Endeavour Silver on track for year-end start at Terronera in Mexico

Endeavour Silver (TSX: EDR; NYSE: EXK) is pushing ahead to start its Terronera silver-gold project in Jalisco state, Mexico, by the end of this year. 

However, the miner raised its capital cost estimate for a second time since it released a 2021 feasibility study on the underground project.

Following a risk analysis last year, the revised capex is US$271 million, up 17.6% from an estimate last April. That estimate was itself 32% higher than the original capex of US$175 million.

The feasibility forecast annual production of 4 million oz. of silver and 38,000 oz. of gold over a 10-year life.

“Given the trends that we have seen at our existing Mexican operations, Terronera is being advanced against headwinds, which include a stronger Mexican peso, ongoing inflation and tight markets for equipment and bulk materials such as steel, piping and electrical supplies,” Dan Dickson, Endeavour’s CEO said in a release. “We remain confident in our commissioning schedule, our updated capital cost estimate, and our ability to address these challenges as we advance the project for the benefit of all stakeholders.”

Concrete work is well advanced at the site, and vertical construction is underway, Endeavour says.

Cost estimates have risen for mill equipment (US$11 million, primarily for electrical equipment) and for structural steel fabrication (US$8 million due to both higher steel prices and design changes made during detailed engineering). The cost of the tailings storage facility has risen by US$5.5 million following final geotechnical studies and modifications. And an extra US$13.9 million has been added for mine development, equipment, and infrastructure through the commissioning phase. Much of that cost is for mobile equipment at both the Terronera and La Luz mines. The permanent camp ran US$2.2 million over budget.

Terronera is located within the Sierra Madre volcanic belt, which hosts most of Mexico’s silver and gold deposits. Both the Terronera and La Luz underground deposits will be mined using a combination of long hole and cut and fill methods. The mineral processing plant will have a capacity of 2,000 tonnes per day. 

Terronera has proven and probable reserves of 7.4 million tonnes grading 197 grams silver per tonne and 2.25 grams gold (88.8 million oz. of silver equivalent). 

Endeavour has two producing assets in Mexico, the Guanacevi silver mine and the Bolanitos gold mine.

Endeavour shares traded 3.1% lower at $2.30 each this afternoon in Toronto. The company has a market cap of nearly $500 million with shares that have traded between $2.21 and $6.08 in the past year.