ENDEAVOUR SILVER CORP Annual Report - How They Did This Year

I’ve put together this guide to help you understand how Endeavour Silver performed this year. My goal is to turn complex financial filings into plain English so you can decide if this company fits your investment strategy.

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1. What does this company do and how did they perform this year?

Endeavour Silver mines gold and silver, handling everything from exploration to mine operations. While they have traditionally operated in Mexico at their Guanaceví and Bolañitos sites, they are now growing into a larger, more diverse company. A major milestone for 2025 was the $134 million purchase of Minera Kolpa in Peru. This move expands their footprint beyond Mexico and adds the high-grade Colqui mine to their portfolio.

2. Financial performance: Growing, but spending big

The company is in a heavy building phase. Their total assets increased from $719 million in 2024 to over $1.2 billion in 2025, driven by the construction of the Terronera project and the acquisition of Peruvian assets.

Revenue reached $345 million, a 12% increase from last year, supported by higher silver prices. To fund the Kolpa purchase and the $230 million Terronera construction budget, the company issued $231 million in debt. These notes are convertible into company shares, reflecting management’s expectation that the stock price will rise, which would simplify debt management.

3. Major wins and challenges

The Kolpa acquisition is the primary engine for growth and is expected to boost annual silver production by approximately 2.5 million ounces. This expansion introduces new operational complexities, as the company must now manage assets across two countries with distinct tax and legal frameworks.

Investors should note that auditors identified the valuation of the Kolpa mines as a "critical audit matter." The $134 million valuation is based on long-term price assumptions of $28.00/oz for silver and $2,100/oz for gold. If metal prices decline or production levels fall short of projections, the company may need to adjust the carrying value of these assets, which would impact the balance sheet.

4. Financial health: How they manage their money

• Cash Position: The company ended 2025 with $215 million in cash, up from $106 million the previous year. These funds are earmarked to complete the Terronera mine by mid-2026.
• Hedging: They use financial contracts to lock in prices for roughly 25% of their silver production. This provides a safety net against price drops, though it caps potential gains if silver prices exceed $35.00/oz.
• Governance: Independent directors oversee the audit committee, and their auditors, KPMG, have confirmed that the company’s internal financial controls are operating effectively.

5. Key risks

• Debt Load: The company’s debt has increased significantly. If the Terronera project faces delays beyond 2026, interest payments could strain cash reserves, potentially necessitating further share issuance and diluting existing shareholders.
• Valuation Sensitivity: The value of the Peruvian assets is tied to metal prices. A 10% decline in long-term silver prices could trigger a write-down of these assets, reducing total profit and book value.

6. Future outlook

The company is targeting production of 15 million ounces of silver equivalent by 2027. A key metric to monitor is their "all-in sustaining costs," which they aim to maintain between $18.00 and $20.00 per ounce. Rising labor or energy costs could compress these margins, impacting the company's ability to service its debt.

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Note: We now have a clear view of their expansion and the debt they’ve taken on. To make a final decision, watch their next quarterly report. Check if actual production from Kolpa and Terronera hits the targets they used to justify these big purchases.