Endeavour Silver Corp.
FRANKFURT : EJD
PINK SHEETS : EDRGF
TSX : EDR

Endeavour Silver Corp.

November 14, 2006 16:14 ET

Endeavour Releases Third Quarter Report for 2006 and Restates Second Quarter Financial Statements

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Nov. 14, 2006) - Endeavour Silver Corp. (TSX:EDR)(PINK SHEETS:EDRGF)(FWB:EJD) released today its unaudited interim financial and operating results for the Third Quarter ("Q3") and Nine Month periods ended September 30, 2006. The Company also restated its unaudited interim financial statements for the Second Quarter ("Q2") ended June 30, 2006.

The financial statements and management discussion and analyses for both quarters have been filed on www.sedar.com and are reported in $CA. ($US amounts reported herein were converted using the 1.1215 average Q3 exchange rate). Highlights in the Third Quarter 2006 were as follows:



Operating Highlights Third Quarter Nine Months
--------------------- --------------- ---------------

- Silver Production 332,407 oz 983,366 oz
- Plant Throughput 31,201 tonnes 83,591 tonnes
- Mine Output 40,069 tonnes 118,194 tonnes
- Metal Recoveries 82.0% Ag 79.9% Ag

Financial Highlights Third Quarter Nine Months
--------------------- --------------- ---------------

- Gross Revenues US$ 2.8 million US$ 9.7 million
- Operating Cash Flow US$ 0.9 million US$ 5.0 million
- Operating Earnings US$ 0.6 million US$ 3.5 million
- Net Gain (loss) (US$ 0.1 million) (US$ 3.4 million)


Corporate Highlights

- Balance sheet has never been stronger, with working capital of US$41.9 million, after closing a US$4.5 million financing from special warrant over-subscription.

- Also raised US$1.9 million from warrant exercise by Industrias Penoles who now hold 5% of Endeavour's issued shares.

- Acquired remaining 49% interest in Guanacevi Plant through purchase of Metalurgica Guanacevi SA de CV.

- Expanded into second major silver district in Mexico, through acquisition of Minas Nuevas and other exploration properties in Parral.

- Reported exceptional drilling results from Porvenir mine, including 324 gpt silver over a 45.2 m length and 3898 gpt silver over a 1.0 m length.

Third Quarter Silver Production

For the nine months ended September 30, 2006, silver production from the Guanacevi Mines Project jumped 48% to 983,366 oz and gold production increased 20% to 2062 oz (1,091,621 oz Ag equivalents at 52.5 Ag: 1 Au ratio) compared to the same period in 2005. The sharp rise in metal output can be attributed to increases in plant throughput (up 11% to 83,591 tonnes), ore grades (silver up 23% to 455 gpt and gold up 3% to 0.94 gpt), and metal recoveries (silver up 8% to 79.9% and gold up 3% to 81.2%).

In Q3, 2006, however, silver production dropped 5% to 332,407 oz and gold production fell 30% to 599 oz (363,855 oz Ag equivalents) compared to Q2, 2006. The modest drop in metal output reflected a decrease in ore grades (silver down 18% to 404 gpt and gold down 38% to 0.73 gpt) due to processing more development muck and a slowing of the planned plant throughput (up only 13% to 31,201 tonnes) due to delays in the installation of a large new ball mill and related infrastructure.



Comparative Table of Mine Operations
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Ag Au Ag Au Ag Au
Period Tonnes (gpt) (gpt) (oz) (oz) (%) (%)
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Q1, 2005 19,898 417 0.97 209,066 495 78.3 79.4

Q2, 2005 24,861 256 1.00 147,405 630 72.1 78.9

Q3, 2005 30,360 434 0.79 306,374 596 72.3 77.3

9M, 2005 75,119 371 0.91 662,845 1721 73.7 78.5

Q1, 2006 24,805 479 0.95 300,872 605 77.4 79.5

Q2, 2006 27,585 492 1.18 350,087 858 80.3 82.2

Q3, 2006 31,201 404 0.73 332,407 599 82.0 81.8

9M, 2006 83,591 455 0.94 983,366 2062 79.9 81.2
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Q3, 2006 : Q2, 2006 +13% -18% -38% -5% -30% +2% -1%

Q3, 2006 : Q3, 2005 +3% -7% -8% +8% 0 +13% +6%

9M, 2006 : 9M, 2005 +11% +23% +3% +48% +20% +8% +3%

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Plant Operations

A newly refurbished, 10 1/2 ft x 12 ft, 600 tonne per day ball mill is now being commissioned for start up this month, replacing an old 5 ft x 7 ft ball mill. Having already rebuilt the jaw crusher, re-conditioned two cone crushers and constructed a new 600 tonne fine ore bin and conveyor system, Endeavour is now nearing completion of its US$1.3 million plant refurbishment program for 2006. The plant is currently operating at only 350 tpd whereas the expanded crushing and grinding circuits will have a revised capacity of 800 to 1000 tpd.

Mine Operations

The Porvenir mine, part of the Guanacevi Mines Project, produced 40,069 tonnes ore (436 tpd) in Q3, 2006, down 12% compared to Q2, 2006. This minor reduction in mine output was the result of heavy rains in September that caused an incursion of water into the adjacent Santa Cruz mine. Some mining crews were seconded from the Porvenir mine to Santa Cruz to stop the water inflow and repair some damage in the Santa Cruz shaft.

Because the Porvenir mine output continued to outperform the plant throughput in Q3, 2006, an additional 8,869 tonnes ore were added to the ore stockpiles at the plant. These stockpiles totaled 49,069 tonnes grading 322 gpt (containing an estimated 508,046 oz silver) at September 30, 2006, including 43,270 tonnes from the Porvenir mine, 1472 tonnes in custom stockpiles from other small mines and 4569 tonnes in low-grade stockpiles.

In order to expand production and reduce costs at the Guanacevi Mines Project, Endeavour has ordered US$3.5 million worth of new mining equipment, including four 2 yard scoop trams, four 3 1/2 yard scoop trams, two jumbo drills, one compressor and one generator. Three scoop trams have already arrived onsite and the remaining equipment is scheduled for delivery over the next three months.

The Company has also hired its own mining crews who took on about 20% of the ore headings in Q3 in order to complement the work of our mining contractor, who conducted all of the development headings and 80% of the ore headings. Endeavour plans to assume all of the mining operations and retire the mining contract at year-end.

Financial Review

Gross revenues of US$2.8 million in Q3, 2006 were substantially lower than the US$4.7 million gross revenues reported in Q2, 2006. However, the difference can be attributed to three factors: 1) the accrual and settlement of some dore bar shipments to the smelter right at the end of Q2 which had the effect of increasing Q2 revenues at the expense of Q3 revenues, 2) a goodwill loss in Q3 related to the purchase of Metalurgica Guanacevi SA de CV and 3) slightly lower silver production.

There is no comparable nine-month period for 2005 because the financial statements of the Mexican subsidiaries were not consolidated in 2005 and Endeavour changed its financial year-end last year. Realized metal prices during the Third Quarter were US$11.79 per oz for silver and US$621 per oz for gold, very close to the average spot prices of US$11.70 for silver and US$621 for gold.

Operating cash flow (net of cash costs) amounted to US$0.9 million and mine operating earnings (after depreciation, depletion and amortization) totaled US$0.6 million. Sharply lower foreign exchange, stock option, income tax and non-controlling interest expenses resulted in a major reduction in net losses to US$0.15 million in Q3 compared to US$1.8 million in Q2.

Cash operating costs (after royalties and gold credits) rose 7% to US$4.96 per oz silver compared to US$4.65 per oz silver in Q2, 2006, mainly due to the accumulation of ore in stockpiles and the processing of lower grade ores. The Company anticipates that cash costs will drop as the mine output continues to rise and the ore stockpiles get processed the coming months.

Restatement of Second Quarter Financial Statements

The interim unaudited financial statements of the Company for the second quarter ended June 30, 2006 have been amended and restated to include the recognition of income taxes attributable to earnings realized from the Company's mining operations and a future income tax recovery. Final valuation estimates for purchase price allocations to assets and liabilities, valuation estimates for mineral properties, the process plant, future income tax assets/liabilities and their tax effects are not yet complete due to the inherent complexity associated with the valuations.

An income tax expense of US$1.1 million was recognized for the six-month period ended June 30, 2006, which was off-set by an income tax recovery of US$0.3 million and minority interest was reduced to US$0.8 million. Overall this increased net losses to US$3.2 million for the six-month period (or a loss per share of US$0.09). On the balance sheet, the Company recognized an income tax payable of US$1.1 million, and restated and reduced the future income tax liability to US$1.8 million. In addition, certain reclassifications were made to conform to current presentation.

For Q2, the net effect of these non-cash amendments to the Statement of Operations and Deficit are a 16% increase in the cost of operations to US$1.8 million, thereby reducing the earnings from mining operations 14% to US$2.0 million and increasing the loss for the three month period 47% to US$1.8 million or CA$0.05 per share. The Q2 Balance Sheet shows a 53% increase in receivables and prepaids leading to a 3% rise in total assets to US$54.4 million, and new US$1.1 million income tax payable with related adjustments to the long term future income tax and non-controlling interest liabilities that result in a 38% increase in total liabilities to US$6.1 million.

2006 Guidance

The steadily mounting ore stockpiles and increasing Porvenir mine output should result in the ore production for 2006 exceeding the 2 million oz silver production target. However, as previously announced, the delays in installing the new ball mill at the plant will cause a significant shortfall in silver production and cash flows and an attendant increase in cash costs compared to the company's 2006 forecasts. Once the new ball mill is fully commissioned later this month, revised 2006 targets will be released. However, the Company anticipates silver production will increase sharply over the next six months as the accumulated ore stockpiles and rising mine output are processed through the plant.

Endeavour has been drilling underground at Santa Cruz this year with the goal of estimating a new reserve/resource by year-end and developing the Santa Cruz mine in 2007 into the second operating mine of the Guanacevi Mines Project. As a result of the delay in drilling due to the water inflows and related shaft repairs in Q3 and Q4, Endeavour has now re-scheduled the resource estimate for Santa Cruz to the end of Q1, 2007. However, the production start-up of the Santa Cruz mine remains scheduled for Q4, 2007 and the Porvenir mine resource estimate for Q1, 2007.

The ongoing Porvenir surface drilling program continues to deliver excellent drill intercepts, expanding the area of high grade silver mineralization at depth and towards the northwest. As a result, management has a reasonable expectation of meeting or beating the 25 million oz upside resource target for 2006.

SEC Registration and AMEX Listing Application

Endeavour today filed a 40F application for registration with the SEC and a simultaneous application for a listing on the American Stock Exchange (AMEX). There is no certainty Endeavour will receive an AMEX listing but the Company appears to meet all of the requirements for listing.

A conference call to discuss the Q3 results will be held at 1:15 PM Pacific Time today. To participate in the conference call, please dial the following:

- 1-877-461-2814 Canada & USA (Toll-Free)

- 416-695-9753 Toronto area callers

- No pass code necessary

A replay of the conference call will be available until November 28, 2006 by dialing 1-888-509-0081 in Canada & USA (Toll-free) or 416-695-5275 in the Toronto area. The required pass code is 634620.

A simultaneous webcast plus a podcast of the conference call will be posted on the home page of the company's website, www.edrsilver.com.

Endeavour Silver Corp. is a silver mining company focused on the growth of its silver production, reserves and resources in Mexico. The expansion program now underway at the high grade Guanacevi Mines Project in the state of Durango should propel Endeavour into the ranks of the top five primary silver producers.

ENDEAVOUR SILVER CORP.

Bradford J. Cooke, Chairman and CEO

CAUTIONARY DISCLAIMER - FORWARD-LOOKING STATEMENTS

Certain statements contained herein regarding the Company and its operations constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. All statements that are not historical facts, including without limitation statements regarding future estimates, plans, objectives, assumptions or expectations of future performance, are "forward-looking statements". We caution you that such "forward looking statements" involve known and unknown risks and uncertainties that could cause actual results and future events to differ materially from those anticipated in such statements. Such risks and uncertainties include fluctuations in precious metal prices, unpredictable results of exploration activities, uncertainties inherent in the estimation of mineral reserves and resources, fluctuations in the costs of goods and services, problems associated with exploration and mining operations, changes in legal, social or political conditions in the jurisdictions where the Company operates, lack of appropriate funding and other risk factors, as discussed in the Company's filings with Canadian and American Securities regulatory agencies. Resource and production goals and forecasts may be based on data insufficient to support them. Godfrey Walton, P.Geo. and/or Bradford Cooke, P.Geo. are the Qualified Persons for the Company as required by NI 43-101. The Company expressly disclaims any obligation to update any forward-looking statements. We seek safe harbour.



ENDEAVOUR SILVER CORP.
CONSOLIDATED BALANCE SHEETS
(Unaudited Prepared by Management)
(expressed in thousands of Canadian dollars)

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September 30, December 31,
Notes 2006 2005
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ASSETS
CURRENT
Cash and cash equivalents $ 41,378 $ 18,561
Receivables and prepaids 3,484 1,739
Marketable securities 4 2,538 -
Inventories 5 2,549 -
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49,949 20,300
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NON-CURRENT
Due from related parties - 5,688
Plant and equipment 6 8,419 287
Mineral properties 7 12,305 4,125
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20,724 10,100
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$ 70,673 $ 30,400
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LIABILITIES
CURRENT
Accounts payable and accrued liabilities $ 1,307 $ 1,343
Income tax payable 1,570 -

LONG-TERM
Asset retirement obligations 3 and 8 367 -
Future income tax liability 3 2,950 -
Non-controlling interests 1,378 -
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7,572 1,343
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SHAREHOLDERS' EQUITY
Share capital 9(a) 69,175 39,706
Special warrants 9(a) 5,004 -
Contributed surplus 9(c) 5,924 2,558
Deficit (17,002) (13,207)
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63,101 29,057
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$ 70,673 $ 30,400
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Nature of operations 1
Commitments and contingencies 7
Subsequent events 9(a)

Refer to the accompanying notes to the unaudited consolidated financial
statements.

ENDEAVOUR SILVER CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(Unaudited - Prepared by Management)
(expressed in thousands of Canadian dollars, except per share amounts)

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Three Months Ended Nine Months Ended
----------------------- -----------------------
September 30, August 31, September 30, August 31,
Notes 2006 2005 2006 2005
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Revenues $ 3,181 $ - $ 10,926 $ -
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Cost of
operations 2,168 - 5,272 -
Amortization and
depletion 355 - 1,767 -
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Earnings from
mining
operations 658 - 3,887 -
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General and
administration 649 433 2,084 1,380
Foreign exchange
loss (gain) (148) 89 471 (119)
Stock-based
compensation - - 3,602 1,343
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(Loss) income
before the
undernoted 157 (522) (2,270) (2,604)

Income (loss)
from option
interests
in mineral
properties 7(a) (13) (521) 138 (534)
Royalty income,
net - - - 222
Interest income 422 19 877 86
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(Loss) income
before income
tax and
non-controlling
interest 566 (1,024) (1,255) (2,830)

Income tax
expense (317) - (1,570) -
Future income
tax recovery 60 - 407 -
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(Loss) income
before
non-controlling
interest 309 (1,024) (2,418) (2,830)

Non-controlling
interests (482) - (1,377) -
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(Loss) income
for the period (173) (1,024) (3,795) (2,830)
Deficit,
beginning of the
period (16,829) (8,695) (13,207) (6,889)
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Deficit, end of
period $ (17,002) $ (9,719) $ (17,002) $ (9,719)
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Basic and
diluted (loss)
earnings per
share $ - $ (0.05) $ (0.10) $ (0.14)
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Weighted average
number of shares
outstanding 40,123,105 21,642,581 36,443,383 20,900,888
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Refer to the accompanying notes to the unaudited consolidated financial
statements.


ENDEAVOUR SILVER CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - Prepared by Management)
(expressed in thousands of Canadian dollars)

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Three Months Ended Nine Months Ended
----------------------- -----------------------
September 30, August 31, September 30, August 31,
2006 2005 2006 2005
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CASH PROVIDED
FROM (USED FOR):

OPERATIONS
(Loss) income
for the period $ (173) $ (1,024) $ (3,795) $ (2,830)
Items not
affecting cash:
Amortization and
depletion 355 57 1,767 62
Stock-based
compensation - - 3,602 1,343
Income from
option interest
in mineral
properties 13 - (138) -
Unrealized
currency
translation gain 40 - - -
Future income
tax recovery (60) - (407) -
Non-controlling
interest 482 - 1,377 -
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657 (967) 2,406 (1,425)
Net changes in
non-cash working
capital items:
Receivables and
prepaids 1,115 (169) (503) (1,153)
Inventory 295 - (2,158) -
Due from related
parties (74) - - (180)
Accounts payable
and accrued
liabilities (718) (435) (617) 613
Income tax
payable 317 - 1,570 -
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1,592 (1,571) 698 (2,145)
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FINANCING
Issuance of
common shares,
net of issue
costs 1,973 26 27,124 2,058
Issuance of
special warrants 5,004 - 5,004 -
Loans payable - - - 504
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6,977 26 32,128 2,562
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INVESTMENTS
Acquisition of
marketable
securities (958) - (2,538) -
Acquisition of
subsidiary, net
of cash acquired (316) - (463) -
Acquisition of
plant and
equipment (782) (147) (2,770) (284)
Acquisition and
exploration of
mineral
properties (2,020) 1,270 (4,238) (4,265)
Due from related
party - (1,784) - (2,651)
Advance for
acquisition - - - 1,053
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(4,076) (661) (10,009) (6,147)
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INCREASE
(DECREASE) IN
CASH AND CASH
EQUIVALENTS 4,493 (2,206) 22,817 (5,730)
CASH AND CASH
EQUIVALENTS,
BEGIN OF PERIOD 36,885 2,987 18,561 6,511
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CASH AND CASH
EQUIVALENTS, END
OF PERIOD $ 41,378 $ 781 $ 41,378 $ 781
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Refer to the accompanying notes to the unaudited consolidated financial
statements.




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