Filed Pursuant to General Instruction II.L of
Form F-10
File No. 333- 272755
PROSPECTUS SUPPLEMENT
TO THE SHORT FORM BASE SHELF PROSPECTUS
DATED JUNE 16, 2023
| New Issue | December 18,
2023 |
ENDEAVOUR SILVER CORP.
Up to U.S.$60,000,000
Common Shares
This Prospectus Supplement, together with the accompanying Prospectus,
qualifies the distribution (the “Offering”) of common shares (each, an “Offered Share”) of Endeavour
Silver Corp. (“Endeavour” or the “Company”) having an aggregate offering price of up to U.S.$60,000,000.
Endeavour has entered into a sales agreement dated December 18, 2023 (the “Sales Agreement”) with BMO Capital
Markets Corp. (the lead agent), TD Securities (USA) LLC, CIBC World Markets Inc., Raymond James (USA) Ltd., B. Riley Securities,
Inc., H.C. Wainwright & Co., LLC, A.G.P./Alliance Global Partners and Stifel Nicolaus Canada Inc. (each an “Agent”
and, collectively, the “Agents”) pursuant to which Endeavour may distribute Offered Shares from time to time through
the Agents, as agents or as principals for the distribution of the Offered Shares, in accordance with the terms of the Sales Agreement.
See “Plan of Distribution”.
The
outstanding common shares of the Company (the “Common Shares”) are listed for trading on the Toronto Stock Exchange
(“TSX”) under the symbol “EDR” and on the New York Stock Exchange (“NYSE”) under the
symbol “EXK”. On December 15, 2023, the last trading day before the date of this Prospectus
Supplement, the closing trading price of the Common Shares on the TSX was $2.75 per Common Share and the closing trading price
of the Common Shares on the NYSE was U.S.$2.06 per Common Share. The Company has applied to the TSX and NYSE
for the listing of the Offered Shares offered hereunder and such listing is subject to the approval of the TSX and NYSE in accordance
with its applicable listing requirements.
Sales of Offered Shares, if any, under this Prospectus
Supplement and the accompanying Prospectus are anticipated to be made in transactions that are deemed to be “at-the-market distributions”
as defined in National Instrument 44-102 - Shelf Distributions (“NI 44-102”), including
sales made directly on the NYSE or any other recognized marketplace upon which the Common Shares are listed or quoted or where the Common
Shares are traded in the United States (“Marketplace”). No Offered Shares will be offered or sold in Canada on the
TSX or other trading markets in Canada. The Offered Shares will be distributed at the market prices prevailing at the time of the
sale. As a result, prices may vary as between purchasers and during the period of distribution. The Offering is being made in the United
States under the terms of a registration statement on Form F-10 (the “Registration Statement”) filed with the
United States Securities and Exchange Commission (the “SEC”) under the United States Securities Act of 1933, as amended
(“U.S. Securities Act”). There is no minimum amount of funds that must be raised under this Offering. This means
that the issuer could complete this Offering after raising only a small proportion of the offering amount set out above. See “Plan
of Distribution”.
Endeavour will pay the Agents compensation, or
allow a discount, for their services in acting as agents or in connection with the sale of Offered Shares pursuant to the terms of the
Sales Agreement of 2% of the gross sales price per Offered Share sold. See “Plan of Distribution” for a description of compensation
payable to the Agents.
No Agent under the Offering, and no person or
company acting jointly or in concert with an Agent, may, in connection with the Offering, enter into any transaction that is intended
to stabilize or maintain the market price of the Common Shares, including selling an aggregate number of Offered Shares that would result
in the Agent creating an over-allocation position in the Common Shares.
The purchase of Offered Shares is subject to
certain risks that should be considered carefully by prospective purchasers. See “Risk Factors” in the Prospectus Supplement
and the accompanying Prospectus and the risk factors in the Company’s documents which are incorporated by reference herein for a
description of risks involved in an investment in Offered Shares.
This Offering is made by a Canadian issuer
that is permitted under a multi-jurisdictional disclosure system (“MJDS”) adopted by the United States and Canada to prepare
this Prospectus Supplement and the accompanying Prospectus in accordance with Canadian disclosure requirements. Prospective investors
should be aware that such requirements are different from those applicable to issuers in the United States. Financial statements incorporated
herein by reference have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by
the International Accounting Standards Board (“IASB”), and may not be comparable to financial statements of United States
companies.
Prospective investors should be aware that
the acquisition, holding or disposition of the Common Shares may have tax consequences. Such consequences for investors who are resident
in, or citizens of, the United States may not be described fully herein. Prospective investors should read the tax discussion contained
in this Prospectus Supplement under the heading “Certain U.S. Federal Income Tax Considerations” and should consult their
own tax advisor with respect to their own particular circumstances.
The enforcement by investors of civil liabilities
under the United States federal securities laws may be affected adversely by the fact that the Company is existing under and governed
by the laws of the province of British Columbia and the federal laws of Canada, that some or all of the Company’s officers and directors
are residents of Canada, that some or all of the experts named in the Registration Statement may be residents of Canada, and that a substantial
portion of the Company’s assets and the assets of the officers and directors of the Company are located outside the United States.
NEITHER THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION NOR ANY STATE SECURITIES REGULATOR HAS APPROVED OR DISAPPROVED OF THE SECURITIES OFFERED HEREBY OR DETERMINED IF THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.
The Company’s head office is located at
1130-609 Granville Street, Vancouver, British Columbia V7Y 1G5 and its registered office is located at 19th Floor, 885 West
Georgia Street, Vancouver, British Columbia V6C 3H4.
TABLE OF CONTENTS
Prospectus Supplement
IMPORTANT
NOTICE ABOUT INFORMATION IN THIS PROSPECTUS SUPPLEMENT
This document is in two parts. The first part
is this Prospectus Supplement, which describes the specific terms of this Offering and also adds to and updates information contained
in the accompanying Prospectus and the documents incorporated by reference herein and therein. The second part is the accompanying Prospectus,
which provides more general information. If the description of the Common Shares varies between this Prospectus Supplement and the accompanying
Prospectus, investors should rely on the information in this Prospectus Supplement. Before you invest, you should carefully read this
Prospectus Supplement, the accompanying Prospectus, all information incorporated by reference herein and therein, as well as the additional
information described under “Where You Can Find Additional Information” in this Prospectus Supplement. These documents contain
information you should consider when making your investment decision. This Prospectus Supplement may add, update or change information
contained in the accompanying Prospectus or any of the documents incorporated by reference herein or therein. To the extent that any statement
made in this Prospectus Supplement is inconsistent with statements made in the accompanying Prospectus or any documents incorporated by
reference herein or therein filed prior to the date of this Prospectus Supplement, the statements made in this Prospectus Supplement will
be deemed to modify or supersede those made in the accompanying Prospectus and such documents incorporated by reference.
You should rely only on the information contained
or incorporated by reference in this Prospectus Supplement and the accompanying Prospectus. The Company has not, and the Agents have not,
authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information,
you should not rely on it. The Company is offering to sell, and seeking offers to buy, Offered Shares only in jurisdictions where offers
and sales are permitted. The distribution of this Prospectus Supplement and the Offering in certain jurisdictions may be restricted by
law. You should assume that the information contained in this Prospectus Supplement and the accompanying Prospectus, as well as information
previously filed with the SEC and with the securities regulatory authority in each of the provinces of Canada, that is incorporated by
reference herein and in the accompanying Prospectus, is accurate only as of its respective date. The Company’s business, financial
condition, results of operations and prospects may have changed since those dates.
This Prospectus Supplement does not constitute,
and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy, any securities offered by this Prospectus
Supplement by any person in any jurisdiction in which it is unlawful for such person to make such an offer or solicitation.
This Prospectus Supplement is deemed to be incorporated
by reference into the accompanying Prospectus solely for the purposes of this Offering. Other documents are also incorporated or deemed
to be incorporated by reference into this Prospectus Supplement and into the accompanying Prospectus. See “Documents Incorporated
by Reference”.
The address of the Company's website is www.edrsilver.com.
Information contained on the Company's website does not form part of this Prospectus Supplement nor is it incorporated by reference herein.
Prospective investors should rely only on the information contained or incorporated by reference in this Prospectus Supplement and the
accompanying Prospectus. The Company has not authorized any person to provide different information.
Unless the context otherwise requires, references
in this Prospectus Supplement and the accompanying Prospectus to “Endeavour” or the “Company” refer to Endeavour
Silver Corp. and include each of its subsidiaries as the context requires.
Currency
Presentation and Exchange Rate Information
Unless stated otherwise or as the context otherwise
requires, references in this Prospectus Supplement and the accompanying Prospectus to “$” or “Cdn.$” are to Canadian
dollars and references to “U.S. dollars” or “U.S.$” are to United States dollars.
Except as otherwise noted in the AIF (as defined
under “Documents Incorporated by Reference”) and the Company’s financial statements and related management’s discussion
and analysis that are incorporated by reference into this Prospectus Supplement and the accompanying Prospectus (see “Documents
Incorporated by Reference”), the financial information contained in such documents is expressed in United States dollars.
The high, low, average and closing rates for the
United States dollar in terms of Canadian dollars for each of the financial periods of the Company ended September 30, 2023, December 31, 2022
and December 31, 2021, as quoted by the Bank of Canada, were as follows:
| | |
Nine months ended
September 30, 2023
(Cdn.$) | | |
Year ended
December 31, 2022
(Cdn.$) | | |
Year ended
December 31, 2021
(Cdn.$) | |
| High | |
| 1.3807 | | |
| 1.3856 | | |
| 1.2942 | |
| Low | |
| 1.3128 | | |
| 1.2451 | | |
| 1.2040 | |
| Average | |
| 1.3457 | | |
| 1.3011 | | |
| 1.2535 | |
| Closing | |
| 1.3520 | | |
| 1.3544 | | |
| 1.2678 | |
On December 15, 2023, the exchange rate
for the United States dollar in terms of Canadian dollars, as quoted by the Bank of Canada, was U.S.$1.00 = Cdn.$1.3378.
Cautionary
Note Regarding Forward-Looking Statements
This Prospectus Supplement and the accompanying
Prospectus, and the documents incorporated by reference herein and therein, contain “forward-looking information” within the
meaning of applicable Canadian securities legislation and “forward-looking statements” within the meaning of applicable U.S.
securities legislation. Please see “Cautionary Note Regarding Forward-Looking Statements” in the accompanying Prospectus which
identifies forward-looking statements and sets out the assumptions upon which they are based and the risk factors to which they are subject.
See also “Risk Factors” in this Prospectus Supplement.
Cautionary
Note to United States Investors
The Company is permitted under a MJDS adopted
by the United States and Canada to prepare this Prospectus Supplement and the accompanying Prospectus in accordance with Canadian disclosure
requirements, which are different from United States disclosure requirements. The Company prepares its annual financial statements, certain
of which are incorporated by reference herein, in accordance with IFRS as issued by the IASB, and our interim financial statements, certain
of which are incorporated by reference herein, in accordance with IFRS as issued by the IASB as applicable to interim financial reporting,
and they therefore may not be comparable to financial statements of United States companies.
The Company is subject to the reporting requirements
of the applicable Canadian securities laws and, as a result, reports the mineral reserves and resources of the projects it has an interest
in according to Canadian standards. Canadian reporting requirements for disclosure of mineral properties are governed by National Instrument 43-101
- Standards of Disclosure for Mineral Projects (“NI 43-101”). NI 43-101 is a rule developed by the Canadian Securities
Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning
mineral projects. These standards differ from the requirements of the SEC that are applicable to domestic United States reporting companies
under subpart 1300 of Regulation S-K (“S-K 1300”) under the United States Securities Exchange Act of 1934,
as amended (the “U.S. Exchange Act”). As an issuer that prepares and files its reports with the SEC pursuant to MJDS,
the Company is not subject to the requirements of S-K 1300. Any mineral reserves and mineral resources reported by the Company in
accordance with NI 43-101 may not qualify as such under or may differ from those prepared in accordance with S-K 1300. Accordingly,
information included or incorporated by reference in this Prospectus Supplement and the accompanying Prospectus concerning descriptions
of mineralization and estimates of mineral reserves and resources under Canadian standards may not be comparable to similar information
made public by United States companies subject to the reporting and disclosure requirements of S-K 1300.
SCIENTIFIC
and Technical Information
Except
as otherwise disclosed herein, scientific and technical information relating to the Parral project, Bolañitos Mine and Guanaceví
Mine (as described under “Recent Developments” below) has been reviewed and approved by Dale Mah, P.Geo., Vice President Corporate
Development of the Company, a “qualified person” within the meaning of NI 43-101.
Documents
Incorporated by Reference
The following documents of the Company, filed
with the securities regulatory authorities in the jurisdictions in Canada in which the Company is a reporting issuer and filed with, or
furnished to, the SEC, are specifically incorporated by reference into, and form an integral part of, this Prospectus Supplement:
| 8. | material change report dated and filed June 30, 2023 with respect to a sales agreement dated June 27, 2023 (the “June 2023 Sales Agreement”) with BMO Capital Markets Corp., CIBC World Markets Inc., TD Securities (USA) LLC, H.C. Wainwright & Co., LLC, B. Riley Securities, Inc., Raymond James (USA) Ltd. and National Bank of Canada Financial, Inc. (collectively, the “June 2023 Agents”) pursuant to which the Company sold through the June 2023 Agents common shares of the Company for aggregate gross proceeds of U.S.$57.9 million (the “June 2023 ATM Offering”); and |
All documents of the type referred to in section 11.1
of Form 44-101F1 of National Instrument 44-101—Short Form Prospectus Distributions filed by the Company with
the securities commissions or similar regulatory authorities in the applicable provinces of Canada after the date of this Prospectus Supplement,
and before the termination of the distribution under the Offering, are also deemed to be incorporated by reference into this Prospectus
Supplement and the accompanying Prospectus.
If the Company disseminates a news release in
respect of previously undisclosed information that, in the Company’s determination, constitutes a “material fact" (as
such term is defined under applicable Canadian securities laws), the Company will identify such news release as a “designated news
release” for the purposes of this Prospectus Supplement and the accompanying Prospectus in writing on the face page of the
version of such news release that the Company files on SEDAR+ at www.sedarplus.ca (each such news release, a “Designated News
Release”), and each such Designated News Release shall be deemed to be incorporated by reference into this Prospectus Supplement
and the accompanying Prospectus for the purposes of the Offering.
In addition, to the extent that any document or
information incorporated by reference into this Prospectus Supplement is included in any report that is filed with or furnished to the
SEC after the date of this Prospectus Supplement and prior to the date that all Offered Shares offered hereunder are sold or the Offering
is otherwise terminated, such document or information shall be deemed to be incorporated by reference as an exhibit to the Registration
Statement of which this Prospectus Supplement forms a part (in the case of documents or information deemed furnished on Form 6-K,
only to the extent specifically stated therein).
Any statement contained in this Prospectus
Supplement or in the accompanying Prospectus or in a document incorporated or deemed to be incorporated by reference herein or therein
is not deemed to be included or incorporated by reference to the extent that any such statement is modified or superseded by a statement
contained herein or in any other subsequently filed document that also is or is deemed to be incorporated by reference herein or in the
accompanying Prospectus. Any such modifying or superseding statement need not state that it has modified or superseded a prior statement
or include any other information set forth in the document that it modifies or supersedes. The making of a modifying or superseding statement
shall not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation,
an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make
a statement not misleading in light of the circumstances in which it was made. Any statement so modified or superseded shall not be considered
in its unmodified or superseded form to constitute part of this Prospectus Supplement or the accompanying Prospectus; rather only such
statement as so modified or superseded shall be considered to constitute part of this Prospectus Supplement or the accompanying Prospectus.
Upon a new annual information form or annual report
on Form 20-F or Form 40-F and the related audited annual consolidated financial statements together with the auditor’s
report thereon and management’s discussion and analysis related thereto being filed by us with the applicable securities regulatory
authorities during the currency of this Prospectus Supplement or the accompanying Prospectus, the previous annual information form or
annual report on Form 20-F or Form 40-F, the previous audited annual consolidated financial statements and all interim financial
statements, annual and quarterly management’s discussion and analyses, material change reports and business acquisition reports
filed by us prior to the commencement of our financial year in which the new annual information form or annual report on Form 20-F
or Form 40-F was filed, no longer shall be deemed to be incorporated by reference herein and therein for the purpose of future offers
and sales of our Common Shares hereunder.
Copies of the documents incorporated herein
by reference may be obtained on request without charge from the Chief Financial Officer of Endeavour at 1130-609 Granville Street,
Vancouver, British Columbia V7Y 1G5, telephone: (604) 685-9775, and are also available electronically at www.sedarplus.ca and www.sec.gov.
DOCUMENTS
FILED AS PART OF THE REGISTRATION STATEMENT
In addition to the documents specified in this
Prospectus Supplement under “Documents Incorporated by Reference”, the Sales Agreement described in this Prospectus Supplement
and the consents of KPMG LLP and the experts referred to and listed under “Interests of Experts” in the AIF and in this
Prospectus Supplement have been or will be filed with the SEC and do or will form part of the Registration Statement of which this Prospectus
Supplement forms a part.
PROSPECTUS
SUPPLEMENT SUMMARY
This summary highlights certain information
about the Company, this Offering and selected information contained elsewhere in or incorporated by reference into this Prospectus Supplement
and the accompanying Prospectus. This summary is not complete and does not contain all of the information that you should consider before
deciding whether to invest in the Offered Shares. For a more complete understanding of the Company and this Offering, the Company encourages
you to read and consider carefully the more detailed information in this Prospectus Supplement and the accompanying Prospectus, including
the information incorporated by reference in this Prospectus Supplement and the accompanying Prospectus, and in particular, the information
under the heading “Risk Factors” in this Prospectus Supplement. All capitalized terms used in this summary refer to definitions
contained elsewhere in this Prospectus Supplement or the accompanying Prospectus, as applicable.
Overview
The Company is a Canadian mineral company engaged
in the evaluation, acquisition, exploration, development and exploitation of precious metal properties in Mexico, Chile and the USA. The
Company has two producing silver-gold mines in Mexico: the Guanaceví Mine in Durango acquired in 2004 and the Bolañitos
Mine in Guanajuato acquired in 2007. In addition to operating these two mines, the Company is advancing one development and two advanced
exploration projects in Mexico: the Terronera property in Jalisco acquired in 2010 that is in the construction and development stage,
the prospective Pitarrilla property in Durango acquired in 2022 and the Parral properties in Chihuahua acquired in 2016.
The Company has exploration projects in Chile
that have been advanced over the past several years and in 2021, the Company acquired the Bruner Property, located in Nye County, Nevada,
USA which is an exploration project that includes mineral claims, mining rights, property assets, water rights, and government authorizations
and permits.
Further information regarding the business of
the Company, its operations and its mineral properties can be found in the AIF and the materials incorporated by reference into this Prospectus
Supplement and the accompanying Prospectus. See “Documents Incorporated by Reference”.
THE
OFFERING
| Offered Shares |
|
Common Shares having an aggregate offering price of up to U.S.$60,000,000. |
| Manner of offering |
|
Sales of Offered Shares, if any, under this Prospectus Supplement and the accompanying Prospectus may be made in transactions that are deemed to be “at-the-market distributions” as defined in NI 44-102, including sales made directly on the NYSE or other existing trading markets for the Common Shares in the United States. No Offered Shares will be offered or sold in Canada on the TSX or other trading markets in Canada. The Offered Shares will be distributed at market prices prevailing at the time of the sale of such Offered Shares. See “Plan of Distribution”. |
| Use of proceeds |
|
The principal business objectives that the Company expects to accomplish using the net proceeds from the Offering, together with the Company’s current cash resources, are to fund the construction and development of the Terronera Project, to advance the evaluation and development of the Pitarrilla and Parral properties, to assess potential development stage mineral properties for acquisition, to fund the potential acquisition of other development stage mineral properties, for continued exploration on the Company’s various existing mineral properties, and to add to the Company’s working capital. See “Use of Proceeds”. |
| Risk factors |
|
See “Risk Factors” in this Prospectus Supplement and the accompanying Prospectus and the risk factors discussed or referred to in the documents which are incorporated by reference into this Prospectus Supplement and the accompanying Prospectus for a discussion of factors that should be read and consider before investing in the Offered Shares. |
| Tax considerations |
|
Purchasing Offered Shares may have tax consequences. This Prospectus Supplement and the accompanying Prospectus may not describe these consequences fully for all investors. Investors should read the tax discussion in this Prospectus Supplement and the accompanying Prospectus and consult with their own tax advisor. See “Certain U.S. Federal Income Tax Considerations” in this Prospectus Supplement. |
| Listing symbol |
|
The Common Shares are listed for trading on the TSX under the symbol “EDR” and the NYSE under the symbol “EXK”. |
RECEnt
DEVELOPMENTS
June 2023 ATM Offering
On June 27, 2023, the Company entered into
the June 2023 Sales Agreement with the June 2023 Agents in connection with the June 2023 ATM Offering. Under the terms
of the June 2023 ATM Offering, the Company, from time to time, sold common stock having an aggregate offering value of up to U.S.$60
million on the New York Stock Exchange. The Company determined, at its sole discretion, the timing and number of shares to be sold under
the June 2023 ATM Offering.
The Company issued 23,428,572 common shares under
the June 2023 ATM Offering at an average price of U.S.$2.47 per share for gross proceeds of U.S.$57.9million, less commission of U.S.$1.2
million. The June 2023 ATM Offering was completed on December 13, 2023. During the year ended December 31, 2023, the Company also recognized
U.S.$0.6 million of additional transaction costs related to the June 2023 ATM Offering as share issuance costs, which have been presented
net of share capital.
Terronera Project Construction Update
Overall construction progress at the Company’s
Terronera Project in Jalisco state, Mexico is 38% complete. Project commitments total U.S.$160 million, which is 69% of the U.S.$230.4
million capital budget. The project remains on track and on budget for initial production in Q4 2024.
During Q3 2023, Portal 1 mine yard
excavation reached the design elevation of 1,475 metres (m) allowing mine development to advance on four fronts: Portal 1,
Portal 2, and Portal 4 (incline & decline). Over 1,300 m of underground development have been completed through to Q3 2023. As
planned, mining advance rates increased as Portals 2 and 4 passed through the fault zone and ground conditions improved.
Cozamin Sale
On August 30, 2023, the Company’s wholly-owned
subsidiary, Minera Plata Adelante, S.A. de C.V., sold its interest in the 1% Cozamin royalty (the “Royalty”) to Gold
Royalty Corp. for total consideration of U.S.$7,500,000, payable in cash. The Royalty applies to two concessions (Calicanto and Vicochea)
on Capstone’s Cozamin copper-silver mine, located 3.6 kilometres north-northwest of Zacatecas City in the state of Zacatecas, Mexico.
The Company obtained the Royalty through a concession
division agreement signed in 2017 on seven wholly-owned concessions which were acquired for U.S.$445,000. The Cozamin Mine, a copper-silver
mine owned and operated by Capstone Copper in Zacatecas, Mexico, is located on two of the seven Concessions. The sale transaction includes
an option granted to Gold Royalty Corp. to purchase any additional royalties which may be granted on the five remaining concessions under
the 2017 concession division agreement.
Debt Facility
On October 6, 2023 the Company’s wholly-owned
subsidiary, Terronera, executed the Terronera Credit Agreement for a senior secured debt facility for up to U.S.$120 million (the “Debt
Facility”) with ING Capital LLC (together with ING Bank N.V.) and Société Générale acting as Joint
Lead Arrangers. Proceeds from the Debt Facility will be used towards construction of the underground mine and mill at the Company’s
Terronera Project in Jalisco state, Mexico.
Key terms of the Debt Facility include the following:
| · | Facility amount – Up to U.S.$120 million principal amount on senior secured debt. |
| · | Term – 8.5 years, including a 2-year grace period during the construction phase. Cash sweep
will be applied to 35% of excess cash flow after debt service from completion onwards until U.S.$35 million of loan principal has been
prepaid. |
| · | Interest rate – US Secured Overnight Financing Rate (“SOFR”) + 4.50% per
annum prior to completion (SOFR + 3.75% per annum upon completion). |
| · | Repayment and maturity – Principal payments are payable in quarterly installments commencing
in the fourth quarter of 2025. |
| · | Gold hedge – Prior to initial drawdown, Terronera is required to enter into a hedging program
for 68,000 ounces of gold over the initial two operating years prior to initial drawdown. No hedging requirements apply to the silver
production. |
| · | Foreign exchange hedge – Prior to initial drawdown, Terronera is required to enter into a
hedging program for managing exposure to the Mexican Peso during construction. The program requires approximately 75% of the remaining
capital expenditure incurred in Mexican Pesos be hedged. Prior to initial production, a hedging program is required for managing exposure
to the Mexican Peso during operations. Under this program 50% of the projected operating costs incurred in Mexican Pesos are hedged prior
to completion. Thereafter, the foreign exchange protection program for operations will rise to 70% of the projected operating costs incurred
in Mexican pesos. |
| · | Project cost overrun funding – Cost overrun funding is required in the form of cash, letter
of credit issued by a Canadian financial institution or a combination of both for up to U.S.$48 million. |
| · | Financial Covenants – The Debt Facility is subject to certain customary conditions precedent
and debt servicing covenants. The Debt Facility is secured through corporate guarantees from Endeavour and certain Endeavour subsidiaries
and a first ranking security interest over the Terronera Project. |
Guanaceví Exploration Update
The Company’s 2023 drill program at Guanaceví
has continued to focus on the El Curso - Alondra properties, establishing lateral and vertical extensions of the mineralized zone towards
Porvenir Cuatro and continued testing the deep northwest extension of the Porvenir Dos orebody. Drilling continues along the prolific
Santa Cruz vein in two areas, with the objective to convert, expand, and discover new resources.
Within the El Curso concessions, 18 new holes
have been completed totalling 3,162 metres. The program targeted two areas. Underground drilling along strike in the Porvenir Cuatro area
targeted the southeast edge of and outside mineral resources. Underground drilling to the north end of El Curso, located proximal to existing
development, returned very high intercepts. Most of the holes had grades and widths that are above the resource cut-off assumptions and
are expected to convert to reserves.
Near Porvenir Dos, on the Alondra concessions,
19 new holes have been completed totalling 5,854 metres. The deposit is extending down dip on the northwest edge of the mineralized horizon.
Endeavour plans to continue drilling towards the northwest to test continuity with the objective of accessing ore from development advancing
between the El Curso and Porvenir Dos areas that would eventually be connected.
Parral Exploration Update
The Company’s drill program over the past
year at its Parral project in the State of Chihuahua, Mexico revealed positive high grade results, showing the potential for resource
expansion at depth and along strike in the San Patricio area. Since September 2022, the Company has drilled over 6,595 metres in 22 holes
from surface, with the aim to expand mineralized zones at San Patricio and test regional targets that were previously identified.
Recent drilling in the San Patricio vein system
has demonstrated the continuation of mineralization to the south and down dip, which is expected to grow the estimated resources at Parral.
The most recent and deepest hole, SPT-53 intersected 198 grams per tonne (“gpt”) gold, 0.3 gpt silver, 1.98% lead and
7.3% zinc for 536 gpt silver equivalent1 over 3.9 metres. All drilling was outside of the published mineral resource estimate
and results are expected to grow the resource estimate. In addition to more drilling, the Company plans further metallurgical testing
and the commencement of an economic assessment of the Parral project.
Bolañitos Exploration Update
The Company’s 2023 exploration program at
the Bolañitos Mine in Guanajuato state, Mexico focused primarily on 2 areas, drilling the El Puertecito and Fortuna veins. At both
areas, surface drilling intersected high-grade gold and silver mineralization near historic workings and provide opportunities to increase
resources, replace reserves and extend mine life.
At El Puertecito, since the beginning of the year,
32 new holes were completed totalling 5,833 metres. El Puertecito is a new area south of Bolañitos, situated 300 metres northeast
from Endeavour Silver’s historic Golondrinas Mine. New high-grade vein mineralization has now been delineated over 400 metres in
length to a depth of 120 metres. The structure remains open at depth and to the southeast.
At Fortuna, 13 holes were completed totalling
2,922 metres. Fortuna is located south of Bolañitos situated 200 metres from current accesses to the Lana vein of Endeavour Silver’s
Lucero mine. Two structures have been delineated to define a mineralized zone of 250 metres in length and 100 metres to depth, open to
the southeast.
Consolidated
Capitalization
Other than the sale of 15,245,745 Common Shares
pursuant to the June 2023 ATM Offering for gross proceeds of U.S.$34.5 million, there has been no material change in the share and
loan capital of the Company, on a consolidated basis, since September 30, 2023 (the period end of the most recent financial statements
of the Company filed and incorporated by reference in this Prospectus Supplement). As of the date of this Prospectus Supplement, there
were 214,933,871 Common Shares issued and outstanding, as well as 4,828,007 Common Shares reserved for issuance pursuant to outstanding
stock options, deferred share units and performance share units.
Use
of Proceeds
The net proceeds from the Offering cannot be determined
due to the nature of the distribution. The net proceeds of any given distribution of Offered Shares through the Agents in an “at-the-market
distribution” will represent the gross proceeds after deducting the applicable compensation payable to the Agents under the Sales
Agreement and the expenses of the distribution.
The principal business objectives that the Company
expects to accomplish using the net proceeds from the Offering, together with the Company’s current cash resources, are to fund
the construction and development of the Terronera Project, to advance the evaluation and development of the Pitarrilla and Parral properties,
to assess potential development stage mineral properties for acquisition, to fund the potential acquisition of other development stage
mineral properties, for continued exploration on the Company’s existing mineral properties, and to add to the Company’s working
capital.
1 Silver equivalents are calculated
using a silver price of $23 per troy ounce, lead price of $0.90 per pound, zinc price of $1.20 per pound and gold price of $1,840 per
ounce and using the following formula:
Ag (gpt) + [Au (gpt) X Au Price / Ag Price] + [Pb
(%) X 2204.6 X Pb Price / Ag Price X 31.1]
+ [Zn (%) X 2204.6 X Zn Price / Ag Price X 31.1]
Plan
of Distribution
The Company entered into the Sales Agreement
with the Agents under which it may issue and sell from time to time Offered Shares through the Agents having an aggregate offering
price of up to U.S.$60,000,000. Sales of Offered Shares, if any, will be made in transactions that are deemed to be
“at-the-market distributions” as defined in NI 44-102, including sales made directly on the NYSE or other existing
trading markets for the Common Shares in the United States. No Offered Shares will be offered or sold in Canada on the TSX or
other trading markets in Canada. If expressly authorized by the Company, the Agents may also sell Offered Shares in privately
negotiated transactions in the United States.
The Agents will offer the Offered Shares subject
to the terms and conditions of the Sales Agreement on a daily basis or as otherwise agreed upon by the Company and the Agents. The Company
will designate the maximum amount of Offered Shares to be sold pursuant to any single placement instruction to an Agent, determined in
the sole discretion of the Company (the “Designated Agent”). Subject to the terms and conditions of the Sales Agreement,
the Designated Agent will use its commercially reasonable efforts to sell on the Company’s behalf all of the Offered Shares requested
to be sold by the Company. The Company may instruct the Designated Agent not to sell Offered Shares if the sales cannot be effected at
or above the price designated by the Company in any such instruction.
Either the Company or the Designated Agent may
suspend the offering of the Offered Shares being made through the Agents under the Sales Agreement upon proper notice to the other party.
The Company has the right, by giving written notice as specified in the Sales Agreement, to terminate the Sales Agreement in its sole
discretion at any time. Each of the Agents has the right, by giving written notice as specified in the Sales Agreement, to terminate the
Sales Agreement in its sole discretion with respect to itself, but not with respect to any other Agent, at any time.
Endeavour will pay the Agents compensation, or
allow a discount, for their services in acting as agents or in the sale of Offered Shares pursuant to the terms of the Sales Agreement
of 2% of the gross sales price per Offered Share sold. The remaining sales proceeds, after deducting any expenses payable by the Company
and any transaction or filing fees imposed by any governmental, regulatory, or self-regulatory organization in connection with the sales,
will equal the net proceeds to the Company for the sale of such Offered Shares.
The Designed Agent will provide written confirmation
to the Company following the close of trading on the NYSE on each day in which Offered Shares are sold through the Agents as agents under
the Sales Agreement. Each confirmation will include the number of Offered Shares sold on that day, the volume-weighted average price of
the Offered Shares sold on the NYSE, the percentage of daily trading volume and net proceeds to the Company.
Settlement for sales of Offered Shares will occur,
unless the parties agree otherwise, on the second trading day following the date on which any sales were made in return for payment of
the net proceeds to the Company. There is no arrangement for funds to be received in an escrow, trust or similar arrangement. Sales of
Offered Shares as contemplated in this Prospectus Supplement will be settled through the facilities of The Depository Trust Company or
by such other means as the Company and the Designated Agent may agree upon.
In connection with the sales of the Offered Shares
on the Company’s behalf, the Agents may be deemed to be an “underwriter” within the meaning of the U.S. Securities
Act, and the compensation paid to the Agents may be deemed to be underwriting commissions or discounts. The Company has agreed in the
Sales Agreement to provide indemnification and contribution to the Agents against certain liabilities, including liabilities under the
U.S. Securities Act. In addition, the Company has agreed, under certain circumstances, to reimburse the reasonable fees and disbursements
of the Agents’ legal counsel in connection with this offering up to a maximum of U.S.$100,000, plus an additional U.S.$20,000 for
each subsequent fiscal quarter, pursuant to the terms of the Sales Agreement. Further, the Company has agreed to reimburse Agents’
legal counsel fees and expenses relating to clearance of the Offering with the Financial Industry Regulatory Authority, Inc., in
an amount up to U.S.$10,000. No Agent under the Offering, and no person or company acting jointly or in concert with an Agent, may, in
connection with the Offering, enter into any transaction that is intended to stabilize or maintain the market price of the Common Shares,
including selling an aggregate number of Offered Shares that would result in the Agent creating an over-allocation position in the Common
Shares.
The total expenses of the Offering payable by
the Company, excluding commissions payable to the Agents under the Sales Agreement, are estimated to be approximately U.S.$250,000.
Stifel Nicolaus Canada Inc. is not a U.S. registered
broker-dealer under Section 15 of the Exchange Act; therefore, to the extent that it intends to effect any sales of the securities in
the United States, it will do so through Stifel, Nicolaus & Company, Incorporated, its affiliated U.S. registered broker-dealer, in
accordance with the applicable U.S. securities laws and regulations, and as permitted by Financial Industry Regulatory Authority regulations.
The Offering pursuant to the Sales Agreement will
terminate upon the earlier of (i) the issuance and sale of all of the Offered Shares subject to the Sales Agreement, (ii) July 16,
2025, and (iii) the termination of the Sales Agreement as permitted therein.
Each of the Agents and its affiliates may in the
future provide various investment banking, commercial banking and other financial services for the Company and its affiliates, for which
services they may in the future receive customary fees. To the extent required by Regulation M, the Agents will not engage in any
market making activities involving the Common Shares while the Offering is ongoing under this Prospectus Supplement.
Purchaser’s rights and remedies under applicable
Canadian securities legislation against an Agent in an at-the-market distribution such as the Offering will not be affected by the Agent’s
decision to effect the distribution directly or through a selling agent.
The Company has applied to the
TSX and NYSE for the listing of the Offered Shares offered hereunder and such listing is subject to the approval of the TSX and NYSE in
accordance with its applicable listing requirements.
Description
of Securities Being Distributed
Common Shares
The
Company is authorized to issue an unlimited number of Common Shares, without par value. As at December 15, 2023, there are 214,933,871
Common Shares issued and outstanding.
Each Common Share ranks equally with all other
Common Shares with respect to distribution of assets upon dissolution, liquidation or winding-up of the Company and payment of dividends.
The holders of Common Shares are entitled to one vote for each share on all matters to be voted on by such holders and are entitled to
receive pro rata such dividends as may be declared by the board of directors of the Company. The holders of Common Shares have no
pre-emptive or conversion rights. The rights attaching to the Common Shares can only be modified by the affirmative vote of at least two-thirds
of the votes cast at a meeting of shareholders called for that purpose.
Prior
Sales
During the 12 months prior to the date of this
Prospectus Supplement, the Company issued Common Shares pursuant to the June 2023 ATM Offering under the June 2023 Sales Agreement
with the June 2023 Agents. Under the terms of the June 2023 Sales Agreement, the Company had the ability to sell, from time
to time, Common Shares having an aggregate offering value of up to U.S.$60.0 million on the NYSE at prevailing market prices. The Company
determined, at its sole discretion, the timing and number of Common Shares to be sold under the June 2023 ATM Offering. The Company
sold under the June 2023 ATM Offering a total of 23,428,572 Common Shares at prices ranging from U.S.$2.08 to U.S.$3.03 per share
(with the volume weighted average price being U.S.$2.47 per share) for gross proceeds of U.S.$57.9 million
The following table sets out details of additional
Common Shares issued by the Company during the 12 months prior to the date of this Prospectus Supplement.
| Date | |
Number of
Common Shares | | |
Price per
Common Share
(Cdn.$) | | |
Reason for issuance |
| March 1, 2023 | |
| 350,829 | | |
| 4.07 | | |
Performance share units redemption |
| March 8, 2023 | |
| 411,836 | | |
| 4.07 | | |
Performance share units redemption |
| March 10, 2023 | |
| 377,000 | | |
| 2.14 | | |
Stock option exercise |
| Date | |
Number of
Common Shares | | |
Price per
Common Share
(Cdn.$) | | |
Reason for issuance |
| March 15, 2023 | |
| 257,000 | | |
| 3.23 | | |
Stock option exercise |
| March 15, 2023 | |
| 29,000 | | |
| 2.14 | | |
Stock option exercise |
| March 17, 2023 | |
| 206,000 | | |
| 3.80 | | |
Stock option exercise |
| April 11, 2023 | |
| 2,000 | | |
| 3.80 | | |
Stock option exercise |
| April 11, 2023 | |
| 2,400 | | |
| 4.12 | | |
Stock option exercise |
| April 21, 2023 | |
| 31,500 | | |
| 3.80 | | |
Stock option exercise |
| April 24, 2023 | |
| 193,000 | | |
| 3.80 | | |
Stock option exercise |
The following table sets out details of all securities
convertible or exercisable into Common Shares that were issued or granted by the Company during the 12 months prior to the date of
this Prospectus.
| Date | |
Type of Security Issued | |
Number of Common Shares
issuable upon exercise or
conversion | | |
Exercise or conversion
price per Common
Share
(Cdn.$) | |
| December 31, 2022 | |
Deferred share units | |
| 3,481 | | |
| 4.49 | |
| March 7, 2023 | |
Deferred share units | |
| 199,338 | | |
| 4.12 | |
| March 7, 2023 | |
Performance share units | |
| 423,000 | (1) | |
| N/A | |
| March 7, 2023 | |
Stock options | |
| 991,000 | | |
| 4.12 | |
| March 31, 2023 | |
Deferred share units | |
| 4,083 | | |
| 4.90 | |
| June 14, 2023 | |
Performance share units | |
| 48,000 | (1) | |
| N/A | |
| June 14, 2023 | |
Stock options | |
| 88,000 | | |
| 4.08 | |
| June 30, 2023 | |
Deferred share units | |
| 5,816 | | |
| 3.73 | |
| September 28, 2023 | |
Deferred share units | |
| 7,283 | | |
| 3.30 | |
| (1) | Under the Company’s Equity-Based Share Unit Plan, vested performance share units (“PSUs”)
are redeemable, at the election of the Board of Directors of the Company in its discretion, for Common Shares, a cash payment equal to
the market value of a Common Share as of the redemption date, or a combination of cash and Common Shares. 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 Company’s total shareholder return peer group. |
Trading
Price and Volume
The Common Shares are listed for trading on the
TSX under the symbol “EDR” and on the NYSE under the symbol “EXK”.
The following table sets forth the trading price
range and volumes of the Common Shares for the periods indicated as reported by the TSX, the Canadian marketplace on which the greatest
volume of trading or quotation for the Common Shares generally occurs.
| Month | |
High
(Cdn.$) | | |
Low
(Cdn.$) | | |
Volume | |
| December 2022 | |
| 4.80 | | |
| 4.13 | | |
| 8,842,136 | |
| January 2023 | |
| 5.18 | | |
| 4.47 | | |
| 8,553,508 | |
| February 2023 | |
| 4.85 | | |
| 3.89 | | |
| 6,000,052 | |
| March 2023 | |
| 5.37 | | |
| 3.87 | | |
| 5,115,917 | |
| April 2023 | |
| 6.08 | | |
| 5.15 | | |
| 6,509,620 | |
| May 2023 | |
| 5.91 | | |
| 4.16 | | |
| 6,265,391 | |
| June 2023 | |
| 4.46 | | |
| 3.63 | | |
| 3,604,833 | |
| July 2023 | |
| 5.11 | | |
| 3.68 | | |
| 5,351,491 | |
| August 2023 | |
| 4.60 | | |
| 3.72 | | |
| 4,090,244 | |
| September 2023 | |
| 3.95 | | |
| 3.11 | | |
| 3,194,826 | |
| October 2023 | |
| 3.59 | | |
| 2.93 | | |
| 4,799,419 | |
| November 2023 | |
| 3.14 | | |
| 2.53 | | |
| 9,204,358 | |
| December 2023 (to December 15) | |
| 3.06 | | |
| 2.57 | | |
| 8,014,857 | |
The following table sets forth the trading price
range and volumes of the Common Shares for the periods indicated as reported by the NYSE. The data includes Common Shares sold through
certain quotation systems in the United States.
| Month | |
High
(U.S.$) | | |
Low
(U.S.$) | | |
Volume | |
| December 2022 | |
| 3.58 | | |
| 3.03 | | |
| 48,486,958 | |
| January 2023 | |
| 3.89 | | |
| 3.27 | | |
| 42,777,247 | |
| February 2023 | |
| 3.65 | | |
| 2.86 | | |
| 37,607,064 | |
| March 2023 | |
| 3.97 | | |
| 2.79 | | |
| 37,079,441 | |
| April 2023 | |
| 4.55 | | |
| 3.82 | | |
| 59,911,270 | |
| May 2023 | |
| 4.36 | | |
| 3.05 | | |
| 49,699,277 | |
| June 2023 (to June 26) | |
| 3.32 | | |
| 2.75 | | |
| 33,648,403 | |
| June 2023 | |
| 3.32 | | |
| 2.73 | | |
| 41,496,333 | |
| July 2023 | |
| 3.89 | | |
| 2.75 | | |
| 50,398,011 | |
| August 2023 | |
| 3.44 | | |
| 2.74 | | |
| 41,029,540 | |
| September 2023 | |
| 2.92 | | |
| 2.30 | | |
| 38,547,770 | |
| October 2023 | |
| 2.64 | | |
| 2.11 | | |
| 51,695,218 | |
| November 2023 | |
| 2.305 | | |
| 1.83 | | |
| 76,560,157 | |
| December 2023 (to December 15) | |
| 2.26 | | |
| 1.90 | | |
| 75,143,497 | |
Risk
Factors
Investing in the Offered Shares is speculative
and involves a high degree of risk due to the nature of Endeavour’s business and the present stage of exploration and development
of our mineral properties. The following risk factors, as well as risks currently unknown to Endeavour, could materially adversely affect
our future business, operations and financial condition and could cause them to differ materially from the estimates described in this
Prospectus Supplement, the accompanying Prospectus or the documents incorporated by reference herein or therein, each of which could cause
purchasers of Offered Shares to lose part or all of their investment.
Risks relating to the Company
In addition to the other information contained
in this Prospectus Supplement, the accompanying Prospectus and the documents incorporated by reference herein and therein, prospective
investors should carefully consider the factors set out under “Risk Factors” in the AIF, Annual MD&A and Interim MD&A
(as well as any future such documents incorporated by reference herein) in evaluating Endeavour and its business before making an investment
in the Offered Shares.
Changes in Mexican mining laws
Recent changes to mining laws in Mexico may affect
the Company’s ability to renew its concessions, explore and obtain new concessions, obtain permits to conduct mining operations
or pledge its concessions as security for loan facilities to develop its mineral projects. These changes may have a material adverse effect
on the Company’s operations, development activities and future exploration in Mexico.
Risks relating to the Common Shares and the Offering
Future sales or issuances of equity or equity-linked securities
could decrease the value of any existing Common Shares, dilute investors’ voting power, reduce our earnings per share and make future
sales of the Company’s equity securities more difficult
Endeavour may sell or issue additional equity
or equity-linked securities in offerings to finance our operations, exploration, development, acquisitions or other projects. Endeavour
cannot predict the size of future sales and issuances of equity or equity-linked securities or the effect, if any, that future sales and
issuances of equity or equity-linked securities will have on the market price of the Common Shares.
Sales or issuances of a substantial number of
equity or equity-linked securities, or the perception that such sales could occur, may adversely affect prevailing market prices for the
Common Shares. With any additional sale or issuance of equity securities (or the conversion or exercise of equity-linked securities),
investors will suffer dilution of their voting power and may experience dilution in the Company’s earnings per share. Sales of Common
Shares by shareholders might also make it more difficult for the Company to sell equity securities at a time and price that it deems appropriate.
The Common Share price has experienced volatility and may be
subject to fluctuation in the future based on market conditions
The market prices for the securities of mining
companies, including the Company’s, have historically been highly volatile. The market has from time to time experienced significant
price and volume fluctuations that are unrelated to the operating performance of any particular company. In addition, because of the nature
of the Company’s business, certain factors such as the Company’s announcements and the public’s reaction to such announcements,
the Company’s operating performance and the performance of competitors and other similar companies, fluctuations in the market prices
of the Company’s resources, government regulations, changes in earnings estimates or recommendations by research analysts who track
the Company’s securities or securities of other companies in the resource sector, general market conditions, announcements relating
to litigation, the arrival or departure of key personnel and the factors listed under the heading “Cautionary Note Regarding Forward-Looking
Statements” can have an adverse impact on the market price of the Common Shares.
Any negative change in the public’s perception
of Endeavour’s prospects could cause the price of the Company’s securities, including the price of the Common Shares, to decrease
dramatically. Furthermore, any negative change in the public’s perception of the prospects of mining companies in general could
depress the price of the Company’s securities, including the price of the Common Shares, regardless of the Company’s results.
Following declines in the market price of a company’s securities, securities class-action litigation is often instituted. Litigation
of this type, if instituted, could result in substantial costs and a diversion of our management’s attention and resources.
Endeavour will have broad discretion in the use of the net proceeds
of the Offering and may use them in ways other than as described herein
Endeavour will have broad discretion over the
use of the net proceeds from the Offering. Because of the number and variability of factors that will determine our use of such proceeds,
our ultimate use might vary substantially from our planned use. You may not agree with how Endeavour allocates or spends the net proceeds
from the Offering. Endeavour may pursue acquisitions, collaborations or other opportunities that do not result in an increase in the market
value of the Company’s securities, including the market value of the Common Shares, and may increase our losses.
The Company does not intend to pay dividends in the foreseeable
future
The Company has never declared or paid any dividends
on the Common Shares. Endeavour intends, for the foreseeable future, to retain its future earnings, if any, to finance its exploration
activities and further development and the expansion of the business. The payment of future dividends, if any, will be reviewed periodically
by the Board of Directors of Endeavour and will depend upon, among other things, conditions then existing including our earnings, financial
condition, cash on hand, financial requirements to fund our exploration activities, development and growth, and other factors that the
Board may consider appropriate in the circumstances.
Proposed legislation in the U.S. Congress, including changes
in U.S. tax law, and the Inflation Reduction Act of 2022 may adversely impact the Company and the value of the Offered Shares
Changes to U.S. tax laws (which changes may have
retroactive application) could adversely affect the Company or holders of the Offered Shares. In recent years, many changes to U.S. federal
income tax laws have been proposed and made, and additional changes to U.S. federal income tax laws are likely to continue to occur in
the future.
The U.S. Congress is currently considering numerous
items of legislation which may be enacted prospectively or with retroactive effect, which legislation could adversely impact the Company’s
financial performance and the value of the Offered Shares. Additionally, states in which the Company operates or owns assets may impose
new or increased taxes. If enacted, most of the proposals would be effective for the current or later years. The proposed legislation
remains subject to change, and its impact on the Company and purchasers of Offered Shares is uncertain.
In addition, the Inflation Reduction Act of 2022
includes provisions that impact the U.S. federal income taxation of corporations. Among other items, this legislation includes provisions
that impose a minimum tax on the book income of certain large corporations and an excise tax on certain corporate stock repurchases that
are imposed on the corporation repurchasing such stock. It is unclear how this legislation will be implemented by the U.S. Department
of the Treasury and the Company cannot predict how this legislation or any future changes in tax laws might affect the Company or purchasers
of the Offered Shares.
Certain
U.S. Federal Income Tax Considerations
The following is a general summary of certain
material U.S. federal income tax considerations applicable to a U.S. Holder (as defined below) arising from and relating to the acquisition,
ownership, and disposition of Offered Shares acquired pursuant to this Offering.
This summary is for general information purposes
only and does not purport to be a complete analysis or listing of all potential U.S. federal income tax considerations that may apply
to a U.S. Holder arising from and relating to the acquisition, ownership, and disposition of Offered Shares. In addition, this summary
does not take into account the individual facts and circumstances of any particular U.S. Holder that may affect the U.S. federal income
tax consequences to such U.S. Holder, including, without limitation, specific tax consequences to a U.S. Holder under an applicable income
tax treaty. Accordingly, this summary is not intended to be, and should not be construed as, legal or U.S. federal income tax advice with
respect to any U.S. Holder. This summary does not address the U.S. federal net investment income, U.S. federal alternative minimum,
U.S. federal estate and gift, U.S. state and local, and non-U.S. tax consequences to U.S. Holders of the acquisition, ownership, and disposition
of Offered Shares. In addition, except as specifically set forth below, this summary does not discuss applicable tax reporting requirements.
Each prospective U.S. Holder should consult its own tax advisor regarding the U.S. federal income, U.S. federal net investment income,
U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local, and non-U.S. tax consequences relating to the acquisition,
ownership, and disposition of Offered Shares.
No ruling from the Internal Revenue Service (the
“IRS”) has been requested, or will be obtained, regarding the U.S. federal income tax consequences of the acquisition,
ownership, and disposition of Offered Shares. This summary is not binding on the IRS, and the IRS is not precluded from taking a position
that is different from, and contrary to, the positions taken in this summary. In addition, because the authorities on which this summary
is based are subject to various interpretations, the IRS and the U.S. courts could disagree with one or more of the conclusions described
in this summary.
Scope of this Summary
Authorities
This summary is based on the Internal Revenue
Code of 1986, as amended (the “Code”), Treasury Regulations (whether final, temporary, or proposed), published rulings
of the IRS, published administrative positions of the IRS, the Convention Between Canada and the United States of America with Respect
to Taxes on Income and on Capital, signed September 26, 1980, as amended (the “Canada-U.S. Tax Convention”), and
U.S. court decisions that are applicable, and, in each case, as in effect and available, as of the date of this document. Any of
the authorities on which this summary is based could be changed in a material and adverse manner at any time, and any such change could
be applied retroactively. This summary does not discuss the potential effects, whether adverse or beneficial, of any proposed legislation
that, if enacted, could be applied on a retroactive or prospective basis.
U.S. Holders
For purposes of this summary, the term “U.S. Holder”
means a beneficial owner of Offered Shares acquired pursuant to this Offering that is for U.S. federal income tax purposes:
| · | an individual who is a citizen or resident of the United States; |
| · | a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) organized
under the laws of the United States, any state thereof or the District of Columbia; |
| · | an estate whose income is subject to U.S. federal income taxation regardless of its source; or |
| · | a trust that (1) is subject to the primary supervision of a court within the United States and the
control of one or more U.S. persons for all substantial decisions or (2) has a valid election in effect under applicable Treasury
Regulations to be treated as a U.S. person. |
Non-U.S. Holders
For purposes of this summary, a “non-U.S.
Holder” is a beneficial owner of Offered Shares acquired pursuant to this Offering that is not a U.S. Holder and is not a partnership
for U.S. federal income tax purposes. This summary does not address the U.S. federal income tax consequences to non-U.S. Holders arising
from and relating to the acquisition, ownership and disposition of Offered Shares acquired pursuant to this Offering. Accordingly, a non-U.S.
Holder should consult its own tax advisor regarding the U.S. federal, U.S. federal net investment income, U.S. federal alternative minimum,
U.S. federal estate and gift, U.S. state and local, and non-U.S. tax consequences (including the potential application and operation of
any income tax treaties) relating to the acquisition, ownership and disposition of Offered Shares acquired pursuant to this Offering.
U.S. Holders Subject to Special U.S. Federal Income Tax Rules Not
Addressed
This summary does not address the U.S. federal
income tax considerations applicable to U.S. Holders that are subject to special provisions under the Code, including, but not limited
to, U.S. Holders that: (a) are tax-exempt organizations, qualified retirement plans, individual retirement accounts, or other
tax-deferred accounts; (b) are financial institutions, underwriters, insurance companies, real estate investment trusts, or regulated
investment companies; (c) are broker-dealers, dealers, or traders in securities or currencies that elect to apply a mark-to-market
accounting method; (d) have a “functional currency” other than the U.S. dollar; (e) own Offered Shares as part
of a straddle, hedging transaction, conversion transaction, constructive sale, or other integrated transaction; (f) acquire Offered
Shares in connection with the exercise of employee stock options or otherwise as compensation for services; (g) hold Offered Shares
other than as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment purposes);
(h) are partnerships and other pass-through entities (and investors in such partnerships and entities); (i) are S corporations
(and shareholders thereof); (j) are subject to special tax accounting rules; (k) own, have owned or will own (directly, indirectly,
or by attribution) 10% or more of the total combined voting power or value of the outstanding shares of the Company; (l) are U.S.
expatriates or former long-term residents of the U.S.; (m) hold Offered Shares in connection with a trade or business, permanent
establishment, or fixed base outside the United States; or (n) are subject to the alternative minimum tax. U.S. Holders that
are subject to special provisions under the Code, including, but not limited to, U.S. Holders described immediately above, should
consult their own tax advisor regarding the U.S. federal income, U.S. federal net investment income, U.S. federal alternative
minimum, U.S. federal estate and gift, U.S. state and local, and non-U.S. tax consequences relating to the acquisition,
ownership and disposition of Offered Shares.
If an entity or arrangement that is classified
as a partnership (or other “pass-through” entity) for U.S. federal income tax purposes holds Offered Shares, the U.S. federal
income tax consequences to such entity and the partners (or other owners) of such entity generally will depend on the activities of the
entity and the status of such partners (or owners). This summary does not address the tax consequences to any such partner (or owner).
Partners (or other owners) of entities or arrangements that are classified as partnerships or as “pass-through” entities for
U.S. federal income tax purposes should consult their own tax advisors regarding the U.S. federal income tax consequences arising
from and relating to the acquisition, ownership, and disposition of Offered Shares.
Ownership and Disposition of Offered Shares
The following discussion is subject in its entirety
to the rules described below under the heading “Passive Foreign Investment Company Rules”.
Taxation of Distributions
A U.S. Holder that receives a distribution,
including a constructive distribution, with respect to an Offered Share will be required to include the amount of such distribution in
gross income as a dividend (without reduction for any foreign income tax withheld from such distribution) to the extent of the current
or accumulated “earnings and profits” of the Company, as computed for U.S. federal income tax purposes. To the extent
that a distribution exceeds the current and accumulated “earnings and profits” of the Company, such distribution will be treated
first as a tax-free return of capital to the extent of a U.S. Holder’s tax basis in the Offered Shares and thereafter as gain
from the sale or exchange of such Offered Shares (see “Sale or Other Taxable Disposition of Offered Shares” below). However,
the Company may not maintain the calculations of its earnings and profits in accordance with U.S. federal income tax principles,
and each U.S. Holder should therefore assume that any distribution by the Company with respect to the Offered Shares will constitute
dividend income. Dividends received on Offered Shares by corporate U.S. Holders generally will not be eligible for the “dividends
received deduction”. Subject to applicable limitations and provided the Company is eligible for the benefits of the Canada-U.S. Tax
Convention or the Offered Shares are readily tradable on a United States securities market, dividends paid by the Company to non-corporate
U.S. Holders, including individuals, generally will be eligible for the preferential tax rates applicable to long-term capital gains
for dividends, provided certain holding period and other conditions are satisfied, including that the Company not be classified as a PFIC
(as defined below) in the tax year of distribution or in the preceding tax year. The dividend rules are complex, and each U.S. Holder
should consult its own tax advisor regarding the application of such rules.
Sale or Other Taxable Disposition of Offered Shares
A U.S. Holder will recognize gain or loss
on the sale or other taxable disposition of Offered Shares in an amount equal to the difference, if any, between (a) the amount of
cash plus the fair market value of any property received and (b) such U.S. Holder’s tax basis in such Offered Shares sold
or otherwise disposed of. Any such gain or loss generally will be capital gain or loss, which will be long-term capital gain or loss if,
at the time of the sale or other disposition, such Offered Shares are held for more than one year.
Preferential tax rates apply to long-term capital
gains of a U.S. Holder that is an individual, estate, or trust. There are currently no preferential tax rates for long-term capital
gains of a U.S. Holder that is a corporation. Deductions for capital losses are subject to significant limitations under the Code.
Passive Foreign Investment Company Rules
If the Company were to constitute a “passive
foreign investment company” (“PFIC”) for any year during a U.S. Holder’s holding period, then
certain potentially adverse rules would affect the U.S. federal income tax consequences to a U.S. Holder resulting from
the acquisition, ownership and disposition of Offered Shares. The Company believes that it was not a PFIC for the prior tax year, and
based on current business plans and financial expectations, the Company expects that it will not be a PFIC for the current tax year and
expects that it will not be a PFIC for the foreseeable future. No opinion of legal counsel or ruling from the IRS concerning the status
of the Company as a PFIC has been obtained or is currently planned to be requested. However, PFIC classification is fundamentally factual
in nature, generally cannot be determined until the close of the tax year in question, and is determined annually. In addition, the analysis
depends, in part, on the application of complex U.S. federal income tax rules, which are subject to differing interpretations. Consequently,
there can be no assurance that the Company has never been, is not, and will not become a PFIC for any tax year during which U.S. Holders
hold Offered Shares.
In any year in which the Company is classified
as a PFIC, a U.S. Holder will be required to file an annual report with the IRS containing such information as Treasury Regulations
and/or other IRS guidance may require. In addition to penalties, a failure to satisfy such reporting requirements may result in an extension
of the time period during which the IRS can assess a tax. U.S. Holders should consult their own tax advisors regarding the requirements
of filing such information returns under these rules, including the requirement to file an IRS Form 8621 annually.
The Company generally will be a PFIC if, after
the application of certain “look-through” rules with respect to subsidiaries in which the Company holds at least 25%
of the value of such subsidiary, for a tax year, (a) 75% or more of the gross income of the Company for such tax year is passive
income (the “income test”) or (b) 50% or more of the value of the Company’s assets either produce passive income
or are held for the production of passive income (the “asset test”), based on the quarterly average of the fair market value
of such assets. “Gross income” generally includes all sales revenues less the cost of goods sold, plus income from investments
and from incidental or outside operations or sources, and “passive income” generally includes, for example, dividends, interest,
certain rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions. In
addition, for purposes of the PFIC income test and asset test described above and assuming certain other requirements are met, “passive
income” does not include certain interest, dividends, rents or royalties that are received or accrued by the Company from a “related
person” (as defined in Section 954(d)(3) of the Code), to the extent such items are properly allocable to the income of
such related person that is not passive income and certain other requirements are satisfied. Active business gains arising from the sale
of commodities generally are excluded from passive income if substantially all of a foreign corporation’s commodities are stock
in trade or inventory, depreciable property used in a trade or business or supplies regularly used or consumed in the ordinary course
of its trade or business, and certain other requirements are satisfied.
Under certain attribution rules, if the Company
is a PFIC, U.S. Holders will be deemed to own their proportionate share of any subsidiary of the Company which is also a PFIC (a “Subsidiary
PFIC”), and will be subject to U.S. federal income tax on (i) a distribution on the shares of a Subsidiary PFIC or (ii) a
disposition of shares of a Subsidiary PFIC, both as if the holder directly held the shares of such Subsidiary PFIC.
If the Company were a PFIC in any tax year during
which a U.S. Holder held Offered Shares, such holder generally would be subject to special rules with respect to “excess
distributions” made by the Company on the Offered Shares and with respect to gain from the disposition of Offered Shares. An “excess
distribution” generally is defined as the excess of distributions with respect to the Offered Shares received by a U.S. Holder
in any tax year over 125% of the average annual distributions such U.S. Holder has received from the Company during the shorter of
the three preceding tax years, or such U.S. Holder’s holding period for the Offered Shares. Generally, a U.S. Holder would
be required to allocate any excess distribution or gain from the disposition of the Offered Shares ratably over its holding period for
the Offered Shares. Such amounts allocated to the year of the disposition or excess distribution would be taxed as ordinary income, and
amounts allocated to prior tax years would be taxed as ordinary income at the highest tax rate in effect for each such year and an interest
charge at a rate applicable to underpayments of tax would apply.
While there are U.S. federal income tax elections
that sometimes can be made to mitigate these adverse tax consequences (including the “QEF Election” under Section 1295
of the Code and the “Mark-to-Market Election” under Section 1296 of the Code), such elections are available in limited
circumstances and must be made in a timely manner.
U.S. Holders should be aware that, for each
tax year, if any, that the Company is a PFIC, the Company can provide no assurances that it will satisfy the record keeping requirements
of a PFIC, or that it will make available to U.S. Holders the information such U.S. Holders require to make a QEF Election
with respect to the Company or any Subsidiary PFIC.
Certain additional adverse rules may apply
with respect to a U.S. Holder if the Company is a PFIC, regardless of whether the U.S. Holder makes a QEF Election. These rules include
special rules that apply to the amount of foreign tax credit that a U.S. Holder may claim on a distribution from a PFIC. U.S. Holders
should consult their own tax advisors regarding the potential application of the PFIC rules to the ownership and disposition of Offered
Shares, and the availability of certain U.S. tax elections under the PFIC rules.
Additional Considerations
Receipt of Foreign Currency
The amount of any distribution paid to a U.S. Holder
in foreign currency, or on the sale, exchange or other taxable disposition of Offered Shares, generally will be equal to the U.S. dollar
value of such foreign currency based on the exchange rate applicable on the date of receipt (regardless of whether such foreign currency
is converted into U.S. dollars at that time). A U.S. Holder will have a basis in the foreign currency equal to its U.S. dollar
value on the date of receipt. Any U.S. Holder who converts or otherwise disposes of the foreign currency after the date of receipt
may have a foreign currency exchange gain or loss that would be treated as ordinary income or loss, and generally will be U.S. source
income or loss for foreign tax credit purposes. Different rules apply to U.S. Holders who use the accrual method of tax accounting.
Each U.S. Holder should consult its own U.S. tax advisor regarding the U.S. federal income tax consequences of receiving, owning,
and disposing of foreign currency.
Foreign Tax Credit
Dividends paid on the Offered Shares will be treated
as foreign-source income, and generally will be treated as “passive category income” or “general category income”
for U.S. foreign tax credit purposes. Any gain or loss recognized on a sale or other disposition of Offered Shares generally will be United
States source gain or loss. Certain U.S. Holders that are eligible for the benefits of the Canada-U.S. Tax Convention may elect to
treat such gain or loss as Canadian source gain or loss for U.S. foreign tax credit purposes. The Code applies various complex limitations
on the amount of foreign taxes that may be claimed as a credit by U.S. taxpayers. In addition, Treasury Regulations that apply to foreign
taxes paid or accrued (the “Foreign Tax Credit Regulations”) impose additional requirements for Canadian withholding
taxes to be eligible for a foreign tax credit, and there can be no assurance that those requirements will be satisfied. The Treasury Department
has recently released guidance temporarily pausing the application of certain of the Foreign Tax Credit Regulations.
Subject to the PFIC rules and the Foreign
Tax Credit Regulations, each as discussed above, a U.S. Holder that pays (whether directly or through withholding) Canadian income
tax with respect to dividends paid on the Offered Shares generally will be entitled, at the election of such U.S. Holder, to receive
either a deduction or a credit for such Canadian income tax paid. Generally, a credit will reduce a U.S. Holder’s U.S. federal
income tax liability on a dollar-for-dollar basis, whereas a deduction will reduce a U.S. Holder’s income that is subject to
U.S. federal income tax. This election is made on a year-by-year basis and applies to all foreign taxes paid (whether directly or
through withholding) by a U.S. Holder during a year. The foreign tax credit rules are complex and involve the application of
rules that depend on a U.S. Holder’s particular circumstances. Accordingly, each U.S. Holder should consult its own
U.S. tax advisor regarding the foreign tax credit rules.
Backup Withholding and Information Reporting
Under U.S. federal income tax law and Treasury
Regulations, certain categories of U.S. Holders must file information returns with respect to their investment in, or involvement
in, a foreign corporation. For example, U.S. return disclosure obligations (and related penalties) are imposed on individuals who
are U.S. Holders that hold certain specified foreign financial assets in excess of certain threshold amounts. The definition of specified
foreign financial assets includes not only financial accounts maintained in foreign financial institutions, but also, unless held in accounts
maintained by a financial institution, any stock or security issued by a non-U.S. person, any financial instrument or contract held
for investment that has an issuer or counterparty other than a U.S. person and any interest in a foreign entity. U.S. Holders
may be subject to these reporting requirements unless their Offered Shares are held in an account at certain financial institutions. Penalties
for failure to file certain of these information returns are substantial. U.S. Holders should consult their own tax advisors regarding
the requirements of filing information returns, including the requirement to file an IRS Form 8938.
Payments made within the U.S. or by a U.S. payor
or U.S. middleman, of dividends on, and proceeds arising from the sale or other taxable disposition of, Offered Shares will generally
be subject to information reporting and backup withholding tax, (currently at the rate of 24%), if a U.S. Holder (a) fails to
furnish such U.S. Holder’s correct U.S. taxpayer identification number (generally on Form W-9), (b) furnishes
an incorrect U.S. taxpayer identification number, (c) is notified by the IRS that such U.S. Holder has previously failed
to properly report items subject to backup withholding tax, or (d) fails to certify, under penalty of perjury, that such U.S. Holder
has furnished its correct U.S. taxpayer identification number and that the IRS has not notified such U.S. Holder that it is
subject to backup withholding tax. However, certain exempt persons generally are excluded from these information reporting and backup
withholding rules. Backup withholding is not an additional tax. Any amounts withheld under the U.S. backup withholding tax rules generally
will be allowed as a credit against a U.S. Holder’s U.S. federal income tax liability, if any, or will be refunded, if
such U.S. Holder furnishes required information to the IRS in a timely manner.
The discussion of reporting requirements set forth
above is not intended to constitute a complete description of all reporting requirements that may apply to a U.S. Holder. A failure
to satisfy certain reporting requirements may result in an extension of the time period during which the IRS can assess a tax, and under
certain circumstances, such an extension may apply to assessments of amounts unrelated to any unsatisfied reporting requirement. Each
U.S. Holder should consult its own tax advisor regarding the information reporting and backup withholding rules.
THE ABOVE SUMMARY IS NOT INTENDED TO CONSTITUTE
A COMPLETE ANALYSIS OF ALL TAX CONSIDERATIONS APPLICABLE TO U.S. HOLDERS WITH RESPECT TO THE ACQUISITION, OWNERSHIP, AND DISPOSITION OF
OFFERED SHARES. U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX CONSIDERATIONS APPLICABLE TO THEM IN THEIR OWN PARTICULAR
CIRCUMSTANCES.
Interests
of Experts
Allan Armitage, Ph.D., P. Geo., is the author
of the technical report titled “Mineral Resource Estimate for the Pitarrilla Ag-Pb-Zn Project, Durango State, Mexico” dated
March 15, 2023 with an effective date of October 6, 2022.
Dale Mah, P. Geo.; Richard A. Schwering, P.G.,
SME-RM; and Donald P. Gray, P.E., SME-RM, prepared the technical reports titled “NI 43-101 Technical Report: Updated Mineral Resource
and Reserve Estimates for the Bolañitos Project, Guanajuato State, Mexico” dated December 14, 2022 with an effective
date of November 9, 2022 and “NI 43-101 Technical Report: Updated Mineral Resource and Reserve Estimates for the Guanaceví
Project, Durango State, Mexico” dated December 14, 2022 with an effective date of November 5, 2022.
Henry Kim, P. Geo.; William Bagnell, P.Eng.; James
Tod, P.Eng.; Alan Drake, P.L. Eng.; Kirk Hanson, P.E.; Paul Ivancie, P.G.; Dale Mah, P. Geo.; and Humberto Preciado, P.E., prepared the
2023 Terronera Technical Report.
Dale Mah, P. Geo., Vice President Corporate Development
of the Company, is the qualified person who reviewed and approved the technical information relating to Parral project, Bolañitos
Mine and Guanaceví Mine under “Recent Developments”.
To the best of the Company’s knowledge,
other than Mr. Mah and Mr. Gray, the other experts named above did not have any registered or beneficial interest, direct or
indirect, in any securities or other property of the Company when the experts prepared their respective reports or afterwards, nor will
they receive any such interest. As of the date of this Prospectus Supplement, Mr. Mah holds, options to acquire 194,200 common shares
of the Company and 78,000 performance share units (each convertible into common shares of the Company), and Mr. Gray holds options
to acquire 393,000 common shares of the Company and 174,000 performance share units (each convertible into common shares of the Company).
KPMG LLP is the auditor of the Company and has
confirmed with respect to the Company that it is independent within the meaning of the relevant rules and related interpretations
prescribed by the relevant professional bodies in Canada and any applicable legislation or regulations under all relevant United States
professional and regulatory standards.
Material
Contracts
The following are the contracts material to the
Company that have been entered into since the AIF:
| · | the Sales Agreement in connection with the Offering; |
| · | the June 2023 Sales Agreement in connection with the June 2023 ATM Offering; and |
| · | the Terronera Credit Agreement. |
Legal
Matters
Certain legal matters relating to the Offering
will be passed upon on behalf of the Company by Koffman Kalef LLP, as to Canadian legal matters, and Dorsey & Whitney LLP,
as to U.S. legal matters, and on behalf of the Agents by Skadden, Arps, Slate, Meagher & Flom LLP, as to U.S. legal matters.
Auditor,
Transfer Agent and Registrar
The auditor of the Company is KPMG LLP, Chartered
Professional Accountants, of 777 Dunsmuir Street, Vancouver, British Columbia, V7Y 1K3. KPMG LLP has reported to the Company
that they are independent of the Company within the meaning of the relevant rules and related interpretations prescribed by the relevant
professional bodies in Canada and any applicable legislation or regulations and also that they are independent accountants with respect
to the Company under all relevant United States professional and regulatory standards.
The transfer agent and registrar for the Common
Shares is Computershare Investor Services Inc. at its principal offices in Vancouver, British Columbia and Toronto, Ontario.
Where
You Can Find Additional Information
The Company has filed with the SEC the Registration
Statement on Form F-10 relating to certain of its securities, including the Common Shares. This Prospectus Supplement and the accompanying
Prospectus, which constitute a part of the Registration Statement, do not contain all of the information contained in the Registration
Statement, certain items of which are contained in the exhibits to the Registration Statement as permitted by the rules and regulations
of the SEC. Statements included or incorporated by reference in this Prospectus Supplement and the accompanying Prospectus about the contents
of any contract, agreement or other documents referred to are not necessarily complete, and in each instance you should refer to the exhibits
for a more complete description of the matter involved. Each such statement is qualified in its entirety by such reference.
The Company is subject to the information requirements
of the U.S. Exchange Act and applicable Canadian securities legislation and, in accordance therewith, files reports and other information
with the SEC and with the securities regulators in Canada. Under MJDS, documents and other information that the Company files with the
SEC may be prepared in accordance with the disclosure requirements of Canada, which are different from those of the United States. As
a foreign private issuer within the meaning of rules under the U.S. Exchange Act, the Company is exempt from the rules under
the U.S. Exchange Act prescribing the furnishing and content of proxy statements, and the Company’s officers, directors and
principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the U.S. Exchange
Act. In addition, the Company is not required to publish financial statements as promptly as United States companies.
You may read and download some of the documents
that the Company has filed with the SEC’s EDGAR system at www.sec.gov. You may read and download any public document that the Company
has filed with the Canadian securities regulatory authorities under the Company’s profile on the SEDAR+ website at www.sedarplus.ca.
SHORT FORM BASE SHELF PROSPECTUS
ENDEAVOUR SILVER CORP.
Common Shares
Warrants
Subscription Receipts
Debt Securities
Units
Endeavour Silver Corp. (the “Company”
or “Endeavour”) may offer and issue from time to time common shares of the Company (“Common Shares”),
warrants (“Warrants”) to purchase Common Shares or other Securities (as defined below), subscription receipts (“Subscription
Receipts”) which entitle the holder to receive upon satisfaction of certain release conditions, and for no additional consideration,
Common Shares or Warrants of the Company or any combination thereof, debt securities (“Debt Securities”) or units (“Units”)
consisting of two or more of the foregoing (all of the foregoing, collectively, the “Securities” and individually,
a “Security”) or any combination thereof during the 25-month period that this short form base shelf prospectus (the
“Prospectus”), including any amendments thereto, remains effective. Securities may be offered separately or together,
in amounts, at prices and on terms to be determined based on market conditions at the time of sale and set forth in an accompanying shelf
prospectus supplement (a “Prospectus Supplement”) to this Prospectus. Securities may be also offered and issued in
consideration for the acquisition of other businesses, assets or securities by the Company or a subsidiary of the Company. The consideration
for any such acquisition may consist of any of the Securities separately, a combination of Securities or any combination of, among other
things, Securities, cash and assumption of liabilities.
This offering is made by a Canadian issuer
that is permitted, under a multijurisdictional disclosure system adopted by the United States and Canada (“MJDS”), to prepare
this Prospectus in accordance with Canadian disclosure requirements. Prospective investors in the United States should be aware that such
requirements are different from those of the United States. Financial statements included or incorporated by reference herein have been
prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting
Standards Board (“IASB”) and may not be comparable to financial statements of United States companies.
Prospective investors should be aware that
the acquisition, holding or disposition of the Securities described herein may have tax consequences both in the United States and in
Canada. Such consequences for investors who are resident in, or citizens of, Canada or the United States may not be described fully herein.
Prospective investors should read the tax discussion contained in the applicable Prospectus Supplement with respect to a particular offering
of Securities.
The
enforcement by investors of civil liabilities under the United States federal securities laws may be affected adversely by the fact that
the Company is existing under and governed by the laws of the province of British Columbia and the federal laws of Canada,
that some or all of the Company’s officers and directors are residents of Canada, that some or all of the experts named in the registration
statement of which this Prospectus forms a part are not residents of the United States, and that a substantial portion of the assets of
the Company and said officers, directors and experts are located outside the United States.
NEITHER THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION NOR ANY STATE OR CANADIAN SECURITIES COMMISSION OR REGULATOR HAS APPROVED OR DISAPPROVED THE SECURITIES OFFERED HEREBY OR DETERMINED
IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.
The Securities may be sold from time to time in
one or more transactions at a fixed price or prices which may be changed or at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices, including sales in transactions that are deemed to be “at-the-market
distributions” (each an “ATM Distribution”) as defined in National Instrument 44-102 – Shelf Distributions
(“NI 44-102”), including sales made directly on the Toronto Stock Exchange (the “TSX”), the
New York Stock Exchange (the “NYSE”) or other existing trading markets for the Securities, and as set forth in an accompanying
Prospectus Supplement. The prices at which the Securities may be offered and sold may vary as between purchasers and during the period
of distribution. In connection with any offering of Securities, subject to applicable laws and other than an ATM Distribution, unless
otherwise specified in a Prospectus Supplement, the underwriters, dealers or agents, as the case may be, may over-allot or effect transactions
which stabilize, maintain or otherwise affect the market price of the Securities at a level other than those which otherwise might prevail
on the open market. Such transactions may be commenced, interrupted or discontinued at any time. A purchaser who acquires Securities forming
part of the underwriters’, dealers’ or agents’ over-allocation position acquires those securities under this Prospectus
and the Prospectus Supplement relating to the particular offering of Securities, regardless of whether the over-allocation position is
ultimately filled through the exercise of the over-allotment option or secondary market purchases. See “Plan of Distribution”.
This
Prospectus may qualify an ATM Distribution. No underwriter of an ATM Distribution, and no person or company acting jointly or in concert
with an underwriter, may, in connection with the distribution, enter into any transaction that is intended to stabilize or maintain the
market price of the Securities or Securities of the same class as the Securities distributed under the at-the-market prospectus, including
selling an aggregate number or principal amount of Securities that would result in the underwriter creating an over-allocation position
in the Securities. See “Plan of Distribution”.
The specific terms of the Securities with respect
to a particular offering will be set out in the applicable Prospectus Supplement and may include, where applicable: (i) in the case
of Common Shares, the number of Common Shares offered, the issue price, and any other terms specific to the Common Shares being offered;
(ii) in the case of Warrants, the designation, number and terms of the Common Shares or other Securities issuable upon exercise of
the Warrants, any procedures that will result in the adjustment of these numbers, the exercise price, dates and periods of exercise, the
currency in which the Warrants are issued and any other specific terms; (iii) in the case of Subscription Receipts, the designation,
number and terms of the Common Shares or Warrants receivable upon satisfaction of certain release conditions, any procedures that will
result in the adjustment of those numbers, any additional payments to be made to holders of Subscription Receipts upon satisfaction of
the release conditions, the terms of the release conditions, terms governing the escrow of all or a portion of the gross proceeds from
the sale of the Subscription Receipts, terms for the refund of all or a portion of the purchase price for Subscription Receipts in the
event the release conditions are not met and any other specific terms, (iv) in the case of Debt Securities, the specific designation,
the aggregate principal amount, the currency or the currency unit for which the Debt Securities may be purchased, the maturity, the interest
provisions, the authorized denominations, the offering price, whether the Debt Securities are being offered for cash, the covenants, the
events of default, any terms for redemption or retraction, any exchange or conversion rights attached to the Debt Securities, whether
the debt is senior or subordinated to the Company’s other liabilities and obligations, whether the Debt Securities will be secured
by any of the Company’s assets or guaranteed by any other person and any other terms specific to the Debt Securities being offered;
and (v) in the case of Units, the terms of the component Securities and any other specific terms. A Prospectus Supplement may include
specific variable terms pertaining to the Securities that are not within the alternatives and parameters described in this Prospectus.
Where required by statute, regulation or policy, and where Securities are offered in currencies other than Canadian dollars, appropriate
disclosure of foreign exchange rates applicable to such Securities will be included in the Prospectus Supplement describing such Securities.
This Prospectus does not qualify for issuance
Debt Securities, or Securities convertible or exchangeable into Debt Securities, in respect of which the payment of principal and/or interest
may be determined, in whole or in part, by reference to one or more underlying interests, including, for example, an equity or debt security,
or a statistical measure of economic or financial performance (including, but not limited to, any currency, consumer price or mortgage
index, or the price or value of one or more commodities, indices or other items, or any other item or formula, or any combination or basket
of the foregoing items). For greater certainty, this Prospectus may qualify for issuance Debt Securities, or Securities convertible or
exchangeable into Debt Securities, in respect of which the payment of principal and/or interest may be determined, in whole or in part,
by reference to published rates of a central banking authority or one or more financial institutions, such as a prime rate or bankers’
acceptance rate, or to recognized market benchmark interest rates such as CDOR (the Canadian Dollar Offered Rate), SOFR (the Secured Overnight
Finance Rate), EURIBOR (the Euro Interbank Offered Rate) or a U.S. federal funds rate.
As
of the date hereof, the Company has determined that it qualifies as a “well-known seasoned issuer” under the WKSI Blanket
Orders (as defined below). See “Reliance on Exemptions for Well-Known Seasoned Issuers”. All information permitted under applicable
laws, including as permitted under the WKSI Blanket Orders, to be omitted from this Prospectus will be contained in one or more Prospectus
Supplements that will, except in respect of any sales pursuant to an ATM Distribution as contemplated by NI 44-102, be delivered to purchasers
together with this Prospectus, such delivery to be effected in the case of United States purchasers through the filing of such Prospectus
Supplement or Prospectus Supplements with the SEC. Each Prospectus Supplement will be incorporated by reference into this Prospectus for
the purposes of securities legislation as of the date of the Prospectus Supplement and only for the purposes of the distribution of the
Securities to which the Prospectus Supplement pertains. Prospective investors should read this Prospectus and any applicable Prospectus
Supplement carefully before investing in any Securities issued pursuant to this Prospectus. This Prospectus may not be used
to offer or sell Securities without the Prospectus Supplement which includes a description of the method and terms of that offering.
This Prospectus constitutes a public offering
of these Securities only in those jurisdictions where they may be lawfully offered for sale and therein only by persons permitted to sell
such Securities. The Company may offer and sell Securities to or through underwriters or dealers and may offer and sell certain Securities
directly to purchasers or through agents pursuant to exemptions from registration or qualification under applicable securities laws. A
Prospectus Supplement relating to each issue of Securities offered thereby will set forth the names of any underwriters, dealers or agents
involved in the offering and sale of such Securities and will set forth the terms of the offering of such Securities, the method of distribution
of such Securities including, to the extent applicable, the proceeds to the Company and any fees, discounts or any other compensation
payable to underwriters, dealers or agents and any other material terms of the plan of distribution.
The
outstanding Common Shares of the Company are listed for trading on the TSX under the symbol “EDR” and on the NYSE under
the symbol “EXK”. On June 15, 2023, the closing price of the Common Shares on the TSX was $ 3.91 per share and the
closing price of the Common Shares on the NYSE was U.S.$ 2.96 per share. Unless otherwise specified in the applicable Prospectus
Supplement, Securities other than the Common Shares of the Company will not be listed on any securities exchange. There is
currently no market through which Securities, other than the Common Shares, may be sold and purchasers may not be able to resell
such Securities purchased under this Prospectus and the Prospectus Supplement. This may affect the pricing of the Securities, other
than the Common Shares, in the secondary market, the transparency and availability of trading prices, the liquidity of these
Securities and the extent of issuer regulation. See “Risk Factors”.
Prospective investors should be aware that
the acquisition of the Securities described herein may have tax consequences. Such consequences may not be described fully herein or in
any applicable Prospectus Supplement. Prospective investors should read the tax discussion contained in this Prospectus under the heading
“Certain Income Tax Considerations” as well as the tax discussion contained in the applicable Prospectus Supplement with respect
to a particular offering of Securities. Prospective investors should also consult with their own tax advisors with respect to their particular
circumstances.
No underwriter has been involved in the preparation
of this Prospectus or performed any review of the contents of this Prospectus.
Investing
in securities of the Company involves a high degree of risk. You should carefully review the risks outlined in this Prospectus
and in the documents incorporated by reference in this Prospectus and consider such risks in connection with an investment in such securities.
See “Risk Factors”.
The offering of Securities hereunder is subject
to approval of certain legal matters on behalf of the Company by Koffman Kalef LLP, with respect to Canadian legal matters,
and Dorsey & Whitney LLP, with respect to United States legal matters.
The Company’s head office is located at
1130-609 Granville Street, Vancouver, British Columbia V7Y 1G5 and its registered office is located at 19th Floor,
885 West Georgia Street, Vancouver, British Columbia V6C 3H4.
Certain directors of the Company and certain “Qualified
Persons” for the purposes of NI 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”)
reside outside of Canada. The persons named below have appointed the following agent(s) for service of process:
| Name of Person or Company |
Name and Address of Agent |
|
Directors:
Margaret Beck
Ricardo M. Campoy
Amy Jacobsen
Mario Szotlender
|
Endeavour Silver Corp.
1130-609 Granville Street,
Vancouver, British Columbia
Canada V7Y 1G5 |
|
Qualified Persons:
Allan Armitage
Richard A. Schwering
Humberto F. Preciado
Paul Gill Ivancie
Kirk Hanson |
N/A
|
Purchasers are advised that it may not be possible
for investors to enforce judgments obtained in Canada against any person who resides outside of Canada, even if the party has appointed
an agent for service of process.
TABLE OF CONTENTS
_____________________________
You should rely only on the information contained
in or incorporated by reference in this Prospectus or contained in any applicable Prospectus Supplement in connection with an investment
in the Securities. The Company has not authorized anyone to provide you with different information. The Company is not making an offer
of these Securities in any jurisdiction where the offer is not permitted. You should not assume that the information contained in this
Prospectus and any Prospectus Supplement is accurate as of any date other than the date on the front of those documents or that any information
contained in any document incorporated by reference is accurate as of any date other than the date of that document.
Unless the context otherwise requires, references
in this Prospectus and any Prospectus Supplement to “we”, “our”, “us”, “Endeavour” or
the “Company” refer to Endeavour Silver Corp. and each of its material subsidiaries.
Cautionary
Note Regarding Forward-Looking Statements
This Prospectus and the documents incorporated
by reference herein contain forward-looking statements within the meaning of applicable Canadian securities laws and forward-looking
statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking statements
concern the Company’s anticipated results and developments in the Company’s operations in future periods, planned exploration
and development of its properties, plans related to its business and other matters that may occur in the future. These statements relate
to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions
of management.
Statements concerning reserves and mineral resource
estimates may also be deemed to constitute forward-looking statements to the extent that they involve estimates of the mineralization
that will be encountered if the property is developed and, in the case of mineral reserves, such statements reflect the conclusion based
on certain assumptions that the mineral deposit can be economically exploited. Any statements that express or involve discussions with
respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance are not statements
of historical fact and may be forward-looking statements. Forward-looking statements are subject to a variety of known and unknown risks,
uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking
statements, including, without limitation:
| · | risks
relating to precious and base metal price fluctuations; |
| · | fluctuations
in the price of consumed commodities; |
| · | risks
relating to fluctuations in the currency markets (particularly the Mexican peso, Chilean
peso, Canadian dollar and United States dollar); |
| · | the
impact of COVID-19 or future pandemics on the Company’s operations; |
| · | risks
relating to the inherently dangerous activity of mining, including conditions or events beyond
the Company’s control, and operating or technical difficulties in mineral exploration,
development and mining activities; |
| · | uncertainty
in the Company’s ability to fund the development of its mineral properties or the completion
of further exploration programs; |
| · | uncertainty
as to actual capital costs, operating costs, production and economic returns, and uncertainty
that the Company’s development activities will result in profitable mining operations; |
| · | risks
relating to the adequacy or availability of infrastructure to support current or future mining
developments; |
| · | risks
relating to the Company’s reserves and mineral resource figures being estimates based
on interpretations and assumptions which may result in less mineral production under actual
conditions than is currently estimated and to diminishing quantities or grades of mineral
reserves as properties are mined; |
| · | uncertainty
as to the market price of silver or gold; |
| · | volatility
of global financial markets and the Company’s share price; |
| · | risks
relating to changes in governmental regulations, changes to mining, environmental, tax and
labour laws, among others, and the availability of licenses and permits and securing and
maintaining mineral property concessions; |
| · | risks
relating to our mineral properties being subject to prior unregistered agreements, transfers,
indigenous peoples’ claims and other defects in title; |
| · | risks
relating to inadequate insurance or inability to obtain insurance; |
| · | risks
relating to our ability to acquire new projects and to successfully integrate the acquisitions; |
| · | uncertainty
in the Company’s ability to obtain adequate financing for planned mine development
and further exploration programs; |
| · | risks
relating to increased competition that could adversely affect the Company’s ability
to attract necessary capital funding or acquire suitable producing properties for mineral
exploration in the future; |
| · | risks
related to the Company operating in foreign jurisdictions, including political, economic,
and regulatory instability; |
| · | risks
related to mine closure and reclamation; |
| · | risks
related to the impact of climate change; |
| · | challenges
related to recruiting and retaining qualified personnel; |
| · | the
impact of the conflict in Ukraine and its effects on supply chains; |
| · | the
impact of increased interest rates; |
| · | risks
relating to the Company’s officers and directors becoming associated with other natural
resource companies which may give rise to conflicts of interests; |
| · | uncertainties
relating to our status as a foreign issuer under United States federal securities laws; and |
| · | risks
relating to financial instruments. |
This
list is not exhaustive of the factors that may affect the Company’s forward-looking statements. Should one or more of these risks
and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described
in the forward-looking statements due to a variety of risk, uncertainties and other factors, including, without limitation, those referred
to in this Prospectus and any Prospectus Supplement under “ Risk Factors” and elsewhere in this Prospectus and any
Prospectus Supplement and in the documents incorporated by reference herein. The Company’s forward-looking statements are based
on beliefs, expectations and opinions of management on the date the statements are made and the Company does not assume any obligation
to update forward-looking statements if circumstances or management’s beliefs, expectations or opinions change, except as required
by applicable law. For the reasons set forth above, investors should not place undue reliance on forward-looking statements.
Cautionary
Notes to United States Investors
We are permitted under the MJDS to prepare this
Prospectus in accordance with Canadian disclosure requirements, which are different from United States disclosure requirements. We prepare
our annual financial statements, certain of which are incorporated by reference herein, in accordance with IFRS as issued by the IASB,
and our interim financial statements, certain of which are incorporated by reference herein, in accordance with IFRS as issued by the
IASB as applicable to interim financial reporting, and they therefore may not be comparable to financial statements of United States
companies.
The Company is subject to the reporting requirements
of the applicable Canadian securities laws and, as a result, reports the mineral reserves and resources of the projects it has an interest
in according to Canadian standards. Canadian reporting requirements for disclosure of mineral properties are governed by National Instrument 43-101
- Standards of Disclosure for Mineral Projects (“NI 43-101”). NI 43-101 is a rule developed by the
Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information
concerning mineral projects. These standards differ from the requirements of the SEC that are applicable to domestic United States reporting
companies under subpart 1300 of Regulation S-K (“S-K 1300”) under the United States Securities Exchange Act of
1934, as amended (the “U.S. Exchange Act”). As an issuer that prepares and files its reports with the SEC pursuant
to MJDS, the Company is not subject to the requirements of S-K 1300. Any mineral reserves and mineral resources reported by the
Company in accordance with NI 43-101 may not qualify as such under or differ from those prepared in accordance with S-K 1300.
Accordingly, information included or incorporated by reference in this Prospectus concerning descriptions of mineralization and estimates
of mineral reserves and resources under Canadian standards may not be comparable to similar information made public by United States
companies subject to the reporting and disclosure requirements of S-K 1300.
Currency
Presentation and Exchange Rate Information
Unless
stated otherwise or as the context otherwise requires, all references to dollar amounts in this Prospectus and any Prospectus
Supplement are references to Canadian dollars. References to “$” or “Cdn.$” are to Canadian dollars and references
to “U.S. dollars” or “U.S.$” are to United States dollars.
Except
as otherwise noted in the Company’s annual information form for the year ended December 31, 2022 (the “AIF”)
and the Company’s financial statements and related management’s discussion and analysis of financial condition and results
of operations of the Company that are incorporated by reference into this Prospectus (see “Documents Incorporated by Reference”),
the financial information contained in such documents is expressed in United States dollars.
The high, low, average and closing exchange rates
for the United States dollar in terms of Canadian dollars for each of the financial periods of the Company ended December 31, 2022,
December 31, 2021 and December 31, 2020, as quoted by the Bank of Canada, were as follows:
| | |
Year ended December
31, 2022 | | |
Year ended December
31, 2021 | | |
Year ended December
31, 2020 | |
| | |
| |
| High | |
1.3856 | | |
1.2942 | | |
1.4496 | |
| Low | |
1.2451 | | |
1.2040 | | |
1.2718 | |
| Average | |
1.3011 | | |
1.2535 | | |
1.3415 | |
| Closing | |
1.3544 | | |
1.2678 | | |
1.2732 | |
On
June 15, 2023, the exchange rate for the United States dollar in terms of Canadian dollars, as quoted by the Bank of Canada, was
U.S.$1.00 = Cdn.$ 1.3252 (Cdn.$ 1.00 = U.S.$ 0.7546).
The
Company
The Company is a Canadian mineral company engaged
in the evaluation, acquisition, exploration, development and exploitation of precious metal properties in Mexico, Chile and the USA.
The Company has two producing silver-gold mines in Mexico: the Guanaceví Mine in Durango acquired in 2004 and the Bolañitos
Mine in Guanajuato acquired in 2007. In addition to operating these two mines, the Company is advancing one development and two exploration
projects in Mexico: the Terronera property in Jalisco acquired in 2010 that is now in the development stage, the prospective Pitarrilla
property in Durango acquired in 2022 and the Parral properties in Chihuahua acquired in 2016.
The Company has two exploration projects in northern
Chile that have been advanced over the past several years; the Aida project (silver) and the Paloma project (gold).
In 2021, the Company acquired the Bruner Property,
located in Nye County, Nevada, USA which is an exploration project that includes mineral claims, mining rights, property assets, water
rights, and government authorizations and permits.
Further
information regarding the business of the Company, its operations and its mineral properties can be found in the Company’s AIF
and the materials incorporated by reference into this Prospectus. See “Documents Incorporated by Reference”.
Recent
Developments
Terronera Project
On May 31, 2023, the Company filed an amended
and restate technical report titled “NI 43-101 Technical Report on the Feasibility Study of the Terronera Project, Jalisco State,
Mexico – Amended” dated May 15, 2023 with an effective date of September 9, 2021 (the “2023 Terronera Technical
Report”). The 2023 Terronera Technical Report supersedes the Company’s previous technical report, as further described
in the AIF, titled “NI 43-101 Technical Report on the Feasibility Study of the Terronera Project, Jalisco State, Mexico”
dated October 21, 2021 with an effective date of September 9, 2021.
Updated Development Plans and Initial Capital Costs
Since the Company filed the 2023 Terronera Technical
Report the Company has further evaluated various operating scenarios, cost-benefit initiatives and technologies to optimize the Terronera
Project’s operating flexibility and economics. The Company has approved the construction of an optimized Terronera Project scenario,
consisting of a process plant with 2,000 tonne per day (tpd) capacity and an initial capital expenditure cost of U.S.$230 million, partially
offset by a decrease in sustaining capital to U.S.$88.3 million over the life of the mine. The Company expects a 21-month construction period, including 3 to 6 months ramp up to full production with initial production
expected in the fourth quarter of 2024.
The revised metrics for the 2,000 tpd plant as
compared to the 1,700 tpd plant contained in the 2023 Terronera Technical Report are set out in the following table. The Company does
not consider these changes to be material. References in “$” in the following table are to U.S.$.
| 2023 Revised 2,000 TPD Plant Compared to 2021 FS |
Internal – FS Change |
| |
2023 |
2021 |
% Change |
| Silver Price |
$20.00 |
$20.00 |
0% |
| Gold Price |
$1,575 |
$1,575 |
0% |
| Silver: Gold Ratio |
79 |
79 |
0% |
| Operating Statistics |
|
|
|
| LOM Tonnes Processed LOM (thousands) |
7,382 |
7,380 |
0% |
| Life of Mine (Years) |
10.0 |
12.0 |
(17%) |
| Average silver grade (g/t) |
196 |
197 |
(1%) |
| Average gold grade (g/t) |
2.13 |
2.25 |
(5%) |
| Silver equivalent grade (g/t)(1) |
364 |
374 |
(3%) |
| Average silver recovery |
89.5% |
87.7% |
2% |
| Average gold recovery |
78.7% |
76.3% |
2% |
| LOM payable Ag ounces produced (millions) |
39.9 |
39.3 |
0% |
| LOM payable Au ounces produced (thousands) |
384 |
393 |
(2%) |
| LOM payable Ag Eq ounces produced (millions) |
69.7 |
70.3 |
(1%) |
| Avg annual payable Ag ounces produced (millions) |
4.0 |
3.3 |
20% |
| Avg annual payable Au ounces produced (thousands) |
38 |
33 |
17% |
| Avg annual payable Ag Eq ounces produced (millions) |
7.0 |
5.9 |
18% |
| Capital Expenditure Statistics |
|
| Initial Capital Expenditure (millions) |
$230.4 |
$175.0 |
32% |
| Process Capacity (tonnes per day) |
1,990 |
1,700 |
17% |
| LOM Sustaining Capital |
$88.3 |
$105.6 |
(16%) |
| Total LOM Project Capital |
$318.7 |
$280.6 |
14% |
| Operating Cost Metrics (in U.S.$) |
|
| LOM Gross Revenue (millions) |
1,403.2 |
1,406.2 |
0% |
| LOM Gross COS (millions) |
596.4 |
642.5 |
(7%) |
| LOM EBITDA (millions)(2) |
806.9 |
756.6 |
7% |
| After Tax LOM Free Cash Flow (millions)(2) |
316.9 |
311.4 |
2% |
| Cash costs by Product (per silver ounce)(2) |
(0.20) |
0.59 |
(134%) |
| All in sustaining (per silver ounce)(2) |
2.15 |
3.24 |
(34%) |
| Cash costs by Silver Equivalent (per silver ounce)(2) |
8.50 |
9.14 |
(7%) |
| All in sustaining Silver equivalents (per silver ounce)(2) |
9.84 |
10.62 |
(7%) |
| Total Direct Production Costs (per Tonne) |
80.43 |
87.06 |
(8%) |
| Mining Costs (per tonne) |
29.26 |
30.96 |
(7%) |
| Processing Costs (per tonne) |
23.38 |
25.47 |
(8%) |
| General and Administrative (per tonne) |
9.32 |
10.90 |
(14%) |
| Treatment & Refining Charges (per tonne) |
14.36 |
15.26 |
(6%) |
| Royalty Costs (per tonne) |
4.47 |
4.46 |
0% |
| (1) | Silver equivalent grade is calculated using a 79:1 silver:gold
ratio. |
| (2) | Non-IFRS measures - For a detailed description of each of the non-IFRS measures used in this Prospectus,
refer to the “Non-IFRS Measures” section in the Company’s Interim MD&A (as defined below and incorporated by reference
in this Prospectus) on pages 16-21. As these items are forward-looking we do not currently have comparable forward looking IFRS measures
to report and therefore no reconciliation of these items is presented. The comparable measures under IFRS for these items would be net
earnings, net operating earnings and direct production costs which would be divided by silver ounces produced or silver equivalent ounces
produced, respectively. LOM EBITDA represents LOM Net earnings plus LOM Depreciation and LOM Taxes. After Tax LOM Free Cash Flow represents
LOM Net operating earnings plus LOM Taxes and LOM Capital Costs. Management believes these non-IFRS measures are important measures of
the potential economics of the proposed mine plan and demonstrate potential mine economics with factors like depreciation and taxes which
can vary over LOM. The important factors in determining IFRS comparable measures which remain unknown at this time include mining, processing
and indirect costs, and mining, processing and indirect labour costs which may require adjustments to IFRS from estimates provided in
the Life of Mine (“LOM”). |
The scientific and technical information contained
in this Updated Development Plans and Initial Capital Costs has been reviewed and approved by Dale Mah, P.Geo., Vice President
Corporate Development, and Don Gray, SME-RM., Chief Operating Officer, each a Qualified Person within the meaning of NI 43-101.
Use
of Proceeds
Unless otherwise specified in a Prospectus Supplement,
the net proceeds from the sale of the Securities will be used for general corporate purposes, including, without limitation, the following
anticipated purposes:
| · | to
fund the construction and development of the Terronera Mine; |
| · | advancement
of the Pitarrilla property; |
| · | to
assess potential development stage mineral properties for acquisition; |
| · | to
fund the potential acquisition of other development stage mineral properties; and |
| · | for
continued exploration on the Company’s various existing mineral properties. |
Each Prospectus Supplement will contain specific
information concerning the use of proceeds from that sale of Securities.
All expenses relating to an offering of Securities
and any compensation paid to underwriters, dealers or agents, as the case may be, will be paid out of the Company’s general funds,
unless otherwise stated in the applicable Prospectus Supplement.
Consolidated
Capitalization
Other
than the issuance of 228,900 Common Shares pursuant to the exercise of stock options, there has been no material change in the share
and loan capital of the Company, on a consolidated basis, since March 31, 2023 (the period end of the most recent financial statements
of the Company filed and incorporated by reference in this Prospectus). As of the date of this Prospectus, there were 191,505,299
Common Shares issued and outstanding, as well as 4,854,508 Common Shares reserved for issuance pursuant to outstanding stock options,
deferred share units and performance share units. The applicable Prospectus Supplement will describe any material change in, and the
effect of such material change on, the share and loan capital of the Company that will result from the issuance of Securities pursuant
to such Prospectus Supplement.
Earnings
Coverage Ratios
If the Company offers any Debt Securities having
a term to maturity in excess of one year under a Prospectus Supplement, the Prospectus Supplement will include earnings coverage ratios
giving effect to the issuance of such Debt Securities.
Dividend
Policy
The
Company has not declared or paid any dividends on its Common Shares since the date of its incorporation. The Company intends to retain
its earnings, if any, to finance the growth and development of its business and does not expect to pay dividends or to make any other
distributions in the foreseeable future. The Company’s board of directors may, however, declare from time to time such cash
dividends or distributions out of the monies legally available for dividends or distributions as the board of directors considers advisable.
Any future determination to pay dividends or make distributions will be at the discretion of the board of directors and will depend on
the Company’s capital requirements, results of operations and such other factors as the board of directors considers relevant.
Description
of Common Shares
The Company’s authorized share capital consists
of an unlimited number of Common Shares without par value. As at the date of this Prospectus, there are 191,505,299
Common Shares issued and outstanding.
Each Common Share ranks equally with all other
Common Shares with respect to distribution of assets upon dissolution, liquidation or winding-up of the Company and payment of dividends.
The holders of Common Shares are entitled to one vote for each share on all matters to be voted on by such holders and are entitled to
receive pro rata such dividends as may be declared by the board of directors of the Company. The holders of Common Shares have no
pre-emptive or conversion rights. The rights attaching to the Common Shares can only be modified by the affirmative vote of at least
two-thirds of the votes cast at a meeting of shareholders called for that purpose.
Description
of Warrants
The
following description, together with the additional information the Company may include in any Prospectus Supplements, summarizes the
material terms and provisions of the Warrants that the Company may offer under this Prospectus, which may consist of Warrants to purchase
Common Shares or other Securities and may be issued in one or more series. Warrants may be offered independently or together with Common
Shares or other Securities offered by any Prospectus Supplement, and may be attached to or separate from those Securities. While
the terms summarized below will apply generally to any Warrants that the Company may offer under this Prospectus, the Company will describe
the particular terms of any series of Warrants that it may offer in more detail in the applicable Prospectus Supplement. The terms of
any Warrants offered under a Prospectus Supplement may differ from the terms described below.
General
Warrants
will be issued under and governed by the terms of one or more warrant indentures or agreements (each a “Warrant Indenture”)
between the Company and a warrant agent or warrant trustee (a “Warrant Agent”) that the Company will name in the relevant
Prospectus Supplement. Each Warrant Agent will be a financial institution organized under the laws of Canada or any province thereof
and authorized to carry on business as a trustee. If applicable, the Company will file with the SEC as exhibits to the registration
statement of which this Prospectus is a part, or will incorporate by reference from a Report of Foreign Private Issuer on Form 6-K
that the Company files with the SEC, any Warrant Indenture describing the terms and conditions of such Warrants that the Company is offering
before the issuance of such Warrants.
This summary of some of the provisions of the
Warrants is not complete. The statements made in this Prospectus relating to any Warrant Indenture and Warrants to be issued under this
Prospectus are summaries of certain anticipated provisions thereof and do not purport to be complete and are subject to, and are qualified
in their entirety by reference to, all provisions of the applicable Warrant Indenture. Prospective investors should refer to the Warrant
Indenture relating to the specific Warrants being offered for the complete terms of the Warrants. The applicable Prospectus Supplement
relating to any Warrants offered by us will describe the particular terms of those Warrants and include specific terms relating to the
offering.
The particular terms of each issue of Warrants
will be described in the applicable Prospectus Supplement. This description will include, where applicable:
| · | the
designation and aggregate number of Warrants; |
| · | the
price at which the Warrants will be offered; |
| · | the
currency or currencies in which the Warrants will be offered; |
| · | the
date on which the right to exercise the Warrants will commence and the date on which the
right will expire; |
| · | the
number of Common Shares or other Securities that may be purchased upon exercise of each Warrant
and the price at which and currency or currencies in which the Common Shares or other Securities
may be purchased upon exercise of each Warrant; |
| · | the
designation and terms of any Securities with which the Warrants will be offered, if any,
and the number of the Warrants that will be offered with each Security; |
| · | the
date or dates, if any, on or after which the Warrants and the other Securities with which
the Warrants will be offered will be transferable separately; |
| · | any
minimum or maximum number of Warrants that may be exercised at any one time; |
| · | whether
the Warrants will be subject to redemption and, if so, the terms of such redemption provisions; |
| · | whether
the Company will issue the Warrants as global securities and, if so, the identity of the
depositary of the global securities; |
| · | whether
the Warrants will be listed on an exchange; |
| · | material
Canadian federal income tax consequences and, if applicable, material United States federal
income tax consequences of owning the Warrants; and |
| · | and
any other material terms or conditions of the Warrants. |
Rights of Holders Prior to Exercise
Prior to the exercise of Warrants, holders of
Warrants will not have any of the rights of holders of the Common Shares or other Securities issuable upon exercise of the Warrants.
Exercise of Warrants
Each Warrant will entitle the holder to purchase
the Securities that the Company specifies in the applicable Prospectus Supplement at the exercise price described therein. Unless the
Company otherwise specifies in the applicable Prospectus Supplement, holders of the Warrants may exercise the Warrants at any time up
to the specified time on the expiration date set forth in the applicable Prospectus Supplement. After the close of business on the expiration
date, unexercised Warrants will become void.
Holders of the Warrants may exercise the Warrants
by delivering the Warrant Certificate representing the Warrants to be exercised together with specified information, and paying the required
amount to the Warrant Agent in immediately available funds, as provided in the applicable Prospectus Supplement. The Company will set
forth on the Warrant Certificate and in the applicable Prospectus Supplement the information that the holder of the Warrant will be required
to deliver to the Warrant Agent.
Upon receipt of the required payment and the
Warrant Certificate properly completed and duly executed at the corporate trust office of the Warrant Agent or any other office indicated
in the applicable Prospectus Supplement, the Company will issue and deliver the Securities purchased on such exercise. If fewer than
all of the Warrants represented by the Warrant Certificate are exercised, a new Warrant Certificate will be issued representing the balance
of the Warrants. If the Company so indicates in the applicable Prospectus Supplement, holders of the Warrants may surrender securities
as all or part of the exercise price for Warrants.
Anti-Dilution
The Warrant Indenture will specify that, upon
the subdivision, consolidation, reclassification or other material change of the Common Shares or any other reorganization, amalgamation,
arrangement, merger or sale of all or substantially all of the Company’s assets, Warrants exercisable for Common Shares will thereafter
evidence the right of the holder to receive the securities, property or cash deliverable in exchange for or on the conversion of or in
respect of the Common Shares to which the holder of a Common Share would have been entitled immediately after such event. Similarly,
any distribution to all or substantially all of the holders of Common Shares of rights, options, warrants, evidence of indebtedness or
assets will result in an adjustment in the number of Common Shares to be issued to holders of Warrants that are exercisable for Common
Shares.
Rescission
The Warrant Indenture will also provide that,
if Warrants are offered separately, any misrepresentation in this Prospectus, the Prospectus Supplement under which Warrants are offered
separately, or any amendment hereto or thereto, will entitle each initial purchaser of Warrants to a contractual right of rescission
following the issuance of the Common Shares or other Securities to such purchaser entitling such purchaser to receive the amount paid
for the Warrants upon surrender of the Common Shares or other Securities, provided that such remedy for rescission is exercised in the
time stipulated in the Warrant Indenture. This right of rescission does not extend to holders of such separately offered Warrants who
acquire such Warrants from an initial purchaser, on the open market or otherwise, or to initial purchasers who acquire such Warrants
in the United States.
Global Securities
The Company may issue Warrants in whole or in
part in the form of one or more global securities, which will be registered in the name of and be deposited with a depositary, or its
nominee, each of which will be identified in the applicable Prospectus Supplement. The global securities may be in temporary or permanent
form. The applicable Prospectus Supplement will describe the terms of any depositary arrangement and the rights and limitations of owners
of beneficial interests in any global security. The applicable Prospectus Supplement will describe the exchange, registration and transfer
rights relating to any global security.
Modifications
The Warrant Indenture will provide for modifications
and alterations to the Warrants issued thereunder by way of a resolution of holders of Warrants at a meeting of such holders or a consent
in writing from such holders. The number of holders of Warrants required to pass such a resolution or execute such a written consent
will be specified in the Warrant Indenture.
The Company may amend any Warrant Indenture and
the Warrants, without the consent of the holders of the Warrants, to cure any ambiguity, to cure, correct or supplement any defective
or inconsistent provision, or in any other manner that will not materially and adversely affect the interests of holders of outstanding
Warrants.
Description
of Subscription Receipts
The
Company may issue Subscription Receipts, which will entitle holders to receive upon satisfaction of certain release conditions and for
no additional consideration, Common Shares, Warrants or any combination thereof. Subscription Receipts will be issued pursuant to one
or more subscription receipt agreements (each, a “Subscription Receipt Agreement”), each to be entered into between
the Company and an escrow agent (the “Escrow Agent”), which will establish the terms and conditions of the Subscription
Receipts. Each Escrow Agent will be a financial institution organized under the laws of Canada or a province thereof and authorized to
carry on business as a trustee. A copy of the form of Subscription Receipt Agreement will be filed with Canadian securities regulatory
authorities and, if applicable, the Company will file with the SEC as exhibits to the registration statement of which this Prospectus
is a part, or will incorporate by reference from a Report of Foreign Private Issuer on Form 6-K that the Company files with the
SEC, any Subscription Receipt Agreement describing the terms and conditions of such Subscription Receipts that the Company is offering
before the issuance of such Subscription Receipts.
The following description sets forth certain
general terms and provisions of Subscription Receipts and is not intended to be complete. The statements made in this Prospectus relating
to any Subscription Receipt Agreement and Subscription Receipts to be issued thereunder are summaries of certain anticipated provisions
thereof and are subject to, and are qualified in their entirety by reference to, all provisions of the applicable Subscription Receipt
Agreement and the Prospectus Supplement describing such Subscription Receipt Agreement.
The Prospectus Supplement relating to any Subscription
Receipts the Company offers will describe the Subscription Receipts and include specific terms relating to their offering. All such terms
will comply with the requirements of the TSX and NYSE relating to Subscription Receipts. If underwriters or agents are used in the sale
of Subscription Receipts, one or more of such underwriters or agents may also be parties to the Subscription Receipt Agreement governing
the Subscription Receipts sold to or through such underwriters or agents.
General
The Prospectus Supplement and the Subscription
Receipt Agreement for any Subscription Receipts the Company offers will describe the specific terms of the Subscription Receipts and
may include, but are not limited to, any of the following:
| · | the
designation and aggregate number of Subscription Receipts offered; |
| · | the
price at which the Subscription Receipts will be offered; |
| · | the
currency or currencies in which the Subscription Receipts will be offered; |
| · | the
designation, number and terms of the Common Shares, Warrants or combination thereof to be
received by holders of Subscription Receipts upon satisfaction of the release conditions,
and the procedures that will result in the adjustment of those numbers; |
| · | the
conditions (the “Release Conditions”) that must be met in order for holders
of Subscription Receipts to receive for no additional consideration Common Shares, Warrants
or a combination thereof; |
| · | the
procedures for the issuance and delivery of Common Shares, Warrants or a combination thereof
to holders of Subscription Receipts upon satisfaction of the Release Conditions; |
| · | whether
any payments will be made to holders of Subscription Receipts upon delivery of the Common
Shares, Warrants or a combination thereof upon satisfaction of the Release Conditions (e.g. an
amount equal to dividends declared on Common Shares by the Company to holders of record during
the period from the date of issuance of the Subscription Receipts to the date of issuance
of any Common Shares pursuant to the terms of the Subscription Receipt Agreement); |
| · | the
identity of the Escrow Agent; |
| · | the
terms and conditions under which the Escrow Agent will hold all or a portion of the gross
proceeds from the sale of Subscription Receipts, together with interest and income earned
thereon (collectively, the “Escrowed Funds”), pending satisfaction of
the Release Conditions; |
| · | the
terms and conditions pursuant to which the Escrow Agent will hold Common Shares, Warrants
or a combination thereof pending satisfaction of the Release Conditions; |
| · | the
terms and conditions under which the Escrow Agent will release all or a portion of the Escrowed
Funds to the Company upon satisfaction of the Release Conditions; |
| · | if
the Subscription Receipts are sold to or through underwriters or agents, the terms and conditions
under which the Escrow Agent will release a portion of the Escrowed Funds to such underwriters
or agents in payment of all or a portion of their fees or commission in connection with the
sale of the Subscription Receipts; |
| · | procedures
for the refund by the Escrow Agent to holders of Subscription Receipts of all or a portion
of the subscription price for their Subscription Receipts, plus any pro rata entitlement
to interest earned or income generated on such amount, if the Release Conditions are not
satisfied; |
| · | any
contractual right of rescission to be granted to initial purchasers of Subscription Receipts
in the event this Prospectus, the Prospectus Supplement under which Subscription Receipts
are issued or any amendment hereto or thereto contains a misrepresentation; |
| · | any
entitlement of the Company to purchase the Subscription Receipts in the open market by private
agreement or otherwise; |
| · | whether
the Company will issue the Subscription Receipts as global securities and, if so, the identity
of the depositary for the global securities; |
| · | whether
the Company will issue the Subscription Receipts as bearer securities, registered securities
or both; |
| · | provisions
as to modification, amendment or variation of the Subscription Receipt Agreement or any rights
or terms attaching to the Subscription Receipts; |
| · | whether
the Subscription Receipts will be listed on an exchange; |
| · | material
Canadian federal income tax consequences and, if applicable, material United States federal
income tax consequences of owning the Subscription Receipts; and |
| · | any
other material terms of the Subscription Receipts. |
The holders of Subscription Receipts will
not be shareholders of the Company. Holders of Subscription Receipts are entitled only to receive Common Shares, Warrants or a combination
thereof on exchange of their Subscription Receipts, plus any cash payments provided for under the Subscription Receipt Agreement, if
the Release Conditions are satisfied. If the Release Conditions are not satisfied, holders of Subscription Receipts shall be entitled
to a refund of all or a portion of the subscription price therefor and all or a portion of the pro rata share of interest earned
or income generated thereon, as provided in the Subscription Receipt Agreement.
Escrow
The Escrowed Funds will be held in escrow by
the Escrow Agent, and such Escrowed Funds will be released to the Company (and, if the Subscription Receipts are sold to or through underwriters
or agents, a portion of the Escrowed Funds may be released to such underwriters or agents in payment of all or a portion of their fees
in connection with the sale of the Subscription Receipts) at the time and under the terms specified by the Subscription Receipt Agreement.
If the Release Conditions are not satisfied, holders of Subscription Receipts will receive a refund of all or a portion of the subscription
price for their Subscription Receipts plus their pro rata entitlement to interest earned or income generated on such amount, in
accordance with the terms of the Subscription Receipt Agreement. Common Shares or Warrants may be held in escrow by the Escrow Agent
and will be released to the holders of Subscription Receipts following satisfaction of the Release Conditions at the time and under the
terms specified in the Subscription Receipt Agreement.
Anti-Dilution
The Subscription Receipt Agreement will specify
that upon the subdivision, consolidation, reclassification or other material change of Common Shares or Warrants underlying the particular
Subscription Receipts or any other reorganization, amalgamation, arrangement, merger or sale of all or substantially all of the Company’s
assets, the Subscription Receipts will thereafter evidence the right of the holder to receive the securities, property or cash deliverable
in exchange for or on the conversion of or in respect of the Common Shares or Warrants to which the holder of a Common Share or identical
Warrant would have been entitled immediately after such event. Similarly, any distribution to all or substantially all of the holders
of Common Shares of rights, options, warrants, evidences of indebtedness or assets will result in an adjustment in the number of Common
Shares to be issued to holders of Subscription Receipts whose Subscription Receipts entitle the holders thereof to receive Common Shares.
Alternatively, such securities, evidences of indebtedness or assets may, at the option of the Company, be issued to the Escrow Agent
and delivered to holders of Subscription Receipts on exercise thereof. The Subscription Receipt Agreement will also provide that if other
actions of the Company affect the Common Shares or Warrants, which, in the reasonable opinion of the directors of the Company, would
materially affect the rights of the holders of Subscription Receipts and/or the rights attached to the Subscription Receipts, the number
of Common Shares or Warrants which are to be received pursuant to the Subscription Receipts shall be adjusted in such manner, if any,
and at such time as the directors of the Company may in their discretion reasonably determine to be equitable to the holders of Subscription
Receipts in such circumstances.
Rescission
The Subscription Receipt Agreement will also
provide that any misrepresentation in this Prospectus, the Prospectus Supplement under which the Subscription Receipts are offered, or
any amendment hereto or thereto, will entitle each initial purchaser of Subscription Receipts to a contractual right of rescission following
the issuance of the Common Shares or Warrants to such purchaser entitling such purchaser to receive the amount paid for the Subscription
Receipts upon surrender of the Common Shares or Warrants, provided that such remedy for rescission is exercised in the time stipulated
in the Subscription Receipt Agreement. This right of rescission does not extend to holders of Subscription Receipts who acquire such
Subscription Receipts from an initial purchaser, on the open market or otherwise, or to initial purchasers who acquire Subscription Receipts
in the United States.
Global Securities
The Company may issue Subscription Receipts in
whole or in part in the form of one or more global securities, which will be registered in the name of and be deposited with a depositary,
or its nominee, each of which will be identified in the applicable Prospectus Supplement. The global securities may be in temporary or
permanent form. The applicable Prospectus Supplement will describe the terms of any depositary arrangement and the rights and limitations
of owners of beneficial interests in any global security. The applicable Prospectus Supplement also will describe the exchange, registration
and transfer rights relating to any global security.
Modifications
The Subscription Receipt Agreement will provide
for modifications and alterations to the Subscription Receipts issued thereunder by way of a resolution of holders of Subscription Receipts
at a meeting of such holders or a consent in writing from such holders. The number of holders of Subscriptions Receipts required to pass
such a resolution or execute such a written consent will be specified in the Subscription Receipt Agreement.
The Subscription Receipt Agreement will also
specify that the Company may amend the Subscription Receipt Agreement and the Subscription Receipts, without the consent of the holders
of the Subscription Receipts, to cure any ambiguity, to cure, correct or supplement any defective or inconsistent provision, or in any
other manner that will not materially and adversely affect the interests of the holders of outstanding Subscription Receipts or as otherwise
specified in the Subscription Receipt Agreement.
Description
of Debt Securities
This section describes the general terms that
will apply to any Debt Securities issued pursuant to this Prospectus. Debt Securities may be offered separately or in combination with
one or more other Securities of the Company. The Debt Securities may be issued in one or more series under an indenture (the “Indenture”)
to be entered into between the Company and one or more trustees (the “Trustee”) that will be named in a Prospectus
Supplement for a series of Debt Securities. To the extent applicable, the Indenture will be subject to and governed by the United
States Trust Indenture Act of 1939, as amended. A copy of the form of the Indenture to be entered into has been or will be filed
with the SEC as an exhibit to the registration statement of which this Prospectus is a part and will be filed with the securities commissions
or similar authorities in Canada when it is entered into. The description of certain provisions of the Indenture in this section do not
purport to be complete and are subject to, and are qualified in their entirety by reference to, the provisions of the Indenture. This
section describes the general terms of the Debt Securities. The specific terms of the Debt Securities, and the extent to which the general
terms described in this section apply to those Debt Securities, will be set forth in the applicable Prospectus Supplement. This description
may include, but may not be limited to, any of the following, if applicable:
| • | the
title of the Debt Securities; |
| • | any
limit on the aggregate principal amount of the Debt Securities; |
| • | the
date or dates, if any, on which the Debt Securities will mature and the portion (if less
than all of the principal amount) of the Debt Securities to be payable upon declaration of
acceleration of maturity; |
| • | the
rate or rates (whether fixed or variable) at which the Debt Securities will bear interest,
if any, the date or dates from which any such interest will accrue and on which any such
interest will be payable and the record dates for any interest payable on the Debt Securities; |
| • | the
terms and conditions under which the Company may be obligated to redeem, repay or purchase
Debt Securities pursuant to any sinking fund or analogous provisions or otherwise; |
| • | the
terms and conditions upon which the Company may redeem the Debt Securities, in whole or in
part, at its option; |
| • | the
covenants applicable to the Debt Securities; |
| • | the
terms and conditions for any conversion or exchange of the Debt Securities for any other
securities; |
| • | the
extent and manner, if any, to which payment on or in respect of the Debt Securities of the
series will be senior or will be subordinated to the prior payment of other liabilities and
obligations of the Company; |
| • | whether
the Debt Securities will be secured or unsecured; |
| • | whether
the Debt Securities will be issuable in the form of registered global securities and, if
so, the identity of the depositary for such registered global securities; |
| • | the
denominations in which Debt Securities will be issuable, if other than denominations of US$1,000
or integral multiples of US$1,000; |
| • | each
office or agency where payments on the Debt Securities will be made and each office or agency
where the Debt Securities may be presented for registration of transfer or exchange; |
| • | if
other than United States dollars, the currency in which the Debt Securities are denominated
or the currency in which we will make payments on the Debt Securities; |
| • | material
Canadian federal income tax consequences and United States federal income tax consequences
of owning the Debt Securities; |
| • | any
index, formula or other method used to determine the amount of payments of principal of (and
premium, if any) or interest, if any, on the Debt Securities; and |
| • | any
other terms, conditions, rights or preferences of the Debt Securities which apply solely
to the Debt Securities. |
If the Company denominates the purchase price
of any of the Debt Securities in a currency or currencies other than United States dollars or a non-United States dollar unit or units,
or if the principal of and any premium and interest on any Debt Securities is payable in a currency or currencies other than United States
dollars or a non-United States dollar unit or units, the Company will provide investors with information on the restrictions, elections,
general tax considerations, specific terms and other information with respect to that issue of Debt Securities and such non-United States
dollar currency or currencies or non-United States dollar unit or units in the applicable Prospectus Supplement. Each series of Debt
Securities may be issued at various times with different maturity dates, may bear interest at different rates and may otherwise vary.
The terms on which a series of Debt Securities may be convertible into or exchangeable for Common Shares or other securities will be
described in the applicable Prospectus Supplement. These terms may include provisions as to whether conversion or exchange is mandatory,
at the option of the holder, or at the option of the Company, and may include provisions pursuant to which the number of Common Shares
or other securities to be received by the holders of such series of Debt Securities would be subject to adjustment. To the extent any
Debt Securities are convertible into Common Shares or other securities, prior to such conversion the holders of such Debt Securities
will not have any of the rights of holders of the securities into which the Debt Securities are convertible, including the right to receive
payments of dividends or the right to vote such underlying securities.
The Company may, from time to time, issue debt
securities and incur additional indebtedness other than through the issue of Debt Securities pursuant to this Prospectus.
Description
of Units
The following description, together with the
additional information the Company may include in any applicable Prospectus Supplements, summarizes the material terms and provisions
of the Units that the Company may offer under this Prospectus. While the terms summarized below will apply generally to any Units that
the Company may offer under this Prospectus, the Company will describe the particular terms of any issue of Units in more detail in the
applicable Prospectus Supplement. The terms of any Units offered under a Prospectus Supplement may differ from the terms described below.
The
Company will also add to disclosure in any subsequent Prospectus Supplement whereby Units are offered the form of any unit agreement
(“Unit Agreement”) between the Company and a unit agent (“Unit Agent”) that describes the terms
and conditions of the issue of Units being offered, and any supplemental agreements. The following summaries of material terms and provisions
of the Units are subject to, and qualified in their entirety by reference to, all the provisions of any Unit Agreement and any supplemental
agreements applicable to a particular issue of Units. The Company urges you to read the applicable Prospectus Supplements relating to
the particular issue of Units that the Company sells under this Prospectus, as well as any Unit Agreement and any supplemental agreements
that contain the terms of the Units. If applicable, the Company will file with the SEC as exhibits to the registration statement
of which this Prospectus is a part, or will incorporate by reference from a current report on Form 6-K that the Company files with
the SEC, any Unit Agreement describing the terms and conditions of such Units that the Company is offering before the issuance of such
Units.
General
The
Company may issue Units comprising two or more of Common Shares, Warrants or Debt Securities, in any combination. Each Unit will be issued
so that the holder of the Unit is also the holder of each Security included in the Unit. The holder of a Unit will accordingly have the
rights and obligations of a holder of each included Security. Any Unit Agreement under which a Unit is issued may provide that the Securities
included in the Unit may not be held or transferred separately, at any time or at any time before a specified date. The Company will
describe in the applicable Prospectus Supplement the terms of the issue of Units, including: the designation and terms of the Units and
of the securities comprising the Units, including whether and under what circumstances those securities may be held or transferred separately;
any provisions of any governing Unit Agreement that differ from those described below; and any provisions for the issuance, payment,
settlement, transfer or exchange of the Units or of the securities comprising the Units. The provisions described in this section, as
well as those described under “ Description of Common Shares”, “ Description of Warrants” and “
Description of Debt Securities” will apply to each Unit and to any Common Share, Warrant or Debt Security included in each Unit,
respectively.
Issuance in Series
The Company may issue Units in such amounts and
in such series as the Company may determine.
Enforceability of Rights by Holders of Units
Each Unit Agent will act solely as the Company’s
agent under any applicable Unit Agreement and will not assume any obligation or relationship of agency or trust with any holder of any
Unit. A single trust company may act as a Unit Agent for more than one series of Units. A Unit Agent will have no duty or responsibility
in case of any default by the Company under any applicable Unit Agreement or Unit, including any duty or responsibility to initiate any
proceedings at law or otherwise, or to make any demand upon the Company. Any holder of a Unit may, without the consent of any related
Unit Agent or the holder of any other Unit, enforce by appropriate legal action its rights as holder under any security included in the
Unit. The Company, any Unit Agents, and any of the Company’s or their agents may treat the registered holder of any Unit certificate
as an absolute owner of the Units evidenced by that certificate for any purpose and as the person entitled to exercise the rights attaching
to the Units so requested, despite any notice to the contrary.
Denominations,
Registration and Transfer
The Securities will be issued in fully registered
form without coupons attached in either global or definitive form and in denominations and integral multiples as set out in the applicable
Prospectus Supplement. Other than in the case of book-entry-only Securities, Securities may be presented for registration of transfer
(with the form of transfer endorsed thereon duly executed) in the city specified for such purpose at the office of the registrar or transfer
agent designated by the Company for such purpose with respect to any issue of Securities referred to in the Prospectus Supplement. No
service charge will be made for any transfer, conversion or exchange of the Securities but the Company may require payment of a sum to
cover any transfer tax or other governmental charge payable in connection therewith. Such transfer, conversion or exchange will be effected
upon such registrar or transfer agent being satisfied with the documents of title and the identity of the person making the request.
If a Prospectus Supplement refers to any registrar or transfer agent designated by the Company with respect to any issue of Securities,
the Company may at any time rescind the designation of any such registrar or transfer agent and appoint another in its place or approve
any change in the location through which such registrar or transfer agent acts.
In the case of book-entry-only Securities, a
global certificate or certificates representing the Securities will be held by a designated depositary for its participants. The Securities
must be purchased or transferred through such participants, which includes securities brokers and dealers, banks and trust companies.
The depositary will establish and maintain book-entry accounts for its participants acting on behalf of holders of the Securities. The
interests of such holders of Securities will be represented by entries in the records maintained by the participants. Holders of Securities
issued in book-entry-only form will not be entitled to receive a certificate or other instrument evidencing their ownership thereof,
except in limited circumstances. Each holder will receive a customer confirmation of purchase from the participants from which the Securities
are purchased in accordance with the practices and procedures of that participant
Plan
of Distribution
The
Company may sell the Securities to or through underwriters or dealers, and also may sell Securities to one or more other purchasers directly
or through agents, including sales pursuant to ordinary brokerage transactions and transactions in which a broker-dealer solicits purchasers.
Underwriters may sell Securities to or through dealers. Each Prospectus Supplement will set forth the terms of the offering, including
the name or names of any underwriters, dealers or agents and any fees or compensation payable to them in connection with the offering
and sale of a particular series or issue of Securities, the public offering price or prices of the Securities and the proceeds to the
Company from the sale of the Securities. In addition, Securities may be offered and issued in consideration for the acquisition
(an “Acquisition”) of other businesses, assets or securities by the Company or its subsidiaries. The consideration
for any such Acquisition may consist of any of the Securities separately, a combination of Securities or any combination of, among other
things, securities, cash and assumption of liabilities.
The Securities may be sold, from time to time
in one or more transactions at a fixed price or prices which may be changed or at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices, including sales in transactions that are deemed to be “at-the-market
distributions” as defined in NI 44-102, including sales made directly on the TSX, NYSE or other existing trading markets for the
Securities, and as set forth in an accompanying Prospectus Supplement. The prices at which the Securities may be offered may vary as
between purchasers and during the period of distribution. If, in connection with the offering of Securities at a fixed price or prices,
the underwriters have made a bona fide effort to sell all of the Securities at the initial offering price fixed in the applicable Prospectus
Supplement, the public offering price may be decreased and thereafter further changed, from time to time, to an amount not greater than
the initial public offering price fixed in such Prospectus Supplement, in which case the compensation realized by the underwriters will
be decreased by the amount that the aggregate price paid by purchasers for the Securities is less than the gross proceeds paid by the
underwriters to the Company.
Underwriters, dealers or agents who participate
in the distribution of Securities may be entitled under agreements to be entered into with the Company to indemnification by the Company
against certain liabilities, including liabilities under the U.S. Securities Act and Canadian securities legislation, or to contribution
with respect to payments which such underwriters, dealers or agents may be required to make in respect thereof. Such underwriters, dealers
or agents with whom the Company enters into agreements may be customers of, engage in transactions with, or perform services for, the
Company in the ordinary course of business.
In
connection with any offering of Securities, other than an ATM Distribution, the underwriters may over-allot or effect transactions which
stabilize or maintain the market price of the Securities offered at a level above that which might otherwise prevail in the open market.
Such transactions, if commenced, may be discontinued at any time. No underwriter involved in an ATM Distribution, no affiliate
of such an underwriter and no person or company acting jointly or in concert with such an underwriter may over-allot securities in connection
with the distribution or may effect any other transactions that are intended stabilize or maintain the market price of the Securities
in connection with an ATM Distribution including selling an aggregate number or principal amount of Securities that would result in the
underwriter creating an over-allocation position in the Securities.
Unless otherwise specified in the applicable
Prospectus Supplement, the Company does not intend to list any of the Securities other than the Common Shares on any securities exchange.
Any underwriters, dealers or agents to or through which Securities other than the Common Shares are sold by the Company for public offering
and sale may make a market in such Securities, but such underwriters, dealers or agents will not be obligated to do so and may discontinue
any such market making at any time and without notice. No assurance can be given that a market for trading in Securities of any series
or issue will develop or as to the liquidity of any such market, whether or not the Securities are listed on a securities exchange.
Prior
Sales
A description of prior sales of the Securities
will be provided as required in each Prospectus Supplement to this Prospectus.
Trading
Price and Volume
The Common Shares are listed for trading on the
TSX under the symbol “EDR” and on the NYSE under the symbol “EXK”. Trading price and volume of the Common Shares
will be provided as required in each Prospectus Supplement to this Prospectus.
Certain
Income Tax Considerations
The
applicable Prospectus Supplement may describe certain Canadian federal income tax consequences to investors described therein of acquiring
Securities, including, in the case of an investor who is not a resident of Canada (for purposes of the Income Tax Act (Canada)),
if applicable, whether payment of principal, premium, if any, and interest will be subject to Canadian non-resident withholding tax.
The applicable Prospectus Supplement may also
describe certain United States federal income tax consequences of the acquisition, ownership and disposition of Securities by an initial
investor who is a “U.S. person” (within the meaning of the United States Internal Revenue Code), if applicable, including,
to the extent applicable, any such consequences relating to Securities payable in a currency other than the United States dollar, issued
at an original issue discount for United States federal income tax purposes or containing early redemption provisions or other special
terms.
Investors should read the tax discussion in any
Prospectus Supplement with respect to a particular offering and consult their own tax advisors with respect to their own particular circumstances.
REliance
on Exemptions for Well-known Seasoned Issuers
The securities regulatory authorities in each
of the provinces of Canada have adopted substantively harmonized blanket orders, including British Columbia Instrument 44-503 –
Exemption from Certain Prospectus Requirements for Canadian Well-known Seasoned Issuers (together with the equivalent local blanket
orders in each of the other provinces of Canada, collectively, the “WKSI Blanket Orders”). The WKSI Blanket Orders
were adopted to reduce the regulatory burden for certain large, established reporting issuers with strong disclosure records. This Prospectus
has been filed by the Company in reliance upon the WKSI Blanket Orders, which permit “well-known seasoned issuers” or “WKSIs”,
to file a final short form base shelf prospectus as the first public step in an offering, and exempt qualifying issuers from certain
disclosure requirements relating to such final short form base shelf prospectus. As of the date hereof, the Company has determined that
it qualifies as a “well-known seasoned issuer” under the WKSI Blanket Orders.
Legal
Matters
Certain legal matters in connection with the
Securities offered hereby will be passed upon on behalf of the Company by Koffman Kalef LLP with respect to Canadian legal
matters and by Dorsey & Whitney LLP with respect to United States legal matters.
In addition, certain legal matters in connection
with any offering of Securities will be passed upon for any underwriters, dealers or agents by counsel to be designated at the time of
the offering by such underwriters, dealers or agents, as the case may be.
Interest
of Experts
Allan
Armitage, Ph.D., P. Geo., is the author of the technical report titled “Mineral Resource Estimate for the Pitarrilla Ag-Pb-Zn
Project, Durango State, Mexico” dated March 15, 2023 with an effective date of October 6, 2022.
Dale Mah, P. Geo.; Richard A. Schwering, P.G.,
SME-RM; and Donald P. Gray, P.E., SME-RM, prepared the technical reports titled “NI 43-101 Technical Report: Updated Mineral Resource
and Reserve Estimates for the Bolañitos Project, Guanajuato State, Mexico” dated December 14, 2022 with an effective date
of November 9, 2022 and “NI 43-101 Technical Report: Updated Mineral Resource and Reserve Estimates for the Guanaceví Project,
Durango State, Mexico” dated December 14, 2022 with an effective date of November 5, 2022.
Henry Kim, P. Geo.; William Bagnell, P.Eng.;
James Tod, P.Eng.; Alan Drake, P.L. Eng.; Kirk Hanson, P.E.; Paul Ivancie, P.G.; Dale Mah, P. Geo.; and Humberto Preciado, P.E., prepared
the 2023 Terronera Technical Report.
To the best of the Company’s knowledge,
other than Mr. Mah and Mr. Gray, the other experts named above did not have any registered or beneficial interest, direct or indirect,
in any securities or other property of the Company when the experts prepared their respective reports or afterwards, nor will they receive
any such interest. As of the date of this Prospectus, Mr. Mah holds, options to acquire 194,200 common shares of the Company and 78,000
performance share units (each convertible into common shares of the Company), and Mr. Gray holds options to acquire 393,000 common
shares of the Company and 174,000 performance share units (each convertible into common shares of the Company).
KPMG LLP is the auditor of the Company and has
confirmed with respect to the Company that it is independent within the meaning of the relevant rules and related interpretations prescribed
by the relevant professional bodies in Canada and any applicable legislation or regulations under all relevant United States professional
and regulatory standards.
Risk
Factors
Investing
in securities of the Company involves a significant degree of risk and must be considered speculative due to the high-risk nature of
the Company’s business. Risks related to the Offering and certain risks related to the Company are set out below. The risks set
out below are not the only risks that the Company faces. Investors should also carefully consider the information included or incorporated
herein by reference in this Prospectus and the Company’s historical consolidated financial statements and related notes thereto
before making an investment decision concerning the Securities. There are various risks, including those discussed in the Company’s
AIF and MD&A (as defined below under “Documents Incorporated by Reference”), which are incorporated herein by reference,
that could have a material adverse effect on, among other things, the operating results, earnings, properties, business and condition
(financial or otherwise) of the Company. These risk factors, together with all of the other information included, or incorporated by
reference in this Prospectus, including information contained in the section entitled “Cautionary Note Regarding
Forward-Looking Statements” should be carefully reviewed and considered before a decision to invest in the Securities is made.
Additional risks and uncertainties not currently known to the Company, or that the Company currently considers immaterial, may also materially
and adversely affect its business. In addition, risks relating to a particular offering of Securities will be set out in a Prospectus
Supplement relating to such offering.
Risks Related to the Offering
Market price of Common Shares
The market price of the Common Shares and any
other Securities offered hereunder that become listed and posted for trading on the TSX, NYSE or any other stock exchange could be subject
to significant fluctuations in response to variations in the Company’s financial results or other factors. In addition, fluctuations
in the stock market may adversely affect the market price of the Common Shares and any other Securities offered hereunder that become
listed and posted for trading on a stock exchange regardless of the financial performance of the Company. Securities markets have also
experienced significant price and volume fluctuations from time to time. In some instances, these fluctuations have been unrelated or
disproportionate to the financial performance of issuers. Market fluctuations may adversely impact the market price of the Common Shares
and any other Securities offered hereunder that become listed and posted for trading on a stock exchange. There can be no assurance of
the price at which the Common Shares that become listed and posted for trading on a stock exchange will trade.
Absence of a public market for some of the
Securities
There is no public market for the Debt Securities,
Warrants, Subscription Receipts or Units and, unless otherwise specified in the applicable Prospectus Supplement, the Company does not
intend to apply for listing of the Debt Securities, Warrants, Subscription Receipts or Units on any securities exchanges. If the Debt
Securities, Warrants, Subscription Receipts or Units are traded after their initial issuance, they may trade at a discount from their
initial offering prices depending on prevailing interest rates (as applicable), the market for similar securities and other factors,
including general economic conditions and the Company’s financial condition. There can be no assurance as to the liquidity of the
trading market for the Debt Securities, Warrants, Subscription Receipts or Units, or that a trading market for these Securities will
develop at all.
Future sales or issuance of debt or equity
Securities
The
Company may issue and sell additional securities of the Company from time to time. The Company cannot predict the size of future
sales and issuances of debt or equity securities or the effect, if any, that future sales and issuances of debt or equity securities
will have on the market price of any securities of the Company that are issued and outstanding from time to time. Sales or issuances
of a substantial number of equity securities, or the perception that such sales could occur, may adversely affect prevailing market prices
for the securities of the Company that are issued and outstanding from time to time. With any additional sale or issuance of securities
of the Company, investors will suffer dilution of their voting power and may experience dilution in the Company’s earnings per
share. Moreover, this Prospectus may create a perceived risk of dilution resulting in downward pressure on the price of the Company’s
issued and outstanding Common Shares, which could contribute to progressive declines in the prices of such securities.
Discretion over Use of Proceeds
The Company intends to allocate the net proceeds
it will receive from an offering as described under “Use of Proceeds” in this Prospectus and the applicable Prospectus Supplement.
However, the Company will have broad discretion over the use of the net proceeds from an offering by the Company of the Securities. There
can be no assurance as to how the net proceeds received from any offering will be allocated, in particular, if the Company determines
to revise its business plan and growth strategy. Because of the number and variability of factors that will determine the Company’s
use of such proceeds, the Company’s ultimate use might vary substantially from its planned use. The failure by the Company to apply
these funds effectively could have a material adverse effect on the business of the Company. The Company may pursue acquisitions, collaborations
or other opportunities that do not result in an increase in the market value of the Securities, including the market value of the Common
Shares, or which may result in losses.
Liquidity
No assurance can be given that an active or liquid
trading market for the Common Shares will be sustained. If an active or liquid market for the Common Shares fails to be sustained, the
prices at which such shares trade may be adversely affected. Whether or not the Common Shares will trade at lower prices depends on many
factors, including the liquidity of the Common Shares, the markets for similar securities, general economic conditions and the Company’s
financial condition, historic financial performance and future prospects.
Unsecured Debt Securities
The Company carries on its business through corporate
subsidiaries, and the majority of its assets are held in corporate subsidiaries. The results of the Company’s operations and its
ability to service indebtedness, including the Debt Securities, are dependent upon the results of operations of these subsidiaries and
the payment of funds by these subsidiaries to the Company in the form of loans, dividends or otherwise. Unless otherwise indicated in
the applicable Prospectus Supplement, the Company’s subsidiaries will not have an obligation to pay amounts due pursuant to any
Debt Securities or to make any funds available for payment on Debt Securities, whether by dividends, interest, loans, advances or other
payments. In addition, the payment of dividends and the making of loans, advances and other payments to the Company by its subsidiaries
may be subject to statutory or contractual restrictions. Unless otherwise indicated in the applicable Prospectus Supplement, the indenture
governing the Company’s Debt Securities is not expected to limit the Company’s ability or the ability of its subsidiaries
to incur indebtedness. Unless otherwise indicated in the applicable Prospectus Supplement, such indebtedness of the Company’s subsidiaries
would be structurally senior to the Debt Securities. As such, in the event of the liquidation of any subsidiary, the assets of the subsidiary
would be used first to repay the obligations of the subsidiary, including indebtedness and trade payables, prior to being used by the
Company to pay its indebtedness, including any Debt Securities.
Effect of changes in Interest Rates on Debt
Securities
Prevailing interest rates will affect the market
price or value of any Debt Securities. The market price or value of any Debt Securities may decline as prevailing interest rates rise
for comparable debt instruments, or increase as prevailing interest rates for comparable debt instruments decline.
Effect of Fluctuations in Foreign Currency
Markets on Debt Securities
Debt Securities denominated or payable in foreign
currencies may entail significant risk. These risks include, without limitation, the possibility of significant fluctuations in the foreign
currency markets, the imposition or modification of foreign exchange controls and potential liquidity restrictions in the secondary market.
These risks will vary depending upon the currency or currencies involved and will be more fully described in the applicable Prospectus
Supplement.
Risks Related to the Company
Government Regulation
The Company’s operations, exploration and
development activities are subject to extensive foreign federal, state and local laws and regulations governing such matters as environmental
protection, management and use of toxic substances and explosives, management of natural resources, health, exploration and development
of mines, production and post-closure reclamation, safety and labour, mining law reform, price controls, import and export laws, taxation,
maintenance of claims, tenure, government royalties and expropriation of property. The activities of the Company require licenses and
permits from various governmental authorities. There is no assurance that future changes in such regulation or licensing, if any, will
not adversely affect the Company’s operations.
Recent changes to mining laws in Mexico may affect
the Company’s ability to renew its concessions, explore and obtain new concessions, obtain permits to conduct mining operations
or pledge its concessions as security for loan facilities to develop its mineral projects. These changes may have a material adverse
effect on the Company’s planned operations and development of its projects in Mexico and future exploration in Mexico.
Documents
Incorporated by Reference
Information
has been incorporated by reference in this Prospectus from documents filed with securities commissions or similar authorities in Canada,
which have also been filed with, or furnished to, the SEC. Copies of the documents incorporated herein by reference may be
obtained on request without charge from the Chief Financial Officer of the Company at 1130-609 Granville Street, Vancouver, British
Columbia V7Y 1G5, telephone: (604) 685-9775. These documents are also available through the internet on SEDAR (www.sedar.com)
and on EDGAR (accessed at www.sec.gov).
The following documents of the Company, filed
with the securities regulatory authorities in the jurisdictions in Canada in which the Company is a reporting issuer, are specifically
incorporated by reference into, and form an integral part of, this Prospectus:
All documents of the type referred to in section 11.1
of Form 44-101F1 of National Instrument 44-101—Short Form Prospectus Distributions filed by the Company with the
securities commissions or similar regulatory authorities in the applicable provinces of Canada after the date of this Prospectus, and
before the termination of the Offering, are deemed to be incorporated by reference into this Prospectus.
In addition, to the extent that any document
or information incorporated by reference into this Prospectus is included in any report filed with or furnished to the SEC pursuant to
the U.S. Exchange Act, after the date of this Prospectus, such document or information shall be deemed to be incorporated by reference
as an exhibit to the registration statement of which this Prospectus forms a part (in the case of documents or information deemed furnished
on Form 6-K, only to the extent specifically stated therein).
Any statement contained in this Prospectus
or in a document incorporated or deemed to be incorporated by reference in this Prospectus shall be deemed to be modified or superseded
for the purposes of this Prospectus to the extent that a statement contained herein or in any subsequently filed document that also is
or is deemed to be incorporated by reference herein modifies or supersedes such statement. The modifying or superseding statement need
not state that it has modified or superseded a prior statement or include any other information set forth in the document that contains
the statement that it modifies or supersedes. The making of such a modifying or superseding statement shall not be deemed an admission
for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material
fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in
light of the circumstances in which it was made. Any statement so modified or superseded shall not constitute a part of this Prospectus,
except as so modified or superseded.
A Prospectus Supplement containing the specific
terms of an offering of Securities will be delivered to purchasers of such Securities together with this Prospectus and will be deemed
to be incorporated by reference into this Prospectus as of the date of such Prospectus Supplement, but only for the purposes of the offering
of Securities covered by that Prospectus Supplement.
Upon a new annual information form and related
annual financial statements being filed by us with, and where required, accepted by, the applicable securities regulatory authority during
the currency of this Prospectus, the previous annual information form, the previous annual financial statements and all interim financial
statements, material change reports and information circulars and all Prospectus Supplements filed prior to the commencement of the Company’s
financial year in which a new annual information form is filed shall be deemed no longer to be incorporated into this Prospectus for
purposes of future offers and sales of Securities hereunder.
Documents
Filed as Part of the Registration Statement
The
following documents have been or will be filed with the SEC as part of the registration statement of which this Prospectus forms a part:
(i) the documents set out under the heading “Documents Incorporated by Reference”; (ii) the consents of
the Company’s auditor and technical report authors; (iii) the powers of attorney from the directors and certain officers of
the Company; and (iv) the form of indenture for Debt Securities. A copy of the form of debt or warrant indenture, subscription receipt
agreement or statement of eligibility of trustee on Form T-1, as applicable, will be filed by post-effective amendment or by incorporation
by reference to documents filed or furnished with the SEC under the U.S. Exchange Act.
Additional
Information
The Company has filed with the SEC a registration
statement on Form F-10 relating to the Securities. This Prospectus, which constitutes a part of the registration statement, does not
contain all of the information contained in the registration statement, certain items of which are contained in the exhibits to the registration
statement as permitted by the rules and regulations of the SEC. See “Documents Filed as Part of the Registration Statement”.
Statements included or incorporated by reference in this Prospectus about the contents of any contract, agreement or other documents
referred to are not necessarily complete, and in each instance you should refer to the exhibits for a more complete description of the
matter involved. Each such statement is qualified in its entirety by such reference. Each time the Company sells Securities under the
registration statement, the Company will provide a Prospectus Supplement that will contain specific information about the terms of that
offering. The Prospectus Supplement may also add to, update or change information contained in this Prospectus.
The Company is subject to the information requirements
of the U.S. Exchange Act and applicable Canadian securities legislation and, in accordance therewith, files and furnishes annual
and quarterly financial information and material change reports, business acquisition reports and other material with the securities
commission or similar regulatory authority in each of the provinces of Canada and with the SEC. Under MJDS adopted by the United States
and Canada, documents and other information that the Company files with the SEC may be prepared in accordance with the disclosure requirements
of Canada, which are different from those of the United States. As a foreign private issuer within the meaning of rules made under the
U.S. Exchange Act, the Company is exempt from the rules under the U.S. Exchange Act prescribing the furnishing and content
of proxy statements, and the Company’s officers, directors and principal shareholders are exempt from the reporting and shortswing
profit recovery provisions contained in Section 16 of the U.S. Exchange Act. In addition, the Company is not required to publish
financial statements as promptly as United States companies.
The Company’s reports and other information
filed or furnished with or to the SEC are available from the SEC’s Electronic Document Gathering and Retrieval System, or EDGAR,
at www.sec.gov, as well as from commercial document retrieval services. The Company’s Canadian filings are available on the System
for Electronic Document Analysis and Retrieval, or SEDAR, at www.sedar.com. Unless specifically incorporated by reference herein, documents
filed or furnished by the Company on SEDAR or EDGAR are neither incorporated in nor a part of this Prospectus.
Enforceability
of Civil Liabilities AGAINST NON-u.s. PERSONS
The
Company is a corporation existing under the Business Corporations Act (British Columbia). Most of the Company’s directors
and officers, and some or all of the experts named in this Prospectus, are residents of Canada or otherwise reside outside the United
States, and all or a substantial portion of their assets, and substantially all of the Company’s assets, are located outside the
United States. The Company has appointed an agent for service of process in the United States, but it may be difficult for holders of
Common Shares who reside in the United States to effect service within the United States upon those directors, officers and experts who
are not residents of the United States. It may also be difficult for holders of Common Shares who reside in the United States to realize
in the United States upon judgments of courts of the United States predicated upon the Company’s civil liability and the civil
liability of the Company’s directors and officers and experts under the United States federal securities laws. A final and conclusive
in personam judgment of a United States court predicated solely upon civil liability under United States federal securities laws
may be enforceable in British Columbia; however, a British Columbia court will enforce any such judgment only if several conditions are
met. Those conditions include, among other things: (a) the British Columbia court has territorial competence and does not decline
to exercise that territorial competence or, if it lacks territorial competence, exercises its discretion to hear the action; (b) the
United States court in which the judgment was obtained had jurisdiction as recognized by the British Columbia court, (c) the judgment
is not void or voidable under the laws of the United States court and was not obtained by fraud or in a manner contrary to the rules
of natural justice; (d) if obtained by default, there is no manifest error on the face of the judgment; (e) the enforcement
of the judgment is not contrary to public policy and does not constitute, directly or indirectly, the enforcement of laws characterized
by a British Columbia court as being a revenue, expropriatory, penal or similar law; and (f) the action to enforce the judgment
is commenced and maintained in accordance with the procedural requirements of, and within the applicable limitation periods under, British
Columbia law. Furthermore, the British Columbia court may stay or decline to hear the action to enforce a judgment of a United States
court pending an appeal or if there is any subsisting judgment in any jurisdiction relating to the same cause of action. The enforceability
of a judgment of a foreign court is subject to, among other things, applicable bankruptcy, insolvency, moratorium, arrangement, winding-up
and other similar laws generally affecting the enforcement of rights of creditors and the general principles of equity. However, there
is substantial doubt whether an action could be brought in Canada in the first instance on the basis of liability predicated solely upon
United States federal securities laws.
The
Company filed with the SEC, concurrently with its registration statement on Form F-10 of which this Prospectus is a part, an appointment
of agent for service of process on Form F-X. Under the Form F-X, the Company appointed CT Corporation System as its agent for
service of process in the United States in connection with any investigation or administrative proceeding conducted by the SEC, and any
civil suit or action brought against or involving the Company in a United States court arising out of or related to or concerning the
offering of the Securities under this Prospectus.
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