Regulatory Kinks Must Be Ironed Out

Q: What strategies does the company use to ensure healthy levels of cash flow?

A: To survive the last five-year bear market in metal prices, Endeavour Silver had to incorporate several strategies to reduce our cash operating and all-in sustaining costs. We reduced our workforce and retrained our remaining employees to use newer and more efficient mining equipment and methods. We also reduced our exploration and capital budgets. Last year, when metal prices started to increase, we raised some equity capital to invest in growth. In 2017, we plan to raise some debt financing as well to build one of our new mines. Our healthy cash flows are now helping us become one of the fastest-growing silver mining companies in the world.

Q: How much of a challenge is the new Ecological Tax in Zacatecas for miners?

A: We think the state government is in financial difficulty and this was the solution. However, we and most other mining companies in Zacatecas think the state has no right to tax us for the environment so we have all filed constitutional challenges in court to block the new taxes. Even the federal government is challenging the new state taxes in court. Our hope is that these taxes are defeated in court because this legislation was poorly thought out.

Q: What challenges are you experiencing at Terronera?

A: We ran into several issues with state governmental authorities when it came to issuing permits. They do not have the experience or expertise in approving mine permits so they were moving very slowly. We requested some assistance from the federal authorities and now our permit applications are moving more smoothly.

Q: How do you expect your investments in Mexico to progress?

A: When it comes to investing, our board is becoming nervous about investing in Mexico, which is why we are active in Chile. We told the Undersecretary for Mining that we need more positive action from the Mexican administration before we can approve more investments. Mexico is an ideal location for Canadian investment but the country needs to implement deferred exploration expenditures, amend its mining duties, improve its VAT refunds and permit timelines to attract new investment in exploration.