2004

July 12, 2004
Shareholder Update: Overview of 2003 and Outlook for 2004

Bradford Cooke, President and CEO of Endeavour Gold Corp. (EDR:TSXV), provides shareholders with the following overview for fiscal 2004 (ended February 29, 2004) and the outlook for fiscal 2005 (ending February 28, 2005).

Overview of Fiscal 2004

Last year, the new bull market for commodities saw major gains in the prices of gold and gold stocks, but silver and silver stocks only started to move upwards late in the year. Typical of silver, it came late to the party, and then outperformed all other metals, rising 70% from US $5 per oz to US $8.50 between November 2003 and April 2004.

Last year was also a breakout year for Endeavour, as the company acquired in January 2004 the right to purchase up to a 100% interest in the producing Santa Cruz silver mine and Guanacevi processing plant in Durango, Mexico, for US $7 million over a 4 year period. The share price responded by jumping 400% from CA $0.50 per share to CA $2.00 per share between November 2003 and February 2004. 

Prior to this major acquisition, Endeavour acquired options in Q3, fiscal 2004 to purchase two other attractive but early stage gold-silver prospects, the San Jose and El Taco properties. A CA $915,000 private placement financing was closed in Q4 in order to facilitate the ongoing evaluation of silver mining projects in Mexico.

Having looked at over three dozen projects in fiscal 2004, management recognized a unique opportunity for Endeavour after visiting the Santa Cruz mine. This project stood out from the crowd for a number of reasons: current silver production generating positive cash flows, an oversized processing plant with capacity to increase output by several-fold, higher than average grade of silver ore, good exploration potential to find new ore, and great local access and infrastructure.

Outlook for fiscal 2005

Subsequent to the fiscal 2004 year-end (February 29, 2004), the prices of silver and silver stocks pulled back sharply, once again reflecting the additional volatility of silver compared to other metals. Silver fell 55% over a 6 week period in April-May 2004 back to the US $5.50 per oz range, as the first correction of the new bull market took its toll.

Endeavour shares also dropped, falling 75% to a CA $1.15 low in May 2004. However, subsequent to the fiscal year-end, the company was able to close a CA $9.9 million financing in May 2004 at CA $1.60 per unit, which facilitated the closing of the Santa Cruz/ Guanacevi option agreements in May 2004.

Management's view on silver is that it is still in the first year of a new secular bull market for the metal. We see the silver price basing in the US $6 per oz range with the potential for significant upward spikes going forward. The Santa Cruz mine not only launches Endeavour into the realm of producing silver companies, it also gives us tremendous growth potential to increase production at a time of rising silver prices, something few other primary silver producers can offer.

Endeavour's strategic plan for fiscal 2005 is to increase production at both the Santa Cruz mine and the Guanacevi plant. By developing one new ore body this year at the mine and increasing the feed of sulfide silver ore and oxidized silver tailings into the plant, we aim to triple production by year-end (February 2005).

To facilitate this plan, Endeavour will spend approximately US $1 million on developing an access ramp into the new ore body and drilling a 50 m pattern of drill holes to outline a mineable resource. The mine development work will be contracted out in order to complete the ramp by Q3. Metallurgical studies will be carried out in order to try and improve the mill recoveries of silver and gold.

Even though it has produced 500 million oz silver historically, the Guanacevi district still offers good potential for the discovery of new silver ore bodies because many old mines did not go below the water table. Endeavour also plans to continue evaluating and acquiring additional properties for exploration with a view to bringing the plant output up to its capacity of 1400 tpd or 4 million oz silver equivalent per year.

Given the tremendous growth potential of Endeavour's Santa Cruz silver mine and Guanacevi plant, the coming year should be very rewarding for Endeavour shareholders. To more accurately reflect our move into the silver business, the Company proposes to change its name to Endeavour Silver Corp.

I would like to thank all of our shareholders for your continuing support and we welcome all shareholders and investors to contact us with any questions or comments. See attached photo of silver bars produced at the Santa Cruz mine the week of March 28, 2004.

On Behalf Of The Board Of Directors 
ENDEAVOUR GOLD CORP.

/s/ Bradford J. Cooke 

Bradford J. Cooke
President and CEO 


For more information, please contact Gregg Wilson, tel: (604) 685-9775, toll free 1-877-685-9775, fax: (604) 685-9744, email invest@edrgold.com or visit our website, edrgold.com. The TSX-Venture Exchange has neither approved nor disapproved the contents of this shareholder update.