Home > Mining > View from the Top

Inside Perspective on Innovative Mine Financing

Bradford Cooke - Endeavour Silver
CEO

STORY INLINE POST

Wed, 10/19/2016 - 11:56

share it

Q: What have been the main highlights of Endeavour Silver’s operating mines in 2015?

A: For the third year in a row, we met or exceeded our production and cost guidance in 2015. Our operations group delivered another solid year of production and we once again reduced our all-in sustaining costs. Guanaceví and Bolañitos each performed better than planned, and the completion of the phase two mine expansion at El Cubo to 2,200t/d was a major achievement. For 2016, our priorities are to maximize after-tax free cash flow and renew our focus on growth. The emphasis will be on reducing allin sustaining costs (AISC) rather than increasing metal output. We will also be advancing Terronera toward prefeasibility and working to expand the resources and refine the engineering of our newly acquired El Compas mine.

Q: What have been Endeavor Silver’s main achievements considering the bear market conditions?

A: We improved the strength of our balance sheet recently with two very successful At-the-Market (ATM) financings. Since 4Q15, we raised over US$30 million and our cash position at the end of the 2Q16 was close to US$50 million. We intend to use the proceeds to pay off the remainder of our short term debt, fund our growth initiatives including exploration and acquisitions, and increase our working capital. We have also worked diligently to reduce our costs structure, and in 2016 we are anticipating our fourth consecutive year of reduced costs. This year we guided cash costs to around US$8-9/oz of silver net of by-product credits and AISC to US$12-13/oz of silver net of by-product credits. This emphasis on cost containment will allow us to generate healthy free cash flows in 2016, even in this low silver price environment.

Q: What are the main drivers and trends influencing these investment decisions?

A: Last year’s capital expenditures amounted to US$37.6 million, primarily for mine development, and this year we were more conservative, forecasting capital projects totaling US$11.3 million mainly at Guanaceví where we continue to invest in mine development in order to access and replace reserves. No capital investments are planned at Bolañitos or El Cubo until free cash flows and metal prices improve. Last year’s exploration expenditures totaled US$7.2 million, and while only US$2.5 million was budgeted for 2016, we expect to invest substantially more than that thanks to the higher metal prices. We will continue our brownfield exploration drilling programs at existing operations in order to extend their mine lives. Our drilling programs at both Terronera and El Compas are focused on expanding resources this year so that we can model larger, lower-cost mines in the pre-feasibility study for Terronera and the preliminary economic assessment for El Compas. All of these investments will drive the next leg of our growth.

At El Cubo, we expanded the plant in 2015 to 2,000t/d in an effort to drive unit costs down. When we took over El Cubo in 2012 the operation was losing money, and in spite of our success in driving the AISC down from more than US$40/ oz to less than US$20/oz of silver net of gold credits, El Cubo continued to consume cash. Therefore we made the difficult decision earlier this year to transition El Cubo to care and maintenance, and we have suspended investments on exploration and mine development until metal prices improve. We will mine the accessible reserves this year at El Cubo, which means we will see a steady decline of production through the year until it adapts to care and maintenance in 4Q16. In the meantime we are evaluating new processing technologies and mining methods in order to further reduce the operating costs at El Cubo.

You May Like

Most popular

Newsletter