VANCOUVER, BRITISH COLUMBIA, Aug 03, 2011 (MARKETWIRE via COMTEX) — Endeavour Silver Corp.  (frankfurt:EJD) announced today its financial and operating results and unaudited financial statements for the Second Quarter, 2011. Endeavour owns and operates two high-grade, underground, silver-gold mines in Mexico, the Guanacevi Mines in Durango State and the Guanajuato Mines in Guanajuato State.

The Company reported adjusted earnings (a non-IFRS measure) of $10.6 million ($0.12 per share) in the Second Quarter 2011. Net earnings were $17.0 million and operating cash-flow was $21.3 million from revenues totaling $36.4 million. Silver sales averaged $37.65 per ounce (oz) and the cash cost of silver production was $6.98 per oz net of gold credits in Q2, 2011.

Highlights of Second Quarter, 2011 (Compared to Q2, 2010)

        —  Adjusted Earnings (non-IFRS measure) escalated to $10.6 million ($0.12

            per share) compared to a $1.4 million loss (see IFRS comment below)

        —  Net Earnings (IFRS measure) increased to $17.0 million ($0.20 per share)

            compared to a $3.2 million loss

        —  Operating Cash-Flow jumped 553% to $21.3 million

        —  Mine Operating Cash-Flow rose 151% to $23.6 million

        —  Revenues climbed 85% to $36.4 million

        —  Silver production up 3% to 850,476 oz

        —  Gold production up 8% to 4,831 oz

        —  Silver equivalent production up 4% to 1.04 million oz (40:1 silver)(40:no base metals)

        —  Realized silver price up 102% to $37.65 per oz sold, realized gold price

            up 26% to $1523 per oz sold

        —  Cash cost up 6% to $6.98 per oz silver produced (net of gold credits)

        —   Gross profit margin up 241% to $30.67 per oz silver

        —   Working capital up 31% to $133.6 million, with cash and short term

            investments of $108.9 million

Bradford Cooke, Chairman and CEO, commented, “Endeavour posted healthy financial and operating results in the Second Quarter, 2011 and continued to grow its cash position and working capital thanks to a robust and rising gross profit margin. As a result of rising silver and gold production and substantially higher precious metal prices, our sales revenues, operating cash-flow, and adjusted earnings were all up sharply compared to Q2, 2010.”

“Endeavour is well on track to meet its 2011 guidance for silver production (3.7 million oz) and cash costs (less than $5.70 per oz), with our better than expected First Quarter results being partially offset by a slower Second Quarter. Cash costs of production did jump in Q2, 2011 as industry-wide cost pressures caught up to us during the quarter. While costs such as labour, power and consumables will likely continue their slow rise, we expect our cash costs of production to start falling again once the economies of scale from our new mine and plant expansion at Guanajuato take effect.”

“The Guanajuato plant expansion project from 600 tonnes per day (tpd) to 1,000 tpd is now over 75% complete with commissioning of the new circuits scheduled for the first two weeks of September. The crushing circuit is nearing completion this week, the grinding and flotation circuits should be ready in three weeks and the new electrical substation by month-end. Our operations team also added new mining personnel during the quarter and as a result, the mines are now delivering over 900 tonnes per day to the ore stockpile. The mines are scheduled to ramp up to 1000 tpd over the next two months.”

Financial Results (see Consolidated Statement of Operations)

Revenues increased 85% to $36.4 million in Q2, 2011 (Q2, 2010 – $19.7 million) thanks to sharply higher silver-gold production and precious metal prices. The Company sold 804,881 silver oz and 3,980 gold oz at average realized prices of $37.65 per oz and $1,523 per oz respectively. Costs of Sales were up 27% to $17.1 million (Q2, 2010 – $13.4 million) primarily due to higher output and cost factors described above.

Mine Operating Cash-Flow increased 151% to $23.6 million (Q2, 2010 – $9.4 million) and Mine Operating Earnings rose to $19.2 million (Q2, 2010 – $6.3 million). The Company realized Operating Earnings of $13.8 million (Q2, 2010 – $2.3 million), Operating Cash-Flow was $21.3 million (Q2, 2010 – 3.3 million) and Earnings Before Taxes were $22.7 million (Q2, 2010 – loss of $1.2 million).

Net Earnings were $17.0 million ($0.20 per share) for the period after deducting an Income Tax Expense of $5.8 million (Q2, 2010 – $2.0 million). Net Earnings includes a mark to market derivative liability gain related to share purchase warrants issued in 2009 denominated in Canadian dollars, while the Company’s functional currency is the US dollar. Under IFRS, these warrants are classified and accounted for as financial liability at fair market value with adjustments recognized through net earnings. The depreciation of these warrants resulted in a derivative liability gain of $6.3 million compared to a $1.8 million loss in 2010.

Adjusted Earnings are 10.6 million ($0.12 per share) compared to a $1.4 million loss in 2010 (negative $0.05 per share), excluding the derivative liability adjustments related to the warrants.

Cash Costs climbed 6% to $6.98 per oz silver produced in Q2, 2011 (Q2, 2010 – $6.57 per oz) due to a number of factors, including rising labour, power and fuel costs, the appreciation of the Mexican Peso to US dollars, supply constraints on plant re-agents, more mining in ore-bodies subject to production royalties, and some one-time mine and plant equipment availability issues that affected our mined tonnes and plant throughput at Guanacevi.

Capital investments totaled $12.0 million in property, plant and equipment during the Second Quarter, 2011. The main focus of the capital programs was the continued underground development of Guanacevi and Guanajuato mines, certain plant upgrade projects at Guanacevi and the plant expansion program at Guanajuato, which is on schedule for completion in Q3, 2011.

At June 30, 2011, the Company held cash and short term investments of $108.9 million and working capital totaled $133.6 million, up $31.5 million from the end of 2010.

Endeavour’s financial results are expressed in US dollars and are now prepared in accordance with International Financial Reporting Standards (“IFRS”). Our accounting policies have changed and the presentation, financial statement captions and terminology used in this news release and the accompanying unaudited financial statements differ from that used in all previously issued financial statements and quarterly and annual reports. The new policies have been consistently applied to all of the past periods presented in this news release and all prior period information has been restated or reclassified for comparative purposes unless otherwise noted. Shareholders are referred to the Company’s website for more information and further details on the conversion to IFRS are provided in Management’s Discussion and Analysis and in Note 17 to our Unaudited Condensed Consolidated Financial Statements for the period ended June 30, 2011. Click on the following links for the Second Quarter, 2011 Financial Statements – http://www.edrsilver.com/s/FinancialStatements.asp and Management’s Discussion and Analysis (“MD&A”) – http://www.edrsilver.com/s/MDA.asp .

Operating Results (see Consolidated Table of Operations)

Consolidated silver production increased 3% to 850,476 oz and gold production climbed 8% to 4,831 oz in Q2, 2011 compared to Q2, 2010 thanks to higher plant throughput at both Guanacevi and Guanajuato, partially offset by slightly lower silver grades and recoveries and enhanced by slightly higher gold grades and recoveries. As a result, consolidated silver and equivalent production rose 4% to 1.04 million oz (40:1 silver)(40:no base metals) compared to Q2, 2010.

Consolidated plant throughputs in Q2, 2011 totaled 136,958 tonnes, up 11% compared to Q2, 2010 due to the benefits of the 2010 mine development program at Guanajuato. The Guanacevi Mine averaged 941 tonnes per day (tpd) and the Guanajuato Mine averaged 564 tpd during the Second Quarter, 2011. Consolidated silver grades averaged 266 grams per tonne (gpt) silver (8.5 oz per ton) and gold grades averaged 1.36 gpt. Consolidated silver recoveries averaged 73% and gold recoveries averaged 81%.

Guanacevi silver production for Q2, 2011 was 618,083 oz, down 1% compared to 622,385 oz in Q2, 2010 and gold production was 1,633 oz, an increase of 2% compared to 1,602 oz. Plant throughput was 85,594 tonnes at average grades of 310 gpt silver and 0.69 gpt gold, compared to 75,701 tonnes grading 332 gpt silver and 0.80 gpt gold in Q2, 2010. The increased silver and gold production is attributable to the 13% increase in plant throughput while grades and recoveries were both slightly lower.

Guanajuato silver production for Q2, 2011 was 232,393 oz, up 14% compared to 204,054 oz in Q2, 2010 and gold production was 3,198 oz, an increase of 12% compared to 2,858 oz. Plant throughput was 51,364 tonnes at average grades of 192 gpt silver and 2.48 gpt gold, compared to 48,124 tonnes grading 166 gpt silver and 2.14 gpt gold in Q2, 2010. The increased silver and gold production is attributable to the 7% increase in throughput, and higher ore grades.

Outlook for Third Quarter, 2011

In Q3, 2011, Endeavour anticipates its financial performance will continue to improve, reflecting still rising silver and gold prices, a modest increase in precious metal production once the new expanded mill and flotation circuits at the Guanajuato plant are commissioned during the quarter, and falling cash costs related to the new economies of scale at Guanajuato. However, industry-wide cost pressures such as rising labour, power, fuel and consumables costs will likely continue to partially offset the Company’s progress towards cost reductions at its two mining operations.

Similar to 2010, the first two quarters of silver production in 2011 were relatively flat as forecast, with the operations team focused on the mine development and plant expansion capital programs. Silver production is expected to start rising again late in the third quarter, once the mine and plant expansion at Guanajuato is completed.

Guanacevi is currently producing at close to its 1,000 tonne per day (tpd) capacity and that is expected to continue in Q3, 2011. Guanacevi currently draws 80% of its ore production from the Porvenir Mine with the balance coming from Porvenir Dos, Porvenir Cuatro and Santa Cruz. However, Santa Cruz production will continue to escalate as mine development advances and Porvenir Dos will continue to decline as it nears the end of its mine-life late this year.

Guanajuato is currently producing at close to its 600 tpd capacity and that is expected to rise to 1,000 tpd late this quarter once the new plant expansion is completed. Production from the Lucero, Karina, Fernanda and Daniela veins has already ramped up to 900 tpd and now contributes 90% of ore production with the balance coming from Cebada and Bolanitos. The installation of the new 1,000 tonne per day mill and flotation circuit at the Guanajuato plant is anticipated to increase capacity from 600 tpd to 1,600 tpd. Once the new 1,000 tpd circuit is commissioned, the old 600 tpd circuit will be idled until such time as the Company has sufficient new reserves and resources to bring it back on line.

Endeavour is currently undertaking an aggressive $9.2 million, 47,000 meter, 175-hole exploration drill program to test multiple exploration targets within three mining districts and the newly-acquired properties. Based on pending exploration results and property acquisitions, the Company is currently assessing whether to increase the 2011 drill program and budget.