Endeavour Silver (NYSE:EXK) reported higher production, record metal sales and a sharp increase in mine operating cash flow during the second quarter, as the Terronera mine continued ramping up and the Kolpa operation achieved higher throughput.
Chief Executive Officer Dan Dickson said the company produced nearly 2 million ounces of silver and more than 10,000 ounces of gold during the quarter, totaling 3 million silver-equivalent ounces. Production was 36% higher than in the second quarter of 2025.
Costs Rose Alongside Metal Prices
All-in sustaining costs, net of by-product credits, were $37 per ounce in the quarter, up 47% from the prior-year period. Dickson said higher profitability also raised royalties, purchase-material costs, profit-sharing expenses and mining taxes.
Direct operating costs per ton increased 14% from the prior-year quarter, partly reflecting the appreciation of the Mexican peso and its effect on inputs. The company also cited cost inflation in labor and supplies.
“With increased profitability, we continue to invest in sustaining capital costs,” Dickson said. He added that metal prices can directly affect costs through royalties, mining duties, third-party material purchases and profit-sharing requirements.
At Guanaceví, all-in sustaining costs were also affected by lower grades and increased purchases of third-party ore. Dickson said purchased ore accounted for more than 25% of the operation’s direct costs during the quarter, but the company earns an estimated 30% to 33% margin on such material and views it as a way to extend mine life.
The higher metal-price environment has enabled Endeavour to mine lower-grade areas at Guanaceví, according to Dickson. The company expects higher-grade areas to come into production in the near future, while drilling continued in deeper portions of the mine and along the Cruz vein.
Terronera Ramp-Up Continues
Terronera’s daily throughput remained consistent during the quarter as the processing plant focused on recoveries. Silver grades were in line with the company’s plan and are expected to rise in the second half as mining moves into higher-grade areas.
Dickson said the increase in silver grades is expected to be incremental through July, August and September, though he expects third-quarter grades to exceed second-quarter levels. Gold grades are expected to remain around 2 grams per ton at Terronera, while higher-grade material from La Luz is currently planned for 2027 rather than 2026.
The company expects Terronera’s cost per ton to decline during the second half through higher grades and ramp-up efficiencies, including commissioning of its liquefied natural gas plant and development work related to waste handling.
The LNG plant was commissioned in June after permitting took longer than anticipated, Dickson said. The delay followed additional emergency-response and storage requirements related to an LNG spill in Mexico City in late 2025. The processing plant was connected to the LNG system by the end of June, while the mine was expected to be connected by mid-August.
Exploration drilling restarted at Terronera during the quarter, marking the mine’s first drill program since 2020. The program is intended to better define and expand mineralization along strike and at depth. Endeavour expects to release an updated Terronera resource estimate by year-end but does not plan to issue a new technical study or mine plan.
Kolpa Expansion and Capital Spending
During the first quarter, Kolpa installed and commissioned a three-stage pressure ball mill that increased plant capacity to 2,500 tons per day. Dickson said the operation has run on certain days at between 2,600 and 2,800 tons per day, but further work is needed to support sustained higher throughput.
Management increased its 2026 budget by $18 million to advance capital projects, including tailings-storage expansion, a water-treatment plant, power substations and camp upgrades. About $5 million of the increase relates to overruns associated with the ball mill installation and related requirements, while the balance largely reflects projects brought forward from future years, Dickson said.
The company is also pursuing a shift from conventional wet tailings to dry-stack tailings at the operation. Dickson characterized most of the spending as one-time investment intended to support the mine’s longer-term viability. Endeavour expects an updated resource and mine plan for the operation by the end of the year.
Cash Position and Pitarrilla Plans
As of June 30, Endeavour held $236 million in cash and $214 million in working capital. Dickson said the company expects to collect approximately $70 million in value-added-tax refunds during the third quarter, primarily related to the Terronera build.
The company said operating cash flow from Terronera and Kolpa is expected to cover their ongoing sustaining and expansion spending, leaving its balance-sheet cash and future cash generation primarily available for Pitarrilla.
Endeavour expects to complete the Pitarrilla feasibility study by the end of the third quarter. Dickson said management estimates construction costs could fall in a range of $500 million to $600 million, although the final figure will be provided in the study. The contemplated mill capacity is expected to be between 3,500 and 4,000 tons per day.
The key gating item for Pitarrilla is permitting for its dry-stack tailings storage facility, Dickson said. The underground mine and processing plant are already permitted. Some of the $48 million budgeted for Pitarrilla this year may shift into 2027 as the feasibility-study timing delays equipment deposits and other spending.
Chief Financial Officer Elizabeth Senez said Endeavour has unwound its foreign-exchange hedges related to the construction period but continues to hedge a limited portion of peso-denominated operating costs. The company’s silver collars expired in June, while gold hedges remain in place through June of next year. Senez said Endeavour has no current plans for additional metal hedging.
About Endeavour Silver (NYSE:EXK)
Endeavour Silver Corp. is a Vancouver-based precious metals mining company focused on the acquisition, development and operation of silver and gold properties in Mexico. Publicly listed on the New York Stock Exchange under the ticker EXK, the company has positioned itself as a mid-tier producer with a portfolio of high-grade, operating mines and exploration assets in key mineral belts.
Endeavour Silver’s core business activities revolve around four principal underground mines located in the states of Durango, Zacatecas, Guanajuato and Jalisco.
