Close

Form 6-K ENDEAVOUR SILVER CORP For: Jun 30

August 9, 2022 9:08 AM EDT

Get inside Wall Street with StreetInsider Premium. Claim your 1-week free trial here.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of August 2022

Commission File Number: 001-33153

ENDEAVOUR SILVER CORP.
(Translation of registrant's name into English)

#1130-609 Granville Street
Vancouver, British Columbia, Canada V7Y 1G5

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

[           ] Form 20-F   [ x ] Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [           ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [           ]

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes [           ] No [ x ]

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- _________


SUBMITTED HEREWITH

Exhibits

Exhibit   Description
   
99.1   Condensed Consolidated Interim Financial Statements for the period ended June 2022
99.2   Management Discussion and Analysis for the period ended June 2022
99.3   Form 52-109F2 Certification of Interim Filings Full Certificate - CEO
99.4   Form 52-109F2 Certification of Interim Filings Full Certificate - CFO

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

  Endeavour Silver Corp.
  (Registrant)
     
Date: August 9, 2022 By: /s/ Daniel Dickson
    Daniel Dickson
  Title: CEO

 




ENDEAVOUR SILVER CORP.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

(unaudited - prepared by management)

(expressed in thousands of US dollars)



      June 30,     December 31,  
  Notes   2022     2021  
               
ASSETS              
               
Current assets              
Cash and cash equivalents   $ 116,226   $ 103,303  
Other investments 4   8,293     11,200  
Accounts and other receivable 5   13,486     14,462  
Income tax receivable     1,219     177  
Inventories 6   35,664     27,485  
Prepaid expenses     11,566     5,135  
Total current assets     186,454     161,762  
               
Non-current deposits     595     599  
Non-current income tax receivable     3,570     3,570  
Non-current other investments 4   2,943     -  
Non-current IVA receivable 5   7,528     4,256  
Deferred income tax asset     -     936  
Intangible assets     -     40  
Right-of-use leased assets     614     664  
Mineral properties, plant and  equipment 8   141,806     122,197  
Total assets   $ 343,510   $ 294,024  
               
LIABILITIES AND SHAREHOLDERS' EQUITY              
               
Current liabilities              
Accounts payable and accrued liabilities   $ 26,383   $ 31,991  
Income taxes payable     4,995     4,228  
Loans payable 9   5,179     4,128  
Lease liabilities     176     207  
Total current liabilities     36,733     40,554  
               
Loans payable 9   7,392     6,366  
Lease liabilities     755     794  
Provision for reclamation and rehabilitation     7,576     7,397  
Deferred income tax liability     8,545     1,506  
Total liabilities     61,001     56,617  
               
Shareholders' equity              
Common shares, unlimited shares authorized, no par value, issued              
and outstanding 181,051,354 shares (Dec 31, 2021 - 170,537,307 shares) Page 4   631,751     585,406  
Contributed surplus Page 4   5,349     6,331  
Retained earnings (deficit) Page 4   (354,591 )   (354,330 )
Total shareholders' equity     282,509     237,407  
Total liabilities and shareholders' equity   $ 343,510   $ 294,024  

Commitments and contingencies (Notes 8, 9)

Subsequent events (Note 8(c), 10(d))

The accompanying notes are an integral part of these consolidated financial statements.

Approved on behalf of the Board:

/s/    Margaret Beck   /s/    Daniel Dickson  
Director   Director  


ENDEAVOUR SILVER CORP.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE EARNINGS (LOSS)
(unaudited - prepared by management)

(expressed in thousands of US dollars, except for shares and per share amounts)



      Three months ended     Six months ended  
      June 30,     June 30,     June 30,     June 30,  
  Notes   2022     2021     2022     2021  
                           
Revenue 11 $ 30,782   $ 47,775   $ 88,522   $ 82,241  
                           
Cost of sales:                          
Direct production costs     19,828     26,223     46,549     44,951  
Royalties     2,194     4,340     6,511     6,800  
Share-based payments 10 (c)(d)   113     111     240     229  
Depreciation, depletion and amortization     4,175     6,624     10,481     14,120  
Write down of inventory to net realizable value 6   -     272     -     272  
      26,310     37,570     63,781     66,372  
                           
Mine operating earnings     4,472     10,205     24,741     15,869  
                           
Expenses:                          
Exploration and evaluation 12   3,784     5,025     7,000     9,155  
General and administrative 13   1,348     4,293     5,645     7,816  
Care and maintenance costs     189     55     379     576  
Impairment (reversal of impairment) of non-
      current assets, net
8   -     -     -     (16,791 )
Write off of exploration properties     500     -     500     -  
      5,821     9,373     13,524     756  
                           
Operating earnings (loss)     (1,349 )   832     11,217     15,113  
                           
Finance costs     336     216     634     507  
                           
Other income (expense):                          
Foreign exchange     (289 )   659     522     (35 )
Gain on asset disposal     -     5,841     -     5,841  
Investment and other     (6,872 )   1,802     (1,052 )   4,553  
      (7,161 )   8,302     (530 )   10,359  
                           
Earnings (loss) before income taxes     (8,846 )   8,918     10,053     24,965  
                           
Income tax expense:                          
Current income tax expense     1,325     1,146     2,340     1,817  
Deferred income tax expense     1,752     1,116     7,974     4,243  
      3,077     2,262     10,314     6,060  
                           
Net earnings (loss) and comprehensive earnings (loss) for the period   $ (11,923 ) $ 6,656   $ (261 ) $ 18,905  
                           
                           
Basic earnings (loss) per share based on net earnings   $ (0.07 ) $ 0.04   $ (0.00 ) $ 0.12  
Diluted earnings (loss) per share based on net earnings 10(f) $ (0.07 ) $ 0.04   $ (0.00 ) $ 0.11  
                           
Basic weighted average number of shares outstanding     180,974,609     168,383,755     176,291,929     164,051,368  
Diluted weighted average number of shares outstanding 10(f)   184,569,970     172,195,942     179,018,499     167,743,113  

The accompanying notes are an integral part of these consolidated financial statements.


ENDEAVOUR SILVER CORP.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(unaudited - prepared by management)

(expressed in thousands of US dollars, except share amounts)


    Note     Number of shares     Share
Capital
    Contributed
Surplus
    Retained Earnings
(Deficit)
    Total   
Shareholders'
Equity
 
                                     
Balance at December 31, 2020         157,924,708     517,711     9,662     (368,302 )   159,071  
                                     
Public equity offerings, net of issuance costs   10 (a)     9,899,485     57,556     -     -     57,556  
Exercise of options   10 (b)     2,096,861     8,550     (3,967 )   -     4,583  
Share-based compensation   10 (b)(c)(d)     -     -     2,193     -     2,193  
Settlement of performance share units   10(c)     379,340     561     (2,735 )   -     (2,174 )
Earnings for the period         -     -     -     18,905     18,905  
Balance at June 30, 2021         170,300,394   $ 584,378   $ 5,153   $ (349,397 ) $ 240,134  
                                     
Public equity offerings, net of issuance costs   10 (a)     160,913     833     -     -     833  
Exercise of options   10 (b)     76,000     195     (59 )   -     136  
Share-based compensation   10 (b)(c)(d)     -     -     1,443     -     1,443  
Expiry and forfeiture of options   10 (b)     -     -     (17 )   17     -  
Settlement of performance share units   10 (c)     -     -     (189 )   -     (189 )
Loss for the period         -     -     -     (4,950 )   (4,950 )
Balance at December 31, 2021         170,537,307   $ 585,406   $ 6,331   $ (354,330 ) $ 237,407  
                                     
Public equity offerings, net of issuance costs   10 (a)     9,293,150     43,189     -     -     43,189  
Exercise of options   10 (b)     553,200     2,333     (755 )   -     1,578  
Issued for performance share units   10 (c)     664,170     806     (2,703 )   -     (1,897 )
Issued for deferred share units   10 (c)     3,527     17     (17 )   -     -  
Share-based compensation   10 (b)(c)(d)     -     -     2,499     -     2,499  
Settlement of deferred share units   10 (c)     -     -     (6 )   -     (6 )
Loss for the period         -     -     -     (261 )   (261 )
Balance at June 30, 2022         181,051,354   $ 631,751   $ 5,349   $ (354,591 ) $ 282,509  

The accompanying notes are an integral part of these consolidated financial statements.


ENDEAVOUR SILVER CORP.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(unaudited - prepared by management)

(expressed in thousands of US dollars)


        Three months ended Six months ended
          June 30,     June 30,     June 30,     June 30,  
    Notes     2022     2021     2022     2021  
                               
Operating activities                              
Net earnings (loss) for the period       $ (11,923 ) $ 6,656   $ (261 ) $ 18,905  
                               
Items not affecting cash:                              
Share-based compensation   10(b)(c)(d)     972     1,028     2,499     2,193  
Depreciation, depletion and amortization   8     4,324     6,723     10,786     14,347  
Impairment (reversal of impairment) of non-current assets, net   8     -     -     -     (16,791 )
Write off of exploration properties         500     -     500     -  
Deferred income tax expense         1,752     1,116     7,974     4,243  
Unrealized foreign exchange loss (gain)         (84 )   (143 )   (220 )   (53 )
Finance costs         336     216     634     507  
Write down of inventory to net realizable value         -     272     -     272  
Loss (gain) on asset disposal         105     (5,841 )   46     (5,807 )
Loss (gain) on other investments   4     7,626     (1,366 )   2,269     (3,912 )
Net changes in non-cash working capital   14     (22,156 )   806     (21,042 )   (8,360 )
Cash from (used in) operating activities         (18,548 )   9,467     3,185     5,544  
                               
Investing activities                              
Proceeds on disposal of property, plant and equipment         48     6,985     82     7,541  
Mineral property, plant and equipment   8     (15,451 )   (8,164 )   (28,448 )   (15,434 )
Purchase of investments         (748 )   -     (2,119 )   (832 )
Proceeds from disposal of marketable securities   4     -     4,905     -     9,288  
Redemption of (investment in) non-current deposits         2     19     4     (1 )
Cash from (used) in investing activities         (16,149 )   3,745     (30,481 )   562  
                               
Financing activities                              
Repayment of loans payable   9     (1,214 )   (918 )   (2,297 )   (1,887 )
Repayment of lease liabilities         (54 )   (43 )   (106 )   (85 )
Interest paid   9     (204 )   (174 )   (381 )   (367 )
Public equity offerings   10(a)     -     29,034     46,001     59,134  
Exercise of options   10(b)     1,448     785     1,578     4,583  
Share issuance costs   10(a)     (15 )   (664 )   (2,812 )   (1,266 )
Deferred share unit redemption         (6 )   -     (6 )   -  
Performance share unit redemption         -     (2,174 )   (1,897 )   (2,174 )
Cash from (used) financing activities         (45 )   25,846     40,080     57,938  
                               
Effect of exchange rate change on cash and cash equivalents         (46 )   144     139     64  
                               
Increase (decrease) in cash and cash equivalents         (34,742 )   39,058     12,784     64,044  
Cash and cash equivalents, beginning of the period         151,014     85,989     103,303     61,083  
Cash and cash equivalents, end of the period       $ 116,226   $ 125,191   $ 116,226   $ 125,191  

Supplemental cash flow information (Note 14)

The accompanying notes are an integral part of these consolidated financial statements.


ENDEAVOUR SILVER CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Three and six months ended June 30, 2022 and 2021
(unaudited – prepared by management)
(expressed in thousands of US dollars, unless otherwise stated)

1. CORPORATE INFORMATION

Endeavour Silver Corp. (the "Company" or "Endeavour Silver") is a corporation governed by the Business Corporations Act (British Columbia).  The Company is engaged in silver mining in Mexico and related activities including acquisition, exploration, development, extraction, processing, refining and reclamation.  The Company is also engaged in exploration activities in Chile and United States.  The address of the registered office is #1130 - 609 Granville Street, Vancouver, B.C., V7Y 1G5. 

2. BASIS OF PRESENTATION

These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and do not include all of the information required for full annual financial statements and should be read in conjunction with the Company's consolidated financial statements as at and for the year ended December 31, 2021.   

The Board of Directors approved the consolidated financial statements for issue on Aug 4, 2022.

The preparation of consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.  Actual results may differ from these estimates.

These consolidated financial statements are presented in the Company's functional currency of US dollars and include the accounts of the Company and its wholly owned subsidiaries: Endeavour Management Corp., Endeavour Gold Corporation S.A. de C.V., EDR Silver de Mexico S.A. de C.V. SOFOM , Minera Santa Cruz Y Garibaldi S.A de C.V., Metalurgica Guanaceví S.A. de C.V., Minera Plata Adelante S.A. de C.V., Refinadora Plata Guanaceví S.A. de C. V., Minas Bolañitos S. A. de C.V., Guanaceví Mining Services S.A. de C.V., Recursos Humanos Guanaceví S.A. de C.V., Recursos Villalpando S.A. de C.V., Servicios Administrativos Varal S.A. de C.V., Minera Plata Carina SPA, MXRT Holding Ltd., Compania Minera del Cubo S.A. de C.V., Minas Lupycal S.A. de C.V., Metales Interamericanos S.A. de C.V., Oro Silver Resources Ltd., Minera Oro Silver de Mexico S.A. de C.V., Terronera Precious Metals S.A. de C.V, Endeavour USA Holdings and Endeavour USA Corp. All intercompany transactions and balances have been eliminated upon consolidation of these subsidiaries.

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies applied in these condensed consolidated interim financial statements are the same as those applied in the Company's annual audited consolidated financial statements as at and for the year ended December 31, 2021, except as described below.

The following new accounting standards has been adopted in the condensed consolidated financial statements:

On May 14, 2020, the International Accounting Standard Board (IASB) published a narrow scope amendment to IAS 16 Property, Plant and Equipment - Proceeds before Intended Use.  The amendment prohibits deducting from the cost of property, plant and equipment amounts received from selling items produced while preparing the asset for its intended use.  Instead, amounts received will be recognized as sales proceeds and the related costs in profit or loss.  As of June 30, 2022, these amendments did not affect our condensed consolidated interim financial statements as no amounts have been received from selling items produced while preparing assets for their intended use.

In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Company's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the annual audited consolidated financial statements as at and for the year ended December 31, 2021 and accordingly should be read in conjunction with the Company's annual audited financial statements for the year ended December 31, 2021. 


ENDEAVOUR SILVER CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Three and six months ended June 30, 2022 and 2021
(unaudited – prepared by management)
(expressed in thousands of US dollars, unless otherwise stated)

 

4. OTHER INVESTMENTS

    June 30,     December 31,  
    2022     2021  
Balance at beginning of the year $ 11,200   $ 4,767  
Acquisition of marketable securities, at cost   2,305     3,753  
FMV of investments received on asset disposal   -     9,851  
Disposals   -     (9,288 )
Gain (loss) on marketable securities   (2,269 )   2,117  
Balance at end of the period   11,236     11,200  
Less: Current portion   8,293     11,200  
Non-Current marketable securities $ 2,943   $ -  

The Company holds $10,313 in marketable securities that are classified as Level 1 and $923 in marketable securities that are classified as Level 3 in the fair value hierarchy and are classified as financial assets measured at FVTPL.  The fair values of Level 1 marketable securities are determined based on a market approach reflecting the closing price of each particular security at the reporting date. The closing price is a quoted market price obtained from the exchange that is the principal active market for the particular security, being the market with the greatest volume and level of activity for the assets. Marketable securities classified as Level 3 in the fair value hierarchy are share purchase warrants and the fair value of the warrants at each period end has been estimated using the Black-Scholes Option Pricing Model.

During the six months ended June 30, 2022, the Company acquired 6,600,000 units of Max Resource Corp ("Max") through a private placement with each unit consisting of one common share and ½ share purchase warrant. At the same time, the Company entered into a collaboration agreement with Max under which acquired shares and warrants of Max have certain transfer restrictions and cannot be liquidated before March 28, 2024. Accordingly, those shares and warrants have been classified as non-current.

5. ACCOUNTS AND OTHER RECEIVABLES

      June 30,     December 31,  
  Note   2022     2021  
               
Trade receivables (1)   $ 4,745   $ 4,751  
IVA receivables (2)     8,367     8,863  
Other receivables     374     847  
Due from related parties 7   -     1  
    $ 13,486   $ 14,462  

(1) The trade receivables consist of receivables from provisional silver and gold sales from the Bolañitos mine.  The fair value of receivables arising from concentrate sales contracts that contain provisional pricing mechanisms is determined using the appropriate quoted forward price on the measurement date from the exchange that is the principal active market for the particular metal.  As such, these receivables, which meet the definition of an embedded derivative, are classified within Level 2 of the fair value hierarchy (Note 17).

(2) The Company's Mexican subsidiaries pay value added tax, Impuesto al Valor Agregado ("IVA"), on the purchase and sale of goods and services. The net amount paid is recoverable but is subject to review and assessment by the tax authorities. The Company regularly files the required IVA returns and all supporting documentation with the tax authorities, however, the Company has been advised that certain IVA amounts receivable from the tax authorities are being withheld pending completion of the authorities' audit of certain of the Company's third-party suppliers. Under Mexican law the Company has legal rights to those IVA refunds and the results of the third-party audits should have no impact on refunds. A smaller portion of IVA refund requests are from time to time improperly denied based on the alleged lack of compliance of certain formal requirements and information returns by the Company's third-party suppliers. The Company takes necessary legal action on the delayed refunds as well as any improperly denied refunds.


ENDEAVOUR SILVER CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Three and six months ended June 30, 2022 and 2021
(unaudited – prepared by management)
(expressed in thousands of US dollars, unless otherwise stated)

These delays and denials have occurred within Compañia Minera del Cubo ("El Cubo") and Refinadora Plata Guanaceví S.A. de C.V. ("Guanaceví").  At June 30, 2022, El Cubo holds $512 and Guanaceví holds $8,851 in IVA receivables which the Company and its advisors have determined to be recoverable from tax authorities (December 31, 2021 - $302 and $8,067 respectively). The Company is in regular contact with the tax authorities in respect of its IVA filings and believes the full amount of its IVA receivables will ultimately be received; however, the timing of recovery of these amounts and the nature and extent of any adjustments to the Company's IVA receivables remains uncertain. 

As at June 30, 2022, the total IVA receivable of $15,895 (December 31, 2021 - $13,119) has been allocated between the current portion of $8,367, which is included in accounts receivable, and a non-current portion of $7,528 (December 31, 2021 - $8,863 and $4,256 respectively).  The non-current portion is composed of El Cubo and Guanacevi of $167 and $1,456 respectively, which are currently under appeal and are unlikely to be received in the next 12 months.  The remaining $5,905 is IVA receivable for Terronera, which may not become recoverable until Terronera recognizes revenue for tax purposes.

6. INVENTORIES

    June 30,     December 31,  
    2022     2021  
             
Warehouse inventory $ 10,018   $ 8,698  
Stockpile inventory   3,469     2,335  
Finished Goods inventory   20,777     15,550  
Work in process inventory   1,400     902  
  $ 35,664   $ 27,485  

7. RELATED PARTY TRANSACTIONS

The Company shares common administrative services and office space with a company related by virtue of a common director and from time to time will incur third party costs on behalf of related parties on a full cost recovery basis.  The charges for these costs totaled $3 and $9 for the three and six months ended June 30, 2022 respectively (June 30, 2021 - $1 and $2 respectively). The Company has a $Nil net receivable related to these costs as of June 30, 2022 (December 31, 2021 - $1).

The Company was charged $72 and $342 for legal services for the three and six months ended June 30, 2022 respectively by a legal firm in which the Company's corporate secretary is a partner (June 30, 2021 - $51 and $192 respectively). The Company has $17 payable to the legal firm as at June 30, 2022 (December 31, 2021 - $5).


ENDEAVOUR SILVER CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Three and six months ended June 30, 2022 and 2021
(unaudited – prepared by management)
(expressed in thousands of US dollars, unless otherwise stated)

8. MINERAL PROPERTIES, PLANT AND EQUIPMENT

(a) Mineral properties, plant and equipment comprise:

    Mineral           Machinery &           Transport &        
    properties     Plant     equipment     Building     office equipment     Total  
Cost                                    
                                     
Balance at December 31, 2020 $ 552,878   $ 106,445   $ 81,003   $ 13,314   $ 12,777   $ 766,417  
                                     
Additions   40,261     2,838     15,435     1,623     2,113     62,270  
Disposals   (81,740 )   (11,098 )   (9,298 )   (1,492 )   (2,845 )   (106,473 )
                                     
Balance at December 31, 2021 $ 511,399   $ 98,185   $ 87,140   $ 13,445   $ 12,045   $ 722,214  
                                     
Additions   20,482     1,774     9,219     665     505     32,645  
Disposals   (686 )   -     (272 )   -     (373 )   (1,331 )
                                     
Balance at June 30, 2022 $ 531,195   $ 99,959   $ 96,087   $ 14,110   $ 12,177   $ 753,528  
                                     
Accumulated amortization and impairment                                
                                     
Balance at December 31, 2020 $ 510,335   $ 94,815   $ 53,122   $ 10,166   $ 10,024   $ 678,462  
                                     
Amortization   15,614     3,393     4,947     352     1,202     25,508  
Disposals   (81,180 )   (10,000 )   (8,624 )   (1,324 )   (2,825 )   (103,953 )
                                     
Balance at December 31, 2021 $ 444,769   $ 88,208   $ 49,445   $ 9,194   $ 8,401   $ 600,017  
                                     
Amortization   7,872     1,164     2,593     164     366     12,159  
Disposals   -     -     (191 )   -     (263 )   (454 )
                                     
Balance at June 30, 2022 $ 452,641   $ 89,372   $ 51,847   $ 9,358   $ 8,504   $ 611,722  
                                     
Net book value                                    
At December 31, 2021 $ 66,630   $ 9,977   $ 37,695   $ 4,251   $ 3,644   $ 122,197  
At June 30, 2022 $ 78,554   $ 10,587   $ 44,240   $ 4,752   $ 3,673   $ 141,806  

Included in Mineral properties is $20,162 in acquisition costs for exploration properties and $17,458 for development properties (December 31, 2021 - $19,063 and $10,311 respectively). 

As of June 30, 2022, the Company has $24.6 million committed for capital equipment purchases.

(b) El Cubo, Mexico

On March 17, 2021, the Company signed a definitive agreement to sell its El Cubo mine and related assets to Guanajuato Silver Company Ltd. ("GSilver") (formerly known as VanGold Mining Corp.) for $15.0 million in consideration composed of cash and share payments plus additional contingency payments. On April 9, 2021, GSilver purchased the El Cubo assets for the following consideration:

Per the terms of the agreement, GSilver agreed to pay $15.0 million for the El Cubo assets. The Company has received total gross consideration of $19.7 million as follows:

  • $0.5 million cash down-payment
  • $7.0 million cash on closing
  • $9.8 million paid in shares with 21,331,058 shares of GSilver with fair value of CAN$0.58 per share on April 9, 2021. Total fair value of the shares at the time of agreement was $5.0 million priced at CAN$0.30 
  • $2.4 million paid by unsecured promissory note with face value $2.5 million (settled in November 2021).

GSilver has also agreed to pay the Company up to an additional $3.0 million in contingent payments, for which the Company has not recorded any consideration, based on the following events:

  • $1.0 million upon GSilver producing 3.0 million silver equivalent ounces from the El Cubo mill
  • $1.0 million if the price of gold closes at or above $2,000 dollars per ounce for 20 consecutive days within two years after closing
  • $1.0 million if the price of gold closes at or above $2,200 dollars per ounce for 20 consecutive days prior to April 9, 2023.

ENDEAVOUR SILVER CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Three and six months ended June 30, 2022 and 2021
(unaudited – prepared by management)
(expressed in thousands of US dollars, unless otherwise stated)

During the period ended March 31, 2021, the El Cubo mine project, consisting of the land rights, plant, buildings and the related reclamation liability were re-classified to current assets and liabilities as "assets held for sale" and "liabilities held for sale" . Immediately prior to the classification to assets and liabilities held for sale, the carrying amounts of the land rights, plant and building were remeasured and the historical gross impairments of $216.9 million net of depletion and depreciation of $200.1 million, were reversed resulting in a $16.8 million impairment reversal. The reclamation provision for the El Cubo mine of $4.6 million was transferred to GSilver upon acquisition of the related mining concessions. The Company has recognized a $5.8 million gain on the disposal of the El Cubo mine and related assets in the year ended December 31, 2021.

On November 16, 2021 the Company arranged for early payment of the $2.5 million promissory note. In consideration for the early payment, the Company has agreed to reduce the principal amount of the note by $25,000 and settle the Mexican value added tax payable on the purchase price for El Cubo represented by the note for 901,224 common shares of GSilver.

(c) Acquisition of the Pitarrilla Project

On January 17, 2022, the Company entered into a definitive agreement to purchase the Pitarrilla project in Durango State, Mexico, by acquiring all of the issued and outstanding shares of SSR Durango, S.A. de C.V. from SSR Mining Inc. ("SSR") for total consideration of $70 million (consisting of $35 million in Company's shares and a further $35 million in cash or in the Company's shares at the election of SSR and as agreed to by the Company) and a 1.25% net smelter returns royalty. SSR retains a 1.25% NSR Royalty in Pitarrilla. Endeavour will have matching rights to purchase the NSR Royalty in the event SSR proposes to sell it.

The acquisition was completed on July 6, 2022. Total consideration paid included 8,577,380 shares of the Company issued on July 6, 2022 with deemed value of $34.9 million and $35,1 million cash payment.  The shares are subject to a hold period of four months and one day following the date of closing.

9. LOANS PAYABLE

    June 30,     December 31,  
    2022     2021  
             
Balance at the beginning of the year $ 10,494   $ 9,672  
Net proceeds from software and equipment financing   4,374     4,399  
Finance cost   347     650  
Repayments of principal   (2,297 )   (3,563 )
Repayments of finance costs   (347 )   (611 )
Effects of movements in exchange rates   -     (53 )
Balance at the end of the period $ 12,571   $ 10,494  
             
Statements of Financial Position Presentation            
Current loans payable $ 5,179   $ 4,128  
Non-Current loans payable   7,392     6,366  
Total $ 12,571   $ 10,494  

The Company has financing arrangements for equipment totaling $21,915, with terms ranging from 1 year to 4 years.  The agreements require either monthly or quarterly payments of principal and interest with a weighted-average interest rate of 6.0%.

The equipment financing is secured by the underlying equipment purchased and is subject to various non-financial covenants and as at June 30, 2022 the Company was in compliance with these covenants.  As at June 30, 2022, the net book value of equipment includes $20,137 (December 31, 2021 - $16,090) of equipment pledged as security for the equipment financing.


ENDEAVOUR SILVER CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Three and six months ended June 30, 2022 and 2021
(unaudited – prepared by management)
(expressed in thousands of US dollars, unless otherwise stated)

10. SHARE CAPITAL

(a) Public Offerings

In April 2020 the Company filed a short form base shelf prospectus that qualifies for the distribution of up to CAN$150,000 of common shares, debt securities, warrants or units of the Company comprising any combination of common shares and warrants (the "Securities") over a 25 month period. The Company filed a corresponding registration statement in the United States registering the Securities under United States federal securities laws. The distribution of Securities may be effected from time to time in one or more transactions at a fixed price or prices, which may be changed, at market prices prevailing at the time of sale, or at prices related to such prevailing market prices to be negotiated with purchasers and as set forth in an accompanying prospectus supplement, including transactions that are "At-The-Market (ATM) distributions.

On October 1, 2020, the Company entered into an ATM equity facility with BMO Capital Markets (the lead agent), CIBC Capital Markets, H.C. Wainwright & Co. LLC, TD Securities Inc., Roth Capital Partners, LLC, B. Riley Securities Inc. and A.G.P./Alliance Global Partners (together, the "Agents").  Under the terms of this ATM facility, the Company can, from time to time, sell common stock having an aggregate offering value of up to $60,000 on the New York Stock Exchange.  The Company determined, at its sole discretion, the timing and number of shares sold under the ATM facility.

In the period from January 1, 2021 to July 20, 2021, when this ATM facility was completed, the Company issued 10,060,398 common shares under the ATM facility at an average price of $5.96 per share for gross proceeds of $59,998, less commission of $1,230 and recognized $379 of other transaction costs related to the ATM financing as share issuance costs, which have been presented net within share capital.

On March 22, 2022, the Company completed a prospectus equity financing with the offering co-led by BMO Capital Markets and PI Financial Corp., together with a syndicate of underwriters consisting of CIBC World Markets Inc., B. Riley Securities Inc., and H.C. Wainwright & Co., LLC. The Company issued a total of 9,293,150 common shares at a price of $4.95 per share for aggregate gross proceeds of $46,001, less commission of $2,524 and recognized $288 of other transaction costs related to the financing as share issuance costs, which have been presented net within share capital.

(b) Stock Options

Options to purchase common shares have been granted to directors, officers, employees and consultants pursuant to the Company's current stock option plan, approved by the Company's shareholders in fiscal 2009 and amended and re-ratified in 2021, at exercise prices determined by reference to the market value on the date of grant.  The stock option plan allows for, with approval by the Board, granting of options to its directors, officers, employees and consultants to acquire up to 5.0% of the issued and outstanding shares at any time. Prior to the 2021 amendment, the plan allowed for the granting of up to 7.0% of the issued and outstanding shares at any time.

The following table summarizes the status of the Company's stock option plan and changes during the period:

Expressed in Canadian dollars   Six months ended     Year ended  
    June 30,
2022
    December 31,
2021
 
    Number of
options
    Weighted
average exercise
price
    Number of
options
    Weighted
average exercise
price
 
 
                         
Outstanding, beginning of the year   3,848,200   $ 3.68     5,978,300   $ 3.29  
Granted   736,986   $ 6.24     818,500   $ 6.90  
Exercised   (553,200 ) $ 3.60     (2,801,600 ) $ 3.76  
Expired and forfeited   -     -     (147,000 ) $ 4.29  
Outstanding, end of the period   4,031,986   $ 4.16     3,848,200   $ 3.68  
                         
Options exercisable at the end of the period   3,126,399   $ 3.50     2,973,100   $ 3.40  

During the six months ended June 30, 2022, the weighted-average share price at the date of exercise was CAN$6.84 (December 31, 2021 - CAN$7.51).


ENDEAVOUR SILVER CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Three and six months ended June 30, 2022 and 2021
(unaudited – prepared by management)
(expressed in thousands of US dollars, unless otherwise stated)

The following table summarizes the information about stock options outstanding at June 30, 2022:

Expressed in Canadian dollars      
  Options  Outstanding Options exercisable
           
  Number Weighted Average Weighted
Average
Number
Exercisable
Weighted
Average
  Outstanding Remaining
Price as at Contractual Life Exercise as at Exercise
Intervals June 30, 2022 (Number of Years) Price June 30, 2022 Price
           
$2.00 - $2.99 1,382,600 2.7 $2.14 1,382,600 $2.14
$3.00 - $3.99 1,131,900 1.4 $3.45 1,129,900 $3.45
$4.00 - $4.99  - - -  -  -
$5.00 - $5.99 60,000 3.2 $5.60 48,000 $5.60
$6.00 - $6.99 1,457,486 4.2 $6.57 565,899 $6.74
  4,031,986 2.9 $4.16 3,126,399 $3.50

During the three and six months ended June 30, 2022, the Company recognized share-based compensation expense of $495 and $1,105 respectively (June 30, 2021 - $554 and $1,294 respectively) based on the fair value of the vested portion of options granted in the current and prior periods.

The weighted-average fair values of stock options granted and the assumptions used to calculate the related compensation expense have been estimated using the Black-Scholes Option Pricing Model with the following assumptions:

 

Six months ended

Year ended

 

June 30,
2022

December 31,
2021

Weighted-average fair value of options in CAN$

$3.17

$3.37

Risk-free interest rate

2.19%

0.66%

Expected dividend yield

0%

0%

Expected stock price volatility

67%

66%

Expected options life in years

3.80

3.85

(c) Share Units Plan

On March 23, 2021 the Company adopted an equity-based Share Unit Plan ("SUP"), which was approved by the Company's shareholders on May 12, 2021.  The SUP allows for, with approval by the Board, granting of Performance Share Units ("PSU"s) and Deferred Share Units ("DSU"s), to its directors, officers, employees to acquire up to 1.5% of the issued and outstanding shares. The SUP incorporates any new PSUs and DSUs granted and are to be subject to share settlement, cash settlement or a combination of cash and share procedures at the discretion of the Board of Directors.

Performance Share Units

The PSUs granted are subject to a performance payout multiplier between 0% and 200% based on the Company's total shareholder return at the end of a three-year period, relative to the total shareholder return of the Company's peer group. 

    Six months ended     Year ended   
    June 30,
2022
    December 31,
2021
 
    Number of units     Number of units  
             
Outstanding, beginning of year   1,639,000     1,805,000  
Granted   316,000     322,000  
Cancelled   -     (100,000 )
Settled for shares   (535,000 )   (388,000 )
Outstanding, end of period   1,420,000     1,639,000  


ENDEAVOUR SILVER CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Three and six months ended June 30, 2022 and 2021
(unaudited – prepared by management)
(expressed in thousands of US dollars, unless otherwise stated)

There were 316,000 PSUs granted during the six months ended June 30, 2022 (June 30, 2021 - 322,000).  The PSUs vest over a two to three-year period if certain pre-determined performance and vesting criteria are achieved. Performance criteria are based on the Company's share price performance relative to a representative group of other mining companies and specific achievements related to Terronera development. 806,000 PSUs vest on March 1, 2023, 298,000 PSUs vest on March 4, 2024, 256,000 PSUs vest on March 23, 2025 and 60,000 PSUs vest on or before June 30, 2025.

On March 3, 2022, PSUs granted in 2019 vested with a payout multiplier of 200% based on the Company's shareholder return, relative to the total shareholder return of the Company's peer group over the three year period and 535,000 PSUs were settled, on a net of tax basis, through the issuance of 664,170 common shares.

During the three and six months ended June 30, 2022, the Company recognized share-based compensation expense of $466 and $893 respectively related to the PSUs (June 30, 2021 - $484 and $899 respectively).

Deferred Share Units

The DSUs granted are vested immediately and are redeemable for shares at the time of a Director's retirement.

    Six months ended     Year ended   
    June 30,
2022
    December 31,
2021
 
    Number of units     Number of units  
             
Outstanding, beginning of year   -     -  
Granted   101,862     -  
Settled for shares   (5,038 )   -  
Outstanding, end of period   96,824     -  

There were 101,862 DSUs granted during the six months ended June 30, 2022 (June 30, 2021 - Nil) under the SUP. During the six months 5,038 DSUs were settled, on a net of tax basis, through the issuance of 3,527 common shares. During the three and six months ended June 30, 2022, the Company recognized share-based compensation expense of $488 and $12 related to the DSUs (June 30, 2021 - $Nil and $Nil).

(d) Deferred Share Units - Cash settled

The Company previously had a Deferred Share Unit ("DSU") plan whereby deferred share units were granted to independent directors of the Company in lieu of compensation in cash or share stock options. These DSUs vested immediately and are redeemable for cash, based on the market value of the units at the time of a director's retirement. Upon adoption of the SUP plan in March 2021, no new DSUs will be granted under this cash settled plan.

Expressed in Canadian dollars   Six months ended     Year ended   
    June 30,
2022
    December 31,
2021
 
    Number
of units
    Weighted Average
Grant Price
    Number
of units
    Weighted Average
Grant Price
 
                         
Outstanding, beginning of year   1,348,765     $3.24     1,266,199     $3.00  
Granted   -     -     82,566     $6.90  
Redeemed   -     -     -     $0.00  
Outstanding, end of period   1,348,765     $3.24     1,348,765     $3.24  
                         
Fair value at period end   1,348,765     $4.49     1,348,765     $5.35  

During the three and six months ended June 30, 2022, the Company recognized a mark to market recovery on director's compensation related to these DSUs, which is included in general and administrative salaries, wages and benefits, of $1,614 and $ 989 respectively (June 30, 2021 - expense of $1,596 and $1,869 respectively) based on the change in the fair value of the DSUs granted in the prior years.  As at June 30, 2022, there are 1,044,204 cash settled deferred share units outstanding with a fair market value of $3,272 and 304,561 cash settled deferred share units outstanding with a redemption value of $1,421 (December 31, 2021 - 1,348,765 cash settled deferred share units outstanding with a fair market value of $5,682) recognized in accounts payable and accrued liabilities.


ENDEAVOUR SILVER CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Three and six months ended June 30, 2022 and 2021
(unaudited – prepared by management)
(expressed in thousands of US dollars, unless otherwise stated)

Subsequent to June 30, 2022, 304,561 DSUs were settled through cash with a fair market value of $ 1,421.

(e) Share Appreciation Rights

As part of the Company's bonus program, the Company may grant share appreciation rights ("SARs") to its employees in Mexico and Chile.  The SARs are subject to vesting conditions and, when exercised, constitute a cash bonus based on the value of the appreciation of the Company's common shares between the SARs grant date and the exercise date. 

    Six months ended     Year ended  
    June 30,
2022
    December 31,
2021
 
    Number
of Units
    Weighted Average
Grant Price
    Number
of Units
    Weighted Average
Grant Price
 
                         
Outstanding, beginning of year   113,670     $5.40     -     -  
Granted   119,403     $4.97     115,930     $5.40  
Exercised   -     -     (2,260 )   $5.34  
Cancelled   (26,248 )   $5.51     -     -  
Outstanding, end of period   206,825     $5.14     113,670     $5.40  
                         
Exercisable at the end of the period   81,581     $5.26     40,912     $5.39  

During the six months ended June 30, 2022, the Company recognized an expense related to SARs, which is included in operation cost of sales and exploration salaries, wages and benefits, of $4 (June 30, 2021 - expense $67) based on the change in the fair value of the SARs granted in prior years.  As of June 30, 2022, there are 206,825 SARs outstanding (December 31, 2021 - 113,670) with a fair market value of $108 (December 31, 2021 - $113).

The SARs were valued using an option pricing model, which requires the input of highly subjective assumptions. The expected life of the SARs considered such factors as the average length of time similar grants in the past have remained outstanding prior to exercise, expiry or cancellation and the vesting period of SARs granted. Volatility was estimated based on average daily volatility based on historical share price observations over the expected term of the SARs grant. Changes in the subjective input assumptions can materially affect the estimated fair value of the SARs. The Company amortized the fair value of SARs on a graded basis over the respective vesting period of each tranche of SARs awarded.

(f) Diluted Earnings per Share


ENDEAVOUR SILVER CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Three and six months ended June 30, 2022 and 2021
(unaudited – prepared by management)
(expressed in thousands of US dollars, unless otherwise stated)


    Three months ended     Six months ended  
    June 30,
2022
    June 30,
2021
    June 30,
2022
    June 30,
2021
 
                         
Net earnings (loss) $ (11,923 ) $ 6,656   $ (261 ) $ 18,905  
Basic weighted average number of shares outstanding   180,9974,609     168,383,755     176,291,929     164,051,368  
Effect of dilutive securities:                        
  Stock options   -     2,073,187     -     1,952,745  
  Equity settled deferred share units   -     -     -     -  
  Performance share units   -     1,739,000     -     1,739,000  
Diluted weighted average number of share outstanding   180,974,609     172,195,942     176,291,929     167,743,113  
                         
Diluted earnings (loss) per share $ (0.07 ) $ 0.04   $ (0.00 ) $ 0.11  

As of June 30, 2022, there are 2,822,240 anti-dilutive stock options (June 30, 2021 - 2,048,255 stock options).

11. REVENUE

             
    Three months ended     Six months ended  
    June 30,     June 30,     June 30,     June 30,  
    2022     2021     2022     2021  
                         
Silver Sales (1) $ 13,698   $ 30,052   $ 55,582   $ 46,987  
Gold Sales (1)   18,021     18,305     34,531     36,463  
Less: smelting and refining costs   (937 )   (582 )   (1,591 )   (1,209 )
Revenue $ 30,782   $ 47,775   $ 88,522   $ 82,241  

(1) Changes in fair value from provisional pricing in the period are included in silver and gold sales.

      Three months ended     Six months ended  
      June 30,     June 30,     June 30,     June 30,  
Revenue by product   2022     2021     2022     2021  
                           
  Concentrate sales $ 16,117   $ 16,270   $ 30,578   $ 34,198  
  Provisional pricing adjustments   (587 )   641     43     (114 )
Total revenue from concentrate sales   15,530     16,911     30,621     34,084  
Refined metal sales   15,252     30,864     57,901     48,157  
Total revenue $ 30,782   $ 47,775   $ 88,522   $ 82,241  

Provisional pricing adjustments on sales of concentrate consist of provisional and final pricing adjustments made prior to the finalization of the sales contract.  The Company's sales contracts are provisionally priced with provisional pricing periods lasting typically one to three months with provisional pricing adjustments recorded to revenue as market prices vary. 


ENDEAVOUR SILVER CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Three and six months ended June 30, 2022 and 2021
(unaudited – prepared by management)
(expressed in thousands of US dollars, unless otherwise stated)

12. EXPLORATION AND EVALUATION

    Three months ended     Six months ended  
    June 30,
2022
    June 30,
2021
    June 30,
2022
    June 30,
2021
 
                         
Depreciation and depletion $ 98   $ 72   $ 205   $ 151  
Share-based compensation   117     145     211     306  
Exploration salaries, wages and benefits   401     734     1,093     1,310  
Direct exploration expenditures   1,021     2,099     1,812     3,658  
Evaluation salaries, wages and benefits   524     361     1,145     643  
Direct evaluation expenditures   1,623     1,614     2,534     3,087  
  $ 3,784   $ 5,025   $ 7,000   $ 9,155  

13. GENERAL AND ADMINISTRATIVE

    Three Months Ended     Six Months Ended  
    June 30,     June 30,     June 30,     June 30,  
    2022     2021     2022     2021  
                         
Depreciation and depletion $ 51   $ 38   $ 99   $ 72  
Share-based compensation   741     772     2,047     1,658  
Salaries, wages and benefits   983     747     2,215     1,907  
Directors' DSU mark to market expense (recovery)   (1,614 )   1,596     (989 )   1,896  
Direct general and administrative   1,187     1,140     2,273     2,283  
  $ 1,348   $ 4,293   $ 5,645   $ 7,816  

14. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS

    Three months ended     Six months ended  
    June 30,     June 30,     June 30,     June 30,  
    2022     2021     2022     2021  
                         
Net changes in non-cash working capital:                        
Accounts receivable $ 2,087   $ 3,081   $ 2,296   $ 6,270  
Income tax receivable   1,042     (33 )   1,042     (3,578 )
Inventories   8,718     (2,180 )   6,424     (7,267 )
Prepaid expenses   6,024     (4,222 )   6,431     (5,015 )
Accounts payable and accrued liabilities   6,379     3,484     5,616     1,587  
Income taxes payable   (2,094 )   676     (767 )   (357 )
  $ 22,156   $ 806   $ 21,042   $ (8,360 )
                         
Non-cash financing and investing activities:                        
Fair value of exercised options allocated to share capital      $ (706 ) $ (348 ) $ (755 ) $ (3,967 )
Fair value of performance share units allocated to
share capital     
$ -   $ (561 ) $ (806 ) $ (561 )
Fair value of capital assets acquired under equipment loans $ 1,496   $ -   $ 4,374   $ -  
                         
Other cash disbursements:                        
    Income taxes paid $ 98   $ (162 ) $ 451   $ 4,326  
    Special mining duty paid $ -   $ -   $ 2,272   $ 1,331  


ENDEAVOUR SILVER CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Three and six months ended June 30, 2022 and 2021
(unaudited – prepared by management)
(expressed in thousands of US dollars, unless otherwise stated)

15. SEGMENT DISCLOSURES

The Company's operating segments are based on internal management reports that are reviewed by the Company's executives (the chief operating decision makers) in assessing performance.  The Company has two operating mining segments which are located in Mexico, Guanaceví and Bolañitos, the El Compas mine which is on care and maintenance, one development project in Mexico, Terronera, as well as Exploration and Corporate segments.  The Exploration segment consists of projects in the exploration and evaluation phases in Mexico, Chile and the USA.  Exploration projects that are in the local district surrounding a mine are included in the mine's segments.  Comparative period figures related to Terronera, previously reported as part of the exploration segment have been reclassified to conform with current period's presentation.  Comparative period figures related to the El Cubo mine, which was on care and maintenance from November 2019 until the sale of the mine and related assets in April 2021, previously reported as it own segment have been reclassified to the Corporate segment.

June 30, 2022  
    Corporate     Exploration     Guanaceví     Bolanitos     El Compas     Terronera     Total  
                                           
Cash and cash equivalents $ 80,760   $ 3,686   $ 18,808   $ 9,845   $ 2,399   $ 728   $ 116,226  
Other Investments   11,236     -     -     -     -     -   $ 11,236  
Accounts and other receivables   364     139     7,013     6,539     268     (837 ) $ 13,486  
Income tax receivable   27     1     1,121     68     2     -   $ 1,219  
Inventories   116     -     29,963     5,341     196     48   $ 35,664  
Prepaid expenses   1,322     181     1,372     596     4     8,091   $ 11,566  
Non-current deposits   150     -     318     127     -     -   $ 595  
Non-current IVA receivable   168     -     1,456     -     -     5,904   $ 7,528  
Non-currrent income tax receivable   3,570     -     -     -     -     -   $ 3,570  
Right-of-use leased assets   564     -     -     50     -     -   $ 614  
Mineral property, plant and equipment   503     19,896     59,999     27,282     1,091     33,035   $ 141,806  
Total assets $ 98,780   $ 23,903   $ 120,050   $ 49,848   $ 3,960   $ 46,969   $ 343,510  
                                           
Accounts payable and accrued liabilities $ 8,003   $ 319   $ 12,058   $ 4,503   $ 67   $ 1,433   $ 26,383  
Income taxes payable   -     -     4,215     780     -     -   $ 4,995  
Loans payable   -     -     1,515     3,070     -     7,986   $ 12,571  
Lease obligations   877     -     -     54     -     -   $ 931  
Provision for reclamation and rehabilitation   -     -     4,093     3,329     154     -   $ 7,576  
Deferred income tax liability   -     -     8,310     235     -     -   $ 8,545  
Total liabilities $ 8,880   $ 319   $ 30,191   $ 11,971   $ 221   $ 9,419   $ 61,001  


ENDEAVOUR SILVER CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Three and six months ended June 30, 2022 and 2021
(unaudited – prepared by management)
(expressed in thousands of US dollars, unless otherwise stated)


December 31, 2021  
    Corporate     Exploration     Guanaceví     Bolanitos     El Compas     Terronera     Total  
                                           
Cash and cash equivalents $ 68,149   $ 144   $ 27,060   $ 4,234   $ 3,349   $ 367   $ 103,303  
Other Investments   11,200     -     -     -     -     -   $ 11,200  
Accounts and other receivables   812     -     6,706     6,633     308     3   $ 14,462  
Income tax receivable   169     1     3     2     2     -   $ 177  
Inventories   351     -     19,852     7,057     195     30   $ 27,485  
Prepaid expenses   1,327     118     844     349     20     2,477   $ 5,135  
Non-current deposits   150     -     321     128     -     -   $ 599  
Non-current IVA receivable   164     -     1,434     -     -     2,658   $ 4,256  
Deferred income tax asset   -     -     -     936     -     -   $ 936  
Non-current Income tax receivable   3,570     -     -     -     -     -   $ 3,570  
Intangible assets   2     1     15     17     2     3   $ 40  
Right-of-use leased assets   564     -     100     -     -     -   $ 664  
Mineral property, plant and equipment   373     18,963     54,234     27,371     2,005     19,251     122,197  
Total assets $ 86,831   $ 19,227   $ 110,569   $ 46,727   $ 5,881   $ 24,789   $ 294,024  
                                           
Accounts payable and accrued liabilities $ 10,121   $ 238     15,247   $ 4,667   $ 141   $ 1,577   $ 31,991  
Income taxes payable   29     -     3,563     636     -     -   $ 4,228  
Loans payable   43     -     2,005     4,048     -     4,398   $ 10,494  
Lease obligations   896     -           105     -     -   $ 1,001  
Provision for reclamation and rehabilitation   -     -     3,997     3,237     163     -   $ 7,397  
Deferred income tax liability   -     -     1,271     235     -     -     1,506  
Total liabilities $ 11,089   $ 238   $ 26,083   $ 12,928   $ 304   $ 5,975   $ 56,617  


ENDEAVOUR SILVER CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Three and six months ended June 30, 2022 and 2021
(unaudited – prepared by management)
(expressed in thousands of US dollars, unless otherwise stated)


Three months ended June 30, 2022  
    Corporate     Exploration     Guanaceví     Bolanitos     El Compas     Terronera     Total  
Silver revenue $ -   $ -   $ 9,533   $ 4,165   $ -   $ -   $ 13,698  
Gold revenue   -     -     5,719     12,302     -     -     18,021  
Less: smelting and refining costs   -     -     -     (937 )   -     -     (937 )
Total revenue $ -   $ -   $ 15,252   $ 15,530   $ -   $ -   $ 30,782  
                                           
  Salaries, wages and benefits:                                          
        mining $ -   $ -   $ 1,745   $ 2,140   $ -   $ -   $ 3,885  
        processing   -     -     793     642     -     -     1,435  
        administrative   -     -     1,386     1,127     -     -     2,513  
        stock based compensation   -     -     57     56     -     -     113  
        change in  inventory   -     -     (2,371 )   688     -     -     (1,683 )
Total salaries, wages and benefits   -     -     1,610     4,653     -     -     6,263  
                                           
  Direct costs:                                          
        mining   -     -     8,049     3,237     -     -     11,286  
        processing   -     -     3,749     1,542     -     -     5,291  
        administrative   -     -     1,905     1,202     -     -     3,107  
        change in  inventory   -     -     (7,459 )   1,453     -     -     (6,006 )
Total direct production costs   -     -     6,244     7,434     -     -     13,678  
                                           
  Depreciation and depletion:                                          
        depreciation and depletion   -     -     3,507     2,603     -     -     6,110  
        change in  inventory   -     -     (2,567 )   632     -     -     (1,935 )
Total depreciation and depletion   -     -     940     3,235     -     -     4,175  
                                           
  Royalties   -     -     2,128     66     -     -     2,194  
                                           
Total cost of sales $ -   $ -   $ 10,922   $ 15,388   $ -   $ -   $ 26,310  
                                           
Care and maintenance costs   -     -     -     -     189     -     189  
Write off of exploration properties   -     -     -     -     -     500     500  
                                           
Earnings (loss) before taxes $ (8,845 ) $ (1,636 ) $ 4,330   $ 142   $ (189 ) $ (2,648 ) $ (8,846 )
                                           
  Current income tax expense   -     -     1,181     144     -     -     1,325  
  Deferred income tax expense   -     -     1,752     -     -     -     1,752  
Total income tax expense   -     -     2,933     144     -     -     3,077  
                                           
Net earnings (loss) $ (8,845 ) $ (1,636 ) $ 1,397   $ (2 ) $ (189 ) $ (2,648 ) $ (11,923 )

The Exploration segment included $353 of costs incurred in Chile for the three months ended June 30, 2022 (June 30, 2021 - $175).



ENDEAVOUR SILVER CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Three and six months ended June 30, 2022 and 2021
(unaudited – prepared by management)
(expressed in thousands of US dollars, unless otherwise stated)


ENDEAVOUR SILVER CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Three and six months ended June 30, 2022 and 2021
(unaudited – prepared by management)
(expressed in thousands of US dollars, unless otherwise stated)


Six months ended June 30, 2022  
    Corporate     Exploration     Guanaceví     Bolanitos     El Compas     Terronera     Total  
Silver revenue $ -   $ -   $ 47,160   $ 8,422   $ -   $ -   $ 55,582  
Gold revenue   -     -     10,741     23,790     -     -     34,531  
Less: smelting and refining costs   -     -     -     (1,591