VANCOUVER, British Columbia, Sept. 09, 2021 (GLOBE NEWSWIRE) -- Endeavour Silver Corp. (NYSE: EXK) (TSX: EDR) is pleased to announce it has now completed a Feasibility Study (“FS”) on the 100% owned Terronera Project in Jalisco state, Mexico. Robust economics are supported by larger mineral reserves, higher annual production and longer mine life (“LOM”) compared to the 2020 Pre-Feasibility Study (“Endeavour Silver Corp. Terronera Project NI 43-101 Technical Report dated July 31, 2020) (“2020 PFS”).
The Feasibility Study supports a high grade, silver-gold underground mining operation at Terronera producing an average of 3.3 million payable ounces (“oz”) silver and 32,874 payable oz gold per year over a 12-year mine life. Endeavour management worked with Wood PLC for 12 months to complete the FS, which included comprehensive reviews of the construction, operations, and costs, to provide confidence for project completion within budget and on schedule. Endeavour Silver has commenced initial earthworks and intends to make a formal construction decision subject to completion of a financing package, and receipt of additional amended permits later this year. An additional $13 million budget has been approved to advance the initial earthworks, site clearing, temporary camp and ordering of long lead items for a cumulative 2021 development budget of $21 million approved to date.
Wood PLC will author the Technical Report in accordance with National Instrument 43-101, to be filed on SEDAR and EDGAR within 45 days of this news release.
The FS base case assumes a silver price of $20 per oz and a gold price of $1,575 per oz with an implied 79:1 silver to gold ratio, and a Mexican Peso to US Dollar exchange rate of 20:1. The FS also presents project sensitivities including a sensitivity scenario using a spot silver price of $24 per oz and a spot gold price of $1,800 per oz. All currency references herein are in US$.
A video webcast to discuss the results of the Feasibility Study is scheduled for today, Thursday September 9, 2021, at 7:00 a.m. Pacific time (10:00am Eastern time) with Chief Executive Officer, Dan Dickson. The investor presentation which accompanies this news release is available (here). All details with respect to participation in the webcast are outlined in the “2021 Feasibility Study Video Webcast” section below.
Highlights from the Feasibility Study
Models an underground mine operation that will process 7.4 million tonnes of ore at 1,700 tonnes per day (“tpd”) over the 12-year mine life (“LOM”).
Base Case and Spot Price sensitivity highlights (Spot Price sensitivity uses $24 silver and $1,800 gold):
Metric Base Case Base case at Spot Price Sensitivity
After- tax NPV (5%) $174 million $282 million
After-tax IRR 21.3% 30.0%
Payback Period 3.6 years 2.5 years
LOM Cash Cost per oz silver payable, net of gold credit(1) $0.59 per oz ($1.51) per oz
LOM Mine All-in sustaining per oz silver payable, net of gold credit (“MAISC”)(1) $3.24 per oz $1.15 per oz
Pre-tax cumulative undiscounted free cash flow(1) $476 million $716 million
After-tax cumulative undiscounted free cash flow (1) $311 million $467 million
Abbreviations include: NPV = net present value, IRR = internal rate of return, LOM = life of mine, MAISC = mine site all-in sustaining cost, AgEq = silver equivalent.
Larger Mineral Reserve
Revised reserve estimate incorporates improved methodology to capture high grade silver zones. Total LOM reserves increased by 33% to 7.4 million tonnes (Mt) at comparable grades as provided in the 2020 PFS – additional 1.8 Mt was included in the reserve estimate in the feasibility study.
Higher Annual Silver Production Over Longer Mine Life
Years 1-4 averages 4.4 million oz silver and 39,767 oz gold for 7.5 million oz silver equivalent at an average throughput grade of 455 gpt silver equivalent. The mine plan sequences the high-grade La Luz orebody in early years to optimize grade and cash flow.
LOM annual payable production averages 3.3 million oz silver and 32,874 oz gold for 5.9 million oz silver equivalent at an average throughput grade of 374 gpt silver equivalent.
Low Quartile Operating Costs will Generate Significant Free Cash Flow
LOM MAISC at the base case is $3.24 per payable oz silver, net of the gold credit; years 1-4 MAISC weighted average is $4.69 per payable oz silver, due to front loaded development schedule.
LOM annual after-tax free cash flow at the base case, once in full year production is $40 million.
LOM annual after-tax free cash flow at the spot price sensitivity, once in full year production is $52 million.
Increased Capital Cost
Initial capital(1) cost of $175 million.
Early construction activities have commenced including temporary camp construction and preparation for forestry work and site clearing (portal #1 & #2 areas). Full construction work will commence following a formal development decision upon completion of project financing package.
Front-end engineering and design work is well advanced, and procurement activities of long lead items are underway.
Key permits required to begin construction have been granted; minor permit amendments and extensions are being filed to meet current feasibility design
Dan Dickson, CEO, commented, “With the completion of the feasibility study, the Terronera project is now advancing rapidly towards financing and construction. The results provided today support the construction of our largest, and lowest cost mine. We believe there are further opportunities to optimize the project and grow the mineral resource. It is our belief that, with continued drilling success, there is potential to add significant production ounces and mine life at Terronera.”
“In the mining industry, there are very few silver dominant projects that are substantially de-risked and located in favorable jurisdictions such as the Terronera Project. The Feasibility Study reflects a tremendous amount of rigour and work required to elevate the project to be suitable for financial due diligence. We believe the Feasibility Study provides a well-designed, comprehensive plan completed under the direction of our management team and a successful global engineering firm, Wood PLC.”
“Subject to Board review and approval later this year, we plan to formally break ground on construction. We are very pleased to deliver this important milestone for our shareholders, employees, the local communities, and other stakeholders.”
Location, Access, Physiography, Infrastructure
Terronera is located approximately 50 kilometres northeast of the port city of Puerto Vallarta in Jalisco state, Mexico, about a 1½ hour drive on Highway 70 to the town of San Sebastian del Oeste. The property has excellent road access and is situated in a mountainous region at elevations of 1,500-2,200 metres above sea level. Water, power and labour are all available locally; however, for the mining operations, site-power generation and an employee camp will be required. Water for the operations will be supplied from mine dewatering.
Property, History, Geology, Mineralization
Terronera consists of 25 mineral concessions totaling 20,128 hectares. Discovered in 1542, the San Sebastian district went through sporadic periods of small-scale silver and gold production from more than 50 old mines on approximately 20 mineralized veins. All mining halted around 1910-1912 during the Mexican Revolution and little work was done at Terronera until Grupo Mexico acquired the project and conducted some exploration work in the late 1980’s and early 1990’s.
Endeavour purchased Terronera from Grupo Mexico for $2.75 million in 2010, and all expenditures since inception including exploration and engineering to date total $32.9 million. The Company commenced exploration work in 2011 and discovered mineralization in the Terronera Vein in 2012. High grade, silver-gold sulfide and sulfosalt mineralization is hosted in multiple low sulfidation, epithermal veins from 1 to 30 m thick over an area 12 km long by 6 km wide. The veins occur within late Cretaceous andesite to rhyolite volcanic rocks within the Sierra Madre Occidental metallogenic belt where it transects the Trans-Mexico Volcanic Belt.
Mineral Reserves and Resources
The Feasibility Study provides a revised mine plan from the previously completed Pre-Feasibility studies, including revised reserve and resource estimates, mining methods, mining dilution and recovery assumptions. The revised resource estimate uses high yield restriction methodology to ensure that the influence of the high-grade samples did not extend beyond their observed range of continuity.
Terronera and La Luz Probable Mineral Reserve (FS 2021)
Terronera Tonnes (kt) Ag (g/t) Au g/t Ag Eq g/t Ag (000’s oz) Au (000’s oz) Ag Eq (000’s oz)
Total Probable 7,380 197 2.25 374 46,707 534 88,834
Mineral Resource cut-off grades for Terronera was 150 g/t silver equivalent and the Mineral Reserve cut-off grades for Terronera and La Luz Deposits were 166 g/t and 197 g/t silver equivalent respectively.
Mining recoveries of 93% were applied for Terronera for Mineral Reserve Estimate calculations. Minimum mining widths were 1.0 metres for Mineral Reserve Estimate calculations.
Dilution factors for Mineral Reserve Estimate calculations averaged 27.5%.
Silver equivalent grades and ounces are based on a 79:1 silver:gold ratio
See Cautionary Note to U.S. Investors below.
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