Endeavour Silver Building Mexico’s Next Silver Mine
Endeavour Silver (TSX: EDR NYSE: EXK), a company with two high-grade underground silver-gold mines in Mexico, has a history of success that spans close to 20 years.
Since its beginning, Endeavour has relied on the insight of its founders, exploration geologists with a knack for buying undervalued historical mines and turning them into winners. Their efforts have helped to grow Endeavour into what it is today – a company with a billion-dollar market cap.
Now, Endeavour is ready to cement the next leg of its growth story, with the recently announced development of their Terronera project in Jalisco state, Mexico.
The new project, which includes the construction of an underground mine and a processing plant with a 2000 tonne per day capacity, will eventually double Endeavour’s annual production capabilities from nine million ounces of silver equivalent to 16 million ounces, and cut its cost profile in half, to make it one of the lowest-cost producing silver mines in the world.
“Terronera will be an absolute game changer for us in terms of production and cost,” boasted Endeavour’s CEO & Director Dan Dickson. “Now it’s about execution. If we can deliver on time and on budget, we’ll enhance our profile in the marketplace, which will help us expand our growth portfolio. Just as importantly, we’ll maintain our silver dominant focus, something that's very, very rare. Our peers in this space have been picking up gold assets on their pathway to growth because there is a scarcity of silver dominant assets. We, on the other hand, have built a compelling pipeline of projects that will allow us to grow without diluting our silver focus.”
Based on past performance, there’s every reason to believe that Endeavour will deliver operationally. In 2021 and 2022 the company beat their guidance, while they continued to assemble an extremely flexible and nimble management team with a skillset capable of successfully completing the company’s first build.
“Developing that kind of expertise inside our company has been very important to us,” Dickson said. “In many ways, Terronera is similar to several other projects that we’ve successfully managed. We're underground epithermal vein miners. It's what we know and its what we do.”
The Terronera project, which comes with a fully funded initial capital expenditure of $230 million, has a 95 million oz resource and an expected 10-year mine life with excellent prospects for further growth. The project’s land package consists of over 20,000 hectares and over 50 identified veins. So far, only five or six veins have been drilled, all with very good results. With additional exploration, Dickson is confident mine life could be extended to between 20 and 25 years. However, the immediate focus will be on building the mine, with any additional work designed to extend mine life occurring over the next five years.
Thanks to pre-development work the company has undertaken, Endeavour is well positioned to hit the ground running. Prior to final approval of the project, the company has already gotten a head start on development. This entailed the early securement of key procurement contracts intended to head off inflationary cost spikes and supply chain constraints; the hiring of on-site management; plant equipment purchases; access road improvements; and the completion of permanent housing for on-site employees. All this will go a long way to ensure the project remains on time and on budget.
A lot of advance work has also gone into establishing a productive relationship with surrounding communities. With Puerto Vallarta a mere hour and a half from Terronera, there is a substantial seasoned labour pool to draw from. Recruitment efforts have already started for the over 750 jobs that need to be filled for the development phase of the project. This is in addition to significant opportunities for indirect and direct business support in the region.
Social investment consultations with local communities have also resulted in several initiatives, including medical services to the local communities, the restoration of public spaces; the improvement of public infrastructure, the awarding of scholarships; a tablet donation program that was implemented during the pandemic that allowed students to keep up with online learning; and the donation of a garbage collection vehicle to the municipality of San Sebastian del Oeste.
On the sustainability front, environmental and social impacts reports have been produced. While they were required to secure financing for the project, they highlight a top priority for Endeavour. “This year will mark the release of our tenth sustainability report for the company,” Dickson proclaimed. “This is something that’s unparalleled for a company of our size, but we see it as critical. We’re going into new towns near where we're exploring or developing, and this is our track record. It provides us the validity we need to go into these regions, so it’s got to be a core principle for any mining company.”
By all accounts, local communities are supportive of the Terronera Project, which they view as a welcome source of employment for hundreds of people.
The next year promises to be a busy one for Endeavour. Their primary focus will continue to be the development of Terronera, which is scheduled to ramp up by Q4 2024. After that, the company will turn its attention to two other promising exploration properties, also in Mexico. Pitarrilla is considered to be the “next Terronera” in the company’s pipeline. Management wants to assess its viability as an underground operation. According to the latest technical report, it has 600 million defined ounces of silver, and is one of the world’s largest undeveloped silver deposits..
The other property is Parral, which has a 43 million ounce resource defined as of December 2019, with drill results in 2021 and 2022 that suggest a larger resource. Together with the company’s future flagship project Terronera, these properties will provide Endeavour with an unparalleled growth profile. Just as importantly, it will help take the company a giant step closer to the premier senior silver producer status it covets.
For more information on Endeavour Silver Corp. (TSX: EDR, NYSE: EXK) please click the request investor info button.
FULL DISCLOSURE: Endeavour Silver Corp. is a client of BTV-Business Television. This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional. Any action taken as a result of reading information here is the reader’s sole responsibility.