Thank you for standing by. This is the Chorus Call Conference operator. Welcome to the Endeavour Silver's Fourth Quarter 2013 Financial Results Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. (Operator Instructions). At this time, I would like to turn the conference over to Meghan Brown, Director of Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to the Endeavour Silver Fourth Quarter 2013 Financials Conference Call. On the call today, we have the company's CEO, Brad Cooke; as well as our President and COO, Godfrey Walton; our CFO, Dan Dickson; and our VP of Corporate Development, Terry Chandler. Before we get started, I'm required to remind you that certain statements on this call will include forward-looking information within the meaning of applicable securities laws. These may include statements regarding Endeavour's anticipated performance in 2014 and future years, including revenue and cost forecasts, silver and gold production, grades and recoveries and the timing in expenditures required to develop new silver mines in mineralized zones. The company does not intend to, and does not assume any obligation to update such forward-looking statements or information, other than as required by applicable law. Thank you. With that, I will turn the call now over to Endeavour's CEO, Brad Cooke.

Thanks, Meghan, and welcome everybody. I'd like to, as I normally do, just cover the highlights of today's news release and our financial and operating performance in the fourth quarter 2013 and the full year 2013. Then I'll open it up for a Q&A and you have our full attention. Most of the core management group is here today. So, our highlights on the financial side in 2013 were led by a net loss of $89.5 million compared to earnings of 42.1 million in 2012. That loss is primarily due to an impairment of our assets due to the lower metal prices. Our adjusted earnings fell 72% to $11.1 million or $0.11 per share compared to $40 million of earnings in 2012 and that adjustment also includes the deferred Mexican tax liability. I know that some of our peers actually don't include that deduction on their adjusted earnings but we do. EBITDA actually increased 10% last year to $100 million. Both cash flow from operations and mine operating cash flow were relatively flat year-on-year; cash flow being at $81.6 million and mine operating cash flow at $116.9 million. Revenues actually jumped 3% to $277 million and that was primarily due to a significant spike in our silver and gold production last year. Our realized silver price fell 25% to around $23 an ounce and our realized gold price fell 18% to $1,375 an ounce. That was the main story for all of the silver and gold producers last year. Our cash costs rose 8% year-on-year to $7.92 per ounce of silver payable and our all-in sustaining costs actually fell 21% to $18.31 per ounce of silver payable. Our cash and equivalents actually rose 88% year-on-year to 35 million at year-end compared to 19 million at the end of 2012. And…

Thank you. We will now begin the question-and-answer session. (Operator Instructions). The first question is from Benjamin Asuncion of Haywood Securities. Please go ahead.

Good morning, guys. Congratulations on a good quarter there. Brad, I was just hoping to get some clarification on the consolidated guidance you talked about $95 a ton. Could you give us some visibility on how that breaks apart between what your expectations are by mine?

Hi, Ben. Dan Dickson here. Thanks for the question. I think going forward obviously using retrospective costs is the key there and that for Guanaceví it ran about $110, at Bolañitos $78 to $80 and at El Cubo $95 is what we're modeling.

Ben, as you probably are well aware, $95 at El Cubo is quite an accomplishment.

No, definitely. And then just more in terms of looking at exploration this year, what's your sense at Bolañitos in terms of what do you need to see to be able to justify another sort of subsequent expansion?

So we're certainly not contemplating that in 2014 but we are in 2015 subject to successful reserve replacement and significant resource expansion this year. And so we are aggressively drilling several targets at Bolañitos in 2014.

Okay. Is there a threshold for sort of a mine life that you'd like to keep in terms of a reserve support in mine life?

Yes, our mine lives at each of our three mines have peaked individually at about three years, and so that's kind of the ideal. There are clearly not there right now but they have been there and that's our goal over the next year or two to get all three mines back to that level.

Okay, perfect. All right, I'll hop back in the queue and let somebody else ask questions. Thanks again guys.

The next question is from [Gordon Seashore of Seashore Investments] (ph). Please go ahead.

Gentlemen in terms of your 2014 focus, I didn't hear anything regarding the regulatory government strategy where you can try to negate to some extent the tax rate, the addition of duty tax and the environmental tax though I understand that maybe you might have to do this in a consortium, but is there something ongoing that you might be successful? And if not, would there be some aggressive thinking about buybacks?

Thanks, Gordon. It's Dan Dickson. It's funny, in the last six months we have dealt a lot working with the industry trying to get a voice with the Mexican government with regards to tax reform which put the special mining duty on, which is an EBITDA royalty and the environmental tax which is a 0.5% revenue tax. At this point there's lots we can do, lots that we can plan for, lots that we actually really don't talk significantly about publicly as far as how we structure our organization, but we continually look at to make sure that we're paying the taxes that we're required to pay under the laws. As far as working with the consortium and pushing for that, and Brad might even be able to speak a little bit better to this, but at PDAC last week, the Mexican government and specifically the Secretary of Economy was talking about the impact on that 7.5%, two minors and possibly adjusting the legislation with regards to how we're able to deduct various costs. Now that's very early on. I've talked with a couple of accounting firms. They were under the same understanding as us, they were, but until we see something from the Mexican government on paper, we're not going to move in any direction with that. As far as leaving Mexico, we still consider Mexico a very strong jurisdiction, albeit we prefer no royalty taxes at all but that's not the world that we live in and we're going to adjust and we're going to make it work. We're not opposed to looking at further projects in Mexico but at the same time we have looked outside of Mexico and it's something that's always in the front of our minds of where to be, and again we're not going to run from Mexico.

Gordon, this is Brad. Perhaps I could just add a little bit of color to Dan's comments. The mining industry in Mexico is in a little bit of love-hate relationship with the government in the last year, because of the imposition of the new mining taxes. The love part is that we really like working in Mexico and it's still one of the top jurisdictions in the western world for mining investments. However, the magnitude of the new mining taxes and the way that they were implemented was quite a rude wakeup call for our industry and Mexico we believe did shoot itself in the foot to a certain extent and impaired the attractiveness of Mexico for new mining investment. Not that it's now a negative but it's just on par with several other very attractive places in Latin America. So from our point of view we have already put in place tax management strategies that were already existing and legal in Mexico and everybody else in our sector is doing the same thing. But perhaps more importantly, and again Dan highlighted this in his comments, last week the Ministry of Finance from Mexico, that's the Secretary of Economy, had both a private dinner and then a public session on Mexico Day in Toronto and he made some very significant comments with regards to mining tax. They're not going to climb down from the 7.5% number but they still are in the process of writing the detailed wording of that piece of legislation as that detailed wording has to be submitted by mid-April, and he basically said that they're looking for ways to soften the blow so as to encourage new mining investments. We can't take it much further than that but it was very encouraging and over the next six weeks, our mining industry in Mexico are rolling up our sleeves and meeting with the government representatives as often as we can to show them how we think they cannot change the legislation but change maybe the wording to again soften the blow and encourage new investments. So I think that's a very tangible change in the government tone since last year.

Thank you. I know you can't go into a lot of details but I hope that the industry has some proactive attorneys/consultants in D.C. that's working with the Obama Administration and going back and having some serious discussions with Mexico. When they want some help from us, we can push back on what we need to do to have a fair platform in terms of operations.

Well, we'll certainly call up our good friend Obama when we need him.

Is that a serious comment? I was serious in what I said. There are [lawyers] (ph) and attorneys who I know that do this can be affected because you had talks at the highest level and sometimes you can get something on the plate that can be beneficial to the silver industry?

No, practically speaking we also investigated the possibility of lawsuits under NAFTA and there are certainly grounds for that, but the time and money involved makes that approach completely impractical compared to the more practical corporate restructurings that we put in place in Mexico, which was something we could do before year-end last year which everybody else is doing. It's all of our Board and (indiscernible) very persistent. We've been a thorn in the government's side both privately and publicly in Mexico to the point where I think we succeeded and that's the main reason why the Ministry of Finance came with softening up his comments last week. So I appreciate your comments but there's certainly legal options here under NAFTA, but they're probably not as practical as what we're doing right now.

All right, thank you.

The next question is from Graham Tanaka of Tanaka Capital. Please go ahead.

Brad, congratulations on your production gains. Yes, just to get a bit more clear picture of the Mexico tax situation, what is the estimated higher costs this year for operations because of these tax increases?

Based on our 2014 guidance, the estimated additional costs at today's prices was about $3.5 million specifically to our bottom line which is tax deductible, so it's essentially 70% -- it's about $3 million for us is what we expect again at today's prices.

So really the most important thing of course is the silver and gold prices. The only thing that's controlled here is costs and I'm just wondering – you talked about the three-year mine lives, what would be the trend of costs over the three years of current reserves in the ground and what would be the actual costs to replace those reserves, cost of replacement if that's estimatable? Thanks.

In terms of trends on a core product basis where we're not including gold as a byproduct credit, we're reporting it separately as a revenue item, we're clearly seeing the year-on-year inflation industry wide and in our operations as well. And so when we report cash costs net of the byproduct gold credit, then it becomes much more of a function of the amount of gold we produce and the price that we sell it at. And so that trend is actually on a bit of rollercoaster. We had a huge run in the value of our gold credit all the way up to 2011 peak and then a cascade down trend on the value of the gold sold based on falling gold price. If you look at the snapshot from last year, Q3 was a great quarter because the metal price is valued and so the gold credit was significantly higher. Our view is that and this is sticking to your question about trends, our view is that this is the turnaround year for the precious metals and we're already seeing that in the robustness of the January, February and now March rally. That doesn't mean I don't expect to pullback from the current levels, it's usually a second quarter pullback in our sector. But I'm quite keen on the outlook for the sector now and again if last year's rollercoaster was bottom at the beginning of July and a temporary bounce back in September, I'm actually thinking we've probably seen the bottom already and there's some significant moves ahead of us perhaps through the fourth quarter of this year. So, in terms of trends our costs on a core product basis are generally just tied to their inflation rate and on a byproduct gold credit basis, there are a bit of a rollercoaster and if we stick to that this year, I think our costs will be coming down in the second half as the gold price rises.

Graham, with regards to the cost about replacing reserves and what our costs is, it's a very difficult question to ask, it's something that I approach our exploration group and our engineers all the time with is what's that costs and they kind of give me that look. Part of it is because you can drill and you can discover both 500,000 ounces with one drill hole. You can drill 10 drill holes and discover no ounces. So, it's very difficult to put a specific cost on what's the cost to replace those reserves. If it's talking about converting from resource reserves, it's the development costs which cost about $1,200 a meter for us to move through, but again how many ounces get moved from resource to reserve on that development, it's very difficult to say, it's very variable throughout the mine. So there's no specific doing it, it's not a metric that we keep internally and that we gauge ourselves against as a cost to move from resource to reserve, but we do look at our exploration – what we spend in exploration and see what we add to resources.

Actually, Graham, if you'd like we can just – we'll go back and look at every year's exploration budget in the last five or ten years and show you the resource growth year-on-year and that I think will be a much simpler formula.

I guess I was trying to get at – thank you for your answer, but I guess I was trying to get at maybe it's too odd to do but what the cost is to grow reserves incrementally because you've been able to grow them at a great rate? And if the cost of the additional ounces of reserves is going to trend higher or stay the same or go lower in the mines you're in now, I just don't know what the grade fluctuations are? Thanks.

Hi, Graham. This is Godfrey. Just on the resource before we go to the reserves, it averaged over the last several years about $1 an ounce for discovery rate. Some years it was a little higher on that, some years were a little lower but that's part of our guiding influence on how much money we put towards exploration. As Dan has been mentioning, the cost of changing resources into reserves and we only call reserves, reserves when we are actually able to touch them. So we want to make sure we have that development in place. As Dan mentioned, it's about $1,000 to $1,200 a meter for every meter of development. And again our development budgets are looking at pushing as much ahead of where we're mining as we can within a reasonable amount of development per month. So our budgets for development are again looking at how we increase the area that we open up to then be able to find that as a reserve cost. And that I think are capital program for El Cubo is $20 million, so that's going to help us out but not a large chunk of that new area called Asunción which we've announced before and we're continuing to drill that. So that will increase our reserves in that area there, which is a main push for El Cubo. At Bolañitos the development is really focused on the La Luz system. We have a lot of Daniela already opened out, it's just ready for mining. We are developing at the lower part of Daniela, so we will add reserves in there. But the key area is going to be the La Luz system where we're doing a lot of development to open up some of the areas that we've been drilling over the last – few months of last year and a lot during this year's exploration.

Thank you very much.

(Operator Instructions). The next question is from Chris Thompson of Raymond James. Please go ahead.

Good morning, guys. Thanks for the opportunity to asking some questions. I just want to – a couple of quick questions on a mine-by-mine basis here. If we look at Bolañitos, you see that you plan on I guess delivering grades slightly above reserve grades in the middle there. Are we looking at – when you mentioned that in the MD&A, are we looking at proven or probable from a grade perspective now?

Sorry, Chris. To clarify your question, are we looking at silver and gold grades that are closer to proven or closer to probable?

That's correct. I mean you mentioned that you want to – you see, I guess, grades for metal in a higher than reserve grade and the question I guess is when you mention reserve grade, are you looking at proven reserve grade or probably reserve grade?

Hi, Chris. This is Godfrey. Thanks for the question. It will be the reserve grade, the proven grade.

Proven grade, okay, perfect. Also recoveries at Bolañitos, obviously we saw 90% recoveries I think on the silver. Is this sustainable, do you think?

Yes. We've actually been tweaking the plants and Abyl was our Corporate Metallurgist. He's getting some good increases in our recoveries in all our plants actually. So, yes, I think it is.

Okay, perfect. Thanks, Godfrey. Just moving on to El Cubo quickly, at least the plan is you mentioned 1,100 to 1,200 ton a day this year. So are we going to see a peak of 1,200 ton a day no more than that with no throughput?

Well, that will be Guanaceví at 1,200 tons. So El Cubo obviously is primarily our growth asset this year with no capacity in the 1,500 to 1,600 ton range and current last year was around 1,100 to 1,200 tons, so we've been pushing tons slowly in the first quarter but they'll ramp up to the planned capacity by year end.

Okay.

And that, Chris, is not a function of plan. It's a function of mine development primarily in the Villalpando-Asunción zone. Just give you a snapshot of how we're doing there, if you recall that was a (indiscernible) discovery adjacent to some old workings just over a year ago. It was about nine months ago a six hole wonder and now it's actually not only in development, it's producing about 100 to 150 tons a day to the mill and our goal is to actually take that particular zone up to perhaps 500 or 600 tons per day by year end. That's where the growth primarily is going to come from. And by the way that mineralized zone, Villalpando-Asunción zone when we announced it last year it was about 200 meters long and we've now been able to track it for almost a kilometer. So we're very, very encouraged by both the lakes and the vertical extent of that mineralized zone. We have one section with 630 meter space holes and they all hit. So that kind of segues me into a material news going forward and I think given our role is to replace reserves and expand resources this year. Some primary value drivers over the next two quarters will be drilling obviously. At El Cubo it's going to be Villalpando-Asunción zone that's currently expanding. At Bolañitos it's going to be the La Luz-Asunción zone. And at San Sebastián, we haven't resumed drilling there yet but we do plan to do so in Q2 and the focus there will be obviously resuming our resource expansion. We've walked out last year a 1.1 kilometer long mineralized zone at San Sebastián but we spent the last half of last year after we suspended drilling mapping and sampling the vein for over 5 kilometers and we're again very encouraged by the potential at San Sebastián. So those will be the main value drivers over the next two quarters.

Okay. Thanks. Just another quick question on El Cubo, as far as recoveries you say that you expect recoveries to return to about 90% on the silver. What's the current plant – what recoveries are you currently achieving right now?

Yes. This quarter we had an anomaly that we flushed out. Again, the lead circuit at the plant was able to obtain 99%, but it's very similar to Bolañitos. We expect silver and gold recoveries to be 90%, 91% for the quarter. In and around that would be a good benchmark, Chris.

Okay, perfect. Just quickly on Guanaceví, Guanaceví increased as far as silver grades are concerned. Did you see this as expendable? I mean what sort of silver grade should we be really modeling sort of looking forward?

Yes, the silver grades have moved up and that's primarily because of people actually. We've got some excellent grades in people and they were expecting to continue mining that all year. So, yes, the grades should continue up and I think you'll find them above our reserve grade.

Perfect, thanks. And then very finally on San Sebastián, I know you mentioned that just now Brad. Obviously drilling to commence you're saying in Q2, what do we need here as far as a development plan? I mean where do you want to drive this project? Obviously, I guess cash is somewhat limited at the moment, I understand that, but what's the forward plan as far as San Sebastián is concerned?

We've held off on drilling it so far and until late Q2, primarily for a priority of reasons. It was more important that we get drilling and developing at our mines, but our goal at San Sebastián is actually to continue drilling as best we can this year to see how big it actually is. We did actually complete the environmental baseline studies last year and we did file a development plan and permit application with the government in December. And we are hopeful that we'll receive that permit perhaps Q3 or Q4, so that by the end of Q4 we're in a position based on anticipated resource expansions and permitting to make a decision on mine development at San Sebastián. We will probably lean towards a phased development plan at San Sebastián. Again, it's just thinking of now prices and cash flow more than anything. We don't really want to go out and do a project loan, for instance. We'd rather see it funded internally through cash, cash flow and their current line of credit. But our goal very simply this year is to get to a decision by year end if possible.

Fantastic. Thanks, guys.

Thanks, Chris.

Next is a follow-up question from Benjamin Asuncion of Haywood Securities. Please go ahead.

Hi, guys. Just have one more quick question here. I guess looking at selling El Cubo and Bolañitos product as concentrate, can you give us a sense of what you're looking at? Are we looking at sort of similar payability in terms as we kind of saw in the fourth quarter, or do you see any change in that?

Ben, this is Dan. Thanks for the follow-up question. We do have two concentrate contracts out of Bolañitos, which puts the term somewhere around 95% payability whereas at El Cubo we have one contract. We now have two contracts, so it should be us at similar 94%, 95% payability on El Cubo stuff going forward.

Okay, perfect. And you're seeing just in terms of visibility or the economic tradeoff that's been producing concentrate and further refining to doré, you're still obviously seeing favorable terms in the market from refiners to take the concentrate?

Hi, Ben. This is Godfrey. Yes, we have very good terms with the two people that we sell company concentrate to and we actually sell 50% of Bolañitos and 50% of El Cubo to each…

Okay, perfect. Thanks guys.

Thank you.

There are no more questions at this time. I'll now hand the call back over to Brad Cooke for closing comments.

Well, thank you very much operator. So I think the main takeaways from today's call should be that we had an exceptional year in operations last year. We actually did really good on revenues and cash flow and the main downside was the impairments that we took on our earnings relative to reduced reserves, lower metal prices, et cetera. I think given that our view is this is a turnaround year in the metal prices, we're still fully running our business this year to plan to get a little bit more cash flow out of our operations before the metal prices move up so that they are holding and ready for outperformance and that we need focus on reserve replacements and resource expansion so that we can get back to where we were a year or so ago. Lots of exciting news coming in the company and I would like to thank everybody for attending.

This concludes today's conference call. You may now disconnect your lines. Thank you for participating and have a pleasant day.