Resource World Magazine

54 www.resourceworld.com O C T O B E R / N O V E M B E R 2 0 1 8 MINING ENDEAVOUR SILVER CORP. [EDR-TSX; EXK-NYSE] has recently tabled updated resource and reserve estimates together with a Pre-Feasibility Study that paints a very profitable production scenario for its Terronera Mine Project located just 40 km northeast of Puerto Vallarta in the state of Jalisco, Mexico. This new project is expected to sig - nificantly enhance the bottom line of the company and together with its impressive pipeline of exploration and development projects, Endeavour Silver has set itself firmly on a path to become a senior silver producer. The economic projections for Terronera are impressive and are expected to be amongst the lowest in the silver mining sector: • Cash costs of US $0.15/oz of silver net of gold by-product credits and an all-in sus - taining cost of US $1.36/oz of silver, net of gold by-product credits; • Robust economics point to an after-tax Net Present Value (NPV) using a 5% dis- count rate of US $117.8 million and an after-tax Internal Rate of Return (IRR) of 23.5% with a payback period of 5.4 years. This represents a 51% increase in NPV from 2017 Pre-Feasibility Study; • The mine is expected to generate Life- of-Mine revenue of US $815.8 million, EBITDA of US $447.7 million and total free cash flow of US $193.2 million. These numbers are based on a mine life of 9.5 years with an average annual pro - duction of 5.1 million silver equivalent ounces. The 2018 PFS used base case metal prices of US $17/oz silver and US $1,275/ oz gold. Silver equivalent ounces are calcu- lated using a 75:1 gold:silver ratio. Initial Capital costs are estimated at US $75.8 mil- lion with an expansion phase in year three adding another US $39.2 million. The improved economics are the result of multiple engineering trade-off studies and the incorporation of the very high- grade La Luz vein resources and reserves into the 2018 Pre-Feasibility Study. "Our efforts to optimize the Terronera Mine Project have resulted in signifi - cantly improved operating parameters and financial returns for this high-grade, district-scale exploration and mining proj- ect," commented Bradford Cooke, CEO of Endeavour Silver. Cooke went on to say that Endeavour Silver was not done yet, stating that the 2018 infill drilling program into the deeper parts of the Terronera vein is generating better than anticipated results and addi - tional engineering studies are underway to further optimize the project. The deepest mineralized hole drilled to date intersected 618 g/t silver and 3.2 g/t gold over 21.2 metres (true width) in hole TR11-4 at 430 metres vertical depth and the deposit remains open at depth. "We continue to await the final govern - ment permits needed for us to finalize the debt financing and make a development decision," said Cooke. "We look forward to when we can give the green light to develop Terronera into our fifth mine." The significant upgrade in the economic outlook of the project is in large part due to the increase in silver equivalent mineral reserves by 32% to 59.4 million oz. Unlike many projects which typically trade off grade for ounces when building their resource base, this reserve boost came with a very healthy 8% increase in silver grades and a 17% increase in gold grades and a 16% increase in overall tonnage. The overall mineral resource inven - tory was also amplified. Silver equivalent indicated resources rose 23% to 60 million ounces. This came with a 10% increase in tonnage and 3% and 16% bumps in silver and gold grades, respectively. The inferred portion of the resource grew by 55% to 14.8 million silver equivalent ounces. The tonnage increased by 49% and gold grades rose by 61%. In 2017, Endeavour spent $1.9 mil - lion exploration mapping and sampling the Terronera Project and drilled 25 holes (5,760 metres) into the La Luz vein. The La Luz, which was originally discovered in 2016, is situated just 2.2 km northeast of the Terronera vein. It is narrower but shal - lower and has a much higher grade when compared with Terronera. The La Luz vein is 600 metres in length, 250 metres deep, and still remains open for expansion at depth. Updated Mineral Reserves (not applying silver equivalents): • Probable mineral reserves at Terronera currently stand at 4.56 million tonnes averaging 226 g/t silver and 2.0 g/t gold. • This translates to 33 million oz. contained silver and 290,000 oz contained gold; • The probable mineral reserves at La Luz weigh in at 142,000 tonnes averaging 158 Low cost Terronera Mine promises to boost Endeavour Silver's bottom line by Thomas Schuster Photo Caption: Brad Cooke, CEO of Endeavour Silver, examines diamond drill core. Photo courtesy Endeavour Silver Corp.

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