Bradford Cooke
Endeavour Silver
View from the Top

Extracting Value from Mexico’s Historic Silver Assets

Mon, 10/21/2013 - 11:38

Q: Could you please describe how Endeavour Silver achieved eight consecutive years of accretive growth?

A: Endeavour Silver’s main focus is on growing our business in an accretive way: finding, acquiring, building, and operating quality silver mines that create real value for our shareholders. Endeavour Silver specializes in acquiring under-performing mines in historic districts that are struggling to survive. We bring the money and expertise needed to turn the operations around and bring them back to being profitable, then unlock their full potential by making new high grade discoveries and fast-tracking new mines to production, in order to drive annual growth. For instance, our first two mines at Guanaceví in the state of Durango and Bolañitos in Guanajuato were small, tired old mines when we bought them but we recognized that they each had attractive modernization, exploration, and expansion potential. Today they are large and profitable core assets that are still growing. Our model for success has also diversified to include the discovery of new silver-gold deposits in historic mining districts where there are no operating mines, such as our Terronera find at San Sebastián in Jalisco. Endeavour continues to focus on capturing opportunities that play to our strengths, and that works to our competitive advantage.

Q: Why did the company choose Mexico as the main pillar of its growth strategy?

A: When we started the company in 2003 we wanted to get into the silver mining sector, and we had to decide which country offered the best mineral potential, with the fewest issues that could negatively impact mining. We chose Mexico for several reasons, and that decision turned out to be a very good one. Mexico clearly has exceptional mineral potential, as evidenced by the growth of its mineral resources and production in recent years. Even 450 year old historic mining districts have not been fully explored by modern methods, which is why Endeavour has been able to make new discoveries in some of these districts almost every year.

Q: What has been Endeavour Silver’s strategy to keeping operating costs low at Guanaceví and Bolañitos?

A: Since the Guanaceví plant has a mineral leach circuit that produces doré silver-gold bars, we recognized in 2008 that the mineral concentrates produced at our Bolañitos plant would generate lower costs and higher profits if they were leached at Guanaceví, to produce similar doré silver-gold bars. This vertical integration of the two mines helped to keep our operating costs down. Since we acquired El Cubo mine not far from Bolañitos, and the El Cubo plant also has a mineral leach circuit that produces doré silver-gold bars, we now have the opportunity to produce doré bars from Bolañitos concentrates at El Cubo instead of Guanacevi, which also helps to reduce trucking costs.

Q: What are Endeavour Silver’s ambitions regarding its social and environmental responsibility?

A: Endeavour Silver has been one of the most proactive mining companies in Mexico regarding sustainability programs for community, health, safety, and the environment. We call it corporate social integrity. Our actions are a reflection of who we are and what we do. The path to success anywhere in the mining world goes right through the heart of better safety, better health, better community benefits, and higher environmental standards. In all of our company’s activities we consider how to maximize potential benefits for our stakeholders and minimize any possible negative impacts coming out of our operations.

Q: What are the next steps for Endeavour Silver to become a senior silver producer?

A: At each of our non-producing exploration properties in Mexico – Parral, Arroyo Seco, Pánuco-Labertino and Lourdes – we see good potential for new silver-gold discoveries, so our challenge is to do the exploration work and find new ore bodies, and our opportunity will be to turn any new discoveries into profitable operating mines. In order to achieve our production targets for 2013 we need to complete a modernization of El Cubo mine and plant and turn the operation around from losing money to making money; continue expanding mine production at the Bolañitos mine; and improve the production grades at the Guanaceví mine. To become the next senior silver mining company Endeavour also plans to find or acquire at least two new silver projects that we can develop into our fourth and fifth mines. In fact, our San Sebastián project alone may indeed have the potential to make Endeavour Silver a 10 million ounce per year senior silver producer.