Endeavour Silver's Strategic Pivot: Debt Swap Fuels A Growth Giant

NEW YORK, NY – December 01, 2025 – In a financial maneuver that speaks volumes about its future ambitions, mid-tier producer Endeavour Silver Corp. (NYSE: EXK; TSX: EDR) has priced a significant offering of US$300 million in convertible senior notes, with an option to expand to US$350 million. While any capital raise draws market attention, this transaction is far more than a simple fundraising effort. It represents a shrewd strategic pivot, swapping expensive, restrictive debt for cheap, flexible capital designed to de-risk its balance sheet and simultaneously fuel the development of a potential company-making asset.

A Masterclass in Balance Sheet Optimization

The most immediate impact of this offering is a sophisticated restructuring of the company's liabilities. A primary use of the proceeds is the repayment of Endeavour's senior secured credit facility with ING Capital and Societe Generale. This facility, which was fully drawn to fund the construction of the now-commissioning Terronera Project, carried a floating interest rate of SOFR plus a hefty 4.5% premium. By replacing this high-cost, secured debt, Endeavour achieves several critical objectives.

First, the interest rate on the new convertible notes is a remarkably low 0.25% per annum. This dramatically reduces the company's debt servicing costs, freeing up cash flow that can be deployed elsewhere. Second, and perhaps more importantly, the move shifts the company's debt from a secured to an unsecured position. This releases the assets previously pledged as collateral, providing Endeavour with a cleaner balance sheet and substantially more financial flexibility for future endeavors. In essence, the company is leveraging strong market sentiment, reflected in its soaring stock price, to shed financial constraints and fortify its financial foundation for the next phase of growth.

Fueling the Pitarrilla Growth Engine

Beyond the immediate balance sheet benefits, the offering's true long-term significance lies in its second objective: funding the advancement of the Pitarrilla project in Durango, Mexico. Described by management as a future “cornerstone asset,” Pitarrilla is one of the largest undeveloped silver projects on the planet. Acquired from SSR Mining in 2022, the deposit is a geological behemoth, hosting indicated mineral resources of 491.6 million ounces of silver, alongside substantial lead and zinc credits.

This capital injection is the catalyst needed to transform Pitarrilla from a line item in a resource statement into a tangible development project. The funds will support technical studies and engineering work essential for producing a Preliminary Economic Assessment (PEA) by the end of 2025. This study will be the first comprehensive look at the project's potential economics under Endeavour's ownership and will lay the groundwork for a future development decision. With its Terronera mine ramping up, securing funding for Pitarrilla signals a clear and aggressive path forward, underpinning the company's stated goal of evolving into a senior silver producer with an output exceeding 20 million ounces per year.

The Convertible Calculus: Cheap Debt vs. Future Dilution

For any company, issuing convertible debt is a calculated trade-off between securing cheap capital today and accepting potential share dilution tomorrow. The terms Endeavour secured are exceptionally favorable, indicating strong investor appetite for its growth story. The 32.5% conversion premium sets the initial conversion price at approximately US$12.4550 per share, a significant hurdle above the stock's current trading price.

This high premium protects existing shareholders from immediate dilution. The notes will only be converted into equity if the company's stock price appreciates significantly, a scenario that would also generate substantial returns for current investors. Should the full US$350 million in notes be converted, it would result in the issuance of approximately 28 million new shares, representing a potential dilution of just under 9% based on the current share count. Investors in the notes are effectively making a long-term bet on Endeavour's ability to execute its growth plan, accepting a minimal 0.25% yield in exchange for the equity upside if the Pitarrilla and Terronera projects deliver on their promise. For Endeavour, it is patient capital at an almost negligible cost.

Navigating a High-Growth, High-Cost Transition

This financing does not occur in a vacuum. It comes as Endeavour navigates a critical, and costly, transitional period. The company’s recent Q3 2025 results painted a picture of this duality: production soared 88% year-over-year, yet heavy capital expenditures on Terronera's commissioning led to a net loss and an All-In Sustaining Cost (AISC) of over $30 per ounce. The company's working capital has been under pressure from this intense investment cycle. However, the market has largely looked past these temporary pains, sending the stock up over 175% in the last six months, creating the perfect window for this advantageous financing.

Ultimately, this convertible note offering is the capital bridge Endeavour needs to get from its current high-investment phase to a future of potentially robust free cash flow. It addresses the debt from the last major project while simultaneously seeding the next. By skillfully refinancing its past and funding its future in a single strategic move, Endeavour Silver has fortified its position to pursue its ambitious transformation into a senior silver producer.