Endeavour Silver hikes Guanacevi reserves (April 17, 2006)

Vancouver — Junior silver producer Endeavour Silver (EDR-T, EDRGF-O) has significantly boosted reserves and resources at its Guanacevi mines operation in Durango state, Mexico.

The project now hosts proven and probable reserves of 183,875 tonnes grading 589 grams silver per tonne and 0.85 gram gold per tonne in zones 1, 2 and 3. There were no previously classified reserves at the deposit, which contains almost 3.5 million oz. silver (almost 3.8 million oz. silver equivalent when the gold is factored in).

Inferred resources also saw a significant increase, up 178% to 755,476 tonnes averaging 439 grams silver and 0.9 gram gold in the Porvenir Mine, Porvenir Dos and Deep Santa Cruz zones, or about 12 million contained ounces silver equivalent.

There are more than 13 million oz. total silver reserves and resources at Guanacevi, good for a 6-year mine life, says Endeavour Silver chairman and CEO Bradford Cooke, assuming that all resources can be converted to reserves.

“This updated mineral reserve and resource estimate is further evidence of the robust size and grade of silver mineralized zones in the Santa Cruz vein system,” Cooke says.

In 2005, its first year of operation under Endeavour, Guanacevi produced 948,323 direct oz. silver and 2,332 oz. gold, for a silver-equivalent yield of 1,088,543 oz. The mine was previously operated by Industrias Peoles (IPOAF-O, PENOLES-M).

Endeavour optioned Guanacevi in mid-2004, fast tracking development of the North Porvenir zone. The company spent about US$4 million in capital investments in 2005, with the project generating US$1.5 million in net operating cash flow from gross revenues of US$6.5 million. The company holds a 51% interest in the operation and can acquire the remaining 49% for two payments totalling US$3 million by early 2008.

The company continues on its expansion plan to boost the mining rate from 350 tonnes per day to the 600-tonne-per-day level. It has forecast 2006 silver production to double to about 2 million oz.; with cash operating costs of US$4.50 per oz., Endeavour has budgeted US$4.3 million in 2006 for the new development and exploration.

Endeavour recently arranged a $22.5-million financing through a syndicate of brokers, including Salman Partners, Canaccord Capital and Dundee Securities, to place 5 million special warrants at $4.50 apiece. The brokers retain an overallotment option to sell an additional 2 million of the special warrants, each of which entitles the holder to one common share plus half a warrant, with each full warrant exercisable at $5.25 for 18 months.

Shares of Endeavour Silver rallied to new highs around $5.00 on the reserve and resource updates. The company posts a $160-million market capitalization based on its 32.5 million shares outstanding.