Meghan Brown - Director of Investor Relations Bradford J. Cooke - Chief Executive Officer and Director Daniel W. Dickson - Chief Financial Officer and Principal Accounting Officer

Heiko Ihle - Euro Pacific Capital, Inc., Research Division Chris Thompson - Raymond James Ltd., Research Division Benjamin Asuncion - Haywood Securities Inc., Research Division Dale Mah - Dundee Capital Markets Inc., Research Division

This is the conference operator. Welcome to Endeavour Silver year end financials conference call. [Operator Instructions] At this time, I would like to turn the conference over to Meghan Brown. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to the Endeavour Silver 2012 Year End Earnings Conference Call. My name is Meghan Brown, and I'm Endeavor's new Director of Investor Relations. With me on the call today are Brad Cooke, the company's CEO; and Dan Dickson, Endeavour's CFO. Brad and Dan will be available for questions following Brad's remarks. Also in the room with us today is Terry Chandler, Endeavor's VP of Corporate Development. I'd like to remind everyone on the call to please refer to the cautionary statements in the news release and also available on our website at www.edrsilver.com. A replay of this call will be available later today and instructions on how to access the replay are available on the website. I would now like to turn the call over to Brad Cooke. Bradford J. Cooke: Great. Thank you, Meghan, and welcome to this conference call on our year-end earnings cash flow and revenues. I'm delighted to say that notwithstanding the lower metal prices and soft market last year, Endeavour enjoyed its 8th consecutive year of growing silver and gold production and it had a positive impact on our financial performance. We have now strung together 6 consecutive years of outperformance on the financial side. What I'd like to do is just run through some of the financial operating and exploration highlights and then, we'll just open it up for Q&A. So right off the top on our financial report for 2012, revenues jumped 63% to $208 million last year, partly due to the expansions of our 2 older mines, Guanacevi and Bolanitos and partly due to the acquisition of our third mine, El Cubo. Because of that, cash flow from operations, before working capital changes, rose 30% to around $83 million. EBITDA jumped 71% to $90 million and net earnings increased, more than double, to $42 million. On the operations side, silver production was up 20% to 4.5 million ounces, gold up 77% to 39,000 ounces, silver equivalents came in around 6.4 million ounces. And there's basically 3 main events in operations that drove our financial performance last year. We completed on time and on budget a 60% expansion of the Bolanitos mine and plant to 1,600 tonnes per day. We also completed on time and budget the 20% expansion of the Guanacevi mine and plant to 1,200 tonnes per day. And we acquired the third mine in the group, the El Cubo mine last year in July at around 1,100 tonnes per day. Moving to exploration. We enjoyed, across the board, a total jump in, let's call it total mineral inventory, in the order of 60%, with all categories of reserves and resources being up on the year. A part of that, clearly, was the acquisition of the El Cubo mine and Guadalupe y Calvo exploration project. But a good part of that was also organic growth through the drill bit, making new discoveries and advancing new mine developments at Guanacevi and Bolanitos. So like operations, there were 3 seminal events that drove our exploration success last year. We delineated a new high grade silver-gold discovery in the Milache area at Guanacevi and it's still open for expansion, so we continue to drill it this year. There's another kilometer of strike length northwest of the Milache discovery, on the Milache property, that will be tested in the first half of this year before we make any decision to put the mine into development, presumably, in the second half of the year. We did drill out a new high-grade silver discovery in the new Lana vein at Bolanitos and it's been fully delineated and is now being developed for production this year. Last but not least, perhaps, the most exciting new development at exploration was our find, the Terronera vein on the San Sebastian property in Jalisco state. This is a grassroots find, basically, a historic district that had never been drilled and we've come up with a new high-grade discovery there. I think the maiden resource, as of 2 weeks ago came out with a total inventory in the order of 31 million ounces of silver and 200,000 ounces of gold wide open. So on the financial, operating and exploration fronts, good progress across the board. Q4 was also another solid quarter for the company. And the only real drag on both our Q4 and 2012 operating results were the cash cost. They rose over 40% to $7.33 per ounce of payable silver, net of gold and the primary reason for that was the acquisition of El Cubo. It was a high-cost mine when we acquired it. It did lose money for much of last year with some very high cost, in the $35 per ounce range. And of course, that dragged our consolidated cash cost higher. If you x out El Cubo's performance, then, the other 2 mines were actually buying on where we're looking for, in the low $5 cash cost range. Moving to our outlook for the year. We are guiding yet another year of pure organic growth for the company, with just over 5 million ounces of silver and just under 50,000 ounces of gold production. But as of today's news release, wherein we announced the signing of 2 contracts to sell silver-gold tonnes from Bolanitos. That will accomplish a number of things. I think most importantly, it will allow us to overproduce from the Bolanitos mine to the Las Torres process plant for a period of time. And those extra concentrates didn't have a home in our leach plants. So with today's announcement, we now have a home for those cons. We're going to sell them to 2 different smelter groups. And because the smelter terms were commercially very competitive with our own cost to process these cons into saleable metals, the net effect of the sale of the concentrates this year will be twofold. We'll actually enjoy about a 7% increase of production at Bolanitos over the forecasted production. In other words, the payable metals from the concentrates is higher than the payable metals from leaching in our own plants. But our own plants are lower cost and the smelter cons are higher cost. So there'll actually be a slightly higher cash cost per ounce on the processing of those cons. Slightly more payable metals and the impact on the bottom line is slightly more positive cash flow. So all in all, a good thing. It will also allow us to completely update our metallurgical balance at each plant and start looking at additional ways to optimize recoveries at Guanacevi and Bolanitos. We do expect to resume leaching of the concentrates, Bolanitos concentrates, sometime in the future. But given the competitiveness of the concentrate sales contracts, we're not in any rush there. And we'll obviously assess the performance of those contracts on a monthly basis throughout the year. We've also, we're in the process of arranging to enter into a 6-month sales contract for additional cons over the next 6 months and that will allow us to do the metallurgical work. So we are forecasting yet another good year of operations in 2013. The concentrate sales contracts which should allow us to outperform our guidance at Bolanitos. And even though, the cash cost are guided significantly higher this year. That's very much related to the high-cost El Cubo operation. And we can tell you that we went cash-flow positive on El Cubo late last year so we are now investing capital at El Cubo that we're actually making off of the operation. The outlook is for the cash cost to come down sharply throughout 2013, probably, a drop and a plateau and a drop and a plateau. But towards year end, we'll be looking at cash cost at El Cubo much closer to our consolidated outlook for the year and we'll look to continue to track the cost down in 2014. So I think that's probably all I want to say at this point in time. And Terry Chandler, our VP of Corporate Development is here, if you have any questions on the broader markets and M&A activity. Dan Dickson, our CFO, is on the line for all financial questions. And operator, at this time, let's open it up for Q&A.

[Operator Instructions] Our first question today comes from Heiko Ihle of Euro Pacific Capital. Heiko Ihle - Euro Pacific Capital, Inc., Research Division: Meg and Brad, I'm just trying to get some more color on those cash costs for production that you guys put out. I mean, obviously, you raised the range to $9 to $10 per ounce and that's a little bit higher than what I had modeled. And obviously, with El Cubo, it will raise the overall cost even though it will go down in 2013, down from the levels we saw in '12. But can you just sort of walk me through your assumptions that you're using to get to that cash cost please? Daniel W. Dickson: Heiko, it's Dan here. The assumptions in our base case is about $30 -- it's $30 silver and $16.50 gold. And I think the biggest driver for us and what pushed our cash cost, really, at Bolanitos and at Guanacevi this year, they're relatively flat, except for the fact that our grams per tonne of silver coming out of Guanacevi is lower than in previous years. You saw it at the end of 2012, our grades went from about 270 grams per tonne down into the 215 grams per tonne range. We modeled 215 grams per tonne for the year and at Bolanitos, same thing, I think we averaged 148 grams per tonne or high 40s and we're slightly lower for 2013, right around 140 grams per tonne. So that's what's driving that change in cash cost because our cost per tonne is relatively similar. And then, over at El Cubo, it really comes down to when we're projecting that stuff and obviously, we don't have a long history with Cubo, but we have assumptions that we've made. We've been very conservative with our assumptions, even from a production standpoint that we're going to see similar to slightly higher grades. But we weren't trying to get aggressive in that model. So again, to get into that $9 range that you're seeing in our guidance, it's $16.50 gold credit. Heiko Ihle - Euro Pacific Capital, Inc., Research Division: Got it. How should I look at this on a quarter by quarter basis, if you're willing and able to go into that sort of detail? Bradford J. Cooke: I was just going to say, in general, we don't guide on a quarterly basis. But Dan, do you want to comment? Daniel W. Dickson: Yes -- no, I was going to say the same thing. I don't -- we don't normally guide on a quarterly basis. I mean, the key is just driving where our production is on a quarterly basis. And in the past, we've typically been lower in the first 6 months, higher in the back 6 months. But this year, with El Cubo already -- Cubo pretty much can be steady-state, there is a little bit of a drive-up at the end of the year. But Bolanitos and Guanacevi, we ended the year at 1,600 tonnes at Bolanitos and 1,200 at Guanacevi. We can push Guanacevi a little bit more. But at the same time, those are going to be pretty steady-state for the whole year. So I would model it pretty steady-state for the year, with El Cubo, hopefully, coming down from Q1 down to Q4. Heiko Ihle - Euro Pacific Capital, Inc., Research Division: That's fair. Bradford J. Cooke: I can give a little bit more color if you'd like. I mean, Guanacevi is now a steady-state operation. So really what you're looking for is what could go wrong and what could go right. At Guanacevi, we're guiding I think fairly low silver and gold grades and so what could go right is that we could beat those grades. And what could go wrong is if we continue to see grades drop. And of course, there's only a small gold credit at Guanacevi. So the gold price shouldn't have a dramatic impact on Guanacevi's cash cost. So moving to Bolanitos, a little bit different there because again, as we push the volumes up with the expansion last year. And it would end with the mine actually outproducing the plants this year. We're currently running 1,700 to 1,800 tonnes per day at the mine and the extra tonnes are going over to Las Torres for processing. We're clearly on track to do better than our guidance, in terms of produced metal. And again, the main factors there are grade and metal prices. Grade, I don't think you're going to see much variation off of what we've guided and we're pretty confident in that asset. And the main variable I think is gold price. Because of the very significant gold credit, we do see a move in the gold price. It would have a fairly strong impact on -- positive impact on Bolanitos' cash cost. Same thing at El Cubo. I mean, El Cubo is the loose cannon amongst the 3 mines, obviously, we're still wrapping our arms around it and trying to get it to perform. Fortunately, it's turned its first corner. Let's say it's turned first base in that it went from losing money to making money. Now second base is to make that sustainable and continue the trend of less dilution, higher grades, better cash flow. And on cash cost at El Cubo, because they were so high at Q3, Q4 last year, I think that's where we have the most to gain. And again, it's 2 things, grade and gold price. Because the reserve grades are very comparable to the Bolanitos reserve grades and operating grades. But the operating grades at El Cubo are still a fraction of the reserve grades. That's where we can make some real progress. And of course, if the gold price moves, that could also be beneficial. So that's my color. Heiko Ihle - Euro Pacific Capital, Inc., Research Division: That's more color than I thought you were going to give me, to be honest with you. So with silver below $29 right now you guys, obviously, have stockpiled some metals in the past when you consider the price to be sort of low. I'm trying to model cash flow quarter-by-quarter. Are you planning on doing this at all in 2013, or have you even done it in Q1, I mean, Q1 is going to be over in 2.5 weeks? Bradford J. Cooke: Yes, our decisions in the past to sell or not to sell any given lot and to stockpile or accelerate sales because we've done both in the past for the benefit of the Treasury, is in the back burner this year because of our cash needs at El Cubo. We're in the peak spending period Q1, Q2 and our capital spending will diminish significantly after Q2. We modeled all of our spending this year on the cash flow, but of course, the cash flow is spread over 12 months. So that's why we put the line of credit in place. So that's also why we're looking now to sell a good chunk of our inventory, almost all of our concentrate inventory before month end. That decision is simply a cash flow decision. We want to see that cash in the Treasury through Q2, to help manage our spending, cover our spending. And then, as we go forward in the year, we'll make our decisions based on where we stand versus spending and cash flow.

The next question comes from Chris Thompson of Raymond James. Chris Thompson - Raymond James Ltd., Research Division: A couple of quick questions here. First, on Guanacevi. What's the plant doing at the moment by way of throughput? Bradford J. Cooke: It's running around 1,400 tonnes per day in March. It was a bit lower than that in January. We actually had a cone crusher go down for a couple of weeks. It's playing catch-up now. As you know, the plant's rated at 1,200 tonnes per day, but we've had the -- both the mine and the plant up to 1,400 tonnes per day late last year and that's where it is now. That was hope -- we were hoping to actually get a bump in production but the grades have come off as we go deeper and deeper into the Porvenir Norte mine. So I think our guidance is solid for the year, 2.5 million ounces, I think, is deliverable. But it's presuming 1,400 tonnes per day at the slightly lower grades that we've guided to compare it to previous years. Chris Thompson - Raymond James Ltd., Research Division: Great. Right. Just so looking at, I guess, cost per tonne milled here. I mean, I think you delivered about $100 per tonne milled, Q4, can we see that come down anything with increased sort of mill throughput there, or is that pretty much steady-state? Bradford J. Cooke: Dan, you want to comment? Daniel W. Dickson: It's all right. It just cut in and out here, I'm sitting here in Mexico, Chris. Can you repeat your question? Chris Thompson - Raymond James Ltd., Research Division: No worries. So I guess, the question relates to cost per tonne milled for Guanacevi, I mean, whether we can expect a slight reduction, I guess, from $100 per tonne milled in Q4? Daniel W. Dickson: Yes, so Q4 $104 per tonne milled. I mean, that's our mining processing and indirect cost in there and specific for processing it, it was just under $30. But in our -- we came in at $103 per tonne milled for the year, we expect to be steady-state similar cost. We had some costs pushed down, with some prices coming down in the plant. But at the same time, I think we had 1.6% increase across the board in our budget. So I wouldn't expect a reduction in cost at Guanacevi. The additional throughput that we're seeing a little now in March, really, is offsetting a little bit more cost, higher cost in the mining being the lower in North Porvenir, and then, additional wage increases out of Mexico. Chris Thompson - Raymond James Ltd., Research Division: Okay, great. Just moving on to Bolanitos quickly. As far as the current mine output, what are we dealing over there at the moment, Brad? Bradford J. Cooke: The mine has been doing, since fourth quarter of last year, 1,700 to 1,800 tonnes per day. Actually averaged just under 1,800 tonnes per day in Q4 and it's about 1,750 tonnes per day so far this quarter. The bottleneck, clearly, was what to do with extra tonnes. So we started stockpiling them and then, we started processing them early this year over at the Las Torres plant, started building up extra concentrates. So today's announcement, obviously, was to debottleneck our ability to outproduce at Bolanitos. We still don't have a fixed management plan. We're feeling our way. But we do think the mine is capable of 2,000 tonnes per day and we've fought that for several months and we've actually been there on a weekly basis. So focus is obviously still on El Cubo and we're not going to worry about Bolanitos in Q1, Q2. Probably continue at the 1,800-tonne run rate into Q2 and then, I'll look to maybe take it higher in Q3, Q4. But we'll let you know if and when we take that decision. Chris Thompson - Raymond James Ltd., Research Division: Great. Brad, just a final question. Obviously, I guess, the question is relating to a mill expansion, I guess, at Bolanitos. And what would give you guys, obviously, comfort to consider that in a very serious way? I understand that there's a lot of work being directed at El Cubo, but what can we sort of look for from Bolanitos? I mean, we saw good numbers by way of the reserve resource estimate last month. Any comment to that, Brad? Bradford J. Cooke: Yes, well, so we have plans to complete the plant reconstruction at El Cubo in Q2 to 1,600 tonnes of capacity. It's currently running around just shy of 1,200 tonnes per day. So we're -- it's implying that there's a future expansion at El Cubo. If we don't expand El Cubo this year, that extra capacity could be used for Bolanitos. So no need to go into a plant expansion of Bolanitos this year. However, so I guess, the answer to your question is, exploration success at El Cubo. If we some time or during the course of the year can come up with bona fide new discovery or bigger reserve blocks that would justify taking the throughput up at El Cubo, that would constrain what we can send through the El Cubo plant from Bolanitos and force our hand, if you will, on a decision for a plant expansion. Chris Thompson - Raymond James Ltd., Research Division: So the idea would be to continue sort of outproducing by way of mined production at Bolanitos, utilizing the capacity in the mill at El Cubo? Bradford J. Cooke: Yes, so really what my answer should be is what is our wish list. Our wish list is that we make a discovery this year that allow us to model, filling the El Cubo plant with El Cubo ore and we would then enter into design and construction of a plant expansion at Bolanitos. We certainly haven't taken that position yet, but that's what's on our wish list for the year.

The next question comes from Tom Hartman, a private investor.

I was just wondering, first of all, what roughly is your percentage of labor cost, compared to overall cost and do you see that increasing also? Daniel W. Dickson: It's Dan here. It's funny you asked that, it's 31% at Guanacevi, 32% at Bolanitos and 33% at Cubo. It's something I was just looking at a couple of weeks ago. We typically do see inflation increases on wages in Mexico. And obviously, Mexico inflation is a little bit higher than what we see in the United States or Canada. But with the increased tonnage, we typically offset that increase in labor cost or even the FX rates have taken care of that in the past as well. The 30% or 32% is a good average to use as far as labor cost on a per tonne basis, or on a per ounce basis, obviously.

Is that kind of within industry standards? And do you see, like -- are you locked into, or I'm assuming that you have unions to deal with. I'm not 100% sure if you do. But do you have a long-term contract locked in with labor now or no? Daniel W. Dickson: The 30% is standard, we do benchmarking with other companies in the Mexican space and we're right in the 75 percentile paying our employees. We're right where we want to be. As far as unions, we have 2 unions at Guanacevi and Bolanitos that we've never had issues with. And obviously, at El Cubo, we acquired what many call the Black Union, the Mexican national mining union. We're working on the contracts. We've got some -- and Brad might be able to speak more to this, but we've been working on a contract. We've gone through a lot of negotiations. We've settled a number of issues. We still haven't signed the final contract, but we don't expect any issues going for that. Can you give more color on that, Brad? Bradford J. Cooke: Yes, so in Mexico, by labor law, every union contract is negotiated every year. So there is no long-term labor agreement. It's always an annual event for every industry across the board. Mining is no different. And at Guanacevi and Bolanitos, we have 1 union who have been, historically, very cooperative and we've never had any labor disruptions at those operations. At our newly acquired El Cubo mine in the Guanajuato district, we inherited the National Syndicate of Miners union. And while they have a spotty track record, so we say, both nationally and particularly at El Cubo in recent years, we took the view that this is our workforce and if there were issues, then, we would do everything on our part to resolve past issues. And not only that, more importantly, to take the high road and try and set higher standards of safety, higher standards of performance and ultimately, higher standards of pay. And so far, the union has been, I think, forthright in their discussions with us and we have concluded our discussions for the year and we're simply waiting for the union to approve all of the discussions that we've conducted. So we are expecting a positive outcome shortly. And that will be it for the year.

That's really good to know because obviously, we all want to make money whether we're working for it or investing for it. I just wanted to touch on security issues. Because we all hear the stories of things that are happening in Mexico as far as organized crime and everything. Is that an issue at all with your mines or no? Bradford J. Cooke: Yes, we get a lot of questions, particularly in America with regard to the security issue in Mexico and I'm going to give you a couple of answers. The broader picture is that 99.9% of Mexicans get up every day and go to work. And of course everybody's horrified by what they see from time to time on TV. But to be honest, most, the vast majority of the drug violence is along the U.S. border, highways leading to the U.S. border, cities, bars and bingo halls on those highways. And that's not where you find mines. And most mines are often at the heart of the Sierra Madre or in the middle of Altiplano. So in general, I would say, the sector has not had many challenges. There's been issues from time to time. And in our group, so to answer your question specifically about security, Guanajuato really being in the heart of, not only the geographic center of Mexico, but kind of the population center. You've got Guadalajara to the west and Mexico City to the southeast. So there really is no issues with narco gangs in Guanajuato. Guanacevi is a much more remote location and so we presume that it's a grow area for certain crops and we see them and they see us. But so far, so good. And I think that's probably the prevailing opinion amongst other miners, too.

The next question comes from Arthur Friedman of Friedman Asset Management.

Thank you for taking my question, I actually, have 2. The first one is can you explain, you talked about El Cubo and turning the corner on the first base, could you explain like what were some of the specific challenges you faced and how did you meet those challenges? Bradford J. Cooke: Wow, that could take 1 day or 2. Let's just say that the previous owner really didn't want to be there, and had pretty much given up on the operating performance of the mine. So it wasn't like there was 1 or 2 things wrong, and it's not like there is a silver bullet to fix it. It really goes back to management 101. Basically, they had let pretty much everything slip from management to supervision to safety to -- and of course, that impacts performance. So it was losing money. We've simply gone back to management 101. That is, way more hands-on supervision, training, new equipment, focusing on ore, not least, safety. Just a quick snapshot, what we inherited from AuRico at El Cubo had a track record of between 50 and 70 lost time accidents per year. We don't do 5 or 10 at our other operations. So that is a symptom, not only of the safety culture, or lack thereof, but of the operating culture. And the good news is that we've had a dramatic immediate and positive effect on the safety culture by dramatically increasing safety training, safety meetings, changing safety policies as needed. And we're seeing it now on the safety performance, a significant reduction in lost time accidents at El Cubo. There are tons of work to do there. But that symptom is also, I think, reflective of the turnaround in the operating performance, with slightly higher grades each quarter, less waste, more tonnes going to the plant. And therefore, we think we're going to see a nice drop in cash cost this quarter. So I hope that gives you a flavor for what we've been addressing at El Cubo.

Actually, that's a very complete answer. I have one other question, which is one of my personal specialties having to do with energy and fuel cost. Could you explain the output of each mine, where does it go and how does it get there? I mean, are you using trucks or rail and what percentage of your rail cost or fuel cost. You touched on the labor earlier, what about your fuel cost? Daniel W. Dickson: You want me to take that one, Brad? Bradford J. Cooke: Yes, go ahead. Daniel W. Dickson: Yes. We're all underground mechanized mines. Our fuel cost, when it comes to diesel, is actually quite small, less than $200,000 a month at each operation. One is even just above $100,000. So it's actually barely into our top 10 cost. It's something we don't track like that. And then, from a power cost, we're on the local state grid, the CFE. I cannot tell you how much kilowatt-hours we use on a monthly basis. Unfortunately, I don't have that in front of me and haven't actually looked into that. It's something I leave to the operations and the engineers. But as far as its cost, the big open pit mines are going to use a lot of fuel. For us, we don't use near as much as what you'd expect. I hope that answers it, but it's not prevalent in our costs as it would be i.e. labor reagent is our next cost, explosives, drill bits, et cetera, et cetera.

Great. That actually helps. Because I was looking at, like, a lot of the trucking industry in the U.S. is switching to natural gas to save cost over diesel. But if your actual costs are low to begin with, then, that wouldn't probably be cost beneficial? Daniel W. Dickson: No. No, it wouldn't be.

The next question comes from Benjamin Asuncion of Haywood Securities. Benjamin Asuncion - Haywood Securities Inc., Research Division: I think most of my questions have been answered, but maybe if I can just kind of get an update with respect to the independent review on the metallurgical test balances, kind of where do you see the numbers dropping out at Guanacevi and kind of how that compares. Is that similar to recoveries that we're looking in 2011? Bradford J. Cooke: So we stopped feeding concentrate into both the Guanacevi plant and the El Cubo plant, I'm talking about Bolanitos cons here, February 1, and so we've really only had 1 month spend to evaluate. And to be honest, there's still concentrate in circuit at Guanacevi. So it's too early to say. But because of the 6 months sales contract, we will have now ample time to completely reassess the metallurgical performance and hopefully, improvement at Guanacevi. Suffice it to say that in the first 2.5 months of this year, we haven't seen much in the way of change yet. Benjamin Asuncion - Haywood Securities Inc., Research Division: Okay, and just turning quickly to Bolanitos, in Q4, we saw obviously, the impact of the expansion in terms of production and throughput. We don't really quite get the same leverage on operating cost. And I think you're around $76 a tonne. Can you kind of give us some comments on, are there further synergies that haven't really flowed through that we might be able to see some pressure, at least, downwards on some of the operating costs? Or is sort of Q4 pretty reflective of what we'd be looking at going forward? Bradford J. Cooke: Dan? Daniel W. Dickson: Yes, Ben, the $76 per tonne is kind of reflective going forward. Part of the reason we've been able to ramp up to the 1,800 tonnes per day -- even sometimes 2,000 tonnes per day coming out of the mine is we've brought in contractors to help get us up to that level. We did expect to see some synergies in Q3, Q4 with how close all those veins are and we did significant development there last year. In fact, it's one of the things I've been looking for is our mining cost, on a per tonne basis, to come down and we haven't seen that come. We're hoping it's going to come, but it's actually not built into our budget. We're relatively conservative from a budgeting standpoint. And ideally, we do see some costs come down now that we're kind of up going, everybody knows what they're doing. It's becoming more steady-state in the mine rather than pushing and pushing going from the 1,200 tonnes to 1,600 tonnes and even up to 1,800 tonnes. So we hope it's going to come, but it's not built into our model. I'll let you know in the coming quarters, I mean, we'll see yet whether we're getting some synergies there or not in the mine. From a plant standpoint, we've been relatively steady-state there too. And ideally, we get a couple of bucks there or a $1 there. So not a significant drop in the processing cost and then where we have seen and then start to seen it is in the indirect cost. Obviously, we're not increasing the amount of accountants and supports around the mine, so the increased tonnage will reduce those G&A cost at the mine on a per tonne basis. But unfortunately, so far, we've seen the additional contractors in the mine offset those synergies that we're seeing from an indirect standpoint. So hopefully, it's coming. It's just not there yet. Bradford J. Cooke: And Ben, this is Brad. So just to reiterate what Dan is saying, the main variable for mining cost is our contractor cost. And if they perform, we do better. And if they don't, we do worse. Benjamin Asuncion - Haywood Securities Inc., Research Division: Okay, that's fair. And just lastly, touching on labor. At El Cubo, any sense of when we can start to see the headcount sort of being reduced to a more manageable and efficient level? Bradford J. Cooke: We've undergone attrition since taking over, so I think we're down probably 60 people since July and that attrition philosophy will continue up until the restart of the newly rebuilt plant. And -- so we are expecting, in Q2, to actually undertake a round of layoffs in addition to normal attrition. Normal attrition, by the way, the turnover at El Cubo is surprisingly high and, maybe 50 people a month. So just relying on attrition on over a course of the year, actually, could have a significant impact as well. But we are looking at doing something more proactive in Q2.

Your next question comes from Andy Schopik, a private investor.

Brad, I'd like to get a little more color on the anticipated cash cost trends at El Cubo. Looking at the press release, I see that for the year, the cash cost at El Cubo were apparently above $35.27 per ounce. But in the fourth quarter, it appears that the cash cost there, actually, were higher at $38.52 per ounce. And if I understood you correctly, I believe you've indicated that you hope to get those cash costs down to around a projected consolidated cash cost for the current year of $9 to $10 per ounce. Can you confirm that the fourth quarter cash costs at El Cubo are the peak and from there, there will be a steady quarterly sharp decline in these expected cash costs? Bradford J. Cooke: So Dan, do you want to tackle that one? Daniel W. Dickson: Yes, I'm a little bit nervous that Andy's going to back me into a corner, but -- no, we believe that we're -- we've hit a peak with El Cubo from a cash cost standpoint. I think over the last 6 months, we spent a significant amount of money on training. As Brad alluded to, the LTAs for the first 6 months is incredible. We brought those down and we've got a long ways to go with it yet. I think we've put in about 25 hours of training per head on the 1,000 employees that we have there. And then, just the clean up, the painting, remobilizing our contractors. There's just a lot of things that we have to do and we have to change the culture, bring in studies, study the metallurgy in the plants. We've put a lot of that stuff that we're expensing as we incur it into it, which is pushing that cost up, so we've actually seen from a cost per tonne standpoint. AuRico, before we acquired it, was running about 95. Before the strike, they're actually running in the high 60s, low 70s, 95 after the strike ended and we've actually pushed that up, as you saw, 115 for Q4, 117 for Q3. And all those additional costs relate to legal cost, training cost, et cetera, et cetera, to get El Cubo to where it needs to be so we can start pushing cost down and operating that mine to where we know and think we can operate it. As far as exactly how it's going to step down, we don't know. It's going to be 2 steps forward, 1 step back, 2 steps forward, 1 step back. We see the gradual decrease, but again to what we've said, we don't give specific guidance on quarter to quarter to quarter, partly, because a lot of things can change. There's a significant gold credit at El Cubo, so the movement in gold is going to change how those cash costs are going to look each quarter. At the same time, we're looking to focus on driving that cost per tonne down, increasing the grades per ore going to the plant. And with that, it's going to drive, obviously, our cash cost down. I can't give you, specifically, Q1 is going to be this, Q2 is going to be that, 3 and 4 is this. But we can say we've invested significantly in the first 6 months and a lot of that stuff is going through our expenses. So with that cost per tonne that we're expecting to come down, we have to start to perform at El Cubo to do that. And we think we've turned the corner on that stuff, like Brad alluded to. It starts with safety and it's a good barometer for how the rest of the mine's operating. We've seen our LTAs significantly come down. We expect LTA to come down again here in Q1. So with that, we can just focus on the process and I think everything else is going to take care of itself. Bradford J. Cooke: Yes, and Andy, if I could chip in. It's Brad here. So I can also give you our wish list, but just don't hold us to it. It's certainly not guidance. On our wish list -- and I can also talk about the drivers behind the wish list. We believe that the steadily rising grades and dropping dilution will finally gain traction on Q1 cash cost. So we are looking for a pretty good reduction this quarter. Q2, the drivers will be in the workforce and the inauguration of all the new surface infrastructure there, especially the rebuilt plant. And so we'll look for maybe an incremental reduction in Q2 -- no, Q3 will be the first full quarter with the newly rebuilt plant and the newly retooled workforce. So I think, once again, I'd look for maybe a little bit bigger stepdown in Q3. And again, this is our wish list. We've got a lot of loose cannons still going on at El Cubo, as Dan mentioned. And if we get our arms around those cannons, then we'd like to see the months of December be closer to our $10 consolidated cost than the $35 cost that we had last year. So I know it sounds like we're not answering the question. But given the number of variables at El Cubo, all we know is that the trend right now is in the right direction. Q1 should actually look pretty decent compared to Q4 and we'll just continue that trend.

Okay, fair enough. Again, I just want to be sure that you're not setting an expectation relative to this particular operation that may not be likely to be achieved in the time frame, given the context of the discussion on the call today. Bradford J. Cooke: Sure. Well, we went through this at Bolanitos and it did take 8 quarters to deliver a full turnaround there and that is what we're budgeting at El Cubo. And think about it, we're 2.5 quarters into the El Cubo turnaround, so it's still early days yet. In fact, in our PowerPoint on the website, there's a chart -- I can't remember which page, but it's the operating performance at Bolanitos over 8 quarters, the first 8 quarters and the first 2 quarters at El Cubo. And you can see that they're quite comparable for the first 2 quarters of performance. In other words, they were both ugly.

But there's different parameters involved. Bradford J. Cooke: And as the bulk of the upside is ahead of us, but we do expect to make significant gains on cost at El Cubo this year. I should also point out that conceptually, Bolanitos went to negative cash cost only because we were able to make exciting new high-grade discoveries and fast-track the development. And it was the opening up of new mines at Bolanitos that actually took the cost to negative territory. We're not budgeting negative territory for El Cubo, but we do think, with new discoveries at El Cubo, that is a cornerstone for turning the cost from kind of either industry average or higher, to well below industry average or maybe, even close to 0. So we're not loving that this year clearly, but that is part of the game plan. That's why we bought the asset. Everyone of these 3 mines, we bought them for 2 reasons. We thought we could turn them around from losing money to making money and we felt there was really compelling exploration potential on them. If we're right and we've turned discoveries into new mines, then it has a dramatic positive impact on cost.

Hopefully, it will all pan out. 2 quick questions. On Guanacevi, what is the average ore grade that you expect to mine in 2013? Bradford J. Cooke: We modeled 215 grams per tonne silver and I can't remember the gold's, Dan? Daniel W. Dickson: I want to say it was 0.56 [ph] gold.

Yes, I was looking for silver. So it's 215 grams per tonne? Daniel W. Dickson: Right. Bradford J. Cooke: Yes.

Okay. And also, I did want to ask a question about the silver-gold ratio that you've been using. You've been using pretty much a steady 50:1, which is great because everything's apple to apples, in terms of your actual and your forecast, but is there a particular rationale why you've stuck with that 50:1 ratio? I think based on current spot, it's probably 53, 54 and I don't think it's been lower than 50:1 in quite a while now. I just wanted to ask you what the rationale behind that is? Bradford J. Cooke: Well, in fact, for our modeling -- our internal modeling this year, we went to 55 because it was closer to the current spot ratio. But 50:1, if you want to be able to compare silver equivalents, that's a handy ratio that's close to the last 2 years' range.

The next question comes from Jeremy Hampton, a private investor.

I'm a new investor in your company. You've provided quite a bit of information that I was interested in. I was happy to see the 70 percentile on labor cost. The question about labor was the availability of skilled miners in your areas. Bradford J. Cooke: So that is probably the biggest challenge of our industry worldwide. The availability of skilled personnel across the entire spectrum of jobs, from head office to site management to underground miners and everything in between. And so we decided to do something about it. And in addition to aggressively seeking skilled personnel, 3 years ago we started our own mine training schools, principally, to give the young and unemployed career skills in mining. There's no obligation for them to come work for us, but I'm happy to say that 90% of our graduates, and we've had over 90 graduates in the last 3 years, have come to work for Endeavour. So that's one way we're grappling with this skills problem.

Okay. And the other question was you showed a marked increase in grades at El Cubo. I was wondering if you also had an equivalent increase in reserves? Bradford J. Cooke: Well, so when we bought the mine last year, we actually slashed the reserves. We felt that the reserves of the previous owner were inappropriate and far too aggressive. So we took the reserves down upon closing the deal last year to what we felt were conservative and doable. And yes, I actually think that both reserves and resources have a good chance of climbing this year. We are aggressively drilling both in and around the mine in reserve blocks. The concept there is that small, scattered 5,000-tonne or 10,000-tonne reserve blocks here and there are not only hard to mine and manage, they are not terribly profitable. But many of them are open. And so we're trying to drill off select areas and accelerate the development. So instead of one level, you end up with multilevels. And instead of 5,000 tonnes or 10,000 tonnes, you end up with 50 tonnes or 100 tonnes per block and that becomes much more manageable and therefore, more profitable. Outside of the mine, we have a pretty aggressive surface exploration program this year, over $3 million of surface drilling on multiple targets. And conceptually -- and this, again, bears on our interest in buying this property. The northernmost 4 kilometers of the El Cubo property is where all of the 160 years of historic production and all of the current production are located. But the southernmost 4 kilometers where there's numerous known outcropping silver-gold veins. They're not obviously ore grade, or they would have been mined historically. But there's clear targets in multiple veins in the southernmost 4 kilometers of the property that really have never been drilled. And so that is the upside. We don't feel we paid for that. And I think if we're good and lucky, we'll get into a discovery or 2 and hopefully, be able to turn them into new mines over the course of the next couple of years.

Can you give an estimate of when you might have an update on your reserves there? Bradford J. Cooke: Yes, we only do year end reserve and resource updates. So look for an announcement next February, probably, just like we did this year.

Okay. And then, the last question, to an individual investor like myself even more scary than the narco gangs is what I read about derivative liability loss that was in your release here. Do we have -- can we anticipate other types of financial derivatives or any other items like that, that might not necessarily be related to mining, but to financing, but..? Bradford J. Cooke: Jeremy, actually, we don't own any derivatives and so I should let Dan clarify what that line item actually is. Daniel W. Dickson: Yes, Jeremy, it's funny that you asked that. I get that question often. The derivative liability is something that came into effect for us when we moved from Canadian GAAP to International Financial Reporting Standards. And this derivative liability relates to warrants that we have that are actually well in the money that are priced in Canadian dollars and obviously, our functional currency is in U.S. dollars. Because of the difference in the currencies, we've got a derivative on these warrants. The movement in the value of those warrants, which is valued through Black-Scholes, the movement of that, whether it's a gain or a loss, flows through our income statement and then, we show those warrants as a liability on our balance sheet. And that's why we actually have an adjusted earnings. We pull that out because we see it as an equity instrument, we don't see it as a liability. I think most of the weighted average price on those warrants is about $1.47. There's 900,000 out related to it. Those come off the books February 14 -- or February 25, 2014. So it's not the normal derivative liability that you're thinking as far as hedges, whether it's foreign exchange or silver-gold hedges. It's surely an accounting number, something that, like I said, we adjust out because I don't think it means a lot to our readers. Bradford J. Cooke: Jeremy, this is Brad. I don't know if you're an accountant or not, but I'd be happy to put that into plain English. We have warrants outstanding. As Dan mentioned, they're in the money. As our stock goes up, the warrants are worth more and therefore, we have to carry a larger loss for the increased value of the warrants. So as our stock goes down, the warrants are worth less, so we actually record a gain. So it's completely counter-intuitive to what a lay person would think, but that's what it is.

But at any rate, do you only anticipate 1 more year when these warrants will be out or? Daniel W. Dickson: Yes, we anticipate that they will be exercised before February 2014. Like I say, they're well in the money and people would want it exercised, obviously.

Now at El Cubo, do you anticipate any external financing or you expect to be able to generate it internally? Bradford J. Cooke: No, no, this is -- all of our spending at El Cubo, most of which is capital, is covered by cash flow for the year. But the spending is not spread out over the year. It's mostly first half. So that's the reason why we put the line of credit in place. It's also the reason why we decided to sell our concentrate inventories. But yes, we're expecting that all -- everything is internally financed and no need for external financing.

The next question comes from Dale Mah of Dundee Securities. Dale Mah - Dundee Capital Markets Inc., Research Division: Just quickly again, back to El Cubo. I feel like we're doing -- flogging a dead horse there. But just quickly on grades, the mine grades are much lower than the reserve grades, which are running just north of 160 grams per tonne of silver. So is it an issue of just accessing the higher grade resource blocks or is it just not reconciling with your modeled grades? Bradford J. Cooke: It's probably both. I mean, the reserve grades are scattered in many small blocks so we can't access the reserves, in other words, we're mining reserves but we're also mining resources. The principal issue has historically been dilution. And while we do model some dilution, historically, the mine has had significant excess dilution. We've made some gains on dilution, that's why the production grades are up. And just to reiterate, for those still listening, when we bought the mine, what we inherited was running 70 grams of silver and 1 gram of gold in July of last year, and we managed to get the year's average up to, I think, closer to 90 grams silver and 1 point -- I can't remember, 1.4 gold maybe. And so over the course of this year, we'd like to incrementally improve on that. Expressed as a silver equivalent, 90 plus 1.4 works out to what, about 160? So that would be our own internal guideline for the year, is that we want to beat that number and the reserve grades are up in the 250 range, silver equivalent. So there's still lots of upside, but it's all about managing dilution and we can only get there incrementally. Again, when you're -- so specifically, if you have a 5,000-tonne or 10,000-tonne reserve block, then, you can only develop it in vein, you cannot develop in the foot wall. And if you're in the vein, you're basically when you're in ore, you set up to mill and when you're in waste, it just goes to the dump. So you have no flexibility in small reserve blocks to manage your dilution, whereas, when you drill out larger reserve blocks and can then justify putting all of the developments in the foot wall, now you can access the ore and just mine the ore and you don't actually have to mine the low-grade vein. It doesn't go to the waste, it stays in the mine. So that's an example, a simple example of what we're dealing with and of course, drilling out bigger reserve blocks, developing multiple levels and then, enjoying those higher grades and lower dilution, is a function of time.

That concludes the time allowed for questions today. I'll now turn the conference back over to Meghan Brown for any closing comments.

Thanks, operator, and thanks, everybody, for dialing in today. If there are any follow-on questions, please feel free to call the office. Brad and I are both here today and available to answer any additional questions. Bradford J. Cooke: Thank you, all.

Ladies and gentlemen, the conference is now concluded. Thank you for joining and have a pleasant day. Goodbye.