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Endeavour Silver Corp: THE INVESTMENT CASE

Endeavour Silver making the most of mining opportunities in Mexico

It recently announced an improvement in third quarter output from its three silver-gold mines, versus the second quarter
Endeavour Silver making the most of mining opportunities in Mexico
INVESTMENT OVERVIEW: EDR The Big Picture
The group operates three silver-gold mines in Mexico and a fourth is on the way

Endeavour Silver Corp (TSE:EDR, NYSE:EXK) is steadily building scale in Mexico and plans are well underway to develop its fourth mine in the country.

Recently, the mid-tier miner announced an improvement in third quarter production from its three silver-gold mines, compared to the second quarter.

Three core assets currently....

The group operates three silver-gold mines in Mexico - the Guanacevi mine in Durango state and the Bolanitos and El Cubo mines - also in Guanajuato state.

It also has exploration sites, and development sites at El Compas and Terronera. On the latter (Terronera), it continues to be encouraged by high grade gold and silver it is finding.

The group is on track to produce between 8.5 and 9 million (mln) ounces of silver equivalent in 2017.

A new estimate at Parral...

In terms of exploration it is making sound progress, and is now looking at a new resource estimate soon for its Parral property, one of three exploration properties, also in Mexico, after drilling confirmed high grade silver there.

Twenty one holes totalling 6,928 metres (m) were drilled to test a portion of a historic resource, never mined, within the Argentina-Remedios area of the Veta Colorada.

Highlights included  457 gpt (grams per tonne) silver over a 9.3 m true width in one hole. Another high grade intercept assayed 4,641 gpt silver over a 2.3 m true width in another hole.

Drilling is also ongoing at other areas of the Parral property such as Palmilla and San Patricio, where there was a history of high grade mining but very little drilling and no previous resources, to test for new silver resources.

Bolañitos and El Cubo bolster production in third quarter.

Production in the third quarter was 1,262,064 ounces (oz) of silver and 13,648 ounces of gold resulting in silver equivalent production of 2.2 mln ounces.

It was slightly lower year on year, due to the operating issues at the Guanacevi mine, which are now mostly resolved, and revised annual mine plans, leading to lower throughput.

Chief executive Bradford Cooke told investors: “Both Bolanitos and El Cubo are on track to meet or beat their operating plans for the year. Guanaceví’s performance is now rebounding with grades up in Q3 and our forecasted throughput up for Q4, targeting 1000 tpd by year-end."

He also revealed plans were "well underway" on developing the high grade El Compas project in Zacatecas, Mexico as its fourth mine.

Production here is scheduled to begin by the end of the first quarter, 2018.

A unique deal to explore Toro del Cobre...

In September this year, it has a struck a unique agreement with Capstone Mining over the exploration for precious metals in Zacatecas state in Mexico.

Endeavour has acquired the right to explore above 2,000 metres above sea level (masl) on the 181-hectare Toro del Cobre concessions owned by Capstone Mining.

Meanwhile, it (Endeavour Silver) has granted Capstone the right to explore and mine for base metals below the 2,000 m level on Endeavour's Calicanto concessions.

Capstone has granted Endeavour a 1% NSR (net smelter royalty) on all Capstone base metal production on Endeavour property, while Endeavour has granted Capstone a 1% NSR on all Endeavour precious metal production on Capstone property.

A 'silver-plated' buying opportunity, says Lundin

In late September, Brien Lundin, editor of the Gold Newsletter, has looked at the miner and repeated a 'buy' rating.

He reckoned the share drop after second quarter financials represented a "silver-plated buying opportunity"  for investors and that silver bulls should take advantage.

He said of its three mines, Guanacevi was the only one that has underperformed so far this year, which Lundin reckons will reverse, while the Bolanitos and El Cubo mines are both expected to meet or exceed their targets.

Meanwhile, two new mines, El Compas and Terronera, are expected to start operating in the next few years.

The share price...

Shares are at C$2.89 today (October 24), up from US$2.65 on August 9, but down from C$4.19 on June 23. They ended 2016 at C$4.75.

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