Q: What have been the main highlights and challenges of Endeavour Silver’s three operating mines in Mexico?

BC: Our only disappointment last year was the Guanaceví mine, which fell behind its planned production. It encountered some operating issues underground, including breaking into an area of hot water and we did not have sufficient pumping, ventilation and electrical capacity to cope. We started a recovery plan last year to expand those capacities and the work should be completed in 2017 so that the mine will be back on track by year-end. We remain confident in the long-term potential at Guanaceví.

Our second mine, Bolañitos, was last year and has for many years been our most profitable mine. The gold we produce at Bolañitos typically exceeds the total cost to run the mine so the production of silver is effectively free. We are concerned about its short mine life and we are working on exploration and land acquisitions to identify further reserves and resources.

El Cubo, our third operating mine, was originally bought at the top of the metals market in 2012 as an operational turnaround candidate and a synergistic fit with Bolañitos. It was a high-cost mine that was unwanted by its previous owner. We invested a substantial amount of capital to discover new orebodies, expand the reserves and resources, redevelop the property and rebuild the plant and surface infrastructure. After being forced to accept some operating losses during the turnaround phase, El Cubo broke through last year and generated healthy positive cash flow.

Q: What strategy does the company follow when selecting new areas for acquisition and development?

GW: We look for brownfield opportunities where we can make a difference. Our geological expertise helps us to decide where to go and what needs to be done to discover new orebodies. Investing in drill holes to test virgin targets is a must. One example of success is Guanaceví. It was producing 100t/d of old tailings when we bought the mine and now it is producing up to 1,200t/d of high-grade ores.

Bolañitos is another example; it was producing 50t/d of old Spanish mine fill when we bought it and now it is producing up to 1,600t/d of high-grade ores.

BC: We have several exciting development projects in our portfolio. El Compas is a small but high-grade mine that should be in production by the end of 2017. We bought El Compas because even though the resources are small, the exploration and production potential are much larger, the mine is mostly permitted and the plant was already built and available on a 10-year lease.

Endeavour has several prospective properties in our exploration portfolio, including the large Guadalupe y Calvo district in Chihuahua. The district was famous many years ago for its high-grade ores and is located only 25km from Fresnillo’s newest large silver-gold mine at San Julian. We are testing new targets at Guadalupe y Calvo to augment the historic high-grade resources and we believe the opportunities here are promising, especially given the area's historic potential.

Terronera in Jalisco was acquired because it is an entire district of silver-gold veins that had never been properly explored in modern times. It has the potential to be the biggest and second-most profitable of our mines by the end of 2018. Our first discovery is shallower, thicker and richer than the orebodies at our operating mines, so it has a high probability of having better economics. It will initially produce at 1,000t/d, then expand to 2,000t/d in year two, to eventually produce over 5 million ounces of silver equivalent. Finally, our Parral project was acquired because it has a 32-million-ounce historic resource and there are multiple untested exploration targets to expand the resources. Parral is a possible production startup by the end of 2019.