A NEW GOLD-SILVER CYCLE

SILVER SETTING UP FOR A PERFECT STORM

2 3PART 1

THE SILVER SERIES

DEMANDINVESTMENT

Silver is a precious metal.

Currency debasement is not new: governments throughout history have “printed” money, while silver

retains its value relative to these paper assets.

Just like gold, silver has functionedas money for centuries—and its role

as a store of value and a hedge against monetary inflation is growing.

In addition to the investment thesis for silver as a monetary metal, silver is also special for its industrial uses:

With base metals currently in a bear market, there is a dwindling supply of silver.

Silver is produced primarily as a by-product of non-

precious metals mining.

This is placingupward pressure on

the price of silver—potentially

indicating the start of a new

gold-silver cycle.

But silver is a green metal which supports

rising industrial demand.

DEMANDSUPPLY AND

Until recently, ETF investment has been relatively flat, but there has been a surge in the price of silver. Meanwhile, demand for silver-backed financial products has increased the demand for physical silver.

2002

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02004 2006 2008 2010 2012 2014 2016 2018 2019

Silver ETFs represent 742.7Moz

DEC 2019

UK

GERMANYAUSTRALIA

SWITZERLAND

CANADA

USA

TOTAL

Silver ETFs represented approximately 6.6Moz

DEC 2000

Since 2000, the amount of financial instruments has ballooned across many financial products and markets.

This is a 116x increase, worth approximately ~$13.6 billion intoday’s silver prices*.

SILVER OUNCES IN ETFS BY COUNTRY

*US$17.95 per oz. Source: CPM Group

But the average investor today does not own physical silver. Rather, they invest in financial instruments that track the performance of the physical commodity itself, such as silver exchange-traded funds (ETFs).

There are two types of silver ETFs:

A Direct Silver ETF owns the silver bullion and acts as a custodian on behalf of the buyer.

An Equity Silver ETF buys stocks of silver mining companies andtracks an equity index.

#1

#2

In fact, silver is powering the green revolution.

Silver is the best natural conductor of electricity and heat. It’s used in:

A silver paste is used in the solar PV cell which collects electrons and subsequently forms an electric current. Silver then helps conduct electricity out of the cell. Without silver, solar panels could not be as efficient in turning sunlight into usable energy.

As investments and the green revolution are demanding more and more silver, where is the precious metal coming from?

LED & RFID chips

Semiconductors Electricvehicles

Alloys & coatings

Solar panelsBatteriesElectronics

2019201620132010200720042001

800Moz

600Moz

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0

Source: Silver Institute

DEMANDINDUSTRIAL

Silver is not just an investment, but also a green metal with many industrial applications.

ANNUAL FABRICATION DEMAND

Photovoltaic

Imports intotrans economies

Other countries

Other Uses

Biocides

Superconductors

Electronics

Jewelry &silverware

Photography

Silver is finding a new and growing use in photovoltaic solar cells.

1,000Moz

Supply disruptions in Canada, U.S., and Guatemala caused a 2% drop in global production, the third year of decline in a row.

Concentration of production can lead to severe supply disruptions.

GLOBAL SILVER MINE PRODUCTION BY COUNTRY, 2018

SUPPLY Silver production is highly concentrated in several countries.

SILVER MINE

196.6Moz144.9Moz

114.9Moz43.4Moz42.1Moz

39.9Moz39.6Moz

35.4Moz28.0Moz26.5Moz

24.8Moz23.2Moz

19.5Moz14.6Moz

11.9Moz11.2Moz

5.5Moz5.0Moz3.6Moz3.4Moz

21.7Moz

MexicoPeru

ChinaRussia

ChileBoliviaPoland

AustraliaUnited States

ArgentinaCanada

IndiaKazakhstan

SwedenIndonesiaMorocco

TurkeyArmenia

IranDominican Republic

Rest of World

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2

3

4

5

6

7

8

8

9

10

11

12

13

14

15

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17

18

19

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Source: Silver Institute

SOURCE OF SILVER IN MINE PRODUCTION

The bulk of silver production comes as a by-product of other metal mines.

As silver is not the primary metal emerging from some of these mines, it faces a supply crunch now.

Zinc & leadmines

Silvermines

Coppermines

Goldmines

31.7% 22.8%29.8% 15.7%

Typeof Mine

% of Total MineSupply 2018

Source: CPM Group

CRUNCHSILVER SUPPLY

Silver supply is falling for 3 reasons:

Declining production

#1

Declining silver mine capacity

#2

Declining reserves of silver

#3

Prolonged weakness in price provides little incentive for primary silver producers to increase output through expansions or build new mines.

#1 SILVER SUPPLY BY SOURCE

Source: GFMS

Mine Production Secondary Government Disposals

20002002

20042006

20082010

20122014

20162018

2020

Supply has decreasedfor the last three years

0

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New silver mine capacity increased due to run up in prices between 2010-2011 followed by a sharp decline from 2013 onwards.

While “above-ground” supply is dwindling, so is silver in the ground. Nearly all reserves at the largest silver mines have been in decline.

#2 ANNUAL ADDITIONS OF SILVER MINE CAPACITY

Source: GFMS

2013 2014 2015 2016 2017 2018 2019p0

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edrsilver.com

Endeavour Silver finds, builds, and operates quality silver mines in a sustainable way

to create real value for stakeholders.

TSE: EDR NYSE: EXK

#3 “LIFE OF MINE” (LOM) SILVER RESERVE DECLINES

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Source: USGS, 2018

Fresnillo mine

San Jose

Saucito

Arcata

Cannington

San Bartolomé

Dukat

Palmarejo

Pirquitas

La Colorada

Greens Creek

Uchucchacua

Silver miners who make new discoveries could prove to bethe next great opportunity. Declining supply and rising silver

demand is setting silver up for the perfect storm.

0

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100Moz

150Moz

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250Moz

300Moz

350Moz

400Moz Global decline in reserves for Ag, Au & Cu due to reduction in

exploration expenses as companiessought to preserve capital.

There are fewer high grade, world scale deposits.