Americas silver producer Endeavour Silver Corp aims to bring its proposed US$230 million Terronera silver-project in Mexico on line in the fourth quarter of next year after its board this week signed off on the development. The project is set to double the circa-$800 million company’s annual silver output.
The cost of a mine and plant at Terronera has more than doubled since Ausenco prepared a prefeasibility study for Endeavour in 2020 (sub-$100m capex). Its 2021 feasibility study, this time completed by Wood, had a $175m initial investment in a c600,000tpa underground mine and plant delivering 5.9 million ounces a year silver-equivalent at US$10.62/oz AISC over 12 years.
Now Endeavour plans a c720,000tpa operation producing 7Mozpa Ag-eq at $9.84/oz AISC for 10 years. Higher silver output of 4Mozpa (+20%) and 38,000ozpa gold production (+17%) over the life-of-mine are being targeted. Endeavour is using a silver price of $20/oz and $1575/oz gold in its economic base case. It is banking on a 21-month construction period and 3-6-month ramp-up to full production.
The company said it had signed a commitment letter with Societe Generale and ING Bank for a $120m debt facility for the project.
“With official board approval now in hand, the path is cleared to advance construction of the Terronera project, which will be Endeavour’s next producing mine,” CEO Dan Dickson said.
“After undergoing a comprehensive due diligence process, we secured very competitive financing terms with quality financiers that protect the upside for our shareholders.”
Endeavour says additional cost pressures have emerged since 2021 from “systemic inflation and constrained global supply chains, which have contributed to increased costs of inputs within the mining sector”. The company has completed six independent technical reports, including the 2021 NI 43-101 feasibility study, since acquiring Terronera in 2010.
COO Don Gray said project optimisation work over the past year had “captured opportunities for higher throughput and improved metallurgical recoveries”.
“At the same time, technical risks have been mitigated by further study, engineering, testing and early works,” he said.
“Overall, we are very fortunate we started with pre-development activities well in advance of this construction decision. This has significantly de-risked the project, as we have been able to secure several procurement contracts before certain inflationary cost spikes and supply chain constraints.
“Like others in the industry, we are dealing with inflation on the remaining unawarded work.
“However, such inflation affects a smaller portion of the overall Terronera project.”
Endeavour says increased long-hole stoping underground (now to produce c60% of ore from underground) is aimed at reducing mining costs. The high-grade, low sulfidation epithermal vein system is on Mexico’s prolific Sierra Madre Occidental Volcanic belt, about 50km north-east of Puerto Vallarta in Jalisco state.
Endeavour plans to own and operate an LNG-fired power plant and use dry stack tailings to “reduce risk and impact” in the mountainous project location.