Endeavour Silver Corp. has 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 31 July 2020) (2020 PFS).
The FS supports a high grade, silver-gold underground mining operation at Terronera producing an average of 3.3 million payable 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 US$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 US$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 9 September 2021.
The FS base case assumes a silver price of US$20/oz and a gold price of US$1575/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 US$24/oz and a spot gold price of $US1800/oz.
Highlights from the FS
- Models an underground mine operation that will process 7.4 million t of ore at 1700 tpd) over the 12-year LOM.
- Base Case and Spot Price sensitivity highlights (Spot Price sensitivity uses US$24 silver and US$1800 gold).
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 t at comparable grades as provided in the 2020 PFS – additional 1.8 million t was included in the reserve estimate in the FS.
Higher annual silver production over LOM
- 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 g/t silver equivalent. The mine plan sequences the high-grade La Luz orebody in early years to optimise 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 g/t silver equivalent.
Low quartile operating costs will generate significant free cash flow
- LOM MAISC at the base case is US$3.24 per payable oz silver, net of the gold credit; years 1 – 4 MAISC weighted average is US$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 US$40 million.
- LOM annual after-tax free cash flow at the spot price sensitivity, once in full year production is US$52 million.
Increased capital cost
- Initial capital cost of US$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 optimise 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 favourable jurisdictions such as the Terronera Project. The FS reflects a tremendous amount of rigour and work required to elevate the project to be suitable for financial due diligence. We believe the FS 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.”
Read the article online at: https://www.globalminingreview.com/exploration-development/13092021/endeavour-silver-completes-terranera-project-feasibility-study/
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