Endeavour Silver Corp. (NYSE: EXK) (TSX: EDR) is pleased to announce its consolidated production and cost guidance as well as its capital and exploration budgets for 2022. All dollar amounts are in US dollars (US$).
2022 Production and Cost Guidance Highlights
In 2022, silver production is expected to range from 4.2 to 4.8 million ounces and gold production is anticipated to be between 31,000 oz and 35,000 oz. Silver equivalent production is forecasted to total between 6.7 million and 7.6 million oz at an 80:1 silver:gold ratio.
Consolidated cash costs2 and all-in sustaining costs2 in 2022 are estimated to be $9.00-$10.00 per oz silver and $20.00-21.00 per oz silver, respectively, net of gold by-product credits. The Company’s 2022 cost outlook is higher than the prior year as inflation, royalties and mining duties are expected to increase in 2022.
“Our operations outperformed last year with Guanacevi’s production bolstered by higher than anticipated mined ore grades,” stated Dan Dickson, Endeavour’s CEO. “In 2022, our production outlook is on par with the average of the last three years as we anticipate the grade at Guanacevi to be more in line with our estimated reserves and we remove the small annual contribution from our El Compas mine, which closed last August.”
Mr. Dickson added, “This year, the team is focused on managing costs in order to offset the inflationary pressures we are seeing across the industry. Equally important will be expanding resources and advancing our exceptional growth pipeline. Terronera will move from the funding and approval phase through to construction. As well, we will initiate a preliminary economic assessment at Parral and define a current resource at Pitarrilla following the closing of this acquisition in the first half of the year.”
2022 Guidance Summary
|Tonnes per day||tpd||1,100 – 1,200||1,000 – 1,200||2,100 – 2,400|
|Silver production||M oz||3.8 – 4.2||0.4 – 0.6||4.2 – 4.8|
|Gold production||k oz||10.0 – 12.0||21.0 – 23.0||31.0 – 35.0|
|Silver Eq production1||US$/oz||4.6 – 5.2||2.1 – 2.4||6.7 – 7.6|
|Cash costs, net of gold by-product credits2||US$/oz||$9.00 – $10.00|
|AISC, net of gold by-product credits2||US$/oz||$20.00 – $21.00|
|Sustaining capital2 budget||US$M||$34.3|
At Guanaceví, 2022 production will range from 1,100 tonnes per day to 1,200 tpd and average 1,165 tpd from the Milache, SCS and P4E orebodies. A significant portion of production will be mined from the Porvenir Cuatro extension on the El Curso concessions. The El Curso concessions were leased from a third party with no upfront costs but with significant royalty payments on production. Compared to 2021, ore grades are expected to decrease slightly with similar recoveries. Cash costs per ounce and direct operating costs per tonne are expected to increase in 2022, primarily due to the impact of inflation on power costs, re-agent costs and salaries as well as higher estimated royalty and mining duty payments.
In 2022, production at Bolañitos is expected to range from 1,000 tpd to 1,200 tpd and average 1,080 tpd from the Plateros-La Luz, Lucero-Karina and Bolanitos-San Miguel vein systems. Ore grades and recoveries are expected to be similar to 2021. Cash costs per oz and direct costs per tonne are expected to increase primarily due to inflationary impact on power costs and salaries.
In 2022, cash costs, net of gold by-product credits, are expected to be $9.00-$10.00 per oz of silver produced. Consolidated cash costs on a co-product basis2 are anticipated to be $13.00-$14.00 per oz silver and $1,100-$1,200 per oz gold.
All-in sustaining costs, net of gold by-product credits, in accordance with the World Gold Council standard, are estimated to be $20.00-$21.00 per oz of silver produced. When non-cash items such as stock-based compensation and accretion are excluded, AISC are forecast to be in the $19.00-$20.00 range.
Direct costs2 per tonne are estimated to be $95-$100 with inflationary pressures expected to continue in 2022. Direct operating costs2, which includes royalties and special mining duties are estimated to be in the range of $120-$125 per tonne.
Management made the following assumptions in calculating its 2022 cost forecasts: $22 per oz silver price, $1,760 per oz gold price, and 20:1 Mexican peso per US dollar exchange rate.
2022 Capital Budget
|Guanaceví||$10.3 million||$10.1 million||$20.4 million||–||$20.4 million|
|Bolañitos||$8.4 million||$3.8 million||$12.2 million||–||$12.2 million|
|Terronera||–||–||–||$9.5 million||$9.5 million|
|Corporate||–||–||$1.7 million||$2.0 million||$3.7 million|
|Total||$18.7 million||$13.9 million||$34.3 million||$11.5 million||$45.8 million|
Sustaining Capital Investments
In 2022, Endeavour plans to invest $34.3 million in sustaining capital, including $32.6 million at its two operating mines and $1.7 million to maintain exploration concessions and cover corporate infrastructure. At current metal prices, the sustaining capital investments are expected to be paid out of operating cash flow.
At Guanacevi, $20.4 million will be invested in capital projects, the largest of which is the development of 5.7 kilometres of mine access at the Milache, SCS and the P4E orebodies for an estimated $10.3 million. The additional $10.1 million will go to upgrade the mining fleet, support site infrastructure and expand the tailings dam.
At Bolañitos, $12.2 million will be invested in capital projects, including $8.4 million for 5.5 kilometres of mine development to access resources in the Plateros-La Luz, Lucero-Karina, Bolanitos-San Miguel and Belen vein systems. The additional $3.8 million will go to upgrade the mining fleet, support site infrastructure, raise the tailings dam and commence a new portal to access the Belen ore body.
At Terronera, $9.5 million is budgeted for the first quarter of 2022 to continue with final detailed engineering, early earth works, critical contracts and procurement of long lead items. The Company intends to make a formal construction decision, subject to completion of a financing package and receipt of amended permits, in the coming months, at which time the budget for the remainder of 2022 for the project will be determined.
The capital budget presented above does not include the $70 million acquisition cost associated with the Company’s recently announced acquisition of the Pitarrilla Project (see January 13, 2022 news release) in Durango State, Mexico from SSR Mining Inc. The transaction is expected to be completed in the first half of 2022.
2022 Exploration Budget
|Project||2022 Activity||Drill Metres||Expenditures|
|Parral||Drilling/Economic Study||7,000||$1.7 million|
|Chile – Aida||Drilling||3,000||$1.5 million|
|Chile – Other||Evaluation||–||$0.9 million|
In 2022, the Company plans to spend $13.0 million drilling 50,000 metres across its properties.
At the Guanacevi and Bolanitos mines, 21,000 metres of drilling are planned at a cost of $3.3 million to replace reserves and expand resources.
At the Terronera development project, 11,000 metres are planned to test multiple regional targets identified in 2021 to expand resources within the district.
At the Parral project in Chihuahua state, 7,000 metres are planned at a cost of $1.7 million to delineate existing resources, expand resources and test new targets. In the second half of the year, the Company expects to initiate a preliminary economic assessment.
In Chile, management intends to invest $1.5 million to test the Aida exploration project located in the northern Chile Region II along the Argentina border accessible by paved highway and dirt road. The Company plans to drill 3,000 metres to test a manto target with significant silver-manganese-lead-zinc anomaly at surface in the second half of 2022. Additionally, the Company plans to advance mapping, sampling and surface exploration on its other exploration projects in Chile, estimated to cost $0.9 million including administration costs in the country.
At the Bruner project management plans to invest $1.9 million to evaluate and verify historical data to define a current resource, map and sample new targets and drill 3,000 metres verifying historical data and testing new targets.
Similarly, subject to closing the Pitarrilla acquisition, management plans to invest $1.8 million for drilling to verify the historical data and define a current resource in 2022. Management plans to release a more detailed exploration and evaluation plan for the Pitarrilla project following closing of the transaction.
About Endeavour Silver
Endeavour Silver Corp. is a mid-tier precious metals mining company that operates two high-grade underground silver-gold mines in Mexico. Endeavour is currently advancing the Terronera mine project towards a development decision, pending financing and final permits and exploring its portfolio of exploration and development projects in Mexico, Chile and the United States to facilitate its goal to become a premier senior silver producer. Our philosophy of corporate social integrity creates value for all stakeholders.
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