VANCOUVER - Endeavour Silver Corp. (NYSE: EXK) (TSX: EDR) announces that the Company's recent re-assessment of all aspects of the Terronera Mine Project in Jalisco state, Mexico has resulted in more robust economics in the final Pre-Feasibility Study ('2020 PFS') compared to the earlier Pre-Feasibility Study released on August 30, 2018 ('2018 PFS').
Endeavour management worked with Ausenco Engineering Canada Inc. (Ausenco) on the re-conceptualization and re-engineering of the project to generate the significantly improved 2020 PFS economics presented herein. Ausenco will co-author the 2020 PFS Technical Report in compliance with National Instrument 43-101, to be filed on SEDAR and EDGAR within 45 days of this news release. All currency references herein are in US$.
The PFS base case assumes a two-year trailing average silver price of $15.97 per ounce ('oz') and a gold price of $1,419 per oz with an implied 89:1 silver:gold ratio, and an MXN:USD exchange rate of 20:1. The 2020 PFS also presents an alternative spot case using the closing metal prices as of July 8th, 2020, with silver at $18.49 per oz and gold at $1,812 per oz for a silver: gold ratio of 98:1.
Bradford Cooke, CEO, commented, 'This final iteration of our Terronera PFS adds real value to the project, reducing the initial development capex and significantly enhancing our financial returns. Endeavour's Director of Project Development Ernesto Lima worked with Ausenco to re-evaluate every parameter in our previous Pre-Feasibility studies and the result is very simply a better project, with low capital and operating costs, quick payback period and robust financial returns.'
'At base case prices, the improved economics include an NPV of $137 million, IRR of 30.0%, and payback period of 2.7 years. At current spot prices, the project exhibits the exceptional economics that one would expect from such a shallow, thick and rich silver-gold vein system. Endeavour now plans to complete a Feasibility Study at an estimated cost of $1.8 million over the next 12 months. Terronera represents our next core asset and once built, should become our largest and lowest cost mine.'
Location, Access, Physiography, Infrastructure
Terronera is located approximately 50 kilometres (km) northeast of the port city of Puerto Vallarta in Jalisco state, Mexico, about a 11/2 hour drive on Highway 70 to the town of San Sebastian del Oeste. The property has excellent road access and is situated in a mountainous region at elevations of 1,500-2,200 metres (m)above sea level. Supplies, water, power and labour are all available locally however for mining operations, new water wells, more power capacity and employee camps will be required.
Property, History, Geology, Mineralization
Terronera consists of 24 mineral concessions totalling 17,369 hectares. Discovered in 1542, the San Sebastian district went through sporadic periods of small-scale silver and gold production from more than 50 old mines on approximately 20 mineralized veins. All mining halted around 1910-1912 during the Mexican Revolution and not much happened at Terronera until Grupo Mexico acquired the project and conducted some exploration work in the late 1980's and early 1990's.
Endeavour acquired an option from Grupo Mexico to purchase Terronera for $2.75 million in 2010, and all expenditures since inception including exploration and engineering to date total $27.8 million. The Company commenced exploration work in 2011 and discovered mineralization in the Terronera Vein in 2012. High grade, silver-gold sulfide and sulfosalt mineralization is hosted in multiple low sulfidation, epithermal veins from 1 to 30 m thick over an area 12 km long by 6 km wide. The veins occur within late Cretaceous andesite to rhyolite volcanic rocks within the Sierra Madre Occidental metallogenic belt where it transects the Trans-Mexico Volcanic Belt.
Reserves and Resources
The 2020 PFS provides a revised mine plan, including revised mining dilution and recovery assumptions, which resulted in slight reductions to tonnes, grades and oz in the December 31, 2019 Mineral Reserve Estimate. Probable Mineral Reserves totaled 5.563 million tonnes grading 201 gpt silver and 2.29 gpt gold or 405 gpt AgEq (89:1 silver:gold ratio) for 36.0 million oz silver and 410,000 oz gold or 72.5million oz AgEq. Inferred Mineral Resources total 1.080 million tonnes grading 208 gpt silver and 2.28 gpt gold or 379 gpt AgEq for 7.2 million oz silver and 79,000 oz gold or 13.2 million oz AgEq. Changes from the 2018 PFS Mineral Reserve Estimate include tonnes up 18%, silver grade down 10%, gold grade up 0.4%, silver oz up 6.5% and gold oz up 20%, mainly due to infill drilling of the Terronera and La Luz Inferred Mineral Resources to upgrade them to Probable Mineral Reserves.
Initial and Sustaining Capital
The initial capital cost of the project is $99 million, to be incurred over an 18 month period prior to the start of commercial production. Initial capital is 14% lower than the 2018 PFS due to reducing initial mine development and equipment, reducing the plant footprint, updating the plant flowsheet, utilizing some used plant equipment from El Cubo, modifying the tailings storage facility and moving some capex into sustaining capital through lease financing. Cumulative sustaining capital is estimated at $60 million with over 80% spent in years 1-4 for the phased underground mine development.
Operating, Cash and All-in Sustaining Costs
The average annual operating cost per tonne is $83.82, or about 7% higher than the 2018 PFS due mainly to higher processing costs and smelter charges. Cash cost is slightly lower, however, MAISC is higher than the 2018 PFS, mainly due to the re-allocation of initial mine development to sustaining mine development.
EBITDA and FCF
The average annual EBITDA during commercial production is $48 million and after-tax free cash flow is $31 million. The cumulative LOM EBITDA and after-tax free cash flow are estimated at $476 million and $217 million, respectively 6% and 13% higher than the 2018 PFS.
Project Sensitivities
At current spot prices, the after tax NPV and IRR are most sensitive to metal prices and least sensitive to initial capex and has approximately equal exposure to silver and gold prices.
Mining Operations
Both Terronera and La Luz will be mechanized ramp access underground mines capable of producing an average of 1,600 tpd to meet the plant capacity. Mining operations were improved to defer some initial capital as well as reduce the operating cost. Four pieces of mining equipment were deemed redundant under the updated layout. Operating cost was reduced by increasing long-hole mining in both deposits and decreasing the re-handling of waste and backfill inside the mine to minimize transport cost.
Plant Flowsheet
The plant flowsheet with a 1,600 tpd capacity, consists of three stage crushing, grinding, flotation (flash, rougher, scavenger and cleaner), thickening and filtration of concentrate, tailings filter plant and a filtered-tailings (dry stack) storage facility. Plant operations were also improved to reduce capital. Construction capital was reduced by shrinking the plant footprint, reducing earthworks, eliminating the crusher building and regrind circuit, reducing the thickener size, utilizing used equipment from El Cubo and lease financing some new equipment. Operating cost was reduced by increasing plant capacity by 7%, simplifying the flowsheet, better utilizing equipment and reducing the power consumption and cost.
Surface Infrastructure
Surface infrastructure to be constructed at Terronera includes conventional gravel roads, underground haul roads, power generation plant, reclaim and fresh-water dams, waste and ore stockpiles, ancillary buildings, communications and camp facilities. The estimated power requirement for the project is 4.9MW and an additional 1MW for the camp. The power to the camp will be provided either by the national grid, CFE or as part of the project power supply which will be powered through a liquified natural gas generating station in tandem with a solar power plant built and maintained by a Mexican power provider.
Project Schedule
Management now plans to proceed with a Feasibility Study over the next 12 months at an estimated cost of $1.8 million to further de-risk the project and access additional project debt financing alternatives. Once a development decision is made, the Terronera Project will take approximately 18 months to construct and commission to commercial production. These timeframes do not take into account any further disruptions to the labour market and supply chain due to the COVID 19 pandemic.
About Endeavour Silver
Endeavour Silver Corp. is a mid-tier precious metals mining company that owns and operates three high-grade, underground, silver-gold mines in Mexico. Endeavour is currently advancing the Terronera Mine Project towards a development decision and exploring its portfolio of exploration and development projects in Mexico and Chile to facilitate its goal to become a premier senior silver producer. Our philosophy of corporate social integrity creates value for all stakeholders.
Contact:
Galina Meleger
Tel: (604) 640-4804
Email: gmeleger@edrsilver.com
Web: www.edrsilver.com
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 2020 and future years including statements regarding the economics analysis and production estimates in the 2020 PFS, changes in mining operations and production levels, 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, among others, the reliability of the Terronera economic analysis and production estimates for Terronera, the ultimate impact of the COVID 19 pandemic on operations and projects and results, changes in production timelines 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 ability to achieve the revenue, costs and production estimates in the Terronera 2020 PFS, 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, no material impact of the COVID 19 pandemic on the Terronera development plans provided for in the 2020 PFS, 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.
ENDEAVOUR SILVER CORP. 
