

Guanacevi have done a phenomenal job for us to build our company. They are going to be high-cost assets going forward. The transition that we've gone through over the last two years and been a bit of a heavy lift some days is trying to find assets that are long life, low cost. Terronera in itself completely changes our profile.

As we go through Q4, Q1, Q2, it's going to be our job to work to get those cost profiles down to what we expected in the feasibility study. It's not going to be $88 that we have there. It's going to -- we've seen inflation 25%, 30%. So we can be around $120 to $130. I think that's going to be good. Of course, we want to be $88, but the world has changed.

Right now, we have aspects around Terronera that's making our cost higher. We're running diesel gensets because we're waiting for a permit from the Mexican government, the power arm to ultimately let us start using our LNG plant that's completed. So we've had the construction permit. Now we're waiting for our vaporization plant permit to be able to take the LNG, turn it into electricity. We expect that relatively soon. We didn't have any setbacks in Mexico.

There was an LNG truck that exploded in Mexico City. It required everybody to put an emergency response plan. Hopefully, we get that before the year is out, but that's out of our control. But that diesel cost versus LNG costs, you're talking about $0.33 per kilowatt hour compared to LNG, our expectation of $0.17. Big savings that comes from that.

Ultimately, we're trucking some waste, trucking some ore for the we want. Part of that is our MEA regional permit that we received. We have (inaudible) some Conagua stuff. Again, great dialogue through the authorities. We expect that to come.

All that to say, over the next to answer your question on free cash flow, we expect it soon, and we expect those costs at Terronera to really improve over the -- partly from some of these permits, partly from our operational efficiencies. So Q4, Q1 free cash flow, again, Kolpa is going to be in a great position again, we get that stuff out, and you'll see that in January. I hope that helps answer the question, Cos.

Yes, yes, that does. And I do have a follow up. And Q4 and Q1 positive free cash flow, when can I start asking you about capital return in terms of potentially a dividend, share buybacks or a reverse ATM and other sort of capital return policy like that. Is that me asking about using your ATM? I can potentially ask you about share buybacks.

Yeah. No, it's very fair, and I think we're still in that transition, right? So we're excited about what Terronera is going to deliver to us from a cash flow standpoint. And I can understand when you look at those numbers, it comes down dividends. What we haven't really talked about today is the opportunity with Pitarrilla.

So Pitarrilla, 600 million ounces in the ground, half of that sulfides. Obviously, I touched that we have a feasibility study out next year. There's the envelope numbers that you can look at for Pitarrilla, and it's a very compelling asset. We foresee any of the cash flow that we have at Terronera going into pushing on Pitarrilla. Our goal is to produce 30 million ounces by 2030, 30 by 30.

We think Pitarrilla being between 3,000, 4,000 tonne per day operation. The grades run around 300 grams. silver, silver equivalent, 60% of that silver. It could have a mine life of 10, 15, 20, 25 years, but ultimately being a low-cost asset. So round about saying that cash flow that we're going to generate is going to go into Pitarrilla and completely transform Endeavour Silver, and then we can start talking about returning cash to our shareholders.

I think it's very important that we deliver here at Terronera and hit our marks that will give us the ability to go out and build Pitarrilla. But I really think the numbers that we're going to see of the Pitarrilla feasibility study are going to be compelling and allow us to invest at that operation or that development project.

So investing in Pitarrilla likely come first before capital churn?

Yes.

Okay. But how about -- as you mentioned, Dan, you had to do it, but you had to put in some forward sales contracts in place, some hedges in place for part of your gold production and gold prices have now since done a lot better, and it's created some volatility for you in terms of accounting. Also mark-to-market, you're selling gold at lower price now. Any thoughts in terms of buying those back?

Yeah. We talk about it all the time. And ultimately, as Elizabeth said in an earlier question, we have a project loan facility right now, and we're always looking to try to improve our cost profile, of course. That's our job as management and taking that project loan and trying to get it refinanced and put it at the corporate level is something that we're looking at.

Obviously, part of that whole discussion and security around everything is those hedge contracts that sit with those project loan providers. And that's part of our discussion. We haven't made any decision on how to handle those hedges going forward, whether we leave them fully in, fully take them out or partial. And when we figure that out, obviously, we'll announce that to the market. We don't have one way or the other at this point in our heads.

Okay. Sounds good. And maybe one last question. I don't know that Guanacevi was older than us the mill, but hopefully, it's aged okay. But on that, as you mentioned, Q3 throughput, higher grade, lower, how should we look at throughput and grade into Q4? And then Bolanitos, as you mentioned, both throughput and grade were lower in Q3. How should we look at Q4?

Yeah. Throughput would be similar. I mean we know they're pretty steady state between 1,100, 1,200 tonnes per day for both operations. Ultimately, grades have continued in October to be slightly lower. We always look at the trend for the year. I know for the year, we've trended relatively on plan.

If you look at our production profile that we put out for guidance at Guanacevi, Bolanitos, we're kind of trending towards the bottom end of that guidance, and that's because of the grades that we're seeing really out of Bolanitos and a little bit lower grades out of Guanacevi, but mostly the lower gold grades out of Bolanitos. I expect that to continue here in Q4.

Trevor Ward, Private Investor.

It's been quite some time since I last spoke almost two years ago. Obviously, a lot has changed in two years. I will say, obviously, like I mentioned earlier, obviously, these other talking heads, it sounds to me, for the most part, a lot of them represent clients, whereas myself being a personal investor, obviously, it's rather disappointing to see my portfolio, which I'm mostly exposed with Endeavour.

So to fall so hard, so fast in one month. And it's -- I think it's almost 30% or thereabouts. So just a couple of questions in terms of going forward. Obviously, another big loss in this third quarter. And if I'm correct, I think I heard you say initially that this third quarter, you didn't include Terronera?

Correct.

Terronera -- so -- so when you say you didn't include Terronera in the third quarter, it didn't -- obviously, it didn't make any money, or you just included the losses from there into the third quarter.

No. So let me clarify that then, Trevor. Yeah, ultimately, in our income statement, Terronera is included, and it was going through the commissioning phase. We actually recognize the revenue, we recognize the cost of sales. Obviously, we incur it, sits on our balance sheet.

The working capital numbers sit on our balance sheet. Where Terronera has not been included is in our production profile metrics. So as we've gone through construction into commissioning and commissioning now into commercial production, going forward, our cash costs, our all-in sustaining costs, our production profile will include Terronera's numbers.

Prior to that, it's unfair to kind of throw those in because they're so volatile. We've got days we're operating, not operating, we're testing different things. It's not reflective of what we see going forward at Terronera. So it's just not in our operating metrics when we report that or speak to that, speaking to numbers that aren't reflective of what we see going forward.

And I hear you from a standpoint on losses and a significant loss coming through on Q3, and I'm appreciative of that. And that's a big function of that, Trevor, is the loss derivatives that we're recognizing on a mark-to-market basis under accounting rules under IFRS. And ultimately, it was $39 million this quarter. That's a reflection of gold price going from $2,300 or $2,325 when we entered into these hedges.

And at the end of the quarter, I think gold sat around $4,400. So that delta of $2,000 plus times 68,000 ounces of gold, we recognize that immediately as it's happened. And it creates and go to the last question, it creates a lot of noise in that income statement and a lot of volatility. And unfortunately, those are the IFRS rules.

We don't change that. It is what it is. We have to report to that. It creates so much noise that sometimes it's nice pulling that out. And that's why you'll have various companies use adjusted earnings or adjusted EPS, et cetera, et cetera, to take away some of that noise that are onetime items or mark-to-markets that aren't actually cash.

So again, we'd love to have that go the other way. But if that is the other way, that means my revenue number goes down, the value of the company goes down. If you've held Endeavor for two years as we talked, I would argue that our share price is a lot higher.

I know there's movements over the last 30 days where silver hit $55, now we're sitting at $48. That's going to be reflected in our share price. And those movements are sometimes hard, but I think the volatility of Endeavor has attracted a lot of different shareholders into us. And over time, I hope our share price appreciates and you stick with us.

Yeah, sure. So these derivatives going forward are kind of I kind of get it. I understand it to some extent where it went from $2,325, obviously, you're having to pay the difference there. I mean, obviously, I suppose you needed the input -- you needed the money, so you had to take this option, right?

Well, that's ultimately it. When we entered in the Project 1 facility in 2022, all the offers on the table, putting in $6,800 gold hedge. Our gold hedge on 68,000 ounces at $2,300 when gold was at $1,600, $1,700 felt like a good thing. At $4,400 probably feels a little bit differently, obviously.

So now going forward, what's the exposure to the same scenario happening in the next quarter, the following quarter, these recurring charges in terms of the derivatives how does that look going forward?

Yeah. So right now, we originally entered into 68,000. I think we're sitting on about 57,000 in that. So it rolls off over time. We have no interest in entering any other gold hedges. But that means Pitarrilla comes and depending on the market, depending on how we want to finance that, we're going to look at it.

Our preference is to stay out of that hedge. If you're going to invest in Endeavour Silver, you believe in the silver price going up. That's the first hypothesis. I really believe that we want to -- we don't want to take that away from our shareholders. And there's times maybe little things in your quarters or whatever have you that we do things, but fully recognize that you're buying a silver company because you believe silver price is going up.

Sure. Okay. But I didn't quite understand that. How long -- how much -- what are you looking at? Let's just give an average price of this cost in the quarters going forward. I mean, $39 million is a big chunk. I mean how does that show in real terms on paper? Or I don't quite understand that.

Yeah, maybe Yes. So we have 57,000 ounces sold at $2,325 over the next 18 months, 20 months, we'll roll out of that. And so ultimately, our cash flow coming in is going to be $2,325, and we recognize that loss on a mark-to-market basis that flows through as the price happens.

So if gold goes to $5,000 at the end of this quarter, you're going to see more loss go through, and that's that delta from $4,400 to $5,000. If gold goes from $4,400 to $4,000 like you've seen, you're going to see a reversal of that derivative liability. So you're going to have a gain in our income statement, $400 times the 57,000. Again, that rolls off, that noise goes away.

Is it not possible -- and there's no way you can buy yourself out of it or refund in somewhere else.

And that was Cosmos's question previously, can you buy yourself out of it. And again, right now, with where our cash is going, we're not in a position to go spend $90 million to buy out those hedges. And it's the right thing, wrong thing. We haven't made a decision on that at this point in time.

Okay. So that was -- because I didn't understand his question, but now I get to see it. So ultimately, the best thing to do would be hopefully to find the money somewhere to buy yourself out of the situation, considering that going forward, gold, silver could reach much higher prices, it's going to hurt even more.

Correct. But we just need to produce and deliver into those hedges. We're good. Thanks for the questions, Trevor. Much appreciate it, and thanks for being a shareholder.

This concludes the question-and-answer session. I would like to turn the conference back over to Dan Dickson for any closing remarks. Please go ahead.

Thank you, operator, and I appreciate everybody listening in on our Q3 financial call. Again, a very transformational quarter for Endeavor with us bringing Terronera online.

We're very excited about what it's going to mean for us going forward. Q4, Q1, Q2 and ultimately get out guidance here in January on next year. And again, with where prices are, I expect, again, a big and ultimately exciting future for our company. Thanks a lot.

This brings to a close today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.