Endeavour Silver Completes Sale of Bolanitos Mine

Executive Summary

• Endeavour Silver Corp. has completed the sale of its Bolañitos silver and gold mine in Guanajuato, Mexico, to Guanajuato Silver Company Ltd.
• The transaction involves a total upfront consideration of US$40 million, structured as US$30 million in cash and US$10 million in Guanajuato Silver common shares.
• The deal includes two potential contingent payments of US$5 million each, triggered by the production of 2 million and 4 million ounces of silver equivalent, respectively.

Key Details

• Transaction Structure: Guanajuato Silver acquired all issued and outstanding shares of Mina Bolañitos, S.A. de C.V. from Endeavour affiliates.
• Upfront Consideration (Base Consideration): Total value of US$40 million.
  • Cash Component: US$30 million paid in cash.
  • Equity Component: US$10 million paid in common shares of Guanajuato Silver ("BaseShares").
  • Share Price: BaseShares issued at a deemed price of US$0.2709413 (C$0.3815) per share, based on the 10-day VWAP of Guanajuato Shares on the TSXV preceding the agreement date.
• Contingent Payments: Two payments of US$5 million each are payable upon specific production milestones:
  • Milestone 1: Production of 2 million ounces of silver equivalent.
  • Milestone 2: Production of 4 million ounces of silver equivalent.
• Contingent Payment Structure: Each US$5 million contingent payment is satisfied 50% in cash and 50% in Guanajuato Shares ("Contingent Shares").
• Contingent Share Pricing: Issued at the greater of (i) the 10-day VWAP on the milestone payment date, or (ii) the minimum price permitted by the TSXV (converted to USD). Any shortfall in value between the Market Price and the Contingent Share Issue Price is paid in cash.
• Ownership Cap: The issuance of Contingent Shares is subject to a maximum ownership percentage of 9.9% of Guanajuato Silver’s issued and outstanding shares. Any portion of the contingent payment exceeding this cap is payable in cash.
• Investor Rights Agreement:
  • Endeavour agreed to vote its Guanajuato Shares in accordance with Guanajuato Silver’s board recommendations for 12 months.
  • Endeavour received participation rights.
  • Transfer Restrictions: All Base Shares are subject to voluntary transfer restrictions for 12 months. After this period, 50% of the Base Shares remain subject to restrictions for an additional two years.
• Finders' Fees: None paid.

Notable Quotes

• “The sale of the Bolañitos Mine marks an exciting milestone for Endeavour as we continue to focus our resources on our core silver assets and strategic growth,” said Dan Dickson, Chief Executive Officer. “We are pleased that Guanajuato Silver is well-positioned to further develop Bolañitos, and we look forward to the continued success of both companies as we advance sustainable mining in the region.”