Terronera, Endeavour's next core asset
Terronera represents Endeavour's next core asset – our future flagship mine, located 50km northeast of Puerto Vallarta, in Jalisco state, Mexico. Since acquiring the property in 2010, Endeavour has performed over a decade of work on the project including six technical reports and over 105,000 metres of drilling. The most recent feasibility study entitled "NI 43-101 Technical Report on the Feasibility Study of the Terronera Project, Jalisco State, Mexico" dated October 21, 2021 with an effective date of September 9, 2021 (the "Terronera Feasibility Study"), supports a high-grade, silver-gold underground mining operation, producing an average of 3.3 million payable oz silver and 32,874 payable oz gold per year over a 12-year mine life. (see news release dated September 9, 2021).
Since filing the Terronera Feasibility study, the Company has further evaluated various operating scenarios, cost-benefit initiatives and technologies to optimize the Terronera Project's operating flexibility and economics. Management recommended and the Board has approved the construction of an optimized Terronera Project scenario (the "Revised Scenario"), consisting of a process plant with 2,000 tonne per day (tpd) capacity and an initial capital expenditure cost of $230 million, partially offset by a decrease in sustaining capital to $88.3 million over the life of the mine. Endeavour expects a 21-month construction period, including 3 to 6 months ramp up to full production with initial production expected in the fourth quarter of 2024.
The revised metrics for the 2,000 tpd plant as compared to the 1,700 tpd plant contained in the 2021 Terronera Feasibility Study are set out in the following table. The Company does not consider these changes to be material to the Company.
A detailed investor presentation, prepared to accompany the NI 43-101 feasibility study is available here.
2023 2021 % Change Silver Price 20.00 20.00 0% Gold Price 1,575 1,575 0% Silver: Gold Ratio 79 79 0% Operating Statistics LOM Tonnes Processed LOM (thousands) 7,382 7,380 0% Life of Mine (Years) 10.0 12.0 (17%) Average silver grade (g/t) 196 197 (1%) Average gold grade (g/t) 2.13 2.25 (5%) Silver equivalent grade (g/t) 364 374 (3%) Average silver recovery 89.5% 87.7% 2% Average gold recovery 78.7% 76.3% 2% LOM payable Ag ounces produced (millions) 39.9 39.3 0% LOM payable Au ounces produced (thousands) 384 393 (2%) LOM payable Ag Eq ounces produced (millions) 69.7 70.3 (1%) Avg annual payable Ag ounces produced (millions) 4.0 3.3 20% Avg annual payable Au ounces produced (thousands) 38 33 17% Avg annual payable Ag Eq ounces produced (millions) 7.0 5.9 18% Capital Expenditure Statistics Initial Capital Expenditure (millions) 230.4 175.0 32% Process Capacity (tonnes per day) 1,990 1,700 17% LOM Sustaining Capital 88.3 105.6 (16%) Total LOM Project Capital 318.7 280.6 14% Operating Cost Metrics LOM Gross Revenue (millions) 1,403.2 1,406.2 (0%) LOM Gross COS (millions) 596.4 642.5 (7%) LOM EBITDA (millions) 806.9 756.6 7% After Tax LOM Free Cash Flow (millions) 316.9 311.4 2% Cash costs by Product (per silver ounce) (0.20) 0.59 (134%) All in sustaining (per silver ounce) 2.15 3.24 (34%) Cash costs by Silver Equivalent (per silver ounce) 8.50 9.14 (7%) All in sustaining Silver equivalents (per silver ounce) 9.84 10.62 (7%) Total Direct Production Costs (per Tonne) 80.43 87.06 (8%) Mining Costs (per tonne) 29.26 30.96 (7%) Processing Costs (per tonne) 23.38 25.47 (8%) General and Administrative (per tonne) 9.32 10.90 (14%) Treatment & Refining Charges (per tonne) 14.36 15.26 (6%) Royalty Costs (per tonne) 4.47 4.46 (0%)
Several identified opportunities remain to enhance the value of the Terronera Project, which will be evaluated during the construction phase. The main Terronera and La Luz vein orebodies are both open to a certain extent to surface and at depth. There are three main areas with significant potential to increase mineral resources: (i) the deep central area, (ii) the central-north part and (iii) the shallow part of the Santa Gertrudis – El Hundido area. As per the news release dated June 8, 2021, the Company announced that it has intercepted high-grade silver-gold mineralization in a number of structures near the Terronera vein, highlighting the potential of the area. Four structures (the San Simon, Fresno, Pendencia and Lindero veins) are located immediately to the southeast of the Terronera vein. The Los Cuates vein is located ~10 kilometres to the northwest of the Terronera Project.