Endeavour Mining Capital announces Q2 earnings



    Toronto Stock Exchange: EDV

    GEORGE TOWN, Grand Cayman, Feb. 12 /CNW/ - Endeavour Mining Capital Corp.
("Endeavour" or "Corporation") recorded net income of $1.5 million or $0.05
per share (or approximately CDN$0.05 per share) for the quarter ended
December 31, 2007. This compares with net income of $32.3 million or $1.38 per
share (or approximately CDN$1.61 per share) reported for the quarter ended
December 31, 2006. The Corporation recorded $20.7 million of revenue from
realised gains, interest and dividends and $17.3 million of financial advisory
fees during the quarter. The realized revenue of $38.0 million was offset by
an unrealised mark to market loss on the investment portfolio of
$18.8 million, resulting in total revenue of $19.2 million.
    Commenting, Neil Woodyer, Chief Executive Officer stated, "In this
quarter, we earned $17.3 million of revenue from advisory fees and
$1.9 million of net investment income from our proprietary capital
investments. We are satisfied to have generated a positive amount of
investment income given the overall weak conditions of the global equity
markets during the quarter. We are very pleased with the advisory fee revenues
which are primarily the result of Endeavour's role with two long-standing
merchant banking clients, Northern Orion and Rusoro Mining. During the quarter
we acted as an advisor to Northern Orion on its three-way merger with Yamana
Gold and Meridian Gold to create one of the leading gold producers amongst the
intermediates with a combined market value of $9.8 billion. Endeavour also
acted as the advisor to Rusoro Mining on its acquisition of Gold Fields'
Venezuelan gold assets in a transaction valued at $526 million. Most recently,
Endeavour acted as the advisor to Petro Rubiales Energy on its acquisition of
Pacific Stratus which closed in January 2008 to create the largest independent
oil and gas company in Colombia. Due to the timing of the closing, the Petro
Rubiales transaction will contribute to Q3 results. We are clearly seeing
numerous benefits from the integrated merchant banking business strategy
wherein we seek to maximise our earnings through advisory fees and timely
capital investments. We are focused on creating value for our clients as we
are often shareholders. We have, or have had, equity investments in each of
Northern Orion, Yamana, Rusoro, Petro Rubiales and Pacific Stratus, to name a
few."
    Commenting on the results, Frank Holmes, Chairman said, "The resource
markets have continued to experiencing a sharp sell off as investors scramble
for liquidity due to the subprime debt crisis. Despite the sell off,
Endeavour's net investment income was positive for the quarter at
$1.9 million. We consider the proprietary capital investments to be well
positioned in a very volatile market and we have no exposure to asset backed
securities or subprime debt. Most importantly China's 11th five year plan is
to double infrastructure spending and India has increased its five year
investment plan by 130% to a record $500 billion to improve their
infrastructure on the back drop of tight supplies for most metals."
    Endeavour will host a conference call today to discuss this earnings
announcement at 10:00 AM Eastern Standard Time. The meeting will be webcast by
V-Call and can be accessed from the Corporation's website at
www.endeavourminingcapital.com or by calling the operator at 201-689-8031 or
toll free 1-877-407-8031 prior to the scheduled start time.
    The conference call will be archived for later playback on the
Corporation's website.

    Endeavour Mining Capital Corp. is a publicly-traded merchant banking
company offering integrated capital investment and financial advisory services
to the global natural resources sector. The Corporation offers a unique
combination of financial and intellectual capital to help build companies and
create shareholder value. Our shares are listed on the Toronto Stock Exchange
under the symbol EDV and offer a distinctly different way to invest in the
natural resources sector.
    For additional information, please visit our corporate website,
www.endeavourminingcapital.com.

    On behalf of Endeavour Mining Capital Corp.

    "Bill Koutsouras"
    Chief Financial Officer, Director & Secretary

    The Toronto Stock Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this release. The foregoing
information may contain forward-looking statements relating to the future
performance of Endeavour Mining Capital Corp. Forward-looking statements,
specifically those concerning future performance, are subject to certain risks
and uncertainties, and actual results may differ materially. These risks and
uncertainties are detailed from time to time in the Corporation's filings with
the appropriate securities commissions.



    ENDEAVOUR MINING CAPITAL CORP.

    Second Quarter Report
    December 31, 2007

    (Expressed in Thousands of United States Dollars)



    ENDEAVOUR MINING CAPITAL CORP.
    Management's Discussion and Analysis of
    Results of Operations and Financial Condition
    Second Quarter Report - December 31, 2007 and 2006
    -------------------------------------------------------------------------

    Introduction and business information

    This discussion and analysis should be read in conjunction with the
financial information included in the accompanying unaudited consolidated
financial statements. The unaudited consolidated financial statements have
been prepared in accordance with Canadian generally accepted accounting
principles. The functional currency of the business is the United States
Dollar. All monetary values are expressed in United States Dollars, unless
otherwise indicated. Tabular amounts are in thousands of United States
Dollars, except per share amounts. This discussion and analysis is prepared as
of February 12, 2008.
    Endeavour Mining Capital Corp. ("Endeavour" or "Corporation") is a
merchant banking company offering integrated capital investment and financial
advisory services to the global natural resources sector. The Corporation
actively grows new companies, provides advice to existing ones and makes
strategic capital investments. The Corporation actively manages its investment
capital base and earnings are generated through financial advisory fees and
timely capital investments. The consolidated financial results include the
operating results of Endeavour Financial for the five months since the date of
the acquisition that was completed on July 30, 2007. The acquisition of
Endeavour Financial has benefited the Corporation due to the growth
opportunities arising from synergies as a result of the integration of the
businesses and the fee derived revenue from the financial advisory services
has resulted in revenue diversification. Prior to the acquisition the revenue
of the Corporation was derived from the capital appreciation of its
investments. The Corporation now offers a full range of financial advisory
services including debt finance, corporate finance, mergers and acquisitions,
technical evaluations and financial valuations. The Corporation currently has
twenty-six client mandates and management is working closely with many of
these client companies in advancing transactions that are expected to
contribute to future advisory services revenue and add value to our capital
investments.

    
    Overall performance and business highlights

    -   The Corporation completed its acquisition of Endeavour Financial
        Corporation on July 30, 2007, creating an integrated natural resource
        merchant bank.
    -   Endeavour acted as the advisor on $10.3 billion of Mergers &
        Acquisitions that were concluded during the quarter, including the
        Northern Orion Resources three way business combination with Yamana
        Gold and Meridian Gold. Endeavour also was the financial advisor to
        Rusoro Mining in connection with Rusoro's acquisition of Gold Fields
        Venezuelan assets.
    -   Recorded revenue from advisory services of $17.3 million for the
        quarter ended December 31, 2007.
    -   Recorded net investment income of $1.9 million during the quarter
        despite the overall weak conditions of the global equity markets
        during the quarter.
    -   Earnings before interest, taxes, depreciation and amortization of
        $4.0 million or $0.13 per share for the quarter ended December 31,
        2007.
    -   Net income of $1.5 million or $0.05 per share for the quarter ended
        December 31, 2007 compared to net income of $32.3 million or
        $1.38 per share for the quarter ended December 31, 2006.
    -   The Corporation increased its annualized dividend payment by 80% and
        increased the frequency of dividend payments from semi-annually to
        monthly.
    

    Critical accounting policies

    A detailed description of all the Corporation's significant accounting
policies is included in Note 2 to the annual consolidated financial statements
for the year ended June 30, 2007 and Note 1 to the unaudited consolidated
financial statements for the six month period ended December 31, 2007.
    As an integrated merchant banking company the Corporation originates and
invests in equity, equity linked and debt transactions where it can generate
value through its business approach of making timely capital investments while
also providing financial advisory services. The Corporation's revenue is
derived from two sources (1) financial advisory services, and (2) investment
income from its capital investments.
    The Corporation's revenue recognition and investment valuation policy are
critical to the understanding of the results described below.
    Financial advisory fees from client mandates are comprised of monthly
retainer fees and transaction success fees. Monthly advisory fees are
recognized as services are rendered and collectibility is reasonably assured.
Transaction success fees are recorded when all the services have been
rendered, the related transaction has closed and collectibility is reasonably
assured.
    Net investment income is comprised of realized gains from the sale of
investments, interest income and dividends and the change in the market value
of investments. Investment transactions are accounted for on the day that a
buy or sell order is executed. Dividend income, including stock dividends, is
recorded on the ex-dividend date and interest income is recorded on the
accrual basis. The change in market value of investments represents the
aggregate of the difference between their average cost and fair value at the
balance sheet date. The valuation policies applied to investments at each
balance sheet date are described below.
    For portfolio investments, securities, held in long or short positions,
that are traded on a recognized securities exchange and for which no sales
restrictions apply are recorded at carrying values based on the last quoted
sales price at the balance sheet dates or the closing price on the last day
the security traded if there were no trades at the balance sheet dates.
    Securities that are traded on a recognized exchange but that are escrowed
or otherwise restricted as to sale or transfer are recorded at amounts
discounted from market value. In determining the discount for such
investments, the Corporation considers the nature and length of the
restriction, business risk of the investee company, its stage of development,
market potential, relative trading volume and price volatility and any other
factors that may be relevant to the ongoing and realizable value of the
investments.
    Securities in privately-held companies are recorded at cost unless an
upward adjustment is considered appropriate and supported by persuasive and
objective evidence such as a significant subsequent equity financing by an
unrelated, professional investor at a transaction price higher than the
Corporation's carrying value. Downward adjustments to carrying value are made
when there is evidence of a decline in value as indicated by the assessment of
the financial condition of the investment based on operational results,
forecasts, financing and other developments since acquisition.

    
    Included in the Corporation's investments are certain instruments that are
accounted for as follows:

    -   Loans are valued at the lesser of the loan value amount plus accrued
        interest or the amount of the loan deemed to be recoverable.
    -   Convertible loans and debentures are valued at the greater of their
        loan value amount as described above or as though converted to the
        underlying securities.
    -   Warrants for public companies which are not listed or traded on a
        national exchange are valued at the difference between the exercise
        price and the quoted market price of the underlying shares, plus an
        adjustment for time value.
    -   Options for public companies which are not listed or traded on a
        national exchange are valued at the difference between the exercise
        price and the quoted market price of the underlying shares.
    -   Options and warrants for private companies are valued at the
        difference between the exercise price and the carrying value of the
        underlying shares.
    

    At each quarterly financial reporting period, the Corporation's
management determines the valuation of investments based on the criteria above
and reflects such valuations as corporate investments in the consolidated
financial statements. The resulting values may differ from values that would
be realized had a ready market existed. The amounts at which the Corporation's
privately-held investments could be disposed of currently may differ from the
carrying value assigned due to changes in valuation assumptions resulting from
current market conditions. The amounts at which the Corporation's
publicly-traded investments could be disposed of currently may differ from the
carrying value based on market quotes as the value at which significant
ownership positions are sold is often different than the quoted market price
due to a variety of factors such as premiums paid for large blocks or
discounts due to illiquidity.

    Risks and Uncertainties associated with investing in Common Shares

    Speculative Nature of Common Shares

    The Corporation's Common Shares are speculative in nature and suitable
only for investors able to sustain a total loss of their investment.
Shareholders should not rely upon realizing any significant returns from
Common Shares and should be aware that the value of Common Shares and the
income from them could, in common with other shares and bonds, fluctuate.
There is no assurance that the investment objectives of the Corporation will
actually be achieved.

    Risks Relating to the Corporation's Business

    The Corporation depends on certain key professionals and the loss of any
    of their services could have a material adverse effect on the revenues
    and profitability.

    Management believes the Corporation's performance is strongly correlated
to the performance of certain key professionals and, accordingly, the
retention of these individuals is crucial to the Corporation's future success.
Certain of the key professionals have entered into consultancy agreements and
into non-competition and non-solicitation agreements. The initial term of the
agreements is three years from closing of the Endeavour Financial acquisition,
however, there is no guarantee that these individuals will not resign or
otherwise terminate their agreements. The Corporation's future earnings will
also depend, among other things, on its ability to maintain intellectual
capital. The Corporation's senior professionals possess experience and
expertise, which may be difficult to replace and the Corporation may not be
successful in its efforts to recruit additional personnel or retain current
personnel.

    Currency and Foreign Exchange Rate Fluctuations

    The Corporation's results are reported in US dollars. It is anticipated
that a substantial portion of the Corporation's investments will be made in
securities denominated or quoted in foreign currencies. Therefore, changes in
currency exchange rates as well as associated transaction costs could
adversely affect profitability in any given period. In addition, the
Corporation could also make investments in jurisdictions which may place
restrictions on the repatriation of funds.
    A portion of the Corporation's business is conducted by its subsidiaries
in the United Kingdom and Canada and the associated overhead costs are
denominated in UK pounds sterling and in Canadian dollars, respectively. Any
fluctuations in the value of the pound sterling and the Canadian dollar
relative to the US dollar may result in variations in the net income of the
Corporation. The Corporation does not enter into hedging or derivative
arrangements to manage its foreign exchange risk.

    Reduced Revenues during Periods of Declining Resource Prices

    The Corporation's revenue is likely to be lower during a period of
declining natural resource market and commodity prices. The Corporation's
advisory services are particularly dependent on the debt finance, equity and
mergers and acquisitions markets for companies in the natural resource sector.
A prolonged period of declining natural resource prices could cause a
reduction in fee revenue from advisory services. The Corporation's investment
income is driven in part by natural resource and commodity prices and a
decline in resource prices could also cause a decrease in investment income.

    Risk of Limited Number of Investments

    The Corporation intends to participate in a limited number of core
merchant banking investments and, as a consequence, the aggregate return of
the Corporation may be adversely affected by the unfavourable performance of
even a single investment. In addition, as the Corporation's investments are
concentrated in the resource sector, their performance will be
disproportionately subject to adverse developments in the resource sector.

    Thinly Traded Securities

    Certain publicly traded investments held by the Company are in equities
that are characterized by thin, and sometimes uneven, trading volumes, and are
potentially subject to highly volatile price swings. All publicly traded
investments have been valued by the Company based on the last sales price. Due
to the thinly traded nature of such investments, the prices at which the
Company could have sold its holdings in such equities at the period end may
have differed from the recorded values.

    Resource Development Risks

    Resource development involves a high degree of risk which cannot be
avoided, even with a combination of careful evaluation, experience and
knowledge. Although the Corporation will typically be investing in projects,
or companies having projects, in later stages of development, there is no
assurance that such projects will prove to be economically feasible and there
is also no assurance that the projects owned by companies in which the funds
of the Corporation may be invested will be brought into, or continue to be in,
commercial production. Investee companies are also subject to government and
political risk as well as volatility in commodity prices that can affect the
economic feasibility of projects.

    Summary of Quarterly Results

    The following table summarizes the Corporation's results of the last
eight reporting periods.

    
                                Q2 2008     Q1 2008     Q4 2007     Q3 2007
                             ------------------------------------------------

    Total assets              $  319,208  $  309,487  $  273,884  $  218,504

    Shareholder's Equity         311,193     307,978     255,328     210,986

    Total revenue                 19,213       2,881      57,455      32,043

    Net income (loss)              1,518        (199)     44,645      24,525

    Basic (loss) earnings
     per share                $     0.05  $    (0.01) $     1.92  $     1.05

    Diluted (loss) earnings
     per share                $     0.05  $    (0.01) $     1.83  $     0.99
    -------------------------------------------------------------------------


                                Q2 2007     Q1 2007  June 2006(xx)  Q3 2006
                             ------------------------------------------------

    Total assets              $  187,770  $  155,847  $  187,758  $  195,210

    Shareholder's Equity         186,676     155,487     172,032     178,073

    Total revenue                 34,885     (14,323)     (7,115)     46,186

    Net (loss) income             32,330     (15,874)     (6,046)     35,599

    Basic (loss) earnings
     per share                $     1.38  $    (0.68) $    (0.25) $     1.53

    Diluted (loss) earnings
     per share                $     1.33  $    (0.68) $    (0.25) $     1.45
    -------------------------------------------------------------------------

    (xx) The results in the fourth quarter of 2006 are for a one month period
    as a result of the change in the Corporation's year end to June 30.
    

    The Corporation marks its investments to market at each reporting period,
and as a result experiences significant movements in its quarterly results
which are substantially driven by changes in the unrealized appreciation and
depreciation of its investments. The mark to market value of the Corporation's
investments is affected by many factors but the primary forces include
resource prices and investor sentiment. The Corporation's results are highly
correlated to its core merchant banking investments.

    Results from Operations

    During the quarter ended December 31, 2007, revenue totaled $19.2 million
and the Corporation recorded net income of $1.5 million (or $.05 per share -
basic). Revenue for the quarter ended December 31, 2007 includes realized
gains from the sale of investments totaling $20.4 million, interest and
dividends of $0.3 million and financial advisory fee revenue of $17.3 million.
Total revenue from the above noted items totaled $38.0 million however they
were offset by a mark to market loss on the investment portfolio of
$18.8 million. Net income for the quarter ended December 31, 2007 was reduced
by non cash expenses totaling $4.9 million of which $2.8 million was
attributable to stock based compensation and $2.1 million was attributable to
amortization of intangible assets.
    The financial advisory fees are generated from the active client base of
the Corporation. The Corporation earned fees as the financial advisor on two
significant transactions that closed during the quarter. They acted as the
financial advisor to Northern Orion Resources on the three way business
combination with Yamana Gold and Meridian Gold and also acted as the advisor
to Rusoro Mining in connection with the acquisition of Gold Fields Venezuelan
assets. The diversified revenue base from this fee derived business offset the
unrealized mark to market loss on the portfolio during the quarter. The
unrealized mark to market loss was a result of the resource markets
experiencing a decline during the quarter which impacted the carrying value of
the Corporation's investments. The net revenue from the capital investment
business was $1.9 million.
    During the quarter ended December 31, 2006 the Corporation recorded
revenue of $34.9 million and net income of $32.3 million (or $1.38 per share -
basic). The revenue was comprised of realized losses on the sale of investment
of $.1 million, interest and dividends of $0.4 million and an unrealized mark
to market gain on the investment portfolio of $34.6 million. The resources
markets increased during this period and as a result had a positive impact on
the carrying value of the investments resulting in the unrealised mark to
market gain on the portfolio. There was no financial advisory fee revenue
during this period since the Corporation's business was limited to capital
investments prior to the acquisition of Endeavour Financial on July 30, 2007.
    During the six month period ended December 31, 2007, revenue totaled
$22.1 million and the Corporation recorded net income of $1.3 million (or
$.05 per share - basic). Revenue for the six month period ended December 31,
2007 includes realized gains from the sale of investments totaling
$36.0 million, interest and dividends of $0.7 million and financial advisory
fee revenue of $19.3 million. Total revenue from the above noted items totaled
$56.0 million however they were offset by an unrealised mark to market loss on
the investment portfolio of $33.9 million. Net income for the six month period
ended December 31, 2007 was reduced by non cash expenses totaling $5.7 million
of which $2.8 million was attributable to stock based compensation and
$2.9 million attributable to amortization of intangible assets.
    During the six month period ended December 31, 2006 revenue totaled
$20.6 million and the Corporation recorded net income of $16.5 million (or
$0.71 per share - basic). The Corporation's revenue of $20.6 million was
comprised of realized losses on the sale of investment of $1.6 million,
interest and dividends of $0.7 million and an unrealised mark to market gain
on the investment portfolio of $21.5 million.
    Highlighted in the table below are sector breakdowns of the Corporation's
portfolio holdings as at December 31, 2007 and June 30, 2007.

    
    ---------------------------------------------------------------
    Sector                        % of Total Assets
    ---------------------------------------------------------------
                       December 31, 2007       June 30, 2007
    ---------------------------------------------------------------
    Gold                      23%                    15%
    ---------------------------------------------------------------
    Oil & Gas                 22%                    19%
    ---------------------------------------------------------------
    Copper                    14%                    11%
    ---------------------------------------------------------------
    Cash                      11%                    16%
    ---------------------------------------------------------------
    Platinum                   7%                     5%
    ---------------------------------------------------------------
    Other metals               7%                     7%
    ---------------------------------------------------------------
    Other                      6%                    11%
    ---------------------------------------------------------------
    Silver                     5%                     6%
    ---------------------------------------------------------------
    Uranium                    4%                     5%
    ---------------------------------------------------------------
    Coal                       1%                     5%
    ---------------------------------------------------------------
                             100%                   100%
    ---------------------------------------------------------------
    

    The most significant change to the sector weightings when compared to
June 30, 2007 is an increase in gold sector investments from 15% to 23%. The
increase in gold investments as a percentage of total assets is a result of
the Corporation having made additional capital investments in merchant banking
client companies who operate in the gold sector.
    The Corporation employs an operating style that has shown excellent
results and allows it to add value quickly and efficiently. The Corporation
offers a unique combination of financial and intellectual capital to help
build companies and generate shareholder value. It invests in companies with
the potential for significant future growth with aggressive management teams
either in-place or brought in as part of the transaction.
    The Corporation operates in a highly competitive financial marketplace
that demands the utmost discretion and confidentiality. Accordingly, its
practice is not to disclose sensitive details regarding individual
transactions. This practice has been carefully considered with the primary
objective of maximizing our potential returns by limiting the possibility of
adverse market impacts caused by inopportune disclosure.
    The Corporation has an investment advisory agreement with US Global
Investors, Inc. (US Global), who is related to the Corporation by way of a
director in common. In support of the Corporation's merchant banking business
plan US Global's mandate is to actively manage the cash in the Corporation's
portfolio and to identify and implement market trading opportunities to
enhance the profitability of the Corporation. US Global is paid: (1) an
investment advisory fee, calculated and payable monthly as 1/12th of 1% of net
assets, and (2) an annualized performance fee of 10% of the Corporation's net
income from operations in excess of an 8% return on the weighted average
Shareholders' Equity during the fiscal period. The calculation of net assets
and net income from operations remove the effect of goodwill and other
intangibles and exclude the net assets and net income of Endeavour Financial.
During the quarter ended December 31, 2007 the Corporation paid $0.6 million
(December 31, 2006 - $0.4 million) of investment advisory fees to US Global
and no performance fees were accrued. For the six month period ended
December 31, 2007 $1.3 million of investment advisory were paid to US Global
(six months ended December 31, 2006 - $0.9 million) and no performance fees
were accrued (six months ended December 31, 2006 - $0.3 million). The higher
advisory fees in the current quarter and the six month period are a result of
the growth in the net assets of the Corporation.
    Endeavour's management and staff are responsible for originating and
sourcing client merchant banking investments and to continuously monitor, make
investment decisions and determine exit strategies for these strategic
investments. Prior to the acquisition of Endeavour Financial on July 30, 2007,
the Corporation incurred an expense for amounts it paid to Endeavour Financial
in fulfilling this role as an investment advisor. An investment advisory fee
expense of $0.2 million was incurred during the six month period ended
December 31, 2007 for the pre acquisition period which consisted of the month
of July 2007. For the three and six month periods ended December 31, 2006 the
amounts paid to Endeavour Financial are equivalent to the amounts paid to US
Global.
    Compensation expense totaled $7.7 million during the quarter ended
December 31, 2007. For the six months ended December 31, 2007 the expense
totaled $8.9 million. This expense relates to total compensation paid to
consultants and employees of the Corporation since the date of the Endeavor
Financial acquisition. There was no compensation expense for the quarter ended
and six month period ended December 31, 2006 since the Corporation had no
employees at the time.
    General and administrative expenses during the quarter ended December 31,
2007 totaled $2.8 million (quarter ended December 31, 2006 - $0.5 million).
For the six months ended December 31, 2007 the expense totaled $3.8 million
(six months ended December 31, 2006 - $0.9 million). The increase in the
current quarter and six month period is attributable to the addition of the
Endeavour Financial operating expenses since the date of acquisition. This
expense category includes professional fees, consulting fees, marketing,
travel, rent and administrative costs for the consolidated group.
    A foreign exchange loss of $1.2 million was recorded during the quarter
ended December 31, 2007 compared to a foreign exchange loss of $0.5 million
during the quarter ended December 31, 2006. For the six month period ended
December 31, 2007 the foreign exchange loss totaled $0.5 million compared to
$0.8 million for the six month period ended December 31, 2006. The foreign
exchange losses are a result of the revaluation of foreign currencies and non
cash working capital items denominated in foreign currencies.
    The Corporation also recorded $2.1 million of amortization expense for
the quarter ended December 31, 2007 and $2.9 million for the six month period
ended December 31, 2007. No amortization expense was recorded for the three
and six month periods ended December 31, 2006. This expense is the
amortization of intangible assets such as customer relationships and customer
contracts which were acquired as part of the Endeavour Financial acquisition,
along with the amortization of capital assets. The intangibles are being
amortized on a straight line basis over their useful lives.
    Stock based compensation expense of $2.8 million was recorded for the
three and six months periods ended December 31, 2007. No stock based
compensation expense was recorded for the three and six month periods ended
December 31, 2006. This expense relates to the vested portion of the stock
options granted to directors, officers, employees, consultants and charities
to purchase an aggregate of up to 2,612,500 common shares of the Corporation
at an exercise price of CDN$10.00 per share, expiring on October 25, 2012.
Using the Black-Scholes fair value method for stock-based compensation, the
value of the vested portion of the stock options that were granted during the
three and six months ended December 31, 2007 was $2.8 million of which
$2.4 million relates to options issued to employees, directors and charities
and $0.4 relates to options issued to consultants.

    Liquidity and Capital Resources

    At December 31, 2007, the Corporation had cash and cash equivalents of
$42.1 million (June 30, 2007 - $44.0 million), investments of $225.6 million
(June 30, 2007 - $229.8 million) and a working capital position of
$262.2 million (June 30, 2007 - $255.3 million). The Corporation has adequate
cash resources to settle outstanding liabilities and fund continuing
operations. The increase of $55.9 million in Shareholders' Equity in the
Corporation to $311.2 million at December 31, 2007 from $255.3 million at
June 30, 2007 is primarily attributable to the shares issued in connection
with the acquisition of Endeavour Financial. A total of 6,239,806 shares were
issued up front and they were recorded in shareholders equity at
$52.3 million.

    Contractual Obligations

    The Corporation is subject to operating lease commitments in connection
with rented office premises. A summary of lease commitments is provided below.

    
                                  Less than    1 - 3      4 - 5      After
                          Total     1 Year     Years      Years     5 Years
    -------------------------------------------------------------------------
    Operating Leases   $   4,137  $     725  $   2,069  $     701  $     642
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Outstanding Share Data

    As at February 12, 2008 the Corporation had the following number of issued
and outstanding shares:

                                                     Number of
                                                       Shares        Total
                                                    ------------ ------------
    Voting shares
      June 30, 2007                                  23,506,178   $   53,180
      Issued pursuant to the transaction(xx)         10,400,930       52,261
      Stock options & warrants exercised                269,000          948
      Shares repurchased                                (37,500)        (313)
    -------------------------------------------------------------------------
    Issued at December 31, 2007                      34,138,608      106,076
      Shares in escrow(xx)                           (3,467,601)           -
    -------------------------------------------------------------------------
    Issued and outstanding at February 12, 2008      30,671,007   $  106,076
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (xx) The Corporation issued a total of 10,400,930 shares in connection
    with the Endeavour Financial acquisition. 6,239,806 shares were issued
    up-front and 4,161,124 shares have been placed in escrow and held
    pursuant to the terms of an earn-out escrow agreement. The earn-out
    escrow agreement provides for the escrowed shares to be released in equal
    quarterly installments based on Endeavour Financial meeting a cumulative
    EBITDA target of $3.0 million per quarter during the earn-out period
    which commenced on August 1, 2007 and ends on June 30, 2010. The first
    earn-out period commenced on August 1, 2007 and ended on December 31,
    2007. The cumulative EBITDA target for this period was $6.0 million.
    Endeavour Financial exceeded the EBITDA target and consequently 693,523
    of the earn-out shares were issued subsequent to December 31, 2007 and
    have been valued at $6.1 million. The balance of shares remaining in
    escrow is 3,467,601.


    The Corporation also has the following outstanding warrants and stock
options:

    -   3,409,000 warrants outstanding and exercisable with a weighted
        average exercise price of CDN$5.50 and weighted average remaining
        contractual life of .86 years.

    -   65,000 options outstanding and exercisable with an exercise price of
        CDN$4.20 and remaining contractual life of .94 years.

    -   2,612,500 options outstanding with an exercise price of CDN$10.00 and
        remaining contractual life of 4.82 years, of which 885,834 are
        exercisable.
    

    During the six months ended December 31, 2007, 37,500 shares of the
Corporation were repurchased for net proceeds of $0.3 million and 269,000
shares were issued from the exercise of options and warrants for net proceeds
of $0.9 million.

    Related Party Transactions

    With the exception of the transactions with EFC and US Global, as
described in 'Results from Operations' above, there have been no related party
transactions for the three and six months ended December 31, 2007.

    Controls and Procedures Certification

    As a reporting issuer, the Corporation is required to comply with the
requirements of Multilateral Instrument 52-109, "Certification of Disclosure
in Annual and Interim Filings ("MI 52-109") issued by the Canadian Securities
regulatory authorities (often referred to as Bill 198). The Corporation's
senior management team monitors the disclosure and internal controls over
financial reporting. The Corporation believes it has adequate human and
financial resources in place in order to be able to meet all certification
requirements required by the regulators.
    In compliance with the requirements of MI 52-109, the Corporation's Chief
Executive Officer (CEO) and Chief Financial Officer (CFO) have certified as to
the fair presentation of the Corporation's MD&A and financial statements on a
quarterly basis since the start of fiscal 2005. The Certifying officers have
conducted an evaluation of the disclosure controls and procedures and are of
the opinion that these controls and procedures provide reasonable assurance
that all information considered necessary for appropriate disclosure has been
accumulated and disclosed in the annual and quarterly filings and other
reports submitted under applicable securities legislation.

    Outlook

    With the acquisition of Endeavour Financial, the Corporation is now an
integrated natural resource merchant banking company. The Corporation expects
to benefit from increased revenue diversification by the addition of the
fee-derived revenue in addition to the growth opportunities arising from
synergies as a result of the integration of the businesses. The outlook for
the business is strong as the Corporation has several active client mandates
    Our view is that strong, positive forces will continue driving the
natural resources sector, which is expected to benefit the fully integrated
business by creating increased opportunities to make both capital investments
along with providing financial advisory services to companies in the resource
sector. At the same time the Corporation believes it is well positioned to
continue to grow its core merchant banking positions.
    In this increasingly competitive environment, the Corporation is focused
on opportunities where it sees a path to value creation. While earnings
volatility should be anticipated, management believes that its superior deal
flow and access to potentially high return transactions will result in the
continued growth of the integrated business.
    Additional information relating to the Corporation is available on the
Corporation's web site at www.endeavourminingcapital.com and in the
Corporation's Annual Information Form for the twelve month period ended
June 30, 2007 on SEDAR at www.sedar.com.


    
    ENDEAVOUR MINING CAPITAL CORP.
    Consolidated Balance Sheets
    (Expressed in Thousands of United States Dollars,
     except per share amounts)
    (Unaudited)
    -------------------------------------------------------------------------

                                                    December 31,     June 30,
                                                           2007         2007
                                                    ------------ ------------
    ASSETS

    Cash and cash equivalents                        $   42,124   $   43,980
    Investments, at market (Note 3)                     225,632      229,750
    Accounts receivable and other assets                  2,056          154
    -------------------------------------------------------------------------
                                                        269,812      273,884

    Capital assets (Note 4)                                 600            -
    Intangible assets (Note 5)                           33,344            -
    Goodwill (Note 2)                                    15,452            -
    -------------------------------------------------------------------------
                                                     $  319,208   $  273,884
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES

    Performance fees payable                         $        -   $   17,988
    Accounts payable and accrued liabilities              7,594          568
    -------------------------------------------------------------------------
                                                          7,594       18,556

    Future income taxes (Note 7)                            421            -
    -------------------------------------------------------------------------
                                                          8,015       18,556
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY

    Share capital (Note 6)                              106,076       53,180
    Contributed surplus (Note 6)                          3,177          492
    Retained earnings                                   201,940      201,656
    -------------------------------------------------------------------------
                                                        311,193      255,328
    -------------------------------------------------------------------------
                                                     $  319,208   $  273,884
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    SUBSEQUENT EVENT (Note 2)

    Approved by the Board:

    "Neil Woodyer"     Director    "Wayne McManus"    Director
    -------------------            -------------------

    The accompanying notes are an integral part of these unaudited
    consolidated financial statements



    ENDEAVOUR MINING CAPITAL CORP.
    Consolidated Statements of Operations, Comprehensive Income
    and Retained Earnings
    (Expressed in Thousands of United States Dollars,
     except per share amounts)
    (Unaudited)
    -------------------------------------------------------------------------

                                 Three months ended       Six months ended
                                    December 31,            December 31,
                                  2007        2006        2007        2006
                              ----------- ----------- ----------- -----------
    REVENUE
      Net realized gain
       (loss) on investments  $   20,413        (132)     36,022  $   (1,616)
      Change in net
       unrealized
       appreciation
       (depreciation) of
       investments               (18,793)     34,619     (33,915)     21,476
      Interest and dividends         274         398         689         702
      Financial advisory fees     17,319           -      19,298           -
    -------------------------------------------------------------------------
                                  19,213      34,885      22,094      20,562
    -------------------------------------------------------------------------

    EXPENSES
      Performance fees                 -         683           -         683
      Investment advisory fees       658         890       1,494       1,728
      Compensation                 7,747           -       8,925           -
      General and
       administrative              2,803         520       3,752         918
      Foreign exchange loss        1,186         462         532         776
      Stock-based compensation
       (Note 6 (c))                2,839           -       2,839           -
      Amortization                 2,110           -       2,885           -
    -------------------------------------------------------------------------
                                  17,343       2,555      20,427       4,105
    -------------------------------------------------------------------------
    INCOME BEFORE INCOME TAXES     1,870      32,330       1,667      16,457
    -------------------------------------------------------------------------

    Current income taxes             (44)          -         (44)          -
    Future income taxes             (308)          -        (303)          -
    -------------------------------------------------------------------------
    NET INCOME AND
     COMPREHENSIVE INCOME          1,518      32,330       1,320      16,457
    RETAINED EARNINGS,
     BEGINNING OF PERIOD         201,457     102,260     201,655     119,183
    DIVIDENDS PAID                (1,035)     (1,004)     (1,035)     (2,054)
    -------------------------------------------------------------------------
    RETAINED EARNINGS, END
     OF PERIOD                $  201,940  $  133,586  $  201,940  $  133,586
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    BASIC EARNINGS PER SHARE  $     0.05  $     1.38  $     0.05  $     0.71
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    DILUTED EARNINGS
     PER SHARE                $     0.05  $     1.33  $     0.04  $     0.68
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    WEIGHTED-AVERAGE COMMON
     SHARES OUTSTANDING       29,983,285  23,362,913  28,919,565  23,333,935
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    DILUTED WEIGHTED-AVERAGE
     COMMON SHARES
     OUTSTANDING              31,383,147  24,289,259  30,365,719  24,362,281
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The accompanying notes are an integral part of these unaudited
    consolidated financial statements



    ENDEAVOUR MINING CAPITAL CORP.
    Consolidated Statements of Cash Flows
    (Expressed in Thousands of United States Dollars,
     except per share amounts)
    (Unaudited)
    -------------------------------------------------------------------------

                                 Three months ended       Six months ended
                                    December 31,            December 31,
                                  2007        2006        2007        2006
                              ----------------------- -----------------------
    OPERATING ACTIVITIES
      Net income              $    1,518  $   32,330  $    1,320  $   16,457
      Adjustments to
       reconcile net income
       to net cash used in
       operating activities:
        Net realized (gain)
         loss on investments     (20,413)        132     (36,022)      1,616
        Change in net
         unrealized
         depreciation
         (appreciation)
         of investments           18,793     (34,619)     33,915     (21,476)
        Amortization               2,110           -       2,885           -
        Stock-based
         compensation
         (Note 6 (c))              2,839           -       2,839           -
        Increase in future
         income tax expense          308           -         303           -
      Changes in non-cash
       working capital:
        Decrease (increase) in
         accounts receivables
         and other assets            355        (165)       (738)       (347)
        Increase (decrease)
         in performance fees
         payable                       -         683      (8,994)    (14,630)
        Increase (decrease) in
         accounts payable and
         accrued liabilities       6,201          52     (30,346)         (2)
      Purchase of investments    (50,694)    (17,329)    (73,993)    (37,982)
      Proceeds from the sale
       of investments             38,982       3,066      80,179       7,358
    -------------------------------------------------------------------------
                                      (1)    (15,850)    (28,652)    (49,006)
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
      Received from the issue
       of common shares                -           -         794         380
      Repurchase of common
       shares                       (107)       (139)       (313)       (139)
      Dividends paid              (1,035)     (1,004)     (1,035)     (2,054)
    -------------------------------------------------------------------------
                                  (1,142)     (1,143)       (554)     (1,813)
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
      Net cash received on
       purchase of Endeavour
       Financial                       -           -      27,063           -
      Purchase of capital
       assets                        (27)          -        (105)          -
    -------------------------------------------------------------------------
                                     (27)          -      26,958           -
    -------------------------------------------------------------------------

    Effect of exchange rate
     changes on cash and cash
     equivalents                   1,105         462         392         776
    -------------------------------------------------------------------------

    DECREASE IN CASH AND CASH
     EQUIVALENTS                     (65)    (16,531)     (1,856)    (50,043)
    CASH AND CASH EQUIVALENTS,
     BEGINNING OF PERIOD          42,189      26,279      43,980      59,791
    -------------------------------------------------------------------------
    CASH AND CASH EQUIVALENTS,
     END OF PERIOD            $   42,124  $    9,748  $   42,124  $    9,748
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    CASH AND CASH EQUIVALENTS
     IS COMPRISED OF:
      Cash in Bank            $   38,401  $    9,748  $   38,401  $    9,748
      Short Term Money Market
       Instruments                 3,723           -       3,723           -
    -------------------------------------------------------------------------
                              $   42,124  $    9,748  $   42,124  $    9,748
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The accompanying notes are an integral part of these unaudited
    consolidated financial statements



    ENDEAVOUR MINING CAPITAL CORP.
    Notes to the Unaudited Consolidated Financial Statements
    For the Three and Six Month Periods Ended December 31, 2007
    (Expressed in Thousands of United States Dollars,
     except per share amounts)
    -------------------------------------------------------------------------

    1.  BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

        These unaudited interim consolidated financial statements have been
        prepared in accordance with Canadian generally accepted accounting
        principles for interim financial statements. They follow the same
        accounting policies and methods of application as the audited
        consolidated financial statements of Endeavour Mining Capital Corp.
        (the "Corporation") for the year ended June 30, 2007 except as noted
        below. These unaudited interim consolidated financial statements do
        not include all the information and note disclosures required by
        generally accepted accounting principles for annual financial
        statements and therefore should be read in conjunction with the most
        recent annual audited consolidated financial statements.

        As a result of the acquisition of Endeavour Financial Corporation
        ("Endeavour Financial") on July 30, 2007 (Note 2), the unaudited
        interim consolidated financial statements include the results of
        operations for Endeavour Financial and its subsidiaries for the five
        month period following the date of the acquisition. In addition, the
        following significant accounting policies have been adopted during
        the six month period ended December 31, 2007:

        a) Investments

           The Corporation adopted the provisions of Sections 3855, Financial
           Instruments - Recognition and Measurement, 3861 - Financial
           Instruments - Disclosure and Presentation, 3251 - Equity, 3865 -
           Hedges and 1530, Comprehensive Income, on July 1, 2007 which
           address the classification, recognition and measurement of
           financial instruments in the financial statements and the
           inclusion of other comprehensive income. The adoption of these
           standards did not have a material impact on the Company's
           financial statements.

           The Corporation has classified all investments in its portfolio,
           including common shares, options and warrants in public and
           private companies, loans, convertible loans and debentures, as
           held for trading. The methods and significant assumptions used to
           determine the fair value of the investments are disclosed in
           Note 2 to the Company's audited annual consolidated financial
           statements for the year ended June 30, 2007.

           At each quarterly financial reporting period, the Corporation's
           management determines the valuation of investments based on the
           criteria as outlined in Note 2 to the Company's audited annual
           consolidated financial statements for the year ended June 30, 2007
           and reflects such valuations as corporate investments in the
           consolidated financial statements. The resulting values may differ
           from values that would be realized had a ready market existed. The
           amounts at which the Corporation's privately-held investments
           could be disposed of currently may differ from the carrying value
           assigned due to changes in valuation assumptions resulting from
           current market conditions. The amounts at which the Corporation's
           publicly-traded investments could be disposed of currently may
           differ from the carrying value based on market quotes as the value
           at which significant ownership positions are sold is often
           different than the quoted market price due to a variety of factors
           such as premiums paid for large blocks or discounts due to
           illiquidity.

        b) Capital assets

           Capital assets are recorded at cost. Amortization is recorded at
           annual rates considered adequate to amortize the cost of the
           assets on a straight-line basis over their estimated useful lives,
           as follows:

           Office equipment - 3 years
           Furniture and fixtures - 5 years
           Leasehold improvements - 5 years

           When assets are retired or otherwise disposed of, the cost and
           related accumulated amortization are removed from the accounts,
           and any resulting gain or loss is reflected in the statement of
           operations and retained earnings.

        c) Goodwill and other intangible assets

           Business combinations are accounted for using the purchase method.
           Goodwill represents the excess of the purchase price paid for the
           acquisition of subsidiaries over the fair value of the net
           tangible and identified intangible assets acquired. Goodwill is
           subject to an impairment test conducted at least on an annual
           basis. Goodwill impairment is identified by comparing the carrying
           value of the reporting unit to its fair value. If the carrying
           value of the reporting unit exceeds its fair value, goodwill
           impairment is calculated based on the fair value of the assets and
           liabilities. Any impairment of goodwill will be recognized as an
           expense in the period of impairment, and subsequent reversals of
           impairment are prohibited.

           Other intangible assets are amortized on a straight-line basis
           over their estimated lives and tested for impairment when events
           or circumstances indicate the carrying amounts may not be
           recoverable. Customer relationships are amortized over 15 years.
           Customer contracts and other intangible assets have amortization
           periods of up to four years.

        d) Revenue recognition

           Financial advisory fee income consists of revenue generated from
           structuring, arranging and managing various strategic initiatives
           for clients and investee companies in the areas of debt finance,
           corporate finance and mergers and acquisitions. Monthly advisory
           fees are recognized as services are rendered and collectibility is
           reasonably assured. Success fees are recorded when all the
           services have been rendered, the related transaction has closed
           and collectibility is reasonably assured.

        e) Income taxes

           The Corporation follows the liability method of accounting for
           income taxes. Using this method, income tax liabilities and assets
           are recognized for the estimated tax consequences attributable to
           differences between the amounts reported in the financial
           statements of the Company and their respective tax bases, using
           enacted income tax rates. The effect of a change in income tax
           rates on future tax liabilities and assets is recognized in income
           in the period in which the change occurs. A future income tax
           asset is recorded when the probability of the realization of the
           asset is more likely than not. Income taxes are paid by the
           Corporation's wholly owned subsidiaries in Canada and the United
           Kingdom.

        f) Foreign currency translation

           Assets and liabilities of integrated foreign subsidiary operations
           and foreign currency denominated assets and liabilities of
           Canadian and United Kingdom operations are translated into United
           States dollars (the reporting currency) at exchange rates
           prevailing at the balance sheet date for monetary items and at
           exchange rates prevailing at the transaction date for non-monetary
           items. The revenues and expenses are converted at the average
           exchange rate for the reporting period.

        g) Stock-based compensation

           The Corporation recognizes in operations, compensation costs for
           the granting of all stock options and direct awards of stock over
           the vesting period using the fair value method of accounting, with
           a corresponding increase to contributed surplus. Upon the exercise
           of stock options, consideration paid, together with the amount
           previously recorded in contributed surplus is recorded as an
           increase to share capital.

        h) Segmented information

           The Corporation operates in one segment being integrated merchant
           banking focused on the global natural resources sector.

    2.  ACQUISITION OF ENDEAVOUR FINANCIAL

        On June 8, 2007, the Corporation signed a definitive agreement to
        acquire 100% of Endeavour Financial, a privately-held investment
        banking firm that provides financial and strategic advisory services
        to the global natural resources sector (the "Transaction"). The
        Transaction was approved by the shareholders of the Corporation and
        closed on July 30, 2007.

        The shareholders of Endeavour Financial were issued 10,400,930 common
        shares from treasury which valued Endeavour Financial at
        $103 million. Approximately 40% of the consideration shares were
        placed in escrow and are held pursuant to the terms of an earn-out
        escrow agreement.

        The earn-out agreement provides for the escrowed shares to be
        released in equal quarterly installments based on Endeavour Financial
        meeting a cumulative earnings (before interest, income taxes,
        depreciation and amortization charges) ("EBITDA") target of
        $3.0 million per quarter during the earn-out period which commenced
        on August 1, 2007 and ends on June 30, 2010. In addition, 7,800,699
        of the consideration shares are subject to resale restrictions with
        equal tranches available for resale 6, 12 and 18 months from closing.

        The 4,161,124 shares of the Corporation, which will be released upon
        the achievement of certain future earnings targets, will be valued at
        the fair value of the Corporation's shares when the contingency is
        resolved and the additional consideration is released. Any additional
        consideration will result in an increase to goodwill.

        The first earn-out period commenced on August 1, 2007 and ended on
        December 31, 2007. The cumulative EBITDA target for this period was
        $6.0 million. Endeavour Financial exceeded the EBITDA target and
        consequently 693,523 of the earn-out shares have been released from
        escrow. The shares were released subsequent to December 31, 2007, and
        have been valued at $6.1 million, being the market value of the
        shares on December 31, 2007. The balance of shares remaining in
        escrow is 3,467,601.

        The business combination was accounted for as a purchase transaction,
        with the Corporation being identified as the acquirer and Endeavour
        Financial as the acquiree. The Corporation's shares issued in
        exchange for the Endeavour Financial shares have been valued at a
        price of $9.20 (C$9.79) being the weighted average trading price of
        the Corporation's shares two days before, the day of and two days
        after the date of the announcement.

        The allocation of the purchase price is summarized as follows:

        Purchase price:
          6,239,806 Endeavour common shares(i)                    $   52,261
          Acquisition costs                                            1,532
        ---------------------------------------------------------------------
                                                                  $   53,793
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Net assets acquired:
          Cash                                                    $   28,595
          Investments                                                    355
          Receivables and other assets                                10,738
          Accounts payable and accruals                              (37,488)
          Intangible assets                                           36,141
          Goodwill                                                    15,452
        ---------------------------------------------------------------------
                                                                  $   53,793
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        (i) A total of 10,400,930 were issued by EMCC, however the
            4,161,124 shares which are contingent on future earnings targets
            have not been included in the purchase price.


    3.  INVESTMENTS

        Investments are comprised of the following:

                                    December 31, 2007       June 30, 2007
                                  --------------------- ---------------------
                                               % of                  % of
        Investments by location     Value   Investments   Value   Investments
        -----------------------   ---------- ---------- ---------- ----------

        Equities:
          North America           $  54,814      24.3%  $  56,114      24.4%
          South America              73,800      32.7%     53,742      23.4%
          Europe and Asia            19,443       8.6%     18,484       8.0%
          Africa                     20,241       9.0%     23,887      10.4%
          Oceania                    16,701       7.4%      8,235       3.6%
        ---------------------------------------------------------------------
        Total equities              184,999      82.0%    160,462      69.8%
        ---------------------------------------------------------------------

        Convertible Loans and
         Debentures
          North America               1,260       0.6%          -       0.0%
          South America                   -       0.0%     16,470       7.2%
        ---------------------------------------------------------------------
        Total Convertible Loans
         and Debentures               1,260       0.6%     16,470       7.2%
        ---------------------------------------------------------------------

        Warrants
          North America              10,590       4.7%     14,251       6.2%
          South America              23,135      10.3%     31,525      13.7%
          Europe and Asia             2,252       1.0%      3,454       1.5%
          Africa                      2,470       1.1%      2,848       1.2%
          Oceania                       926       0.3%        740       0.4%
        ---------------------------------------------------------------------
        Total Warrants               39,373      17.4%     52,818      23.0%
        ---------------------------------------------------------------------
        Total Investment
         Portfolio                $ 225,632     100.0%  $ 229,750     100.0%
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        The cost of investments totaled $145,966 at December 31, 2007
        (June 30, 2007 - $116,146).

        The Corporation appoints directors to some of the companies in which
        it invests. The market value of investments in companies for which
        the Corporation has directors in common totaled $23,102 at
        December 31, 2007 (June 30, 2007 - $51,582).

        The carrying value of investments in privately-held companies totaled
        $4,237 at December 31, 2007 (June 30, 2007 - $3,701).

    4.  CAPITAL ASSETS

        Capital assets are comprised of the following:

                                                                    June 30,
                                       As at December 31, 2007        2007
                                  -------------------------------- ----------
                                                Accumu-
                                                 lated
                                                amorti-  Net book   Net book
                                       Cost     zation      value      value
                                  ---------- ---------- ---------- ----------

        Office equipment          $     411  $     (58) $     353  $       -
        Furniture and fixtures           75         (8)        67          -
        Leasehold improvements          201        (21)       180          -
        ---------------------------------------------------------- ----------
                                  $     687  $     (87) $     600  $       -
        ---------------------------------------------------------- ----------
        ---------------------------------------------------------- ----------

    5.  INTANGIBLE ASSETS

        Intangible assets are comprised of the following:

                                                                    June 30,
                                       As at December 31, 2007        2007
                                  -------------------------------- ----------
                                                Accumu-
                                                 lated
                                                amorti-  Net book   Net book
                                       Cost     zation      value      value
                                  ---------- ---------- ---------- ----------

        Customer relationships    $  25,000  $    (694) $  24,306  $       -
        Customer contracts &
         other intangible assets     11,141     (2,103)     9,038          -
        ---------------------------------------------------------- ----------
                                  $  36,141  $  (2,797) $  33,344  $       -
        ---------------------------------------------------------- ----------
        ---------------------------------------------------------- ----------

    6.  SHARE CAPITAL

        a) Voting shares

           Authorized
             1,000,000,000 voting shares of $0.01 par value
             1,000,000,000 undesignated shares

                                                       Additional
                                 Number of               Paid In
                                   Shares    Par Value   Capital     Total
                                 ----------- ---------- ---------- ----------
           Voting shares
             June 30, 2007       23,506,178  $     234  $  52,946  $  53,180
             Issued pursuant to
              the Transaction
              (Note 2)           10,400,930         62     52,199     52,261
             Stock options &
              warrants exercised    269,000          3        945        948
             Shares repurchased(i)  (37,500)         -       (313)      (313)
           ------------------------------------------------------------------
           Issued at
            December 31, 2007    34,138,608        299    105,777    106,076
             Shares in
              escrow(ii)         (4,161,124)         -          -          -
           ------------------------------------------------------------------
           Issued and
            outstanding at
            December 31, 2007    29,977,484  $     299  $ 105,777  $ 106,076
           ------------------------------------------------------------------
           ------------------------------------------------------------------

           (i)  During the six months ended December 31, 2007, the
                Corporation re-purchased 37,500 of its Common Shares in the
                market at a weighted average price of $8.35 per share
                (CDN$8.62 per share). All of these shares have been returned
                to treasury.

           (ii) The shares are held in escrow pursuant to an earn-out escrow
                agreement providing for the escrowed shares to be released in
                equal quarterly installments based on Endeavour Financial
                meeting a cumulative EBITDA target of $3.0 million per
                quarter during the earn-out period which commenced on
                August 1, 2007 and ends on June 30, 2010. The 4,161,124
                shares of the Corporation, which will be released upon the
                achievement of the EBITDA earnings targets, will be valued at
                the fair value of the Corporation's shares when the
                contingency is resolved and the additional shares are
                released. As described in Note 2, 693,523 shares were
                released subsequent to December 31, 2007 and have been valued
                at $6.1 million.

        b) Contributed Surplus

           A summary of changes in contributed surplus is presented below:

           June 30, 2007                                          $      492
           Stock options exercised                                      (154)
           Stock-based compensation (Note 6 (c))                       2,839
           ------------------------------------------------------------------
           December 31, 2007                                      $    3,177
           ------------------------------------------------------------------
           ------------------------------------------------------------------

        c) Stock-based compensation

           The Corporation has established a stock option plan whereby the
           Corporation's directors may from time to time grant options to
           directors, employees or consultants. The maximum term of any
           option is ten years. The exercise price of an option is not less
           than the closing price on the exchange on the last trading day
           preceding the grant date. At December 31, 2007 there were
           3,413,860 options available for grant under the plan (June 30,
           2007 - 2,350,617).

           On October 25, 2007, the Corporation granted stock options to its
           directors, officers, employees, consultants and charities to
           purchase an aggregate of up to 2,612,500 common shares of the
           Corporation at an exercise price of CDN$10.00 per share, expiring
           on October 25, 2012.

           Using the Black-Scholes fair value method for stock-based
           compensation, the value of the vested 2,612,500 stock options that
           were granted during the six months ended December 31, 2007 was
           $2,838,562 of which $2,373,585 relates to options issued to
           employees, directors and charities and $464,977 relates to options
           issued to consultants.

           A summary of the changes in stock options is presented below:

                                                                   Weighted
                                                       Options      average
                                                     outstanding   exercise
                                                          &          price
                                                     exercisable     (CDN$)
                                                    ------------ ------------

           At June 30, 2007                             282,500   $     2.93
             Granted                                  2,612,500        10.00
             Exercised                                 (217,500)        2.55
           ------------------------------------------------------------------

           At December 31, 2007                       2,677,500   $     9.86
           ------------------------------------------------------------------
           ------------------------------------------------------------------

           The following table summarizes information about the stock options
           outstanding as at December 31, 2007:

                                                            Weighted average
                                          Weighted average      remaining
                                           exercise price      contractual
           Outstanding     Exercisable         (CDN$)              life
           ------------    ------------   ----------------  -----------------

                65,000          65,000     $         4.20          .94 years
             2,612,500         820,834              10.00         4.82 years
           ------------    ------------

             2,677,500         885,834
           ------------------------------------------------------------------
           ------------------------------------------------------------------

           The following weighted average assumptions were used for the
           Black-Scholes valuation of stock options:

           Risk-free interest rate                            4.19%
           Expected life                                    3 years
           Annualized volatility                                46%
           Dividend rate                                         2%
           Weighted average fair value per option         $    2.45


        d) Warrants

           A summary of the changes in warrants is presented below:

                                                            Weighted average
                              Warrants    Weighted average      remaining
                             outstanding   exercise price      contractual
                            & exercisable      (CDN$)              life
                            -------------  ---------------  -----------------

           June 30, 2007       3,460,500   $         5.50         1.37 years
           Warrants exercised    (51,500)            5.50
           ------------------------------------------------------------------

           December 31, 2007   3,409,000   $         5.50          .86 years
           ------------------------------------------------------------------
           ------------------------------------------------------------------

    7.  INCOME TAXES

        Income taxes for the three and six months period ended December 31
        are comprised of the following:

                                   Three months ended     Six months ended
                                       December 31,          December 31,
                                     2007       2006       2007       2006
                                  ---------- ---------- ---------- ----------

        Income from continuing
         operations before
         income taxes             $   1,870  $  32,330  $   1,667  $  16,457
        Statutory tax rate               0%         0%         0%         0%
        ---------------------------------------------------------------------

        Income tax expense based
         on above rates                   -          -          -          -
        Future income tax expense
         on unrealized gains on
         investments held by
         subsidiaries in taxable
         jurisdictions                  308          -        303          -
        Income tax on earnings
         of subsidiaries in
         taxable jurisdictions           44          -         44          -
        ---------------------------------------------------------------------

        Income tax expense        $     352  $       -  $     347  $       -
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        The components of future income taxes are as follows:

                                                    December 31,     June 30,
                                                           2007         2007
                                                    ------------ ------------

        Fair value of investments held in taxable
         subsidiaries in excess of cost              $    1,203   $        -
        Income tax rate                                     35%           0%
        ---------------------------------------------------------------------

        Future income tax liability                  $      421            -
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    8.  RELATED PARTY TRANSACTIONS

        The Corporation has an investment advisory agreement with US Global
        Investors, Inc. ("US Global"), who is related to the Corporation by
        way of a director in common. In support of the Corporation's merchant
        banking business plan US Global's mandate is to actively manage the
        cash in the Corporation's portfolio and to identify and implement
        market trading opportunities to enhance the profitability of the
        Corporation. US Global is paid: (1) an investment advisory fee,
        calculated and payable monthly as 1/12th of 1% of net assets, and (2)
        an annualized performance fee of 10% of the Corporation's income from
        operations in excess of an 8% return on the weighted average
        Shareholders' Equity during the fiscal period. The calculation of net
        assets and income from operations remove the effect of goodwill and
        other intangibles and exclude the net assets and income of Endeavour
        Financial. During the six month period ended December 31, 2007, the
        Corporation paid $1.3 million (December 31, 2006 - $0.9 million) of
        investment advisory fees to US Global and no performance fees were
        accrued. A total of $0.2 million is payable to US Global at
        December 31, 2007 (June 30, 2007 - $9.2 million).

        Endeavour's management and staff are responsible for originating and
        sourcing client merchant banking investments and to continuously
        monitor, make investment decisions and determine exit strategies for
        these strategic investments. Prior to the acquisition of Endeavour
        Financial on July 30, 2007, the Corporation incurred an expense for
        amounts it paid to Endeavour Financial in fulfilling this role as an
        investment advisor. An investment advisory fee expense of
        $0.2 million was incurred during the six month period ended
        December 31, 2007 for the pre acquisition period which consisted of
        the month of July 2007. During the six month period ended
        December 31, 2006, the Corporation paid $0.9 million of investment
        advisory fees to Endeavour Financial and a total of $9.2 was payable
        to Endeavour Financial at June 30, 2007.
    





For further information:

For further information: Phone: Vanguard Shareholder Solutions,
1-866-801-0779 or (604) 608-0824, email: investor@endeavourminingcapital.com

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ENDEAVOUR FINANCIAL CORPORATION

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