June 17th, 2009:
Endeavour Silver Corp (EXK)
Current Price: $1.66
www.edrsilver.com
EXK is a small-cap silver mining company focused on the growth of its silver production, reserves and resources in Mexico. Since start-up in 2004, EXK has posted four consecutive years of aggressive silver production and resource growth.
The organic expansion programs now underway at EXK's two operating silver mines in Mexico combined with its strategic acquisition program should help EXK achieve its goal to become the next premier mid-tier primary silver producer.
EXK stands out from other silver mining companies for the strong organic growth potential of its core assets, its high silver grades and leverage to the price of silver, the substantial exploration upside of its Mexican mining properties, and the significant under-utilized capacities of its Guanacevi and Guanajuato plants.
In 2004, EXK acquired options to purchase 100% of the historic Santa Cruz silver mine and large Guanacevi process plant (the "Guanacevi Mines Project") in Durango State. EXK accelerated the purchase of its 100% interests in Guanacevi through early buy-outs of the plant in July 2006 and the mines in May 2007.
In Q2, 2007, EXK purchased 100% of the famous Cebada and Bolanitos silver-gold mines and the modern Bolanitos process plant (the "Guanajuato Mines Project") in Guanajuato State.
Within 6 months of optioning the Guanacevi Mines Project in 2004, EXK successfully discovered high-grade silver mineralization in the new North Porvenir zone, drove a 400m access ramp into it, estimated an initial 4.8 million oz inferred silver resources, and commenced production. Exploration drilling to year-end 2008 has discovered four new orebodies and increased the combined reserves and resources to 62 million oz silver equivalents, still open for expansion in all directions!
In 2008, EXK announced three new discoveries; a high grade silver-gold-zone at the Cebada Mine at the Guanajuato Project, several high grade silver zones on the San Pedro properties at Guanacevi and four new high grade silver-gold zones of its Bolanitos properties, also at Guanajuato.
In 2008, EXK increased silver production to 2,340,000 oz (plus gold) which represents a growth rate of 600% since 2004! Capital programs are underway at both operations, and production is projected to grow a further 100% over the next two years.
2008 was EXK’s fourth consecutive year of rising mineral sales, up 22% to $39.3 million. EXK’s mine operating cash-flow jumped 44% to $11.5 million. EXK's silver resources increased by 47% to 39 million oz, and silver equivalent reserves and resources were up 24% to 62.1 million oz!
Silver production rose 38% from Q1 to Q4 to 695,000 oz as a result of the $12.6 million capital investment program of mine development and plant upgrades that facilitated the ramp-up of mine output and ore grades at Guanajuato and the increase of silver recoveries at Guanacevi!
In 2009, shareholders can look forward to EXK's fifth consecutive year of growing silver production, up +20% to the 2.7-2.9 million oz range. Three new mines are now under development in Guanacevi and will commence production this year. Assuming a US$12.50-$13.00 average silver price in 2009, EXK should generate in the order of US$12 to $16 million in mine operating cash-flow this year.
Already in the first quarter of 2009, EXK made huge strides with silver production rising 13% to 572,785 oz, gold production rising 63% to 2,335 oz, and cash costs falling 24% to $7.56 per oz silver produced!
EXK’s silver production should jump in Q3 and Q4 of 2009, as the three new mines now under development at Guanacevi are expected to enter into production.
We believe that EXK has the solid fundamentals we look for in a small-cap mining company heading to become the next premier mid-tier primary silver producer. EXK should capitalize significantly on the upcoming boom in silver prices when hyperinflation hits. EXK is one of the lowest priced silver companies we have suggested, and could have the most upside potential!
A co-founder of NIA has purchased 5,950 shares of EXK at an average price of $3.05 and could sell them at any time.
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