Endeavour Silver Corp.
(“Endeavour” or the
“Company”) (NYSE: EXK; TSX: EDR) is
pleased to announce its consolidated production and cost guidance
as well as its capital and exploration budgets for 2022. All dollar
amounts are in US dollars (US$).
2022 Production and Cost Guidance
Highlights
In 2022, silver production is expected to range
from 4.2 to 4.8 million ounces (oz) and gold production is
anticipated to be between 31,000 oz and 35,000 oz. Silver
equivalent production is forecasted to total between 6.7 million
and 7.6 million oz at an 80:1 silver:gold ratio.
Consolidated cash costs2 and all-in sustaining
costs2 (“AISC”) in 2022 are estimated to be $9.00-$10.00 per oz
silver and $20.00-21.00 per oz silver, respectively, net of gold
by-product credits. The Company’s 2022 cost outlook is higher than
the prior year as inflation, royalties and mining duties are
expected to increase in 2022.
“Our operations outperformed last year with
Guanacevi’s production bolstered by higher than anticipated mined
ore grades,” stated Dan Dickson, Endeavour’s CEO. “In 2022, our
production outlook is on par with the average of the last three
years as we anticipate the grade at Guanacevi to be more in line
with our estimated reserves and we remove the small annual
contribution from our El Compas mine, which closed last
August.”
Mr. Dickson added, “This year, the team is
focused on managing costs in order to offset the inflationary
pressures we are seeing across the industry. Equally important will
be expanding resources and advancing our exceptional growth
pipeline. Terronera will move from the funding and approval phase
through to construction. As well, we will initiate a preliminary
economic assessment at Parral and define a current resource at
Pitarrilla following the closing of this acquisition in the first
half of the year.”
2022 Guidance Summary
|
|
Guanacevi |
Bolanitos |
Consolidated |
Tonnes per day |
tpd |
1,100 - 1,200 |
1,000 - 1,200 |
2,100 - 2,400 |
Silver production |
M oz |
3.8 - 4.2 |
0.4 - 0.6 |
4.2 - 4.8 |
Gold production |
k oz |
10.0 - 12.0 |
21.0 - 23.0 |
31.0 - 35.0 |
Silver Eq production1 |
US$/oz |
4.6 - 5.2 |
2.1 - 2.4 |
6.7 - 7.6 |
Cash costs, net of gold by-product credits2 |
US$/oz |
|
|
$9.00 - $10.00 |
AISC, net of gold by-product credits2 |
US$/oz |
|
|
$20.00 - $21.00 |
Sustaining capital2 budget |
US$M |
|
|
$34.3 |
Development budget |
US$M |
|
|
$11.5 |
Exploration budget |
US$M |
|
|
$13.0 |
Operating Mines
At Guanaceví, 2022 production will range from
1,100 tonnes per day (tpd) to 1,200 tpd and average 1,165 tpd from
the Milache, SCS and P4E orebodies. A significant portion of
production will be mined from the Porvenir Cuatro extension on the
El Curso concessions. The El Curso concessions were leased from a
third party with no upfront costs but with significant royalty
payments on production. Compared to 2021, ore grades are expected
to decrease slightly with similar recoveries. Cash costs per ounce
and direct operating costs per tonne are expected to increase in
2022, primarily due to the impact of inflation on power costs,
re-agent costs and salaries as well as higher estimated royalty and
mining duty payments.
In 2022, production at Bolañitos is expected to
range from 1,000 tpd to 1,200 tpd and average 1,080 tpd from the
Plateros-La Luz, Lucero-Karina and Bolanitos-San Miguel vein
systems. Ore grades and recoveries are expected to be similar to
2021. Cash costs per oz and direct costs per tonne are expected to
increase primarily due to inflationary impact on power costs and
salaries.
Operating Costs
In 2022, cash costs, net of gold by-product
credits, are expected to be $9.00-$10.00 per oz of silver produced.
Consolidated cash costs on a co-product basis2 are anticipated to
be $13.00-$14.00 per oz silver and $1,100-$1,200 per oz gold.
All-in sustaining costs, net of gold by-product
credits, in accordance with the World Gold Council standard, are
estimated to be $20.00-$21.00 per oz of silver produced. When
non-cash items such as stock-based compensation and accretion are
excluded, AISC are forecast to be in the $19.00-$20.00 range.
Direct costs2 per tonne are estimated to be
$95-$100 with inflationary pressures expected to continue in 2022.
Direct operating costs2, which includes royalties and special
mining duties are estimated to be in the range of $120-$125 per
tonne.
Management made the following assumptions in
calculating its 2022 cost forecasts: $22 per oz silver price,
$1,760 per oz gold price, and 20:1 Mexican peso per US dollar
exchange rate.
2022 Capital Budget
|
Mine Development |
Other Capital |
Sustaining Capital |
Growth Capital |
Total Capital |
Guanaceví |
$10.3 million |
$10.1 million |
$20.4 million |
- |
$20.4 million |
Bolañitos |
$8.4 million |
$3.8 million |
$12.2 million |
- |
$12.2 million |
Terronera |
- |
- |
- |
$9.5 million |
$9.5 million |
Corporate |
- |
- |
$1.7 million |
$2.0 million |
$3.7 million |
Total |
$18.7 million |
$13.9 million |
$34.3 million |
$11.5 million |
$45.8 million |
Sustaining Capital
Investments
In 2022, Endeavour plans to invest $34.3 million
in sustaining capital, including $32.6 million at its two operating
mines and $1.7 million to maintain exploration concessions and
cover corporate infrastructure. At current metal prices, the
sustaining capital investments are expected to be paid out of
operating cash flow.
At Guanacevi, $20.4 million will be invested in
capital projects, the largest of which is the development of 5.7
kilometres of mine access at the Milache, SCS and the P4E orebodies
for an estimated $10.3 million. The additional $10.1 million will
go to upgrade the mining fleet, support site infrastructure and
expand the tailings dam.
At Bolañitos, $12.2 million will be invested in
capital projects, including $8.4 million for 5.5 kilometres of mine
development to access resources in the Plateros-La Luz,
Lucero-Karina, Bolanitos-San Miguel and Belen vein systems. The
additional $3.8 million will go to upgrade the mining fleet,
support site infrastructure, raise the tailings dam and commence a
new portal to access the Belen ore body.
At Terronera, $9.5 million is budgeted for the
first quarter of 2022 to continue with final detailed engineering,
early earth works, critical contracts and procurement of long lead
items. The Company intends to make a formal construction decision,
subject to completion of a financing package and receipt of amended
permits, in the coming months, at which time the budget for the
remainder of 2022 for the project will be determined.
The capital budget presented above does not
include the $70 million acquisition cost associated with the
Company’s recently announced acquisition of the Pitarrilla Project
(see January 13, 2022 news release) in Durango State, Mexico from
SSR Mining Inc. The transaction is expected to be completed in the
first half of 2022.
2022 Exploration Budget
Project |
2022 Activity |
Drill Metres |
Expenditures |
Guanaceví |
Drilling |
11,000 |
$1.8 million |
Bolañitos |
Drilling |
10,000 |
$1.5 million |
Terronera |
Drilling |
11,000 |
$1.9 million |
Parral |
Drilling/Economic Study |
7,000 |
$1.7 million |
Chile - Aida |
Drilling |
3,000 |
$1.5 million |
Chile - Other |
Evaluation |
- |
$0.9 million |
Bruner |
Drilling/Evaluation |
3,000 |
$1.9 million |
Pitarrilla |
Drilling/Evaluation |
5,000 |
$1.8 million |
Total |
|
50,000 |
$13.0 million |
In 2022, the Company plans to spend $13.0
million drilling 50,000 metres across its properties.
At the Guanacevi and Bolanitos mines, 21,000
metres of drilling are planned at a cost of $3.3 million to replace
reserves and expand resources.
At the Terronera development project, 11,000
metres are planned to test multiple regional targets identified in
2021 to expand resources within the district.
At the Parral project in Chihuahua state, 7,000
metres are planned at a cost of $1.7 million to delineate existing
resources, expand resources and test new targets. In the second
half of the year, the Company expects to initiate a preliminary
economic assessment.
In Chile, management intends to invest $1.5
million to test the Aida exploration project located in the
northern Chile Region II along the Argentina border accessible by
paved highway and dirt road. The Company plans to drill 3,000
metres to test a manto target with significant
silver-manganese-lead-zinc anomaly at surface in the second half of
2022. Additionally, the Company plans to advance mapping, sampling
and surface exploration on its other exploration projects in Chile,
estimated to cost $0.9 million including administration costs in
the country.
At the Bruner project management plans to invest
$1.9 million to evaluate and verify historical data to define a
current resource, map and sample new targets and drill 3,000 metres
verifying historical data and testing new targets.
Similarly, subject to closing the Pitarrilla
acquisition, management plans to invest $1.8 million for drilling
to verify the historical data and define a current resource in
2022. Management plans to release a more detailed exploration and
evaluation plan for the Pitarrilla project following closing of the
transaction.
About Endeavour Silver –
Endeavour Silver Corp. is a mid-tier precious metals mining company
that operates two high-grade underground silver-gold mines in
Mexico. Endeavour is currently advancing the Terronera mine project
towards a development decision, pending financing and final permits
and exploring its portfolio of exploration and development projects
in Mexico, Chile and the United States to facilitate its goal to
become a premier senior silver producer. Our philosophy of
corporate social integrity creates value for all stakeholders.
SOURCE Endeavour Silver Corp. Contact
InformationTrish MoranInterim Head of Investor
RelationsTel: (416) 564-4290Email: pmoran@edrsilver.comWebsite:
www.edrsilver.com
Follow Endeavour Silver on Facebook, Twitter,
Instagram and LinkedIn
Endnotes
1 Silver equivalent is calculated using an 80:1 silver:gold
ratio.
2 Non-IFRS Financial
Measures
The Company has included certain performance
measures that are not defined under International Financial
Reporting Standards (“IFRS”). The Company believes that these
measures, in addition to conventional measures prepared in
accordance with IFRS, provide investors an improved ability to
evaluate the underlying performance of the Company. The non-IFRS
measures are intended to provide additional information and should
not be considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. These measures do not
have any standardized meaning prescribed under IFRS, and therefore
may not be comparable to other issuers.
Cash costs and cash costs per
ounce
Cash costs per ounce is a non-IFRS measure. In
the silver mining industry, this metric is a common performance
measure that does not have a standardized meaning under IFRS. Cash
costs include direct costs (including smelting, refining,
transportation and selling costs), royalties and special mining
duty and changes in finished goods inventory net of gold credits.
Cash costs per ounce is based on ounces of silver produced and is
calculated by dividing cash costs by the number of ounces of silver
produced.
Cash costs on a co-product and cash
costs on a co-product per ounce
Silver co-product cash costs and gold co-product
cash costs include mining, processing (including smelting,
refining, transportation and selling costs), and direct overhead
costs allocated on pro-rated basis of realized metal value. Cash
costs on a co-product per ounce is based on the number of either
silver or gold ounces produced.
Direct operating costs and direct
costs
Direct operating costs per tonne include mining,
processing (including smelting, refining, transportation and
selling costs) and direct overhead at the operation sites. Direct
costs per tonne include all direct operating costs, royalties and
special mining duty.
All-in sustaining costs (“AISC”) and
AISC per ounce
This measure is intended to assist readers in
evaluating the total cost of producing silver from operations.
While there is no standardized meaning across the industry for AISC
measures, the Company’s definition conforms to the definition of
AISC as set out by the World Gold Council and used as a standard of
the Silver Institute. The Company defines AISC as the cash costs
(as defined above), plus reclamation cost accretion, mine site
expensed exploration, corporate general and administration costs
and sustaining capital expenditures. AISC per ounce is based on
ounces of silver produced and is calculated by dividing AISC by the
number of ounces of silver produced.
Sustaining capital
Sustaining capital is defined as the capital
required to maintain operations at existing levels. This
measurement is used by management to assess the effectiveness of an
investment program.
For further information on reconciliations of
Non-GAAP measures, refer to the Non-IFRS Measures section of the
Company’s Management’s Discussion & Analysis for the three and
nine months ending September 30, 2021, beginning on page 19.
Cautionary Note Regarding Forward-Looking
Statements
This news release contains “forward-looking
statements” within the meaning of the United States private
securities litigation reform act of 1995 and “forward-looking
information” within the meaning of applicable Canadian securities
legislation. Such forward-looking statements and information herein
include but are not limited to statements regarding Endeavour’s
anticipated performance in 2022 including changes in mining
operations and forecasts of production levels, anticipated
production costs and all-in sustaining costs, the timing and
results of various activities and the impact of the COVID 19
pandemic on operations. The Company does not intend to and does not
assume any obligation to update such forward-looking statements or
information, other than as required by applicable law.
Forward-looking statements or information
involve known and unknown risks, uncertainties and other factors
that may cause the actual results, level of activity, production
levels, performance or achievements of Endeavour and its operations
to be materially different from those expressed or implied by such
statements. Such factors include but are not limited to the
ultimate impact of the COVID 19 pandemic on operations and results,
changes in production and costs guidance, national and local
governments, legislation, taxation, controls, regulations and
political or economic developments in Canada and Mexico; financial
risks due to precious metals prices, operating or technical
difficulties in mineral exploration, development and mining
activities; risks and hazards of mineral exploration, development
and mining; the speculative nature of mineral exploration and
development, risks in obtaining necessary licenses and permits, and
challenges to the Company’s title to properties; as well as those
factors described in the section “risk factors” contained in the
Company’s most recent form 40F/Annual Information Form filed with
the S.E.C. and Canadian securities regulatory authorities.
Forward-looking statements are based on
assumptions management believes to be reasonable, including but not
limited to: the continued operation of the Company’s mining
operations, no material adverse change in the market price of
commodities, mining operations will operate and the mining products
will be completed in accordance with management’s expectations and
achieve their stated production outcomes, and such other
assumptions and factors as set out herein. Although the Company has
attempted to identify important factors that could cause actual
results to differ materially from those contained in
forward-looking statements or information, there may be other
factors that cause results to be materially different from those
anticipated, described, estimated, assessed or intended. There can
be no assurance that any forward-looking statements or information
will prove to be accurate as actual results and future events could
differ materially from those anticipated in such statements or
information. Accordingly, readers should not place undue reliance
on forward-looking statements or information.
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