Endeavour gets El Cubo back on track

Endeavour Silver (EDR-T, EXK-N) has its El Cubo mine in Guanajuato, Mexico, up and running again.

Endeavour Silver (EDR-T, EXK-N) has its El Cubo mine in Guanajuato, Mexico, up and running again.

The company says that re-commissioning of its Tajo plant was finished on May 31 and that the work was done on time and on budget — a feat made more impressive by the fact that the entire re-build only took seven months.

Endeavour acquired El Cubo in July of last year and immediately set to work to try and turn the mine from money eater into a money maker.

It devised a two-step strategy to bring about a turnaround that, all told, is expected to take two years to see through to fruition.

Its early success has been market by improving production grades, falling lost accident time and declining operating costs. Last year the company produced 300,000 oz of silver and 4,893 oz of gold from the mine at cash costs of US$35.27 per oz of silver.

It plans to produce between 900,000 and 1 million oz of silver this year along with 14,500 to 16,000 oz of gold at cash costs, “significantly” lower than last year.

Endeavour will spend a total of $67.1 million on the project when all is said and done — an amount that includes $34 million to upgrade mining equipment and accelerate exploration — and $33.1 million to modernize the plant, buildings and surface infrastructure.

The company says the bulk of that capex has been spent and that recent cost cutting programs have kept it in strong financial shape, with roughly $39 million of credit available on its $75 million revolving credit line.

With the re-commissioning, the mill is now processing between 1,200 and 1,200 tonnes of ore from El Cubo, but Endeavour says it will add another 350 tonnes of ore from the nearby Bolanitos deposit in July.

The processing of Bolanitos ore means more work ahead for Endeavour. On top of finishing up the plant and infrastructure to further support El Cubo, which will take another month, it will have to refurbish the leaching circuits that will be used to treat material from Bolanitos. That work is expected to be done by year end.

But not everyone is optimistic about the changes. Haywood Securities analyst Benjamin Asuncion’s model of the mine predicts weaker performance going forward.

“We anticipate a sequential decline in performance at El Cubo due to lower throughput from the transition and higher costs given the aforementioned lower production and severance costs from the workforce reduction,” he wrote in a recent research note.

In Toronto on June 3, the company’s shares finished the day trading a penny higher at $4.66 on 465,000 shares traded.

To read more Northern Miner articles, click here


Your email address will not be published.