Endeavour Silver Begins ‘Major Expansion’ at El Cubo Mine

Endeavour Silver Corp. (TSX:EDR,NYSEMKT:EXK) announced that it has started a “major expansion” at its Mexico-based El Cubo mine. The plan is to increase mine output over the next four months from the current capacity of 1,550 tonnes per day to 2,200 tonnes per day.

The company also said it has revised its 2015 production guidance, operating costs and capital budget.

As quoted in the press release:

The additional 650 tpd of mine production at El Cubo will come primarily from the V-Asunción mine area, which has thicker mineralized zones amenable to long hole mining, and the Santa Cecilia mine area, which has narrower but higher grade veins, and will be processed at Endeavour’s Bolañitos plant, located 18 kilometres away in the same district, which has available capacity and comparable circuits to El Cubo. Production at Bolañitos will be reduced by a small amount to accommodate more processing of El Cubo ore.

The main reason for the mine expansion is to drive operating costs lower and generate free cash flow at El Cubo by taking advantage of the available plant capacity at Bolañitos. As a result, El Cubo will become the Company’s largest mine by metal production. Endeavour received the cooperation of the miners’ union at El Cubo last week in finalizing a labour contract that facilitates the mine expansion and helps establish the short- and long-term viability of the mine.

Revised production guidance is as follows:

The Company has revised its silver production estimate for 2015 upwards by 11% to a range of 6.3-7.0 million ounces (oz). Gold production guidance increases by 27% to the 60,000-66,000 oz range, and silver equivalent production is now forecast to be approximately 10.4-11.6 million oz (using a 70:1 silver:gold ratio).

Bradford Cooke, CEO of Endeavour Silver, commented:

We fulfilled our initial two year capital expansion and operating turn-around plans at El Cubo in December, but with precious metal prices still falling, it was clear we needed to do more to make El Cubo a viable mine. The current mine expansion will bring operating costs down further and should allow El Cubo to start generating free cash flow.

Our revised production guidance for 2015 is now close to our 2014 performance, and our revised AISC cost guidance also matches our 2014 performance notwithstanding the substantially lower current value of the gold credits. Management continues to seek opportunities to optimize each of the mining operations to improve their financial performance.

One example of this is our power cost at Bolañitos. Over the past three years, we installed a 15 km, 34 kva power line to connect with the high tension power grid and replace the rental diesel generators being used at the Bolañitos plant. The new power line was energized in early March and the diesel generators were decommissioned, which should drive our power costs lower at Bolañitos in 2015.

Click here to read the full Endeavour Silver Corp. (TSX:EDR,NYSEMKT:EXK) press release.